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

Profile
Basic Corporate Vision
NIPPON SHOKUBAI CO., LTD. has been undertaking numerous eﬀorts
to build a more solid business structure and gain a sharper competitive edge
to keep pace with rapid changes in the world, under its corporate philosophy
of "TechnoAmenitiy", which means Providing aﬄuence and comfort to people
and society, with our unique technology, and the following slogans：Management Philosophy
1. We will conduct all of our corporate activities based upon a deep
respect for humanity.
2. We will aim at coexisting with society, and working in harmony withthe environment.
3. We will pursue futuristic technology.
4. We will act from an international perspective.

Business Fields

Financial Highlights .............................1
To Our Shareholders ...........................2
Review of Operations ...........................4
Medium- and Long-term
Business Plans............................6
Corporate Governance..........................8
Topics ................................................... 10
Responsible Care................................. 11
Management Indices ........................... 15
Financial Section
Report of Independent Auditors .. 18
Consolidated Balance Sheets ......... 19
Consolidated Statements ofOperations................................. 21
Consolidated Statements of
Changes in Net Assets ............2 2
Consolidated Statements ofCash Flows................................ 25
Notes to Consolidated
Financial Statements............... 27
Coporate Data ...................................... 42

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

Year ended March 31,

2009

2008

（ Millions of Yen）

Net sales
Operating Income
Ordinary Income（ loss）
Net Income

2009（ Thousands of U.S. dollars）¥ 289,102
622
757（5,307）¥ 302,669
18,37920,745
11,875

US＄ 2,943,113
6,332
7,706
（54,026）¥ 302,948
151,662¥ 352,783
175,634

US＄ 3,084,068
1,543,948
U.S. dollars

Yen¥（29.61）
15.50

¥

69.41
16.00

US＄

（0.30）
0.16

98.23

289

0.8
0.2
'05

'06

'07

'08

'09

'05

'06

'07

'08

'09

'05

'06

'07

'08

'09

5.3

1

To Our Shareholders
It gives me pleasure to report on the performance of
NIPPON SHOKUBAI GROUP（ the Company ）for the ﬁscal
year ended March 31, 2009.

Overview
The Japanese economy experienced an unprecedented
slowdown in the fiscal year under review as the global
economy retreated due to fallout from the US-originatedfinancial crisis, and capital investment spending andexports declined.

The business environment for the chemicals industry
became increasingly harsh due to sharp volatility in crude
oil prices and foreign exchange rates, and a drop off indemand ‒ never experienced before ‒ caused by the
economy s downturn.

In this business environment, consolidated net sales
declined 4.5% year-over-year to 289,102 million yen（ -13,567
million yen） in the fiscal year under review. NIPPONNYUKAZAI Co., Ltd., which we made a consolidated
subsidiary, has began contributing sales in the current
ﬁscal year, but sales volumes fell substantially following
a drop off in global demand from last autumn, andrepatriated sales declined due to yen appreciation.

As for profits, operating income declined 96.6%
year-over-year to 622 million yen（ -17,757 million yen）.
Although we cut costs through the consolidation of acrylicacid production to the Himeji Plant（ we closed the Ehime
Plant and increased capacity at the Himeji Plant）among
other measures, the drop in production and sales volumes
from the second half of the ﬁscal year, combined with the
emergence of inventory valuation losses from plunging
raw materials prices, weighed heavily on proﬁts.

Ordinary income declined 96.4% year-over-year to 757
million yen（ -19,988 million yen）as non-operating income
declined 2,231 million yen due to a decrease in earnings
from equity-method investments, an increase in foreign2

To Our Shareholders

exchange losses, and a deterioration in the balance of

The Company's basic policy is to improve thefinances. Net income declined 17,182 million yen year-

dividend level in the medium to long-term in line withover-year to a loss of 5,307 million yen because we booked

consolidated earnings, while ensuring sufficient retained

loss on valuation of investment securities and impairment

earnings to expand the business and strengthen theloss on noncurrent assets.

corporate structure.
In consideration of the fact that the Company
recorded a loss due to the rapid deterioration of thebusiness environment and earnings, as well as thedevelopment of the Company's business going forward,
the Company regrets to propose a year-end dividend of
7 yen per share for the ﬁscal year ended March 31, 2009.
Together with the interim dividend, the annual dividend
for the ﬁscal year ended March 31, 2009 will be 15.50 yen
per share.

We would like to express our sincere appreciation
and ask all of our shareholders for your continued support
and guidance as we move forward.
June 2009

Performance Highlights
Year endrd March 31,

2009
Net sales
Operating income
Ordinary income（ loss）
Net Income
Net income per share
ROA
ROE
Exchanging rate
Naphtha price289,102622
757（ 5,307）（ ￥ 29.61）
0.2%（ 3.3%）＄=￥100.58
EUR=￥143.66￥ 58,900en/kl

2008（ 13,567）（ 4.5％）（ 17,757）（ 96.6％）（ 19,988）（ 96.4％）（ 17,182）（ ￥ 94.52）

̲
̲

̲
̲

（ 5.9points）（ 10.2points）（ ￥13.80）（ ￥17.93）（ 2,600円/kl）

3

Review of Operations
Performance by Business Segment

Basic Chemicals

Functional Chemicals

Sales of acrylic acid, acrylates, ethylene oxide, andSales of superabsorbent polymers declined, despite

higher alcohol declined, despite efforts to adjust selling

an increase in sales volumes primarily in emerging

prices in the ﬁrst half of the ﬁscal year, due to a sharp

markets, due to a decline in repatriated sales from yen

drop in sales volumes in the second half.

appreciation.

Sales of ethylene glycol and ethanolamine declined,

Sales of specialty acrylates, raw materials fordespite high market prices in the first half of the fiscal

detergents, and resin modiﬁers declined, despite eﬀorts toyear, due to a sharp drop in sales volumes in the second

adjust selling prices in the ﬁrst half of the ﬁscal year, due

half.

to a sharp drop in sales volumes in the second half.
Sales of electronic information materials, maleic

The consolidation of NIPPON NYUKAZAI Co., Ltd.

anhydride, processed adhesive products, and iodine

as a subsidiary contributed to strong sales growth.
In summary, sales in the basic chemicals segmentcompounds declined due to a drop in sales volumes in thesecond half.

increased 7.8% year-over-year to 117,902 million yen.
Operating income decreased 76.4% year-over-year

Sales of polymers for concrete admixtures, and resins

to 1,589 million yen, despite the consolidation of acrylic

for adhesive/paints, increased due to firm demand andacid production to the Himeji Plant and other costeﬀorts to adjust selling prices in the ﬁrst half.

cutting efforts, due to a strong impact from the decline

Sales of unsaturated polyester resins declined year

in production and sales volumes in the second half, andby year as we discontinued production and marketing atinventory valuation losses.

the end of September 2007.
In summary, sales in the functional chemicals
segment decreased 10.3% year-over-year to 139,862 million
yen.
Operating income declined 10,664 million yen yearover-year to a loss of 1,895 million yen as we could not

Paints（ Acrylates）

Synthetic Detergents（ SOFTANOL）

fully factor higher raw materials prices into selling prices,and due to a drop in production and sales volumes inthe second half, as well as the emergence of inventory
valuation losses.

Diapers（ Superabsorbent polymer）

Flat Panel Display（ Electronic Information
associated Materials）

2008

ChangePerformance by Business Segment
2009（ Year ended March 31,）Net Sales
Operating income（ loss）

4

117,902
1,589

139,862（ 1,895）

31,338
1,222

109,331
6,721

155,892
8,769

37,477
2,812

8,572

（ 16,030）（ 6,109）（ 5,132）（ 10,644）（ 1,590）

Review of Operations

Environment & Catalysts

sales volumes.

Sales of process catalysts declined as sales volumes

In summary, sales in the environment & catalysts

fell sharply due to seasonal weakness in replacement

segment decreased 16.3% year-over-year to 31,338 million

demand.

yen.
Operating income declined 56.6% year-over-year toSales of emission detoxiﬁcation catalysts declined due

1,222 million yen due to a

to a drop in sales volumes.
Sales of automotive catalysts fell sharply, despite

decline in sales volumes

higher selling prices on the back of surging preciousof process catalysts, andmetal prices, as sales volumes declined due to a sharp

an impact from inventory

drop in demand from the second half.

valuation losses.

Sales of De-NOx catalysts rose due to an increase in

Performance by Regions

volumes, as higher raw materials prices reduced proﬁtability.

Japan

Asia

Sales in Japan declined 1,011 million yen year-over-Sales in Asia declined 11.4% year-over-year toyear to 212,782 million yen as a decline in sales volumes

26,406 million yen, despite higher sales volumes ofin the second half outweighed an expansion of sales

superabsorbent polymers and polymers for concrete

volumes in the ﬁrst half, higher product prices to reﬂect

admixtures, due to a decline in sales volumes of acrylic

higher raw materials prices, and a contribution fromacid and acrylates, and the negative impact of yen

the consolidation of NIPPON NYUKAZAI Co., Ltd. as aappreciation.

subsidiary.

Operating income declined 499 million yen year-over-

Operating income declined 95.5% year-over-year to a loss of 64 million yen due to a deterioration inyear to 774 million yen, despite cost cutting andthe profitability of primarily acrylic acid and acrylates.

efforts to adjust selling prices, as we failed to fully

Other regions

pass on the higher costs of raw materials, production

Sales in other regions rose slightly year-over-and sales volumes dropped off sharply from theyear to 15,991 million yen as the negative impact of yen

second half, and inventory valuation losses emerged.

appreciation was outweighed by an increase in sales

Europevolumes of superabsorbent polymers, polymers for

Sales in Europe declined 21.3% year-over-year toconcrete admixtures, and raw materials for detergents.

33,924 million yen, despite greater sales volumes ofOperating income improved 334 million yen year-

superabsorbent polymers, due to the negative impact ofover-year due to higher sales volumes, but a loss of 1,058

yen appreciation.

million yen was booked because profitability remained

Operating income declined 742 million yen year-over-low.

year to a loss of 460 million yen, despite higher sales

Performance by regions（ Year ended March 31,）

212,782
Net Sales
774
Operating income（ loss）

2009

33,924
26,40615,991
213,793（ 460）（ 64） （ 1,058） 17,380

2008

43,130282

Change29,816
15,930 （ 1,011）（ 9,207） （ 3,410）
435 （ 1,392）（ 16,605） （ 742） （ 499）

61
334

5

Medium- and Long-term Business Plans
The Company drew up a long-term business plan, TechnoAmenity V3, which sets out the management vision for the ﬁve
years since ﬁscal year ending Mar. 2007
（ FY2006）to ﬁscal year ending Mar. 2011
（ FY2010）, together with a mediumterm
business plan as its action program, in a bid to deliver further growth.

The Company seeks further growth under the long-coupled with the Medium-term Business Plan（ for FY

term business plan TechnoAmenity V3 （ for ﬁscal 2006

2006 to 2008）, which provides a concrete action plan toto 2010）, which sets out a long-term management vision,

realize the long-term business plan.

A global company creating new values through unique technologies
Obsessiveness to our strength such as key technologies and key materials
Transformation of way of marketing and research
Leap to be realized through Pursuit and Innovation

6

The Company seeks to enter into growth areas

Company will concentrate its management resources(fields; overseas) outside the domain of its existingon the electronic and information materials business as

business, and at the same time, continue to pursue

the top priority for the TechnoAmenity V3 plan, while

innovative production technologies in order to enhancesearching for more sharply focused next-generation

its cost competitiveness. As for new lines of business, thebusiness themes.

Medium- and Long-term Business Plans

Progress on the Medium-term Business Plan

（1）Existing Businessthe world market. Polymers for concrete admixtures

With respect to the progress on the business plan,for the superabsorbent polymers business, a new plant iscurrently under construction at the Himeji Plant, whichis scheduled to be completed in autumn 2010. Aftercompletion, the Group s annual production capacity forsuperabsorbent polymers will be 470,000 tons, allowing theCompany to maintain its leadership position in the global
market. For the acrylic acid business, under a scrapand-build plan, the Ehime Plant（ an acrylic acid plant）
was shut down, and a new acrylic acid manufacturing
plant with an annual production capacity of 80,000 tons iscurrently under construction at the Himeji Plant, which isscheduled to be completed at the end of 2009. By taking
these measures, the Company will have an acrylic acidproduction capacity of 620,000 tons, and the Company will
strive for further eﬃciency in the acrylic acid business bygathering the domestic production sites.

