ANNUAL REPORT
Providing affluence and comfort to people and society, with our unique technology

Profile
Basic Corporate Vision
NIPPON SHOKUBAI CO., LTD. has been undertaking numerous eﬀorts
to build a more solid business structure and gain a sharper competitive edge
to keep pace with rapid changes in the world, under its corporate philosophy
of "TechnoAmenitiy", which means providing aﬄuence and comfort to people
and society, with our unique technology, and the following management
philosophy：

Management Philosophy
1. We will conduct all of our corporate activities based upon a deep
respect for humanity.
2. We will aim at coexisting with society, and working in harmony withthe environment.
3. We will pursue innovative technology.
4. We will operate on the global stage.

Business Fields

such as automotive catalysts, process catalysts, De-NOx catalysts and dioxin
Financial Highlights..............................1
To Our Shareholders............................2
Review of Operations............................4
Medium- and Long-term
Business Plans.............................6
Corporate Governance..........................8
Topics.................................................... 10
Management Indices............................ 11
Financial Section
Report of Independent Auditors... 13
Consolidated Balance Sheets.......... 14
Consolidated Statements ofOperations................................. 16
Consolidated Statements of
Changes in Net Assets.............1 7
Consolidated Statements ofCash Flows................................ 20
Notes to Consolidated
Financial Statements................ 22
Coporate Data...................................... 43

decomposition / elimination equipments, etc.

Financial Highlights

Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Year ended March 31,

2010

2009

（ Millions of Yen）

Net sales
Operating Income
Ordinary Income
Net Income（ loss）

2010（ Thousands of U.S. dollars）¥ 244,317
13,881
14,934
10,832¥289,102622
757（5,307）

US＄ 2,625.935
149.194160.512116.423¥ 310,946
163,781¥ 302,948
151,662

US＄ 3,342.068
1,760.329
U.S. dollars

Yen¥ 60.85
14.00¥（29.61）
15.50

US＄

0.65
0.15

93.04

289
244
10.8

14.9
4.9

0.8
'06

'07

'08

'09

'10

'06

'07

'08

'09

0.2
'10

'06

'07

'08

'09

'10

5.3

1

To Our Shareholders
It gives me pleasure to report on the performance of
NIPPON SHOKUBAI GROUP（ the“Company”）for the ﬁscal
year ended March 31, 2010.

Overview
The Japanese economy in the ﬁscal year under review
showed some signs of a pick up in production due to arecovery in exports, but the outlook remained uncertain
due to harsh employment conditions, and sluggish capital
investment and personal consumption.
In the chemicals industry, demand continued to recoverin China and other emerging markets, but the businessenvironment remained harsh overall due to the yen's
appreciation, stagnant domestic demand, and rising raw
materials prices.
In this business environment, the Group's
consolidated net sales declined 15.5% year-over-year to244,317 million yen（ －44,786 million yen）in the ﬁscal year
under review.
The sales volumes of most products increased,
but product prices declined due to a decrease in raw

2

To Our Shareholders

materials prices and slack in the supply-demand balance

and ask all of our shareholders for your continued support

among other factors.

and guidance as we move forward.
June 2010

As for profits, operating income increased 13,260
million yen year-over-year to 13,881 million yen in theﬁscal year under review. Despite a narrowing of spreads（ product prices fell by more than raw materials prices）, profitability improved due to cost reductions and anincrease in production and sales volumes among otherfactors. Also, large inventory valuation losses booked lastﬁscal year were absent in the ﬁscal year under review.
Ordinary income increased 14,177 million yen yearover-year to 14,934 million yen in the fiscal year underreview as net of non-operating income/expenses rose
918 million yen due to a decline in foreign exchange
losses and an increase in earnings from equity-method
investments among other factors. Net income increased
16,139 million yen year-over-year to 10,832 million yen in
the ﬁscal year under review, moving back into the black,as extraordinary income/loss improved 6,001 million
yen due to a decline in loss on valuation of investment
securities among other factors.
We would like to express our sincere appreciation

Performance Highlights
Year endrd March 31,

Net sales
Operating income
Ordinary income
Net Income（ loss）
Net income per share
ROA
ROE
Exchanging rate
Naphtha price2010

244,317
13,881
14,934
10,832￥ 60.85
4.9%
7.0%$=￥92.88
EUR=￥131.14￥41,200/kl

2009

289,102622
757（ 5,307）（ ￥ 29.61）
0.2%（ 3.3%）＄=￥100.58
EUR=￥143.66￥ 58,900/kl（ 44,786）

13,26014,177
16,139￥ 90.46（ 15.5％）____4.7points
10.3points（ ￥7.70）（ ￥12.52）（ ￥ 17,700/kl）

3Review of Operations
Performance by Business Segment

for adhesive/paints decreased due to a decline in sales

Basic Chemicals

volumes and a decline in selling prices from lower raw

Sales of acrylic acid, acrylates, ethylene oxide, andmaterials prices among other factors.
Sales of processed adhesive products stood at thehigher alcohol decreased, despite an increase in sales
volumes, due to a decline in selling prices from lower raw

same level of the previous ﬁscal year.
Sales of specialty acrylates and resin modifiers

materials prices among other factors.
Sales of ethylene glycol decreased, despite an increase

increased, despite a decline in selling prices from lower

in sales volumes, due to a decline in selling prices fromraw materials prices among other factors, as exports

slack in the supply-demand balance among other factors.

drove an increase in sales volumes.

Sales of ethanolamine decreased due to a decline insales volumes and selling prices on stagnant demand.
In summary, sales in the basic chemicals segment

Sales of electronic and information materials
increased due to an increase in sales volumes of opticalﬁlm materials and other products.
Sales of iodine compounds increased due to an

decreased 15.8% year-over-year to 99,329 million yen.
Operating income increased 3,739 million yen year-

increase in sales volumes.

over-year to 5,328 million yen, despite a narrowing ofIn summary, sales in the functional chemicals

spreads, due to greater production and sales volumes,

segment decreased 6.0% year-over-year to 131,514 million

various cost reductions, and the absence of inventoryyen.
Operating income increased 11,056 million yen year-

valuation losses.

over-year to 9,161 million yen, moving back into theblack, despite a decline in the profitability of polymers
for concrete admixtures from lower production andsales volumes, due to various cost reductions, greater
production and sales volumes of superabsorbent polymers
Paints（ Acrylates）

Synthetic Detergents（ SOFTANOL）

and electronic and information materials, and the absenceof inventory valuation losses.

Functional Chemicals
Sales of superabsorbent polymers decreased, despite
an increase in sales volumes, due to a decline in selling
prices from lower raw materials prices among otherfactors.
Sales of polymers for concrete admixtures, maleic

Diapers（ Superabsorbent polymer）

Flat Panel Display（ Electronic Information
associated Materials）

2009

Changeanhydride, raw materials for detergents, and resins

Performance by Business Segment
2010（ Year ended March 31,）Net Sales
Operating income（ loss）

4

99,3295,328

131,514
9,161

13,473（ 645）

117,902
1,589

139,862（ 1,895）

31,338
1,222（ 18,573）

3,739（ 8,348）

11,056（ 17,865）（ 1,867）

Review of Operations

Environment & Catalysts

yen in the current ﬁscal year.

Sales of automotive catalysts decreased sharply due

Operating income decreased 1,867 million yen year-

to a decline in sales volumes and a decline in selling prices

over-year to a loss of 645 million yen due to a large

on falling precious metal prices.

impact from the decline in production and sales volumesof process catalysts.

Sales of process catalysts, De-NOx catalysts, andemission detoxification catalysts decreased due to a
decline in sales volumes.
S a l e s o f d io xi n d ec o mp o s i ti o n c a t al ys t s a nd
equipment increased due to a rise in new projects.
In summary, sales in the environment & catalysts
segment decreased 57.0% year-over-year to 13,473 million

Performance by Regions

million yen, despite higher sales volumes of polymers forJapan

concrete admixtures, superabsorbent polymers, acrylic

173,912 million yen, despite an increase in sales volumes

lower raw materials prices among other factors.

acid and acrylates, due to a decline in selling prices from

Sales in Japan decreased 18.3% year-over-year to

on a gradual recovery in demand, due to a large impact

Operating income returned to the black, rising to 901

from a decline in product prices on lower raw materials

million yen, despite a narrowing of spreads, due to a large

prices among other factors.

impact from greater production and sales volumes among
other factors.

Operating income increased 10,317 million yen year-

Other regions

over-year to 11,091 million yen, despite a narrowingof spreads, due to improved profitability from cost

Sales in other regions decreased 13.0% year-over-year

reductions and greater production and sales volumes, andto 13,906 million yen, despite an increase in sales volumes

the absence of inventory valuation losses.

of superabsorbent polymers, due to a decline in sales

Europevolumes of polymers for concrete admixtures and raw
materials for detergents, and a decline in selling prices

Sales in Europe decreased 4.5% year-over-year tofrom lower raw materials prices among other factors.

32,407 million yen, despite an increase in sales volumes ofOperating income returned to the black, rising tosuperabsorbent polymers, due to a decline in selling prices

127 million yen, despite a decline in the profitability offrom lower raw materials prices among other factors.
Operating income returned to the black, rising to 942

polymers for concrete admixtures and raw materials formillion yen, as widening spreads and greater production

detergents, due to a wider spread and greater production

and sales volumes improved profitability.

and sales volumes of superabsorbent polymers.

Asia
Sales in Asia decreased 8.8% year-over-year to 24,091

Performance by regions（ Year ended March 31,）Net Sales
173,912
Operating income（ loss） 11,091

2010

32,407942

2009

24,091901

13,906
127

212,782774

33,924（ 460）

Change26,40615,991 （ 38,870）（ 1,516） （ 2,316） （ 2,084）（ 64） （ 1,058） 10,317
1,402
965
1,185

5

Medium- and Long-term Business Plans
Challenges, Long-term Business Strategies, and Performance Targets
The NIPPON SHOKUBAI Group launched in FY3/07
its five-year long-term business plan“TechnoAmenity

long-term business plan. It will strive under these plans
for a rapid recovery and improvement in earnings.

V3”targeting growth through the expansion of its new

The new long-term business plan is firmly rooted

electronic and information（“E&I”） materials business.

in the Company's long-standing corporate philosophy

However, the Company produced its first loss everof “TechnoAmenity: providing value and comfort toin FY3/09 as rising raw materials prices weighed on

people and society, with our unique technology.”Under aprofitability and economies around the globe fell into

management philosophy ofrecession from the second half of 2008. Also, the Company

１）respecting human nature,

is far from reaching its targets for new products in terms

２）coexisting with society and working in harmonyof both sales and the ratio to overall sales.
In light of these conditions, the Company decided towith the environment,
３）creating innovative technology, andcreate new business targets one year ahead of schedule.

