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

Financial Highlights .............................1
To Our Shareholders ...........................2
Review of Operations ...........................4
Medium- and Long-term
Business Plans............................5
Corporate Governance..........................7
Topics .....................................................9Management Indices ........................... 10
Financial Section
Report of Independent Auditors .. 12
Consolidated Balance Sheets ......... 13
Consolidated Statements ofIncome ....................................... 15
Consolidated Statements ofComprehensive Income .......... 16
Consolidated Statements of
Changes in Net Assets ............1 7
Consolidated Statements ofCash Flows................................ 20
Notes to Consolidated
Financial Statements............... 22
Coporate Data ..................................... 47such as automotive catalysts, process catalysts, De-NOx catalysts and dioxin
decomposition / elimination equipments, etc.

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

Year ended March 31,

2011

2010

（ Millions of Yen）

Net sales
Operating Income
Ordinary Income（ loss）
Net Income

2011（ Thousands of U.S. dollars）¥ 288,345
29,81330,955
21,119¥ 244,317
13,881
14,934
10,832

US＄ 3,467.769
358.545372.279253.987¥ 329,332
194,266¥ 310,946
163,781

US$ 3,960.698
2,336.332
U.S. dollars

Yen¥ 110.30
22.00¥ 60.85
14.00

US＄

1.33
0.26

83.15

31.0
22.0

21.1

20.0

289

288

18.0

9.7

16.0

244

14.0
12.0

14.9

10.8

10.0

4.9

8.0
6.0
4.0
2.0

0.8
'07

'08

'09

'10

'11

'07

'08

'09

0.2

0.0
'10

'11

'07

'08

'09

'10

'11

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, 2011.

Overview
The Japanese economy in fiscal 2010 showed somesigns of a pickup in production due to a recovery in exports,
but uncertainty heightened as natural resources prices
continued to rise globally and the employment environment
remained harsh.
In the chemicals industry, demand was firm in China
and some other regions, but the business environment
remained harsh overall due to the yenʼs appreciation, rising
crude oil prices, and the start of operations at large plants in
the Middle East and Asia.
In this business environment, the Nippon ShokubaiGroupʼs consolidated net sales rose 18.0% year-over-year
to 288,345 million yen (+44,028 million yen) in the ﬁscal
year under review. Yen appreciation reduced the value ofrepatriated sales, but sales volumes rose on firm demand,2

To Our Shareholders

and product prices rose due to elevated raw materials prices

of operations of the Group. No employees were injured andand tight supply-demand conditions.

there was only minimal damage to the facilities of somesubsidiaries.

As for profits, operating income increased 114.8%
year-over-year to 29,813 million yen (+15,932 million

We would like to ask all our shareholders for yourcontinued support for the future.

yen) in the fiscal year under review. Although fixed costs
increased due to the bolstering of production capacity for

June 2011

ethylene oxides, acrylic acids and superabsorbent polymers,
proﬁtability improved due to an increase in production andsales volumes and a widening of spreads for some products(product prices rose more than raw materials prices in the

Masanori Ikeda, President

markets).
Ordinary income increased 107.3% year-over-year to30,955 million yen (+16,021 million yen) in the ﬁscal year
under review. Although foreign exchange losses and losses
on retirement of noncurrent assets increased, non-operating
income rose 89 million yen due to an increase in equitymethod investment profits. Net income increased 95.0%
year-over-year to 21,119 million yen (+10,288 million yen).
The Great East Japan Earthquake that occurred on
March 11, 2011 did not have a signiﬁcant impact on results

Performance Highlights
Year endrd March 31,

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

2011

2010

￥ 288,345
29,81330,955
21,119￥ 110.30
9.7
12.1$=￥85.72
EUR=￥113.15￥47,500/kl

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

44,02815,932
16,021
10,288￥ 49.45̲̲

18.0％
114.8％
107.3％
95.0％
81.3％
4.8 points
5.1 points（ ￥7.16）（ ￥17.99）￥6,300/kl

3Review of Operations
Performance by Business Segment

and upward revisions to selling prices to reflect higher

Basic Chemicals

raw materials prices.

Sales of acrylic acids and acrylates increased sharply

Sales of polymer for concrete admixture, electronic

due to a signiﬁcant increase in sales volumes on the backand information materials, and resins for paints increasedof ﬁrm demand, and an increase in export prices due todue to a rise in sales volumes.
Sales of raw materials for detergents increased due

a surge in market prices driven by tight supply-demand

to upward revisions to selling prices, despite a decline inconditions worldwide.
Sales of ethylene oxide also increased due to a rise insales volumes.
Sales of processed adhesive products and iodine

sales volumes on ﬁrm demand, and upward revisions tocompounds decreased due to a decline in sales volumes.

selling prices to reﬂect higher raw materials prices.

In summary, sales in the functional chemicals

Sales of ethylene glycol increased as market prices

segment increased 7.6 % year-over-year to 141,553 million

remained high and domestic sales volumes rose.
Sales of higher alcohol increased due to a rise in sales

yen.

volumes driven mainly by exports, and upward revisions
to selling prices to reﬂect higher raw materials prices.
Sales of ethanolamine were roughly flat as upwardrevisions to selling prices to reﬂect higher raw materials
prices oﬀset lower export sales volumes.
In summary, sales in the basic chemicals segment

Diapers（ Superabsorbent polymer）

Flat Panel Display（ Electronic Information
associated Materials）

increased 25.9% year-over-year to 125,052 million yen.

Environment & Catalysts
Sales of automotive catalysts, process catalysts, andfuel cell materials increased sharply due to a signiﬁcant
increase in sales volumes.
Sales of De-NOx catalysts, and dioxins decomposition
Paints（ Acrylates）

Synthetic Detergents（ SOFTANOL）

catalysts decreased due to a decline in sales volumes.
In summary, sales in the environment & catalysts
segment increased 61.4% year-over-year to 21,740 million

Functional Chemicals
Sales of superabsorbent polymers increased, despiteyen.

a decline in selling prices from yen appreciation among
other factors, as sales volumes significantly increasedon firm demand and also thanks to the bolstering ofproduction capacity.
Sales of specialty acrylates, maleic anhydride, andresin modiﬁers increased due to a rise in sales volumes

Automotive Catalysts

Fuel-cell materials（ Zirconia sheets, cells）

2010

ChangePerformance by Business Segment
2011（ Year ended March 31,）Net Sales
Operating income（ loss）

4

125,052
13,986

141,553
13,323

21,7402,366

99,3295,328

131,514
9,161

13,473（ 645）

25,722
8,658

10,039
4,162

8,267
3,011

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 everofin 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 ofTechnoAmenity: providing value and comfort torecession 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;5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.
Lastly, the Company steadfastly carries out its role

（ reference ﬁgure）.

and 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 oncompliance and selfresponsibility, and intends to ensure

6

principle, safety takes precedence over production. We
would like to ask all our shareholders for your continued
support for the future.

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

Board of Directors

AuditsReports

President

Accounting
Auditors

Corporate Management
Committee

Collaborates

Collaborates

Legal
Advisors

Risk Management
Committee

AuditsProvidessupportCSR Management
Committee

Auditors’ Office

RC Promotion
Committee
Compliance
Committee

Internal Control
Committee
Corporate
Planning

Internal
Audit
OfficeInternal
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

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 to7

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 by
the president, discusses and decides the policy and plansof activities for Responsible Care
（ RC） placing a special
emphasis on environmental preservation, safety and8

Auditors and Accounting Auditors.

Topics
Expansion of production capacity of zirconia sheets for fuel cells
We developed a mass-production technology ofzirconia sheets, which are a key material of Solid Oxide
Fuel Cells（ “SOFC”）, and to meet the growing demand
we established a production capacity of 3 million sheets
per year in February 2011. We will expand our sales ofzirconia sheets through satisfying usersʼ requirements
appropriately. We will develop our fuel cell materials thathave high potential as a clean energy into one of our core

Zirconia sheets & cells

businesses in the future.

