NICHIAS Corporation Annual Report 2010

Annual Report 2010
for the year ended March 31, 2010
Profile
Contributing to Society Through the Safety and
Reliability of Thermal Insulation Technologies
NICHIAS Corporation was founded in 1896 as a pioneer in thermal insulation
materials. For more than 110 years, NICHIAS has engaged in a broad
spectrum of activities encompassing basic industries such as electric power
and gas, as well as petroleum and petrochemicals, chemicals, shipbuilding,
steel, automobiles and construction. More recently, NICHIAS business
activities have also expanded to include growth industries such as electronics
and environmental protection.
Going forward, NICHIAS remains firmly committed to contributing to
society by providing the safety and reliability that insulation and anti-corrosion
technologies make possible.
Contents
Financial Highlights
Corporate Governance
18
A Message From the Management
Helping to Sustain the Environment
22
At a Glance
Board of Directors, Corporate Auditors and
NICHIAS Line-up
Industrial Products
Executive Officers
24
Financial Section
25
Advanced Products
10
Glossary
53
Automotive Parts
12
Organization
54
Building Materials
14
Group Network
55
Industrial Thermal Insulation Work
15
History
56
16
Corporate Data/Investor Information
57
Research and Development
Forward-looking Statements
This annual report contains forward-looking statements about NICHIAS Corporations future plans, strategies, beliefs and performance that are not historical facts. They are based
on current expectations, estimates, forecasts and projections about the industries in which NICHIAS Corporation operates, managements beliefs and assumptions made by
management. As the expectations, estimates, forecasts and projections are subject to a number of risks, uncertainties and assumptions, actual results may differ materially from
those projected. NICHIAS Corporation, therefore, wishes to caution readers not to place undue reliance on forward-looking statements. Furthermore, the company undertakes no
obligation to update any forward-looking statements as a result of new information, future events or other developments.
Risks, uncertainties and assumptions mentioned above include, but are not limited to, commodity prices; exchange rates and economic conditions; the outcome of pending
and future litigation; and the continued availability of financing, financial instruments and financial resources.
* TOMBO is a registered trademark of NICHIAS Corporation.
All brand names and product names are trademarks or registered trademarks of NICHIAS Corporation.
Financial Highlights
NICHIAS Corporation and Consolidated Subsidiaries

Years ended March 31
Thousands of
U.S. Dollars
Millions of Yen
2008
Net sales
Material division
Engineering division
Operating income
Income (loss) before income taxes and minority interests
Net income (loss)
Depreciation
R&D costs
2009
2010
2010
169,650 149,211 128,071

114,430
96,318
83,095
55,220
52,893
44,976
14,795
6,794
6,574
(18,520)
3,805
13,377
(11,857)
428
8,336
4,624
4,890
4,293
5,346
5,299
4,871
Total assets
Inventories
Property, plant and equipment
Total equity
149,533
18,831
39,282
37,466
Per Share Data (Yen and U.S. Dollars):

Net income (loss)
Basic
Diluted
Cash dividends
137,709
17,160
37,515
34,755
(99.62)
$ 1,376,515
893,110
483,405
70,658
143,777
89,596
46,141
52,354
127,216
15,189
34,730
44,800
3.60
4.00
70.10
6.00
1,367,326
163,252
373,280
481,513
0.75
0.06
Note: U.S. dollar amounts have been translated, for convenience only, at 93.04=U.S.$1, the rate of exchange prevailing on March 31, 2010.
Net Sales
Operating Income
(Millions of yen)
180,000
Net Income (Loss)

(Millions of yen)
15,000
(Millions of yen)
100
8,000
4,000
120,000
10,000
Net Income (Loss) per Share

(Yen)
(Basic)
50
0
0
4,000
50
60,000
5,000
8,000
100
12,000
0
06 07 08 09 10
16,000
06 07 08 09 10
150
06 07 08 09 10
06 07 08 09 10
NICHIAS Annual Report 2010
A Message From the Management
Overview of Fiscal 2010 Results

In fiscal 2010, ended March 31, 2010, the Japanese economy
showed signs of an impending recovery, encouraged by an
economic rebound overseas and the benefits of emergency
economic stimulus measures taken at home. Severe conditions,
however, continued to prevail overall, reflecting subdued capital
investment among Japanese corporations, weak consumer
spending due to a worsening employment and personal income
outlook, and other negative factors.
In the current environment, while demand related to semiconductor production equipment and automotive parts recovered
steadily after bottoming out in the fourth quarter of last year, sales
Kunihiko Yano President
in the Industrial Products Division, Industrial Thermal Insulation

Work Division, and Building Materials Division were all lower for
the year. This downturn was primarily the result of reluctant capital
spending in Japans manufacturing sector linked to the recession,
coupled with lower construction demand. Consequently, the
NICHIAS Group recorded consolidated net sales of 128,071
million, representing a year-on-year decline of 14.2%.
In terms of earnings, consolidated operating income
decreased by 3.2% to 6,574 million. The decline in earnings
was minimized by income-side improvements in the Advanced
Products Department and Automotive Parts Division accompanying increased production. Furthermore, as announced on March
8, 2010, steady progress made in repairs and other remedial
work in connection to the improper acquisition of fire-resistance
certification for some of our building materials has led to a
project-by-project reevaluation of costs required for this repair
work. Consequently, provisions made to an allowance based on
initial estimates for these repairs have been revised and reversed,
range of industrial sectors. We also strive to be a company that
with new estimates some 7 billion lower than originally forecast.
once again benefits from public trust based on the fundamental
The remainder of this allowance was subsequently posted as
principle of providing safe and reliable products based on insula-
other income. As a result, net income rose 1,846.1% year on
tion and anti-corrosion technologies the NICHIAS Group has
year to 8,336 million.
developed over many years, expanding a ring of trust, and

contributing to society.
Outlook for Fiscal Year Ending March 31, 2011

Although a modest recovery led by external demand continues,
the outlook for the Japanese economy remains uncertain. Exacerbating this is a widespread sense of excess capacity in the
corporate sector with respect to employment and facilities due
to lackluster domestic demand.
In the fiscal year ending March 31, 2011, sales in the Building
Materials and Industrial Thermal Insulation Work Divisions are
expected to decline year on year, the result of weak construction
demand and decreased demand for thermal insulation work at
To achieve these aims, we have set forth an executive stance

anchored by the following four aspects and are managing the
business in accordance with that stance.
Fulfill our responsibilities, mindful of our role in society.
Value communication with our customers in the pursuit of their
satisfaction.
Create a feedback-based corporate culture by listening to
people on the front lines.
Respect each employees individuality and support their personal growth.
Japanese industrial plants. By contrast, sales in the Advanced

Products Division, Industrial Products Division, and the Automotive
Parts Division are projected to improve over the previous fiscal
year. Along with a stable recovery in demand related to semicon-
The NICHIAS Group Corporate Vision

A Company Trusted by Customers
Where People Can Work with Pride
ductor manufacturing equipment, sales will likely grow atop
Since its founding, the NICHIAS Group has spent many years
modest but broad recovery undertones in Japan, both in capital
building up an extensive customer network, lines of high-
investment and in demand for automotive parts.
performance, high-quality products that function under extreme

temperatures made from a wide range of materials encompassing
Basic Policies of the NICHIAS Group

On April 1, 2008, the NICHIAS Group adopted a new corporate
philosophy: The New NICHIAS Spirit. The expression The New
NICHIAS Spirit encapsulates the NICHIAS Groups aspiration
everything from inorganic and organic substances to metals,

technologies developed over many years, and the intangible asset
of customer reliance. Over the years we have increased corporate
value through business activities built on this foundation.
to be reborn as a company that provides new value to a wide
The NICHIAS Group is pursuing various measures to increase
Promotion of efficient business management
corporate value by providing products and services that custom-
With regard to core businesses, we are ensuring efficient opera-
ers can rely on, promoting business expansion in growth industries,
tions with clearly defined roles for each business to secure stable
and shaping the Company into one where employees can work
profits, while simultaneously taking advantage of our far-reaching
with peace of mind.
network to seek out new growth areas for the future and expand
To implement these initiatives, we set forth a new manage-
into new business domains. We are also continuing to effectively
ment vision to become A company trusted by customers where
invest management resources over the long term in businesses
people can work with pride. The NICHIAS Group will enact
related to current growth areas, including the automotive and
measures based on the following basic policies to realize this
semiconductor fields. Furthermore, we are rebuilding our business
management vision.
in the building materials industry and transforming it into a solid

pillar of the NICHIAS Groups operations.
Rigorous enforcement of compliance

We will rigorously enforce compliance so that the NICHIAS Group
Creation of products we can sell with confidence
can achieve stable growth. Specifically, we will review our compli-
To provide products and services that customers can use with
ance program and, through alliances spearheaded by the Compli-
peace of mind, the NICHIAS Group will pay careful attention to
ance Committee with subcommittees and labor unions at each
safety and the environment in its manufacturing activities, and
Group business site, take steps to assess the status of legal
will further reinforce research and development, production
compliance and focus on increasing compliance awareness
technologies, facilities technologies, and technical services.
among employees.
Going forward, along with upgrading and bolstering our
Development of personnel to lead the way into the future
compliance systems, we plan to pursue measures to create
To ensure future growth and development, the NICHIAS Group
an organization that is open and receptive to feedback from
will invest in personnel development, including development of
its employees.
the next generation of executive managers, rebuild the personnel

evaluation and compensation system, and further enhance
systems to support the growth of our Group employees.
With regard to key issues, we will continue the all-out effort
Guided by this basic policy, the decision to pay dividends is
to further remedial work made necessary following the problems
made after careful consideration of a range of factors, including
caused to many customers by our improper acquisition of fire-
the availability of capital investment funds and investment in R&D
resistance certification.
to support future business development. In finalizing this decision,
The NICHIAS Group will continue working to further

strengthen its corporate structure and run operations more
emphasis is given to profit levels for the fiscal year, financial

position, and the outlook for future business performance.
efficiently. Specifically, we will strive to boost asset efficiency by
In terms of dividends for fiscal 2010, the payment of interim
building a production framework that is more responsive to
dividends was withheld due to worsening business performance
demand trends, investing more efficiently, cutting expenses,
caused by rapid changes in our economic environment through
reducing inventories, and promoting extensive fund manage-
the second quarter. However, based on the above policy, the
ment, among other actions.
Company paid a year-end dividend of 6 per share.
The NICHIAS Group will undertake Group-wide reforms
While we tentatively plan to pay an annual dividend of 6
in keeping with our new corporate philosophyThe New
per share for the fiscal year ending March 31, 2011, this decision
NICHIAS Spirit.
will ultimately rest on a range of factors unknown at this time,

including the Groups financial condition and operating results
Dividend Policy
for the term.
In addition to strengthening the management base and enhancing earnings power, the basic policy of the NICHIAS Group
with respect to the distribution of profits is to strive for the
June 2010
long-term and appropriate return of profits to shareholders by

expanding the level of such profits available as dividends and
increasing shareholder value, all while retaining sufficient
reserves for reinvestment.
Kunihiko Yano
President and Chief Executive Officer
At a Glance
PROFILE
SHARE OF NET SALES
Wielding reliable technologies honed over its long history, NICHIAS

provides a wide range of products such as gaskets and packing,
fluoropolymer products, thermal insulation, and filter materials to
basic industries that include electric power, gas, petroleum and
petrochemicals, chemicals, and construction. This business is
the core operation of the NICHIAS Group.
31.8%
In highly advanced industries such as semiconductors and LCDs,

there is a driving demand for materials, used in manufacturing
equipment and facilities, to realize both higher levels of performance
and new functionality. NICHIAS offers cutting-edge products and
technologies related to piping systems and machinery particularly
for handling heat, liquid chemicals and gas, as well as those related
to process environments.
6.5%
BUSINESS FIELDS
INDUSTRIAL PRODUCTS
Net sales
(Billions of yen)
FY10
40.7
FY09
48.3
ADVANCED PRODUCTS
Net sales
(Billions of yen)
FY10
8.3
FY09
9.0
AUTOMOTIVE PARTS
Net sales
FY10
(Billions of yen)
21.8
FY09
22.8
While sealing materials such as cylinder head gaskets are the

basic products offered in this business, NICHIAS is working to
expand areas of business as vehicles evolve by, for example,
providing parts with thermal insulation, soundproofing and vibration control attributes, thereby meeting the needs of increasingly
globalized customers.
17.0%
BUILDING MATERIALS
Net sales
FY10
FY09
(Billions of yen)
24.0
29.2
NICHIAS mission in this business is to create safe, comfortable

environments in office buildings, factories, research facilities,
hospitals and residences through its dedication to supplying
building materials and building materials installation work that
deliver non-combustible, thermal insulating and fireproofing
qualities.
18.8%
INDUSTRIAL THERMAL INSULATION WORK

Net sales
FY10
FY09
(Billions of yen)
33.2
39.8
From ultra-low to ultra-high temperatures, NICHIAS engineering

and construction systems draw on distinctive technologies to
insulate or retain heat. Using these systems, NICHIAS is contributing to the conservation of energy and natural resources in basic
industries such as electric power, LNG, petroleum and petrochemicals, as well as environmental facilities such as waste
incinerators.
Net sales presented in the At a Glance and NICHIAS Line-up sections are based on figures for business departments.
As such, they differ from the segment information contained in the Financial Section of this report.
25.9%
MAIN PRODUCTS AND SERVICES
Fire-resistant Wrapping Work
Example of access floor

installation work
Chemical filter for low

concentrated ammonia
Fuel Economy-enhancing Products
Access Floor Work
Water jacket spacers
Example of wrap-type
fireproofing installation
Soundproofing Work
Fireproofing Work
Cryogenic Insulation Work
Example of cryogenic insulation

work for LNG plant pipes
Corrosion-resistant tank lining

materials
Filter Products
Insulation panels with built-in
heaters used in sintering furnaces
Catalytic converter support

mats
Rockwool insulation
Corrosion-resistant Tank
Lining Materials
Rockwool products
Support Parts
Non-combustible decorative
building wall panel
Example of installation work for

metallic heat insulation used in piping
systems at nuclear power plants
Inorganic Fiber Insulation Products
Anti-squeal, vibration damping,

rubber coated metal
Housing Insulation
Nuclear Power-related Work
Thermal Insulation Work

Example of thermal insulation
for plant equipment pipes
Thermal insulation cover for

exhaust manifold
Interior Finishing Materials
Interior Materials/Substrates
Calcium silicate boards
Fluoroelastomer O-rings for semiconductor processing equipment
Soundproofing Parts
Heat Proofing Parts
Sealing Materials
Gasket for automotive cylinder
head
Ceramic fiber products
Insulation Materials for Plants

and Buildings
Processed fluoropolymer PTFE

products
Engineering Plastic Products
Anti-static PFA tubing for the transfer

of high-purity organic solvent
Spiral-wound gaskets
Inorganic Fiber Insulation Materials

for Ultra-high Temperatures
Gaskets and Packing
Gaskets and Packing

Sheet gaskets
Example of fireproofing for

waste incinerators
Example of soundproofing for

power plant exhaust ducts
NICHIAS Line-up
INDUSTRIAL PRODUCTS
Industrial Products Division
Net sales
(Billions of yen)
40.7
FY10
48.3
FY09
0
20
40
60
Growing in Step with Basic Industries

Basic industries such as electric power, gas, petroleum and
petrochemicals, chemicals, shipbuilding and steel are also fundamental sectors for the NICHIAS Group, and have been vital to
the expansion of the NICHIAS Groups own business domains.
As a result, NICHIAS today is able to meet needs in a variety of
industries through a wide-ranging product line-up encompassing sealing materials such as gaskets and packing, fluoropolymer
products with anti-corrosion properties, and thermal insulation
materials for insulating or retaining heat.
Broad Array of Materials to Respond to

