Annual Report 2009

Nisshinbo Holdings Inc.

Fiscal Year Ended March 20092-31-11, Ningyo-cho, Nihonbashi, Chuo-ku, Tokyo 103-8650, Japan
Tel: 03-5695-8833 Fax: 03-5695-8970
http://www.nisshinbo.co.jp/english/

New Business Frontiersof the Environment

Using a Century of Experience
for a New Era
Nisshinbo was established in 1907 as a manufacturer of cotton yarn and thread. In over a century
since then, we have consistently created value that meets the demands of society. We have done
this by supplying goods and services that contribute to quality of life in a wide range of fields

CONTENTS

including textiles, brakes, paper products, mechatronics, chemicals, and electronics. In April 2009,
Nisshinbo Industries, Inc. implemented a corporate split and made a new start as a corporate groupby making use of the technology and human strengths that it has accumulated since its foundation.

Financial Highlights(Years ended March 31)(thousands of
US dollars)(millions of yen)

Consolidated:
Net Sales

2005
¥

2006

243,421¥2007

278,617¥

2008

312,825¥2009

322,412

￥

2009

350

Textiles

286,167$ 2,861,670

300

Automobile Brakes

Textiles

82,16482,87982,24378,816

67,593675,930

Automobile Brakes

54,306

58,13061,764

66,39753,261

532,610Papers28,58528,612

29,90833,54734,214342,140

Mechatronics

5,561

7,572

6,844

8,083

14,738147,380

Chemicals

34,19936,00737,671

38,52832,624326,240

Electronics

16,84345,85876,06876,47560,550605,500

Real Estate Leasing

4,945

4,781

4,788

5,446

6,433

64,330

Other Businesses

16,818

14,77813,53915,12016,754

167,540

Operating Income

9,651

10,524

11,551

12,034408

4,080

Net Income (loss)

8,199

11,183

15,107

12,290(1,286)(12,860)

222,771

Equity266,434

282,015

245,909

193,698

Per Share:
Net Income (loss)
Shareholders’ Equity
Cash Dividends

1,936,980

(yen)

¥

39.03

¥

53.21

¥

74.19

¥

63.34

¥

Consolidated Net Sales by Segment(billions of yen)

(7.08)(dollars)$(0.07)

1,072.54

1,283.21

1,301.14

1,179.43

985.19

9.85

10.00

10.00

15.00

15.00

15.00

0.15

250

2.2

2.6

3.1

2.7

(0.3)

Return on Equity (ROE)

3.8

4.6

5.7

5.1

(0.6)

Note: The United States dollar amounts in this report are given for convenience only and represent translations of Japanese yen at the rate of ¥100 = US$1.

Five Questions for President Uzawa

8

Feature:14

Overview and Business Resultsof Individual Business Segments

16

Textiles18

Automobile Brakes

20

Papers22

Mechatronics

23

Chemicals

24Electronics

26

Real Estate Leasing

27

The Nisshinbo Group’s CSR
Activities

31

Financial Section

54

Board of Directors

55

History & Corporate Data

56

Main Group Companies

Striving to Be an Environmental
Company

Mechatronics

200

Chemicals

150

Electronics
Real Estate Leasing

100

Other Businesses

50
0

’05

’06

’07

’08

’09

Consolidated Operating Income by Segment(billions of yen)

15

TextilesAutomobile Brakes

10PapersMechatronics

5

ChemicalsElectronics

0

Real Estate Leasing
Other Businesses(%)

Return on Assets (ROA)

3

Papers-5

Key Ratio:

Executive Message

-10

’05

’06

’07

’08

’09

Note: The mechatronics segment, which previously was included in the other business segment, has
increased in significance, and accordingly, is now presented as a separate category. The tableshows the categories following this change for fiscal 2008 and 2009, but data for fiscal 2007
and earlier has not been modified.

Annual Report 2009

company. The Nisshinbo Group will chart its way through this new business frontier, the environment,

2

1
Nisshinbo

with Nisshinbo Holdings Inc. as its holding company. We are now striving to be an environmental

5

Nisshinbo

2
Annual Report 2009

The fiscal year ended March 2009 was extremely trying
for the global economy. The financial crisis sparked by
the subprime loan problem in the United States caused a
severe global recession the like of which occurs only once a
century. It was unavoidable for the Nisshinbo Group to post
lower net sales and income.
Despite these hard times, the Nisshinbo Group has
set a new course to become a collective of environmental
companies. The photovoltaic module manufacturing
equipment business continues to grow at a rapid pace, andother new business fields that can contribute to alleviating
global warming are also showing signs of steady growth.
Meanwhile, Nisshinbo Industries, Inc. implemented a
corporate split in April 2009 and was reborn as Nisshinbo
Holdings Inc., a holding company at the center of acorporate group active in six main business areas.
I look forward to receiving your continued support for
the new Nisshinbo Group in the coming year.

Shizuka Uzawa, President
Nisshinbo Holdings Inc.

Group, which recently embarked on a new course amid
extremely difficult economic conditions? In this section,
President Uzawa responds to five key questions.

-Questions

Nisshinbo
Holdings Inc.

Q.1
A.1

TextilesNisshinbo Textile Inc.

Automobile Brakes

Nisshinbo Brake Inc.

PapersNisshinbo Paper Products Inc.

Mechatronics

Nisshinbo Mechatronics Inc.

Chemicals

Nisshinbo Chemical Inc.

Electronics

New Japan Radio Co., Ltd.

The Nisshinbo Group made a new start with a corporate split in April 2009. Could you explain the
background of the split and the prospects for Nisshinbo’s future?

3
Nisshinbo

The Nisshinbo Group Has Set Course to
Overcome Global Economic Turmoil andBecome an Environmental Company

Holdings Inc. in June 2009. How will he steer the Nisshinbo

Annual Report 2009

Five Questions for
President Uzawa

Shizuka Uzawa was appointed president of Nisshinbo

The corporate split was designed to raise overall corporate value by enabling eachbusiness to respond rapidly to market changes through autonomous management.

I am honored to have been appointed president of the new Nisshinbo
Holdings Inc., and I ask for the continued support and guidance of ourshareholders and investors.

subsidiaries more maneuverability, thereby enhancing competitiveness.
Nisshinbo’s financial foundations are solid, but this can lead tocomplacency and lagging profitability at underperforming business sectors.

On April 1, 2009, the Nisshinbo Group spun off five business

Following the corporate split, the profitability of each business segment willsegments: textiles, automobile brakes, papers, mechatronics, andbe much clearer. By reforming the repeated selection of priority areas andchemicals. It adopted a holding company structure with six businessconcentration of resources, each group company can focus its managerial

companies including an electronics company under the management of

resources in areas that can be expected to generate high returns. This

Nisshinbo Holdings Inc.

continuous reform will mean higher profitability for the entire Group. We

We decided to split the Group into separate companies to raise

used the corporate split to give each group company a greater sense

overall corporate value. The Nisshinbo Group has a history of more than aof urgency and to clarify responsibilities and authority in each businesscentury and has expanded from its initial textile business to a wide range

segment. By supporting independent and agile operations at each unit,of business areas. In the past, if the textile business performed poorly,

Nisshinbo will be reborn as a group in which every business can survive

for example, the brake business was able to make up the difference,and thrive even amid harsh economic conditions.

and we were able to maintain a well-balanced, integrated management.

Since the corporate split was announced in November 2007, theChanges in the economic environment, however, have become faster andGroup has disseminated information concerning its vision throughout

more extreme, and this means that rapid decision-making is essential

all group companies. The categorization of “textile” and “non-textile”

for achieving continuous growth. We therefore determined that ourbusinesses that has been in place since our foundation will no longer be

management format had to be reformed, and we decided to split theused. Each business segment will be given the managerial freedom tocompany and transfer management authority to the individual companies.

operate independently. Expect great things from the new Nisshinbo Group.

We sought to raise overall corporate value by giving each of the main

Five Questions for President Uzawa
Sales by Business Segment

Targets for the Fiscal Year Ending March 2010

(billions of yen)

350
300

Net sales¥262,000

millionOperatingincome¥5,000

million

Net income¥7,000

millionTextilesAutomobile Brakes

250

Papers200

Mechatronics
Chemicals

150

Electronics

100

Real Estate Leasing
Other Businesses

50
0

’07

’08

’09

Please explain the Nisshinbo Group’s financial results for the fiscal year ended March 2009 amid theglobal recession.

We were able to support our financial results with a well-balanced business portfolio
despite the difficult business environment.

Q.3
A.3

What are the medium- to long-term prospects for the Nisshinbo Group’s business?

A downturn is preparation for recovery. By establishing a high-profit structure, the Groupwill embark on a course to new growth in three years.

Annual Report 2009

The rapid changes in the global environment following the Lehman Brothers

The ability of a wide range of business sectors to complement

The current fiscal year (ending March 2010) is the initial period of our new

In conjunction with the structural reforms, we are also creating

shock have had a major impact on the automobile brake business, one ofeach other and support our financial results is one of the strengths of themedium-term management plan, but we have postponed announcement ofand expanding new businesses. We’re starting to see results in a number

our main business lines.

Nisshinbo Group. Our businesses have a flexible structure, and by linking

the plan. Under these unclear economic conditions, we cannot know whatof new businesses that will support the Nisshinbo Group’s growth as anunits with different characteristics, we are able to absorb a variety ofcircumstances will be in six months, so we determined that announcing

environmental company, such as the photovoltaic module manufacturing

the fiscal year ended March 2009 was as follows: Sales were ¥286,167

risks caused by the recession as well as factors such as exchange ratequantitative targets for the next three years may mislead investors. Thisequipment business, which achieved substantial increases in sales andmillion (down 11.2% from the previous year) and operating income wasfluctuations and high materials costs. In addition, the cash flows generated

does not mean, however, that we are standing idly by. We are rapidly

income in the fiscal year ended March 2009. Expanding new businesses¥408 million (down 96.6%). Thus, we experienced declines in both sales

from the effective use of real estate assets serve to support the Group’s

implementing measures to overcome these economic conditions.

will also set us on a course for new growth in three years.

and income. Ordinary income was ¥7,151 million (down 62.2%) due tofinancial results, becoming a source of capital to develop high-growthFirst, in conjunction with the corporate split, we implemented an

dividends received and equity method investment income, but we posted

sectors. The corporate split will strengthen each business segment andearly retirement incentive program and streamlined the personnel structure

March 2010, under the anticipated ongoing financial difficulties and with theextraordinary losses for special severance payments under an earlymake it better adapted to the times.

of Nisshinbo Industries during the previous fiscal year. As a result, theeffects of the lower fixed costs, is for lower revenues but higher income. We

retirement incentive program and for other expenditures. As a result, we

personnel expenses will decrease this year by approximately ¥2.6 billion.

are projecting sales of ¥262,000 million, operating income of ¥5,000 million,

posted a net loss of ¥1,286 million (compared to net income of ¥12,290

We have created a structure that will allow our human resources to exhibit

and net income of ¥7,000 million. We postponed the announcement of ourmillion in the previous fiscal year).

their full potential.

new medium-term management plan this term. Based on group corporate

Under this environment, our consolidated financial performance for

As a result of these measures, the outlook for the fiscal year ending

Although operating income in the automobile brake business was

Also, we switched our depreciation calculation method from theprinciple and philosophy, and management principle adopted in conjunction

only about 70% that of the previous year and the electronics business also

declining balance method to the straight line method, which is the global

with the corporate split, however, our long-term goals are to achieve an ROE

deteriorated, sales of photovoltaic module manufacturing equipment werestandard, making it consistent with the method used by our overseas

in excess of 9% and sales in excess of ¥600 billion by the fiscal year ending

strong and the mechatronics business posted substantially higher sales andsubsidiaries. The result is a reduction in depreciation expenses ofMarch 2018 by achieving both dynamic implementation of business andincome. Also, the paper products business, which consists of household

approximately ¥3.4 billion. Moreover, New Japan Radio Co., Ltd., which

proper governance.

paper products, high-quality printing paper, and processed paper products,

is one of our main subsidiaries, is expected to reduce fixed expenses byDuring Nisshinbo’s century-long history, we have overcome major

maintained its results from the previous year despite the difficult economic

approximately ¥5.0 billion, and other group companies will reduce fixedrecessions as well as a war that devastated Japan. Now, we must overcome

environment, and the real estate leasing business was strong. Other

expenses by a total of ¥1.0 billion, for a combined decrease in fixed

a global recession. A period of downturn is an opportunity to eliminate allbusinesses compensated for the slowdown in the automobile brake business.

expenses of approximately ¥12.0 billion.

excess from the company and make preparations for future growth. We
must not neglect this chance.

Annual Report 2009

Nisshinbo

4

Q.2
A.2

’06

5
Nisshinbo’05

Five Questions for President Uzawa
Capital Investment(billions of yen)

25
20
15
10
5
0

’06

’07

’08

’09

Environmental policies are being implemented on a national level in many countries around the world,such as the U.S. Green New Deal. As an environmental company, how will Nisshinbo respond to thisdevelopment?

We will make the environment and energy the centers of all business fields, boldly
develop overseas business, and make capital investments.

Q.5
A.5

Please discuss Nisshinbo’s policies concerning returns to shareholders, distribution of profits, andfending off hostile takeovers. Also, as Nisshinbo’s new president what message do you have forshareholders and investors?

It is our responsibility to provide stable dividends to shareholders. We have set ¥15 peryear as the minimum dividend and are working to increase dividends by raising income.

Annual Report 2009

The “environmental company” that we seek to become is based on the idea

developing a carbon alloy catalyst that can replace platinum catalyst, which

The fundamental policy of the Nisshinbo Group is the payment of stablebuyers. We consider these measures to be necessary for maintaining soundof contributing to society through our business activities by employing ouris the key to reducing the cost of fuel cells. Our carbon bipolar plates and adividends. The total annual dividend for the fiscal year ended March 2009

corporate governance.

technologies to address environmental issues such as global warming. In thiscarbon alloy catalyst will play crucial roles in expanding the use of fuel cells.

way, we can carry out our corporate principle of serving as a “public entity.”

including the interim dividend was ¥15 per share. We have set a policy ofI have held a variety of positions within the Nisshinbo Group and

In addition, Carbodilite, a modifying material that is essential for the

paying at least ¥15 in the fiscal year ending March 2010 and are working tolearned from many people. I believe every encounter is a once-in-a-lifetime

manufacture of green plastics, and electric double-layer capacitors that canincrease the dividend by raising profits. We executed a buyback of 10 million

opportunity, and that applies to our relationship with shareholders as well as

use solar energy and carbon to prevent global warming. By focusing all

recover energy from automobiles, industrial equipment, and constructionof our own shares in May 2008 and retired 6.6 million shares in April and an

businesses. As I put all of my effort into meeting new business, I also value

business segments including new businesses on the environment and energy,

equipment and contribute to stabilizing the output of natural energy are

additional 8 million shares in September.

my encounters with shareholders. I ask our shareholders to give us their

the Nisshinbo Group can achieve rapid growth as an environmental company.

expected to contribute to Nisshinbo’s future growth along with other new

The continuation of our takeover defense measures for three years

products. The beginnings of our environmental business can be seen in

was approved at the 2009 general shareholders meeting. The objective isvarious areas.

to reduce the risk of takeover by funds that do not intend to manage the

We are currently working to develop environmental technologies that

One of our main environmental businesses is photovoltaic module
manufacturing equipment, which is essential for solar power generation.
We have the highest domestic market share in this business and are

We are also making capital investments in response to these

rapidly expanding sales channels to increase global market share. We willdevelopments. Total group-wide capital investment in the fiscal year ended

expand our business in response to America’s Green New Deal and the

March 2009 was ¥16.8 billion, and we plan capital investment of ¥13.3

environmental policies of other countries.

billion for the fiscal year ending March 2010 despite the harsh economic

company, such as greenmailers. It is not intended to preclude strategic

Dividends and Retirement of Treasury Shares

environment. We have established commitment lines and electronic(thousand shares)

one of Nisshinbo’s core environmental businesses. Our bipolar plates forcommercial paper frameworks with financial institutions and taken other

50,000

Dividends

fuel cells are at the world’s highest levels in terms of both quality andmeasures to secure the capital necessary to support our aggressive

quantity, and demand has been increasing since the launch of the Ene-business development.

40,000

Cumulative total of treasury sharesacquired and retired

The carbon bipolar plates that are necessary for fuel cells are also

Farm household fuel cells in May 2009. Construction of a new plant is to be

New environmental policies of countries around the world arecompleted in September 2009, and we hope to increase production evensignificant favorable developments for the Nisshinbo Group. We will strive tofurther. We are conducting research and development on bipolar plates forbecome an essential social contributor as an environmental company withinfuel cells for motor vehicle use, and we expect rapid growth in conjunction

a low-carbon (hydrogen-based) economy.

with the widespread use of next-generation fuel cell vehicles. We are also

support from a long-term perspective.

