A New Phase of Growth with
www.nisshinbo.co.jp/english/

Nisshinbo Holdings Inc.
2-31-11, Ningyo-cho, Nihonbashi,
Chuo-ku, Tokyo 103-8650, JAPANTEL +81-3-5695-8833 FAX +81-3-5695-8970

Annual Report 2013
Printed in Japan

Fiscal Year Ended March 2013

Financial Highlights

As an environmental and energy company contributing to the sustained
development of society, Nisshinbo Holdings Inc. has set long-term targets

For the years ended March 31

of net sales in excess of ¥600 billion and return on equity (ROE) of morethan 9% by the fiscal year ending March 2018.
In April 2013, the Group announced a new three-year management plan

Summary

goals. Under the plan’s three basic policies—reinforcing the Group’s management, strengthening the business structure, and fostering growth drivers—Nisshinbo will work to increase the corporate value of the Group.

TextilesAutomobile Brakes
PapersPrecision Instruments

Moving from
Challenge 2012 to NEXT 2015

ChemicalsElectronics
Real Estate
Other Businesses

Net Sales of Nisshinbo Holdings Inc.

100

(billions of yen)

200

300

400

(thousands of
US dollars)

2009

2010

2011

2012

2013

2013

Net Sales¥286,167¥242,409¥325,555¥379,340¥450,693$4,744,137

Textiles

64,39253,222

57,40060,96450,773

534,453

Automobile Brakes

49,23041,046

46,11947,450118,849

1,251,042

Papers34,214

31,53630,32630,22030,524

321,305

Precision Instruments

35,602

24,90832,02025,191

24,520258,105

Chemicals

8,059

6,309

7,284

8,258

8,150

85,790Electronics

60,54951,699112,820

169,907

175,308

1,845,347

Real Estate

6,011

6,298

12,437

9,082

15,367

161,758

Other Businesses

28,11027,391

27,14928,26827,202

286,337

Operating Income

408

3,570

19,843

4,170

13,394140,989

Net Income (Loss)(1,286)

1,896

11,185

9,416

6,418

67,558

Total Assets¥366,858¥358,110¥479,852¥534,584¥551,933$5,809,821

Net Assets

193,698

193,639

211,557

213,751

242,623

2,553,926

Net Cash Provided by Operating Activities¥11,939¥27,538¥16,529¥12,974¥34,095$358,895

Net Cash Provided by (Used in) Investing Activities(14,393)(9,949)11,591(57,861)(10,973)(115,506)

Net Cash Provided by (Used in) Financing Activities

11,940(30,347)703

16,835(24,073)(253,400)(yen)(dollars)

Operating Results

called NEXT 2015, a key milestone on the road to achieving the long-term

0(millions of yen)

500

600

Financial Position
Fiscal Year Ending March 31,

2016

NEXT 2015(Plan)Cash Flows
Fiscal Year Ended March 31,

Fiscal Year Ended March 31,

Contents

2013

Challenge 2012

2010

Per Share

1 Financial Highlights

22 Precision Instruments

2 Business Diversification

24 Chemicals

4 Three-year Management Plan NEXT 2015

26 Electronics

8 To Our Shareholders

28 Real Estate

14 At a Glance

29 The Nisshinbo Group’s Management Framework

16 Overview of Business Segments

34 Board of Directors

Net Income (Loss)¥(7.08)¥10.38¥63.32¥53.83¥36.74$0.39

Shareholders’ Equity

985.191,034.04

1,036.80

1,063.19

1,198.67

12.62

Cash Dividends

15.00

15.00

15.00

15.00

15.00

0.16

(%)

Key Ratios
Return on Assets (ROA)

(0.3)

0.5

2.7

1.9

1.2

(0.6)

1.0

6.1

5.1

3.2

16 Textiles

35 Financial Section

Return on Equity (ROE)

18 Automobile Brakes

58 History

Note: The U.S. dollar amounts in this report are given for convenience only and represent translations of Japanese yen at the rate of ¥95 = US$1.

20 Papers

59 Corporate Data

1

Business Diversification
Fiscal Year Ended Mar. 2013
Segment sales

Segment

1940

1945

1955

1965

1975

1985

1995

2005

Main products

Share

Amount(billions of yen)

TextilesCotton spinning has been Nisshinbo’s core business since it was founded in 1907. Since launch-• Dress shirts, denim

ing APOLLOCOT 100% cotton non-iron shirts in 2009, we have been using the same technology
to develop and sell a range of new APOLLOCOT products.

11%

50.8

26%

118.8

7%

30.5

6%

24.5

2%

8.2

39%

175.3

3%

15.4

6%

27.2

Automobile Brakes

Leveraging our technologies in textile spinning, we diversified into automotive friction materials
immediately after World War II. Nisshinbo became the world’s leading maker of brake friction
materials by market share in 2012. We are currently working on the development of new materials that meet environmental standards for lower copper content.

• Automotive friction materials

PapersAfter World War II we began focusing on household paper products and specialty paper amid ashift in demand to the private sector. We now focus on high value-added products such as highly
absorbent toilet tissue for use with bidets and fine paper for high-grade printing applications.

• Household papers• Fine papers

Precision Instruments• Customized machine tools

During World War II our facilities were used as military factories to make aircraft parts. Afterthe war, we switched to the manufacture of various machine tools. Today we make fans andother plastic molded parts and precision processed parts for automobiles.

• Precision parts processing• Plastic molding

Conducted research anddevelopment
into friction materials

Chemicals

Diversification achieved
thanks to large teamof chemical engineers,material development
capabilities andaccumulated expertiseThis business has its roots in our man-made fiber business. We are currently stepping up thedevelopment of environmental and energy products, such as rigid urethane foam used in insulation materials, functional chemicals, and fuel cell parts and materials.

Electronics
Nisshinbo’s involvement in this field began in the 1950s when we transferred management personnel toJapan Radio Co., Ltd. after receiving a request for support. Over the years, we gradually strengthened
our partnership with the Japan Radio Group to enhance our presence in the environmental and energy
field. The four companies of the Japan Radio Group are now consolidated subsidiaries.

• Rigid urethane foam
• Functional chemicals• Bipolar plates for fuel cells• Electric double-layer capacitors• Wireless disaster warning
systems and other solutions,marine radio systems, semiconductor products

Assisted Japan Radiothrough dispatch ofmanagers

Real Estate

Since the 1990s this business has been working to effectively use the Group’s idle land that was
freed up due to a shift in manufacturing overseas. The business has focused on leasing real estate
for shopping centers, and more recently, on releasing land for residential development.

• Residential building lot
sales, property leasing andother real estate businesses

Effectively utilized former
factory sites

Other Businesses• Others

Friction materials,
disc pads, brake linings

100% cotton
non-iron dress shirts
2

Household papers

Photovoltaic module
manufacturing equipment

Plastic moldings

Electric double-layer
capacitors

Precision parts processing

Rigid urethane foam

Bipolar plates
for fuel cells

Wireless disasterwarning systems

Functional chemicals

TOTAL

450.7

Marine radio systems

Semiconductor products

Real estate

3

¥600
billion¥550
billionThree-year Management Plan NEXT 2015¥450

– Integration for GrowthbillionNEXT 2015

Nisshinbo Holdings Inc. announced a new three-year management plan in April 2013. As an environmental
and energy company contributing to the sustained development of society, the Nisshinbo Group has set
long-term targets of achieving net sales in excess of ¥600 billion and return on equity (ROE) in excess of 9%

Three years targeting global growth in the envi-¥242

ronmental and energy businesses and enhancing

Sales in excess of ¥600 billion

billioncorporate value to realize our long-term vision

ROE in excess of 9%"Next" step after"challenge"

Long-term goals

by the fiscal year ending March 2018. Under this new plan, we will work to deliver continued growth.

Challenge 20122010.3

Overview of NEXT 2015
As the "next" stage following the pe-

2011.32012.32013.32014.32015.32016.32017.32018.3

NEXT 2015: Basic Policies and Priority Measuresorder to remain competitive in the future,

become an environmental and energy

We have formulated three basic policies

a recovery in earnings at TMD Friction

nesses such as bipolar plates for fuel cells

riod of "challenge" under the previous

the new plan aims to unify domestic andcompany that can compete globally.

and related priority measures to achieveGroup S.A., which was acquired in 2011,and electric double-layer capacitors. We

management plan, the newly formulated

overseas operations within each business

Through these initiatives, we will work

the targets in NEXT 2015.

and expand production capacity in Asia,

also aim to generate synergies with otherNEXT 2015 plan positions the coming

field and create integrated operations

to boost earnings in each business to de-

The first policy is to strengthen thewhere the market is growing strongly. In

businesses such as smart factories.

three years as a period to build a global

Group’s business structure. Specifically,

the textiles, papers, precision instruments

The third policy is to reinforce manage-

beyond the boundaries of each businessliver net sales of ¥550 billion and operat-

growth strategy based on environmental

field. Specifically, we will implement re-ing income of ¥24 billion in the final year

we will improve profitability in each busi-

and chemicals businesses, we will step up

ment to support Nisshinbo’s transforma-and energy businesses and to enhance

forms to build a solid management struc-of the plan (the fiscal year ending Marchness to enhance the Group’s global com-

globalization and improve profitability.

tion into a truly global enterprise. This will

corporate value in order to realize long-ture to generate sustained earnings and2016). In terms of shareholder returns,

petitiveness. In the electronics business

The second policy under the plan is toinclude reinforcing corporate governance,

term targets.

drive further growth; promote proactive

we plan to pay a basic annual dividend ofcentered on Japan Radio Co., Ltd., wefoster growth drivers, accelerating growthhiring and training personnel, and creating

Based on the theme of "integration for

management by fostering and expanding¥15 per share, supplemented by dividend

will implement a growth strategy andin environmental and energy businesses.

global financial and tax systems. Creating

growth” (global, environmental, energy) in

new businesses and utilizing M&As; andhikes in line with earnings growth.

reform the global cost structure. In the

By actively reinvesting profits from existinga global operating framework will support

automobile brakes business, we will drive

businesses, we plan to rapidly launch busi-

our operations in each region.

NEXT 2015 – Net Sales by Segment

NEXT 2015 – Operating Income by Segment(billions of yen)(billions of yen)

600

40

Integration for growth (global, environmental, energy)
Fiscal year ending March 2016 net sales ¥550 billion, operating income ¥24 billion

500

30

400

Incomeinjection

Strengthening of business structure:

20

Improve profitability and enhance global competitiveness300

10Accelerate growth in environmental and energy businesses

1. Regenerate and expand electronics business

Earlycommercialization

2. Strengthen automobile brakes business
200

0

100

-10

0

13.3
Electronics

14.3

15.3

16.3

(Plan)(Plan)(Plan)

Automobile Brakes

Precision Instruments

Chemicals

TextilesReal Estate

PapersOther Businesses-20

Foster growth drivers:
1. Expand environmental business
2. Generate synergies

3. Strengthen profitability of textiles, papers, precision instruments, and chemicals businesses and accelerate globalization

Support,control

13.3

14.3

15.3

16.3

(Plan)(Plan)(Plan)

Electronics

Automobile Brakes*

Chemicals

Real Estate

TextilesPapersInvestment

Investment

Utilize internal resources(income from sale of real estate)

Support,control

Reinforce management:

1. Reinforce corporate governance

2. Strengthen global management setup

Transform Nisshinbo into a truly global enterprise

3. Hire and train global human resources

4. Create global financial and tax systems

Precision Instruments

Other Businesses, Eliminations/Corporate

TMD goodwill and impact of accounting standards adjustment*Excluding TMD goodwill and impact of accounting standards adjustment.

4

5

Strengthening the automobile brakes business

Regenerating and expanding
the electronics business

new growth and implement radical struc-to rising demand. A new plant in Thailand

expand, centered on the emerging mar-is due to start operations in January 2014.

kets of Asia. By improving development

We expect the plant to contribute to earn-capabilities and investing aggressively, we

ings in the final year of the new three-year

aim to demonstrate our true capabilities

management plan, when the plant is dueas the world’s number-one maker of brake

to come fully onstream.

friction materials.

Business restructuring centered on Japan RadioWe will roll out a strategy to generate

Global automobile demand is expected to

We will also take steps to restore earn-

A subsidiary of Nisshinbo Brake Inc.

ings at TMD, which has been affected bysor technology, we plan to contribute tobased in Changshu City in China’s Jiangsu

the downturn in the European economy.

the creation of a smart society.

Province began full-scale operations in April

By implementing ongoing cost structure

tural reforms centered on Japan RadioAs part of cost structure reforms on

2013. Nisshinbo Brake has also upgradedreforms, we plan to achieve a rapid recov-

Co., Ltd., which is focused on wirelessa global level, we will close the Mitaka

its production sites in Thailand in response

ery in the company’s earnings structure.

communications technology, and Nagano

Plant operated by Japan Radio Co., Ltd.

Japan Radio Co., Ltd. and Ueda Japan Ra-

and transfer manufacturing activities to

dio Co., Ltd., which all have close business

Nagano Japan Radio Co., Ltd., Ueda Japanlinks. By using a shared growth strategy

Radio Co., Ltd. and overseas subsidiaries.

for these companies, we aim to reinforce

We also plan to establish a new advanced

the Group’s operating structure and drive

technology center in Nagano, and us-

rapid business development.

ing a Nagano Japan Radio subsidiary in

Expanding Production Sites in Asia
Saeron Automotive
Corporation(Cheonan, South Korea)

Saeron Automotive
Beijing Corporation(Beijing)

Nisshinbo Saeron (Changshu)
Automotive Co., Ltd(Changshu,
Jiangsu Province, China)

New site

Nisshinbo Somboon
Automotive Co., Ltd.
(Rayong Province, Thailand)

Strengthening the textiles, papers, precision instruments andchemicals businesses and accelerating globalization
Construct advanced technology center in Nagano;transfer production from Mitaka Plant• Reduce headcount through closureof Mitaka Plant and sale of site
• Transfer engineering and backoffice departments to new location

We will accelerate the shift in production

Precision instruments: Restore profit-and sales to Asia. We will also reinforce

ability in the solar power business by im-earnings structures through M&As andplementing restructuring, and acceleratebusiness partnerships.

the creation of a global production andTextiles: Reinforce the global businesssales framework in the plastic molding andThis growth strategy will shift theShenzhen in China’s Guangdong Province,

focus of production and sales from Japanestablish more full-scale production sites

to emerging countries in Asia and otheroverseas. In addition, we will integrate theframework centered on Indonesia andprocessing business to tap global demand.

regions and target business expansion

three companies’ procurement systems

China and expand sales of the APOLLO-

Chemicals: In the functional chemicals busi-

overseas, such as wireless disaster warn-

and upgrade and review overseas parts

COT brand.

ness, increase production capacity and build

ing systems in Southeast Asian countries.

sourcing and distribution systems, reduc-Papers: Accelerate the shift to higha sales framework for bio-plastic modifiersAlso, through innovations in information

ing the number of personnel to create anvalue-added products and promote busi-

in response to expanding demand.

and communication technology and sen-

optimum framework. Funds provided byness partnerships in the processed paper

the sale of the Mitaka Plant site will be

product business on a global level.

Use Nagano Japan Radio’s subsidiary in Shenzhen,
Guangdong Province, China to establish new production bases

used for these structural reforms.

Growth strategy for New Japan RadioAt New Japan Radio Co., Ltd., which isSteering

Continuing on from our previous three-year

and construction machinery to automotive

focused on the semiconductor business,(amplification of sensor signals, etc.)

management plan, we aim to generateapplications and expand the business.

we will focus on developing new markets.

Ventilation/exhaust

further growth as an environmental andWe will also promote cooperationenergy company through new businesses

across Group companies to create new

in the environmental and energy fields.

products and services, such as radars and

The company has traditionally had a highdependence on home electronics. In addition to products for this market, we will
steadily strengthen its lineup of products
for handheld devices and wireless equipment and step up development of auto-

6

Stepping up growth in environmental and energy businesses(amplification of sensor signals, etc.)

Engine(amplification of sensor signals, etc.)

Driving
Transmission/axle

In particular, we will leverage our posi-sensors in automotive products and elec-tion as the market leader in bipolar plates

tronic components that utilize proprietaryfor fuel cells for the domestic householdmaterials such as Carbodilite, in ordermarket to develop our presence in fixed fu-

to drive growth. In October 2012, wemotive IC products, demand for which

Controlel cell and automotive fuel cell applications.

opened a smart factory test facility thathas been growing recently.

ABS/cruise

In electric double-layer capacitors, we willbrings together our electronics, chemical

shift our focus from industrial equipment

and mechatronics technologies.

