Annual Report 2013
Year Ended March 31, 2013

Profile

Nipro group Corporate Management Philosophy:
Always keep “Creation and Innovation” in mind, undertake diverse company
operations toward the future, strive for self-actualization and contribute to society
The Nipro Corporation was founded in 1954. Since then we have seen the pursuit of creative products andtechnologies as the keys to growth. We are consistently improving the QOL (quality of life) of patients andresponding to the issues and needs of medical practice. This is based on our concept “technological innovation”
and our corporate philosophy “contribute to society through our business activities.”
The Nipro Corporation began with the manufacture and sale of tube glass for ampoules and vials, andexpanded into the medical and pharmaceutical businesses. In the field of medical devices, Nipro is well regarded
worldwide for its technical capabilities and high quality, including our world-leading dialyzer. We have performed
strongly in the pharmaceutical business, through product development which captures the needs of medical
practice. An example of this is our kit preparations which combine the drug with the administration system. In theglass business we are capitalizing on our excellent production technologies, which we have cultivated since ourestablishment. These technologies allow us to produce and market highly functional and high quality products.
As well as expanding the scope of our business, we have also spread the location of our activities overseas.
Today we continue to grow as a global corporation with around 120 sites across the globe.
The medical industry is entering a period of unprecedented change. To survive and thrive in this challenging
time, we aim to strengthen our research and development, production and marketing foundations, by always basing
technological innovations on the “patient perspective” and “user perspective.” As the world’s top multidisciplinary
medical manufacturer, we will draw together our strengths in the medical, pharmaceutical and glass businesses tofurther advance diverse business developments.

Contents
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9
13
15
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27
29
31
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47
48

ProfileConsolidated Financial Highlights
A Message to Our Shareholders and Investors
At a Glance
Global Activities
Research and Development
Plant and Equipment
Status of Corporate Governance
TopicsBoard of Directors and Auditors
Financial Review
10 Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statement
Report of Independent Auditors
Corporate Information

1 Nipro Corporation Annual Report 2013

Disclaimer regarding Forward-looking Statements
This report contains forward-looking statements regarding business indices,
strategies and performance representing the expectations and judgments ofthe management, based on information available to the Company andpublishable at the time this report was prepared.
When reading this report, please understand that forward-looking
statements involve potential risks and uncertainties; actual future businessperformance and forecasts may therefore differ materially from thosecontained in these statements, given the possible emergence of new factors
or changes in economic circumstances and/or the business environment.

Consolidated Financial Highlights

Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Thousands of
U.S. Dollars

Millions of yen

For the year:
Net sales .....................................................................
Operating income .......................................................
Net income .................................................................
Capital expenditures ...................................................
Depreciation and amortization ....................................
R&D Expenses ............................................................
At the year-end:
Total assets .................................................................
Net assets ..................................................................
Per share data (in yen and U.S. dollars)
Net income:Basic (*1) ................................................................
Diluted (*1) ..............................................................
Cash dividends (*1) .....................................................
Equity (*1) ...................................................................

2013

2012

2013

¥ 241,021
11,371
10,23237,997
21,2106,464¥ 212,013
15,825
4,586
39,525
21,581
5,957$ 2,562,690
120,904
108,793404,009
225,518
68,729¥ 579,302
128,763¥ 499,687
113,951$ 6,159,510
1,369,091

¥

¥

$

60.0
54.1
27.5
703.5

35.3
31.0
23.5
643.9

0.64
0.58
0.29
7.48

Note:
(*1) Effective the fiscal year ended March 31, 2012, the Company has adopted ASBJ Statement No.2 “Accounting Standard for Earnings Per Share” (June 30, 2010), ASBJ
Guidance No.4 "Guidance on Accounting Standard for Earnings Per Share" (June 30, 2010) and ASBJ PITF No.9 “Practical Solution on Accounting for Earnings Per
Share” (June 30, 2010). In addition, the Company has split one share of common stock into two shares on October 1, 2011 based on the resolution at the board of
directors’ meeting held on August 27, 2011. In accordance with this adoption, equity per share, basic earnings per share and diluted earnings per share are calculatedon the assumption that the two-for-one stock split of common stock was conducted at the beginning of fiscal year ended March 31, 2011.
The U.S. dollar amounts in this report represent translations of Japanese yen, for convenience only, at the rate of ¥94.05 =U.S.$1, the approximate exchange rate on
March 31, 2013.

■ Net Sales (Millions of yen)

■ Operating Income (Millions of yen)
241,021250,000

20,00018,094

212,013
195,943
200,000

17,225
15,825

14,775

175,945 177,830

15,00011,371150,000
10,000100,000
5,000

50,000

2009

2010

2011

2012

2013

■ Net Income (Millions of yen)

2009

2010

2011

2012

2013

■ Return on Equity (%)

12,00010.0

8.9

10,232
10,000

8.0

6.9

7,253

8,000

6.0
6,000

4.2

4.2

4,586

4,531

4.0
2.2

4,000

2,456
2.0

2,000
2009

2010

2011

2012

2013

2009

2010

2011

2012

2013

Nipro Corporation Annual Report 2013 2

A Message to Our Shareholders and Investors

Three organizations united,pursuing natural profit

Yoshihiko Sano
President

3 Nipro Corporation Annual Report 2013

Sales and profit growth in achanging environment
The world economy has been severely hit by theEuropean credit crisis. Now, the USA is seeing
improvements in employment and consumer
confidence, and is taking the lead in a gradualworld recovery. In Japan there is a sense of
anticipation about the growth strategy of the
new administration, which has already led to a
weakening of the Yen since New Year. The
renewed efforts to shrug off deflation are finallybeginning to bear fruit. Nevertheless, as acompany we remain keenly aware of thechallenges we face, such as falling exports due
to a strong Yen in the long-term and a retreating
Chinese economy.
In these circumstances, Nipro group has
continuously and unwaveringly striven to
consolidate and strengthen its global production
and distribution base, and worked to expand
sales and increase profits.
As a result, consolidated sales this termreached 241.0 billion yen (13.7% up fromprevious fiscal year). Consolidated operating
income was 11.4 billion yen (28.1% down fromprevious fiscal year), but consolidated net
income was 10.2 billion yen (123.1% up fromprevious fiscal year), due to extraordinary profits.

Patient-focused businessdevelopment
Our former president founded our company. He
believed that business can’t go on without
growth, that it is important to have ambition, andin the face of failure to have the will to take stockand challenge again. He advocated developing
our business by attaining a world-leading market
share. We will take on the hopes and ideas of
our former president into the future. Nipro groupwill work together to fulfill our long-termbusiness targets of consolidated net sales of
500 billion yen by fiscal year 2020 and 1 trillion
yen by fiscal year 2030.
In recent years we have actively invested inestablishing overseas production facilities andM&A. I believe that we must continue to realize
persistent growth in the global market, and raise
profitability.

To achieve this, it is essential that we arepatient-focused. This is the viewpoint that forms
the bedrock of all our business activities.
Product value derives from its use by end
users, i.e. patients. Providing products andservices that are useful to patients and people
working in the medical field leads to repeat
business and naturally generates profit. I believe
the road to natural profit is opened up byreiterating this process.

Reorganization of three intoone
The key to ensuring we operate as apatient-focused business, is to move from asystem of generating business value in each of
our business fields individually, as medical
devices, pharmaceuticals and glass containers,
to development which retains a sense of unity. In
the 12 months since I was appointed president, I
have focused on laying the groundwork for thiseffort. Every product is essential to medical
practice and patients can’t be treated withoutthem. That’s why building up our line-up of
full-system products combining the drug andmedical device or the drug and container, suchas double bags or pre-filled syringes, ensuressafety for patients and saves effort for medical
practitioners. These full-system products show
how we can maximize our strengths bydeveloping across multiple fields.
Moving from products to systems andbringing these to market quickly requires acoordinated and dynamic structure. To achievethis, the first step was to set up apharmaceutical division bringing together drugs
and their devices or containers. In the second
stage we combined our domestic sales teams
for medical devices and drugs.
We have launched committees for
information management, product planning,production technology, material procurement
and plant management. Their goal is to increase
production technologies, reduce costs, and set
reasonable prices while maintaining highexpertise in medicine. The committees function
as a horizontal structure within the group, as acounterbalance to divisions, which havejurisdiction over the upstream to downstream

Nipro Corporation Annual Report 2013 4

movement of products. This interlocking verticaland horizontal matrix ensures close sharing of
information and strong cooperation.

Introducing new products thatmeet local needs
We are taking positive action to cultivate sales,
particularly in emerging markets, and develop
distribution bases to achieve a world-leading
market share. At the same time we want toefficiently increase sales and market share byintroducing new products through existing sales
routes used by the Dialyzer, which already has a
25% world market share.
The specification required of a productdiffers depending on the country or region.
Infection control safety products such as
pre-filled syringes or products with error
prevention functions (e.g. the prevention ofneedle-stick injuries) are currently in highdemand in Japan, and these are likely to beneeded in advancing nations in the near future.
We will continue to provide both high grade andstandard grade products to meet local demand
and requirements.
We are open to strategic partnerships andM&As to demonstrate a competitive advantage
in the market. However our policy is to show
great discretion in partner selection, investing
management resources only into those which
will lead to synergies in the future. Nevertheless,I believe our policy should be to actively prepare
the building blocks of the future, such as byinvesting in promising ventures in fields where
growth is expected.

The importance of consistent
supplyWe have sought to build business bases withlocal roots, and promote local production for
local consumption. Production has begun inIndia, Indonesia and Bangladesh, with a focus
on dialysis products. We also have plans toopen a new plant in China in 2013. By settingout the whole chain from production to sale, we
can ensure product development and stablesupply which meets local needs.

5 Nipro Corporation Annual Report 2013

We cannot allow patients’ lives to bejeopardized by a lack of supply of essential
products to the medical care front line. Stabilityof supply engenders trust from patients andmedical professionals, and leads to a significant
advantage in acquiring market share.
Our roots are in the development of ampoule
production machinery, and our production line
automation technology is advanced. We want tobring in labor-saving measures to reduce costs,
but we also want to offer stable supply of highquality products. To do this we have set up
several independent production technology
development units within our Research andDevelopment Laboratory, as ‘production
technology centers.’ At the same time we aresetting up a production technology development
committee to drive all our plants worldwide tojoin together to take further steps forward.

Continuous increase individends
Nipro group has made profit return toshareholders one of its key business policies.
Our sliding-scale system is one of our basic
policies in which profit distributions are made toshareholders, employees and managers,
according to our performance.
Dividends this term included an interim
dividend of 12 yen per share and an end of term
dividend of 15.5 yen per share, making anannual dividend of 27.5 yen per share.
Dividends for next term will continue under
the same basic policy, and are expected to bemade in consideration of the balance of retained
earnings, based on future growth of capitaldemand.

Integrating production anddistribution to increase sales
Our policy in the medical devices business is for
growth in circulatory products, as an additionalcore product line to add to dialysis anddisposable products. In spring this year we took
on Goodman Co., Ltd. as a subsidiary, aprominent and established brand in catheter
products. We will join with Goodman and makefrom glass to pharmaceutical rubber plugs andneedles, within a single company. We havemade it our goal to acquire one third of global
market share. Now all we have to do is put it into
practice.

Becoming a company worthy ofgratitude

good use of their dominance of the Japanesemarket, and the management resources of bothcompanies. I look forward to highly synergistic
results in terms of development, manufacturing
and sales. Looking ahead, we are working to
expand manufacture and sales overseas, and tostrengthen the business base.
In the pharmaceutical business we see theJapanese market making a switch to genericdrugs, as a primary strategy of drug cost
reduction. This is an opportunity that we cannot
afford to miss. I want us to use our highly
original manufacturing technologies and abilities
to promote generic drugs. We are also aiming
for early release of products with complex
development, such as anticancer drugs andbiosimilars.
In the glass business we have invested in arange of production facilities, including a cuttingedge furnace in our tube plant in France and a
new production line in our German processing
plant. In Japan, a new plant is underconstruction at the site of our glass businessmother plant and is due to open in spring 2014.
This will finally enable us to demonstrate our key
selling point, of combining the manufacture,processing and sale of a wide range of products,

While the end user for any medical manufacturer
is the patient, the target for product sales is the
medical institution. Japanese medical
institutions are sometimes non-profit
organizations funded in part by taxes.
I believe we must act as a good corporate
citizen in our business activities, commensuratewith the special status of the field of medicine.
We need to think not just about the market, but
about the needs of patients and medical
professionals. We will not chase short-term
returns; rather we will provide support throughour high quality products and services, to ensure
patients receiving treatment can recover evenone extra day of healthy life, to ensure thanks
are deserved.
Also, to ensure suitable treatments
demanded by patients and medical
professionals are not delayed, we understandthe social role that we must fulfill, by providing astable supply of our products.
As ever, I would like to thank all of ourshareholders and investors who have supported
us, and for your continued understanding of theunique characteristics of the medical businessand your long-term support.

July 2013

Yoshihiko Sano
President

Nipro Corporation Annual Report 2013 6

At a Glance

Medical-Related
Business

Our diverse product line support people across theworld working in medicine and fighting disease.
We have carved out a leading market shareworldwide in artificial kidney products (Dialyzer).
We have also made our full-scale entry into thediabetes market and aim to make further gains as
a leading manufacturer of medical devices.
In the Japanese market, the sales of our HDF filter areuup significantly on the previous year, while dialysispproducts such as Dialyzer showed stable growth. We
hhave also acquired Goodman, Co, Ltd., a strong brandin circulatory products, creating a basis for opening up
nnew markets in synergy with our own products.
As for overseas sales, we acquired dialysis solutionmmanufacturers and distributors in Brazil and Spain,eenhancing our sales power with a more comprehensiveddialysis product line. We have also actively developed
distribution networks in emerging nations such as
Myanmar. Intensive marketing activities in the region
have allowed us to effectively introduce our dialysis
products and blood glucose meter products, anddramatically extend business performance. Finally, newplants have come online smoothly in India, Indonesia
and Bangladesh.

Dialyzer

Safetouch IV Cath

Main Products• Injection and infusion products• Artificial organ products• Advanced products• Dialysis products• Diabetes products

Net Sales Ratio

69%(millions of yen)

2013

2012

Net Sales ············ ¥ 167,532 ¥ 145,082
Operating Income ··14,55817,078

7 Nipro Corporation Annual Report 2013

NCU-18

Pharmaceutical-Related
Business

As the largest contract manufacturer group in
Japan, we have made progress through marketing
distinctive products. We also contribute to safety
and user-friendliness in the medical field bydeveloping pharmaceutical kit products thatcombine our technology and knowledge of both
medical products and pharmaceuticals.
Sales of our oral and injectable drug kits grew well as aresult of our research and development efforts into
unique drug formulation technologies, as well as oursales activities.
New production plants have come online including
dedicated facilities for biopharmaceutical and anticancer
drugs, and a new facility for infusion. Construction of anew plant in Vietnam is progressing well and is due toopen in 2015. We continue to create solid foundations to
supply low cost, high quality products reliably, to meet abroad market demand, including overseas corporations.
We have also integrated departments forpharmaceutical products and for their containers, tofurther expand our business base. This is expected todeliver better devices and containers as well as flexible
and innovative pharmaceutical product development
and contract manufacturing.

Glass-Related Business• Tube Glass for
Pharmaceuticals,
Vials, Ampoules• Glass for lighting
purposes

Net Sales Ratio

3%(millions of yen)

2013
Net Sales ············ ¥ 7,042
Operating Income ··330

Main Products• Injectable drugs• Oral drugs• Kit products• Dialysis products

Net Sales Ratio

28%(millions of yen)

2013
Net Sales ············ ¥ 66,212
Operating Income ··
3,988

2012
¥ 59,715
4,940

We produce high-performance and high-quality
glass for use in the medical field, as well as
physical and chemical sciences and industry. We
also sell heat-resistant, impact-resistant andchemically durable glass, and high-precision glass
for medical and industrial use.

Glass products

Main Products

Kit preparation

2012
¥

6,954
454

We have made a successful transition to sales of vials
meet demand for vials for vaccine as well as ensuring
stable sales of tube glass for vials to meet overseas
demand.
We have utilized our excellent glass processing
technology developed since our establishment for
expansion within Japan, and achieved high quality, lowcost product growth across Asia in countries such as
China, where future growth is anticipated.
Our focus with regard to joint business with China
has been on pushing capital investment and personnel
deployment to places where future demand is expected.
This will help us to realize higher quality productmanufacture and improved production efficiency.

Nipro Corporation Annual Report 2013 8

Global Activities■ Ratio of product made in Domestic and Overseas
Overseas

Domestic

Overseas
erseasDomestic

49%

51%

58%
%

42%

2012

2013

Nipro Glass France S.A.S.

Nipro India Corporation Private Limited

Demand in the global medical market continues to grow.
The requirement for medical care is rapidly increasing inemerging countries such as China, India, other Asian
countries, as well as Central and South American and
African countries. This is due to increasing population,
economic growth and improvements to medical
infrastructure such as social health insurance systems.
We have responded to this environment by producing
high quality and safe products at low cost and highvolume. In fiscal year 2012 we focused on opening newplants in emerging nations, based on our policy to supply
to a range of regions across the world. At the same time

9 Nipro Corporation Annual Report 2013

Nipro JMI Co., Ltd.

we worked to augment our sales offices and reinforce
our business base through M&A. As a result, we haveachieved substantial growth in consolidated sales, with
Nipro group overseas sales of ¥102.1 billion (US$1,085.2
million), a 23.3% increase from previous fiscal year.
Currently, Nipro group has 86 sales offices across 40
countries and 33 manufacturing plants across 12
countries (including plants under construction). Our ‘local
production for local consumption’ system continues topay dividends. The proportion of products sold overseas
increased from 49% in 2012 to 58% in 2013 due toincreasing levels of production at our overseas plants.

Marketing
Manufacturing
Manufacturing and Marketing

Nipro(Shanghai)Co.,
Ltd.
Nipro (Shanghai) Co Ltd
Nipro Med
Medicaldical Corporation■ Sales Ratio by Region (2013)
Asia

10%

Europe13%
Total Sales

America

19%241,021(Millions of yen)Domestic 58%
Ltda.
Nipro Medical
Med
dical Ltda

This percentage is expected to rise further to 70% in
2014. This trend enables us to diversify our currency
exchange risk and ensure flexibility in responding tocustomer needs and local specification requirements byhaving manufacturing close to demand.
In 2012 we have supported the establishment ofdialysis centers in various countries, including Myanmar,
India, Ecuador and Senegal. Emerging nations havegrowing populations, but often lag behind in terms ofadvanced medical treatment such as dialysis. We believe
it is an important duty to support these new centers, tooffer the opportunity for treatment to patients who would

not previously have received it. Additionally, the new
dialysis centers will use our products and provide alocation to introduce doctors and nurses to premium
medical care using our products, and provide training,taking the presence of Nipro products to the next level.
The environment surrounding our business is challenging, but our medical, pharmaceutical and pharmaceuticalpacking materials businesses have substantial growthpotential. We will continue to expand our businessthrough our global network and our hardworking andhigh quality human resources in all locations, in order tocontribute to medical care around the world.

Nipro Corporation Annual Report 2013 10

Global Activities■ America■ Europe

The establishment of dialysis center in Nicaragua(Nipro Medical Corporation)

Manufacturing floor (Nipro Glass Germany AG)(Millions of yen)

46,31150,00040,00037,121

40,519(Millions of yen)
40,00032,37230,00020,70730,00023,14020,00020,00010,00010,000

2011

2012

2013

Sales in America increased 13.4% from previous fiscal year on
a local currency basis.
Nipro Medical Ltda. is based in Brazil, and is involved in the
manufacture and sale of oxygenator products and the sale ofdialysis products. On September 25, 2012, Nipro Medical Ltda.
purchased Salbego Laboratorio Farmaceutico Ltda., which
manufactures and sells dialysis solution in Brazil. We aim to
improve our service by adding dialysis solution to the productline-up and offering a more comprehensive range of related
products.
Nipro Medical Corporation has continued to expand its
sales channel in Central and South America. In 2012 it
established offices in Concepcion in Chile, Santa Cruz in
Bolivia and Asunción in Paraguay. This brings the number ofsales offices in Central and South America to 30, spanning 19
countries. Using these offices as a base, we will implement a
service better tuned to local needs, and further enhance the
Nipro brand presence in Central and South America.
Nipro Diagnostics, Inc. manufactures and sells blood
glucose meters and test strips for diabetic patients. Since its
purchase in 2010, Nipro Diagnostics has used the Nipro global
distribution network for its products, and as of March 2013supplies products to 71 countries across the globe. This has
led to a 23% increase in sales volume of blood glucose test
strips in 2012, compared to previous fiscal year. While there
are concerns over a reduction of average unit prices due to US
health insurance reforms, we plan to counter this by reducing
costs through changes to materials and boosting promotion ofsales activities. Looking forward, we plan to build a morerobust sales platform by developing sales promotion activities
on a global scale.

