Annual Report

2013“Providing affluence andcomfort to people and society,with our unique technology”

Corporate Philosophy (Resolved in1991):

Providing affluence and comfort to people and society, with our unique
technology.
Management Philosophy (Revised in 2006):
We will conduct all of our corporate activities based upon a deep respect for humanity.
We will aim at coexisting with society, and working in harmony with the environment.
We will pursue innovative technology.
We will act on the global stage.

Nippon Shokubai Corporate Behavior Charter (Resolved in 2007):In the belief that it is our social responsibility to conduct business based upon the principles of compliance andself-responsibility for the sake of proper social development, we have set forth the following basic corporate
behavior guidelines as the “Nippon Shokubai Corporate Behavior Charter.”
1. ‌Guided by our corporate philosophy of “TechnoAmenity,” we will conduct all of our actions as a good
corporate citizen.
2. ‌We will comply with relevant laws both inside and outside of Japan, and act in accordance with in-house
regulations.
3. ‌We will create and nurture a sound, vibrant workplace, where each individual can hone their professional
competence and find fulfillment in their career.
4. ‌We will develop and market products and services that are both safe and useful, based upon an accurate
understanding of social demands.
5. ‌We will commit ourselves to eliminating labor hazards and accidents, and constantly strive to protest the
global environment.
6. ‌We will conduct business based on fair and open competition.
7. We will take a firm stance when dealing with unlawful or antisocial groups.
8. ‌We will ensure frequent communications with our shareholders and members of society in general, andguarantee the appropriate disclosure of corporate information.
9. ‌With respect for the culture and customs of every nation/region we serve, we will contribute to theirdevelopment and wellbeing through community-based business undertakings.
10. ‌We will ensure the solid and sustainable development of the company through business undertakings based
soundly upon the above action guidelines.

Contents
Consolidated Financial Highlights

01

Ten-Years Summary

12

Messages from President

02Management Discussion and Analysis of Operation

14

Description of Business

06

Business Risks

16

Governance System

08

Financial Statements

18

CSR Based on Responsible Care Concept

11

Corporate Data

50

4

Nippon Shokubai Co., Ltd. Annual Report 2013

Consolidated Financial Highlights
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Net sales

Operating income¥269,520
million¥10,034
milliona down 67.7%

a down 16.0%
Net assets

Total assets¥220,248
million¥352,373
millions up 5.3%

a down 1.1%

ROA

3.9%
a down 5.8 points• ‌On September 29, 2012, an explosion and fire at the Himeji Plant,a core facility of the Group, resulted in suspension of operations atthat plant and a significant decline in production volume.
‌• ‌Consolidated net sales declined 16.0% year on year, while
operating income fell 67.7%.
• Operating income amounted to ¥10,034 million.
• Net assets grew to ¥220,248 million.
• ‌The decline in total assets stemmed mainly from a decrease innotes and accounts receivable.
‌• ‌Profitability was affected by declines in both equity capital andtotal assets.
Annual Report 2013 Nippon Shokubai Co., Ltd.

01

Messages from President

Masanori Ikeda
President

Regaining Public Trust as a
Chemical Company
On September 29, 2012, an explosion and fire occurred at the acrylic acidproduction facilities in the Himeji Plant of Nippon Shokubai. At the same time,
we sincerely apologize to the enormous problems this incident caused for theneighborhood of the plant and to other people associated with this incident.
Since 1973, Nippon Shokubai has adopted corporate commitment of “Safety
takes priority over production” and has pursued safety initiatives on acompany-wide basis. In addition, we have advanced our business as a chemical
manufacturing company that build on a platform of proprietary technologies.
We deeply regret that our pride in technologies may have made us overconfident
and thus caused us to falter in addressing immediate safety concerns.
I do not view it as an isolated incident with the acrylic acid manufacturing
facilities of the Himeji Plant, and commit myself to inspect potential risks inall facilities and to take all measures to prevent recurrences. Every employee
including myself will elucidate and communicate any latent issues to make
improvements with person concerned awareness, as we make a fresh start inour efforts for “Regaining Public Trust as a Chemical Company”.

02

Nippon Shokubai Co., Ltd. Annual Report 2013

Accident Timeline
September 29, 2012
Explosion and fire broke out
The Company received orders from the relevant authority to temporarilysuspend operations at plants handling hazardous materials, resulting insuspension of operations at the Himeji Plant and all the facilities of an affiliatedcompany adjacent to that plant.

October 5, 2012

The Company established an Accident Investigation
Committee.

November 2012

Production resumed for automotive catalysts and othercatalysts, and resins for paints.

December 2012

Production resumed for electronics & informationmaterials and resin modifiers.

January 2013

Production resumed for maleic anhydride and polymers
for concrete admixture.

March 27, 2013

The Company received the investigation report from the
Accident Investigation Committee (disclosed on March
29, 2013).

June 2013

Production resumed for acrylic acid and superabsorbent
polymers.

September 2013

Production resumed for all kinds of product in the Himeji
Plant.
“Safety Pledge” Declaration* ‌Suspension is not yet lifted for some facilities manufacturing
acrylic acid.

Annual Report 2013 Nippon Shokubai Co., Ltd.

03

Investigation Report“Nippon Shokubai Co., Ltd. Himeji Plant, Explosion and Fire at Acrylic Acid
Production Facility, Investigation Report”, March 2013, Accident Investigation
Committee, Nippon Shokubai Co., Ltd. (please refer to corporate website)
Measures to Prevent Recurrence
1. Lateral deployment of recurrence prevention countermeasures(1) Ensure risk assessment implementation(2) Collect, share, and effectively use the safety technology information(3) Enhance education and training programs
2. Strengthen the culture of safety prioritization
3. Verify the implementation of safety countermeasures

Business Continuity Plan
In light of the Great East Japan Earthquake of 2011 and the recent accident, theCompany will strengthen its business continuity plan (BCP) by reassessing its
entire supply chain, from procurement of raw materials to sale of final products.
At the same time, we will reaffirm the roles we have played in the industry
and society through our business activities. We will work as a Group to restore
the confidence and trust of all stakeholders, including customers, business
partners, shareholders and other investors, governments, local communities,
and employees.

Net Sales

Operating Income(¥ billions)(¥ billions)

35

350
300

300

269.5

250

25

200

20

150

15

100

10

50

5

0

2010

2011

Net Sales

04

30

Nippon Shokubai Co., Ltd. Annual Report 2013

2012

2013

2014(E)

0

14
10.0

2010

2011

2012

Operating Income

2013

2014(E)

Business Environment and Performance
In fiscal 2012, ended March 31, 2013, the Japanese economy faced difficult
conditions due to sharp volatility in foreign exchange rates and slowdown of the
global economy. In the chemicals industry, the outlook remained unclear due toelevated raw materials prices and stagnating demand in emerging nations.
In this business environment, the Nippon Shokubai Group posted
consolidated net sales of ¥269,520 million, down 16.0% from the previous
fiscal year, and operating income of ¥10,034 million, down 67.7%. For theyear, sales volumes declined sharply due to the impact of the accident at the
Himeji Plant.
In light of its performance in fiscal 2012 and future business advancement
plans, the Company declared a year-end dividend of ¥5.00 per share. Afteraccounting for the interim dividend of ¥11.00, this brought total annual
dividends to ¥16.00 per share.

Outlook
The Japanese economy has seen improvement in the export environment for
manufacturers and a pick-up in domestic production due to the yen’s recent
depreciation. However, we expect the outlook to remain unclear for some time
due to downside concerns about overseas economies.
In the chemicals industry, conditions will remain unpredictable due toseveral factors, including a slowdown in the Chinese economy, weakness in thedomestic market, and concerns of another flare-up in the European crisis.
Under these conditions, the Nippon Shokubai Group expects to recoverfrom the aforementioned accident in fiscal 2013 and looks forward to increases
in sales volumes, centering on functional chemicals. We also forecast an
increase in net sales, confident of making progress in translating increases in
raw materials prices to the final prices of our products.
With respect to earnings, we expect operations at the Himeji Plant torecover in the second half of the year, and the resulting resumption of full-scale
production will lead to higher sales volumes. Accordingly, we anticipate yearon-year increases in operating income, ordinary income, and net income.
We look forward to your renewed support and understanding as weembrace the challenges ahead.

Masanori Ikeda
President

Annual Report 2013 Nippon Shokubai Co., Ltd.

05

Description of Business

From a business management perspective, the Group’s products areclassified into three segments: Basic Chemicals, Functional Chemicals,and Environment & Catalysts. These products are developed,
manufactured, and sold by five business divisions: Ethylene Oxide
Business Division, Acrylic Business Division, Performance Chemicals
Business Division, E&I Materials Business Division, and Catalysts & Green
Energy Materials Division.

Descriptionof Business

Ethylene Oxide
Business DivisionaAcrylic Business
Divisiona

Basic
Chemicals•Ethylene oxide (EO)
•Ethylene glycol•Ethanolamine•‌Secondary alcohol
ethxylates•Acrylic acid
•Acrylates

Functional
Chemicals•‌Polymers forconcrete admixture•‌Water-soluble
polymers•Specialty acrylates•‌Specialty
methacrylates

Environment&
Catalysts

06 Nippon Shokubai Co., Ltd. Annual Report 2013

•Process catalysts

Superabsorbents
Business Division

Performance
Chemicals Business
Division

Catalysts & Green
Energy Materials
Business Division

a

a

a

• ‌Superabsorbent
polymers• ‌Maleic anhydride& Derivatives• ‌Resins for paints &adhesives• ‌Acrylic resin for
optical materials• ‌Zirconia sheets &cells• ‌Automotive
catalysts• ‌De-Nox & dioxins
decomposition
catalysts

Basic Chemicals

profitability, together with theSales of acrylic acid and acrylates

impact of lower sales volumes.

declined sharply, due to a significant

Sales of higher alcohols increased

drop in sales volumes stemming fromdue to a rise in sales volumes. Sales

lower production output at the Himeji

of ethanolamine decreased as a

Plant accident, as well as a drop

decline in sales volumes, primarily

in selling prices due to depressed

for exports, offset upward revisions

market conditions. This was despite ato selling prices to reflect higher raw

surge in market prices in the previous

material prices.

fiscal year.
Sales of ethylene oxide decreased

As a result, the Basic Chemicals
segment reported a 16.6% decline

due to a decline in sales volumes.

in sales, to ¥113,862 million, and an

Sales of ethylene glycol declined

84.3% fall in operating income, to

as falling market prices reduced¥2,097 million.

Functional Chemicals

for paints also declined due to falls in

In fiscal 2012, sales of superabsorbent

sales volumes. Sales of ethyleneimine

polymers declined sharply due toderivatives decreased as upward

a significant drop in sales volumes

revisions to selling prices were offset

resulting from the Himeji Plant

by lower sales volumes. Despite a fall

accident. This was despite higher

in selling prices, sales of electronic

prices, particularly at overseas

and information materials increased

subsidiaries, stemming from the yen’s

thanks to a rise in sales volumes.

depreciation toward fiscal year-end.

Consequently, the Functional

Sales of special esters, raw

Chemicals segment posted a 14.8%

materials for detergents and otherdecrease in sales, to ¥137,012 million,

water-soluble polymers, maleic

and a 59.0% fall in operating income,anhydride, polymers for concreteto ¥6,779 million.

admixture, resin modifiers, and resins

Environment & Catalysts

mix. Sales of process catalysts, dioxins

Sales of De-NOx catalysts and polymer

decomposition catalysts, and fuel cellfor lithium-ion batteries increasedmaterials decreased due to a decline

due to a rise in sales volumes. Sales ofin sales volumes.

automotive catalysts declined sharply

As a result, the Environment &due to lower sales volumes stemming

Catalysts segment recorded a 20.2%

from the accident at the Himeji

decrease in sales, to ¥18,646 million,

Plant, lower selling prices caused by

and a 14.4% decline in operating

declines in precious metals prices,income, to ¥1,431 million.

and a deterioration in the productAnnual Report 2013 Nippon Shokubai Co., Ltd.

07

Governance System

We are working to improve our corporate culture andthat the Board decided. In principal, the Board convenes

strengthen our competitiveness in order to respond toonce a month, chaired by the president, at which fourglobal trends. Our approach to corporate governancecorporate auditors, including two from outside, are in

therefore establishes our foundation. Using the system

attendance. The corporate auditors present statement

illustrated in the following diagram, we are taking steps

when deemed necessary.

to revitalize our board of directors, strengthen our audit

For the purpose of further speeding decision-making

system, improve the efficiency of our management

involving management and reinforcing the management

structure, and improve and strengthen our

supervisory role of the Board, the Company started tocompliance system.

utilize the corporate officer system from June 22, 2010.
This system separates the role of reaching decisions

The Board, comprised of 8 members of the board Including

involving management and supervising management, andtwo from outside as of June 20, 2013, deliberates andthe role of executing business operations. The number

resolves the matter relating to the execution of businessof corporate officers is 16 (7 of those who serve as theoperations, and supervises the execution of operation

director concurrently).

Our Corporate Governance System(as of July 1, 2013)

General Meeting of Shareholders

The Board
Board of Auditors

Audit

President
Corporate Managing
Committee

Reports

Risk Management
Committee
Accounting
Auditors

CSR Management
Committee
Audit

Collaborates
ProvidesSupportCollaborates

RC Promotion
Committee

Legal
Advisors

Compliance
Committee

Consultation

Internal Control
Committee

Auditors Office

Executive Officers

Internal
Audit
OfficeInternal
Audit

Corporate
Planning

GeneralAdministration& Personnel

Purchasing &Logistics

08

Nippon Shokubai Co., Ltd. Annual Report 2013

Finance &Accounting

Informational
Technology
Management
OfficeResearch
Planning &Development

Responsible
Care

Investor &Public Relations

Sales

ProductionCorporate Management Committee, as an advisory organemphasis on environmental preservation, safety andto the president, deliberates basic management policies,

quality throughout the entire life cycle of our products

the matters related to the execution of important businessfrom the development to disposal. The Committee

operations. Agenda items that come up to this Committee

established the “7th (for FY 2010 to 2012) Medium-term

and are regarded as important will be forwarded to the

RC Promotion Basic Plan” to reinforce our RC more active.