7

To Our Shareholders

Financial Results for the Fiscal Year Ended March 2013
Our Group faced a challenging operating environment, but
the electronics business saw a marked improvement in earnings.

Taking the
Nisshinbo Group
into a newphase of growth

In the fiscal year ended March 2013, net sales increased

site in Nagoya, helped the Group to offset the deteriora-

18.8% year on year to ¥450.6 billion and operating incometion in earnings at TMD and absorb the increase in costs

surged 221.1% to ¥13.3 billion. However, net income fell

related to the acquisition of TMD. Goodwill related to the

31.8% to ¥6.4 billion.

TMD acquisition is being amortized over a five-year period.

The large rise in sales was mainly due to a full year ofsales from TMD Friction Group S.A., which we acquired in
November 2011.

We adopted this short period in line with our normal conservative approach to goodwill amortization.
Despite the improvement in operating income, net

Operating income roughly tripled year on year. This

income declined year on year. This reflected the booking

reflected a number of factors, including a return to profit

of extraordinary losses related to the early redemption

at New Japan Radio Co., Ltd. due to business restructuringof corporate bonds issued by a subsidiary of TMD. These

that reversed substantial losses in the previous fiscal year.

losses comprised a one-time write-off of issuance expenses

Japan Radio Co., Ltd. also returned to profit after incurring

and a premium paid to bondholders. Other factors behindlarge losses last year. This improvement came on the backthe decline in net income included an increase in corporate

My name is Masaya Kawata, appointed asof a strong performance by the solutions business, particu-

taxes and the impact of changes in minority interests inthe new President of Nisshinbo Holdings Inc.

larly in wireless disaster warning systems. These factors,

earnings at subsidiaries due to a return to profit at Japan

along with large-scale property releases in the real estate

Radio and New Japan Radio.

in June 2013. Building on the work of mybusiness as part of the redevelopment of the former plantpredecessor Shizuka Uzawa, now Chairman,
I will lead the Nisshinbo Group toward ourlong-term goals of net sales of more than¥600 billion and ROE of over 9%. I will also
focus on further enhancing the Group’s global
presence by developing our environmental
and energy businesses.

Moving from Challenge 2012 to NEXT 2015
Based on the theme of “integration for growth,”NEXT 2015 is designed to transform Nisshinbo into a truly global company.
We announced a new three-year management plan called

Over the last three years under Challenge 2012, weNEXT 2015 in April 2013. Building on the progress madeadded Japan Radio and Nagano Japan Radio Co., Ltd. towith our previous plan, Challenge 2012, we will reinforce

the Group in 2010 and acquired TMD in 2011, driving

the Group’s operating structure and develop new growthstrong growth in net sales.

drivers to achieve the plan’s long-term targets of net sales

We also made progress with improving the Group’s

in excess of ¥600 billion and return on equity (ROE) of moreearnings structure by creating overseas manufacturing

than 9% by the fiscal year ending March 2018, ultimately

frameworks for the textile and precision instruments busi-

aiming to enhance Nisshinbo’s corporate value.

ness. This has given us an initial foothold to begin ourtransformation into a global business.

89During the three years of Challenge 2012, the realestate business booked sales of ¥36 billion and operatingGroup through major acquisitions, are still not fully real-

previous fiscal year, but moved back into the black in theizing their earnings potential.

fiscal year under review amid an upturn in the operating

income of over ¥29 billion, providing the financial support

We plan to overcome these issues and transform

environment. However, as part of efforts to create an earn-

Nisshinbo into a truly global company by focusing on theings structure that is more resilient to fluctuations in the

However, we were unable to achieve the plan’s operat-

theme of “integration for growth” during NEXT 2015. We

operating environment, we have decided to end produc-

ing income target, partly due to the extremely challeng-

aim to achieve integration in two ways: by unifying domes-

tion activities at Japan Radio’s plant in Mitaka, Tokyo. Pro-ing conditions over the last three years. During the period

tic and overseas management structures in each businessduction will be transferred to plants operated by Nagano

covered by the plan, economic conditions were affected byand by strengthening cooperation across different businessJapan Radio and Ueda Japan Radio in Japan and to a newly

natural disasters such as the Great East Japan Earthquake

fields. By promoting this more integrated approach, we

expanded plant operated by a subsidiary of Nagano Japanand the flooding in Thailand, as well as by the very strong

aim to be consistently profitable and build a solid manage-

Radio in Shenzhen, China. Funds provided by the sale ofyen and the euro crisis. There were also political tensions

ment structure, while also developing and expanding our

the Mitaka Plant site will be used for structural reforms. As

between Japan and the governments of China and South

environmental and energy businesses to drive the Group’s

a result of these structural reforms, we plan to book ex-

Korea. One of the key challenges we still face is that Japanfuture growth.

traordinary losses in the fiscal year ending March 31, 2014,

We think Japan Radio has the potential to leverage its

including losses for one-time retirement benefits related towireless communications technologies in growing markets

a reduction in the workforce.

in Asia, but we also see significant scope for the company

for the Group’s growth.

Radio and TMD, which both became part of the Nisshinbo

NEXT 2015

Theme:“Integration for Growth”

Unification of domestic andoverseas management foreach business

Reforms to ensure sustained
income and sturdy
management structure

Integration transcending
business fields

Fostering and expansion ofenvironmental and energy businesses

ResultFY ended March 2013

“NEXT 2015” targets
FY ending March 2016

Net sales¥450.6 billion¥550.0 billion

Operating income¥13.3 billion¥24.0 billion

Restructuring the Electronics Business
Building an earnings structure more resilient tochanges in the operating environment.

to contribute to the creation of smart societies by com-in the Nisshinbo Group and will therefore play a key rolebining these technologies with those in Group businesses

in technology and business integration between segments.

outside the electronics business segment.

Making Nisshinbo More Global
We are hiring global business people and creating a more robust support
structure in areas such as financing and tax.
Enhancing the Group’s global presence is a key theme ofgreater support. Under NEXT 2015, we are aiming to hire

NEXT 2015. Under our previous three-year managementand develop global business people and create a more ro-plan, we substantially increased our overseas manufactur-

bust support structure in areas such as financing and tax

ing capacity in the textiles, automobile brakes, precisionin order to step up business expansion in overseas markets

instruments and electronics businesses. This has given us

where we see significant potential.

an even stronger base from which to expand our global

In our automobile brakes business, which is already theoperations. Excluding some businesses such as automo-

largest in the world due to the acquisition of TMD, we will

bile brakes, the Group is yet to begin sales of its products

work rapidly to drive a recovery in earnings at TMD. We

overseas on a full-scale basis. Nisshinbo will now work to

aim to consistently generate profits by leveraging our new

Revitalizing and expanding the electronics business is key

fore plan to implement structural reforms that bring the

expand sales of the APOLLOCOT range and other high-sales network, tapping rising demand for automobiles into the success of NEXT 2015. Three of the four main sub-companies closer together by integrating procurement andquality products worldwide, with a particular focus on

China, and pushing ahead with cost reduction. We are alsosidiaries in the electronics business—Japan Radio, Nagano

improving the efficiency of distribution systems, centeredemerging markets in Asia.

steadily increasing production capacity in China and Thai-

Japan Radio and Ueda Japan Radio Co., Ltd.—have similaron the largest company, Japan Radio.

businesses focused on wireless-related products. We there-

10

The electronics business is the largest business segment

Japan Radio reported a large operating loss in the

To drive this expansion, we will need to strengthen

land in response to global growth in automobile output.

management of Group companies and provide them with11

Shifting Our Focus to the Environment and Energy

plants by expanding the Tokushima facility and constructing
another facility at our business site in Shizuoka.

Our environmental and energy businesses will be

These environmental and energy businesses, including

the Group’s key businesses in the future.

We have set up a smart factory test facility at our Tokushima businesssite. The facility includes a power generation system based on solar

our smart factory test facility opened to the public in 2012,

panels, wind turbines and fuel cells, a power storage system incor-

As explained earlier, we are targeting further growth in our

1.75MW solar power facility at our Tokushima businesswill play a key role going forward, helping to enhance theporating electric double-layer capacitors, and a high-voltage direct

existing businesses by reinforcing earnings capabilities andsite, due for completion in August 2013.

Group’s corporate value.

current power supply system that eliminates power losses that occur
when electricity is converted between direct current and alternat-

extending our operational reach worldwide. At the same

In electric double-layer capacitors, which help to im-time, we plan to develop our environmental and energy

prove automobile fuel efficiency, our products have been

Sales of CARBODILITE

businesses into future growth drivers, underpinned by ouradopted by a major automaker for use in a hybrid racing(billions of yen)goal of transforming Nisshinbo into an environmental andcar, underlining the significant potential of our products.

3.0

energy company that contributes to society.

Also, the outlook seems bright for our carbon bipolar

In the fiscal year ended March 31, 2013, demand forbio-plastic modifier Carbodilite grew strongly, so we are

gradually moving closer to commercialization.

adding further production capacity. In the solar power

Meanwhile, we completed testing of strawberry culti-

generation business, which is faced with panel oversupply

vation using artificial light at our Tokushima business site.

problems, we have launched new panel material and in-

The test facility, which has the capacity to cultivate 10,000

stallation businesses to complement our existing operations

strawberry plants, proved that highly profitable cultivationin photovoltaic module manufacturing equipment. Theof high-quality strawberries is possible. Based on this out-

installation business is currently constructing a newcome, we have significantly boosted capacity to 170,000

inside storage tanks, resulting in highly safe, low-costhydrogen tanks.

Carbon Alloy Catalysts

5nm

Carbon alloy catalysts boast catalytic performance(open-circuit voltage and output density) that is at leastas high as platinum, supplies of which are concentrated
in only a few countries. They also potentially cost lessthan platinum catalysts.

Carbon Bipolar Plates
Carbon bipolar plates have outstanding corrosion resistance properties and have captured a dominant shareof the residential polymer electrolyte fuel cell (PEFC)
market.

A
IR

ELECTRONICCONTROL UNIT

ing current. All these elements are monitored and controlled by anenergy management system.
We have also started work on a mega solar power plant at theTokushima business site. The power plant, due for completion in
August 2013, will have 7,840 panels and a generating capacity of

2.5

1.75MW.

plates, a key component in fuel cell vehicles, which are

The Nisshinbo Group’s Initiatives to Support Fuel Cell Use
H2
H2
H2
CarbonH2
H2 Hydrogen-Storing
H2
2
H2
H2
Automotive
fuelHcells
require high-pressure hydrogen
H2
H2 tanks, which
H2 creates a number of technological and
H2
H2
H2issues. Hydrogen-storing
cost
carbon reduces pressures

2.0

1.5

WIND
POWER

HYDROGEN

STORAGEBATTERIES

0.5

0

10.3

11.3

12.3

13.3

MOTOR

EMS*

FUEL
CELLS

14.3
(Forecast)

FACTORYGRID
POWER*Energy Management System

Working Together with Our Shareholders
Success with NEXT 2015 will lead to a higher level of stable profits
I believe our long-term goals for the fiscal year endingachieve a higher level of stable profits and boost earnings.

March 31, 2018 will start to look increasingly achievable as

I hope we can count on your continued support in thewe implement the management strategies laid out in NEXT

year ahead.

2015. Meanwhile, the Group’s financial leverage is now
slightly high following the two major acquisitions of Japan
June 2013

stable from a financial perspective as well, including efforts

BATTERY
CURRENTWATER

HYDROGENCYLINDER

FUEL CELLS

SOLAR
POWER

1.0

Radio and TMD. We therefore aim to ensure operations are

12

Smart Factory Initiatives

Electric Double-Layer Capacitors
Electric double-layer capacitors are energy storage devices. They are extremely safe and can be recharged several
million times, giving them a long operational life.

to reinforce shareholders’ equity.
Our policy is to pay a stable annual dividend of ¥15
per share, while also working to increase returns for share-

Masaya Kawata

holders through future dividend hikes in line with efforts to

President13

At a Glance

automobile brakes, papers, precision instruments, chemicals,
electronics and real estate. Leveraging the manufacturing technologies and assets of our original cotton spinning business, wehave diversified into other business fields, where we supply highvalue-added products to satisfy a range of customer needs.

Segment ShareNet Sales

plies high-quality “Made by Nisshinbo” dress shirts, denim,
uniforms and other products to markets worldwide

61.0
50.8

11.3%

— Shirts:

Net Sales

Leverages advanced mechatronics technologies in a wide

(billions of yen)range of business fields, such as customized machine tools, air

25.2

24.5

— Customized machine tools, LED mounting equipment and12.3 13.3

photovoltaic generation system businesses— Precision parts processing— Plastic molding and processing

Net Sales

Manufactures a range of highly promising products in the(billions of yen)environmental and energy fields, such as Carbodilite, an ad8.3

8.2

1.8%
— Carbodilite high-performance chemical additive— Textiles:— Bipolar plates for fuel cells

Uniform fabric and casual fabric— Electric double-layer capacitors

12.3 13.3— Denim:— Rigid urethane foamJeans and denim fabric— Mobilon urethane elastomer— Others

The Nisshinbo Group is the world’s leading maker of brake fric-Net Sales(billions of yen)tion materials by market share; acquired TMD Friction Group
118.8

26.4%

S.A., Europe’s largest manufacturer of brake friction materials,
in 2011; now expanding presence as a true global supplier,with manufacturing bases in North America, South Korea,
Thailand, China, Europe, South America, and South Africa.

47.5— Carbon productsElectronics

Automobile Brakes

Segment Share

Segment ShareNet Sales

Using the consolidation of Japan Radio, a pioneer in wire-(billions of yen)less communication devices, to develop and strengthen the
175.3

169.9

Group’s energy businesses by drawing on the company’s
advanced control technologies

38.9%— Solutions business including wireless disasterwarning systems— Friction materials:

12.3 13.3— Semiconductor products

12.3 13.3

Disc pads and brake linings— Information and communications devices and equipment— Assembly products:— Power supply units and electronic components

Drum brake products
Makes high value-added products for everyday use such as

Net Sales(billions of yen)

toilet tissue and other household paper products, specialty
30.5

30.2

paper used in pamphlets and other materials and processed
paper products such as telegram paper— Household paper products:— Microwave products

Real Estate

PapersSegment Share

6.8%

Segment ShareNet Sales

Contributing to the growth and financial strength of the(billions of yen)

Nisshinbo Group by effectively utilizing idle plant sites andother real estate assets arising from business restructuring
15.4

3.4%

9.1

Toilet tissue, facial tissue (made with virgin and recycled pulp)
and kitchen-related products

12.3 13.3— Specialty paper:

Fine paper and synthetic paper— Processed paper products:

Telegram paper, high-end packaging and other products

14

ditive used in bio-plastic manufacturing, and bipolar plates
for fuel cells

Dress shirts, casual shirts and fabric12.3 13.3

conditioner fans and processed precision automotive parts

5.4%

Segment Share

Chemicals

TextilesMainstay business is products made from natural cotton; sup-(billions of yen)

Precision Instruments

The Nisshinbo Group comprises seven businesses: textiles,

Segment Share— Leasing:

12.3 13.3

ARIO Nishi Arai and other properties— Sales:

Unused sites at the former Harisaki Plant and the former
Kawagoe Plant

15

Overview of Business Segments

TextilesSegment Income Breakdown

Segment Income

Capital Investment Plan(millions of yen)(millions of yen)(billions of yen)

1,000

1.5

Domestic

11.3

12.3

13.3

(800)

847

287
750
1.0

Overseas

822

76

126

Eliminations

161

(83)

161

Total

184

840

575

500
0.5

Summary of Financial Results for
the Fiscal Year Ended March 2013
In the fiscal year ended March 2013, the textiles business reported net sales of ¥50,773 million, down 16.7% year on year,
and operating income of ¥575 million, a decline of 31.6%. In
the fiscal year under review, the business upgraded its overseas
sites to strengthen global operations and worked to develop
new products and expand sales, centered on the APOLLOCOT
brand. However, in the domestic market, demand softened
overall compared with the previous fiscal year, when demand
was firm. Overseas, there were signs of an upturn at the Group’s
Indonesian subsidiaries, despite the ongoing impact of high raw
material prices. Also, operations in Brazil, which struggled in the

Nisshinbo Textile Inc.

250

0

11.3

13.3

12.3

NEXT 2015 Business Strategies
In the textiles business, we shifted production overseas andworked to rebuild operations on a global basis under theprevious three-year management plan, Challenge 2012. These
initiatives helped the business return to the black in the fiscal
year ended March 2011, and operations have been consistently profitable since then. We also created a steady streamof new products based on our APOLLOCOT fabric, made with
Nisshinbo’s unique processing technology. Customers can
now buy handkerchiefs, business pants and business knitted
shirts, in addition to business shirts. We also continued toactively develop new types of denim, non-woven fabric and
MOBILON materials.