11 Nipro Corporation Annual Report 2013

2011

2012

2013

In Europe, there was considerable growth in sales of our primary
products such as dialysis and diabetes products, with a major
upswing in sales of 46.2% from previous fiscal year on a local
currency basis. In the dialysis business, we have broadened therange for core products such as the Dialyzer through gradualaddition of support products. This has enabled us to respondto bundling, which is the predominant current bidding practice,and expand our business with major dialysis providers.
Our headquarters for the European region, Nipro Europe
N.V., is involved in sales activities for medical devices across awide area centered on Europe, including in Russia and Africa.
Nipro Europe purchased NEFRO-ION S.L. (name changed to
Nipro Renal Solutions Spain S.L.), which manufactures andsells dialysis solution in Spain on November 6, 2012. As in
Brazil, our aim is to increase sales in Spain and other key
European markets, and increase local market share for dialysis
solution from the current 25% to 35% within 5 years. To do thiswe will further enhance our existing dialysis product line-up.
We are currently pushing ahead in Tunisia with the establishment of a medical devices distribution company. Africa has apopulation of 1 billion people, and is currently surging ahead of
the global economy. The medical field is no exception, andmajor market expansion is anticipated going forward. We plan
to build a stable distribution network to gain a foothold in the
African market with its high growth potential, by opening new
branches and developing sales focusing on dialysis products.
We continue to make progress in the glass business. We
acquired pharmaceutical glass container manufacture anddistribution companies in France and Belgium in 2011 and inGermany in 2012. These have become leading sites for glassbusiness within the group, and have helped to ensure asmooth transition in sales of pharmaceutical glass containers
in Europe. In the future, we plan to improve production
efficiency and quality through installation of a new glass
furnace in France, and installation of a glass syringe production
line in Germany. We are investing in production equipment andrealizing higher quality and lower costs, to build a production
base capable of responding to diverse needs, principally thoseof local pharmaceutical companies. Our joint venture with alocal partner company in Russia began production of
ampoules and vials in September 2012, distributing within
Russia itself. Established businesses such as these will help us
to push towards our goal to acquire a world-leading market
share in the medical glass industry by fiscal year 2020.

■ Asia■ China

Dialysis Society in India (Nipro India Corporation Pvt.,
Ltd.)

Manufacturing floor (Jilin Nipro Jiaheng Pharmaceutical
Packaging Co., Ltd.)(Millions of yen)
16,00013,513

9,000

5,756

7,453
8,000

6,000

4,000

3,000

2011

9,863
8,634

10,482

12,000(Millions of yen)
12,0002012

2013

In Asia, sales increased 27.4% from previous fiscal year as aresult of new plants coming online and a reorganization of
distribution systems to meet increasing medical demand.
In 2012 new medical device plants which were underconstruction smoothly began operations. Cannula production
began at our Indian plant in November, after which
manufacture and sale of all planned production ranges
including syringes and the Dialyzer has commenced. This plantis the first in India to produce the Dialyzer. It also has gamma
ray sterilization technology, which allows high quality and safe
products to reach patients requiring dialysis treatment in India.
Our plants in Indonesia and Bangladesh began production ofblood tubings in December 2012. The Indonesian plant willphase in production of other ranges throughout 2013. In
addition to these sites coming online, we have opened abranch in Myanmar, where further economic growth isanticipated. We have also actively expanded our distribution
system, such as by establishing a resident office in Pakistan,which has a population of approximately 180 million.
We have invested in our glass business in India to further
improve production efficiency and quality, at Nipro Tube Glass
Limited, which manufactures and sells pharmaceutical glass
containers, and Nipro Glass India Private Limited, which
manufactures and sells tube glasses for pharmaceuticals. We
have also gathered the managers of all plants in the group to
exchange opinions on unifying quality standards and sharing,
improving and optimizing production techniques between
subsidiaries. These meetings will be held periodically to drive
global standardization of the group’s glass plants in India andother regions across the world.
We are also moving ahead with international expansion inpharmaceuticals. In April 2012 Nipro Pharma Corporation
established a pharmaceutical production plant in Vietnam. Its
goal is to supply good quality pharmaceuticals at aninternationally competitive cost, to take on the intenselycompetitive international pharmaceuticals market.
Construction is scheduled for completion at the end of 2013,
with commercial production starting in 2015. Nipro JMI
Pharma Ltd. in Bangladesh is making efforts on stronger
business strength and increasing trademarking. It is working toacquire a market share in the Bangladesh pharmaceuticals
market, which is growing by more than 15% a year.

2011

2012

2013

Our sales in China increased 10.8% from previous fiscal year.
In China medical needs are rapidly expanding due toeconomic growth and improved medical infrastructure. The
dialysis market is aggressively expanding due to an increase inpatient numbers. While competition is fierce, acquiring andmaintaining market share in China, with its huge potential, is
our highest priority.
Nipro Trading (Shanghai) Co., Ltd. is setting up 17 offices
across China and putting a system in place to respond to thisfuture demand increase. Work on new plant facilities in Heifei,
Anhui Province started in 2011 in an effort to further curtailproduction costs in preparation for fierce cost-competition in
the future. Manufacturing key products such as the Dialyzer inthe location of maximum demand not only tackles costs, but
has a significant impact in terms of reducing delivery times andadapting quickly to the needs of customers. Construction of
the new plant is progressing well, and it is scheduled to begin
commercial production in July 2013. We will use it to build arobust system for both manufacture and distribution in the
Chinese market.
We are also making advances with our glass business in
China. The market for pharmaceutical containers such as
ampoules has expanded rapidly through an increase in global
pharmaceutical contracted manufacturing as well as domestic
demand. This market is expected to be the world’s largest in
the near future. In order to build a solid position in thispotential market, we are developing joint ventures for
manufacture and sale of pharmaceutical glass containers in
Chengdu in Sichuan, Songyuan in Jilin and Anyang in Henan.
Participating in the market through a venture and providing
financial and technical support using our local partner’s baseenables us to promote our business aggressively. In recent
years, there has been a trend in China to use more appropriate
glass containers for drugs, and there is an ever increasing
demand for higher quality products on the market. This is why
our production plant in Chengdu, Sichuan plans to import tube
glasses with low alkaline component loss and establish a plant
to process them. This is a rapidly changing market but we arepushing ahead with dynamic business development using local
human resources, and aim to acquire market share throughincreased sales and quality.

Nipro Corporation Annual Report 2013 12

Research and Development

Nipro group promotes research and development of both
medical devices and pharmaceuticals, mainly through our R&D
center. Last year we set up a new medical glass development
center within the R&D center. Its purpose is to innovate andcreate glass products with world-class quality and prices.
A new branch office of our R&D center was also establishedby our subsidiary, Nipro Thailand Corporation Limited. It seeks
to accelerate the marketing of products and to reflect
international needs.
We are also currently participating in an industry – university– government research project to develop an automatedculture system capable of safe and stable cell culture.
This cultivation device includes a specialized bag as acultivation container to prevent bacterial contamination and toachieve safe cell culture. This automated cell culture system
will be of benefit to a range of end users.
Additionally, we are actively collaborating with universities
that have seed technologies showing potential for use in thefields of cellular and regenerative medicine. We are developing
various devices targeted at such fields. Finally, an implantableventricular assisting device HeartMate II™ (Thoratec
Corporation, USA) was approved for production and sale. This
product was just brought to market this term.

Finoscholar™ pTau and hTau can detect total tau andphosphoric tau, which are helpful markers of cognitive
impairment and Creutzfeldt-Jakob disease.
Genescholar™ PZA TB can detect drug-resistanttuberculosis that cannot be treated with pyrazinamide, in aquick and simple way.

Division of Functional Pharmaceutical Containers
We have released a vial solution needle called EASYACCESS®.
This device is supposed to be used for self-injection by
patients with blood coagulation factor VIII. It offers a simple
and safe means for dissolution and conditioning of powdered
blood plasma protein fraction preparations with injection
solvent, and aspiration into a syringe. It also provides
mechanisms for prevention of foaming, reduction of residual
drug, and a filter for removal of foreign substances.
Our group was awarded the Grand Prix of Risk Management
Design Award by Koukyo Network Association (A generalincorporated association). It was awarded for our kit productenabling easy collection and storage of bloodstains, saliva andsemen samples. This kit was developed in a joint project withnational organizations.

Division of Circulatory and Interventional Products

1. Medical-Related Business
Division of Medical Devices
In diabetes products, a one-time-use safety lancet, LS Lancet™,
was launched this term. This product incorporates a number offeatures that contribute to safer treatment for patients andmedical staff.
In transfusion products, we released 2-way and 3-way
stopcocks as accessories to our needle-free connection
SAFETOUCH® series. These products enhance safe andreliable selection and usage of pharmaceuticals, where
infusion of several pharmaceuticals is required.
In dialysis products, a novel clamp with a side-slip
prevention mechanism and a soft lock connector wasincorporated into products for improved safety.
We have also released a blood tubing with a Luer-Lockconnection mechanism to prevent blood loss due to improper
connection, using a flexible material for the soft lockconnectors.
We have also released an enteral nutritional product thathas a novel wing-like connector with a safe round shape toprovide a secure connection and to reduce pain and reddening
during fixation.

Division of Diagnosis and Testing Products
Lithium preparations are often used to treat manic andmanic-depressive illnesses. Since their effective and poisonous
ranges are very close, monitoring of blood concentration isnecessary during dosing. To assist this, we have launched alithium-measuring reagent ESPA™ Li, which enables simple
measurement of blood concentration using a general-purpose
device.
This term we have also released reagents called Finoscholar™
pTau, Finoscholar™ hTau and Genescholar™ PZA TB.

13 Nipro Corporation Annual Report 2013This division develops products for percutaneous coronary
intervention (PCI) in coronary artery diseases such as acute
myocardial infarction or coronary artery occlusion.
This term we have developed and released a new thrombus
aspiration catheter TVAC®-II with an improved anti-kinking
shaft. This product removes thrombi from thrombotic lesions in
the coronary artery and aids revascularization. We havereleased a 7Fr type catheter and a type with a stylet needle, tocover market demand and to improve operability up to thepoint of reaching the lesion.

Division of Artificial Organs
In Brazil we have released a membrane-type artificial lung witha venous reservoir. This product includes a high efficiency
artificial lung that removes carbon dioxide and oxygenates the
blood in place of the lungs. The product also incorporates avenous reservoir, which allows the filtration and collection oflost blood, removal of bubbles from blood, and maintenance of
bodily blood volume with excellent operability.
We have also released a small infant blood concentration
device. This product removes excess water from blood thathas been diluted by intraoperative pharmaceuticals.
Finally, we also released a percutaneous cardiopulmonary
support (PCPS) system with excellent durability. This productis used for critical care and heart surgery.
The basic concept of our R&D center is to develop andprovide high-value added products by approaching medical
needs and problems from unique viewpoints. Our primary aim
is to carry out exhaustive research of medical devices, and toact as a driving force to produce high-quality Nipro products.
Total research and development costs in this business for thecurrent fiscal year were ¥2.6 billion (US$27.7 million).

2. Pharmaceutical-Related BusinessIn our pharmaceutical business area, we are currently
developing high quality generic drugs for various target
illnesses and in various forms, to meet the requirements ofreducing medical care costs and increasing medical carequality. We are also focused on the development ofhigh-added value products such as kits to make administrationeasier in medical practice, and orally-disintegrating tablets forpatients who find it difficult to swallow.
Our main focuses at the Nipro Pharmaceutical ResearchCenter are as follows.

Development of Anti-Cancer Drugs

Fexofenadine (branded version Sanofi’s ALLEGRA™) is an
ODT in which the bitter taste is masked using our microparticle
coating technology. It is scheduled for release in fiscal year
2013.

External Use Products
We are currently developing a tape format and ahydrogel-patch format which are thin, light, adhesive andelastic. During this term we will acquire approval for production
and sale of tape, hydrogel-patch and gel formats of theanti-inflammatory pain relief agent loxoprofen sodium (branded
version Daiichi Sankyo’s LOXONIN™). Release is scheduled forthe next term.

We are currently developing anti-cancer drugs, where themarket is desperate for a generic entry due to the present highcosts. We expect to release five products next term. Three ofthese will be injection format and two will be oral format. We
will continue to provide good quality generic products and toparticipate actively in development.

Putting Major Generic Drugs on the Market

Injection Kit Products

Development of Biosimilars

We are actively progressing with development of injection kits
which are very easy to handle in medical practice. We aredeveloping pre-filled syringe solutions for prolonged-action
sustained-release injections, premixed bag solutions in a
pre-diluted format, and double bag solutions for liquids andpowders.

We are currently progressing with development of biosimilars
such as antibody drugs in the rapidly expanding market. Our
goal is to bring these to market from 2016. We will achieve thisusing a dual approach. The first is to select drug substanceswith excellent cost and quality characteristics and introduce
these drug substances to aid faster productization. The
second is to create high-expression, easily producible vectors
and cell lines and to conduct our own development to enable
lower cost productization.

Orally-Disintegrating Tablets
We are currently developing orally-disintegrating tablets (ODT).
This is a highly convenient format which makes drugs easier totake for patients with a poor ability to swallow, such as thevery elderly. They also enable water intake to be reduced for
those who are not allowed to drink water. The anti-allergy drug

We are developing generic forms of blockbuster products suchas LIPITOR™ (atorvastatin), BLOPRESS™ (candesartan
cilexetil) and DIOVAN™ (valsartan). We will be bringing
atorvastatin to market this term, with the other major generics
to follow next term.

Total research and development costs in this business for thecurrent fiscal year were ¥3.9 billion (US$41.0 million).

Research and Development Laboratory

Nipro Corporation Annual Report 2013 14

Plant and Equipment

1. Overview of Capital Investments, etc.
Nipro group has focused on investing in research and development andproduct areas where growth can be expected in the future. The key aims
are energy efficiency, rationalization, product quality improvement, andincreasing production capacity. Capital investment (tangible fixed assets
on an acceptance basis; figures shown do not include consumption tax,etc.) during this consolidated fiscal year totaled ¥35.1 billion (US$373.4
million). Capital investment broken down by business segment is shown
below.
Millions of yen

Thousands of
U.S. dollars¥$ 244,136
108,889
13,2707,113$ 373,408

Medical-Related .............................
Pharmaceutical-Related ..................
Glass-Related .................................
Corporate .......................................
Total ...............................................

¥

22,961
10,241
1,248
669
35,119

Medical-Related business segment made capital investments primarily
to increase production capacity and for production rationalization at ourOdate plant. In addition, Nipro India Corporation Pvt. Ltd., Nipro Medical(Hefei) Co., Ltd. and P.T. Nipro Indonesia Jaya undertook the construction of new plants.
In Pharmaceutical-Related business segment Nipro Pharma
Corporation made capital investments primarily in anticancer drug
production facilities at the Odate plant and ampoule manufacturing
facilities at the Ise plant.
Glass-Related business segment made capital investments primarily
in tube bottle manufacturing facilities at our Otsu plant.
Corporate capital investments were made primarily for renovation of
Nipro Corporation’s Headquarters and preproduction machinery andmolds at our Research and Development Laboratory.
The required funds were allocated primarily from self-financing andloans.
There was no material retirement or disposal of plants and equipment.

* The names of segment are abbreviated to “Medical”, “Pharmaceutical” and “Glass”
in the following tables.

2. Status of Major Plant and Equipment(1) Nipro Corporation
As of March 31, 2013
Name of Facility(Location)
Odate Plant(Odate, Akita)
Otsu Plant(Otsu, Shiga)
Packaging & Material Department(Bunkyo-ku, Tokyo)
Domestic Operations
21 Branches and
32 Sales Offices in Japan
Research and Development
Laboratory & Pharmaceutical
Research Center (Kusatsu, Shiga)
Headquarters(Kita-ku, Osaka)

Leased Assets, Other(Settsu, Osaka, Other)

Name of Facility(Location)
Odate Plant(Odate, Akita)
Otsu Plant(Otsu, Shiga)
Packaging & Material Department(Bunkyo-ku, Tokyo)
Domestic Operations
21 Branches and
32 Sales Offices in Japan
Research and Development
Laboratory & Pharmaceutical
Research Center (Kusatsu, Shiga)
Headquarters(Kita-ku, Osaka)

Leased Assets, Other(Settsu, Osaka, Other)

Segment by
Business Category
MedicalBook Value (Millions of yen)Type of Asset

Buildings and Machinery and
Structures
Equipment
¥

7,615

961
(198,026 )25(4,604 )2,092(441 )
204(1,691 )¥Sales Facilities

Corporate

Research and Development
Plant and Equipment, etc.

1,780

556

467
(26,544 )

2

2,805

250

MedicalPharmaceutical
Glass
Corporate
Other

Other Plant and Equipment

423

398

1,508
(1,891 )

22

2,351

180

Other Plant and Equipment

1,092

1

4,921
(56,296 )[21,020] *Note:(1)

—

6,014

—

Segment by
Business Category

Type of Asset

114

236

40

353

1,013

171

¥

Number of
Employees(People)Medical

143

¥

Total

Pharmaceutical

Medical9,185

Constructionin Progress

Medical Equipment
Production Facilities, etc.
Glass Tube Processing
Production Facilities, etc.
Sales Facilities

Glass

¥

Land
(Area m2)

17,932

1,225

11

293

41

—

2,368

17

11

1,581

724

Book Value (Thousands of U.S. dollars)
Buildings and Machinery and
Structures
Equipment$

80,9681,818$ 190,665

1,225

117

3,115

41

—

25,17817

117

16,810724$

MedicalSales Facilities

3,753

10,771

Corporate

Research and Development
Plant and Equipment, etc.