Diverse Needs
For a host of basic industries, the NICHIAS Group provides
products that use an array of materials, covering inorganic
materials, organic materials and metals, compatible with ultralow through to ultra-high temperature ranges. The proven
technologies honed over its long history form a base that
enables NICHIAS to respond to the diverse needs and the
sophisticated, wide-ranging demands of its customers.
Assorted gaskets
Rockwool products
Fluoropolymer fiber-scope tubing
NAFLON Multi-Lumen Tube
In materials to prevent leakage, NICHIAS develops and offers
In insulating materials, NICHIAS has supplied its cornerstone
functional parts such as gaskets and packing used in piping
thermal insulation products to a host of industries over the
systems and machinery for plants of every type in basic indus-
years, developing these products in step with the changing
tries such as petroleum and petrochemicals, electric power and
times. NICHIAS materials can withstand ultra-low through to
steel. Similarly, the NICHIAS Group develops, manufactures and
ultra-high temperatures. The many varieties of thermal insula-
sells gaskets and packingfunctional materials used in indus-
tion products brought to market by the NICHIAS Group include
trial equipment. Furthermore, the NICHIAS Group consistently
rigid polyurethane, calcium silicate, rockwool, and ceramic
answers newly emerging needs with innovative products thanks
fibers, as well as fire-resistant thermal insulation materials, and
to technologies for the optimal selection and usage of raw materi-
a range of ceramic products that offer superior heat-resistance
als, as well as the development and application of process tech-
and functionality.
nologies. These proprietary technologies enable NICHIAS to
NICHIAS has also developed honeycomb-structured filters
respond to customers increasingly sophisticated requirements
made from inorganic fiber paper, supplying these filter products
by offering optimal products.
to fields ranging from use in home appliances to industrial appli-
In anti-corrosion materials, NICHIAS supplies a host of
cations. Embodying the NICHIAS Groups adsorption and cata-
industries with fluoropolymer products, which have superior
lyst technologies, NICHIAS filters help to improve the living and
resistance to heat and corrosion, as well as outstanding insulat-
natural environments by controlling humidity, processing gas
ing and non-adhesive properties. The NICHIAS Group stole a
emissions from power stations, removing ozone emitted from a
march on its competition by becoming first to process PTFE and
variety of equipment and machinery, and adsorbing and concen-
developing PTFE-based sealing materials, back in 1951. Since
trating volatile organic compounds (VOCs).
then, NICHIAS has leveraged the properties of fluoropolymer
Going forward, NICHIAS remains committed to addressing
processing technologies to develop various products that it sup-
needs across the full spectrum of industries by combining the
plies to all basic industries. Today, the applications for fluoropo-
Groups distinctive technologies to develop new products,
lymer products are expanding beyond more traditional industries
thereby contributing to the entire sector.
to include their use as materials for medical equipment.
Reusable, flexible thermal insulation product
VOC concentrator
ENETHERMO
SOLVENTCLEAN
Corrosion-resistant lining; pipe materials
NICHIAS Line-up
ADVANCED PRODUCTS
Advanced Products Division
Net sales
(Billions of yen)
8.3
FY10
9.0
FY09
0
10
Using Advanced Technology to Develop and

Supply New Products to Rapidly Changing
Electronics-related Industries
In electronics-related industries, there is a strong demand for
materials that exhibit a high degree of cleanliness and that are
capable of withstanding diverse usage environments. This is
particularly the case for materials used in clean rooms and manufacturing equipment in the semiconductor and flat-panel display
(FPD) industries.
In Advanced Products, NICHIAS offers an array of cuttingedge products and technologies to meet customers constantly
evolving needs related to equipment, piping and machinery for
handling heat, liquid chemicals and gas, as well as related process environments.
Leveraging Advanced Technology and

Comprehensive Capabilities to Act Globally
The NICHIAS Group has developed a variety of products that it
has supplied to the electronics industry and a wide range of
other sectors over the years. These include specialty polymer
processed products, specifically chemical-resistant and high
purity fluoropolymers, and insulation parts, particularly inorganic
fiber with outstanding heat resistance, insulating and anticorrosion properties, as well as filter products built from applied
honeycomb-structure technology.
Anti-static PFA tubing for the transfer of high-purity organic solvent
NAFLON PFA-NE Tube
10
Fluoroelastomer O-rings for semiconductor

processing equipment
Insulation panels with built-in heaters used in sintering furnaces
FINEFLEX Molded Panel Heater
NICHIAS has been expanding the domains where it can
In this context, NICHIAS is responding to customers and
meet the needs of customers, particularly with parts for use in
market requirements, and is contributing to the advancement of
semiconductor manufacturing equipment, by taking advantage
device-processing technologies. The Group develops and pro-
of its processing and forming technologies, materials develop-
vides clean and compact processed polymer products backed
ment capabilities, and measurement and analysis technologies.
by advanced processing, hot melt adhesion and structural analy-
In 2008, NICHIAS moved to specifically target advanced
sis technologies; high heat-resistant rubber O-rings and other
industrial fields such as semiconductors, FPDs and new-energy-
sealing materials, thermal insulation panels with built-in heaters
related fields within the electronics sector by adding clean tech-
that offer superior temperature rise, heat insulating properties
nologies as a new domain alongside the Groups core insulation
and high heat-insulating, low-dust-generation jacket heaters;
and anti-corrosion technologies. This is part of NICHIAS creation
and filter products to remove harmful gases that have adverse
of a new business organization that is capable of responding in a
effects on the manufacture of semiconductors and FPDs.
more agile way such as by proposing new technologies and

products while developing close relationships with customers.
Going forward, there are growing expectations for the development of environmentally friendly solar photovoltaic power
The manufacture of semiconductors encompasses manu-
generation business in these industrial fields. The NICHIAS group
facturing equipment and facilities, all of which require different
of companies will expand the field of its business operations not
functions based on the desired process.
only in electronics-related industries such as the manufacture of
Furthermore, the shift toward miniaturization and higher
semiconductor and LCD manufacturing equipment, but also in
densities for semiconductors, as well as growth in silicon wafer
cutting-edge industries such as new energy industries in and
diameters, show no signs of abating as customer and market
outside of Japan, developing and providing new products utilizing
requirements continue to become more sophisticated. Addition-
its advanced technologies and integrated corporate capabilities.
ally, measures for enhancing the energy efficiency of the various

kinds of manufacturing equipment and production lines used in
semiconductor-related industries is emerging as an increasingly
important issue in addressing environmental concerns.
Detachable jacket heater for pipe heating and insulation
Chemical filter for low concentrated ammonia
Processed fluoropolymer PTFE product
ENETHERMO PH
CHEMICALGUARD-N
Cup for single wafer cleaning equipment
11
NICHIAS Line-up
AUTOMOTIVE PARTS
Net sales
(Billions of yen)
21.8
FY10
Automotive Parts Division
22.8
FY09
0
10
20
30
Contributing Thermal Insulation Technologies for

Automotive Environmental Innovation
The race is on among automakers to create vehicles that offer
continually higher performance. Todays society, however, also
demands close attention to making cars safer, more comfortable
and more environmentally friendly. Progress is unstoppable.
NICHIAS automotive parts business stemmed originally from
thermal insulation technologies. NICHIAS thermal insulation products are now used in a variety of automotive fields, ranging from
insulating against heat to materials for controlling the screeching
noise of brakes. In this way, the NICHIAS Group is contributing to
environmental innovation in the automotive sector.
Integrated System Encompassing Materials

Development, Design, Evaluation and Manufacture
and Quality Assurance
The NICHIAS Groups presence in the automotive industry has
its roots in sealing materials. NICHIAS products have been
employed in a variety of automotive parts, the most notable
being engine cylinders, which are exposed to the harshest conditions, exhaust manifolds and other engine-related parts. The
purpose of sealing materials is self-evident. But manufacturing
sealing materials requires the skill to select and develop the most
appropriate materials and processing technologies according to
the location and service condition of each part. That is where the
12
Gasket for automotive cylinder head
Anti-squeal, vibration damping, rubber coated metal
Thermal insulation cover for exhaust manifold
METAKOTE Cylinder Head Gasket
METAPLUS Multi-Layer Shim
INSULCOVER
NICHIAS Group comes in, with technical know-how, R&D capa-
The centers bench wing, meanwhile, contains a measuring
bilities and technological prowess nurtured over many years in
bench room and an exhaust system bench room, in addition to
this business.
a bench room for evaluating parts durability. With this dedicated
The automotive industry has evolved by rising to the challenges of achieving low emissions, while improving fuel efficiency,
bench wing, the aim is to enhance development efficiency

through high-precision measurement and evaluation.
safety, performance, comfort and affordability. For the NICHIAS
The NICHIAS Group has far-reaching sales and technology
Group, these challenges present an ideal opportunity for using
networks targeting automakers and automotive parts manufac-
the NICHIAS Groups core and original technologies, which are
turers in Japan and overseas. Leveraging soundproofing, thermal
gaining traction in new fields. Combinations of these technolo-
insulation and sealing technologies honed over many years, the
gies, moreover, have led to NICHIAS line-up of support mats for
NICHIAS Group is striving to meet customer needs through an
the catalytic converters that purify automotive exhaust, water
integrated system encompassing materials development,
jacket spacers, which improve fuel economy, and ultra-lightweight
design, evaluation, production and quality assurance. At the
and flexible soundproofing covers.
same time, the Group is expanding its operations globally to
Furthermore, to effectively meet increasingly diverse customer requirements, NICHIAS in 2007 began channeling devel-
provide safety and reliability, high quality, and customer satisfaction in countries where major customers are active overseas.
opment resources into the newly established Automotive Parts

Technical Center. The new center, consisting of an R&D wing
and a bench wing, has consolidated development resources
once dispersed across different sites. The R&D wing is outfitted
with an assortment of testing equipment. Utilizing acoustic testing equipment and other facilities, the center conducts high-level
research into soundproofing materials and braking simulations,
among other areas. The center also uses the various testing
machinery and measuring devices at its disposal to design and
develop sealing materials, heatproofing materials and catalytic
converter support mats.
Catalytic converter support mats
ECOFLEX
Water jacket spacers
Automotive Parts Technical Center
13
NICHIAS Line-up
BUILDING MATERIALS
Building Materials Division
Net sales
(Billions of yen)
24.0
FY10
29.2
FY09
0
Diverse Product Lines and Construction Systems
10
20
30
In the field of building materials, the NICHIAS Group mainly

manufactures and sells non-combustible interior materials and
for Safer, More Comfortable Buildings

Safety and comfort are essential qualities of any building, whether
designed as an office building or residential dwelling. Building
materials and construction systems from the NICHIAS Group
incorporate technologies that form barriers against various
intrusive elements. Among the many properties offered are fire
resistance, fireproofing, and thermal insulation. All contribute to
safety and comfort. NICHIAS is also taking environmental preservation steps with its line-up of low environmental impact, noncombustible interior materials and access floor products that
bear the Eco Mark of the Japan Environment Association.
decorative interior finishing materials made primarily of calcium

silicate, effectively reusing this waste material generated by
thermal power plants and similar facilities. As a leading manufacturer of non-combustible materials handling everything from raw
materials to highly functional building products, NICHIAS will
continue to focus on the development of environmentally
responsible products. In housing materials, NICHIAS is meeting
demands for measures to prevent global warming by supplying
rockwool products, which provide excellent thermal insulation
and deliver substantial energy savings.
In the field of building materials installation work, NICHIAS
Providing Non-combustible and Insulation

Materials, Access Floors and Fireproofing
Materials Backed by Years of Experience
operations are founded on the trust and considerable track

record it has earned during its many years in the business.
Construction projects include the installation of access floors for
the creation of safe and comfortable office spaces in todays
For many years, the NICHIAS Group has been developing and
intelligent buildings, and eco-consciously developed wrap-type
manufacturing a broad spectrum of non-combustible, fireproof,
fireproofing materials to protect the steel structure of buildings.
and thermal insulation materials and installation methods that

make structures safer and more comfortable.
NICHIAS is also spurring advancement in high-performance,

value-added building materials. Here, development is proceeding on new construction methods for isolating structures from
earthquakes and making them fireproof, including methods for
protecting building equipment vital to resisting earthquakes from
fire caused by the event.
14
Calcium silicate boards
Access floors
Installation of wrap-type fireproofing materials
ECOLUX
NICHIAS SIGMA FLOOR
MAKIBEI
NICHIAS Line-up
INDUSTRIAL THERMAL
INSULATION WORK
Net sales
39.8
FY09
0
Construction Division
(Billions of yen)
33.2
FY10
10
20
30
40
Contributing to Comfortable Living and
insulation, soundproofing, fireproofing, and recycling. For this,
Working Environments
NICHIAS draws on superior heat insulation and environmentally
Industrial thermal insulation work was originally designed to

conserve energy and raise heat efficiency. In recent years, however, the business has been playing an instrumental role in
conserving resources and helping protect the environment. In
addition to technologies used in thermal insulation work to insulate or retain heat, the NICHIAS Group is building soundproofing
systems to improve acoustic containment at factories, helping
create more comfortable living and working environments.
sound technologies to answer market needs.

In addition to developing highly functional materials that meet
the needs of todays markets, NICHIAS is expanding these businesses by developing products and construction methods that
lead to reductions in costs, man-hours and environmental load.
For example, we developed CFC-free, cold insulation materials
with the same performance as the previous CFC type. These
environmentally friendly products are widely used at LNG storage terminals and other thermal insulation projects. Using highperformance thermal insulation materials with low thermal
Providing Efficient and Comprehensive
conductivity and excellent water repelling and vapor permeability
Engineering Services
properties, NICHIAS is developing groundbreaking methods for

In addition to construction work around thermal insulation materi-
recovering deteriorated functionality in previously installed ther-
als, which has long been a major business for the NICHIAS
mal insulation materials. These methods accomplish this without
Group, operations today extend across the range of construction
the use of replacement construction that could generate indus-
work related to heat and acoustics. NICHIAS makes a contribu-
trial waste, thus contributing substantially to resource conserva-
tion in many areas to conserve energy and preserve the environ-
tion and reductions in carbon emissions.
ment. In doing so, the NICHIAS Group plays an instrumental role
NICHIAS is advancing a business strategy involving raising
in building more comfortable public environments. NICHIAS is
the level of activity in the maintenance field. In addition to the
active primarily in nuclear power, LNG, petrochemicals and refuse
Groups traditional business domains, NICHIAS is expanding
incinerator projects. The NICHIAS Group provides efficient, com-
business in the area of non-destructive testing for plant equip-
prehensive engineering services spanning development, design,
ment, including preventive corrosion analysis that combines with
construction and maintenance relating to fire resistance, thermal
our existing thermal analysis and soundproofing solutions.
LNG thermal facilities using NICHIAS

cryogenic insulation materials
NICHIAS thermal insulation materials in a

petroleum plant
NICHIAS metallic heat insulation used at

nuclear power plant facilities
15
Research and Development
Utilizing Distinctive Technological Capabilities Based on Insulation

and Anti-corrosion Technologies to Promote Advanced R&D
Underpinned by a corporate philosophy committed to providing safe and reliable products, broadening the circle of
trust, and contributing to society, the NICHIAS Group pursues innovations in core technologies related to its business
domains, which primarily involve insulation and anti-corrosion
technologies. The NICHIAS Groups strong developmental
prowess and original technologies facilitate an accurate
response to market needs. NICHIAS believes that formulating a precise and timely understanding of market needs is of
vital importance. In line with this thinking, the NICHIAS
Groups R&D activities are linked directly to marketing and
product development. This approach allows the Company
to deliver products and technologies that contribute to a
dynamic and constantly evolving industrial scene.
R&D Domains
Promoting technology-based R&D into materials,

products and services for all industries in insulation and anti-corrosion
Semiconductor manufacturing
equipment components
Air purification filter

products
Anti-corrosion
technologies
Industrial gaskets
and packing
Clean technologies
Insulation and Anti-corrosion Technologies

Sealing
technologies
Insulation for ultra low temperature

and construction methods
Heat-resistant
technologies
Soundproof
technologies
Automotive parts
16
Heat-resistant inorganic fiber materials
Organization of Laboratories
Promoting an integrated R&D structure, from materials development to product evaluation
Research laboratory
Technical center
Basic and applied research
Product development and evaluation
Support
Support
Support
R&D Analysis Section
Planning & Development

Department
Intellectual Property Section
R&D activities at the NICHIAS Group are carried out by the
NICHIAS Group-wide R&D organization is built on ties
Hamamatsu and Tsurumi research laboratories and the techno-
between several supporting sections: the R&D Analysis Sec-
logical development units under each operating division. Within
tionsupporting R&D advancement and improved product
the research laboratories, the R&D Department, in collaboration
quality through the breakdown and analysis of raw materials,
with the Planning & Development Department, which serves as
products and usage environmentsand the Intellectual Property
a head office, strives to ensure the basic technologies that sup-
Section, responsible for patenting and safeguarding the NICHIAS
port NICHIAS businesses and bolster its distinctive technolo-
Groups proprietary technologies and devising ways to strategi-
gies, all while seeking out and addressing R&D themes from a
cally leverage intellectual rights.
medium- to long-term perspective. The technical centers under
In addition, NICHIAS is also aggressively pursuing alliances
the operating divisions, meanwhile, conduct fast-paced devel-
with universities, research institutes and other companies in a
opment that closely reflects customer requests.
bid to expand and strengthen its technological domains.

