industrial aerospace medical · receiving treatment worldwide, of which 100,000 are in china and...
TRANSCRIPT
MEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICALMEDICAL
AEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEAEROSPACEINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IALINDUSTR IAL
Annual Report 2010Year Ended March 31, 2010
Consolidated Balance Sheets 24
Consolidated Statements of Income 26
Consolidated Statements of Changes in Equity 27
Consolidated Statements of Cash Flows 28
Notes to Consolidated Financial Statements 29
Independent Auditors’ Report 48
Board of Directors and Auditors 49
Executive Officers 49
Corporate Data 49
Global Network 50
Contents
Consolidated Financial Highlights 01
To Our Shareholders and Investors 02
Special Feature 04
Business at a Glance 08
Segment Information 10
Topics 14
Corporate Social Responsibility 16
Corporate Governance 18
Management’s Discussion and Analysis 20
NIKKISO Profile
Nikkiso Co., Ltd., was established in 1953 by Keijiro Oto. Since its foundation, the Nikkiso Group has provided a host of products worldwide based on its core fluid control technology expertise. These include fluid equipment, water conditioning systems for thermal and nuclear power plants, medical products and carbon fiber products. We plan to continue in our endeavors to build a brighter future for industry.
In 2006, the Nikkiso Group made a major change in direction, navigated by globally aware management, from its former focus on the domestic Japanese market to future high-growth overseas regions. As a result of this strategic shift, Nikkiso products are now readily available throughout the world.
We aim to maintain the leading position in our field by responding to the ever-changing needs of industry and society through our extensive accumulated experience and innovative research and development.
The ideals we pursue are not fixed, nor are they a mere extension of the past. While being firmly grounded, we will set high goals and continually consider and promptly carry out measures to achieve them. We believe that deepening the connection between technology and the market, without losing sight of the value of the technologies and products we have developed and the close relationships we have fostered with our customers, as well as fulfilling our social responsibility to protect and nurture “life” and “the environment,” will lead to greater flourishing of the Nikkiso Group.
Millions of YenThousands of U.S.
Dollars
2010 20 0 9 20 0 8 20 07 20 0 6 2010
Results of OperationsNet sales ¥ 78,020 ¥ 72,395 ¥ 72,532 ¥ 65,400 ¥ 58,916 $ 838,919
Gross profit 24,248 21,094 23,116 20,354 18,883 260,734
Operating income 5,663 4,771 6,908 5,737 5,630 60,891
Income before income taxes and minority interests 5,027 2,327 6,682 6,248 5,817 54,052
Net income 3,240 1,368 3,657 4,015 3,709 34,836
Financial PositionTotal assets ¥ 115,131 ¥ 83,688 ¥ 91,157 ¥ 80,144 ¥ 70,530 $ 1,237,965
Inventories 13,861 14,198 14,589 11,442 10,058 149,038
Property, plant and equipment, net 20,677 19,036 20,514 17,070 15,840 222,338
Total liabilities 67,614 46,966 50,876 40,714 28,337 727,027
Equity 47,517 36,722 40,281 39,430 41,585 510,938
Equity ratio (%) 40.5 43.3 43.5 48.5 59.0
Per Share (¥)
Net income
Basic ¥ 47.49 ¥ 21.46 ¥ 56.59 ¥ 60.44 ¥ 52.48 $ 0.51
Diluted – – – – 51.98Cash dividends applicable to the year 12.00 12.00 12.00 12.00 12.00 0.13
Payout ratio (%) 25.27 55.92 21.21 19.85 22.87
Equity 587.66 578.72 614.18 601.46 595.65 6.32
Key Ratios (%)
ROE 7.8 3.6 9.3 10.0 9.5
ROA 3.3 1.6 4.3 5.3 5.5
Consolidated Financial HighlightsNIKKISO CO., LTD., AND CONSOLIDATED SUBSIDIARIES For the years ended March 31
Notes: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥93 to $1, the approximate rate of exchange at March 31, 2010. Under a new accounting standard for the presentation of equity, which is effective for fiscal years ending on or after May 1, 2006, certain items such as stock acquisition rights, minority interests and deferred gain or loss on derivatives are now presented as components of equity, whereas they were previously presented as liabilities. On November 26, 2009, the Company issued and publicly offered 5,500,000 shares and disposed of 9,000,000 treasury stocks. On December 22, 2009, 2,175,000 shares were issued to a third party through over allotment. As a result, the number of shares issued increased by 7,675,000 shares and the treasury stocks decreased by 9,000,000 shares.
Net Sales Net Income Total Assets/Equity Equity Ratio ROE/ROA
’06 ’07 ’08 ’09 ’100
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
’06 ’07 ’08 ’09 ’10’06 ’07 ’08 ’09 ’10’06 ’07 ’08 ’09 ’100
1,000
2,000
3,000
4,000
5,000
0
20,000
40,000
60,000
80,000
100,000
120,000
0
10
20
30
60
80
100
50
40
70
90
0
2
4
6
8
10
(Millions of Yen) (Millions of Yen) (Millions of Yen) (%) (%)
Total Assets Equity Equity Ratio ROE ROA
’06 ’07 ’08 ’09 ’100
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
’06 ’07 ’08 ’09 ’10’06 ’07 ’08 ’09 ’10’06 ’07 ’08 ’09 ’100
1,000
2,000
3,000
4,000
5,000
0
20,000
40,000
60,000
80,000
100,000
120,000
0
10
20
30
60
80
100
50
40
70
90
0
2
4
6
8
10
(Millions of Yen) (Millions of Yen) (Millions of Yen) (%) (%)
Total Assets Equity Equity Ratio ROE ROA
’06 ’07 ’08 ’09 ’100
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
’06 ’07 ’08 ’09 ’10’06 ’07 ’08 ’09 ’10’06 ’07 ’08 ’09 ’100
1,000
2,000
3,000
4,000
5,000
0
20,000
40,000
60,000
80,000
100,000
120,000
0
10
20
30
60
80
100
50
40
70
90
0
2
4
6
8
10
(Millions of Yen) (Millions of Yen) (Millions of Yen) (%) (%)
Total Assets Equity Equity Ratio ROE ROA
’06 ’07 ’08 ’09 ’100
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
’06 ’07 ’08 ’09 ’10’06 ’07 ’08 ’09 ’10’06 ’07 ’08 ’09 ’100
1,000
2,000
3,000
4,000
5,000
0
20,000
40,000
60,000
80,000
100,000
120,000
0
10
20
30
60
80
100
50
40
70
90
0
2
4
6
8
10
(Millions of Yen) (Millions of Yen) (Millions of Yen) (%) (%)
Total Assets Equity Equity Ratio ROE ROA
1Annual Report 2010
To Our Shareholders and Investors
NIKKISO is implementing a vigorous globalization strategy to drive the Company’s future growth.