18,926

5,913

4,965
(26,544 )21

29,825250

MedicalPharmaceutical
Glass
Corporate
Other

Other Plant and Equipment

4,498

4,231

16,034(1,891 )234

24,997

180

Other Plant and Equipment

11,611

11

52,323(56,296 )[21,020] *Note:(1)—63,945

—

1,520

1,212

2,509

426

$

10,218(198,026 )266(4,604 )22,243(441 )
2,169(1,691 )Pharmaceutical

15 Nipro Corporation Annual Report 2013

97,661

Number of
Employees(People)Constructionin Progress

Medical Equipment
Production Facilities, etc.
Glass Tube Processing
Production Facilities, etc.
Sales Facilities

Glass

$

Total

Land
(Area m2)

(2) Domestic Subsidiaries
As of March 31, 2013

Book Value (Millions of yen)Company

Name of Facility(Location)

Nipro Medical
Industries Co., Ltd.
Nipro Pharma
Corporation

Tatebayashi Plant(Tatebayashi, Gunma)
Ise Plant(Matsuzaka, Mie)
Odate Plant(Odate, Akita)
Tohoku Nipro
Kagamiishi Plant
Pharmaceutical(Kagamiishi-machi,
Corporation
Iwase-gun, Fukushima)
Zensei Pharmaceutical Kishiwada Plant
Industries Co., Ltd.
(Kishiwada, Osaka)
Nipro Patch Co., Ltd. Kasukabe Plant(Kasukabe, Saitama)
Hanyu Plant(Hanyu, Saitama)

Segment by
Business Category
MedicalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceutical

Type of Asset
Medical Equipment
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities

Buildings and Machinery and
Structures
Equipment

Land(Area m2)

Constructionin Progress

¥

¥

¥

1,100

¥

880

7,326

3,213

12,866

7,381

7,381

4,227

2,455

563

1,459

741

1,123

615

521
(15,461)
1,557(104,763)
1,247(204,890)
450(81,610)552(21,357)
1,008(9,611)455(16,680)

79

Total
¥

2,580

350

588

12,684583

1,127

22,621

552

259

12,317

244

2

3,572

271

301

3,509

146

2

2,195

50

Book Value (Thousands of U.S. dollars)Company

Name of Facility(Location)

Nipro Medical
Industries Co., Ltd.
Nipro Pharma
Corporation

Tatebayashi Plant(Tatebayashi, Gunma)
Ise Plant(Matsuzaka, Mie)
Odate Plant(Odate, Akita)
Tohoku Nipro
Kagamiishi Plant
Pharmaceutical(Kagamiishi-machi,
Corporation
Iwase-gun, Fukushima)
Zensei Pharmaceutical Kishiwada Plant
Industries Co., Ltd.
(Kishiwada, Osaka)
Nipro Patch Co., Ltd. Kasukabe Plant(Kasukabe, Saitama)
Hanyu Plant(Hanyu, Saitama)

Nipro Corporation Odate Plant

Segment by
Business Category
MedicalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceutical

Type of Asset

Total

Number of
Employees(People)840$ 27,432

350

6,252

134,864583

11,983

240,521

552

2,754

130,962244

21

37,980271

3,200

37,310146

21

23,33950

Buildings and Machinery and
Structures
Equipment

Land(Area m2)

Constructionin Progress

Medical Equipment
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities$ 11,696$$

Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities

$

9,356

77,89534,162

136,800

78,47978,48044,943

26,103

5,987

15,513

7,879

11,940

6,540

5,540
(15,461)
16,555(104,763)
13,259(204,890)
4,785(81,610)
5,869(21,357)
10,718(9,611)
4,838(16,680)

Number of
Employees(People)Zensei Pharmaceutical Industries Co., Ltd. Kishiwada Plant

Nipro Corporation Annual Report 2013 16

(3) Overseas Subsidiaries
As of March 31, 2013
Name of Facility(Location)

Company

Nipro (Thailand)
Corporation Ltd.
Nipro (Shanghai)Co., Ltd.
Nipro Medical Ltda.
Nipro Diagnostics,
Inc.

Thailand Plant(Ayuthaya, Thailand)
Shanghai Plant(Shanghai, China)
Brazil Plant(Sorocaba, Sao Paolo, Brazil)
Fort Lauderdale Plant(Florida, U.S.A)

Nipro India
Corporation Pvt. Ltd.
Nipro Medical (Hefei)
Co., Ltd.
Nipro Glass Americas
Corporation
P.T. Nipro Indonesia
Jaya

India Plant(Satara, India)
Hefei Plant(Hefei, China)
Millville Plant(New Jersey, U.S.A)
Indonesia Plant(West Java, Indonesia)

Company

Name of Facility(Location)

Nipro (Thailand)
Corporation Ltd.
Nipro (Shanghai)Co., Ltd.
Nipro Medical Ltda.
Nipro Diagnostics,
Inc.

Thailand Plant(Ayuthaya, Thailand)
Shanghai Plant(Shanghai, China)
Brazil Plant(Sorocaba, Sao Paolo, Brazil)
Fort Lauderdale Plant(Florida, U.S.A)

Nipro India
Corporation Pvt. Ltd.
Nipro Medical (Hefei)
Co., Ltd.
Nipro Glass Americas
Corporation
P.T. Nipro Indonesia
Jaya

India Plant(Satara, India)
Hefei Plant(Hefei, China)
Millville Plant(New Jersey, U.S.A)
Indonesia Plant(West Java, Indonesia)

Segment by
Business Category

Medical
Medical
Medical
Medical

Medical
Medical
Medical
MedicalType of Asset

Medical Equipment
Production Facilities
Medical Equipment
Production Facilities
Medical Equipment
Production Facilities
Medical Equipment
Production Facilities
Medical Equipment
Production Facilities
Medical Equipment
Production Facilities
Glass Equipment
Production Facilities
Medical Equipment
Production Facilities

Segment by
Business Category

Medical
Medical
Medical
Medical

Medical
Medical
Medical
MedicalType of AssetBook Value (Millions of yen)
Buildings and Machinery andLandConstruction
Structures
Equipment(Area m2)
in Progress

¥

3,248

¥ 10,822

917

2,059

484

1,667

1,447

2,097

4,349

6,114

7,098

411

843

1,159

3,417

980

¥

310
¥
93
(159,196)—
96<40,681> *Note:(2)8016(73,623)
545
2,822(55,466)<13,162> *Note:(2)—1,646<210,000> *Note:(2)—1,973<189,877> *Note:(2)9562(194,249)—
38<125,297> *Note:(2)Book Value (Thousands of U.S. dollars)
Buildings and Machinery andLandConstruction
Structures
Equipment(Area m2)
in Progress

Medical Equipment
Production Facilities
Medical Equipment
Production Facilities
Medical Equipment
Production Facilities
Medical Equipment
Production Facilities$ 34,535$ 115,066

9,750

21,892

5,146

17,725

15,38522,297

Medical Equipment
Production Facilities
Medical Equipment
Production Facilities
Glass Equipment
Production Facilities
Medical Equipment
Production Facilities

46,24165,00975,470

4,371

8,963

12,32436,332

10,420

$

3,296
$
989
(159,196)—
1,021<40,681> *Note:(2)851
170(73,623)
5,795
30,005(55,466)<13,162> *Note:(2)—17,501<210,000> *Note:(2)—20,978<189,877> *Note:(2)
1,010
659
(194,249)—
404<125,297> *Note:(2)Total

Number of
Employees(People)¥ 14,473

4,710

3,072

705

2,247

305

6,911

464

12,109

958

9,482

132

2,159

297

4,435

397

Total

Number of
Employees(People)$ 153,886

4,710

32,663705

23,892305

73,482

464

128,751958

100,819132

22,956297

47,156397

Note:(1) [21,020] is the area (m2) of major facilities leased to entities other than consolidated subsidiaries.
(2) <40,681>, <13,162>, <210,000>, <189,877> and <125,297> are the area (m2) of facilities leased from entities other than consolidated subsidiaries.
(3) The figures shown above do not include consumption taxes, etc.
(4) There are no major facilities currently in abeyance.
(5) In addition to the above, the details of major facilities leased from entities other than consolidated subsidiaries are shown below.
1) Nipro Corporation

Name of Facility (Location)

Headquarters (Kita-ku, Osaka)

Domestic Operations
21 Branches and 32 Sales Offices in Japan
Name of Facility (Location)

Headquarters (Kita-ku, Osaka)

Domestic Operations
21 Branches and 32 Sales Offices in Japan

17 Nipro Corporation Annual Report 2013

Segment by
Business Category

MedicalPharmaceutical
Glass
Corporate
MedicalSegment by
Business Category

MedicalPharmaceutical
Glass
Corporate
MedicalType of Facilities

Major
Lease Period

Annual Lease Payments(Millions of yen)

Lease Contracts Balance(Millions of yen)

Host Computer andPeripheral Equipment, etc.

5 Years

¥

24

¥

53

Company Vehicles, etc.

5 Years

¥

239

¥

622

Type of Facilities

Major
Lease Period

Annual Lease Payments(Thousands of U.S. dollars)

Lease Contracts Balance(Thousands of U.S. dollars)

Host Computer andPeripheral Equipment, etc.

5 Years

$

255

$

564

Company Vehicles, etc.

5 Years

$

2,541

$

6,614

3. Plans for New Construction or Disposal of Facilities(1) New Construction of Major Facilities, etc
Nipro Corporation leads coordination of plans for the new construction offacilities to avoid duplicate investment across Nipro group, since eachindividual consolidated subsidiary is principally responsible for setting

Company

Location

Segment by
Business
Category

Type of Asset

Nipro
Florida,Diagnostics, Inc. U.S.A

MedicalBlood Glucose Meter
SensorProduction Facilities, etc.

Nipro Medical(Hefei) Co., Ltd.

Hefei,
China

Medical

Medical Equipment
Production Facilities, etc.

Tohoku Nipro
Pharmaceutical
Corporation

Kagamiishi-machi,
Iwase-gun,
Fukushima

PharmaceuticalPharmaceutical
Production Building and
Production Facilities, etc.

Company

Location

Segment by
Business
Category

Type of Assettheir own capital investment plans. Plans for new construction of major
facilities are as shown below.

Planned Amount of Investment
Total Amount Paid-in Amount(Millions of yen) (Millions of yen)
¥

(

2,369

¥

Means ofFund RaisingMonth and Year Month and Yearof Plannedof Construction
Completion
Start

1,494

Self-financing

June 2011

June 2014

21,445

10,829Investment
July 2011
Funds from
Nipro Corporation

July 2013

3,000

—

Loans andself-financing

December 2014

Planned Amount of Investment
Total Amount Paid-in AmountThousands of Thousands of
U.S. dollars
U.S. dollars

) (

)

Nipro
Florida,Diagnostics, Inc. U.S.A

MedicalBlood Glucose Meter
SensorProduction Facilities, etc.

$ 25,189$ 15,885

Nipro Medical(Hefei) Co., Ltd.

Hefei,
China

Medical

Medical Equipment
Production Facilities, etc.

228,017

115,141

Tohoku Nipro
Pharmaceutical
Corporation

Kagamiishi-machi,
Iwase-gun,
Fukushima

PharmaceuticalPharmaceutical
Production Building and
Production Facilities, etc.

31,898—Means ofFund RaisingSelf-financing

August 2013

Month and Year Month and Yearof Plannedof Construction
Completion
Start
June 2011

June 2014

Investment
July 2011
Funds from
Nipro Corporation

July 2013

Loans andself-financing

December 2014

August 2013

Note: The figures shown above do not include consumption taxes, etc.

(2) Disposal of Major Facilities, etc
There are no planned disposals, etc., of major facilities.

Tohoku Nipro Pharmaceutical Corporation

Nipro Medical (Hefei) Co., Ltd.

Nipro Corporation Annual Report 2013 18

Status of Corporate Governance

1. System for Corporate Governance(1) System for Corporate Governance and Reasons for
Adoption
Nipro Corporation has an established corporate governance system
including organizations for the Meeting of Shareholders and directors as
required under the Companies Act, in addition to a Board of Directors,
auditors, Board of Auditors and an Accounting Auditor. Nipro
Corporation has also established internal committees such as the
Operational Risk Management Committee. This committee continuously
maintains close coordination with external parties such as the company
attorney, to enable effective monitoring and supervision of the efficiency
and propriety of operations across the company as a whole.
Since its establishment, Nipro Corporation has diversified its businessand has established an independent management system for eachdivision. Nipro group operations are integrated through mutual
collaboration and company-wide governance by Nipro Corporation. The
foundations for this system are the management systems of eachbusiness unit. Our corporate governance system functions effectively asa traditional and coordinated management system for the Nipro group,by clarifying responsibilities and enhancing management systems.

(2) Internal Control Systems
Nipro Corporation’s basic policy for internal control systems, as
stipulated in Article 362, Paragraph 5 of the Companies Act, wasapproved at the Board of Directors meeting convened on April 29 andimplemented from May 1, 2006.
Nipro Corporation strives to make business units the foundations of
its internal control system for the Nipro group overall. Nipro
Corporation’s directors and auditors, as well as representatives of eachof the major companies of the group, hold a group management meetingon a monthly basis. These meetings are used to report on the progressof business activities, decide key operating matters, and deliberate on
pending matters.
To build awareness of and compliance with laws, regulations andcorporate ethics among executives and employees, Nipro Corporation is
engaged in efforts to raise awareness and promote compliance.
Examples of this are preparing a compliance handbook and legal
compliance manuals and making them available on the corporate portal
site, implementing an internal reporting system to collect and respond torisk data, and distributing appropriate information via net bulletin boards
and the intranet. These internal control systems are targeted at theexecutives and employees of each company in the Nipro group, and areoperated under an integrated management mechanism which seeks toensure close mutual collaboration.

(3) Risk Management System
Nipro Corporation has established risk management regulations and asystem for managing business and other specific risks. Its purpose is torecognize and capture risks that could have a material impact on
business operations, in an appropriate and comprehensive manner.
Nipro Corporation has also established an Operational Risk Management
Committee to ensure cross-sectional management across all groupcompanies. The committee endeavors to further strengthen risk
management systems to prevent, avoid and learn from risks and crises.
Nipro Corporation has also established a Sanction Committee, chairedby the President, which endeavors to ensure sound business
management through the appropriate handling of sanctions.

(4) Basic Structure of Corporate Governance and Risk
Management
Meeting of Shareholders
Election
Accounting
AuditorAccounting
Audit(Auditors)
Board ofAuditors

Operational
Audit(Directors)
Board ofDirectors

Committees[Decision-making]Supervisionof Directors’
executionof duties

President
Third
Party
i.e.
lawyer,accountant

Directorwithresponsibility
for operation( )Operational
Risk
Management
Committee

Division General Manager,
Manager, Assistant Manager
Conceptual Diagram of Corporate Governance

2. Internal and Statutory Auditing(1) Internal Auditing
Nipro Corporation has established an Internal Audit Division, consistingof an Audit Office and an Overseas Audit Office, and conducts audits ofaccounting and other operations based on internal audit protocols.
In addition to the two full-time employees in the Internal Audit
Division, employees are dispatched as necessary from the Head Office
Management Division or other divisions. Auditors carry out inspections
and ensure smooth and efficient performance.
Audits are carried out efficiently in accordance with audit policies andschedules as determined each fiscal year. Nipro Corporation endeavors
to ensure smooth accounting and statutory audits through mutual
collaboration between our auditors and accounting auditors.

(2) Statutory Auditing
For each statutory audit, auditors attend key meetings such as those of
the Board of Directors, in accordance with the auditing policy and roles
determined by the Board of Auditors. Auditors receive performance
reports from directors and employees, and are able to request further
explanation when necessary, and inspect key documents. Auditors also
undertake other auditing duties such as investigating the state ofoperations and assets in key places of business. Board of Auditors
Meetings are held regularly, or as necessary, in order to exchange views
and hold discussions.

3. External Directors and External Auditors(1) External Directors
Nipro Corporation does not have external directors.
<Why external directors are not appointed>
Our two external auditors have, through their prior experiences, profound19 Nipro Corporation Annual Report 2013

knowledge of and insight into business management. They receive
reports on the activities of directors and employees via the full-time
auditors, particularly on those matters which may have a material impact
on the Nipro group, and on the performance of internal audits. Therefore,
they are always able to carry out independent and objective audits. Our
external auditors adequately perform the function and role expected ofan external director by attending meetings of the Board of Directors tomake appropriate statements and offer advice.

(2) External Auditors
Two of the three Auditors are external auditors, one of whom isdesignated as an independent auditor.

(3) Personal, Capital, Business or Other Interests
between Nipro Corporation and External Auditors
There are no particular interests or relations between Nipro Corporationand the two external auditors.

(4) Function and Role of External Auditors in the
Corporate Governance of Nipro Corporation
External auditors are expected to apply their profound knowledge frompast experience of business management to the examination of the
management of Nipro Corporation from a broad perspective. They workin close collaboration with the internal auditors, employees of the Audit
Office, auditors and accounting auditors of subsidiaries. Their role is toeffectively demonstrate an objective auditing function, and to effectively
ensure integrated and effective audit activities across the Nipro group asa whole.

(5) Policy and Criteria for Independence from Nipro
Corporation for Election of External Auditors
Nipro Corporation has no criteria or policy in place regarding
independence from the filing company with respect to the election of
external auditors. However, the evaluation criteria used for the
independence of stock exchanges are referenced in such elections.

(6) Approach to the Election of External Auditors
Close coordination with the full-time auditors, employees of the Audit
Office and assigned staff from the management section of the head
office (as needed) ensures sufficient cover to implement the audit
function and role as required by the current corporate governancesystem.
In the event that the number of auditors falls below the legal
minimum, a pre-nominated standing auditor who meets the requirements
to qualify as an external auditor would be called upon.
Should the need arise to improve the audit function in accordancewith business developments and future expansion, a review of the audit
system would be considered, including an increase in the number ofauditors.

(7) Mutual Collaboration between External Audits andInternal, Statutory and Accounting Audits, and theRelationship between Internal Control Divisions
External auditors carry out auditing activities including attending key
meetings such as meetings of the Board of Directors in accordance withthe audit policy and roles determined by the Board of Auditors. They areable to access reports via the full-time auditors or directly from directors
and employees, and inspect key documents. External auditors also
attend periodic or occasional meetings of the Board of Auditors tocontribute to discussion and exchange opinions from an objective andindependent viewpoint.
External auditors strive to facilitate a smooth audit service throughclose collaboration with employees of the Audit Office, the full-time
auditors, auditors of subsidiaries and the accounting auditor.

4. Remuneration of Directors and Auditors(1) Total Amount of Remuneration, Total Amount of
Remuneration by Type, and Number of Directors
and Auditors Eligible for Remuneration
Total
amount of
remuneration

Directors¥
Auditors excluding
external auditors
External auditors

469
6Millions of yen
Total amount of remuneration by type
AnnualRetirement
Bonus
remuneration
benefits

¥

110
6

3

Total
amount of
remuneration

Directors$ 4,988
Auditors excluding
64
external auditors
External auditors
32

3

¥

317
—

¥

—

Number of
eligible
persons

42
—

27
1

—

3

Thousands of U.S. dollars
Total amount of remuneration by type
Number of
eligible
AnnualRetirement
Bonuspersons
remuneration
benefits$ 1,17064$ 3,371
—

32

—

$

447
—

27
1

—

3

(2) Total Amount of Remuneration etc. for Director and
AuditorAs there was no director or auditor whose total consolidated
remuneration exceeded 100 million yen, this information is not disclosed.

(3) Policy for Determination of Officer Remuneration• Director’s Remuneration, etc.
Director’s remuneration is determined by the Board of Directors orbased on fixed standards set out by the Board of Directors.
Annual remuneration is determined considering the market rate
and the salary level of employees. Bonuses are calculated by a fixed
method based on a sliding scale system in accordance with theperformance of the business. Retirement benefits are granted by aresolution of the Board of Directors, up to a ceiling approved by the
Meeting of Shareholders.
• Auditor Remuneration, etc.
The annual remuneration is determined by mutual accord with theauditors.
Ceilings on the amounts of remuneration for directors and auditors
are determined by a resolution taken at the Meeting of Shareholders.
Annual directors’ remuneration may be up to 800 million yen, basedon a resolution of the 57th Meeting of Shareholders held on June 25,
2010.
Annual auditors’ remuneration may be up to 30 million yen, basedon a resolution of the 54th Meeting of Shareholders held on June 27,
2007.

5. Accounting Audits
Name of Accounting Auditor : Osaka Audit Corporation
Names of Certified Public Accountants conducting the Audit:
Yoshitsugu Hashimoto,
Kouichi Aki,
Takashi Kinoshita
Support Staff for Audits:
Certified Public Accountants : 7 people
Other staff: 4 people

Nipro Corporation Annual Report 2013 20

Topics

1. Development of an automated cultivation apparatus for ES/iPS cells*
In November 2012, Nipro and Institute for Integrated
Cell-Material Sciences (iCeMS, Kyoto University) released a
prototype of an automated cultivation apparatus. It enables
safe and efficient production of embryonic stem cells (EScells) and induced pluripotent stem cells (iPS cells).
This apparatus utilizes a special surface-treated bag as acultivation container. It contributes to reducing the risk ofcontamination during cultivation and allows a large quantityof cells to be efficiently prepared in a single process.
This apparatus was developed as a part of NEDO**
research project; “Evaluation and Development ofFundamental Technologies for the Practical Use of Human
Stem Cells”.

Appearance of the apparatus*ES/iPS cells: Types of pluripotent stem cells that can differentiate
into various cells. ES cells (embryonic stem cells) and iPS cells(induced pluripotent stem cells) can be harvested from fertilized
eggs and skin cells, respectively.
**NEDO: New Energy and Industrial Technology Development
Organization

Culture bag with special surface
treatment

2. Decision of establishing a training facility for medical professionals,“Nipro iMEP”

Rendering of the facility
Rendering of medical technology researchfacility

Nipro has decided to establish a technical training
facility for medical professionals in its birthplace ofShiga (scheduled for completion in June 2014), and has
named it Nipro iMEP after Nipro institute for medical
practice. The facility will be located on the same site as
our grand hall, R&D laboratory and pharmaceuticalresearch center. Therefore, the facility and hall can beused for combined technical and educational training.
We aim to achieve speedy development and improved
product quality by collecting medical professionals’
opinions and demands directly and quickly.