17
Corporate Governance
Corporate Governance Structure

Basic Approach to Corporate Governance
At NICHIAS, we view raising management transparency, fairness
and efficiency as the most critical management issue we face in
ensuring the capacity to consistently improve the corporate
value of the entire NICHIAS Group over the long term. The first
step to improving corporate value is to earn the trust and support of our shareholders, customers and other stakeholders by
fulfilling our social mission through open and equitable corporate
activities. Accordingly, we recognize the formation of a system
for entrenching well-developed corporate governance as the
most fundamental proposition for achieving this aim.
Reasons for Adoption of Current Governance Structure

To enable swift and efficient management decision-making, the
Board of Directors consists of directors well-versed in the
Companys business operations. Similarly, the Board of Corporate
Auditors, in order to ensure the objectivity and neutrality of its
management monitoring functions, has three outside corporate
auditors capable of expressing their opinions from a fully independent perspective. The other two auditors are standing corporate auditors, both of whom have a range of experience pertaining
to NICHIAS business operations. This configuration allows the
Board of Corporate Auditors to actively express its opinions with
respect to management from a highly objective point of view. The
adoption of these systems is raising the transparency, fairness
Overview of Corporate Governance Structure
and efficiency of the Companys management.
Corporate governance at NICHIAS is based on the corporate

auditor system. As of June 29, 2010, the Company had seven
directors (none of whom are outside directors) and five corporate
auditors, three of whom are outside corporate auditors.
The Board of Directors meets regularly once each month
and convenes special meetings as necessary. The board decides
important matters stipulated in the Board of Directors Regulations
and supervises the state of business execution. In addition to the
Board of Directors, the Executive Committee, which consists of
directors, standing corporate auditors, executive officers serving
as general managers, and persons named by the president, as a
rule meets weekly to approve proposals and to deliberate and
report on company-wide business operations and important
individual matters.
The Board of Corporate Auditors as a rule meets once each
month and met a total of 13 times during the year under review.
The outside corporate auditors actively expressed opinions from
the perspective of their respective areas of specialization (corporate management, the law, and accounting and taxation).
18
Status of Development of Internal Control Systems

Guided by the aforementioned basic approach to corporate
governance, NICHIAS has phased in the following initiatives.
To accelerate management decision-making, in June 1999,
we significantly reduced the size of our Board of Directors, and
introduced a corporate executive officer system in which members serve one-year terms.
NICHIAS currently has no plans to adopt the Company with
Committees governance framework. However, in April 2001,
we established a Nominating Committee and a Compensation
Committee under the conventional corporate auditor system.
Deliberations by directors on issues such as nominees for directorships and executive officers, as well as remuneration, are
based entirely on the proposals of these committees. Decisions
on compensation also reflect an assessment of operating results
and other relevant factors.
In addition to these measures, we amended the Companys
Status of Development of Risk Management System
Articles of Incorporation in June 2002 to shorten the two-year
Risk management at NICHIAS is structured in accordance with
term of office for directors to one year. This was done to bring
basic internal regulations governing risk management. Individual
consistently greater clarity to the managerial duties of directors
risks pertaining to areas such as safety, disasters, the environ-
each business term by securing the mandate of shareholders
ment, quality, information security, and export control are man-
every year. The retirement age for directors is based on two
aged by each business department responsible for confronting
upper limits, one determined by age and the other by years of
said risk. For this task, the departments formulate regulations
service in each post, in accordance with internal regulations.
and operating guidelines, produce and distribute manuals, and
In April 2003, a Compliance Committee, chaired by the
conduct training in the effort to mitigate risk.
director overseeing compliance, was established. We also for-
Meanwhile, each division evaluates and analyzes the spe-
mulated a Compliance Code, which outlines our standards of
cific risks faced, followed by appropriate steps taken to manage
conduct, and established a contact point, known as the
such risk.
Compliance Counter, both inside the company and at an outside

attorneys office, to allow employees to report irregular practices
Status of Internal Audits and Audits by
and other matters. In February 2007, we added the office of the
Corporate Auditors
labor union as a third Compliance Counter point of access. We

have also established on the corporate website a point of contact to receive compliance-related reports from outside the
Group and instituted a framework for transmitting to the law
office all information received in this way.
With respect to corporate auditors, one additional outside
corporate auditor was elected at the ordinary general meeting of
shareholders held in June 2004. Currently, three of the five corporate auditors are outside auditors.
The Audit Section, which handles internal auditing, became
independent from operating divisions in July 2006 and now
reports directly to the president. The authority of the Audit
Section was strengthened in accordance with its role. In July
2009, the Audit Section was merged with the Internal Control
Section to form the Audit Section. The merger has served to
enhance the sections corporate auditing function.
For internal audits, the previously mentioned Audit Section

maintains ties with the corporate auditors and the independent
auditor, and performs audits of NICHIAS and its Group companies to confirm that accounting treatment and business
operations at the companies are legally and properly conducted in conformance with relevant laws and internal regulations. The Audit Section currently has an eight-member staff.
To develop internal control systems compliant with laws and
ordinances, in June 2006 we launched the Internal Control
Project Team, which was reorganized as the Internal Control
Section in April 2008, an organization responsible for developing the internal control framework necessary to ensure
reliability of the Groups financial reports, and building a
system for evaluating this framework. With this internal control
framework having been put in place, the Internal Control
Section and the Audit Section were merged into a single body
called the Audit Section in July 2009. In addition to strengthening the sections auditing functions, we continuously evaluate the internal control framework to ensure that it is
functioning correctly, and make any necessary revisions.
19
Although at this time no dedicated employees have been

assigned to assist the corporate auditors, the corporate auditors receive ample support for their day-to-day activities from
the Audit Section and the Corporate Strategic Planning
Department. On this basis, the corporate auditors, with the
standing corporate auditors in a central role, engage in audit
activities with respect to the following matters in accordance
with the audit policy, audit plan, and division of duties decided
each fiscal year.
Attendance at meetings of the Board of Directors and the
Executive Committee and other important meetings; examination of important decision documents, including approval
documents and contracts; auditing of the head office, other
important business sites, and subsidiaries (including investigations of the state of sales, manufacturing, and management
and the state of financial assets); receipt of the audit plan and
the report on audit results from the independent auditor;
attendance of some audits performed by the independent
auditor; examination of monthly closing documents; examination of audit documents at the quarterly and year-end
closing of accounts; and other duties.
Confirmation that there is no breach in the execution of
duties by directors by requesting the submission of signed
and sealed Directors Business Execution Confirmation
Documents at the end of each fiscal year.
Outside Corporate Auditors

NICHIAS Has Three Outside Corporate Auditors
Outside corporate auditor and attorney Go Kajitani is the principal of a law office with which the Company has a legal counsel
agreement. He also serves concurrently as the outside director
of Electric Power Development Co., Ltd., a company with no
special relationship to NICHIAS.
Outside corporate auditor Yoshito Hirabayashi serves concurrently as Representative Director of Technofer, a company
with which NICHIAS has no special relationship.
Outside corporate auditor Tatsumi Jonoo is a tax accountant
at a tax accounting office that has no business relationship with
NICHIAS. Mr. Jonoo also serves concurrently as the outside
corporate auditor for TV TOKYO Broadband Entertainment, Inc.,
a company with no special relationship to NICHIAS.
To preserve the ability of the outside corporate auditors to
monitor management from an objective and neutral standpoint, NICHIAS selects candidates for this role who have
substantial experience and insight in areas such as corporate
management, corporate law, finance and accounting, who
are able to independently express their opinions openly and
with candor.
The corporate auditors and the independent auditor create
opportunities to meet and exchange opinions. Meetings are
also held prior to and after all audit processes are performed
in order to maintain sufficient ties between both groups of
auditors. This includes the mutual presence of the corporate
auditors and the independent auditor during the development
of interim and year-end audit plans and during audits performed at the Companys main bases and consolidated subsidiaries. Audits of key bases and consolidated subsidiaries
include audits of inventory management at production sites,
mechanisms for the purchase of goods, and the status of
internal control systems at sales bases.
20
Internal audits are carried out by the Audit Section. When
At present, NICHIAS has appointed no outside directors to
preparing to visit departments and subsidiaries to perform audits,
the Board of Directors. However, three of the five corporate
the section meets in advance with the corporate auditors. The
auditors within the Companys corporate auditor system are
results of audits conducted by the corporate auditors and the
outside corporate auditors. This configuration enables the
section, apart from being reported at meetings of specific gover-
corporate auditors to accurately discern the status of busi-
nance bodies, are also mutually reported between the corporate
ness execution by the directors and strengthens monitoring
auditors and the section in order to maintain close ties. The
and oversight at the Company. Based on the corporate scale
corporate auditors receive support for their day-to-day activities
and organization of NICHIAS, we believe that this corporate
from the Audit Section and the Corporate Strategic Planning
governance structure has ample monitoring functions for
Department to ensure that auditing activities are not hindered in
observing management from an external viewpoint.
any way.
Reference information: organization chart

General Meeting of Shareholders
Appointment, dismissal
Reporting
Reporting
Board of Directors
Submission of
proposals
Auditing
Appointment, Appointment,
dismissal
dismissal, supervision
Collaboration
Board of Corporate Auditors
Auditing
Reporting
Auditing
Independent Auditors
Reporting, improvement requests

Reporting
Executive Committee
(Deliberation on important matters, etc.)
Reporting
Instruction, supervision
(Execution of business)
Policies, plans, instructions, approval
Proposals, reports
Collaboration
Auditing
Executive Officers
Regulation Establishment and

Revision Committees
Capital Investment Committee
Business Investment Committee
Development Investment Committee
Resource Investment Committee
Audit Section
Reporting
Compliance Committee
Nominating Committee
Compensation Committee
President
Auditing
Operating Divisions, Group Companies
21
Helping to Sustain the Environment
Using Distinctive Insulation and Anti-corrosion

Technologies to Preserve the Natural Environment
By offering such attributes as heat resistance, prevention of
fluid leakage, soundproofing and anti-corrosion, the NICHIAS
Groups products fulfill customers environmental needs with
respect to energy and resource conservation, safety and
hygiene, and environmental preservation, helping to reduce
their environmental impact at the stage where NICHIAS
products are used. NICHIAS has undertaken its business
activities over the years with the environment constantly in
mind. Thanks to its deep involvement in the environmental
field, NICHIAS has long shown itself to be an environmentally
conscious company.
Basic Stance on Environmental Activities

The NICHIAS Environmental Charter and NICHIAS Environmental Action Guidelines express a dedication to the development of
environmentally friendly products that conserve resources and
energy, as well as NICHIAS commitment to pursuing respectful
management of the workings of nature and harmony with the
global environment in all of its business activities.
Environmental Management
NICHIAS has actively promoted environmental conservation
activities since the 1970s, establishing an Environmental
Improvement Committee when environmental issues such as
soot and wastewater first began to be widely discussed. To
better organize these activities, NICHIAS took steps to obtain
ISO 14001 and other environmental management certifications.
As of July 2010, certification was completed or renewed at five
of the Companys factories, seven domestic subsidiaries and
eight overseas subsidiaries, with activities under way to obtain
certification for the entire NICHIAS Group.
22
How NICHIAS Reduces Environmental Impact from Business Operations
Energy efficiency
Reduction in environmental impact

Resource conservation
Environmental protection
Health and safety
Usage stage of customers

Fluoropolymer products
NICHIAS product line-ups
Gaskets and packing
Insulation materials
Preventing leakage (sealing)
Automotive parts
Construction materials
Soundproofing materials
Insulation and Anti-corrosion
Maintaining heat (heat retention)
Preventing noise (soundproofing)

Preventing corrosion (anti-corrosion)
Retaining heat (insulation)
Anti-vibration materials (damping)
Environmental Performance
Environmentally Friendly Products
NICHIAS is enacting initiatives at its manufacturing sites aimed
With environmentally conscious manufacturing as a key slogan,
at reducing energy and resource consumption by manufactur-
the NICHIAS Group supplies environmentally friendly products
ing processes, as well as the volume of chemical substances
that demonstrate concern for conserving resources and energy,
and waste these processes generate. NICHIAS is also shifting
and generating few substances that impact the environment, at
away from the use of fuel oil at its sites in favor of city gas in an
every stage of the product lifecycle.
effort to help prevent global warming by reducing its carbon

dioxide emissions. Deodorizing equipment, meanwhile, has
been introduced to reduce the burden on the local environment
stemming from manufacturing operations. Through these and
other means, NICHIAS is striving to minimize the impact of its
operations to achieve greater harmony with both the global and
local environments.
Green Procurement
To develop products low in substances that impact the environment, NICHIAS established green procurement standards
in 2005 for new purchases of raw materials and auxiliary materials. The NICHIAS Group also promotes green procurement for
its existing products.
Environmentally Conscious Activities

The urgent need to develop a recycling-oriented society today is
sparking renewed calls by society to practice the 3Rs
Reduce, Reuse and Recycle. In addition to reducing waste
generated by its business sites, NICHIAS has built systems for
recycling certain of the products that it sells, including calcium
silicate materials, waste rockwool materials and waste ceramic
fiber materials.
23
Board of Directors, Corporate Auditors and Executive Officers
From left (Back):

Director, Hideo Yokowatari; Director, Nobuo Suwa;
Standing Corporate Auditor, Teruo Nishihara; Standing Corporate Auditor, Kiyoharu Takatani;
Corporate Auditor, Go Kajitani; Corporate Auditor, Yoshito Hirabayashi; Corporate Auditor, Tatsumi Jonoo;
From left (Front):
Director, Keizo Kamiya; Director, Teruo Sato; President and CEO, Kunihiko Yano; Director, Yasuo Yonezawa; Director, Yasuo Yoda
Board of Directors
Corporate Auditors
Executive Officers
President and Chief Executive Officer
Standing Corporate Auditors
Executive Officers
Kunihiko Yano
Teruo Nishihara
Shigeaki Mitsukuri
Kiyoharu Takatani
Kohichi Kimura
Director and Senior Managing

Executive Officer
Corporate Auditors
Teruo Sato
Go Kajitani
Directors and Managing

Executive Officers
Yasuo Yonezawa
Yoshito Hirabayashi
Tatsumi Jonoo
Masayuki Tomita
Fuminori Sato
Satoru Koide
Shoichi Yonezawa
Takeshi Ohya
Toshiyuki Takei
Keizo Kamiya
Yasuo Yoda
Directors and Executive Officers
Nobuo Suwa
Hideo Yokowatari
24
(As of June 29, 2010)
Financial Section
Contents
Consolidated Five-year Summary
25
Managements Discussion and Analysis of Operations
26
Consolidated Balance Sheets
32
Consolidated Statements of Income
34
Consolidated Statements of Changes in Equity
35
Consolidated Statements of Cash Flows
36
Notes to Consolidated Financial Statements
37
Independent Auditors Report
52

Years ended March 31
Consolidated Five-year Summary
Thousands of
U.S. Dollars
Millions of Yen
Net sales
Material division
Engineering division
Operating income
Income (loss) before income taxes
and minority interests
Net income (loss)
Depreciation
R&D costs
2006
2007
2008
2009
2010
2010
139,545
97,261
42,284
10,138
164,704
110,644
54,060
14,473
169,650
114,430
55,220
14,795
149,211
96,318
52,893
6,794
128,071
83,095
44,976
6,574
$1,376,515
893,110
483,405
70,658
10,093
5,411
3,887
5,049
13,589
7,626
4,269
5,096
(18,520)
(11,857)
4,624
5,346
3,805
428
4,890
5,299
13,377
8,336
4,293
4,871
143,777
89,596
46,141
52,354
119,840
15,016
38,315
44,247
130,117
16,645
39,204
51,509
149,533
18,831
39,282
37,466
137,709
17,160
37,515
34,755
127,216
15,189
34,730
44,800
1,367,326
163,252
373,280
481,513
Total assets
Inventories
Property, plant and equipment
Total equity
Per Share Data (Yen and U.S. Dollars):
Net income (loss)
Basic
Diluted
Cash dividends
45.35
45.19
11.00
64.16
64.01
14.00
(99.62)
3.60
4.00
70.10
6.00
0.75
0.06
Notes: 1. U.S. dollar amounts have been translated, for convenience only, at 93.04=U.S.$1, the rate of exchange prevailing on March 31, 2010.
2. Total equity for fiscal years up to and including the fiscal year ended March 31, 2006 shows shareholders equity.
25
Managements Discussion and Analysis of Operations

NICHIAS Corporation (the Company) has 31 consolidated subsidiaries and 1 affiliate within its
Net Sales
(Millions of yen)
scope of consolidation. The Company and its consolidated subsidiaries are primarily engaged
in the manufacture and sale of industrial products, building materials, and other materials, and
the installation of thermal insulation materials and building materials.
180,000
120,000
Overview of Consolidated Results

Net Sales
Overall economic conditions in Japan remained adverse in fiscal 2010, the year ended March 31,
60,000
2010. Although the economy saw a favorable turn as a result of business recovery overseas and
the impact of emergency economic stimulus measures, Japanese companies curbed capital
investment, and a worsening employment and income environment caused consumer spending
06 07 08 09 10
to stagnate.
In these circumstances, although demand for semiconductor production equipment and
automotive parts bottomed out in the fourth quarter of 2009, the Companys net sales fell sharply
as a result of subdued capital investment by manufacturers in Japan in response to worsening
economic conditions, a decline in construction demand, and other factors. The sales slowdown
was especially pronounced for the Industrial Products Division, Industrial Thermal Insulation Work
Division, and Building Materials Division. As a result, the NICHIAS Group recorded consolidated
net sales of 128,071 million ($1,376,515 thousand), a decrease of 21,140 million, or 14.2%,
from the previous fiscal year.
Cost of Sales and SG&A Expenses

Although cost of sales decreased 18,504 million, or 15.3%, year on year to 102,230 million
($1,098,774 thousand) on lower sales, the cost of sales ratio improved by 1.1 percentage points
from the previous year to 79.8%. This outcome was principally the result of profit and loss
improvement accompanying increased production in the Advanced Products and Automotive
Parts Divisions, as well as declines in manufacturing-related expenses due to lower raw materials
prices. Selling, general and administrative (SG&A) expenses decreased 2,416 million, or 11.1%,
to 19,267 million ($207,083 thousand) because of decreases in personnel expenses and activities expenses.
Operating Income
Notwithstanding the sharp decline in net sales, due to the above factors operating income
declined only slightly to 6,574 million ($70,658 thousand), a decrease of 220 million, or 3.2%,
from the previous fiscal year.
26
Other Income and Expenses

Other income was 6,803 million ($73,119 thousand), an increase of 9,792 million from the
Net Income (Loss)

(Millions of yen)
previous fiscal year. The turnaround is mainly attributable to a reversal of allowance for loss on
compensation for building materials and a decrease in impairment loss. During the course of
9,000
remedial work following the improper acquisition of fire-resistance certification, the Company was
6,000
able to reexamine the cost estimate for remedial work on an individual project basis. Since the
3,000
costs associated with remedial work are estimated to be 7,000 million lower than the original
0
estimate, the Company recorded the reversal of allowance.
3,000
Net Income
The above factors resulted in income before income taxes and minority interests of 13,377
6,000
9,000
million ($143,777 thousand) for the fiscal year under review. Net income was 8,336 million
($89,596 thousand), a substantial increase of 7,908 million, or 1,846.1%, from the previous
12,000
06 07 08 09 10
fiscal year. As a result, net income per share was 70.10 ($0.75).
Segment Information
ROE
(%)
Sales by business segment are as follows.