４）acting on the global stage, the Company seeks to

It has therefore formulated a new long-term businessbuild a more solid business structure and gain aplan“TechnoAmenity 2015”which sets out a long-term

sharper competitive edge to keep pace with rapid

management vision, coupled with a medium-term businesschanges in the world.

plan which provides a concrete action plan to realize the１）Outline of the Long-term Business Plan“TechnoAmenity 2015”
a. The slogan of the Company's long-term business plan is“Challenge to the future, make dreams come true”. The vision,
targets, and goal of the plan are to realize an ambitious future for the Group. This is a challenger’s declaration with aneye on the future, with returning to its founding spirit and resolving to continue ﬁghting to achieve results no matter how
diﬃcult the path.
b. Performance benchmark targets
The Company targets FY3/16 consolidated net sales of 400 billion yen, ordinary income of 30 billion yen, and ROA of 7.5%.
The performance benchmark targets it places particular importance on are proﬁt margins（ ROA, and the operating income
margin in each business segment）.
c. The Company's vision and target（ its ideal）for 2025 is“a chemical company providing new values through innovativetechnologies,”and also it sets level to attain in 2015. The following is its basic business strategy for achieving these;6Medium- and Long-term Business Plans

・Make the E&I materials business an earnings pillar

related materials.

by strengthening and enriching the product lineup

In the health and medical fields, it will obtain a certain

in markets the Company has already entered, andproduct group to maintain future development.

accelerating the launch of products in new markets.
・

As for existing businesses, the Company aims to・As for new businesses, the Company aims to establish astrengthen the competitiveness of its business of acrylic

ﬁrm position for itself as a fuel cell materials manufacturer

acids, ethylene oxide, and their derivatives by developingin the field of new energy, and bring to market new

innovative processes and lowering costs; further expand

materials for new fuel-related products. It also aims to

the possibilities for derivatives; and bring about adevelop green chemistry technologies such as biomass-

recovery and improvement in proﬁtability.

２）Outline of the Medium-term Business Plan
The Company targets FY3/13 consolidated net

thoroughness in corporate ethics, to promote‘responsible

sales of 330 billion yen（ including sales of new products

care’regarding the environment, safety, and quality, andlaunched to market within the past ﬁve years of 57 billion

to push forward with activities that contribute to societyyen）, ordinary income of 22 billion yen, and ROA of 6.3%

and environmental preservation activities in particular.

（ reference ﬁgure）.

Lastly, the Company steadfastly carries out its roleand mission while ensuring safe operations based on the

The Group also places the promotion of corporatesocial responsibility （ CSR ） at thefoundation of its

management to engage in corporate activities based onprinciple,‘safety takes precedence over production.’We
would like to ask all our shareholders for your continued
support for the future.

compliance and selfresponsibility, and intends to ensure

7

Corporate Governance
We are working to improve our corporate culture

to revitalize our board of directors, strengthen ourand strengthen our competitiveness in order to respondaudit system, improve the eﬃciency of our management

to global trends. Our approach to corporate governancestructure, and improve and strengthen our compliance

therefore establishes our foundation. Using the systemsystem.

illustrated in the following diagram, we are taking steps
Our Corporate Governance System (as of April 1, 2010)

General Meeting of Shareholders
Board ofCorporate Auditors
Reports

Board of Directors

AuditsPresident

Accounting
Auditors
Collaborates

Collaborates

Corporate Management
Committee
Legal
Advisors

Risk Management
Committee

AuditsProvidessupportCSR Management
Committee

Auditors’ Office

RC Promotion
Committee
Compliance
Committee

Internal Control
Committee

Internal
Audit
OfficeCorporate
Planning
Internal
audit

Consultation

GeneralAdministration& Personnel

Purchasing &Logistics

Finance &Accounting

Informational
Technology
Management
OfficeResearch
Planning &Development

Responsible
Care

Investor &Public Relations

Sales

Production

The Board, comprised of 9 members of the board

supervisory role of the Board, the Company started toincluding 1 from outside as of June 22, 2010,

utilize the corporate officer system from June 22, 2010.

deliberates and resolves the matter relating to theThis system separates the role of reaching decisions

execution of business operations, and supervises

involving management and supervising management, andthe execution of operation that the Board decided.

the role of executing business operations. The number

In principal, the Board convenes once a month,of corporate officers is 16（ 7 of those who serve as thechaired by the president, at which four corporate

director concurrently）.

auditors, including two from outside, are in attendance.
The corporate auditors present statement when

8

Corporate Management Committee, as an advisorydeemed necessary.

organ to the president, deliberates basic management

For the purpose of further speeding decision-making

policies, the matters related to the execution of important

involving management and reinforcing the managementbusiness operations. Agenda items that come up toCorporate Governancethis Committee and are regarded as important will be

quality throughout the entire life cycle of our products

forwarded to the Board for deliberation.

from the development to disposal. The Committee

The members of the Corporate Management Committee

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

are the president and corporate oﬃcers nominated by the

Promotion Basic Plan”to reinforce our RC more active.

president. In principal, the Committee convenes twice a

Moreover, Responsible Care Office implements plansmonth.

and internal audits on responsible care activities in eachdivision.

Board of Corporate Auditors is comprised offour corporate auditors, including two from outside. In

Compliance Committee, chaired by the president,

principle, the Board convenes once a month to report,

discusses and decides measures to enhance our

discuss and resolve important matters. In addition

companywide compliance management.

to attending the Board of Directors, the corporate
auditors attend the Corporate Management Committee

The Internal Control Committee concerning ﬁnancial

and other important meetings to monitor the decision

reporting, chaired by the president, discusses andmaking process, and grasp the execution of corporate

prepares for the highly eﬃcient Internal Control System

officers’operation, receive reports from the accounting

enforced by Financial Instruments and Exchange Law as

auditors, corporate officers and others, and put forward

of April 1st 2008, not only aim to ensure the reliability ofan audit opinion following due consultation.

the company’s ﬁnancial reporting, but also to ensure the

The two current Corporate Auditors from outside haveeffectiveness and efficiency of the company’s businessno personal or any other relationship through investments

activities.

that could create a conﬂict of interest in the performanceof their duties.

Legal Advisers provide their opinions for us whensolicited. None of the Legal Advisors is involved in the

Risk Management Committee, chaired by the

management of the Company.

president, explores and analyzes the risks surrounding
the Company. On the basis of the analysis, the Committee

Accounting Auditors perform their services underdiscusses the preventive measures or countermeasures

the Commercial Code and Securities and Exchange Law

for the risks.

of Japan, and provide their opinions when we call for
it to make decisions on accounting issues. None of the

CSR（Corporate Social Responsibility）Management
Committee,chaired by the president, discusses andAccounting Auditors is involved in the management of
the Company.

decides the CSR policy and activities that would make all
the stakeholders beneﬁcial, in cooperation with the other

Internal Audit Office carries out internal auditscommittees such as Risk Management Committee or the（ verify the adequacy and effectiveness of the business

Compliance Committee.

process in each division and report the results to thedirectors）in cooperation with the Board of Corporate

Responsible Care Promoting Committee, chaired byAuditors and Accounting Auditors.

the president, discusses and decides the policy and plansof activities for“ Responsible Care（ RC）”placing a special
emphasis on environmental preservation, safety and9Topics
To reduce energy consumption and CO2 emissions
The supply of steam to ten neighboring factories

Kawasaki Steam supplies steam of 300,000 tons ain Kawasaki Chidori and Yako industrial complex by

year that is generated by TEPCO's No.1 thermal power

Kawasaki Steam Net Ltd.（“Kawasaki Steam”）was begun

plant at its operation.

on February 1, 2010.

As a result, it is expected to reduce 11,000 kiloliters

Kawasaki Steam was established by Tokyo Electricof crude oil and 25,000 tons of CO2 annual in total comparedPower Company（“TEPCO”）, ASAHI KASEI CHEMICALS

with the current process of generating steam with boilers.

CORPORATION, and NIPPON SHOKUBAI, and has been

Converting it into the ordinary family, it is expected

aimed at installation, operation and maintenance of theto reduce about 9,500 households’worth of an energy

steam supply pipe lines that connect to each factory inconsumption-volumes and about 4,700 households’worth

the industrial complex, and at promotion of the energy-of carbon-dioxide emissions annual.

saving through the steam supply.

Ethylene oxide production equipment

Development of“Nippon Shokubai Headwater Forest”
The activity of 2010 has begun in“Nippon Shokubai
Headwater Forest”in Akazai valler, Shino City, Hyogo
Prefecture since May 22, 2010.
Though the damage of the typhoon in August 2009
remained in the forest, the employee volunteer worked
while hoping to reproduce the forest as soon as possible.
We try to maintain the forest of diversity that brings
up a lot of lives through“Activity to defend forest.”

10

Management Indices（ 1）Consolidated Management IndicesYear ended March 31

2006

2007

2008

2009

2010
（Millions of yen）

Net Sales

232,441

266,513302,669

289,102244,317

Ordinary Income

26,14822,754

20,745757

14,934（ loss）
Net Income

16,257

13,988

11,875（5,307）

10,832

Total Assets

291,564

310,946

164,631352,783_

302,948

Total Shareholders’Equity

323,675_

154,900

163,244

Total Net Assets

168,704

179,368

175,634

151,662

163,781（Yen）

Net Assets per Share875.00948.34947.34

831.11898.33Net Income（ loss）per Share

85.89
_

74.92
_

64.91
_

（29.61）_

60.85_

Capital Ratio（ %）

56.5

54.1

48.6

48.8

51.4

Return on Equity
（ %）

10.5

8.2

6.9

Price Earning Ratio（ times）

16.3

17.0

10.2

（3.3）
_

7 .0
_

Fully Diluted Net Income per Share（Thousands of U.S. dollars）

Cash Flow from Operating Activities

17,46816,087

20,21917,61344,346

Cash Flow from Investing Activities（20,663） （23,109） （33,100） （16,675）（23,850）

Cash Flow from Financing Activities（2,562）

4,037

17,495

8,099（21,772）

Cash and Cash Equivalents at Year-end

19,856

16,991

21,371

29,45028,234

Number of Employees

2,806

2,841

3,290

3,415

3,430

Note 1： Net Sales do not include consumption taxes.
Note 2： Eﬀective the year ended March 31, 2007, the Company has adopted a new accounting standard for the presentation of net assets in the balance
sheet and the related implementation guidance. In addition, eﬀective the year ended March 31, 2007, the Company is required to prepare consolidated
statements of changes in net assets instead of consolidated statements of shareholders' equity. In this connection, the previously reported consolidatedbalance sheet as of March 31, 2006 and consolidated statement of shareholders' equity for the year then ended have been restated to conform to thepresentation and disclosure of the consolidated ﬁnancial statements for the year ended March 31, 2007.
Note 3： Fully diluted Net Income per Share is not recorded because no dilutive shares exist.
Diluted Earnings per Share for the ﬁscal year 2008 ended Mar. 31, 2009 is not disclosed because of the net loss in the consolidated results, and theanti-dilutive eﬀect.
Note 4： Price Earnings Ratio for the ﬁscal year ended Mar. 31, 2009 is not disclosed because of the net loss in the consolidated results.

11

Years ended March 31, 2010 and 2009
with Report of Independent Auditors

Consolidated Financial Statements
Report of Independent Auditors ........................................13
Consolidated Balance Sheets ..............................................14
Consolidated Statements of Operations .............................16
Consolidated Statements of Changes in Net Assets........17
Consolidated Statements of Cash Flows ........................20
Notes to Consolidated Financial Statements ..................22

12

Ernst & Young ShinNihon LLC

Report of Independent Auditors
The Board of Directors
Nippon Shokubai Co., Ltd.