0

13.3(actual)14.3(plan)

15.3(plan)

16.3(plan)

Under the new three-year management plan NEXT 2015,
we are aiming to reinforce our global operating framework
in order to generate net sales of ¥60 billion and operating
income of ¥3 billion in the fiscal year ending March 2016.
Specifically, we plan to increase output at our two main
subsidiaries and our denim fabric production company inIndonesia and at our shirt fabric processing plant in China.
We will also work to expand sales overseas, mainly targeting
the U.S. and Europe.
In addition, we will focus on increasing sales of the APOLLOCOT brand. Here we plan to further enhance the functionality of business shirts and boost sales of handkerchiefs
for women. We will also expand the choice of business pantsand extend the APOLLOCOT range into jackets, white medical
wear and other areas.

previous fiscal year, saw a recovery in earnings and returned to
profit. Sales at our operations in China declined due to a slowdown in domestic sales and in export sales to Europe.

Since its founding in 1907, Nisshinbo has

At overseas production sites, our shirt fabric processing

led the Japanese textile industry with its

plant in China started full-scale production, while our sewing

state-of-the-art technologies and high qual-

subsidiary in Indonesia began producing uniforms at a newly

ity. Nisshinbo expanded its business into theconstructed plant. This followed the installation of an additional

spinning, weaving, processing and sewing

production line at the subsidiary’s shirt manufacturing plant infields and possesses some of the world’s

the previous fiscal year. Our denim fabric production subsidiarymost advanced technologies in areas rang-

in Indonesia is also expanding output.

ing from development to production. It
is currently upgrading its overseas sites inIndonesia, China, India and elsewhere andworking to expand sales of the APOLLOCOTAPOLLOCOT
100% cotton non-iron shirt

In research and development, we pushed ahead with thedevelopment of several new products outside our APOLLOCOT
range. These new products include highly stretchable nonwoven fabric and knitwear fabric, and faded denim fabric thatfeatures seven colors in the faded areas.

brand worldwide.

16

17

Overview of Business Segments

Automobile Brakes

Segment Income Breakdown

Segment Income

Capital Investment Plan

TMD

(millions of yen)(millions of yen)(billions of yen)

Nisshinbo Brake

6,000

15

11.3

12.3

13.3

NISB* —Domestic

2,751

2,615

1,732

NISB

2,279

1,788

2,158

TMD

—

—

(941)

TMD acquisition costs——(7,284)-2,000Eliminations

61

(149)

34

-4,000

5,090

4,254

(4,302)—Overseas

Total

4,000
2,000

10

0

-6,000

5

11.3

12.3

0

13.3

13.3
(actual)14.3(plan)

15.3(plan)

16.3(plan)* Nisshinbo Brake Inc.

capacity at overseas sites. In May 2012, we completed the

Our first goal under the new three-year management

construction of a new plant at Nisshinbo Saeron (Changshu)

plan, NEXT 2015, is to drive a recovery in earnings at TMD.

Automotive Co., Ltd. in China, with mass production gettingSpecifically, we will ensure profits are managed along busi-

In the fiscal year ended March 2013, the automobile brakes busi-

under way from January 2013. Also, in November 2012, weness divisions following the introduction of the business unit

ness reported net sales of ¥118,849 million, up 150.5% year on

started the construction of a second production site at Nisshin-system in January 2013, and we will rebuild TMD’s operating

year, and an operating loss of ¥4,302 million. Operating profita-

bo Somboon Automotive Co, Ltd., a subsidiary in Thailand.

system in order to establish a sustainable earnings structure.

Summary of Financial Results for
the Fiscal Year Ended March 2013

Our second goal is to strengthen our Asian business. At ourbility deteriorated by ¥8,556 million compared with the previous
fiscal year, as a result of goodwill amortization of ¥5,078 million
related to the acquisition of TMD and adjustments of ¥2,205

new plant in China, we plan to begin mass shipments forNEXT 2015 Business Strategies

each project from May 2013 onwards in order to rapidly

Under our previous three-year management plan, Challengeestablish a business base in the market. Moreover, construc-

2012, we worked to upgrade all our manufacturing sites

tion of our new plant in Thailand is on schedule, and whenfiscal year due to rebuilding demand in the aftermath of thein Japan and overseas in order to build the optimum global

completed, it will allow us to meet demand of the AsianGreat East Japan Earthquake and the government’s eco-car

supply framework in the automobile brakes business. We also

market, which continues to expand.

subsidy scheme. However, sales and profits declined over thefocused on developing products that comply with new regula-full year due to a weaker performance in the second half, re-tions on copper content in friction materials*. We created a

the fiscal year ending March 2014. We will target further

flecting the end of the subsidy scheme in September 2012 andspecialist group to research and develop new materials thatgrowth in sales by addressing our customers’ needs and by

a sharp drop in sales volume for Japanese vehicles in China.

meet the copper regulations, and global R&D meetings arebuilding the optimum global supply framework.

In the overseas market, orders were firm in Asia and North

held to share information with product development cent-Nisshinbo is a global supplier with world-

America, and in addition, consolidation of TMD resulted in

ers throughout the world. In terms of cooperation between

class development capabilities in the field of

substantial growth in sales. However, profitability deteriorated

TMD and Nisshinbo Brake Inc., we have established working* The U.S. state of California has passed a law, effective from 2021, prohibiting thesale of new friction materials or vehicles fitted with friction materials that havea copper content of more than 5%. From 2023 or 2025, the limit on copper
content will be reduced to no more than 0.5%.

friction materials, which are key components

sharply, reflecting weaker-than-expected profits at TMD amidgroups in development, marketing, procurement and otherof automobile brake systems. In November

a slump in the European automotive market, as well as theareas and began implementing joint projects from June 2012.

2011, Nisshinbo became the world’s largest

occurrence of goodwill related to the acquisition of TMD and a

There are currently 21 joint projects under way.

manufacturer of brake friction materials withnegative impact from adjustments of TMD’s accounts to bringmillion due to the alignment of accounting standards.
In the domestic market, orders grew in the first half of the

Nisshinbo Brake Inc./TMD Friction Group S.A.

the acquisition of Luxembourg-based TMD
Friction Group S.A. As the global leader inthe friction materials industry, we are work-

We expect steady sales of cars in Japan and overseas inthem in line with Japanese standards used by Nisshinbo.
Despite this backdrop, we steadily increased production
Disc pading to address global automakers’ needs for
optimum parts procurement.

18

19

Overview of Business Segments

PapersSegment Income Breakdown

Segment Income

Capital Investment Plan(millions of yen)(millions of yen)(billions of yen)

11.3

12.3

13.3

(661)

(246)

92

2

800

Household

600

Fine Papers

618

615

618

400
1
200

Eliminations

(103)

(108)

(1)

Total

(146)

260

709

Summary of Financial Results for
the Fiscal Year Ended March 2013

-200

11.3

12.3

13.3

NEXT 2015 Business Strategies
Under the previous three-year management plan Challenge

In the fiscal year ended March 2013, the paper products business

2012, we worked to strengthen sales and production systems

reported net sales of ¥30,524 million, up 1.0% year on year, andin each business to align them with customer needs. We

operating income of ¥709 million, an increase of 171.8%.

also sought to build a more distinctive position in the market

In household paper products, sales prices were weakthrough new product development, design and planning

due to the impact of deflation and a gap between supply

capabilities, and stepped up cooperation with other companies.

and demand. However, profitability improved, supported by

Also, we enhanced our partnerships with overseas companies

an increase in sales due to targeted efforts to boost sales ofthrough OEM deals and made progress with shifting to produc-

mainstay high value-added toilet tissue products and a decline

tion and sales in optimal locations worldwide.

in prices for raw materials such as pulp and waste paper.
In specialty paper, demand was soft due to the slowdown

Under our new three-year management plan NEXT 2015,
we intend to build on this progress by stepping up our shift

in the economy and the shift to digital media. Despite thisto high value-added products and by creating a global paper

backdrop, sales increased on the back of new fine paper

products business built on partnerships.

packaging products and strong sales of synthetic paper

In the fiscal year ending March 2014, we expect the

Nisshinbo

products for inkjet printing. This sales growth, along with

operating environment to remain challenging due to increases

increased sales of high-margin products and lower prices forin fuel and raw material prices caused by the weak yen, andPaper Products Inc.

pulp, supported a rise in profits.

falling demand for paper products, particularly in the com-

In processed paper products, we expanded our businessmercial printing field. Against this backdrop, we will imple-

This business supplies high value-addedwith leading packaging users amid rising demand for luxury

ment priority measures in each product segment in order topaper products tailored to market needs inpackaging products, supporting firm sales. However, sales andachieve our targets for the business.

various fields, from facial tissue and toilet

profits in processed paper products declined year on year due

tissue in the household paper products field,

to the sale of the Hasler postage meter business by Nisshinbo

framework in Japan and overseas as part of our efforts to

Postal Chemical Co., Ltd. and further contraction in demand

become a household paper product trading business with afor telegrams and other products.

manufacturing base. We will also strive to secure fair prices

to fine paper and synthetic paper productsin the commercial printing and business communication paper field and telegram paper,
luxury packaging and other products in theprocessed paper products field.

20

0
0

13.3
(actual)14.3(plan)

15.3(plan)

16.3(plan)

products such as toilet tissue for use with bidets. In addition,
we will work to create a stable earnings structure throughinitiatives such as improving profitability at consolidated
subsidiary Tokai Seishi Kogyo Co., Ltd.
In specialty paper, we are aiming to create a highly competitive and profitable operating structure rather than focusing
on business expansion. Specifically, we plan to develop new
applications for fine paper and synthetic paper products,
launch new products designed to energize the market, andreinforce cooperation with partner companies in order tostimulate demand and enhance the earnings structure.
In processed paper products, we are aiming to build aposition as a global supplier of luxury packaging products bydeveloping the business worldwide. We intend to leverageGroup synergies to expand operations in order to secure morebusiness from leading overseas packaging users. In preparation
for business expansion, we will also upgrade our product andsales sites and reinforce quality control and other systems.

In household paper products, we will reinforce our supply

for our products and work to boost sales of high-margin

Bath tissue designed
specifically for bidets withtwice the absorbency

21

Overview of Business Segments

Precision Instruments

Segment Income Breakdown

Segment Income

Capital Investment Plan(millions of yen)(millions of yen)(billions of yen)

1,500

2.5

Mechatronics

11.3
741

12.3
(1,653)

13.3
(805)

1,000

2.0

500

1.5

0

Plastic molding

672

658

584

1.0

-500

0.5

-1,000

Total

1,414

(1,070)(146)-1,500

11.3

12.3

13.3

16.3
(plan)

However, profits increased owing to a decline in materials costs

three-year management plan NEXT 2015. First, we will work to

and improvements in productivity.

drive a recovery in earnings by rebuilding the precision instru-

ules fell sharply year on year, reflecting delays and cancellations

In production activities, a new plastic molding parts plant inIndia began volume production in July 2012.

NEXT 2015 Business Strategies

worldwide slump in the solar panel market. The photovoltaic

2012, we were forced to revise our targets for the precision

module manufacturing equipment business incurred a large

instruments business due to the global slump in the solar panel

loss in the previous fiscal year, but this narrowed significantly

market. However, we focused on reinforcing our global operat-

during the year under review due to cost reductions and ongo-

ing base for photovoltaic module manufacturing equipment,

ing business restructuring. A number of factors contributed

centered on East Asian countries such as China, Taiwan andto sales growth in the business, such as higher sales of other

South Korea. We also carried out research and development

roughly 70 years as a machine tool makercustomized equipment, the launch of new electronic compo-

into solar panel materials as part of efforts to develop total

supporting various manufacturing industries,

nent mounting equipment, and the start of a new photovoltaic

solutions that integrate materials, installation and consulting.

Nisshinbo is focusing on three businesses

generation system installation business in October 2012.

photovoltaic modules, which are seen as aalthough profits declined due to an increase in depreciation

promising source of clean energy; precision

costs related to higher capital investment.

photovoltaic module manufacturing equipment business, andWe will also implement a number of reform projects aimed

During the previous three-year management plan Challenge

In precision parts processing, sales increased year on year,

ments business. We have already reduced the workforce in the

we have created an operating structure aligned to demand.

to planned capital investment at solar panel makers amid thecars; and plastic molding and processing,(plan)

outlook, we plan to implement two key policies under the newSales of manufacturing equipment for photovoltaic mod-safety and environmental performance of

15.3

transfer of production out of Japan by domestic customers.

million incurred in the previous fiscal year.

automotive parts, which help improve the(plan)

the Fiscal Year Ended March 2013a substantial improvement from the operating loss of ¥1,070

in this field: manufacturing equipment for14.3

in the market likely materializing in around 2015. Based on thisyear on year, and an operating loss of ¥146 million, which was

Utilizing know-how accumulated over(actual)year due to deteriorating market conditions in China and thebusiness reported net sales of ¥24,520 million, down 2.7%

Mechatronics Inc.

13.3

Summary of Financial Results forIn the fiscal year ended March 2013, the precision instruments

Nisshinbo

0

We think the current situation of excess solar panel inventories will continue in the near term, with a full-fledged recovery

at building a stable and sustainable operating structure. For
example, we plan to launch a new solar panel material business from the fiscal year ending March 2015.
Our second key policy under the plan is to accelerate theshift to global production and sales. In precision parts processing, our client companies are actively moving into China andwe expect demand to expand further in the Chinese market.
Similarly, we see rising demand for plastic molding parts inemerging markets, especially in Asia. We therefore plan tostrengthen the management of overseas subsidiaries andimplement initiatives to develop low-cost products and reinforce marketing.

In plastic molding and processing, demand for fan components used in household appliances and automotive applications increased in ASEAN countries, but sales were flat year on

primarily fans for air conditioners. We aredeveloping these businesses globally, centered on Asia.

22

Photovoltaic module
manufacturing equipment

23

Overview of Business Segments

Chemicals

Segment Income Breakdown

Segment Income

Capital Investment Plan(millions of yen)(millions of yen)(billions of yen)

11.3

12.3

13.3

Urethane, etc.

561

937

823

Environmental &Energy Business

(925)

(601)

(761)

Others61

36

60

Eliminations

9

1

10

(295)

374

133

Total

Summary of Financial Results for

5

400

4

200

3
0
2
-200

-400

1

11.3

12.3

13.3

In response to this growth in demand, we have increased(actual)14.3(plan)

15.3(plan)

16.3(plan)

We forecast continued growth in demand for Carbodilite,
driven by its use as a bioplastic modifier and as a water-based

facility in June 2013. This has tripled our capacity for water-cross-linking agent, an application that saw growth in the

In the fiscal year ended March 2013, the chemicals businessbased cross-linking agents.

fiscal year ended March 2013. Also, amid a growing need forreported net sales of ¥8,150 million, down 1.3% year on year,* Added to water-based paint and ink with active hydrogen compounds in orderto improve durability, chemical resistance and adhesiveness; Carbodilite has beencertified as safe, allowing users to comply with VOC standards.

more durable solar panel materials, we plan to aggressively

and operating income of ¥133 million, a decline of 64.5%.

products, the chemicals business reported a second consecutive
year of profits at the operating income level.

market Carbodilite as a materials modifier.
Demand for our fuel cell bipolar plates remains strong

Despite heavy investment in environment- and energy-related

NEXT 2015 Business Strategies

in the domestic residential market, but we are also seeing
a gradual upward trend in demand for stationary fuel cell

Under the previous medium-term management plan Challenge

applications overseas. We are also continuing to push ahead

demand for energy efficiency applications, but sales of high-2012, the chemical business used its expertise in the chemicalwith the development of bipolar plates for automotive ap-

margin products were sluggish. Demand for carbon products was

field to actively develop environmental-related businesses andplications, targeting full-scale launch in the fiscal year ending

affected by the weak semiconductor market, while elastomer

new products that accurately targeted customer needs. These

March 2018.

products were hit by the economic downturn in Europe andefforts helped the chemical business to sharply expand sales of

In electric double-layer capacitors, many automakers are

falling prices for apparel applications in Japan. As a result, sales

products such as Carbodilite. Also, the Company’s fuel cell bi-

stepping up their initiatives in engine start-stop systems andand profits in chemical products declined year on year.

polar plates saw strong sales for use in the Ene-Farm residential

energy regeneration systems. Some cars on the market today

fuel cell system in Japan. Our bipolar plates held onto the lead-are already fitted with electric double-layer capacitors. In

In chemical products, thermal insulation products saw firm

In environment- and energy-related products, sales of fuelThis segment is pushing ahead with thecell bipolar plates for the Ene-Farm residential fuel cell system

ing position in the domestic residential fuel cell market while

the fiscal year ending March 2014, we will install production

development of environmental-related prod-in Japan were strong, supported by rising energy efficiency

also achieving sales growth. In electric double-layer capacitors,

capacity for these components ahead of projected widespreaducts on a global basis, drawing on a broadneeds since the nuclear power plant accident. However, sales

which have potential for automotive applications, we actively

adoption in the market. This will give us the framework tobase of expertise and intellectual property

of fuel cell bipolar plates declined overall due to sluggish

marketed our products to automakers and consolidated ourprovide car makers with test products made on productionin the chemical field. Our environment- anddemand for overseas automotive and stationary fuel cellbusiness sites to create a stronger research & development andlines that we plan to use for full-scale production, allowing us

energy-related products include bipolar

applications. Sales of electric double-layer capacitors declined

production framework.

to step up marketing activities.

plates for fuel cells, electric double-layer

due to a strategic focus on automotive applications, leading toUnder our new medium-term management plan NEXT

lower sales of capacitors for industrial machinery applications.