3. Reinforcement of circulatory business:
new subsidiary, Goodman Co., Ltd.

4. Release of an implantable ventricularassisting device, HeartMate II™

In March 2013, Goodman Co., Ltd. became a subsidiary of Nipro
Corporation as a result of a takeover bid. Our aim is to further
reinforce our circulatory business.
Our strategy is to foster circulatory medical devices as the third
major business, next to dialysis and general disposable products.
We aim to achieve sales of ¥30 billion (US$319 million, based on arate of US$1 = ¥94.05) in the field of circulatory products by fiscal
year 2020.

In April 2013, Nipro began sales of HeartMate II™. (Manufacturer:
Thoratec Corporation)
HeartMate II™ is a device to improveand maintain patient’s blood circulation.
It is to be implanted in the body ofpatients with severe heart failure andwho require a heart transplantation. The
device incorporates a small-type axial
pumping mechanism and is particularly
aimed at home care after leaving
hospital. This device has been alreadyused for over 14,000 patients all over theworld (mainly in the U.S and Europe).
Nipro continues to develop and supply safer and environmentfriendly products for the improvement of patients’ QOL andsatisfaction of medical professionals.

21 Nipro Corporation Annual Report 2013

Board of Directors and Auditors

President & Representative Director

Directors

Standing Statutory Auditor

Yoshihiko Sano

Akihiko Yamabe

Takayuki Nomiya

Mitsutaka Ueda
Managing Directors

Tsuyoshi Yamazaki

Statutory Auditors

Makoto Sato

Hideo Okamoto

Kazumichi Irie

Kazuo Wakatsuki

Masanobu Iwasa

Masayoshi Hasegawa

Kiyotaka Yoshioka

Kyoetsu Kobayashi

Toshiaki Masuda

Yozo Sawada
Kimihito Minoura
Hideto Nakamura
Yasushi Kutsukawa
Masayuki Ito
Itsuo Akasaki
Kazuhiko Sano
Akio Shirasu
Hiroshi Yoshida
Hiroshi Sudoh
Takeo Kikuchi
Kenichi NishidaToyoshi Yoshida
Kouki Hatakeyama
Yasushi Ohyama
Kenju Fujita

Nipro Corporation Annual Report 2013 22

Financial Review■ Overview

In the current period under review (the year ended March 31, 2013), theglobal economy showed gradual signs of recovery, with continued stablepersonal consumption and an increase in employment in America,
despite the shackling effect of the European financial crisis on world
economic progress.
The Japanese economy, on the other hand, recovered slowly, withdemand for reconstruction arising from the Great East Japan
Earthquake. Other minor improvements were also seen withexpectations of an increase in exports due to the sharp depreciation of
the yen over the year, and a departure from prolonged deflation.
Nipro group has continued to work hard to expand and strengthen
our manufacturing and sales bases in order to increase sales andimprove profit.

■ Consolidated Business Results
Net Sales
In the year ended March 31, 2013, consolidated net sales amounted to¥241.0 billion (US$2,562.7 million), an increase of 13.7% compared withprevious fiscal year.
Medical-Related BusinessLooking at the domestic market, business conditions remained hostile
with an increase in market competition due to the effect of revised
medical treatment fees and the reduction of official prices for drugs andmedical materials. However, each product group recorded good sales asa result of our aggressive sales activities and improvement of sales
efficiency, aiming to expand our share.
Our medical device products such as the dialysis system and our
dialysis products such as the HDF filter, blood tubings and dialysis
pharmaceuticals showed strong growth. Sales of our testing products
such as the glucose analysis device (POCT) and vacuum blood drawing
system, enteral alimentation products and injection and transfusion
products also steadily increased.
Overseas sales suffered as a result of the appreciation of the yen
against the dollar and the euro over the year. However, we pushed
expansion of sales bases across the world and aimed to realize thestable sales activities in each country. As a result of these activities andyen’s sharp fall, overseas sales showed a considerable increase fromprevious fiscal year.
On the product level, the sales of dialysis products such as the
Dialyzer and blood glucose monitoring device increased steadily as aresult of our local based sales activities.
In addition, we encouraged expansion of our sales network intodeveloping countries such as Myanmar and Bangladesh based on theconcept of “local production for local consumption” to appropriately
introduce products needed in medical practice.
As a result, net sales of this business increased 15.5% from theprevious year to ¥167.5 billion (US$1,781.3 million).
Pharmaceutical-Related Business
On October 1, 2012, the pharmaceutical business division was newly
established to carry out a control function for our group subsidiaries.

■ Net Sales (Millions of yen)

■ Operating Income (Millions of yen)
18,09420,000300,000

241,021250,000
200,000 175,945 177,830

195,943

This business division includes the following departments: thecontracted manufacturing department for offering high value-added
products to meet customer needs, the collaborative promotion
department for handling generic drugs featuring our unique
pharmaceutical techniques, the development and sales department forsuitable container and dosing devices for each pharmaceutical product,
the sales department for pharmaceutical containers and thepharmaceutical research center. This integration is expected to enable
more flexible development and contracted manufacture ofpharmaceutical products with more suitable devices and containers. It isalso expected to provide unique, value-added and high quality
pharmaceutical products.
Sales of generic drugs are expected to grow in line with the market,
due in part to a government policy for the expansion of the market sharefor generic drugs to over 30% by the end of fiscal year 2012.
Consequently a number of policies have been implemented toencourage the use of generic products. Major pharmaceuticalmanufacturers have made a full-scale entry into the Japanese market
and foreign generic manufacturers have strengthened their marketingstrategies, making for a more competitive environment surrounding thedomestic market.
Under these conditions, we worked hard to increase our share of theoral drug market by closely co-operating with drug wholesalers, while
reinforcing our sales promotions to dispensing pharmacies prescribing
for hospitals and doctors’ offices. In addition, as a result of our detailed
information service provided mainly to large hospitals, the sales in thecurrent year showed steady growth.
Looking at sales in our contracted manufacturing business, we
focused on providing a variety of services such as contracted
development and supporting high value-added initiatives, other thanOEM manufacturing of other companies’ brands. We also encouraged
contracted manufacturing in collaboration with the generic sales
divisions and new drug development divisions of domestic and foreign
major pharmaceutical manufacturers. As a result the sales in the current
year far exceeded those in the previous year.
As for the pharmaceutical containers, medical preparation andadministration devices, sales showed a healthy increase. This was a
result of providing suitable containers and systems for each
pharmaceutical product to meet a variety needs in medical practice,such as bags for antimicrobial agents or osteoporosis and pre-filled
syringes, in addition to rubber stoppers for pharmaceutical and vaccine
use and kit form containers. These containers and systems weredeveloped by our own development teams or through joint developmentwith pharmaceutical companies based on our processing techniques forplastics, metal and rubber. Furthermore, under the restrictive policy for
medical costs, we continue to promote contract manufacturing anddevelopment in cooperation with domestic and foreign pharmaceuticalcompanies in general life cycle management of pharmaceuticals. This
includes the development of combination products, systematization for
self-injection and modification of dosage forms.
As a result, net sales of this business increased 10.9% from theprevious year to ¥66.2 billion yen (US$704.0 million).

212,013

16,000■ Income Before Income Taxes

and Minority Interests (Millions of yen)
18,06020,00017,225
15,825

14,775

13,872

15,00011,371

11,022

12,0009,379

150,000

10,000

7,432

8,000
100,000
5,000

4,000

50,000

2009

2010

2011

2012

23 Nipro Corporation Annual Report 2013

2013

2009

2010

2011

2012

2013

2009

2010

2011

2012

2013

Glass-Related BusinessTotal sales of tube glass for ampoules and vials decreased slightly fromthe previous year as the demand for tube glass for ampoules decreasedin Japan and abroad, while sales of tube glass for vials performed well.
On the other hand, sales of vials increased from the previous year due
to an increase in demand for vials for vaccines. As for thepharmaceutical glass business in China, the effect of the campaign toboycott Japanese products caused concerns, however sales increased alittle from the previous year as a result of promoting sales activities.
Sales of glass for thermos bottles could not match those of theprevious year which included the special demand of Great East Japan
Earthquake. As the market stabilized, sales decreased from the previous
year. In the field of glass for lighting purposes, the order of tube glasses
for electric lamps and electric lamp production decreased due to thecampaign to boycott Japanese products in China. In addition, a trend
away from glass for electric lamps was accelerated by the growing
popularity of LEDs, and sales decreased from the previous year.
As a result, net sales of this business increased 1.3% from theprevious year to ¥7.0 billion (US$74.9 million).

Pharmaceutical-Related Business
Operating income in the Pharmaceutical-Related business decreased
19.3% compared with previous fiscal year to ¥4.0 billion (US$42.4
million), due to the effect of the Great Earthquake in the previous period
on Tohoku Nipro Pharmaceutical Corporation.

Other Business
Sales from real estate rental income decreased 10.5% from the previous
year to ¥0.2 billion (US$2.5 million).

We recorded other income of ¥6.7 billion (US$71.1 million) comparedwith other expenses of ¥4.8 billion in previous fiscal year. In the period
under review, we recorded ¥3.1 billion (US$32.6 million) in foreignexchange gains, an increase of 253.4% compared with previous fiscal
year, and gains on sales of investment securities were ¥4.2 billion(US$44.3 million).

Cost of Sales
The cost of sales increased 17.5% compared with previous fiscal year to¥175.3 billion (US$1,864.1 million). The increase corresponded to anincrease in net sales, however, the ratio of cost of sales to net sales
increased by 2.3 percentage points compared with previous fiscal year to72.8%, mainly due to the effect of exchange rates and the addition to thegroup of Nipro Glass Germany AG and other glass business companies,
which have a higher cost of sales ratio.
As a result, gross profit increased 4.7% compared with previous fiscal
year to ¥65.7 billion (US$698.6 million)

Sales, General and Administrative Expenses
Sales, general and administrative expenses increased 15.8% comparedwith previous fiscal year to ¥54.3 billion (US$577.7 million), mainly as aresult of the addition of P.T. Nipro Indonesia Jaya and 5 other companies
into the scope of consolidation and an increase in research anddevelopment expenses in domestic companies.

Operating Income
As a result of the aforementioned factors, operating income decreased
28.1% compared with previous fiscal year to ¥11.4 billion (US$120.9
million). The ratio of operating income to net sales decreased 2.8
percentage points to 4.7%, owing to an increase in sales, general andadministrative expenses.

Operating Income by Business Segment
Medical-Related Business
Operating income in the Medical-Related business decreased 14.8%
compared with previous fiscal year to ¥14.6 billion (US$154.8 million),
due to the effect of the exchange rate and increases in start-up costs for
new plants.

■ Net Income (Millions of yen)

Glass-Related Business
Operating income in the Glass-Related business decreased 27.3%
compared with previous fiscal year to ¥0.3 billion (US$3.5 million), due to
expenses for improving manufacturing facilities.
Other Business
Operating income in other business amounted to ¥0.2 billion (US$2.4
million), mainly from real estate rental income.
Adjustment
Unallocated corporate costs, consisting mainly of R&D expenses andheadquarters administration expenses, increased 12.4% compared withprevious fiscal year to ¥7.7 billion (US$82.2 million) mainly due toincreases in experimental and research expenses.

Other Income (Expenses)

Income before Income Taxes and Minority Interests
As a result of the factors outlined above, income before income taxes
and minority interests increased 63.9% compared with previous fiscal
year to ¥18.1 billion (US$192.0 million).

Income Taxes
Income taxes, including deferred taxes, increased 23.9% compared withprevious fiscal year to ¥7.4 billion (US$79.1 million) due to the increase inincome before income taxes and minority interests. The effective tax rate
was 41.2%, lower than the rate of 54.5% for previous fiscal year, mainly
because of a decrease in losses for consolidated subsidiaries for which avaluation allowance on deferred tax assets was provided.

Minority Interests in Income from Consolidated Subsidiaries
Minority interests in net income from consolidated subsidiaries
amounted to ¥0.4 billion (US$4.1 million).

Net Income
Net income increased 123.1% compared with previous fiscal year to¥10.2 billion (US$108.8 million). Net income per share increased to ¥60.0(US$0.64) from ¥35.3 for previous fiscal year. Return on equity increased
4.7 percentage points to 8.9% from 4.2% for previous fiscal year
because of the higher net income.

Net Sales and Operating Income by Geographic Segment
Japan
In Japan, net sales increased 7.5% compared with previous fiscal year to¥139.0 billion (US$1,477.5 million) due to steady sales in our Medical andPharmaceutical-Related businesses.

■ Capital Expenditures (Millions of yen)

■ Total Assets (Millions of yen)

50,000600,000

579,302
12,000

10,232

10,00039,52540,000

7,253

8,000

400,000 330,641

23,323300,000

4,586

4,531

15,20920,0004,000

200,000

2,456
10,000

2,000

2009

2010

2011

476,510500,000

383,397

30,0006,000

37,99733,142499,687

2012

2013

100,000

2009

2010

2011

2012

2013

2009

2010

2011

2012

2013

Nipro Corporation Annual Report 2013 24

America
In America, net sales increased 14.3% compared with previous fiscal
year to ¥46.3 billion (US$492.4 million). The major reason of the increase
was the expansion of our distribution network and a growth in sales ofglass products for medical purposes.

As a result, net cash and cash equivalents increased ¥13.2 billion
compared with the end of previous fiscal year to ¥92.6 billion (US$984.8
million).

EuropeIn Europe, net sales increased 39.9% compared with previous fiscal yearto ¥32.4 billion (US$393.9 million) due to healthy sales of dialysis
products and glass products for medical purposes and the effect of theacquisition of a glass business in Germany in 2012.

Total number of employees at the end of the period under review
increased 4,761 compared with the end of previous fiscal year to 19,327.
Employees in Japan increased 143 to 5,370, and overseas employees
increased 4,618 to 13,957.

■ Staff■ Basic Policy on Distribution of Profit

Asia
In Asia, net sales increased 22.3% compared with previous fiscal year to¥23.4 billion (US$344.2 million) due to a steady growth of sales of
dialysis- and diabetes products in the Asian market.

As we consider profit return to be an important management measure,
our policy is that 50% of the non-consolidated net income is to be
distributed to shareholders.
Retained earnings are to be invested in sales and production facilities
as well as in R&D, in view of enlarging the firms management basis andlong-term business developments, so as to ensure stable andcontinuous growth.

■ Financial Position

Total assets as of March 31, 2013 stood at ¥579.3 billion (US$6,159.5
million), an increase of 15.9% from the end of previous fiscal year.
Current assets increased 15.0% from the end of previous fiscal yearto ¥288.0 billion (US$3,061.9 million), due mainly to the increase in cash
and deposits, notes and accounts receivable-trade.
Property, plant and equipment, net of accumulated depreciation,
stood at ¥174.7 billion (US$1,857.6 million), a slight increase of 19.9%
compared with previous fiscal year.
Capital investments in property, plant and equipment totaled ¥35.1
billion (US$373.4 million). By business segment, capital investments
amounted to ¥23.0 billion (US$244.1 million) in Medical-Related businessand ¥10.2 billion (US$108.9 million) in Pharmaceutical-Related business.
Intangible assets increased 78.9% to ¥34.3 billion (US$364.3 million)
due to an increase in goodwill.
Investment and other assets decreased 2.4% to ¥82.4 billion(US$875.7 million), due mainly to the decrease in investment securities.
Current liabilities increased 13.1% from the end of previous fiscal
year to ¥213.8 billion (US$272.8 million), mainly due to an increase incurrent portion of long-term debt.
Long-term liabilities increased 20.4% from the end of previous fiscal
year to ¥236.8 billion (US$2,517.6 million), owing to an increase inlong-term debt.
Total net assets increased 13% from the end of previous fiscal year to¥128.8 billion (US$1,369.1 million), due to an increase in retained
earnings and foreign currency translation adjustment.

■ Risk Factors

The following are risks that may have an effect on Nipro group’s
operational results and/or financial condition.
The items concerned were determined as of March 31, 2013.

(1) Risks Related to Product Safety
Nipro group brings all of its capabilities to bear in ensuring productsafety in the design, development and manufacturing of medical devices
and pharmaceutical products. There are still the risks, however, that
accidental defects or adverse effects could result in damages to a third
party and our being sued for liability.
To cover these risks, we therefore maintain general liability andproduct liability insurance. In the unlikely event of a successful claim inexcess of the insurance coverage, however, there could be a material
adverse effect on our operational results and/or financial condition.

(2) Risks Related to Supplier Concentration
Nipro group procures materials and parts for its operations from a large
number of suppliers. Some key materials or parts may be obtained only
from a single supplier or a limited group of suppliers. If circumstances at
any of these suppliers make it impossible for us to acquire a sufficientquantity of materials or parts to meet our production needs in a timely
and cost-effective manner, there could be a material adverse effect on
our operational results and financial condition.

(3) Risks Related to Changes in Government Healthcare Policies■ Cash Flow

The business sector to which Nipro group belongs is intimately
connected with the healthcare system and is subject to the regulations
laid out by government organizations, including the National Health
Insurance System and the Pharmaceutical Affairs Law. Should
circumstances arise in which we were unable to respond to changes inthe environment brought about by unforeseeable wholesale changes ingovernment healthcare policies, there could be a material adverse effecton our operational results and financial condition.

Net cash provided by operating activities increased 45.9% comparedwith the previous period to ¥22.6 billion (US$240.2 million), mainly
because of an increase in net income and depreciation and amortization.
Net cash used in investing activities amounted to ¥37.4 billion(US$398.0 million), mainly due to purchase of available-for-salesecurities and purchase of property, plants and equipment.
Net cash provided by financing activities amounted to ¥23.4 billion(US$248.4 million) as a result of proceeds from long-term loans.

■ Net Assets (Millions of yen)
150,000

128,763
116,071

120,000■ Basic Earnings Per Share (yen)■ Number of Employees

150

24,00019,327114.4

109,038 113,951

20,000120

96,56014,566

16,00090,00090

60,00060

30,000

30

60.0

2009

2010

2011

2012

25 Nipro Corporation Annual Report 2013201312,01771.4
35.3

12,000

9,354

9,939

2009

2010

8,000

19.4
4,000

2009

2010

2011

2012

2013

2011

2012

2013

(4) Risks Related to Changes in Sale Prices(11) Risks Related to Controls on Personal Information

The products sold by Nipro group include some that are affected on an
irregular two year basis by price reductions under the Japanese payment
system for medical care, drug prices and reimbursement prices for
medical materials and supplies. Moreover, should measures to holddown medical costs also become pervasive worldwide, resulting in
intensified competition between corporations and leading to prices
falling to a greater degree than anticipated, there could be a material
adverse effect on our operational results and financial condition.

Nipro group has established strict precautions to protect theconfidentiality of personal information in our possession. However, if due
to unforeseen events or an accident this personal information is leakedoutside the group, causing a loss of trust or customers, there could be amaterial adverse effect on our operational results and financial condition.

(12) Risks Related to Litigation
On December 7, 2007, a damage suit was filed at the Tokyo Higher
Court by Naigai Co., Ltd. and Naigai Glass Kogyo Co., Ltd. (collectively
the “Plaintiff”) against the Company, based on Article 25 of the Antitrust
Law. The claimed amount was ¥2,032 million (US$21,606 thousand,based on a rate of US$1=¥94.05). On December 21, 2012, the Tokyo
High Court made a judgment that the Company pay to the Plaintiff a sumof ¥133 million (US$1,414 thousand) together with an amount thereon at
the rate of 5% per annum until full payment of such sum shall has beenmade. The Plaintiff was not satisfied with the judgment and a petition for
acceptance of final appeal has been filed on January 7, 2013. The
purpose is to reverse the part of the original judgment (high court ruling)
denying the Plaintiff’s appeal and to claim that the Company pay to thePlaintiff a sum of ¥1,352 million (US$14,375 thousand) together with anequivalent amount thereon at the rate of 5% per annum besides theaccepted amount in the original judgment. Should the defense of theCompany be unsuccessful and a judgment to order the payment ofcompensation be given to the Company, there could be a material
adverse effect on our operational results and financial condition.