Board for deliberation.

Moreover, Responsible Care Office implements plans

The members of the Corporate Management
Committee are the president and corporate officers

and internal audits on responsible care activities ineach division.

nominated by the president. In principal, the Committee
convenes twice a month.

Compliance Committee, chaired by the president,
discusses and decides measures to enhance our

Board of Corporate Auditors is comprised of four corporatecompanywide compliance management.

auditors, including two from outside. In principle, theBoard convenes once a month to report, discuss and

The Internal Control Committee concerning financial

resolve important matters. In addition to attending thereporting, chaired by the president, discusses andBoard of Directors, the corporate auditors attend the

prepares for the highly efficient Internal Control System

Corporate Management Committee and other important

enforced by Financial Instruments and Exchange Law as

meetings to monitor the decision making process, andof April 1st 2008, not only aim to ensure the reliability

grasp the execution of corporate officers’ operation,of the company’s financial reporting, but also to ensure

receive reports from the accounting auditors, corporate

the effectiveness and efficiency of the company’s

officers and others, and put forwardbusiness activities.

an audit opinion following due consultation.
The two current Corporate Auditors from outside have

Legal Advisers provide their opinions for us when solicited.

no personal or any other relationship through investments

None of the Legal Advisors is involved in the managementthat could create a conflict of interest in the performanceof the Company.

of their duties.
Accounting Auditors perform their services under the
Risk Management Committee, chaired by the president,

Commercial Code and Securities and Exchange Law of

explores and analyzes the risks surrounding the Company.

Japan, and provide their opinions when we call for it

On the basis of the analysis, the Committee discusses theto make decisions on accounting issues. None of thepreventive measures or countermeasures for the risks.

Accounting Auditors is involved in the management of
the Company.

CSR(Corporate Social Responsibility) Management
Committee, chaired by the president, discusses andInternal Audit Office carries out internal audits (verify

decides the CSR policy and activities that would make all

the adequacy and effectiveness of the business process

the stakeholders beneficial, in cooperation with the otherin each division and report the results to the directors) in

committees such as Risk Management Committee or thecooperation with the Board of Corporate Auditors andCompliance Committee.

Accounting Auditors.

Responsible Care Promoting Committee, chaired by thepresident, discusses and decides the policy and plansof activities for “Responsible Care(RC)” placing a special

Annual Report 2013 Nippon Shokubai Co., Ltd.

09

Outside Members of the Board and Outside Corporate Auditors
Main activities in the year under review and reasons for election
Hidetoshi Nakatani (Outside Member of the Board)
Mr. Nakatani applied his experience as an executive of a manufacturing company with a high public profile toprovide useful advice concerning the Company’s management and to perform a supervisory function from an
independent perspective.
(Mr. Nakatani attended all 14 meetings of the Board)(Mr. Nakatani is an adviser to Osaka Gas Co., Ltd.)(New Appointment)
Kouichi Miura (Outside Member of the Board)
Mr. Miura was nominated as a candidate for the position of outside member of the Board because his
expertise in chemical engineering and depth of knowledge of the chemical industry will allow him toprovide useful advice concerning the Company’s management and perform a supervisory function from an
independent perspective.
Kozo Arao (Outside Corporate Auditor)
Mr. Arao stated his views from the perspective of an expert in legal matters, as needed.
He engaged in discussions concerning audit results, where he expressed his opinion and discussed important
audit-related items. Mr. Arao periodically engaged in discussions with the Company’s senior management.
(Mr. Arao attended 12 of the 14 meetings of the Board, and 12 of the 13 Board of Corporate Auditors’
meetings)(Mr. Arao is an attorney-at-law)
Akira Omachi (Outside Corporate Auditor)
Mr. Omachi stated his views based on his experience as a senior executive of another company, as needed.
He engaged in discussions concerning audit results, where he expressed his opinion and discussed important
audit-related items. Mr. Omachi periodically engaged in discussions with the Company’s senior management.
(Mr. Omachi attended 10 of the 11 meetings of the Board held following his appointment, and nine of the ten
Board of Corporate Auditors’ meetings held following his appointment.)(Mr. Omachi is a director and senior vice-president of JX Holdings, Inc.)

10

Nippon Shokubai Co., Ltd. Annual Report 2013

CSR Based on Responsible Care Concept

CSR Concept
Nippon Shokubai’s corporate philosophy of “TechnoAmenity” is reflected in both its management philosophy andCorporate Behavior Charter. The wide-ranging charter encompasses economic, social, and environmental aspects. The
Company has positioned corporate ethics, responsible care, human rights and labor, information disclosure, social
contribution, and corporate governance as key management priorities. Nippon Shokubai strives to enhance corporate
value while engaging in dialog with all stakeholders, including, customers, business partners, shareholders, investors,
government agencies, employees, and local communities.
This concept of CSR underpins Nippon Shokubai’s long-term vision, which is encapsulated in the concrete actionplans that constitute the Medium-Term Business Plan. Guided by the Plan, we will strive to foster the development of asustainable society.

CSR Promotion Framework
The CSR Management Committee, which is chaired by the president, oversees the policies and action plans of each committee,
as well as their implementation and outcomes, to ensure highly effective CSR management.
• CSR Management Committee (Determines overall policy on CSR activities)• Responsible Care Promotion Committee (Determines overall policy on responsible care activities and implements the PDCA* cycle)• Corporate Ethics Committee (Determines policy and implements the PDCA cycle to ensure thorough compliance with corporate ethics)• ‌Information Disclosure Committee (Implements the PDCA cycle in relation to information disclosure from the perspective ofenhancing communication with society)• CSR Promotion Office (Implements a framework for the promotion of CSR and the PDCA cycle in relation to social contribution activities)(* PDCA: Plan-Do-Check-Action)
The Company’s CSR management is centered on responsible care activities. In addition to setting specific challenges andverifying the results, we receive third-party verification by reporting such activities to the Japan Chemical Industry Association’s
Japan Responsible Care Council.

Basic Policy on Responsible Care
1. ‌Endeavor to protect the environment and take account of the environmental impact of a product throughout its lifecycle,
from development to disposal.
2. ‌Guided by the corporate credo “Safety takes priority over production.” endeavor to ensure the safety of employees and society
with the aim of zero accidents and zero disasters.
3. ‌Give due consideration to the health of employees, logistics personnel, customers, and all other involved persons byconfirming the safety of all chemical substances handled, including raw materials, intermediates, and products.
4. Deliver stable product quality and services that satisfy and earn the trust of customers.
5. ‌Endeavor to engage in open communication with society through disclosure so that society gains an accurate understandingof the outcomes of the above-mentioned activities.
Nippon Shokubai tackles a wide range of challenges and activities in order to comply with its basic policy on responsible care. They
include (1) the environmental impact associated with business activities, (2) global warming prevention, (3) eco-friendly logistics,(4) prevention of atmospheric and water pollution, (5) waste reduction, (6) control of chemical substances, (7) environmental
accounting, (8) environmental investment, (9) basic stance on safety, (10) promotion of voluntary safety initiatives, (11) ongoing
improvements through an occupational health and safety management program, (12) addressing the asbestos problem, (13)logistics safety initiatives, (14) chemical product safety initiatives, and (15) quality assurance initiatives. These activities areundertaken not only by the Company’s manufacturing facilities, but also by all domestic and overseas Group companies.

Annual Report 2013 Nippon Shokubai Co., Ltd.

11

Ten-Years Summary

2004

2005

2006

Operating results
Net sales �����������������������������������������������������������������������������������������������������������������������������
Operating income �����������������������������������������������������������������������������������������������������������
Net income (loss) �������������������������������������������������������������������������������������������������������������

¥169,733
15,451
8,823¥197,222
22,212
15,705¥232,441
23,22816,257

Financial position
Total assets ������������������������������������������������������������������������������������������������������������������������
Net assets ��������������������������������������������������������������������������������������������������������������������������

220,186
131,685

249,349
144,660

291,564
164,631

Cash flows
Cash flows from operating activities ��������������������������������������������������������������������������Cash flows from investment activities �����������������������������������������������������������������������Cash flows from financing activities ���������������������������������������������������������������������������Cash and cash equivalents ��������������������������������������������������������������������������������������������

16,399(9,161)(9,506)
18,654

22,161(16,934)(861)
24,16017,468(20,663)(2,562)
19,856

Years ended March 31,

Per share (¥/$)
Net income (loss) �������������������������������������������������������������������������������������������������������������
Net assets ��������������������������������������������������������������������������������������������������������������������������Cash dividends �����������������������������������������������������������������������������������������������������������������

¥

45.37
685.2
9.0

¥

81.37
757.72
13.0

¥

85.89
875.0016.0

Shareholders’ equity ratio(%) ��������������������������������������������������������������������������������������
ROE (%) ������������������������������������������������������������������������������������������������������������������������������
ROA(%) ������������������������������������������������������������������������������������������������������������������������������
Liquidity ratio(%) �������������������������������������������������������������������������������������������������������������
PER(%) ��������������������������������������������������������������������������������������������������������������������������������
Dividend payout ratio(%) ���������������������������������������������������������������������������������������������

59.81
7.0
7.9
157
17.99
19.8

58.02
11.4
10.1
176
11.92
16.0

56.46
10.5
9.7
156
16.29
18.6

Market data
Exchange rate, average (¥/$) ���������������������������������������������������������������������������������������
Naphtha price (¥/kl) �������������������������������������������������������������������������������������������������������
Share price(¥) (Closing) �������������������������������������������������������������������������������������������������
(High) ���������������������������������������������������������������������������������������������������������������������������
(Low) ����������������������������������������������������������������������������������������������������������������������������

113.1125,600816
881
538

107.5232,200
970
1,017
690

113.3542,400
1,399
1,426
851

Notes: Conversions into USD are just for indication only. The exchange rate is the rate at March 31, 2013. (¥94.05/$1.00)
Figures are rounded off.

12

Nippon Shokubai Co., Ltd. Annual Report 2013

Millions of
U.S. dollars(Notes)Millions of yen

2007

2008

2009

2010

2011

2012

2013

2013

¥266,513
19,42913,988¥302,669
18,37911,875¥289,102622(5,307)¥244,317
13,881
10,832¥288,345
29,813
21,119¥320,704
31,10021,257¥269,520
10,0348,401$2,866107
89323,675
179,368

352,783
175,634

302,948
151,662

310,946
163,781329,332
194,266

356,407
209,070

352,373
220,248

3,747
2,341

16,087(23,109)
4,037
16,991

20,129(33,100)
17,495
21,371

17,613(16,675)
8,099
29,45044,346(23,850)(21,772)
28,23431,706(16,696)(3,050)39,17443,857(21,747)(9,671)50,812

27,322(31,878)81
47,801

291
(339)
0.86
508

64.91
947.3416.0¥ (29.61)
831.11
15.5

110.3
938.6722.0¥ 104.71
1,006.48
22.0¥ 41.38
1,059.85
16.0$ 0.44
11.27
0.17

54.08
8.2
7.4
146
16.98
21.4

48.61
6.9
6.1
150
10.18
24.6

48.83
(3.3)
0.2
159
—
—

51.43
7.0
4.9
155
13.89
23.0

57.86
12.1
9.7
197
9.45
19.9

57.33
10.8
9.7
174
9.16
21.0

61.05
4.0
3.9
189
19.94
38.7

—
—
—
—
—
—

117.0050,000
1,272
1,503
1,152

114.3861,400
661
1,316
626

100.5858,900
622
866
442

92.88
41,200
845
920
600

85.72
47,500
1,042
1,047
682

79.07
54,900
959
1,100
764

83.09
57,500
825
987
738

—
611.38
8.77
10.49
7.85

¥

74.92
948.34
16.0

¥

¥

60.85
898.33
14.0¥

Annual Report 2013 Nippon Shokubai Co., Ltd.

13

Management Discussion and Analysis of Operation

Fiscal 2012 Performance

Financial Position

In fiscal 2012, ended March 31, 2013, the Japanese

As of March 31, 2013, total assets amounted to ¥352,373

economy faced difficult conditions due to sharp

million, down ¥4,034 million from a year earlier. Within

volatility in foreign exchange rates and slowdown of thethat amount, current assets fell ¥23,828 million, mainly

global economy. In the chemicals industry, the outlook

due to a decrease in notes and accounts receivable.

remained unclear due to elevated raw materials prices

Noncurrent assets rose ¥19,794 million, due to capitaland stagnating demand in emerging nations.

expenditures and an increase in investment securities fromOn September 29, 2012, an explosion and fire occurred

price appreciation.

in an acrylic acid intermediate tank at the Himeji Plant,

As the Company expects to receive an insurance

a main facility of the Nippon Shokubai. The company

payout, the book value of inventories and noncurrent

consequently received orders from the relevant authority

assets lost in the accident, as well as repair expenses forto temporarily suspend operations at plants handlingassets damaged related to the explosion and fire at thehazardous materials, resulting in suspension of operations

Himeji Plant on September 29, 2012 totaling ¥2,176

at the Himeji Plant and all the facilities of an affiliatedmillion are booked as a “Fire loss suspense account” withincompany adjacent to that plant. The suspension orders

the “Other” category of current assets.

were incrementally lifted starting in November 2012, with

Despite an increase in long-term loans payable, total

permission granted to manufacture all product genres

liabilities declined ¥15,212 million, to ¥132,125 million.

in August 2013. As of October 31, 2013, however, theThis was due mainly to decreases in notes and accounts

suspension order remained in place for some facilities

payable and accrued income taxes, as well as a decline in

manufacturing acrylic acid.

bonds payable stemming from redemptions.

