NEXT 2015

Heading in the Right Direction
Annual Report 2014

www.nisshinbo.co.jp/english/

Fiscal Year Ended March 2014

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

Printed in Japan

Financial Highlights
As an environmental and energy company contributing to the sustained development of society, Nisshinbo Holdings Inc. has
set strategic targets of net sales in excess of ¥600 billion, operating income of over ¥40 billion and return on equity (ROE)of more than 9% by the fiscal year ending March 2018.
In April 2013, the Group announced a new three-year management plan called NEXT 2015, a key milestone on the roadto achieving the strategic targets. Under the plan’s three basic policies—reinforcing the Group’s management, strengthening
the business structure, and fostering growth drivers—Nisshinbo will work to increase the corporate value of the Group.

For the years ended March 31(millions of yen)(thousands of
US dollars)

2010

2011

2012

2013

2014

2014

Net Sales¥242,409¥325,555¥379,340¥450,693¥494,350$4,708,095

Textiles

53,222

57,40060,96450,77351,349489,038

Automobile Brakes

41,046

46,11947,450118,849

148,699

1,416,181

Papers

31,53630,32630,22030,524

31,686

301,771

Precision Instruments

24,90832,02025,191

24,52028,655272,905

Chemicals

6,309

7,284

8,258

8,150

8,810

83,905

Electronics

51,699112,820

169,907

175,308

187,743

1,788,029

Real Estate

6,298

12,437

9,082

15,367

10,567

100,638

Other Businesses

27,391

27,14928,26827,202

26,841

255,628

Operating Income

3,570

19,843

4,170

13,394

13,175

125,476

Net Income

1,896

11,185

9,416

6,418

9,012

85,829Total Assets¥358,110¥479,852¥534,584¥551,933¥611,311$5,822,010

Net Assets

193,639

211,557

213,751

242,623

276,865

2,636,810

Net Cash Provided by Operating Activities¥27,538¥16,529¥12,974¥34,095¥26,075$248,333

Net Cash Provided by (Used in) Investing Activities(9,949)11,591(57,861)(10,973)(19,862)(189,162)

Net Cash Provided by (Used in) Financing Activities(30,347)703

16,835(24,073)(2,321)(22,104)(yen)(dollars)

Operating Results

NEXT 2015“Integration for Growth”
Unification of domestic andoverseas management foreach business

Reforms to ensure sustained income
and sturdy management structure

Integration transcending
business fields

Fostering and expansion of environmental
and energy businesses“NEXT 2015” targets for fiscal year ending March 2016
Net sales

Operating income¥550.0 billion ¥24.0 billion

Financial Position

Progress toward NEXT 2015 targets
Net Sales of Nisshinbo Holdings Inc.

(For the years ended March 31)

2014

NEXT 2015
2016
0

100

200

300

400

500

600

(billions of yen)
TextilesAutomobile Brakes

PapersPrecision Instruments

ChemicalsElectronics

Real Estate

Cash Flows

Other Businesses

Per Share
Net Income¥10.38¥63.32¥53.83¥36.74¥51.60$0.49

Shareholders’ Equity

1,034.04

1,036.80

1,063.19

1,198.67

1,369.78

13.05

15.00

15.00

15.00

15.00

15.00

0.14

Cash Dividends

Contents

1 Financial Highlights
2 Business Diversification
4 Features
7 To Our Shareholders
12 At a Glance
14 Overview of Business Segments
14 Textiles
16 Automobile Brakes
18 Papers
20 Precision Instruments

22 Chemicals
24 Electronics
26 Real Estate
27 The Nisshinbo Group’s Management Framework
33 Outside Director Interview
34 Board of Directors
35 Financial Section
58 History
59 Corporate Data(%)

Key Ratios
Return on Assets (ROA)

0.5

2.7

1.9

1.2

1.5

Return on Equity (ROE)

1.0

6.1

5.1

3.2

4.0

Note: The U.S. dollar amounts in this report are given for convenience only and represent translations of Japanese yen at the rate of ¥105 = US$1.

1

Business Diversification
Segment

Fiscal year ended Mar. 2014

1940

1945

1955

1965

1975

1985

1995

2005

Textiles

100% cotton non-iron dress shirts

Cotton spinning has been Nisshinbo’s core business since it was founded in
1907. Since launching APOLLOCOT 100% cotton non-iron shirts in 2009,
we have been using the same technology to develop and sell a range of new
APOLLOCOT products.

After World War II, we began focusing on household paper products andspecialty paper amid a shift in demand to the private sector. We now focus onhigh value-added products such as highly absorbent toilet tissue for use withbidets and fine paper for high-grade printing applications.

• Customized machine tools

Luxury packaging
products

Plastic
moldings

Precision parts
processing• Precision parts processing• Rigid urethane foamConducted research anddevelopment
into friction materials

Bipolar plates
for fuel cells

Functional
chemicals

148.7

6.4%

31.7

5.8%

28.7

1.8%

8.8

Wireless disasterwarning systems

Semiconductor
products

38.0%

187.7

2.1%

10.6

5.4%

26.8

• Functional chemicals• Bipolar plates for fuel cells

Diversification achieved
thanks to large teamof chemical engineers,material development
capabilities and accumulated expertise• Electric double-layer• capacitors• Wireless disaster warning systems and othersolutions, marine radio
systems, semiconductor
products

Assisted Japan Radiothrough dispatch ofmanagers

Real estate

Effectively utilized former
factory sites• Residential building lot
sales, property leasing
and other real estatebusinesses• Others

TOTAL
2

30.1%

• Plastic molding

Electronics

Other Businesses

Householdpapers• Fine papers

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

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

51.3• Household papers

Precision Instruments

Real Estate

10.4%• Automotive• friction materials

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

Amount(billions of yen)

Disc pads

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

This business has its roots in our man-made fiber business. We are currently
stepping up the development of environmental and energy products, such as
rigid urethane foam used in insulation materials, functional chemicals, and fuelcell parts and materials.

Share• Dress shirts, denim

Automobile Brakes

Chemicals

Segment Sales

Main products¥ 494.3 billion

3Feature 01

Feature 02

Bipolar Plates for
Fuel Cells

Carbodilite
Carbodilite is seeing steady growth in demand as a modifier that improves the
durability of bioplastic and as a cross-linking agent used in water-based resins
for paint, which are both attracting attention as environmental materials.

The Nisshinbo Group makes bipolar plates for fuel cells.
These plates are playing a crucial role in the switch to clean energy.

Fuel cells are a promising source ofclean energy
Fuel cells generate electricity through a chemical reaction
between oxygen from the air and hydrogen. Fuel cells do not
require a heat engine, which gives them a number of advantages. Energy efficiency is high, there are no CO2 emissions
and they are very quiet. These characteristics make thema promising source of clean energy. Bipolar plates made by
Nisshinbo are an important component in fuel cells. As partof the fuel cell process, oxygen and hydrogen pass throughthese plates, and our products have been recognized for theirhigh performance in this area.
Use of residential fuel cell cogeneration
systems is gaining momentum
Residential fuel cell cogeneration systems work by extracting hydrogen from the residential gas supply, which is thenreacted with oxygen to produce electricity. Heat generated aspart of that process is also used to heat water. These systems
are expected to become increasingly popular. Thermal power
plants waste vast amounts of heat energy in the electricity
generation process. In comparison, fuel cell cogeneration systems achieve much higher levels of energy efficiency because
Sales of Residential Fuel Cell
Cogeneration Systems

How Fuel Cell Cogeneration Systems Work
OxygenFuel cell unit

Fuel cell stack

Hydrogen

Fuel reformer

Hot water unit

Backup heat source

Hot
water

Heat
InverterTown gas
LP gasHeat
recoverysystemHot water
storage tank

Water
supplyElectricity

they utilize this heat. Many people in Japan have experienced
power outages due to major earthquakes, so cogeneration
systems are attracting attention as a reliable source of energy
during natural disasters.
Our bipolar plates are used in fuel cell cogeneration systems and have captured a large share of the market. Lowerpriced systems for condominiums are likely to drive increased
uptake going forward. Meanwhile, European governments andcompanies are interested in promoting fuel cell cogeneration systems in their own countries due to their high energy
efficiency.

(thousands of units)
35
30
25
20
15
10
5
0

10.3

4

11.3

12.3

13.3

14.3

Helping to protect theenvironment in many ways
Carbodilite is helping to protect the environment in other ways, not just as a modifier forstrengthening eco-materials. One of those
applications is as a cross-linking agent used inwater-based resins for paint and ink. In this way,
Carbodilite is helping to drive growth in themarket for highly safe water-based resins that do
not contain organic solvents.
Although biodegradable plastic offers
significant benefits due to its low environmental
impact, water in the plastic tends to make it degrade too quickly, presenting a significant hurdle
to commercialization. Wider use of Carbodilite
as a modifier therefore offers significant benefits
for the environment.

Fuel cells for vehicles
Fuel cells do not emit CO2 and the only exhaust is water.
Automakers, together with active support from the government, are therefore working to develop and promote fuel cellvehicles as a key part of efforts to tackle environmental issues.
The first fuel cell vehicles are set to appear on the market in2015, but costs are still high.
We expect the use of fuel cell vehicles to take off fromaround 2020. With that goal in mind, we are working on adaily basis to help develop more affordable fuel cell vehicles
with our highly cost-competitive bipolar plates.

Extending the usable life of bioplastic
Switching from petrochemical-based plastic to plant-derived bioplastic
such as polylactic acid (PLA) resin is attracting growing attention.
When burned, waste plastic produces CO2, which is a greenhousegas. Steps are being taken by countries worldwide, including emerging
economies, to reduce emissions of CO2.
Bioplastic is already being used in many and varied real-world
applications, such as interior parts for cars, PC and projector housings,
photocopier manual cases, food and cosmetics containers, supermarket bags and multi-use film for agricultural applications. However,bioplastic still lacks durability. Our Carbodilite modifier helps to rectify
this issue, enhancing the advantages of biodegradable resins by controlling the speed of the degradation process. This is likely to support
strong demand for Carbodilite in the future.

Sales of CARBODILITE(billions of yen)
2.5

2.0

1.5

1.0

0.5

0.0

11.3

12.3

13.3

14.3

15.3

（Forecast）

5

To Our Shareholders

Feature 03
All photos show the Fujieda plant factory.

APOLLOBERRY®
Plant Factory
Plant factories are the ultimate in modern agriculture. By
controlling all aspects of the growing environment, they candeliver significant improvements in food safety and yields.

Heading in the
Right Direction
Jiro Fukuda

Center President
Business Development
Department

From Tokushima to Fujieda
In 2011, the Nisshinbo Group succeeded in cultivatingstrawberries on a large scale using a plant factory inTokushima. In Japan, the six-month period from December
to May is generally the best time to grow sweet and tasty
strawberries using conventional outdoor cultivation methods.
However, our plant factories have turned this thinking on its
head, allowing tasty strawberries to be grown all year round.
Large-scale cultivation has already started at our Tokushimaplant, where we have increased the plant factory’s capacity to
70,000 strawberry plants.
We have branded our plant factory strawberries
APOLLOBERRY®＊ and shipments to cake shops andhotels are rising steadily. In order to expand the business,
we have opened a second plant factory in Fujieda with acapacity of 100,000 strawberry plants. We plan to start
shipping APOLLOBERRY® strawberries from Fujieda near
the end of 2014.
＊ Named after the Apollo program to invoke the “first-ever” milestone of
Nisshinbo’s achievement.

Further gains in yields and profitability
APOLLOBERRY® strawberries have ended the seasonal
nature of premium strawberry cultivation and have also
proved popular in the market. However, we see further
scope for gains in yields and profitability. To achieve these6

Tadatoshi Manabe

Senior Manager
Business Development
Department

improvements, we are conducting ongoing research into
maximizing productivity per plant by making changes to thegrowing environment inside the plant factories. We currently
harvest around three tons of strawberries each month at ourTokushima plant, but we are aiming to boost annual output
to 100 tons without increasing the number of strawberry
plants. Similarly, we plan to raise annual output at the Fujieda
plant to 150 tons.
We currently use fluorescent tube lighting in our plantfactories, but we are now on the verge of switching to LED
lights, which normally make it difficult to alter the flavor of
the strawberries. However, we have made progress in resolving this problem. Switching to LED lights will help to halve
electricity costs, which currently account for around 30% of
total business costs.

We have completed the first year of ourcurrent three-year management plan, NEXT
2015, which was launched in April 2013. In thefiscal year ended March 2014, operating income
fell slightly, but net sales and net income bothincreased year on year. The year under review
marked steady progress toward the goals in
our three-year management plan.

Supporting local jobs
We currently employ 20 people to harvest strawberries at
our Tokushima plant and 28 at the Fujieda plant. This workforce includes five people with disabilities. Job opportunities
for disabled people are another important benefit of ourplant factories. The Fujieda plant also receives regular help
from a local school for disabled students, who visit the plantfactory as part of their work experience studies.

7

Financial Results for the Fiscal Year Ended March 2014
PCs. Earnings at Ueda Japan Radio Co., Ltd. were also

The electronics business and automobile
brakes business drove earnings, and Nisshinbo
became a more global corporate Group

firm. Nagano Japan Radio Co., Ltd. significantly cut backits industrial equipment power supply business in orderlosses in excess of ¥1 billion. However, we are confident
9.7% year on year to ¥494.3 billion, but operating income
slipped 1.6% to ¥13.1 billion. However, net income rose
40.4% to ¥9.0 billion.The main factor behind the decline
in operating income was a drop of ¥4.5 billion year on
year in profits from the real estate business. However, thiswas mostly offset by strong performances in the electronics business and the automobile brakes business, which
limited the decline in operating income to roughly ¥0.2
billion year on year.
In the electronics business, Japan Radio Co., Ltd.
registered another year of solid sales in solutions for the
public sector, and New Japan Radio Co., Ltd. posted higher
sales and profits in all its business segments, including
semiconductors.The company also moved into newmarkets with its SAW filters＊1and MEMS devices ,＊2starting up supplies to makers of smartphones and tablet

making the business

Alphatron Marine, a leading developer of vessel control sys-

more global. Textile

tems, to develop integrated equipment, enabling it to supply

processing at our Miai

highly competitive products. We see significant potential inbusiness site in Aichi

the growing market of offshore development vessels.

Prefecture has beentransferred to Yoshi-

to refocus management resources on other businesses.
The company was also forced to book inventory valuation

In the fiscal year ended March 2014, net sales increased

offshore development. Japan Radio plans to work withthat Nagano Japan Radio can rapidly turn around earnings
through business restructuring and other measures.
In the automobile brakes business, sales increased inJapan, mainly due to a rush in demand ahead of the hiketo consumption tax. Overseas, sales were also strong in
the US and Asia, and aftermarket sales recovered in Europe.The business also benefited from favorable exchange
rates. As a result, sales in the automobile brakes businessrose 25.1% year on year. One highlight was that Nisshinbo
Brake Inc. reported sales and profit growth at all its
overseas business sites in the US, South Korea, China andAutomobile Brakes Businessnogawa in Tokushima

The automobile brakes business holds the key to earn-

Prefecture. We are also

ings at Nisshinbo. The business is currently adding extra

strengthening textile

production capacity at its sites in China and Thailand,

processing technology

with the new capacity set to become fully operationalat Yoshinogawa so that it can become a research andin 2014. TMD is also moving and expanding its Saodevelopment center to support global expansion.