(5) Risks Related to Changes in Prices of Raw Materials
The products manufactured by Nipro group include some that are madefrom petrochemical products such as plastics. Should the cost of raw
materials such as petrochemicals rise, there could be a material adverse
effect on our operational results and financial condition.

(6) Risks Related to Overseas Expansion
Nipro group maintains manufacturing bases and sales offices around theworld for the production and supply of its products. Should there be
unexpected revisions to legal regulations or political or economicchanges in these countries or regions, there could be a material adverse
effect on our operational results and financial condition.

(7) Risks Related to Intellectual Property
Nipro group owns numerous patents and trademarks, and maintains
various proprietary rights for the products it manufactures. Additionally,
we take all possible measures to avoid infringing the patents andproprietary rights of any third party, and to avoid breaching any license
agreements we have concluded concerning technologies. Nevertheless,
if an unanticipated claim for damages were to be made by a third party
and the defense of Nipro group were to be rejected, there could be amaterial adverse effect on its operational results and financial condition.

(13) Risks Related to Fund Raising
Nipro group relies on debt finance in the form of loans from financial
institutions or issuance of corporate bonds and commercial papers, etc.
to raise business and investment funds. Due to turmoil in financial
markets, reduction of lending from financial institutions to us or asignificant downgrade of our credit rating by credit rating agency, we
may not be able to raise the necessary funds when we need them on
acceptable terms, our fund raising may be restricted or the cost of fundraising could increase, and there could be a material adverse effect on
our operational results and financial condition.

(8) Risks Related to Environmental Regulations
Nipro group believes it has taken adequate precautions to comply withapplicable regulations in the course of its business activities. Should ouractivities cause an unforeseen environmental problem, however, with aclaim for damages made against us, there could be a material adverse
effect on our operational results and financial condition.

(14) Risks Related to M&A and Business Alliances(9) Risks Related to Exchange Rate Fluctuations
Nipro group, including its overseas subsidiaries, carries out its foreign
currency transactions primarily in US Dollars and Euros, but calculates
financial statements for its overseas subsidiaries using Japanese Yen forthe purpose of producing consolidated financial statements. Fluctuations
in exchange rates may therefore have a material adverse effect on ouroperational results and financial condition.

Nipro group conducts M&A activities and enters into business alliances
to reinforce its business base. Prior to concluding these deals, we carryout a thorough investigation of the target company. However, should any
problems arise such as the discovery of unrecognized liabilities or should
the development of the acquired business not proceed as planned, there
could be a material adverse effect on our operational results andfinancial condition.

(10) Risks Related to Investment Value(15) Other Risks

Nipro group’s assets include investments in stocks and other securities.
These investments have been made for purposes such as building goodbusiness relationships with the issuers of such securities, or forgathering useful information for the development of new products or new
business opportunities. Should the value of these investments decline
significantly owing to fluctuations in the stock market, circumstances at
an issuer, or a change in the accounting methods used to deal withthese investments, there could be a material adverse effect on ouroperational results and financial condition.

Fires, earthquakes, acts of terrorism, wars, epidemics, or other
unforeseen man-made or natural disasters affecting areas or facilities
where Nipro group conducts its business activities may cause a delay orinterruption in production, sales, distribution, or provision of services.
Should such a delay or interruption be extended, there could be amaterial adverse affect on our operational results and financial condition.

■ Equity Ratio (%)■ Return on Assets (%)■ Return on Equity (%)

40.0

6.0

10.0

28.7

29.8

30.0

5.0

22.4

22.0

20.7

5.1
4.3

3.2

3.0

20.0

6.9

8.0

4.0

4.0

8.9

6.0

2.1

4.2

4.2

4.0

2.2

2.0
10.0

2.0

1.0

2009

2010

2011

2012

2013

2009

2010

2011

2012

2013

2009

2010

2011

2012

2013

Nipro Corporation Annual Report 2013 26

10 Year Summary

Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31
Millions of yen

2013
Income Statement Data:
Net sales ················································································
Medical-Related (*1) ···························································
Pharmaceutical-Related (*1) ···············································
Glass-Related (*1) ······························································
Other (*1) ···········································································Store (*1) ············································································
Cost of sales ··········································································
Selling, general and administrative expenses ··························
Operating income ··································································
Medical-Related (*2) ···························································
Pharmaceutical-Related (*2) ···············································
Glass-Related (*2) ······························································
Other (*2) ···········································································Store (*2) ············································································
Income before income taxes and minority interests ················Net income ············································································
Capital expenditures ······························································
Depreciation and amortization ················································
R&D expenses ·······································································
Balance Sheet Data:
Total assets ···········································································
Property, plant and equipment-net ·········································
Working capital ······································································
Current liabilities ·····································································
Long-term liabilities ································································
Common stock ······································································
Capital surplus ·······································································Net Assets ·············································································

2012

2011

2010

¥

241,021
167,532
66,212
7,042
235—
175,31454,336
11,371
14,558
3,988
330
222
—
18,060
10,23237,997
21,2106,464¥

212,013145,082
59,715
6,954
262—
149,253
46,935
15,825
17,078
4,940
454
230
—
11,022
4,586
39,525
21,581
5,957¥

195,943
132,817
38,00524,704417—
137,768
40,95017,225
18,437
1,658
2,701
88
—
7,432
2,456
23,323
21,244
4,977¥

177,830
118,517
34,52824,338447—
126,145
33,591
18,09419,923
2,102
3,103
64
—
13,872
7,253
15,20918,421
4,846¥

579,302174,70374,216
213,758
236,781
84,398
636
128,763¥499,687
145,679
61,346
189,090
196,646
84,398636
113,951¥476,510
128,506
40,621
176,401
191,071
28,66329,973109,038¥

383,397
124,20941,725
138,204
129,122
28,66329,973116,071

¥

19.4
17.4
50.0
839.7

¥

114.4
114.1
53.0
1,802.3

Yen

Per Share Data:
Basic earnings (*3) ·································································
Diluted earnings (*3) ·······························································Cash dividends ······································································
Equity (*3) ···············································································

¥

60.0
54.1
27.5
703.5

¥

35.3
31.0
23.5
643.9

Number of common shares issued ·············································
Number of employees ································································

171,459,479
19,327

171,459,479
14,56663,878,505
12,017

63,878,505
9,939

Selected Data and Ratios:
Equity ratio (*4) (%) ·································································
Return on assets (*4) (%) ························································
Return on equity (*4) (%) ·························································
Price earnings ratio (*4) (times) ···············································

20.7
2.1
8.9
14.0

22.0
3.2
4.2
17.5

22.4
4.0
2.2
42.5

29.8
5.1
6.9
15.8

(*1) Effective the fiscal year ended March 31, 2011, the Company has adopted ASBJ Statement No.17 “Accounting Standard for Disclosures about Segment of an Enterprise andRelated Information” (March 27, 2009) and ASBJ Guidance No.20 “Guidance on Accounting Standard for Disclosures about Segment of an Enterprise and RelatedInformation” (March 21, 2008). Net sales and operating income for the period for the fiscal year ended March 31, 2010 have been restated to show what the Group’s result
would have been if the new accounting standards had been applied in that year. Before the fiscal year ended March 31, 2009, net sales and operating income have beenstated in compliance with previous accounting rules. In addition, the corporate reorganization was conducted effective on October 1, 2012 in order to enforce
Pharmaceutical-Related business and build a strong cooperative relationship among Medical-Related, Pharmaceutical-Related and Glass-Related business. As a result of thisreorganization, some business divisions included in Glass-Related business were changed to Pharmaceutical-Related business. The segment information is presented as if theaforementioned reorganization had been conducted at the beginning of the financial year 2012, and the presentation for the prior financial years are not restated.
(*2) Operating income at the operating segment level is not adjusted for intra-segment transactions. See Note 16. “Segment Reporting” to the consolidated financial statements.
(*3) Effective the fiscal year ended March 31, 2012, the Company has adopted ASBJ Statement No.2 “Accounting Standard for Earnings Per Share” (June 30, 2010), ASBJ
Guidance No.4 “Guidance on Accounting Standard for Earnings Per Share” (June 30, 2010) and ASBJ PITF No.9 “Practical Solution on Accounting for Earnings Per Share”(June 30, 2010). In addition, the Company has split one share of common stock into two shares on October 1, 2011 based on the resolution at the board of directors’ meeting

27 Nipro Corporation Annual Report 2013

Thousands of
U.S. dollars(Note 1)Millions of yen

2009
¥

¥

2008

175,945
112,970
52,726
9,554
695—
124,396
36,774
14,775
16,209
4,082
1,772
4
—
9,379
4,531
33,142
18,1095,352¥

330,641
126,739
46,070114,796
119,285
28,66329,97396,560¥2007

172,113
111,084
48,754
11,437838—
123,108
35,32813,677
15,830
3,271
1,890
13
—
8,260
4,454
25,90015,054
6,194¥

349,302
118,81253,911
108,835
120,923
28,66329,975
119,544¥2006

184,363
97,30042,152
12,9191,019
30,973
132,142
39,16813,053
14,334
3,298
1,865
151
270
16,776
8,555
23,093
12,4704,461¥

336,660
104,882
43,128104,105
105,535
28,66329,973127,020¥

2005

206,801
90,86835,22011,934
1,518
67,261
149,971
44,49812,332
13,430
2,111
1,836
529
578
9,061
4,513
20,874
12,315
3,760¥

338,741
106,195
34,579111,285
113,453
28,66329,972
114,003¥

2004

192,320
82,504
26,207
11,667
1,101
70,841140,072
41,844
10,404
11,039
2,261
1,889
288
115
8,660
4,519
16,312
10,266
3,422¥

293,749
98,78839,12396,242
99,19828,66329,972
98,309¥188,700
78,72725,33911,891
1,386
71,357137,153
38,99012,557
12,117
2,471
1,819
404
420
8,044
4,216
14,5009,819
3,074$ 2,562,690
1,781,308
704,00974,875
2,498

279,701
94,00528,57096,36486,932
28,66329,972
96,405$ 6,159,510
1,857,556
789,1122,272,811
2,517,608
897,374
6,762
1,369,091

71.4
—
32.0
1,498.5

¥

70.2
—
37.5
1,861.8

¥

134.7
—
80.0
1,979.2

1,864,051
577,735
120,904
154,790
42,403
3,509
2,360
—
192,025
108,793404,009
225,518
68,729U.S. dollars(Note 1)

Yen

¥

2013

¥

69.6
—
37.5
1,767.7

¥

69.4
—
38.5
1,519.6

¥

64.9
—
30.5
1,487.5

63,878,505
9,354

63,878,505
9,020

63,878,505
8,807

63,878,505
9,048

63,878,505
8,617

63,878,505
8,132

28.7
4.3
4.2
21.5

33.8
4.0
3.7
24.8

37.3
3.9
7.2
17.1

33.2
3.9
4.3
26.0

32.9
3.6
4.7
25.6

33.9
4.7
4.7
24.1

$

0.64
0.58
0.29
7.48

held on August 27, 2011. In accordance with this adoption, equity per share, basic earnings per share and diluted earnings per share are calculated on the assumption thatthe two-for-one stock split of common stock was conducted at the beginning of fiscal year ended March 31, 2011. Before the fiscal year ended March 31, 2010, each amount
has been stated in compliance with previous accounting rules.
(*4) Equity ratio is the ratio of the sum of total shareholders’ equity and accumulated other comprehensive income to total assets at the period end. Return on assets is the ratio of
operating income for the period to average of total assets during the period. Return on equity is the ratio of net income for the period to average of the sum of total
shareholders’ equity and accumulated other comprehensive income during the period. Price earnings ratio is the ratio of the closing price of the Company’s shares listed on
the First Section of the Tokyo Stock Exchange on the last trading day in March of each year to basic earnings per share.

Nipro Corporation Annual Report 2013 28

Consolidated Balance Sheets

Nipro Corporation and its Consolidated Subsidiaries
As of March 31, 2013 and 2012
Thousands of U.S. dollars(Note 1)Millions of yen

2013

2012

2013

AssetsCurrent assets:
Cash and cash equivalents (Note 5) ····························································

79,450$ 984,827

Time deposits (over three months) (Note 5) ·················································¥

13,37892,623¥

16,288142,244

Trade notes and accounts receivable (Note 5) ············································

83,66568,642889,580

Allowance for doubtful receivables ······························································(464)(361 )(4,934)Inventories (Notes 3 and 5) ·········································································

81,65571,604

868,208

Deferred income taxes (Note 4) ··································································

5,375

4,830

57,150

Other current assets (Note 5) ······································································

11,742

9,983

124,848

Total current assets ················································································

287,974

250,436

3,061,923

Property, plant and equipment (Note 5):
Land ···········································································································

22,173

20,447

235,758

Buildings and structures ·············································································

138,548

116,879

1,473,131

Machinery and equipment ··········································································

206,840

172,065

2,199,256

Construction in progress ············································································

23,787

26,958

252,919

391,348

336,349

4,161,064

Accumulated depreciation ··········································································(216,645)(190,670 )(2,303,508)

Property, plant and equipment-net ·························································

174,703

145,679

1,857,556

Goodwill ·····································································································

22,74011,895

241,786

Other (Note 5) ·····························································································

11,525

7,256

122,540

Total intangible assets ············································································

34,265

19,151

364,326

and an affiliate accounted for by the equity method ································

2,158

12,21022,945Investment securities (Note 6) ·····································································

60,98359,620648,410Intangible assets:

Investments and other assets:
Investment in unconsolidated subsidiaries

Lease deposits ···························································································

815

606

8,666

Deferred income taxes (Note 4) ··································································

8,805

6,597

93,620102,064

Other (Note 5) ·····························································································

9,599

5,388

Total investments and other assets ·························································

82,36084,421

875,705

Total ··········································································································¥ 579,302¥ 499,687$6,159,510

The accompanying notes are an integral part of these statements.

29 Nipro Corporation Annual Report 2013

Thousands of U.S. dollars(Note 1)Millions of yen

2013

2012

2013

Liabilities and net assets
Current liabilities:
Short-term bank loans (Notes 5 and 10) ·····················································

63,258$ 888,591

Current portion of long-term debt (Notes 5 and 10) ····································¥

83,572
44,944¥50,874

477,873

Trade notes and accounts payable ·····························································

40,87937,721

434,651

Accrued income taxes ················································································

3,854

3,277

40,978

Accrued expenses ······················································································

15,95911,974

169,686

Allowance for loss on clearance of business ···············································

1,955

1,955

20,787

Commercial papers (Note 10) ·····································································

10,00010,000106,326

Notes and accounts payable for plant and equipment ································

5,742

6,331

61,053

Other current liabilities ················································································

6,853

3,700

72,866

Total current liabilities ·············································································

213,758

189,090

2,272,811

Long-term debt (Notes 5 and 10) ·······························································

226,954

189,380

2,413,121

Accrued pension and severance liabilities (Note 11) ····································

2,855

1,988

30,356

Deferred income taxes (Note 4) ··································································

2,213

1,761

23,530Long-term liabilities:

Other long-term liabilities ············································································

4,759

3,517

50,601

Total long-term liabilities ·········································································

236,781

196,646

2,517,608

84,39884,398897,374

Commitments and contingent liabilities (Note 12)
Net Assets (Notes 15):
Common stock ··························································································
Authorized: 400,000,000 shares
Issued: 171,459,479 shares
Capital surplus ···························································································

636

636

6,762

Retained earnings ······················································································

54,78848,389582,541

Less cost of common shares of treasury stock ···········································(865)(865 )(9,197)(914,107 shares in 2013 and 913,612 shares in 2012)
Total shareholders’ equity ·······································································

138,957

132,558

1,477,480

Unrealized gain (loss) on available-for-sale securities ··································(12,547)(6,528 )(133,408)

Foreign currency translation adjustments ····················································(6,437)(16,209 )(68,442)

Accumulated other comprehensive income ············································(18,984)(22,737 )(201,850)

Minority interests ························································································

8,790

4,130

93,461

Total net assets ······················································································

128,763

113,951

1,369,091

Total ··········································································································¥ 579,302¥ 499,687$6,159,510

The accompanying notes are an integral part of these statements.

Nipro Corporation Annual Report 2013 30

Consolidated Statements of Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012
Thousands of U.S. dollars(Note 1)Millions of yen

2013

2012

2013

Net sales ·······································································································
Cost of sales ································································································
Gross profit ································································································¥ 241,021
175,31465,707¥ 212,013
149,253
62,760$2,562,690
1,864,051
698,639

Selling, general and administrative expenses (Notes 17 and 18)
Operating income ·······················································································

54,336
11,371

46,935
15,825

577,735
120,904

Other income (expenses):
Interest and dividend income ······································································
Interest expense ·························································································
Loss on sale and disposal of property, plant and equipment-net ················
Exchange gain (loss) ···················································································
Equity in profit (loss) of an affiliated company ··············································
Gain (loss) on sale of investment securities (Note 6) ····································
Loss on impairment of fixed assets ·····························································
Reversal of provision (Provision) for loss on disaster ···································
Other income (loss)-net ··············································································
Income before income taxes and minority interests

2,716(3,447)
(320)
3,063
(38)
4,168
(2)
—
549
18,0601,386(3,308 )(348 )(1,997 )(84 )—(529 )
117(40 )
11,022

28,878(36,651)(3,402)32,568(404)
44,317(21)—
5,836
192,025

Income taxes (Note 4):
Current ·······································································································
Deferred ·····································································································

6,865
575

6,203
(197 )

72,993
6,114

Net income before minority interests ························································

10,6205,016

112,918

430
4,586

4,125
$ 108,793

Minority interests in income (loss) of consolidated subsidiaries
Net income ·································································································¥

388
10,232¥

U.S. dollars(Note 1)

Yen

Amounts per common share:
Basic earnings ····························································································
Diluted earnings ··························································································Cash dividends ···························································································

¥

60.0
54.1
27.5

¥

35.3
31.0
23.5

$

0.64
0.58
0.29

The accompanying notes are an integral part of these statements.

Consolidated Statements of Comprehensive Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012
Thousands of U.S. dollars(Note 1)Millions of yen

2013
Net income before minority interests ························································
Other comprehensive income:Unrealized gain (loss) on available-for-sale securities ······························
Foreign currency translation adjustment ·················································
Comprehensive income ··············································································
Comprehensive income attributable to:Shareholders of the parent ·····································································
Minority interests ····················································································
The accompanying notes are an integral part of these statements.