Business Results
During the fiscal year ended March 31, 2010, its 69th year of business, the Nikkiso Group gained orders of ¥74.7 billion and posted net sales of ¥78.0 billion, operating income of ¥5.6 billion, ordinary income of ¥6.0 billion and net income of ¥3.2 billion. These results represent increases from the previous fiscal year in terms of both sales and profits. In terms of sales, these results were nearly in line with the forecasts we announced in November 2009; we surpassed our income forecasts significantly.
Gains were primarily due to such factors as the addition to the Nikkiso Group of the LEWA Group of Germany, the world’s leading manufacturer of reciprocating pumps; to favorable domestic sales by the Medical Division arising from the launch of new dialysis machines; to thorough measures to cut production costs and other expenses; and the positive influence of a devalued yen at year-end.
Performance by the Industrial Business was affected by the global recession during the first half of the year, with a sequence of delays and cancellations of capital investment plans leading to a severe operating environment. However, during the second half there were signs of customers’ demand recovery in part of the Japanese and overseas markets.
New models of dialysis machines that feature functions to streamline and bolster the efficiency of
I would like to thank our shareholders for their continued support and encouragement. The following is an overview of the Nikkiso Group’s operations during the year ended March 31, 2010 (our 69th year in business).
Business Results
During the fiscal year ended March 31, 2010, its 69th year
NIKKISO Co., Ltd.2
dialysis administration contributed to sales by the Medical Business, aided by advances of such dialysis-related disposables as dialyzers, blood tubing lines and dialysate solution powders. Overseas, unit sales of dialysis machines to South America and China enjoyed steady growth.
Measures for Growth
Nikkiso made a conscious change in management direction in 2006, reinforcing its global operations to supplement its existing domestic-market-oriented approach. Subsequently, we upgraded production facilities in step with an expansion of sales channels and vigorously shifted emphasis toward an overseas perspective. This initiative has facilitated smooth growth for the Nikkiso Group. Our policy for the future is to maintain and reinforce progress along this meridian, driven by three key management measures to propel the Group in its quest for globalization:
1 LEWA GmbH
In August 2009, we acquired a 100% stake in the LEWA Group, based in Germany. Since then, although we have continued to investigate means for the optimal utilization of production and sales synergies, the effects of the inclusion of Nikkiso and LEWA in a Group framework have proved to be over and above our initial presumptions. Specifically, LEWA has leveraged its information on the oil and gas industries, in which its operations are rooted, to open up sales of such Nikkiso products as cryogenic pumps for LNG and canned motor pumps. Conversely, we have promoted solution-based marketing using LEWA’s larger-scale, more efficient products and system engineering in Nikkiso’s Asian and Japanese markets in which our activities had formerly been restricted to pump sales. This has opened up new development possibilities for our future industrial business. We have also commenced reorganization of our operational sites based on LEWA’s existing extensive overseas sales network and are striving to set concrete performance targets in our midterm business plans.
2 Production Tie-Up for Dialysis Machines in China
In April 2010, we reached an agreement with the Weigao Group, a leading Chinese manufacturer of medical appliances, to establish of a joint venture for the production, marketing and maintenance of dialysis
machines in China. There are reckoned to be some 1.5 million people in need of dialysis in China. By contrast, it is estimated that there are 1.5 million patients currently receiving treatment worldwide, of which 100,000 are in China and 300,000 in Japan. If dialysis treatment were to be broadly available in China, it would double the scale of the worldwide market in one fell swoop. The Chinese Government has earmarked a financial outlay of some CNY850 billion (¥11 trillion) for medical system improvements by fiscal 2011, and plans for facilities in the field of dialysis are advancing accordingly. The Nikkiso Group aims to stake its claim in this enormous evolving market by deploying the sales prowess of local medical equipment manufacturers and Nikkiso’s dialysis machine production technologies and maintenance experience and technologies accumulated through its history of involvement in dialysis treatment in Japan.
3 Production Aircraft Parts at Our Vietnam Plant
The Aerospace Division successfully gained its first orders for composite material aircraft parts, other than for cascade components for thrust reversers. We have commenced production of parts for Boeing 777 aircraft at a new plant in the suburbs of Hanoi, Vietnam. Focused on the advantages of the Vietnam site, we are fielding various business inquiries about non-cascade aircraft parts, and plan to carefully cultivate this facility as a cost-competitive production site on a scale comparable to the current cascade production at our Shizuoka Plant in four to five years.
The NIKKISO Group’s Path Forward
In the future, we anticipate difficult operating conditions for the Nikkiso Group. Nevertheless, we shall vigorously tackle such management challenges as globalization, strategic business development, productivity improvements and reinforcement of development based on our medium- to long-term policies. This approach will ensure steady progress toward fortifying our business base in the future.
We would like to thank all our shareholders for their support in the pursuit of these endeavors.
June 2010
Toshihiko Kai
President & Chief Executive OfficerChief Executive Officer
Measures for Growth
promoted solution-based marketing using LEWA’s larger-The NIKKISO Group’s Path Forward
Annual Report 2010 3
Interview: 2
Interview: 1
of business
of Industrial business
Interview: 3
Special Feature
The Nikkiso Group formulates and implements various key measures based on its new mid-term
policy. Three of these key measures are earmarked as being of particular importance: globalization
of operations, restructuring of industrial product operations and Nikkiso’s technological regeneration.
The corporate officers responsible for these areas discuss their future goals below.
Globalization
ReorganizationInterview: 2
Interview: 1
of business
of Industrial businessReorganizationof Industrial businessReorganization
Hiroshi NakamuraDirector, Europe, Business Strategy
Hiroshi NogamiDirector, Industrial Business, Head of Manufacturing, Business Promotion and R&D
RevitalizationInterview: 3
of Nikkiso technologyYoshikazu FusasakiPresident & Chief Executive Officer, Nikkiso Technical Research Institute
NIKKISO Co., Ltd.4
Globalization
During the fiscal year ended March 31, 2010, what were the main topics affecting
the Group’s overseas operations?NAKAMURA: Major themes were the inclusion of Germany’s LEWA Group and the establishment of a joint venture in China. Regarding the former, we acquired a stake in the LEWA Group in August 2009, in time for it to make a considerable contribution to this fiscal year’s business results. In the future, the LEWA Group’s leading brand of industrial large reciprocating pumps will supplement the Nikkiso Group’s product lineup, and we will be positioned for more dynamic sales expansion. The latter initiative concerns an agreement with the Weigao Group, a top Chinese manufacturer of medical appliances with a broad-ranging sales network throughout China, over the establishment of a joint venture for the production, sales and maintenance of dialysis machines. The Chinese market is headed for further dramatic growth, and this move has enabled us to build a framework for business development in the country.