The Nippon Shokubai Wood of Water Resources Development Activity
Forest maintenance activity was performed as a partof new employees training at “Nippon Shokubai Woodof Water Resources” in Akazai valley, Shisou City, Hyogo
Prefecture on April 15. They reconﬁrmed the importanceof environmental preservation through the group
discussion after the training. We hope that they will growup into businesspersons with a social viewpoint.
In addition, the activity of 2011 by the volunteer

Forest maintenance activity

employees has begun since May 21, 2011. We try tomaintain diversity of forest that brings up a lot of lives
through “Activity to conserve forest.”

New employees training（ group discussion）

New employees training（ thinning operation）

9

Management Indices（ 1）Consolidated Management IndicesYear ended March 31

2007

2008

2009

2010

2011
（Millions of yen）

Net Sales

266,513302,669

289,102244,317

288,345

Ordinary Income

22,754

20,745757

14,93430,955（ loss）
Net Income

13,988

11,875（5,307）

10,832

21,119Total Assets

323,675
̲

352,783̲

302,948

310,946

329,332

154,900

163,244

198,092

179,368

175,634

151,662

163,781

194,266

Total Shareholders Equity
Total Net Assets（Yen）

Net Assets per Share

948.34947.34

831.11898.33938.67（ loss）per ShareNet Income

74.92
̲

64.91
̲

（29.61）
̲

60.85
̲

110.3
̲

Capital Ratio
（ %）

54.1

48.6

48.8

51.4

57.9

Return on Equity
（ %）

8.2

6.9

7 .0

1 2 .1Price Earning Ratio（ times）

17.0

10.2

（3.3）
̲

13.9

9.4

Fully Diluted Net Income per Share（Millions of yen）

Cash Flow from Operating Activities
Cash Flow from Investing Activities

16,087

20,12917,61344,346（23,109） （33,100） （16,675） （23,850）

31,706（16,696）

Cash Flow from Financing Activities

4,037

17,495

8,099（21,772）（3,050）Cash and Cash Equivalents at Year-end

16,991

21,371

29,45028,234

39,174

Number of Employees

2,841

3,290

3,415

3,430

3,576

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.

10

Years ended March 31, 2011 and 2010
with Report of Independent Auditors

Consolidated Financial Statements
Report of Independent Auditors ..........................................12
Consolidated Balance Sheets ................................................13
Consolidated Statements of Income .....................................15
Consolidated Statement of Comprehensive Income ...........16
Consolidated Statements of Changes in Net Assets ...........17
Consolidated Statements of Cash Flows .............................20
Notes to Consolidated Financial Statements .......................2211

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, 2011 and 2010, and the related
consolidated statements of income, changes in net assets, and cash ﬂows for the years
then ended and consolidated statement of comprehensive income for the year ended
March 31, 2011, all expressed in yen. These ﬁnancial statements are the responsibilityof the Company s management. Our responsibility is to express an opinion on theseﬁnancial 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, 2011 and 2010, 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.
Supplemental Information
As described in Note （1 g）to the consolidated ﬁnancial statements, the Company and its
domestic consolidated subsidiaries have changed their depreciation method for property,
plant and equipment（ except for leased assets）from the declining-balance method to thestraight-line method.
The U.S. dollar amounts in the accompanying consolidated financial statements withrespect to the year ended March 31, 2011 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 21, 201112

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

March 31,
2011

2010

2011
（Thousands of
U.S. dollars）（Millions of yen）

（Note2）

AssetsCurrent assets：
Cash and cash equivalents（ Note 3）・・・・・・・・・・・・・・・・・・・・・・・・・￥ 39,174130￥ 28,234
170$ 471,125
1,563

7,855
64,821（74）
39,4153,707
5,807
160,835

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

94,468779,567（890）
474,023
44,582
69,8381,934,276

31,567
79,232
289,3232,649
523（287,501）
115,793

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

379,639
952,880
3,479,531
31,8586,290（3,457,618）
1,392,580

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

21,80317,026
3,517
3,158
7,200
52,70420,047
17,687
3,201
3,399
7,943
52,277262,213204,762
42,29737,98086,590633,842

Total assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・￥ 329,332￥ 310,946$ 3,960,698

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 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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 :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）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

13

Consolidated Balance Sheets（continued）

March 31,

2011

2010

（Millions of yen）

2011
（Thousands of
U.S. dollars）（Note2）

Liabilities and Net Assets
Current liabilities :￥ 16,749
4,884￥ 26,587
7,631$ 201,431
58,737

6,193
33,450
‒
30
2,798
177
2,586
180
7,639
7,113
81,7994,449
34,042
12
34
2,405
146
2,526
‒
2,476
8,710
89,01874,480402,285‒361
33,6502,129
31,1002,165
91,87085,544
983,752

42,418
198
9,079
284
1,288
53,26747,257
272
8,770
356
1,492
58,147510,1382,381
109,1883,416
15,491
640,61425,03822,083
158,961（7,990）198,092

16,52913,574
141,118（7,977）
163,244

301,118
265,580
1,911,738（96,091）
2,382,345

2,367（9,885）Net unrealized deferred loss on hedges ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・（17）
Total accumulated other comprehensive loss, net・・・・・・・・・・・・・・・・・・・・・・（7,535）
Minority interests ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
3,709
Total net assets・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
194,266
Total liabilities and net assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 329,332

2,615（5,901）（35）（3,321）
3,858
163,781￥ 310,946

28,467（118,882）（204）（90,619）
44,606
2,336,332$ 3,960,698

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 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Reserve for loss on disaster ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
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 15）
Net assets :Shareholders equity（ Note 10）：
Common stock :Authorized ‒ 424,000,000 shares ;Issued ‒ 212,000,000 shares in 2011 and 187,000,000 shares in 2010
Capital surplus・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Retained earnings ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Less treasury stock, at cost ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total shareholders' equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accumulated other comprehensive income（ loss）:
Net unrealized holding gain on securities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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

14

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

Years ended March 31,
2011

2010

（Millions of yen）

2011
（Thousands of
U.S. dollars）（Note2）

221,796
66,54936,73629,813￥ 244,317
196,066
48,251
34,37013,881$ 3,467,769
2,667,420
800,349
441,804
358,545

699
（874）
416
2,354
（938）
（362）
（571）
1,198
1,161
322
138
（402）
（191）
（2,361）30,402641（1,222）
391
1,037
（312）
‒
（704）
1,237
‒
‒
‒
‒
（248）
（574）
14,127

8,406（10,511）
5,003
28,310（11,281）（4,354）（6,867）
14,408
13,963
3,873
1,660（4,835）（2,297）（28,395）
365,628

9,992（1,004）
8,988
21,414（295）￥ 21,119

2,332
821
3,153
10,974（142）￥ 10,832

120,168（12,075）
108,093257,535（3,548）$ 253,987

Net sales（ Note 18）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 288,345
Cost of sales（ Note 11）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Gross proﬁt
Selling, general and administrative expenses（ Note 11）・・・・・・・・・・・・
Operating income（ Note 18）・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other 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 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Gain on accident insurance claims（ Note 12） ・・・・・・・・・・・・・・・・・・
Gain on sales of property, plant and equipment ・・・・・・・・・・・・・・・・
Government subsidies ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on reduction of property, plant and equipment ・・・・・・・・・・・・・
Loss on disposal of property, plant and equipment ・・・・・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Income before income taxes and minority interests ・・・・・・・・・・・・
Income taxes（ Note 9）：
Current ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Deferred ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Income before minority interests ・・・・・・・・・・・・・・・・・・・・・・・・
Minority interests in earnings of consolidated subsidiaries ・・・・・・・・・・
Net income（ Note 16）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

15

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

Year ended March 31,

Income before minority interests ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

2011

2011

（Millions of yen）

（Thousands of
U.S. dollars）（Note2）¥ 21,414$ 257,535（253）
1（3,679）（514）（4,445）¥16,969（3,043）
12（44,245）（6,182）（53,458）$204,077¥ 16,90564$ 203,307
770

Other comprehensive income（ loss）:
Net unrealized holding loss on securities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net unrealized deferred gain on hedges ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Translation adjustments ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other comprehensive loss of equity-method aﬃliates attributable to the Company ・・・
Total other comprehensive loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Comprehensive income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Comprehensive income attributable to :Shareholders of the Company ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Minority interests ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

16

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, 2009 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 16,529￥ 13,562 ￥132,778￥（7,969） ￥154,900