2015, we will build on this progress by further strengthening

In functional chemicals, sales of Carbodilite grew year on year.

products positioned to support the Group in the future, such

This reflected growth in new orders after the material was

as Carbodilite, fuel cell bipolar plates and electric double-

certified as safe for use as a water-based cross-linking agent*.

layer capacitors.

capacitors and Carbodilite, which is a highperformance plastic material that increases
the durability of bio-plastics. We are investing management resources in these promising growth areas as a matter of priority.

24

13.3

Carbodilite production capacity with the completion of a new

the Fiscal Year Ended March 2013

Nisshinbo Chemical Inc.

0

High-performance chemical product
CARBODILITE

25

Overview of Business Segments

Electronics

Segment Income Breakdown

Segment Income

Capital Investment Plan(millions of yen)(millions of yen)(billions of yen)

8,000

12

Japan Radio*

11.3

12.3

13.3

4,829

(2,791)

3,919

6,000

New Japan Radio

761(4,101)

1,470

Nagano Japan Radio*

538

918

864

Ueda Japan Radio

340

556

330

Eliminations

(285)

1,307

1,205

Total

6,184

(4,111)

7,788

4,000

8

2,000
0
4

-2,000-4,000-6,000

11.3

12.3

13.3

0

13.3
(actual)14.3(plan)

15.3(plan)

16.3(plan)* Segment income for 11.3 is for the fourth quarter only.

Summary of Financial Results for
the Fiscal Year Ended March 2013
In the fiscal year ended March 2013, the electronics businessa fundamental improvement in profitability through initiatives

At Japan Radio, we will continue to focus on securing orders

such as the relocation of the Mitaka Plant and cutbacks inin the disaster prevention business field and in the water andpersonnel. Japan Radio booked extraordinary gains in Marchriver management business field, amid an expected increase in2013 related to the sale of the Saitama Plant site.

spending on public sector projects spurred by the government’s

reported net sales of ¥175,308 million, up 3.2% year on year,

emergency economic stimulus measures and growth strategies.

and operating income of ¥7,788 million, a substantial improve-

We also aim to expand our share of the marine electronic equip-

ment from the operating loss of ¥4,111 million incurred inNEXT 2015 Business Strategies

the previous fiscal year. A recovery in performance at Japan

During the previous three-year management plan Challengeboats and offshore vessels, a market segment that is likely toRadio Co., Ltd. was one reason behind the rise in sales. In

2012, Japan Radio and Nagano Japan Radio Co., Ltd. became

see rising demand due to economic growth in Southeast Asianthe previous fiscal year, sales related to public sector demandconsolidated subsidiaries. Together with existing subsidiaries

countries and progress with resources development. In addition,

declined due to the Great East Japan Earthquake and other

New Japan Radio and Ueda Japan Radio Co., Ltd., this made thewe will work to expand sales of automotive equipment, anotherfactors. In the fiscal year under review, although sales ofelectronics business the Group’s largest business segment. The

market that offers growth potential due to the development ofmarine equipment contracted year on year, sales of communi-

electronics business is currently being restructured.

intelligent transport systems (ITS).

cations infrastructure-related equipment rose due to increased

Under the new three-year management plan NEXT 2015,

ment market for small and medium class vessels, such as work

Meanwhile, New Japan Radio faces a steep decline ininvestment by mobile phone operators to improve coverage

we have developed a shared growth strategy for Japan Radio,demand for consumer electronics due to the slowdown in thein underground shopping arcades, tunnels and other areas

Nagano Japan Radio and Ueda Japan Radio, which all haveglobal economy. In response, the company aims to improve costwith poor reception. Disaster prevention-related demand also

close business links. This strategy targets a more global ap-

competitiveness through business restructuring while expanding

expanded, supporting higher sales of disaster management

proach to production and sales. As part of this strategy, we

new businesses. Based on the SAW filter business transferred

wireless communication systems to local governments andplan to close Japan Radio’s Mitaka Plant and transfer produc-from Japan Radio, New Japan Radio will launch a new foundry

This segment is Nisshinbo’s largest andbackbone multi-channel communication systems for centraltion to manufacturing sites operated by Nagano Japan Radiobusiness that leverages its existing skills in semiconductor

is centered on leading communications

and local governments. As a result, public sector sales grewand Ueda Japan Radio, including overseas locations. Also,

production technology, and also use this technology to createstrongly year on year.

in March 2013, we built a new plant operated by Nagano

a high-frequency module business. Looking further ahead,

Japan Radio Co., Ltd.

equipment company Japan Radio Co., Ltd.

There were significant contributions to earnings from Japan

Japan Radio’s manufacturing subsidiary in Shenzhen, China.

New Japan Radio plans to boost profitability by focusing on theRadio, which returned to the black due to an increase in sales,

Meanwhile, we will also reduce the workforce at Japan Radio.

promising growth fields of automotive and industrial equipment.

and from New Japan Radio Co., Ltd., which also returned toJapan Radio Co., Ltd. and Ueda Japan RadioIn May 2013, we announced an early retirement program, withprofit on the back of business restructuring measures imple-

Co., Ltd., which operate businesses in the

495 employees applying to take up the offer. As a result, wemented in the previous fiscal year. Japan Radio announced

electronic equipment, communications andintend to book approximately ¥4.6 billion in related costs underrestructuring measures in September 2012 aimed at delivering

extraordinary losses in the fiscal year ending March 2014.

Other major subsidiaries in the segment
include New Japan Radio Co., Ltd., Nagano

semiconductor fields.

26

27

Overview of Business Segments

Real Estate

Summary of Financial Results for

The Nisshinbo Group’s Management Framework

the Fiscal Year Ended March 2013
In the fiscal year ended March 2013, the real estate business
reported net sales of ¥15,367 million, up 69.2% year on year,
and operating income of ¥12,290 million, an increase of 82.3%.
Revenues from sales of building lots rose significantly due to largescale property releases as part of the redevelopment of the former
Nagoya Plant site.
In the building lot sales business, we began releasing lots for
detached houses at the former Kawagoe Plant site. Sales of lots at
the former Hamamatsu Plant site also gained momentum, con-Our Vision for the Nisshinbo GroupThe Nisshinbo Group’s business activities are guided by its Corporate Philosophy: Public Entity, Consistent
Integrity and Innovation. Based on this philosophy, Nisshinbo has created a Corporate Code of Conduct andalso formulates medium-term management plans to drive sustained growth. The Group contributes to society
through the implementation of these plans.

Corporate Philosophy of the Nisshinbo Group
Public Entity

Believing that our companies are public entities, we shall aim to realize a sustainable society by proposing solutions to global environmental problems.

Consistent Integrity

Respecting the diverse cultures and customs of the world, as well as
biodiversity, we shall conduct fair and sincere business activities withpride as a corporate citizen.

Innovation

Maintaining our spirit of response to change and unceasing challenge,
we shall create an affluent future together with our stakeholders.

tributing to earnings throughout the year. Sales of lots were alsosteady at the former Harisaki Plant site, a project that has been
under way for some time, with sales rising year on year.

Nisshinbo Holdings Inc.

Conditions in the rental property market remained challenging,with the office vacancy rate at a persistently high level. However,Nisshinbo’s real estate business is active in thein our property leasing business, revenues were firm in land leasing

redevelopment of business property that has

and in facility leasing such as offices and commercial properties.

Corporate Code of Conduct

become idle as a result of business changes
by Group companies. It is also involved in theleasing of office and commercial facilities andthe sale of residential building lots. The income is used as capital to launch new business-

NEXT 2015 Business Strategies

Human Rights Charter

Under the previous three-year management plan Challenge 2012,

Product Safety Charterour management policy was to rationalize the Group’s asset port-

revenues generated from the sale of building lots during the period

Many Group properties and facilities locatedof the plan totaled ¥17.9 billon, much higher than we projected.

throughout Japan have high asset values andOur focus will now be on bringing the business up to a steadyhave been used for a wide range of purposes,

speed, centered on sales of residential lots for detached houses.
Under the new three-year management plan NEXT 2015, thereal estate business will continue to fulfill its role as a source offunds to help Nisshinbo attain its management targets by effectively utilizing the real estate assets of the whole Group.

Segment Income(millions of yen)

Redevelopment projects in

15,000the fiscal year ending March 2014
10,000— Former Harisaki Plant site (all 227 lots)— Former Hamamatsu Plant site (all 56 lots)

5,000— Former Kawagoe Plant site (all 257 lots)— Former dormitory site at Osaka Branch (all 13 lots)

0

28

11.3

12.3

13.3

— Former Notogawa Plant site (all 41 lots)“An environmental and energy company”
The Nisshinbo Group aims to contribute to the sustained
development of smart societies worldwide
Targets for the fiscal year ending March 2018
Net sales of more than ¥600 billion, ROE of over 9%
Medium-Term Management Plan
(fiscal year ending March 2014 to fiscal year ending March 2016)

folio by disposing idle real estate assets. As a result of this policy,

es and develop the Group’s global operations.

including shopping centers and offices.

Environment Charter

Medium- to Long-Term Management PlanThree-year management plan NEXT 2015

Corporate Governance
Based on our belief that corporations are public entities, the Nisshinbo Group adheres to its fundamental
stance of always acting with integrity and in good faith toward its stakeholders. Reflecting this in our corporate
governance activities, we work to ensure the transparency of management, reinforce accountability and act
ethically in all matters.
The Group’s Business Oversight and Execution Frameworkings to discuss important matters related to business execution

The Company’s Board of Directors is responsible for making

throughout the Group.

decisions on key management matters and for overseeing businessexecution by the directors. We have also adopted a managing of-

The Group’s Audit Framework

ficer system in order to strengthen and separate decision-making

Nisshinbo has established a Audit & Supervisory Board. The audit

and oversight functions and business execution functions.

framework comprises the audit & supervisory board members, who

The Executive Officers Conference, which is made up of direc-

conduct audits, the independent auditor, who carries out account-tors, managing officers and other senior personnel, holds meet-ing audits, and the Internal Audit Department, which is responsible

29

Maintaining Internal Control Systems

Corporate Governance Structure
General Shareholders Meeting
Board of Directors
Financial Auditors

11 Directors(including three outside directors)

Audit & Supervisory Board
Four Audit & Supervisory Board Members

Nisshinbo endeavors to create a healthy and highly transparent

1) Internal Control System Reporting Related to
Financial Reporting

corporate culture in accordance with the Corporate Philosophy

The Financial Instruments and Exchange Law, which includes provi-of the Nisshinbo Group. An internal control system has beensions on internal corporate control known as J-SOX, came into force

established to identify and then remedy any issues in business

in April 2008. Since then, we have implemented control measures

execution processes.

to maintain and upgrade our internal control system related to(including two outside audit & supervisory board members)

financial reporting. During the fiscal year ended March 2013, an assessment led by the Audit Office confirmed that the internal control

Internal Audit Department

Representative Directors

system related to financial reporting is operating effectively.
Executive Officers
ConferenceManaging Officers, Business Divisions, Group Companies
Representative Directors

Directors

Managing Officers

Representative directors are selected by resolutions of the Board of Directors. As of June27, 2013, the chairman, president and senior
executive vice president were the Company’s
three representative directors.

As of June 27, 2013, the Company had 11 directors, including three outside directors.
The Board of Directors is responsible formaking decisions on important management
matters and for monitoring the execution ofduties by directors. Directors are appointed for
one-year terms in order to clarify management
responsibility each fiscal year.

Nisshinbo has adopted a managing officer system to speed up decision-making for businessexecution and clarify operational responsibilities. As of June 27, 2013, the Company had 13
managing officers, including seven directors
with dual roles as managing officers. Managing officers are also appointed for one-year
terms.

Global Management System
Nisshinbo subsidiaries in ASEAN and China
Management companies
Overseas sites

pendent from executive business functions to act as the Internal

to improve corporate governance.

Audit Division. The Internal Audit Department conducts ongoing

Nisshinbo also conducts oversight of specific areas such as
workplace safety, environmental issues and IT systems.

global operations. The second management company, Nisshinbo
Nisshinbo
Business Management(Shanghai) Co., Ltd.

legal and rational standpoint. In the fiscal year ended March 2013,

The Company’s Audit & Supervisory Board comprises four audit

the Internal Audit Department stepped up the oversight of Group& supervisory board members, two of whom are outside audit &subsidiaries overseas, which now play an increasingly important

supervisory board members. In accordance with audit policy androle in the Group’s operations.

plans determined by the Audit & Supervisory Board, the audit &Business Management (Shanghai) Co., Ltd., provides internal control and operational support to 22 subsidiaries in China.
Going forward, Nisshinbo will utilize these two subsidiaries as

to protect corporate assets and increase management efficiency

1) Audit & Supervisory Board

Ltd., is responsible for providing financial and internal control

Thailand and Indonesia. It will also train personnel for the Group’s

audits of operations across the entire Nisshinbo Group and works

by providing advice and proposals for remedial measures from a30

Singaporeregion. The first management company, Nisshinbo Singapore Pte.

support to eight subsidiaries located in ASEAN countries such as

Hong Kong:
4 subsidiaries

Thailandfor conducting internal audits. These groups work closely together

In the fiscal year ended March 2012, we established two management companies in Asia to support business expansion in the

Shanghai:
9 subsidiaries

China

Centralized Management of Operations in Asia

Indonesia

Nisshinbo
Singapore Pte. Ltd.

business hubs in their respective regions to reinforce corporate
governance from a global perspective and optimize the Group’s
operating structure.

Risk Management
In order to fulfill its corporate social responsibility by contributing to society through ongoing businesssupervisory board members monitor business management andTimely Information Disclosure

execution at the Company and its subsidiaries by attending impor-

Nisshinbo is working to ensure it is accountable to all stakehold-tant management meetings such as meetings of the Board of Di-

ers in order to create a highly transparent business. In addition

rectors and Executive Officers Conference in order to understandto fulfilling timely disclosure standards determined by the Tokyo

Crisis Management System

to any risk that impacts on the Group, while systems have been

operating conditions.

Stock Exchange, we hold briefings for shareholders and investors

In order to mitigate and minimize risk and any potential losses,

put in place to minimize any losses. In the fiscal year ended Marchon a regular basis and provide other timely information via our

the Company has formulated Crisis Management Regulations

2013, the Group carried out emergency response drills to test

2) Internal Audit Division

corporate website as part of ongoing efforts to improve the provi-

covering the whole Group. It also conducts annual training exer-

its rapid response system, which was overhauled in the previous

Nisshinbo has established an Internal Audit Department inde-sion of information to stakeholders and retain their trust.

cises and inspections. Action plans have been created to respondfiscal year.

activities, the Nisshinbo Group has established systems to ensure stable operations by mitigating a range of risks
that could have a serious impact on the smooth operation of the business.

31

Corporate Ethics Reporting System
1) Disaster Prevention System

steps are taken to prevent information leaks and realize ongoingFirefighting teams at each Group business site conduct regularimprovements.

drills to improve disaster prevention capabilities. These drills in-Reportcrease readiness for early-stage fires, life-saving situations andInitiatives to Ensure Information Security

potential emergencies such as gas or chemical leaks, and are

The Nisshinbo Group is constantly reinforcing information se-

developed based on the type and location of each facility. Major

curity measures to prevent leaks of personal information aboutbusiness sites conduct annual comprehensive disaster drills, whichcustomers and other sensitive information. Nisshinbo widely uses

are reviewed by senior management, to ensure disaster preven-anti-virus software and programs to remedy security issues in its IT

tion management activities remain at a high state of readiness. In

systems in order to prevent computer viruses from causing leaks

the fiscal year ended March 2013, managing officers inspected 14

of sensitive data. Steps are also being taken to tighten access to IT

business sites.

systems to prevent and limit leaks of information caused by inter-

President

Division subject to investigation
ReportInstruct

Investigate

Corporate Ethics Committee
External Contact Point

Internal Contact Point(Corporate Ethics Committee)

Response(Disclosed whistleblower)

nal unethical actions.
Initiatives to Protect Personal Information

Nisshinbo Group

Nisshinbo Holdings Inc.