What are the merits of the LEWA Group acquisition in terms of customers?
NAKAMURA: This is inherent in our ability to provide solutions. By pooling the LEWA Group’s many years of accumulated expertise in system products, in addition to simply providing products in line with customer requests, we will be able to offer solutions for the multifarious
problems and concerns that beset our customers. This development, I believe, represents a significant benefit to customers. Moreover, we have fortified our product lineup through the introduction of new models of controlled-volume pumps and will be able to provide many other benefits outside the oil and gas industries.
What is the status of the LEWA Group’s business performance?
NAKAMURA: During the previous fiscal year, the LEWA Group’s business results were impacted by the global recession. However, sales to and profits from the oil and gas industries—the LEWA Group’s main markets—were not down that significantly, even in this environment. In addition, the LEWA Group’s orders for the previous fiscal year were at an all-time high. By geographical region, sales increased in Southeast Asia and the United States, with particularly large gains in sales and profits through a marketing subsidiary in Singapore.
As the executive officer responsible for overseas operations, what are the Nikkiso
Group’s global strategies for the future?NAKAMURA: Since 2006, we have vigorously implemented overseas strategies and steadily improved performance. Our acquisition of the LEWA Group, which had already been instrumental in our success, and the establishment of the joint venture in China are extensions along this growth path. While maintaining the domestic market as the core of our operations, in the future we shall develop our global strategies in various ways, with Japan as a hub for technological development, in active pursuit of greater, stronger overseas operations.
Interview: 1
Q
Q
Q
Q
▲Toshihiko Kai, President & CEO of Nikkiso Co., Ltd., and Bernd M. Stütz, Managing Director of LEWA GmbH
GlobalizationGlobalizationInterview: 1
“ Vigorous expansion and reinforcement of overseas operations”Hiroshi NakamuraDirector, Europe, Business Strategy
NIKKISO Co., Ltd.5
In April 2010, the Pump Division and the Industrial Solutions Division combined
to form the Industrial Division. What was the purpose of this merger?NOGAMI: For half a century, the Pump Division and the Industrial Solutions Division have conducted their business activities separately. However, to unleash the full power of the LEWA Group, which became part of the Nikkiso Group in August 2009, and to realize robust corporate growth, it was necessary to integrate the two divisions to form a new organizational framework. More specifically, the Pump Division, the Industrial Solutions Division and the LEWA Group are unified to fuse their respective production sites, sales networks and product structures in a global market. Our primary objective was to achieve optimization through this merger.
Exactly what effects do you anticipate from this integration?
NOGAMI: Initially, it will enable us to reinforce our sales capacities in the worldwide market by vigorously promoting mutual support between the respective sales networks of the three bodies. In addition, it is important to promote the global provision of Nikkiso’s high-quality products and services to overseas regions at the required quality and price levels. The combination of the three units will make this simpler to achieve than has been the case to date. The initiative will also realize a world-leading lineup of products.
What benefits can customers enjoy as a result of the merger?
NOGAMI: Another important objective in integrating these three organizational bodies was to transform our operations from a product-based business to a system solutions business approach. We are providing system solutions that meet customer needs in ways that were unattainable under our former product-based sales regime. With an ever customer-centric perspective, we are actively offering composite services through the provision of formerly unavailable proposals and product combinations. Further, we are advancing our sales of regionally attuned product series and improvements and expansion of our global after-sales service system.
What is your vision for the Nikkiso Group’s future?
NOGAMI: Amid the lingering effects of the global recession, it is difficult to forecast a sudden recovery in the business climate; the harsh operating environment looks set to continue through the current fiscal year. However, Nikkiso is in the process of establishing integrated production and sales systems through the newly formed Industrial Division, which includes the LEWA Group. I am confident
that activating these systems will ensure steady growth in the future. The Industrial
Business, which includes the Aerospace Division, along with the Medical Business, will serve as the powerful driving force to propel the Nikkiso Group into the future.
Interview: 2
Q
Q
Q
Q
▲Chemical Injection System
Industrial SolutionsIndustrial SolutionsInterview: 2
Industrial SolutionsIndustrial Solutions
Hiroshi NogamiHiroshi NogamiDirector, Industrial Business, Head of Manufacturing,Director, Industrial Business, Head of Manufacturing,
Business Promotion and R&DBusiness Promotion and R&D
The newly formed Industrial Divisioncombines three organizational bodies to rise to the challenges of new markets and reach new horizons
“
”
6
What were the purpose and philosophy behind the establishment of the Nikkiso
Technical Research Institute?FUSASAKI: As the scope of the Nikkiso Group’s operations expands, we recognize that research into and development of new products and technologies is indispensable from a medium- to long-term perspective. Based on this premise, we founded the Nikkiso Technical Research Institute in July 2009 as a manufacturing hub for the entire Nikkiso Group.
The Nikkiso Technical Research Institute differs from a regular corporate R&D organization in that it takes the form of an independent limited company so as to facilitate
total concentration on R&D, while defining cost effectiveness and schedules. In addition, the staff at the institute, which was established under the philosophies of “Regenerating Nikkiso through technology” and “Building a launching pad to the future,” is primarily composed of younger members, fired up with enthusiasm and vision for R&D.
What are the criteria for the selection of the R&D themes?
FUSASAKI: Our R&D staff are not simply focused on technologies. They are perpetually aware of our markets and aim to develop new products that anticipate medium- to long-term changes. In this respect, we take a bold approach to the selection and focus of management resources—people, goods and money—on R&D. Currently, we are narrowing down candidate R&D themes with a view to achieving certain results within five years.
Accordingly, important criteria in the selection of R&D themes include whether new products and technologies have the allure to penetrate new markets; whether conventional technologies deployed feature Nikkiso’s proven strengths; and whether synergies achieved through the fusion of product and manufacturing technologies are sufficiently great.
What are the characteristics of the Nikkiso Technical Research Institute?