31 Nipro Corporation Annual Report 2013¥

10,620¥(6,018)
10,266
14,86813,985
883

2012

2013

¥

5,016

$ 112,918¥(17,915 )(6,984 )(19,883 )(63,987)
109,155$ 158,086(20,258 )375

148,6979,389

Consolidated Statements of Changes in Net Assets

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012
Thousands
Outstanding
number of Commonshares ofstockcommonstock

Balance at March 31, 2011 ·····Net income ····························
Increase (decrease) in
retained earnings due toinclusion of new subsidiaries
in consolidation ···················
Issue of new stock ·················Cash dividends ······················
Purchase of treasury stock ····
Disposal of treasury stock ······
Transfer to common stock from
capital surplus reserve ·········
Decrease of retained earnings(Other) ·······························
Other net change during
the year ·····························
Balance at March 31, 2012 ·····Net income ····························
Increase (decrease) in
retained earnings due toinclusion of new subsidiaries
in consolidation ···················Cash dividends ······················
Purchase of treasury stock ····
Disposal of treasury stock ······
Decrease of retained earnings(Other) ·······························
Other net change during
the year ·····························
Balance at March 31, 2013 ·····

63,422¥ 28,663

107,581

26,398

CapitalsurplusRetainedearnings¥ 29,973¥ 46,631
4,586¥ (864 ) ¥ 104,403
4,586

(69)

(69)
26,398(2,759 )
(1 )
0

(69 )
26,398(2,759 )
(1 )
0

—

—

(0 )

(0 )

(2,759 )
(457)
0

(1 )
0

(0 )
29,337(29,337)(0 )

170,546

84,398636

48,38910,232(865)

320(4,009)(1)
0

170,545¥ 84,398

170,546$ 897,374

(1)
0

¥ 636

Capitalsurplus(6,928 )(16,209)¥ 2,107(24,844 )(22,737)¥ 2,528 ¥ 109,038
4,586

1,602
4,130

(23,242 )113,951
10,232

(144)

(144)

(144)

¥ 54,788—¥ (865) ¥ 138,957(0)0Retainedearnings(6,019)¥ (12,547)

9,772
3,753
¥ (6,437) ¥ (18,984)

Thousands of U.S. dollars (Note 1)
Unrealized Foreign Accumulated
Total
gain (loss) on currency
Treasury shareholders’comavailable- translation otherstock
equityfor-sale adjustments prehensive
incomesecurities

Minority
interests

Total
net assets$ (9,197 ) $1,409,442
108,793

3,402(42,626 )

3,402(42,626 )
(0 )
0

3,402
(42,626 )(0 )0(1,531 )(1,531 )(0 )0$ 6,762$ 582,541$ (69,410 ) $ (172,344 ) $ (241,754 )

4,660
8,413
¥ 8,790 ¥ 128,763$ 6,762 $ 514,503
108,793(0 )$ 897,374(17,916 )(6,528)¥ (9,281 )Total
net assets

320(4,009)(0)0(1,531 )

170,545—
132,558
10,232¥ 11,388

Minority
interests

320(4,009)(0)0(0)

Thousands
Outstanding
number of Commonshares ofstockcommonstock

Balance at March 31, 2012 ····Net income ····························
Increase (decrease) in
retained earnings due toinclusion of new subsidiaries
in consolidation ···················Cash dividends ······················
Purchase of treasury stock ····
Disposal of treasury stock ······
Decrease of retained earnings(Other) ·······························
Other net change during
the year ·····························
Balance at March 31, 2013 ·····

Millions of yen
Unrealized Foreign Accumulated
Total
gain (loss) on currency
Treasury shareholders’comavailable- translation otherstock
equityfor-sale adjustments prehensive
incomesecurities—(63,998 )$ (9,197 ) $1,477,480 $ (133,408 )

103,90239,904$ (68,442 ) $ (201,850)$ 43,913 $1,211,601
108,793

49,54889,452$ 93,461 $1,369,091

The accompanying notes are an integral part of these statements.

Nipro Corporation Annual Report 2013 32

Consolidated Statements of Cash Flows

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012
Thousands of U.S. dollars(Note 1)Millions of yen

2013
Operating activities:
Net income ···································································································
Adjustments to reconcile net income to net cash provided operating activities:
Depreciation and amortization ···································································
Amortization of goodwill ············································································
Loss on impairment of fixed assets ···························································
Equity in loss (profit) of an affiliated company ·············································
Allowance for doubtful receivables ····························································
Gain (loss) on sales of available for sales securities ····································
Provision for deferred taxes ·······································································
Exchange loss (gain) ··················································································
Loss on devaluation of marketable securities ·············································
Loss on sale and disposal of property, plant and equipment-net ···············
Other, net ··································································································$ 108,793

21,210
2,834
2
38
194
(4,164)575(1,694)28
320
426

21,581
2,652
529
84
(71 )
—
(197 )
1,969
—
348
972

225,518
30,13321404
2,063(44,274)
6,114(18,012)
298
3,402
4,530

Changes in operating assets and liabilities:
Trade receivables ······················································································
Inventories ·································································································
Other current assets ··················································································
Lease deposits ··························································································
Trade payables ·························································································
Accrued income taxes ···············································································
Other, net ··································································································
Total adjustments ·················································································Net cash provided by operating activities ··············································(8,965)(3,183)
518
(178)
(830)
990
4,241
12,362
22,594(7,491 )(10,925 )(1,366 )(213 )
4,909
111(1,992 )10,900
15,486(95,322)(33,844)
5,508(1,893)(8,825)
10,52645,094131,441
240,234

Investing activities:
Purchase of property, plant and equipment ···················································
Proceeds from sales of property, plant and equipment ··································
Purchase of available-for-sale securities ························································
Purchase of investments in unconsolidated subsidiaries ································
Proceeds from sales of available-for-sale securities ·······································
Purchases of investments in consolidated subsidiaries affecting scope of consolidation ····
Proceeds from investments in consolidated subsidiaries affecting scope of consolidation ··Proceeds from sale of investments in subsidiaries and affiliates ·····················Net decrease (increase) in short-term loans to affiliates ··································
Deposits (Over three months) ········································································
Other, net ······································································································Net cash used in investing activities ······················································(36,254)152(11,567)(3,825)18(2,386)
3,216
5,800
1,813
7,776
(2,174)(37,431)(37,738 )443(299 )(3,253 )10(10,405 )——1,078(14,699 )(3,056 )(67,919 )(385,476)
1,616(122,988)(40,670)
191(25,369)
34,19561,66919,277
82,679(23,115)(397,991)

Financing activities:
Net increase (decrease) in short-term loans ···················································
Proceeds from long-term loans ·····································································
Repayment of long-term loans ······································································
Proceeds from issuance of bonds ·································································
Repayment of bonds ·····················································································
Proceeds from issuance of common stock ····················································Cash dividends paid ······················································································
Other, net ······································································································Net cash provided by financing activities ···············································

9,445
61,629(43,039)
9,941(10,100)
262(4,009)(770)
23,359(3,653 )63,894(33,500 )7,974(5,000 )19,181(2,759 )(412 )
45,725

100,425655,279(457,618)
105,699(107,390)
2,786(42,626)(8,187)248,368

3,031
11,55379,450(2,287 )(8,995 )78,92232,228122,839844,763

9,523
79,45017,225$ 984,827

The accompanying notes are an integral part of these statements.

33 Nipro Corporation Annual Report 2013¥

10,232

1,620
92,623

¥

2013

4,586

Effect of exchange rate changes on cash and cash equivalents ··············Net increase (decrease) in cash and cash equivalents ······························Cash and cash equivalents, beginning of period ········································Cash and cash equivalents of newly consolidated subsidiary,
beginning of period ····················································································Cash and cash equivalents, end of period ···················································

¥

2012

¥

Notes to Consolidated Financial Statement

1. Basis of Presenting Consolidated Financial Statements
The financial statements of Nipro Corporation (“the Company”) and its
consolidated domestic subsidiaries have been prepared in accordancewith the provisions set forth in the Financial Instruments and Exchange
law of Japan and its related accounting regulations, and in conformity
with accounting principles generally accepted in Japan, which are
different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
Effective from the year ended March 31, 2009, the Company has
adopted the “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements”(PITF No. 18) and as a result, the accounts of consolidated overseas
subsidiaries are prepared in accordance with either International
Financial Reporting Standards or generally accepted accounting
principles in the United States, with adjustments for the specified fiveitems as applicable.

In preparing the accompanying consolidated financial statements,
certain reclassifications have been made to the consolidated financial
statements issued domestically, in order to present them in a form which
is more familiar to readers outside Japan. However, no adjustment has
been made which would change the financial position or the results ofoperations presented in the original financial statements. In addition, thenotes to consolidated financial statements include additional information
which is not required under generally accepted accounting principles
and practices in Japan.
The financial statements presented herein are expressed in Japanese
yen and, solely for the convenience of the reader, have been translated
into United States dollars at the rate of ¥94.05=US$1, the approximate
exchange rate on March 31, 2013. These translations should not be
construed as representations that the Japanese yen amounts actuallyare, have been could be converted into U.S. dollar amounts.

2. Summary of Significant Accounting Policies(a) Basis of Consolidation(e) Inventories

The consolidated financial statements include the accounts of theCompany and the significant subsidiaries and affiliated company
accounted for by the equity method.
Investments in unconsolidated subsidiaries are stated at cost and theequity method is not applied for the valuation of such investments since
they are considered immaterial in the aggregate.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profit included in
assets resulting from transactions within the Company and its
consolidated subsidiaries is eliminated. The difference between the costof investments in subsidiaries and affiliates and the equity in their net
assets at dates of acquisition is being amortized on a straight-line basis
over five to ten years.
All accounts herein have been presented on the basis of the twelve
months ended March 31, 2013 for the Company, consolidated domestic
subsidiaries and some of consolidated overseas subsidiaries, andDecember 31, 2012 for the other consolidated overseas subsidiaries.
Adjustments have been made for any significant intercompany
transactions which took place during the period between the end of
accounting period of the consolidated overseas subsidiaries and that of
the Company.

Inventories are stated principally at cost, carrying amount in the balance
sheet is calculated with consideration of written downs due to thedecreased profitability. Cost is determined principally by the averagemethod, except for certain inventories determined by the first-in, first-out
method.

(f) Property, Plant and Equipment
Depreciation of property, plant and equipment of the Company and its
consolidated domestic subsidiaries is computed principally by the
declining-balance method. The straight-line method is applied tobuildings acquired by the domestic companies after April 1, 1998, and isprincipally applied to the property, plant and equipment of consolidated
overseas subsidiaries.
The range of useful lives is principally from 31 to 50 years forbuildings and from 7 to 8 years for machinery and equipment.

(g) Intangible Assets
Amortization of intangible assets, including software for the Company’s
own use, is computed by the straight-line method over the estimateduseful life of the asset.
Goodwill is amortized on a straight-line basis over the period theCompany benefits from its use.

(b) Translation of Foreign Currencies
Balance sheets of consolidated overseas subsidiaries are translated into
Japanese yen at the current exchange rate as of the balance sheet date
except for shareholders’ equity, which is translated at the historical rate.
Income statements of consolidated overseas subsidiaries are translated
into Japanese yen at the average exchange rate for the period. Resulting
translation adjustments are shown as “Foreign currency translation
adjustments” in the “Accumulated other comprehensive income” sectionof net assets.

(c) Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments, generallywith original maturities of three months or less, that are readily
convertible to cash.

(d) Allowance for Doubtful Receivables
An allowance for possible losses from notes and accounts receivable,loans and other receivables is provided based on past experience andthe Companies’ estimates of losses on collection.

(h) Investment Securities
Investment securities are classified and accounted for, depending on
management’s intent, as follows:i) held-to-maturity debt securities, which are expected to be held tomaturity with the positive intent and ability to hold to maturity arereported at amortized cost; andii) available-for-sale securities, which are not classified as theaforementioned securities, are reported at fair value. Unrealized
gain and loss, net of applicable tax, are reported in the“Accumulated other comprehensive income” section of net assets.
For the year ended March 31, 2013, there was no held-to-maturity
debt securities held by the Company and its consolidated subsidiaries.
Non-marketable available-for-sale securities are stated at cost
determined by the average method.
For other than temporary declines in fair value, investment securities
are reduced to net realizable value by a charge to income.

Nipro Corporation Annual Report 2013 34

(i) Allowance for Loss on Clearance of Business
The company has withdrawn from retail business and a provision for
anticipated losses of sales of related fixed assets is provided.

(j) Employees’ Retirement and Severance Benefits
The liabilities and expenses for retirement and severance benefits are
determined based on amounts actuarially calculated using certain
assumptions. The Company and some consolidated subsidiaries provide
the allowance for employees’ retirement and severance benefits basedon the estimated amounts of projected benefit obligation and the fairvalue of plan assets.

(k) Derivatives
Derivatives are stated at fair value, with changes in fair value included in
net income or loss for the period in which they arise, except forderivatives designated as hedging instruments. Please see (m) Hedge
Accounting below.

(l) Leases
Finance leases, except for certain immaterial leases, are capitalized in
the balance sheet. Amortization of finance lease assets is calculated bystraight-line method over the lease period assuming no residual value.
The Company and its consolidated domestic subsidiaries account for
the finance leases for which ownership is not transferring to the lessee
and commenced prior to April 1, 2008. The pro-forma information ofsuch leases on a “as if capitalized” basis is presented in Note 7. “Leases”.

(m) Hedge Accounting<Method of hedge accounting>
The deferral hedge accounting method is applied in principle. The
allocation method is applied to currency swap and the exceptional
accounting method is applied to interest rate swap when the relevant
criteria are met.
<Hedge instrument and hedge items>(Hedge instrument)(Hedge item)
Currency swap
Foreign currency denominated loans
Interest rate swap
Interests on loans payable<Hedge policy>
The Company uses interest rate swaps to mitigate the interest raterisk involved in procuring funds and hedge items are identified on an
individual contract basis.
<Method of efficacy evaluation>
The efficacy evaluation for currency swap which meets the relevant
criteria of the allocation method and interest rate swaps which meetsthe relevant criteria of the exceptional accounting method are left out.

(n) Income Taxes
The provision for income taxes is computed based on income forfinancial statement purpose. The asset and liability approach is used torecognize deferred tax assets and liabilities for the future tax
consequences of temporary differences between the carrying amountsof assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes.

(o) Amounts per Common Share
Basic earnings per share is computed by dividing net income available tocommon shareholders by the weighted-average number of commonshares outstanding for the period. Diluted earnings per share reflect thepotential dilution that could occur if securities were exercised orconverted into common stock. Diluted earnings per share of common
stock assume full conversion of the outstanding convertible notes andbonds at the beginning of the year (or at the time of issuance) with anapplicable adjustment for related interest expense, net of tax, and full
exercise of outstanding warrants.

35 Nipro Corporation Annual Report 2013(p) Changes in Accounting Policies which are Difficult toDistinguish from Changes in Accounting Estimates
Effective the fiscal year ended March 2013, the Company and its
domestic subsidiaries have changed the depreciation method for the
relevant tangible assets newly acquired after April 1, 2012 according to
the amendment of Corporation Tax Act in Japan.
As a result, consolidated operating income and consolidated income
before income taxes and minority interests increased by 389 million yen(US$ 4,136 thousand) for each compared with the previous method.

(q) Unapplied Accounting Standards, etc.
Accounting Standard for Retirement Benefits (Accounting Standards
Board of Japan (ASBJ) Statement No. 26 of May 17, 2012), andGuidance on Accounting Standard for Retirement Benefits (ASBJ
Guidance No.25. of May 17, 2012)
1) Outline
Under the revised accounting standard, actuarial gains and losses andpast service costs shall be recognized within net assets on the
consolidated balance after adjusting for tax effects, and the accumulated
deficit or surplus shall be recognized as a liability or asset. Also,
regarding the estimated amount of retirement benefits and the method of
attributing them to accounting periods, in addition to the straight line
attribution standard, the benefit formula may be used and the method of
calculating the discount rate has been revised.
2) Scheduled Date of Adoption
These accounting standards will be adopted from the start of the fiscal
year ending March 2014. However, the revision to how retirement benefit
obligations and current service costs are determined will be adopted
from the start of the year ending March 31, 2015.
3) Impact of Adoption of New Accounting Standard
The impact in the consolidated financial statements as a result of the
adoption of this accounting standard is currently being evaluated.

(r) Subsequent Event
The purchase of the Company’s own shares was executed through themarket pursuant to Article 165 Paragraph 3 of the Corporate Law and
the Company’s article of incorporation.
1) Authorization at the Company’s Board of Directors on May 14, 2013
Type of shares to be purchased:
Common stock of the Company
Total number of shares to be purchased:
Up to 37,721 thousand shares
Purchase price:¥862(US$9) per share
Total cost of purchase:
Up to ¥32,539 million (US$345,976 thousand)
Period to be purchased:
From May 15, 2013 to June 11, 2013
2) The Result of PurchaseTotal number of shares purchased:
19,834 thousand shares
Total cost of purchase:¥17,097 million (US$181,786 thousand)Ratio of purchased shares to issued:
11.57%

3. Inventories
Inventories consisted of the following:Thousands of U.S. dollars(Note 1)Millions of yen

Finished goods and merchandises ·································································
Raw materials ································································································
Work in process ·····························································································
Packing and other ··························································································
Total ·······································································································

2013
53,89913,916
10,4803,360¥ 81,655

2012
48,114
11,8528,753
2,885¥ 71,604

¥

¥

2013
$ 573,089
147,964
111,430
35,725$ 868,208

4. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local taxes based on income which, in aggregate, resulted in a normal
statutory tax rate of approximately 37.8% and 40.5% for the years ended March 31, 2013 and 2012 respectively.
The significant components of deferred tax assets and liabilities were as follows:
Thousands of U.S. dollars(Note 1)Millions of yen

2013
Deferred tax assets
Operating loss carryforwards for tax purposes ········································
Intercompany profits ···············································································
Valuation loss on inventories ···································································
Allowance for bonuses to employees ······················································
Allowance for loss on clearance of business ···········································
Accounts receivable ···············································································
Loss on impairment of fixed assets ·························································
Excess of allowance for doubtful accounts over tax allowable amounts ····
Accrued pension and severance liabilities ···············································
Accrued enterprise taxes ········································································
Unrealized loss on available-for-sale securities ········································
Other ······································································································
Gross deferred tax assets ···········································································
Less: Valuation allowance ···········································································
Total deferred tax assets ············································································
Deferred tax liabilities
Unrealized gain on available-for-sale securities ·······································
Revaluation reserve for land ····································································
Revaluation reserve for intangible assets ················································
Revaluation reserve for fixed assets – other ············································
Other ······································································································
Total deferred tax liabilities ··········································································Net deferred tax assets (liabilities) (*1) ·····························································

¥

¥

5,135
518
854
918
739
230
613
900
864
362
6,974
2,826
20,933(5,896)15,037

¥
¥

5
674
1,427
496
485
3,087
11,950

¥

2012
¥

2013

¥

4,633
661
497
830
739
170
613
991
634
300
4,343
2,924
17,335(3,628 )
13,70754,599
5,508
9,080
9,761
7,857
2,445
6,518
9,569
9,187
3,849
74,15230,048$ 222,573(62,690)$ 159,883

¥
¥

839
674
1,165
1,135
228
4,041
9,666

53
7,166
15,173
5,274
5,157$ 32,823$ 127,060

2013
37.8%
2.0
(3.1)
1.6
—
5.5
(2.5)
(0.5)
0.4
41.2

2012
40.5%
2.4
(3.3 )
8.9
6.1
8.6
(3.9)
(2.0)
(2.8)
54.5

¥

$

Reconciliation of the differences between the statutory tax rates and the effective income tax rates was as follows:
Statutory tax rate (*2) ······························································································································
Expenses not deductible for tax purposes ··························································································
Non-taxable dividend income ·············································································································
Loss in subsidiaries ····························································································································
Effect of tax rate change ·····················································································································
Amortization of goodwill ·····················································································································Tax credits primarily for research and development costs ···································································
Operating loss carryforwards for tax purpose ·····················································································
Other ··················································································································································
Effective income tax rate ························································································································(*1) The current portion of Deferred Tax Liabilities for the year ended March 31, 2013 is ¥17million (US$181 thousand) and is accounted for as “Others” of Current Liabilities.
(*2) The statutory tax rate changed from 40.5% to 37.8% due to the “Act for Partial Revision of the Income Tax Act, etc. for the Purpose of Creating Taxation System Responding
to Changes in Economic and Social Structures” and the “Act on Special Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction
following the Great East Japan Earthquake” promulgated on December 2, 2011.