Board of Directors

Coordinate(Corporate Attorney)

Promote Groupwide
understanding

Group companies

Report, consult(Disclosed / undisclosed whistleblower)

Stakeholders

We have also formulated information security guidelines, which

The Nisshinbo Group recognizes that one of its key corporate

are used as a checklist by Group companies in Japan and overseas

responsibilities is to ensure important information related to cus-

to conduct their own inspections of information security systems.

tomers, suppliers, employees and other individuals is protected

In addition to the above measures to protect IT systems, we are

Corporate Ethics Reporting System

Compliance Education

appropriately. In order to fulfill this responsibility, we handle

making continuous improvements to the protection of personal

The Nisshinbo Group has established a Corporate Ethics Reporting

In order to promote wider understanding of corporate ethics,

personal information in accordance with an internal privacy

information and management of trade secrets through annual

System to rapidly identify and prevent any reoccurrence of po-

the Nisshinbo Group conducts compliance training for different

policy. In addition, internal audits are conducted based on Com-

internal audits.

tential or actual legal violations. Group employees and external

employee levels and work sites. Compliance is also part of theparties can submit reports to the system, which can be used tocurriculum for new employee orientation courses.

pany regulations to ensure systems are working properly, andCompliance
Guided by its philosophy of “consistent integrity,” the Nisshinbo Group believes it is important to act with
fairness and integrity and to contribute to society through its business activities. We have therefore formulated
the Nisshinbo Group’s Corporate Code of Conduct. In order to realize the objectives of this Corporate Codeof Conduct, the Nisshinbo Group has also created Compliance Guidelines that clearly define the behavior
Nisshinbo employees are expected to follow, as part of wider efforts to enforce compliance.
Corporate Ethics Committee(1) implementing corporate ethics systems and regulations, (2)Nisshinbo has established a Corporate Ethics Committee that

deciding the content and methods of corporate ethics training foranswers directly to the president. The committee is led by a direc-

employees, and (3) formulating and implementing investigations,

tor with a dual role as a managing officer, who is responsible forresponses, procedures and remedial measures related to consulta-

handling all compliance matters across the Nisshinbo Group.

tions and reports received through the Company’s Corporate Eth-

Specifically, the Corporate Ethics Committee is responsible for

ics Reporting System.

communicate directly with the Corporate Ethics Committee or an

The Employee Handbook, which is used as a tool in training pro-outside corporate attorney. Every effort is made to protect thosegrams, includes information about corporate ethics, such as thewho have used the system from unfair treatment.

Nisshinbo Group’s Corporate Code of Conduct and Compliance

If the Corporate Ethics Committee receives a report via the system, it convenes a meeting, launches an investigation and takes

Guidelines, in order to educate and enlighten employees about
the importance of compliance.

appropriate action where necessary. If the outside corporate at-

The Employee Handbook is available in both Japanese andtorney receives a report, appropriate action is taken based on close

English, and it plays an effective role in compliance training atcooperation with the Corporate Ethics Committee.

overseas subsidiaries. The handbook is being translated into otherIn the case of reports received from individuals who have provided their name and contact details, the Corporate Ethics Com-

languages for use at overseas subsidiaries where English is not the
local language.

mittee provides information about how the matter is being dealt
with, such as updates on the investigation and a summary of its
conclusions. The Corporate Ethics Committee also works to prevent any future violations of law or corporate ethics by providing
information to all companies in the Group about its response to
the issue based on the results of the investigation.
Employee Handbook

32

33

Board of Directors (As of June 27, 2013)

Director,*1
Chairman

Director,*1
President

Director,*1
Senior Executive Vice President

Director,
Senior Executive Vice President

Shizuka Uzawa

Masaya Kawata

Yoshihito Onda

Masaaki Isobe

Director,
Executive Managing Officer

Director,
Managing Officer

Director,
Managing Officer

Director,
Managing Officer

Masahiro Murakami

Nobuyuki Hagiwara

Koji Nishihara

Toshihiro Kijima

Financial Section*1 Representative director*2 Outside director
Director*2

Director*2

Director*2

Tomofumi Akiyama

Noboru Matsuda

Yoshinori Shimizu

Audit & Supervisory Board Members

Managing Officers(As of June 27, 2013)(As of June 27, 2013)

Yoshio Ide
Masao Satsuka

Outside Audit &Supervisory Board Members

Yo Kawakami
Toshihiko Tomita

President

Managing Officers

Masaya Kawata*Nobuyuki Hagiwara*

Senior Executive Vice Presidents

Yoshihito Onda*
Masaaki Isobe*

P36
P41
P42
P44
P45
P46
P47
P48
P57

Management’s Discussion and Analysis
Six-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ Report

Koji Nishihara*
Toshihiro Kijima*
Kazunori Baba
Masahiro Kawamura

Executive Managing Officer

Masahiro Murakami*

Hiroshi Nakano
Akihiro Yoshino
Masakazu Aitsuki
Kazuhiro Iwata* Concurrent board member

34

35

Management’s Discussion and Analysis
HIGHLIGHTSAs the “next” stage following the period of “challenge”

year under review. In order to further strengthen the operating• Net sales rose sharply year on year due to a full year of sales from TMD Friction Group S.A., acquired in the previous fiscal year.

under the previous management plan, NEXT 2015 positions

structure in the electronics business, we will roll out a strategy

the coming three years as a period to build a global growth

to generate new growth and implement radical structural re-• Operating income increased on the back of an improvement in profitability in the electronics business and largescale property releases in the real estate business.

strategy based on environmental and energy businesses andforms centered on Japan Radio Co., Ltd., which is focused on

to enhance corporate value in order to realize the Group’s

wireless communications technology, as well as Nagano Japan

long-term performance goals. Guided by three basic policies—

Radio Co., Ltd. and Ueda Japan Radio Co., Ltd., which all havestrengthening the Group’s business structure by improving

close business links.

• The Group formulated NEXT 2015, its new three-year management plan from the fiscal year ending March 2014.

OPERATING RESULTS
Overview

profitability and enhancing global competitiveness; fostering

In the automobile brakes business, we plan to reinforce

growth drivers; and reinforcing management—we will focus

the earnings structure by implementing cost reforms at TMD.

on: regenerating and expanding the electronics business,

We forecast earnings will improve in the fiscal year ending

strengthening the automobile brakes business, stepping up

March 2014. Although one-time factors that boosted profits

During the fiscal year ended March 2013, the U.S. economy

wireless communications business, part of the electronics busi-

growth in environmental businesses, and generating synergies

in the fiscal year under review are set to drop out, such ascontinued to see a moderate recovery supported by consumer

ness segment. These reforms are part of a package of measures

between businesses.

(billions of yen)
500
operating income of ¥5,476 million in the real estatebusiness

3

spending, but the European economy remained in recession

aimed at strengthening the Nisshinbo Group’s business base.

related to large-scale property releases (sales of lots at the400

2former Nagoya Plant site), we expect the automobile brakes

2business (upturn in earnings at TMD) and the precision instru-

1

For the fiscal year ending March 2014, the key theme willbe “integration for growth” (global, environmental, energy).

due to factors such as the sovereign debt crisis and persistently

Guided by this theme, we will implement a growth strategy

the back of a pickup in consumer spending and exports, despite

Results of Operations in the Current Term andComparison with the Previous Terma slowdown in economic growth in China and India. In Japan,

Net sales totaled ¥450,693 million, up 18.8% year on year.

the Group in a bold new direction by rapidly developing new

the economy remained lackluster. However, there were signs of

The large increase in sales mainly reflected the consolidation ofbusinesses in the environmental and energy fields. Our prior-an upturn, including early indications of a recovery in consumer

TMD Friction Group S.A. (TMD). Operating income also grew

ity measures will be to regenerate and expand the electronics

spending. The correction to the strong yen and strengthening

500
strongly, rising 221.1% year on year to ¥13,394 million due

consumer confidence fueled expectations of a gradual recovery

to a recovery in profitability in the electronics business and
400

250

In the electronics business, we plan to build on the suc-large-scale property releases in the real estate business. In the

200

cess of business restructuring at New Japan Radio in the fiscal

high unemployment. In Asia, the economy recovered overall onin the domestic economy, but the risk of a downturn remained
amid concerns about the impact of the sovereign debt crisis in
Europe and fiscal austerity measures in the U.S.

that targets the expanding Asian economy. We will also steer(billions of yen)

300

electronics business, restructuring measures helped New Japan

Radio Co., Ltd. return to profit.
200

Against this backdrop, the Nisshinbo Group worked to makeits operations more global in parallel with business expansion,develop and strengthen new businesses in the environmental andenergy fields, and rebuild existing businesses. In order to drive a

100

However, net income declined 31.8% year on year to ¥6,418

million, reflecting extraordinary losses such as a one-time writeoff0 of issuance
expensesa premiumbondholders
08.3
09.3 and
10.3
11.3 paid
12.3 to 13.3

300

(billions of yen)business and to achieve a recovery in earnings at TMD.

Net Sales (millions of yen)

100
50
0

related to the early redemption of corporate bonds issued by

08.3

Textiles

50,773 down 16.7%

Automobile Brakes

118,849 up 150.5%

09.3Papers
10.3

11.3

12.3

13.3

Precision Instruments

30,524 up 1.0%
24,520 down 2.7%

a subsidiary of TMD. Other factors behind the decline in net

Chemicals

reforms in the precision instruments business segment and in theincome included an increase in corporate taxes.

Electronics

175,308 up 3.2%

Net Sales

Operating Income

Real Estate

15,367 up 69.2%(billions of yen)

400

20
15

300
10

200

5

100
0

08.3

09.3

10.3

11.3

12.3

13.3

0

300
250

25

27,202 down 3.8%

150

Operating Income (Loss) (millions of yen)

20

(billions of yen)

575 down 31.6%(4,302) a deterioration of ¥8,556 million

15

709 up 171.8%

10(146) an improvement of ¥923 million

57,788 an improvement of ¥11,900 million

133 down 64.5%

012,290 up 82.3%
08.3

down 59.7%
263 10.3
09.3
11.3

100

DIVIDEND

10

Paying shareholders a stable dividend is one of Nisshinbo’s top

Cash Dividends

priorities. Based on this thinking, the Company’s basic policy is

20

50

5

0

0

12.3

13.3

08.3

08.3 10.3
09.3 11.3
10.3 12.3
11.3 13.3
12.3
09.3

13.3

(yen)

to pay a stable and consistent dividend while taking into ac08.3

count the need to strengthen the entire Group over the long

09.3

10.3

11.3

12.3

15

13.3

term and to ensure sufficient internal reserves to fund businessIn line with this policy, Nisshinbo aims to pay an annual

105dividend of ¥15.00 per share while working to distribute profits

NEXT 2015, a new three-year management plan covering theto shareholders by flexibly increasing dividends in response to(yen)(billions of yen)periodfrom
25 the fiscal year ending March 2014 to the fiscal year
20of yen)Nisshinbo intends to regrowth in earnings. Also, in(billions
principle,

to be achieved in the fiscal year ending March 2018. As a key

ending March 2016.

15
milestoneon the road to those goals, the Group has formulated

15

10

10

0

US$ and ¥125/€.

15(billionsgoalsof yen)billion
20 and ROE of over 9% as long-term performance0

are based on average exchange rates for the fiscal year of ¥95/

(billions of yen)

The Nisshinbo Group is targeting net sales of more than ¥600

50relatedto businessJapan Radio.
08.3 restructuring
09.3 10.3 at11.3
12.3 Our
13.3estimates

20

200

CURRENT BUSINESS STRATEGIES AND FUTURE PROSPECTS

5

ings growth. However, we also foresee extraordinary losses

Note: Changes in net sales and operating income (loss) are year-on-year figures; please refer to pages 16 to 28 for details on performance in individual segments.

development.

36

1module manufacturing equipment business) to support earn-

100

8,150 down 1.3%

Other Businesses(billions of yen)(billions of yen)200
ments business (benefits of restructuring in the photovoltaic

150

further recovery in profitability, the Group launched structural

500

300

20

20

15

15

10

10

5

5

0

0

-5

0

08.3

09.3

10.3

11.3

12.3

13.3

tire treasury stock rather than hold it for long periods.

600
500

(billions of yen)

37

PRODUCTION RESULTS
500

300

(billions of yen)

FINANCIAL POSITION
400(billions of yen)

Production results in each segment for the fiscal year under review were as follows:

250

Industry Segment

Total assets at the end of the fiscal year under review stood atcurrency200
translation adjustments, and ¥5,194 million in minor-¥551,933 million, an increase of ¥17,349 million from the end

ity interests.
150 As a result of the above, the shareholders’ equity

200of the previous fiscal year. This increase mainly reflected the con-ratio increased
3.2 percentage points year on year to 37.9%.
100

300

solidation of companies such as Nisshinbo Saeron (Changshu)
100

In the fiscal year ended March 2013, the Company carried
50

95,497123.1

26,679-1.0

Precision Instruments

23,575

1.3

Chemicals

6,445

-1.1

183,915

2.5

investment securities.
Other 10.3
changes11.3
in assets
included
08.3 09.3
12.3
13.3 increases

a subsidiary of TMD.08.3
In addition,
to reduce
09.3 steps
10.3 were
11.3taken
12.3
13.3

Electronicsof ¥4,840 million in receivables and ¥15,307 million in invest-

interest-bearing debt and interest payments by using funds

Other Businesses

ment securities, and a decline of ¥2,339 million in goodwill.

more efficiently on a global basis through the use of regional

Total

million, a decline of ¥11,523 million from the end of the pre-0

subsidiaries established in Singapore and China in the previous

500

fiscal year.

400

Going forward, the Group is likely to require substantial

vious fiscal year. This mainly reflected an increase of ¥14,491
20
millionin the current portion of long-term debt, a decline of(billions of yen)funds for25
shareholder returns such as dividend payments, for

300¥34,853 million in long-term debt, and an increase of ¥7,437

restructuring
20 existing businesses to change their strategic direc-

200

million in deferred tax liabilities (long-term liabilities).

tion, and for new business development in the environmental

10 Net assets at the end of the fiscal year totaled ¥242,623

and energy fields. In addition to using operating cash flow tomillion, an increase of ¥28,872 million from the end of the10requirements, the Group will reduce inventories andfund theseprevious
fiscal year. This primarily reflected increases of ¥3,742
5other current assets to further cut back interest-bearing debt

million in retained earnings, ¥9,903 million in net unrealized

and use funds more efficiently.

(billions of yen)

15

100

15

0

0

08.3

09.3

10.3

11.3

12.3

(billions of yen)

13.3

300

152

—

373,471

15.7(billions of yen)

Notes: 1. Amounts are calculated based on manufacturing costs.
2. The real estate business does not engage in manufacturing, and therefore 250
the above table does not include any amounts from this segment.
3. The above amounts do not include consumption taxes.
4. Production in the automobile brakes business increased sharply year on year
due to the consolidation of TMD Friction Group S.A. and its 34 consolidated
200
subsidiaries.