Changes during the year :Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・‒‒
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 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 16,529
Net income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・（2,492）‒（2,492）‒
10,832‒
10,832
‒
‒
（16）
（16）
‒
‒
8
20
12
‒
‒
‒
‒
8,340
（8）
8,344
12
￥ 13,574 ￥141,118 ￥（7,977） ￥163,244

Accumulated other comprehensive income（loss）
Net
Net
Total
unrealized
unrealized accumulated
holdingdeferredothergain onTranslation
loss
comprehensive
securities adjustments on hedges
loss, net

Minority
interests

Total net
assets￥ 3,717¥151,662‒‒‒‒（2,492）
10,832（16）
20（Millions of yen）

Balance at March 31, 2009 ・・・・・・・・・・・・・・・・￥ 41 ￥（6,841） ￥（155） ￥（6,955）

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 ・・・・・・・・・・・・・・・・

940
2,574
940
2,574
￥ 2,615 ￥（5,901）

3,634
120
3,634
120
￥（35） ￥（3,321）

141
3,775
141
12,119￥ 3,858 ￥ 163,781

17

Consolidated Statements of Changes in Net Assets（continued）

Shareholders equity

Commonstock

CapitalsurplusLess
treasuryTotalstock, shareholders
at costequityRetainedearnings（Millions of yen）

Balance at March 31, 2010 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 16,529￥ 13,574 ￥ 141,118￥（7,977） ￥ 163,244

Changes during the year :Issuance of new stock ・・・・・・・・・・・・・・・・・・・・・・・・・・・・

8,509
8,509
‒
‒
17,018‒‒（3,276）‒（3,276）
Net income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・‒‒
21,119‒21,119Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・・
‒
‒
‒
（15）
（15）
Disposition of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・
‒
0
‒
2
2
Net changes in items other than shareholders equity ・・・・・
‒
‒
‒
‒
‒
Total changes during the year ・・・・・・・・・・・・・・・・・・・・・・・
8,509
8,509
17,843（13）
34,848
Balance at March 31, 2011 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 25,038 ￥ 22,083 ￥ 158,961 ￥（7,990） ￥ 198,092
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Accumulated other comprehensive income（loss）
Net
Net
Total
unrealized
unrealized accumulated
holdingdeferredothergain onTranslation
loss
comprehensive
securities adjustments on hedges
loss, net

Minority
interests

Total net
assets￥ 3,858¥163,781

‒
‒
‒
‒
‒

17,018（3,276）21,119（15）
2（Millions of yen）

Balance at March 31, 2010 ・・・・・・・・・・・・・・・・￥ 2,615￥（5,901）

‒
‒
‒
‒
‒

‒
‒
‒
‒
‒

￥（35） ￥（3,321）

Changes during the year :Issuance of new stock ・・・・・・・・・・・・・・・・・
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, 2011 ・・・・・・・・・・・・・・・・

18（248） （3,984）（248） （3,984）￥ 2,367 ￥（9,885）

18（4,214）18（4,214）￥（17） ￥（7,535）（149） （4,363）（149）
30,485￥ 3,709 ￥ 194,266

Consolidated Statements of Changes in Net Assets（continued）

Shareholders equity

Commonstock

CapitalsurplusLess
treasuryTotalstock, shareholders
at costequityRetainedearnings（Thousands of U.S. dollars）（Note 2）

Balance at March 31, 2010 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ $ 198,785$ 163,247 $ 1,697,150 $（95,935）$ 1,963,247

Changes during the year :Issuance of new stock ・・・・・・・・・・・・・・・・・・・・・・・・・・・・

102,333‒
Net income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・‒
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・・‒
Disposition of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・‒
Net changes in items other than shareholders equity ・・・・・‒
Total changes during the year ・・・・・・・・・・・・・・・・・・・・・・・ 102,333
Balance at March 31, 2011 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ $ 301,118
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

102,333‒‒
204,666‒ （39,399）‒ （39,399）‒
253,987‒
253,987
‒
‒
（180）
（180）
0
‒
24
24
‒
‒
‒
‒
102,333
214,588（156）
419,098$ 265,580 $ 1,911,738 $（96,091）$ 2,382,345

Accumulated other comprehensive income（loss）
Net
Net
Total
unrealized
unrealized accumulated
holdingdeferredothergain onTranslation
loss
comprehensive
securities adjustments on hedges
loss, net

Minority
interests

Total net
assets（Thousands of U.S. dollars）（Note 2）

Balance at March 31, 2010 ・・・・・・・・・・・・・・・・$ 31,449$（70,968）

‒
‒
‒
‒
‒

‒
‒
‒
‒
‒

$（421） $（39,940） $ 46,398 $ 1,969,705

Changes during the year :Issuance of new stock ・・・・・・・・・・・・・・・・・
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・
Net income ・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・・・

‒
‒
‒
‒
‒

‒
‒
‒
‒
‒

‒
‒
‒
‒
‒

204,666（39,399）
253,987（180）
24

Net changes in items other than shareholders
equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total changes during the year ・・・・・・・・・・・・
Balance at March 31, 2011 ・・・・・・・・・・・・・・・・（2,982） （47,914）（2,982） （47,914）$ 28,467 $（118,882）

217 （50,679） （1,792） （52,471）
217 （50,679） （1,792）
366,627$（204） $（90,619） $ 44,606 $ 2,336,332

19

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

Year ended March 31,
2011

2010

（Millions of yen）

2011
（Thousands of
U.S. dollars）（Note2）

Operating activities :Income before income taxes and minority interests ・・・・・・・・・・・・・・・・
Adjustments to reconcile income before income taxes and minority
interests to net cash provided by operating activities :Depreciation and amortization ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on impairment of property, plant and equipment ・・・・・・・・・・・
Loss on devaluation of investments in other securities・・・・・・・・・・・
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 ・・・・・・・・・・・・・
Stock issuance cost ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Fire damage to factory equipment ・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on reduction of property, plant and equipment ・・・・・・・・・・・・
Gain on accident insurance claims ・・・・・・・・・・・・・・・・・・・・・・・・・・
Gain on sale of property, plant and equipment ・・・・・・・・・・・・・・・・
Government subsidies・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
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 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Proceeds from accident insurance claims ・・・・・・・・・・・・・・・・・・・・・・・・
Proceeds from government subsidies ・・・・・・・・・・・・・・・・・・・・・・・・・・・（ Payment）refund of income taxes ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net cash provided by operating activities ・・・・・・・・・・・・・・・・・・・・・・・¥ 30,402¥ 14,127$ 365,628

15,619
571
362
317
（699）
874
（2,354）
172
97
839
402
（1,161）
（322）
（138）
1,902

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

187,841
6,867
4,354
3,812
（8,406）
10,511（28,310）
2,069
1,167
10,090
4,835（13,963）（3,873）（1,660）22,875（10,910）（3,327）3,080（239）
35,487
1,739
（884）
1,034
138
（4,879）（929）
31,706（10,021）
5,227
14,954
185
43,1971,105（1,368）‒‒1,412‒
44,346（131,209）（40,012）37,041（2,874）
426,783
20,914（10,631）
12,435
1,660（58,677）（11,173）
381,311（15,301）396（2,610）（24,025）
108（1,261）（184,017）
4,762（31,390）

330
200
（177）
134
332
¥
（16,696）

516
400
（8）
686
（266）
¥
（23,850）

3,969
2,405
（2,129）1,612
3,993$（200,795）

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

Consolidated Statements of Cash Flows（continued）

Year ended March 31,
2011

2010

（Millions of yen）

2011
（Thousands of
U.S. dollars）（Note2）Financing activities：
Decrease in short-term bank loans, net ・・・・・・・・・・・・・・・・・・・・・・・
Proceeds from long-term debt ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Repayment of long-term debt ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Cash dividends paid ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Repayments of bonds ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Proceeds from issuance of common stock ・・・・・・・・・・・・・・・・・・・・・
Payments of stock issuance cost ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net cash used in ﬁnancing activities ・・・・・・・・・・・・・・・・・・・・・・・・・
Eﬀect of exchange rate changes on cash and cash equivalents ・・・・・・
Increase（ decrease）in cash and cash equivalents ・・・・・・・・・・・・・・・
Cash and cash equivalents at beginning of year ・・・・・・・・・・・・・・・・・
Cash and cash equivalents at end of year ・・・・・・・・・・・・・・・・・・・・・¥（9,255）
210（7,585）（3,276）‒
17,018
（97）
（15）
（50）
（3,050）（1,020）10,94028,234¥ 39,174¥（2,707）
1,100（12,642）（2,492）（5,000）
‒
‒
（15）
（16）
（21,772）
60（1,216）29,450¥ 28,234$（111,305）
2,526（91,221）（39,399）‒
204,666（1,167）（180）（601）（36,681）（12,266）
131,569
339,556$ 471,12521