15

15

15

15

10

12
10

30,000
7

7

7

(yen)

9

7

20,000

6

10,000

3

0

0

’01

’02

’03

’04

’05

’06

’07

’08

’09

Annual Report 2009

Nisshinbo

6

Q.4
A.4

’05

7
Nisshinbo’04

Feature

Striving to Be an Environmental Company
Global Sales and Service Sites

1

ANSWER

Photovoltaic Module
Manufacturing Equipment

Becoming a Leading Player in the Solar Cell
Business, a Key Factor in Renewable Energy

Maintenance services begin under outsourcing
agreement with local company

Sales base establishedin October 2008

Site established in Shanghai
Sites planned for Shenzhen and Tianjin

Solar cells are attracting increasing attention around the world as a source of renewable energy that does not produce carbon
dioxide and has no impact on the global environment. The Nisshinbo Group is developing its photovoltaic module manufacturing
equipment business based on mechatronics technologies accumulated over half a century. Nisshinbo Mechatronics has alreadygenerated substantial income as a core business in Nisshinbo’s environmental strategy. Hiroshi Nakano, President of Nisshinbo
Mechatronics Inc., discusses the current status and future prospects of the rapidly growing manufacturing equipment business.

Netherlands
U.S.A.
South Korea
Middle East

China
India

TaiwanCooperation with local sales company
Marketing activities start

Sales and Business Plan

Sales base establishedin July 2009

Local subsidiary establishedin May 2009

Fourth Plant begins operating
Subsidiary established in Taiwan ’09
Sales base established in North America(Sales: millions of yen)

10,000Hiroshi Nakano, President
Nisshinbo Mechatronics Inc.

Multi-stage laminator development
Contract with Spire Corp. terminated ’08
Sales base established in Europe

8,000
6,000

Products supplied to all leading domestic manufacturers’07
First orders for module manufacturing lines received

4,000

Nisshinbo

8

’98

’99

’00

’01

’02

’03

’04

’05

’06

’07

’08

’09

Annual Report 2009

The Leading Domestic Back-End Manufacturer

We Aim to Control 30% of the Rapidly Growing Back-End Market

Solar cell manufacturing includes the initial process (front-end) of making
the solar cells and the subsequent process (back-end) of assembling them

Aggressive Manufacturing and Sales Strategies
to Win Global Markets

Total Photovoltaic Module Manufacturing Equipment Solutions
Supported by High Added-ValueFirst, we completed construction of the Miai Machinery Plant, a specialized

We are also working to increase the added-value of our products so we canphotovoltaic manufacturing equipment plant in Okazaki City, Aichi

establish a position of market superiority. We will propose new solar cell

Prefecture, in April 2009. When this plant goes online, production capacity

sealing technologies that improve durability to increase the lifespan of solar

is expected to double.

cells, which is currently said to be approximately 20 years, to as long as 60

We are also working on expanding and improving our global sales

or even 100 years. To do this, we are investigating the module production

The photovoltaic module manufacturing line market leveled off in the fiscal

and service network. We established a business site in the Netherlands inand installation business in collaboration with a front-end manufacturer.

year ending March 2010, but we are confident that it will grow over the

October 2008, bolstering our sales and service structures in the European

We are also developing manufacturing equipment that

into a module in panel format. Nisshinbo Mechatronics Inc. produces core

medium- to long-term, and projects are that the market will reach ¥3 trillion

market, which has the world’s highest demand. In Taiwan, where sales

allows changes in workpieces from manufacturing to be visible toback-end equipment, including solar simulators, module laminators, electro-

in 2030. The back-end market is expected to reach ¥120 billion in the fiscal

are expected to increase to ¥2.5 billion in the fiscal year ending Marcheliminate defective products. Development of products that integrate

luminescence (EL) cell inspection equipment for detecting cracks in panels

year ending March 2012, and we have set a target of capturing 30% of the2010, we established a local subsidiary in May 2009. In South Korea, wemanufacturing and inspection is proceeding, and we hope to reinforce

from manufacturing, and manufacturing lines that integrate these devices,market or achieving sales of at least ¥30 billion. This is a very ambitious

began providing maintenance services by concluding a service outsourcing

total solar cell manufacturing solutions by covering everything from line

target, but I believe we can achieve it by reacting quickly to developments

agreement with a local company and plan to establish a sales base during

design to maintenance.

in global markets.

the fiscal year ending March 2010. We are also cooperating with local

and supplies them to manufacturers in Japan, Asia, Europe, and the UnitedStates. In Japan, we command overwhelming market shares for laminators(more than 70%) and simulators (more than 90%), and we have a roughly
10% share of the global market. Our product reliability and our overallcapabilities have been praised by solar cell manufacturers worldwide.
The Nisshinbo Group began developing and manufacturing
specialized machine tools in the 1940s and has built solid foundations forenergy in 100 years, suggesting they are a potential source of tremendous

the Green New Deal policies, use of new energy sources centered on solar

activities in these regions. In China, Asia’s largest producer country, wewealth with numerous new business opportunities. We are striving tocells is expected to become obligatory, and use of solar cells is expected

opened a marketing office in Shanghai and plan to establish service sites

continuously improve photovoltaic module manufacturing equipment toto increase to 30 GW (gigawatts) by about 2030. Total global solar cellin the Shenzhen and Tianjin regions. In the United States, we established ameet customer needs and to make Nisshinbo Mechatronics a leading force

installations are currently 6 GW, so the United States will be using five times

sales office on the West Coast this summer.

in the solar cell industry.

For example, in the United States, which is currently implementing

producing photovoltaic module
manufacturing equipment.
Starting in 1998, we made useof this accumulated experienceand introduced technology fromoverseas to introduce simulatorsand laminators to the domestic
market. The business has
experienced rapid growth over the
past 2 to 3 years.

Scale of Markets for Solar Cell
Manufacturing Equipment in the Future
Projection of Photovoltaic
Module ManufacturingLine Market in 2010

Projection of Photovoltaic
Module ManufacturingLine Market in 2022

that volume. Use of solar cells is likely to

As that solar cell panel manufacturers adopt on-demand structures

expand rapidly throughout the world. We

and increase local production around the world, we are considering global

have therefore set targets of capturing

production structures for manufacturing and producing equipment overseas.

10% of the market for back-end lines

Core devices such as laminators and simulators would be produced atand 30% of the market for laminators

mother plants in Japan such as the Miai Machinery Plant, and other units

and simulators, the key units on back-will be produced overseas, and we would be able to reduce business risks

Front-end(film formation) process

end manufacturing lines. If we can doby operating our own plants.

¥280 billion¥2,835 billion

this, our annual sales revenues in the

Back-end
process

Back-end
process

U.S. market alone will increase fromto respond immediately to increases in overseas demand while avoiding¥3 billion to ¥8 billion. We are currently

currency exchange rate risks and reducing costs. We have implemented

aggressively developing our global

the local production concept in Taiwan as a model case and anticipate twobusiness to achieve these targets.

bases in Asia and the United States.

Front-end(film formation) process

Some manufacturers predict solar cells will account for 75% of all

sales companies in the Middle East and India and have started marketing¥40 billion¥405 billion

The local procurement and local production model will allow us

A Thin-Film Photovoltaic Module Manufacturing Line

9
Nisshinbo

0

Annual Report 2009

Sales in Asia reinforced ’05
Technology from Spire Corp. (U.S.A.) introduced’98 and domestic sales of laminators and simulators started

2,000Feature

Striving to Be an Environmental Company
Structure of a Fuel CellANSWER
Fuel Cell Products
Business

2

Carbon Technologies Will Pave the Way for a
Hydrogen-based Economy

Fuel cells generate electricity using a chemical reaction between hydrogen and oxygen but generate almost no substances ofconcern, making them an ideal method for both preventing global warming and providing stable energy supplies. The Nisshinbo
Group produces carbon bipolar plates, an essential component in fuel cells, and is a world-class player in terms of quality andquantity. Masaaki Isobe, President of Nisshinbo Chemical Inc. and General Manager of the Business Development Division,
discussed the fuel cell products business, a main pillar of Nisshinbo’s environmental strategy.

Cell

Stack

BipolarplatesElectrode
Catalyst
Electrolyte
film
Catalyst
Electrode
BipolarplatesCurrent collector

HydrogenHydrogen

Oxygen(air)
Oxygen (air)A fuel cell consists of layers of cells made of plate-shaped electrodes, an electrolyte, and acatalyst. The bipolar plate supports the structure and is an important component that serves
as the passageway for the oxygen and hydrogen necessary to generate electricity.

Outlook for the Fuel Cell Materials Business(billions of yen)

Masaaki Isobe, Director, Executive Managing Officer, and General Manager,
Business Development Division, Nisshinbo Holdings Inc.
President, Nisshinbo Chemical Inc.

200
170

Projection of Market Size
Projection of Nisshinbo Sales

150

Cell

The Nisshinbo Group’s Vision for a Hydrogen-based Economy

100
70

1

10

Accelerating Fuel Cell Use with Two Key Products

5

Nisshinbo Chemical will begin shipping samples of the plates and catalyst’15

to manufacturers of automotive and household fuel cells in spring 2010.

’20

From 2020

Photovoltaic module
manufacturing line
Bipolar plates
for fuel cells
Capacitors

Solar cell business
Become a maker ofBipolar plates for fuel cells a wide range of materials,
Capacitors
components, and systems
in a new energy andCarbon catalysts
Hydrogen storage materials hydrogen-based society

Carbon catalyst
Hydrogen storage
materials

Solar cell materials
Components of electric
power storage device

automotive fuel cell market is expected to take off. We hope to accelerate
the widespread use of fuel cells with our carbon bipolar plates and carbon

Annual Report 2009

Nisshinbo’s Bipolar Plates Control the Domestic Market for
Household Fuel Cells

Developing Carbon Alloy Catalysts to Reduce Fuel Cell
Manufacturing Costs

alloy catalyst.

Television commercials for Ene-Farm household fuel cells began airing inFuel cells use platinum as a catalyst to promote the chemical reaction

With its ability to activate oxygen and increase oxidizing power, it can be

Japan in spring 2009. Nisshinbo Chemical supplies nearly all bipolar plates

between hydrogen and oxygen. But platinum is quite expensive and is one

used in a wide range of applications, such as treating nitrogen oxides

to manufacturers of household fuel cells. Bipolar plates, key componentsof the main factors behind the high cost of fuel cells. To address this issue,in emissions gases, deodorizing ammonia, and in chemical production

in fuel cells, are available in two types: carbon and metal. Although carbon

the Nisshinbo Group began joint development of an alternative catalyst withprocesses. The carbon alloy catalyst presents tremendous potential for

bipolar plates are superior to metal ones in terms of corrosion resistance,

Professor Junichi Ozaki of Gunma University in 2006 and participated in a

Nisshinbo’s environmental strategy.

metal bipolar plates are stronger. Nisshinbo Chemical used its carbon

project organized by the New Energy and Industrial Technology Development

technologies to overcome this problem and create thin but strong carbon

Organization (NEDO). It successfully developed a carbon catalyst that can bebipolar plates that can match metal bipolar plates. Our carbon bipolar plates

supplied stably and at low cost.

lead the global market in terms of strength, thinness, corrosion resistance,
moldability, flexibility, conductivity, and weight.
The Japanese market for household fuel cells is expected to expand
rapidly in the next few years, and we are working to raise cost performance

The catalyst has many potential applications apart from fuel cells.

hydrogen-based economy through the provision of various environmental

Nisshinbo’s carbon alloy catalyst boasts world-class performancethat is nearly equivalent to that of platinum. In tests, the catalyst exhibitedin order to maintain our existing share of the market. We will complete

substantial cost benefits — about one-sixth that of platinum catalyst. If

construction of a new plant in Chiba Prefecture in September 2009 andcarbon alloy catalysts were used in fuel cell vehicles, the cost per vehicle

expand production. Over the short term, we anticipate sales in the ¥3.0

would fall by an estimated ¥500,000.

Platinum catalyst

Open voltage OCV (V)

0.98

0.95 – 1.00

Voltage at 0.2A/cm2 (V)

0.67

0.70 – 0.75

525

500 – 7002

Output density (mW/cm )billion to ¥5.0 billion range annually.
Catalyst cost

The next potential market for carbon bipolar plates will emerge when
automotive fuel cells begin to enter widespread use starting around 2015.

Stability

1,000 yen/g or lesswhen mass produced
No deterioration after
500 hours of charging

technologies. The hydrogen-based economy uses hydrogen produced fromwater through electrolysis as an energy source and returns the hydrogen towater, a clean energy cycle that does not produce carbon dioxide. We hopeto advance the arrival of the hydrogen-based economy by combining theCarbon alloy catalyst
developed by Nisshinbo

no deterioration after 500 continuous hours of generating electricity,
confirming its outstanding stability and output. Above all, it offers

A Company Supporting the Hydrogen-based Economy ThroughSolar Cells
The Nisshinbo Group has a bold vision of contributing to the coming

Fuel Cell Electric Power Generation Performance of the Carbon
Alloy Catalyst

carbon and new energy technologies that we have accumulated.
For example, by combining solar cells with fuel cells, we can break
down water using electricity generated by the solar cells, transport theextracted hydrogen to remote locations, and generate electricity by using
the hydrogen in fuel cells. By using a method such as this, the losses that
occur from transmitting electricity over power lines are eliminated, and it

6,000 – 10,000yen/gis possible to generate electricity from hydrogen whenever it is needed. To—

achieve this vision of a hydrogen-based economy, the Nisshinbo Group’s

The fuel cell materials business including both household and automotive

Business Development Division is developing not only solar cells and fuelapplications is expected to expand to ¥170 billion annually by 2020.

cells but also various other environmental technologies such as hydrogen

Nisshinbo Chemical was an early innovator in products for fuel cell vehicles

storage materials and electric power storage devices. A company thatand is aiming for annual sales of ¥70 billion. We expect competition in high-supports the hydrogen-based economy of the future — this is the true

durability metal bipolar plates. We thus intend to capitalize on our carbon

image of the environmental company that the Nisshinbo Group strives to be.

technologies and compete successfully against metal bipolar plates basedon the superior cost and ease-of-use of our products.

The new plant for bipolar plates
for fuel cells in Chiba

11
Nisshinbo

We also plan to establish a full-scale production site around 2015 when theDevelopment
Strategy

Nisshinbo

10’10

Business
Development

20

By 2015

Annual Report 2009

By 200950

FeatureFeatureStriving to Be an Environmental Company

ANSWER
Carbodilite

3

Unique Technology Supports Green Plastics
Limiting Environmental Impact

The Nisshinbo Group is developing a broad range of environmental businesses in addition to the photovoltaic module
manufacturing equipment and fuel cell products discussed already. One such business is Carbodilite, a high-performancechemical product that is used in green plastics and other materials.

Striving to Be an Environmental Company

ANSWER
Electric Double-Layer
Capacitors (EDLC)

4

Advanced Energy Devices Can Store Solar andWind PowerElectric double-layer capacitors (EDLCs) can store and reuse energy that until now has been wasted. These devices cancontribute to saving energy and reducing carbon dioxide emissions. They are attracting attention as key components inenvironmentally friendly automobiles such as hybrid vehicles. This technology holds considerable potential to support the
Nisshinbo Group’s vision of a hydrogen-based society.

Projected Carbodilite Sales(millions of yen)

4,000

4,000
3,500

3,200

3,000

2,700

2,500

2,200

2,000

1,700

1,500

1,200

1,100

1,000
Annual Report 2009

500

Nisshinbo

’08

12

’09

’10

’11

’12

’13

’14

Components for industrial equipment

Automotive on-board devices

Annual Report 2009

Nisshinbo Provides Functional Chemicals Essential for Plant-based Plastics

Propelled by Environmental Regulations, Business Will Grow to ¥4 Billion

Convert to Electricity and Store Energy That Would Be Wasted

As global environmental problems worsen, the importance of green plastics

Various laws and regulations cutting substances of concern and chemical

When you use the brakes of a vehicle and decelerate, energy is created. This

made from plant materials such as corn is increasing as environmental

substances, including VOC and RoHS regulations, are being adopted around theenergy has traditionally been wasted by releasing it into the air, but it can

A market for EDLCs that is expected to undergo rapid growth ismaterials that can help minimize the implication of products throughout theirworld, and as petroleum-based resources diminish, demand for green plastics

be converted into electricity, stored, and used to help power the vehicle. The

environmentally friendly vehicles. The Nisshinbo Group is developing EDLCs

life cycles. But green plastics lack durability and heat resistance and requireis rising rapidly. Carbodilite is also expected to see rapid growth in the future.

device that makes this possible is the electric double-layer capacitor (energy

for automotive use and is working to increase sales in markets including

can also be recovered by a battery, but capacitors have higher uptake

hybrid vehicles. We plan to launch products between 2011 and 2015 underefficiency). This device is a type of capacitor that stores electricity.

a rough sales target of tens of billions of yen annually by 2020.

modification for use in a wide range of products.