We have audited the accompanying consolidated balance sheets of Nippon ShokubaiCo., Ltd. and consolidated subsidiaries as of March 31, 2010 and 2009, and the related
consolidated statements of operations, changes in net assets, and cash ﬂows for the years
then ended, all expressed in yen. These ﬁnancial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these ﬁnancial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the ﬁnancial statements. An audit also includes assessing the accounting
principles used and signiﬁcant estimates made by management, as well as evaluating theoverall ﬁnancial statement presentation. We believe that our audits provide a reasonablebasis for our opinion.
In our opinion, the ﬁnancial statements referred to above present fairly, in all material
respects, the consolidated ﬁnancial position of Nippon Shokubai Co., Ltd. and consolidated
subsidiaries at March 31, 2010 and 2009, and the consolidated results of their operations
and their cash ﬂows for the years then ended in conformity with accounting principles
generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements withrespect to the year ended March 31, 2010 are presented solely for convenience. Our
audit also included the translation of yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis described in Note 2.

Osaka, Japan
June 22, 201013

Consolidated Balance Sheets
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

March 31,
2010

2009

2010
（Thousands of
U.S. dollars）（Millions of yen）

（Note2）

AssetsCurrent assets：
Cash and cash equivalents（ Note 3）・・・・・・・・・・・・・・・・・・・・・・・・・
Time deposits（ Notes 3 and 7）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Notes and accounts receivable（ Note 3）：
Unconsolidated subsidiaries and aﬃliates ・・・・・・・・・・・・・・・・・・・
Trade・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Allowance for doubtful receivables ・・・・・・・・・・・・・・・・・・・・・・・・
Inventories（ Note 5） ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Deferred income taxes（ Note 9）・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other current assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total current assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・￥28,234
170￥29,450475$ 303,461
1,827

5,505
57,581（227）
37,3573,380
6,214
138,214

6,761
46,143（251）42,361
4,618
8,343
137,900

59,168618,884（2,440）401,516
36,32866,789
1,485,533

30,71079,119276,851
16,436630（283,291）
120,455

30,75376,701
263,634
12,529612（267,775）
116,454330,073
850,376
2,975,613
176,655
6,771（3,044,830）
1,294,658

Property, plant and equipment, at cost
（ Notes 6 and 7）：

Land ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Buildings and structures ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Machinery and equipment ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Construction in progress ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Leased assets・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accumulated depreciation ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Property, plant and equipment, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・

Investments and other assets：

Total investments and other assets ・・・・・・・・・・・・・・・・・・・・・・・・・

20,047
17,687
3,201
3,399
7,943
52,277

15,562
16,514
4,335
3,948
8,235
48,594215,466
190,101
34,40536,53385,372561,877

Total assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・￥310,946￥302,948$3,342,068

Investments in securities（ Notes 3 and 4） ・・・・・・・・・・・・・・・・・・
Investments in unconsolidated subsidiaries and aﬃliates ・・・・・・・・
Deferred income taxes（ Note 9）・・・・・・・・・・・・・・・・・・・・・・・・・・
Prepaid pension cost（ Note 8）・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other assets（ Notes 7 and 10）・・・・・・・・・・・・・・・・・・・・・・・・・・・

14

Consolidated Balance Sheets（continued）

March 31,

2010

2009

（Millions of yen）

2010
（Thousands of
U.S. dollars）（Note2）

Liabilities and Net Assets
Current liabilities：￥ 26,587
7,631￥ 28,950
17,614$ 285,759
82,0184,449
34,042
12
34
2,405
146
2,526
2,476
8,710
89,0183,141
20,055
8
26
2,235
15
1,914
405
12,47986,84247,818365,886129
365
25,8491,569
27,15026,612
93,616
956,771

47,257
272
8,770
356
1,492
58,14753,775
294
8,465
275
1,635
64,444507,921
2,923
94,261
3,826
16,037
624,968

16,52913,574
141,118（7,977）
163,244

16,52913,562
132,778（7,969）154,900

177,655
145,894
1,516,745（85,737）
1,754,557

2,615（5,901）
Net unrealized deferred loss on hedges ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・（35）
Total valuation and translation adjustments・・・・・・・・・・・・・・・・・・・・・・・・・・・・（3,321）
Minority interests ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
3,858
Total net assets・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
163,781
Total liabilities and net assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 310,946

41（6,841）（155）（6,955）
3,717
151,662￥ 302,948

28,106（63,424）（376）（35,694）
41,466
1,760,329$3,342,068

Short-term bank loans（ Notes 3 and 7）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Current portion of long-term debt
（ Notes 3 and 7）・・・・・・・・・・・・・・・・・・・・・
Notes and accounts payable（ Note 3）：・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Unconsolidated subsidiaries and aﬃliates ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Trade・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Construction ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Lease obligations ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued bonuses to employees ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued bonuses to directors and corporate auditors・・・・・・・・・・・・・・・・・・
Reserve for periodic repairs ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued income taxes（ Note 9）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other current liabilities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total current liabilities・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Long-term liabilities：
Long-term debt
（ Notes 3 and 7）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Lease obligations ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued retirement beneﬁts for employees（ Note 8）・・・・・・・・・・・・・・・・・・
Deferred income taxes（ Note 9）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total long-term liabilities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Contingent liabilities（ Note 14）
Net assets：
Shareholders' equity（ Note 11）：
Common stock：
Authorized – 424,000,000 shares；
Issued – 187,000,000 shares in 2010 and 2009
Capital surplus・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Retained earnings ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Less treasury stock, at cost ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total shareholders' equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Valuation and translation adjustments：
Net unrealized holding gain on securities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Translation adjustments ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

15

Consolidated Statements of Operations
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

March 31,
2010

2009

（Millions of yen）

2010
（Thousands of
U.S. dollars）（Note2）

Net sales（ Note 17）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 244,317
Cost of sales（ Note 12）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Gross proﬁt
Selling, general and administrative expenses（ Note 12）・・・・・・・・・・・・
Operating income（ Note 17）・・・・・・・・・・・・・・・・・・・・・・・・・・・

196,066
48,251
34,37013,881Other income（ expenses）：
Interest and dividend income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest expense ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Royalty income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Equity in earnings of an unconsolidated subsidiary and aﬃliates ・・・・
Foreign exchange loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on devaluation of investments in securities ・・・・・・・・・・・・・・・・
Loss on impairment of property, plant and equipment（ Note 6）・・・・
Rent income from real estate ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on discontinued operations ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on disposal of property, plant and equipment ・・・・・・・・・・・・・・
Loss on claims ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Income（ loss）before income taxes and minority interests ・・・・・・・

Deferred ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Income（ loss）before minority interests ・・・・・・・・・・・・・・・・・・・
Minority interests in earnings of consolidated subsidiaries ・・・・・・・・・・
Net income（ loss）（ Note 15）・・・・・・・・・・・・・・・・・・・・・・・・・・・

16$ 2,625,935
2,107,330
518,605
369,411
149,194641（1,222）
391
1,037
（312）
–
（704）
1,237
–
（248）
–
（574）
14,1271,108（1,456）723
374（1,921）（3,886）（2,011）
1,000
（46）
（923）
（246）
611
（6,051）

6,890（13,134）
4,202
11,146（3,353）–（7,567）
13,295–（2,666）–（6,169）151,838

2,332
821
3,153
10,974（142）￥10,832

166（1,009）（843）（5,208）（99）￥（5,307）

25,0658,824
33,889117,949（1,526）$ 116,423

Income taxes（ Note 9）：
Current ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・￥ 289,102
250,891
38,211
37,589622

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

Shareholders' equity

Commonstock

CapitalsurplusRetainedearnings

Less
treasuryTotalstock, shareholders’at costequity（Millions of yen）

Balance at March 31, 2008 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 16,529 ￥ 13,567
Decrease due to changes in accounting policies applied to￥148,955 ￥（13,552） ￥165,499（231）

overseas subsidiaries ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Changes during the year：

（231）

–
（2,970）– （2,970）––（5,307）– （5,307）–
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・・––（2,100） （2,100）–
Disposition of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・
–
（5）
14
9
（0）
Retirement of shares of common stock held in treasury ・・・
–
7,669
–
（5） （7,664）
Net changes in items other than shareholders' equity ・・・・・
–
–
–
–
–
Total changes during the year ・・・・・・・・・・・・・・・・・・・・・・・–
5,583 （10,368）（5） （15,946）
Balance at March 31, 2009 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 16,529 ￥ 13,562 ￥132,778￥（7,969） ￥154,900
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Net loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Valuation and translation adjustments
Net
Net
Total
unrealized
unrealized valuation
holdingdeferredandgain onTranslation
loss
translation
securities adjustments on hedges adjustment

Minority
interests

Total net
assets￥（22） ￥ 5,990￥ 4,145¥175,634（Millions of yen）

Balance at March 31, 2008 ・・・・・・・・・・・・・・・・
Decrease due to changes in accounting policies
applied to overseas subsidiaries ・・・・・・・・・・
Changes during the year：
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・
Net loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・・・
Retirement of shares of common stock held intreasury ・・・・・・・・・・・・・・・・・・・・・・・・・・
Net changes in items other than shareholders’equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total changes during the year ・・・・・・・・・・・・
Balance at March 31, 2009 ・・・・・・・・・・・・・・・・￥ 2,644￥ 3,368

–

–

–

–

–

（231）

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

（2,970）（5,307）（2,100）
9

–

–

–

–

–

–

（2,603） （10,209）（2,603） （10,209）￥ 41 ￥（6,841）（133） （12,945）（133） （12,945）￥（155）￥（6,955）（428） （13,373）（428） （23,741）￥ 3,717 ￥ 151,662

17

Consolidated Statements of Changes in Net Asset（continued）

Shareholders' equity
Commonstock

Capitalsurplus¥16,529¥13,562

Less
treasuryTotalstock, shareholders’at costequityRetainedearnings（Millions of yen）

Balance at March 31, 2009 ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Changes during the year：
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・
Net changes in items other than shareholders' equity ・・・・・
Total changes during the year ・・・・・・・・・・・・・・・・・・・・・・・
Balance at March 31, 2010 ・・・・・・・・・・・・・・・・・・・・・・・・・・・

–
–
–
–
–
–
–
12
–
–
–
12
¥ 16,529 ¥ 13,574¥132,778¥（7,969） ¥154,900（2,492）– （2,492）
10,832–
10,832
–
（16）
（16）
–
8
20
–
–
–
8,340
（8）
8,344
¥ 141,118 ¥（7,977）¥ 163,244

Net
Net
Total
unrealized
unrealized valuation
holdingdeferredandgain onTranslation
loss
translation
securities adjustments on hedges adjustments

Minority
interests

Total net
assets¥（155） ¥（6,955）¥3,717¥151,662

–
–
–
–

–
–
–
–

（2,492）
10,832
（16）
20

3,634
120
3,634
120
¥（35） ¥（3,321）

141
141¥3,858

3,775
12,119¥163,781（Millions of yen）

Balance at March 31, 2009
Changes during the year：
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・
Net income ・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・・・・
Net changes in items other than shareholders'equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total changes during the year ・・・・・・・・・・・・・
Balance at March 31, 2010 ・・・・・・・・・・・・・・・・・