Paulo Plant in Brazil, aiming to steadily increase capacity

In Indonesia, we are reinforcing local production
facilities in order to manufacture the full line ofthrough to 2020.
TMD is targeting further profit growth by integrat-

APOLLOCOT products locally. Targeting increased

ing procurement activities with Nisshinbo Brake andexports to the US and Europe, we plan to boost

by strengthening its aftermarket business. The company

production capacity in Indonesia by around 10–20%

also aims to reinforce its business base by boostingand establish sales channels to overseas markets before

operational efficiency.

the end of 2014, which should provide a significant
boost to sales and profits. However, amid sharp

Thailand.TMD Friction Group S.A. also reported higher
Textiles Businessincreases in local wage costs in Indonesia, we are

before interest and taxes).

Even in our founding business of textiles, we are

actively cutting costs by adopting more automated＊1 Surface acoustic wave filters: Used in smartphones and othercommunication devices＊2 Micro electro-mechanical system devices: Small devices made using
semiconductor fabrication technology.

steadily strengthening the operating structure andproduction processes.

Focusing on Automobile Brakes and Electronics

sales and a return to profit at the EBIT level (earnings

Net sales of Nisshinbo GroupNEXT 2015: Initiatives for the Second Yearof the Three-year Management Plan
The fiscal year ending March 2015 is the second year of
our three-year management plan. We aim to build on the
results of the plan’s first year to grow earnings further.
Electronics BusinessWe continue to make good
progress with restructuring theelectronics business – one of the
key issues faced by Nisshinbo

We are steadily restructuring the electronics business,
which is one of the key areas we have to tackle under
our three-year management plan. We are currently
building a new Advanced Technology Center in Nagano,which is due to be completed in November 2014.
The center will be staffed by 1,000 engineers fromboth Japan Radio and Nagano Japan Radio, leading togreater cooperation between the two companies. Also,
Japan Radio has decided to acquire land from Nagano(billions of yen)

494.3

500
400
300

Others242.4

200municipal disaster prevention systems and otherJapan Radio acquired Dutch company Alphatronsales of electronic equipment for vessels used in

187.7

Automobile Brakes

148.7

100

products.
Marine Beheer B.V. in December 2013 to strengthen

Electronics

149.6

Japan Radio to build a new plant. The plant, which isscheduled for completion in March 2015, will produce

157.9

0

51.6
41.0

10.3

Acquired TMD Friction Group in Nov. 2011

14.3

Acquired Japan Radio and Nagano Japan Radio in Dec. 201089

Four Business Fields to Drive Growth
The Nisshinbo Group has seven business segments
operating in four main business fields. Wireless communications and electronics is our largest business field,
represented by key subsidiary Japan Radio. The second

We are aiming to generate significant value through cooperation andsynergies between business fields

business field is automotive parts and devices, which
covers the automobile brakes business, parts processing in the precision instruments business, and semiconductor devices. Third is the lifestyle and materials field,

Smart Factory Initiatives
We have set up a smart factory test facility at our Tokushima business site.The facility includes a power generation
system based on solar panels, wind turbines and fuel cells,

which is focused on textiles and paper products thatplay an important role in everyday life. Fourth is the
new energy and smart society field.
In each of these business fields, we are aiming toleverage our competitive advantages to boost earnings.
Also, as an environmental and energy company, we aim

WIND
POWER

a power storage system incorporating electric double-

SOLAR
POWER

layer capacitors, and a high-voltage direct current power
STORAGEBATTERIES

supply system that eliminates power losses that occur
when electricity is converted between direct current andalternating current. All these elements are monitored and

EMS*

FUEL
CELLS

controlled by an energy management system.

FACTORY

GRID
POWER

* Energy Management System

to generate significant new value through cooperationand synergies between businesses in each of the four
fields. By steadily implementing the initiatives in ourNEXT 2015 three-year management plan, we areconfident that we can achieve our strategic targets forthe fiscal year ending March 2018: net sales in excess of¥600 billion, operating income of over ¥40 billion and
ROE of at least 9%.

Working Together with Shareholders
We are now stepping up global expansion. As we implement our growth strategy targeting market needs, we will
focus on two areas in the fiscal year ending March 2015.
First, we will spread our Corporate Philosophy andBusiness Conduct Guidelines to all areas of the Group.

Opportunities as an Environmental and Energy Company
green guidelines and developing copper-free friction

The environment and energy is a theme thatruns through all four business fields

materials in response to tighter environmental regulations. In the paper products business, we are helping
to create a recycling-based society by making our
products from recycled paper. Our photovoltaic (PV)The Nisshinbo Group develops carbon bipolar plates,
which are used in fuel cells. We are also developing carbon alloy catalysts, which are seen as potential replacements for platinum catalysts. Nisshinbo also supplies
Carbodilite, an essential modifier used in bio-plastics
production. These products are the most obvious
examples of our environmental and energy products,
but as an environmental and energy company, we
believe manufacturing, product development and theprovision of solutions in all our businesses must have aclose connection to the environment and energy.
For example, in the textiles business, the advanced
processing technology we use to make APOLLOCOT
100% cotton shirts means ironing is no longer required.
In the automobile brakes business, we are implementing

10

business, which is part of the precision instruments
business segment, is steadily building a track record in
PV module installation, and the business has also
successfully developed an encapsulation sheet for PV modules that eliminates potential induced degradation (PID).
Also, as mentioned above, the Group manufactures
carbon bipolar plates for fuel cells. Our bipolar plates
have a dominant market share in residential cogeneration
systems in Japan. Our next application target for theseproducts is automotive fuel cells. Meanwhile, demand forbio-plastic modifier Carbodilite is poised to expand asSpecifically, we will encourage our 25,000 Group
employees to take onboard the main principles of our
Corporate Philosophy – Public Entity, Consistent Integrity

The Nisshinbo Group aims to be a global company
with a key role to play in every region worldwide.
Guided by our Corporate Philosophy and Business Conduct Guidelines, it is vital we develop ourbusiness overseas while paying due attention to
the different characteristics of each market.

and Innovation – and share the ideals of our BusinessConduct Guidelines. We will also create an organizationthat ties the growth of our employees to the growth of
the Company, as we believe that cycle is crucial to transforming Nisshinbo into a Group with a vital presence inevery region worldwide.
Second, we will improve cash flow management.
Focusing on cash flow will enable us to streamline thebalance sheet and strengthen the Company through more
efficient management, ultimately boosting the corporate

By focusing on these two areas, I am confident we
can achieve our strategic targets for the fiscal year ending March 2018 and realize our vision for the Nisshinbo
Group’s next stage of development in the 2020s.
I hope you can join us as we work to deliver evengreater success going forward.
June 2014

value of the Group.To achieve that goal, we will haveto visualize the everyday business processes of all our
personnel and ensure the plan–do–check–act (PDCA)
process is followed rigorously.

Masaya Kawata
President

environmental standards become tougher. At the
Nisshinbo Group, our aim is to deliver growth by contributing to society through environmental products andproducts that support the development of clean energy.

11At a Glance
The Nisshinbo Group comprises seven businesses: textiles, automobile
brakes, papers, precision instruments, chemicals, electronics and real estate.
Leveraging the manufacturing technologies and assets of our original cotton
spinning business, we have diversified into other business fields, where we
supply high value-added products to satisfy a range of customer needs.

TextilesAutomobile
BrakesPapersPrecision
Instruments

ChemicalsElectronics

Real Estate

10.4%

30.1%

6.4%

5.8%

1.8%

38.0%

2.1%

SEGMENT SHARENET SALES

MAIN BUSINESS AREAS(billions of yen)(billions of yen)(billions of yen)(billions of yen)(billions of yen)(billions of yen)

51.3
50.8
50.851.3
50.8 51.3

51.3 31.7 148.7
51.3
51.3
51.3
8.88.88.8
8.8
8.8 8.2 8.8 187.7
31.7
31.7
31.7
148.7
148.7 50.8
148.7
148.7 148.7
50.8
15.4
50.8
50.8 30.5
15.4
15.4
15.4 15.4
187.7
187.7
30.5
30.5
30.5
30.5
30.5
30.5 31.7 8.2
28.7 187.7
28.7
28.7148.7
28.7 31.7
28.7
28.7 28.7
8.2 31.7
8.2 8.8
8.2
8.2 15.4
8.2 15.4
175.3 187.7
175.3
175.3
175.3 187.7
175.3 187.7
24.5 175.3
24.5
24.5118.8
24.5
24.5
24.5 24.5 175.3
118.8
118.8 118.8
118.8
118.8 118.8
10.6
10.6
10.6
10.6
10.6
10.6 10.6

13.3
13.3 14.3
14.3
13.3

14.3 14.3
13.3
13.3 14.3
14.3
13.3 13.3
13.3
14.3 14.3
14.3
13.3 12.3
14.3
12.313.3
14.3
14.3
12.3
13.3
13.3

14.3

13.3
14.3
14.3
13.3 13.3
14.3
13.3 14.3
14.3
13.314.3
12.3
12.3
14.3 14.3
14.3
12.3

12.3
14.3
14.3 13.3
13.3 14.3
14.3
13.3
13.3
13.3 14.3
14.3
14.3
13.3

13.3
14.3
14.3
13.3
13.3
14.3
14.3
13.3

14.313.3
13.3 13.3
14.3
14.3
13.3
13.314.3
14.3
14.3
13.3 13.3
14.3 14.3
13.3
13.3

14.3
14.3
13.3

14.3 14.3
14.3 13.3 13.3
13.3
14.3
13.3

14.3 13.3

14.3

Mainstay business is products
made from natural cotton;
supplies high-quality “Made by
Nisshinbo” dress shirts, denim,
uniforms and other products
to markets worldwide

The Nisshinbo Group is theworld’s leading maker of brakefriction materials by market share;acquired TMD Friction Group S.A.,
Europe’s largest manufacturer ofbrake friction materials, in 2011;
now expanding presence as a true
global supplier, with manufacturingbases in North America, South
Korea,Thailand, China, Europe,
South America, and South Africa.

Makes high value-added products for everyday use such as
toilet tissue and other household paper products, specialty
paper used in pamphlets andother materials and processed
paper products such as telegram paper

Leverages advanced mechatronics technologies in awide range of business fields,such as customized machine
tools, air conditioner fans andprocessed precision automotive parts

Manufactures a range of highly
promising products in the environmental and energy fields, suchas Carbodilite, an additive usedin bio-plastic manufacturing, andbipolar plates for fuel cells

Using the consolidation of Japan
Radio, a pioneer in wirelesscommunication devices, todevelop and strengthen theGroup’s energy businesses
by drawing on the company’s
advanced control technologies

Contributing to the growthand financial strength of the
Nisshinbo Group by effectively utilizing idle plant sites andother real estate assets arisingfrom business restructuring— Shirts:— Friction materials:— Household paper products:— Assembly products:— Carbodilite highperformance chemical
additive— Bipolar plates for fuelcells
— Electric double-layer 		
capacitors— Rigid urethane foam
— Mobilon urethane 		elastomer— Carbon products— Solutions businessincluding wireless 		
disaster warning systems— Semiconductor products— Information andcommunications devices 		and equipment— Power supply units and 		electronic components— Microwave products— Leasing:— Textiles:— Customized machine
tools, LED mounting
equipment andphotovoltaic generation 		
system businesses— Precision parts
processing— Plastic molding andprocessing

Dress shirts, casual shirts 		
and fabricUniform fabric and casual 		fabric— Denim:Jeans and denim fabric— Others

12(billions of yen)

Disc pads and brake 		
linings
Drum brake products

Toilet tissue, facial tissue (madewith virgin and recycled pulp)
and kitchen-related products— Specialty paper:

Fine paper and synthetic 		
paper— Processed paper products:

Telegram paper, high-end
packaging and other products

ARIO Nishi Arai and otherproperties— Sales:

Unused sites at the former
Harisaki Plant, the former
Kawagoe Plant and otherlocations13Overview of Business Segments

TextilesNisshinbo Textile Inc.

Segment Income

Segment Income Breakdown(millions of yen)(millions of yen)

1,000
800

Since its founding in 1907, Nisshinbo has led the Japanese textile industry with its state-of-the-art
technologies and high quality. Nisshinbo expanded its business into the spinning, weaving, processing, andsewing fields and possesses some of the world’s most advanced technologies in areas ranging fromdevelopment to production. Nisshinbo is currently upgrading its overseas sites in Indonesia, China andIndia and working to expand sales of the APOLLOCOT brand worldwide.

600

12.3

13.3

14.3

Domestic

847

287

(41)

Overseas

76

126

689

Eliminations

(83)

161

(96)

Total

840

575

552

400
200
0

12.3

13.3

14.3

Summary of Financial Results for the Fiscal
Year Ended March 2014

Business Strategies for the Fiscal YearEnding March 2015

In the fiscal year ended March 2014, the textiles business
reported net sales of ¥51,349 million, up 1.1% year on year,
and operating income of ¥552 million, a decline of 4.0%.
In the domestic market, earnings were affected by anincrease in the price of products imported from overseas
manufacturing sites due to the yen’s rapid depreciation, andby a slow recovery in market conditions in the uniform sector.
However, earnings from spandex fiber increased, driven byexports, and there was an upturn in shirt fabric from thesecond half of the fiscal year. Overseas operations moved
clearly back into profit, supported by investment in laborsaving equipment and price hikes by key Indonesia subsidiaries, and by growth in exports from Indonesia to Europe,
North America and Japan. The Group’s subsidiary in Brazil
also performed well.
In order to create an integrated research and development facility focused on the textile business’s core textile
processing technology, we decided to transfer the functionsof the Miai business site, operated by Nisshinbo Textile Inc.,
to a business site in Yoshinogawa operated by Nisshin Denim
Inc. We also made the decision to merge Nisshin Denim into
Nisshinbo Textile. Separately, we started negotiations with apotential buyer for the business of subsidiary CHOYA CORP.

Under the NEXT 2015 three-year management plan, thetextiles business is building a global operating structure andworking to boost sales of APOLLOCOT-branded products.
At key manufacturing sites in Indonesia, we are installing
automated production facilities and labor-saving equipment.
We plan to invest more in our local facilities in 2014 toexpand production capacity, as well as reduce manuallabor processes, with the aim of carrying out all stages of
APOLLOCOT product manufacturing in Indonesia.