For example, Carbodilite has been praised for its safety as crosslinking

Carbodilite is a high-performance chemical product developed by theagent for waterborne resins and inks, and demand is increasing in Europe, theCapacitors are more durable than secondary batteries, can take in andApplication Fields Expand From Eco-Cars to New EnergyStandardization

Nisshinbo Group. It has been praised as a modifier that enhances durability

United States, and Asia. It is also attracting attention for its lead-free and halogen-and heat resistance when added to polylactic acid resin and other materials

free composition, heat resistance, and compatibility with high-speed and low-discharge large currents very rapidly, do not contain lead or other substancessources including solar cells and wind power. Electric power generation

during manufacturing. Applications include a wide range of industrial fields

profile applications when used as an adhesive in electronic components and asof concern, and have high energy efficiency. They offer outstanding

from these energy sources is dependent on weather conditions and as a

including use as crosslinking agent for waterborne resins and as resin forresin for printed circuit board. The Nisshinbo Group is expanding applications forenvironmental performance and can reduce carbon dioxide emissions.

result is unstable. We believe that capacitors, which can respond to changes

printed circuit board. Carbodilite is an essential material for the development

Carbodilite in automobiles and electrical and electronic components. We have set

Nisshinbo Group’s EDLCs are highly energy efficient, compact, lightweight,

instantaneously, can supply electric power in a stable fashion. We believeof environmentally friendly products.

a target of increasing annual sales to ¥4 billion by 2014.

and high-performance.

the EDLCs to be a key technology for developing a hydrogen-based economy

Because of its low toxicity, Carbodilite is distinguished from otherAs environmental regulations around the world become stricter, demand

EDLCs can provide additional power during times of peak load, allow

products around the world and has attracted considerable attention fromfor green plastics and water-based paints with minimal environmental impact

energy recovery, and have an established track record in applications such

numerous manufacturers.

is expected to increase. As a result, Carbodilite will become a key businessas industrial and construction machinery. In 2007, the Nisshinbo Groupsupporting Nisshinbo’s core environmental strategy.

constructed its Asahi Plant in Chiba Prefecture with production capacity of

We have high expectations concerning standardization of new energy

along with solar cells and fuel cells. We are committed to increasing EDLC
performance.

30,000 cells per month to support mass production.

Automotive Applications of Carbodilite
Performance and Applications of Electric Double-Layer Capacitors
Low Toxicity

Adhesion

Durability

Water-based paint (body & bumpers)
Low Toxicity

Low Toxicity

Adhesion

Durability

Water-based coating (plastic)

Durability

Polylactic acid automobile interior part

Low Toxicity

Adhesion

Durability

Water-based coating (leather seats)

Durability

Anti-fogging rubber, joint boots

Heat Resistance

Adhesion

Silicone liquid gaskets

Durability

13

Supplementing peak output
Reduce input power supply capacity
Make equipment more compact

Increased battery life
Energy saving and higher
operating efficiency
Improved battery lifespan

Energy recovery and reuse• Higher output• Maintenance free
• Faster acceleration • Lead free
• Higher operating• Reduced CO2
emissionsefficiency• Energy saving

Charging during recovery
Discharging during high loads

Distribution of power supplies
Improved power supply reliability
Distribution of power supplies

2
4

13
Nisshinbo0Overview and Business Results of Individual Business Segments

Our Inaugural Business Leads Japan’s Textile Industry
Since its foundation in 1907, Nisshinbo has led the Japanese textile industry with its advanced technologies and high quality. Nisshinbo expanded its business into
the spinning, weaving, processing, and sewing fields and possesses the world’s most advanced technologies in areas ranging from development to production.
Nisshinbo is focusing on the development of new technologies and products that incorporate the concepts of environmental sustainability, health, and comfort. To
enhance international competitiveness, Nisshinbo is shifting general textile production to sites in China and Indonesia and is constructing a global production system.

●Shirts: Dress shirts, school uniform

shirts, casual shirts, and fabric●Textiles: Uniform fabrics, homefurnishing fabrics (bedding), casual
fabrics●Knits: Knit products and fabrics●Oikos: Nonwoven material●Mobilon: Polyurethane elastomer fiber●Yarn: Fiber material●Denim: Jeans and denim fabric

Automobile Brakes●Friction materials: Brake linings, disc pads

A Global Supplier of Brake Friction Materials for Safer Driving●Assembly products: Drum brake products, disc brake products for trucks

Nisshinbo has world-class development capabilities for brake systems, which play a crucial role in the safety and comfort of automobiles, and brake friction materials, a
key component in brakes. To respond to the global optimal procurement needs of automakers, we are strengthening collaboration with domestic and overseas affiliates,
establishing strategic alliances, and reinforcing our stable supply system with central bases in Asia, North America, and Europe. We are also developing applications for highperformance, high-quality products and are focusing our energies on expanding our lineup of Green Pad products manufactured from environmentally friendly materials.

●ABS

PapersPaper Products Characterized by Environment- and People-Friendly Manufacturing
Nisshinbo Paper Products manufactures and sells various paper products including household tissues and toilet paper, speciality paper and other fine papers,
telegram papers, and high-quality packaging. Based on the concept of environment- and people-friendly manufacturing, for the household products segment
we developed Cotton Feel, a tissue paper that contains cotton, and highly porous toilet paper designed for use with bidets. In the speciality paper segment, wedeveloped distinctive, top-quality printing papers featuring both outstanding texture and print quality such as Vent Nouveau fine paper. We are also putting priority on
expanding the use of products certified by the Forest Stewardship Council (FSC) to contribute to the preservation of forests.

●Household paper products: Tissues, toilet paper (made with virgin and recycled pulp),

and kitchen-related products●Speciality paper: Fine paper, synthetic paper●Process paper products: Telegram paper, high-end packaging, advertising-related

products, card products, photo mounts, and other products

Nisshinbo

14

Mechatronics
Rapid Expansion in the Solar Cell BusinessAnnual Report 2009

Nisshinbo Mechatronics is using its expertise acquired as a machine tool manufacturer over a half-century to aggressively develop the photovoltaic module
manufacturing equipment business, which holds great potential as a source of clean energy. Our products feature outstanding performance and reliability. We offer
high-quality technology services ranging from individual production units to the construction of integrated module manufacturing lines. We have constructed numerous
production lines, particularly in Taiwan, South Korea, and China, and have been recognized for the quality of our products and services by numerous manufacturers.

●Photovoltaic module manufacturing equipment: Photovoltaic module laminators, solar

simulators, EL cell inspection equipment, edge isolation systems, assemblers●Customized machinery: Customized machinery for aircraft and automobiles, specialpresses, welding systems, mass production component assembly units●Precision parts processing

Chemicals●Bipolar plates for fuel cells

Expanding High Added-Value Products Business with Environmental Focus●Carbodilite high-performance chemical productNisshinbo Chemical is focusing management resources on environmental technologies and products in promising, high-growth fields, such as bipolar plates for fuel cells and theCarbodilite high-performance chemical product. We are also working to create new applications and markets by developing high added-value products such as thermoplastic urethane
elastomer, glass-like carbon, and rigid urethane foam. Going forward, we are committed to developing new creative technologies and enhancing the functionality and performance ofexisting products while expanding sales structures globally. We will also strive to supply next-generation chemical products that will respond to social needs everywhere.

●Rigid urethane foamElectronics●Mobilon urethane elastomer●Carbon products●Semiconductor products

Strategic Collaboration Holds the Key to Group Development●Information and communications devices and equipment

New Japan Radio Co., Ltd. and Ueda Japan Radio Co., Ltd. play central roles in the semiconductor, electronic equipment, and information and communications business segments. We enjoy
a strong superiority in the semiconductor field with respect to analog technologies and in the information and communication field with respect to microwave technologies. We are developing
new products with a focus on consumer audiovisual equipment, industrial and automotive devices, and information and communications. The electronics business is key to developing ourenergy business, one of the Nisshinbo Group’s priority areas, and we are actively working to reinforce and expand our business through strategic collaboration within the Group.

●Power supply units and electronic components●Microwave products●Electronic medical devices and instruments

Real Estate Leasing●Leasing

Effective Use of Assets in Leasing and Sales●Sales: Unused sites at the former Hamamatsu Plant and the former Harisaki Plant

Nisshinbo’s real estate business is active in using idle assets, redeveloping vacant commercial lots, leasing office and commercial facilities, and dividing andselling residential land. We strive to contribute to local communities through the creation of more pleasant urban environments. The Group is making use of its
assets for the development of shopping centers, sports and leisure facilities, office buildings, housing, nursing home facilities, and model homes.

23.6
18.6
11.9
5.1
11.4
21.1
2.2

Annual Report 2009

TextilesSales Composition (%)

15
Nisshinbo

Main Business Areas

Overview of the Nisshinbo Group’s BusinessTextilesMessage to Shareholders and Investors
I believe that the measures we took prior to thecorporate split to streamline facilities and reduce
costs will start to produce results gradually as
we move forward. This is the first year of the newcompany, and all personnel are working together
to achieve the target of returning to profitability.
I ask for the cooperation and support of ourshareholders and investors.

Nisshinbo

Summary of Financial Results for the Fiscal Year Ended March 200916

Sluggish Personal Consumption Leads to Lower Revenues and Income;though, while P.T. Nikawa Textile Industry in Indonesia reported lower

remains an ongoing process, but the effects of structural reforms areCo., Ltd. Specific measures include reciprocal use of the production

sales but higher income as a result of shifting from unprofitable

starting to be felt.

sites of the three companies and readjusting sales channels for eachproducts to high added-value products.

Annual Report 2009

As a result, the textile business as a whole recorded lower net

Overseas Business Shows Positive Signs
The textile business continued to face an extremely difficult businesssales and lower income, with net sales of ¥67,593 million (down 14.3%

environment including a substantial drop in demand for finishedfrom the previous year) and an operating loss of ¥2,743 million (aclothing products along with sluggish personal consumption caused bydeterioration of ¥1,527 million from the previous year).

the economic recession.
In Japan, uniform fabrics generated higher income due to efforts
to lower costs. However, sales of shirt fabrics and spandex products fell

Business Strategies and Outlook for the Fiscal Year Ending March 2010

Following the reforms, the textile business created an

brand to improve profitability. Examples of expanded local production

organization with a strong awareness of integrated manufacturing andinclude increasing the facilities of P.T. Gistex Nisshinbo Indonesia (G&N)

sales and began its first year following the corporate split.

in Indonesia and establishing a joint venture with Vardhman in India.

The Textile Fabrics Division consists of a weaving and finishing

Under the joint venture business, Nisshinbo Textile performs fabricdivision and a sales division that covers almost all textile areas including

processing, CHOYA performs product sewing, and Vardhman conducts

casual fabrics and bedding, with a focus on shirt fabrics and uniform

sales in India. In this way, each company is able to operate in its areas

fabrics. Shirt fabrics play a central role in the global sales developmentof strength.

business strategy, which makes use of close ties with leading domestic

The denim business is suffering from excess inventory, but

in both the domestic and overseas markets. Sales of denim were weak

An Organization That Integrates Manufacturing and Sales

customers and overseas production sites. Efforts are also being madea thorough identification and disposal of defective inventory was

because of slumping sales to major jeans makers, and as a result bothAt the time of the corporate split, the textile business carefully

to increase profits from the uniform fabric business by introducing new

implemented prior to the April 2009 corporate split. New production

sales revenues and income were down.

examined and reviewed the content of its business and took measures

products and increasing sales in the white garment field.

rules were adopted to improve structures so that excess inventories

Overseas, P.T. Gistex Nisshinbo Indonesia’s sales and income

to eliminate all waste including withdrawal from unprofitable

The Yarns Division consists of a procurement division thatdeclined because of higher raw materials and fuel costs and otherbusinesses. Amid the ongoing deterioration of the businesshandles yarn for in-group use and sale, as well as a spinning division.

factors. Nisshinbo Do Brasil Industria Textil LTDA. performed well,environment, the transition to an organization that can generate profits

Production is currently performed domestically and in China and India,
but it is likely that production will increasingly be shifted overseas.
The Denim Department, Knitted Fabrics Department, Mobilon

Net Sales

Operating Income (Loss)(billions of yen)(billions of yen)

Department, and Oikos Department will work to use the unique

100

1.5

characteristics of their respective products and expand sales underorganizations that integrate manufacturing and sales.

80

14.3%

40

¥1.5
billion
-1.5

20
-3.0

’06

’07

’08

’09

Environmentally Friendly Products
Nisshinbo Textile is responding to increasing demand forenvironmentally friendly products by marketing original materials andappealing products.
It is encouraging the use of banana fibers, bamboo fibers, andMeasures to Return to Profitability

leading apparel brands and is attracting considerable attention aroundTo achieve profitability following the corporate split, Nisshinbo Textile

the world including frequent visits by ministers from leading banana-

will increase local production, reinforce product development, and work

producing countries. In addition, the use of recycled materials such as

for a recovery in the leading shirt and denim segments.

polyester and cotton is increasing. Nisshinbo Textile is also working toRegarding the shirt business, Nisshinbo Textile will shore up
0

inventories can be eliminated.

other natural and ecological fibers. Banana fiber is already used in

060

do not occur. As a result, unreasonable sales necessitated by excess

’06

’07

’08

’09

CHOYA Co., Ltd., which continues to experience poor results, andreinforce integrated operations of Nisshinbo, CHOYA, and Naigai Shirts

develop products that can promote a low-carbon economy in fields thatmake use of existing materials.

17
Nisshinbo

Reforms, New Products to Power Return toProfitability Following the Split

Annual Report 2009TEXTIlES

Yoshihito Onda, President
Nisshinbo Textile Inc.

Overview of the Nisshinbo Group’s Business

Automobile Brakes
Message to Shareholders and Investors
Current conditions are, on the whole, extremely
challenging, but our structural reform efforts areproducing results. If we are able to establish the “70%structure”* that we are aiming for, the brake businesswill be transformed into an even more profitablebusiness when a recovery in auto production occurs.
The entire Group is committed to efforts to establish
this “70% structure”* as soon as possible.

Urgently Raising Cost Competitiveness Ahead of
Production Recovery at Automakers
Nisshinbo

Summary of Financial Results for the Fiscal Year Ended March 200918

Plummeting Automobile Sales Worldwide Drive Net Sales andlower net sales and lower income, with net sales of ¥53,261 million

establishment of a “70% structure”* in November 2008. Consideringwith Japanese and Korean makers and maintaining our leadership(down 19.8% from the previous year) and operating income of ¥3,310

that the downturn is the result of extreme change in the demand

position while developing cost-competitive products tailored tomillion (down 62.7% from the previous year).

structure and an unprecedented drop in automobile demand throughout

specific markets.

Annual Report 2009

the world, it may be some time before demand returns to previous

Income Down
Net sales of brake products in Japan and by our subsidiaries abroadfell as domestic and overseas production by Japanese and South

Business Strategies and Outlook for the Fiscal Year Ending March 2010

levels, particularly in developed countries. Thus, we reorganized our

New Friction Materials for Next-Generation Automobile Technologies

business structures so we can generate a profit even with orders at

The next-generation brake systems needed by hybrid vehicles, electriclevels lower than they have been in the past.

vehicles, and fuel cell vehicles will vary greatly depending on advances

Korean manufacturers plunged amid the deepening global recession

Transforming to Profitable Structures in Difficult Timesand declining auto sales in Japan, North America, and emerging

The current economic recession, said to be a once-in-a-century

markets in the second half. Also, factors including higher domestic

occurrence, has had a severe impact on the automobile industry. At thisthat can adapt to changes in order volumes, eliminating all non-components. Auto parts manufacturers are focusing technology

depreciation costs in conjunction with a review of the useful lives oftime there are no signs of recovery in production for domestic sales

essential and non-urgent investment, and implementing cost-developments on electronically controlled brake systems (EBS), andassets at the time of changes to the tax system pushed operating

or export. The brake business has grown in step with the growth andcutting measures with no areas off-limits. Overseas businessthere will likely be little change in the importance of friction materials

income down substantially.

Specifically, we are constructing flexible production structuresin automotive electronic controls and trends in the use of electronic

global expansion of Japanese automobile manufacturers. It has madesites are implementing similar measures to reduce fixed costs,

themselves for the time being. We will continue intensive research on

ABS products also posted lower net sales and income as a result

significant contributions to the profitability of the Nisshinbo Group, so

increasing local procurement of raw materials and components andtechnologies related to friction materials for brake performance.

of the completion of the transfer of business to Continental Automotive

the rapid decline in orders since October 2008 represents a drastic

streamlining production sites according to the cost structures of

Our environmental responses are focused on compliance with

Corporation, a joint venture company, at the end of December 2008.

change in the business environment.

each site. More than six months have passed since these reform

regulations concerning chemical substances in the EU, the adoption

measures went into effect, and we are starting to see some resultsof our own stricter standards, and the development of green friction

both in Japan and abroad.

materials that do not use substances of concern. We are also working to

In response, the brake business proposed the rapid

As a result, the automobile brake business as a whole reported

develop production technologies that reduce carbon dioxide emissions.

Net Sales

Operating Income(billions of yen)(billions of yen)

80

10Advancing in Emerging Markets
In addition to structural reforms, we are making active advances into
emerging countries, which are expected to act as a driving force for

8

60

19.8%

40

new demand when automobile markets recover. For example, Japanese

6

62.7%

4
20

and Korean makers have established full-scale operations in India. In
1984 we concluded a technology support agreement with Rane Brake
Lining Ltd. (RBL), the leading friction material manufacturer in India. In
1996, we acquired 10% of RBL’s shares, and we are now cooperating2

with RBL to expand sales in the Indian market. We plan to increase our
0

0

’06

’07

’08

’09

’06

’07

’08

’09

holdings of RBL shares to strengthen our relationship.
We are committed to making the most of our good relationships* Seventy percent structure: A Group effort to reorganize business structures in a mannerthat a profit can be generated even with orders at 70% of their level in fiscal 2007 withthe assumption that this will continue for at least three years.