For the ethylene oxide business, a facility expansion

have now grown into one of the core businesses of theCompany with a Group-wide annual production capacityof 85,000 tons.

（2）New Business
For the electronic and information materials business,
the Company has been carrying out development andcommercialization of new products in order to strengthen
and develop the business into one of the future corebusinesses of the Company. Acrylic resins for opticalmaterials （ ACRYVIEWA ） have been delivered for
LCD panels, and business development in the areas ofspherical ﬁne particles and functional dye has also madesteady progress.

The Company will continue to focus on development
and commercialization in health & medical care and newenergy which are ﬁelds that are considered future growthareas.

at the Ukishima Plant（ Kawasaki）that will add an extra
70,000 tons of annual production capacity is scheduled
to be completed in August 2009.

After completion,

production capacity of ethylene oxide, together with the
Chidori Plant（ Kawasaki）, will reach 320,000 tons per
year, which is the largest in Japan. The Company aims
to establish a stable business foundations that is lesssensitive to market ﬂuctuations by maximizing synergies
between NIPPONNYUKAZAI

Co., Ltd. and SINO-

JAPAN CHEMICAL Co., Ltd., two companies whichbecame subsidiaries of the Company, and boosting salesof ethylene oxide and derivative products up to thetarget ratio of 80% or higher for non-EG（ ethylene glycol）
products.

For other business areas, the Company aims tointroduce more of its globally competitive products into7

Corporate Governance
We have strived toward reinforcing our staying
power and competitive edge so that we can cope ﬂexibly
with any ﬂuctuation of the world, and regard corporate
governance as key for achieving the goal. We are taking

audit system, increase the eﬃciency and eﬀectiveness ofoperation, and improve compliance system.
The diagram below shows the frame of our corporate
governance system.

steps to revitalize the board of directors, strengthen the

GeneralAdministration& Personnel

Purchasing& Logistics

Investor& Public Relations
OfficeBoard of Directors, comprised of 16 directors as ofCorporate Management Committee, as an advisory

April 1, 2009, deliberates and resolves the matters relatingorgan to the president, deliberates basic management

to the execution of business operations, and supervises

policies, the matters related to the policies, and theeach director s execution of operation. In principle, theexecution of important business operations by individual

Board of Directors convenes once a month, chaired by thedivisions. Agenda items that come up to this Committeepresident, at which four corporate auditors, including two

and are regarded as important will be forwarded to thefrom outside, are in attendance.

Board of Directors for deliberation.

The corporate auditors present statements when
deemed necessary.

The member of the Corporate Management Committee
are the president, senior managing directors managing
directors and directors nominated by the president.

8Corporate Governance

Board of Corporate Auditors is comprised ofdivision.

four corporate auditors, including two from outside. In
principle, the Board convenes once a month to report,

Compliance Committee, chaired by the president,

discuss and resolve important matters. In addition to

discusses and decides measures to enhance our company-

attending the Board of Directors, the corporate auditors

wide compliance management.

attend the Corporate Management Committee andother important meetings to monitor the decisionmaking

The Internal Control Committee concerning

process, and grasp the execution of directors operation,

financial reporting, chaired by the president, discusses

receive reports from the accounting auditors, directors

and prepares for the highly efficient Internal Control

and others, and put forward an audit opinion following

System enforced by Financial Instruments and Exchange

due consultation.

Law as of April 1st 2008, not only aim to ensure the

The two current Corporate Auditors from outside

reliability of the company s ﬁnancial reporting, but also tohave no personal or any other relationship throughensure the eﬀectiveness and eﬃciency of the company s

investments that could create a conﬂict of interest in thebusiness activities.

performance of their duties.
Legal Advisers provide their opinions for us when
Risk Management Committee, chaired by thepresident, explores and analyzes the risks surrounding

solicited. None of the Legal Advisors is involved in the
management of the Company.

the Company. On the basis of the analysis, the Committee
discusses the preventive measures or countermeasures
for the risks.

Accounting Auditors perform their services under
the Commercial Code and Securities and Exchange Law
of Japan, and provide their opinions when we call for

CSR（Corporate Social Responsibility）Management

it to make decisions on accounting issues. None of theCommittee, chaired by the president, discusses andAccounting Auditors is involved in the management ofdecides the CSR policy and activities that would make all

the Company.

the stakeholders beneﬁcial, in cooperation with the othercommittees such as Risk Management Committee or theCompliance Committee.

Internal Audit Office carries out internal audits（ verify the adequacy and effectiveness of the businessprocess in each division and report the results to the
Responsible Care Promoting Committee, chaired by
the president, discusses and decides the policy and plans

directors） in cooperation with the Board of Corporate
Auditors and Accounting Auditors.

of activities for Responsible Care（ RC） placing a special
emphasis on environmental preservation, safety andquality throughout the entire life cycle of our products
from the development to disposal. The Committee
established the 6th（ for FY 2009 to 2011）Medium-term
RC Promotion Basic Plan ” to reinforce our RC more
active.
Moreover, Responsible Care Oﬃce implements plans
and internal audits on responsible care activities in each9Topics
Kawasaki Plants Marked 50th Anniversary
Nippon Shokubai s Kawasaki Plants marked their

In August 2009, we completed the expansion of

50th anniversary in June, 2009. The ﬁrst Kawasaki plant

our Ukishima plant, adding on additional 70,000 tons

(current Chidori plant) opened in 1959, and the secondof annual production capacity, making us the largest

plant (current Ukishima plant) opened in 1967. Ever

manufacturer of ethylene oxide in Japan at 320,000 tons

since becoming Japan s first company to industrialize

per year. By making our Kawasaki Plants “EO center” ,ethylene oxide using our proprietary technology, these

we will dedicate our eﬀorts diligently while working inplants have thrived as the key plants of our corecollaboration with our group companies.

ethylene oxide business.

Chidori plant

Ukishima plant

Ethylene oxide production equipment

Building Nippon Shokubai's Forest of Water Supply
In an effort to address the prevention of global

observation parties.

warming, a prime issue for the 21st century, Nippon

These activities allow each and every employee

Shokubai has been involved in the program forto develop a proactive stance toward environmental

Prevention of Global Warming and the Japan-China

preservation.

Forest of Friendship (Inner Mongolia). Now, we havelaunched a new social action program, the building of
Nippon Shokubai s Forest of Water Supply in Shiso
City, Hyogo Prefecture.
Employee volunteers work to protect the rich forest
in Akazai valley, which is one of the Ibogawa riverheads
and the location of our Himeji Plant, by followinga systematic forest maintenance and preservation
program.
On November 15, 2008, approximately 70 employees
and their families, as well as other related personnel,
participated in an event to formerly open the forest,and experience its benefits and importance throughmaintenance and preservation activities, as well as

10Nature trail construction

Responsible Careas

The Company has set the corporate philosophy

1. Acknowledging environmental preservation throughout

TechnoAmenity: providing affluence and comfort

the entire life cycle of a product, from development toto society through technology . Adhering to thephilosophy, the Company has defined the four priorities
regarding Environment, Safety and Quality, which willbring our business activities into harmony with global
environmental preservation and conservation:

disposal
2. Aiming for zero accidents and disasters and keeping
society, including our employees, safe
3. Conﬁrming the safety of chemical materials,
intermediates and products, and considering the healthof respective people such as our customers, employees
of logistics, and our employees, etc.
4. Stably supplying products and associated services thatmeet customer satisfaction and inspire their trust11

Responsible Care

Environmental Preservation

Attainment of common targets to all

・

6% reduction of energy per unit of production on FY2008

NIPPON SHOKUBAI GROUP（ vs.FY2005）（ 3% reduction of CO2 emission per unit of<Group common targets>

production on FY2008（ vs.FY2005））

1）Environmental preservation

Accession to zero emission* and its maintenance・・

40% reduction of emission of PRTR* chemical substances

・（ vs.FY2005）

・・

Establishment of eco-friendly product design system

・Promotion of energy saving activities
Reduction of emission of PRTR chemical substances
Reduction of amount of waste generated2）Process Safety and Disaster Prevention
Zero disasters

・Process Safety and Disaster Prevention
Zero disasters

・

Zero accidents

・

Occupational Safety and HealthZero industrial injuries with lost workdays

・（ including contractors）

Zero industrial injuries without lost workdays

・（ including contractors）

Chemical Safety
Zero problem on chemical safety（ legal or social）

・

Zero accidents

・3）Occupational Safety and Health
50% reduction of industrial injuries with lost workdays

・（ vs.FY2004 - FY2005）

4）Chemical Safety
Zero problems on chemical safety(legal or social)・5）Quality
Zero serious claims・6）Communication with Society
Promotion of dialogue to stakeholders and adequate・

disclosure of the information
7）Management System

Quality
Zero serious claims・Communication with Society
Promotion of dialogue with stake holders and・adequate disclosure of the information regarding RC

12Introduction of ISO14001 and risk assessment of・

OHSAS18001.

Responsible Care

4. RC Performance in FY 2008
（ 1）Environmental Preservation② Lower GHG emissions① Action to save energy

The Company is committed to curtailing its CO2 emissions

The Company is taking action to save energy in allby an all-out campaign to save energy. It has cut its CO2

divisions, and has managed to reduce its consumption ofemissions per unit of production by 18% relative to theenergy per unit of production by 10% from the level in1990 level.

FY1990.

0.459

115

'08

'08

③ Less chemical emissions④ Investment for preserving the environment

The Company has been making efforts to release lessEvery year, the Company makes extensive investments

chemical substances into the environment since 1995

in initiatives for preserving the environment. The table

before enforcement of legal regulation. In FY 2008, it

below presents cumulative figures for this investment

attained more than its target of 40% reduction from FY

over the period FY1990 to FY2008.

2005, and assures continuing efforts to reduce PRTR
emissions.

12,107

74

'08

'08

13

Responsible Care

（2）Process Safety and Disaster Prevention① Implementation of safety assessment by HAZOP*（6）Communication with Society
Regional activities such as conserving local② Reduction of change risk through Management of Changes*

chrysanthemum Noji-Giku in danger of extinction, and③ Training for emergency

inviting children to potato digging in Himeji Plant.

④ Logistic safety using Yellow Card* system andtraining for transportation emergency

Noji-Giku (Himeji Plant)

A Fire Drill

Training for Transportation
Emergency

Poteto Diggung Party for Children in
Himeji Plant（7）RC activities of the Company in Japan & overseas■Reduction of environmental emission, labor accident,（3）Occupational Safety and Health① Reduction of risk in workspace throughOccupational Safety and Health Management System② Prevention of injuries caused by unsafe action

equipment trouble and quality claim & nonconformity■Information sharing for RC activity① Aﬃliated companies in Japan:■RC Hearing（ the consolidated subsidialies
and aﬃliates)（4）Chemical Safety① Safety assessment of new products through Stage Gate System② Global Product Stewardship through REACH* and GHS*

■RC audit（ Nippoh Chemicals Co., Ltd. Nihon
Polymer Industries Co., Ltd.）■Eco-Action 21*（ Tokyo Fine Chemical Co., Ltd.）② Overseas aﬃliated companies:（5）Quality■RC meeting in Himeji Plant① Prevention of quality complaint by improving Quality
Management System②Disclosing information concerning green procurement
to the customers

PRTR：Pollutant Release and Transfer Register
A regulatory system which requires reporting of emission volumes ofwastes. Data compiled to the government bodies are disclosed to the
public.
Zero Emission
Less quantity of ﬁnal oﬀ-site landﬁll than 0.1% of total amount of waste
generated.
HAZOP：Hazard and Operability Studies
An execution to estimate the safety of plants.
Management of Changes
Program to ensure that proposed changes to plant operations are evaluatedchanges are prevented so as to public, and the environmental, etc.
Yellow Card
A card staring the producers to be taken and contact information fortransporters, ﬁre squads, and police in the event of an accident during
the road transport of chemicals.