The APOLLOCOT brand is gaining ground in the business wear market in Japan in areas such as pants, knitted
shirts and handkerchiefs, on top of its existing presence inbusiness shirts. In the fiscal year ending March 2015, we plan
to continue strengthening our manufacturing capabilities inIndonesia to support the start of full-scale APOLLOCOT
sales in Europe and North America.

APOLLOCOT

14

100% cotton non-iron shirt

15

Overview of Business Segments

Automobile
BrakesNisshinbo Brake Inc./TMD Friction Group S.A.
Nisshinbo is a global supplier with world-class development capabilities in the field of friction
materials, which are key components of automobile brake systems. The automobile brakes businessalso includes Luxembourg-based TMD Friction Group S.A., making Nisshinbo one of the world’s
leading manufacturers of friction materials. As a global leader in the friction materials industry,
we are working to address global automaker needs for optimum parts procurement.

Segment Income

Segment Income Breakdown(millions of yen)(millions of yen)

12.3

13.3

14.3

NISB* —Domestic

2,615

1,732

1,836

NISB —Overseas

1,788

2,158

4,824

TMD

—

(941)

718

TMD acquisition costs—(7,284)(9,172)Eliminations

(149)

34

(20)

Total

4,254

(4,302)(1,814)

6,000
4,000
2,000
0
-2,000-4,000-6,000

12.3

13.3

14.3

* Nisshinbo Brake Inc.

Summary of Financial Results for the Fiscal
Year Ended March 2014
In the fiscal year ended March 2014, the automobile brakes
business reported net sales of ¥148,699 million, up 25.1%
year on year, and an operating loss of ¥1,814 million, an
improvement of ¥2,488 million compared with the previous
fiscal year. Operating income improved despite goodwill
amortization costs of ¥5,978 million and adjustments of¥3,193 million due to the alignment of accounting standards
related to the acquisition of TMD.
In Japan, car sales declined slightly in the first half of the
fiscal year after the end of the government’s subsidy scheme.
However, there was a sharp rise in sales in the second half,
supported by new model launches by automakers and a rushin demand ahead of the hike to consumption tax. As a result,domestic car sales rose nearly 10% year on year. Overseas,
demand in Asia and North America expanded year on year,
building on growth registered in the previous fiscal year. In
Europe, which has seen a prolonged impact from financial

16

instability, car markets in Germany, Spain and other countries
showed signs of recovery in the second half of the fiscal year,with sales overall falling only slightly year on year. Nisshinbo
Brake Inc. reported sales and profit growth in Japan andoverseas.
TMD saw a decline in orders for friction materials usedin new vehicles, reflecting the weak car market in Europe, but
sales and profits overall rose year on year due to a recovery
in aftermarket orders. As a result, the automobile brakes
business comfortably cleared its second-year targets in thethree-year management plan.
In production, Thai subsidiary Nisshinbo Somboon Automotive Co., Ltd. completed construction of its second plant inAugust 2013. Also, at the same site, we established Nisshinbo
Commercial Vehicle Brake Ltd. to manufacture brakes forcommercial vehicles. The company’s manufacturing facility wascompleted in May 2014 and mass production is scheduled tostart in December.

Business Strategies for the Fiscal YearEnding March 2015
In the fiscal year ending March 2015, we forecast a decline
in domestic sales due to a pullback in demand after the hiketo consumption tax. However, we forecast overseas sales will
expand, supported by continued growth in North Americaand Asia and recovery in Europe. Against this backdrop, theautomobile brakes business will increase production capacity in Asia and work to boost earnings at TMD, in line withstrategies in the NEXT 2015 three-year management plan.
We started mass production at our new plant in Changshu, China in January 2013. We plan to rapidly strengthen theplant’s operating base by further upgrading its capabilities inmanufacturing, quality management and sales. Together with
our second plant in Thailand, which came onstream in March
2014, we plan to expand our business by boosting global

supply capacity in order to secure a larger share of the Asia
market, which is projected to continue expanding. In Latin
America, TMD is building a new plant in Brazil, scheduled tocome onstream in 2016. Production at TMD’s existing site
in Brazil will be transferred to the new plant, which will also
increase our production capacity in the region.
In order to boost earnings at TMD, we are currently
working on a joint purchasing system that we plan to have up
and running in 2015. We have also adopted a business unit
system at TMD to manage profits more carefully, as part ofongoing efforts to strengthen the earnings structure.
Our research and development efforts will remain
focused on developing products that comply with new regulations on copper content in friction materials＊.
＊ The US state of California has passed a law, effective from 2021, prohibiting the sale of new

friction materials or vehicles fitted with friction materials that have a copper content of more than
5%. From 2023 or 2025, the limit on copper content will be reduced to no more than 0.5%.

Friction materials, disc pads, brake linings

17Overview of Business Segments

PapersNisshinbo Paper Products Inc.
This business supplies high value-added paper products tailored to market needs in various fields, from facial
tissue and toilet tissue in the household paper products field, to fine paper and synthetic paper products inthe commercial printing and business communication paper field and telegram paper, luxury packaging andother products in the processed paper products field.

Segment Income

Segment Income Breakdown(millions of yen)(millions of yen)

800

12.3

13.3

14.3

600

Household

(246)

92

(118)

400

Fine Papers

615

618

159

Eliminations

(108)

(1)

1

Total

260

709

42

200

0

12.3

13.3

14.3

Summary of Financial Results for the Fiscal
Year Ended March 2014

Business Strategies for the Fiscal YearEnding March 2015

In the fiscal year ended March 2014, the paper products business reported net sales of ¥31,686 million, up 3.8% year on
year, and operating income of ¥42 million, a decline of 94.0%.
Although sales rose, driven by an increase in sales volume
and sales value, mainly in household paper products, profits
declined year on year due to a surge in the cost of imported
raw materials caused by the weak yen.
In household paper products, sales grew year on year,
supported by targeted efforts to boost sales of toilet tissue
for use with bidets and the launch of new character-themed
facial tissue featuring Snoopy and Kumamon.
In specialty paper, sales of KI・HOU・SHI paper for
packaging applications increased and demand for high-grade
printing paper expanded. However, total sales of specialty
paper declined slightly year on year due to weak demand forsynthetic paper products.
In processed paper products, sales were affected by thetransfer of the Hasler postage meter business in the previous
fiscal year and a decrease in demand for telegram paper, but
total sales were steady year on year on the back of strong
sales of packaging products and label products.

Although we see some signs of recovery in domestic demandfor printing paper, we think the operating environment in thepaper products business will remain challenging. We forecast
falling demand from the publishing and commercial printing
sectors amid wider use of digital media, and costs are likely torise due to persistently high prices for imported fuel and raw
materials caused by the weak yen. Uncertainties related tothe supply-demand environment for waste paper could also
lead to higher costs. Against this backdrop, the paper products
business will step up its shift to high value-added products andseek business alliances at the global level, in line with strategies
in the NEXT 2015 three-year management plan.
In household paper products, we will reinforce our
supply framework in Japan and overseas as part of efforts tobecome a household paper product trading company with
manufacturing bases. We will also strive to secure fair prices
for our products and work to boost sales of high-margin
products such as toilet tissue for use with bidets. In addition,
we will work to create a stable earnings structure throughinitiatives such as improving profitability at consolidated
subsidiary Tokai Seishi Kogyo Co., Ltd.
In specialty paper, we are aiming to create a highly competitive and profitable business model. Specifically, we plan todevelop new applications for fine paper and synthetic paper
products, launch new products designed to energize the market, and step up cooperation with partner companies in orderto stimulate demand and reinforce the earnings structure.
In processed paper products, we are aiming to build aposition as a global supplier of luxury packaging products bydeveloping the business worldwide. We intend to leveragesynergies in the segment to expand operations in order tosecure more business from leading overseas packaging users.
To support business expansion, we will upgrade our productand sales sites and reinforce quality control and other systems.

Luxury packaging products

1819Overview of Business Segments

Precision
Instruments
Nisshinbo Mechatronics Inc.

Utilizing know-how accumulated over roughly 70 years as a machine tool maker supporting various
manufacturing industries, Nisshinbo is focusing on three areas in this field: customized production equipment, including manufacturing equipment for photovoltaic modules; precision parts processing, mainly for
automotive applications; and plastic molding and processing, primarily fans for air conditioners. We aredeveloping these businesses globally, centered on Asia.

Summary of Financial Results for the Fiscal
Year Ended March 2014
In the fiscal year ended March 2014, the precision instruments
business reported net sales of ¥28,655 million, up 16.9%
year on year, and operating income of ¥1,075 million, a large
improvement from the operating loss of ¥146 million in theprevious fiscal year.
In manufacturing equipment for photovoltaic modules,
demand for modules was at a high level due to the government’s renewable energy feed-in tariff system, but module
makers remained cautious on capital investment, resulting
in flat sales year on year. However, there was a substantial
improvement in the operating loss due to cost reduction
measures. The photovoltaic generation system installation
business, started in October 2012, also performed well. In
addition, sales of other customized production equipment
were strong, supported by rising investment by customers attheir overseas facilities.
In precision parts processing, sales and profits both roseyear on year, reflecting strong orders in Japan and improvements to the volume production system in China.
In plastic molding and processing, sales and profits also
grew year on year, driven by rising demand in China and
ASEAN countries and measures to reduce raw material costs
and boost productivity.

Segment Income Breakdown

Segment Income(millions of yen)(millions of yen)
1,500
1,000
500
0
-500

12.3

13.3

14.3

Mechatronics(1,653)

(790)

218

Plastic molding

584

689

949

Eliminations

-

(46)

(92)

(1,070)

(146)

1,075

-1,000Total-1,500

12.3

13.3

14.3

In the fiscal year ended March 2014, we dissolved ourphotovoltaic module subsidiary in the US, but we establisheda new joint venture in Yangzhou, China with Continental
Automotive Holding Co., Ltd. The new company, NisshinboContinental Precision Machining (Yangzhou) Co. Ltd., will
manufacture and sell valve blocks, a key component in electronic brake systems (EBS). Volume production is scheduled
to start in 2015.

Business Strategies for the Fiscal YearEnding March 2015

In the precision parts processing business, we will makepreparations to start volume production at our joint venture
in China with Continental Automotive Holding.
In the plastic molding and processing business, we aim
to boost competitiveness amid growing demand in ASEAN
countries. Specifically, we will make products that are lighterand cost less. We will also actively target the automotive
components field, aiming to boost productivity throughsustained capital investment. Supported by these measures,
we plan to step up efforts to expand our global presence.

In line with strategies in the NEXT 2015 three-year management plan, the precision instruments business will work
to strengthen earnings through business restructuring andaccelerate efforts to expand its manufacturing and sales
network globally.
In the photovoltaic module-related business, we will
strengthen the earnings structure ahead of a projected recovery in demand for photovoltaic module manufacturing equipment in 2015. We will also continue to work on developing
competitive new products. One of those products, ethylenepropylene diene monomer (EPDM) rubber diaphragms,
which are high value-added consumables used in module
laminators, are scheduled to enter full-scale production in
2014. The addition of this new product to our range will allow
us to offer total solutions for photovoltaic modules, bringing
together materials, manufacturing equipment, and consulting
services.

Plastic moldings

20

21Overview of Business Segments

Chemicals
Nisshinbo Chemical Inc.
This segment is pushing ahead with the development of environment-related products on a global basis,drawing on a broad base of expertise and intellectual property in the chemical field. Our environment- andenergy-related products include bipolar plates for fuel cells and Carbodilite, which is a high-performanceplastic material that increases the durability of bio-plastics. We are investing management resources in thesepromising growth areas as a matter of priority.

Segment Income

Segment Income Breakdown(millions of yen)(millions of yen)400

In the fiscal year ended March 2014, the chemicals business
reported net sales of ¥8,810 million, up 8.1% year on year,
and operating income of ¥106 million, down 20.5%. Despite
heavy spending on research and development in environment- and energy-related products, the chemicals business
reported a third consecutive year of profits at the operating
income level.
In chemical products, sales of thermal insulation productsrose year on year, supported by strong demand for residential
and tunnel repair applications. However, profits from chemical
products declined due to the high price of naphtha and otherraw materials. Carbon products registered lower sales andprofits amid weak investment in LCD panel manufacturing
equipment. However, sales and profits in elastomer products
increased year on year, reflecting the successful launch of newtape products amid rising demand for apparel applications.
In environment- and energy-related products, sales of fuelcell bipolar plates increased, supported by continued strong
demand for the Ene-Farm residential fuel cell system. Sales ofelectric double-layer capacitors for construction machinery
applications declined, but sales overall expanded year on year

due to rising demand from the motorsport field. In functional
chemicals, sales of bio-plastic modifier Carbodilite rose year
on year, but profits declined due to an increase in costs forreinforcing the research and development system and as aresult of the weak yen, which led to higher costs for imported
raw materials.

13.3

14.3

300

Urethane, etc.

937

823

849

200

Environmental &Energy Business

(601)

(761)

(785)

100

Others36

60

40

Eliminations

1

10

1

374

133

106

0

12.3

Summary of Financial Results for the Fiscal
Year Ended March 2014

12.3

13.3

14.3

In the fiscal year ended March 2014, the Japanese government paid out subsidies of ¥20.0 billion for the installationof residential fuel cell systems. We expect the government toprovide a similar amount in the fiscal year ending March 2015.
In June 2013, we completed our new Carbodilite production
facility, tripling production capacity for water-based crosslinking agents＊.
＊ Added to water-based paint and ink with active hydrogen compounds in order to improve
durability, chemical resistance and adhesiveness; Carbodilite has been certified as safe, allowing
users to comply with VOC standards.

Business Strategies for the Fiscal YearEnding March 2015

Total

In fuel cell bipolar plates, our products remain the industry standard in Japan for residential fuel cells. Going forward,
we plan to build on this position by expanding sales in fixed
fuel cells overseas and by pushing ahead with the development of automotive applications.
Our carbon alloy catalysts are promising products for fuelcell vehicles, which are expected to become more common
on Japan’s roads from 2017. Carbon alloy catalysts potentiallyoffer much better cost performance than current platinum
catalysts, and we are now working to overcome a number ofissues before commercialization.

Under the NEXT 2015 three-year management plan, thechemical business will boost production of Carbodilite andstrengthen the product’s sales network, while also working to
expand the environmental business.
In our Carbodilite business, where we have significantly
increased production capacity after completing a new facility,
we forecast continued growth in demand for use in bioplastic and PET film applications. We will strengthen our sales
network for Carbodilite, as we see potential demand for new
applications such as water-based linking-agents and prospects
for growth in users of existing applications.

Bipolar plates for fuel cells

2223Overview of Business Segments

Electronics

Segment Income

Segment Income Breakdown(millions of yen)(millions of yen)Japan Radio Co., Ltd.

5,000

This segment is Nisshinbo’s largest and is centered on leading communications equipment company Japan
Radio Co., Ltd. Other major subsidiaries in the segment include New Japan Radio Co., Ltd, Nagano Japan
Radio Co., Ltd. and Ueda Japan Radio Co., Ltd., which operate businesses in the electronic equipment, communications, and semiconductor fields.