In addition to reduced production capacity stemming

Net assets were up ¥11,179 million, to ¥220,248

from the accident, profitability declined due to weakened

million, owing mainly to increases in retained earnings,

market conditions for acrylic acids and acrylates. This wasand net unrealized holding gain on securities.

further compounded by a slowdown in global economic

As a result, the shareholders’ equity ratio at fiscal year-

growth and an overall decline in sales volumes, resulting in

end was 61.1%, up 3.8 points from 57.3% a year earlier,significant decreases in revenue and earnings. Consolidated

while net asset per share stood at ¥1,059.85, up ¥53.37.

net sales for the year declined 16.0%, to ¥269,520 million,
and operating income fell 67.7%, to ¥10,034 million.

Sharholders Equity andTotal Assets

Segment Sales(¥ billions, year ended 2013)(¥ billions)
25

400

6.9%

352

8.6

113.9 42.2%

200
215

50.8% 137.0

Basic Chemicals
Functional Chemicals
Enviroment & Catlysts

14

Nippon Shokubai Co., Ltd. Annual Report 2013

0

2009

2010

Sharholders Equity
Total Assets

2011

2012

2013

Cash Flows

factors, such as the need to expand our business andAs of March 31, 2013, cash and cash equivalents stood atstrengthen our financial base. We also take into account¥47,801 million, down ¥3,012 million from a year earlier,the payout ratio in determining dividends. In addition toas net cash used in investing exceeded the sum of net cash

dividend distributions, we will continue conducting shareprovided by operating activities and net cash provided bybuybacks to increase our share price.

financing activities (loans payable, etc.).

In order to boost shareholder value, underpin our

Net cash provided by operating activities amountedinternational competitiveness, and deliver continuousto ¥27,322 million, down from ¥43,857 million in thegrowth, we need to make active investments in capital

previous year. This was mainly due to decreases in notes

equipment and research and development. We also

and accounts payable and income before income taxes

recognize the importance of bolstering retained earnings

and minority interests, although progress was made in

to enable such investments, and will carefully consider

collection of notes and accounts receivable.

the most appropriate balance of dividend payments andNet cash used in investing activities totaled ¥31,878
million, up from ¥21,747 million in the previous year. Thiswas mainly due to an increase in purchases of property,
plant and equipment.

retained earnings accordingly.
The Company pays dividends twice a year: an interim
dividend and a year-end dividend.
Based on the aforementioned basic policy, andNet cash provided by financing activities was ¥81

considering the regrettable impact of the accident at themillion, compared with net cash used in financing activities

Himeji Plant, the Company declared a year-end dividend ofof ¥9,671 million in the previous year. This was mainly¥5.00 per share. After accounting for the interim dividend

due to an increase in proceeds from loans payable, whichof ¥11.00, this brought total annual dividends to ¥16.00

contrasted with outlays for redemption of bonds.

per share.
In fiscal 2013, we plan to pay total annual dividends

Cash Flows(Operating activities, Investments and Free cash flows)of ¥16.00 per share, consisting of interim and year-end
dividends of ¥8.00 each.

(¥ billions)
50

25

40

20

30

15

20

10

per euro, and naphtha prices of ¥65,000 per kiloliter.

10

5

Operations at the Himeji Plant are expected to recover00

in the second half of the year, and production capacity

-40

2009

2010

2011

2012

2013

-5

Operating activities
Investments
Free cash flows

Fiscal 2013 Outlook
Our consolidated forecasts for fiscal 2013 are based on
exchange rates of ¥90.00 per U.S. dollar and ¥115.00

should return to pre-accident levels by the fourth quarter.
Accordingly, we look forward to higher sales volumes,
especially of functional chemicals, and plan to translateincreases in raw materials prices to the final prices ofour products.

Profit Appropriation Policy

For fiscal 2013, we forecast an 11.3% increase in

Returning profits to shareholders is an importantconsolidated net sales, to ¥300 billion; a 49.5% jump inmanagement priority. Our basic policy is to make

operating income, to ¥15 billion; and a 42.8% rise in net

consistent dividend payments over the medium and longincome, to ¥12 billion.

terms based on comprehensive consideration of various

Annual Report 2013 Nippon Shokubai Co., Ltd.

15

Business Risks

Risks that could have an impact on the business(4) Overseas operations

performance and financial position of the Nippon

The Nippon Shokubai Group has production and sales

Shokubai Group are described below. The Group aware ofoperations in North America, Europe, and Asia, withpotential risks, and works to avoid such risks and minimize

the objective of operating in regions with optimal

their impact should they occur. The items relating to future

production conditions. With such overseas operations,risks are those identified by the Group when producing

there is the risk of the existence or emergence of adverse

this report in the year ending March 31, 2013, and do noteconomic factors, such as unforeseen changes to laws andrepresent all the business risks that could affect the Group.

regulations, weakening of the industrial infrastructure, ordifficulties in recruiting or retaining personnel. There is also

(1) Economic situation

the risk of social or political upheaval caused by terrorism,

The Group’s mainstay business is the manufacture andwar, or other factors. If such risks were to materialize, they

supply of chemical products, and demand for these

could harm the Group’s overseas business activities, which

products is affected by economic conditions in the

could affect the Group’s business performance and futurecountries and regions where they are sold. As a result,business plans.

economic trends and the accompanying changes indemand in the Group’s major markets, including Japan,(5) R&D on new products

Asia, Europe, and North America, could have an impact on

The Nippon Shokubai Group strives to accelerate and

the Group’s business performance and financial position.

improve the precision of its research and development
by drawing on the strengths it has amassed to date.

(2) ‌Fluctuations in crude oil and naphtha markets

The Group also aims to cultivate genuine demand

The prices of crude oil and naphtha are subject tothrough active collaboration with customers, including

fluctuations. If the Nippon Shokubai Group is unable toby promoting joint development activities. However, it isquickly pass on price changes to its product prices, oralways possible that the development of a new productmaintain a sufficient profit margin, fluctuations in the

could become deadlocked, or that a sudden unforeseen

crude oil and naphtha markets could affect the Group’schange in market demand could occur. Such factors could

business performance and financial position.

affect the Group’s future business plans.

(3) Foreign currency exchange rate fluctuations(6) Intellectual property

As a manufacturer and supplier of products worldwide,

The Nippon Shokubai Group’s business operations

the Nippon Shokubai Group works hard to minimize thein its existing product fields depend on intellectual

impact of short-term fluctuations in exchange rates byproperty, such as know-how, and the acquisition ofentering forward exchange contracts. However, exchange

many patents as a result of previous R&D activities.

rate fluctuations greater than expected could have an

Even today, we continue to protect know-how by

impact on the Group’s business performance and financial

filing patent applications and appropriately managing

position. Moreover, the value of overseas operations

information. In cases where another company infringes

presented in local currencies that are translated into yen

on a patent held by the Company, we take various

could be affected by exchange rate fluctuations at the timemeasures, such as issuing a warning or pursuing legalof translation.

action. However, the Group may not be able to prevent

16

Nippon Shokubai Co., Ltd. Annual Report 2013

another company from investigating and analyzing(8) Environmental measures

the Group’s patents and products in order to develop

The Nippon Shokubai Group recognizes that contributing

a similar product or technology. In new product fields

to society through the provision of products andearmarked for new business establishment, the Grouptechnologies that contribute to environmental

fully investigates the intellectual property rights of otherpreservation is an important management priority. At thecompanies when developing proprietary technology

same time, we promote responsible care based on theor new products. However, it is possible that the Groupprinciple of protecting the global environment. However,in the future could infringe the intellectual property

it is conceivable that new social responsibilities as a resultrights of other companies. Moreover, in countries whereof tighter environmental regulations and changes inthere is insufficient infrastructure or penalties relating

current approaches to environmental protection could

to intellectual property rights, there is a risk of theemerge, and that environmental pollution could be

appearance of products that imitate the Group’s productscaused by past acts that occurred prior to the enactment

due to the leaking of so-called trade secrets, includingof laws. Mounting costs associated with such scenarios

technical secrets, or the outflow of personnel.

could affect the Group’s business performance and futurebusiness plans.

(7) Natural disasters and accidents
Committed to the promotion of responsible care, theNippon Shokubai Group endeavors to earn the full trust(9) ‌Loss on impairment of manufacturing facilities andother fixed assetsof customers and local communities by actively pursuing

The Nippon Shokubai Group owns many manufacturing

environmental protection, chemical product safety,

facilities and other fixed assets, and adopts the accounting

public security, disaster prevention, and other activities

standard for impairment of such assets. In the future,

Groupwide. We have business continuity plans that set out

therefore, the Group may incur impairment losses

appropriate measures to be taken in the event of a major

due to such factors as major deterioration in businessdisaster. However, it is impossible to completely preclude

performance or slump in real estate prices, and such losses

the possibility of difficulties in continuing production

could affect its business performance and financial position.

activities as a result of a natural disaster, power outage,
power shortage, or an accident at a manufacturing site.
For example, should a large-scale earthquake, tsunami,
accident, or other phenomena that force the disruptionof operations occur in the area where the Company’s
main facilities are located, any significant reduction in
production capacity for mainstay products could affect theGroup’s business performance and future business plans.

Annual Report 2013 Nippon Shokubai Co., Ltd.

17

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries
Financial Statements
Consolidated Balance Sheet

Consolidated Balance Sheet

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

March 31,
2012

2013

(Millions of yen)

AssetsCurrent assets:
Cash and cash equivalents (Note 4)
Time deposits (Notes 4 and 9)
Notes and accounts receivable (Notes 3 and 4):
Unconsolidated subsidiaries and affiliates
Trade
Allowance for doubtful receivables
Inventories (Note 6)
Deferred income taxes (Note 11)
Other current assets (Note 7)
Total current assets¥

Property, plant and equipment, at cost
(Notes 8, 9 and 22):Land
Buildings and structures
Machinery and equipment
Construction in progress
Leased assets
Accumulated depreciation
Property, plant and equipment, net

Investments and other assets:
Investments in securities (Notes 4 and 5)
Investments in unconsolidated subsidiaries and affiliates
Deferred income taxes (Note 11)
Prepaid pension cost (Note 10)
Other assets (Notes 8 and 9)
Total investments and other assets

Total assets

18

Nippon Shokubai Co., Ltd. Annual Report 2013

2¥

47,801
2,046¥

50,812952

2013(Thousands of
U.S. dollars)(Note 2)$508,251
21,754

6,382
46,197(49)
42,2092,918
11,548159,052

5,486
72,608(64)
44,012
3,753
5,320
182,879

67,858491,196(521)
448,793
31,026
122,786
1,691,143

32,396
87,770313,622
25,321
616(321,224)
138,501

32,271
82,157
298,591
16,363542(307,198)
122,726

344,455
933,227
3,334,631
269,2296,550(3,415,460)
1,472,632

22,536
19,545
3,793
3,538
5,408
54,82020,21916,851
4,617
3,168
5,947
50,802

239,617
207,815
40,33037,61857,501
582,881352,373¥356,407$3,746,656

March 31,
2012

2013

Liabilities and Net Assets
Current liabilities:
Short-term bank loans (Notes 4 and 9)
Current portion of long-term debt (Notes 4 and 9)
Notes and accounts payable (Notes 3 and 4):
Unconsolidated subsidiaries and affiliates
Trade
Lease obligations
Accrued bonuses to employees
Accrued bonuses to directors and corporate auditors
Reserve for periodic repairs
Reserve for loss on disasterAccrued income taxes (Note 11)
Other current liabilities
Total current liabilities

2013(Thousands of
U.S. dollars)(Note 2)

(Millions of yen)¥

Long-term liabilities:
Long-term debt (Notes 4 and 9)
Lease obligations
Accrued retirement benefits for employees(Note 10)Deferred income taxes (Note 11)
Other
Total long-term liabilities
Contingent liabilities (Note 19)

14,53314,080¥14,373
14,694$

154,524
149,708

4,488
34,927
36
2,597
23
2,680
45
751
10,04884,208

4,571
48,566
44
2,991
193
2,359
104
7,144
10,249105,288

47,719371,366
383
27,613245
28,495
478
7,985
106,838
895,354

36,06016430,224
172

383,413
1,744

10,418222
1,053
47,917

10,251260
1,142
42,049110,771
2,360
11,196509,484

25,03822,083
172,375(897)
218,599

25,03822,083
168,441(890)
214,672

266,220
234,801
1,832,801(9,537)2,324,285

2,846(6,309)1(3,462)
5,111
220,248352,373

1,366(11,721)(2)(10,357)
4,755
209,070
356,40730,260(67,081)11(36,810)54,343
2,341,818
3,746,656

Net assets:
Shareholders’ equity (Note 12):
Common stock:
Authorized – 636,000,000 shares;
Issued – 204,000,000 shares in 2013 and 2012
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income (loss):
Net unrealized holding gain on securities
Translation adjustments
Net unrealized deferred gain (loss) on hedges
Total accumulated other comprehensive loss, net
Minority interests
Total net assets
Total liabilities and net assets¥

See accompanying notes to consolidated financial statements.

¥$

Annual Report 2013 Nippon Shokubai Co., Ltd.

3

19

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Income

Consolidated Statement of Income
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Years ended March 31,
2012

2013

2013
(Thousands of
U.S. dollars)(Note 2)

(Millions of yen)
Net sales (Note 22)¥269,520¥

320,704$

2,865,710

224,901

252,363

2,391,292

44,61968,341

474,418

34,58537,241

367,730

10,034

31,100106,688

Interest and dividend income

1,032

958

10,973

Interest expense

(674)

(735)

(7,166)

1,291

584

13,727

1,371

2,353

14,577

–

(840)

–

(89)

(280)

(946)

Rent income from real estate

1,066

1,157

11,334Gain on insurance claims (Note 14)

8,231

1,105

87,517–

Cost of sales (Note 13)
Gross profit
Selling, general and administrative expenses (Note 13)
Operating income (Note 22)
Other income (expenses):

Royalty income
Equity in earnings of an unconsolidated subsidiary andaffiliates
Foreign exchange loss, net
Loss on impairment of property, plant and equipment(Notes 8 and 22)

Government subsidies–

100

Loss on reduction of property, plant and equipment

(47)

(449)

(500)

Loss on disposal of property, plant and equipment

(20)

(264)

(213)

–

(134)

–

Loss on discontinued operations
Loss on devaluation of investments in unconsolidated
subsidiaries and affiliates

(264)

–

(2,807)(8,882)–(94,439)(274)(1,328)(2,913)

12,77533,327

135,832

Current

3,343

11,77835,545

Deferred

872

(158)

9,272

4,215

11,62044,817

8,560

21,70791,015

(159)

(450)

(1,690)Loss on explosion and fire accident (Note 15)
Other, net
Income before income taxes and minority interests
Income taxes (Note 11):

Income before minority interests
Minority interests
Net income

¥

8,401

See accompanying notes to consolidated financial statements.