20
Material Division
The Material Division posted overall sales of 83,095 million ($893,110 thousand), a year-on-year
10
decline of 13,223 million, or 13.7%.

0
10
The Industrial Products Division posted sales of 70,817 million, down 11.7% from the previous
fiscal year. The division accounted for approximately 55% of overall Group sales.
20
Sales of industrial products fell 15.8% from the previous fiscal year to 40,673 million
because of lower domestic demand for sealing materials for use in facilities maintenance in the
petroleum refining, petrochemicals and chemicals industries, general industrial sealing materi-
30
06 07 08 09 10
als, thermal insulation materials, and fluoropolymer products. The decline in demand resulted
from restricted capital investment in the manufacturing sector in response to deteriorating economic conditions.
Sales of advanced products declined 7.9% year on year to 8,332 million. Although sales of
fluoropolymer products and thermal insulation products to manufacturers of semiconductor production equipment and related equipment and semiconductor manufacturers have increased due
to rapid recovery in demand, full-year sales fell below the prior-year level.
Automotive parts sales decreased 4.4% year on year to 21,812 million, notwithstanding a
second half increase sparked by a dramatic recovery in demand from domestic and foreign automakers and parts manufacturers.
27

Sales of non-residential building materials and residential building materials alike decreased
because of a sharp decline in the floor area of construction starts against a backdrop of lower
construction demand. As a result, sales fell 23.9% year on year to 12,278 million.
Engineering Division
Sales in the Engineering Division were 44,976 million, a decrease of 7,917 million, or 15.0%,
year on year.
Industrial Thermal Insulation Work Division

Overall sales from industrial thermal insulation work declined 16.6% year on year to 33,218 million.
Sales from maintenance work and construction work declined as companies cut back on maintenance of existing facilities at plants in Japan and new plant investment in response to deteriorating
business conditions.
Building Materials Installation Work Division

Sales from building materials installation declined 10.1% year on year to 11,758 million, mainly
as a result of lower sales from floor work caused by a sharp decrease in the floor area of construction starts amid lower construction demand.
Total Assets, Total Equity and

(Millions of yen/%)
Equity Ratio
Financial Condition
Assets, Liabilities, and Net Assets
Total assets as of March 31, 2010 were 127,216 million ($1,367,326 thousand), down
150,000
10,493 million from a year earlier. This decline was due mainly to decreases in inventories, con-
39.5
36.9
34.3
struction in progress and deferred tax assets.

Total liabilities as of March 31, 2010 were 82,416 million ($885,813 thousand), down
100,000
20,538 million from a year earlier. Although liabilities increased as a result of the issuance of
25.1 25.2
bonds, short-term bank loans and long-term debt decreased, and the allowance for loss on
compensation for building materials decreased.
50,000
Total equity as of March 31, 2010 was 44,800 million ($481,513 thousand), up 10,045 million
from a year earlier. Retained earnings, unrealized gain on available-for-sale securities, and foreign
0
currency translation adjustments all increased.

06 07 08 09 10
Total Assets Total Equity Equity Ratio
28
Research and Development Costs

R&D Costs
In accordance with the corporate philosophy of commitment to providing safe and reliable prod-
(Millions of yen)
ucts, broadening the circle of trust, and contributing to society in business domains that primarily
involve insulation and anti-corrosion technologies, the NICHIAS Group focuses on R&D from a
6,000
medium- to long-term perspective to amass core technologies and reinforce distinctive technologies that support its businesses. At the same time, the Group engages in fast-paced development
4,000
closely aligned with customer needs. The Group has a research and development staff of 424
employees who engage in R&D activities at the Hamamatsu Research Laboratory, the Tsurumi
Research Laboratory, and the technological development units of each business division.
2,000
In the fiscal year ended March 31, 2010, R&D expenditures totaled 4,871 million
($52,354 thousand), representing 3.8% of net sales. The R&D activities and expenditures for
each business division for the year under review were as follows.
06 07 08 09 10
The Company develops sealing materials, thermal insulation materials, fluoropolymer products,
and other materials and equipment components used in the environment, energy, petroleum and
petrochemicals, semiconductor production equipment, automotive, and other industries.
Principal R&D results in the fiscal year under review included the development of corrosionresistant gaskets for piping systems, elements for industrial dehumidification systems, decontamination filters for semiconductor production equipment, and lightweight sound-absorbing
materials for automobiles. R&D expenditures related to this business were 3,652 million.

The Company engages in the research and development of noncombustible materials and systems required by the building construction and housing industries.
Principal R&D results in this division included the development of noncombustible decorative
boards made from calcium silicate, for which the Company has also acquired Eco Mark certification. R&D expenditures related to this business were 571 million.

The Company engages in the research and development of thermal and high-temperature insulation structures and of sound absorption and soundproofing structures required by the energy,
environment, and other industries, as well as installation systems related to these products.
Principal R&D results for the year included the development of installation methods to restore
the function of existing thermal insulation materials using water-repelling, high-performance insulation materials. R&D expenditures related to this business were 648 million.
29
Capital Expenditures
Capital Expenditures and
(Millions of yen)
Depreciation
The NICHIAS Group had overall capital expenditures of 1,798 million ($19,325 thousand) in the
fiscal year under review. Expenditures were focused on business sectors from which future growth
8,000
is expected and included outlays for the expansion and upgrading of overseas business sites.
Principal capital expenditures for each business division for the year under review were
6,000
as follows.
4,000

The Group made a total of 252 million in investments in the industrial products business. Investment in manufacturing facilities at consolidated subsidiary NICHIAS CERATECH CORPORATION
2,000
has been discontinued.

The Group made 398 million in investments in the advanced products business, includ-
06 07 08 09 10
Capital Expenditures Depreciation
ing investments for advanced products manufacturing facilities at the Ohji Factory and the
Fukuroi Factory.
The Group made 658 million in investments in the automotive parts business, including
investments in automotive parts manufacturing facilities at the Yuki Factory and at consolidated
subsidiary METAKOTE INDUSTRY CO., LTD.

The Group made a total of 70 million in investments in the building materials business.

The Group made a total of 45 million in investments in the industrial thermal insulation
work business.
Building Materials Installation Work Division

The Group made a total of 12 million in investments in the building materials installation
work business.
Corporate Assets
The Group made a total of 363 million in investments in land, buildings, and equipment in connection with the relocation of the Kyushu Branch.
Investments were financed from own funds and borrowings.
30
Cash Flows
Cash and cash equivalents at the end of the fiscal year (hereinafter cash) increased by 224 million
Dependency on
Interest-bearing Liabilities
(%)
from the previous fiscal year to 14,267 million ($153,343 thousand). Cash flows and factors
affecting cash flows are as follows.
Cash Flows from Operating Activities
45
30
Net cash provided by operating activities was 12,884 million ($138,478 thousand). Although
cash decreased due to a decline of 8,502 million in the allowance for loss on compensation for
building materials and a decrease of 1,763 million in other payables, this was outweighed by
15
cash inflows from income before income taxes and minority interests of 13,377 million, depreciation and amortization of 4,293 million, and a decrease in inventories of 2,139 million.
0
Cash Flows from Investing Activities
06 07 08 09 10
Net cash used in investing activities was 1,967 million ($21,141 thousand). The principal item
was 1,956 million for purchases of property, plant and equipment.
Cash Flows from Financing Activities

Net cash used in financing activities was 10,816 million ($116,251 thousand). Proceeds of
2,946 million from the issuance of bonds were offset by net decreases of 10,895 million in
short-term bank loans and 2,738 million in long-term debt.
Financial Policy
The net assets of the NICHIAS Group decreased substantially for reasons including the posting
as an extraordinary loss in the fiscal year ended March 31, 2008 of expenses required for the
replacement and modification of building materials in connection with the improper acquisition of
fire-resistance certification. To recover from this setback, the Company is reinforcing the corporate structure and engaging in efficient business operations in accordance with its basic management policy. In this way, the Company will undertake to increase shareholders equity and the
equity ratio by continuously posting stable profits in the coming years.
With regard to the use of operating cash flows, the Company will pay dividends to shareholders, invest to develop new products and new businesses, and invest in facilities, mainly in business fields where future growth is anticipated, while at the same time reinforcing its financial
position and reducing financial expenses by means of rigorous cash management.
31
Consolidated Balance Sheets

March 31, 2010 and 2009
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
ASSETS
2010
2009
2010
14,267
14,043
$ 153,343
94
19
1,010
CURRENT ASSETS:
Cash and cash equivalents (Note 15)
Time deposits other than cash equivalents (Note 15)
Receivables (Note 15):
Trade notes
Trade accounts
Allowance for doubtful accounts
5,508
5,950
59,200
34,277
34,140
368,411
(574)
(251)
(6,169)
Inventories (Note 3)
15,189
17,160
163,252
Deferred tax assets (Note 11)

Prepaid expenses and other current assets
Total current assets
2,117
2,092
72,970
1,289
3,434
75,784
22,754
22,486
784,287
Land
10,966
11,020
117,863
Buildings and structures
37,590
37,307
404,020
Machinery and equipment
55,939
52,378
601,235
Tools, furniture and fixtures
6,617
6,609
71,120
271
144
348
3,160
2,913
1,548
111,527
(76,797)
34,730
110,822
(73,307)
37,515
1,198,699
(825,419)
373,280
Investment securities (Notes 4, 6 and 15)
5,539
4,268
59,534
Investments in and advances to unconsolidated

subsidiaries and associated companies
2,723
2,862
29,267
132
286
1,419
PROPERTY, PLANT AND EQUIPMENT (Notes 6, 13 and 14):
Lease assets
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
INVESTMENTS AND OTHER ASSETS:
Goodwill (Note 5)
Guarantee deposit
Deferred tax assets (Note 11)
Other assets
Total investments and other assets
TOTAL
See notes to consolidated financial statements.
32
515
1,733
5,535
6,976
11,678
74,979
4,324
(693)
19,516
127,216
4,503
(920)
24,410
137,709
46,473
(7,448)
209,759
$1,367,326
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
LIABILITIES AND EQUITY
2010
2009
2010
22,625
33,469
$ 243,175
1,480
13,938
15,907
CURRENT LIABILITIES:
Short-term bank loans (Notes 6 and 15)
Current portion of long-term debt (Notes 6 and 15)
Payables (Note 15):
Trade notes
Trade accounts
Income taxes payable
7,987
8,777
85,845
14,291
13,912
153,601
835
478
8,975
1,493
816
16,047
2,409
4,691
55,811
2,336
6,645
80,371
25,892
50,419
599,861
16,901
4,181
181,653
2,080
2,124
22,356
113
161
1,215
127
134
1,365
3,732
3,652
26,605
12,234
3,749
22,583
40,112
39,251
285,952
Common stockauthorized, 240,000,000 shares;

issued, 125,057,344 shares in 2010 and 2009
9,284
9,284
99,785
Capital surplus
9,842
9,842
105,782
122
64
1,311
Advances received on construction work in progress (Note 15)

Accrued expenses
Other current liabilities
Total current liabilities
LONG-TERM LIABILITIES:
Long-term debt (Notes 6 and 15)
Liability for retirement benefits (Note 7):
Employees
Directors and corporate auditors
Deferred tax liabilities (Note 11)
Allowance for loss on compensation for building materials (Note 2.k)
Other liabilities
Total long-term liabilities
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 14, 16 and 17)
EQUITY (Notes 8 and 9):
Stock acquisition rights

Retained earnings
26,448
17,826
284,265
Unrealized gain on available-for-sale securities
1,156
230
12,425
Foreign currency translation adjustments

Treasury stockat cost, 6,146,986 shares in 2010 and
6,133,405 shares in 2009
(1,178)
(1,481)
(12,661)
(1,955)
(1,951)
(21,012)
43,719
1,081
44,800
127,216
33,814
941
34,755
137,709
469,895
11,618
481,513
$1,367,326
Total
Minority interests
Total equity
TOTAL
33
Consolidated Statements of Income

Years Ended March 31, 2010 and 2009
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
2010
2009
2010
NET SALES
COST OF SALES
128,071
102,230
149,211
120,734
$1,376,515
1,098,774
Gross profit
25,841
28,477
277,741
19,267
6,574
21,683
6,794
207,083
70,658
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 7, 12 and 14)

Operating income
OTHER INCOME (EXPENSES):
Interest and dividend income
217
228
2,332
Interest expense
(593)
(617)
(6,374)
Gain (loss) on sales or disposals of property, plant and equipmentnet
197
(57)
2,117
(6)
(704)
(64)
Loss on impairment of investment securities

Loss on impairment of shares in unconsolidated subsidiaries
(65)
Loss on impairment of insurance reserve funds
(54)
Loss on impairment of long-lived assets (Note 13)
(297)
(1,458)
26
64
Gain on reversal of stock acquisition rights

Reversal of allowance for doubtful accounts
(3,192)
279
112
Reversal of allowance for loss on compensation for building materials

Othernet
Other income (expenses)net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS
1,204
7,000
147
6,803
(326)
(2,989)
75,236
1,581
73,119
13,377
3,805
143,777
1,302
3,592
4,894
1,107
2,115
3,222
13,994
38,607
52,601
147
155
1,580
INCOME TAXES (Note 11):

Current
Deferred
Total income taxes
MINORITY INTERESTS IN NET INCOME
NET INCOME
8,336
428
Yen
89,596
U.S. Dollars
2010
2009
2010
PER SHARE OF COMMON STOCK (Notes 2.s and 18):

Basic net income
Cash dividends applicable to the year
34
70.10
6.00
3.60
4.00
0.75
0.06
Consolidated Statements of Changes in Equity

Thousands
BALANCE, APRIL 1, 2008
Millions of Yen
Outstanding
Number of
Shares of
Common
Stock
Common
Stock
Capital
Surplus
118,996
9,284
9,843
Stock
Acquisition
Rights
127
Adjustment of retained
earnings due to an adoption
of PITF No. 18 (Note 2.b)
Retained
Earnings
Unrealized
Gain on
Availablefor-Sale
Securities
Foreign
Currency
Translation
Adjustments
Treasury
Stock
Total
17,882
1,466
(158)
(1,935)
36,509
(5)
Decrease in retained
earnings under Chinese
accounting standards
Net income
Cash dividends, 4 per share
(95)
Disposal of treasury stock

Net change in the year
23
9,284
9,842
64
Net income
Purchase of treasury stock
(5)
(3)
(3)
428
428
(476)
(476)
(23)
(23)
(23)
17,826
(1,236)
(1,323)
6
(2,622)
(16)
6
(2,638)
230
(1,481)
33,814
941
34,755
(1,951)
204
Take-over of retained
earnings for merger of an
unconsolidated subsidiary
37,466
(3)
(63)
118,924
957
Total
Equity
428
(1)
Adjustment of retained
earnings for newly
consolidated subsidiaries
Minority
Interests
(5)
(476)
BALANCE, MARCH 31, 2009

204
204
82
82
82
8,336
8,336
8,336
(5)
(17)
(5)
(5)