Notes to Consolidated Financial Statements
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries March 31, 2011

1. Summary of Signiﬁcant Accounting Policies（a）Basis of presentation
The accompanying consolidated financial statements of Nippon Shokubai Co., Ltd.（ the Company ） and its consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted in Japan, which are diﬀerent in certain respects
as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from theconsolidated ﬁnancial statements prepared by 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.
Eﬀective the year ended March 31, 2011, the Company and its consolidated subsidiaries have adopted Accounting Standard for
Presentation of Comprehensive Income （ Accounting Standards Board of Japan（ ASBJ ） Statement No.25 issued on June 30,2010）. Accumulated other comprehensive income and Total accumulated other comprehensive loss, net in the accompanying
consolidated balance sheet for the year ended March 31, 2010 were previously presented as Valuation and translation
adjustments and Total valuation and translation adjustments in the prior years consolidated balance sheets, respectively.

（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 arising from the diﬀerence of cost and underlying net assets at the date of acquisition are amortized over a period of ﬁve
years on a straight-line basis.
（ Change in accounting policy）

Effective the year ended March 31, 2011, the Company and its domestic consolidated subsidiaries have adopted AccountingStandard for Equity Method of Accounting for Investments （ ASBJ Statement No.16 issued on March 10, 2008） and Practical
Solution on Uniﬁcation of Accounting Policies Applied to Associates Accounted for Using the Equity Method （ ASBJ PITF No.24
issued on March 10, 2008）. There was no impact of the adoption of this standard and practical solution on operating income andincome before income taxes and minority interests.

（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 but are reported as translation adjustments and minority interests in theaccompanying consolidated balance sheets at March 31, 2011 and 2010.
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.

22

Notes to Consolidated Financial Statements（continued）（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.

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

（g）Property, plant and equipment
Depreciation is computed principally by the straight-line method over the estimated useful lives of the respective assets except forleased assets.
（ Changes in accounting policies）

Eﬀective the year ended March 31, 2011, the Company and its domestic consolidated subsidiaries have changed their depreciation
method from the declining-balance method to the straight-line method to reflect the current economic reality of property,
plant and equipment. As a result of analyzing operating conditions and history of disposal and replacement of property, plantand equipment, it was ascertained that they operated stably over their useful lives with no sudden technical or economical
obsolescence. As this situation is anticipated to continue in the future with major investments, the Company determined that thestraight-line method better reﬂects the economic reality of property, plant and equipment usage. As a result of this change, grossproﬁt increased by ¥5,173 million（ $62,213 thousand）, operating income increased by ¥5,410 million（ $65,063 thousand）and income
before income taxes and minority interests increased by ¥5,411 million（ $65,075 thousand）for the year ended March 31, 2011 fromthe corresponding amounts which would have been recorded under the previous depreciation method. The impact on segment
information is outlined in Note 18.
Eﬀective April 1, 2010, the Company and its domestic consolidated subsidiaries have adopted Accounting Standard for Asset
Retirement Obligations （ ASBJ Statement No. 18 issued on March 31, 2008） and Implementation Guidance on AccountingStandard for Asset Retirement Obligations （ ASBJ Guidance No. 21 issued on March 31, 2008）. There was no impact of the
adoption of this standard and guidance on operating income and income before income taxes and minority interests for the year
ended March 31, 2011.

（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.

（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 asassets 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.

23

Notes to Consolidated Financial Statements（continued）（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 and certain consolidated subsidiaries provide a reserve for the cost of periodic repairs to production facilities atplants based on their estimates of the future cost of such repairs.

（p）Reserve for loss on disasterA domestic consolidated subsidiary has recorded a reserve for loss on disaster at the amount estimated to be necessary to provide
for restoration of assets damaged by the Great East Japan Earthquake.

（q）Retirement beneﬁts
Accrued retirement beneﬁts for employees have been provided based on the retirement beneﬁt 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.

（r）Distribution of retained earnings
Under the Corporation Law of Japan, the distribution of retained earnings with respect to a given ﬁnancial period is made 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 20）.

（s）Recognition of contract revenue and cost
The Company recognizes revenue by applying the percentage-of-completion method for the construction projects for which
the outcome of the construction activity is deemed certain at the end of the reporting period. To estimate the progress of such
construction projects, the Company measures the percentage 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 accounting standard and guidance outlined above, revenue from, and related cost of, construction contracts thatcommenced on or after 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.

24Notes to Consolidated Financial Statements（continued）

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 ¥83.15 = U.S. $1.00, the approximate rate of exchange in eﬀect on March 31, 2011. 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 AccountingStandard for Financial Instruments （ ASBJ Statement No.10 issued on March 10, 2008）and Implementation Guidance on Disclosuresabout Fair Value of Financial Instruments （ ASBJ Guidance No.19 issued on March 10, 2008.）（1）Current status of ﬁnancial instruments
1）Policy for ﬁnancial instruments
The Group manages temporary surplus funds through short-term bank deposits. The Group raises funds through bank loans.
The Group uses derivatives for the purpose of reducing foreign currency exchange rate fluctuation risk or interest rate
ﬂuctuation risk, and does not enter into derivatives for speculative or trading purposes.

2）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 one year, which are also hedged byforward 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, andthe assessment of the eﬀectiveness of hedging activities can be found in Note 17.

3）Risk management for ﬁnancial instrumentsi ）Monitoring for credit risk（the risk that customers or counterparties may default）
With respect to trade receivables, each related division of the Company monitors the 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.

25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, 2011 and 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.

2011

2010
（Millions of yen）

Carrying
value

Fair
value

Unrealized
loss

Carrying
value

Fair
value

¥ 39,304
72,676

Unrealized
loss¥ 39,304
72,676¥‒‒¥ 28,404
63,086¥ 28,404
63,086¥‒‒

20,648¥ 132,628

20,648¥ 132,628‒¥‒

18,902¥ 110,392

18,902¥ 110,392‒¥‒

Total liabilities ・・・・・・・・・・・・・・・・・・・・・¥ 39,643
16,7494,884
27,418¥ 88,694¥ 39,643
16,7494,908
27,693¥ 88,993

¥‒
‒
24
275
¥ 299

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

¥‒
‒
59
231
¥ 290

Derivatives ・・・・・・・・・・・・・・・・・・・・・・・・

¥（5）

¥（5）

¥‒

¥（7）

¥（7）

¥‒

Assets：i ）Cash and cash equivalents, and time
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 ・・・・・・・・・・・・・・・・・・

26

Notes to Consolidated Financial Statements（continued）

2011（Thousands of U.S. dollars）

Carrying
value

Fair
value

Unrealized
loss$ 472,688
874,035$ 472,688
874,035$‒‒

248,322

248,322‒$‒

Assets：i ）Cash and cash equivalents, and time
deposits ・・・・・・・・・・・・・・・・・・・・・・・・ii ）Notes and accounts receivable・・・・・・・・
iii）Investments in securities：
Other securities ・・・・・・・・・・・・・・・・・・・

Total assets ・・・・・・・・・・・・・・・・・・・・・・・ $ 1,595,045 $ 1,595,045

Liabilities：iv ）Notes and accounts payable ・・・・・・・・・$ 476,765 $ 476,765
201,431
201,431vi ）Current portion of long-term debt ・・・・
59,02658,737vii）Long-term debt ・・・・・・・・・・・・・・・・・・
333,049
329,741
Total liabilities ・・・・・・・・・・・・・・・・・・・・・ $ 1,066,674 $ 1,070,271
$（60）
$
（60）
v ）Short-term bank loans ・・・・・・・・・・・・・

$‒
‒
289
3,308
$ 3,597$‒

Derivatives ・・・・・・・・・・・・・・・・・・・・・・・・（l）Calculation methods of fair value of ﬁnancial instruments, securities, and derivatives are as follows :Assets :i ）Cash and cash equivalents, time deposits, and ii）notes and accounts receivable
Since these items are settled in a short period of time, their carrying values approximate the fair value.
iii）Investments in securities
Please refer to Note （1 i）.
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 is based on present value of the total amount including principal and interest, discounted by the
expected interest rate in the case of new borrowings under the same conditions and in the same amount of the balance as of theend of the period. Long-term loans with ﬂoating interest rates were hedged by interest-rate swap agreements and accounted for
as loans with ﬁxed interest rates. The estimated fair value of those long-term loans is reasonably based on the present value ofthe total of principals, interests and net cash ﬂows of swap agreements discounted by the interest rates, estimated reasonably,
applicable to loans made under similar conditions.
Derivatives transactions:
Please refer to Note 17.