20

Nippon Shokubai Co., Ltd. Annual Report 2013¥

21,257$89,325

4

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Years ended March 31,

2012

2013

2013
(Thousands of
U.S. dollars)(Note 2)

(Millions of yen)

Income before minority interests

¥

8,560

¥

21,707$91,015

Other comprehensive income (loss)
Net unrealized holding gain (loss) on securities
Net unrealized deferred gain on hedges
Translation adjustments

1,486(1,002)15,800

3

1

32

3,911

(1,544)

41,584

1,736

(365)

18,4597,136(2,910)75,875

Other comprehensive income (loss) of equity
method affiliates attributable to the Company
Total other comprehensive income (loss)(Note 16):Comprehensive income¥

15,696¥

18,797$

166,890¥

15,297¥

18,435$

162,648

Comprehensive income attributable to:Shareholders of the Company
Minority interests399

See accompanying notes to consolidated financial statements.

362

4,242

5
Annual Report 2013 Nippon Shokubai Co., Ltd.

21

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets

Consolidated Statement of Changes in Net Assets
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Shareholders’ equity
Capitalsurplus

Common stock
Balance at April 1, 2011¥

25,038¥Retainedearnings(Millions of yen)

22,083¥

158,961

Less treasury
stock,
at costTotal
shareholders’equity¥¥(7,990)198,092

Changes during the year:
Cash dividends––(4,669)–(4,669)Net income––

21,257–

21,257Purchases of treasury stock

–

–

–

(9)

(9)

Disposition of treasury stock

–

0

(0)

1

1

Retirement of shares of common
stock held in treasury–(0)(7,108)

7,108–

Net changes in items other thanshareholders’ equity

–

–

–

–

–

–

(0)

9,480

7,100

16,580Total changes during the year¥

Balance at March 31, 2012

25,038¥22,083¥

168,441

¥

(890)

¥

214,672

Accumulated other comprehensive income (loss)
Net
unrealized
holding gain
on securities

Translation
adjustments

Net
unrealized
deferred loss
hedgesTotal accumulated
othercomprehensive
loss, net

Minority
interests

Total net
assets¥¥(Millions of yen)
Balance at April 1, 2011

¥

2,367

¥

(9,885)¥ (17)¥(7,535)

3,709

194,266

Changes during the year:
Cash dividends

–

–

–

–

–

(4,669)Net income

–

–

–

–

–

21,257Purchases of treasury stock

–

–

–

–

–

(9)

Disposition of treasury stock

–

–

–

–

–

1

Retirement of shares of common
stock held in treasury

–

–

–

–

–

–

(1,001)(1,836)15(2,822)

1,046(1,776)(1,001)(1,836)15(2,822)

1,046

14,804

Net changes in items other thanshareholders’ equity
Total changes during the year
Balance at March 31, 2012

22

¥

1,366

¥

(11,721)

¥

(2)

¥

(10,357)

¥

4,755

¥

209,070

6
Nippon Shokubai Co., Ltd. Annual Report 2013

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets (continued)
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Shareholders’ equity
Capitalsurplus

Common stock

Retainedearnings

Less treasury
stock,
at costTotal
shareholders’equity¥¥(Millions of yen)¥

Balance at April 1, 2012

25,038¥22,083¥

168,441(890)

214,672

Changes during the year:
Cash dividends––(4,467)–(4,467)

Net income

–

–

8,401

–

8,401

Purchases of treasury stock

–

–

–

(7)

(7)

Disposition of treasury stock

–

–

–

–

–

Retirement of shares of common
stock held in treasury

–

–

–

–

–

Net changes in items other thanshareholders’ equity

–

–

–

–

–

–

–

3,934

(7)

3,927

Total changes during the year¥

Balance at March 31, 2013

25,038¥22,083¥

172,375¥(897)

Accumulated other comprehensive income (loss)
Net
Net
Total accumulated
unrealized
unrealizedotherholding gain
deferred gain
comprehensive
Translation
on securities
on hedges
loss, netadjustments¥

218,599

Minority
interests

Total net
assets¥¥(Millions of yen)
Balance at April 1, 2012

¥

1,366

¥

(11,721)

¥

(2)

¥

(10,357)

4,755

209,070

Changes during the year:
Cash dividends

–

–

–

–

–

(4,467)

Net income

–

–

–

–

–

8,401

Purchases of treasury stock

–

–

–

–

–

(7)

Disposition of treasury stock

–

–

–

–

–

–

Retirement of shares of common
stock held in treasury

–

–

–

–

–

–

1,480

5,412

3

6,895

356

7,251

1,480

5,412

3

6,895

356

11,178(3,462)¥ 5,111¥ 220,248

Net changes in items other thanshareholders’ equity
Total changes during the year
Balance at March 31, 2013

¥

2,846

¥

(6,309)¥1¥

7
Annual Report 2013 Nippon Shokubai Co., Ltd.

23

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Change in Net Assets (continued)
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Shareholders’ equity
Commonstock

CapitalsurplusRetainedearnings

Total
shareholders’equityLess treasury
stock, at cost(Thousands of U.S. dollars) (Note 2)$

Balance at April 1, 2012

266,220$

234,801$

1,790,973$(9,463)$2,282,531

Changes during the year:
Cash dividends––(47,497)

Net income––

Purchases of treasury stock––

Disposition of treasury stock–

Retirement of shares of common
stock held in treasury
Net changes in items other thanshareholders’ equity–(47,497)

89,325–89,325

–

(74)

(74)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

Total changes during the year$

Balance at March 31, 2013

266,220$

41,828234,801$

1,832,801(74)$(9,537)

Accumulated other comprehensive income (loss)
Total
Net
accumulated
Net unrealized
unrealizedotherholding gain
Translation
deferred gain
comprehensive
on hedges
on securities
adjustments
loss, net

41,754$2,324,285

Minority
interests

Total net
assets(Thousands of U.S. dollars) (Note 2)
Balance at April 1, 2012$

14,524$(124,625)

$

(21)

$

(110,122)$

50,558$2,222,967

Changes during the year:
Cash dividends

–

–

–

–

–

(47,497)

Net income

–

–

–

–

–

89,325Purchases of treasury stock

–

–

–

–

–

(74)

Disposition of treasury stock

–

–

–

–

–

–

Retirement of shares ofcommon stock held intreasury

–

–

–

–

–

–

15,73657,54432

73,312

3,785

77,097

15,73657,54432

73,312

3,785

118,851

Net changes in items other thanshareholders’ equity
Total changes during the year
Balance at March 31, 2013

$ 30,260$ (67,081)$11$ (36,810)

See accompanying notes to consolidated financial statements.

24

Nippon Shokubai Co., Ltd. Annual Report 2013$

54,343$

2,341,818

8

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement Consolidatedof Cash FlowsStatement of Cash Flows
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Years ended March 31,
2012
2013
(Thousands of
U.S. dollars)(Millions of yen)
(Note 2)

2013

Operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation and amortization
Loss on devaluation of investments in unconsolidated
subsidiaries and affiliates
Loss on discontinued operations
Loss on impairment of property, plant and equipment
Increase in accrued retirement benefits for employees
Interest and dividend income
Interest expense
Equity in earnings of an unconsolidated subsidiary andaffiliates
Loss on disposal of property, plant and equipment
Loss on reduction of property, plant and equipment
Gain on insurance claims
Government subsidies
Other, net
Changes in operating assets and liabilities:
Notes and accounts receivable
Inventories
Notes and accounts payable
Other current liabilities
SubtotalInterest and dividends received
Interest paid
Proceeds from insurance claims
Proceeds from government subsidies
Payment of income taxes
Net cash provided by operating activities
Investing activities:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of short-term investments and investments insecurities
Proceeds from sales of short-term investments and investments
in securities
Proceeds from redemption of investments in securities
Payments for purchases of shares of affiliates
Proceeds from purchase of investments in subsidiaries resulting
in change in scope of consolidation (Note 17)
Increase in loans receivableCollection of loans receivable
Other, net
Net cash used in investing activities¥ 12,775¥ 33,327$ 135,832

15,402

16,767

163,764

264
–
89
157
(1,032)
674

–
134
280
478
(958)
735

2,807
–
946
1,669
(10,973)
7,166(1,371)23
47(8,231)–(5,544)(2,353)270
449(1,105)
(100)
1,832

(14,577)245
500(87,517)–(58,948)

26,9193,030(14,869)(269)
28,064
2,799
(691)
8,231
–
(11,081)
27,322(2,534)(4,395)
10,684105
53,616
2,022
(745)
1,226
100
(12,362)
43,857286,220
32,217(158,097)(2,860)298,394
29,761(7,347)87,517–(117,820)
290,505(29,382)12(20,883)4(312,408)
128

(521)

(451)

(5,539)

216
200
(984)

193
200
(18)

2,296
2,127
(10,463)–(1,299)177(297)¥ (31,878)

182
–
132
(1,106)¥ (21,747)–(13,812)
1,882(3,158)$ (338,947)

Annual Report 2013 Nippon Shokubai Co., Ltd.

25

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows (continued)
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Years ended March 31,
2012
2013
(Thousands of
U.S. dollars)(Millions of yen)
(Note 2)

2013

Financing activities:
Decrease in short-term bank loans, net
Proceeds from long-term debt
Repayment of long-term debt
Repayments of bonds
Cash dividends paid
Purchases of treasury stock
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Decrease (increase) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

¥

(299)
19,687(9,743)(5,000)(4,467)
(7)
(90)
81
1,464
(3,011)50,812¥ 47,801

See accompanying notes to consolidated financial statements.

26

Nippon Shokubai Co., Ltd. Annual Report 2013

¥ (2,587)
2,542(4,872)–(4,669)(9)(76)(9,671)(801)
11,63839,174¥ 50,812$(3,179)209,325(103,594)(53,163)(47,497)
(74)
(957)
861
15,566(32,015)
540,266$ 508,25110

Notes to Consolidated Financial Statements
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

1. Summary of Significant Accounting Policies(a) Basis of presentation
The accompanying consolidated financial statements of Nippon Shokubai Co., Ltd. (the “Company”) andits consolidated subsidiaries are prepared on the basis of accounting principles generally accepted in Japan,
which are different in certain respects as to the application and disclosure requirements of International
Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by theCompany as required by the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications andrearrangements have been made to the consolidated financial statements issued domestically in order topresent them in a format which is more familiar to readers outside Japan.
(b) Basis of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
significant subsidiaries. All significant intercompany items have been eliminated in consolidation.
The overseas consolidated subsidiaries are consolidated on the basis of fiscal periods ending December
31, a date which differs from the balance sheet date of the Company. As a result, adjustments have been
made for any significant intercompany transactions which took place during the period between the year
end of these overseas consolidated subsidiaries and the year end of the Company.
Investments in an unconsolidated subsidiary and significant affiliates are accounted for by the equity
method.
Investments in unconsolidated subsidiaries and affiliates not accounted for by the equity method are
carried at cost.
(c)Foreign currency translation
The financial statements of the overseas consolidated subsidiaries are translated into yen at the rates of
exchange in effect at the balance sheet date, except that the components of net assets excluding minority
interests are translated at their historical exchange rates. Differences resulting from translating thefinancial statements of the overseas consolidated subsidiaries are not included in the determination of net
income but are reported as translation adjustments and minority interests in the accompanying consolidatedbalance sheets at March 31, 2013 and 2012.
Revenue and expense items arising from transactions denominated in foreign currencies are generallytranslated into yen at the rates of exchange in effect at the respective transaction dates.
All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rates
of exchange in effect at the balance sheet date and gain or loss on each translation is credited or charged toincome.

(d)Cash and cash equivalents
Cash and cash equivalents include cash on hand and in banks and other highly liquid investments withmaturities of three months or less when purchased.

(e)Allowance for doubtful receivables
The Company and its consolidated subsidiaries provide an allowance for doubtful receivables at an amountcalculated based on their historical experience of bad debts on ordinary receivables plus an additional
estimate of probable specific bad debts from customers experiencing financial difficulties.

(f)

Inventories
Inventories are stated at the lower of cost or net selling value, cost being determined primarily by themoving average method.

11
Annual Report 2013 Nippon Shokubai Co., Ltd.

27

(g) Property, plant and equipment
Depreciation is computed principally by the straight-line method over the estimated useful lives of therespective assets except for leased assets.
(h) Leases
Leased assets under finance lease transactions that do not transfer ownership to the lessee are depreciated toa residual value of zero by the straight-line method using the contract term as the useful life.
For finance lease transactions that do not transfer ownership to the lessee, those that started on or before
March 31, 2008 continue to be accounted for as operating lease transactions.
(i)

Short-term investments and investments in securities
Securities are classified into three categories: trading securities, held-to-maturity debt securities and othersecurities. Trading securities, consisting of debt and marketable equity securities, are carried at fair value.
Gain and loss, both realized and unrealized, are credited and charged to income. Held-to-maturity debt
securities are carried at amortized cost. Marketable securities classified as other securities are carried atfair value, with any changes in unrealized holding gain or loss, net of the applicable income taxes, reported
as a separate component of net assets. Non-marketable securities classified as other securities are carriedat cost. Cost of securities sold is determined by the moving average method.