0-5,000-10,000

12.3

Summary of Financial Results for the Fiscal
Year Ended March 2014
In the fiscal year ended March 2014, the electronics business
reported net sales of ¥187,743 million, up 7.1% year on year,
and operating income of ¥9,352 million, an increase of 20.1%.
A continued strong performance by Japan Radio Co., Ltd.
was the main reason behind the rise in sales.
Japan Radio struggled in the marine equipment and communications equipment fields due to weak market conditions,but sales rose on the back of robust public-sector demandin the solutions and specialized equipment fields, mainly forwater and river information systems and satellite communication systems.
New Japan Radio was affected by weaker-than-expecteddemand for semiconductors from customers in China, but

12.3

13.3

14.3

Japan Radio(2,791)

3,919

7,281

New Japan Radio(4,101)

1,470

2,276

Nagano Japan Radio

918

864

(1,813)

Ueda Japan Radio

556

330

437

Eliminations

1,307

1,205

1,170

Total

(4,111)

7,788

9,352

10,000the company ramped up its MEMS device＊1 business, withaggregate shipments of MEMS transducers for microphones
used in smartphones and tablet PCs topping 100 million units.
New Japan Radio’s earnings capabilities also improved after
the completion of a new plant in Thailand.
Amid weak profits from power supplies and energy
equipment, Nagano Japan Radio scaled back its industrial
equipment power supply business in order to refocus management resources on other businesses. The company also
booked inventory valuation losses of ¥1,011 million, mainly
related to the industrial equipment power supply business,
which weighed on overall profits in the electronics business.
Ueda Japan Radio reported an increase in sales andprofits on the back of sharp growth in manufacturing orders
for measurement equipment.
We also continued to make steady progress on restructuring the electronics business. In June 2013, Japan Radioannounced an early retirement program, with 495 employees

13.3

14.3

applying to take up the offer. The company is also in theprocess of transferring production and technology development functions at its Mitaka Plant to a new site in Nagano.
Using land acquired from Nagano Japan Radio, Japan Radiois currently building a new Advanced Technology Center anda new manufacturing plant. The center will become the maintechnology development site for Japan Radio, Nagano Japan
Radio and Ueda Japan Radio.
Meanwhile, in the marine equipment field, Japan Radioacquired a majority stake in Alphatron Marine Beheer B.V., a
company with a strong presence in marine equipment system
integration. Going forward, we plan to expand our overseas
business by integrating the two companies’ product development and sales strategies.

Business Strategies for the Fiscal YearEnding March 2015
Under the NEXT 2015 three-year management plan, theelectronics business is aiming to generate new growth byrestructuring its operations, based on two basic strategies:
implement a growth strategy and reform the global cost
structure.

recovering commercial vessel market and in the workboat
and offshore vessel market. Japan Radio will increase costcompetitiveness by using overseas production sites and target
growth in services that support safe vessel operations. In thesolutions and specialized equipment field, the government isleading major upgrades of disaster prevention facilities acrossJapan. We therefore forecast continued strong demand fordisaster management wireless communication systems andwater and river information systems. We are also planning todevelop and expand our solutions business overseas.
New Japan Radio ramped up its SAW filter＊2 and MEMS
device business in the fiscal year ended March 2014. Buildingon this progress, we will work to expand the business further
in the next fiscal year, while also shifting our focus in thesemiconductor business to the promising growth markets ofautomotive and industrial electronics.
＊1 Micro electromechanical system devices: small devices made using semiconductor fabrication
technology＊2 Surface acoustic wave filters: used in smartphones and other communication devices

In order to build a new earnings base, Japan Radio will
focus on expanding its global business in emerging economies, particularly the fast-growing markets of Southeast Asia.
Marine equipment will also be a key field. Here the company
will reinforce its strategic business alliance with Alphatronin order to boost its share of marine equipment in the
JRC Premium Bridge

24

25

Overview of Business Segments

Real Estate

The Nisshinbo Group’s Management Framework

Segment Income

CORPORATE VISION(millions of yen)
15,000Nisshinbo Holdings Inc.
Nisshinbo’s real estate business is active in the redevelopment of business property that has become idle as a result of business changes by Group companies.
It is also involved in the leasing of office and commercial facilities and the sale ofresidential building lots. Income from those activities is used as capital to launch
new businesses and develop the Group’s global operations. Many Group properties and facilities located throughout Japan have high asset values and have beenused for a wide range of purposes, including shopping centers and offices.

The Nisshinbo Group believes strongly that its companies are public entities. While pursuing profit on thebasis of fair competition, we consider it our mission to contribute to society at large through our corporate
activities. To achieve further growth in global society by utilizing the organizational culture we have cultivated,
we have formulated our Corporate Philosophy and Business Conduct Guidelines to reflect the values andstandards of behavior that all of our employees throughout the world share and respect.

10,000

5,000

0

12.3

13.3

14.3

Nisshinbo Group Corporate Philosophy

Redevelopment projects in the fiscal

Business Conduct Guidelines of the Nisshinbo Group

year ending March 2015

Summary of Financial Results for the Fiscal
Year Ended March 2014
In the fiscal year ended March 2014, the real estate business
reported net sales of ¥10,567 million, down 31.2% year on
year, and operating income of ¥7,781 million, a drop of 36.7%.
The declines in sales and profits came after a large-scale
property release in the previous fiscal year as part of theredevelopment of the former Nagoya Plant site.
In the building lot sales business, we sold lots at former
plant sites, such as Harisaki, Hamamatsu and Kawagoe.
In the property leasing business, revenues were strong inland leasing and facility leasing, such as offices and commercial
properties. We also began leasing land for a commercial
facility at our Shimada Plant site.

Business Strategies for the Fiscal YearEnding March 2015
Under the NEXT 2015 three-year management plan, thereal estate business will continue to fulfill its role as a sourceof funds to help Nisshinbo attain its management targets bySites now on sale
Former Kawagoe Plant site (all 257 lots)
Former Harisaki Plant site (all 227 lots)
Former Notogawa Plant site (all 42 lots)
Site scheduled for sale
Former Nagoya Plant site (detached houses)(all 72 lots)

Compliance

Environment

Human Rights

Workplace

Product Safety

Procurement

Nisshinbo Group Corporate Philosophy
Our corporate philosophy expresses the values we share as members of the Nisshinbo Group.

effectively utilizing the real estate assets of the whole Group.
We are targeting stable operations in real estate, underpinnedby the twin businesses of building lot sales and property leasing.
In the fiscal year ending March 2015, we will start releasing lots for detached houses at the former Nagoya Plant site,in addition to ongoing lot sales at other sites from the previous fiscal year. We have also started looking at the best ways
to maximize the location of the Miai Plant site, which is due
to be redeveloped following the transfer of operations to the
Yoshinogawa Plant. After further surveys and site preparation
work, we expect the sale of lots at the site to contribute toearnings from around the fiscal year ending March 2020.

PUBLIC ENTITYCONSISTENT INTEGRITYINNOVATION

Believing that our companies are public
entities, we shall aim to realize a sustainable
society＊1 by proposing solutions to global
environmental problems.

Respecting the diverse cultures and customsof the world, as well as biodiversity, we shallconduct fair and sincere business activities withpride as a corporate citizen.

Maintaining our spirit of response to change
and unceasing challenge, we shall create an affluent future together with our stakeholders＊2 .

・ We remember at all times and in all our 		
activities that the ultimate goal of our Group
is to contribute to society.

・ We fulfill our social responsibilities as a 		corporate citizen by acting in good faith andwith fairness at all times.

・ We work toward the creation of an affluent
society by constantly creating new and 		original value.

・ We offer products and services that
help solve global environmental issues, withan eye to developing a society where all 		
people can enjoy comfortable lifestyles long
into the future.

・ We respect the diverse cultures and customsof countries and regions throughout the 		world and uphold the laws and regulationsof each.

・ We satisfy stakeholder expectations by 		
sensitively anticipating changes in the times 		
and the environment and boldly taking on 		new challenges.

・ We conduct our business activities with fullrecognition that the global environment 		
depends on the maintenance of a delicate
harmony among all living things and that weare part of that diverse harmony.

・ We build ties of trust with stakeholders 		
and work together with them in ourbusiness activities.

＊1 A sustainable society is a society where environmental 		preservation and effective resource use are balanced with 		economic rationality and where, as a result, all people can 		
enjoy comfortable lifestyles long into the future.

26＊2 A stakeholder is any person or organization involved inor affected by our corporate activities, including customers,
shareholders, employees, business partners, community
residents, and governmental organizations.

27

CORPORATE GOVERNANCE
Guided by two key principles in its Corporate Philosophy – Public Entity and Consistent Integrity –the Nisshinbo Group adheres to its fundamental stance of always acting with integrity and in good faith
toward its stakeholders. Reflecting this in our corporate governance activities, we work to ensure thetransparency of management, reinforce accountability and act ethically in all matters.
The Group’s Business Oversight and Execution

decision-making and oversight functions and business execu-

Framework

tion functions.

The Company’s Board of Directors is responsible for making

The Executive Officers Conference, which is made up

decisions on key management matters and for overseeingof directors, managing officers and other senior personnel,

business execution by the directors. We have also adopted aholds meetings to discuss important matters related to

managing officer system in order to strengthen and separatebusiness execution throughout the Group.

Corporate Governance Structure

The Group’s Audit Framework

Timely Information Disclosure

Nisshinbo has established an Audit & Supervisory Board.

Nisshinbo is working to ensure it is accountable to all stake-

The audit framework comprises the audit & supervisory

holders in order to create a highly transparent business. In

board members, who conduct audits, the independent audi-

addition to fulfilling timely disclosure standards determined

tor, who carries out accounting audits, and the Internal Audit

by the Tokyo Stock Exchange, we hold briefings for share-

Department, which is responsible for conducting internal

holders and investors on a regular basis and provide otheraudits. These groups work closely together to improvetimely information via our corporate website as part ofcorporate governance.

ongoing efforts to improve the provision of information to

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

Maintaining Internal Control Systems
1) Audit & Supervisory Board

Nisshinbo endeavors to create a healthy and highly trans-

The Company’s Audit & Supervisory Board comprises fourparent corporate culture in accordance with the Corporate

audit & supervisory board members, two of whom are

Philosophy of the Nisshinbo Group. An internal control

outside audit & supervisory board members. In accordancesystem has been established to identify and then remedy

with audit policy and plans determined by the Audit &any issues in business execution processes.

Supervisory Board, the audit & supervisory board members

General Shareholders Meeting

monitor business management and execution at the ComBoard of Directors
12 Directors

Financial Auditors(including three outside directors)

Audit & Supervisory Board

Four Audit & Supervisory Board Members(including two outside audit & supervisory board members)

Representative Directors

stakeholders and retain their trust.

Internal Audit Department

Executive Officers
ConferenceManaging Officers, Business Divisions, Group Companies

pany and its subsidiaries by attending important manage-

1) Internal Control System Reporting Related to Financial
Reportingment meetings such as meetings of the Board of Directors

The Financial Instruments and Exchange Law, which includes

and Executive Officers Conference in order to understandprovisions on internal corporate control known as J-SOX,

operating conditions.

came into force in April 2008. Since then, we have implemented control measures to maintain and upgrade our2) Internal Audit Divisioninternal control system related to financial reporting. During

Nisshinbo has established an Internal Audit Department

the fiscal year ended March 2014, an assessment led by the

independent from executive business functions to act as

Audit Office confirmed that the internal control system

the Internal Audit Division. The Internal Audit Department

related to financial reporting is operating effectively.

conducts ongoing audits of operations across the entire
Nisshinbo Group and works to protect corporate assets

28

Representative Directors

Directors

Managing Officers

Representative directors are selected byresolutions of the Board of Directors.
As of June 27, 2014, the chairman andpresident were the Company’s two
representative directors.

As of June 27, 2014, the Company had 12
directors, including three outside directors. The Board of Directors is responsible for making decisions on importantmanagement matters and for monitoring
the execution of duties by directors.
Directors are appointed for one-year
terms in order to clarify management
responsibility each fiscal year.

Nisshinbo has adopted a managing officer system to speed up decision-making
for business execution and clarify operational responsibilities. As of June 27, 2014,
the Company had 15 managing officers,
including eight directors with dual roles
as managing officers. Managing officers
are also appointed for one-year terms.

and increase management efficiency by providing advice andproposals for remedial measures from a legal and rational
standpoint. In the fiscal year ended March 2014, the Internal
Audit Department stepped up the oversight of Groupsubsidiaries overseas, which now play an increasingly important role in the Group’s operations.

29

GLOBAL MANAGEMENT SYSTEM
Centralized Management of Operations in Asia
In the fiscal year ended March 2012, we established two
management companies in Asia to support business expansion in the region. The first management company, Nisshinbo
Singapore Pte. Ltd., is responsible for providing financial
and internal control support to 10 subsidiaries (as of April

Nisshinbo subsidiaries in ASEAN and China
Management companies
Overseas sites

1, 2014) located in ASEAN countries such as Thailand andHong Kong:
4 subsidiaries

Indonesia. It also trains personnel for the Group’s global
operations. The second management company, Nisshinbo

Shanghai:
9 subsidiaries

China

control and operational support to 24 subsidiaries (as of April
1, 2014) in China.

Singapore

Going forward, Nisshinbo will utilize these two subsidiaries as business hubs in their respective regions to reinforce
corporate governance from a global perspective and optimize

Indonesia

about customers and other sensitive information. Nisshinbo

The Nisshinbo Group recognizes that one of its key

widely uses anti-virus software and programs to remedy

corporate responsibilities is to ensure important informa-security issues in its IT systems in order to prevent computer

tion related to customers, suppliers, employees and otherviruses from causing leaks of sensitive data. Steps are also

individuals is protected appropriately. In order to fulfill thisbeing taken to tighten access to IT systems to prevent andresponsibility, we handle personal information in accordance

limit leaks of information caused by internal unethical actions.

with an internal privacy policy. In addition, internal audits are

We have also formulated information security guidelines,

conducted based on Company regulations to ensure systems

which are used as a checklist by Group companies in Japanare working properly, and steps are taken to prevent infor-and overseas to conduct their own inspections of informa-mation leaks and realize ongoing improvements.

tion security systems.
In addition to the above measures to protect IT systems,

ThailandBusiness Management (Shanghai) Co., Ltd., provides internal

Initiatives to Protect Personal Information

Nisshinbo
Business Management(Shanghai) Co., Ltd.

Initiatives to Ensure Information Security

we are making continuous improvements to the protection

The Nisshinbo Group is constantly reinforcing informationof personal information and management of trade secrets

security measures to prevent leaks of personal information

through annual internal audits.

Nisshinbo
Singapore Pte. Ltd.

the Group’s operating structure.