18

¥41

¥（6,841）

–
–
–
–

–
–
–
–

2,574
2,574
¥2,615940
940¥（5,901）––––

Consolidated Statements of Changes in Net Assets（continued）

Shareholders' equity
Commonstock

CapitalsurplusRetainedearnings

Less
treasurystock,
at costTotal
shareholders’equity（Thousands of U.S. dollars）（Note2）

Balance at March 31, 2009 ・・・・・・・・・・・・・・・・・・・・・・・・ $177,655
Changes during the year：$145,765$1,427,106

–
–
–
–
–
–
$177,655

–
–
–
129
–
129
$145,894（26,784）– （26,784）
116,423–
116,423
–
（172）
（172）
–
86
215
–
–
–
89,639（86）
89,682$1,516,745 $（85,737） $1,754,557

Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・・・・・・・・・・・
Net changes in items other than shareholders' equity ・・
Total changes during the year ・・・・・・・・・・・・・・・・・・・・
Balance at March 31, 2010 ・・・・・・・・・・・・・・・・・・・・・・・・$（85,651） $1,664,875

Valuation and translation adjustments
Net
unrealized
holding
gain onsecurities

Translation
adjustments

Net
unrealized
Total
deferred valuation andlosstranslation
on hedges adjustments

Minority
interests

Total net
assets$（1,666） $（74,753） $39,951$1,630,073（Thousands of U.S. dollars）（Note2）$440$（73,527）––
Disposition of treasury stock ・・・・・・・・・・–
Net changes in items other than ・・・・・・・–
shareholders' equity ・・・・・・・・・・・・・・・・・
27,666
Total changes during the year ・・・・・・・・・・
27,666
Balance at March 31, 2010 ・・・・・・・・・・・・・・ $ 28,106––––
10,103
10,103$（63,424）

Balance at March 31, 2009 ・・・・・・・・・・・・・・
Changes during the year：

Cash dividendsNet income ・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・––（26,784）–––
116,423
–
–
–
（172）
–
–
–
215
–
39,0591,515
40,574
1,290
39,0591,515
130,256
1,290$（376） $（35,694） $ 41,466 $ 1,760,329

19

Consolidated Statements of Cash Flows
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Year ended March 31,
2010

2009

（Millions of yen）

2010
（Thousands of
U.S. dollars）（Note2）

Operating activities：

Income（ loss）before income taxes and minority interests ・・・・・・・・・・・
Adjustments to reconcile income（ loss）before income taxes and minority
interests to net cash provided by operating activities：
Depreciation and amortization ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on discontinued operations ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on impairment of property, plant and equipment ・・・・・・・・・・・
Loss on devaluation of investments in other securities・・・・・・・・・・・
Loss on claims ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Increase in accrued retirement beneﬁts for employees ・・・・・・・・・・
Interest and dividend income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest expense・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Equity in earnings of an unconsolidated subsidiary and aﬃliates ・・・
Loss on disposal of property, plant and equipment ・・・・・・・・・・・・・
Other, net
Changes in operating assets and liabilities：
Notes and accounts receivable ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Inventories ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Notes and accounts payable ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other current liabilities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest and dividends received・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest paid ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Payment related to shutdown of a plant ・・・・・・・・・・・・・・・・・・・・・・・・
Payment related to discontinued operations ・・・・・・・・・・・・・・・・・・・・・・
Payment related to claims ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Refund（ 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 in securities ・・・・
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 ・・・・・・・・・・・・・・・・・・・・
Collection of loans receivable ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net cash used in investing activities ・・・・・・・・・・・・・・・・・・・・・・・・・・・

20¥ 14,127¥（6,051）$151,838

16,234
–
704
–
–
305
（641）
1,222
（1,037）248
1,690

17,958
46
2,011
3,886
246
324
（1,108）
1,456
（374）
923
（486）

174,484
–
7,567
–
–
3,278
（6,890）13,134（11,146）
2,666
18,164（10,021）
5,227
14,954
185
43,1971,105（1,368）–––1,412
44,34625,9908,993（30,832）（5）
22,9772,025（1,367）（1,060）（222）（246）（4,494）
17,613（107,706）
56,180160,727
1,988
464,284
11,877（14,703）–––
15,176476,634（24,025）
108（1,261）（17,757）444（750）（258,222）
1,161（13,553）

516
400
（8）
686
（266）
¥（23,850）

826
–
（8）
900
（331）
¥（16,676）

5,546
4,299
（86）
7,373
（2,859）$（256,341）

Consolidated Statements of Cash Flows（continued）

Year ended March 31,
2010

2009

（Millions of yen）

2010
（Thousands of
U.S. dollars）（Note2）Financing activities：（ Decrease）increase in short-term bank loans, net ・・・・・・・・・・・・・・・

Proceeds from long-term debt ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Repayment of long-term debt ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Cash dividends paid ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Repayments of bonds ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net cash（ used in）provided by 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 ・・・・・・・・・・・・・・・・・・・・・¥（2,707）
1,100（12,642）（2,492）（5,000）（15）（16）（21,772）
60（1,216）29,450¥28,234¥ 2,675
17,355（6,832）（2,970）–（2,100）
（29）
8,099
（957）
8,079
21,371¥29,450$（29,095）
11,823（135,878）（26,784）（53,740）
（161）
（172）
（234,007）
644（13,070）
316,531$303,461

21

Notes to Consolidated Financial Statements
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries March 31, 2010

1. Summary of Significant Accounting Policies（a）Basis of presentation
Nippon Shokubai Co., Ltd.（ the“Company”）and its domestic subsidiaries maintain their accounts and records in accordance withaccounting principles generally accepted in Japan. Its overseas subsidiaries maintain their accounts and records in conformity
with the requirements of their respective countries of domicile.
The accompanying consolidated ﬁnancial statements of the Company and its consolidated subsidiaries are prepared on the basisof 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 preparedby the Company as required by the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated ﬁnancial statements, certain reclassiﬁcations and rearrangements have been made to
the consolidated ﬁnancial statements issued domestically in order to present 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.
Goodwill and negative goodwill arising from the difference of cost and underlying net assets at the date of acquisition areamortized over a period of ﬁve years on a straight-line basis, except that immaterial amounts are charged or credited to income as
incurred.
（ Change in accounting policy）

Effective the year ended March 31, 2009, the Company and its overseas subsidiaries have adopted“Practical Solution on（ Accounting Standards
Uniﬁcation of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”
Board of Japan（“ASBJ”） Practical Issues Task Force No. 18 issued on May 17, 2006）. The impact on operating income andloss before income taxes and minority interests was immaterial. The eﬀect of this change on segment information has not been
disclosed because it was also immaterial.

（c）Foreign currency translation
The ﬁnancial statements of the overseas consolidated subsidiaries are translated into yen at the rates of exchange in eﬀect atthe balance sheet date, except that the components of net assets excluding minority interests are translated at their historicalexchange rates. Differences resulting from translating the financial statements of the overseas consolidated subsidiaries are
not included in the determination of net income（ loss） but are reported as translation adjustments and minority interests theaccompanying consolidated balance sheets at March 31, 2010 and 2009.
Revenue and expense items arising from transactions denominated in foreign currencies are generally translated into yen at therates 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 atthe balance sheet date and gain or loss on each translation is credited or charged to income.

（d）Cash and cash equivalents
Cash and cash equivalents include cash on hand and in banks and other highly liquid investments with maturities 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 amount calculated 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.

22

Notes to Consolidated Financial Statements（continued）（f ）Inventories
Inventories are stated at the lower of cost or net selling value, cost being determined primarily by the moving average method.
（ Change in accounting policy）

Up to the year ended March 31, 2008, inventories of the Company and its domestic consolidated subsidiaries were valued at thelower of cost or market, cost being determined by the moving average method.
（ ASBJ Statement No. 9 issued
Eﬀective the year ended March 31, 2009, as“Accounting Standard for Measurement of Inventories”
on July 5, 2006）has been applied, inventories of the Company and its domestic consolidated subsidiaries are stated at the lowerof cost or net selling value, cost being determined primarily by the moving average method. As a result of this change, operating
income increased by ¥266 million, and loss before income taxes and minority interests decreased by ¥311 million for the year
ended March 31, 2009 from the corresponding amounts which would have been recorded under the previous method. The impact
on segment information is outlined in Note 17.

（g ）Property, plant and equipment
Property, plant and equipment are stated on the basis of cost. Depreciation is computed principally by the declining-balancemethod over the estimated useful lives of the respective assets, except that the overseas consolidated subsidiaries computedepreciation by the straight-line method over the estimated useful lives of the respective assets.
（ Supplementary information）

Eﬀective the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries have changed their useful lives
for depreciation of machinery and equipment. This change was made based on an amendment to the Corporation Tax Law. As
a result of this change, operating income increased by ¥429 million, and loss before income taxes and minority interests decreasedby ¥429 million for the year ended March 31, 2009 from the corresponding amounts which would have been recorded under theprevious useful lives. The impact on segment information is outlined in Note 17.

（ h）Leases
Leased assets under ﬁnance lease transactions that do not transfer ownership to the lessee are depreciated to a residual value ofzero 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.
（ Change in accounting policy）

Up to the year ended March 31, 2008, ﬁnance lease transactions that do not transfer ownership to the lessee were accounted for as
operating leases.
（ ASBJ Statement No. 13 originally issued
Eﬀective the year ended March 31, 2009,“Accounting Standard for Lease Transactions”
by the First Committee of the Business Accounting Council on June 17, 1993 and revised by the ASBJ on March 30, 2007）and（ ASBJ Guidance No. 16 originally issued by the“Implementation Guidance on Accounting Standard for Lease Transactions”
Accounting System Committee of the Japanese Institute of Certiﬁed Public Accountants on January 18, 1994 and revised by the
ASBJ on March 30, 2007）have been applied. Lease transactions of the Company and its domestic consolidated subsidiaries areaccounted for as ﬁnance leases if substantially all of the beneﬁts and risks of ownership have been transferred to the lessee. The
impact of the adoption of this standard on operating income and loss before income taxes and minority interests was immaterial.
The eﬀect of this change on segment information has not been disclosed because it was also immaterial.

（ i）Short-term investments and investments in securities
Securities are classiﬁed into three categories: trading securities, held-to-maturity debt securities and other securities. 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 at fair 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 to income as incurred,
except if these are deemed to contribute to the generation of future income or cost savings. Such expenditures are capitalized as23

Notes to Consolidated Financial Statements（continued）

assets and amortized by the straight-line method over their respective 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. Deferred income tax assets
and liabilities are computed based on the temporary diﬀerences between ﬁnancial reporting and the tax bases of the assets andliabilities which will result in taxable or tax-deductible amounts in the future. The calculation of deferred income tax assets andliabilities 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 theswaps had originally applied to the underlying debt.
Forward foreign currency exchange contracts which meet certain criteria are accounted for by the allocation 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.