150
100

CAPITAL EXPENDITURES

50

The 08.3
Nisshinbo
Group channels capital expenditures into prior09.3 10.3 11.3 12.3 13.3

0 and Nisshinbo Saeron (Changshu) Automotive Co., Ltd. In
Ltd.
08.3 09.3 10.3 11.3 12.3 13.3

and into upgrading manufacturing equipment to raise productwas mainly spent on semiconductor manufacturing and R&D

quality. It also invests in environmental measures such as thefacilities at consolidated subsidiary New Japan Radio.

ity product fields that offer the potential for long-term growth

5

0 on available-for-sale securities, ¥9,933 million in foreign
gain
08.3 09.3 10.3 11.3 12.3 13.3

-15.0

Automobile Brakes

out the early redemption of some corporate bonds issued by

Total liabilities at the end of the fiscal year were ¥309,310

Year-on-Year Change (%)

37,207

PapersAutomotive Co., Ltd. and an increase in the market value of0

Amount (millions of yen)

Textilesthe electronics business, ¥2,168 million in capital expenditures

reduction of greenhouse gases and in manufacturing facili20

CASH FLOWSCash Flows from Financing Activities(yen)
20 provided by operating activities totaled ¥34,095 million,
Cash(billions of yen)
Cash used20in financing activities totaled ¥24,073 million, mainly

mainly reflecting income before income taxes and minority in-reflecting 15
cash provided of ¥4,301 million from the issuance of

15

terests of ¥16,886 million and depreciation and amortization of¥18,969 million.

long-term debt and cash used of ¥28,884 million for the repay-

10
5

10

25

0

5

Cash
5 Flows from Investing Activities

As a result of the above, cash and cash equivalents at the end

Cash used in investing activities totaled ¥10,973 million, pri-of the fiscal year totaled ¥18,403 million, an increase of ¥1,499

0 reflecting cash used of ¥19,489 million for the purchasemarily-5 the end of the previous fiscal year.
million from

10.3

11.3

12.3

13.3

assets, totaled ¥20,123 million. In the automobile brakes busi-

15

tion material manufacturing capacity at consolidated subsidiary

10

TMD Friction GmbH and other companies, and ¥3,310 million
consolidated subsidiaries Nisshinbo Somboon Automotive Co.,
08.3

09.3

10.3

11.3

12.3

13.3

08.3

09.3

10.3

11.3

12.3

400

500

300
250

400

200

300

150

200

100

100

100

50

0

0

0

300
200

08.3

15

Net Assets(billions of yen)(billions of yen)

09.3
08.3 10.3
09.3 11.3
10.3 12.3
11.3 13.3
12.3

13.3

08.3

09.3

10.3

11.3

12.3

13.3

Forward-looking statements in this report are based on informa-and the Company implements impairment accounting based ontion available to the Nisshinbo Group as of March 31, 2013.

even stricter internal standards for a portion of these securities.

20

600

0

RISK INFORMATION

13.3

million from the sale of property, plant and equipment.

500

5

0

of property, plant and equipment and cash provided of ¥6,859

Total Assets(billions of yen)20

ness, the Group invested ¥3,917 million to increase brake fric-to upgrade brake friction material manufacturing facilities atment of long-term debt.

10

09.3

Capital Expendituresyen)driven by market expansion. In the fiscal (billions
year ofended
March2013, capital expenditures, including spending on intangible
15

Cash Flows from Operating Activities

08.3

ties in China and Southeast Asia in response to rising demand

80(billions of yen)

(yen)

10

60
5
40
0

20
0
-10

(yen)

(billions
yen)
Based
on current accounting standards and standards
forofasset
20

Risks Associated with New Businesses

impairment, there is a limited possibility that impairment losses

The Nisshinbo Group is actively developing new businesses such

will have an impact on net income, as the acquisition cost ofas electric double-layer capacitors and carbon catalysts in order

10 investment securities was low. However, comprehensive
theto expand sales and profits. However, uncertainties are inher-

incomemay fluctuate significantly owing to changes in market
5

ent in new businesses and the development of appealing newvalue. Also, the Company plans to limit increases in interest-

products and the formation of new markets may not proceedbearing liabilities by selling investment securities to procure

as anticipated. This could delay or prevent the recovery of priorcapitalneeded for mergers and acquisitions, overseas business-5

investments.

development, and capital investment, but misalignment of the

08.3

09.3

10.3

11.3

12.3

13.3

15

0

08.3

09.3

10.3

11.3

12.3

13.3

timing between sale and investment may give rise to unfore08.3

09.3
08.3 10.3
09.3 11.3
10.3 12.3
11.3 13.3
12.3

Risk of Fluctuation in the Value ofInvestment Securities

13.3

seen circumstances.

Investment securities held by Nisshinbo are marked to market
600
500
20
38

15

(billions of yen)

25
20

(billions of yen)in accordance with accounting standards for(billions
financialof yen)products,

80

(yen)

60

400
300
200

40
39

20

Risks Associated with the Utilization of Idle Land

Six-Year Summary

To reform its business structures, Nisshinbo is taking active steps

Risks Associated with Changes inCustomer Business Performance

to close certain business sites and subsequently use the idle land.

The customers of the Nisshinbo Group’s automobile brakes busi-

Income from these redevelopment projects is providing a signifi-

ness are automobile manufacturers that conduct business glo-

cant contribution to the Company’s profits. The redevelopment

bally. The cancellation of contracts or requests to sharply reduceof this land may result in cleanup expenses and revisions to laws

prices owing to changes in the business results of such client

could impede redevelopment work.

Risks Associated with Product Quality

For the years ended March 31

2008
500

2013

2012

(billions of yen)

450,693242,409

325,555

379,340

companies are factors outside the control of Nisshinbo, and con-

Operating Income

12,034408

3,570

19,843

4,170

13,394

sequently may have an impact on the Group’s financial results.

300

Net Income (Loss)

12,290(1,286)150

1,896

11,185

9,416

6,418

200

Net Assets

245,909

193,698100

193,639

211,557

213,751

242,623

Total Assets

424,706

366,858 50

358,110479,852

534,584

551,93353.0

49.0 051.1

Return on Assets (%)

2.7

(0.3)

0.5

2.7

1.9

1.2

Return on Equity (%)

5.1

(0.6)

1.0

6.1

5.1

3.2

Payout Ratio (%)*

—

—

167.7

27.5

36.1

31.5

24,28016,872

13,027

12,80015,705The Japan Radio Group has a relatively high ratio of busiconcentrated toward the end of the fiscal year. In addition,

100

trends in central and local government spending plans and capi-0

cur in the future. The Company has product liability insurance,

tal expenditure in the telecommunications sector may affect thebut the occurrence of a large liability could have an adverse

Group’s financial results.

impact on the Group’s financial results.

Risks Associated with Overseas
Business Development
500

Risks inherent to this international presence include unforeseen

affected by fluctuations in market prices owing to market de-

400changes in laws and regulations,unfavorable political or eco-velopments and competition with other companies. Sales prices

nomic factors and social
turmoil.
300

Shareholders’ Equity Ratio (%)
08.3

09.3

10.3

11.3

12.3

13.3

Capital Expenditures

The Nisshinbo Group owns many production bases overseas.

Some of the Nisshinbo Group’s products can be significantly(billions of yen)

20
15
10

200

300

250
200

(billions of yen)(billions of yen)

Depreciation and Amortization

16,890250

18,025

5The Nisshinbo Group has secured funding from multiple fi-

its consolidated subsidiaries) generates more than 80% of its

09.3 consolidated
10.3 11.3
nancial institutions. The Company08.3
and some

consolidated sales from semiconductor devices. Significant fluc-

subsidiaries have entered into commitment line contracts, while

tuations in demand in the semiconductor market may therefore

consolidated subsidiary New Japan Radio has entered into ahave a large impact on the Nisshinbo Group’s financial results.

term loan contract and consolidated subsidiary TMD Friction

0

12.3

0

13.3

Finance S.A. has issued corporate bonds. These companies are

Risk Associated with Fluctuations in
Exchange Rates

bound by certain financial covenants.

The Nisshinbo Group imports raw materials such as cotton and

Risks Associated with
15 Supply Chain

pulp. An inability to reflect changes in exchange rates in prod-

The Group may face difficulties in securing necessary com-

uct prices may put pressure on profits.

10 in the economic environment. For
ponents owing to changes(billions of yen)

20
15
10

example, rapid developments in specific parts supply regionsin foreign currencies. While the Group takes steps to mitigate
the risk of exchange rate fluctuations, not all this risk can benies and lead to delivery delays. This in turn could impact the

avoided. Fluctuations in exchange rates may therefore affect08.3 09.3 in margins
10.3 11.3
Group’s shipment plans or lead to deteriorationow-

the Nisshinbo Group’s financial results, with phases of yen ap-

ing to sharp increases in the price of components.

0

38.0

09.3

10.3

34.7

11.3

12.3

13.3

37.9

20,123(billions of yen)

18,96912,96013,15814,550200
Common Shares Issued

198,698,939

150

184,098,939 15184,098,939

178,798,939

178,798,939

178,798,939

63.32

53.83

36.74

10

100

Net Income (Loss)
50

63.34

(7.08) 5

10.38

Shareholders’Equity0

1,179.43

985.19 0

1,034.04

Cash Dividends

15.00

15.00

15.00

15.00

15.00

15.00

Number of Employees

13,253

12,726

12,48818,292

22,30422,08308.3

08.3 10.3
09.3 11.3
10.3 12.3
11.3 13.3
12.3
09.3

13.3

08.3

1,036.80

09.3

10.3

1,063.19

11.3

12.3

1,198.67

13.3*Payout Ratio is on a non-consolidated basis.

20

5and product fields may affectsupply capacity at parts compa-

25

08.3

20

Per Share (in yen):

Risks Associated with Financial Covenants
100
Related to Capital Procurement

The New Japan Radio Group (New Japan Radio Co., Ltd. andSome of the Group’s business transactions are denominated2011

286,167

there is no guarantee that quality-related problems will not oc-

particularly susceptible to these market trends.

2010

300

322,412in accordance with international quality control standards, but

the Group such as cotton, pulp, steel and other materials are

2009

Net Sales

ness with central and local governments, so sales tend to be

for textile and paper products and raw materials procured by(billions of yen)

400

The majority of the Nisshinbo Group manufactures products

Risks Associated with Market Shifts Relating to
Product Sale Prices and Raw Material Procurement(millions of yen)

5
12.3

0

13.3

25

Net
20 Sales
500
15
400
10
300
5
200
0
08.3 10.3
09.3 11.3
10.3 12.3
11.3 13.3
12.3
100 08.3 09.3
0

preciation putting pressure on profits.

(yen)(billions of yen)

08.3

09.3

10.3

11.3

12.3

20
15

(billions of yen)

10

13.3

(billions of yen)

300

(billions of yen)

250

5

200

0

150

-5

100
50

08.3

0

13.3

09.3
08.3

10.3
09.3

11.3
10.3

12.3
11.3

13.3
12.3

13.3

Risks Associated with Disasters and Accidents
Risk Associated with Unforeseen
Revisions to Laws and Regulations

The Nisshinbo Group takes steps to manage risk related to

Products supplied by the Japan Radio Group (Japan Radio Co.,

major disaster or a sudden accident such as a fire may cause sig-

Ltd. and its consolidated subsidiaries) are subject to a range of

Net Income (Loss) per Share

600

20

(billions of yen)(billions of yen)nificant damage to the Group’s manufacturing facilities, leading500

laws and regulations governing areas such as national security.

to the suspension of production activities that causes shipment

400(billions of yen)

These laws include export restrictions, import regulations anddelays. The Group may also
10 incur considerable costs to restore

15
20
10

300

environmental and recycling laws. The Japan Radio Group hasdamaged buildings or facilities.

200

established clear internal regulations regarding compliance withthese laws. However, unforeseen revisions to laws and regulations may limit the Group’s business activities and lead to anincrease in costs.

40

Net Income (Loss)disasters and accidents. However, a large earthquake or other
20

(yen)

15

5
In addition, the outbreakand spread of a new infectious

100

disease may have an impact on the Group’s operations.
0

08.3

09.3

10.3

11.3

12.3

13.3

0

10
0

0

60
40

15
5

-5
5 08.38008.3 10.3
09.3 11.3
10.3 12.3
11.3 13.3
12.3
09.3
08.3

09.3

10.3

11.3

12.3

13.3
13.3

(yen)

25

(billions of yen)

20

20

15

0
-10

10
5 08.3
0

09.3
08.3

10.3
09.3

11.3
10.3

12.3
11.3

13.3
12.3

13.3
41

Consolidated Balance Sheets(March 31, 2013 and 2012)ASSETS

2013(millions of yen)(thousands of
US dollars) (Note 1)

2012

2013

Current assets:
Cash and cash equivalents
Time deposits (Note 5)
Marketable securities (Note 4)(millions of yen)(thousands of
US dollars) (Note 1)

2013

2012

2013

Short-term bank loans (Note 5)¥28,736¥26,929$302,484

LIABILITIES AND NET ASSETS
Current liabilities:¥18,403¥16,904$193,716

1,798

3,995

18,926

Commercial paper

30,00027,000315,790

162

163

1,705

Current portion of long-term debt (Note 5)

35,116

20,625

369,642

Notes and accounts payable, trade (Note 5)

58,54358,970616,242

Unconsolidated subsidiaries and affiliates

217

562

2,284

PayablesReceivables
Notes receivable, trade

10,05913,226

105,884

Accounts receivable, trade (Note 5)

118,806

111,122

1,250,589

1,317

224

13,863

Unconsolidated subsidiaries and affiliates
Other

4,073

4,895

42,874

134,255

129,467

1,413,210

(804)

(856)

(8,463)

133,451

128,611

1,404,747

Inventories (Notes 3 and 5)

79,706

81,603

839,011

Deferred tax assets (Note 7)

2,832

5,297

29,810Less allowance for doubtful accounts

9,071

9,757

95,48567,831

69,289714,011

Accrued expenses

12,838

11,867135,137

Accrued income taxes

3,066

2,170

32,274

Other

41

628

431

10,777

10,431

113,442

188,405

168,939

1,983,211

Long-term debt (Note 5)

27,346

62,199287,853

Accrued severance benefits (Note 6)

41,00843,342431,663

Deferred tax liabilities (Note 7)

34,40926,972362,200

Other long-term liabilities (Note 5)

18,142

19,381

190,968

120,905

151,894

1,272,684

27,58827,588290,400

Deferred tax liabilities (Note 7)
Other current liabilities
Total current liabilities

Other current assets (Note 5)

2,967

3,028

31,232

Total current assets

239,319

239,601

2,519,147

Property, plant and equipment (Note 5):Land51,792

54,973545,179

Buildings and structures

166,154

165,866

1,748,990

Machinery, equipment and tools

282,553

271,415

2,974,242

2,389

3,417

25,147502,888495,671

5,293,558(337,336)(332,846)(3,550,905)

165,552

162,825

1,742,653

Construction in progress
Less accumulated depreciation

Long-term liabilities:

Commitments and contingencies (Note 11)
Net assets (Note 12):
Shareholders’ equity:
Common stock:
Authorized—371,755,000 shares
Issued2013 and 2012—178,798,939 shares

Capital surplus

20,401

20,401

214,747

Retained earnings

143,955

140,213

1,515,316(3,534)—(37,200)

Less shares in treasury
2013—4,126,301 shares
2012—4,107,359 shares
Total shareholders’ equity—(3,522)—

188,410

184,680

1,983,263

25,247

15,344

265,758

Accumulated other comprehensive income:Investments and other assets:

Net unrealized gain on available-for-sale securities

Investment securities (Notes 4 and 5)

72,01356,706758,032

Deferred gain (loss) on derivatives under hedge accounting

Investments in and advances to unconsolidated subsidiaries and affiliates

18,845

17,177

198,368

Foreign currency translation adjustments

Deferred tax assets (Note 7)

5,883

5,395

61,926

Goodwill

23,002

25,341

242,126

Stock acquisition rights

Other27,31927,539287,569

Minority interests

147,062

132,158

1,548,021¥551,933¥534,584$5,809,821

Total accumulated other comprehensive income

Total net assets

65

(11)

684

(4,347)(14,280)(45,758)

20,965

1,053

220,684

282

246

2,968

32,966

27,772

347,011242,623

213,751

2,553,926¥551,933¥534,584$5,809,821

See Notes to Consolidated Financial Statements.

42

43

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income(Years ended March 31, 2013 and 2012)(Years ended March 31, 2013 and 2012)(millions of yen)

Net sales(thousands of
US dollars) (Note 1)

2013

2012

2013

¥450,693¥379,340$4,744,137(millions of yen)

Income before minority interests(thousands of
US dollars) (Note 1)

2013

2012

2013

¥10,595¥6,351$111,526

10,042

1,522

105,705

76

65

800

10,411(4,623)

109,590

Other comprehensive income:Costs and expenses:

Net unrealized gain on available-for-sale securities

Cost of sales

359,463317,534

3,783,821

Selling, general and administrative expenses

77,836

57,636819,327

437,299375,170

4,603,148

Operating income

Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Equity in earnings (loss) of affiliates

508

(115)

5,347

21,037(3,151)

221,442¥31,632¥3,200$332,968

13,394

4,170

140,989

Interest and dividend income

1,621

1,888

17,063

Parent¥26,330¥6,888$277,158

Interest expenses(2,241)(1,099)(23,589)

Minority interests¥5,302¥(3,688)$55,810Equity in earnings of affiliates

3,075

3,502

32,368Other, net (Note 10)

1,037(5,430)10,916

3,492(1,139)36,75816,886

3,031

177,747

Current

3,750

2,718

39,474

Deferred

2,541(6,038)26,747

6,291(3,320)66,221

10,595

6,351

111,526

Comprehensive income:

Other income (expenses):

Income before income taxes and minority interests

Comprehensive income

See Notes to Consolidated Financial Statements.