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, 2011 and 2010 are presented as follows:

2011

2010

2011

（Millions of yen）

Unlisted securities and other ・・・・・・・・・・・・・・¥ 1,155（Thousands of
U.S. dollars）¥ 1,145$ 13,891

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）The redemption schedule for monetary assets and securities classiﬁed as held-to-maturity debt securities withmaturity dates as of March 31, 2011 and 2010 is as follows :

2011

2010
（Millions of yen）

Cash and cash equivalents, and time deposits ・・
Notes and accounts receivable ・・・・・・・・・・・・・・

Due within
one year

Due after one
year throughﬁve years

Due within
one year

Due after one
year throughﬁve years¥ 39,304
72,676¥‒‒¥ 28,404
63,086¥‒‒‒¥ 111,980

400
¥ 400

‒
¥ 91,490

400
¥ 400

Investments in securities：
Held-to-maturity debt securities（ unlisted foreign debt securities）・・・・・・・

2011（Thousands of U.S. dollars）

Cash and cash equivalents, and time deposits ・・
Notes and accounts receivable ・・・・・・・・・・・・・・

Due within
one year

Due after one
year throughﬁve years$ 472,688
874,035$‒‒‒$ 1,346,723

4,811$ 4,811

Investments in securities：
Held-to-maturity debt securities（ unlisted foreign debt securities）・・・・・・・

28

Notes to Consolidated Financial Statements（continued）

4. Short-Term Investments and Investments in Securities
Marketable securities classiﬁed as other securities at March 31, 2011 and 2010 are summarized as follows :

2011

2010
（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 ・・・・・・・・・・・・・・・・・・・・・・・・・・¥ 17,800
17,800¥ 13,357
13,357¥ 4,443
4,443¥ 12,403
12,403¥ 7,518
7,518¥ 4,885
4,885

2,848
2,848
¥ 20,648

3,555
3,555
¥ 16,912

（707）
（707）
¥ 3,736

6,499
6,499
¥ 18,902

7,664
7,664
¥ 15,182（1,165）（1,165）¥ 3,720

Securities whose cost exceeds their fairmarket value：
Equity securities ・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

2011（Thousands of U.S. dollars）

Book value（fair market
value）

Cost

Unrealizedgain（loss）$ 214,071
214,071$ 160,637
160,637$ 53,434
53,43434,251
34,251$ 248,322

42,75442,754$ 203,391（8,503）（8,503）$ 44,931

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

The above book value presents the amount after the recognition of loss on impairment. The Company and its consolidated subsidiaries
recorded a loss on impairment amounted to ¥362 million（ $4,354 thousand）for marketable securities classiﬁed as other securities forthe year ended March 31, 2011.

Sales of other securities for the years ended March 31, 2011 and 2010 were as follows :

2011

2010

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

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

¥5
¥‒
¥‒

2011

¥8
¥3
¥‒

$ 60
$ ‒
$ ‒

29

Notes to Consolidated Financial Statements（continued）

5. Inventories
Inventories at March 31, 2011 and 2010 were as follows :

2010

2011

（Millions of yen）

Merchandise and ﬁnished goods ・・・・・・・・・・・
Raw materials ・・・・・・・・・・・・・・・・・・・・・・・・・
Work in process ・・・・・・・・・・・・・・・・・・・・・・・
Supplies ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・¥ 21,690
8,787
5,765
3,173
¥ 39,415¥ 21,256
7,930
5,044
3,127
¥ 37,357

2011（Thousands of
U.S. dollars）$ 260,854
105,676
69,33338,160$ 474,023

6. Loss on Impairment of Property, Plant and Equipment
Property, plant and equipment are primarily grouped based on the business segment categories designated for
management control purposes. In addition, idle assets for which no immediate use is recognized are grouped individually.
For the year ended March 31, 2011, the Company determined that market expansion was unlikely, market prices would
decrease and a loss on process adhesive products would continue. Accordingly, the Company has written down certain
ﬁxed assets to their respective net recoverable amounts.
For the year ended March 31, 2010, the Company anticipated that the markets for polymers for concrete admixture andemulsions for damping materials would not expand because of the stagnation of the U.S. economy. Accordingly, theCompany has written down certain ﬁxed assets to their respective net recoverable amounts.
The net recoverable amounts of assets impaired were measured at net selling value based on prices issued by the Japanese
Ministry of Land, Infrastructure, Transport and Tourism.
Details of the loss on impairment of property, plant and equipment for the years ended March 31, 2011 and 2010 are
summarized as follows :2011
Company

Application

Nippon ShokubaiCo., Ltd.

Machines that produce
process adhesive products

Classiﬁcation
Buildings andstructures, machinery andequipment and automotive
equipment

Total（Millions of yen）

¥ 571
¥ 571

2010
Company
NA Industries, Inc.

Total

30

Application
Machines that produce
polymers for concrete
admixture andemulsions for
damping materials

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

¥ 704
¥ 704

（Thousands of U.S. dollars）$ 6,867$ 6,867

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, 2011 and 2010 were 0.68% and 0.72% respectively.
Long-term debt at March 31, 2011 and 2010 consisted of the following :

2011

2010

2011
（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¥ 15,000$ 180,397

Unsecured loans from banks and insurance companies, payable in yen,
at rates from 0.64% to 2.03%, due through 2014 ・・・・・・・・・・・・・・・

30,64037,640368,490

Unsecured loans from banks, payable in U.S. dollars, at rates from
0.46% to 0.68%, due through 2012 ・・・・・・・・・・・・・・・・・・・・・・・・・・

1,149

1,741

13,818

Secured loans from banks and insurance companies, payable in yen, at
rates from 1.55% to 2.10%, due through 2015 ・・・・・・・・・・・・・・・・・

513

507

6,170

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

47,302（4,884）¥ 42,418

54,888（7,631）¥ 47,257

568,875（58,737）$ 510,138

The aggregate annual maturities of long-term debt subsequent to March 31, 2011 are summarized below :Year ending March 31,

2012 ・・・・・・・・・・・・・・・
2013 ・・・・・・・・・・・・・・・
2014 ・・・・・・・・・・・・・・・
2015 ・・・・・・・・・・・・・・・
2016 and thereafter ・・・・

（Millions of yen）

（Thousands of
U.S. dollars）¥ 4,884
14,48013,732
14,18125¥ 47,302$ 58,737
174,143
165,147
170,547301$ 568,875

Assets pledged as collateral for short-term bank loans, long-term debt, including the current portion thereof, and notes andaccounts payable at March 31, 2011 and 2010 were as follows :

2011

2010

（Millions of yen）

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

¥‒
293
150
233
13
¥ 689

2011
（Thousands of
U.S. dollars）

¥8
293
167
292
5
¥ 765

$‒
3,524
1,804
2,802
156
$ 8,28631

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, 2011 and 2010 for the Company s and the consolidated
subsidiaries deﬁned beneﬁt pension plans :

2010

2011

（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 ・・・・・・・・・・・・・・¥（32,394）
21,204（11,190）
5,249
20（5,921）
3,158¥（9,079）¥（31,999）
20,328（11,671）6,276
24（5,371）
3,399¥（8,770）

2011（Thousands of
U.S. dollars）$（389,585）
255,009（134,576）
63,127241（71,208）
37,980$（109,188）

The components of retirement beneﬁt expenses for the years ended March 31, 2011 and 2010 are outlined as follows :