COMPLIANCERISK MANAGEMENT
In order to fulfill its corporate social responsibility by contributing to society through ongoing businessactivities, the Nisshinbo Group has established systems to ensure stable operations by mitigating a rangeof risks that could have a serious impact on the smooth operation of the business.

30

Crisis Management System

1) Disaster Prevention System

In order to mitigate and minimize risk and any potential

Firefighting teams at each Group business site conduct

losses, the Company has formulated Crisis Management

regular drills to improve disaster prevention capabilities. These

Regulations covering the whole Group. It also conducts

drills increase readiness for early-stage fires, life-saving situa-

annual training exercises and inspections. Action plans havetions and potential emergencies such as gas or chemical leaks,

been created to respond to any risk that impacts on theand are developed based on the type and location of eachGroup, while systems have been put in place to minimize

facility. Major business sites conduct annual comprehensive

any losses. In the fiscal year ended March 2014, the Groupdisaster drills, which are reviewed by senior management, tocontinued to carry out emergency response drills to test its

ensure disaster prevention management activities remain at

rapid response system, which was overhauled in the fiscal

a high state of readiness. In the fiscal year ended March 2014,

year ended March 2012.

managing officers inspected 14 business sites.

Based on two key principles in its Corporate Philosophy – Public Entity and Consistent Integrity –the Nisshinbo Group’s mission is to act with fairness and integrity in order to contribute to society throughits business activities. To achieve this aim, we have formulated the Nisshinbo Group Business Conduct
Guidelines, which clearly define the standards of behavior that Nisshinbo employees are expected to follow
as part of wider efforts to enforce compliance.
Corporate Ethics Committee

Corporate Ethics Reporting System

Nisshinbo has established a Corporate Ethics Committee

The Nisshinbo Group has established a Corporate Ethics Re-

that answers directly to the president. The committee is led

porting System to rapidly identify and prevent any reoccur-

by a director with a dual role as a managing officer, who isrence of potential or actual legal violations. Group employees

responsible for handling all compliance matters across theand external parties can submit reports to the system, which

Nisshinbo Group.

can be used to communicate directly with the Corporate

Specifically, the Corporate Ethics Committee is responsi-

Ethics Committee or an outside corporate attorney. Everyble for (1) implementing corporate ethics systems and regu-

effort is made to protect those who have used the system

lations, (2) deciding the content and methods of corporate

from unfair treatment.

ethics training for employees, and (3) formulating and imple-

If the Corporate Ethics Committee receives a report via

menting investigations, responses, procedures and remedial

the system, it convenes a meeting, launches an investigation

measures related to consultations and reports received throughand takes appropriate action where necessary. If the outside

the Company’s Corporate Ethics Reporting System.

corporate attorney receives a report, appropriate action is31

Outside Director

taken based on close cooperation with the Corporate Ethics

Compliance Education

Committee.

In order to promote wider understanding of corporate

In the case of reports received from individuals who have

ethics, the Nisshinbo Group conducts compliance training forprovided their name and contact details, the Corporate Eth-different employee levels and work sites. Compliance is also

ics Committee provides information about how the matterpart of the curriculum for new employee orientation courses.

interview

is being dealt with, such as updates on the investigation anda summary of its conclusions. The Corporate Ethics Com-

Basic Stance on Antisocial Forces

mittee also works to prevent any future violations of law or

The Nisshinbo Group rejects all contact with antisocial

corporate ethics by providing information to all companies

forces, which threaten the peace and stability of civil society.

in the Group about its response to the issue based on the

The Group as a whole takes an uncompromising approach

results of the investigation.

to any antisocial forces and their associates. We will work

Tomofumi Akiyama
Outside Director, Nisshinbo Holdings Inc.
Chairman, Fukoku Mutual Life Insurance Company

closely with the relevant authorities to deal with any illegitimate demands received from antisocial forces. We do notrespond to such demands in any circumstances.

What is your role as outside director?

What is your view of the Nisshinbo Group?

I believe it is important to ask the otherI am excited about Nisshinbo’s future,

directors candidly about the “how” and “why”

because it has the scope to innovate totallyof their decision-making from the perspective

new businesses by combining its strengths inof an ordinary member of the public.

existing fields.

I work for a financial institution, so I lack specialist knowledge

Nisshinbo has traditionally had a sound corporate culture,

about the manufacturing sector. However, as the representative

offering reassurance in terms of risk management. Also, it returnsof the Company’s shareholders, I believe one of my key roles in

profits to shareholders and invests in its businesses, rather thanthe management of the Company is to ask the other directors

holding onto large reserves of cash. Management strategy iscandidly about the “how” and “why” of their management deci-also clear. I believe Nisshinbo’s strategy of channeling manage-

sions from the perspective of an ordinary member of the public.

ment resources into promising growth businesses and overseas

Naturally, I also use my expertise from the finance sector to offer

operations is the right way to go to achieve its targets for theforthright opinions about the health of Nisshinbo’s managementfiscal year ending March 2018: net sales in excess of ¥600 billion,

and investment efficiency.

operating income of over ¥40 billion and ROE of at least 9%.

Corporate Ethics Reporting System
Nisshinbo Holdings Inc.

Board of Directors

Nisshinbo Group

ReportPresident

Division subject to investigation
ReportInstruct

Investigate

Corporate Ethics Committee

Internal Contact Point(Corporate Ethics Committee)

Response(Disclosed whistleblower)

Coordinate

External Contact Point(Corporate Attorney)

Report, consult(Disclosed / undisclosed whistleblower)

Stakeholders

Promote Groupwide
understanding

Group companies

The Nisshinbo Group’s Board of Directors is extremely

However, amid rapid expansion in overseas production,

active and open to new ideas. Every member of the board is also

Nisshinbo needs to make every effort to ensure safe operations.

committed to achieving the Group’s management goals. I and the

I want Nisshinbo to be one of the most highly trusted companies

other two outside directors actively participate in meetings offor safety in Japan and overseas.

the board, sometimes to the point where I worry that we may

Throughout its history, the Nisshinbo Group has faced manybe obstructing proceedings, but often our ideas and opinions are

far-reaching changes in its operating environment. However, every

reflected in the running of the Company, making our participa-

time, the Group has overcome these challenges due to the abilitytion worthwhile. We also regularly visit the Group’s business sites.

of its employees and senior managers to adapt to change. The

These visits give us insights into Nisshinbo’s many businesses toGroup today is made up of seven main businesses. Just as thehelp us discuss proposals that come before the board.

automobile brakes business was born out of the textiles businessin the past, I believe Nisshinbo has the scope to innovate totallynew businesses by combining its strengths in existing fields. I am
excited about what lies ahead for the Nisshinbo Group.

32

33

Board of Directors (As of June 27, 2014)

Director,*1
ChairmanShizuka Uzawa

Director,
Executive Managing Officer

Masahiro Murakami

Director,
Managing Officer

Takayoshi Okugawa

Director,*1
President

Masaya Kawata

Director,
Managing Officer

Takayoshi TsuchidaDirector,
Managing Officer

Kazunori Baba

Director,
Managing Officer

Nobuyuki Hagiwara

Director,
Managing Officer

Koji Nishihara

Director,
Managing Officer

Financial Section

Toshihiro Kijima

Director*2

Director*2

Director*2

Tomofumi Akiyama

Noboru Matsuda

Yoshinori Shimizu

P36
P41
P42
P44
P45
P46
P47
P48
P57

Management’s Discussion and Analysis
Six-Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ Report*1 Representative director *2 Outside director
Audit & Supervisory Board Members

Managing Officers(As of June 27, 2014)(As of June 27, 2014)

Yoshio Ide
Yoichi Fujiwara

Outside Audit &Supervisory Board Members
Yo Kawakami
Toshihiko Tomita

President
Masaya Kawata*
Executive Managing Officer
Masahiro Murakami*

Managing Officers

Hajime Sasaki

Takayoshi Tsuchida*

Hiroshi Nakano

Nobuyuki Hagiwara*

Kazuhiro Iwata

Koji Nishihara*

Akihiro Ishizaka

Toshihiro Kijima*

Makoto Sugiyama

Takayoshi Okugawa*Kazunori Baba*
Masahiro Kawamura
Akihiro Yoshino* Concurrent board member

34

35

Management’s Discussion and Analysis
HIGHLIGHTS• Net sales increased 9.7% year on year, reflecting a large rise in sales in the automotive brakes business and the electronics business.
• Net income rose 40.4% year on year.
• For the fiscal year ending March 2015, we forecast higher earnings in the electronics business and the automobile brakes business, supported by the start of full-scale operations at a brake subsidiary in China.

OPERATING RESULTS
Economic Environment

During the fiscal year ended March 2014, the US economy
continued to recover at a moderate pace. The European
economy also gained momentum, with Germany, the U.K. andother countries in the region starting to see a pickup in economic growth. However, the slowdown in emerging economies
deepened, reflecting the impact of fund flows back to advanced
economies after the US started to wind back monetary easing.
China sought to move away from its policy of rapid economic
growth fueled by major economic stimulus packages to a moresustainable growth path, while geopolitical risks such as the crisisin Ukraine were a cause for concern.
The Japanese economy continued to see a modest recovery.
A coordinated effort between the government and the Bankof Japan in economic and monetary policy led to a weakening
in the yen and gains in the equity market. This supported an
improvement in consumer confidence, which along with a spikein demand ahead of the increase to consumption tax, spurred
an upturn in consumer spending. Corporate earnings also gained
momentum on the back of factors such as strengthening consumer spending and post-earthquake rebuilding demand.
Going forward, rising household incomes and private-sector
capital investment could underpin a more established recovery
in the domestic economy, but the risk of a downturn is likely topersist due to the impact of higher import prices caused by the
weak yen and a possible pullback in demand after the consumption tax hike.

Results of Operations in the Current Termand Comparison with the Previous Term

The Nisshinbo Group reported higher sales, but a modest
decline in operating income compared with the fiscal year
ended March 2013, when the Group booked sales from alarge-scale property release. However, net income increased
year on year.
Net sales totaled ¥494,350 million (US$4,708 million),
an increase of 9.7% year on year. This reflected a large rise insales in the automobile brakes business due to strong sales atoverseas subsidiaries and the positive impact of the weak yen
on overseas sales when converted into yen. Sales also rose in
the electronics business on the back of strong performancesby solutions and semiconductors.
36

Operating income declined 1.6% year on year to ¥13,175
million (US$125 million). The modest decline in operating income reflected a drop in profits of ¥4,509 million in the realestate business from the previous fiscal year, when the Group
carried out a large-scale property release. This was mainly
offset by a sharp improvement in earnings in the automobile
brakes business due to a recovery at TMD Friction Group
S.A. (TMD) and a strong performance by other overseas
subsidiaries, and also by profit growth at Japan Radio Co.,
Ltd. in the electronics business. The operating income figure

Net Sales(billions of yen)500of ¥13,175 million is after ¥9,172 million in total costs related
to the TMD acquisition, including goodwill amortization andcosts related to the alignment of Japanese, US and European
accounting standards.
Net income increased 40.4% year on year to ¥9,012 million (US$86 million). Although the Company booked extraordinary losses of ¥4,541 million due to business restructuringcosts at Japan Radio Co., Ltd. and other factors, corporate
taxes declined due to the recognition of deferred tax assets at
a subsidiary.

CURRENT BUSINESS STRATEGIESAND FUTURE PROSPECTS
As an environmental and energy company providing solutions
to help tackle humanity’s greatest challenge – global environmental issues – Nisshinbo is targeting net sales in excess of¥600 billion, operating income of over ¥40 billion and ROEof at least 9% by the fiscal year ending March 2018. We aim
to achieve these targets by focusing on strategic businesses infour areas: wireless communications and electronics, automotive parts and devices, lifestyle and materials, and new energy
and smart society. In April 2013, we formulated a new threeyear management plan called NEXT 2015, the roadmap forour strategic targets. Under the plan, we are aiming for net
sales of ¥550 billion and operating income of ¥24 billion in

the fiscal year ending March 2016. In order to achieve thosetargets, we are enhancing the Group’s global competitiveness by restructuring and expanding the electronics business,
strengthening the automobile brakes business, and improving
profitability in the textiles, papers, precision instruments andchemicals businesses.
In the fiscal year ending March 2015, our main priorities
will be restructuring and expanding the electronics businessand boosting earnings in the automobile brakes business. In
the electronics business, we plan to build on the success ofbusiness restructuring at New Japan Radio Co., Ltd. in thefiscal year ended March 2014. In order to further strengthen
the operating structure in the electronics business, we will rollout a strategy to generate new growth and implement radical
structural reforms, centered on Japan Radio Co., Ltd., which is
focused on wireless communications technology, and at Nagano Japan Radio Co., Ltd. and Ueda Japan Radio Co., Ltd. In theautomobile brakes business, we plan to reinforce the earnings
structure further by implementing cost reforms at TMD. For
the fiscal year ending March 2015, we forecast higher earnings
in the electronics business due to growth in solutions andsteady progress with business restructuring. We also project
earnings growth in the automobile brakes business, supported bya stronger performance by TMD and the start of full-scale operations at a subsidiary in China. Our estimates are based on averageexchange rates for the fiscal year of ¥105/US$ and ¥140/€.

400

Net Sales (millions of yen)
300

200

100

0
09.3

10.3

11.3

12.3

13.3

14.3

Operating Income (Loss) (millions of yen)

Textiles

51,349 up 1.1%

552 down 4.0%

Automobile Brakes

148,699 up 25.1%

Papers

31,686 up 3.8%

Precision Instruments

28,655 up 16.9%

1,075 an improvement of ¥1,221 million

Chemicals

8,810 up 8.1%

106 down 20.5%

Electronics

187,743 up 7.1%

9,352 up 20.1%

Real Estate

10,567 down 31.2%

7,781 down 36.7%

Other Businesses

26,841 down 1.3%

(1,814) an improvement of ¥2,488 million
42 down 94.0%(67) a deterioration of ¥330 million

Note: Changes in net sales and operating income (loss) are year-on-year figures; please refer to pages 14 to 26 for details on performance in individual segments.

DIVIDEND

Operating Income

Cash Dividends(yen)(billions of yen)

Paying shareholders a stable dividend is one of Nisshinbo’s top
management priorities. Based on this thinking, the Company’s
basic policy is to pay a stable and consistent dividend while
taking into account the need to strengthen the entire Groupover the long term and to ensure sufficient internal reserves
to fund business development.
In line with this policy, Nisshinbo aims to pay an annual
dividend of ¥15.00 (US$0.14) per share while working
to distribute profits to shareholders by flexibly increasing
dividends in response to growth in earnings. Also, in principle,
Nisshinbo intends to retire treasury stock rather than hold it
for long periods.