Annual Report 2009

AUTOMOBILE BRAKES

Masaya Kawata, President
Nisshinbo Brake Inc.

19
Nisshinbo

Kunihiro Toda, Chairman
Nisshinbo Brake Inc.

Overview of the Nisshinbo Group’s Business

PapersMessage to Shareholders and Investors
We are working to increase profitability and expand
business in the household paper products, speciality
papers, and processed paper segments by collaboratingwith other group companies. We have implemented apolicy of selecting target areas and focusing resources onthem. Although demand conditions remain unfavorable,
we aim to be a company with a strong market presence.
Our shareholders and investors can expect significant
developments from new Nisshinbo Paper Products.

Nisshinbo

Summary of Financial Results for the Fiscal Year Ended March 200920

(up 2.0% from the previous year) and operating income of ¥780 million(down 32.8%).

Household Paper Flat, Speciality Papers Down for Higher Sales andAnnual Report 2009

Lower Income Overall
Net sales of household paper products were higher due to increased

Business Strategies and Outlook for the Fiscal Year Ending March 2010

In the speciality papers segment, we will prioritize increasing

With respect to speciality papers, we are increasing products

sales of high added-value products and marketing new products. We

that use natural materials as well as products that incorporate pulp

will offer more environmentally friendly products and add new functions

made from recycled paper. Also, we have positioned products certified

to fine papers to make them more distinctive and stimulate demand. In

by the Forest Stewardship Council (FSC) as priority products.

the synthetic papers segment, we will shift from unprofitable products
Becoming a Core Member of Nisshinbo Through Synergy Effects

sales of core products including toilet paper designed for bidets andIncreasing Profitability and Establishing a New Business Model

recycled toilet paper. But operating income remained flat because of

As paper product prices continue to fall and demand declines, we will

higher costs for pulp and fuel and rising prices for various materials.

carry out responses tailored to each business segment in the fiscal

to increase sales of telegram-related products, which haveNisshinbo Paper Products is collaborating with subsidiaries with the aim

year ending March 2010 to raise overall profitability.

generated stable income, by proposing new projects. With respectof becoming a highly profitable, core member of the Nisshinbo Group.

In the speciality papers segment, sales of packaging-related

to high-profit products and take other steps to reorganize the business.
In the processed paper products segment, we will strive

with Subsidiaries

In the household paper products segment, we will increase

to packaging products, we will strengthen collaboration with Daiwa

The operations of Tokai Seishi Co., Ltd. were integrated in theprocessed telegram paper were strong. Sales of the main fine paper

sales with a focus on toilet paper designed for bidets. We will also

Shiko Co., Ltd., a subsidiary, and expand our range of business. In

fiscal year ended March 2009, and with updates to its raw material

products, however, were down as a result of the recession, and sales

improve distinctive pulp products and enhance the quality of recycled

the label business, we will integrate business with Nisshinbo Postal

processing facilities, we expect significant improvements in productof printer-related products by Nisshinbo Postal Chemical Co., Ltd. fell,

paper products by improving facilities, particularly raw material

Chemical Co., Ltd. to raise profitability.

quality and cost competitiveness. We are also working to integrate

resulting in lower net sales and income.

processing, to increase income. In addition, we will raise international

products for sweets by Daiwa Shiko Co., Ltd., a subsidiary, and of

As a result, the paper products business as a whole recorded
higher net sales and lower income, with net sales of ¥34,214 million

the label business with Nisshinbo Postal Chemical Co., Ltd. to raise

cost competitiveness by forming alliances with overseas companies inFurther Advances in High Added-Value Products

profitability. In the packaging products segment, we are working

relation to products that we market in the future.

Until now, the paper products business has maintained and improved

to generate synergy effects with Daiwa Shiko Co., Ltd., which wasits financial performance by developing distinctive products with highacquired in the fiscal year ended March 2008, to increase income. With

added-value. Going forward, we will strengthen this trend.

respect to telegram products, we are collaborating with Shanghai Sun-Net Sales

Operating Income(billions of yen)(billions of yen)

50

2.0

Cotton Feel is a high-quality tissue product using the attributesof natural cotton fibers that has enhanced our product lineup. We willcontinue to create distinctive products such as Shower Roll, a rolled

40

1.5

30

2.0%

paper product, and market new high added-value products such as

32.8%

1.0

20

new printed and embossed products.
Nisshinbo Paper Products is also actively developing
environmentally friendly products. In the household paper segment, we

0.5

10

are expanding sales of Cotton Feel, which uses some natural materials,
and of resource-saving Shower Roll. Tokai Seishi Co., Ltd., a subsidiary

0

0

’06

’07

’08

’09

’06

’07

’08

’09

that manufactures recycled toilet paper, is increasing the use ofrecycled paper by updating its raw material processing facilities.

Rich Arts & Crafts Co., Ltd., a production site, to raise income.

21
Nisshinbo

Boosting Product Added-Value with Other Group
Companies to Raise Profitability

Annual Report 2009

PAPERS

Shinji Takeuchi, President
Nisshinbo Paper Products Inc.

Overview of the Nisshinbo Group’s Business

Mechatronics

Chemicals
Message to Shareholders and Investors

Message to Shareholders and Investors

For solar cells to come into widespread use,
module prices must fall. It seems likely thatdemand concerning manufacturing costs
will become more pressing. That is why it isessential we increase the added-value andcompetitiveness of our products even further.
We hope to use the strengths of the entire
Nisshinbo Group and become the world’s
leading supplier of photovoltaic module
manufacturing equipment.

Enhancing Competitiveness of Photovoltaic Module
Manufacturing Equipment and Promoting Rapid Globalization
Summary of Financial Results for the Fiscal Year Ended March 2009

product line, were somewhat sluggish in the first half as a resultof production adjustments, particularly in Asia. In the second half,

CHEMICALS

Masaaki Isobe, President
Nisshinbo Chemical Inc.

High Profitability Based on a Lineup of Advanced
Environmental Technologies
Summary of Financial Results for the Fiscal Year Ended March 2009

an operating loss of ¥1,449 million (a deterioration of ¥660 million
from the previous year).

however, we received inquiries highly likely to result in sales, and theRecession Weighs on Income, But New Environmental Businesses

Boosts Sales and Income

prospects are good for sales to exceed the previous year’s performance

Achieve Steady Results

In the mechatronics segments, rising interest in clean energy continuesof ¥8.1 billion. Going forward, we have set a target of ¥12 billion in

The insulating products segment posted higher income despite lower

22

to spur rapid growth in solar power markets. Sales of solar simulators,

net sales. Demand for solar power will continue to increase in many

sales due to withdrawing unprofitable products and higher shipments

Growth Centered on Environmental Businesses

module laminators, and particularly of integrated photovoltaic module

leading countries because of electric power purchasing policies, andof LNG panels. Elastomer products, however, experienced lower sales

Environment-related technologies and business will prosper within the

manufacturing lines were sharply higher. At the same time, thewe believe that we will be able to achieve this target.

and income as a result of slumping exports to Europe and the United

chemical products business as a core part of the Nisshinbo Group.

States. The plastic molding and processing business saw lower sales

We anticipate that sales of both bipolar plates for fuel cells, of which

Annual Report 2009

Nisshinbo

Rapid Growth in Photovoltaic Module Manufacturing Equipment

The Miai Machinery Plant, a new specialized photovoltaic module

global downturn caused a rapid decline in demand for automobile

Business Strategies and Outlook for the Fiscal Year Ending March 201023

manufacturing line equipment and precision parts processing in the

manufacturing equipment plant located in Okazaki City, Aichi Prefecture,and income because of downturns in global markets in the second half

we control nearly 100% of the domestic market, will take off along

second half.

began operating in April 2009 at the same time as the corporate split.

and declining production in conjunction with inventory adjustments.

with Carbodilite high-performance resin additive, with demand forelectric double-layer capacitors following suit several years later. We

As a result, the mechatronics business as a whole reported

Demand for solar cells fell as a result of the so-called “Spain shock,” andhigher net sales and income, with net sales of ¥14,738 million (upthe market cooled, but this proved to be temporary, and there has been

performance chemical products plunged and sales were lower. But

will also begin sample shipments of carbon alloy catalysts in spring

82.3% from the previous year) and operating income of ¥1,554 million

no fundamental change in market growth. We believe that growth in thesales of bipolar plates for fuel cells to leading fuel cell manufacturers

2010 and are currently preparing for the start of full-scale business.

(up 285.6%).

range of 30% annually can be sustained in the future. We are raising thewere steady as they prepared for mass production of household fuelThe development and enhancement of these one-of-a-kind, industry-

added-value of our products by developing EL cell inspection equipment

cells. Also, electric double-layer capacitor production structures wereleading, and highly competitive products as well as the accuratethat makes module laminators with outstanding productivity. We will alsoestablished to respond to increasing demand by installing full-scale

determination of customer needs are our key policies.

cautiously increase production capacity in conjunction with the expansion

mass production facilities.

Business Strategies and Outlook for the Fiscal Year Ending March 2010of sales channels from Asia to Europe and the United States.

Market Trends for Photovoltaic Module Manufacturing Equipment

We are working to improve profitability by withdrawing from

As a result, the chemical products business as a whole reported
net sales of ¥32,624 million (down 15.3% from the previous year) andSales of photovoltaic module manufacturing equipment, our main

Net Sales

In new business segments, automotive-related orders for high-Operating Income

unprofitable businesses and consolidating production sites. Throughthese measures, we aim to achieve profitability in fiscal 2010.

Net Sales

Operating Income (Loss)(billions of yen)(billions of yen)(billions of yen)(billions of yen)

20

2.0

50

1.0

15

1.5

40

0.5

82.3%

10

0.5

5

Note: The mechatronics segment, which previously
was included in the other business segment, has
increased in significance and accordingly is now
presented as a separate category.

0

0

’08

’09

30

285.6%

1.0

’08

’09

15.3%

0

20

-0.5

10

-1.0

¥0.6
billion

-1.5

0

’06

’07

’08

’09

’06

’07

’08

Annual Report 2009

MECHATRONICS

Hiroshi Nakano, President
Nisshinbo Mechatronics Inc.

’09

Nisshinbo

Yoshihiro Sakaki, Chairman
Nisshinbo Mechatronics Inc.

Favorable developments regarding
environmental products are unfolding globally.
We have laid the groundwork for expanding
our environmental product business in the
future. We are working hard to expand the useof fuel cells, and the practical application ofhigh-performance carbon alloy catalysts is now
in sight. Nisshinbo Chemical is ready to makegreat leaps forward.

Overview of the Nisshinbo Group’s BusinessElectronics
Message to Shareholders and Investors
Fiscal 2010 marks the 50th anniversary of New Japan Radio’s
establishment. Based on our accumulated know-how, we haveengaged in business ranging from research and development tomanufacturing and sales with a focus on analog semiconductors,
one of our strengths, and boast world-leading sales volume ofoperational amplifiers, our main product line. As the functionality ofsemiconductors and wireless communications equipment increases,
we will raise our corporate value by using our original technologies
to provide optimal components.

implementing cost-cutting strategies, and raising process quality.

based on original wireless and ultrasonic technologies in a wide

Annual Report 2009

Summary of Financial Results for the Fiscal Year Ended March 2009

Business Strategies and Outlook for the Fiscal Year Ending March 2010

Slump in Global Demand Causes Larger Operating Loss

New Japan Radio Co., Ltd., which plays a central role in thebusiness calls for us to bolster marketing capabilities, maintainIn the fiscal year ended March 2009, the electronics industry

electronics business, will strive to become profitable in fiscal 2010

marketing structures, and develop new competitive products. To do

performed sluggishly as a result of a global slump in demand and a

Raising corporate value by eliminating New Japan Radio’s losses isthis, we will reinforce marketing activities closely tied to customers

Evolving As an Environmental Company with Group Companies

major drop in exports, which had been a driving industry force. Newan urgent task for the future development of the Group’s electronics

through our design centers in Osaka and Singapore. We will also

Collaborating with other Nisshinbo Group firms is an important priority.

Japan Radio Co., Ltd. saw its sales fall considerably as a result of

business. In the current term year ending March 2010, we expect

expand sales in the north and east of China through NJR Shanghai Co.,For example, in the core photovoltaic module manufacturing equipmentthat inventory adjustments will end and markets will begin to recoverLtd., a group business established in January 2008, and take steps

business, electric power storage technologies and control technologies

in the second quarter. A large-scale recovery of demand cannot bein new application fields with respect to communications, industrial

are crucial for expanding business. We anticipate collaboration withapplication products including satellite communication component

anticipated in the near future, so we are planning on sales at levels

equipment, and automotive devices so we can respond accurately tothe electronics products business in the future. We are expanding the

products. This resulted in an overall extremely poor performance.

of the previous year. Even so, we anticipate increases in sales ofcustomer needs.

electronics products business by collaborating with other Nisshinbo

lower production by customers in the main semiconductor segment,
lower sales of large electron tubes, and a decline in sales of microwave

The electronics product business had net sales of ¥60,550

Our medium- to long-term strategy for our main semiconductor

for third-generation mobile markets in China. In addition, we willloss of ¥3,918 million (a deterioration of ¥5,021 million from theimprove performance and return to profitability by reconstructing sales

New Japan Radio Co., Ltd. is also implementing integrated productprevious year).

strategies by formulating and implementing new product development

strategies to achieve dominant positions in markets with high added-

strategies, reorganizing production structures, reconstructing andvalue. In fiscal 2010, we will focus on expanding sales of highly reliable
automotive operational amplifiers, high-precision, stable operational
amplifiers for industrial equipment, MUSES operational amplifiers for

Net Sales

Operating Income (Loss)(billions of yen)(billions of yen)

100

2

80

1

higher-end audio devices, microwave devices (GaAs ICs) in domestic
and overseas markets, and the world’s smallest reflectors for camera
modules used in increasingly compact mobile phones.
We are also working on development of a number of new devices

0

60

20.8%

40

with which we hope to expand business over the medium to long¥5billion

-1
-2

20

-3

0

-4

’06

’07

’08

’09

term. These products include digital power supply control ICs, digital
video decoders used primarily in car navigation systems, and microelectro-mechanical systems used in electronic switches and silicon
microphones. In addition, we are developing SiC devices and GaN
devices as wide-gap semiconductor devices.

’06

’07

’08

’09

imaging equipment.

Group companies in a wide range of fields and are making every effort

microwave devices (GaAs ICs) for mobile phone use in Japan andWorld-Leading Product Strategies

million (down 20.8% from the previous year) and an operating

range of fields including marine radar and medical ultrasoundIn addition, Ueda Japan Radio Co., Ltd. supplies new products

to maintain our status as a highly valued company benefiting society.

25
Nisshinbo

Nisshinbo

24

New Japan Radio Co., Ltd. and Ueda Japan Radio Co., Ltd.
Play Central Roles in the Semiconductor, Electronic Equipment,
and Other Business Segments

Annual Report 2009

ELECTRONICS

Kazuo Hirata, President
New Japan Radio Co., Ltd.

Overview of the Nisshinbo Group’s Business

The Nisshinbo Group’s CSR Activities

Real Estate Leasing

Contributing to Society Through Good Faith and Fair Business
Activities Based on the Management Principle of the Group as a
Public Entity

Message to Shareholders and Investors
The role of the real estate leasing business in
the Nisshinbo Group is to support the financial
performance of the Group by effectively
using properties vacated by business shifts
to generate income. Following the corporate
split, real estate leasing has become a central
division of the holding company, and we hope
to serve by raising the corporate value of theentire Group.

Since its foundation in 1907, the Nisshinbo Group has undertaken business activities that contribute tosociety based on our belief that companies are public entities. This is reflected in our creed of “consistentintegrity.” All our employees in Japan and abroad know our principle and philosophy, which is to improve
quality of life for people around the world, do business in harmony with society and the global environment,
and work in good faith and fairly. In addition, we strive to maintain management transparency and run ourbusiness based on the principle that corporations are public entities. Corporate social responsibility (CSR)

Summary of Financial Results for the Fiscal Year Ended March 2009

Group Corporate
Principles

Public Entity: We shall contribute to human society through our businessactivities.
Consistent Integrity: We shall respond to stakeholders with honesty andintegrity.
Innovation: We shall create the future through continuous innovation.

Group Corporate
Philosophy• As the eco-company, we shall contribute broadly toward enhancing the
comfortable lifestyles and cultures of people around the world.

stores are happening in the distribution industry. We expect it will bedifficult to conclude new contracts in the future. In addition, changes
in the business environment, including stricter regulatory schemes,

Former Plant Sites

are making redevelopment more difficult. The number of projects that

The real estate leasing business reported higher net sales and income

require considerable time before profitability is increasing. We are26

due to more area at the former Hamamatsu Plant site being leased asthus considering land uses including residential sales as a means ofwell as the leasing of large-scale commercial facilities constructed on

maintaining and increasing income.

• We shall aim to achieve harmony with society and conduct businessactivities with honesty and integrity based on the belief that companies
are public entities.

Higher Sales and Income Expected in Fiscal 2010 with Two• We shall constantly aim to raise corporate value and become a corporategroup with a strong presence.