14

REACH:Registration, Evaluation, and Authorization of Chemicals
A new EU regulatory framework for the Registration, Evaluation andAuthorization of Chemicals aiming to improve the protection of humanhealth and the environment through the better and earlier identiﬁcationof the properties of chemical substances.
GHS：Globally Harmonized System of Classiﬁcation and Labelingof Chemicals
A system for classiﬁcation and labeling of chemicals hazard
according to the globally harmonized rule.
Eco-Action 21
Eco-Action 21 is a certificate / registration system that enables awide variety of organizations to adopt eﬀective and eﬃcient systems
that promotes environmental activities, to establish objectives ofenvironmental activities, and to compose, evaluate and reportthe resultsof these activities based on the guideline published by the Ministry of
the Environment Japan in 2004.

Management Indices（ 1）Consolidated Management IndicesYear ended March 31

2005

2006

2007

2008

2009
（Millions of yen）

Net Sales

197,222

232,441

266,513302,669

289,102

Ordinary Income

23,70926,14822,754

20,745757（ loss）
Net Income

15,705

16,257

13,988

11,875（5,307）

Total Assets

249,349

291,564

Total Shareholders Equity

144,660
̲

164,631

323,675
̲

352,783̲

302,948
̲

179,368

175,634

151,662

Total Net Assets

168,704（Yen）

Net Assets per Share

757.72875.00948.34947.34

831.11（ loss）per ShareNet Income

81.37
̲

85.89
̲

74.92
̲

64.91
̲

（29.61）̲

Capital Ratio（ %）

58.0

56.5

54.1

48.6

48.8

Return on Equity
（ %）

11.4

10.5

8.2

6.9

Price Earning Ratio（ times）

11.9

16.3

17.0

10.2

（3.3）
̲

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

Cash Flow from Operating Activities
Cash Flow from Investing Activities

22,161

17,46816,087

20,21917,613（16,934） （20,663） （23,109） （33,100） （16,675）

Cash Flow from Financing Activities（861）（2,562）

4,037

17,495

8,099

Cash and Cash Equivalents at Year-end

24,16019,856

16,991

21,371

29,450

Number of Employees

2,721

2,806

2,841

3,290

3,415

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

15

Management Indices（continued）（ 2）Non-consolidated Management IndicesYear ended March 31

2005

2006

2007

2008

2009
（Millions of yen）

Net Sales

146,789

170,510

192,177

231,151

207,870

Ordinary Income

17,79523,00820,37819,815

4,262（ loss）
Net Income

11,063

14,502

12,378

11,707（7,353）

Capital16,52916,52916,52916,52916,529Issued and Outstanding Shares

194,881

194,881

194,881

194,881

187,000（ Thousands shares）（Millions of yen）

Total Assets

207,303

237,571

Total Shareholders' Equity

133,100̲

148,283

Total Net Assets

148,283

262,059̲

280,080̲

246,636̲

151,266

148,553

133,625（Yen）

Net Assets per Share

697.19788.11

819.47820.49750.53

Dividend per Share

13.00

16.00

16.00

16.00

15.50

（ Interim Dividend per Share）（5.00）（7.50）（8.00）（8.00）（8.50）Net Income（ loss）per Share

57.20
̲

76.61
̲

66.30
̲

63.49
̲

（41.01）̲

Capital Ratio
（ %）

64.2

62.4

57.7

53.0

54.2

Return on Equity
（ %）

8.6

10.3

8.3

7.8

Price Earning Ratio（ times）

17.0

18.3

19.2

10.3

（5.2）
̲

Dividend Payout Ratio
（ %）

22.7

20.9

24.1

25.0

Number of Employees

1,731

1,730

1,742

1,798

Fully Diluted Net Income per Share

̲

1,862

Note 1: Net Sales do not include consumption taxes.
Note 2: Eﬀective the year ended March 31, 2007, the Company has adopted a new accounting standard for the presentation of net assets in the balance sheet
and the related implementation guidance. In addition, eﬀective the year ended March 31, 2007, the Company is required to prepare consolidated
statements of changes in net assets instead of consolidated statements of shareholders' equity. In this connection, the previously reported consolidatedbalance sheet as of March 31, 2006 and consolidated statement of shareholders' equity for the year then ended have been restated to conform to thepresentation and disclosure of the consolidated ﬁnancial statements for the year ended March 31, 2007.
Note 3: The dividend per share for the ﬁscal year ended March 31, 2005（ ﬁscal 2004）include a¥2 memorial dividend our 65th annuversary of the company's
foundation.
Note 4: Fully diluted Net Income per Share is not recorded because no dilutive shares exist.
Diluted Earnings per Share for the ﬁscal year ended Mar.31, 2009 is not disclosed because of the net loss in the unconsolidated results, and the antidilutive eﬀect.
Note 5: Price Earnings Ratio and Payout for the ﬁscal year ended Mar.31, 2009 is not disclosed because of the net loss in the unconsolidated resuls.

16Years ended March 31, 2009 and 2008
with Report of Independent Auditors

Consolidated Financial Statements
Report of Independent Auditors ..........................................18
Consolidated Balance Sheets ................................................19
Consolidated Statements of Operations ..............................21
Consolidated Statements of Changes in Net Assets ..........22
Consolidated Statements of Cash Flows .............................25
Notes to Consolidated Financial Statements .....................27

17

Ernst & Young ShinNihon LLC

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

We have audited the accompanying consolidated balance sheets of Nippon ShokubaiCo., Ltd. and consolidated subsidiaries as of March 31, 2009 and 2008, and the related
consolidated statements of operations, changes in net assets, and cash ﬂows for the years
then ended, all expressed in yen. These ﬁnancial statements are the responsibility of theCompany s management. Our responsibility is to express an opinion on these ﬁnancial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the ﬁnancial statements. An audit also includes assessing the accounting
principles used and signiﬁcant estimates made by management, as well as evaluating theoverall ﬁnancial statement presentation. We believe that our audits provide a reasonablebasis for our opinion.
In our opinion, the ﬁnancial statements referred to above present fairly, in all material
respects, the consolidated ﬁnancial position of Nippon Shokubai Co., Ltd. and consolidated
subsidiaries at March 31, 2009 and 2008, and the consolidated results of their operations
and their cash ﬂows for the years then ended in conformity with accounting principles
generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements withrespect to the year ended March 31, 2009 are presented solely for convenience. Our
audit also included the translation of yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis described in Note 2.

Osaka, Japan
June 19, 200918

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

March 31,
2009

2008

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

（Note2）

AssetsCurrent assets：
Cash and cash equivalents ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Time deposits（ Note 6）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・￥29,450475￥21,371215$299,807
4,836

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

12,056
69,262（308）
200
54,353
3,874
7,438
168,461

68,828469,744（2,555）‒431,243
47,012
84,933
1,403,848

30,75376,701
263,634
12,529612（267,775）
116,454

32,05877,009274,929
5,573‒（265,606）
123,963

313,071
780,8312,683,844
127,548
6,230（2,726,000）
1,185,524

15,562
16,514
4,335
3,948
8,235
48,59422,996
20,970
3,521
3,874
8,998
60,359158,424
168,116
44,13140,191
83,834
494,696￥302,948￥352,783$3,084,068

Notes and accounts receivable：
Unconsolidated subsidiaries and aﬃliates ・・・・・・・・・・・・・・・・・・・
Trade・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Allowance for doubtful receivables ・・・・・・・・・・・・・・・・・・・・・・・・・・
Short-term investments（ Note 3）・・・・・・・・・・・・・・・・・・・・・・・・・・・
Inventories（ Note 4） ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Deferred income taxes（ Note 8）・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other current assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total current assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Property, plant and equipment, at cost（ Note 6）：
Land ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Buildings and structures ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Machinery and equipment ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Construction in progress ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Leased assets・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accumulated depreciation ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Property, plant and equipment, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・

Investments and other assets：
nvestments in securities（ Notes 3 and 6）・・・・・・・・・・・・・・・・・・・・・
Investments in unconsolidated subsidiaries and aﬃliates ・・・・・・・・・・
Deferred income taxes（ Note 8）・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Prepaid pension cost（ Note 7）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other assets（ Notes 6 and 9）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total investments and other assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・

Total assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

19

Consolidated Balance Sheets（continued）

March 31,

2009

2008

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

（Note2）

Liabilities and Net Assets
Current liabilities：￥ 28,950
17,614￥ 27,571
6,998$ 294,716
179,314

Total current liabilities・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

3,141
20,055
8
26
2,235
15
1,914
405
‒
12,47986,842

9,141
48,143
38
‒
2,485
157
2,673
2,982
1,236
10,692
112,116

31,976204,164
81
265
22,753
153
19,485
4,123‒
127,038
884,068

Long-term liabilities：
Long-term debt（ Note 6）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Lease obligations ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued retirement beneﬁts for employees（ Note 7）・・・・・・・・・・・・・・・・・・
Deferred income taxes（ Note 8）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total long-term liabilities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

53,775
294
8,465
275
1,635
64,44454,797
‒
8,153
710
1,373
65,033

547,440
2,993
86,1752,800
16,644
656,052

16,52913,562
132,778（7,969）154,900

16,52913,567
148,955（13,552）
165,499

168,268
138,064
1,351,705（81,126）
1,576,911

41
Translation adjustments ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・（6,841）
Net unrealized deferred loss on hedges ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・（155）
Total valuation and translation adjustments ・・・・・・・・・・・・・・・・・・・・・・・・・・・・（6,955）
Minority interests ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
3,717
Total net assets・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
151,662
Total liabilities and net assets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 302,948

2,644
3,368
（22）
5,990
4,145
175,634￥ 352,783

417（69,643）（1,577）（70,803）37,8401,543,948$ 3,084,068

Short-term bank loans（ Note 6） ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Current portion of long-term debt（ Note 6） ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Notes and accounts payable：
Unconsolidated subsidiaries and aﬃliates ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Trade・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Construction
Lease obligations ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued bonuses to employees ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued bonuses to directors and corporate auditors ・・・・・・・・・・・・・・・・・
Reserve for periodic repairs・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Accrued income taxes（ Note 8）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Reserve for loss on shutdown of a plant ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other current liabilities・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Contingent liabilities（ Note 15）
Net assets：
Shareholders equity（ Note 10）：
Common stock：
Authorized ‒ 424,000,000 shares;
Issued ‒ 187,000,000 shares in 2009 and
194,881,287 shares in 2008 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Capital surplus ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Retained earnings ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Less treasury stock, at cost ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total shareholders equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Valuation and translation adjustments：
Net unrealized holding gain on securities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・

20

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

March 31,
2009

2008

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

（Note2）

250,891
38,211￥ 302,669
248,023
54,646$ 2,943,113
2,554,118
388,995

37,589622

36,267
18,379382,663
6,332

1,108
（1,456）723
374（1,921）（3,886）‒

1,377（1,349）994
1,671（1,390）‒（1,873）

11,280（14,822）
7,360
3,807
（19,556）（39,560）‒（2,011）
1,000
（46）
（923）
（246）
611
（6,051）

（355）
998
（686）
（116）
‒
196
17,846（20,472）
10,180（468）（9,396）（2,504）
6,219（61,600）

166（1,009）（843）（5,208）

5,945
21
5,966
11,8801,690（10,272）（8,582）（53,018）（99）￥（5,307）（5）￥ 11,875（1,008）$（54,026）

Net sales（ Note 19）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 289,102
Cost of sales（ Note 11）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Gross profit ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Selling, general and administrative expenses（ Note 11）・・・・・・・・・・・・
Operating income（ Note 19）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other income（ expenses）：
Interest and dividend income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest expense ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Royalty income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Equity in earnings of an unconsolidated subsidiary and aﬃliates ・・・・
Foreign exchange loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on devaluation of investments in securities ・・・・・・・・・・・・・・・・
Loss on shutdown of a plant（ Note 13）・・・・・・・・・・・・・・・・・・・・・・・
Loss on impairment of property, plant andequipment（ Note 5）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Rent from real estate ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on discontinued operations（ Note 14）・・・・・・・・・・・・・・・・・・・・
Loss on disposal of property, plant and equipment ・・・・・・・・・・・・・・
Loss on damages ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・（ Loss）income before income taxes and minority interests ・・・・・・

Income taxes（ Note 8）：
Current ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Deferred ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・（ Loss）income before minority interests ・・・・・・・・・・・・・・・・・・・・

Minority interests in earnings of consolidated subsidiaries ・・・・・・・・・・・・
Net（ loss）income（ Note 16）・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