Income taxes (Note 7):

Income before minority interests
Minority interests (loss) in net income

4,177(3,065)43,968Net income¥6,418¥9,416$67,558(yen)(US dollars)

Net income¥36.74¥53.83$0.39

Cash dividends

15.00

15.00

0.16

Per share:

See Notes to Consolidated Financial Statements.

44

45

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Cash Flows(Years ended March 31, 2013 and 2012)(Years ended March 31, 2013 and 2012)2013
Common stock:
Balance at beginning of year
(2013 and 2012—178,798,939 shares)
Balance at end of year
(2013 and 2012—178,798,939 shares)(millions of yen)(thousands of
US dollars) (Note 1)

2012

2013

¥27,588¥27,588$290,400¥27,588¥27,588$290,400

Capital surplus:
Balance at beginning of year
Balance at end of year

¥20,401¥20,401¥20,401¥20,401$214,747$214,747

Retained earnings:
Balance at beginning of year
Net income
Cash dividends
Adjustment due to increase in consolidated subsidiaries
Adjustment due to increase in affiliates accounted for by the equity method
Sale of treasury stock
Other
Balance at end of year

¥140,213
6,418(2,620)
(54)
—
(1)
(1)
¥143,955¥133,230
9,416(2,630)
(27)
141
0
83
¥140,213$1,475,927
67,558(27,579)
(568)
—
(11)
(11)
$1,515,316

Treasury stock at cost:
Balance at beginning of year
Add: acquired
Deduct: sold
Balance at end of year¥(3,522)(13)
1¥(3,534)¥(2,591)(931)
0¥(3,522)$(37,074)(137)
11$(37,200)

Net unrealized gain on available-for-sale securities:
Balance at beginning of year
Net changes
Balance at end of year

¥15,344
9,903¥25,247¥13,430
1,914¥15,344$161,516
104,242$265,758

¥(11)
76
¥65

¥(76)
65
¥(11)

$(116)
800$684¥(14,280)
9,933¥(4,347)¥(9,601)(4,679)¥(14,280)$(150,316)
104,558$(45,758)

Stock acquisition rights:
Balance at beginning of year
Net changes
Balance at end of year

¥246
36
¥282

¥203
43
¥246

$2,589379$2,968

Minority interests:
Balance at beginning of year
Net changes
Balance at end of year

¥27,772
5,194¥32,966¥28,973(1,201)¥27,772$292,337
54,674$347,011

Deferred gain (loss) on derivatives under hedge accounting:
Balance at beginning of year
Net changes
Balance at end of year
Foreign currency translation adjustments:
Balance at beginning of year
Net changes
Balance at end of year

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile net income to net cash provided by operating activities:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Equity in earnings of affiliates
Provision for doubtful receivables
Provision for accrued pension and severance benefits
Payment of accrued pension and severance benefits
Gain on sale of property, plant and equipment
Impairment of long-lived assets
Gain on sale of investment securities and investments in and advances
to unconsolidated subsidiaries and affiliates
Loss on write-down of investment securities and investments in andadvances to unconsolidated subsidiaries and affiliates
Other
Changes in operating assets and liabilities:
Receivables
Inventories
PayablesOther, net
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment
Proceeds from sale of investment securities and investments in and advances
to unconsolidated subsidiaries and affiliates
Payment for purchase of property, plant and equipment
Payment for purchase of investment securities and investments in andadvances to unconsolidated subsidiaries and affiliates(Increase) decrease in time deposits
Cash paid for newly consolidated subsidiaries, net of payment for purchaseof companies
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of long-term debt
Repayment of long-term debt
Increase in short-term bank loans
Increase in commercial paper
Cash dividends paid
Payment for purchase of treasury stock
Proceeds from treasury stock sold of consolidated subsidiaries
Decrease in other long-term liabilities
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents of newly consolidated subsidiaries
at beginning of year
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

(millions of yen)(thousands of
US dollars) (Note 1)

2013

2012

2013

¥16,886¥3,031$177,747(2,410)18,9694,899(3,075)161
6,325(9,121)(2,191)384(1,552)
14,55041(3,502)
87
6,986(7,274)
(348)
1,045

(25,368)
199,674
51,568(32,368)
1,695
66,579(96,011)(23,063)
4,042

(255)

(670)

(2,684)

328
602

534
1,444

3,453
6,337

(1,146)
4,033(1,543)
1,249
34,095

(919)
(138)
1,052
(1,393)
12,974(12,063)
42,452(16,242)
13,147
358,895

6,859

2,791

72,200314(19,489)

3,224(14,580)

3,305(205,147)

(246)
2,742

(1,436)(2,720)(2,590)28,863—(1,153)(10,973)(43,361)(1,779)(57,861)—(12,137)(115,506)

4,301(28,884)
1,380
3,000
(2,620)(13)
0(1,089)(148)(24,073)

49,492(31,734)998
2,000(2,630)(12)
167(1,103)(343)
16,83545,274(304,042)
14,526
31,579(27,579)(137)
0(11,463)(1,558)(253,400)

1,662
711

(1,223)(29,275)

17,495
7,484

788
16,904¥18,403616
45,563¥16,904

8,295
177,937$193,716

See Notes to Consolidated Financial Statements.

See Notes to Consolidated Financial Statements.

46

47

Notes to Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forth in
the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles and practices generally accepted in Japan, which are
different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
In addition, the accompanying footnotes include information which is not required under generally accepted accounting

principles and practices in Japan but is presented herein as additional information.
The United States dollar ($) amounts included herein are
given solely for convenience and are stated, as a matter of arithmetical computation only, at the rate of ¥95=$1, the approximate exchange rate at March 31, 2013. The translations
should not be construed as representations that the Japanese
yen amounts have been, could have been, or could in the future be, converted into United States dollars.

2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accounts ofNisshinbo Holdings, Inc. (hereinafter the “Company”) and its
significant subsidiaries (together, the “Group”).
Under the control or influence concept, those companies inwhich the Parent, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant
influence are accounted for by the equity method.
Investments in unconsolidated subsidiaries and affiliatedcompanies are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries
and affiliated companies are stated at cost. If the equity
method of accounting had been applied to the investments inthese companies, the effect on the accompanying consolidated
financial statements would not be material.
All significant intercompany balances and transactions havebeen eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Groupis eliminated.

(b) Foreign currency transactions
All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into
Japanese yen at the exchange rates at the balance sheet date.
The foreign exchange gains and losses from translation are recognized in the income statement to the extent that they are nothedged by forward exchange contracts.
Investments in and advances to unconsolidated subsidiaries
and affiliates in foreign currencies are translated at the historical rates effective at the dates of transaction from which suchaccounts were originated.

(c) Foreign currency financial statements
The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange

48

rate. Revenue and expense accounts of consolidated foreignsubsidiaries are translated into yen at the average exchangerate.

(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits
placed with banks on demand and highly liquid investmentswith insignificant risk of changes in value which have maturities
of six months or less when purchased.

(e) Inventories
Inventories are measured principally at the lower of cost and
net realizable value, cost being substantially determined by theactual cost method or the average cost method.

(f) Marketable securities and otherinvestments
The Group classifies all of its marketable securities as availablefor-sale which are reported at fair value, with unrealized gains
and losses included in net assets as net unrealized gain on
available-for-sale securities. Other investments without quoted
market prices are stated at cost. Realized gains or losses on thesale of securities are based on the average cost of a particular
security held at the time of sale.
Marketable securities and other investment securities are
regularly reviewed for other-than-temporary declines in carrying amount based on criteria that include the length of time
and the extent to which the market value has been less thancost, the financial condition and near-term prospects of the issuer and the Company’s intent and ability to retain marketablesecurities and investment securities for a period of time sufficient to allow for any anticipated recovery in market value.
When such a decline exists, the Company recognizes an
impairment loss to the extent of such decline.

(g) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciationis computed principally on the straight-line method over theirestimated useful lives. Contributions in aid of purchases ofproperty, plant and equipment from national and local governments are deducted from the acquisition costs of related assets
in accordance with tax regulations.

transactions, but does not cover cash-settled, share-based payment transactions. In addition, the standard allows unlistedcompanies to measure options at their intrinsic value if theycannot reliably estimate fair value.

(l) Research and development costs
Research and development costs are charged to income as
incurred.

(h) Goodwill
The difference between the cost and underlying fair value ofthe net assets of investments in subsidiaries at acquisition is
included in goodwill or other long-term liabilities and amortized on a straight-line basis over five years.
Effective April 1, 2010, the Company changed its accounting method for excess of fair value of acquired net assets overcost to be recognized as other income.

(i) Impairment of long-lived assets
Long-lived assets are evaluated for impairment using an estimate of undiscounted cash flows whenever events or changes
in circumstances indicate that the carrying amount of such
assets may not be recoverable. If the estimate of undiscounted
cash flow is less than the carrying amount of the asset, an impairment loss is recorded based on the fair value of the asset.
Fair value is determined primarily by using the anticipated cash
flows discounted at a rate commensurate with the risk involved.
For assets held for sale, an impairment loss is further increased
by costs to sell. Long-lived assets to be disposed of other thanby sale are considered held and used until disposed of.

(j) Retirement and pension plans
The Group has defined benefit plans and defined contributionplans that cover substantially all employees. Under the defined
benefit plans for the Group, the annual provision for retirement
benefits is calculated to state the liability for retirement benefits based on the projected benefit obligations and plan assets
at the balance sheet date.
Retirement benefits to directors and corporate auditors areprovided at the amount that would be required if all directors
and corporate auditors retired at the balance sheet date.

(k) Stock options
The accounting standard for stock options requires companies
to recognize compensation expense for employee stock options based on the fair value at the date of grant and over thevesting period as consideration for receiving goods or services.
The standard also requires companies to account for stock options granted to non-employees based on the fair value of either the stock option or the goods or services received. On thebalance sheet, the stock option is presented as a stock acquisition right as a separate component of net assets until exercised.
The standard covers equity-settled, share-based payment(m) Income taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statements of income.
The asset and liability approach is used to recognize deferred
tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax laws to
the temporary differences.

(n) Derivative financial instruments
The Group uses a variety of derivative financial instruments,
including foreign currency forward contracts, currency swaps,
coupon swaps, currency options and interest rate swaps, as ameans of hedging exposure to foreign currency and interest
rate risks. The Group does not enter into derivatives for tradingor speculative purposes.
The foreign currency forward contracts, coupon swaps andcurrency options are utilized to hedge foreign currency exposures in sales of finished products to overseas customers andprocurement of raw materials from overseas suppliers. Trade
receivables and payables denominated in foreign currencies aretranslated at the contracted rates if the contracts qualify forhedge accounting.
Interest rate swaps are utilized to hedge the interest rate
exposures of long-term debt.

(o) Asset retirement obligations
The asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from theacquisition, construction, development and the normal operation of such tangible fixed assets under the Japanese accounting standard.
The asset retirement obligation is recognized as the sumof the discounted cash flows required for the future asset
retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made.
The asset retirement cost is allocated to expense throughdepreciation over the remaining useful life of the assets.

49

3. Inventories

Annual maturities of long-term debt were as follows:

Inventories at March 31, 2013 and 2012 were as follows:(millions of yen)(thousands of US dollars)Year ending March 31,(millions of yen)(thousands of US dollars)

2014¥35,116$369,642

2013

2012

2013

2015

19,041

200,432

Finished products¥27,606¥30,323$290,590

2016

5,490

57,789Work in process

34,34433,739361,516

2017

1,015

10,684

Materials and supplies

17,756

17,541

186,9052018 and thereafter¥79,706¥81,603$839,011

4. Marketable and Investment Securities(millions of yen)

2013

2012

2013

¥15,360¥14,044$161,684

Property, plant and equipment

26,524

20,838279,200

Accounts receivable, trade

13,982

12,695

147,179

409

338

4,305

1,612

1,479

16,969

482

664

5,074

¥58,369¥50,058$614,411(thousands of US dollars)

2013

2012

2013

Cost

¥29,421¥29,008$309,695

Unrealized gains

41,621

27,597438,116

Investment securities

Unrealized losses(1,483)(2,712)(15,611)

Time deposits¥69,559¥53,893$732,200

Other current assets

Aggregate cost of non-marketable securities accounted for under the cost method totaled ¥2,616 million ($27,537 thousand) and¥2,976 million at March 31, 2013 and 2012, respectively.

At March 31, 2013 and 2012, in addition, pledged assets as collateral for liabilities other than the above were as follows:

5. Short-Term Bank Loans and Long-Term Debt
The annual interest rates applicable to the short-term bank loans at March 31, 2013 and 2012 were 0.5% to 8.2%. Long-term debt
at March 31, 2013 and 2012 consisted of the following:

2013(millions of yen)(thousands of US dollars)

2012

2013

Long-term debt with collateral:
Loans from banks maturing serially to 2025, ranging from 0.7% to 3.8%

¥12,851¥14,958$135,274

10.8% bonds due in 2014

11,134

16,113

117,200

Investment securities
Time deposits

Long-term debt without collateral:

Less current portion50(millions of yen)(thousands of US dollars)

2013

2012

2013

¥7,378¥7,605$77,663

488

450

5,137

Assets pledged:
Property, plant and equipment

Capital lease obligations, due through 2018

(thousands of US dollars)

Inventories(millions of yen)

Loans from banks maturing serially to 2018, ranging from 0.6% to 6.0%

18,948$657,495

At March 31, 2013 and 2012, net book value of assets pledged as collateral for short-term bank loans and long-term debt wereas follows:

The carrying amounts and aggregate fair values of available-for-sale securities included in marketable and investment securities at
March 31, 2013 and 2012 were as follows:

Fair value

1,800¥62,462

37,30650,862392,695

1,171

891

12,326

Other long-term liabilities

62,462

82,824657,495

Notes and accounts payable, trade(35,116)(20,625)(369,642)¥27,346¥62,199$287,853

1—

11¥7,867¥8,055$82,811(millions of yen)(thousands of US dollars)

2013

2012

2013

¥8,031¥8,596$84,537

Liabilities with collateral:
314

311

3,305

¥8,345¥8,907$87,84251

6. Retirement and Pension Plans
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined basedon the rate of pay at termination, years of service and certain
other factors.
The Group provides defined benefit plans and defined contribution plans. In addition, the Company and certain subsidiaries have established employee retirement benefit trusts.

7. Income Taxes
The liability for retirement benefits for directors and corporate auditors at March 31, 2013 and 2012 were ¥153 million($1,610 thousand) and ¥333 million, respectively. The retirement benefits for directors and corporate auditors are paid
subject to the approval of the shareholders.

2013
Fair value of plan assets
Unrecognized prior service cost
Unrecognized actuarial loss
Prepaid pension cost

(millions of yen)(thousands of US dollars)

2013

2012

2013

Loss on devaluation of inventories¥1,951¥2,589$20,537

Tax loss carryforwards

23,62025,429248,632

Deferred tax assets:

The liability for employees’ retirement benefits at March 31, 2013 and 2012 consisted of the following:

Projected benefit obligation

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at
March 31, 2013 and 2012 were as follows:

806

1,084

8,484

Accrued employees’ bonuses

2,184

2,145

22,989Accrued severance benefits

10,663

11,056112,242

Impairment of long-lived assets and depreciation in excess of tax limitation

1,088

1,045

11,453

Allowance for doubtful accounts(millions of yen)(thousands of US dollars)

2012

2013

¥107,866¥98,258$1,135,432(58,219)(51,746)(612,832)

Devaluation of investment securities

1,024

877

10,779

2,080

2,343

21,89549,64746,512522,600

Software costs

1,211

1,520

12,748Other(13,034)(7,847)(137,200)

37,82440,185398,148

3,031

2,824

31,905¥40,855¥43,009$430,053

4,536

4,210

47,747(34,925)(35,323)(367,632)¥13,027¥15,455$137,126¥(14,659)¥(9,107)$(154,305)(5,497)(4,114)(57,863)

Land revaluation surplus(9,461)(10,815)(99,590)

Intangible assets recognized in business combination(5,117)(5,339)(53,863)

Less valuation allowance

Deferred tax liabilities:
Unrealized gain on available-for-sale securities

The components of net periodic retirement benefit costs for the years ended March 31, 2013 and 2012 were as follows:

2013

Deferred gains on sale of property(millions of yen)(thousands of US dollars)

2012

2013

Defined benefits plans:¥4,546¥3,992

Interest cost

2,105

1,782

22,158

Expected return on plan assets(1,221)(574)(12,853)

Service cost

Other

$47,853

Amortization of prior service cost

(308)

(258)

(3,242)

Recognized actuarial loss

1,139

1,094

11,989Net periodic benefit costs

6,261

6,036

65,905

636

628

6,695

¥6,897¥6,664$72,600

Net deferred tax

Total

Retirement benefits paid due to restructuring of business operations for the years ended March 31, 2013 and 2012 were ¥1,093
million ($11,505 thousand) and ¥4,583 million, respectively.