Annual Report 2009

Nisshinbo

Higher Sales and Income Maintained Through Effective Use of

the site of the former Tokyo Plant.
As a result, the real estate leasing business overall had net salesof ¥6,433 million (up 18.1% from the previous year) and operating

Residential Sales Projects

income of ¥3,340 million (up 22.7%).

We have decided to implement two residential sales projects:
redevelopment of the Hamamatsu and Harisaki Plant sites. In terms ofBusiness Strategies and Outlook for the Fiscal Year Ending March 2010

project scale, we expect sales of approximately ¥14.0 billion from fiscal
2010 to fiscal 2014.
In fiscal 2010, we project increases in sales and income as weEntering the Building Lot Sales Segment

1. Corporate GovernanceIn the real estate leasing business, long-term leases are possible,

begin the subdivision of single-family residential lots at the Hamamatsu

and for this reason leased properties were maintained and managedsite (6,500 m²). Going forward, we plan to increase the pace ofBasic Stancepursuant to medium- to long-term repair plans. The central aspect ofbusiness to achieve profitability at the earliest possible time and to

the real estate leasing business is leasing property to major distribution

engage in town development that contributes to the improvement ofcompanies, but restructuring as well as the “scrap-and-build” oflocal communities.

The Nisshinbo Group has long held a basic belief that companies are public entities, and this is reflected in the way we deal withthe public, customers, shareholders, employees, and other stakeholders with integrity and in good faith. This thinking is put into
practice in corporate governance as well. Nisshinbo is working to ensure the transparency of management, reinforce accountability,
and strengthen corporate ethics.
Following the transition to a holding company structure, we will continue our efforts to maximize the corporate value of theentire Nisshinbo Group and to further strengthen corporate governance.

Net Sales

Operating Income(billions of yen)(billions of yen)

8

4

6

3

Corporate Governance Structures

18.1%

4
2

22.7%

2
1

0

0

’06

’07

’08

’09

’06

’07

’08

’09

Nisshinbo is reinforcing corporate governance through the following management structures:
1 There are 11 directors, of which three are outside directors (as of June 26, 2009); the directors make timely decisions on
management strategies and policies and support business execution and audit functions.
2 The term of office for directors is one year, and managerial responsibilities are clarified each fiscal year.
3 The three outside directors serve to enhance the transparency of management.
4 Nisshinbo instituted a managing officer system with the intention of separating management decision-making and execution.

Annual Report 2009

Maintaining Sound Group Management Through the
Building Lot Sales Segment and Effectively Using Assets

is the most important management principle for the Nisshinbo Group.

27
Nisshinbo

REAL ESTATE
LEASING

Shinji Takeuchi, Senior Executive Managing Officer
Nisshinbo Holdings Inc.

The Nisshinbo Group’s CSR Activities

2 Disaster Prevention and Response

Nisshinbo’s Corporate Governance Structures
General Shareholders Meeting
Appoint to andremove from officeAppoint to and remove from office
Reports

11 Directors(including three outside directors)

Corporate
Attorneys

Reports

Board of Statutory Auditors

AdviceFour Statutory Auditors(including two outside
statutory auditors)

Financial Auditors

4 Information Systems (Server Management)
Approve appointment
and removal from office
Collaboration

Representative Directors

Executive Officers Conference

Internal Audit Dept.
AuditsWe have created systems that allow crucial computer servers to operate 24 hours a day, 365 days a year by installing them insecure facilities designed to withstand major earthquakes and other disasters.
5 Protection of Personal Information

AuditsManaging Officers, Business Divisions, Group Companies

Management Oversight Functions

Annual Report 2009

Two standing statutory auditors and two outside statutory auditors attend Board of Directors’ meetings to understand and oversee
the status of management. The statutory auditors also investigate the finances of subsidiaries.
Corporate attorneys provide legal advice to management. Veritas & Co. has been appointed to serve as the Group’s financial
auditors and perform rigorous and fair financial audits.
The Internal Audit Department works with the corporate and financial auditors to improve audit effectiveness.

Nisshinbo continuously strives to enhance information security. We perform annual audits to ensure the safety of important
information concerning customers, employees, and others. Our Personal Information Protection Charter (Privacy Policy) isavailable on our Web site. (http://www.nisshinbo.co.jp/site/privacy.html)

Total Compliance
Nisshinbo adopted the Corporate Code of Conduct as a statement of specific conduct guidelines for Nisshinbo Group employees. We
ensure employees are aware of the Code and follow it. The Corporate Ethics Committee, under the direct authority of the president andchaired by a Nisshinbo Holdings operating officer, undertakes corporate ethics activities directly linked to management.
1 Corporate Ethics Committee and Corporate Ethics Reporting System

Nisshinbo established the Corporate Ethics Committee to oversee group-wide compliance activities.
The Corporate Ethics Reporting System was created for the early discovery and prevention of legal violations. People outside theGroup can also report to the system, which can be used to communicate directly with the Corporate Ethics Committee or an outside
corporate attorney. The confidentiality of users is guaranteed, and every effort is made to prevent any detriment to them. Reports
are dealt with by the Corporate Ethics Committee.

Establishment of Internal Contr ols
In conjunction with the enactment of the Companies Act in May 2006, there has been growing demand for the establishment ofcorporate internal control systems. The submission of internal control reports has been obligatory since fiscal 2008 under the
Financial Instruments and Exchange Act, which aims to ensure the reliability of financial statements.
In response to these developments, the Nisshinbo Group established pertinent group regulations in April 2008. In consultation
with financial auditors and relevant divisions, the Group developed comprehensive internal control systems.
In addition, the Internal Audit Department assesses internal control structures and implements improvements. Nisshinbo willcontinue to improve its internal control structures.

Corporate Ethics Reporting System

Nisshinbo Holdings Inc.

Board of Directors
President

2. Risk Management and Compliance
Enhancing Risk Management
Corporate management entails a wide range of unforeseeable risks, but we believe that mitigating risk is part of our corporatesocial responsibility.
We work to avoid management risks in numerous areas including external risks such as natural disasters and internal risks
such as leaks of confidential and personal information. If a problem should occur, we have systems in place to respond in a timely
and appropriate manner.
1 Risk Management Structures

The Nisshinbo Group adopted Crisis Management Regulations to respond immediately to a crisis such as earthquake or fire.
Also, we conduct annual emergency contact training to prepare for crises. The emergency contact network is used to confirm
the whereabouts and safety of employees and speed recovery from crisis.

Corporate Ethics Committee
Internal Reporting Site
Corporate Ethics Committee Members

Internal Reporting Site
Corporate Attorney

Inquiries and Consultation

Nisshinbo

28

To prepare for the outbreak of the new strain of influenza, health information is periodically distributed to group companies. We
also distributed high-performance filtration masks developed by Nisshinbo to all group employees.

Stakeholders

Annual Report 2009

Board of Directors

3 Influenza Countermeasures

29
Nisshinbo

Appoint to and remove from officeNisshinbo Holdings and its five core subsidiaries have organized firefighting teams at each business site to prevent and respondto fires, perform regular inspections of firefighting facilities, and train staff on the use of fire hydrants. Our operating officers
have been performing annual fire inspections for more than 40 years.

The Nisshinbo Group’s CSR Activities

Financial Section

2 Legal Risk Management

The Nisshinbo Group conducts legal risk management as one aspect of its activities to ensure compliance in all of its businessundertakings. Checklists are used to conduct periodic inspections concerning major laws and regulations. Making the requirementsof major laws and regulations more visible has facilitated confirmation and raised worksite awareness concerning compliance.
3 Compliance Education

The Nisshinbo Group prepared Corporate Vision of the Nisshinbo Group as an educational tool concerning compliance-related
topics. The handbook is available to all employees on the Group intranet in Japanese and English. It has been translated into local
languages in non-English-speaking countries for employee training.

Corporate Vision of the
Nisshinbo GroupManagement Discussion and Analysis

37

Six-Year Summary

38

Consolidated Financial Statements

43

Notes to Consolidated Financial Statements

30

31Annual Report 2009

3. Antitakeover Defenses
Nisshinbo has adopted a set of rules for parties making large purchases of our stock that include purchase information provision
requirements. The Company also has antitakeover defenses in place. For instance, the Board of Directors can issue new share
warrants when a party does not comply with the rules. This can also occur when a company deemed unsuitable by the Company isin compliance with the rules while seeking to gain control of it.
These antitakeover defenses are aimed at ensuring shareholders get enough information to appropriately respond to large
stock purchases and we believe that they contribute to the shared interests of shareholders. If the Board of Directors issues newshare warrants or takes other defensive measures, a corporate value committee consisting of the outside directors and outside
statutory auditors will review its actions and make a recommendation. The Board will comply with that recommendation to thegreatest possible extent.
The antitakeover defenses were approved at the general shareholders meeting in June 2009. They will remain in effect for three
years, but they can be rescinded at any time before expiration of their term by a resolution of the general shareholders meeting.

More detailed information concerning the Nisshinbo Group’s environmental and social activities can be foundin its CSR Report (http://www.nisshinbo.co.jp).

Nisshinbo

Nisshinbo

32

Annual Report 2009

Contents

Financial Section

Management Discussion and Analysis
Highlights

Current Business Strategies and Future Prospects• Net sales and operating income fell as a result of the rapid downturn of the global economy. The Nisshinbo
Group recorded a net loss for the fiscal year.

In the textile business, we plan to reorganize the businessof CHOYA Co., Ltd. and other consolidated subsidiaries
and develop a global network with production and sales
located in the best possible sites to create profitable businessstructures.
In the mechatronics business, we will rapidly establish
overseas sales sites for photovoltaic module manufacturinglines and take other measures to develop business globally
while investigating the potential for developing new businessin related fields.

Nisshinbo

32
Annual Report 2009

Overview
During the fiscal year under review (the fiscal year ended
March 2009), the Japanese economy experienced an
unprecedented downturn because of the global economic
recession brought about by the subprime loan crisis in the
United States. As a result, the Nisshinbo Group’s businessenvironment was extremely adverse.
It was under these circumstances that the Group
reviewed its business structures pursuant to the core “selection
and concentration” policy of its Three-Year Management Plan
2008 and took active measures to reduce inventories, cut
costs, and review non-urgent capital investment.
Also, Nisshinbo spun off its textiles, automobile brakes,
papers, mechatronics, and chemicals businesses, establishedthem as subsidiaries, and adopted a holding company
structure effective April 1, 2009, to prepare for futureadvances. By implementing this corporate split, we intend
to reinforce diversified management, one of our strengths,
contribute broadly to society through our business activities,
and maintain and increase our momentum as a group.

¥3,120 million in investment security valuation losses wererecorded as a result of the downturn in stock market prices.
As a result, Nisshinbo recorded a net loss of ¥1,286
million (US$13 million), down ¥13,576 million from the prioryear. The net loss per share was ¥7.08 (US$0.07), comparedto net income per share of ¥63.34 in the prior year.

Operating income (million yen)

Textiles

67,593down 14.3% from the previous year

(2,743)a deterioration of ¥1,527 million fromthe previous year

Automobile Brakes

53,261

down 19.8 % from the previous year

3,310

down 62.7% from the previous year

Papers34,214up 2.0% from the previous year

780

down 32.8% from the previous year

Mechatronics

14,738up 82.3% from the previous year

1,554

up 285.6% from the previous year

Chemicals

32,624down 15.3% from the previous year

(1,449)a deterioration of ¥660 million fromthe previous year

Electronics

60,550

down 20.8% from the previous year

(3,918)a deterioration of ¥5,021 million fromthe previous year

200

Real Estate Leasing

6,433

up 18.1% from the previous year

3,340

up 22.7% from the previous year

150

Other Businesses

16,754up 10.8% from the previous year156

down 1.8% from the previous year

100

Eliminations / Corporate

—

(622)

—

50

Total

down 11.2% from the previous year408

down 96.6% from the previous year

Net Sales(billions of yen)

350
300
250

—
286,167

Note: Refer to pages 16 to 26 for details on performance in individual segments.

0’04

Results of Operations in the Current Term andComparison with the Previous Term
Net sales were ¥286,167 million (US$2,862 million), down
11.2% from the previous fiscal year. The cost of goods soldwas ¥243,858 million (US$2,439 million), down ¥22,168 million(8.3%) from the prior year. Selling, general, and administrative
expenses were ¥41,901 million (US$419 million), down ¥2,451
million (5.5%) from the prior year. As a result, operating income
was ¥408 million (US$4 million), down ¥11,626 million (96.6%)
from the prior year. Although the mechatronics businessposted higher net sales and income as a result of strong salesof photovoltaic module manufacturing equipment, the brakeproducts business and electronics business were severely
impacted by the recession.
In addition, although Nisshinbo received ¥4,436
million in investment income from the equity method andgains on the sale of investment securities, ¥3,844 million in
special retirement benefits were paid in conjunction with theimplementation of an early retirement incentive program andNet sales (million yen)

’05

’06

’07

’08

’09

Operating Income

Dividends(billions of yen)

12

Nisshinbo Holdings Inc. paid a year-end dividend of ¥7.5
per share and an interim dividend of ¥7.5 per share for a
total dividend of ¥15.0 per share. Nisshinbo will continue its
policy of paying ¥15.0 per share in the future while working
to increase the distribution of profits to shareholders byincreasing dividends in conjunction with higher income andby taking other measures.

9

6

3

Cash Dividends
(yen)

20

15

10
0

’04

’05

’06

’07

’08

’09
5

0

’04

’05

’06

’07

’08

’09

Annual Report 2009

Operating Results

33
Nisshinbo• In April 2009, Nisshinbo spun off five major businesses, adopted a holding company structure, and changed
its name to Nisshinbo Holdings Inc. The aim is to maximize group corporate value by strengthening
diversified management.

In new environmental and energy-saving fields including
bipolar plates for fuel cells, Carbodilite high-performancechemical product, and carbon alloy catalysts, our products
boast high levels of individuality and are at the industry’s
highest levels. We will focus the investment of management
resources in these fields to achieve rapid growth as anenvironmental company.

Financial Section

Financial Position

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

Total Assets(billions of yen)

Industry Segment

Amount (million yen)

Year-on-Year Change (%)

Textiles46,159△30.4

Automobile brakes

48,790△7.9

Papers29,954+14.5

Mechatronics

11,950+100.0200

Chemicals

25,506△7.2

100

Electronics

57,700△23.8

220,059

△13.6

500
400
300

Total
0

’04

’05

’06

’07

’08

’09

Notes

1. Amounts are calculated based on manufacturing costs.
2. The real estate leasing business does not engage in manufacturing, and therefore the above table does not include any amounts from this segment.
3. The above amounts do not include consumption taxes.
Annual Report 2009

Equity(billions of yen)

Capital Expenditures

300
250
200
150

Annual Report 2009

100
50
0

’04

’05

’06

’07

’08

’09

Capital expenditures amounted to ¥16,872 million during
the fiscal year under review. These included ¥1,380 million
for the acquisition of real estate for the fuel cell business inthe chemicals business and expenditures to increase thecapacity of household paper product manufacturing at the
Shimada Plant in the paper products business. In addition,¥2,843 million was used in the electronics business for New
Japan Radio Co., Ltd., a consolidated subsidiary, to invest insemiconductor manufacturing facilities.

Capital Expenditures

35(billions of yen)

25
Nisshinbo

Nisshinbo

34

Total assets at the end of the fiscal year under review were¥366,858 million, a decrease of ¥57,848 million from the endof the previous fiscal year. The decrease was the result of a¥15,129 million drop in sales receivables and other factors.
Total liabilities at the end of the fiscal year were¥173,160 million, a decrease of ¥5,637 million from the endof the previous fiscal year. Short-term borrowings increasedby ¥18,618 million, while trade payables declined by ¥13,094
million, and deferred tax liabilities fell by ¥15,285 million
in conjunction with a decrease in valuation income frominvestment securities.
Net assets at the end of the fiscal year were ¥193,698
million, down ¥52,211 million from the end of the prior year.
The major factors behind the decline were a decrease of¥9,886 million as a result of the acquisition and retirementof treasury shares, a decrease of ¥19,590 million from lower
net unrealized gain on available for sale securities as a resultof lower securities prices, a decrease of ¥12,490 million fromforeign currency translation adjustments, and a decrease of¥6,910 million from lower minority interests.
Net assets per share were ¥985.19 (US$9.85), down
¥194.24 from the end of the prior year.

Production Results

20
15
10
5

Cash Flows0

Cash Flows from Operating Activities
Cash flows from operating activities were ¥11,939 million(US$119 million), a decrease of ¥12,840 million from theprevious fiscal year. Although amounts recovered from tradereceivables increased, a net loss was recorded for the fiscal
year, income dropped substantially, and payments of trade
payables increased.
Cash Flows from Investing Activities
Cash flows used in investing activities were ¥14,393 million(US$144 million), an increase of ¥4,754 million from theprevious fiscal year. The main factors were decreases in
expenditures for acquisition of investment securities andexpenditures for acquisition of fixed assets.

Cash Flows from Financing Activities
Cash flows from financing activities were ¥11,940 million(US$119 million), an increase of ¥20,769 million from theprevious fiscal year. The main factor in the increase washigher short-term borrowings.
As a result of the above, cash and cash equivalents at theend of the fiscal year were ¥29,203 million (US$292 million),up ¥5,942 million from the end of the previous fiscal year.