（o）Reserve for periodic repairs
The Company provides 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）Retirement benefits
Accrued retirement beneﬁts for employees have been provided based on the retirement beneﬁt obligation and the fair value of thepension plan assets as adjusted for unrecognized actuarial gain or loss and unrecognized prior service cost.
Prior service cost is amortized principally by the straight-line method over a period of 5 years, which is within the estimatedaverage 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 recognized principally by the straightline method over a period of 10 years, which is within the estimated average remaining years of service of the eligible employees.
（ Change in accounting policy）

Effective the year ended March 31, 2009, the Company has early adopted“Partial Amendments to Accounting Standard for（ ASBJ Statement No. 19 issued on July 31, 2008）. There was no impact on the retirement beneﬁt
Retirement Beneﬁts（ Part 3）”
obligation as a result of this change.
（ Supplementary information）

During the year ended March 31, 2009, one domestic consolidated subsidiary has changed its pension plan from a tax-qualiﬁedpension plan to a deﬁned contribution plan. Upon transition,“Guidance on Accounting for Transfers between Retirement Beneﬁt（ ASBJ Guidance No. 1 issued on January 31, 2002） has been applied. The impact on operating income and loss before
Plans”
income taxes and minority interests was immaterial. The eﬀect of this change on segment information has not been disclosed
because it was also immaterial.

（ q）Distribution of retained earnings
Under the Corporation Law of Japan, the distribution of retained earnings with respect to a given ﬁnancial period is made byresolution of the shareholders at a general meeting held subsequent to the close of the ﬁnancial period. The accounts for that
period do not, therefore, reﬂect such distributions (see Note 19).

（r ）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

24

Notes to Consolidated Financial Statements（continued）

construction projects, the Company measures the percentage of completion by comparing costs incurred to date with the mostrecent estimate of total costs required to complete the project (cost to cost basis). For other construction projects where theoutcome cannot be reliably measured, the completed-contract method is applied.
(Change in accounting policy ）Up to the year ended March 31, 2009, the completed-contract method has been applied for revenue recognition of long-term
construction contracts. However, eﬀective the year ended March 31, 2010, the Company and its domestic consolidated subsidiaries
have adopted“Accounting Standard for Construction Contracts”(ASBJ Statement No. 15 issued on December 27, 2007) and“Implementation Guidance on Accounting Standard for Construction Contracts”(ASBJ Guidance No. 18 issued on December 27,2007）.
Under the new accounting standard and guidance, revenue from, and related cost of, construction contracts that commenced on orafter April 1, 2009, are mainly recognized by the percentage-of-completion method.
As a result of the adoption, the impact on operating income and income before income taxes and minority interests was
immaterial. The eﬀect of this change on segment information has not been disclosed because it was also immaterial.

2. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation only,at ¥93.04 = U.S. $1.00, the approximate rate of exchange in eﬀect on March 31, 2010. This translation should not be construed as arepresentation that yen have been, could have been, or could in the future be, converted into U.S. dollars at the above or any otherrate.

3. Financial Instruments
Eﬀective the year ended March 31, 2010, the Company and its consolidated subsidiaries（ the“Group”） have adopted“Accounting（ ASBJ Statement No.10 issued on March 10, 2008）and“Implementation Guidance on Disclosures
Standard for Financial Instruments”（ ASBJ Guidance No.19 issued on March 10, 2008.）
about Fair Value of Financial Instruments”（1）Current status of financial instruments
1）Policy for fnancial 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）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 with which the Group has businessor capital relationships, which are also exposed to market price volatility risk.
Substantially all trade notes and accounts payables have payment due dates within six months, 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 by interest 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 Groupalso 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 and hedged items, hedging policy, and theassessment of the eﬀectiveness of hedging activities can be found in Note 16.

3）Risk management for financial instrumentsi ）Monitoring for credit risk（the risk that customers or counterparties may default）

25

Notes to Consolidated Financial Statements（continued）

With respect to trade receivables, each related division of the Company monitors the conditions of their main customers
periodically, monitors due dates and outstanding balances of individual customers, and evaluates credit worthiness of theirmain customers semiannually. The consolidated subsidiaries also monitor trade receivables in a same manner.
The Group only acquires corporate bonds or other securities with high credit ratings. Accordingly, the Group believes thatthe credit risk deriving from such 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 andothers）
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-tomaturity 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 transactions. Results ofderivative 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 a timely 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 inderivative transactions.

（2）Fair value of financial instruments
Carrying value, fair value, and unrealized loss on ﬁnancial instruments at March 31, 2010 are shown in the following table. The
following table does not include ﬁnancial instruments for which it is extremely diﬃcult to determine the fair value.

26

Notes to Consolidated Financial Statements（continued）（Millions of yen）

Thousands of U.S. dollars

2010

2010

Carrying
value

Fair
value

Unrealized
loss

Carrying
value

Fair
value

Unrealized
loss

Assets：i ）Cash and cash equivalents, and time

¥28,404
63,086¥28,404
63,086¥––$305,288
678,052$305,288
678,052$––

18,902¥110,392

18,902¥110,392–¥–

203,160

203,160–$1,186,500$1,186,500$–

Total liabilities ・・・・・・・・・・・・・・・・・・・・・¥38,491
26,587
7,631
32,257¥104,966¥38,491
26,587
7,690
32,488¥105,256

¥–
–
59
231
¥290

$413,704
285,759
82,018346,700$1,128,181$413,704
285,759
82,652
349,183$1,131,298

$–
–
634
2,483
$3,117

Derivatives ・・・・・・・・・・・・・・・・・・・・・・・・

¥（7）

¥（7）

¥–

$（75）

$（75）

$–

deposits ・・・・・・・・・・・・・・・・・・・・・・・・ii ）Notes and accounts receivable・・・・・・・・
iii）Investments in securities：
Other securities ・・・・・・・・・・・・・・・・・・・
Total assets ・・・・・・・・・・・・・・・・・・・・・・・

Liabilities：iv ）Notes and accounts payable ・・・・・・・・・
v ）Short-term bank loans ・・・・・・・・・・・・・
vi ）Current portion of long-term debt ・・・・
vii）Long-term debt ・・・・・・・・・・・・・・・・・・

1）Calculation method 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 fair value.
iii）Investments in securities
The fair value of equity securities is based on quoted market prices. For information on securities classiﬁed as othersecurities, please refer to Note 4.
Liabilities：iv）Notes and accounts payable, and v）short-term bank loans
Since these items are settled in a short period of time, their carrying values approximate the fair value.
vi）Current portion of long-term debt, and vii）long-term debt
The fair value of long-term debt represents present value of the total interest and principal amount discounted atinterest rates applicable to new loans. With respect to long-term debt with variable interest rates, because interest rate
swap agreements are accounted applying swap rates to underlying long-term debt, their fair value is included in that oflong-term debt and represents present value of the total interest and principal amount discounted at reasonable interest
rates applicable to loans made under similar circumstances.
Derivatives transactions：
Please refer to Note 16.

27

Notes to Consolidated Financial Statements（continued）

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, 2010 and 2009 are presented as follows：

2010

2009

（Millions of yen）

Unlisted securities and other ・・・・・・・・・・・・・・¥ 1,145¥ 1,146

2010（Thousands of
U.S. dollars）$ 12,307

Since there is no market price for unlisted securities and it is diﬃcult to determine the fair value, they are notincluded in the above iii）,“Investments in securities”in the preceding table“（ 2）Fair value of ﬁnancial instruments.”3）Calculation method of fair value of financial instruments is as follows：
The redemption schedule for monetary assets and securities classified as held-to-maturity debt securities withmaturity dates as of March 31, 2010 is as follows：（Millions of yen）

（Thousands of U.S. dollars）

2010

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

28

2010

Due within
one year

Due after one
year throughfive years

Due within
one year

Due after one
year throughfive years¥ 28,404
63,086¥––$ 305,288
678,052$–––¥ 91,490

400
¥400

–
$ 983,340

4,229$ 4,229

Notes to Consolidated Financial Statements（continued）

4. Short-Term Investments and Investments in Securities
Marketable securities classiﬁed as other securities at March 31, 2010 and 2009 are summarized as follows：

2010

2009
（Millions of yen）

Book value（fair market
value）

Cost

Book value
Unrealized （fair market
gain（loss）
value）

Cost

Unrealizedgain（loss）

Securities whose fair market value exceeds
their cost：
Equity securities ・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・
Securities whose cost exceeds their fair

¥12,403
12,403¥7,518
7,518¥4,885
4,885¥5,797
5,797¥3,232
3,232¥2,565
2,565

6,499
6,499
¥18,902

7,664
7,664
¥15,182（1,165）（1,165）¥3,7208,619
8,619¥14,416

11,648
11,648¥14,880（3,029）（3,029）¥（464）

market value：
Equity securities ・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

2010（Thousands of U.S. dollars）

Book value（fair market
value）

Cost

Unrealizedgain（loss）

Securities whose fair market value exceeds
their cost：
Equity securities ・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・
Securities whose cost exceeds their fair

$ 133,308
133,308$ 80,804
80,804$ 52,504
52,50469,852
69,852$ 203,160

82,37382,373$ 163,177（12,521）（12,521）$ 39,983

market value：
Equity securities ・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Sales of other securities for the years ended March 31, 2010 and 2009 were as follows：

2010

2009

（Millions of yen）

Proceeds ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Gross realized gain ・・・・・・・・・・・・・・・・・・・
Gross realized loss ・・・・・・・・・・・・・・・・・・・・

¥8
¥3
¥–

2010
（Thousands of
U.S. dollars）

¥ 600
¥ 92
¥ 5

$ 86
$ 32
$ –

29

Notes to Consolidated Financial Statements（continued）

5. Inventories
Inventories at March 31, 2010 and 2009 were as follows:

2010

2009

（Millions of yen）

¥ 21,363
11,155
7,068
2,775¥ 42,361¥ 21,256
7,930
5,044
3,127
¥ 37,357

Merchandise and ﬁnished goods ・・・・・・・・・・・
Raw materials ・・・・・・・・・・・・・・・・・・・・・・・・・
Work in process ・・・・・・・・・・・・・・・・・・・・・・・
Supplies ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

2010（Thousands of
U.S. dollars）$ 228,461
85,232
54,21333,610$ 401,516

6. Loss on Impairment of Property, Plant and Equipment
The recoverable amounts of the assets other than machines that produce super absorbent polymer and assets leased toothers were determined based on their respective estimated sales prices or value in use, which was calculated as the sumof the anticipated future cash ﬂows discounted at annual rates of 2.7% in 2009. Machines that produce super absorbent
polymer are not anticipated to be utilized in the future as they are obsolete and their carrying values have been reduced
to ￥1. The net recoverable amounts of assets leased to others were measured at net selling value based on appraisals
issued by professional real estate appraisers.
Details of the loss on impairment of property, plant and equipment for the years ended March 31, 2010 and 2009 aresummarized as follows：2010
Company

Application

NA Industries, Inc.