3
BALANCE, MARCH 31, 2010 118,910
1
1,287
43,719
140
1,081
Total
Minority
Interests
Total
Equity
$10,114
$373,549
9,284
9,842
58
122
26,448
926
1,156
303
(1,178) (1,955)
1
1,427
44,800
Thousands of U.S. Dollars (Note 1)
Common
Stock
Capital
Surplus
$99,785 $105,782
Adjustment of retained earnings for

newly consolidated subsidiaries
Stock
Acquisition
Rights
Retained
Earnings
Unrealized
Gain on
Availablefor-Sale
Securities
Foreign
Currency
Translation
Adjustments
Treasury
Stock
$ 688 $191,595 $ 2,472 $(15,918) $(20,969) $363,435

2,193
Take-over of retained earnings for

merger of an unconsolidated subsidiary
Net income
2,193
881
881
881
89,596
89,596
89,596
(54)
(54)
(54)

11
$99,785 $105,782
2,193
11
623
9,953
3,257
13,833
$1,311 $284,265 $12,425 $(12,661) $(21,012) $469,895
1,504
$11,618
11
15,337
$481,513
35
Consolidated Statements of Cash Flows

Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes refund (paid)net
Depreciation and amortization
Provision of allowance for doubtful accounts
(Gain) loss on sales or disposals of property, plant and equipmentnet
Loss on impairment of long-lived assets
Decrease in allowance for loss on compensation for building materials
Changes in assets and liabilities (net of effects):
Decrease in trade receivables
Decrease in inventories
Decrease in trade payables
Decrease in other receivables
(Decrease) increase in other payables
Decrease in guarantee deposit
Increase (decrease) advances received on construction works in progress
Othernet
Total adjustments
Net cash provided by (used in) operating activities
INVESTING ACTIVITIES:
Purchases of investment securities
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Othernet
Net cash used in investing activities
FINANCING ACTIVITIES:
(Decrease) increase in short-term bank loansnet
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bonds
Dividends paid
Proceeds from acquisition of treasury stocknet
Othernet
Net cash (used in) provided by financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED
SUBSIDIARIES, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS INCREASED BY MERGER
OF AN UNCONSOLIDATED SUBSIDIARY
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
36
2010
2009
13,377
3,805
$ 143,777
272
4,293
89
(226)
297
6
(8,502)
(3,834)
4,890
431
44
1,458
704
(16,589)
2,923
46,141
957
(2,429)
3,192
64
(91,380)
745
2,139
(539)
399
(1,763)
1,245
676
376
(493)
12,884
6,161
1,006
(6,851)
54
4,570
800
(365)
387
(7,134)
(3,329)
8,007
22,990
(5,793)
4,288
(18,949)
13,381
7,266
4,043
(5,299)
138,478
(70)
(1,956)
357
(298)
(1,967)
(9)
(5,930)
65
(166)
(6,040)
(752)
(21,023)
3,837
(3,203)
(21,141)
(10,895)
11,200
(13,938)
2,946
(8)
(4)
(117)
(10,816)
11,146
3,500
(1,675)
(478)
(17)
(119)
12,357
(117,100)
120,378
(149,807)
31,664
(86)
(43)
(1,257)
(116,251)
57
158
(342)
2,646
613
1,699
35
31
14,043
14,267
2010
376
11,397
14,043
333
150,935
$ 153,343
Notes to Consolidated Financial Statements

1. BASIS OF PRESENTING CONSOLIDATED

FINANCIAL STATEMENTS
being amortized on a straight-line basis over a period of five years.
The accompanying consolidated financial statements have been
eliminated in consolidation. All material unrealized profit included in
prepared in accordance with the provisions set forth in the Japanese
assets resulting from transactions within the Group is eliminated.
Financial Instruments and Exchange Act and its related accounting
b. Unification of Accounting Policies Applied to Foreign Sub-
regulations, and in conformity with accounting principles generally
sidiaries for the Consolidated Financial StatementsIn May
accepted in Japan (Japanese GAAP), which are different in certain
2006, the Accounting Standards Board of Japan (the ASBJ) issued
respects as to application and disclosure requirements of Interna-
ASBJ Practical Issues Task Force (PITF) No. 18, Practical Solution
tional Financial Reporting Standards.
on Unification of Accounting Policies Applied to Foreign Subsidiaries
All significant intercompany balances and transactions have been
In preparing these consolidated financial statements, certain
for the Consolidated Financial Statements. PITF No. 18 prescribes
reclassifications and rearrangements have been made to the con-
(1) the accounting policies and procedures applied to a parent com-
solidated financial statements issued domestically in order to present
pany and its subsidiaries for similar transactions and events under
them in a form which is more familiar to readers outside Japan. In
similar circumstances should in principle be unified for the prepara-
addition, certain reclassifications have been made in the 2009 finan-
tion of the consolidated financial statements, (2) financial statements
cial statements to conform to the classifications used in 2010.
prepared by foreign subsidiaries in accordance with either Interna-
The consolidated financial statements are stated in Japanese yen,
tional Financial Reporting Standards or the generally accepted
the currency of the country in which NICHIAS Corporation (the
accounting principles in the United States of America tentatively may
Company) is incorporated and operates. The translations of Japa-
be used for the consolidation process, (3) however, the following
nese yen amounts into U.S. dollar amounts are included solely for
items should be adjusted in the consolidation process so that net
the convenience of readers outside Japan and have been made at
income is accounted for in accordance with Japanese GAAP unless
the rate of 93.04 to $1, the approximate rate of exchange at March
they are not material: (a) amortization of goodwill; (b) scheduled
31, 2010. Such translations should not be construed as representa-
amortization of actuarial gain or loss of pensions that has been
tions that the Japanese yen amounts could be converted into U.S.
directly recorded in the equity; (c) expensing capitalized develop-
dollars at that or any other rate.
ment costs of R&D; (d) cancellation of the fair value model accounting for property, plant and equipment and investment properties and
2. SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES
incorporation of the cost model accounting; (e) recording the prior
a. ConsolidationThe consolidated financial statements as of
income where retrospective adjustments to financial statements
March 31, 2010, include the accounts of the Company and its 31
have been incorporated; and (f) exclusion of minority interests from
significant (29 in 2009) subsidiaries (together, the Group).
net income, if contained. PITF No. 18 was effective for fiscal years
years effects of changes in accounting policies in the statements of
Under the control or influence concept, those companies in which
beginning on or after April 1, 2008 with early adoption permitted. The
the Company, directly or indirectly, is able to exercise control over
Group applied this accounting standard effective April 1, 2008. In
operations are fully consolidated, and those companies over which
addition, the Group adjusted the beginning balance of retained earn-
the Group has the ability to exercise significant influence are
ings at April 1, 2008 as if this accounting standard had been retro-
accounted for by the equity method.
spectively applied.
The investment in one associated company is accounted for by
c. Business CombinationIn October 2003, the Business Account-
the equity method as of March 31, 2010 and 2009. Investments in
ing Council issued a Statement of Opinion, Accounting for Business
the remaining 16 (18 in 2009) unconsolidated subsidiaries and asso-
Combinations, and on December 27, 2005, the ASBJ issued ASBJ
ciated companies are stated at cost. If the equity method of account-
Statement No. 7, Accounting Standard for Business Divestitures
ing had been applied to the investments in these companies, the
and ASBJ Guidance No. 10, Guidance for Accounting Standard for
effect on the accompanying consolidated financial statements would
Business Combinations and Business Divestitures.
not be material.
The accounting standard for business combinations allows compa-
The excess of the cost of an acquisition over the fair value of the
nies to apply the pooling of interests method of accounting only when
net assets of the acquired subsidiary at the date of acquisition is
certain specific criteria are met such that the business combination is
37
essentially regarded as a uniting-of-interests.
Under the previous accounting standard, finance leases that deem
For business combinations that do not meet the uniting-of-interests
to transfer ownership of the leased property to the lessee were to be
criteria, the business combination is considered to be an acquisition
capitalized. However, other finance leases were permitted to be
and the purchase method of accounting is required. This standard
accounted for as operating lease transactions if certain as if capital-
also prescribes the accounting for combinations of entities under
ized information is disclosed in the note to the lessees financial
common control and for joint ventures.
statements. The revised accounting standard requires that all finance
d. Cash EquivalentsCash equivalents are short-term investments
lease transactions should be capitalized to recognize lease assets
that are readily convertible into cash and that are exposed to insig-
and lease obligations in the balance sheet. In addition, the revised
nificant risk of changes in value.
accounting standard permits leases which existed at the transition
Cash equivalents include time deposits, certificates of deposit,
date and do not transfer ownership of the leased property to the
money management funds and others, all of which mature or
lessee to be measured at the obligations under finance leases at the
become due within three months of the date of acquisition.
transition date and recorded as acquisition cost of lease assets.
e. InventoriesInventories are stated at the lower of cost, deter-
Depreciation of the leased assets is recognized over the lease term
mined by the moving-average method for finished products, work
on a straight-line basis. Rental expense on operating leases is recog-
in process and raw materials, or net selling value. Construction
nized over the lease term on a straight-line basis.
work in progress is stated at cost determined by the specific iden-
The Group applied the revised accounting standard effective April
tification method.
1, 2008. In addition, the Group accounted for leases which existed
f. Property, Plant and EquipmentProperty, plant and equipment
at the transition date and do not transfer ownership of the leased
are stated at cost. Depreciation of property, plant and equipment of
property to the lessee as acquisition cost of lease assets measured
the Company and its consolidated domestic subsidiaries is com-
at the obligations under finance leases at the transition date. There is
puted substantially by the declining-balance method based on the
no effect by this change.
estimated useful lives of the assets, while the straight-line method is
i. Investment SecuritiesUnder the accounting standard for
applied to buildings acquired after April 1, 1998 for the Company
financial instruments, including marketable and investment securi-
and its consolidated domestic subsidiaries, and all property, plant
ties, all securities held by the Group are classified as available-for-sale
and equipment of consolidated foreign subsidiaries. The range of
securities, depending on managements intent. They are reported at
useful lives is principally from 3 to 50 years for buildings and struc-
fair value, with unrealized gains and losses, net of applicable taxes,
tures, and from 4 to 10 years for machinery and equipment.
reported in a separate component of equity. The cost of securities
g. Long-Lived AssetsThe Group reviews its long-lived assets for
sold is determined based on the moving-average method.
impairment whenever events or changes in circumstance indicate

the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount
Non-marketable available-for-sale securities are stated at cost

principally determined by the moving-average method.
For other than temporary declines in fair value, investment securi-
of an asset or asset group exceeds the sum of the undiscounted
ties are reduced to net realizable value by a charge to income.
future cash flows expected to result from the continued use and
j. Retirement and Pension PlansThe Company and certain
eventual disposition of the asset or asset group. The impairment loss
consolidated subsidiaries have funded plans, unfunded plans and a
would be measured as the amount by which the carrying amount of
defined contribution plan as retirement benefit plans for employees.
the asset exceeds its recoverable amount, which is the higher of the
The plans cover approximately 70%, 15% and 15%, respectively, of
discounted cash flows from the continued use and eventual disposi-
employee benefits. In respect of the funded plans, a part of the
tion of the asset or the net selling price at disposition.
annual provision is funded as contributory and/or non-contributory
h. LeasesIn March 2007, the ASBJ issued ASBJ Statement No. 13,
pension plans with an outside trustee.
Accounting Standard for Lease Transactions, which revised the pre-
The Company and consolidated domestic subsidiaries account
vious accounting standard for lease transactions issued in June 1993.
for the liability for retirement benefits based on the projected benefit
The revised accounting standard for lease transactions is effective for
obligations and plan assets at the balance sheet date in conformity
fiscal years beginning on or after April 1, 2008 with early adoption
with the accounting standard for employees retirement benefits.
permitted for fiscal years beginning on or after April 1, 2007.
38
Actuarial gains and losses are amortized in the years following the
year in which the gain or loss occurs by the straight-line method over
($43 thousand) and income before income taxes and minority inter-
a period of 12 years which is shorter than the average remaining
ests by 4 million ($43 thousand), respectively, for the year ended
years of service of the employees.
March 31, 2010.
Retirement benefits to directors and corporate auditors are pro-
m. Stock OptionsIn December 2005, the ASBJ issued ASBJ
vided at the amount which would be required if all directors and
Statement No. 8, Accounting Standard for Stock Options and
corporate auditors retired at the balance sheet date.
related guidance. The new standard and guidance are applicable to
Upon the resolution of the shareholders meeting held on June 28,
stock options newly granted on and after May 1, 2006.
2007, the Company decided to terminate the retirement benefits
This standard requires companies to recognize compensation
plan for directors and corporate auditors. Due to the termination of
expense for employee stock options based on the fair value at the
the plan, further provision is no longer needed, and the allowance
date of grant and over the vesting period as consideration for receiv-
outstanding as of March 31, 2010 represents only a portion of ben-
ing goods or services. The standard also requires companies to
efit payments reserved before the plans termination.
account for stock options granted to non-employees based on the
k. Allowance for Loss on Compensation for Building Materials
fair value of either the stock option or the goods or services received.
On October 30, 2007, the Company announced that it had used
In the balance sheet, the stock option is presented as a stock
improperly prepared eave assemblies and partition walls to establish
acquisition right as a separate component of equity until exercised.
their fire-resistant of fireproof testing. The Company is now respon-
The standard covers equity-settled, share-based payment transac-
sible to repair and/or replace such eave assemblies and partition
tions, but does not cover cash-settled, share-based payment trans-
walls which were sold to its customers.
actions. In addition, the standard allows unlisted companies to
Allowance for loss on compensation for building materials is

provided based on the estimated future payments to repair and/or
replace these eave assemblies and partition walls.
measure options at their intrinsic value if they cannot reliably estimate fair value.
The Group has applied this accounting standard for stock options
l. Construction ContractsIn December 2007, the ASBJ issued
to those granted on and after May 1, 2006.
ASBJ Statement No. 15 Accounting Standard for Construction
n. Research and Development CostsResearch and develop-
Contracts and ASBJ Guidance No. 18 Guidance on Accounting
ment costs are charged to income as incurred.
Standard for Construction Contracts. Under the previous Japanese
o. Income TaxesThe provision for income taxes is computed
GAAP, either the completed-contract method or the per-
based on the pretax income included in the consolidated statements
centage-of-completion method was permitted to account for con-
of income.
struction contracts. Under this new accounting standard, the
The asset and liability approach is used to recognize deferred tax
construction revenue and construction costs should be recognized
assets and liabilities for the expected future tax consequences of
by the percentage-of-completion method, if the outcome of a con-
temporary differences between the carrying amounts and the tax
struction contract can be estimated reliably. When total construction
bases of assets and liabilities. Deferred taxes are measured by
revenue, total construction costs and the stage of completion of the
applying currently enacted tax laws to the temporary differences.
contract at the balance sheet date can be reliably measured, the
p. Foreign Currency TransactionsAll short-term and long-term
outcome of a construction contract can be estimated reliably. If the
monetary receivables and payables denominated in foreign currencies
outcome of a construction contract cannot be reliably estimated, the
are translated into Japanese yen at the exchange rates at the balance
completed-contract method should be applied. When it is probable
sheet date. The foreign exchange gains and losses from translation
that the total construction costs will exceed total construction reve-
are recognized in the consolidated statements of income to the extent
nue, an estimated loss on the contract should be immediately recog-
that they are not hedged by forward exchange contracts.
nized by providing for a loss on construction contracts. This standard
q. Foreign Currency Financial StatementsThe balance sheet
is applicable to construction contracts and software development
accounts of the consolidated foreign subsidiaries are translated into
contracts and effective for fiscal years beginning on or after April 1,
Japanese yen at the current exchange rate as of the balance sheet
2009. The Group applied the new accounting standard effective
date except for equity, which is translated at the historical rate.
April 1, 2009. The effect of this change was to increase sales by
Differences arising from such translation were shown as Foreign
237 million ($2,547 thousand), operating income by 4 million
currency translation adjustments in a separate component of equity.
39
Revenue and expense accounts of consolidated foreign subsidiar-
(2) The current accounting standard accounts for the research and
ies are translated into yen at the average exchange rate.
development costs to be charged to income as incurred. Under
r. Derivatives and Hedging ActivitiesThe Group uses derivative
the revised standard, an in-process research and development
financial instruments to manage its exposures to fluctuations in inter-
(IPR&D) acquired by the business combination is capitalized as an
est rates. Interest rate swaps are utilized by the Group to reduce
intangible asset.
interest rate risks. The Group does not enter into derivatives for trading or speculative purposes.
(3) The current accounting standard accounts for a bargain purchase