’04

’05

’06

’07

’08

’09

Geographical Segment Information
Sales in Japan were ¥234,950 million, down ¥25,138 million(9.7%) from the previous year, and an operating loss of¥3,006 million was posted, a drop of ¥8,944 million fromthe previous year. The decline was the result of poor results
by New Japan Radio, a consolidated subsidiary, and otherfactors.
In Asia, performance by consolidated subsidiaries in thebrake business was down, with sales of ¥36,013 million, adecrease of ¥8,613 million (19.3%) from the previous year,
and operating income of ¥2,947 million, down ¥1,608 million(35.3%) from the previous year.
In other regions, sales and income were down. Lower
sales and income by consolidated subsidiaries in theautomobile brake business in North America and otherfactors resulted in sales of ¥15,204 million, down ¥2,494
million (14.1%) from the previous year, and operating incomeof ¥963 million, a decrease of ¥998 million (50.9%).

Net Sales by Geographical Segment
Overseas
17.9%

Domestic

Asia

82.1%

12.6%

Other
Regions
5.3%

Financial Section

Six-Year Summary

Risk Information

Annual Report 2009

Product Quality Risks
The vast majority of the Nisshinbo Group’s products are
manufactured in accordance with international quality
control standards, but there is no guarantee that qualityrelated problems will not occur in the future. The Company
has product liability insurance, but the occurrence of a large
liability could have an adverse impact on the Company’sbusiness results.

Risk of Fluctuation in the Value of Investment Securities
Investment securities held by Nisshinbo are marked tomarket in accordance with accounting standards for financial
products, and the Company implements impairment
accounting based on even stricter internal standards fora portion of these securities. If accounting standards arechanged in the future, however, periodic income or losses
may vary widely. Also, the Company plans to limit increases
in interest-bearing liabilities by selling investment securities
to procure capital needed for mergers and acquisitions,overseas business development, and capital investment, but
misalignment of the timing between sale and investment may
give rise to unforeseen circumstances.
In addition, Nisshinbo made a trust contribution of¥14.7 billion in response to losses resulting from a change inaccounting standards regarding employee retirement plans
made in 2000. In the fiscal year under review, the Company
realized a valuation loss of ¥4.2 billion on the contributed
portion. The Company amortizes retirement benefits evenly
over an average 15-year employment term, and therefore,
retirement benefit expenses affected by fluctuations in stock
prices could have an impact on income for the fiscal year.

Risks Associated with Market Shifts relating to ProductSale Prices and Raw Material Procurement
Some of the Nisshinbo Group’s products are significantly
affected by fluctuations in market prices in conjunction withcompetition with other companies and market developments.
Changes in currency exchange rates when procuring
imported raw materials may also curtail income.

Risks Associated with the Utilization of Idle Land
To reform its business structures, Nisshinbo is taking active
measures to close certain business sites and subsequently
use the idle land. Such redevelopment may result in cleanup
expenses, and revisions to laws could impede redevelopment.

Risks Associated with Changes in Customers’ Business
Performance
The customers of the Nisshinbo Group’s automobile brakebusiness are automobile manufacturers that conduct businessglobally. Changes in the business results of such clientcompanies are a factor that the Group cannot control, andconsequently, they may have an impact on our financial results.
Risks Associated with the Electronics Product Business
Semiconductors account for more than 80% of theconsolidated sales of New Japan Radio Co., Ltd., which
is a consolidated subsidiary, and changes in demand insemiconductor markets may have an impact on businessresults. Also, overseas sales account for approximately halfof New Japan Radio’s sales, and changes in exchange rates
may have an impact on business results.

2006

2007

2008

2009

226,883

243,421278,617

312,825

322,412286,167

Operating Income

8,496

9,651

10,524

11,551

12,034408

Net Income (loss)

3,919

8,199

11,183

15,107

12,290(1,286)Equity214,132

222,771

266,434

282,015

245,909

193,698

Total Assets

368,444

370,168

491,230

472,670

424,706

366,858

Shareholders’ Equity Ratio (%)

58.1

60.2

54.2

55.3

53.0

49.0

Return on Assets (%)

1.2

2.2

2.6

3.1

2.7

(0.3)

Return on Equity (%)

2.0

3.8

4.6

5.7

5.1

(0.6)

Payout Ratio (%)*

51.9

28.1

32.2

35.6

̶

―

Capital Expenditures

8,989

12,504

16,54818,30624,28016,872

Depreciation and Amortization

11,776

11,046

13,835

14,984

16,89018,025

216,580,939

208,198,939

208,198,939

201,698,939

198,698,939

184,098,939

Net Sales

Common Shares Issued

37

Per Share (in yen):
Net Income (loss)

17.86

39.03

53.21

74.19

63.34

(7.08)

1,030.98

1,072.54

1,283.21

1,301.14

1,179.43

985.19Cash Dividends

7.00

10.00

10.00

15.00

15.00

15.00

Number of Employees

9,875

9,505

12,602

12,744

13,253

12,726

Shareholders’ Equity*Payout Ratio is on a non-consolidated basis.

Net Sales

Net Income (loss)(billions of yen)350

Corporation Division and Transition to Holding Company Structure

Net Income (loss) per Share(billions of yen)
18

(yen)
100
90

300

15

250

12

200

9

150

6

100

3

50

0

10

0

-3

-10

80
70
60

Nisshinbo implemented a corporate split, spun off its major
business segments, and adopted a holding company
structure effective April 1, 2009. All rights and duties relating
to the textile business were transferred to Nisshinbo Textile
Inc., rights and duties relating to the automobile brakebusiness were transferred to Nisshinbo Brake Inc., rights
and duties relating to the paper business were transferredto Nisshinbo Paper Products Inc., rights and duties relating

to the mechatronics business were transferred to Nisshinbo
Mechatronics Inc., and rights and duties relating to thechemical business were transferred to Nisshinbo Chemical
Inc. As consideration for these transfers, all shares were
granted to Nisshinbo Holdings at the time of their issuanceby the respective companies. On the effective date of thecorporate split, Nisshinbo changed its name to Nisshinbo
Holdings Inc.

50
40
30
20

0

’04

’05

’06

’07

’08

’09

’04

’05

’06

’07

’08

’09

’04

’05

’06

’07

’08

’09

Nisshinbo

Nisshinbo

36

New Business Risks
The Nisshinbo Group is actively developing new businesses
with the aim of increasing sales and income, but there aremany uncertain factors in such new businesses, and it ispossible that the development of appealing new products
and the formation of new markets may not proceed as
anticipated. This could result in delays or the inability torecover prior investments.

2005

Annual Report 2009

(millions of yen)

2004

Financial Section

Consolidated Balance Sheets(March 31, 2009 and 2008)

LIABILITIES AND EQUITY(millions of yen)

2009

2008

2009

Current assets:
Cash and cash equivalents .............................................................
Time deposits (Note 5) ....................................................................
Marketable securities (Note 4) .........................................................
Receivables
Notes receivable, trade ...............................................................
Accounts receivable, trade ..........................................................
Unconsolidated subsidiaries and affiliates ....................................
Other ..........................................................................................

¥

29,203
3,202
1,637

¥

23,261
2,505
1,858

$

292,030
32,02016,370Nisshinbo

9,415
45,0676,649
2,182
63,313

11,06358,922
7,342
1,344
78,671

94,150450,670
66,49021,820633,130

Less allowance for doubtful accounts .........................................

(320)
62,993(549)
78,122(3,200)629,930

Inventories (Note 3) .........................................................................
Deferred tax assets (Note 7) ............................................................
Other current assets........................................................................
Total current assets ..........................................................

48,217
1,665
2,948
149,865

52,1792,853
2,510
163,288482,170
16,65029,4801,498,650

38
Annual Report 2009

Property, plant and equipment (Note 5):
Land ...............................................................................................
Buildings and structures ..................................................................
Machinery, equipment and tools......................................................
Construction in progress .................................................................
Less accumulated depreciation .......................................................

Investments and other assets:
Investment securities (Notes 4 and 5) ..............................................
Investments in and advances to unconsolidated subsidiaries and affiliates...
Deferred tax assets (Note 7) ............................................................
Goodwill ..........................................................................................
Other ..............................................................................................

See Notes to Consolidated Financial Statements.

28,063
127,373
232,833
2,542
390,81126,987
131,627
256,4422,562
417,618

280,630
1,273,730
2,328,330
25,4203,908,110(272,632)
118,179(290,422)
127,196(2,726,320)
1,181,790

51,56535,640
4,000
329
7,280
98,814¥ 366,858

91,02032,978
1,743
438
8,043
134,222¥ 424,706

515,650
356,400
40,0003,290
72,800988,140$ 3,668,580(thousands of
US dollars)(Note 1)(millions of yen)

2009

Current liabilities:
Short-term bank loans (Note 5) .......................................................
Commercial paper...........................................................................
Current portion of long-term debt (Note 5) ......................................
PayablesNotes and accounts payable, trade (Note 5) ...............................
Unconsolidated subsidiaries and affiliates ....................................
Other ..........................................................................................
Employees’ savings deposits ..........................................................
Accrued expenses ..........................................................................
Accrued income taxes ....................................................................
Deferred tax liabilities (Note 7) .........................................................
Other current liabilities (Note 5) ........................................................
Total current liabilities .......................................................
Long-term liabilities:
Long-term debt (Note 5)..................................................................
Accrued severance benefits (Note 6) ...............................................
Deferred tax liabilities (Note 7) .........................................................
Other long-term liabilities (Note 5)....................................................

¥

60,07018,000
2,432

2008

¥

41,452
10,000
2,880

2009

$

600,700
180,000
24,32021,826547
6,530
28,90332,5291,118
8,350
41,997218,260
5,470
65,300289,030

185
6,307
929
1
3,348
120,175

242
7,648
2,546
1
2,708
109,474

1,850
63,0709,290
1033,4801,201,750

4,601
25,634
4,748
18,002
52,985

3,949
28,573
20,033
16,76869,32346,010256,340
47,480180,020529,850

27,58820,401
107
130,521
10,555(42)(8,168)27,58820,401
59
153,746
30,145(112)
4,322

275,880
204,0101,070
1,305,210
105,550(420)(81,680)(1,018)
179,944
13,754
193,698¥ 366,858(10,904)
225,245
20,664245,909¥ 424,706(10,180)
1,799,440
137,540
1,936,980$ 3,668,580

Commitments and contingencies (Note 11)
Equity (Note 12):
Common stock:
Authorized ̶ 371,755,000 shares
Issued2009 ― 184,098,939 shares2008 ̶ 198,698,939 shares .................................................
Capital surplus ................................................................................
Stock acquisition rights ...................................................................
Retained earnings ...........................................................................
Net unrealized gain on available-for-sale securities ..........................
Deferred gain (loss) on derivatives under hedge accounting ............
Foreign currency translation adjustments ........................................
Less shares in treasury
2009 ̶ 1,567,705 shares2008 ̶ 7,771,654 shares ......................................................
Minority interests .............................................................................

Annual Report 2009

(thousands of
US dollars)(Note 1)

39
Nisshinbo

ASSETS

Financial Section(Years ended March 31, 2009 and 2008)(thousands of
US dollars)(Note 1)(millions of yen)

Net sales..................................................................................................................

2009

2008

2009

¥ 286,167¥ 322,412$ 2,861,670

Costs and expenses:
Cost of sales ...................................................................................
Selling, general and administrative expenses ...................................

Operating income ....................................................................................................
Other income (expenses):
Interest and dividend income ..........................................................
Interest expenses ............................................................................
Equity in earnings of affiliates...........................................................
Other, net (Note 10).........................................................................

Nisshinbo

40

Income (loss) before income taxes and minority interests ......................................
Income taxes (Note 7):
Current............................................................................................
Deferred ..........................................................................................

Annual Report 2009

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

¥

243,858
41,901
285,759

266,026
44,352
310,378

2,438,580
419,0102,857,590

408

12,034

4,080

3,466
(1,140)4,436(9,738)(2,976)

3,319(1,255)
5,203
584
7,851

34,660(11,400)
44,360(97,380)(29,760)(2,568)19,885(25,680)

2,120(3,257)(1,137)

5,161
1,365
6,526

21,200(32,570)(11,370)(1,431)145(1,286)

13,359
(1,069)12,290(14,310)1,450(12,860)

¥

$

(yen)

(US dollars)

Per share:
Net income (loss) ............................................................................
Cash dividends ...............................................................................

See Notes to Consolidated Financial Statements.

¥(7.08)
15.00

¥

63.34
15.00

$

(0.07)
0.15(thousands of
US dollars)(Note 1)(millions of yen)

2009

2008

2009

Common stock:
Balance at beginning of year
(2009 ̶ 198,698,939 shares; 2008 ̶ 201,698,939 shares) ..........
Balance at end of year
(2009 ̶ 184,098,939 shares; 2008 ̶ 198,698,939 shares) .........

¥

27,588¥27,588$275,880¥

27,588¥27,588$275,880

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

¥¥

20,401
20,401¥¥

20,401
20,401$$

204,010204,010

¥

59
48
107

¥

16
43
59

$

590
480
1,070

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

¥

Retained earnings:
Balance at beginning of year .............................................................
Net income (loss) ...............................................................................
Cash dividends..................................................................................
Adjustment due to increase in consolidated subsidiaries ...................
Retirement of treasury stock ..............................................................
Other .................................................................................................
Balance at end of year.......................................................................

¥ 153,746(1,286)(2,812)
132(19,211)(48)¥ 130,521¥ 149,507
12,290(3,479)(4,642)70¥ 153,746$ 1,537,460(12,860)(28,120)
1,320(192,110)(480)$ 1,305,210

¥

¥

$

Net unrealized gain on available-for-sale securities:
Balance at beginning of year .............................................................
Net changes ......................................................................................
Balance at end of year.......................................................................
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.......................................................................
Treasury stock at cost:
Balance at beginning of year .............................................................
Add: acquired....................................................................................
Add: increase in the Company’s share of the affiliate accounted for by the equity method ...
Deduct: sold and retirement ..............................................................
Balance at end of year.......................................................................
Minority interests:
Balance at beginning of year .............................................................
Net changes ......................................................................................
Balance at end of year.......................................................................
See Notes to Consolidated Financial Statements.

¥

―

$

30,145(19,590)¥ 10,555

61,225(31,080)¥ 30,145

$

¥

¥

$

¥

(112)
70
(42)

¥

¥

4,322
(12,490)¥ (8,168)¥¥ (10,904)(11,074)(0)
20,960¥ (1,018)¥¥¥

20,664(6,910)13,754

68
(180)
(112)

$

2,989
1,333
4,322

$

(559)
(14,832)
(166)
4,653
¥ (10,904)

$

¥

$

¥

¥

20,780(116)
20,664$$$

301,450(195,900)
105,550(1,120)700(420)43,220(124,900)(81,680)(109,040)(110,740)(0)209,600(10,180)

206,640(69,100)
137,540

Annual Report 2009

Consolidated Statements of Changes in Equity(Years ended March 31, 2009 and 2008)

41
Nisshinbo

Consolidated Statements of Income

Financial Section

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements(Years ended March 31, 2009 and 2008)

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

2009

Nisshinbo

42

Cash flows from operating activities:
Income (loss) before income taxes and minority interests ........................
Adjustments to reconcile net income to net cash provided
by operating activities:
Income taxes-paid ..........................................................................
Depreciation and amortization .........................................................
Amortization of goodwill ..................................................................
Equity in earnings of affiliates...........................................................
Provision for (reversal of) doubtful receivables..................................
Provision for accrued pension and severance benefits ....................
Payment of accrued pension and severance benefits ......................
(Gain) loss on sale of property, plant and equipment........................
Gain on sale of investment securities and investments inand advances to unconsolidated subsidiaries and affiliates ..........
Loss on write-down of investments in and advances
to unconsolidated subsidiaries and affiliates .................................
Loss on plant closures ....................................................................
Other, net ........................................................................................
Changes in operating assets and liabilities:
Receivables.....................................................................................
Inventories ......................................................................................
Payables .........................................................................................
Other, net ........................................................................................
Net cash provided by operating activities .........................

¥

2008

(2,568)¥19,885

2009$(25,680)

Annual Report 2009

(4,914)18,025
1,280(4,436)(1,076)3,564(6,147)
1,818(6,126)
16,8903,212(5,203)36
3,145(2,530)(2,250)(49,140)
180,250
12,800(44,360)(10,760)
35,640(61,470)
18,180(3,948)(3,678)(39,480)

3,120
2,004
848

5
1,403
666

31,20020,0408,480

14,5401,602(9,974)(1,799)11,9393,085
2,060(4,383)(1,438)24,779145,400
16,020(99,740)(17,990)
119,390

770

3,776

7,700

7,644
(17,669)

8,014(21,331)

76,440(176,690)(2,095)(1,317)(7,669)(489)(20,950)(13,170)―(1,726)(14,393)

(792)
(656)
(19,147)(17,260)(143,930)

Cash flows from financing activities:
Proceeds from issuance of long-term debt ..............................................
Repayment of long-term debt .................................................................
Increase (decrease) in short-term bank loans...........................................
Increase in commercial paper .................................................................
Cash dividends paid ................................................................................
Payment for purchase of treasury stock ..................................................
Increase (decrease) in other long-term liabilities .......................................
Other, net ................................................................................................
Net cash provided by (used in) investing activities ............