20

15

10

5

0
09.3

10.3

11.3

12.3

13.3

14.3

20

15

10

5

0
09.3

10.3

11.3

12.3

13.3

14.3
37

FINANCIAL POSITION

CASH FLOWSPRODUCTION RESULTS

Total assets at the end of the fiscal year stood at ¥611,311
million (US$5,822 million), an increase of ¥59,378 million fromthe end of the previous fiscal year. This mainly reflected increasesof ¥6,422 million in cash and cash equivalents, ¥14,899 million
in receivables, ¥9,719 million in inventories, ¥8,695 million inproperty, plant and equipment, and ¥10,068 million in investment securities.
Total liabilities at the end of the fiscal year were ¥334,446
million (US$3,185 million), an increase of ¥25,136 million fromthe end of the previous fiscal year. This was mainly attributable
to increases of ¥19,917 million in short-term bank loans, ¥7,602
million in payables and ¥6,912 million in deferred tax liabilities(under long-term liabilities), and a decrease of ¥14,366 million in
the current portion of long-term debt.
Net assets at the end of the fiscal year totaled ¥276,865
million (US$2,637 million), an increase of ¥34,242 million fromthe end of the previous fiscal year. This primarily reflected
increases of ¥6,392 million in retained earnings, ¥7,460 million in
net unrealized gain on available-for-sale securities, and ¥19,612
million in foreign currency translation adjustments. As a result of
the above, the shareholders’ equity ratio increased 1.2 percentage points year on year to 39.1%.

Cash Flows from Operating Activities

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

Cash flows provided by operating activities totaled ¥26,075
million (US$248 million), mainly reflecting income before
income taxes and minority interests of ¥14,517 million, depreciation and amortization of ¥21,486 million, and a decrease inoperating cash flow of ¥7,128 million owing to an increase inreceivables.

Cash Flows from Investing Activities

Cash flows used in investing activities totaled ¥19,862 million(US$189 million), mainly reflecting cash used of ¥18,902 million
for the purchase of property, plant and equipment.
Cash flows used in financing activities totaled ¥2,321 million(US$22 million), mainly attributable to an increase of ¥18,148
million in short-term bank loans and ¥22,737 million in proceeds from issuance of long-term debt, versus decreases incash flow of ¥39,604 million for the repayment of long-term
debt, ¥1,042 million for decrease in other long-term liabilities,and ¥2,620 million for cash dividends paid.
As a result of the above, cash and cash equivalents at the end of
the fiscal year totaled ¥24,825 million (US$236 million), an increaseof ¥6,422 million from the end of the previous fiscal year.

(billions of yen)(billions of yen)

700

300

600

250

500

Amount(millions of yen)

Year-on-Year
Change (%)

Textiles42,121+13.2

Automobile Brakes

121,429+27.1

Papers

29,054+8.9

Precision Instruments

26,876+14.0

Chemicals

6,783

+5.3

Electronics

197,615+7.5

360+136.2424,233+13.6

Other Businesses
Total

Cash Flows from Financing Activities

Net Assets

Total Assets

Industry
Segment

Notes: 1. Amounts are calculated based on manufacturing costs.
2. The real estate 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.

CAPITAL EXPENDITURESThe Nisshinbo Group channels capital expenditures into priority
product fields that offer the potential for long-term growth andinto upgrading manufacturing equipment to raise product quality.
It also invests in environmental measures such as the reductionof greenhouse gases and in manufacturing facilities in China andSoutheast Asia in response to rising demand driven by market
expansion. In the fiscal year ended March 2014, capital expenditures totaled ¥19,896 million. In the automobile brakes business,
the Group invested ¥3,801 million to increase brake friction
material manufacturing capacity at consolidated subsidiary TMD
Friction GmbH and other companies, and ¥2,651 million to

Capital Expenditures(billions of yen)

25

200
150

200

5

50

100

0

0
09.3

38

10

100

10.3

11.3

12.3

13.3

14.3

Forward-looking statements in this report are based on
information available to the Nisshinbo Group as of March
31, 2014.
Risks Associated with New Businesses

The Nisshinbo Group is actively developing new businesses
such as electric double-layer capacitors and carbon catalysts inorder to expand sales and profits. However, uncertainties are
inherent in new businesses and the development of appealing
new products and the formation of new markets may notproceed as anticipated. This could delay or prevent the recovery of prior investments.

Risk of Fluctuation in the Value ofInvestment Securities

Investment securities held by Nisshinbo are marked to market
in accordance with accounting standards for financial products,
and the Company implements impairment accounting based oneven stricter internal standards for a portion of these securities.
Based on current accounting standards and standards for asset
impairment, there is a limited possibility that impairment losses
will have an impact on net income, as the acquisition cost of
the investment securities was low. However, comprehensive
income may fluctuate significantly owing to changes in market
value. Also, the Company plans to limit increases in interestbearing liabilities by selling investment securities to procure
capital needed for mergers and acquisitions, overseas businessdevelopment, and capital investment, but misalignment of thetiming between sale and investment may give rise to unforeseen
circumstances.

To reform its business structures, Nisshinbo is taking active
steps to close certain business sites and subsequently use theidle land. Income from these redevelopment projects is providing a significant contribution to the Company’s profits. The
redevelopment of this land may result in cleanup expenses andrevisions to laws could impede redevelopment work.

15

300

RISK INFORMATION

Risks Associated with the Utilizationof Idle Land

20

400

upgrade brake friction material manufacturing facilities at consolidated subsidiaries Nisshinbo Somboon Automotive Co., Ltd.
and Nisshinbo Saeron (Changshu) Automotive Co., Ltd. In theelectronics business, ¥3,308 million in capital expenditures was
mainly spent on electronic component manufacturing facilities atconsolidated subsidiary Japan Radio Co., Ltd., and ¥1,699 million
was mainly spent on semiconductor manufacturing and R&D
facilities at consolidated subsidiary New Japan Radio Co., Ltd.

0
09.3

10.3

11.3

12.3

13.3

14.3

09.3

10.3

11.3

12.3

13.3

14.3

39

Six-Year Summary

Risks Associated with Product Quality

The majority of the Nisshinbo Group manufactures products
in accordance with international quality control standards, butthere is no guarantee that quality-related problems will notoccur in the future. The Company has product liability insurance,
but the occurrence of a large liability could have an adverse
impact on the Group’s financial results.

Risks Associated with Market Shifts Relating
to Product Sale Prices and Raw Material
Procurement

Some of the Nisshinbo Group’s products can be significantly
affected by fluctuations in market prices owing to market developments and competition with other companies. Sales prices for
textile and paper products and raw materials procured by theGroup such as cotton, pulp, steel and other materials are
particularly susceptible to these market trends.
The New Japan Radio Group (New Japan Radio Co., Ltd.
and its consolidated subsidiaries) generates more than 80% of
its consolidated sales from semiconductor devices. Significant
fluctuations in demand in the semiconductor market may
therefore have a large impact on the Nisshinbo Group’s financial
results.

Risk Associated with Fluctuations in
Exchange Rates

Fluctuations in foreign exchange rates can have an impact on
the yen value of the Nisshinbo Group’s revenues, expenses,
receivables and payables arising from business transactions thatare denominated in foreign currencies and on foreign currencytranslation adjustments in the financial statements related tooverseas consolidated subsidiaries, which prepare their statements in foreign currencies. While the Group takes steps to mitigate the risk of exchange rate fluctuations, not all this risk can be
avoided. Fluctuations in exchange rates may therefore affect theGroup’s financial results, with periods of yen appreciation puttingpressure on profits.

Risk Associated with Unforeseen
Revisions to Laws and Regulations

Products supplied by the Japan Radio Group (Japan Radio Co.,
Ltd. and its consolidated subsidiaries) are subject to a range oflaws and regulations governing areas such as national security.
These laws include export restrictions, import regulations andenvironmental and recycling laws. The Japan Radio Group has
established clear internal regulations regarding compliance withthese laws. However, unforeseen revisions to laws and regulations may limit the Group’s business activities and lead to anincrease in costs.

Risks Associated with Changes inCustomer Business Performance

The customers of the Nisshinbo Group’s automobile brakes
business are automobile manufacturers that conduct businessglobally. The cancellation of contracts or requests to sharply
reduce prices owing to changes in the business results of suchclient companies are factors outside the control of Nisshinbo,
and consequently may have an impact on the Group’s financial
results.
The Japan Radio Group has a relatively high ratio of businesswith central and local governments, so sales tend to be concentrated toward the end of the fiscal year. In addition, trends
in central and local government spending plans and capital
expenditure in the telecommunications sector may affect theGroup’s financial results.

Risks Associated with Overseas Business
Development

The Nisshinbo Group owns many production bases overseas.
Risks inherent to this international presence include unforeseenchanges in laws and regulations, unfavorable political or economic factors and social turmoil.

Risks Associated with Financial Covenants
Related to Capital Procurement

The Nisshinbo Group has secured funding from multiple
financial institutions. The Company and some consolidated
subsidiaries have entered into commitment line contracts, while
consolidated subsidiary New Japan Radio Co., Ltd. has enteredinto a term loan contract. These companies are bound bycertain financial covenants.

For the years ended March 31(millions of yen)

2009

2010

2011

2012

2013

2014

286,167

242,409

325,555

379,340

450,693494,350

Operating Income

408

3,570

19,843

4,170

13,394

13,175Net Income (Loss)(1,286)

1,896

11,185

9,416

6,418

9,012

Net Assets

193,698

193,639

211,557

213,751

242,623

276,865

Total Assets

366,858

358,110479,852

534,584

551,933

611,311

Shareholders’ Equity Ratio (%)

49.0

51.1

38.0

34.7

37.9

39.1

Return on Assets (%)

(0.3)

0.5

2.7

1.9

1.2

1.5

Return on Equity (%)

(0.6)

1.0

6.1

5.1

3.2

4.0

Payout Ratio (%)

—

167.7

27.5

36.1

31.5

27.8

Capital Expenditures

16,872

13,027

12,80015,705

20,12319,896

Depreciation and Amortization

18,025

12,96013,15814,55018,96921,486

184,098,939

184,098,939

178,798,939

178,798,939

Net Income (Loss)(7.08)

10.38

63.32

53.83

36.74

51.60

Shareholders’ Equity

985.191,034.04

1,036.80

1,063.19

1,198.67

1,369.78

Cash Dividends

15.00

15.00

15.00

15.00

15.00

15.00

Number of Employees

12,726

12,48818,292

22,30422,08322,052Net Sales＊

Common Shares Issued
Per Share (in yen):＊ Payout Ratio is on a non-consolidated basis.

Net Sales(billions of yen)

Risks Associated with Supply Chain

The Group may face difficulties in securing necessary components owing to changes in the economic environment. For
example, rapid developments in specific parts supply regions
and product fields may affect supply capacity at parts companies
and lead to delivery delays. This in turn could impact the Group’s
shipment plans or lead to deterioration in margins owing tosharp increases in the price of components.

Risks Associated with Disasters and Accidents

The Nisshinbo Group takes steps to manage risk related todisasters and accidents. However, a large earthquake or othermajor disaster or a sudden accident such as a fire may causesignificant damage to the Group’s manufacturing facilities, leading
to the suspension of production activities that causes shipment
delays. The Group may also incur considerable costs to restore
damaged buildings or facilities.
In addition, the outbreak and spread of a new infectious
disease may have an impact on the Group’s operations.

500
400
300
200
100
0
09.3

10.3

11.3

12.3

13.3

14.3

Net Income (Loss)Net Income (Loss) per Share(billions of yen)

(yen)

12

80

9

60

6

40

3

20

0
-3

40

178,798,939 178,798,939

0
-10
09.3

10.3

11.3

12.3

13.3

14.3

09.3

10.3

11.3

12.3

13.3

14.3

41

Consolidated Balance Sheets(March 31, 2014 and 2013)ASSETS

2014(millions of yen)(thousands of
US dollars) (Note 1)

2013

2014

Current assets:(thousands of
US dollars) (Note 1)

2014

2013

2014

¥48,653¥28,736$463,362

Commercial paper

30,00030,000285,714

Current portion of long-term debt (Note 5)

20,75035,116

197,619

66,41258,543

632,496

166

217

1,581

LIABILITIES AND NET ASSETS
Current liabilities:

Cash and cash equivalents¥24,825¥18,403$236,429

Time deposits (Note 5)

3,208

1,798

30,5529162

86

Marketable securities (Note 4)(millions of yen)

Short-term bank loans (Note 5)

PayablesReceivables
Notes receivable, trade
Accounts receivable, trade (Note 5)
Unconsolidated subsidiaries and affiliates
Other
Less allowance for doubtful accounts

Notes and accounts payable, trade (Note 5)
9,243

10,05988,029134,229

118,806

1,278,371

1,278

1,317

12,171

4,427

4,073

42,162

149,177

134,255

1,420,733

(827)

(804)

(7,876)

148,350

133,451

1,412,857

Inventories (Notes 3 and 5)

89,42579,706851,667

Deferred tax assets (Note 7)

3,020

2,832

28,762

Unconsolidated subsidiaries and affiliates
Other

8,855

9,071

84,33375,43367,831

718,410

Accrued expenses

13,833

12,838

131,743

Accrued income taxes

2,835

3,066

27,000

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

Other current assets (Note 5)

3,606

2,967

34,343

Total current assets

272,443

239,3192,594,696

Property, plant and equipment (Note 5):Land52,22751,792

497,400

Buildings and structures

172,584

166,154

1,643,657

Machinery, equipment and tools

297,684

282,553

2,835,086

4,193

2,389

39,933526,688502,8885,016,076(352,441)(337,336)(3,356,581)

174,247

165,552

1,659,495

Construction in progress
Less accumulated depreciation

1

41

10

12,156

10,777

115,771

203,661

188,405

1,939,629

Long-term liabilities:
Long-term debt (Note 5)

29,722

27,346

283,067

Liabilities for retirement benefits (Note 6)

43,09241,008410,400

Deferred tax liabilities (Note 7)

41,321

34,409393,533

Other long-term liabilities (Note 5)

16,65018,142

158,571

130,785

120,905

1,245,571

27,58827,588262,743

Commitments and contingencies (Note 11)
Net assets (Note 12):
Shareholders’ equity:
Common stock:
Authorized—371,755,000 shares
Issued2014 and 2013—178,798,939 shares

Capital surplus

20,404

20,401

194,324

Retained earnings

150,347

143,955

1,431,876(3,553)—(33,838)

Less treasury stock at cost
2014—4,149,386 shares
2013—4,126,301 shares
Total shareholders’ equity—(3,534)—

194,786

188,410

1,855,105

32,70725,247

311,495

Accumulated other comprehensive income:Net unrealized gain on available-for-sale securities

Investments and other assets:

Deferred gain (loss) on derivatives under hedge accounting

(42)

65

(400)

Foreign currency translation adjustments

15,265(4,347)

145,381

Post retirement liability adjustments(3,485)—(33,190)

44,44520,965423,286

264

282

2,514

Investment securities (Notes 4 and 5)

82,08172,013

781,724

Investments in and advances to unconsolidated subsidiaries and affiliates

22,374

18,845

213,086

Deferred tax assets (Note 7)

8,831

5,883

84,105

Goodwill

23,37823,002

222,647

Other

Stock acquisition rights

27,95727,319266,257

Minority interests

164,621147,062

1,567,819¥611,311¥551,933$5,822,010

Total accumulated other comprehensive income

Total net assets

37,37032,966355,905

276,865

242,623

2,636,810¥611,311¥551,933$5,822,010

See Notes to Consolidated Financial Statements.
42

43

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income(Years ended March 31, 2014 and 2013)(Years ended March 31, 2014 and 2013)(millions of yen)

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

2014

2013

2014

¥494,350¥450,693$4,708,095(millions of yen)(thousands of
US dollars) (Note 1)

2014

2013

2014

¥10,874¥10,595$103,562

Net unrealized gain on available-for-sale securities

7,699

10,04273,324

Deferred gain (loss) on derivatives under hedge accounting

(107)

76

(1,019)19,982

10,411

190,305

Income before minority interests
Other comprehensive income:Costs and expenses:
Cost of sales

395,084

359,4633,762,705

Selling, general and administrative expenses

86,091

77,836

819,914481,175

437,299

4,582,619

Operating income

Foreign currency translation adjustments
Equity in earnings of affiliates
Comprehensive income

1,143

508

10,88528,717

21,037

273,495¥39,591¥31,632$377,057

13,175

13,394125,476

Interest and dividend income

2,288

1,621

21,790Parent¥35,978¥26,330$342,648

Interest expenses(1,578)(2,241)(15,029)

Minority interests¥3,613¥5,302$34,409

Equity in earnings of affiliates

4,900

3,075

46,667

Other, net (Note 10)(4,268)

1,037(40,647)

1,342

3,492

12,781

14,517

16,886138,257

4,134

3,750

39,371Other income (expenses):

Income before income taxes and minority interests

Comprehensive income:See Notes to Consolidated Financial Statements.