Nipro Corporation Annual Report 2013 36

5. Pledged Assets
The following assets were pledged as collateral:Thousands of U.S. dollars(Note 1)Millions of yen

2013
11,042
2,373
3,010
5,485
10,420¥ 32,330

Buildings and structures ·················································································
Machinery and equipment ··············································································
Land ···············································································································
Notes receivable ·····························································································
Other ··············································································································
Total ···········································································································

2012
9,596
—
1,746
—
214
¥ 11,556

¥

¥

2013
$ 117,406
25,231
32,00458,320110,792$ 343,753

The above assets were pledged against the following liabilities:
Thousands of U.S. dollars(Note 1)Millions of yen

2013
1,887
2,383
5,884
¥ 10,154

Short term bank loans ····················································································
Current portion of long-term debt ···································································
Long-term debt ······························································································
Total ···········································································································

2012
1,956
1,586
5,526
¥
9,068

¥

¥

2013
20,06425,33862,562$ 107,964$

6. Investment Securities
Investment securities as of March 31, 2013 and 2012 consisted of the followings:
Thousands of U.S. dollars(Note 1)Millions of yen

2013
Non-current:
Marketable:
Marketable equity securities ····································································
Investment trust funds and other ····························································Sub total ·································································································
Non-marketable securities ··········································································
Total ·······································································································

¥
¥
¥
¥

2012

59,14649
59,195
1,788
60,983

¥
¥
¥
¥

2013

58,20739
58,246
1,374
59,620$ 628,878
521$ 629,399$ 19,011$ 648,410

The carrying amounts and aggregate fair values of marketable securities for investments as of March 31, 2013 and 2012 were as follows :Millions of yen

2013
Available-for-sale securities
Equity securities ············································································
Debt securities and other ······························································
Total ·························································································

¥
¥

Cost

Unrealized gain

Unrealized loss

79,41947
79,466

¥

¥

¥

4,300
2
4,302

¥

24,573—
24,573

Fair Value¥¥

59,14649
59,195

Thousands of U.S. dollars (Note 1)

2013
Cost

Available-for-sale securities
Equity securities ············································································
Debt securities and other ······························································
Total ·························································································$ 844,434
500$ 844,934

Unrealized gain

Unrealized loss

Fair Value$$ 261,276—$ 261,276$ 628,878
521$ 629,399$

45,7202145,741Millions of yen

2012
Available-for-sale securities
Equity securities ············································································
Debt securities and other ······························································
Total ·························································································

37 Nipro Corporation Annual Report 2013

¥
¥

Cost

Unrealized gain

Unrealized loss

69,14847
69,195

¥

¥

¥

1,957
—
1,957

¥

12,898812,906

Fair Value¥¥

58,20739
58,246

Proceeds from sales of securities and gross realized gain or loss on those sales for the years ended March 31, 2013 and 2012 were as follows:
Thousands of U.S. dollars(Note 1)Millions of yen

2013
Proceeds ··························································································
Gains on sales ··················································································
Losses on sales ················································································

¥

2012
18
9
3

¥

10
—
—

$

2013
191
96
32

7. Leases
Finance leases entered into prior to April 1, 2008 that do not transfer ownership of leased property to the lessee are accounted for as if they were operatingleases. The details of such finance leases accounted for as operating leases at March 31, 2013 and 2012 were as follows:
Thousands of U.S. dollars(Note 1)Millions of yen

Acquisition cost ······························································································
Accumulated depreciation ··············································································Net leased property ························································································

2013
221
217
¥
4

¥

2012
772
736
¥
36
¥

2013
¥
¥

$

2012
7
1
8

¥
¥

2013
2,350
2,307
43

Thousands of U.S. dollars(Note 1)Millions of yen

Payments due within one year ········································································
Payments due after one year ··········································································
Total ···········································································································

$

52
6
58

$
$

2013
74
11
85

Lease payments under such leases for the years ended March 31, 2013 and 2012 were ¥56 million (US$595 thousand) and ¥160 million, respectively.

8. Financial Instruments(1) Circumstances on financial instruments(a) Policy for financial instruments
The Company and its consolidated subsidiaries manage the temporary
surplus funds by deposit with banks that have a high level of safety.
The Company and its consolidated subsidiaries raise funds forbusiness operation with mainly bank loans and bonds considering theirbusiness investment and cash planning.

(b) Details and risk of financial instruments and its risk
management
Receivable such as trade notes and accounts receivable are exposed tocustomer’s credit risk. Receivables denominated in foreign currencies
are exposed to the market risk of fluctuation in foreign currency
exchange rates.
In order to reduce the customer’s risk, the Company monitors thedues and balances by customer in accordance with the Company's
regulations of credit administration.
Investment securities are exposed to the market fluctuation risk, butmainly consist of equity of the companies which conduct business with
the Company. The Company periodically reviews the market price ofsuch securities.
Payables such as trade notes, accounts payable and accounts
payable other are due within 1 year. Payables denominated in foreign
currency are exposed to the risk of fluctuation in foreign currency
exchange rates.

Short-term loans payable are mainly borrowed to raise operating
capital and long-terms loans payable are mainly borrowed to makecapital expenditures. A part of long-term loans with the floating interest
rate has the risk of interest rate fluctuation, but the Company and its
consolidated subsidiaries use interest rate swap to solidify the interest
rate. For some of the loans denominated in foreign currency, theCompany and its consolidated subsidiaries use currency swap to hedge
the currency fluctuation risk.
Bonds and commercial papers are mainly issued to raise the funds forbonds retirement.
Lease obligations are mainly for the capital expenditures, free frominterest-rate risk because the interest rate is fixed.
Payables, loans and bonds are exposed the liquidity risk, but theCompany and its consolidated subsidiaries manage the risk by
establishing cash planning.

(c) Supplemental information on fair values of financial
instruments
Fair values of financial instruments include values based on market priceand reasonably estimated values when market price is not available.
Because variable factors are counted in the estimation, the estimatedvalues may vary by adopting different assumptions.

Nipro Corporation Annual Report 2013 38

(2) Fair values of financial instruments
The book values, fair values and the differences between them as of March 31, 2012 and 2013 are as follows (Financial instruments for which the market
value is extremely difficult to determine are not included as described in remark 2.):Millions of yen

Millions of yen

2013
Cash and cash equivalents, time deposits ·····
Trade notes and accounts receivable,
net of allowance for doubtful receivables ···Investment securities ·····································
Assets total ···················································
Trade notes and accounts payable ················
Short-term bank loans, current portion of
long-term debt, and commercial paper ······
Other notes and account payable (*1) ············
Long-term debt ·············································
Lease obligations (*2) ·····································
Liabilities total

Book value

Fair value¥ 106,001¥ 106,001

83,201
59,195¥ 248,397¥ 40,879

83,201
59,195¥ 248,397¥ 40,879

138,516
14,028226,9543,053¥ 423,430

138,516
14,028226,5202,911¥ 422,854

2012
DifferenceBook value

¥

—

¥

¥
¥

—
—
—
—

68,281
58,246¥ 222,265¥ 37,721

68,281
58,246¥ 222,265¥ 37,721

¥

—
—
434
142
576

124,132
12,367
189,380
1,341¥ 364,941

124,132
12,367
189,165
1,289¥ 364,674

95,738Fair value¥

Difference

95,738

¥

—

¥
¥

—
—
—
—

¥

—
—
215
52
267

Thousands of U.S. dollars (Note 1)

2013
Cash and cash equivalents, time deposits ·····
Trade notes and accounts receivable,
net of allowance for doubtful receivables ···Investment securities ·····································
Assets total ···················································
Trade notes and accounts payable ················
Short-term bank loans, current portion of
long-term debt, and commercial paper ······
Other notes and account payable (*1) ············
Long-term debt ·············································
Lease obligations (*2) ·····································
Liabilities total

Book value

Fair value$1,127,071$1,127,071

884,646629,399$2,641,116$ 434,651

884,646629,399$2,641,116$ 434,651

1,472,790
149,155
2,413,121
32,461$4,502,178

1,472,790
149,155
2,408,506
30,952$4,496,054

Difference

$

—

$
$

—
—
—
—

$

—
—
4,615
1,509
6,124

(*1) This is included in accrued expenses and notes andaccounts payable for plant and equipment on thebalance sheet.
(*2) This is included in other current liabilities and otherlong-term liabilities on the balance sheet.

Remark 1 Methods used to calculate fair values of financial instruments and the details of securities<Assets>• Cash and cash equivalents, time deposits and trade notes and accounts
receivable
Cash and cash equivalents and trade notes and accounts receivable are statedat the relevant book value because the settlement periods are short and the fairvalues are almost the same as the book value.
• Investments securities
Equity securities are stated at market value. See Note 6. “Investment securities”
for the detailed information by classification.
<Liabilities>• Trade notes and accounts payable and short-term bank loans and current
portion of long-term debt and commercial paper
Because the settlement periods of the above items are short and their fair values
are almost the same as their book values, the relevant book values are used.

• Other notes and account payable
Because the settlement periods of the above items are short and their fairvalues are almost the same as their book values, the relevant book values areused.
• Long-term debt
The fair value of long-term debt is calculated by applying a discount rate to thetotal of principal and interest. The discount rate is based on the assumed
interest rate if a similar new loan was entered into.
• Lease obligation
The fair value of lease obligations is calculated by applying a discount rate to
the total of principal and interest. The discount rate is based on the assumed
interest rate if a current lease transaction was renewed.

Remark 2 Financial instruments for which the fair value is extremely difficult to determine
Millions of yen

Unlisted equity securities ·······························

¥

2013
3,946

Thousands of U.S. dollars (Note 1)¥

2012
13,583$2013
41,956

Because these items have no market value and are difficult to estimate the future cash flow and it is extremely difficult to determine their fair values, they are not included ininvestment securities above.

Remark 3 Planned redemption amounts after the balance sheet date for monetary receivables with maturity dates are as follows:
Millions of yen

Cash and cash equivalents, time deposits ·····
Trade notes and accounts receivable ············

39 Nipro Corporation Annual Report 2013

Thousands of U.S. dollars (Note 1)

2013

2012

2013

Within 1 year

Within 1 year

Within 1 year¥¥

$ 1,127,071
884,646

106,001
83,201

95,73868,281

Remark 4 Planned repayment amounts after the balance sheet date for monetary payables with maturity dates
Planned repayment amounts after the balance sheet date for monetary payables with maturity dates at March 31, 2013 are as follows:
Millions of yen

2013

Trade notes and accounts payable ················
Short-term bank loans, current portion of
long-term debt, and commercial paper ······
Other notes and account payable ··················
Long-term debt ·············································
Lease obligations ···········································
Total ······························································

Within 1 year

Over 1 year but
within 2 years

¥

¥

—

¥

—
—
61,782849
62,63140,879138,516
14,028—1,012¥ 194,435

Over 2 years but
within 3 years

¥

—

¥

—
—
63,540463
64,003

Over 3 years but Over 4 years but
within 4 years
within 5 years

Over 5 years

¥

—

¥

—

¥

—
—
52,400235
52,635

¥

—
—
5,763
393
6,156

¥

—

¥

—
—
43,469101
43,570Thousands of U.S. dollars (Note 1)

2013

Trade notes and accounts payable ················
Short-term bank loans, current portion of
long-term debt, and commercial paper ······
Other notes and account payable ··················
Long-term debt ·············································
Lease obligations ···········································
Total ······························································

Within 1 year

Over 1 year but
within 2 years$ 434,651$

1,472,790
149,155—
10,760$2,067,356——
656,906
9,027$ 665,933—

Over 2 years but
within 3 years

$

—

—
—
675,598
4,924$ 680,522

Over 3 years but Over 4 years but
within 4 years
within 5 years

Over 5 years

$

$

—

$

—
—
61,2774,179
65,456—$——557,1502,499$ 559,649———
462,190
1,073$ 463,263

9. Derivatives
The Company and its consolidated subsidiaries had the following derivatives contracts outstanding at March 31, 2013.

(1) Derivatives not designated as hedging instruments(a) Currency related
Millions of yen

2013
Type of Derivatives

Transaction other thanmarket transaction

Currency option
Buying call option/U.S. dollars
Selling put option/U.S. dollars
Currency swap
Buying U.S. dollars

Contract amountOver 1 year out of contract amount

Fair value

¥

279
564

¥

—
—

¥

3
(42)

¥

752

¥

—

¥

(125)

Thousands of U.S. dollars (Note 1)

2013
Type of Derivatives

Transaction other thanmarket transaction

Currency option
Buying call option/U.S. dollars
Selling put option/U.S. dollars
Currency swap
Buying U.S. dollars

Contract amountOver 1 year out of contract amount

Fair value

$

2,967
5,997

$

—
—

$

32
(447)

$

7,996

$

—

$

(1,329)Fair value is based on information provided by financial institution at the end of fiscal year.

(b) Interest related
Millions of yen

2013
Transaction other thanmarket transaction

Over 1 year out of contract amount

Fair value

Type of Derivatives

Contract amountInterest rate option
Interest rate swap
To receive variable/To pay fixed

¥

57

¥

—

¥

0

¥

72

¥

47

¥

(6)

Thousands of U.S. dollars (Note 1)

2013
Transaction other thanmarket transaction

Over 1 year out of contract amount

Fair value

Type of Derivatives

Contract amountInterest rate option
Interest rate swap
To receive variable/To pay fixed

$

606

$

—

$

0

$

766

$

500

$

(64)

Fair value is based on information provided by financial institution at the end of fiscal year.
Nipro Corporation Annual Report 2013 40

(2) Derivatives designated as hedging instruments
Millions of yen

2013
Method of hedge accounting

Type of Derivatives

Principal Hedge item

Exceptional accounting method of interest rate swap
Allocation method of forward foreign exchange contract, etc.

Interest rate swap
Currency swap

long-term loans
long-term loans

Contract amount¥Over 1 year out of contract amount

2,864
1,339

¥

Fair value

2,216
1,268

(*1 )
(*1 )

Thousands of U.S. dollars (Note 1)

2013
Method of hedge accounting

Type of Derivatives

Principal Hedge item

Exceptional accounting method of interest rate swap
Allocation method of forward foreign exchange contract, etc.

Interest rate swap
Currency swap

long-term loans
long-term loans

Contract amount$Over 1 year out of contract amount

30,452
14,237$

Fair value

23,562
13,482

(*1 )
(*1 )

Millions of yen

2012
Method of hedge accounting

Type of Derivatives

Principal Hedge item

Exceptional accounting method of interest rate swap
Allocation method of forward foreign exchange contract, etc.

Interest rate swap
Currency swap

long-term loans
long-term loans

Contract amount¥Over 1 year out of contract amount

3,561
411

¥

Fair value

2,864
339

(*1 )
(*1 )

(*1) The fair value of interest rate swap to which the exceptional accounting method is applied and the fair value of forward foreign exchange contract etc. to which the allocation
method is applied are included in the fair value of long-term loans in Note 8. “Financial Instruments” because such interest rate swap and forward foreign exchange contract
etc. are accounted for as a single item with the corresponding long-term loans.

10. Short-Term Loans and Long-Term Debt
Short-term loans comprised overdrafts and promissory notes.
The weighted-average interest rates of short-term bank loans for the years ended March 31, 2013 and 2012 were 1.001% and 1.067%, respectively.
The weighted-average interest rate of commercial paper for the years ended March 31, 2013 and 2012 were 0.112% and 0.113% respectively.
Long-term debt comprised the following:Thousands of
U.S. dollars (Note 1)

Millions of yen

1.37% unsecured bonds due 2014 ································································
1.37% unsecured bonds due 2013 ································································
2.04% unsecured bonds due 2018 ································································
0.877% unsecured bonds due 2016 ······························································
0.83% unsecured bonds due 2016 ································································
1.09% unsecured bonds due 2018 ································································
Zero coupon convertible bonds due 2015 ······················································
0.64% unsecured bonds due 2016 ································································
0.35%–0.86% unsecured bonds due 2017 ···················································
Long-term bank loans due through 2021, with weighted-averageinterest rate of 1.213% for the year ended March 31, 2013, and of
1.137% for the year ended March 31, 2012 ···············································
Less current portion of long-term debt ···························································
Total ··········································································································

¥

2013
3,000
—
10,00020,0006,000
4,000
14,9001,000
4,424

208,574(44,944)¥ 226,954

¥

2012
3,000
10,00010,00020,000——15,0001,000—

181,254(50,874 )¥ 189,380$

2013
31,898—106,326
212,653
63,79642,531
158,426
10,63347,0392,217,692(477,873)$ 2,413,121

In September 2009, the Company issued ¥3,000 million (US$31,898 thousand) of 1.37% privately-placed bonds due 2014.
In March 2008, the Company issued ¥10,000 million (US$106,326 thousand) of 1.37% unsecured bonds due 2013.
In March 2008, the Company issued ¥10,000 million (US$106,326 thousand) of 2.04% unsecured bonds due 2018.
In March 2011, the Company issued ¥20,000 million (US$212,653 thousand) of 0.877% unsecured bonds due 2016.
In March 2013, the Company issued ¥6,000 million (US$63,796 thousand) of 0.83% unsecured bonds due 2016.
In March 2013, the Company issued ¥4,000 million (US$42,531 thousand) of 1.09% unsecured bonds due 2018.
In March 2010, the Company issued ¥15,000 million (US$158,426 thousand) of zero coupon convertible bonds due 2015.
In April 2011, Tohoku Nipro Pharmaceutical Corporation issued ¥1,000 million (US$10,633 thousand) of 0.64% privately-placed bonds due 2016.
From November 2010 to September 2011, Goodman Co., Ltd. issued ¥4,424 million (US$42,039 thousand) of 0.35%–0.86 unsecure bonds due from 2013 to 2017.

41 Nipro Corporation Annual Report 2013

The aggregate annual maturities of long-term debt outstanding at March 31, 2013 are as follows:
Millions of yen

2013 ··············································································································
2014 ··············································································································
2015 ··············································································································
2016 and thereafter ························································································
Total ···········································································································¥¥

Thousands of U.S. dollars (Note 1)

2013
44,94461,78263,540101,632
271,898$$2013
477,873
656,906
675,598
1,080,617
2,890,994

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional securities and guarantees for present andfuture indebtedness will be given under certain circumstances at the request of the bank.
In addition, the agreements provide that the bank has the right to offset cash deposits against any long-term and short-term bank loan that becomes due, and in case ofdefault and certain other specified events, against all other loans payable to the bank.

11. Accrued Pension and Severance Liabilities
The Company and certain consolidated subsidiaries have defined benefit pension plans and unfunded retirement benefit plans, and defined contribution
pension plan for employees. The following table sets forth the changes in projected benefit obligation, plan assets and funded status of the Company andits consolidated subsidiaries at March 31, 2013 and 2012.
Millions of yen

1) Projected benefit obligation ········································································
2) Fair value of plan assets ·············································································
3) Projected benefit obligation in excess of plan assets 1)+2) ························
4) Unrecognized actuarial (gain) loss ······························································
5) Unrecognized past service obligation ·························································
6) Total 3)+4)+ 5) ··························································································
7) Prepaid pension cost ·················································································
8) Accrued pension and severance liabilities 6)-7) ·········································

2013¥ (10,739)
7,375(3,364)532(6)(2,838)17¥(2,855)

Thousands of U.S. dollars (Note 1)

2012
2013
¥
(8,770 )$ (114,184)
6,141
78,416(2,629 )(35,768)
669
5,657
(9 )
(64)
(1,969 )(30,175)
19
181
Nipro) Corporation Annual
Report) 2013¥
(1,988$ (30,356

The breakdown of net pension and severance costs for the years ended March 31, 2013 and 2012 were as follows:
Millions of yen

Service cost ···································································································
Interest cost ···································································································
Expected return on plan assets ······································································
Amortization of actuarial gain ··········································································
Amortization of past service obligation ····························································
Other ··············································································································Net pension and severance costs ···································································

2013
¥
665
174
(110)
358
(3)
419
¥
1,503

Thousands of U.S. dollars (Note 1)

2012
¥
614
152
(102 )
264
(3 )
264
¥
1,189

$

$

2013
7,071
1,850
(1,170)
3,806
(32)
4,455
15,980

The assumptions used in the accounting for the above benefit plans were as follows:
2013
Primarily 1.2%
Primarily 1.5%
Primarily 5 years
Primarily 5 years

Discount rate ··································································································
Expected rate of return on plan assets ····························································
Amortization period of past service obligation ·················································
Amortization period of actuarial differences ·····················································

2012
Primarily 1.8%
Primarily 1.5%
Primarily 5 years
Primarily 5 years

12. Commitments and Contingent Liabilities
The Company and its consolidated subsidiaries had the following commitments and contingent liabilities:
Millions of yen

2013
Export drafts discounted ················································································
Trade notes receivable discounted ·································································
Total ···········································································································¥¥

Thousands of U.S. dollars (Note 1)

2012
37
—
37

¥
¥

9
10
19

$
$

2013
393
—
393

Nipro Corporation Annual Report 2013 42

13. Stock Options
The stock options outstanding as of March 31, 2013 were as follows:
Consolidated subsidiary (Goodman Co., Ltd.)
2013

Persons granted
Class andnumber of share
Grant date
Exercise period
Terms for vestingSpecified term ofyears before vesting

November 25, 2005
at board of directors’ meeting
Directors of Goodman Co., Ltd: 4
Employees of Goodman Co., Ltd: 348
Others: 4
878,500 shares ofcommon stock of Goodman
December 5, 2005
From December 6, 2005 toAugust 31, 2015—

January 6, 2006
at board of directors’ meeting

April 14, 2006
at board of directors’ meeting

April 27, 2006
at board of directors’ meeting

Employees of Goodman Co., Ltd: 2

Employees of Goodman Co., Ltd: 16

Employees of Goodman Co., Ltd: 66,500 shares ofcommon stock of Goodman
January 6, 2006
From September 23, 2007 to
August 31, 2015—

31,000 shares ofcommon stock of Goodman
April 14, 2006
From September 23, 2007 to
August 31, 2015—

7,000 shares ofcommon stock of Goodman
April 28, 2006
From April 28, 2006 to
August 31, 2015
—

—

—

—

—

In addition to the aforementioned information of the stock options outstanding, the stock option activity is as follows:
Consolidated subsidiary (Goodman Co., Ltd.)