Assumptions used for the years ended March 31, 2013 and 2012 were set forth as follows:

Normal effective statutory tax rate

52

2012

Discount rate

1.0%–2.0%

1.3%–2.0%

Expected rate of return on plan assets

1.5%–4.2%

0.0%–6.0%

Amortization period of prior service cost

10–15 years

10–15 years

Recognition period of actuarial gain / loss

12–14 years

10–15 years(42,400)$(408,021)¥(25,735)¥(16,908)$(270,895)

2013

2012

38.0%

40.7%

Net changes in valuation allowance(10.2)(189.8)Equity in earnings of affiliates

(6.8)

(0.5)

Cash dividends and other permanent differences

0.2(18.4)

Lower income tax rates applicable to income in certain foreign countries(0.3)(11.6)

Amortization of goodwill

12.0

2.8

Effects of revised tax rate

—

54.5

Other

2013

(2,988)¥(32,363)

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2013 and 2012 and the actual effective
tax rates reflected in the accompanying consolidated statements of income was as follows:

Defined contribution plan:
Defined contribution pension cost

(4,028)¥(38,762)

Actual effective tax rate

4.4

12.8

37.3%

(109.5)%

As a result of changes in the corporate tax rate, the deferred tax assets using enacted tax rates in effect for the years in which
differences are expected to reverse at 38.0% for the three years ending March 31, 2013 to 2015 and 35.6% for the years ending
March 31, 2016 and thereafter.

53

8. Leases

10. Other Income (Expenses) — Other, Net

The Group leases certain machinery, computer equipment andother assets.
Total rental expenses for the years ended March 31, 2013
and 2012 were ¥639 million ($6,726 thousand) and ¥423 million, respectively, including ¥63 million ($663 thousand) and¥277 million of lease payments under finance leases.

Pro forma information of leased property such as acquisition cost, accumulated depreciation, accumulated impairment
loss, obligation under finance leases, and depreciation expenseof finance leases that do not transfer ownership of the leased
property to the lessee on an “as if capitalized” basis for theyears ended March 31, 2013 and 2012 was as follows:(millions of yen)(thousands of US dollars)

2013

2012

2013

Acquisition cost

¥631

¥1,069$6,642

Accumulated depreciation

(585)

(918)

(6,157)

(1)

(13)

(11)

¥45

¥138

$474

Accumulated impairment loss
Net leased property

Other income (expenses) — Other, net consisted of the following:(millions of yen)(thousands of US dollars)

2013

2012

2013

¥2,191¥348$23,063

Impairment of long-lived assets(384)(1,045)(4,042)Gain on sale of securities

255

670

2,684

Gain on sale of property, plant and equipment

Write-down of investment securities
Retirement benefits paid due to restructuring of business operations

(328)

(534)

(3,453)(1,093)(4,583)(11,505)

Amortization of goodwill

357

400

3,758

Other, net

39

(686)

411

¥1,037¥(5,430)$10,916(millions of yen)(thousands of US dollars)

2013

2012

2013

11. Commitments and Contingencies

¥35

¥88

$369

Commitments for capital expenditures outstanding at March 31, 2013 and 2012 were in the approximate amounts of ¥2,258 million($23,768 thousand) and ¥2,495 million, respectively.

Obligations under finance leases:
Due within one year

10

50

105

¥45

¥138

$474

(millions of yen)(thousands of US dollars)

2012

2013

Due after one year
Total

2013
Depreciation expense under finance leases:¥63

Depreciation expense

$663

¥272

Depreciation expense, which is not reflected in the accompanying statements of income, is computed by the straight-line method.

12. Subsequent Events(a) Year-end cash dividends(c) Early extinguishment of debt

On May 10, 2013, the Board of Directors of Nisshinbo Holdings
Inc. declared year-end cash dividends (¥7.5 per share) in theamounts of ¥1,310 million ($13,789 thousand).

Consolidated subsidiary TMD Friction Finance S.A. made theearly extinguishment of €97,060 thousand (¥804 million) inbonds (Interest rate: 10.8%) on May 30, 2013. The extinguishment amounts including the premium were €111,749 thousand (¥926 million).

(b) Stock option

9. Derivatives
The Group enters into foreign currency forward contracts andcurrency swap contracts to hedge exchange risk associatedwith certain assets and liabilities denominated in foreign currencies and also into interest rate swap contracts to manage its

interest rate exposures on certain liabilities. Such contracts outstanding at March 31, 2013 and 2012 were as follows, however
the contracts which qualify for hedge accounting are excluded
from the following disclosure of market value information.
(millions of yen)

2013
Not hedged:

At the general shareholders meeting held on June 27, 2013, theCompany’s shareholders approved a stock option plan to grant
stock purchase rights up to 200 thousand shares of the Company’s common stock to directors and key employees in the
period from August 1, 2015 to July 31, 2020.

(thousands of US dollars)

2013

2012

Contract
amountFair value

Unrealized
gain (loss)

Contract
amountFair value

Unrealized
loss

Contract
amountFair value

Unrealized
gain (loss)

¥433

¥(16)

¥(16)

¥389

¥(20)

¥(20)

$4,558$(168)$(168)¥1,040¥(36)¥(36) ¥1,563¥(57)¥(57) $10,947$(379)$(379)

¥945

¥(11)

¥(11)

$9,947$(116)$(116)

Interest rate swaps:
Fixed rate payments, floating rate receipt
Foreign currency forward contracts:
Sold
Purchased———

Currency swap:

54

Receive EUR · Pay JP¥

¥456

¥2

¥2 ¥2,182¥(272)¥(272)$4,800$21$21

Receive EUR · Pay US$

¥183

¥(9)

¥(9) ¥1,044

¥(32)

¥(32)

$1,926

$(95)

$(95)

55

Independent Auditors’ Report
13. Segment Information
Information about industry segments of the Company and its consolidated subsidiaries for the years ended March 31, 2013 and 2012
was as follows:(millions of yen)

2013
Automobile
BrakesPapersPrecision
Instruments

ChemicalsElectronics

Real Estate

Other Eliminations/
Businesses
Corporate

Consolidated¥50,773 ¥118,849

TextilesSales and Segment Profit (loss):¥30,524¥24,520¥8,150¥175,308¥15,367¥27,202¥—¥450,693

27

166

708

862

485

113

2,570

2,259

(7,190)—50,800119,015

31,232

25,382

8,635

175,421

17,937

29,461(7,190)450,693¥575 ¥(4,302)¥709¥44,703 ¥139,592 ¥22,178¥(146)¥133¥26,092 ¥7,965¥7,788¥197,358¥12,290¥49,608¥263¥27,633

Depreciation and amortization¥1,345¥8,424¥1,061¥1,318¥595¥3,888¥1,799¥243¥296¥18,969

Increase in property, plantand equipment andintangible assets¥615¥11,043¥293¥1,673¥354¥4,942¥1,016¥681¥(494)¥20,123

Sales to customers
Intersegment sales
		Total sales
Segment profit (loss)[Operating income (loss)]
Segment assets:¥(3,916) ¥13,394¥36,804 ¥551,933

Other:(millions of yen)

2012
TextilesAutomobile
BrakesPapersPrecision
Instruments

ChemicalsElectronics

Real Estate

Other Eliminations/
Businesses
Corporate

Consolidated

Sales and Segment Profit (loss):¥60,964 ¥47,450 ¥30,220 ¥25,191 ¥8,258 ¥169,907

Sales to customers
Intersegment sales
		Total sales
Segment profit (loss)[Operating income (loss)]
Segment assets:¥9,082 ¥28,268¥— ¥379,340

14

259

754

853

548

135

2,643

2,004

(7,210)—60,97847,70930,974

26,0448,806

170,042

11,72530,272(7,210)379,340¥840 ¥4,254¥260 ¥(1,070)¥374¥(4,111) ¥6,743¥651 ¥(3,771)¥4,170¥47,657 ¥128,418 ¥21,798 ¥24,089 ¥8,640 ¥188,515 ¥50,395 ¥22,190 ¥42,882 ¥534,584

Other:

Depreciation and amortization¥1,060

Increase in property, plantand equipment andintangible assets¥1,992¥2,669¥2,933¥1,102¥765¥1,104¥2,480¥711¥426¥5,387¥5,432¥1,826

¥522

¥109

¥101

¥582

¥1,054¥14,550¥15,705(thousands of US dollars)

2013
Automobile
BrakesPapersPrecision
Instruments

ChemicalsElectronics

Real Estate

Other Eliminations/
Businesses
Corporate$534,453 $1,251,042$321,305$258,105$85,790 $1,845,347$161,758$286,337

7,453

9,074

5,105

1,189

27,053

23,779(75,684)—

534,737 1,252,789 328,758
Total sales
Segment profit (loss)$6,053 $(45,284)$7,463[Operating income (loss)]$470,558 $1,469,389 $233,453
Segment assets:

267,179

90,895

1,846,536

188,811

310,116(75,684)

4,744,137$(1,537)$274,653$1,400$81,979$83,842 $2,077,453$129,368$522,189$2,768$290,874$(41,221) $140,989$387,410 $5,809,821

TextilesConsolidated

Sales and Segment Profit (loss):
Sales to customers
Intersegment sales

284

1,747

$— $4,744,137

We have audited the accompanying consolidated ﬁnancial statements of Nisshinbo Holdings Inc. and its
consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2013, and theconsolidated statements of income, comprehensive income, changes in net assets and cash ﬂows forthe year then ended, and a summary of signiﬁcant accounting policies and other explanatory information,
all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated ﬁnancial
statements in accordance with accounting principles generally accepted in Japan, and for designing andoperating such internal control as management determines is necessary to enable the preparation andfair presentation of the consolidated ﬁnancial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated ﬁnancial statements based on our
audit. We conducted our audit in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated ﬁnancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the consolidated ﬁnancial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated ﬁnancial statements,
whether due to fraud or error. The purpose of an audit of the consolidated financial statements is not
to express an opinion on the effectiveness of the entity’s internal control, but in making these risk
assessments the auditor considers internal controls relevant to the entity’s preparation and fairpresentation of the consolidated ﬁnancial statements in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that the audit
evidence we have obtained is sufﬁcient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated ﬁnancial statements referred to above present fairly, in all material
respects, the ﬁnancial position of Nisshinbo Holdings Inc. and its consolidated subsidiaries as at March
31, 2013, and their ﬁnancial performance and cash ﬂows for the year then ended in conformity withaccounting principles generally accepted in Japan.
Convenience translations
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented
for the convenience of readers, and, in our opinion, the accompanying consolidated financial statements
have been properly translated on the basis described in Note 1 to the consolidated ﬁnancial statements.

VERITAS & Co.

Other:

56

To the Board of Directors of Nisshinbo Holdings Inc.

Depreciation and amortization$14,158$88,674$11,168$13,874$6,263$40,926$18,937$2,558$3,116$199,674

Increase in property, plantand equipment andintangible assets$6,474$116,242$3,084$17,611$3,726$52,021$10,695$7,168$(5,200)$211,821

June 27, 2013
Tokyo, Japan57

History

Corporate Data
(As of March 31, 2013)

1907

Established Nisshin Cotton Spinning Co., Ltd.

1938

Merged with Nisshin Rayon Co., Ltd. (now the Miai Plant)

1940

Established Toa Jitsugyo Co., Ltd. (name changed to Nisshin Toa Inc. in 1990)

1945

Acquired Meiji Plant, Nanshin Seiki Co., Ltd. (now the Fuji Plant)

1949

Established Nihon Postal Franker Co., Ltd. (name changed to Nisshinbo Postal Chemical Co., Ltd. in 2006)

1958

Established Nippon Kohbunshikan Co., Ltd. (name changed to Nippon Kohbunshi Co., Ltd. in 1986)(acquired by Nisshinbo Mechatronics Inc. in 2010)

Common Stock

FoundedFebruary 5, 1907

Authorized
Issued		

Head Office
2-31-11, Ningyo-cho, Nihonbashi, Chuo-ku,
Tokyo 103-8650, Japan

English name of company changed to Nisshin Spinning Co., Ltd.

1972

Established Nisshinbo Do Brasil Industria Textil LTDA. (Brazil)

1978

Acquired Tokai Seishi Kougyou Co., Ltd.

1985

Acquired Nisshin Denim Inc.

2-4-2, Kitakyuhouji-machi, Chuo-ku,
Osaka 541-0057, Japan1989

Established Kohbunshi (Thailand) Ltd. (Thailand)(name changed to Nisshinbo Mechatronics (Thailand) Ltd. in 2011)

Tel: +81-6-6267-5501
Fax: +81-6-6267-5529

1993

Established Pudong Kohbunshi (Shanghai) Co., Ltd. (China)(name changed to Nisshinbo Mechatronics (Shanghai) Co., Ltd. in 2010)

1995

Established Nisshinbo Automotive Corporation (U.S.A.)
Established Nisshinbo Urban Development Co., Ltd.

1996

Established Nisshinbo Somboon Automotive Co., Ltd. (Thailand)

1997

Established Nisshinbo Automotive Manufacturing Inc. (U.S.A.)

1998

Established P.T. Gistex Nisshinbo Indonesia (Indonesia)(name changed to P.T. Nisshinbo Indonesia in 2010)

1999

Established Saeron Automotive Corporation (South Korea)

2000

Purchased additional shares of P.T. Nikawa Textile Industry (Indonesia)

Shareholders
14,234

Tel: +81-3-5695-8833
Fax: +81-3-5695-8970

1962

Composition of Shareholders

Osaka Branch

Securities
firms

2.3%
Japanese financial
institutions

36.0%

Japanese
individuals andothers17.0%

5-2-38, Sakae, Naka-ku,
Nagoya 460-0008, Japan
Tel: +81-52-261-6151
Fax: +81-52-263-9480

Employees
231
21,85222,083

Other Japaneseinstitutions

Foreigninstitutions

18.1%

21.6%

Listings
Tokyo, Osaka, Nagoya, Fukuoka and Sapporo

Transfer Agent

Established Continental Teves Co., Ltd. through merger with Continental Teves AG & Co. oHG(name changed to Continental Automotive Co., Ltd. in 2007)
2002

Treasury stock

5.0%

Nagoya Branch

Parent Company
Subsidiaries
Total

371,755,000 shares
178,798,939 shares¥27,588 million (US$290 million)

Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku,

Established Nisshinbo (Shanghai) Co., Ltd. (China)

Tokyo 100-8212, Japan

Acquired all shares of Iwao & Co., Ltd.
2003

Established Saeron Automotive Beijing Corporation (China)

2004

Established Continental Automotive Corporation (Lian Yun Gang) Co., Ltd (China)

2005

Made tender offer for additional shares of New Japan Radio Co., Ltd.

2006

Acquired additional shares of Japan Radio Co., Ltd. and Nagano Japan Radio Co., Ltd.

(yen)

2007

Acquired all shares of Daiwa Shiko Co., Ltd.

1,000

2008

Stock Price and Trading Volume(million shares)

40

Stock price (left)

Acquired all shares of CHOYA CORP.
Acquired all shares of Nisshinbo Brake Sales Co., Ltd. (acquired by Nisshinbo Brake Inc. in 2010)2009

Spun off five businesses — Textiles, Automobile Brakes, Papers, Precision Instruments, and Chemicals — andconverted to holding company; corporate name changed to Nisshinbo Holdings Inc.

2010

Established Nisshinbo-Yawei Precision Instruments & Machinery (Jiangsu) Co., Ltd. (China)(formerly Jiangsu Yawei Nisshinbo Precision Instruments & Machinery Co., Ltd.)

750

30

500

20

Acquired additional shares in Japan Radio Co., Ltd., making it a consolidated subsidiary
Nagano Japan Radio Co., Ltd. also becomes a consolidated subsidiary as a result
2011

Established Nisshinbo Saeron (Changshu) Automotive Co., Ltd. (China)

250

10

Trading volume (right)

Established Nisshinbo Singapore Pte. Ltd. (Singapore)
Acquired all shares of TMD Friction Group S.A. (Luxembourg)
2012

58
48

Established Nisshinbo Business Management (Shanghai) Co., Ltd. (China)

0

0
9/10

12/10

3/11

6/11

9/11

12/11

3/12

6/12

9/12

12/12

3/13

6/13

49