21

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

Shareholders equity

Commonstock

CapitalsurplusRetainedearnings

Less
treasuryTotalstock, shareholders
at costequity（Millions of yen）

Balance at March 31, 2007 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 16,529 ￥ 13,567 ￥ 140,350
Changes during the year：
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・

‒
‒
‒
‒

‒
‒
‒
（0）

（2,941）
11,875
‒
‒

‒

‒

（329）

￥（10,079）￥ 160,367‒‒（3,478）5（2,941）
11,875（3,478）5Adjustments due to decrease in aﬃliates
accounted for by the equity method ・・・・・・・・・・・・・・・・

‒

（329）

Net changes in items other thanshareholders equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・

‒
‒
‒
‒
‒
Total changes during the year ・・・・・・・・・・・・・・・・・・・・・・・‒
8,605（3,473）
5,132（0）Balance at March 31, 2008 ・・・・・・・・・・・・・・・・・・・・・・・・・・・ ￥ 16,529 ￥ 13,567 ￥ 148,955 ￥（13,552）￥ 165,499

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

Minority
interests

Total net
assets（Millions of yen）

Balance at March 31, 2007 ・・・・・・・・・・・・・・・・ ￥ 10,686
Changes during the year：
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・
Net income ・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・・・￥ 4,000‒￥ 14,686

‒
‒
‒
‒

‒
‒
‒
‒

‒
‒
‒
‒

‒
‒
‒
‒

‒
‒
‒
‒

（2,941）
11,875（3,478）
5

‒

‒

‒

‒

‒

（329）

￥ 4,315 ￥ 179,368

Adjustments due to decrease in aﬃliates
accounted for by the equity method ・・・・・
Net changes in items other thanshareholders equity ・・・・・・・・・・・・・・・・
Total changes during the year ・・・・・・・・・・・・
Balance at March 31, 2008 ・・・・・・・・・・・・・・・・

22

（632）
（8,042）（632）（8,042）￥ 3,368￥ 2,644（170） （8,866）（22） （8,696）（170） （3,734）（22） （8,696）￥ 4,145 ￥ 175,634￥（22） ￥ 5,990

Consolidated Statements of Changes in Net Asset（continued）

Shareholders equity

Commonstock

CapitalsurplusRetainedearnings

Less
treasuryTotalstock, shareholders
at costequity（Millions of yen）

Balance at March 31, 2008 ・・・・・・・・・・・・・・・・・・・・・・・・・・・¥16,529 ¥ 13,567¥ 148,955 ¥（13,552）¥ 165,499

Decrease due to changes in accounting
policies applied to overseas subsidiaries ・・・・・・・・・・・・・・・

（231）

（231）

Changes during the year：
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・

‒
‒
‒
‒

‒
‒
‒
（0）

（2,970）（5,307）‒（5）‒‒（2,100）14‒（5）（7,664）

7,669（2,970）（5,307）（2,100）9Retirement of shares of common stock
held in treasury ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・‒

Net changes in items other thanshareholders equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total changes during the year ・・・・・・・・・・・・・・・・・・・・・・・
Balance at March 31, 2009 ・・・・・・・・・・・・・・・・・・・・・・・・・・・

‒
‒
‒
‒
‒
（5） （15,946）
5,583 （10,368）‒¥ 16,529 ¥ 13,562 ¥ 132,778 ¥（7,969）¥ 154,900

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

Minority
interests

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

Balance at March 31, 2008 ・・・・・・・・・・・・・・・・・¥ 2,644¥ 3,368

¥（22）

‒

‒

‒

‒

‒

（231）

‒
‒
‒
‒

‒
‒
‒
‒

‒
‒
‒
‒

‒
‒
‒
‒

‒
‒
‒
‒

（2,970）（5,307）（2,100）
9

‒

‒

‒

‒

‒

Decrease due to changes inaccounting policies applied
to overseas subsidiaries ・・・・・・・・・・・・・・・・・
Changes during the year：
Cash dividends ・・・・・・・・・・・・・・・・・・・・・・・
Net loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・・・・・・
Retirement of shares ofcommon stock held in treasury ・・・・・・・・・・・‒

Net changes in items otherthan shareholders equity ・・・・・・・・・・・・・・・
Total changes during the year ・・・・・・・・・・・・・
Balance at March 31, 2009 ・・・・・・・・・・・・・・・・・（2,603） （10,209）（2,603） （10,209）¥ 41¥（6,841）（133） （12,945）（428） （13,373）（133） （12,945）（428） （23,741）¥（155） ¥（6,955） ¥ 3,717 ¥ 151,662

23

Consolidated Statements of Changes in Net Assets（continued）

Shareholders equity

Commonstock

CapitalsurplusLess
treasurystock,
at costRetainedearnings

Total
shareholders
equity（Thousands of U.S. dollars）（Note2）

Balance at March 31, 2008 ・・・・・・・・・・・・・・・・・・・・・・・・ $ 168,268$ 138,115 $ 1,516,390 $（137,962）$ 1,684,811

Decrease due to changes inaccounting policies applied tooverseas subsidiaries ・・・・・・・・・・・・・・・・・・・・・・・・‒‒（2,352）‒（2,352）

Changes during the year：
Cash dividends

・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Net loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・
Disposition of treasury stock・・・・・・・・・・・・・・・・・・・

‒
‒
‒
‒

‒
（30,235）‒‒（54,026）‒‒ （21,379）
‒
（51）
143
（0）

‒

（51） （78,021）（30,235）（54,026）（21,379）92

Retirement of shares of common
stock held in treasury ・・・・・・・・・・・・・・・・・・・・・・

78,072‒

Net changes in items other thanshareholders equity ・・・・・・・・・・・・・・・・・・・・・・・‒‒
Balance at March 31, 2009 ・・・・・・・・・・・・・・・・・・・・・・・・ $ 168,268
Total changes during the year ・・・・・・・・・・・・・・・・・・・・‒‒‒‒
56,836 （105,548）（51） （162,333）$ 138,064 $ 1,351,705 $（81,126）$ 1,576,911

Valuation and translation adjustments
Net
unrealized
holding
gain onsecurities

Translation
adjustments

Net
unrealized
Total
deferred valuation andlosstranslation
on hedges adjustments

Minority
interests

Total net
assets（Thousands of U.S. dollars）（Note2）

Balance at March 31, 2008 ・・・・・・・・・・・・・・ $ 26,916
Decrease due to changes in$ 34,287$（223）$ 60,980$ 42,197 $ 1,787,988

accounting policies applied
to overseas subsidiaries ・・・・・・・・・・・・・・

‒

‒

‒

‒

‒

（2,352）

‒
‒
‒
‒

‒
‒
‒
‒

‒
‒
‒
‒

‒
‒
‒
‒

‒
‒
‒
‒

（30,235）（54,026）（21,379）
92

‒

‒

‒

‒

‒

Changes during the year：
Cash dividends ・・・・・・・・・・・・・・・・・・・・
Net loss ・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・
Disposition of treasury stock ・・・・・・・・・・
Retirement of shares ofcommon stock held in treasury ・・・・・・・‒

Net changes in items otherthan shareholders equity・・・・・・・・・・・ （26,499） （103,930）
Total changes during the year ・・・・・・・・・・ （26,499） （103,930）
Balance at March 31, 2009 ・・・・・・・・・・・・・・

24

$ 417

$（69,643）（1,354） （131,783） （4,357） （136,140）（1,354） （131,783） （4,357） （241,688）$（1,577） $（70,803） $ 37,840 $ 1,543,948

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

Year ended March 31,
2009

2008

（Millions of yen）

2009
（Thousands of
U.S. dollars）（Note2）

Operating activities：（ Loss）income before income taxes and minority interests ・・・・・・・・・・・

Adjustments to reconcile（ loss）income before income taxes andminority interests to net cash provided by operating activities：
Depreciation and amortization ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Gain on sales of investments in securities ・・・・・・・・・・・・・・・・・・・・
Loss on shutdown of a plant ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on discontinued operations ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on impairment of property, plant and equipment ・・・・・・・・・・・
Casualty loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on disposal of inventories ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loss on devaluation of investments in other securities・・・・・・・・・・・
Loss on damages ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Increase in accrued retirement beneﬁts for employees ・・・・・・・・・・
Interest and dividend income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest expense・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Equity in earnings of an unconsolidated subsidiary and aﬃliates ・・・
Loss on disposal of property, plant and equipment ・・・・・・・・・・・・・
Other, net・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Changes in operating assets and liabilities：
Notes and accounts receivable ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Inventories ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Notes and accounts payable ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other current liabilities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest and dividends received・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Interest paid ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Payment related to shutdown of a plant ・・・・・・・・・・・・・・・・・・・・・・・・
Payment related to discontinued operations ・・・・・・・・・・・・・・・・・・・・・・
Payment related to casualty loss ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Payment related to damages ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Payment related to disposal of inventories ・・・・・・・・・・・・・・・・・・・・・・・
Income taxes paid ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net cash provided by operating activities ・・・・・・・・・・・・・・・・・・・・・・・¥（6,051）¥ 17,846$（61,600）

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

18,230
（328）
1,873
686
355
185
128
‒
‒
134
（1,377）
1,349（1,671）
116
216

182,816‒‒468
20,472‒‒
39,5602,504
3,298（11,280）
14,822（3,807）
9,396（4,947）25,9908,993（30,832）（5）
22,977（3,229）（4,969）（2,471）
106
27,179264,584
91,550（313,875）（51）
233,9102,025（1,367）（1,060）
（222）
‒
（246）
‒
（4,494）
17,6132,125（1,332）
（333）
（190）
（185）
‒
（128）
（7,007）
20,12920,615（13,916）（10,791）（2,260）‒（2,504）‒（45,750）
179,304（17,757）
444
（750）
826

（20,478）
86（4,370）785（180,770）
4,520（7,635）
8,409

‒
（8）
900
（331）
¥（16,676）（5,793）（4,025）
1,069（374）¥（33,100）

‒
（81）
9,162
（3,370）$（169,765）

Investing activities：
Purchases of property, plant and equipment ・・・・・・・・・・・・・・・・・・・・・
Proceeds from sales of property, plant and equipment ・・・・・・・・・・・・・・
Purchases of short-term investments and investments in securities ・・・・・・・
Proceeds from sales of short-term investments and investments in securities ・・・・・
Acquisition of investments in subsidiaries resulting in change inscope of consolidation・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Payments for purchases of shares of aﬃliates ・・・・・・・・・・・・・・・・・・・・
Collection of loans receivable ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other, net
Net cash used in investing activities ・・・・・・・・・・・・・・・・・・・・・・・・・・・

25

Consolidated Statements of Cash Flows（continued）

Year ended March 31,
2009

2008

（Millions of yen）

2009
（Thousands of
U.S. dollars）（Note2）Financing activities：
Increase in short-term bank loans, net ・・・・・・・・・・・・・・・・・・・・・・・・
Proceeds from long-term debt ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Repayment of long-term debt ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Issuance of bonds ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Cash dividends paid ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of treasury stock ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Net cash provided by ﬁnancing activities ・・・・・・・・・・・・・・・・・・・・・・
Eﬀect of exchange rate changes on cash and cash equivalents ・・・・・・
Increase in cash and cash equivalents ・・・・・・・・・・・・・・・・・・・・・・・・
Cash and cash equivalents at beginning of year ・・・・・・・・・・・・・・・・・
Cash and cash equivalents at end of year ・・・・・・・・・・・・・・・・・・・・・

26¥ 2,675
17,355（6,832）‒（2,970）（2,100）（29）
8,099¥ 4,746
10,167（5,994）15,000（2,941）（3,472）（11）
17,495$ 27,232
176,677（69,551）‒（30,235）（21,378）（296）
82,449（957）
8,079
21,371¥ 29,450

（144）
4,380
16,991¥ 21,371（9,742）82,246
217,561$ 299,807

Notes to Consolidated Financial Statements
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries March 31, 2009

1. Summary of Signiﬁcant Accounting Policies（ a）Basis of presentation
Nippon Shokubai Co., Ltd.（ the Company ） and its domestic
subsidiaries maintain their accounts and records in accordancewith accounting principles generally accepted in Japan. Its
overseas subsidiaries maintain their accounts and records inconformity with the requirements of their respective countriesof domicile.
The accompanying consolidated financial statements of theCompany and consolidated subsidiaries are prepared on thebasis of accounting principles generally accepted in Japan,
which are diﬀerent in certain respects as to the application anddisclosure requirements of International Financial ReportingStandards, and are compiled from the consolidated financial
statements prepared by the Company as required by the
Financial Instruments and Exchange Act of Japan.
Certain reclassifications of previously reported amounts havebeen made to conform the consolidated ﬁnancial statements forthe year ended March 31, 2008 to the 2009 presentation. Such
reclassifications had no effect on consolidated net loss or net
assets.
In preparing the accompanying consolidated financial
statements, certain reclassiﬁcations and rearrangements havebeen made to the consolidated financial statements issued
domestically in order to present them in a format which ismore familiar to readers outside Japan.