(j)Research and development costs and computer software
Research and development costs are charged to income when incurred.
Expenditures relating to the development of computer software intended for internal use are charged toincome as incurred, except if these are deemed to contribute to the generation of future income or costsavings. Such expenditures are capitalized as assets and amortized by the straight-line method over theirrespective estimated useful lives, generally a period of 5 years.

(k) Income taxes
Income taxes are calculated based on taxable income and charged to income on an accrual basis. Deferredincome tax assets and liabilities are computed based on the temporary differences between financial
reporting and the tax bases of the assets and liabilities which will result in taxable or tax-deductible
amounts in the future. The calculation of deferred income tax assets and liabilities is based on the enacted
tax laws.
(l)Hedge accounting
Gain or loss on derivatives positions designated as hedges is deferred until the loss or gain on the respective
underlying hedged items is recognized. Interest rate swaps which meet certain conditions are accounted
for as if the interest rates applied to the swaps had originally applied to the underlying debt.
Forward foreign currency exchange contracts which meet certain criteria are accounted for by theallocation method which requires that recognized foreign currency receivables or payables be translated at
the corresponding contract rates (“Allocation method”).

(m) Accrued bonuses to employees
Accrued bonuses to employees are provided based on the estimated amount of bonuses to be paid to
employees which is charged to income in the current year.
(n) Accrued bonuses to directors and corporate auditors
Accrued bonuses to directors and corporate auditors are provided at an estimate of the amount to be paid in
the following year which has been allocated to the current fiscal year.

28

12
Nippon Shokubai Co., Ltd. Annual Report 2013

(o) Reserve for periodic repairs
The Company and certain consolidated subsidiaries provide a reserve for the cost of periodic repairs to
production facilities at plants based on their estimates of the future cost of such repairs.
(p) Reserve for loss on disasterA domestic consolidated subsidiary has recorded a reserve for loss on disaster at the amount estimated to benecessary to provide for restoration of assets damaged by the Great East Japan Earthquake.
(q) Retirement benefits
Accrued retirement benefits for employees have been provided based on the retirement benefit obligationand the fair value of the pension plan assets as adjusted for unrecognized actuarial gain or loss andunrecognized prior service cost.
Prior service cost is amortized principally by the straight-line method over a period of 5 years, which iswithin the estimated average remaining years of service of the eligible employees.
Actuarial gain or loss is amortized in the year following the year in which the gain or loss is recognizedprincipally by the straight-line method over a period of 10 years, which is within the estimated averageremaining years of service of the eligible employees.
(r)Distribution of retained earnings
Under the Corporation Law of Japan, the distribution of retained earnings with respect to a given financial
period is made by resolution of the shareholders at a general meeting held subsequent to the close of thefinancial period. The accounts for that period do not, therefore, reflect such distributions (see Note 24).

(s) Recognition of contract revenue and cost
The Company recognizes revenue by applying the percentage-of-completion method for the construction
projects for which the outcome of the construction activity is deemed certain at the end of the reporting
period. To estimate the progress of such construction projects, the Company measures the percentage ofcompletion by comparing costs incurred to date with the most recent estimate of total costs required tocomplete the project (cost to cost basis). For other construction projects where the outcome cannot be
reliably measured, the completed-contract method is applied.
(t) Accounting standards issued but not yet effective(Accounting Standard for Retirement Benefits)
Accounting Standard for Retirement Benefits (Statement No. 26 issued by Accounting Standards Board ofJapan (“ASBJ”) on May 17, 2012)
Guidance on Accounting Standard for Retirement Benefits (Guidance No. 25 issued by ASBJ on May 17,
2012)(1) Summary
These accounting standards were amended from the viewpoint of improvements to financial reportingand international convergence, mainly focusing on how actuarial gains or losses and prior service
costs should be accounted for, how retirement benefit obligations and current service costs should bedetermined, and enhancement of disclosures.
Under the revised accounting standard, unrecognized actuarial gains or losses and prior service
cost shall be recognized within net assets (accumulated other comprehensive income (loss)), after
adjusting for tax effects, and the deficit or surplus corresponding to the deference between theretirement benefit obligations and plan assets shall be recognized as a liability or asset. In addition, theretirement benefit obligation can be attributed to each period based on the plan’s benefit formula or
the straight-line method.

13
Annual Report 2013 Nippon Shokubai Co., Ltd.

29

(2) Planned date of adoption
The Company will adopt these accounting standards from the end of the fiscal year ending March 31,
2014.
(3) Effect of adoption of these accounting standards
The impact of the adoption of these accounting standards is currently under assessment.
2. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter ofarithmetic computation only, at ¥94.05 = U.S. $1.00, the approximate rate of exchange in effect on March 31,
2013. This translation should not be construed as a representation that yen have been, could have been, or
could in the future be, converted into U.S. dollars at the above or any other rate.
3. Notes Receivable and Notes Payable
The balance sheet dates for the years ended March 31, 2013 and 2012 fell on a bank holiday. Consequently,
notes receivable, trade of ¥178 million ($1,893 thousand) and ¥264 million, notes payable, trade of ¥152 million($1,616 thousand) and ¥362 million and notes payable of ¥110 million ($1,170 thousand) and ¥14 million
included in other current liabilities with maturity dates of March 31, 2013 and 2012 were included in therespective balances in the consolidated balance sheets at March 31, 2013 and 2012 and were settled on the next
business day.
4. Financial Instruments(1) Current status of financial instruments
1) Policy for financial instruments
The Group manages temporary surplus funds through short-term bank deposits. The Group raises
funds through bank loans. The Group uses derivatives for the purpose of reducing foreign currency
exchange rate fluctuation risk or interest rate fluctuation risk, and does not enter into derivatives for
speculative or trading purposes.
2)30

Types of financial instruments and related risk
Notes and accounts receivable, trade are exposed to credit risk in relation to customers. Trade
receivables in foreign currencies, arising from export transactions for the global business, are exposed
to foreign currency exchange rate fluctuation risk, which are hedged by forward foreign exchange
contracts.
Investments in securities are composed of the shares of common stock of other companies withwhich the Group has business or capital relationships, which are also exposed to market pricevolatility risk.
Substantially all notes and accounts payable, trade have payment due dates within one year,
which are also hedged by forward foreign currency exchange contracts. The loans are taken out
principally for the purpose of making capital expenditures. The loans with variable interest rates are
exposed to interest rate fluctuation risk. However, the interest rate fluctuation risk is covered byinterest rate swap transactions.
Regarding derivatives, the Group enters into forward foreign currency exchange transactions to
avoid foreign currency exchange rate fluctuation risk related to trade receivables and trade payables
denominated in foreign currencies. The Group also enters into interest rate swap transactions to
avoid interest rate fluctuation risk related to the loans.
Further information regarding the method of hedge accounting, hedging instruments andhedged items, hedging policy, and the assessment of the effectiveness of hedging activities can befound in Note 21.

14
Nippon Shokubai Co., Ltd. Annual Report 2013

3)

Risk management for financial instrumentsi)

Monitoring for credit risk (the risk that customers or counterparties may default)With respect to trade receivables, each related division of the Company monitors the conditionsof their main customers periodically, monitors due dates and outstanding balances of individual
customers, and evaluates credit worthiness of their main customers semiannually. The
consolidated subsidiaries also monitor trade receivables in a same manner.
The Group acquires held-to-maturity debt securities such as corporate bonds or other securities,
that have high credit ratings. Accordingly, the Group believes that the credit risk deriving fromsuch debt securities is insignificant.
The Group also believes that the credit risk of derivatives is insignificant as the Group enters
into derivative transactions only with financial institutions with high credit ratings.

ii)

Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest
rates and others)
For trade receivables and trade payables in foreign currencies, the Group enters into forward
foreign currency exchange contracts.
For investments in securities, the Group periodically reviews the fair values of such financial
instruments and the financial position of the issuers. In addition, the Group continuously
evaluates whether securities other than those classified as held-to-maturity should be maintained
taking into account their fair values and relationships with the issuers.
For derivative transactions, the finance department of the Company enters into and manages
derivative transactions. Results of derivative transactions are reported to the director in charge
monthly.

iii) Monitoring of liquidity risk (the risk that the Group may not be able to meet its obligations on
the scheduled due dates)
Based on reports from each division, the Group prepares and updates its cash flow plans on atimely basis to manage liquidity risk.
4)

Supplementary explanation of the estimated fair value of financial instruments
The notional amounts of derivatives in the following table are not necessarily indicative of the actual
market risk involved in derivative transactions.

(2) Fair value of financial instruments
Carrying value, fair value, and unrealized gain on financial instruments at March 31, 2013 and 2012 areshown in the following table. The following table does not include financial instruments for which it isextremely difficult to determine the fair value.
2013
Carrying
value

Assets:i)Cash and cash
equivalents, andtime depositsii) Notes andaccounts receivableiii) Investments insecurities:
Other securities
Total assets¥

49,847¥52,579¥21,831
124,257

2012

Fair
value

(Millions of yen)
Unrealized
Carrying
gain
value

49,847¥52,579¥21,831
124,257

–

¥

–

¥

–
–

51,764

Fair
value

¥

78,094¥

19,332
149,190

51,764

Unrealized
gain¥

78,094¥

19,332
149,190

–
–

¥

–
–

15
Annual Report 2013 Nippon Shokubai Co., Ltd.

31

Liabilities:iv) Notes andaccounts payablev)
Short-term bankloansvi) Current portion of
long-term loansvii) Long-term loans
Total liabilities
Derivatives¥

39,415¥39,415¥¥

53,137¥53,137¥–

14,533

14,533–

14,373

14,373–¥14,08026,06094,088¥14,15426,09094,192

74
30
¥ 104

¥

9,694
20,22497,428¥

9,761
20,374
97,645

67
150
¥ 217

¥

1

¥

1

¥

¥

(3)

¥

(3)

Carrying value

Assets:i) Cash and cash equivalents, and time
depositsii) Notes and accounts receivableiii) Investments in securities:
Other securities
Total assets
Liabilities:iv) Notes and accounts payablev) Short-term bank loansvi) Current portion of long-term loansvii)Long-term loans
Total liabilities
Derivatives

1)

–

$

530,005
559,054$$

232,121
1,321,180$

419,085
154,524
49,708277,087
1,000,404

$

11

–

2013
(Thousands of U.S. dollars)
Fair
value

$

530,005
559,054$$

232,121
1,321,180¥–

Unrealized
gain

$

$

$

$

419,085
154,524
150,494
277,406
1,001,509

$

11

$

–
–
–
–

–
–
786
319
$ 1,105–

Calculation methods of fair value of financial instruments, securities, and derivatives are as follows:
Assets:i)Cash and cash equivalents, time deposits, and ii) notes and accounts receivable
Since these items are settled in a short period of time, their carrying values approximate the fairvalue.
iii) Investments in securities
Please refer to Note 1(i).
Liabilities:iv) Notes and accounts payable, and v) short-term bank loansvi)

Since these items are settled in a short period of time, their carrying values approximate the fairvalue.
Current portion of long-term debt, and vii) long-term debt
The fair value of long-term debt is based on present value of the total amount including principal
and interest, discounted by the expected interest rate in the case of new borrowings under thesame conditions and in the same amount of the balance as of the end of the period. Long-termloans with floating interest rates were hedged by interest-rate swap agreements and accounted for
as loans with fixed interest rates. The estimated fair value of those long-term loans isreasonably based on the present value of the total of principals, interests and net cash flows ofswap agreements discounted by the interest rates, estimated reasonably, applicable to loans madeunder similar conditions.

Derivative transactions:
Please refer to Note 21.

32

16
Nippon Shokubai Co., Ltd. Annual Report 2013

2)

Financial instruments for which it is extremely difficult to determine the fair value:
Other securities whose market value was not determinable at March 31, 2013 and 2012 are presented
as follows:
2013

2013
(Thousands of
U.S. dollars)

2012(Millions of yen)

¥ 705

Unlisted securities and other

¥

$

887

7,496

Since there is no market price for unlisted securities and it is difficult to determine the fair value, they
are not included in the above iii), “Investments in securities” in the preceding table “(2) Fair value offinancial instruments.”3)

The redemption schedule for monetary assets and securities classified as held-to-maturity debt
securities with maturity dates as of March 31, 2013 and 2012 is as follows:2013

Due within
one year

Cash and cash equivalents, andtime deposits
Notes and accounts receivable
Investments in securities:
Held-to-maturity debt
securities (unlisted
foreign debt securities)

2012(Millions of yen)
Due after one year
Due within
through five years
one year¥

49,84752,579––¥102,426–

Cash and cash equivalents, and time deposits
Notes and accounts receivable
Investments in securities:
Held-to-maturity debt securities (unlisted
foreign debt securities)¥––

Due after one year
through five years¥

51,76478,094

¥

–
–

–

200

¥

129,858

¥ 200

2013
(Thousands of U.S. dollars)
Due within
Due after one year
one yearthrough five years$
530,005$–
559,054––
1,089,059$––

5. Short-Term Investments and Investments in Securities
Marketable securities classified as other securities at March 31, 2013 and 2012 are summarized as follows:
2013
Book value (fairmarket value)

Cost

Securities whose fair market value exceeds their cost:¥
15,297¥9,315
Equity securities
15,927

2012(Millions of yen)
UnrealizedBook value (fairgain (loss)
market value)

¥

5,982

¥

11,887

Unrealized
gain (loss)

Cost

¥

8,335

¥

3,552

9,315

5,982

11,887

8,335

3,552

Securities whose cost exceeds their fair market value:
6,534
8,242
Equity securities(1,708)

7,445

8,917

(1,472)(1,708)
4,274

7,445
19,332

8,917
17,252

Subtotal

Subtotal
Total

¥

6,534
21,831¥

8,242
17,557¥¥¥¥(1,472)2,080

17Annual Report 2013 Nippon Shokubai Co., Ltd.