FUSASAKI: Cultivating technicians to shoulder the responsibilities of the next generation is one facet. We aim to turn out personnel, imbued with a sense of management, who can lead the Nikkiso Group in five to ten years. Furthermore, through R&D I would like the Institute to take on the role of a hub of communications for group-wide awareness, specifically fulfilling the function of a hub for the sharing of unique technologies, skills and information between Group companies, including operating divisions and overseas sites. We are creating an environment that facilitates the visualization of the Nikkiso Group’s inherent technologies and skills, aiming for the Nikkiso Technical Research Institute to become a new communications hub for those technologies and skills.
What are the benefits for customers?
FUSASAKI: First, we listen with sincerity to customers’ opinions, and staff make concerted efforts to provide products and services with higher customer satisfaction levels than previously attained in a timely fashion. I have high expectations for the success of the Nikkiso Technical Research Institute.
Q
Q
Q
Q
TechnologyTechnology
▲Members of the Nikkiso Technical Research Institute
TechnologyTechnologyInterview: 3
A new communications hub for technologies and skills“
”Yoshikazu FusasakiPresident & Chief Executive Officer,Nikkiso Technical Research Institute
Annual Report 2010 7
Business at a Glance
The former Pump Division (currently the Industrial Division) develops, manufactures, markets and maintains various types of pumps that contribute to environmental conservation. Following its founding, Nikkiso’s initial strength, fluid technology, led to the manufacture of Japan’s first domestically produced non-seal canned motor pumps and various other unique products. Our pumps, born of epoch-leading technologies, have gained widespread acclaim from customers as specialty environmentally friendly pumps.
During fiscal 2010 (April 1, 2009 to March 31, 2010), the orders by the former Pump Division stood at ¥22,226 million, a jump of 34.4% from the previous fiscal year. Sales grew 19.8% to ¥25,948 million during the term.
Half a century has passed since Nikkiso developed Japan’s first boiler water conditioning systems. In the intervening years, the Industrial Solutions Division continued to contribute to stable energy supply, which is indispensable for modern society, through automatic water conditioning systems for power generation plants, boiler control systems and other products. The multidisciplinary engineering technologies we have cultivated in the meantime have been applied to an array of basic industries and frontier industrial fields.
The former Industrial Solutions Division’s orders declined 14.5% during fiscal 2010 to ¥7,443 million, whereas sales fell 18.3% to ¥7,289 million.
Industrial Division
▶ Former Pump Division ▶ Former ISOL Division
33333333333333.3.3.3% 9.3.3.3.3.3.3.3%%%
’10’09’08’07’06 ’10’09’08’07’06 ’10’09’08’07’06
7,289
’10’09’08’07’06
25,948
3,997
40,786
0
5,000
10,000
15,000
20,000
25,000
30,000
0
2,000
4,000
6,000
8,000
10,000
12,000
0
1,000
2,000
3,000
4,000
5,000
6,000
0
10,000
20,000
30,000
40,000
50,000
’10’09’08’07’06 ’10’09’08’07’06 ’10’09’08’07’06
7,289
’10’09’08’07’06
25,948
3,997
40,786
0
5,000
10,000
15,000
20,000
25,000
30,000
0
2,000
4,000
6,000
8,000
10,000
12,000
0
1,000
2,000
3,000
4,000
5,000
6,000
0
10,000
20,000
30,000
40,000
50,000
Industrial Business
Net Sales (Millions of Yen) Net Sales (Millions of Yen)Share of Net Sales
Share of Net Sales
Share of Net Sales
Results by Region
In April 2010, the Pump Division and the Industrial Solutions Division were restructured and combined to form the Industrial Division.
AsiaAsiaAsia
1111111111111111.5%¥10,282 million
JapanJapanJapanJapanJapan
6969696969696969.6%¥62,069 million
NorthNorthNorthAmericaAmericaAmericaAmericaAmericaAmericaAmerica
44444444.9%¥4,311 million
EuropeEuropeEuropeEuropeEuropeEurope
1414141414141414.0%.0%¥12,487 millionmillion
8 NIKKISO Co., Ltd.
Medical Division
Nikkiso’s Aerospace Division manufactures, sells and provides consulting services related to carbon-fiber-reinforced plastic (CFRP) composite parts for aircraft, satellites and other applications. CFRP is superior to conventional materials in terms of strength, lightness, durability and other properties. Nikkiso’s CFRP is continually finding new general industrial uses in addition to its mainstay aerospace applications.
During fiscal 2010, the Aerospace Division’s orders came to ¥3,995 million, down 9.3% from the previous year. Sales fell 9.4% to ¥3,997 million over the same period.
▶ AsiaSales related to fluid technologies and medical equipment by Nikkiso’s subsidiaries in Asia made good progress during the year, with the effects of yen appreciation boosting the profits of medical equipment manufacturing subsidiaries. The LEWA Group’s subsidiaries in Asia also contributed to the term’s results.
Consequently, sales in Asia climbed 44.5% to ¥10,282 million, and operating income leapt 226.6% to ¥1,409 million.
▶ North AmericaSubsidiaries in North America dealing with fluid and particle technologies posted lackluster performance, affected by the global recession. However, contributions to operating performance from the LEWA Group’s subsidiaries in the region led to a 20.0% rise in sales, to ¥4,311 million, and a 64.8% jump in operating income to ¥482 million.
▶ EuropeDuring the year, we integrated our European medical equipment manufacturing and sales subsidiaries in an effort to reinforce this business. Owing to our success in these activities, sales and profits rose, aided by contributions from the LEWA Group’s head office and European subsidiaries.
Sales in the region soared 113.6% during the year to ¥12,487 million, and operating income amounted to ¥473 million, compared with an operating loss of ¥479 million in the previous fiscal year.
In 1960, Nikkiso applied its core fluid control technologies to develop Japan’s first artificial heart, which served as the springboard that launched our medical operations. The Medical Division develops, manufactures, markets and maintains artificial kidneys and pancreases. We have consistently remained an industry pioneer in the development of artificial kidney equipment, and we currently are Japan’s largest producer of artificial kidney machines, accounting for more than 50% of the total.
Orders in the Medical Division advanced 8.3% during fiscal 2010 to ¥41,107 million, and sales rose 9.1% to ¥40,786 million.