gain (negative goodwill) to be systematically amortized within 20
Derivative financial instruments are classified and accounted for as
years. Under the revised standard, the acquirer recognizes a bar-
follows: (a) all derivatives are recognized as either assets or liabilities
gain purchase gain in profit or loss on the acquisition date after
and measured at fair value, and gains or losses on derivative trans-
reassessing whether it has correctly identified all of the assets
action that do not qualify for hedge accounting are recognized in the
acquired and all of the liabilities assumed with a review of such
consolidated statements of income and (b) gains or losses on deriva-
procedures used.
tives used for hedging purposes, if derivatives qualify for hedge
This standard is applicable to business combinations undertaken
accounting because of high correlation and effectiveness between
on or after April 1, 2010 with early adoption permitted for fiscal years
the hedging instruments and the hedged items are deferred until
beginning on or after April 1, 2009.
maturity of the hedged transactions.
Asset Retirement ObligationsIn March 2008, the ASBJ pub-
The interest rate swaps which qualify for hedge accounting and
lished a new accounting standard for asset retirement obligations,
meet specific matching criteria are not remeasured at market value
ASBJ Statement No. 18 Accounting Standard for Asset Retirement
but the differential paid or received under the swap agreements are
Obligations and ASBJ Guidance No. 21 Guidance on Accounting
recognized and included in interest expense or income.
Standard for Asset Retirement Obligations. Under this accounting
s. Per Share InformationBasic net income/loss per share is
standard, an asset retirement obligation is defined as a legal obliga-
computed by dividing net income/loss available to common share-
tion imposed either by law or contract that results from the acquisi-
holders by the weighted-average number of common shares out-
tion, construction, development and the normal operation of a
standing for the period, retroactively adjusted for stock splits.
tangible fixed asset and is associated with the retirement of such
Diluted net income per share reflects the potential dilution that
tangible fixed asset.
could occur if warrants for stock option plan were exercised. Diluted
The asset retirement obligation is recognized as the sum of the
net income per share of common stock assumes full exercise of
discounted cash flows required for the future asset retirement and is
outstanding warrants.
recorded in the period in which the obligation is incurred if a reason-
Cash dividends per share presented in the accompanying consoli-
able estimate can be made. If a reasonable estimate of the asset
dated statements of income are dividends applicable to the respec-
retirement obligation cannot be made in the period the asset retire-
tive years including dividends to be paid after the end of the year.
ment obligation is incurred, the liability should be recognized when a
t. New Accounting Pronouncements
reasonable estimate of asset retirement obligation can be made.
Business CombinationsIn December 2008, the ASBJ issued a
Upon initial recognition of a liability for an asset retirement obligation,
revised accounting standard for business combinations, ASBJ
an asset retirement cost is capitalized by increasing the carrying
Statement No. 21, Accounting Standard for Business Combina-
amount of the related fixed asset by the amount of the liability. The
tions. Major accounting changes under the revised accounting
asset retirement cost is subsequently allocated to expense through
standard are as follows:
depreciation over the remaining useful life of the asset. Over time, the
(1) The current accounting standard for business combinations allows
liability is accreted to its present value each period. Any subsequent
companies to apply the pooling of interests method of accounting
revisions to the timing or the amount of the original estimate of undis-
when certain specific criteria are met such that the business com-
counted cash flows are reflected as an increase or a decrease in the
bination is essentially regarded as a uniting-of-interests. The
carrying amount of the liability and the capitalized amount of the
revised standard requires to account for such business combina-
related asset retirement cost. This standard is effective for fiscal
tion by the purchase method and the pooling of interests method
years beginning on or after April 1, 2010 with early adoption permit-
of accounting is no longer allowed.
ted for fiscal years beginning on or before March 31, 2010.
40
Accounting Changes and Error CorrectionsIn December 2009,
for the fiscal years beginning on or after April 1, 2010.
ASBJ issued ASBJ Statement No. 24 Accounting Standard for

Accounting Changes and Error Corrections and ASBJ Guidance
3. INVENTORIES
No. 24 Guidance on Accounting Standard for Accounting Changes
Inventories as of March 31, 2010 and 2009, consisted of the
and Error Corrections. Accounting treatments under this standard
following:
and guidance are as follows:

(1) Changes in accounting policies
2010
When a new accounting policy is applied with revision of accounting

standards, a new policy is applied retrospectively unless the revised
accounting standards include specific transitional provisions. When
the revised accounting standards include specific transitional provisions, an entity shall comply with the specific transitional provisions.
(2) Changes in presentations
Thousands of
U.S. Dollars
Millions of Yen
Merchandise
2009
2,437
2010
2,793
$ 26,193
Finished products
3,634
4,517
39,058
Construction work in progress
4,718
4,861
50,709
Raw materials
2,914
3,474
31,320
Other
Total
1,486
1,515
15,972
15,189
17,160
$163,252
When the presentation of financial statements is changed, prior

period financial statements are reclassified in accordance with the
new presentation.
(3) Changes in accounting estimates
A change in an accounting estimate is accounted for in the period of
4. INVESTMENT SECURITIES
Investment securities as of March 31, 2010 and 2009, consisted of
the following:
the change if the change affects that period only, and is accounted
and future periods.

(4) Corrections of prior period errors
When an error in prior period financial statements is discovered,
those statements are restated.
This accounting standard and the guidance are applicable to
Thousands of
U.S. Dollars
Millions of Yen
for prospectively if the change affects both the period of the change
2010
2009
2010
Non-current:
Marketable equity securities 5,297
Non-marketable
equity securities
Total
4,021
$56,933
242
247
2,601
5,539
4,268
$59,534
accounting changes and corrections of prior period errors which are

made from the beginning of the fiscal year that begins on or after
April 1, 2011.
The carrying amounts and aggregate fair value of investment

securities at March 31, 2010 and 2009 were as follows:
Segment Information DisclosuresIn March 2008, the ASBJ

revised ASBJ Statement No. 17 Accounting Standard for Segment
Millions of Yen
Information Disclosures and issued ASBJ Guidance No. 20 Guid-
Unrealized Unrealized
Gains
Losses
ance on Accounting Standard for Segment Information Disclosures.

Under the standard and guidance, an entity is required to report
March 31, 2010
Available-for-sale
Equity securities
Cost
Fair Value
3,725
1,585
13
5,297
3,644
653
276
4,021
financial and descriptive information about its reportable segments.

Reportable segments are operating segments or aggregations of
March 31, 2009
operating segments that meet specified criteria. Operating segments
Available-for-sale
Equity securities
are components of an entity about which separate financial information is available and such information is evaluated regularly by the
Thousands of U.S. Dollars
chief operating decision maker in deciding how to allocate resources

and in assessing performance. Generally, segment information is
March 31, 2010
required to be reported on the same basis as is used internally for
Available-for-sale
Equity securities
evaluating operating segment performance and deciding how to
Cost
Unrealized Unrealized
Gains
Losses
$40,037 $17,036
Fair Value
$140 $56,933
allocate resources to operating segments. This accounting standard

and the guidance are applicable to segment information disclosures
41
The carrying values of available-for-sale equity securities whose

fair value was not readily determinable as of March 31, 2010 and
Annual maturities of long-term debt as of March 31, 2010 were as

follows:
2009 were 242 million ($2,601 thousand) and 247 million, respectively. The similar information for 2010 is disclosed in Note 15.
Year Ending March 31
Millions of Yen
Thousands of
U.S. Dollars
The proceeds from sales of investment securities and gross real-
2011
1,480
$ 15,907
ized gains and losses on these sales are not disclosed because they
2012
1,076
11,565
were immaterial for the years ended March 31, 2010 and 2009.
2013
7,350
78,998
2014
4,600
49,441
5. GOODWILL
2015
3,500
37,618
Goodwill as of March 31, 2010 and 2009 consisted of the
2016 and thereafter
375
4,031
following:
Total
18,381
$197,560
Thousands of
U.S. Dollars
Millions of Yen
2010
Consolidation goodwill
The carrying amounts of assets pledged as collateral for short-term
2010
bank loans of 11,400 million ($122,528 thousand) and long-term

debt of 1,206 million ($12,962 thousand) at March 31, 2010, were
109
190
$1,172
23
96
247
132
286
$1,419
Acquisition goodwill
Total
2009
as follows:
Millions of Yen
6. SHORT-TERM BANK LOANS AND

LONG-TERM DEBT
Buildings and structures

net of accumulated depreciation
Short - term bank loans as of March 31, 2010 and 2009, prin-
Land
cipally consisted of notes to banks and bank overdrafts. The
Investment securities
annual interest rates applicable to the short - term bank loans
Total
Thousands of
U.S. Dollars
1,224
$13,156
667
7,169
3,586
38,542
5,477
$58,867
ranged from 0.73% to 2.80% and 0.90% to 4.55% as of

March 31, 2010 and 2009, respectively.
As is customary in Japan, the Company maintains substantial deposit
Long - term debt as of March 31, 2010 and 2009 consisted

of the following:
balances with banks with which it has borrowings. Such deposit balances are not legally or contractually restricted as to withdrawal.
General agreements with respective banks provide, as is custom-
Millions of Yen
2010
Unsecured the 6-month

TIBOR + 0.675% yen
straight bond, due fiscal
2015
2009
Thousands of
U.S. Dollars
ary in Japan, that additional collateral must be provided under certain
2010
circumstances if requested by such banks and that certain banks

have the right to offset cash deposited with them against any
long-term or short-term debt or obligation that becomes due and, in
3,000
$ 32,244
debt payable to the banks. The Company has never been requested
Loans from banks, due serially

to fiscal 2016 with interest
rates ranging from 0.80% to
2.40% (2010) and from
0.80% to 2.40% (2009):
Collateralized
Unsecured
Total
to provide any additional collateral.

The Company has concluded syndicated loan agreements with its
banks to establish on efficient source of funds in order to repair and
1,206
1,296
12,962
14,175
16,823
152,354
18,381
18,119
197,560
Less current portion
(1,480)
(13,938)
(15,907)
Long-term debt,
less current portion
16,901
4,181
$181,653
42
case of default and certain other specified events, against all other
replace fire-resistant eave assemblies and fireproof partition walls for

its customers.
The outstanding balance of the commitment as of March 31, 2010

was as follows:
Millions of Yen
Total committed line of credit

Executed amount
Unexecuted amount
The liability for employees retirement benefits as of March 31,

2010 and 2009 consisted of the following:
Thousands of
U.S. Dollars
20,000
$214,961
11,000
118,228
9,000
$ 96,733
The above agreements are subject to the following financial
Thousands of
U.S. Dollars
Millions of Yen
2010
2009
2010
17,238
17,843
$185,275
Fair value of plan assets
(10901)
(9,260)
(117,165)
Unrecognized actuarial loss
(5,287)
(7,620)
(56,825)
Prepaid pension cost
1,030
1,161
11,071
2,080
2,124
$ 22,356
Projected benefit obligation
Net liability
covenants:
Ordinary income shall be over 2,500 million ($26,870 thousand)
for the fiscal year ended March 31, 2010, both on a consolidated
and non-consolidated basis.
The components of net periodic retirement benefit costs for the

years ended March 31, 2010 and 2009 were as follows:
Ordinary income shall be not a loss for the first half of the fiscal
non-consolidated basis.
Total liabilities with interest shall be under 65,000 million
($698,624 thousand) as of March 31, 2010, on a consolidated
basis.
Total liabilities with interest shall be under 60,000 million
($644,844 thousand) as of March 31, 2010, on a non-consolidated basis.
7. RETIREMENT AND PENSION PLANS
Thousands of
U.S. Dollars
Millions of Yen
year ending March 31, 2011, both on a consolidated and

Service cost
2010
2009
734
914
2010
$ 7,889
Interest cost
330
325
3,547
Expected return on plan assets
(154)
(264)
(1,655)
Recognized actuarial loss
910
631
9,780
Net periodic retirement

benefit costs
1,820
1,606
19,561
Payment for the defined

contribution pension plan
Total
77
79
828
1,897
1,685
$20,389
The Company and certain consolidated subsidiaries have severance

payment plans for employees, directors and corporate auditors.
Under most circumstances, employees terminating their employ-
Assumptions used for the years ended March 31, 2010 and 2009,
are set forth as follows:
ment are entitled to retirement benefits determined based on the

2010
rate of pay at the time of termination, years of service and certain

other factors. Such retirement benefits are made in the form of a
lump-sum severance payment from the Company or from certain
2009
Discount rate
2.0%
Expected rate of return on plan assets
2.0%
2.0%
3.0%
Recognition period of actuarial gain/loss 12 years
12 years
consolidated subsidiaries and annuity payments from a trustee.

Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or
by voluntary retirement at certain specific ages prior to the mandatory retirement age.
The Company implemented a defined contribution pension plan by
which a part of the severance lump-sum payment plan was terminated.
8. EQUITY
Japanese companies are subject to the Companies Act of Japan (the
Companies Act). The significant provisions in the Companies Act
that affect financial and accounting matters are summarized below:
a. DividendsUnder the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end
dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of
Corporate Auditors, and (4) the term of service of the directors is
prescribed as one year rather than two years of normal term by its
43
articles of incorporation, the Board of Directors may declare divi-
25% of the common stock. Under the Companies Act, the total
dends (except for dividends in kind) at any time during the fiscal year
amount of additional paid-in capital and legal reserve may be
if the company has prescribed so in its articles of incorporation. The
reversed without limitation. The Companies Act also provides that
Company meets all the above criteria. Semiannual interim dividends
common stock, legal reserve, additional paid-in capital, other capital
may also be paid once a year upon resolution by the Board of Direc-
surplus and retained earnings can be transferred among the accounts
tors if the articles of incorporation of the company so stipulate. The
under certain conditions upon resolution of the shareholders.
Companies Act provides certain limitations on the amounts available
c. Treasury Stock and Treasury Stock Acquisition RightsThe
for dividends or the purchase of treasury stock. The limitation is
Companies Act also provides for companies to purchase treasury
defined as the amount available for distribution to the shareholders,
stock and dispose of such treasury stock by resolution of the Board
but the amount of net assets after dividends must be maintained at
of Directors. The amount of treasury stock purchased cannot exceed
no less than 3 million.
the amount available for distribution to the shareholders which is
b. Increases/Decreases and Transfer of Common Stock,
determined by specific formula.
Reserve and SurplusThe Companies Act requires that an amount

equal to 10% of dividends must be appropriated as a legal reserve (a
Under the Companies Act, stock acquisition rights are presented

as a separate component of equity.
component of retained earnings) or as additional paid-in capital (a
The Companies Act also provides that companies can purchase
component of capital surplus) depending on the equity account
both treasury stock acquisition rights and treasury stock. Such trea-
charged upon the payment of such dividends until the total of aggre-
sury stock acquisition rights are presented as a separate component
gate amount of legal reserve and additional paid-in capital equals
of equity or deducted directly from stock acquisition rights.
9. STOCK OPTIONS
The stock options outstanding as of March 31, 2010 were as follows:
Stock Options
Persons Granted
Number of Options Granted
Date of Grant
Exercise Price
2004 Stock Options
5 directors,
1 corporate officer
and 9 employees
360,000 shares
2004.10.1
427
($5)
From April 1, 2005

to June 30, 2010
2005 Stock Options
2 corporate
officers and 8
employees
120,000 shares
2005.10.3
672
($7)
From April 1, 2006

to August 31, 2011
2006 Stock Options
4 directors and 40
employees
800,000 shares
2006.10.2
875
($9)
From April 1, 2007

to August 31, 2012
2009 Stock Options
8 directors, 348
employees and 76
directors and
employees of
subsidiaries
715,000 shares
2009.12.1
340
($4)
From April 1, 2010

to August 31, 2013
44
Exercise Period
The stock option activity is as follows:

Shares
Year Ended March 31, 2009
2004
Stock
Options
2005
Stock
Options
2006
Stock
Options
2009
Stock
Options
205,000
100,000
780,000
Non-vested:
March 31, 2008Outstanding
Granted
Canceled
Vested
Vested:
Vested
Exercised
Canceled
21,000
184,000
400,000
100,000
380,000
Year Ended March 31, 2010
Non-vested:
Granted
715,000
Canceled
Vested
715,000

Vested:
184,000
100,000
380,000
Vested
715,000
Exercised
Canceled
Exercise price
155,000
184,000
100,000
225,000
715,000
427
672
875
340
($5)
($7)
($9)
($4)
118
Average stock price at exercise

Fair value price at grant date
($1)
* 154 ($2) for the income tax unqualified options which exercise period is settled from April 1, 2007 to August 31, 2012, and 168 ($2) for the income tax qualified
options which exercise period is settled from July 1, 2008 to August 31, 2012.
45
The Assumptions Used to Measure Fair Value of 2009 Stock Options
10. RELATED PARTY TRANSACTIONS
Estimate method:
Black-Scholes option
pricing model
Related party transactions are not disclosed because there were
Volatility of stock price:
62.15%
Estimated remaining outstanding period:
2.8 years
Estimated dividend yield:
1.23%
Interest rate with risk free:
0.324%
immaterial for the years ended March 31, 2010 and 2009.
11. INCOME TAXES

The Company and its domestic subsidiaries are subject to Japanese
national and local income taxes which, in the aggregate, resulted in
normal effective statutory tax rate of approximately 40.5% for the
Some cancellations of stock acquisition rights were charged to

other income as gain on reversal of stock acquisition rights of
25 million ($269 thousand) in the year ended March 31, 2010.
years ended March 31, 2010 and 2009.