Machines that produce
polymers for concrete
admixture and emulsions for
damping materials

Total

Classification
Buildings andstructures, machinery andequipment and automotive
equipment（Millions of yen）

¥ 704
¥ 704

2009
Company
NA Industries, Inc.

Nippon ShokubaiCo., Ltd.
Total

30

Application
Machines that produce
super absorbent polymer
Assets leased to others,machines that produce vinyl
pyrrolidone andﬂuoroaromatic compounds

Classification
Land, buildings andstructures, machinery andequipment, automotive
equipment and software
Land, buildings andstructures, machinery andequipment and automotive
equipment（Millions of yen）

¥ 1,413598¥ 2,011（Thousands of U.S. dollars）$ 7,567$ 7,567

Notes to Consolidated Financial Statements（continued）

7. 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, 2010 and 2009 were 0.72% and 1.74% respectively.
Long-term debt at March 31, 2010 and 2009 consisted of the following:

2010

2009

2010
（Thousands of
U.S. dollars）（Millions of yen）

Unsecured bonds payable in yen, at rates from 1.45% to 1.66%, due
through 2014 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・¥ 15,000¥ 20,000$ 161,221

Unsecured loans from banks and insurance companies, payable in yen,
at rates from 0.75% to 2.03%, due through 2014 ・・・・・・・・・・・・・・・

37,64046,615404,557

Unsecured loans from banks, payable in U.S. dollars, at rates from
1.16% to 1.46%, due through 2012 ・・・・・・・・・・・・・・・・・・・・・・・・・・

1,741

2,267

18,712

Unsecured loans from banks, payable in Euro, at rates from 2.55% to3.17%, due through 2009 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

–

691

–

Secured loans from banks and insurance companies, payable in yen, at
rates from 1.50% to 2.32%, due through 2014 ・・・・・・・・・・・・・・・・・

507

1,634

5,449

Secured loans from banks, payable in U.S. dollars, at rates from 3.60%
to 5.83%, due through 2009 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

–

182

–

54,88871,389589,939（7,631）（17,614）（82,018）¥ 47,257¥ 53,775$507,921

Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Less current portion ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

The aggregate annual maturities of long-term debt subsequent to March 31, 2009 are summarized below：
Year ending March 31,

2011 ・・・・・・・・・・・・・・・
2012 ・・・・・・・・・・・・・・・
2013 ・・・・・・・・・・・・・・・
2014 ・・・・・・・・・・・・・・・
2015 and thereafter ・・・・

（Millions of yen）

（Thousands of
U.S. dollars）¥ 7,631
4,925
14,508
13,69014,134¥ 54,888$ 82,018
52,934
155,933
147,141
151,913$ 589,939

Assets pledged as collateral for short-term bank loans, long-term debt, including the current portion thereof, and notes andaccounts payable at March 31, 2010 and 2009 were as follows：

2010

2009

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

Time deposits ・・・・・・・・・・・・・・・・・・・・・・・・・
Land ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Buildings and structures ・・・・・・・・・・・・・・・・・
Machinery and equipment ・・・・・・・・・・・・・・・・
Other assets ・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

¥8
293
167
292
5
¥ 765

2010

¥8
293
157
226
5
¥ 689

$ 86
3,149
1,795
3,138
54
$ 8,22231

Notes to Consolidated Financial Statements（continued）

8. Retirement Benefits
The Company’s employees are covered by an employees’retirement beneﬁt plan and an employees’pension plan. The
employees’retirement benefit plan provides for lump-sum payments determined by reference to their basic salary,
years of service and certain other factors. The domestic consolidated subsidiaries have either unfunded employees’
retirement beneﬁt plans and/or pension plans which are noncontributory and funded and which cover substantially all
their employees. These plans provide for lump-sum payments and/or annuity payments payable upon termination of
employment.
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, 2010 and 2009 for the Company’s and the consolidated
subsidiaries’deﬁned beneﬁt pension plans：

2010

2009

（Millions of yen）

Retirement beneﬁt obligation at end of year ・・
Fair value of plan assets at end of year ・・・・・・
Unfunded retirement beneﬁt obligation ・・・・・・
Unrecognized actuarial loss ・・・・・・・・・・・・・・・
Unrecognized prior service cost ・・・・・・・・・・・
Net retirement beneﬁt obligation ・・・・・・・・・・・
Prepaid pension cost ・・・・・・・・・・・・・・・・・・・・
Accrued retirement beneﬁts ・・・・・・・・・・・・・・¥（31,999）
20,328（11,671）6,276
24（5,371）
3,399¥（8,770）

2010（Thousands of
U.S. dollars）¥（31,739）
17,400（14,339）
10,020（198）（4,517）
3,948¥（8,465）$（343,928）
218,487（125,441）
67,455
258（57,728）
36,533$（94,261）

The components of retirement beneﬁt expenses for the years ended March 31, 2010 and 2009 are outlined as follows：

2010

2009

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

Service cost ・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest cost ・・・・・・・・・・・・・・・・・・・・・・・・・・
Expected return on plan assets ・・・・・・・・・・・・
Amortization：
Prior service cost ・・・・・・・・・・・・・・・・・・・・・・
Actuarial loss ・・・・・・・・・・・・・・・・・・・・・・・・・
Retirement beneﬁt expenses ・・・・・・・・・・・・・・

2010¥ 1,314549（449）¥1,678543（550）$ 14,123
5,901（4,826）（59）
1,535¥ 2,890（186）
978¥ 2,463（634）
16,498$ 31,062

The assumptions used in accounting for the deﬁned beneﬁt pension plans for the years ended March 31, 2010 and 2009were as follows：

Discount rate ・・・・・・・・・・・・・・・・・・・・・・・・・
Expected rate of return on plan assets ・・・・・・

32

2010

2009

Principally 1.9%
Principally 3.0%

Principally 1.9%
Principally 3.0%

Notes to Consolidated Financial Statements（continued）

The following table sets forth the status of the multi-employer pension plan at March 31, 2009, the most recent date on
which such data was available.
（Millions of yen）

（Thousands of U.S. dollars）¥ 325,177$ 3,495,024

502,794¥（177,617）

5,404,063$（1,909,039）

Plan assets at fair value・・・・・・・・・・・・・・・・・・
Beneﬁt obligation used in the calculation ofpension ﬁnancing ・・・・・・・・・・・・・・・・・・・・・
Diﬀerence ・・・・・・・・・・・・・・・・・・・・・・・・・・・・

9. Income Taxes
Income taxes applicable to the Company and its domestic consolidated subsidiaries consist of corporation, inhabitants’and enterprise taxes. The statutory tax rate in Japan for the years ended March 31, 2010 and 2009 was, in the aggregate,approximately 40.6%.
The eﬀective tax rate reﬂected in the accompanying consolidated statements of income for the year ended March 31, 2010
diﬀered from the above statutory tax rate for the following reasons：

2010
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 ・・・・・・・・・・・・・・・・・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Eﬀective tax rate ・・・・・・・・・・・・・・・・・・・・・・・・・・・・

40.6 %
（5.3）
（3.6）
（3.5）
（3.0）
（1.1）
（1.8）
22.3 %A reconciliation of the diﬀerence between the statutory tax rate and the eﬀective tax rate for the year ended March 31,
2009 has not been presented because loss before income taxes and minority interests was recorded.

33

Notes to Consolidated Financial Statements（continued）

Deferred income taxes reﬂect the net tax eﬀect of the temporary diﬀerences between the carrying amounts of the assets
and liabilities calculated for ﬁnancial reporting purposes and the corresponding tax bases reported for income tax purposes.
The signiﬁcant components of the deferred tax assets and liabilities of the Company and its consolidated subsidiaries at
March 31, 2010 and 2009 are summarized as follows：

2010

2009

（Millions of yen）

2010
（Thousands of
U.S. dollars）

Deferred tax assets：
Accrued retirement beneﬁts for employees ・・・・・・・・・・・・・・・・・・
Intercompany proﬁt on inventories and property, plant andequipment ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Tax loss carryforwards ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Reserve for periodic repairs ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Depreciation and amortization（ including impairment loss） ・・・・・・
Loss on impairment of land ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued bonuses to employees ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Impairment of investments insecurities and other ・・・・・・・・・・・・・
Other ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Gross deferred tax assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Less： Valuation allowance ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total deferred tax assets・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Deferred tax liabilities：
Equity in earnings of an overseas aﬃliate ・・・・・・・・・・・・・・・・・・・・
Depreciation and amortization ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Deferred capital gain on property ・・・・・・・・・・・・・・・・・・・・・・・・・
Reserve for depreciation for tax purposes ・・・・・・・・・・・・・・・・・・・
Other ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total deferred tax liabilities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net deferred tax assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・¥ 2,303¥ 1,950$ 24,753

958
2,378
1,025
2,004
1,265
935
2,313
891
14,072（5,904）
8,168

970
4,227
768
1,763
1,267
875
3,446
2,225
17,491（6,646）
10,845

10,29725,55911,017
21,53913,596
10,04924,8609,577
151,247（63,457）
87,790

（995）
（376）
（375）
（5）
（192）
（1,943）¥ 6,225（1,089）
（400）
（380）
（59）
（239）
（2,167）¥ 8,678（10,694）（4,041）（4,030）（54）（2,064）（20,883）$ 66,907

10. Goodwill and Negative Goodwill
Goodwill and negative goodwill are netted against each other. Goodwill and negative goodwill as of March 31, 2009 aresummarized as follows：

2009（Millions of yen）

Goodwill ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Negative goodwill ・・・・・・・・・・・・・・・・・・・・・
Goodwill, net ・・・・・・・・・・・・・・・・・・・・・・・・・¥ 1,979（131）¥ 1,848

Since negative goodwill was fully amortized during the year ended March 31, 2010, the above information at March 31,
2010 has been omitted. Goodwill of ￥1,405 million（ $15,101 thousand）at March 31, 2010 was included in other assets inthe accompanying consolidated balance sheet at March 31, 2010.

34

Notes to Consolidated Financial Statements（continued）

11. 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 capital reserve and thelegal reserve equals 25% of the capital stock account. Such distributions can be made at any time by resolution of theshareholders, 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（ $42,132 thousand）and \3,920 million at March 31,
2010 and 2009, respectively.
Common stock and treasury stock
Movements in shares of common stock in issue and treasury stock during the years ended March 31, 2010 and 2009 aresummarized as follows：2010
Number of shares（Thousands）

March 31, 2009
Common stock ・・・・・・・・・・・
Treasury stock ・・・・・・・・・・・

Increase

187,000
8,991

Decrease–
19

March 31, 2010–
34

187,000
8,976

2009
Number of shares（Thousands）

March 31, 2008
Common stock ・・・・・・・・・・・
Treasury stock ・・・・・・・・・・・

Increase

194,881
13,859Decrease

–
3,029

7,881
7,897

March 31, 2009

187,000
8,991

12. Research and Development Costs
Research and development costs included in cost of sales and selling, general and administrative expenses for the years
ended March 31, 2010 and 2009 totaled \10,753 million（ $115,574 thousand）and \12,082 million, respectively.