（ b）Basis of consolidation
The accompanying consolidated financial statements include
the accounts of the Company and its significant subsidiaries.
All significant intercompany items have been eliminated inconsolidation.
The overseas consolidated subsidiaries are consolidated on thebasis of ﬁscal periods ending December 31, a date which diﬀers
from the balance sheet date of the Company. As a result,adjustments have been made for any signiﬁcant intercompany
transactions which took place during the period between theyear end of these overseas consolidated subsidiaries and theyear end of the Company.
Investments in an unconsolidated subsidiary and significant
aﬃliates are accounted for by the equity method.
Investments in an unconsolidated subsidiary and aﬃliates notaccounted for by the equity method are carried at cost.
Goodwill and negative goodwill arising from the diﬀerence of
cost and underlying net assets at the date of acquisition areamortized over a period of ﬁve years on a straight-line basis,
except that immaterial amounts are charged or credited toincome as incurred.
（ Change in accounting policy）

Effective the year ended March 31, 2009, the Company
and overseas subsidiaries have adopted Practical Solution

on Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements（ Accounting Standards Board of Japan（ ASBJ ） Practical
Issues Task Force No. 18 issued on May 17, 2006 ）. The
impact on operating income and loss before income taxes andminority interests was immaterial. The eﬀect of this change on
segment information has not been disclosed because it was also
immaterial.

（c）Foreign currency translation
The financial statements of the overseas consolidated
subsidiaries are translated into yen at the rates of exchange in
effect at the balance sheet date, except that the components
of net assets excluding minority interests are translated attheir historical exchange rates. Differences resulting fromtranslating the ﬁnancial statements of the overseas consolidated
subsidiaries are not included in the determination of net income
but are reported as translation adjustments and minority
interests the accompanying consolidated balance sheets at
March 31, 2009 and 2008.
Revenue and expense items arising from transactions
denominated in foreign currencies are generally translated
into yen at the rates of exchange in effect at the respective
transaction dates.
All monetary assets and liabilities denominated in foreign
currencies are translated into yen at the rates of exchange
in effect at the balance sheet date and gain or loss on eachtranslation is credited or charged to income.

（d）Cash and cash equivalents
Cash and cash equivalents include cash on hand and in banks
and other highly liquid investments with maturities of threemonths or less when purchased.

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

（f ）Inventories
Inventories are stated at the lower of cost or net selling value,
cost being determined primarily by the moving averagemethod.
（ Change in accounting policy）

Up to the year ended March 31, 2008, inventories of theCompany and its domestic consolidated subsidiaries werevalued at the lower of cost or market, cost being determined by
the moving average method.
Eﬀective the year ended March 31, 2009, as the AccountingStandard for Measurement of Inventories （ ASBJ Statement
No. 9 issued on July 5, 2006）has been applied, inventories of theCompany and its domestic consolidated subsidiaries are stated27Notes to Consolidated Financial Statements（continued）

at the lower of cost or net selling value, cost being determinedprimarily by the moving average method. As a result of thischange, operating income increased by ¥266 million（ $2,708
thousand）, and loss before income taxes and minority interests
decreased by ¥311 million（ $3,166 thousand）for the year ended
March 31, 2009 from the corresponding amounts which would
have been recorded under the previous method. The impact on
segment information is outlined in Note（g ）Property, plant and equipment
Property, plant and equipment are stated on the basis of cost.
Depreciation is computed principally by the declining-balancemethod over the estimated useful lives of the respective assets,
except that the overseas consolidated subsidiaries computedepreciation by the straight-line method over the estimateduseful lives of the respective assets.
（ Supplementary information）

Eﬀective the year ended March 31, 2009, the Company and its
domestic consolidated subsidiaries have changed their useful
lives for depreciation of machinery and equipment. This change
was made based on an amendment to the Corporation Tax Law.
As a result of this change, operating income increased by ¥429
million（ $4,367 thousand）, and loss before income taxes andminority interests decreased by ¥429 million（ $4,367 thousand）
for the year ended March 31, 2009 from the corresponding
amounts which would have been recorded under the previous
useful lives. The impact on segment information is outlined in
Note 19.
（ Change in accounting policy）

Effective the year ended March 31, 2008, the Company andits domestic consolidated subsidiaries have changed their
method of accounting for depreciation of property, plant andequipment acquired on or after April 1, 2007 in accordance with
an amendment to the Corporation Tax Law. As a result of
this change, operating income decreased by ¥539 million, andincome before income taxes and minority interests decreasedby ¥541 million for the year ended March 31, 2008 from thecorresponding amounts which would have been recorded under
the previous method. The impact on segment information isoutlined in Note 19.
（ Supplementary information）

28¥1,482 million, and income before income taxes and minority
interests by ¥1,506 million for the year ended March 31, 2008
from the corresponding amounts which would have beenrecorded under the previous method. The impact on segment
information is outlined in Note 19.

（ h ）Leases
Leased assets under finance lease transactions that do nottransfer ownership to the lessee are depreciated to a residual
value of zero by the straight-line method using the contract
term as the useful life.
For finance lease transactions that do not transfer ownershipto the lessee, those that started on or before March 31, 2008
continue to be accounted for as operating lease transactions.
（ Change in accounting policy）

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

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

In addition, eﬀective the year ended March 31, 2008, depreciation
expense for property, plant and equipment acquired before
April 1, 2007 is computed based on the salvage value of 5% of
acquisition cost, and the amount between the salvage value（ 5%of acquisition cost）and memorandum value is depreciated fromthe year following the year in which the book value of an asset
reaches 5% of its acquisition cost by the straight-line method
over a period of 5 years. This change was made based on anamendment to the Corporation Tax Law.

（ j ） Research and development costs and computer
software

The eﬀect of this change was to decrease operating income by

Research and development costs are charged to income when

Notes to Consolidated Financial Statements（continued）

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

（ k）Income taxes
Income taxes are calculated based on taxable income andcharged to income on an accrual basis. Deferred income tax
assets and liabilities are computed based on the temporary
differences between financial reporting and the tax bases of
the assets and liabilities which will result in taxable or taxdeductible amounts in the future. The calculation of deferredincome tax assets and liabilities is based on the enacted tax
laws.

（ l ）Hedge accounting
Gain or loss on derivatives positions designated as hedges isdeferred until the loss or gain on the respective underlying
hedged items is recognized. Interest-rate swaps which meet certain
conditions are accounted for as if the interest rates applied tothe swaps had originally applied to the underlying debt.
Forward foreign exchange contracts which meet certain criteria
are accounted for by the allocation method which requiresthat recognized foreign currency receivables or payables betranslated at the corresponding contract rates.

（ m）Accrued bonuses to employees
Accrued bonuses to employees are provided based on theestimated amount of bonuses to be paid to employees which is
charged to income in the current year.

（n）Accrued bonuses to directors and corporate auditors
Accrued bonuses to directors and corporate auditors are provided
at an estimate of the amount to be paid in the following year
which has been allocated to the current ﬁscal year.

（o）Reserve for periodic repairs
The Company provides a reserve for the cost of periodic
repairs to production facilities at plants based on their estimatesof the future cost of such repairs.

（p）Reserve for loss on shutdown of a plant
The reserve for loss on shutdown of a plant is stated at theestimated amount of removal cost and so forth to be incurred
as a result of the closure of the Ehime factory at the Himeji
plant.

（ q）Retirement beneﬁts
The Company s employees are covered by an employees
retirement beneﬁt plan and an employees pension plan. The
employees retirement benefit plan provides for lump-sum
payments determined by reference to their basic salary, yearsof service and certain other factors. The domestic consolidated
subsidiaries have either unfunded employees retirement
beneﬁt plans and/or pension plans which are noncontributory
and funded and which cover substantially all their employees.
These plans provide for lump-sum payments and/or annuity
payments payable upon termination of employment.
Accrued retirement beneﬁts for employees have been provided
based on the retirement beneﬁt obligation and the fair value ofthe pension plan assets as adjusted for unrecognized actuarial
gain or loss and unrecognized prior service cost.
Prior service cost is amortized principally by the straight-line
method over a period of 5 years, which is within the estimatedaverage remaining years of service of the eligible employees.
Actuarial gain or loss is amortized in the year following theyear in which the gain or loss is recognized principally by thestraight-line method over a period of 10 years, which is within
the estimated average remaining years of service of the eligible
employees.
（ Change in accounting policy）

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

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

（r ）Distribution of retained earnings
Under the Corporation Law of Japan, the distribution ofretained earnings with respect to a given financial period is
made by resolution of the shareholders at a general meeting
held subsequent to the close of the financial period. The
accounts for that period do not, therefore, reflect such
distributions（ see Note 21）.

2. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is
included solely for convenience, as a matter of arithmetic
computation only, at ¥98.23 = U.S. $1.00, the approximate rateof exchange in eﬀect on March 31, 2009. This translation should
not be construed as a representation that yen have been, could
have been, or could in the future be, converted into U.S. dollars
at the above or any other rate.

29

Notes to Consolidated Financial Statements（continued）

3. Short-Term Investments and Investments in Securities
Marketable securities classiﬁed as other securities at March 31, 2009 and 2008 are summarized as follows：

2009

2008
（Millions of yen）

Cost

Book value（fair market Unrealizedgain（loss）
value）

Cost

Book value（fair market Unrealizedgain（loss）
value）

Securities whose fair market value exceeds
their cost：
Equity securities ・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・¥ 3,232
3,232¥ 5,797
5,797¥ 2,565
2,565¥ 6,612
6,612¥ 13,472
13,472¥ 6,860
6,860

11,648
11,648¥ 14,880

8,619
8,619
¥ 14,416（3,029）（3,029）¥（464）

12,081
12,081¥ 18,693

8,070
8,070
¥ 21,542（4,011）（4,011）¥ 2,849

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

2009（Thousands of U.S. dollars）

Cost

Book value（fair market Unrealizedgain（loss）
value）

Securities whose fair market value exceeds
their cost：
Equity securities ・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・$ 32,902
32,902$ 59,015
59,015$ 26,113
26,113

118,579
118,579$ 151,481

87,74387,743$ 146,758（30,836）（30,836）$（4,723）

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

The proceeds from and gross realized gain on, sales of securities classiﬁed as other securities for the years ended March
31, 2009 and 2008 were as follows：

2009

2008
（Millions of yen）

Proceeds

¥ 600

Gross
realized
gain

Gross
realized loss

¥ 92

¥5

2009
（Thousands of U.S. dollars）

Proceeds$ 6,10830

Grossrealized
gain

$ 937

Gross
realized loss

$ 51

Proceeds

¥ 528

Gross
realized
gain

¥ 407

Gross
realized loss¥‒

Notes to Consolidated Financial Statements（continued）

A breakdown of other securities whose market value was not determinable at March 31, 2009 and 2008 is presented asfollows：

2009

2008

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

Held-to-maturity bonds ・・・・・・・・・・・・・・・・

¥ 400
1,254

¥ 400
746

Other securities ・・・・・・・・・・・・・・・・・・・・・$ 4,072
7,594

The redemption schedule for other securities with maturity dates at March 31, 2009 is summarized as follows：

2009（Millions of yen）

（Thousands of U.S. dollars）

Due in one
year or lessDue after one
year throughﬁve years

Due in one
year or less

¥‒

¥ 400

$‒

Held-to-maturity bonds ・・・・・・・・・・・・・・・・・・・

Due after one
year throughﬁve years$ 4,072

4. Inventories
Inventories at March 31, 2009 and 2008 were as follows：

2009

2008

（Millions of yen）

Merchandise and ﬁnished goods ・・・・・・・・・・・
Raw materials ・・・・・・・・・・・・・・・・・・・・・・・・・
Work in process ・・・・・・・・・・・・・・・・・・・・・・・
Supplies ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・¥ 21,363
11,155
7,068
2,775¥ 42,361¥ 28,740
13,574
8,885
3,154¥ 54,353

2009（Thousands of
U.S. dollars）$ 217,479
113,560
71,95428,250$ 431,243

5. Loss on Impairment of Property, Plant and Equipment
Property, plant and equipment are primarily grouped based on the business segment categories designated for
management control purposes. In addition, idle assets for which no immediate use is recognized are grouped individually.
The carrying values of assets expected to record a loss has been reduced to their respective net recoverable amounts
and the resulting aggregate losses on impairment have been recognized in the accompanying consolidated statements ofoperations for the years ended March 31, 2009 and 2008.
The recoverable amounts of the assets other than machines that produce super absorbent polymer and assets leased toothers were determined based on their respective estimated sales prices or value in use, which was calculated as the sumof the anticipated future cash ﬂows discounted at annual rates of 2.7% and 2.8% in 2009 and 2008, respectively. Machinesthat produce super absorbent polymer are not anticipated to be utilized in the future as they are obsolete and theircarrying values have been reduced to ¥1（ $0.01）. The net recoverable amounts of assets leased to others were measured
at net selling value based on appraisals issued by professional real estate appraisers.