33

Book value(fair market
value)

2013(Thousands of U.S. dollars)
Cost

Securities whose fair market value exceeds their cost:
Equity securities$ 162,648
Subtotal
162,648
Securities whose cost exceeds their fair market value:
Equity securities
69,473
Subtotal
69,473Total$ 232,121$$

Unrealized gain
(loss)

99,043
99,043$ 63,605
63,60587,634
87,634
186,677(18,161)(18,161)$ 45,444

Sales of other securities for the years ended March 31, 2013 and 2012 were as follows:
2012

2013

2013
(Thousands of
U.S. dollars)(Millions of yen)

Proceeds
Gross realized gain
Gross realized loss

¥ 193
6
¥
–

¥ 2
–
¥ 0

6. Inventories
Inventories at March 31, 2013 and 2012 were as follows:
2013

$ 21
–
$ 0

2012

2013
(Thousands of
U.S. dollars)

24,291
9,732
6,761
3,228
44,012$(Millions of yen)

Merchandise and finished goods
Raw materials
Work in process
Supplies
Total

¥

¥

21,468
9,618
7,170
3,953
42,209¥¥$228,262102,265
76,23642,030448,793

7. Other Current Assets
On September 29, 2012, there was an explosion and fire at the Himeji factory in which inventories and property,
plant and equipment were damaged or destroyed. The book value of these items and the repair cost of theproperty, plant and equipment amounted to ¥2,176 million ($23,137 thousand), and was accounted for under ansuspense account included in other current assets since the Company expects to receive insurance proceeds fromthe accident.
8. Loss on Impairment of Property, Plant and Equipment
Property, plant and equipment are primarily grouped based on the business segment categories designated for
management control purposes.
For the year ended March 31, 2013, the electronic device material manufacturing equipment in the Suita
plant that are not intended to be used in the future and were classified as idle after the production of the
manufacturing equipment was discontinued. Accordingly, the Company has written down such assets to theirrespective net recoverable amounts. The net recoverable amounts of these impaired assets were measured at
net selling value in the amount of ¥89 million ($946 thousand).
For the year ended March 31, 2012, the Company determined to discontinue providing Company
owned employee housing in Ibaraki prefecture and to sell its land, which had been used since 1987.
Accordingly, the Company has written down such assets to their respective net recoverable amounts. The net
recoverable amounts of these impaired assets were measured at net selling value based on the appraisal value
determined by a real estate agent.

18

34

Nippon Shokubai Co., Ltd. Annual Report 2013

Details of the loss on impairment of property, plant and equipment for the years ended March 31, 2013
and 2012 are summarized as follows:
2013
Company

Nippon ShokubaiCo., Ltd.

Application

Electronic device
manufacturing
equipment

Machinery

Total

Company

Nippon ShokubaiCo., Ltd.

Application

2012(Thousands of
U.S. dollars)（Millions of yen）

Classification

¥ 89

$ 946

¥ 89

$ 946

（Millions of yen）

Classification

Land for company owned Land, buildings andhousing
structures and other assets
assets

¥ 280

¥ 280

Total

9. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans consisted mainly of unsecured loans. The average interest rates on short-term bank loans
outstanding at March 31, 2013 and 2012 were 0.71% and 0.80% respectively.
Long-term debt at March 31, 2013 and 2012 consisted of the following:
2012

2013

2013
(Thousands of
U.S. dollars)(Millions of yen)Unsecured bonds payable in Japanese yen, at rate of 1.66%, due
through 2014
Unsecured loans from banks and insurance companies, payable
in Japanese yen, at rates from 0.40% to 2.03%, due through2018

15,000$ 106,326

24,70927,138262,722

Unsecured loans from banks, payable in U.S. dollars, at rates
from 0.77% to 1.44%, due through 2020

15,152

2,286

161,106

Unsecured loans from banks, payable in Chinese yuan, at rates
from 5.54% to 5.65%, due through 2013

49

92

521

Secured loans from banks payable in Japanese yen, at rates from
1.33% to 1.55%, due through 2015

230

402

2,446

Lease obligations

200

216

2,127

¥

10,000¥Subtotal

50,34045,134535,248

Less current portion(14,116)(14,738)(150,091)

30,396$ 385,157

Total

¥

36,224¥

The aggregate annual maturities of long-term debt subsequent to March 31, 2013 are summarized below:
Year ending March 31,

2014
2015
2016
2017
2018 and thereafter(Millions of yen)(Thousands of
U.S. dollars)¥ 14,080
16,497
3,378
3,337
12,848$ 149,708
175,40735,91735,481
136,608¥ 50,140$ 533,121

19
Annual Report 2013 Nippon Shokubai Co., Ltd.

35

The aggregate annual maturities of lease obligations to March 31, 2013 are summarized below:(Thousands of
U.S. dollars)(Millions of yen)

Year ending March 31,

2014
2015
2016
2017

¥

36
24
24
23
93

2018 and thereafter

$

¥ 200

383
255
255
245
989

$ 2,127

Assets pledged as collateral for short-term bank loans, long-term debt, including the current portion thereof, andnotes and accounts payable at March 31, 2013 and 2012 were as follows:
2012

2013
(Thousands of
U.S. dollars)

¥

$

2013
(Millions of yen)Time deposits
Land
Buildings and structures
Machinery and equipment
Other assets
Total

¥

–
533
119
214
12

8
533
129
156
5

¥ 831

¥ 878

–
5,667
1,265
2,275
128

$ 9,335

10. Retirement Benefits
Employees of the Company and domestic consolidated subsidiaries are mainly covered by an employees’
retirement benefit plan and an employees’ pension plan. In addition, the Company and a domestic consolidated
subsidiary have established a retirement benefits trust. The employees’ retirement benefit plan provides forlump-sum payments determined by reference to their basic salary, years of service and certain other factors.
These plans provide for lump-sum payments and/or annuity payments payable upon termination of employment.
Certain domestic consolidated subsidiaries have multi-employer pension plans or defined contribution pension
plans.
Certain overseas consolidated subsidiaries have defined benefit/contribution pension plans.
The following table sets forth the funded and accrued status of the pension plans and the amounts recognized in
the accompanying consolidated balance sheets at March 31, 2013 and 2012 for the Company’s and theconsolidated subsidiaries’ defined benefit pension plans:
2012

2013

2013
(Thousands of
U.S. dollars)(Millions of yen)
Retirement benefit obligation at end of year

(33,898)¥(33,456)$(360,426)

Fair value of plan assets at end of year

24,394

21,577259,373

Unfunded retirement benefit obligation(9,504)(11,879)(101,053)

Unrecognized actuarial loss
Unrecognized prior service cost

2,611

4,779

27,762

13

17

138

Net retirement benefit obligation(6,880)(7,083)(73,153)

Prepaid pension costAccrued retirement benefits

36

¥

¥

3,538
(10,418)¥

3,168(10,251)$

37,618(110,771)

20
Nippon Shokubai Co., Ltd. Annual Report 2013

The components of retirement benefit expenses for the years ended Mar 31, 2013 and 2012 are outlined as follows:
2012

2013
(Millions of yen)
Service cost
Interest cost
Expected return on plan assets
Amortization:
Prior service cost
Actuarial loss
Retirement benefit expenses

¥

¥

¥

1,498
605
(590)
3
750
2,266

¥

1,484
599
(578)
3
1,162
2,670

2013
(Thousands of
U.S. dollars)$$

15,9286,433(6,273)
32
7,974
24,094

The assumptions used in accounting for the defined benefit pension plans for the years ended March 31, 2013
and 2012 were as follows:
2012
2013
Discount rate

Principally 1.9%

Principally 1.9%

Expected rate of return on plan assets

Principally 3.0%

Principally 3.0%

The following table sets forth the status of the multi-employer pension plan at March 31, 2012, the most recent
date on which such data was available. The contribution ratio of the Group to the multi-employer pension plan
as of March 31, 2013 was 0.5%.
(Millions of yen)(Thousands of
U.S. dollars)

Plan assets at fair value
Benefit obligation used in the calculation of pension financing¥

414,218
459,016$

4,404,232
4,880,553

Difference¥(44,798)$(476,321)

11. Income Taxes
Income taxes applicable to the Company and its domestic consolidated subsidiaries consist of corporation,
inhabitants’ and enterprise taxes. The statutory tax rates in Japan for the years ended March 31, 2013 and 2012
were, in the aggregate, approximately 38.0% and 40.6%.
The effective tax rates reflected in the accompanying consolidated statements of income for the years
ended March 31, 2013 and 2012 differed from the above statutory tax rate for the following reasons:
2013

2012

Statutory tax rate
Effect of:Valuation allowance
Different tax rate applicable to income of subsidiaries
Tax credit for research and development costs
Equity in earnings of an unconsolidated subsidiary and affiliates
Foreign tax credit
Decrease in deferred income tax assets resulting from change in thestatutory tax rates
Other, net

38.0 %

40.6 %

1.7
(6.8)
(1.8)
(4.1)
(0.5)

(1.3)
(2.8)
(2.9)
(2.9)
(0.1)

–
6.5

2.7
1.6

Effective tax rates

33.0 %

34.9 %

Deferred income taxes reflect the net tax effect of the temporary differences between the carrying amounts of theassets and liabilities calculated for financial reporting purposes and the corresponding tax bases reported forincome tax purposes. The significant components of the deferred tax assets and liabilities of the Company andits consolidated subsidiaries at March 31, 2013 and 2012 are summarized as follows:

21
Annual Report 2013 Nippon Shokubai Co., Ltd.

37

2013

2012

2013
(Thousands of
U.S. dollars)(Millions of yen)
Deferred tax assets:
Depreciation and amortization (including
loss on impairment)
Accrued retirement benefits for employees
Tax loss carryforwards
Intercompany profit on inventories and property, plant andequipment
Accrued bonuses to employees
Loss on impairment of land
Reserve for periodic repairs
Impairment of investments in securities and other
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Net unrealized holding gain on securities
Equity in earnings of an overseas affiliate
Deferred capital gain on property (in overseas subsidiaries)
Depreciation and amortization
Reserve for depreciation for tax purposes
Other
Total deferred tax liabilities
Net deferred tax assets¥ 3,041
2,501
2,936

¥ 3,177
2,580
2,071

1,149
960
1,106
1,019
390
1,131
14,233(4,172)

1,333
1,112
1,107
896
727
1,798
14,801(3,952)

12,217
10,207
11,76010,835
4,147
12,025
151,334(44,359)

10,061

10,849106,975(1,312)
(879)
(322)
(277)
(14)
(768)
(3,572)¥ 6,489

(587)
(908)
(328)
(277)
(1)
(638)
(2,739)¥ 8,110(13,950)(9,346)(3,424)(2,945)(149)(8,165)(37,979)$ 68,996$

32,334
26,592
31,217

12. Shareholders’ Equity
The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of the amount to be disbursed
as distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the capital stock account. Such distributions can be made at any
time by resolution of the shareholders, or by the Board of Directors if certain conditions are met.
Retained earnings include the legal reserve provided in accordance with the provisions of the Law. The legal
reserve of the Company included in retained earnings amounted to ¥3,920 million ($41,680 thousand) and¥3,920 million at March 31, 2013 and 2012, respectively.
Common stock and treasury stock
Movements in shares of common stock in issue and treasury stock during the years ended March 31, 2013 and2012 are summarized as follows:
2013
Number of shares(Thousands)

Common stock
Treasury stock

Common stock
Treasury stock38

April 1, 2012
204,000
1,001

Increase–
9

Decrease––

March 31, 2013
204,000
1,010

April 1, 20112012
Number of shares(Thousands)
Increase
Decrease

March 31, 2012

212,000
8,992

–
9

8,000
8,000

204,000
1,001

22
Nippon Shokubai Co., Ltd. Annual Report 2013

13. Research and Development Costs
Research and development costs included in cost of sales and selling, general and administrative expenses for theyears ended March 31, 2013 and 2012 totaled ¥11,441 million ($121,648 thousand) and ¥11,938 million,
respectively.
14. Gain on Insurance Claims
During the year ended March 31, 2013, the Company received insurance proceeds in the amount of ¥8,231
million ($87,517 thousand) related to the explosion and fire at the Himeji factory on September 29, 2012.
During the year ended March 31, 2012, a domestic consolidated subsidiary received insurance proceeds
related to a loss suffered due to the Great East Japan Earthquake in the amount of ¥716 million and an overseas
consolidated subsidiary received insurance proceeds related to a loss suffered due to fire at a factory in theamount of ¥389 million.
15. Loss on Explosion and Fire Accident
Loss on explosion and fire accident in the amount of ¥8,882 million ($94,439 thousand) is mainly factory fixed
costs due to business suspension resulting from the explosion and fire at the Himeji factory on Sep 29, 2012.
16. Other Comprehensive Income
The following table presents reclassification adjustments and tax effects of components of other comprehensive
income (loss) for the years ended March 31, 2013 and 2012:2013
Unrealized holding income (loss) on securities:
Amount arising during the year
Reclassification adjustments
Before tax effects
Tax effects
Net unrealized holding income (loss) on
securities
Deferred gain on hedges:
Amount arising during the year
Tax effects
Net deferred gain on hedges
Translation adjustments:
Amount arising during the year
Other comprehensive income (loss) of equity
method affiliates attributable to the Company:
Amount arising during the year
Total other comprehensive income (loss)

2012

2013
(Thousands of
U.S. dollars)¥$(Millions of yen)
¥

¥

2,211
0
2,211
(725)

(1,576)(6)(1,582)580

23,5090
23,509(7,709)1,486(1,002)15,800

5
(2)
3

2
(1)
1

53
(21)
32

3,911

(1,544)

41,584

1,736
7,136

¥

(365)
(2,910)$18,45975,875

17. Supplemental Information to Consolidated Statement of Cash Flows
During the year ended March 31, 2012, the Company acquired shares of Nihon Polymer Industries Co., Ltd. andincluded it in the scope of consolidation. Assets acquired and liabilities assumed of this subsidiary at the dateof commencement of consolidation, acquisition cost of shares and proceeds from purchase of shares are
summarized as follows:

23
Annual Report 2013 Nippon Shokubai Co., Ltd.

39

2012

(Millions of yen)
Current assets
Property, plant and equipment
Negative goodwill
Current liabilities
Long-term liabilities
Minority interests

¥

4,421
1,671
(8)
(3,586)
(721)
(713)
(893)

Acquisition cost of shares the Company purchased previously
Acquisition cost of shares of Nihon Polymer Industries Co., Ltd.