2010

2011

（Millions of yen）

Service cost ・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest cost ・・・・・・・・・・・・・・・・・・・・・・・・・・
Expected return on plan assets ・・・・・・・・・・・・

2011（Thousands of
U.S. dollars）¥ 1,429593（536）¥ 1,314549（449）$ 17,186
7,132（6,446）

3
1,302¥ 2,791（59）
1,535¥ 2,89036
15,658$ 33,566

Amortization：
Prior service cost ・・・・・・・・・・・・・・・・・・・・・・
Actuarial loss ・・・・・・・・・・・・・・・・・・・・・・・・・
Retirement beneﬁt expenses ・・・・・・・・・・・・・・

The assumptions used in accounting for the deﬁned beneﬁt pension plans for the years ended March 31, 2011 and2010 were as follows :Discount rate ・・・・・・・・・・・・・・・・・・・・・・・・・
Expected rate of return on plan assets ・・・・・・

32

2011

2010

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, 2010, the most recent date on
which such data was available.
（Millions of yen）

（Thousands of U.S. dollars）¥ 403,992$ 4,858,593

458,224¥（54,232）

5,510,812$（652,219）

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, inhabitantsand enterprise taxes. The statutory tax rate in Japan for the years ended March 31, 2011 and 2010 was, in the aggregate,approximately 40.6%.
The eﬀective tax rates reﬂected in the accompanying consolidated statements of income for the years ended March 31,
2011 and 2010 diﬀered from the above statutory tax rate for the following reasons :Statutory tax rate ・・・・・・・・・・・・・・・・・・・・・・・・・・・・

2011

2010

40.6 %

40.6 %

（5.5）
（2.4）
（3.9）

（5.3）
（3.6）
（3.5）

（3.1）
（0.1）
4.0
29.6 %

（3.0）
（1.1）
（1.8）
22.3 %

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 rates ・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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, 2011 and 2010 are summarized as follows :

2011

2010

（Millions of yen）

2011
（Thousands of
U.S. dollars）

Deferred tax assets：
Accrued retirement beneﬁts for employees ・・・・・・・・・・・・・・・・・・¥ 2,456¥ 2,303$ 29,537

978
2,232
1,050
2,651
1,265
1,099
840
736
13,307（4,278）
9,029

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

11,762
26,843
12,62831,882
15,213
13,217
10,102
8,852
160,036（51,449）
108,587

（896）
（317）
（372）
（3）
（501）
（2,089）¥ 6,940

（995）
（376）
（375）
（5）
（192）
（1,943）¥6,225（10,776）（3,812）（4,474）（36）（6,026）（25,124）$ 83,463

Intercompany proﬁt on inventories and property, plant andequipment ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Tax loss carryforwards ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Reserve for periodic repairs ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Depreciation and amortization（ including loss on impairment）・・・・
Loss on impairment of land ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued bonuses to employees ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Impairment of investments in securities 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 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

34

Notes to Consolidated Financial Statements（continued）

10. 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（ $47,144 thousand）and ¥3,920 million at March 31,
2011 and 2010, respectively.
Common stock and treasury stock
Movements in shares of common stock in issue and treasury stock during the years ended March 31, 2011 and 2010 are
summarized as follows :2011
Number of shares（Thousands）

March 31, 2010
Common stock ・・・・・・・・・・・
Treasury stock ・・・・・・・・・・・

187,000
8,976

Increase

Decrease

25,00017March 31, 2011‒
1

212,000
8,992

2010
Number of shares（Thousands）

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

187,000
8,991

Increase

Decrease‒
19

March 31, 2010‒
34

187,000
8,976

11. 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, 2011 and 2010 totaled ¥11,246 million（ $135,250 thousand）and ¥10,753 million, respectively.

12. Gain on Accident Insurance Claims
During the year ended March 31, 2011, an overseas consolidated subsidiary received insurance proceeds related to a loss
suﬀered due to ﬁre at a factory in the amount of ¥1,161 million（ $13,963 thousand）.

35

Notes to Consolidated Financial Statements（continued）

13. Other Comprehensive Income
The following tables present comprehensive income and other comprehensive income for the year ended March 31, 2010.
（Millions of yen）

2010
Unrealized gains on investments in securities ・・・・・・・¥ 2,584
44
561

Deferred gains on hedges ・・・・・・・・・・・・・・・・・・・・・・
Translation adjustments ・・・・・・・・・・・・・・・・・・・・・・・
Other comprehensive income of equity-method aﬃliates
attributable to the Company ・・・・・・・・・・・・・・・・・・

478¥ 3,667

Total other comprehensive income ・・・・・・・・・・・・・・・
Total comprehensive income attributable to :Shareholders of the Company ・・・・・・・・・・・・・・・・・・・¥ 14,466
175

Minority interests ・・・・・・・・・・・・・・・・・・・・・・・・・・・・

14. 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, 2011 and 2010 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 :

2011

2010

2011
（Thousands of
U.S. dollars）（Millions of yen）

Machinery and equipment and software :Acquisition costs ・・・・・・・・・・・・・・・・・・・・・
Accumulated depreciation/amortization ・・・・
Net book value ・・・・・・・・・・・・・・・・・・・・・・

¥ 782
（361）
¥ 421

¥ 936
（389）
¥ 547

$ 9,405（4,342）$ 5,063

Lease payments of the Company and its domestic consolidated subsidiaries relating to ﬁnance leases amounted to ¥126
million（ $1,515 thousand） and ¥160 million for the years ended March 31, 2011 and 2010, respectively. Depreciation onthese leased assets calculated by the straight-line method would have amounted to ¥126 million（ $1,515 thousand） and¥160 million for the years ended March 31, 2011 and 2010, respectively, if it had been reflected in the accompanying
consolidated balance sheets.
Future minimum lease payments（ including the interest portion thereon） subsequent to March 31, 2011 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,
2012 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
2013 and thereafter ・・・・・・・・・・・・・・・・・・・・

36（Millions of yen）

（Thousands of U.S. dollars）

¥ 94
327
¥ 421

$ 1,130
3,933$ 5,063

Notes to Consolidated Financial Statements（continued）

15. Contingent Liabilities
At March 31, 2011, the Company and one consolidated subsidiary were contingently liable as guarantors of indebtedness ofan aﬃliate in the aggregate amount of ¥1,829 million（ $21,996 thousand）.
In addition, at March 31, 2011, two consolidated subsidiaries had contingent liabilities arising from notes discounted withbanks and notes endorsed in the aggregate amount of ¥477 million（ $5,737 thousand）.

16. Amounts per Share
2010

2011
（Yen）

Net income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・
Net assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

2011（U.S. dollars）¥ 110.30
22.00
938.67¥ 60.8514.00
898.33$ 1.330.26
11.29

Net income per share has been computed based on the net income available to shareholders of common stock and theweighted-average number of shares of common stock outstanding during the year. Diluted net income per share has
not been presented for the years ended March 31, 2011 and 2010 since neither the Company nor any of the consolidated
subsidiaries had any potentially dilutive shares at March 31, 2011 and 2010.
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 per share for the years ended March 31, 2011 and 2010 issummarized as follows :

2011

2010

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

Net income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Deductions from net income ・・・・・・・・・・・・・・・

2011¥ 21,119‒¥ 10,832‒$ 253,987‒¥ 21,119¥ 10,832$ 253,987

191,476

178,008

191,476

Adjusted net income available toshareholders of common stock ・・・・・・・・・・・・
Weighted-average number of shares of common
stock outstanding during the year（ thousandsof shares） ・・・・・・・・・・・・・・・・・・・・・・・・・・・

37

17. 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, 2011 and 2010 is summarized as follows :（Millions of yen）

Currency-related transactions

2011
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

Buy

￥ 93

￥ 74

￥（5）

9,590
19

‒
‒

（*）
（*）

Forward foreign currency
exchange contracts
Allocation method

Accounts receivable,

Sell

trade
Accounts payable, trade

Buy（Millions of yen）

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
Buy

Accounts payable, trade

￥ 232

￥ 112

￥（7）

7,187
19

‒
‒

（*）
（*）

Forward foreign currency
exchange contracts
Allocation method

Sell

Accounts receivable,
trade

Buy

38

Accounts payable, trade

Notes to Consolidated Financial Statements（continued）（Thousands of U.S. dollars）

2011
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

Buy$ 1,118

$ 890

$（60）

115,334
229

‒
‒

（*）
（*）

Forward foreign currency
exchange contracts
Allocation method

Sell

Accounts receivable,

Buy

Accounts payable, trade

trade

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）

2011
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

/ ﬁxed

￥ 300

￥ 100

（*）

（Millions of yen）

2010
Contract value
Method of hedge
accounting

Transaction

Swap rates applied toInterest rate swaps

underlying debt

Receive / ﬂoating and pay/ ﬁxedMajor hedged item

Notional
amountMore than
one year Fair value

Long-term debt

￥ 600

￥ 300

（*）

39

（Thousands of U.S. dollars）

2011
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

/ ﬁxed$ 3,608$ 1,203（*）（ *）Because interest rate swap agreements are accounted for by applying swap rates to underlying long-term debt, theirfair value is included in that of the long-term debt disclosed in Note 3.