31

Notes to Consolidated Financial Statements（continued）

Details of the loss on impairment of property, plant and equipment for the years ended March 31, 2009 and 2008 aresummarized as follows：2009
Company

Application

Classiﬁcation

NA Industries, Inc.

Machines that produce superabsorbent polymer

Land, buildings and structures,
machinery and equipment,
automotive equipment and software

Nippon ShokubaiCo., Ltd.

Assets leased to others,machines that produce vinyl
pyrrolidone andﬂuoroaromatic compounds（Millions of yen） （Thousands of U.S. dollars）

Land, buildings and structures,
machinery and equipment andautomotive equipment

Total¥ 1,413$ 14,384598¥ 2,011

6,088$ 20,472

2008
Company
NA Industries, Inc.

Nippon ShokubaiCo., Ltd.

Application

Classiﬁcation（Millions of yen）

Machines that produce acrylic Machinery and structures
acid built detergents¥ 208

Machines that manufacture Buildings and structures,catalysts for the removal ofmachinery and equipment
NOx and dioxins
and automotive equipment

147
¥ 355

Total

6. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans consisted mainly of unsecured loans. The average interest rates on short-term bank loans
outstanding at March 31, 2009 and 2008 were 1.74% and 2.06%, respectively.
Long-term debt at March 31, 2009 and 2008 consisted of the following：

2009
Unsecured bonds payable in yen, at rates from 0.81% to 1.66%,
due through 2014 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

2008

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

¥ 20,000¥ 20,000$ 203,604

46,61533,479474,550

2,267

3,310

23,078

691

2,700

7,035

1,634

1,850

16,634

182

456

1,853

Unsecured loans from banks and insurance companies, payablein yen, at rates from 0.49% to 2.03%, due through 2014 ・・・・・・・・・・
Unsecured loans from banks, payable in U.S. dollars, at rates
from 2.63% to 5.63%, due through 2012 ・・・・・・・・・・・・・・・・・・・・・・
Unsecured loans from banks, payable in Euro, at rates from
2.55% to 3.17%, due through 2009 ・・・・・・・・・・・・・・・・・・・・・・・・・・
Secured loans from banks and insurance companies, payable inyen, at rates from 0.95% to 4.84%, due through 2013 ・・・・・・・・・・・・
Secured loans from banks, payable in U.S. dollars, at rates from
3.60% to 5.83%, due through 2009 ・・・・・・・・・・・・・・・・・・・・・・・・・・
Subtotal ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Less current portion ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

32

71,389（17,614）¥ 53,775

61,795（6,998）¥ 54,797

726,754（179,314）$ 547,440

Notes to Consolidated Financial Statements（continued）

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

（Thousands of
U.S. dollars）¥ 17,614
7,485
4,673
14,19927,418$ 179,314
76,19947,572
144,549
279,120¥ 71,389$ 726,754

2010 ・・・・・・・・・・・・・・・
2011 ・・・・・・・・・・・・・・・
2012 ・・・・・・・・・・・・・・・
2013 ・・・・・・・・・・・・・・・
2014 and thereafter ・・・・

Assets pledged as collateral for short-term bank loans, longterm debt, including the current portion thereof, and notes andaccounts payable at March 31, 2009 and 2008 were as follows：

2009

2008

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

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

¥ 8
293
157
226
5
¥ 689

¥ 8
293
166
291
5
¥ 763

$ 81
2,983
1,598
2,301
51
$ 7,014

The components of retirement benefit expenses for theyears ended March 31, 2009 and 2008 are outlined asfollows：

2008

2009

（Millions of yen）

Service cost ・・・・・・・ ¥ 1,678
Interest cost ・・・・・・・
543

2009
（Thousands of
U.S. dollars）¥ 1,410542$ 17,083
5,528

Expected return onplan assets ・・・・・・・

（550）

（625）

（5,599）

（186）
978

（186）
485

（1,894）
9,956

Amortization：
Prior service cost ・・
Actuarial loss・・・・・
Retirement beneﬁt
expenses ・・・・・・・・ ¥ 2,463¥ 1,626$ 25,074

The assumptions used in accounting for the defined benefit
pension plans for the years ended March 31, 2009 and 2008
were as follows：

2009

2008

Discount rate ・・・・Principally 1.9% Principally 1.9%
Expected rate of
return on plan
assets ・・・・・・・・・・Principally 3.0% Principally 3.0%

7. Retirement Beneﬁts
The following table sets forth the funded and accrued
status of the pension plans and the amounts recognized in
the accompanying consolidated balance sheets at March
31, 2009 and 2008 for the Company s and the consolidated
subsidiaries deﬁned beneﬁt pension plans：

2009

2008

（Millions of yen）

2009
（Thousands of
U.S. dollars）

Retirement beneﬁt
obligation at end of year ¥（31,493） $（31,739）¥（323,109）Fair value of plan assets
at end of year ・・・・・
22,38917,400177,135
Unfunded retirement
beneﬁt obligation・・・・・ （14,339） （9,104） （145,974）
Unrecognized actuarial
gain ・・・・・・・・・・・・・
5,210
10,020102,005
Unrecognized priorservice cost ・・・・・・・（198） （385） （2,015）
Net retirement beneﬁt
obligation・・・・・・・・・ （4,517） （4,279） （45,984）
Prepaid pension cost ・・
3,874
3,948
40,191
Accrued retirement
beneﬁts ・・・・・・・・・・ ¥（8,465） ¥（8,153） $（86,175）

The following table sets forth the status of the multiemployer pension plan at March 31, 2008, the most recent
date on which such data was available.
（Thousands of（Millions of yen） U.S. dollars）

Plan assets at fair value・・・・・・ ¥ 415,833
Beneﬁt obligation used in thecalculation of pension ﬁnancing
497,473$4,233,259
5,064,369

Diﬀerence ・・・・・・・・・・・・・・・・ ¥（81,640） $（831,110）（ Supplementary information）

Eﬀective the year ended March 31, 2008, the Company has
adopted Partial Amendments to Accounting Standard
for Retirement Beneﬁts（ Part 2）（ ASBJ Statement No.14
issued on May 15, 2007）.

33

Notes to Consolidated Financial Statements（continued）

8. Income Taxes

2009

Income taxes applicable to the Company and its domestic
consolidated subsidiaries consist of corporation, inhabitantsand enterprise taxes. The statutory tax rate in Japan for theyears ended March 31, 2009 and 2008 was, in the aggregate,approximately 40.6%.

The effective tax rate reflected in the accompanying
consolidated statements of operations for the year ended
March 31, 2008 diﬀered from the above statutory tax rate
for the following reasons：Statutory tax rate ・・・・・・・・・・・・・・・・・・

2008
40.6 %

Eﬀect of：
Valuation allowance ・・・・・・・・・・・・・・・

2.4

Tax credit for research anddevelopment costs ・・・・・・・・・・・・・・（5.2）

Equity in earnings of an unconsolidated
subsidiary and aﬃliates ・・・・・・・・・・
Other, net ・・・・・・・・・・・・・・・・・・・・・・
Eﬀective tax rate ・・・・・・・・・・・・・・・・・・

（3.8）
（0.6）
33.4 %A reconciliation of the difference between the statutory
tax rate and the effective tax rate for the year ended
March 31, 2009 has not been presented because loss
before income taxes and minority interests was recorded.
Deferred income taxes reflect the net tax effect of thetemporary diﬀerences between the carrying amounts of
the assets and liabilities calculated for ﬁnancial reporting
purposes and the corresponding tax bases reported forincome tax purposes. The signiﬁcant components of thedeferred tax assets and liabilities of the Company and its
consolidated subsidiaries at March 31, 2009 and 2008 aresummarized as follows：

2008

2009

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

Deferred tax assets：・・・・・・・・・・・・
Accrued retirement ・・・・・・・・・・・¥ 1,950 ¥ 1,856 $ 19,851
beneﬁts for employees
Intercompany proﬁt on inventories
and property, plant and equipment
1,060
970
9,875
Tax loss carryforwards ・・・・・・・・・・ 4,227
2,040 43,032
Reserve for periodic repairs ・・・・・・・
1,078
768
7,818
Depreciation and amortization（ including impairment loss）・・・・・・ 1,763
2,357 17,948
Loss on impairment of land ・・・・・・ 1,267‒ 12,898
Accrued bonuses to employees ・・・
970
875
8,908
Impairment of investments insecurities and other ・・・・・・・・・・ 3,446
1,868 35,081
Reserve for loss on shutdown of aplant ・・・・・・・・・・・・・・・・・・・・・
502‒‒
Other ・・・・・・・・・・・・・・・・・・・・・・・ 2,225
1,832 22,651
Gross deferred tax assets・・・・・・・・・ 17,491 13,563 178,062
Less： Valuation allowance・・・・・・・（6,646）（4,024）（67,658）
Total deferred tax assets ・・・・・・・・・ 10,845
9,539 110,404
Deferred tax liabilities：
Equity in earnings of an overseas
aﬃliate ・・・・・・・・・・・・・・・・・・・・ 1,089
1,472 11,086
Depreciation and amortization ・・・・・
634
400
4,072
Deferred capital gain on property ・・
385
380
3,869
Reserve for depreciation for tax
purposes ・・・・・・・・・・・・・・・・・・・
114
59
601
Other ・・・・・・・・・・・・・・・・・・・・・・・
249
239
2,433
Total deferred tax liabilities ・・・・・・・ 2,167
2,854 22,061
Net deferred tax assets ・・・・・・・・・・¥ 8,678 ¥ 6,685 $ 88,343

9. Goodwill and Negative Goodwill
Goodwill and negative goodwill are netted against eachother. Goodwill and negative goodwill as of March 31,
2009 and 2008 are summarized as follows：

2009

2008

2009

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

Goodwill ・・・・・・・・・・・・・・・・ ¥ 1,979 ¥ 2,658 $ 20,147
Negative goodwill ・・・・・・・・・（131） （340）（1,334）

Goodwill, net ・・・・・・・・・・・・・ ¥ 1,848 ¥ 2,318 $ 18,813

34

Notes to Consolidated Financial Statements（continued）

10. Shareholders Equity

12. Leases

The Corporation Law of Japan（ the Law ）provides thatan amount equal to 10% of the amount to be disbursed
as distributions of capital surplus（ other than the capitalreserve ） and retained earnings（ other than the legal
reserve） be transferred to the capital reserve and thelegal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the capitalstock account. Such distributions can be made at any
time by resolution of the shareholders, or by the Board of
Directors if certain conditions are met.