Aerospace Division
5.1.1.1.1.1.1.1%%% 52525252525252.3.3.3%
’10’09’08’07’06 ’10’09’08’07’06 ’10’09’08’07’06
7,289
’10’09’08’07’06
25,948
3,997
40,786
0
5,000
10,000
15,000
20,000
25,000
30,000
0
2,000
4,000
6,000
8,000
10,000
12,000
0
1,000
2,000
3,000
4,000
5,000
6,000
0
10,000
20,000
30,000
40,000
50,000
’10’09’08’07’06 ’10’09’08’07’06 ’10’09’08’07’06
7,289
’10’09’08’07’06
25,948
3,997
40,786
0
5,000
10,000
15,000
20,000
25,000
30,000
0
2,000
4,000
6,000
8,000
10,000
12,000
0
1,000
2,000
3,000
4,000
5,000
6,000
0
10,000
20,000
30,000
40,000
50,000
Medical Business
Net Sales (Millions of Yen) Net Sales (Millions of Yen)Share of Net Sales Share of Net Sales
Overseas Net Sales by Region(Millions of Yen)
Asia North America Europe
’10’09’08’07’060
5,000
10,000
15,000
20,000
25,000
30,000
12,48712,48712,487
4,3114,311
10,28210,28210,28210,28210,282
9Annual Report 2010
Segment Information
In April 2010, the Pump Division and the Industrial Solutions Division were restructured and combined to form the Industrial Division. Based on its expertise in fluid technologies, accumulated over more than half a century, the Pump Division continues to rise to the challenge of making new and better pumps.
Focal areas include Non-Seal Pumps, with construction integrating the pump and the motor to allow leak-free, safe transportation of liquid up to 450°C; Milflo Pumps that facilitate the fixed-quantity infusion of chemical and medical solutions with superb
precision; and Cryogenic Pumps capable of transporting
super-low temperature
▶Pump Products
Superior Heat Resistance and Precision at Super-Low Temperatures.Cutting-edge fluid and special pump technologies to meet diverse demands worldwide.
Industrial Division
▲ Non-Seal® Pump ▲ Hi-Power Pump ▲ Cryogenic Submerged Motor Pump
liquefied natural gas (LNG) at –164°C. Our pumps maintain reliability even under the harshest conditions, including high temperature, high pressure and super-low temperature.
Most of Nikkiso’s customers are world-leading petrochemical and energy companies and plant engineering contractors. While responding to client-specific issues and to overall high-level customer
needs, Nikkiso also rises to the challenge of developing products capable of handling special conditions.
Renowned for the long standing of its enhanced manufacturing, sales, service, and maintenance structures, Nikkiso is also well known in markets around the world as a global pump supplier.
10 NIKKISO Co., Ltd.
In April 2010, the Pump Division and the Industrial Solutions Division were integrated in a restructuring initiative to form the Industrial Division.
The Industrial Solutions Division has a history of problem-solving in a broad range of industrial sectors by taking full advantage of its innovative technologies. The cornerstone of the division was a water-conditioning system developed by Nikkiso—the first of its kind in Japan—that automatically adjusted and managed the quality of water in the boilers of thermal power plants.
Since then, we have supplemented our world-class knowledge of water-conditioning systems with
▶Water-Conditioning Systems and Measurement Products
Water, Gas, Powder...Meeting industry needs through innovative technologies that contribute to all supportive fields. Leading fluid and special pump technologies to meet diverse demands worldwide.
▲ Microtrac▲ Chemical Feed System for thermal power plant
▲ Sample Hood for nuclear power plant
sampling, high-pressure controls and measurement/analysis techniques to give us the means to support the basic industries that ensure the supply of energy. This gives us the power to help with customer production, quality control and research and development in such cutting-edge fields as electronics and medicine.
Examples of the division’s achievements include isostatic processing equipment for effectively pressing multilayer electronic components for cellular phones and PCs, the Microtrac particle size analyzer for measuring powder distribution, chemical devices for recycling plastic products and
industrial waste water, and SC sprayers for atomizing pharmaceuticals. For Nikkiso, the development and production of an array of products is a ceaseless endeavor.
11Annual Report 2010
Aerospace Division
Meeting the Complex Demands of Aircraft Manufacturers through Strength, Light Weight and Durability. Unleashing new potential through advanced molding technologies that capitalize on the characteristics of carbon-fiber-reinforced plastics.
Cascades are the components of the thrust reversers on commercial aircraft that control engine airflow during landing. A quarter of a century ago, the Aerospace Division produced the world’s first cascades, made of CFRP. CFRP enabled us to reduce component weight by two-thirds without compromising the strength and durability previously provided by aluminum and magnesium alloys, thereby improving fuel efficiency. Nowadays, Nikkiso composite cascades have gained worldwide recognition for such superior qualities as advanced design, analysis, curing, manufacturing techniques and quality control. The majority of commercial
aircraft manufacturers choose our products, including The Boeing Company and Airbus S.A.S.
In addition to cascades, our CFRP products have been applied to the main wings of aircraft in components like ailerons (wing flaps) and shrouds (wing covers). In the aerospace industry, Nikkiso products are used in satellite components. In addition, our technologies are applied to general-consumer industries, for example as components used in liquid crystal panel manufacturing.
By transferring our technologies and production expertise acquired through our work with the aerospace industry to other fields, we hope to help customers expand their horizons and production capabilities.
◀ Cascades Thrust Reverser
▲ Ailerons▲ Blocker Door
12 NIKKISO Co., Ltd.
Medical Division
Reliability and Peace of Mind through Sophisticated Technologies and First-Rate Maintenance Systems. Our goal as a comprehensive manufacturer of dialysis instruments is to improve patients’ quality of life.
As the pioneer of artificial kidney machines in Japan, Nikkiso’s Medical Division strives to improve dialysis medical care and patients’ quality of life.
Our drive to reduce medical staff labor requirements has led to an array of products. These include state-of-the-art computerized artificial kidney machines, dialysis communications systems that integrate peripheral equipment and are compatible with electronic patient records, D-Dry (dialysate powder) and D-Dry dissolving devices, and a multipatient
dialysate supply system. All of these instruments are the results of our efforts to meet clinical practitioners’ needs: reduce the burden on medical
professionals and increase the amount of time dedicated to communicating with patients.
In addition, Nikkiso works to develop disposable products that help to improve patient quality of life, such as a dialyzer that uses proprietary PEPA membranes and blood tubing lines standardized for greater ease of use.
We recognize and take seriously our responsibilities as a manufacturer of products that deal directly with human lives. We also take pride in providing top-of-the-line service and maintenance networks. For example, in addition to training Nikkiso Group technicians, the Company provides its clients with preliminary services and training on the latest techniques.