13. 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, 2010 and 2009 which would have been
reﬂected in the accompanying consolidated balance sheets if ﬁnance leases, other than those which transfer the ownershipof the leased assets to the Company or its domestic consolidated subsidiaries, that started on or before March 31, 2008（ which
are currently accounted for as operating leases）had been capitalized：

2010

2009

（Millions of yen）

2010
（Thousands of
U.S. dollars）

Service costMachinery and equipment andsoftware：Acquisition costs ・・・・・・・・・・・・・・・・・・・
Accumulated depreciation/amortization ・・
Net book value ・・・・・・・・・・・・・・・・・・・・・

¥ 936
（389）
¥ 547

¥ 1,115
（409）
¥ 706

$ 10,060（4,181）$ 5,87935

Notes to Consolidated Financial Statements（continued）

Lease payments of the Company and its domestic consolidated subsidiaries relating to ﬁnance leases amounted to \160
million（ $1,720 thousand） and \177 million for the years ended March 31, 2010 and 2009, respectively. Depreciation onthese leased assets calculated by the straight-line method would have amounted to \160 million（ $1,720 thousand）and \177million for the years ended March 31, 2010 and 2009, respectively, if it had been reﬂected in the accompanying consolidatedbalance sheets.
Future minimum lease payments（ including the interest portion thereon） subsequent to March 31, 2010 under ﬁnancelease transactions, other than those which transfer the ownership of the leased assets to the Company or its domestic
consolidated subsidiaries, that were entered into on or before March 31, 2008 are summarized as follows：Year ending March 31,
2011 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
2012 and thereafter ・・・・・・・・・・・・・・・・・・・・（Millions of yen）

（Thousands of U.S. dollars）

¥ 123
424
¥ 547

$ 1,322
4,557$ 5,879

14. Contingent Liabilities
At March 31, 2010, the Company and one consolidated subsidiary were contingently liable as guarantors of indebtedness ofaﬃliates in the aggregate amount of ￥2,049 million（ $22,023 thousand）.
In addition, at March 31, 2010, two consolidated subsidiaries had contingent liabilities arising from notes discounted withbanks and notes endorsed in the aggregate amount of \309 million（ $3,321 thousand）.

15. Amounts per Share

2010

2009
（yen）

Net income（ loss）・・・・・・・・・・・・・・・・・・・・・・・
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・
Net assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・¥ 60.8514.00
898.33

2010（Thousands of
U.S. dollars）¥ (29.61)
15.50
831.11$ 0.650.15
9.66

Net income (loss) per share has been computed based on the net income (loss) available to shareholders of common stockand the weighted-average number of shares of common stock outstanding during the year. Diluted net income (loss) per
share has not been presented for the years ended March 31, 2010 and 2009 since neither the Company nor any of theconsolidated subsidiaries had any potentially dilutive shares at March 31, 2010 and 2009.
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 theinterim cash dividends paid.
The ﬁnancial data used in the computation of net income (loss) per share for the years ended March 31, 2010 and 2009 issummarized as follows:

2010

2009

（Millions of yen）

Net income（ loss）・・・・・・・・・・・・・・・・・・・・・・・
Deductions from net income（ loss） ・・・・・・・・・・
Adjusted net income（ loss）available toshareholders of common stock ・・・・・・・・・・・・
Weighted-average number of shares of common

2010（Thousands of
U.S. dollars）¥ 10,832–¥ （5,307）–$ 116,423–¥ 10,832¥ （5,307）$ 116,423

178,008

179,244

178,008

stock outstanding during the year（ thousandsof shares） ・・・・・・・・・・・・・・・・・・・・・・・・・・・

36

Notes to Consolidated Financial Statements（continued）

16. Derivatives
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, 2010 is summarized as follows：（Millions of yen）

Currency-related transactions

2010

Contract value
Method of hedge
accounting
Deferral hedge

Transaction

Major hedged item

Maturing Maturing
withinafter one
one year
year
Fair value

Forward foreign currency
exchange contracts

Accounts payable, trade

Forward foreign currency

￥ 232

￥ 112

￥（7）

7,187
19

–
–

（*）
（*）

exchange contracts
Allocation method

Sell：

Accounts receivable,

Buy：

Accounts payable, trade

trade（Thousands of U.S. dollars）

2010

Contract value
Method of hedge
accounting
Deferral hedge

Transaction

Major hedged item

Maturing Maturing
withinafter one
one year
year
Fair value

Forward foreign currency
exchange contracts

Accounts payable, trade

Forward foreign currency$ 2,494$ 1,204$ 75

77,246
204

–
–

（*）
（*）

exchange contracts
Allocation method

Sell：

Accounts receivable,

Buy：

Accounts payable, trade

trade

37

Notes to Consolidated Financial Statements（continued）

Fair value of forward foreign currency exchange contracts is computed using prices provided by counterparty ﬁnancial
institutions.
（ *） Fair value of forward foreign currency exchange contracts under the allocation method is included in accounts

receivable, trade or accounts payable, trade.

Interest-rate related transactions（Millions of yen）

2010

Contract value
Method of hedge
accounting

Transaction

Swap rates applied toInterest rate swaps

underlying debt

Receive / ﬂoating and pay

Major hedged item

Notional
amountMore than
one year Fair value

Long-term debt

￥600

/ ﬁxed￥ 300(*)（Thousands of U.S. dollars）

2010

Contract value
Method of hedge
accounting

Transaction

Swap rates applied toInterest rate swaps

underlying debt

Receive / ﬂoating and pay

Major hedged item

Maturing Maturing
withinafter one
one year
year
Fair value

Long-term debt

/ ﬁxed$ 6,449$ 3,224(*)（ *） Because interest rate swap agreements are accounted applying swap rates to underlying long-term debt, their fairvalue is included in that of the long-term debt disclosed in Note 3.

Derivative transactions to which hedge accounting are applied as of March 31, 2009 are not disclosed because of theirimmateriality.

38Notes to Consolidated Financial Statements（continued）

17. Segment Information
The Company and its consolidated subsidiaries are primarily engaged in the manufacture and sale of products in Japanand overseas.

Business Segments
The business segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2010
and 2009 is outlined as follows：Year ended March 31, 2010

Functional
chemicals

Environmentand catalysts¥ 99,330 ¥ 131,514
22,3301,359
121,660
132,873
116,333
123,712¥ 5,327¥ 9,161

Total assets ・・・・・・・・・・・・・・・・・・・・・・ ¥ 132,981 ¥ 140,470
Depreciation and amortization ・・・・・・・・
7,048
9,345
Loss on impairment of property, plant and equipment–
704
Capital expenditures ・・・・・・・・・・・・・・・
14,8886,510

I. Sales and operating income：Sales to third parties ・・・・・・・・・・・・・・・
Intragroup sales and transfers ・・・・・・・・
Net sales ・・・・・・・・・・・・・・・・・・・・・・・・
Operating expenses ・・・・・・・・・・・・・・・・
Operating income（ loss）・・・・・・・・・・・・・

BasicchemicalsII. Total assets, depreciation and amortization,
loss on impairment of property, plant andequipment and capital expenditures：（Millions of yen）

Total

Eliminations
or corporate

Consolidated¥ 13,473
1,259
14,732
15,377¥ (645)¥ 244,317
24,948269,265
255,422¥ 13,843¥–(24,948)(24,948)(24,986)¥ 38¥ 244,317–
244,317230,436¥ 13,881¥ 15,363
396–
471¥ 288,814
16,789704
21,869¥ 22,132–––¥ 310,946
16,789704
21,869Year ended March 31, 2010

（Millions of yen）

Basicchemicals

Functional
chemicals

Environmentand catalysts

Total

Eliminations
or corporate

Consolidated

Sales to third parties ・・・・・・・・・・・・・・ ¥ 117,902
Intragroup sales and transfers ・・・・・・・
31,735Net sales ・・・・・・・・・・・・・・・・・・・・・・・
149,637
Operating expenses ・・・・・・・・・・・・・・・
148,048
Operating income ・・・・・・・・・・・・・・・・¥ 1,589¥ 139,862
1,624
141,486
143,381¥ (1,895)¥ 31,338
1,656
32,994
31,772¥ 1,222¥ 289,102
35,015324,117323,201¥ 916¥–(35,015)(35,015)(34,721)¥ (294)¥ 289,102–
289,102
288,480¥ 622

Total assets ・・・・・・・・・・・・・・・・・・・・・ ¥ 117,680
Depreciation and amortization ・・・・・・・
7,687
Loss on impairment of property, plant and equipment–
Capital expenditures ・・・・・・・・・・・・・・
12,728¥ 141,205
10,7372,011
7,434¥ 25,462
485–
452¥ 284,347
18,9092,011
20,614¥ 18,601–––¥ 302,948
18,9092,011
20,614Basicchemicals

Functional
chemicals

I. Sales and operating income：II. Total assets, depreciation and amortizationand capital expenditures：Year ended March 31, 2010
Environmentand catalysts

Total

		
Sales to third parties ・・・・・・・・・・・・・・ $ 1,067,606 $ 1,413,521$ 144,808 $ 2,625,935
Intragroup sales and transfers ・・・・・・・
13,532240,004
14,607
268,143
Net sales ・・・・・・・・・・・・・・・・・・・・・・・ 1,307,610 1,428,128
158,340
2,894,078
Operating expenses ・・・・・・・・・・・・・・・ 1,250,355 1,329,665
2,745,293
165,273
Operating income（ loss）・・・・・・・・・・・・$ 57,255$ 98,463$ (6,933) $ 148,785

I. Sales and operating income：II.Total assets, depreciation and amortization,
loss on impairment of property, plant andequipment and capital expenditures：
Total assets ・・・・・・・・・・・・・・・・・・・・・ $ 1,429,288 $ 1,509,781
Depreciation and amortization ・・・・・・・
75,752
100,441
Loss on impairment of property, plant and equipment–
7,567
Capital expenditures ・・・・・・・・・・・・・・
160,017
69,970$ 165,123 $ 3,104,192
180,449
4,256
7,567
–
235,049
5,062（Thousands of U.S. dollars）

Eliminations
or corporate

Consolidated$–(268,143)(268,143)(268,552)$ 409$ 2,625,935–
2,625,935
2,476,741$ 149,194$ 237,876–––$ 3,342,068
180,449
7,567
235,049

39

Notes to Consolidated Financial Statements（continued）

As mentioned in Note 1(f), eﬀective the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries
have changed the method of valuation of inventories. As a result of this change, operating income decreased by ¥50
million in the basic chemicals business segment and increased by ¥441 million in the environment and catalysts businesssegment and operating loss increased by ¥125 million in the functional chemicals business segment for the year ended
March 31, 2009 as compared to the corresponding amounts which would have been recorded under the previous method.
As mentioned in Note 1(g), eﬀective the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries
have changed their useful lives for depreciation of machinery and equipment. As a result of this change, operating income
increased by ¥305 million in the basic chemicals business segment and by ¥3 million in the environment and catalysts
business segment and operating loss decreased by ¥121 million in the functional chemicals business segment for the year
ended March 31, 2009 as compared to the corresponding amounts which would have been recorded under the previous
useful lives.