The following pro forma amounts represent theacquisition cost, accumulated depreciation and net bookvalue of property leased to the Company and its domestic
consolidated subsidiaries at March 31, 2009 and 2008,
which would have been reflected in the accompanying
consolidated balance sheets if finance leases, other thanthose which transfer the ownership of the leased assets
to the Company or its domestic consolidated subsidiaries,that started on or before March 31, 2008（ which are
currently accounted for as operating leases） had been
capitalized：

Retained earnings include the legal reserve provided inaccordance with the provisions of the Law. The legal
reserve of the Company included in retained earnings
amounted to ¥3,920 million（ $39,906 thousand） and ￥3,920 million at March 31, 2009 and 2008, respectively.
Common stock and treasury stock
Movements in shares of common stock in issue andtreasury stock during the years ended March 31, 2009
and 2008 are summarized as follows：2009
Number of shares（Thousands）

March 31,
March 31,
Increase Decrease
2008
2009
Common stock ・・ 194,881
Treasury stock ・・

13,859‒3,029

7,881 187,000
7,897
8,991

2008
Number of shares（Thousands）

March 31,
March 31,
Increase Decrease
2007
2008
Common stock ・・ 194,881
Treasury stock ・・

10,291‒
3,574‒ 194,881
6 13,859

2009（Millions of yen）

Research and development costs included in cost of
sales and selling, general and administrative expenses
for the years ended March 31, 2009 and 2008 totaled ￥12,082 million（ $122,997 thousand） and ￥11,179 million,
respectively.

2009（Thousands of
U.S. dollars）

Machinery and equipment
and software：
Acquisition costs ・・・・・ ¥ 1,115¥ 1,272 $ 11,351
Accumulated ・・・・・・・・
depreciation/amortization （409）（388） （4,164）
Net book value ・・・・・・・・ ¥ 706¥884$ 7,187

Lease payments of the Company and its domestic
consolidated subsidiaries relating to finance leases
amounted to ￥177 million （ $1,802 thousand ） and ￥71 million for the years ended March 31, 2009 and2008, respectively. Depreciation on these leased assets
calculated by the straight-line method would haveamounted to ￥177 million （ $1,802 thousand ） and ￥71 million for the years ended March 31, 2009 and 2008,
respectively, if it had been reﬂected in the accompanying
consolidated balance sheets.
Future minimum lease payments（ including the interest
portion thereon） subsequent to March 31, 2009 underﬁnance lease transactions, other than those which transfer
the ownership of the leased assets to the Company or its
domestic consolidated subsidiaries, that were entered into
on or before March 31, 2008 are summarized as follows：Year ending March 31,

11. Research and Development Costs

2008（Millions of yen）

2010 ・・・・・・・・・・・・・・・・
2011 and thereafter ・・・・・

¥ 160
546
¥ 706

（Thousands of
U.S. dollars）$ 1,629
5,558$ 7,18735

Notes to Consolidated Financial Statements（continued）

13. Loss on Shutdown of a Plant
For the year ended March 31, 2008, the Company andconsolidated subsidiaries recorded a loss on shutdown of
the Ehime factory at the Himeji plant which consisted of
the following：（Millions of yen）

Dismantlement cost of a plant ・・・・・・・・・・
Loss on disposal of a plant ・・・・・・・・・・・・・
Other ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・・¥ 1,269304
300¥ 1,873

The amounts per share of net assets have been computed
based on the number of shares of common stock outstandingat the year end.
Cash dividends per share represent the cash dividends
declared as applicable to the respective years together
with the interim cash dividends paid.
The ﬁnancial data used in the computation of net（ loss）
income per share for the years ended March 31, 2009 and2008 is summarized as follows：（Millions of yen）

14. Loss on Discontinued Operations
For the year ended March 31, 2008, the Company andconsolidated subsidiaries recorded loss on discontinued
operations of the unsaturated polyester business which
consisted of the following：（Millions of yen）

Dismantlement cost of a business ・・・・・・
Loss on disposal of a business ・・・・・・・・・
Other ・・・・・・・・・・・・・・・・・・・・・・・・・・・
Total・・・・・・・・・・・・・・・・・・・・・・・・・・・・

2008

2009

¥ 339
233
114
¥ 686

2009
（Thousands of
U.S. dollars）

Net（ loss）income ・・・・・・・・・ ¥（5,307）¥11,875 $（54,026）
Deductions from net（ loss）
income・・・・・・・・・・・・・・・・

‒

‒

‒

Adjusted net（ loss）income
available to shareholders ofcommon stock ・・・・・・・・・・ （5,307） 11,875 $（54,026）
Weighted-average numberof shares of common stock
outstanding during the year
（ thousands of shares）・・・・・・ 179,244

182,948

179,244

15. Contingent Liabilities
At March 31, 2009, the Company and one consolidated
subsidiary were contingently liable as guarantors ofindebtedness of affiliates in the aggregate amount of ￥2,182 million（ $22,213 thousand）.
In addition, at March 31, 2009, two consolidated subsidiaries
had contingent liabilities arising from notes discountedwith banks and notes endorsed in the aggregate amountof ￥662 million（ $6,739 thousand）.

16. Amounts per Share
2009

2008

（yen）

Net（ loss）income ・・・・・ ¥（29.61） ¥ 64.91
Cash dividends ・・・・・・・
Net assets ・・・・・・・・・・・

15.50
831.11

2009（U.S. dollars）

16.00
947.34$ (0.30)
0.16
8.46

Net（ loss）income per share has been computed based on
the net（ loss）income available to shareholders of common
stock and the weighted-average number of shares ofcommon stock outstanding during the year. Diluted net（ loss） income per share has not been presented for theyears ended March 31, 2009 and 2008 since neither theCompany nor any of the consolidated subsidiaries had any
potentially dilutive shares at March 31, 2009 and 2008.

36

17. Derivatives
Derivative financial instruments are utilized by theCompany and its consolidated subsidiaries principally
to reduce the risk arising from fluctuation in interest
rates and foreign exchange rates. The Company has
established a control environment which includes
policies and procedures for risk assessment and forthe approval, reporting and monitoring of transactions
involving derivatives. The Company and its consolidated
subsidiaries do not hold or issue derivatives for speculative
trading purposes.
The Company and its consolidated subsidiaries are
exposed to certain market risk arising from forward
foreign exchange contracts and interest-rate swaps.
The Company and its consolidated subsidiaries arealso exposed to the risk of credit loss in the event of
nonperformance by the counterparties to these forward
foreign exchange contracts and interest-rate swap
contracts; however, the Company and its consolidated
subsidiaries do not anticipate nonperformance by any of
the counterparties, all of whom are ﬁnancial institutions
with high credit ratings.

Notes to Consolidated Financial Statements（continued）

18. Supplementary Information on Statementsof Cash Flows
During the year ended March 31, 2008, the Company
purchased shares of Nippon Nyukazai Co., Ltd. andinitially consolidated its accounts for the year ended
March 31, 2008. The following total summarizes theassets and liabilities included in consolidation and presents
information on the related acquisition cost and cash
disbursement：（Millions of yen）

Current assets ・・・・・・・・・・・・・・・・・・・・・ ¥ 12,109
Non-current assets ・・・・・・・・・・・・・・・・・・
8,739
Goodwill ・・・・・・・・・・・・・・・・・・・・・・・・・・

2,342

Current liabilities ・・・・・・・・・・・・・・・・・・・ （12,158）
Non-current liabilities ・・・・・・・・・・・・・・・・ （3,859）
Other ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Acquisition cost ・・・・・・・・・・・・・・・・・・・・

7
7,180

Cash and cash equivalents of Nippon
Nyukazai Co., Ltd. ・・・・・・・・・・・・・・・・・
Cash disbursement ・・・・・・・・・・・・・・・・・・

1,387¥ 5,79337

Notes to Consolidated Financial Statements（continued）

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

Business Segments
The business segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2009
and 2008 is outlined as follows：Year ended March 31, 2009
I. Sales and operating income：Basicchemicals

Functional
chemicals

Environmentand catalysts

Sales to third parties ・・・・・・・・・・・・・・・ ¥ 117,902 ¥ 139,862
Intragroup sales and transfers ・・・・・・・・
31,735
1,624
Net sales ・・・・・・・・・・・・・・・・・・・・・・・・
149,637
141,486
Operating expenses ・・・・・・・・・・・・・・・・
148,048
143,381
Operating income（ loss）・・・・・・・・・・・・・¥ 1,589 ¥（1,895）

Total（Millions of yen）

Eliminations
or corporate

Consolidated¥
31,338
1,656
32,994
31,772¥ 1,222¥ 289,102
35,015324,117323,201¥ 916¥ 289,102¥‒‒（35,015）
289,102（35,015）
288,480（34,721）¥ 622¥（294）¥ 25,462
485‒
452¥ 284,347
18,9092,011
20,614¥ 18,601‒‒‒

II. Total assets, depreciation and amortization,
loss on impairment of property, plant andequipment and capital expenditures：
Total assets ・・・・・・・・・・・・・・・・・・・・・・ ¥ 117,680 ¥ 141,205
Depreciation and amortization ・・・・・・・・
7,687
10,737
Loss on impairment of property, plant and equipment‒
2,011
Capital expenditures ・・・・・・・・・・・・・・・
12,728
7,434

Year ended March 31, 2009

¥ 302,948
18,9092,011
20,614（Millions of yen）

Basicchemicals

Functional
chemicals

Environmentand catalysts

Total

Sales to third parties ・・・・・・・・・・・・・・ ¥ 109,330
Intragroup sales and transfers ・・・・・・・
34,188Net sales ・・・・・・・・・・・・・・・・・・・・・・・
143,518
Operating expenses ・・・・・・・・・・・・・・・
136,797
Operating income ・・・・・・・・・・・・・・・・¥ 6,721¥ 155,892
1,357
157,249
148,480¥ 8,769¥ 37,447
718
38,16535,352¥ 2,813¥ 302,669
36,263338,932
320,629¥ 18,303¥‒（36,263）（36,263）（36,339）¥ 76¥302,669‒
302,669
284,290¥ 18,379¥ 164,435
10,762
208
11,484¥ 30,194
456
147
331

¥ 327,894
19,454355
17,624¥ 24,889‒‒‒¥ 352,783
19,454355
17,624

I. Sales and operating income：Eliminations
or corporate

Consolidated

II. Total assets, depreciation and amortizationand capital expenditures：
Total assets ・・・・・・・・・・・・・・・・・・・・・ ¥ 133,265
Depreciation and amortization ・・・・・・・
8,236
Loss on impairment of property, plant and equipment‒
Capital expenditures
5,809

Year ended March 31, 2009
I. Sales and operating income：Basicchemicals

Functional
chemicals

Environmentand catalysts

Sales to third parties ・・・・・・・・・・・・・・ $ 1,200,265 $ 1,423,821$ 319,027
Intragroup sales and transfers ・・・・・・・
16,858323,068
16,533
Net sales ・・・・・・・・・・・・・・・・・・・・・・・ 1,523,333 1,440,354
335,885
Operating expenses ・・・・・・・・・・・・・・・ 1,507,157 1,459,645
323,445
Operating income（ loss）・・・・・・・・・・・・$ 16,176 $（19,291） $ 12,440

II.Total assets, depreciation and amortization,
loss on impairment of property, plant andequipment and capital expenditures：
Total assets ・・・・・・・・・・・・・・・・・・・・・ $ 1,198,005 $ 1,437,493
Depreciation and amortization ・・・・・・・
78,255
109,305
Loss on impairment of property, plant and equipment‒
20,472
Capital expenditures
129,573
75,68038

Total（Thousands of U.S. dollars）

Eliminations
or corporate

Consolidated$ ‒ $ 2,943,113$2,943,113‒
356,459 （356,459）
3,299,572 （356,459） 2,943,113
3,290,247 （353,466） 2,936,781$ 6,332$（2,993）$ 9,325$ 259,208 $ 2,894,706
4,937
192,497‒
20,472
4,601
209,854$ 189,362‒‒‒$ 3,084,068
192,497
20,472
209,854

Notes to Consolidated Financial Statements（continued）

As mentioned in Note 1（ f ）, effective the year ended March 31, 2009, the Company and its domestic consolidated
subsidiaries have changed the method of valuation of inventories. As a result of this change, operating income decreasedby ¥50 million（ $509 thousand）in the basic chemicals business segment and increased by ¥441 million（ $4,489 thousand）
in the environment and catalysts business segment and operating loss increased by ¥125 million（ $1,272 thousand） in
the functional chemicals business segment for the year ended March 31, 2009 as compared to the corresponding amounts
which would have been recorded under the previous method.
As mentioned in Note 1（ g）, effective the year ended March 31, 2009, the Company and its domestic consolidated
subsidiaries have changed their useful lives for depreciation of machinery and equipment. As a result of this change,
operating income increased by ¥305 million（ $3,104 thousand） in the basic chemicals business segment and by ¥3
million（ $31 thousand）in the environment and catalysts business segment and operating loss decreased by ¥121 million（ $1,232 thousand） in the functional chemicals business segment for the year ended March 31, 2009 as compared to thecorresponding amounts which would have been recorded under the previous useful lives.
As mentioned in Note 1（ g）, the Company and its domestic consolidated subsidiaries have changed their method of
accounting for depreciation of property, plant and equipment acquired on or after April 1, 2007 to the procedure stipulated
in the revised law. As a result of this change, operating income decreased by ￥104 million in the basic chemicals businesssegment, by ￥412 million in the functional chemicals business segment and by ￥22 million in the environment andcatalysts business segment for the year ended March 31, 2008 as compared to the corresponding amounts which would
have been recorded under the previous method.
As mentioned in Note 1（ g）, the Company and its domestic consolidated subsidiaries have changed their method of
accounting for property, plant and equipment acquired before April 1, 2007. As a result of this change, operating expenses
in the basic chemicals business segment increased by ￥695 million, the functional chemicals business segment increasedby ￥715 million and the environment and catalysts business segment increased by ￥72 million, and operating income
decreased by the same amounts as compared to the corresponding amounts which would have been recorded under theprevious method.