18. Segment Information
Eﬀective April 1, 2010, the Group adopted Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information （ ASBJ Statement No.17, issued on March 27, 2009） and Guidance on Accounting Standard forDisclosures about Segments of an Enterprise and Related Information （ ASBJ Guidance No.20, issued on March 21, 2008）.

（a）Segment information for the year ended March 31, 2011
1. Outline of reporting segments
The Group s reporting segments are divisions of the Group for which separate ﬁnancial information is available, andwhose operating results are reviewed regularly by the Board of Directors meeting of the Company in order to allocate
management resources and assess performance of operations.
The Group s main business lines are divided based on similarities of function and nature and the Company prepares thecomprehensive strategy and conducts the business activities corresponding to the products handled by each businessline.
Accordingly, the Group has three reporting segments based on product family: Basic chemicals, Functional chemicals,and Environment and catalysis.
Basic chemicals:
Acrylic acids, acrylic ester, ethylene oxides, ethylene glycols, ethanolamine, higher-alcohol and glycol ether
Functional chemicals:Superabsorbent polymers, pharmaceutical intermediates, polymer for concrete admixture, electronic and informationmaterials, iodine, maleic anhydride, resins for adhesives & paints, plastic molded products and process adhesive products
Environment & catalysts:
Automotive catalysts, De-NOx catalysts, dioxin decomposition catalysts, industrial catalysts, exhaust gas treatment
equipment and fuel cell material
2. Calculation methods used for sales, income or loss, assets, and other items on each reporting segment.
The accounting policies of the segments are substantially the same as those described in the significant accounting
policies in Note 1. Intersegment sales and transfers are recorded at the same prices used in transactions with third
parties.
3. Information as to sales, income or loss, assets, and other items on each reporting segment
The segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2011 and 2010is outlined as follows :40

Notes to Consolidated Financial Statements（continued）

Year ended March 31, 2011
Basic
chemicals

Functional
chemicals

Sales to third parties ・・・・・・・・・・・・・・・・ ¥ 125,052
Intragroup sales and transfers ・・・・・・・・
28,730Net sales
153,782

Depreciation and amortization ・・・・・・・・・
Amortization of goodwill ・・・・・・・・・・・・・
Increases in property, plant andequipment and other assets・・・・・・・・・・・

Adjustments
andeliminations

Consolidated¥‒¥ 288,345
32,111 （32,111）
320,456 （32,111）
138
29,67525,312304,020¥ 288,345‒
288,345
29,813329,332

Total（Millions of yen）

Sales and operating income：Segment income :Segment assets :Other items :Environmentand catalysts

13,986137,256¥ 141,553
1,664
143,217
13,323
147,191¥ 21,740
1,717
23,457
2,366
19,573¥ 8,296468¥ 7,5762¥ 381‒¥ 16,253
470¥‒‒¥ 16,253
470

5,036

9,664

525

15,225‒

15,225Adjustments
andeliminations

Consolidated¥‒¥ 13,473 ¥ 244,317
1,259
24,948 （24,948）
14,732
269,265 （24,948）
38（645）
13,843
22,132
15,363288,814¥ 244,317‒
244,317
13,881
310,946

Year ended March 31, 2010
Basic
chemicals

Functional
chemicals

Segment income（loss）:
Segment assets :Other items :Depreciation and amortization ・・・・・・・・・
Amortization of goodwill ・・・・・・・・・・・・・
Increases in property, plant andequipment and other assets・・・・・・・・・・・

Total（Millions of yen）

Sales and operating income：Sales to third parties ・・・・・・・・・・・・・・・・
Intragroup sales and transfers ・・・・・・・・
Net sales

Environmentand catalysts¥ 99,330 ¥ 131,514
22,3301,359
121,660
132,873
5,327
9,161
132,981
140,470¥ 7,048574¥ 9,3453¥ 396‒¥ 16,789
577¥‒‒¥ 16,789
577

14,8886,510

471

21,869‒21,869Adjustments
andeliminations

Consolidated

Year ended March 31, 2011
Basic
chemicals

Functional
chemicals

Total（Thousands of U.S. dollars）

Sales and operating income：Sales to third parties ・・・・・・・・・・・・・・・・$ 1,503,933 $ 1,702,381
Intragroup sales and transfers ・・・・・・・・
345,520
20,012
Net sales
1,849,453
1,722,393

Depreciation and amortization ・・・・・・・・・
Amortization of goodwill ・・・・・・・・・・・・・
Increases in property, plant andequipment and other assets・・・・・・・・・・・

Segment income :Segment assets :Other items :Environmentand catalysts

168,201
1,650,704

160,229
1,770,186$ 261,455 $ 3,467,769$ ‒ $ 3,467,769
20,650‒386,182 （386,182）
282,105
3,853,951 （386,182） 3,467,769
28,455358,545
1,660
356,885
235,394
3,960,698
304,4143,656,284$ 99,772
5,628$ 91,11224$ 44,582‒$ 195,466
5,652

$ ‒
‒

$ 195,466
5,652

60,565116,224

6,314

183,103‒

183,103

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

41

Notes to Consolidated Financial Statements（continued）（ Change in the method of depreciation of ﬁxed assets）

As described in Note 1（ g）, the Company and its domestic consolidated subsidiaries have changed their depreciation
method for property, plant and equipment（ except for leased assets）from the declining-balance method to the straight-line
method. As a result of this change, segment income increased by ¥4,157 million（ $49,994 thousand）in the basic chemicals
business segment, by ¥1,184 million（ $14,239 thousand）in the functional chemicals business segment and by ¥69 million（ $830 thousand）in the environment and catalysts business segment for the year ended March 31, 2011 as compared to thecorresponding amounts which would have been recorded under the previous method.
4. Related information
Geographical information（ 1 ）Sales

Sales categorized by countries and regions based on locations of customers of the Group for the year ended March
31, 2011 are summarized as follows :（Millions of yen）

2011
Japan

Asia

EuropeAmericas

Other

Total

¥ 153,096¥ 57,774¥ 38,504¥ 27,146¥ 11,825¥ 288,345

Total（Thousands of U.S. dollars）

2011
Japan

Asia

EuropeAmericasOther$ 1,841,202$ 694,817$ 463,067$ 326,470$ 142,213 $ 3,467,769

Asia includes east and south-east Asia.
Asia, Europe, North America and Japan.

Americas includes U.S.A. and Canada.