◀ Multi-mode Dialysis Machine
▲ Dialyzer
▲ Blood tubing line
▲ Powder Dialysate and Powder Dialysate Dissolving Device
As a comprehensive manufacturer of dialysis products, we will step up our efforts to build and maintain the trust and peace of mind of our customers.
13Annual Report 2010
NIKKISO
LEWA
NIKKISOJV
Topics
In August 2009, the LEWA Group, which is based in Germany, joined the Nikkiso Group, rounding out its radical reinforcement strategy for its pump operations. The LEWA Group, with LEWA GmbH at its center, is a specialist manufacturer of reciprocating pumps, holding the world’s leading share of this market and extensive brand recognition. In particular, LEWA has established a firm footing in the oil and gas industries and in the European markets. By providing complete systems, including peripheral equipment, as opposed to focusing only on pump unit technologies, the
Industrial Division
LEWA Joins theNIKKISO Family
▶ LEWA GmbH, Germany
Group has developed strengths in solution-based business tailored to specific industries and plants.
Supplementing Nikkiso’s mainstay array of centrifugal pumps with the LEWA Group’s reciprocating pump products has significantly bolstered the Company’s product lineup.
Moreover, our specialism in marketing to Japan and other regions in Asia complements LEWA’s worldwide service network, with a particular emphasis on the countries of Europe, where LEWA is headquartered. Synergistic benefits beyond expectations are emerging from the construction of this mutually supportive market relationship.
▲ LEWA triplex
▲ View of the LEWA Group’s facilities
▲ LEWA Group products rolling off a production line
Company Executives Bernd M. Stütz (CEO), Dr. Andreas Höhler (CTO)Founded 1952Headquarters Leonberg, Region Stuttgart, Germany
16 subsidiaries worldwide, represented in more than 90 countriesEmployees 700 worldwide
Company Facts
14 NIKKISO Co., Ltd.
Corporate Social Responsibility
CSR ActivitiesThe Nikkiso Group contributes to reducing CO2 emissions and to other global environmental preservation issues through its product lineup, spanning diverse fields and backed by accumulated technological prowess. Furthermore, we have introduced environmental management systems and carry out an array of social contribution activities by supporting regional communities, culture and the arts.
Environment-Related ProductsThe Nikkiso Group’s products play an important role in its environmental endeavors, through such initiatives as the seal-less transportation of harmful substances and the reduction of CO2 emissions.
Non-Seal PumpsOur line-up of environmentally friendly products employs specialized techniques to ensure zero leakage during the transportation of substances used in the industrial sector that are hazardous to the environment.
CO2-Related ProductsWe have drastically cut CO2 emissions and utilize currently spotlighted CO2 recovery and storage technologies to curb global warming. Moreover, our product portfolio includes the world’s top grade of high-pressure non-seal reciprocating pumps, which contribute to global warming countermeasures.
The Company’s water conditioning systems and pumps, which are indispensable for such clean energy sources as nuclear power generation, play a major role in reducing CO2 emissions.
Geothermal Power Generation Related ProductsGeothermal power generation derives electricity from turbines driven by natural steam formed from the thermal energy of volcanic activity and other sources. Accordingly, it is a clean energy source, without recourse to fossil fuels. Nikkiso’s equipment is used to monitor vital information for the operational control of power plants.
Commercial Aircraft PartsNikkiso’s products made from carbon fiber composite materials, featuring high strength and lower weight than light alloys, help to reduce the fuel consumption of jet engines for commercial aircraft.
▲ Hi-Power Pump
▲ Non-Seal® Pump
▲ Cascades Thrust Reverser
▲ Online Geothermal Steam Purity Monitor
▲ LEWA triplex
LNG-Related ProductsLiquefied natural gas (LNG) is finding increased use as a source of clean energy. Ultralow-temperature pumps, produced only by Nikkiso and a handful of companies worldwide, are crucial for the transportation of LNG.
▲ Cryogenic Submerged Motor Pump
Environment-Related ProductsThe Nikkiso Group’s products play an important role in its environmental endeavors, through such initiatives as the seal-less transportation of harmful substances and the reduction of CO
16 NIKKISO Co., Ltd.
Philosophy Nikkiso’s corporate philosophy is to contribute to the world using its proprietary technologies, focusing on “human life” and “environment.” Modern-day society is in a stage of transition, seeking both harmony with nature and sustainable development. Nikkiso aims to grow and develop with society and offer technologies, products and services to help realize these objectives.
Environmental Management Systems (ISO 14001)
To develop its environmental management systems, Nikkiso has adopted a process that involves studying the environmental aspects of its operations, identifying any operations with a significant impact on the environment, formulating and implementing environmental management plans, and carrying out reviews by management. All our domestic production bases (Higashimurayama Plant, Shizuoka Plant and Kanazawa Plant) have gained ISO 14001 accreditation through the UK’s Bureau Veritas Certification (formerly BVQI). In the future, we will strive to make ongoing improvements to environmental conservation and pollution prevention.
Following refurbishment, we have reopened a room housing a Nikkiso product display in the Soukei Kaikan, an exhibition hall on the grounds of our Kanazawa Plant that showcases “Kaga Zogan” traditional Kanazawa metal crafts and Nikkiso’s advanced technologies.
With dialysis-related products from Nikkiso’s medical operations as a centerpiece, this facility highlights such cutting-edge Nikkiso medical technologies as the apheresis blood-purification method and new models of artificial pancreas. Other exhibits feature pumps by the LEWA Group of Germany, such carbon fiber composite material products as cascades and blocker doors incorporated in a full-scale model of an aircraft jet engine.
In addition, the building houses a display of “Kaga
Zogan” traditional metal craft products, which represents the Company’s commitment to support the preservation and popularization of traditional crafts from the Kanazawa region through activities by the Soukeikan Foundation as part of Nikkiso’s contribution to culture and the arts.
“Kaga Zogan” is a cultured traditional art, valuing the quality of substance over ostentatious display. Deceptively lavish quantities of silver and gold are used in the enduring finish of these products. For this reason, we see many common points between Nikkiso’s prioritization of quality over quantity with the spirit of “Kaga Zogan” craftsmanship. At Nikkiso, we aim to utilize the legacy of the “Kaga Zogan” spirit in the manufacture of higher-quality products.
Environmental EndeavorsIn March 1998, we announced the Nikkiso Environmental Declaration as part of our stance as a corporation that contributes to an environment-friendly society.