Geographical Segments
The geographical segment information of the Company and its consolidated subsidiaries for the years ended March 31,
2009 and 2008 is outlined as follows：Year ended March 31, 2009
Japan

Europe

Asia

Other

Total

（Millions of yen）

Eliminations
or corporate Consolidated

I. Sales and operating income（loss）：
Sales to third parties ・・・・・・・・・・・・・ ￥212,781
Intragroup sales and transfers ・・・・・・
29,602
Net sales ・・・・・・・・・・・・・・・・・・・・・・ 242,383
Operating expenses ・・・・・・・・・・・・・・ 241,609
Operating income（ loss）・・・・・・・・・・・￥ 774￥ ￥26,406 ￥15,991 ￥289,102￥ ‒ ￥289,102
33,924
1,289
190
31,176 （31,176）‒
95
27,695
16,181
320,278 （31,176） 289,102
34,01927,75917,239321,086 （32,606） 288,480
34,479￥（64） ￥（1,058） ￥（808） ¥ 1,430￥ 622￥（460）
II. Total assets ・・・・・・・・・・・・・・・・・・・ ￥243,696￥25,113￥8,819 ￥294,568 ￥8,380 ￥302,948￥16,940
Year ended March 31, 2009
Japan

Other

Total

（Millions of yen）

Eliminations
or corporate Consolidated

EuropeAsia

Sales to third parties ・・・・・・・・・・・・・ ￥213,793
Intragroup sales and transfers ・・・・・・
33,718Net sales ・・・・・・・・・・・・・・・・・・・・・・ 247,511
Operating expenses ・・・・・・・・・・・・・・ 230,131
Operating income（ loss）・・・・・・・・・・・ ￥ 17,380￥43,130
78
43,20842,925￥ 283￥29,816 ￥15,930 ￥302,669
3,721
244
37,76133,537
16,174340,430
33,103
17,566
323,725￥ 434 ￥（1,392） ￥16,705￥ ‒ ￥302,669（37,761）‒（37,761） 302,669（39,435） 284,290¥1,674 ￥ 18,379

II. Total assets ・・・・・・・・・・・・・・・・・・・ ￥263,558￥23,090￥36,922 ￥13,984 ￥337,554￥15,229 ￥352,783

I. Sales and operating income（loss）：

39

Notes to Consolidated Financial Statements（continued）

Year ended March 31, 2009
Japan

Europe

Asia

Other

Total

（Thousands of U.S. dollars）

Eliminations
or corporate Consolidated

I. Sales and operating income（loss）：
Sales to third parties ・・・・・・・・・・・ $2,166,151 $345,353 $268,818 $162,791 $2,943,113$ ‒ $2,943,113
Intragroup sales and transfers ・・・・‒
317,377 （317,377）
1,934
13,122967
301,354
Net sales ・・・・・・・・・・・・・・・・・・・・ 2,467,505
164,725 3,260,490 （317,377） 2,943,113
281,940
346,320
Operating expenses ・・・・・・・・・・・・ 2,459,625
175,496 3,268,716 （331,935） 2,936,781
282,592
351,003
Operating income（ loss）・・・・・・・・・$ 6,332（10,771） $（8,226） $ 14,558$ 7,880 $（4,683） $（652） $II. Total assets ・・・・・・・・・・・・・・・・・ $2,480,871 $172,452$255,655$89,780 $2,998,758$85,310 $3,084,068

As mentioned in Note 1（ f ）, effective the year ended March 31, 2009, the Company and its domestic consolidated
subsidiaries have changed the method of valuation of inventories. As a result of this change, operating income in the Japan
segment increased by ¥266 million（ $2,708 thousand）for the year ended March 31, 2009 from the corresponding amountwhich would have been recorded under the previous method.
As mentioned in Note 1（ g）, effective the year ended March 31, 2009, the Company and its domestic consolidated
subsidiaries have changed their useful lives for depreciation of machinery and equipment. As a result of this change,
operating income in the Japan segment increased by ¥429 million（ $4,367 thousand） for the year ended March 31, 2009
from the corresponding amount which would have been recorded under the previous useful lives.
As mentioned in Note 1（ g）, the Company and its domestic consolidated subsidiaries have changed their method of
accounting for depreciation of property, plant and equipment acquired on or after April 1, 2007 to the procedure stipulated
in the revised law. As a result, operating income in the Japan segment decreased by ￥539 million from the corresponding
amount which would have been recorded under the previous method.
As mentioned in Note 1（ g）, the Company and its domestic consolidated subsidiaries have changed their method of
accounting for property, plant and equipment acquired before April 1, 2007. As a result, operating income in the Japan
segment decreased by ￥1,482 million from the corresponding amount which would have been recorded under the previous
method.

Overseas Sales
Overseas sales, which include export sales of the Company and its domestic consolidated subsidiaries and sales（ other thanexports to Japan）of the overseas consolidated subsidiaries, for the years ended March 31, 2009 and 2008 are summarized
as follows：Year ended March 31, 2009
Asia

EuropeAmerica

Other

Total

（Millions of yen）

Overseas sales ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Overseas sales as a percentage of consolidated net sales ・・・・・￥ 46,398 ￥ 39,109 ￥ 22,643
16.1%
13.5%
7.8%

￥17,150 ￥125,300
43.3%
5.9%

Year ended March 31, 2008
Asia

EuropeAmerica

Other

Total

（Millions of yen）

Overseas sales ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Overseas sales as a percentage of consolidated net sales ・・・・・￥ 57,458 ￥ 48,683 ￥ 23,667 ￥ 15,434 ￥ 145,242
19.0%
16.1%
7.8%
5.1%
48.0%
Year ended March 31, 2009
Asia

EuropeAmerica

Other

Total

（Thousands of U.S. dollars）

Overseas sales ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

40$ 472,341 $ 398,137 $ 230,510 $ 174,590 $1,275,578

Notes to Consolidated Financial Statements（continued）

20. Related Party Transactions（a）Principal transactions between the Company and its related parties for the years ended March 31, 2009 and 2008 aresummarized as follows：

2009
ICT Co., Ltd.：Sales of ﬁnished goods ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Purchases of raw materials ・・・・・・・・・・・・・・・・・・・・・・・・・・

2008

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

￥ 24,246
21,997￥ 26,561
25,631$ 246,829
223,934

18

18

183

￥‒

￥ 99

$ ‒

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

Nippon Petrochemicals Co., Ltd.：
Rental expense of land and equipment ・・・・・・・・・・・・・・・・・・

The prices for the above related party transactions were determined in reference to market value.
The balances due from and to its related parties at March 31, 2009 and 2008 were as follows：

2009
ICT Co., Ltd.：
Notes and accounts receivable ・・・・・・・・・・・・・・・・・・・・・・・・
Notes and accounts payable

2008

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

￥ 4,557308￥ 10,321
6,464$ 46,391
3,135

￥ ‒

￥ 24

$ ‒

Nippon Petrochemicals Co., Ltd.
Other current liabilities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・（b）Principal transactions between the consolidated subsidiaries and its related parties for the years ended March 31,
2009 and 2008 are summarized as follows：

2009
ICT Co., Ltd.：
Transportation of ﬁnished goods ・・・・・・・・・・・・・・・・・・・・・・

2008

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

￥100

￥‒

$ 1,018

￥ 28

￥‒

$ 285

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

The prices for the above related party transactions were determined in reference to market value.
The balances due from and to its related parties at March 31, 2009 and 2008 were as follows：

2009
ICT Co., Ltd.：
Notes and accounts receivable ・・・・・・・・・・・・・・・・・・・・・・・・

2008（Thousands of
U.S. dollars）（Millions of yen）

￥ 12

2009

￥ ‒

$ 122

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

21. Subsequent Event
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying
consolidated ﬁnancial statements for the year ended March 31, 2009, was approved at a shareholders meeting held on
June 19, 2009：

Cash dividends（ ￥7.00 = $0.071 per share）・・・・・・・・・・・・・・・・（Millions of yen）

（Thousands of
U.S. dollars）￥ 1,246$ 12,685

41

Coporate Data

Issued：￥ 187,000,000￥16,529,413,238
3,415
1,862

（ as of March 31, 2009）

General Administration & Personnel
Purchasing & Logistics

Informational Technology Managment Office
Investor & Public Relations

Fine & Perfotmance Chemicals Business

Suita Plant
Taipei Office42

Coporate DataOﬃces, Plants Consolidated Subsidiaries and Aﬃliates

NIPPON SHOKUBAI EUROPE N.V.

NISSHOKU TRADING(SHANGHAI) CO., LTD.
Taipei Oﬃce

43

Coporate Data
Situation of consolidated group

Domestic
Basic Chemicals Business

Overseas
Basic Chemicals Business
SINO-JAPANCHAMICAL CO., LTD.

Supply of products and merchandiseNIPPON NYUKAZAI CO.,LTD.
Supply of products
and merchandise

Purchasing of materials
Supply of products and merchandise

Shinritsu Co., Ltd.
Supply of products
and merchandise

Purchasing ofmaterials

Purchasing of materials
and merchandise

Supply of products and merchandise
Licensing of technology

PT. NIPPON SHOKUBAIINDONESIA

Supply of technical andmarket information

Singapole Acrylic Pte Ltd

Singapore Glacial Acrylic
Pte. Ltd.

Functional Chemicals BusinessSupply of products
and merchandise

Nippoh Chemicals Co., Ltd.

NIPPON SHOKUBAI(ASIA)
PTE LTD.

Nippon Polyester Co., Ltd.
Supply of products
and merchandise

Japan Composite Co., Ltd.
Tokyo Fine ChemicalCo., Ltd.

Supply of products
and merchandise

Supply of products andmerchandise

Supply of products andmerchandise

Functional Chemicals Business
Purchasing of materials
and merchandise

NA Industries,Inc.
Supply of products

Chugoku Kako Co., Ltd.
Supply of products and merchandise
Licensing of technology

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

Enviroment and Catalyst Business

Ameican Acryl LP.
Lease of assets

American Acryl NA.LLC
Supply of technical andmarket information
Supply of products andmerchandise

ICT Co., Ltd.

NIPPON SHOKUBAIEUROPE N.V.
NISSHOKU CHEMICAL INDUSTRY(ZHANGJIAGANG) CO., LTD.

Purchasing of materials

LGMMA Corporation

Transportation of
products and marchandise

Nisshoku Butsuryu CO.,LTD.

Transportation of
products and marchandise

Note:Shinritsu Co.,Ltd. and Nisshoku Butsuryu Co Ltd.
belong to multiple segments.
Consolidated subsidearies
Equity method affiliates

44

Coporate Data
Consolidated Subsidiaries and Affiliates

Shigeo Yasumoto

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

Hisakazu Fujita
NIPPON SHOKUBAI EUROPE N.V.

Koichiro Yamada
Koichiro Yamada
Manufacture and sale of superabsorbent polymers
and polymers for concrete admixture

Kazumi Fujioka

Hideyuki Tahara

45

Coporate Data
Directory

NIPPON SHOKUBAI EUROPE N.V.

NISSHOKU TRADING (SHANGHAI) CO.,LTD .

Telephone: 86-21-54075959
Facsimile: 86-21-54075673

46

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