The tax effects of significant temporary differences and tax loss
carryforwards which resulted in deferred tax assets and liabilities as
of March 31, 2010 and 2009 were as follows:
Millions of Yen
2010
2009
Deferred tax assets:

Tax loss carryforwards
Liability for retirement benefitsemployees
Loss on impairment of long-lived assets
Allowance for loss on compensation for building materials
Accrued bonuses
Other payables
Depreciation
Liability for retirement benefitsdirectors and corporate auditors
Other
Subtotal
Less valuation allowance
Total
Deferred tax liabilities:
Gain on securities contributed to employees retirement benefit trusts
Unrealized gain on available-for-sale securities
Undistributed earnings of foreign subsidiaries
Deferred gain on sales of property, plant and equipment
Account receivable for enterprise tax refund
Other
Total
Net deferred tax assets
46
Thousands of
U.S. Dollars
2010
5,688
2,235
1,652
1,557
655
369
293
271
94
46
977
13,837
(2,784)
11,053
6,166
2,177
1,838
5,201
590
610
417
295
121
59
1,064
18,538
(3,784)
14,754
$ 61,135
24,022
17,756
16,735
7,040
3,966
3,149
2,913
1,010
494
10,501
148,721
(29,923)
118,798
1,219
403
241
84
1,219
137
198
89
134
169
1,946
12,808
13,102
4,331
2,590
903
141
2,088
8,965
1,516
22,442
$ 96,356
A reconciliation between the normal effective statutory tax rate
14. LEASES
and the actual effective tax rate reflected in the accompanying con-
As Lessee
solidated statements of income for the years ended March 31, 2010
The Group leases certain machinery, tools, furniture and other
and 2009 is as follows:
assets.
Normal effective statutory tax rate
2010
2009
40.5%
40.5%
Depreciation expense and interest expense for the year ended

March 31, 2010, which are not reflected in the accompanying consolidated statements of income, are computed by the straight-line
Expenses not deductible for income tax

purposes
0.6
3.2
Income not taxable for income tax

purposes
(0.2)
(2.4)
Inhabitants taxes
0.7
2.0
Lower income tax rates applicable to

income in certain foreign countries
(1.4)
(2.9)
method and the interest method, respectively.

The minimum rental commitments under noncancelable operating
leases at March 31, 2010 and 2009 were as follows:
2010
Increase and decrease in valuation

allowance for deferred tax assets
(3.3)
44.7
Due within one year
Othernet
(0.3)
(0.4)
Due after one year
Actual effective tax rate
36.6%
84.7%
Thousands of
U.S. Dollars
Millions of Yen
Total
2009
75
2010
87
$807
21
77
90
$828
12. RESEARCH AND DEVELOPMENT COSTS
As Lessor
Research and development costs charged to income were
The Group subleases certain machinery and equipment. These sub-
4,871 million ($52,354 thousand) and 5,299 million for the years
leases are the finance leases that do not transfer ownership of leased
ended March 31, 2010 and 2009, respectively.
machinery and equipment to the lessee. Receivables under such

finance leases as of March 31, 2010 and 2009 were as follows:
13. IMPAIRMENT LOSS

The Group reviewed its long-lived assets for impairment as of March
2010
31, 2010, as a result, recognized an impairment loss of 297 million

($3,192 thousand) as other expense for an idle land of the Company
in Kashiba City and other groups of plants due to a decline of profitability of those groups. The carrying amount of the relevant fixed
Thousands of
U.S. Dollars
Millions of Yen
Due within one year

Due after one year
Total
11
2009
24
2010
$118
24
43
258
35
67
$376
assets was written down to the recoverable amount.

The Group recognized impairment losses on the following assets
for the years ended March 31, 2010 and 2009:
Millions of Yen
2010
2009
Thousands of
U.S. Dollars
On March 10, 2008, the ASBJ revised ASBJ Statement No. 10
2010
Accounting Standard for Financial Instruments and issued ASBJ

Guidance No. 19 Guidance on Accounting Standard for Financial
Fixed assets:
Land
240
Building and structure

Machinery and equipment
Others
Total
15. FINANCIAL INSTRUMENTS AND RELATED

DISCLOSURES
25
$2,580
585
Instruments and Related Disclosures. This accounting standard

and the guidance are applicable to financial instruments and related
55
836
591
disclosures at the end of the fiscal years ending on or after March
12
21
31, 2010 with early adoption permitted from the beginning of the
297
1,458
$3,192
fiscal years ending before March 31, 2010. The Group applied the
revised accounting standard and the new guidance effective March
The recoverable amount of that group was measured at its net
31, 2010.
selling value. The net selling value of land was based on the report of
independent appraisers, and other fixed assets were written off to
(1) Group Policy for Financial Instruments
memorandum price.
The Group uses financial instruments, mainly short-term and
47
long-term debt including bank loans and straight bonds, based on its
officer and the management meeting on a semiannual basis.
capital financing plan. Cash surpluses, if any, are invested in low risk
Liquidity risk management
financial assets. Derivatives are used, not for speculative purposes,
Liquidity risk comprises the risk that the Group cannot meet its con-
but to manage exposure to financial risks as described in (2) below.
tractual obligations in full on maturity dates. The Group manages its
(2) Nature and Extent of Risks Arising from Financial Instruments
liquidity risk by holding adequate volumes of liquid assets at the level
Receivables such as trade notes and trade accounts are exposed
of 0.6 months sales volume, along with adequate financial planning
to customer credit risk. Receivables in foreign currencies are
by the financial department.
exposed to the market risk of fluctuation in foreign currency
(4) Fair Value of Financial Instruments
exchange rates. Investment securities, mainly equity instruments of
Fair values of financial instruments are based on quoted price in
customers and suppliers of the Group, are exposed to the risk of
active markets. If quoted price is not available, other rational valua-
market price fluctuations.
tion techniques are used instead. Also please see Note 16 for the
Payment terms of payables, such as trade notes and trade

accounts, are less than one year. Payables in foreign currencies are
detail of fair value for derivatives.

(a) Fair value of financial instruments
exposed to the market risk of fluctuation in foreign currency

Millions of Yen
exchange rates.
March 31, 2010
Carrying
Amount
after the balance sheet date. Although a part of such bank loans is
Cash and cash equivalents
14,267
14,267
exposed to market risks from changes in variable interest rates,
Receivables
39,784
39,784
those risks are mitigated by using interest-rate swaps derivatives.
5,296
5,296
Total
59,347
59,347
exposure to market risks from changes in interest rates of bank
Payables
22,278
22,278
loans. Please see Note 16 for more detail about derivatives.
Short-term bank loans

(including current portion
of long-term debt)
24,104
24,103
Maturities of bank loans and straight bond are less than six years
Derivatives include interest-rate swaps, which are used to manage
(3) Risk Management for Financial Instruments

Credit risk management
failure to repay or service debt according to the contractual terms.
Advances received on
construction work in
progress
The Group manages its credit risk from receivables on the basis of
Long-term debt
Credit risk is the risk of economic loss arising from a counterpartys
internal guidelines, which include monitoring of payment term and
Derivative transactions are limited to major international financial
1,493
16,852
49
Total
64,776
64,726
50
March 31, 2010
Carrying
Amount
Cash and cash equivalents $153,343

Receivables
about derivatives.
Market risk management (foreign exchange risk and interest rate risk)
Fair
Value
427,601
56,922
56,922
Total
$637,866
$637,866
Interest-rate swaps are used to manage exposure to market risks
Payables
$239,445
$239,445
from changes in interest rates of loan payables.
Short-term bank loans

(including current portion
of long-term debt)
259,071
259,061
16,047
16,047
management meeting on a semiannual basis based on the internal
Advances received on
construction work in
progress
guidelines which prescribe the authority and the limit for each trans-
Long-term debt
Basic principles of derivative transactions have been approved by
action by the financial department. Reconciliation of the transaction

and balances with customers is made by the accounting department,
and the transaction data has been reported to the chief accounting
48
Total
Unrealized
Gain/Loss
$153,343
427,601
Investment securities are managed by monitoring market values
1,493
institutions to relieve the credit risk. Please see Note 16 for the detail
and financial position of issuers on a regular basis.
Unrealized
Gain/Loss
16,901
balances of major customers by each business administration

department to identify the default risk of customers in early stage.
Fair
Value
$ 10
181,653
181,126
527
$696,216
$695,679
$537
Cash and Cash Equivalents, Receivables, Payables and Advances

Received on Construction Work in Progress
(c) Maturity analysis for financial assets and securities with contractual maturities
The carrying values of cash and cash equivalents, receivables, payMillions of

Yen
ables and advanced received on construction works in progress

approximate fair value because of their short maturities.
Due in One
Year or Less
March 31, 2010
Investment Securities
The fair values of investment securities are measured at the quoted
market price of the stock exchange for equity instruments. The information of the fair value for the investment securities by classification
Thousands of
U.S. Dollars
Cash and cash equivalents
14,361
Receivables
Total
$154,353
39,784
427,601
54,145
$581,954
Please see Note 6 for annual maturities of long-term debt.
is included in Note 4.
Short-Term Bank Loans (including Current Portion of Long-Term
Debt)
The Group enters into interest rate swap contracts to manage its
The carrying values of short-term bank loans approximate fair value

because of their short maturities.
interest rate exposures on certain liabilities.

It is the Groups policy to use derivatives only for the purpose of
And current portion of long-term debt is included in above

short-term bank loans and it is determined by discounting the cash
flows related to the debt at the Groups assumed corporate borrowing rate.
Long-Term
16. DERIVATIVES
reducing market risks associated with assets and liabilities. The

Group does not hold or issue derivatives for trading purposes.
All derivative transactions are entered into to hedge interest exposures incorporated within its business. Accordingly, market risk in
Debt
(including
Straight
Bond
and
Long-Term
Borrowings)
these derivatives is basically offset by opposite movements in the

value of hedged liabilities.
The carrying values of straight bond approximate fair value because

it is at floating interest rate and also there is no quoted market price
due to a private placement.
Because the counterparties to these derivatives are major international financial institutions, the Group does not anticipate any losses
arising from credit risk.
The fair values of long-term borrowings are determined by discounting the cash flows related to the debt at the Groups assumed
corporate borrowing rate.
Derivative transactions entered into by the Group have been made

in accordance with internal policies which regulate the authorization
and credit limit amount.
The fair values of the interest-rate swaps in Note 16 which qualify

for hedge accounting and meet specific matching criteria are added
to the fair values of long-term borrowings with fixed interest rate.
Derivatives
As noted in Note 15, the Group applied ASBJ Statement No. 10

Accounting Standard for Financial Instruments and ASBJ Guidance No. 19 Guidance on Accounting Standard for Financial Instruments and Related Disclosures. The accounting standard and the
The information of the fair value for derivatives is included in

Note 16.
guidance are applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31,
2010; therefore, the required information is disclosed only for 2010.
(b) Financial instruments whose fair value cannot be reliably

determined
Carrying Amount
March 31, 2010
Investments in equity instruments that

do not have a quoted market price in an
active market
Millions of
Yen
Thousands of
U.S. Dollars
2,840
$30,525
49
Derivative Transactions to Which Hedge Accounting Is Applied
17. CONTINGENT LIABILITIES
at March 31, 2010
As of March 31, 2010, the Company and certain domestic subsidiarMillions of Yen
March 31, 2010
Contract
Amount
Hedged Item
Interest rate swaps

fixed rate payment, Long-term
floating rate receipt debt
March 31, 2010
Contract
Amount
Due after
One Year
ies are contingently liable for:

Guarantees and items of a similar nature of bank loans and others
amounting to 1,260 million ($13,543 thousand).
Fair Value
Off-balanced notes receivable with repurchase obligation amount13,275
12,475
ing to 832 million ($8,942 thousand).
18. NET INCOME PER SHARE
Interest rate swaps

fixed rate payment,
Long-term
floating rate receipt
debt
Basic net income per share (EPS) is computed based on the

weighted-average number of common stocks outstanding totaling
$142,681 $134,082
118,917 thousand shares for the year ended March 31, 2010.
* The above 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 are recognized and
included in interest expense or income. In addition, the fair value of such
interest rate swaps in Note 15 is included in that of hedged items (i.e.
long-term debt).
Diluted EPS for the year is not disclosed because the Company
does not have any dilutive instruments outstanding.
19. SEGMENT INFORMATION

The Group operates in the following industries:
Material division A consists of industrial products, advanced products (inorganic thermal insulation materials and sealing materials), auto parts and others.
Material division B consists of building materials.
Engineering division A consists of industrial thermal installation work.
Engineering division B consists of building materials installation.
Information about industry segments, geographical segments and sales to foreign customers of the Group for the years ended March 31, 2010
and 2009, was as follows:
(1) Industry Segments

a. Sales and Operating Income
Millions of Yen
2010
Material
Division A
Material
Division B
Engineering
Division A
Engineering
Division B
Sales to customers
70,817
12,278
33,218
11,758
Intersegment sales
189
3,671
71,006
15,949
Total sales
Operating expenses
Operating income
65,180
5,826
Eliminations/
Corporate
Consolidated
128,071
(3,860)
33,218
11,758
(3,860)
15,411
30,293
10,586
27
538
2,925
1,172
(3,887)
128,071
121,497
6,574
b. Total Assets, Depreciation, Impairment Loss and Capital Expenditures

Millions of Yen
2010
Total assets
Depreciation
Impairment loss
Capital expenditures
50
Material
Division A
Material
Division B
Engineering
Division A
Engineering
Division B
58,684
8,981
13,842
8,147
37,562
127,216
3,264
395
84
40
510
4,293
227
297
363
1,798
48
1,308
22
70
45
12
Eliminations/
Corporate
Consolidated

Millions of Yen
2009
Material
Division A
Material
Division B
Engineering
Division A
Engineering
Division B
Sales to customers
80,193
16,125
39,821
13,072
Intersegment sales
445
3,695
80,638
19,820
39,821
13,072
(4,140)
73,664
20,550
36,297
12,439
(533)
(730)
3,524
633
(3,607)
Eliminations/
Corporate
Total sales
Operating expenses
Operating income or operating loss
6,974
Eliminations/
Corporate
Consolidated
149,211
(4,140)
149,211
142,417
6,794

Millions of Yen
2009
Total assets
Material
Division A
Material
Division B
Engineering
Division A
Engineering
Division B
Consolidated
57,421
12,041
16,851
8,741
42,655
137,709
Depreciation
3,608
478
105
85
614
4,890
Impairment loss
1,437
21
4,757
209
144
29
236
5,375
1,458

2010
Material
Division A
Material
Division B
Engineering
Division A
Engineering
Division B
Sales to customers
$761,145
$131,965
$357,029
$126,376
Intersegment sales
2,032
39,456
763,177
171,421
357,029
126,376
700,558
165,639
325,591
113,779
5,782
$ 31,438
$ 12,597
Total sales
Operating expenses
Operating income
$ 62,619
Eliminations/
Corporate
Consolidated
$1,376,515
$(41,488)
(41,488)
290
$(41,778)
1,376,515
1,305,857
$
70,658

2010
Total assets
Depreciation
Impairment loss
Material
Division A
Material
Division B
Engineering
Division A
Engineering
Division B
Eliminations/
Corporate
Consolidated
$630,739
$96,528
$148,775
$87,564
$403,720
$1,367,326
35,082
4,245
903
430
5,481
46,141
2,440
3,192
752
484
129
3,902
19,325
516
14,058
236
Note: As discussed in Note 2.l, effective April 1, 2009, the Company applied ASBJ Statement No. 15 Accounting Standard for Construction Contracts. The effect of
this change was to increase sales to customers of Engineering division A by 78 million ($838 thousand) and sales to customers of Engineering division B by
159 million ($1,709 thousand) for the year ended March 31, 2010. And, the effect of this change was to decrease operating income of Engineering division A
by 10 million ($107 thousand) and to increase operating income of Engineering division B by 14 million ($150 thousand) for the year ended March 31, 2010.
(2) Geographical Segments

The Group operates mainly in Japan and total sales/assets in foreign countries were less than 10% of consolidated sales/assets.
(3) Sales to Foreign Customers