Geographical Segments
The geographical segment information of the Company and its consolidated subsidiaries for the years ended March 31,
2010 and 2009 is outlined as follows：Year ended March 31, 2010
Japan

EuropeAsia

I. Sales and operating income（loss）：

Sales to third parties ・・・・・・・・・・・・・ ￥173,912 ￥32,408
Intragroup sales and transfers ・・・・・・
99
24,903
Net sales ・・・・・・・・・・・・・・・・・・・・・・ 198,815
32,507
Operating expenses ・・・・・・・・・・・・・・ 187,723
31,565
Operating income（ loss）・・・・・・・・・・・ ￥11,092￥942￥24,091
99
24,19023,289￥901
		 		II. Total assets ・・・・・・・・・・・・・・・・・・・ ￥248,096 ￥15,476 ￥26,447

Other

Total

￥13,906 ￥244,317
807
25,90814,713
270,225
14,586257,163￥127 ￥13,062￥244,317–
244,317230,436￥13,881￥10,057 ￥300,076 ￥10,870￥310,946

Total（Millions of yen）

Eliminations
or corporate Consolidated

Europe

Asia

Other

Sales to third parties ・・・・・・・・・・・・・ ￥212,781
Intragroup sales and transfers ・・・・・・
29,602
Net sales ・・・・・・・・・・・・・・・・・・・・・・ 242,383
Operating expenses ・・・・・・・・・・・・・・ 241,609
Operating income（ loss）・・・・・・・・・・・￥774￥33,92495
34,01934,479￥(460)￥26,406
1,289
27,69527,759￥(64)￥15,991 ￥289,102
190
31,176
16,181 320,278
17,239 321,086￥(1,058) ￥ (808)￥– ￥289,102(31,176)–(31,176)
289,102(32,606)
288,480¥1,430￥622

II. Total assets ・・・・・・・・・・・・・・・・・・・ ￥243,696￥16,940￥25,113￥8,819 ￥294,568￥8,380 ￥302,948

I. Sales and operating income（loss）：

Year ended March 31, 2010
Japan

40

Eliminations
or corporate Consolidated￥–(25,908)(25,908)(26,727)¥819

Year ended March 31, 2010
Japan

（Millions of yen）

Europe

Asia

Other

Total

（Thousands of U.S. dollars）

Eliminations
or corporate Consolidated

I. Sales and operating income（loss）：
Sales to third parties ・・・・・・・・・・・ $1,869,218 $348,323
Intragroup sales and transfers ・・・・
267,659
1,064
Net sales ・・・・・・・・・・・・・・・・・・・・ 2,136,877
349,387
Operating expenses ・・・・・・・・・・・・ 2,017,659
339,263
Operating income（ loss）・・・・・・・・・ $119,218$10,124$258,932
1,064
259,996
250,312$9,684$149,462 $2,625,935
8,674
278,461
158,136 2,904,396
156,771 2,764,005$1,365 $140,391$– $2,625,935(278,461)–(278,461) 2,625,935(287,264) 2,476,741$8,803 $149,194

II. Total assets ・・・・・・・・・・・・・・・・・ $2,666,552 $166,337$284,254$108,093 $3,225,236$116,832 $3,342,068

Notes to Consolidated Financial Statements（continued）

As mentioned in Note 1(f), eﬀective the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries
have changed the method of valuation of inventories. As a result of this change, operating income in the Japan segment
increased by ¥266 million for the year ended March 31, 2009 from the corresponding amount which would have beenrecorded under the previous method.
As mentioned in Note 1(g), eﬀective the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries
have changed their useful lives for depreciation of machinery and equipment. As a result of this change, operating incomein the Japan segment increased by ¥429 million for the year ended March 31, 2009 from the corresponding amount which
would have been recorded under the previous useful lives.

Overseas Sales
Overseas sales, which include export sales of the Company and its domestic consolidated subsidiaries and sales (other thanexports to Japan) of the overseas consolidated subsidiaries, for the years ended March 31, 2010 and 2009 are summarized
as follows：Year ended March 31, 2010
Asia

EuropeAmerica

Other

Total

（Millions of yen）

Overseas sales ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Overseas sales as a percentage of consolidated net sales ・・・・・￥ 43,118 ￥ 37,228 ￥ 21,019 ￥ 13,233 ￥114,598
17.7%
15.2%
8.6%
5.4%
46.9%
Year ended March 31, 2009
Asia

EuropeAmerica

Other

Total

（Millions of yen）

Overseas sales ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Overseas sales as a percentage of consolidated net sales ・・・・・￥46,398 ￥ 39,109
16.1%
13.5%

￥22,643
7.8%￥17,150 ￥125,300
5.9%
43.3%

Year ended March 31, 2010
Asia

EuropeAmerica

Other

Total

（Thousands of U.S. dollars）

Overseas sales ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・$ 463,435 $ 400,129 $ 225,914 $ 142,229 $1,231,707

18.Related Party Transactions（ a）Principal transactions between the Company and its related parties for the years ended March 31, 2010 and 2009 aresummarized as follows：

2010
ICT Co., Ltd.：

2008

2010
（Thousands of
U.S. dollars）（Millions of yen）

Sales of ﬁnished goods ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of raw materials ・・・・・・・・・・・・・・・・・・・・・・・・・・￥8,1092,519￥ 24,246
21,997$ 87,156
27,074

Rental expense of buildings ・・・・・・・・・・・・・・・・・・・・・・・・・・

18

18

193

Yatagai Real Estate Co., Ltd.：The prices for the above related party transactions were determined in reference to market value.
The balances due from and to its related parties at March 31, 2010 and 2009 were as follows：41

Notes to Consolidated Financial Statements（continued）

2010
ICT Co., Ltd.：

Notes and accounts receivable ・・・・・・・・・・・・・・・・・・・・・・・・
Notes and accounts payable ・・・・・・・・・・・・・・・・・・・・・・・・・・

2009（Millions of yen）

￥ 3,438
1,773

2010（Thousands of
U.S. dollars）￥ 4,557308$ 36,952
19,056

The prices for the above related party transactions were determined in reference to market value.
The balances due from and to its related parties at March 31, 2010 and 2009 were as follows：（ b）Principal transactions between the consolidated subsidiaries and related parties for the years ended March 31, 2010 and2009 are summarized as follows：

2010
ICT Co., Ltd.：

2009

2010
（Thousands of
U.S. dollars）（Millions of yen）

Transportation of ﬁnished goods ・・・・・・・・・・・・・・・・・・・・・・

￥–

￥ 100

$–

Rental expense of buildings ・・・・・・・・・・・・・・・・・・・・・・・・・・

￥ 26

￥ 28

$ 279

Yatagai Real Estate Co., Ltd.：The prices for the above related party transactions were determined in reference to market value.
The balances due from and to related parties at March 31, 2010 and 2009 were as follows：

2010
ICT Co., Ltd.：
Notes and accounts receivable ・・・・・・・・・・・・・・・・・・・・・・・・

2009（Thousands of
U.S. dollars）（Millions of yen）

￥ –

2010

￥ 12

$ –

ICT Co., Ltd. is a related company in which the Company owns 50% of the shares of common stock.
A director of the Company and his family wholly own the shares of common stock of Yatagai Real Estate Co., Ltd.

19. Subsequent Event
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying
consolidated ﬁnancial statements for the year ended March 31, 2010, was approved at a shareholders’meeting held on
June 22, 2010：（Thousands ofCash dividends（ ￥7.00 = $0.075 per share）・・・・・・・・・・・・・・・・

42（Millions of yen）

U.S. dollars）￥ 1,246$ 13,392

Coporate Data

Issued：187,000,000￥16,529,413,238
3,430
1,899

（as of March 31, 2010）

General Administration & Personnel
Purchasing & Logistics

Informational Technology Managment Office
Investor & Public Relations

ResearchResearch Planning & Development

Fine & Perfotmance Chemicals Business

Catalysts & Green Energy Materials Business

Suita Plant
Taipei Office43

Coporate Data
Offices, Plants Consolidated Subsidiaries and Affiliates

Nippon Shokubai

Aﬃliated Company

Suita Plant

Himeji Plant

Advanced Materials Research Center
Strategic Technology Research Center
Fine & Specialty Chemicals Research Center
E & I Materials Research Center

GSC Catalyst Technology Research Center
Superabsorbents Research Center
Process Technology Center

Nihon Methacryl Monomer Co., Ltd.
Japan Composite Co., Ltd.

Tsukuba Regional Research Center
NIPPON NYUKAZAI CO., Ltd.

Nippon Polymer Ind. Co., Ltd.
NS Green Co., Ltd.

Kawasaki Plant

Nisshoku Engineering Co., Ltd.
CATOX Co., Ltd.

NIPPON SHOKUBAI EUROPE N.V.

NISSHOKU CHEMICAL INDUSTRY(ZHANGJIAGANG) Co., Ltd.

International Catalyst Technology. Inc.

LGMMA Corpration
Korea Oﬃce
Nisshoku Trading (Shanghai) Co., Ltd.
Taipei Oﬃce
SINO-JAPAN CHEMICAL CO.,LTD.

Singapore Acrylic Pte Ltd.
Singapore Glacial Acrylic Pte Ltd.

44

American Acryl NA, LLC
American Acryl L.P.

Coporate Data
Situation of Consolidated Group

Domestic＊1

Basic Chemicals

Supply of products

NIPPON NYUKAZAI CO.,LTD.
Supply of products

Purchasing of materials＊1

Shinritsu Co., Ltd.
Supply of products＊1

Procurement of
raw materials

Overseas
Basic Chemicals

Supply of products
Procurement of products
and raw materials＊2

Supply of products and licensingof technologies＊1

Supply of technologies
and market information＊1

PT. NIPPON SHOKUBAIINDONESIA
Singapole Acrylic Pte Ltd＊1Functional Chemicals

SINO-JAPANCHAMICAL CO., LTD.

Supply of products

Singapore Glacial Acrylic
Pte. Ltd.

Nippoh Chemicals Co., Ltd.
＊1

＊1

Nippon Polyester Co., Ltd.

Supply of products

NIPPON SHOKUBAI (ASIA)
PTE LTD.

Supply of products＊4Japan Composite Co., Ltd.
＊1Tokyo Fine ChemicalCo., Ltd.

Supply of products

Supply of products

Procurement of products
and raw materials

Functional Chemicals＊1＊1

Chugoku Kako Co., Ltd.

＊4

＊1

Nihon Jyoryu Kogyo Co., Ltd.

Supply of products and licensingof technologies＊4

Nippn Polymer Industries
Co., Ltd.

Supply of technologies
and market information

＊5

＊4
＊1

NA Industries,Inc.
Supply of products

Ameican Acryl LP.
Rental of assets

American Acryl NA.LLCNIPPON SHOKUBAIEUROPE N.V.

＊1

Nihon Methacryl
Monomer Co.,Ltd.

NISSHOKU CHEMICAL INDUSTRY(ZHANGJIAGANG)CO., LTD.
＊1

＊4

Enviroment and Catalyst

ICT Co., Ltd.

＊1

LGMMA Corporation

Procurement of raw
materials

Transportation of
products

Nisshoku Butsuryu CO.,LTD.

＊3

Supply of products

Transportation of
products

Daiko Rikuun Co., Ltd.

Transportation of
products

Flow of products and services(Several companies enclosed in a box shows
the relationship between the companies and thecompany linked by arrows)
Mainly companies involved in manufacturing
Mainly companies involved in commerce
Mainly companies involved in transportation
Consolidated subsidiaries
Equity-method non-consolidated subsidiaries
Non-equity-method non-consolidated subsidiaries
Equity-method affiliates
Non-equity-method affiliates
Note: Shinritsu Co., Ltd. and Nisshoku Butsuryu Co.,
Ltd. belong in the several business segments.

45

Coporate Data
Consolidated Subsidiaries and Affiliates

Shigeo Yasumoto

Manufacture and sale of superabsorbent polymers,
polymers for concrete admixture and water soluble polymers
Technical Liaison and business development

Hisakazu Fujita
NIPPON SHOKUBAI EUROPE N.V.
Masakazu Tanaka
Koichiro Yamada
Koichiro Yamada
Manufacture and sale of superabsorbent polymers
and polymers for concrete admixture

Susumu Takase

Hideyuki Tahara

2009

46

Coporate Data
Directory47

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
URL http：//www.shokubai.co.jp