171
353

Cash and cash equivalents
Proceeds from purchase of investments
Nihon Polymer Industries Co., Ltd.

¥

182

18. Leases
The following pro forma amounts represent the acquisition cost, accumulated depreciation and net book value of
property leased to the Company and its domestic consolidated subsidiaries at March 31, 2013 and 2012 which
would have been reflected in the accompanying consolidated balance sheets if finance leases, other than thosewhich transfer the ownership of the leased assets to the Company or its domestic consolidated subsidiaries, thatstarted on or before March 31, 2008 (which are currently accounted for as operating leases) had been capitalized:
2012

2013

2013
(Thousands of
U.S. dollars)(Millions of yen)Equipment:
Acquisition costs
Accumulated depreciation/amortization
Net book value

¥ 640
(313)
¥ 327

¥

564
(303)
¥ 261

$

5,997
(3,222)$ 2,775

Lease payments of the Company and its domestic consolidated subsidiaries relating to finance leases amounted
to ¥66 million ($702 thousand) and ¥94 million for the years ended March 31, 2013 and 2012, respectively.
Depreciation on these leased assets calculated by the straight-line method would have amounted to ¥66 million($702 thousand) and ¥94 million for the years ended March 31, 2013 and 2012, respectively, if it had beenreflected in the accompanying consolidated balance sheets.
Future minimum lease payments (including the interest portion thereon) subsequent to March 31, 2013
under finance lease transactions, other than those which transfer the ownership of the leased assets to theCompany or its domestic consolidated subsidiaries, that were entered into on or before March 31, 2008 aresummarized as follows:Year ending March 31,
20142015 and thereafter(Millions of yen)
¥

59
202
¥ 261

(Thousands of
U.S. dollars)
$
$

627
2,148
2,775

19. Contingent Liabilities
At March 31, 2013, the Company and one consolidated subsidiary were contingently liable as guarantors ofindebtedness of an affiliate in the aggregate amount of ¥1,995 million ($21,212 thousand). However, ¥903
million ($9,601 thousand) of ¥1,995 million ($21,212 thousand) was re-guaranteed by Arkema Delaware Inc.
In addition, at March 31, 2013, two consolidated subsidiaries had contingent liabilities arising from notes
discounted with banks and notes endorsed in the aggregate amount of ¥426 million ($4,530 thousand).

40

24
Nippon Shokubai Co., Ltd. Annual Report 2013

20. Amounts per Share2013
Net income
Cash dividends
Net assets

¥

2012

2013
(U.S. dollars)

104.7122.00
1,006.48

$

(Yen)
¥

41.38
16.00
1,059.85

0.44
0.17
11.27

Net income per share has been computed based on the net income available to shareholders of common stockand the weighted-average number of shares of common stock outstanding during the year. Diluted net income
per share has not been presented for the years ended March 31, 2013 and 2012 since neither the Company nor
any of the consolidated subsidiaries had any potentially dilutive shares at March 31, 2013 and 2012.
The amounts per share of net assets have been computed based on the number of shares of common stock
outstanding at the year end.
Cash dividends per share represent the cash dividends declared as applicable to the respective years
together with the interim cash dividends paid.
The financial data used in the computation of net income per share for the years ended March 31, 2013
and 2012 is summarized as follows:
2012

2013
Net income
Deductions from net income
Adjusted net income available to shareholders ofcommon stock¥(Millions of yen)¥
21,257
8,401
–
–

¥

8,401

Weighted-average number of shares of common
stock outstanding during the year (thousands ofshares)¥2013(Thousands of
U.S. dollars)$
89,325–

21,257$89,325203,003

202,995

21. Derivatives(1) Derivative transactions to which hedge accounting is not applied
Derivative transactions to which hedge accounting is not applied as of March 31, 2013 and 2012 aresummarized as follows:
Millions of yen
2013

Type

Over-the-countermarketTransaction

Contract value
Maturing within
Maturing after
one year
one year

Fair value

Loss

Forward foreign
currency exchange
contracts:
Sell

¥11

¥

–

¥

(1)

¥

(1)

Millions of yen
2012

Type

Over-the-countermarketTransaction

Contract value
Maturing within one Maturing afteryear
one year

Fair value

Loss

Forward foreign
currency exchange
contracts:
Sell

¥

27

¥

–

¥

(0)

¥

(0)

25
Annual Report 2013 Nippon Shokubai Co., Ltd.

41

Type

Transaction

Over-the-countermarketThousands of U.S. dollars
2013
Contract value
Maturing within one
Maturing afteryear
one year
Fair value

Loss

Forward foreign
currency exchange
contracts:
Sell

$

117

$

–

$

(11)

$

(11)

(2) Derivative transactions to which hedge accounting is applied
The estimated fair value of the derivatives positions outstanding which qualify for deferral hedge
accounting as of March 31, 2013 and 2012 are summarized as follows:
Currency-related transactions

Method of hedge
accounting

Deferral hedge

Allocation
methodTransaction

Buy
Forward foreign
currency exchange
contracts:
Sell

Method of hedge
accounting

Transaction

42

Accounts payable, trade¥

Accounts receivable,
trade
Accounts payable, trade

1,114
19

Major hedged item

18

¥

–

¥

–
–

Millions of yen
2012
Contract value
Maturing
within one
Maturing afteryear
one year

2

(*)
(*)

Fair value

Forward foreign
currency exchange
contracts:
Buy

Allocation
methodFair value

Forward foreign
currency exchange
contracts:

Buy

Deferral hedge

Major hedged item

Millions of yen
2013
Contract value
Maturing
within one
Maturing afteryear
one yearAccounts payable, trade

¥

56

¥

37

¥

(3)

Forward foreign
currency exchange
contracts:
Sell

Accounts receivable,
trade

Buy

Accounts payable, trade

8,278

–

(*)

19

–

(*)

26
Nippon Shokubai Co., Ltd. Annual Report 2013

Thousands of U.S. dollars
2013
Contract value
Method ofhedge
accounting

Deferralhedge

Allocation
methodTransaction

Major hedged item

Maturing within one
year

Maturing after
one year

Fair value

Forward foreign
currency exchange
contracts:
Buy

Accounts payable,
trade

Forward foreign
currency exchange
contracts:
Sell
Buy

$

Accounts receivable,
trade
Accounts payable,
trade

191

$

–

$

21

11,845

–

(*)

202

–

(*)

Fair value of forward foreign currency exchange contracts is computed using prices provided bycounterparty financial institutions.
(*) Fair value of forward foreign currency exchange contracts under the allocation method is included inaccounts receivable, trade or accounts payable, trade.
Interest-rate related transactions

Method of hedge
accounting
Swap rates
applied tounderlying debt

Method of hedge
accounting
Swap rates
applied tounderlying debt

Method of hedge
accounting
Swap rates
applied tounderlying debt(*)

Transaction
Interest rate swaps:
Receive / floating andpay / fixedTransaction
Interest rate swaps:
Receive / floating andpay / fixedTransaction
Interest rate swaps:
Receive / floating andpay / fixed

Major hedged item
Long-term debt,
including current
portionMillions of yen
2013
Contract value
NotionalMore thanamountone year¥ 5,000

Major hedged item
Long-term debt,
including current
portionMillions of yen
2012
Contract value
NotionalMore thanamountone year¥ 100

Major hedged item
Long-term debt,
including current
portion¥–¥–Fair value(*)

Fair value(*)

Thousands of U.S. dollars
2013
Contract value
NotionalMore thanamountone year
Fair value$ 53,163$–(*)

Because interest rate swap agreements are accounted for by applying swap rates to underlying long-term debt,
their fair value is included in that of the long-term debt disclosed in Note 4.

22. Segment Information(1) Outline of reporting segments
The Group’s reporting segments are divisions of the Group for which separate financial information is27
Annual Report 2013 Nippon Shokubai Co., Ltd.

43

available, and whose operating results are reviewed regularly by the Board of Directors meeting of theCompany in order to allocate management resources and assess performance of operations.
The Group’s main business lines are divided based on similarities of function and nature and theCompany prepares the comprehensive strategy and conducts the business activities corresponding to the
products handled by each business line.
Accordingly, the Group has three reporting segments based on product family: Basic chemicals,
Functional chemicals, and Environment and catalysts.
Basic chemicals:
Acrylic acids, acrylic ester, ethylene oxides, ethylene glycols, ethanolamine, higher-alcohol and glycol
ether
Functional chemicals:Superabsorbent polymers, pharmaceutical intermediates, polymer for concrete admixture, electronic andinformation materials, iodine, maleic anhydride, resins for adhesives and paints, plastic molded products
and process adhesive products
Environment and catalysts:
Automotive catalysts, De-NOx catalysts, dioxin decomposition catalysts, industrial catalysts, exhaust gas
treatment equipment and fuel cell material(2) Calculation methods used for sales, income or loss, assets, and other items on each reporting segment.
The accounting policies of the segments are substantially the same as those described in the significant
accounting policies in Note 1. Intersegment sales and transfers are recorded at the same prices used intransactions with third parties.
(3) Information as to sales, income or loss, assets, and other items on each reporting segment
The segment information of the Company and its consolidated subsidiaries for the years ended March 31,
2013 and 2012 is outlined as follows:Year ended March 31, 2013
Basic chemicals

Functional
chemicals

Environmentand catalysts

Total

Adjustments
andeliminations

Consolidated(Millions of yen)
Sales and operating income:Sales to third parties¥

Intragroup sales and transfers
Net sales
Segment income
Segment assets
Other items:
Depreciation and amortization
Amortization of goodwill
Increases in property, plant andequipment and other assets

44

113,862¥

137,012¥

18,646¥

269,520¥–¥

269,520

20,132

1,263

1,649

23,044(23,044)–

133,994

138,275

20,295292,564(23,044)

269,520¥

2,097
134,056¥

6,779
149,257¥

1,431
23,742¥

10,307
307,055¥(273)
45,318¥10,034352,373

¥

8,634
468

¥

6,920
1

¥

556
–

¥

16,110
469

¥

–
–

¥

16,110469

13,33415,858350

29,542–29,54228
Nippon Shokubai Co., Ltd. Annual Report 2013

Year ended March 31, 2012
Basic
chemicals

Functional
chemicals

Environmentand catalysts

Total

Adjustments
andeliminations

Consolidated¥¥(Millions of yen)
Sales and operating income:Sales to third parties¥

Intragroup sales and transfers

136,562
35,337¥¥

23,3801,880

162,373

171,899

Net sales
Segment income
Segment assets
Other items:
Depreciation and amortization
Amortization of goodwill
Increases in property, plant andequipment and other assets

160,762
1,611¥

25,260320,704
38,828359,532–(38,828)(38,828)

320,704–
320,704¥

13,387
137,775¥

16,526
159,104¥

1,671
23,657¥31,584
320,536¥(484)
35,871¥

31,100356,407

¥

9,398
468

¥

7,554
13

¥

504
–

¥

17,456
481

¥

–
–

¥

17,456481

8,129

14,247

1,664

24,040Year ended March 31, 2013
Basic
chemicals

Functional
chemicals

Environmentand catalysts

Total

–

24,040Adjustments
andeliminations

Consolidated(Thousands of U.S. dollars)
Sales and operating income:Sales to third parties$

Intragroup sales and transfers
Net sales
Segment income
Segment assets
Other items:
Depreciation and amortization
Amortization of goodwill
Increases in property, plant andequipment and other assets

Note:

1,210,654 $
214,056

1,456,800
13,429$198,256
17,533$2,865,710 $
245,018–(245,018)$

2,865,710–

1,424,710

1,470,229

3,110,728(245,018)$

22,297 $1,425,370

72,0791,586,996$

15,215
252,440$

109,591 $
3,264,806(2,903)481,850$

106,688
3,746,656$

91,802 $
4,976

73,578
11

$

5,912
–

$

171,292 $
4,987

–
–

$

171,292
4,987

141,776

168,613314,110–215,789

3,721

2,865,710

314,110

The adjustments in segment income are related to the elimination between inter segment transactions. The
adjustments in segment assets consist of inter segment elimination and the common properties of the group. The
common properties are the investments held by the Company, mainly cash and cash equivalents, and investments insecurities.
The amount of long-term prepaid expense and its amortized cost are included in increases in property, plant andequipment and other assets.