Company nameNon-vested shares
At the beginning of the year
Granted during the year
Forfeited and expired during the year
Vested during the year
At the end of the year
Vested shares
At the beginning of the year
Vested during the year
Exercised during the year
Forfeited and expired during the year
Unexercised at the end of the year

November 25, 2005
at board of directors’ meeting
Goodman Co., Ltd.

2013
January 6, 2006
April 14, 2006
at board of directors’ meeting at board of directors’ meeting
Goodman Co., Ltd.
Goodman Co., Ltd.

April 27, 2006
at board of directors’ meeting
Goodman Co., Ltd.

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

709,000———
709,000

6,500
—
—
—
6,500

28,500———28,500

2,500
—
—
—
2,500

The number of stock options were converted into that of common stocks.

Yen
2013

Exercise price
Average stock price at exercise
Fair value price at the grant date

Exercise price
Average stock price at exercise
Fair value price at the grant dateNovember 25, 2005
at board of directors’ meeting¥ 2,169——

January 6, 2006
at board of directors’ meeting¥ 2,410——

April 14, 2006
at board of directors’ meeting¥ 2,490——

April 27, 2006
at board of directors’ meeting¥ 2,415——

November 25, 2005
at board of directors’ meeting
$
23
—
—

U.S. dollars (Note 1)
2013
January 6, 2006
April 14, 2006
at board of directors’ meeting at board of directors’ meeting
$
26
$
26
—
—
—
—

April 27, 2006
at board of directors’ meeting
$
26
—
—

14. Business Combination(1) Outline of the business combination
1) Name of the acquired company
Goodman Co., Ltd.
2) Business of the acquired company
Import, development, sale and manufacture of medical devices andmedical disposables
43 Nipro Corporation Annual Report 2013

3) Date of the business combination
March 15, 2013
4) Legal form of the business combination
Acquisition of shares primarily by takeover bid5) Ratio of voting rights acquired
54.2%

(2) Period of the performance of the acquired company
in the consolidated statements of income
No business performance is included in the consolidated statements
of income, as the deemed acquisition date is March 31, 2013.

(3) Acquisition cost
Millions of yen

Common shares ··························
Preferred shares ··························
Others ··········································
Total ·········································

¥

¥

1,986
682
77
2,745

Thousands of U.S. dollars(Note 1)$$

21,116
7,251
819
29,186(4) Amount, cause, method and period of amortizationof goodwill
1) Amount of goodwill¥10,432million (US$110,920 thousand)2) Cause of goodwill
Anticipated future profitability3) Method and period of amortization of goodwill
Straight-line method over the period the Company will benefit fromits use(5) Amounts of assets acquired and liabilities assumedon the day of the business combination
Millions of yen

Current assets ·····························
Fixed assets ································
Total assets ································
Current liabilities ··························
Fixed liabilities ·····························
Total liabilities ·····························

¥
¥
¥
¥

11,8632,760
14,624
14,372
8,438
22,810Thousands of U.S. dollars(Note 1)$$$$

126,135
29,346
155,492
152,81289,718242,531

15. Net Assets
The significant provisions in the Corporate Law of Japan (the “Corporate
Law”) that influence financial and accounting matters are summarized
below:The Corporate Law provides certain limitations on the amounts
available for dividends or the purchase of treasury stock.

(a) Dividends(b) Increases/Decreases and Transfer of Common Stock,
Reserve and Surplus

Under the Corporate Law, companies can pay dividends at any time
during the fiscal year in addition to the year-end dividend upon resolution
at the shareholders’ meeting. For companies that meet certain criteriasuch as (1) having the board of directors, (2) having independent
auditors, (3) having the board of corporate auditors, and (4) the service
period of the directors is prescribed as one year rather than the normal
term of two years by its articles of incorporation, the board of directors
may declare dividends (except for dividends in kind) if the company hasprescribed so in its articles of incorporation. The Company’s present
system meets the first three criteria but the two-year service period of
the directors does not meet the fourth criterion.
Interim dividends may also be paid once a year by the resolution of
the board of directors if the articles of incorporation of the company
stipulate so. The Company’s articles of incorporation contain such a
stipulation, and it pays interim dividend semi-annually by the resolutionof the Board of Directors.

The Corporate Law requires that an amount equal to 10% of dividends
must be appropriated as legal reserve (a component of retained
earnings) or as additional paid-in capital (a component of capital surplus)
depending on the equity account charged upon the payment of such
dividends until the total of aggregate amount of legal reserve andadditional paid-in capital equals 25% of the common stock.
Under the Corporate Law, the total amount of additional paid-in
capital and legal reserve may be reversed without limitation.
The Corporate Law also provides that common stock, legal reserve,
additional paid-in capital, other capital surplus and retained earnings canbe transferred among the accounts under certain conditions by the
resolution of the shareholders’ meeting.
The Company’s legal reserve, which is included in retained earnings,
amounted to ¥1,673 million (US$17,788 thousand) as of March 31, 2013,
and its additional paid-in capital, which is included in capital surplus,
amounted to ¥635 million (US$6,752 thousand) as of March 31, 2013.

16. Segment Reporting
Outline of Reportable Operating Segments
Applied ASBJ Statement No.17 “The Revised Accounting Standard forDisclosures of Segments of an Enterprise and Related Information”, thereportable operating segments are components of an entity for which
separate financial information is available and such as information isevaluated regularly by the board of directors in deciding how to allocate
management resources and in assessing performance.
The Company currently operates its business on a stand-alone basiswith the divisional organization and evaluates the performance of sales
and manufacture of each division regardless of their products.
Accordingly, in our business segments, we divide our operations into 3
reportable operating business segments on the basis of its main
products which each business segment treats with (Medical-Related
business, Pharmaceutical-Related business and Glass-Related business).

Medical-RelatedDomestic division sells injection and infusion products, artificial organ

products, highly functional products, dialysis products and diabetes
products. In the Global business division, head office plays the centerrole and place overseas sales and manufacturing base for medical
devices and sales injection and infusion products, artificial organ
products and diabetic products.

Pharmaceutical-Related
Pharmaceutical business division sells container for combination
products (injectable kit products) and sells pharmaceutical products on aconsignment basis from pharmaceutical companies. Domestic
subsidiaries sell and manufacture injectable drug, oral drugs andcombination products.

Glass-Related
The division sells glass for pharmaceutical purposes including glass forvials and ampoules, and glass & materials products such as glass forthermos bottles and glass for lighting purpose.

Nipro Corporation Annual Report 2013 44

In addition, the corporate reorganization was conducted effective on
October 1, 2012 in order to enforce Pharmaceutical-Related businessand build a strong cooperative relationship among Medical-Related,
Pharmaceutical-Related and Glass-Related business. As a result of thereorganization, some business divisions included in Glass-Related

business were changed to Pharmaceutical-Related business.
Accordingly the segment information is presented as if theaforementioned reorganization had been conducted at the beginning of
the financial year 2012.

Business segment information for the years ended March 31, 2013 and 2012 was as follows:
Millions of yen

2013
MedicalRelated

Net sales:
Outside ································ ¥Intersegment ························
Total ····································
Operating income ························
Identifiable assets ························ ¥Other items
Depreciation and amortization ······ ¥Amortization of goodwill ···············
Capital expenditures ····················

Reportable Segment
GlassPharmaceuticalRelated
Related

167,532
1,277
168,809
14,558295,896¥

11,844
2,733
24,163¥¥

66,212
6,907
73,1193,988
132,829

¥

Other
(*1)

Total

¥

¥

7,042
491
7,533
330
15,942

8,191 ¥
(1)
10,340

319
102
2,212

¥

¥

240,786
8,675
249,461
18,876444,667¥

20,3542,834
36,715

¥

¥

235
45
280
222
4,542

¥

49
—
—

¥

¥

Total

Adjustment(*2)

241,0218,720
249,741
19,098449,209¥20,4032,834
36,715¥

Total

Adjustment(*2)¥

Consolidated
financialstatements— ¥(8,720)(8,720)(7,727)130,093 ¥

241,021—241,021
11,371
579,302

807
—
1,282

21,2102,834
37,997¥

Thousands of U.S. dollars (Note 1)

2013
MedicalRelated

Net sales:
Outside ································ $ 1,781,308
Intersegment ························
13,578
Total ····································
1,794,886
Operating income ························
154,790
Identifiable assets ························ $ 3,146,156
Other items
Depreciation and amortization ······ $ 125,933
Amortization of goodwill ···············
29,059
Capital expenditures ····················
256,917

Reportable Segment
GlassPharmaceuticalRelated
Related

$704,00973,440777,449
42,403$ 1,412,323
$

$

Other
(*1)

Total

$ 2,560,192
92,2392,652,431
200,702$ 4,727,985$$

74,875
5,221
80,096
3,509
169,506

87,092 $(11)
109,942

3,392
1,085
23,519$$216,41730,133
390,378

$

2,498
478
2,976
2,360
48,293520——$ 2,562,690
92,7172,655,407
203,062$ 4,776,278$$

216,937
30,133
390,378$

Total

Adjustment(*2)

212,013
8,694
220,70722,702356,486¥

Consolidated
financialstatements— $ 2,562,690(92,717)—(92,717)
2,562,690(82,158)
120,904$ 1,383,232 $ 6,159,510
8,581—
13,631$

225,518
30,133404,009

Millions of yen

2012
MedicalRelated

Net sales:
Outside ································ ¥Intersegment ·······················
Total ····································
Operating income ························
Identifiable assets ························ ¥Other items
Depreciation and amortization ······ ¥Amortization of goodwill ···············
Investment to companies accounted
for by the equity method ············
Capital expenditures ····················

145,082
1,851
146,933
17,078219,306
12,353
2,403—
23,944

Reportable Segment
GlassPharmaceuticalRelated
Related¥¥¥59,715
6,332
66,047
4,940
120,795
8,095
150—
13,829

¥

¥
¥

6,954
465
7,419
454
11,793
279
99
—
1,064

Other
(*1)

Total

¥ 211,751
8,648
220,399
22,472¥ 351,894¥¥¥

20,727
2,652—
38,837

¥

262
46
308
230
4,592
48
—
—
—

¥

¥
¥

20,775
2,652—
38,837¥¥

Consolidated
financialstatements— ¥(8,694 )(8,694 )(6,877 )
143,201 ¥212,013—212,013
15,825499,687806—

21,581
2,652

1,679
688

¥

1,679
39,525(*1) “Other” is the business segment which is not included in the reportable segment and consists of real estate income and sales by headquarters.
(*2) Adjustment is as follows:• Adjustment for the operating income at March 31, 2013 and 2012 include ¥(44) million (US$(468) thousand) and ¥110 million of elimination of inter-segment transaction and¥(7,683) million (US$(81,691) thousand) and ¥(6,987) million of corporate cost, respectively. Corporate cost consists primarily of sales, general and administrative expenses
and research and development cost which do not belong to the reportable segment.
• Adjustment for Identifiable assets at March 31, 2013 and 2012 include ¥(51,045) million (US$(542,743) thousand) and ¥(3,148) million of elimination of inter-segment
transaction and ¥181,138 million (US$1,925,976 thousand) and ¥146,347 million of corporate assets, respectively. Corporate assets consisted primarily of cash and deposit,
investment securities, assets for development and assets for management division of head office which do not belong to the reportable segment.
• Adjustment for depreciation and amortization at March 31, 2013 and 2012 are for corporate assets. Depreciation and amortization and Capital expenditures include long-term
prepaid expenses.
• Adjustment for capital expenditures is increase in corporate assets.

45 Nipro Corporation Annual Report 2013

Loss on impairment of fixed assets and Unamortized balance of goodwill by business segments were as follows:
Millions of yen

Millions of yen

2013
Reportable Segment
Medical- Pharmaceutical- GlassRelated
RelatedRelatedLoss on impairment of
fixed assets ················· ¥2 ¥Unamortized balance of
goodwill ······················· 22,441

2012
Other

Total

— ¥

— ¥

9

290

2 ¥

Total

— ¥

22,740

Reportable Segment
Medical- Pharmaceutical- GlassRelated
RelatedRelated2—¥

22,740529 ¥
11,539

Other

Total

— ¥

— ¥

(3 )

359

529 ¥
11,895

Total

— ¥

529

—

11,895

Thousands of U.S. dollars (Note 1)

2013
Reportable Segment
Medical- Pharmaceutical- GlassRelated
RelatedRelatedLoss on impairment of
fixed assets ················· $21 $Unamortized balance of
goodwill ······················· 238,607

— $
96

— $
3,083

Other

Total

21 $
241,786

Total

— $
—

21
241,786

Net sales and Property, plant and equipment for each area were as follows:
Millions of yen

Millions of yen

2013
Japan

Net sales ························· ¥ 138,962 ¥Property, plant andequipment ···················
102,527

America

Europe

Asia

Total

Japan

46,311 ¥32,372 ¥23,376 ¥ 241,021

12,1997,870

52,1072012
EuropeAmerica

Asia

Total

¥ 129,237 ¥

40,519 ¥23,140 ¥19,117 ¥ 212,013

102,275

8,392

3,311

31,701

174,703

145,679

Thousands of U.S. dollars (Note 1)

2013
Japan

America

Europe

Asia

Total

Net sales ························· $ 1,477,533 $ 492,408 $ 344,200 $ 248,549 $ 2,562,690
Property, plant andequipment ··················· 1,090,134
129,708
83,679554,035 1,857,556

17. Selling, General and Administrative Expenses
Significant components of selling, general and administrative expenses for the years ended March 31, 2013 and 2012 were as follows:
Millions of yen

Salaries ··········································································································
Freight charges ······························································································

2013¥ 13,192
5,706

Thousands of U.S. dollars (Note 1)2012¥ 11,372
5,143

2013
$ 140,266
60,67018. Research and Development Expenses
Research and development expenses for the years ended March 31, 2013 and 2012 were ¥6,464 million (US$68,729 thousand) and ¥5,957 million,
respectively.

19. Supplemental Disclosures of Cash Flow Information
Supplemental information related to the Consolidated Statements of Cash Flows was as follows:
Millions of yen

2013
Cash paid during the year for:
Interest ·······································································································
Income tax ·································································································

¥

3,439
6,288

Thousands of U.S. dollars (Note 1)

2012
¥

3,226
6,147

2013
$

36,566
66,858

Nipro Corporation Annual Report 2013 46

Report of Independent Auditors

47 Nipro Corporation Annual Report 2013

Corporate Information (As of March 31, 2013)

Principal Shareholders

Date of Establishment
July 8, 1954
Head Office
3-9-3 Honjo-nishi, Kita-ku, Osaka 531-8510, Japan
Telephone: +81-6-6372-2331
Facsimile : +81-6-6375-0669
URL: http://www.nipro.co.jp/english/

Sanri Kosan Co., Ltd. ······························
Nippon Electric Glass Co., Ltd. ················
Japan Trustee Services Bank, Ltd. ···········
Resona Bank Limited ·······························
Trust & Custody Services Bank, Ltd. ········The Master Trust Bank of Japan, Ltd. ······
Kazumi Sano ···········································
Mizuho Corporate Bank, Ltd. ···················
Nipro employees’ stock ownershipassociations ·········································
Mitsubishi Tanabe Pharma Corporation ····
Total ························································

Tokyo Office
4-3-4 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
Telephone: +81-3-5684-5611
Facsimile : +81-3-5684-5610
Number of Employees
Parent Company ·······························································
Consolidated subsidiaries ··················································
Total ·················································································

Common Stock
Authorized
IssuedOutstanding
Number of Shareholders

Number of
Shares Held(in thousands)

Percentage ofTotal Sharesin Issue (%)

36,80925,718
7,618
5,360
2,879
2,083
1,910
1,565

21.47
15.00
4.44
3.13
1.68
1.21
1.11
0.91

1,426
1,166
86,537

0.83
0.68
50.47

2,437
16,89019,327

Stock Price Range(Tokyo Stock Exchange)
400,000,000 shares
171,459,479 shares
170,545,372 shares
40,850

(Yen)
1,100
1,000
900

Stock Listings
Tokyo Stock Exchange
Ticker Code: 8086

800

Transfer Agent
Mizuho Trust & Banking Co., Ltd., Osaka Branch,
Stock Transfer Agency Dpt.
2-11-16 Sonezaki, Kita-ku, Osaka 530-0057, Japan

500

700
600

400
12

3
2011

6

9

12

3
2012

6

9

12

3
2013

Major Subsidiaries (As of June 30, 2013)
Area
Domestic

CountryJapan

OverseaThailand
China

Singapore
India

BangladeshIndonesia
UAE
BrazilU.S.A.

Belgium
FranceGermany
Switzerland

Name
Nipro Medical Industries Co., Ltd.
Goodman Co., Ltd.
Nipro Pharma Corporation
Zensei Pharmaceutical Industries Co., Ltd.
Nichihos Co., Ltd.
Nipro(Thailand)Corporation Limited
Nipro Sales (Thailand) Co., Ltd.
Nipro(Shanghai)Co., Ltd.
Nipro Trading (Shanghai) Co., Ltd.
Chengdu Pingyuan Nipro Pharmaceutical Packaging Co., Ltd.
Jilin Nipro Jiaheng Pharmaceutical Packaging Co., Ltd.
Anyang Nipro Changda Pharmaceutical Packaging Co., Ltd.
Nipro Medical (Hefei) Co., Ltd.
Shanghai Nissho Vacuum Flask Refill Co., Ltd.
Nipro Asia Pte Ltd.
Nipro India Corporation Private Limited
Nipro Glass India Private Limited
Nipro Tube Glass Limited
Nipro JMI Co., Ltd.
Nipro JMI Pharma Ltd.
P.T. Nipro Indonesia JAYA
Nipro Middle East FZE
Nipro Medical Ltda.
Nipro Medical Corporation
Nipro Diagnostics, Inc.
Nipro Glass Americas Corporation
Nipro Europe N.V.
Nipro Glass Belgium N.V.
Nipro Glass France S.A.S.
Nipro Glass Germany AG
Nipro Sterile Glass Germany AG
Nipro Pharma Glass AG

Principal business
Manufacturing and Marketing of medical devices
Manufacturing and Marketing of medical devices
Manufacturing and Marketing of pharmaceuticals
Manufacturing and Marketing of pharmaceuticals
Management of dispensing pharmacies and Marketing of pharmaceutical products
Manufacturing and Marketing of medical devices
Marketing of medical devices
Manufacturing and Marketing of medical devices
Marketing of medical devices
Manufacturing and Marketing of glass products
Manufacturing and Marketing of glass products
Manufacturing and Marketing of glass products
Manufacturing and Marketing of medical devices
Marketing of glass products
Marketing of medical devices
Manufacturing and Marketing of medical devices
Manufacturing and Marketing of medical glass products
Manufacturing and Marketing of medical glass products
Manufacturing and Marketing of medical devices
Manufacturing and Marketing of pharmaceuticals
Manufacturing and Marketing of medical devices and medical glass products
Marketing of medical devices
Manufacturing and Marketing of medical devices
Marketing of medical devices
Manufacturing and Marketing of diabetes products
Manufacturing and Marketing of medical glass products
Marketing of medical devices
Manufacturing and Marketing of medical glass products
Manufacturing and Marketing of medical glass products
Manufacturing and Marketing of medical glass products
Manufacturing and Marketing of medical glass products
Business Management

Nipro Corporation Annual Report 2013 48

NIPRO CORPORATION
3-9-3 Honjo-nishi, Kita-ku, Osaka 531-8510, Japan
Telephone: +81-6-6372-2331
Facsimile : +81-6-6375-0669
http://www.nipro.co.jp/en