Income taxes (Note 7):
Current
DeferredIncome before minority interests
Minority interests in net income

(491)

2,541

(4,676)

3,643

6,291

34,695

10,874

10,595103,562

1,862

4,177

17,733¥9,012¥6,418$85,829

Net income¥51.60¥36.74$0.49

Cash dividends

15.00

15.00

0.14

Net income

Per share:(yen)(US dollars)

See Notes to Consolidated Financial Statements.

44

45

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Cash Flows(Years ended March 31, 2014 and 2013)(Years ended March 31, 2014 and 2013)(millions of yen)(thousands of
US dollars) (Note 1)

2014

2013

2014

¥14,517¥16,886$138,257(5,018)21,486
6,584(4,900)(278)
7,240(8,703)286
1,257(2,410)18,9694,899(3,075)161
6,325(9,121)(2,191)
384(47,790)
204,62962,705(46,667)(2,648)68,952(82,886)
2,724
11,971(1,195)(255)(11,381)

498
1,708

328
602

4,743
16,267(7,128)(3,453)3,493(319)
26,075(1,146)
4,033(1,543)
1,249
34,095(67,886)(32,886)
33,267(3,038)248,333

673

6,859

6,410

5,052
(18,902)314(19,489)

48,114(180,019)(1,397)(1,112)

(246)
2,742

(13,305)(10,591)(2,585)(1,591)(19,862)—(1,153)(10,973)(24,619)(15,152)(189,162)

22,737(39,604)
18,148—(2,620)(32)
180(1,042)(88)(2,321)

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

216,543(377,181)
172,838—(24,953)
(304)
1,714
(9,923)(838)(22,104)

2,530
6,422

1,662
711

24,095
61,162—
18,403¥24,825788
16,904¥18,403—
175,267$236,429(millions of yen)

Commonstock

Balance at April 1, 2012

Capitalsurplus¥27,588¥20,401

Retainedearnings¥140,213

Treasurystock
at cost¥(3,522)

Net
Deferred
unrealized
gain (loss)
Foreign
gain ononcurrency
available- derivatives translation
for-sale under hedge adjustments
securities accounting¥15,344¥(11)¥(14,280)

Post
retirement
liability
adjustments

Stockacquisitionrights¥—¥246

Minority
interests¥27,772

Total net
assets¥213,751

Cash dividends, ¥15.00
per share(2,620)(2,620)Net income

6,418

6,418

Purchase of treasury
stock
Disposal of treasury
stock

(1)

Adjustment due toincrease in consolidated subsidiaries
Other

(13)

(13)

1

0

(54)

(54)

(1)

(1)

Net changes
Balance at March 31, 2013

27,58820,401

143,955(3,534)

9,903

76

9,933

25,24765(4,347)

—

36

5,194

25,142282

32,966242,623

Cash dividends, ¥15.00
per share(2,620)(2,620)Net income

9,012

9,012

Purchase of treasury
stock

(32)

Disposal of treasury
stock

3

Other

13

16

0

0

Net changes
Balance at March 31, 2014

(32)

7,460
¥27,588¥20,404 ¥150,347¥(3,553) ¥32,707(107)

19,612(3,485)

(18)

4,404

27,866¥(42) ¥15,265¥(3,485)¥264¥37,370¥276,865(Thousands of U.S. dollars) (Note 1)

Retainedearnings

Treasurystock
at costNet
Deferred
unrealized
gain (loss)
Foreign
gain ononcurrency
available- derivatives translation
for-sale under hedge adjustments
securities accounting$194,295 $1,371,000$(33,657)$240,448

Commonstock

Balance at March 31, 2013

$262,743

Capitalsurplus$619$(41,400)

Post
retirement
liability
adjustments

StockacquisitionrightsMinority
interests

Total net
assets$—$2,686$313,962$2,310,696

Cash dividends, $0.14
per share(24,953)(24,953)

Net income

85,82985,829Purchase of treasury
stock
Disposal of treasury
stock
Other
Net changes

29

(305)

(305)

124

153

0

0
71,047

Balance at March 31, 2014 $262,743 $194,324 $1,431,876 $(33,838) $311,495
See Notes to Consolidated Financial Statements.

(1,019) 186,781(33,190)(172)$(400) $145,381 $(33,190)$2,51441,943

265,390$355,905 $2,636,810

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

46

47

Notes to Consolidated Financial Statements

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements 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
and practices generally accepted in Japan, which are different incertain respects as to application and disclosure requirementsof International Financial Reporting Standards.
In addition, the accompanying notes include information
which is not required under generally accepted accounting

principles and practices in Japan but is presented herein as additional information.
The United States dollar ($) amounts included herein are
given solely for convenience and are stated, as a matter of arithmetical computation only, at the rate of ¥105=$1, the approximate exchange rate at March 31, 2014. The translations should
not be construed as representations that the Japanese yenamounts have been, could have been, or could in the future be,converted into United States dollars.

2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accounts ofNisshinbo Holdings Inc. (hereinafter the “Company”) and its
significant subsidiaries (together, the “Group”).
Under the control or influence concept, those companies inwhich the Parent, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant
influence are accounted for by the equity method.
Investments in unconsolidated subsidiaries and affiliatedcompanies are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries
and affiliated companies are stated at cost. If the equity methodof accounting had been applied to the investments in thesecompanies, 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 the income statement to the extent that they are nothedged by forward exchange contracts.
Investments in and advances to unconsolidated subsidiaries
and affiliates in foreign currencies are translated at the historicalrates effective at the dates of transaction from which such accounts were originated.

Translation adjustments are presented under minority interests and foreign currency translation adjustments as a component of net assets.

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

48

Retirement benefits to directors and corporate auditors
are provided at the amount that would be required if all directors and corporate auditors retired at the balance sheet date.

(h) Goodwill(k) Stock options

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

The accounting standard for stock options requires companies
to recognize compensation expense for employee stock options based on the fair value at the date of grant and over thevesting period as consideration for receiving goods or services.
The standard also requires companies to account for stock options granted to non-employees based on the fair value of either the stock option or the goods or services received. On thebalance sheet, the stock option is presented as a stock acquisition right as a separate component of net assets until exercised.
The standard covers equity-settled, share-based paymenttransactions, but does not cover cash-settled, share-based payment transactions. In addition, the standard allows unlistedcompanies to measure options at their intrinsic value if theycannot reliably estimate fair value.

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

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

(f) M arketable and investment securities
The Group classifies all of its marketable and investment securities as available-for-sale, which are reported at fair value, withunrealized gains and losses included in net assets as net unrealized gain on available-for-sale securities. Other investment securities without quoted market prices are stated at cost.
Realized gains or losses on the sale of securities are based on
the average cost of a particular security held at the time of sale.
Marketable and investment securities are regularly reviewed for other-than-temporary declines in carrying amountbased on criteria that include the length of time and the extent
to which the market value has been less than cost, the financial
condition and near-term prospects of the issuer and the Company’s intent and ability to retain 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.

(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.

property, plant and equipment from national and local governments are deducted from the acquisition costs of related assets
in accordance with tax regulations.

(g) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciationis computed principally on the straight-line method over theirestimated useful lives. Contributions in aid of purchases of(j) Retirement and pension plans
The Company, domestic consolidated subsidiaries and certain
foreign consolidated subsidiaries have defined benefit plans anddefined contribution plans that cover substantially all employees. Under the defined benefit plans, the annual provision for
retirement benefits is calculated to state the asset and liability
for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date.
On May 17, 2012, the Accounting Standards Board of Japan(ASBJ) issued ASBJ Statement No.26, “Accounting Standard for
Retirement Benefits” and ASBJ Guidance No.25, “Guidance on
Accounting Standard for Retirement Benefits”, which replaced
the Accounting Standard for Retirement Benefits that had been
issued by the Business Accounting Council in 1998 and theother related guidance.
Under the revised accounting standard, actuarial gains andlosses and past service cost are recognized within net assets
accumulated other comprehensive income in the consolidatedbalance sheets after adjusting for tax effects, and the funding
deficit or surplus is recognized as a liability or asset.
The Group has applied the revised accounting standard
from the year ended March 31, 2014.
The effect of this revised accounting standard, the Grouphas recognized this actuarial gains and losses and past service
costs as of March 31, 2014 and recorded ¥3,485 million ($33,190
thousand) as ‘Post retirement liability adjustments’ within net
assets.

(l) Research and development costs
Research and development costs are charged 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. Deferredtaxes are measured by applying currently enacted tax laws to
the temporary differences.

(n) Derivative financial instruments
The Group uses a variety of derivative financial instruments, including foreign currency forward contracts, currency swaps, commodity
swap contracts and interest rate swaps, as a means of hedging exposure to foreign currency and interest rate risks. The Group does notenter into derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted
for as follows: a) all derivatives are recognized as either assets or
liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated statements of income, and b) for derivatives used for hedging
purpose if derivatives qualify for hedge accounting because ofhigh correlation and effectiveness between the hedging instruments and hedged items, gain or losses on derivatives are deferred until maturity of the hedged transactions.
The interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not remeasured at market value, but the differential paid or received under the swap
agreements is recognized and included in interest expense.
49

(o) Asset retirement obligation
The asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from the acquisition,
construction, development and the normal operation of such tangible fixed assets under the Japanese accounting standard.
The asset retirement obligation is recognized as the sum of

the discounted cash flows required for the future asset retirement and is recorded in the period in which the obligation isincurred if a reasonable estimate can be made.
The asset retirement cost is allocated to expense throughdepreciation over the remaining useful life of the assets.

3. Inventories

Annual maturities of long-term debt were as follows:(millions of yen)

2015

¥20,750$197,619

2016

15,557148,1622017

12,091

115,153

2018

575

5,476

2019 and thereafter

Inventories at March 31, 2014 and 2013 were as follows:(millions of yen)(thousands of US dollars)

2014

2013

2014

Finished products¥29,948¥27,606$285,219

Work in process

38,09434,344362,800

Materials and supplies

21,38317,756

203,648¥89,425¥79,706$851,667

The carrying amounts and aggregate fair values of available-for-sale securities included in marketable and investment securities at
March 31, 2014 and 2013 were as follows:

Cost
Unrealized gains
Unrealized losses
Fair value(millions of yen)(thousands of US dollars)

2014

2013

2014

¥27,901¥29,421$265,724

52,933

41,621

504,124(799)(1,483)(7,610)¥80,035¥69,559$762,238

Aggregate cost of non-marketable securities accounted for under the cost method totaled ¥2,055 million ($19,572 thousand) and¥2,616 million at March 31, 2014 and 2013, respectively.

(thousands of US dollars)

2014

2013

2014

¥—

¥15,360$—

Property, plant and equipment

17,045

26,524

162,333

Accounts receivable, trade

9,600

13,98291,429

527

409

5,019

Time deposits

—

1,612

—

Other current assets

—

482

—

¥27,172¥58,369$258,781

Investment securities

At March 31, 2014 and 2013, in addition, pledged assets as collateral for liabilities other than the above were as follows:

2014(thousands of US dollars)

2013

2014

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

¥10,770¥12,851$102,572—

11,134—Loans from banks maturing serially to 2019, ranging from 0.5% to 7.6%

38,43837,306

366,076

Capital lease obligations, due through 2020

1,264

1,171

12,038

10.8% bonds due in 2014

(millions of yen)(thousands of US dollars)

2014

2013

2014

¥7,817¥7,378$74,448

466

488

4,438

Assets pledged:
Property, plant and equipment
Investment securities

The annual interest rates applicable to the short-term bank loans at March 31, 2014 and 2013 were 0.5% to 6.1%. Long-term debt at
March 31, 2014 and 2013 consisted of the following:(millions of yen)

14,276$480,686(millions of yen)Time deposits

5. Short-Term Bank Loans and Long-Term Debt

1,499
¥50,472

At March 31, 2014 and 2013, net book value of assets pledged as collateral for shor t-term bank loans and long-term debt was asfollows:

Inventories

4. Marketable and Investment Securities(thousands of US dollars)Year ending March 31,

1

1

9

¥8,284¥7,867$78,895(millions of yen)(thousands of US dollars)

2014

2013

2014

¥7,466¥8,031$71,105

Liabilities with collateral:
Other long-term liabilities
Notes and accounts payable, trade

1,025

314

9,762

¥8,491¥8,345$80,867

Long-term debt without collateral:

Less current portion

50

50,472

62,462

480,686(20,750)(35,116)(197,619)¥29,722¥27,346$283,067
51

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

7. Income Taxes
The liability for retirement benefits for directors and corporate auditors at March 31, 2014 and 2013 was ¥29 million($276 thousand) and ¥153 million, respectively. The retirement
benefits for directors and corporate auditors are paid subject
to the approval of the shareholders.