Support for Culture and the Arts
▲ Dialysis Machine ▲ Pump by LEWA (Right) ▲ Kaga Zogan (Inlay Craft)
Soukei Kaikan Exhibition Hall and “Kaga Zogan (Inlay Craft)”
Environmental EndeavorsIn March 1998, we announced the Nikkiso Environmental Declaration as part of our stance as a corporation that contributes to an environment-friendly society.
Support for Culture and the Arts
17Annual Report 2010
1. Corporate Governance System
a) Board of Directors and Board of AuditorsThe Board of Directors meets at least once a month to formulate basic management policy, while striving to bolster supervisory functions through resolutions on important management issues, regular reports on the status of business execution and other activities. The Board of Auditors also meets at least once a month, with duties that include deliberating on audit policy, assigning duties to each corporate auditor, determining specific implementation agenda, and conducting hearings of audit reports from corporate auditors and business execution updates from directors. The Board of Auditors reports its results to the Board of Directors.
b) Other Major Administrative BodiesTo ensure swift management decision making and a high level of management transparency, Management Meetings are held twice a month, attended by directors and full-time corporate auditors, with the objective of conducting extensive discussions and preliminary deliberations regarding resolutions by the Board of Directors and other important management issues. Furthermore, the Board of Directors convenes Strategy Meetings at least once a month to confirm and deliberate on the policies and strategies of each operating division, in addition to General Managers Meetings each month and Executive Officers Meetings several times a year to deliberate on major management strategies, report on the status of business execution and carry out various other duties. Strategy Meetings, General Managers Meetings and Executive Officers Meetings are also attended by corporate auditors, who are free to express their opinions and to enter into active discussions.
c) Accounting AuditorThe Company has appointed the Deloitte Touche Tohmatsu audit corporation as its accounting auditor to provide advice regarding audits during the settlement of accounts and on general appropriate accounting as needs dictate.
d) Internal Control SystemNikkiso recognizes the construction and preservation of an internal control system to ensure appropriate business execution as an important management issue for the corporate group, including its subsidiaries. We are improving our internal control system based on Internal Control Basic Policy, as determined by the Board of Directors. To facilitate optimal operation of the Internal Control System, we established an Internal Control Committee, presided over by a director, which deliberates on compliance, risk management, securement of appropriate financial reporting and other issues. Moreover, we established the Internal Control Department, under the direct control of the president, to promote the Internal Control System throughout the Company in a methodical and efficient manner and to conduct self-inspections and independent appraisals by the Internal Auditor. Internal control in relation to financial reporting is carried out via auditing by the Deloitte Touche Tohmatsu audit corporation.
e) Risk Management SystemThrough the Risk Management System, Nikkiso develops and publicizes internal regulations in response to various specific risks, including product liability risk, credit risk, insider trading risk, illicit exporting risk and personal information leakage risk, and revises the system as necessary. Based on internal regulations that systematically stipulate risk management, the General Affairs Department serves as a controlling body for companywide risk management, clarifying the departments responsible for the management of each respective risk in a drive to promote improvements to the risk management system.
Corporate Governance
Nikkiso recognizes that reinforcing corporate governance is a major management priority if it is to maintain fair and trustworthy management and earn a reputation for reliability from its shareholders and all its other stakeholders. Accordingly, we have built a corporate governance system as described below.
1. Corporate Governance System
18 NIKKISO Co., Ltd.
f) Limited Liability of ContractsBased on the provisions of the Company’s Articles of Incorporation, two outside auditors are contracted to the Company with mutual limited liability in damages as stipulated under Article 423, Item 1, of Japan’s Companies Act. The maximum liability in damages based on this contract is whichever is higher of ¥3 million or the legally stipulated minimum total maximum liability.
The Nikkiso Group’s corporate governance system, as described above, is both rational and effective and is deemed to be adequate to accomplish the Group’s corporate governance objectives.
2. Internal Audits and Audits of Auditors
The Nikkiso Group has formed an Internal Control Department, comprising three full-time members under the direct control of the President, as an internal auditing body to conduct internal audits.
Nikkiso deploys a system of corporate auditors. The Board of Auditors comprises four corporate auditors, including two outside auditors, responsible for the auditing of the Nikkiso Group. These corporate auditors include members with significant specialist knowledge of finance and accounting.
The Internal Auditing Department and the corporate auditors regularly exchange information and opinions, in addition to exchanging opinions and deliberating with the accounting auditor on a regular basis or as needed.
3. Outside Directors and Outside Auditors
Nikkiso does not appoint outside directors, but does appoint two outside auditors. No personal or pecuniary relationships or other mutual interests exist between the Company and the outside auditors.
The outside auditors fulfill all requirements as independent corporate officers and hold high levels of knowledge of accounting, taxation, law or other specialties. Their function is to supervise management from an objective, specialist perspective independent of the Company.
Outside auditors are selected for their capacity to fulfill these functions. In addition, outside directors possess adequate information regarding the Company’s management to fulfill their supervisory role, gained through the exchange of information with the Board of Auditors and with directors and other means.
Outside auditors endeavor to exchange information and opinions with full-time auditors and with directors at regularly convened meetings of the Board of Directors and the Board of Auditors, in addition to exchanging information and the opinions with the accounting auditor, the internal auditor and the Internal Control Department on a regular basis or as needed.
The Nikkiso Group implements an effective corporate governance system, which is deemed to be adequate to fulfill its management supervisory functions and accomplish the Group’s corporate governance objectives. Accordingly, no outside directors are appointed by the Company.
2. Internal Audits and Audits of Auditors
3. Outside Directors and Outside Auditors
19Annual Report 2010
Business Results for Fiscal 2010
Operating Environment
During the fiscal year ended March 31, 2010, the Nikkiso Group’s business climate was affected by the lingering global recession during the first half, which was manifest in restrained and delayed capital investment in the industries in which its customers operate. The second half, however, brought signs of capital investment recovery in these markets, although not enough to dispel the uncertainty that clouded the economic environment, particularly in the Japanese market.
Under these conditions, the Nikkiso Group focused on globalization, strategic development, enhanced productivity and a reinforced development drive. During the year, we acquired the outstanding share of the LEWA Group and established the Nikkiso Technical Research Institute as a hub for our R&D activities. Moreover, we completed construction at Nikkiso Vietnam, Inc., of a production facility for aircraft parts in Hanoi, and reinforced medical equipment operations in Europe by integrating dialysis machine manufacturing and sales subsidiaries.