Sales to foreign customers for the years ended March 31, 2010 and 2009 were less than 10% of consolidated sales of the respective years.
51
Independent Auditors Report
52
Glossary
Alumina Fiber
Metal-free Attribute
Alumina is an alternative name given to aluminum oxide. With a melting point

of 2050C, alumina is second only to the diamond in terms of hardness. Due
to its heat-resistant and chemical-resistant properties, superior strength and
low price, alumina is a major component of 90% of ceramics. High expectations are held for alumina fiber, which is produced at high temperatures, as a
fireproof material and a reinforced composite fiber.
In the semiconductor production process, it is essential to mitigate the adverse

effects of metallic ions dissolving into the wafer cleaning solution. Manufacturers look to plastics such as fluoropolymers, which substantially lower the
amount of metal dissolved, for use in areas where cleaning solution is applied.
This metal-free attribute makes fluoropolymers a popular product among
semiconductor manufacturers.
Calcium Silicate
Metallic Heat Insulation
Calcium silicate is produced by mixing lime-based and siliceous materials with

inorganic reinforced fiber through a high-temperature, high-pressure steam
curing process. Calcium silicates firm and stable crystalline form provides it
with non-combustible, fireproof and moisture-proof characteristics. As a result,
it is widely employed in non-combustible decorative interior building materials,
thermal insulation materials and other applications. NICHIAS commercialized
calcium silicate in 1952.
Metallic heat insulation is a material designed specifically for nuclear power plant
facilities. Made from stainless steel and other materials, this material is used for
thermal retention in nuclear reactor pressure vessels and other equipment and
piping systems in the radiation controlled areas of nuclear power plants.
Metallic heat insulation eliminates concerns of corrosion and features superior
mechanical strength as well as short installation times. Together, these qualities will
help to reduce exposure to radioactive material during maintenance periods.
Catalytic Converter Support Mats
Packing Materials
Support mats are felt-like cushioning materials that provide support for extruded
honeycomb-structured ceramic filters used in catalytic converters, devices that
purify automotive exhaust. Mats are formed from inorganic fibers in order to realize
stable catalytic converter support under high temperatures (600C to 1000C).
Used to seal moving parts that, for example, rotate or reciprocate, such as a
valve stem or a pump shaft. Also known as dynamic sealing materials.
Chemical Filters
These honeycomb-structured filters used to remove a wide range of chemical
contaminants, including ammonia gas and acidic and organic gases. Chemical filters are mainly used to remove low-concentration gas in clean rooms,
semiconductor manufacturing equipment, LCD production equipment and
other applications.
Corrosion-resistant Materials
Materials that help prevent corrosion caused by gases and liquids. Fluoropolymers are one example.
Elastomer
Elastomer is a polymer that can be elongated to more than twice its length at
room temperature, and quickly returns to approximately its original length
when released. As such, elastomer exhibits similar elasticity to rubber at room
temperature. Also known as natural rubber, synthetic rubber and thermoplastic elastomer.
Fluoropolymers
Resins that boast a number of outstanding properties, including heat and
chemical resistance, electrical insulation and a low friction coefficient. They are
mainly used in semiconductor manufacturing equipment and chemical plants,
both of which handle high purity chemicals. PTFE and PFA are prime examples.
NICHIAS fluoropolymers are marketed under the NAFLON brand.
Gaskets
Plants, factories and other industrial sites have complex pipeline systems that
link any number of pipes. This poses the threat of fluid inside the pipes leaking
from joints. Gaskets prevent leakage from joints. They are also known as static
seals because they are used to tightly seal stationary parts.
Insulators
These soundproof and heat-insulating metallic products serve to block heat
emitted from the exhaust manifold and other automotive exhaust system components. Insulators are also highly effective at mitigating sound and vibration.
PFA
Acronym for perfluoroalkoxy. Fluoropolymer PFA features similar superior attributes to PTFEs, but is also heat-moldable, unlike PTFE.
PTFE
Acronym for polytetrafluoroethylene, the first fluoropolymer ever discovered
and developed. Heat-resistant, chemical-resistant and non-adhesive, PTFE is
used in a wide range of applications from semiconductor processes to household products. While nine types of fluoropolymers are on the market, PTFE
holds a market share of around 70%.
Rockwool
A manmade fiber material produced by melting rock and slag at about 1500C.
Rockwools superlative fire-resistant, thermal insulation and soundproof characteristics make it a favorite in housing, buildings and factories. In 1938,
NICHIAS became the first company in Japan to manufacture rockwool.
Sealing Materials
Sealing materials that prevent leakage of liquids, generally referred to as gaskets
or packing. Materials used to prevent fluid leakages and infiltration of external
substances. The selection of sealing materials is made in accordance with the type
of fluid, the temperature, pressure and other factors. Static sealing materials are
known as gaskets, and dynamic sealing materials are called packing materials.
Super-engineering Plastics
Super-engineering plastics offer superlative dynamics, insulation and heat
resistance characteristics. They are mainly employed in electrical components,
particularly machine components and other areas that require mechanical
strength. Products manufactured in this area include PEEK.
VOC
Acronym for Volatile Organic Compound. VOCs, which are emitted from
paints, printing and semiconductor lines, have been problematic air pollutants.
While many highly concentrated VOCs have been treated in the past, the
removal of VOCs with a low concentration had presented difficulties. NICHIAS
has developed technology that absorbs and condenses low concentrated
VOCs with effective processing.
53
Organization
Corporate Administration
Division
Personnel Department
General Affairs Department
Accounting Department
Data Systems Department
Operational Support Department
Legal Advisory Section
Environmental Consulting Section
Quality Assurance Division
Quality Assurance Department
Technical Division
Technical Department
Board of
Auditors
Safety & Health Control Section

Environmental Control Section
Environmental Control Center
Rockwool Business Promotion Section
Corporate Strategic
Planning Department
Board of
Directors
Research & Development

Division
Planning & Development Department

Intellectual Property Section
R&D Analysis Section
President
Tsurumi Research Laboratory

Audit Section
Executive
Committee
Hamamatsu Research Laboratory
Advanced Products Division

Automotive Parts Division
Construction Division
Tokyo Branch
Osaka Branch
Nagoya Branch
Kyushu Branch
Tsurumi Factory
Ohji Factory
Hashima Factory
Fukuroi Factory
Yuki Factory
(As of July 1, 2010)
54
Group Network
Major Subsidiaries and Associated Companies (or Affiliates)
(As of April 1, 2010)
Company
Major Products or Main Lines of Business
Domestic
* FUKUSHIMA NICHIAS CORPORATION
Manufacture of fluoropolymer products and insulation materials
* KUMAMOTO NICHIAS CORPORATION
Manufacture of fluoropolymer products
* TOKYO MATERIALS CORPORATION
Sale of fluoropolymer products
* NICHIAS CERATECH CORPORATION
Manufacture and sale of insulation materials and building materials
* KOKUBU INDUSTRIAL CO., LTD.
Manufacture of insulation materials and automotive parts
* TATSUTA KOGYO CO., LTD.
Manufacture of insulation materials, automotive parts and building materials
* OHTA KASEI CORPORATION
Manufacture of insulation materials
* SAKAI NICHIAS CORPORATION
Manufacture of insulation materials
* NICHIAS MECHATECHNO CORPORATION
Manufacture of sealing materials and fluoropolymer products
* NICHIAS KANTO SALES CORPORATION
Sale of sealing materials, insulation materials and fluoropolymer products
* AKITSU INDUSTRIES CORPORATION
Processing and sale of sealing materials and fluoropolymer products
NICHIAS SEALTECH CORPORATION
Manufacture of sealing materials
** TOZETU CO., LTD.
* METAKOTE INDUSTRY CO., LTD.
Manufacture of automotive parts
* NIPPON ROCKWOOL CORPORATION
Sale of building and insulation materials
* KIMITSU ROCKWOOL CORPORATION
Manufacture of building materials
* NICHIAS CEMCRETE CO., LTD.
Sale and construction of building materials
* NIPPON THERMAL ENGINEERING CORPORATION
Engineering and construction of insulation materials
* NICHIAS ENGINEERING SERVICE CO., LTD.
* NICHIAS KYOSHIN CORPORATION
Insurance agency
Overseas (country)
* P.T. NICHIAS ROCKWOOL INDONESIA (Indonesia)
Manufacture of insulation materials and sealing materials
* P.T. NICHIAS METALWORKS INDONESIA (Indonesia)
Manufacture of metal parts for building materials
* P.T. NICHIAS SUNIJAYA (Indonesia)
Sale of industrial products and automotive parts
* NICHIAS FGS SDN. BHD. (Malaysia)
Manufacture and sale of sealing materials, automotive parts and building materials
* NT RUBBER-SEALS SDN. BHD. (Malaysia)
NICHIAS AUTOPARTS MALAYSIA SDN. BHD. (Malaysia)
* NICHIAS SINGAPORE PTE. LTD. (Singapore)
Sale of industrial products and industrial thermal insulation work
* NICHIAS (Thailand) CO., LTD. (Thailand)
Manufacture and sale of automotive parts and industrial products
THAI-NICHIAS ENGINEERING CO., LTD. (Thailand)
* NICHIAS HAIPHONG CO., LTD. (Vietnam)
Manufacture of honeycomb filters, sealing materials and fluoropolymer products
* SUZHOU NICHIAS INDUSTRIAL PRODUCTS CO., LTD. (China)
Manufacture of fluoropolymer products and automotive parts
SUZHOU NICHIAS SEAL MATERIALS CO., LTD. (China)
NICHIAS (Shanghai) TRADING CO., LTD. (China)
Sale of industrial products and building materials
SHANGHAI XINGSHENG GASKET CO., LTD. (China)
SHANGHAI GOYU AUTOPARTS CO., LTD. (China)
NICHIAS INDUSTRIAL PRODUCTS PVT. LTD. (India)
NICHIAS CZECH s.r.o. (Czech Republic)
* Consolidated subsidiaries
** Affiliate accounted for by the equity method
55
History
NICHIAS was founded in 1896 as a pioneer in the field of thermal insulation materials. The Company quickly
established itself as a leader in the sector by developing outstanding product technology and engineering
capabilities. Over more than a century, NICHIAS has continually risen to the challenge of developing new
products and innovations. The Company will remain firmly fixed on this path of progress in the 21st century.
1896
Founded in Osaka
1909
Moved Head Office to Tokyo
1923
TOMBO brand registered
1990
Established P.T. PYN MANUFACTURING (Now P.T. NICHIAS

METALWORKS INDONESIA) in Indonesia
Established NICHIAS FGS SDN. BHD. in Malaysia
1994
Established Hamamatsu Research Laboratory
1931
Produced Japans first joint sheet gasket
1937
Moved Osaka Factory to the newly constructed Ohji Factory
1938
Became first company in Japan to manufacture rockwool
1939
Moved Tokyo Factory to the newly constructed Tsurumi Factory
1951
Developed prototype of fluoropolymer products
1996
Celebrated NICHIAS 100th anniversary
1952
Commenced manufacture of spiral wound gaskets
1997
NICHIAS stock approved for trading on the OTC Market of the Tokyo
Stock Exchange
Second stage construction of Hamamatsu Research Laboratory

completed
1998
Began issuing stock options
1999
Introduced Executive Officer System
2001
Formulated the NICHIAS Environmental Charter
1956
Established the Research Laboratory in Tsurumi in commemoration

of 60th anniversary
Established SUZHOU NICHIAS SEAL MATERIALS CO., LTD.

in China
1995
Established NT RUBBER-SEALS SDN. BHD. in Malaysia

Established P.T. NICHIAS ROCKWOOL INDONESIA
1958
Commenced production of ceramic fiber
1961
Listed on Second Section of Tokyo Stock Exchange
1962
Listed on First Section of Tokyo Stock Exchange
1964
Established Fukuroi Factory
1967
Commenced manufacture of access floor
Established NICHIAS (Shanghai) TRADING CO., LTD. in China
1968
Listed on First Section of Osaka Securities Exchange
1971
Moved Corporate Head Office to present location at Shibadaimon,

Minato-ku, Tokyo
Established NICHIAS AUTOPARTS MALAYSIA SDN. BHD.

in Malaysia
2004
Established NICHIAS CZECH, S.R.O.
1974
Established Yuki Factory
2005
Established Procurement Guidelines
1979
Established NICHIAS SINGAPORE PTE. LTD.
1983
Commenced manufacture and sales of alumina fiber and rigid

polyurethane pipe supports
Established NICHIAS HAIPHONG CO., LTD. in Vietnam
Established P.T. SUNIJAYA (Now P.T. NICHIAS SUNIJAYA)

in Indonesia
2002
Established SUZHOU NICHIAS INDUSTRIAL PRODUCTS CO., LTD.

in China
2003
New building completed at Tsurumi Research Laboratory
Acquired shares in three subsidiaries of NIPPON STEEL CHEMICAL

CO., LTD.
2006
Completed new factory building at Hashima Factory
2007
Opened Construction Technical Center

Completed Automotive Parts Technical Center
1985
Developed ultra-high temperature ceramic thermal insulation tile

2008
Commenced manufacture and sales of rubber coated metal
gaskets
1987
Reorganized business divisions into independent profit centers
Formulated A New Step towards the Next 100 Years as new

corporate slogan
Developed fluoropolymer products for semiconductor production

equipment
Established NICHIAS INDUSTRIAL PRODUCTS PVT. LTD. in India

2009
1988
56
Formulated The New NICHIAS Spirit as the new corporate

philosophy
Established P.T. KUNISEAL NUSANTARA (Now P.T. NICHIAS

ROCKWOOL INDONESIA) in Indonesia
Completed Yuki Factory and new automotive parts factory
Corporate Data
Investor Information
(As of March 31, 2010)
(As of March 31, 2010)
Head Ofce
Authorized Number of Shares
1-26, Shibadaimon 1-chome,

Minato-ku, Tokyo 105-8555, Japan
Tel: +81-3-3433-7251
240,000,000 shares
Number of Shares Issued

125,057,344 shares
Branch Ofces
Tokyo Branch
Osaka Branch
Nagoya Branch
Kyushu Branch
Number of Shareholders
14,198
Securities Traded
Tokyo Stock ExchangeFirst Section
Factories
Tsurumi Factory
Ohji Factory
Hashima Factory
Fukuroi Factory
Yuki Factory
Laboratories
Hamamatsu Research Laboratory
Tsurumi Research Laboratory
Founded
April 9, 1896
Transfer Agent
The Sumitomo Trust and Banking Company, Limited
4-4, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-8233, Japan
Further Information
General Affairs Dept.
Tel: +81-3-3433-7251
E-mail: info@nichias.co.jp
URL
http://www.nichias.co.jp/
Employees
1,599
Paid-in Capital
9,283.57 million
57
NICHIAS Corporation
1-26, Shibadaimon 1-chome,
Minato-ku, Tokyo 105-8555, Japan
Tel: +81-3-3433-7251
http://www.nichias.co.jp/
Printed in Japan
E01-1009-01-GS-TS-RE-0909

NICHIAS Corporation Annual Report 2010

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NICHIAS Corporation Annual Report 2010

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Annual Report 2010

for the year ended March 31, 2010

A Message From the Management

Helping to Sustain the Environment

Board of Directors, Corporate Auditors and

Industrial Thermal Insulation Work

Corporate Data/Investor Information

Research and Development

NICHIAS Corporation and Consolidated Subsidiaries

169,650 149,211 128,071

Per Share Data (Yen and U.S. Dollars):

Net Income (Loss)

Net Income (Loss) per Share

NICHIAS Annual Report 2010

A Message From the Management

Overview of Fiscal 2010 Results

in the Industrial Products Division, Industrial Thermal Insulation

NICHIAS Annual Report 2010

range of industrial sectors. We also strive to be a company that

with new estimates some 7 billion lower than originally forecast.

once again benefits from public trust based on the fundamental

The remainder of this allowance was subsequently posted as

principle of providing safe and reliable products based on insula-

other income. As a result, net income rose 1,846.1% year on

tion and anti-corrosion technologies the NICHIAS Group has

year to 8,336 million.

developed over many years, expanding a ring of trust, and

Outlook for Fiscal Year Ending March 31, 2011

To achieve these aims, we have set forth an executive stance

Japanese industrial plants. By contrast, sales in the Advanced

The NICHIAS Group Corporate Vision

ductor manufacturing equipment, sales will likely grow atop

modest but broad recovery undertones in Japan, both in capital

building up an extensive customer network, lines of high-

investment and in demand for automotive parts.

performance, high-quality products that function under extreme

Basic Policies of the NICHIAS Group

everything from inorganic and organic substances to metals,

to be reborn as a company that provides new value to a wide

NICHIAS Annual Report 2010

The NICHIAS Group is pursuing various measures to increase

Promotion of efficient business management

corporate value by providing products and services that custom-

With regard to core businesses, we are ensuring efficient opera-

ers can rely on, promoting business expansion in growth industries,

profits, while simultaneously taking advantage of our far-reaching

with peace of mind.

To implement these initiatives, we set forth a new manage-

into new business domains. We are also continuing to effectively

ment vision to become A company trusted by customers where

invest management resources over the long term in businesses

related to current growth areas, including the automotive and

measures based on the following basic policies to realize this

semiconductor fields. Furthermore, we are rebuilding our business

in the building materials industry and transforming it into a solid

Rigorous enforcement of compliance

Creation of products we can sell with confidence

can achieve stable growth. Specifically, we will review our compli-

To provide products and services that customers can use with

ance program and, through alliances spearheaded by the Compli-

peace of mind, the NICHIAS Group will pay careful attention to

ance Committee with subcommittees and labor unions at each

safety and the environment in its manufacturing activities, and

Group business site, take steps to assess the status of legal