Note:(4) Related information
Geographical information
1)

Sales
Sales categorized by countries and regions based on locations of customers of the Group for the years
ended March 31, 2013 and 2012 are summarized as follows:

Japan
¥

144,176

Asia
¥

Japan
¥

175,316

Millions of yen
2013
EuropeAmericas54,519¥60,308¥21,376¥

Millions of yen
2012
EuropeAmericasAsia¥

39,038Other¥

35,844¥29,944

10,411

Total
¥

Other
¥

19,292

269,520

Total¥

320,704

29
Annual Report 2013 Nippon Shokubai Co., Ltd.

45

Japan$1,532,972

Thousands of U.S. dollars
2013
EuropeAmericasAsia$

579,681$415,077$

Other

227,283$

Total

110,697$

2,865,710“Asia” includes east and south-east Asia. “Americas” includes U.S.A. and Canada.
includes areas except for Asia, Europe, North America and Japan.
2)“Other”

Property, plant and equipment
Property, plant and equipment categorized by countries and regions as of March 31, 2013 and 2012 issummarized as follow:

Japan
¥

Millions of yen
2013
EuropeAsia

100,631¥

23,757

¥

Other

4,012

¥

Total

10,101¥

138,501

Millions of yen
2012
Japan
¥

Asia

101,635¥

Europe

9,945

¥

Other

3,928

¥

Total

7,218

¥

122,726

Thousands of U.S. dollars
2013
Japan
$

1,069,973$

Asia

Europe252,600$(5) Information of loss on impairment

Other

42,658

Total$107,401$

1,472,632

Millions of yen
2013

Basic
chemicals¥–

Loss on impairment

Reporting segments
Functional
Environment andchemicals
catalysts¥–

Adjustments andeliminations

Total

¥ 89

¥ 89

Adjustments andeliminations

Total

¥ 280

¥ 280

Adjustments andeliminations

Total

$ 946

$ 946

¥–
Millions of yen
2012

Basic
chemicals
Loss on impairment¥–

Reporting segments
Functional
Environment andchemicals
catalysts¥–¥–
Thousands of U.S. dollars
2013

Basic
chemicals
Loss on impairment

46$–

Reporting segments
Functional
Environment andchemicals
catalysts
$–

$–

30
Nippon Shokubai Co., Ltd. Annual Report 2013

(6) Information of amortization and remaining balance of goodwill

Millions of yen
2013

Reporting segments
Functional
Environment andchemicals
catalysts

Basicchemicals

Adjustments andeliminations

Total

Amortization during the
year

¥ 468

¥

1

¥–

¥–

¥ 469

Remaining balance

¥ –

¥

–

¥–

¥–

¥

–

Millions of yen
2012
Basic
chemicals
Amortization during theyear
Remaining balance

¥
¥

468
468

Basic
chemicals
Amortization during theyear
Remaining balance

$
$

4,976
–

Reporting segments
Functional
Environment andchemicals
catalysts¥ 13¥ –Adjustments andeliminations

¥–
¥–

Total

¥–
¥–

¥
¥

Thousands of U.S. dollars
2013
Reporting segments
Functional
Environment andAdjustments andeliminations
chemicals
catalysts
$
$

11
–

$
$

–
–

$
$

481
468

Total

–
–

$
$

4,987
–

23. Related Party Transactions
Principal transactions between the Company and its related party for the years ended March 31, 2013 and 2012
are summarized as follows:
2013
2012
2013
(Thousands of
U.S. dollars)(Millions of yen)
Umicore Shokubai Co., Ltd.:Sales of finished goods
Purchases of raw materials

¥

6,318
4,735

¥

–
–

$

67,17750,346

ICT Co., Ltd.:––Sales of finished goods
Purchases of raw materials––

16,515
14,265The balances due from and to its related party at March 31, 2013 and 2012 were as follows:
2013
Umicore Shokubai Co., Ltd.:
Notes and accounts receivable
Notes and accounts payable
ICT Co., Ltd.:
Notes and accounts receivable
Notes and accounts payable

2012(Millions of yen)

¥

5,821
2,970
–
–

¥

–
–
5,102
3,157

2013

(Thousands of
U.S. dollars)$

61,89331,579––31
Annual Report 2013 Nippon Shokubai Co., Ltd.

47

The prices for the above related party transactions were determined in reference to market value and cost.
During the year ended March 31, 2013, the Company acquired 40% of the shares in the wholly-owningparent company of Umicore Shokubai Co., Ltd. Consequently, the Company indirectly owns 40% of shares of
Umicore Shokubai Co., Ltd. Umicore Shokubai Co., Ltd. took over operations of ICT Co., Ltd. during 2012.
ICT Co., Ltd., which had been 50% owned by the Company, was liquidated in December 2012 and was
excluded from the scope of equity method application from the year ended March 31, 2013.
24. Subsequent Event
The following distribution of retained earnings of the Company, which has not been reflected in theaccompanying consolidated financial statements for the year ended March 31, 2013, was approved at ashareholders’ meeting held on June 20, 2013:
Cash dividends (¥5.00 = $0.053 per share)48(Millions of yen)(Thousands of
U.S. dollars)¥ 1,015$ 10,792

32
Nippon Shokubai Co., Ltd. Annual Report 2013

Annual Report 2013 Nippon Shokubai Co., Ltd.

49

Corporate Data

NIPPON SHOKUBAI CO., LTD.
(As of March 31, 2013)

Established: 21st August, 1941
Common Stock (Paid in Capital): ¥25,038 million
Number of Shares Issued: 204 million SHS
Number of Shares Authorized: 636 million SHS
Number of Employees: 1,986 (3,938 Consolidated)
Markets listed: Tokyo Stock Exchange; Securities Code:4114;
	‌ADR(The Bank of New York Mellon Bank);
Checker Symbol: NPSHY	‌Since 16th July, 2013 Osaka Stock
Exchange stopped dealing common stocks

Fiscal Year Ends: 31st March
Auditors: Ernst & Young Shin Nihon LLC
Lead Managers (Securities) :‌‌Nomura Securities Co., ltd.,
Mizuho Securities Co., Ltd.
Stock Transfer Agency: ‌Mitsubishi UFJ Trust and Banking
Corporation
Banks: ‌‌Resona Bank, Limited, Mizuho Bank, Ltd., Bank ofTokyo-Mitsubishi UFJ
Number of shareholders: 13,513

Organization Chart(As of March 31, 2013)(Divisions)Internal Audit Office
Corporate Planning
General Administration & Personnel
Purchasing & Logistics
Finance & Accounting
Information Technology
Management Office
Investor & Public Relations
Responsible Care
Production
Engineering
Overseas Project
ResearchResearch Planning & Development
Ethylene Oxide Business

The Board

President
Corporate Managing
Committee

Acrylic Business
Fine & Performance
Chemicals Business
E & I Materials Business
Catalysis & Green Energy
Materials Business
Kawasaki Plant
Himeji Plant
Suita Plant

AuditorBoard of Auditors

50

Nippon Shokubai Co., Ltd. Annual Report 2013

Auditor OfficeMajor Shareholders(As of March 31, 2013)
Shareholdings
Name of Shareholders

by Number(thousand SHS)

by Ratio(%)

Sumitomo Chemical Company, Limited

19,484

9.59

JX Holdings, Inc.

10,645

5.24

Resona Bank, Ltd.

6,867

3.38

National Mutual Insurance Federation of Agricultural
Cooperatives

6,540

3.22

Sanyo Chemical Industries, Ltd.

6,338

3.12

The Master Trust Bank of Japan ,Ltd. (Trustee A/C)

5,011

2.46

Mizuho Corporate Bank, Ltd.

4,744

2.33

Japan Trustee Services Bank, Ltd. (Trustee A/C)

4,587

2.25

Toyo Ink SC Holdings Co., Ltd.

4,522

2.22

THE BANK OF NEW YORK, TREATY JASDEC ACCOUNT

3,918

1.93

Other Corporate
Shareholders
14.0%

Financial
Institutions
27.7%

Stock
Brokers
0.9%

Foreign
Institutions, etc
26.2%

Other Corporate
Shareholders
31.2%

1. The Company holds 1,010 thousands shares of treasury stock.
2. Shareholding ratio excludes the treasury stock.
3. Numbers are round down for above table.

Share Price and Turnover (April 2011- September 2013)
Share Price
(¥)

1,200

1,000

800

600
Trading volume(Thousand shares)

60,00030,000

0

4
2011

6

8

10

12

2
2012

4

6

8

10

12

2
2013

4

6

8

Annual Report 2013 Nippon Shokubai Co., Ltd.

51

Subsidiaries & AffiliatesJapan
NIPPOH CHEMICALS CO., LTD.

Manufacture and sale of iodine, intermediates for API and agro-chemicals,
and photo/electro chemicals

CHUGOKU KAKO CO., LTD.

Manufacture and sale of adhesive tapes and fine sphere particles

Nisshoku Butsuryu Co., Ltd.

Logistics of chemical products

NIPPON NYUKAZAI CO., LTD.

Manufacture and sale of surfactant and other chemicals

NIPPON POLYESTER CO., LTD.

Manufacture and sale of plastic products for construction, housing, and so on

Tokyo Fine Chemical CO., LTD.

Manufacture and sale of stabilizer of vinyl chloride resin and anti-freeze

NIHON JYORYU KOGYO CO., LTD

Manufacture and sale of polycyclic aromatic hydrocarbons, (meth)acrylicacid derivatives and photo/electro chemicals

NIPPON SHOKUBAI TRADING CO., LTD.

Sale of chemical products

NIPPON POLYMER IND. Co., Ltd.

Manufacture and sale of acrylic emulsions

Japan Composite Co., Ltd.*1

Manufacture and sale of unsaturated polyester resins and plastic moldedmaterials*1

NS Green Co., Ltd.*2

Maintenance of green tract of land of plant site

NISSHOKU ENGINEERING SERVICE CO., LTD.

Design, construction, repair and maintenance of production facilities

NIHON METHACRYL MONOMER CO. LTD.*3

Manufacture and sale of MAA and MMA

CATOX Co., Ltd.*3

Development and sale of plant control systems*2

Umicore Shokubai Japan Co. Ltd*3

Manufacture, R&D and sale of automotive catalysts

Overseas
NA Industries, Inc.

Manufacture and sale of superabsorbent polymers, polymers for concrete
admixture and water soluble polymers

SINGAPORE ACRYLIC PTE LTD

Manufacture and sale of crude acrylic acid

PT.NIPPON SHOKUBAI INDONESIA

Manufacture and sale of acrylic acid and acrylic esters

NIPPON SHOKUBAI (ASIA) PTE.LTD.

Manufacture glacial acrylic acid, Sale of chemical products

NIPPON SHOKUBAI EUROPE N.V.

Manufacture and sale of superabsorbent polymers

NISSHOKU CHEMICAL INDUSTRY(ZHANGJIAGANG) CO., LTD.

Manufacture and sale of superabsorbent polymers, polymers for concrete
admixture

SINO-JAPAN CHEMICAL CO.,LTD*4

Manufacture and sale of surfactant and other chemicals

LG MMA Corporation*1

Manufacture and sale of MAA , MMA and PMMA

American Acryl NA,LLC

Management of American Acryl L.P.

American Acryl L.P.*1

Manufacture and sale of acrylic acid

*1

NISSHOKU TRADING (SHANGHAI) CO., LTD*2

Sale of chemical products

Umicore Shokubai S.A.

Management of automotive catalysts business*3

52

Nippon Shokubai Co., Ltd. Annual Report 2013

Directory

Board of Directors and Corporate Auditors
Member of the Board, President
Masanori Ikeda
Member of the Board, Senior Managing
Executive Officer
Yosuke Ogata
Yasuhito Nishii
Member of the Board, Managing
Executive Officer
Haruhisa Yamamoto
Masao Yamamoto
Yojiro Takahashi

Member of the Board
Hidetoshi Nakatani
Kouichi Miura
Statutory Corporate Auditor
Shin-ichi Uchida
Masakazu Onishi
Kozo Arao
Akira Omachi
Managing Executive Officer
Hidetaka Yatagai
Koichiro Yamada

HEAD OFFICE
Osaka Office
Kogin Bldg., 4-1-1 Koraibashi, Chuoku, Osaka 541-0043 Japan
TEL +81-6-6223-9111
FAX +81-6-6201-3716
Tokyo Office
Hibiya Dai Bldg., 1-2-2 Uchisaiwai-cho,
Chiyoda-ku, Tokyo 100-0011 Japan
TEL +81-3-3506-7475
FAX +81-3-3506-7598
Kawasaki Plant and Kawasaki
Research Center[Chidori Plant]
14-1 Chidori-cho, Kawasaki-ku,
Kawasaki, Kanagawa 210-0865 Japan
TEL +81-44-288-7366[Ukishima Plant]
10-12 Ukishima-cho, Kawasaki-ku,
Kawasaki, Kanagawa 210-0862 Japan
TEL +81-44-288-5715

Executive Officer
Kenji Rakutani
Nobuyuki Harada
Takehiro Takashima
Takumi Hatsuda
Kin-ya Nagasuna
Yujiro Goto
Masaya Yoshida

Research Centers
Suita Plant and Suita ResearchCenter
5-8 Nishi Otabi-cho, Suita, Osaka 5648512 Japan
TEL +81-6-6317-2202 (Plant)+81-6-6317-2251 (Research Center)
Tsukuba Research Center
1-25-12 Kannondai, Tsukuba, Ibaraki
305-0856 Japan
TEL +81-29-838-2561
Overseas Office
Korea Office
4F SH Energy Bldg., 26, Hwangsaeulro 200beon-gil, Bundang-gu,
Seongnam-si, Gyeonggi-do 463-825
Korea

Strategic Technology ResearchCenter (Suita, Himeji)
Advanced Materials ResearchCenter (Suita, Himeji)
GSC Catalyst Technology ResearchCenter (Suita, Himeji, Kawasaki,
Tsukuba)Superabsorbents Research Center(Himeji)Fine & Specialty Chemicals ResearchCenter (Suita, Kawasaki)
E&I Performance Materials ResearchCenter (Suita, Himeji, Tsukuba)
Process Technology Center (Himeji,
Suita)

Himeji Plant and Himeji ResearchCenter992-1 Aza-Nishioki, Okihama, Aboshiku, Himeji, Hyogo 671-1282 Japan
TEL +81-79-273-1131 (Plant) +81-79273-1145 (Research Center)

Annual Report 2013 Nippon Shokubai Co., Ltd.

53

NIPPON SHOKUBAI CO., LTD.
Osaka Office
Kogin Bldg.
4-1-1 Koraibashi, Chuo-ku,
Osaka 541-0043, Japan
Telephone +81-6-6223-9111
Facsimile +81-6-6201-3716
Tokyo Office
Hibiya Dai Bldg.
1-2-2 Uchisaiwai-cho, Chiyoda-ku,
Tokyo 100-0011, Japan
Telephone +81-3-3506-7475
Facsimile +81-3-3506-7598
Securities Code 4114
URL http://www.shokubai.co.jp