3,570(2,420)19,1968,000(2,812)(11,074)(402)(2,118)
11,9401,859(3,972)(2,710)10,000(3,479)(14,832)
4,702
(397)
(8,829)35,700(24,200)
191,960
80,000(28,120)(110,740)(4,020)(21,180)
119,400

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 ....

(3,947)
5,539
403

693
(2,504)
1(39,470)
55,3904,030

Cash flows from investing activities:
Proceeds from sale of property, plant and equipment ..............................
Proceeds from sale of investment securities and investments inand advances to unconsolidated subsidiaries and affiliates...................
Payment for purchase of property, plant and equipment..........................
Payment for purchase of investment securities and investments inand advances to unconsolidated subsidiaries and affiliates...................
Increase in time deposits .........................................................................
Cash acquired from newly consolidated subsidiaries,
net of payment for purchase of companies...........................................
Other, net ................................................................................................
Net cash used in investing activities .................................

Cash and cash equivalents at beginning of year ....................................................
Cash and cash equivalents at end of year ..............................................................
See Notes to Consolidated Financial Statements.

¥

23,261
29,203¥25,76423,261―$

232,610292,030

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles andpractices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements ofInternational 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 arithmeticalcomputation only, at the rate of ¥100 = $1, the approximate exchange rate at March 31, 2009. 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 of Nisshinbo Industries, Inc. (hereinafter the “Company”) and its
significant subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in which 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 areaccounted for by the equity method.
Investments in unconsolidated subsidiaries and associated companies are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries and associated companies are stated at cost. If the equity methodof accounting had been applied to the investments in these companies, the effect on the accompanying consolidated financial
statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Group is 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 theincome statement to the extent that they are not hedged by forward exchange contracts.
Investments in and advances to unconsolidated subsidiaries and affiliates in foreign currencies are translated at the historicalrates effective at the dates of transaction from which such accounts 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 rate.
Revenue and expense accounts of consolidated foreign subsidiaries are translated into yen at the average exchange rate.
(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits placed with banks on demand and highly liquid investments withinsignificant risk of changes in value which have maturities of six months or less when purchased.
(e) Inventories
Inventories are stated principally at the lower of cost or market, cost being substantially determined by the average cost method.
(f) Marketable securities and other investments
The Group classifies all of its marketable securities as available-for-sale which are reported at fair value, with unrealized gains andlosses included in equity as net unrealized gain on available-for-sale securities. Other investments without quoted market prices arestated at cost. Realized gains or losses on the sale of securities are based on the average cost of a particular security held at thetime 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 than cost, thefinancial condition and near-term prospects of the issuer and the Company’s intent and ability to retain marketable securities andinvestment 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.

Annual Report 2009

(millions of yen)

43
Nisshinbo(thousands of
US dollars)(Note 1)

Financial Section(i) Impairment of long-lived assets
Long-lived assets are evaluated for impairment using an estimate of undiscounted cash flows whenever events or changes incircumstances indicate that the carrying amount of such asset 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 than by sale areconsidered held and used until disposed of.

Nisshinbo

44(j) Retirement and pension plans
Under the employees’ retirement plans for the Company and certain consolidated subsidiaries, 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 thebalance sheet date.
Retirement benefits to directors and corporate auditors are provided at the amount which would be required if all directors andcorporate auditors retired at the balance sheet date.

Annual Report 2009(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 the vesting 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 thestock option or the goods or services received. In the balance sheet, the stock option is presented as a stock acquisition right as aseparate component of equity until exercised. The standard covers equity-settled, share-based payment transactions, but does notcover cash-settled, share-based payment transactions. In addition, the standard allows unlisted companies to measure options attheir intrinsic value if they cannot reliably estimate fair value.
(l) Research and development costs
Research and development costs are changed to income as incurred.
(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. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.

3. INVENTORIESInventories at March 31, 2009 and 2008 were as follows:(thousands of
US dollars)(millions of yen)
2009

Finished products...................................................................................................... ¥Work in process ........................................................................................................
Materials and supplies ...............................................................................................
¥

22,204
15,90910,104
48,217

2008¥¥

23,916
15,87912,38452,1792009$$

222,040
159,090
101,040
482,170

4. MARKETABLE AND INVESTMENT SECURITIESThe carrying amounts and aggregate fair values of securities available-for-sale included in marketable and investment securities at
March 31, 2009 and 2008 were as follows:(millions of yen)
2009

Cost .......................................................................................................................... ¥Unrealized gains ........................................................................................................
Unrealized losses ......................................................................................................
Fair value................................................................................................................... ¥28,084
22,267(2,119)48,232(thousands of
US dollars)

45

2009

2008

¥

¥

33,06156,039(3,554)85,546$$

280,840
222,670(21,190)482,320

Aggregate cost of non-marketable securities accounted for under the cost method totaled ¥4,970 million ($49,700 thousand) and¥7,332 million at March 31, 2009 and 2008, respectively.

5. SHORT-TERM BANK LOANS AND LONG-TERM DEBT
The annual interest rates applicable to the short-term bank loans at March 31, 2009 and 2008 were 0.8% to 6.8%.
Long-term debt at March 31, 2009 and 2008 consisted of the following:(thousands of
US dollars)(millions of yen)
2009

2008

2009

Long-term debt with collateral:
Loans from banks maturing serially to 2024, ranging from 1.1% to 2.6% ............... ¥3,225

Long-term debt without collateral:
Loans from banks maturing serially to 2013, ranging from 1.5% to 5.6% ...............

1,570

1,659

15,700

2,238
7,033

4,461
6,829

22,38070,330Capital lease obligations, due through 2014 ..............................................................
Less current portion ..................................................................................................
¥(2,432)
4,601

¥

¥

709

(2,880)3,949

Annual Report 2009(h) Goodwill
The difference between the cost and underlying fair value of the net equity of investments in subsidiaries at acquisition is included ingoodwill or other long-term liabilities and amortized on a straight-line basis over five years.

(n) Derivative financial instruments
The Group uses a variety of derivative financial instruments, including foreign currency forward contracts and interest rate swaps,
as a means of hedging exposure to foreign currency and interest rate risks. The Group does not enter into derivatives for trading or
speculative purposes.
The foreign currency forward contracts are utilized to hedge foreign currency exposures in procurement of raw materials fromoverseas suppliers. Trade payables denominated in foreign currencies are translated at the contracted rates if the forward contracts
qualify for hedge accounting.
Interest rate swaps are utilized to hedge interest rate exposures of long-term debt.

Nisshinbo(g) Property, plant and equipment
Property, plant and equipment is stated at cost. Depreciation is computed principally on the declining balance method over theirestimated useful lives. Contributions in aid of purchases of property, plant and equipment from national and local governments are
deducted from the acquisition costs of related assets in accordance with tax regulations.

$$32,250(24,320)46,010Financial Section

Annual maturities of long-term debt were as follows:(thousands of US dollars)¥$2010 .................................................................................................................................
2011 .................................................................................................................................

2,432

24,3201,229

12,290637

6,3702012 .................................................................................................................................
2013 ................................................................................................................................

1,035

10,3502014 and thereafter...........................................................................................................

1,700

17,000

¥

7,033

$

70,330Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on therate of pay at termination, years of service and certain other factors.
The Company and certain domestic subsidiaries have basically two types of pension plans for employees: a non-contributory
and a contributory funded defined benefit pension plan. The plan also provides for lump-sum retirement benefits, payable uponearlier termination of employment. The Company has established an employee retirement benefit trust.
The liability for retirement benefits for directors and corporate auditors at March 31, 2009 and 2008 were ¥478 million ($4,780
thousand) and ¥455 million. The retirement benefits for directors and corporate auditors are paid subject to the approval of theshareholders.
The liability for employees’ retirement benefits at March 31, 2009 and 2008 consisted of the following:

At March 31, 2009 and 2008, net book value of assets pledged as collateral for short-term bank loans and long-term debt were as
follows:(thousands of
US dollars)(millions of yen)
2009

Property, plant and equipment ..................................................................................... ¥

9,272

2008

¥

8,861

2009

$

Assets pledged:
Nisshinbo

46

2009

Annual Report 2009

8,692
402
209
9,303

2008

¥

9,225
405
209
9,839

¥

50,401(17,758)
32,643

Unrecognized prior service cost ................................................................................
Unrecognized actuarial loss .......................................................................................
Unrecognized transitional obligation ..........................................................................

2,252(12,482)(87)
22,326

Prepaid pension cost.................................................................................................
Net liability ........................................................................................................... ¥2,830
25,156(thousands of
US dollars)(millions of yen)

Property, plant and equipment ............................................................................. ¥Investment securities ...........................................................................................
Time deposits......................................................................................................
¥

2009

Projected benefit obligation ....................................................................................... ¥Fair value of plan assets ............................................................................................

92,720In addition, pledged assets as collateral for liabilities other than the above were as follows:

2009

$

$

86,9204,020
2,090
93,0302008¥(thousands of
US dollars)(millions of yen)
2009

Other long-term liabilities ..................................................................................... ¥Notes and accounts payable, trade .....................................................................
Other current liabilities .........................................................................................
¥

9,396
313
185
9,894

2008

¥

¥

9,396
181
187
9,764

2009

$

$

93,9603,130
1,850
98,94052,531(23,296)
29,235

2009

$

2,492
(6,644)(144)
24,939¥3,179
28,118504,010(177,580)
326,430
22,520(124,820)(870)
223,260$

28,300251,560

47

The components of net periodic retirement benefit costs for the years ended March 31, 2009 and 2008 were as follows:(thousands of
US dollars)(millions of yen)
2009

Liabilities with collateral:(thousands of
US dollars)(millions of yen)

Service cost .............................................................................................................. ¥Interest cost ..............................................................................................................
Expected return on plan assets .................................................................................
Amortization of prior service cost...............................................................................
Recognized actuarial loss ..........................................................................................
Amortization of transitional obligation ........................................................................
Net periodic benefit costs ......................................................................................
Defined contribution pension cost .............................................................................
Retirement benefits paid due to restructuring of business operations ........................
Total ....................................................................................................................... ¥

2,447
1,095
(508)
(240)
698
56
3,548
94
3,844
7,486

2008

¥

¥

2,526
1,053
(460)
(242)
232
48
3,157
94
32
3,283

Assumptions used for the years ended March 31, 2009 and 2008 were set forth as follows:

Discount rate.............................................................................................................
Expected rate of return on plan assets ......................................................................
Amortization period of prior service cost ....................................................................
Recognition period of actuarial gain / loss .................................................................
Amortization period of transitional obligation ..............................................................

2009

2008

2.0%
1.9%–3.3%
10–15 years
10–15 years
10 years

2.0%–2.5%
1.4%–2.5%
10–15 years
10–15 years
10 years

2009

$

$

Annual Report 2009

(millions of yen)

24,47010,950(5,080)(2,400)6,980
560
35,480940
38,44074,860Nisshinbo

Year ending March 31,

6. RETIREMENT AND PENSION PLANS

Financial Section

7. INCOME TAXES

8. LEASES

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at
March 31, 2009 and 2008 were as follows:

The Group leases certain machinery, computer equipment and other assets.
Total rental expenses for the years ended March 31, 2009 and 2008 were ¥514 million ($5,140 thousand) and ¥431 million,
respectively, including ¥365 million ($3,650 thousand) and ¥419 million of lease payments under finance leases.
On March 30, 2007 the ASBJ issued ASBJ Statement No.13, “Accounting Standard for Lease Transactions” which revised theexisting accounting standard for lease transactions issued on June 17, 1993.
Under the existing accounting standard, finance leases that deem to transfer ownership of the leased property to the lessee are
to be capitalized; however, other finance leases are permitted to be accounted for as operating lease transactions if certain “as if
capitalized” information is disclosed in the note to the lessee’s financial statements.
The revised accounting standard requires that all finance lease transactions should be capitalized. The revised accounting
standard for lease transactions is effective from the fiscal year beginning on April 1, 2008.
Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligation under finance lease,depreciation expense of finance leases that do not transfer ownership of the leased property to the lessee on an “as if capitalized”
basis for the years ended March 31, 2009 and 2008 was as follows:¥

563
12,715174
1,295
10,004216
1,582(9,745)
16,804

2008

¥

¥

509
6,644
264
1,773
11,602
1,420
1,761(9,949)14,024

2009

$

$

5,630
127,150
1,740
12,950100,040
2,160
15,820(97,450)
168,040

2009

Nisshinbo

Deferred tax liabilities:
Unrealized gain on available-for-sale securities..................................................... ¥Deferred gains on sale of property .......................................................................
Other ...................................................................................................................
¥Net deferred tax ........................................................................................................ ¥(8,181)(4,406)(3,301)(15,888)
916

¥

¥
¥

(21,326)(4,685)(3,451)(29,462)(15,438)$$(81,810)(44,060)(33,010)(158,880)$

48
Annual Report 2009

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2009 and 2008 and the actual
effective tax rates reflected in the accompanying consolidated statement of income was as follows:
Normal effective statutory tax rate .............................................................................
Equity in earnings of affiliates............................................................................
Lower income tax rates applicable to income in certain foreign countries .........
Valuation allowance..........................................................................................
Amortization of goodwill ...................................................................................
Intercompany dividends ...................................................................................
Other ...............................................................................................................
Actual effective tax rate .............................................................................................

2009

2008

40.7 %
70.3
24.3(39.9)(24.6)(18.6)(7.9)
44.3 %

40.7 %(10.7)
(5.8)
0.0
6.6
6.6
(4.6)
32.8 %(thousands of
US dollars)(millions of yen)

Acquisition cost ................................................................................................... ¥Accumulated depreciation ...................................................................................
Net leased property ............................................................................................. ¥

2008

1,988
(1,290)
698

¥

2009

2,050
(1,152)
898

¥

$
$

19,880(12,900)
6,980

Obligations under finance leases:(thousands of
US dollars)(millions of yen)

9,160

2009

Due within one year ............................................................................................. ¥Due after one year ...............................................................................................
Total .................................................................................................................... ¥

2008

238
460
698

¥

347
551
898

¥

2009

$

2,380
4,600
6,980

$

Depreciation expense under finance leases:(thousands of
US dollars)(millions of yen)
2009

Depreciation expense .......................................................................................... ¥

2008

365

¥

419

2009

$

3,650

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

9. DERIVATIVESThe Group enters into foreign currency forward contracts to hedge exchange risk associated with certain assets and liabilities
denominated in foreign currencies. Foreign currency forward contracts which qualify for hedge accounting for the years ended
March 31, 2009 and 2008 and such amounts which are assigned to the associated assets and liabilities and are recorded on thebalance sheets at March 31, 2009 and 2008 are excluded from disclosure of market value information.
The Group also enters into interest rate swap contracts to manage its interest rate exposures on certain liabilities. Suchcontracts outstanding at March 31, 2009 and 2008 were as follows:(millions of yen)(thousands of US dollars)

2009

Contract
amountInterest rate swaps:
Fixed rate payments, floating rate receipt.......

Fair
value

2008

Unrealized Contract
loss
amount¥ 7,684 ¥ (692) ¥ (692) ¥ 6,879 ¥

Fair
value

2009

Unrealized Contract
gain (loss) amount

135 ¥

Fair
value

Unrealized
loss

135 $ 76,840 $ (6,920) $ (6,920)

Foreign currency forward contracts
Sold .................................................

¥ 1,139 ¥ 1,178 ¥(39) ¥̶̶ ¥̶ $ 11,390 $ 11,780 $(390)

Purchased ........................................

¥(44) ¥

183 ¥

182 ¥

(1) $ 6,890 $ 6,450 $

(440)

689 ¥

645 ¥

Annual Report 2009

2009

Deferred tax assets:
Inventories ........................................................................................................... ¥Tax loss carryforwards .........................................................................................
Allowance for doubtful accounts ..........................................................................
Accrued employees’ bonuses .............................................................................
Accrued severance benefits.................................................................................
Impairment of long-lived assets and depreciation in excess of tax limitation .........
Other ...................................................................................................................
Less valuation allowance .....................................................................................

49
Nisshinbo(thousands of
US dollars)(millions of yen)

Financial Section

13. SEGMENT INFORMATION(thousands of
US dollars)(millions of yen)
2009

Gain (loss) on sale of property, plant and equipment .................................................. ¥Gain on sale of securities...........................................................................................
Loss on inventory disposal ........................................................................................
Write-down of investment securities ..........................................................................
Loss on plant closures ..............................................................................................
Retirement benefits paid due to restructuring of business operations ........................
Amortization of goodwill ............................................................................................
Other, net ..................................................................................................................
¥(1,818)
3,948(709)(3,120)(2,004)(3,844)(1,280)(911)(9,738)

2008

¥

¥

2,250
3,678
(1,039)(5)(1,403)(32)(2,320)(545)
584(millions of yen)

2009

$

$

(18,180)
39,480(7,090)(31,200)(20,040)(38,440)(12,800)(9,110)(97,380)

11. COMMITMENTS AND CONTINGENCIES

Nisshinbo

Contingent liabilities at March 31, 2008 for loans guaranteed amounted to ¥372 million.
Commitments for capital expenditures outstanding at March 31, 2009 and 2008 were in the approximate amounts of ¥3,856
million ($38,560 thousand) and ¥13,417 million, respectively.