(millions of yen)

2014

(thousands of US dollars)

2013

2014

Projected benefit obligation
Service cost

$15,590

23,620229,562

Unrealized gain caused by intercompany transactions

1,277

1,043

12,162

Accrued employees’ bonuses

2,147

2,184

20,448

Accrued severance benefits

13,513

10,663

128,695

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

1,853

1,088

17,648

894

1,024

8,514

1,731

2,080

16,486¥107,866¥98,258$1,027,295

5,036

4,546

47,962

Devaluation of investment securities

2,105

15,562

Recognized actuarial (gain) loss

(8,771)

Other(10,525)(9,101)(100,238)

Exchange differences

3,239

1,572

30,848

Other

(845)

—

(8,048)¥105,484¥107,866$1,004,610

Less valuation allowance

4,327

4,299

41,209(36,216)(34,925)(344,914)¥15,267¥13,027$145,400

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

Fair value of plan assets¥(18,885)¥(14,659)$(179,857)

Deferred gains on sale of property(5,334)(5,497)(50,800)¥58,219¥51,746$554,467

1,110

1,221

10,571

Land revaluation surplus(9,741)(9,461)(92,771)(5,400)(5,117)(51,429)

Recognized actuarial gain

4,713

4,169

44,886

Intangible assets recognized in business combination

Contributions to the defined pension plan

3,456

5,276

32,914

Other

Payment(5,337)(5,332)(50,828)

Exchange differences

1,896

1,139

18,057

Balance at end of year

¥64,057¥58,219$610,067

Net deferred tax(5,378)(4,028)(51,219)¥(44,738)¥(38,762)$(426,076)¥(29,471)¥(25,735)$(280,676)

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2014 and 2013 and the actual effective
tax rates reflected in the accompanying consolidated statements of income was as follows:

The components of net periodic retirement benefit costs for the years ended March 31, 2014 and 2013 were as follows:(millions of yen)(thousands of US dollars)

2014

2013

2014

Service cost

¥5,036¥4,546$47,962Interest cost

1,634

2,105

15,562

Expected return on plan assets(1,110)(1,221)(10,571)

Amortization of prior service cost

(302)

(308)

(2,876)

Recognized actuarial loss

1,953

1,139

18,600¥7,211¥6,261$68,677

Defined benefits plans:

Retirement benefits paid due to restructuring of business operations for the years ended March 31, 2014 and 2013 were ¥4,065 million($38,714 thousand) and ¥1,093 million, respectively.
Assumptions used for the years ended March 31, 2014 and 2013 were set forth as follows:52¥1,951

10,486

Total

2014

24,104(921)

Expected return on plan assets

2013¥1,637

1,634

Balance at beginning of year

2014
Loss on devaluation of inventories

Interest cost

Balance at end of year

(thousands of US dollars)

Tax loss carryforwards

Software costs

Actual payment of retirement benefits(millions of yen)

Deferred tax assets:

Changes of the liability for employees’ retirement benefits for the years ended March 31, 2014 and 2013 were as follows:

Balance at beginning of year

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at March
31, 2014 and 2013 were as follows:

2014

2013

Discount rate

1.0%–2.0%

1.0%–2.0%

Expected rate of return on plan assets

0.0%–4.5%

1.5%–4.2%

2014

2013

38.0%

38.0%

Net changes in valuation allowance(13.5)(10.2)

Equity in earnings of affiliates(12.3)(6.8)

Dividends income not taxable

(7.0)

(1.0)

Lower income tax rates applicable to income in certain foreign countries

(8.7)

(0.3)

Amortization of goodwill

16.1

12.0

Effects of revised tax rate

1.8

—

Other

10.7

5.6

25.1%

37.3%

Normal effective statutory tax rate

Actual effective tax rate

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

53

8. Leases

10. Other Income (Expenses) — Other, Net

The Group leases certain machinery, computer equipment and other assets.
Total rental expenses for the years ended March 31, 2014 and 2013 were ¥665 million ($6,333 thousand) and ¥639 million,
respectively.

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

2014

2013

2014

9. Derivatives

Gain (loss) on sale of property, plant and equipment¥(286)¥2,191$(2,724)

Impairment of long-lived assets(1,257)(384)(11,971)

Gain on sale of securities

1,195

255

11,381The Group enters into foreign currency forward contracts, currency swap contracts and commodity swap contracts to hedge
exchange risk associated with certain assets and liabilities denominated in foreign currencies and also into interest rate swap

contracts to manage its interest rate exposures on certain liabilities. Such contracts outstanding at March 31, 2014 and 2013
were as follows:(millions of yen)Contract
amountFair value

Unreallzed
loss

Contract
amount

¥309

¥(10)

¥(10)

¥1,268

¥(17)

Sold

¥2,128Purchased¥1,345

Receive EUR · Pay JP¥
Receive EUR · Pay US$

Not hedged:(thousands of US dollars)

2013

2014
Fair value

Contract
amountFair value

Unrealized
loss

¥433

¥(16)

¥(16)

$2,943

$(95)

$(95)

¥(17)

¥—

¥—

¥—

$12,076$(162)$(162)¥(9)¥(9)¥1,040

¥(36)

¥(36)

$20,267

$(86)

$(86)

¥(6)

¥(6)

¥945

¥(11)

¥(11)

$12,810

$(57)

$(57)

¥—

¥—

¥—

¥456

¥2

¥2

$—

$—

$—

¥231

¥(1)

¥(1)

¥183

¥(9)

¥(9)

$2,200

$(10)

$(10)

Commodity swap:
Purchased raw materials

Write-down of investment securities

Foreign currency forward contracts:(thousands of US dollars)

(498)

(328)

(4,743)(4,065)(1,093)(38,714)

Amortization of goodwill

94

357

895

Other, net

549

39

5,229

¥(4,268)¥1,037$(40,647)

Retirement benefits paid due to restructuring of business operations

2014

Unrealized
gain (loss)

Interest rate swap:
Fixed rate payments, floating rate receipt(millions of yen)

11. Commitments and Contingencies
Contingent liabilities at March 31, 2014 and 2013 for trade notes
discounted with banks amounted to ¥659 million ($6,276
thousand) and ¥1,107 million, respectively.
Contingent liabilities at March 31, 2014 and 2013 for loans
guaranteed amounted to ¥90 million ($857 thousand) and ¥43

million, respectively.
Commitments for capital expenditures outstanding at March
31, 2014 and 2013 were in the approximate amounts of ¥3,057
million ($29,114 thousand) and ¥2,258 million, respectively.

Currency swap:(millions of yen)(thousands of US dollars)

2013

2014

2014
Hedged:Contract
Contract amount due
amountafter oneyear

Fair value

Contract
Contract amount due
amountafter one
year

¥957

¥—

¥(76)

¥1,070

¥259

¥—

¥(1)

¥190

¥—

¥1

$2,467$—$(10)¥1,300

¥—

¥19

¥735

¥—

¥41

$12,381$—$181

Fair value

Contract
amount¥42$9,114Contract
amount due
after oneyear

Fair value

Commodity swap:
Purchased raw materials¥—$—

12. Subsequent Events(a) Year-end cash dividends(b) Stock option

On May 8, 2014, the Board of Directors of Nisshinbo Holdings
Inc. declared year-end cash dividends (¥7.5 per share) in theamount of ¥1,310 million ($12,476 thousand).

At the general shareholders meeting held on June 27, 2014, theCompany’s shareholders approved a stock option plan to grant
stock purchase rights up to 200 thousand shares of the Company’s common stock to directors and key employees in the
period from August 1, 2016 to July 31, 2021.

$(724)

Foreign currency forward contracts:
Sold
Purchased

54

55

Independent Auditor’s Report

13. Segment Information
Information about industry segments of the Company and its consolidated subsidiaries for the years ended March 31, 2014 and 2013
was as follows:(millions of yen)

2014
TextilesAutomobile
BrakesPapersPrecision
Instruments

ChemicalsElectronics

Real Estate

Other Eliminations/
Consolidated
Businesses
Corporate

Sales and Segment Profit (loss):
Sales to customers
Intersegment sales  Total sales
Segment profit (loss)[Operating income (loss)]
Segment assets:¥51,349 ¥148,699 ¥31,686 ¥28,655
193

44

746

1,351

¥51,542 ¥148,743 ¥32,432 ¥30,006¥552 ¥(1,814)¥42¥1,075¥47,837 ¥167,264 ¥22,311 ¥29,857¥8,810 ¥187,743 ¥10,567 ¥26,841
267

93

2,479

1,514

¥9,077 ¥187,836 ¥13,046 ¥28,355¥106¥9,352¥7,781¥— ¥494,350(6,687)—¥(6,687) ¥494,350¥(67) ¥(3,852) ¥13,175¥8,215 ¥208,527 ¥47,274 ¥32,533¥47,493 ¥611,311

Other:
Depreciation and amortization¥1,504¥9,732¥1,041¥1,459¥605¥4,751¥1,767¥275

Increase in property, plant andequipment and intangible assets¥1,036¥8,735¥416¥980¥1,080¥7,287

¥550

¥834

¥352

¥21,486¥(1,022) ¥19,896(millions of yen)

TextilesAutomobile
BrakesPapersPrecision
Instruments

2013

ChemicalsElectronics

Real Estate

Other Eliminations/
Consolidated
Businesses
Corporate

Sales and Segment Profit (loss):
Sales to customers
Intersegment sales  Total sales
Segment profit (loss)[Operating income (loss)]
Segment assets:¥50,773 ¥118,849 ¥30,524 ¥24,520
27

166

708

862

¥50,800 ¥119,015 ¥31,232 ¥25,382¥575 ¥(4,302)¥709¥(146)¥44,703 ¥139,592 ¥22,178 ¥26,092¥8,150 ¥175,308 ¥15,367 ¥27,202
485

113

2,570

2,259

¥8,635 ¥175,421 ¥17,937 ¥29,461¥133¥7,788 ¥12,290¥— ¥450,693(7,190)—¥(7,190) ¥450,693¥263¥(3,916) ¥13,394¥7,965 ¥197,358 ¥49,608 ¥27,633¥36,804 ¥551,933

Other:
Depreciation and amortization
Increase in property, plant andequipment and intangible assets¥1,345¥8,424¥1,061¥1,318¥595¥3,888¥1,799¥243¥296¥18,969¥615 ¥11,043¥293¥1,673¥354¥4,942¥1,016¥681¥(494) ¥20,123(thousands of US dollars)

2014
TextilesAutomobile
BrakesPapersPrecision
Instruments

ChemicalsElectronics

Real Estate

Other Eliminations/
Consolidated
Businesses
Corporate

To the Board of Directors of Nisshinbo Holdings Inc.
We have audited the accompanying consolidated ﬁnancial statements of Nisshinbo Holdings Inc. and its
consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2014, and theconsolidated statements of income, comprehensive income, changes in net assets and cash ﬂows for the year
then ended, and a summary of signiﬁcant accounting policies and other explanatory information, all expressedin Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated ﬁnancial statementsin accordance with accounting principles generally accepted in Japan, and for designing and operating suchinternal control as management determines is necessary to enable the preparation and fair presentation of theconsolidated ﬁnancial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated ﬁnancial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
ﬁnancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated ﬁnancial statements. The procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatement of the consolidated ﬁnancial statements, whether due tofraud or error. The purpose of an audit of the consolidated financial statements is not to express an opinion
on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor considers
internal controls relevant to the entity’s preparation and fair presentation of the consolidated ﬁnancial
statements in order to design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide abasis for our audit opinion.
OpinionIn our opinion, the consolidated ﬁnancial statements referred to above present fairly, in all material respects,
the ﬁnancial position of Nisshinbo Holdings Inc. and its consolidated subsidiaries as at March 31, 2014, andtheir ﬁnancial performance and cash ﬂows for the year then ended in conformity with accounting principles
generally accepted in Japan.
Convenience translations
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented forthe convenience of readers, and, in our opinion, the accompanying consolidated financial statements havebeen properly translated on the basis described in Note 1 to the consolidated ﬁnancial statements.

Sales and Segment Profit (loss):
Sales to customers
Intersegment sales  Total sales
Segment profit (loss)[Operating income (loss)]
Segment assets:$489,038 $1,416,181 $301,771 $272,905
1,838

419

7,105

12,866$490,876 $1,416,600 $308,876 $285,771$5,257 $(17,276)$400$10,238$83,905 $1,788,029 $100,638 $255,628
2,543

886

23,61014,419$— $4,708,095(63,686)—$86,448 $1,788,915 $124,248 $270,047$(63,686) $4,708,095$1,010$(36,686)$89,066$74,105$(638)$125,476$455,591 $1,592,991 $212,486 $284,352$78,238 $1,985,971 $450,229 $309,838$452,314 $5,822,010

Depreciation and amortization$14,324$92,686$9,914$13,895$5,762$45,248$16,829$2,619$3,352$204,629

Increase in property, plant andequipment and intangible assets$9,867$83,190$3,962$9,333$10,286$69,400$5,238$7,943$(9,733)$189,486

VERITAS & Co.
June 27, 2014
Tokyo, Japan

Other:

56

57

History

Corporate Data
(As of March 31, 2014)

1907

Established Nisshin Cotton Spinning Co., Ltd.

1938

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

1940

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

1945

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

1949

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

1958

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

1962

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

1972

Established Nisshinbo Do Brasil Industria Textil LTDA. (Brazil)

1985

Acquired Nisshin Denim Inc.

1989

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

1993

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

1995

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

1996

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

1997

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

1998

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

1999

Established Saeron Automotive Corporation (South Korea)

2000

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

Common Stock

FoundedFebruary 5, 1907

Authorized
Issued		

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

Shareholders
12,353

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

Composition of Shareholders

Osaka Branch

Securities
firms

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

4.5%

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

Tel: +81-52-261-6151
Fax: +81-52-263-9480

2004

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

2005

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

2006

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

2007

Acquired all shares of Daiwa Shiko Co., Ltd.

2008

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

230
21,822
22,052

Listings
Tokyo, Nagoya, Fukuoka and Sapporo

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

Stock Price and Trading Volume(yen)(million shares)

1,200

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

800

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

600

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

400

2012
2013

Established Nisshinbo Business Management (Shanghai) Co., Ltd. (China)
Established Nisshinbo Commercial Vehicle Brake Ltd. (Thailand)

35

Stock price (left)

2010

Acquired all shares of TMD Friction Group S.A. (Luxembourg)

58

Tokyo 100-8212, Japan

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

Established Nisshinbo Singapore Pte. Ltd. (Singapore)

25.9%

Transfer Agent

2009

2011

Foreigninstitutions

18.1%

Employees

Acquired all shares of Iwao & Co., Ltd.
Established Saeron Automotive Beijing Corporation (China)

Japanese financial
institutions

35.0%

Other Japaneseinstitutions

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

2003

2.3%

14.2%

5-2-38, Sakae, Naka-ku,
Nagoya 460-0008, Japan

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

Treasury stock

Japanese
individuals andothersNagoya Branch

Parent Company
Subsidiaries
Total

371,755,000 shares
178,798,939 shares¥27,588 million (US$263 million)

30

1,000

25
20
15
10

Trading volume (right)

200

5

0

0
9/11

12/11

3/12

6/12

9/12

12/12

3/13

6/13

9/13

12/13

3/14

6/14

59