（ 2 ）Property, plant and equipment（Millions of yen）

2011
Japan

Asia

EuropeOther¥ 103,693¥ 4,627¥ 6,025¥ 1,448

Total¥ 115,793（Thousands of U.S. dollars）

2011
Japan

$ 1,247,060

42

Asia

EuropeOther$ 55,647$ 72,459$ 17,414 $ 1,392,580

Total

Other includes areas except forNotes to Consolidated Financial Statements（continued）

5. Information of loss on impairment（Millions of yen）

2011
Reporting segments

Loss on impairment・・・・・・・・

Basic chemicals

Functional
chemicals

Environmentand catalysis

Adjustments
and eliminations

Total

¥‒

¥ 571

¥‒

¥‒

¥ 571

（Thousands of U.S. dollars）

2011
Reporting segments

Loss on impairment・・・・・・・・

Basic chemicals

Functional
chemicals

Environmentand catalysis

Adjustments
and eliminations

Total

$‒

$ 6,867$‒$‒$ 6,867

6. Information of amortization of goodwill（Millions of yen）

2011
Reporting segments

Amortization during the year ・・
Remaining balance ・・・・・・・・

Basic chemicals

Functional
chemicals

Environmentand catalysis

Adjustments
and eliminations

Total

¥ 468
¥ 937

¥2
¥‒

¥‒
¥‒

¥‒
¥‒

¥ 470
¥ 937

Adjustments
and eliminations

Total（Thousands of U.S. dollars）

2011
Reporting segments
Basic chemicals
Amortization during the year ・・
Remaining balance ・・・・・・・・$ 5,628$ 11,269

Functional
chemicals$ 24$‒

Environmentand catalysis

$‒
$‒

$‒
$‒

$ 5,652$ 11,269

43

Notes to Consolidated Financial Statements（continued）（b）Segment information for the year ended March 31, 2010
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 year ended March 31, 2010 isoutlined as follows :Year ended March 31, 2010
Basic
chemicals

Functional
chemicals¥ 99,330
22,330121,660
116,333¥ 5,327

Total assets ・・・・・・・・・・・・・・・・・・・・・ ¥ 132,981
Depreciation and amortization ・・・・・・・
7,048
Loss on impairment of property, plant andequipment and other assets ・・・・・・・・・・・‒
Capital expenditures ・・・・・・・・・・・・・・
14,888

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

Environmentand catalysts（Millions of yen）

Eliminations
or corporate

Consolidated¥ 131,514
1,359
132,873
123,712¥ 9,161¥‒¥ 13,473 ¥ 244,317
1,259
24,948 （24,948）
14,732
269,265 （24,948）
15,377
255,422 （24,986）¥ 38¥（645） ¥ 13,843¥ 244,317‒
244,317230,436¥ 13,881¥ 140,470
9,345¥ 15,363
396¥ 288,814
16,789¥ 22,132‒¥ 310,946
16,789

704
6,510

‒
471

704
21,869‒‒704
21,869Total

II. Total assets, depreciation and amortization
and amortization, loss on impairment ofproperty, plant and equipment and capital
expenditures :Geographical Segments
The geographical segment information of the Company and its consolidated subsidiaries for the year ended March 31, 2010is outlined as follows :Year ended March 31, 2010
Japan

Europe

Asia

Other

Total

（Millions of yen）

Eliminations
or corporate Consolidated

I. Sales and operating income：44

Sales to third parties ・・・・・・・・・・・・・ ￥173,912 ￥32,408
Intragroup sales and transfers ・・・・・・
24,90399
Net sales ・・・・・・・・・・・・・・・・・・・・・・ 198,815
32,507
Operating expenses ・・・・・・・・・・・・・・ 187,723
31,565
Operating income ・・・・・・・・・・・・・・・ ￥11,092￥942￥24,091
99
24,19023,289￥901￥13,906 ￥244,317￥‒ ￥244,317
25,908 （25,908）
807‒
270,225 （25,908）
244,317
14,713
257,163 （26,727）
14,586
230,436¥819￥127 ￥13,062￥13,881

II. Total assets ・・・・・・・・・・・・・・・・・・・ ￥248,096 ￥15,476￥26,447￥10,057 ￥300,076 ￥10,870￥310,946

Notes to Consolidated Financial Statements（continued）

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 year ended March 31, 2010 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%

19. Related Party Transactions（ 1）Principal transactions between the Company and its related parties for the years ended March 31, 2011 and 2010 are

summarized as follows:

2011
ICT Co., Ltd.：Sales of ﬁnished goods ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of raw materials ・・・・・・・・・・・・・・・・・・・・・・・・・・

2011

2010

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

￥ 14,168
13,199￥ 8,1092,519$ 170,391
158,737‒

18‒

Yatagai Real Estate Co., Ltd.：
Rental expense of buildings ・・・・・・・・・・・・・・・・・・・・・・・・・・

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, 2011 and 2010 were as follows :2011
ICT Co., Ltd.：
Notes and accounts receivable ・・・・・・・・・・・・・・・・・・・・・・・・
Notes and accounts payable ・・・・・・・・・・・・・・・・・・・・・・・・・・

2010（Millions of yen）

￥ 5,388
3,480

2011（Thousands of
U.S. dollars）￥ 3,438
1,773$ 64,799
41,852（ 2）Principal transactions between the consolidated subsidiaries and related parties for the years ended March 31, 2011 and2010 are summarized as follows :2011
Yatagai Real Estate Co., Ltd.：
Rental expense of buildings ・・・・・・・・・・・・・・・・・・・・・・・・・・

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

￥‒

2011

￥ 26

$‒

The prices for the above related party transactions were determined in reference to market value.
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.

45

Notes to Consolidated Financial Statements（continued）

20. 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, 2011, was approved at a shareholders meeting held on
June 21, 2011 :Cash dividends（ ¥12.00 = $0.144 per share）・・・・・・・・・・・・・・・・

46（Millions of yen）

（Thousands of
U.S. dollars）￥ 2,436$ 29,296

Coporate Data

Issued: 212,000,000
3,576
1,910

（as of March 31, 2011）

Internal Audit Office
Corporate Planning
General Administration & Personnel
Purchasing & Logistics
Finance & Accounting

Information Technology Management Office
Investor & Public Relations
Responsible Care
Production
Engineering
Overseas Project

The Board

President

Research

Corporate Managing
Committee

Research Planning & Development
Ethylene Oxide BusinessAcrylic Business
Fine & Performance Chemicals Business
E & I Materials Business
Catalysis & Green Energy Materials Business

Taipei Office
Kawasaki Plant
Himeji Plant

Suita Plant

AuditorBoard of Auditors

Auditor Office(as of April 1, 2011)47

Coporate DataOﬃces, 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

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

GSC Catalyst Technology Research Center
Superabsorbents Research Center
Process Technology Center
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.

48

American Acryl NA, LLC
American Acryl L.P.

Coporate Data
Situation of Consolidated Group
Domestic

Overseas
Basic Chemicals Business

Basic Chemicals BusinessSupply of products and merchandise

SINO-JAPAN CHEMICAL CO., LTD.

NIPPON NYUKAZAI CO., LTD.
Supply of products andmerchandise

PT. NIPPON SHOKUBAI INDONESIA

Purchasing ofmaterials

Supply of products and merchandise

Shinritsu Co., Ltd.
Supply of products andmerchandise

Purchasing of materials and merchandise
Purchasing ofmaterials

Supply of products and merchandise
Licensing of technology
Supply of technical andmarket information

Functional Chemicals BusinessSingapore Acrylic Pte. Ltd.
Supply of products andmerchandise

Singapore Glacial Acrylic Pte. Ltd.

Nippoh Chemicals Co., Ltd.

Supply of products andmerchandise

Nippon Polyester Co., Ltd

NIPPON SHOKUBAI (ASIA) Pte. Ltd.

Supply of products andmerchandise

Japan Composite Co., Ltd.

Supply of products and merchandise

Tokyo Fine Chemical Co., Ltd.

Purchasing of materials and merchandise

Supply of products andmerchandise

Functional Chemicals Business
NA Industries, Inc.

Chugoku Kako, Ltd.

Supply of products andmerchandise

Nihon Jyoryu Kogyo Co., Ltd.
Nippon Polymer Industries Co., Ltd.

Supply of products and merchandise
Licensing of technology
Supply of technical andmarket information

Environment and Catalyst BusinessSupply of products and merchandise

Lease of assets
American Acryl NA, LLC.
NIPPON SHOKUBAI EUROPE N.V.

ICT Co., Ltd.
Purchasing of materials

Transportation of products
and merchandise

American Acryl L.P.

NISSHOKU CHEMICAL INDUSTRY (ZHANGJIAGANG) Co., Ltd.

Transportation of products
and merchandise

LG MMA Corporation

Nisshoku Butsuryu Co., Ltd.

Consolidated subsidiaries
Equity method affiliates

Note: Shinritsu Co., Ltd. and Nisshoku Butsuryu Co., Ltd.
belong to multiple segments.
(as of March 31, 2010)49

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（ as of June 30, 2011）50

Coporate Data
Directory

51

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