2009

TextilesAnnual Report 2009(a) Changes of company name
On April 1, 2009, the Company divestitured and formed its separate five wholly owned subsidiaries from the textiles, automobile
brakes, papers, mechatronics and chemicals divisions.
The Company changed its name on that date to Nisshinbo Holdings Inc.
(b) Year-end cash dividends
On May 13, 2009, the Board of Directors of Nisshinbo Holdings Inc. declared year-end cash dividends (¥7.5 per share) in theamounts of ¥1,377 million ($13,770 thousand).
(c) Stock option
At the general shareholders meeting held on June 26, 2009, the Company’s shareholders approved a stock option plan to grant
stock purchase rights up to 154 thousand shares of the Company’s common stock to directors and key employees in the period
from August 1, 2011 to July 31, 2016.
(d) Pension plan
According to the enactment of the Defined Contribution Pension Plan Law, the Company and certain domestic subsidiaries
implemented a defined contribution pension plan in April 1, 2009 by which the former qualified defined benefit pensions plan andthe severance lump-sum payment plan were terminated．
As a result of the above change, income before income taxes and minority interests would increase by ¥900 million ($9,000
thousand) approximately in the following year．

Automobile
BrakesPapersMechatronics Chemicals Electronics¥ 34,21448
34,262
33,482¥780¥ 14,738
524
15,262
13,708¥ 1,554

Real Estate
Other Eliminations/
Leasing Businesses Corporate Consolidated

I. Sales and Operating Income (loss)
Sales to customers ....... ¥ 67,593 ¥ 53,261
Intersegment sales........
2
377
Total sales .................
67,59553,638Operating expenses ......
70,33850,328Operating income (loss) ¥ (2,743) ¥ 3,310¥ 32,624 ¥ 60,550 ¥ 6,433
−
592
464
33,21660,5506,897
34,66564,4683,557¥ (1,449) ¥ (3,918) ¥ 3,340− ¥ 286,167¥ 16,754 ¥−
1,365(3,372)
18,119(3,372)
286,167
17,963(2,750)285,759¥156 ¥(622) ¥
408

II. Total Assets, Depreciation and Amortization, Impairment of Long-lived Assets and Capital Expenditures
Total assets ..................
Depreciation and amortization...
Impairment of long-lived assets
Capital expenditures .....

¥ 54,955¥ 2,898¥85¥ 2,959¥ 55,274¥ 4,299−¥¥ 3,409¥ 25,487¥ 1,869−¥¥ 2,965¥ 11,410
¥
758
−
¥
¥
467

¥ 21,022¥ 1,930¥26¥ 2,135¥ 62,817¥ 4,754−¥¥ 2,843¥ 22,142¥ 1,476−¥¥411¥ 8,113 ¥105,638
−
¥
41 ¥
− ¥
−
¥
¥
52 ¥ 1,631¥ 366,858¥ 18,025¥111¥ 16,872(millions of yen)
2008

Textiles12. SUBSEQUENT EVENTS

50(a) Industry segments
Information about industry segments of the Company and its consolidated subsidiaries for the years ended March 31, 2009 and2008 were as follows:

Automobile
BrakesPapersMechatronics Chemicals Electronics

Real Estate
Other Eliminations/
Leasing Businesses Corporate Consolidated¥ 33,547
46
33,59332,431¥ 1,162¥ 8,083
480
8,563
8,160
¥
403

¥ 5,446
513
5,959
3,236
¥ 2,723

Annual Report 2009

Other income (expenses) ̶ Other, net consisted of the following:

I. Sales and Operating Income (loss)
Sales to customers ....... ¥ 78,816 ¥ 66,397
̶Intersegment sales........
8
Total sales .................
78,824
66,397
Operating expenses ......
80,04057,525
Operating income (loss) ¥ (1,216) ¥ 8,872¥ 38,528 ¥ 76,475
̶895
39,42376,47540,21275,371¥ (789) ¥ 1,104

̶ ¥ 322,412¥ 15,120 ¥―447(2,389)15,567(2,389)322,412
15,408(2,005)
310,378¥
159 ¥(384) ¥ 12,034

II. Total Assets, Depreciation and Amortization, Impairment of Long-lived Assets and Capital Expenditures
Total assets ..................
Depreciation and amortization...
Impairment of long-lived assets
Capital expenditures .....

¥ 67,841¥ 2,979¥155¥ 2,117¥ 70,561¥ 4,292̶
¥¥ 5,221¥ 23,308¥ 1,303̶¥¥ 2,746¥ 6,047
¥
374
―
¥
¥
391

¥ 26,235¥ 1,817̶¥¥ 2,136¥ 93,715¥ 4,938̶¥¥ 4,847¥ 27,971¥ 1,081̶
¥¥ 6,547¥ 8,612 ¥100,416
̶
¥
106 ¥
̶ ¥
̶
¥
¥
5 ¥
270

¥ 424,706¥ 16,890¥
155¥ 24,280(thousands of US dollars)
2009

TextilesAutomobile
BrakesPapersMechatronics Chemicals Electronics$ 342,140
480
342,620334,820$ 7,800$ 147,380
5,240
152,620
137,080$ 15,540

Real Estate
Other Eliminations/
Leasing Businesses Corporate Consolidated

I. Sales and Operating Income (loss)
Sales to customers ....... $ 675,930 $ 532,610
Intersegment sales........
20
3,770
Total sales .................
675,950
536,380
Operating expenses ......
703,380
503,280
Operating income (loss) $ (27,430) $ 33,100$ 326,240 $ 605,500 $ 64,330
̶
5,920
4,640
332,160
605,500
68,970346,650644,680
35,570$ (14,490) $ (39,180) $ 33,400

̶ $ 2,861,670$ 167,540 $̶
13,650(33,720)
181,190(33,720) 2,861,670
179,630(27,500) 2,857,590$ 1,560 $ (6,220) $4,080

II. Total Assets, Depreciation and Amortization, Impairment of Long-lived Assets and Capital Expenditures
Total assets ..................
Depreciation and amortization...
Impairment of long-lived assets
Capital expenditures .....

$ 549,550$ 28,980$
850$ 29,590$ 552,740$ 42,990
̶$$ 34,090$ 254,870$ 18,690
̶$$ 29,650$ 114,100$ 7,580̶
$$ 4,670$ 210,220$ 19,300$260$ 21,350$ 628,170$ 47,540
̶
$$ 28,430$ 221,420$ 14,760̶$$ 4,110$ 81,130
$
410
̶
$
$
520

$1,056,380 $ 3,668,580
̶ $ 180,250
$
̶ $
$
1,110
$ 16,310 $ 168,720

51
Nisshinbo

10. OTHER INCOME (EXPENSES) ̶ OTHER, NETFinancial Section(millions of yen)
2009

Asia

Other Regions

Eliminations/
Corporate

Consolidated

36,013
11,00147,014¥¥―¥ 286,167(20,755)(20,755)

286,167

Sales to customers ...........................
Interarea transfer...............................
Total sales .....................................

¥ 234,950
9,405
244,355

Operating expenses ..........................
Operating income (loss) ....................

¥

247,361(3,006)¥44,067
2,947¥

14,590963¥(20,259)(496)¥

Total assets ......................................

¥ 224,937¥

29,546¥

12,955¥99,420¥ 366,858¥

15,204349
15,553―285,759
408(millions of yen)
2008

Japan

Nisshinbo

52

Asia

Other Regions

Eliminations/
Corporate

Consolidated

44,626
13,94958,575¥¥

̶¥ 322,412(25,435)(25,435)

322,412

Sales to customers ...........................
Interarea transfer...............................
Total sales .....................................

¥ 260,088
11,432
271,520

Operating expenses ..........................
Operating income (loss) ....................

¥

265,582
5,938¥

54,0204,555¥

15,791
1,961¥(25,015)(420)¥

Total assets ......................................

¥ 267,150¥

42,362¥

20,160¥95,034¥ 424,706¥

17,69854
17,752

̶

Annual Report 2009

Asia

Sales to customers ...........................
Interarea transfer...............................
Total sales.........................................

$ 2,349,500
94,0502,443,550$ 360,130
110,010
470,140

Operating expenses ..........................
Operating income (loss) ....................

2,473,610$(30,060)

440,670$ 29,470

Total assets ......................................

$ 2,249,370$ 295,460

We have audited the consolidated balance sheet of Nisshinbo Holdings Inc. (formerly Nisshinbo Industries, Inc.) and consolidated
subsidiaries as of March 31, 2009, and the related consolidated statements of income, changes in equity, and cash flows for theyear then ended, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted and applied in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Nisshinbo Holdings Inc. and consolidated subsidiaries as of March 31, 2009, and the results of their operations and their cash flows forthe year then ended, in conformity with accounting principles and practices generally accepted in Japan.
The United States dollar amounts shown in the consolidated financial statements have been translated solely for convenience.
We have reviewed this translation and, in our opinion, the consolidated financial statements expressed in Japanese yen have beentranslated into US dollars on the basis described in Note 1.

310,378
12,034
VERITAS & Co.

53

June 26, 2009
Tokyo, Japan(thousands of US dollars)
2009

Japan

To the Board of Directors of
Nisshinbo Holdings Inc.

Other Regions

Eliminations/
Corporate

Consolidated$

152,040
3,490
155,530$$(207,550)(207,550)

2,861,670$

145,900
9,630(202,590)$(4,960)$2,857,590
4,080$

129,550$$

3,668,580

̶

994,200

2,861,670

Independent Auditors’ Report―(c) Sales to foreign customers
Sales to foreign customers for the years ended March 31, 2009 and 2008 amounted to ¥80,528 million ($805,280 thousand) and¥93,827 million, respectively.

Nisshinbo

Japan

Independent Auditors’ Report

To the Board of Directors of
Nisshinbo Industries, Inc.
We have audited the consolidated balance sheet of Nisshinbo Industries, Inc. and consolidated subsidiaries as of March 31,
2008, and the related consolidated statements of income, changes in equity, and cash flows for the year then ended, all expressed inJapanese yen. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted and applied in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Nisshinbo Industries, Inc. and consolidated subsidiaries as of March 31, 2008, and the results of their operations and their cash flows
for the year then ended, in conformity with accounting principles and practices generally accepted in Japan.

Etsuko Nagashima

Takeshi Takubo

Certified Public Accountant

Certified Public Accountant

June 27, 2008
Tokyo, Japan

Annual Report 2009(b) Geographical segments
The geographical segments of the Company and its consolidated subsidiaries for the years ended March 31, 2009 and 2008 wereas follows:Director, Chairman

Director *1, President

Takashi Iwashita

Shizuka Uzawa

1907

Established Nisshin Cotton Spinning Co., Ltd.

1937

Acquired Kawagoe Cotton Spinning Co., Ltd. (now the Kawagoe Business Office)

1938

Merged with Nisshin Rayon Co., Ltd. (now the Miai Business Office)1940

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

1945

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

1962

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

1972

Established Nisshinbo Do Brasil Industria Textil LTDA.

1978

Acquired Tokai Seishi Co., Ltd.

Nisshinbo

1985

Acquired Nisshin Denim Co., Ltd.

Director *1,
Senior Executive Vice President

1989

Established Kohbunshi (Thailand) Ltd.

Kunihiro Toda

1993

Established Pudong Kohbunshi (Shanghai) Co., Ltd.

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

1999

Established Saeron Automotive Corporation (South Korea)

2000

Purchased additional shares of P.T. Nikawa Textile Industry (Indonesia)
Established Continental Teves Co., Ltd. through merger with Continental Teves AG & Co. oHG(name changed to Continental Automotive Co., Ltd. in 2007)

2002

Acquired all shares of Iwao Co., Ltd.
Established NISSHINBO (SHANGHAI) CO., LTD.

2003

Established Saeron Automotive Beijing Corporation (China)

2004

Established Continental Teves Corporation (Lian Yun Gang) (China)

2005

Acquired additional shares of ALOKA Co., Ltd.
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.

2007

Acquired all shares of Daiwa Shiko Co., Ltd.

2008

Acquired all shares of CHOYA Co., Ltd.
Acquired all shares of Nisshinbo Brake Sales Co., Ltd.

2009

Spun off five businesses̶Textiles, Automobile Brakes, Papers, Mechatronics, and Chemicals̶and converted to holding company;
corporate name changed to Nisshinbo Holdings Inc.

Director, Senior Executive
Managing Officer

Director,
Executive Managing Officer

Director,
Executive Managing Officer

Director,
Executive Managing Officer

Shinji Takeuchi

Yoshihito Onda

Yoshihiro Sakaki

Masaaki Isobe

54
Annual Report 2009

Director, Managing Officer

Director *2

Director *2

Director *2

Masaya Kawata

Tomofumi Akiyama

Toshiya Hanawa

Koji Kato

55*1 Representative director*2 Outside director

Managing Officers and Auditors

Corporate Data

(As of June 26, 2009)(As of March 31, 2009)

President

Executive Managing Officers

Managing Officers

Standing Statutory Auditors

Founded:Feb. 5, 1907

Shizuka Uzawa *1

Yoshihito Onda *1
Yoshihiro Sakaki *1
Masaaki Isobe *1

Masaya Kawata *1
Masahiro Murakami
Kazunori Baba

Yoshio Ide
Masao Satsuka

Head Office:2-31-11, Ningyo-cho, Nihonbashi,
Chuo-ku, Tokyo 103-8650, Japan
Tel: 03-5695-8833 Fax: 03-5695-8970

Vice President

Kunihiro Toda *1

Statutory Auditors
2

Senior Executive Managing Officer

Yo Kawakami *Toshihiko Tomita *2

Shinji Takeuchi *1*1 Board member as well
*2 Outside auditor

Osaka Branch: 2-4-2, Kitakyuhouji-machi, Chuo-ku,
Osaka 541-0057, Japan
Tel: 06-6267-5501 Fax: 06-6267-5529
Nagoya Branch: 5-2-38, Sakae, Nakaku, Nagoya
460-0008, Japan
Tel: 052-261-6151 Fax: 052-263-9480

Annual Report 2009

History(As of June 26, 2009)

Nisshinbo

Board of Directors

Employees:

Parent Company 2,484
Subsidiaries
10,242
Total
12,726

Common Stock: Authorized 371,755,000 shares
Issued184,098,939 shares¥27,588 million − US$276 million
Shareholders:

13,153

Listings:

Tokyo, Osaka, Nagoya, Fukuoka, and Sapporo

Transfer Agent: Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Main Group Companies(As of April 1, 2009)

Nisshinbo Textile Inc.

Nisshinbo Holdings Inc.

TextilesDevelopment, manufacture, processing, trading, and import/export ofthread, woven fabric, nonwoven fabric, apparel, industrial textile
materials, and other fiber products.

General Shareholders Meeting
Corporate Strategy Center
Board of Directors• CHOYA Co., Ltd.
• Nisshin Denim Inc.
• Nisshinbo Do Brasil Industria Textil LTDA.
• P.T. Gistex Nisshinbo Indonesia• P.T. Nikawa Textile Industry• NISSHINBO (SHANGHAI) CO., LTD.
• P.T. Naigai Shirts Indonesia

Business Support Center

Nisshinbo Brake Inc.

ChairmanPresident
Board of Management

Automobile Brakes

Business Development Division

Development, manufacture, processing, trading, andimport/export of friction materials, brake equipment, and brakeparts for automobiles and transport machinery.

Property Management Department• Nisshinbo Brake Sales Co., Ltd.
• Nisshinbo Automotive Corporation• Nisshinbo Automotive Manufacturing Inc.
• Nisshinbo Somboon Automotive Co., Ltd.
• Saeron Automotive Corporation

Board of Statutory Auditors

Nisshinbo Paper Products Inc.
Development, manufacture, processing, trading, andimport/export of paper and processed paper products andprocessing of industrial waste.

Nisshinbo

Nisshinbo Mechatronics Inc.
Mechatronics

56
Annual Report 2009

Development, manufacture, processing, trading, andimport/export of special-purpose industrial machinery,general industrial machinery, other equipment, and parts forthese products.

• Tokai Seishi Kougyou Co., Ltd.
• Daiwa Shiko Co., Ltd.
• Nisshinbo Postal Chemical Co., Ltd.

• Nippon Kohbunshi Co., Ltd.
• Nisshinbo Precision Instrument &Machinery Hiroshima Corporation• Nisshinbo Alps tech Co., Ltd.
• Taiwan Nisshinbo Photovoltaic Co., Ltd.
• Pudong Kohbunshi (Shanghai) Co., Ltd.
• Kohbunshi (Thailand) Ltd.

Nisshinbo Chemical Inc.
Chemicals
Development, manufacture, processing, trading, and import/exportof inorganic chemical industrial products, organic chemical industrial
products, medical products, and other industrial chemical products
as well as construction and civil engineering design, implementation,and management.

• Iwao & Co., Ltd.

New Japan Radio Co., Ltd.
Electronics
Development, manufacture, processing, trading, and import/exportof electron tubes, semiconductor elements, integrated circuits,
and other electronic components and electrical machinery using
these products.

• Ueda Japan Radio Co., Ltd.

Other Group Companies
Real Estate Leasing
Other Businesses• Nisshinbo Urban Development Co., Ltd.
• Nisshinbo Europe B.V.
• Nisshin Toa Inc.

Annual Report 2009

Papers57
Nisshinbo

Statutory Auditor