In the future, Nikkiso will fortify its management base to foster growth by leveraging the tie-up with the LEWA Group and its consequent synergistic effects, promoting a joint venture for the manufacture and sales of dialysis machines in China and various other initiatives.
Overview by Business Segment
Industrial Business
▶ Pump DivisionThe worldwide recession affected operations by the Pump Division during the year through delays to and cancellations of capital investment plans. However, during the second half we revived negotiations regarding energy-related business and gained a large-scale order from the Middle East for cryogenic pumps, giving grounds for anticipation of an investment recovery.
During fiscal 2010, the orders by the Pump Division stood at ¥22,226 million, a jump of 34.4% from the previous fiscal year. Sales grew 19.8% to ¥25,948 million during the term.
Although these results indicated a recovery trend in orders, we recognize that more time is needed before these gains translate to sales performance. From here on, we will focus on steady business expansion in conjunction with the LEWA Group and promotion of a collaborative framework with the Industrial Solutions Division in a bid to accurately respond to customer needs.
▶ Industrial Solutions DivisionVarious power companies adopted a cautious stance toward capital investment during the term. Nevertheless, we endeavored to bolster sales through upgrade proposals for water conditioning systems in existing facilities. There was an upswing in fields related to electronic device production equipment and particle characterization equipment from the latter half of the fiscal year, with the first signs of upturns in overseas orders for large-scale laminating systems and sales in Europe and the United States of particle-size analyzers.
The Industrial Solutions Division’s orders declined 14.5% during fiscal 2010 to ¥7,443 million, whereas sales fell 18.3% to ¥7,289 million.
In the future, the Industrial Solutions Division will focus on manufacturing and marketing water conditioning systems for nuclear power stations in Japan and on expanding sales of these products to nuclear power stations overseas, where construction plans remain firm. Moreover, we aim to develop a marketing approach finely attuned to demand for warm laminating systems and particle-size analyzers.
▶ Aerospace DivisionCascades for existing aircraft suffered continued lackluster demand as a result of calls for output cuts and delivery delays from customers. Orders and sales both declined, mainly during the first half, partially influenced by the ongoing appreciation of the yen. However, we commenced the manufacture and shipments of mass-produced blocker doors for newly ordered Boeing 777 commercial aircraft from June 2009, basically on schedule.
During fiscal 2010, the Aerospace Division’s orders stood at ¥3,995 million, down 9.3% from the previous year. Sales diminished 9.4%, to ¥3,997 million over the same period.
We anticipate that the impact of the rising yen will be alleviated and that production costs will be driven down.
Management’s Discussion and Analysis
Operating Environment
During the fiscal year ended March 31, 2010, the Nikkiso
Overview by Business Segment
Industrial Business
20 NIKKISO Co., Ltd.
Accordingly, we shall focus on promoting orders for new products from our Nikkiso Vietnam facility in Hanoi, which was completed in January 2010.
Medical Business
▶ Medical DivisionIn the domestic market, new models of dialysis machines, equipped with functions to enhance efficiency and promote laborsaving, helped to boost sales. Other contributors to sales growth included dialyzers and such disposable products for dialysis as blood tubing lines and dialysate.
Overseas sales advanced steadily, despite the ongoing effect of a high yen, led by an increase in unit sales of dialysis machines to South America and China.
Orders for the Medical Division advanced 8.3% during fiscal 2010 to ¥41,107 million, and sales increased 9.1%, to ¥40,786 million.
Key initiatives for the future by the Medical Division include the introduction of dialysis equipment tailored to the needs of the domestic market, the promotion of an integrated sales and service system, and the reduction of product development lead times. Overseas, we aim to establish a framework for our newly established joint venture for the production and maintenance of dialysis machines in China at the earliest possible juncture and to fortify our medical equipment operations in Europe.
Orders, Sales and Income
During the fiscal year ended March 31, 2010, the Nikkiso Group gained orders of ¥74,771 million, an increase of 10.6%, and posted net sales of ¥78,020 million, 7.8% more than during the previous fiscal year. These results were approximately in line with our projections.
Profit-driven sales development and measures to reduce costs resulted in a 2.0% increase in gross profit to ¥24,248 million. Profits far overshot projections, rising to all-time highs, with operating income climbing 18.7% to ¥5,663 million, and net income shooting up 136.9% to ¥3,240 million. This was primarily due to efforts to raise business efficiency and reduce expenses, aided by a falling yen from the end of the year. Consequently, ratios of profits to sales were higher across the board than during the previous term.
These results represent combined performance following the acquisition of the LEWA Group. The various expenses and amortization of goodwill associated with the purchase are included in the accounts for the fiscal year.
Financial Position
Consolidated total assets as of March 31, 2010, stood at ¥115,131 million, a rise of ¥31,443 million from one year earlier. The assets, liabilities and other accounting items from the LEWA Group fell within the scope of consolidation for the year, which was one factor behind the increase. Goodwill of ¥25,679 million associated with the acquisition was also included.
Total liabilities were up ¥20,648 million from the end of the previous fiscal year, to ¥67,614 million.
Part of the funds used to purchase the LEWA Group was sourced from bank loans, which caused an increase in long-term debt.
(Millions of Yen)
Sales YoY Change Operating Income YoY Change
Japan ¥62,069 (6.8%) ¥6,046 (13.4%)
Asia ¥10,282 44.5% ¥1,409 226.6%
North America ¥4,311 20.0% ¥482 64.8%
Europe ¥12,487 113.6% ¥473 Operating loss of ¥479
Results by Geographical Segment
products from our Nikkiso Vietnam facility in Hanoi, which Orders, Sales and Income
During the fiscal year ended March 31, 2010, the Nikkiso
Financial Position
Consolidated total assets as of March 31, 2010, stood at
21Annual Report 2010
Net assets at year-end stood at ¥47,517 million, up ¥10,795 million from a year earlier, as a result of fund procurement through equity offerings via a public stock offering in November 2009 and the disposal of treasury stock. The capital adequacy ratio at year-end was 40.5%.
Net cash provided by operating activities was ¥11,674 million during the year, up ¥7,264 million from a year earlier. This was primarily due to a decrease in inventories and income from income taxes refunded. Net cash used in investing activities was ¥25,208 million, a rise of ¥21,287 million from the previous year. The main use of these funds was the acquisition of the LEWA Group. Net cash provided by financing activities was ¥15,005 million compared with net cash used in financing activities of ¥886 million during the preceding fiscal year. Primary sources were proceeds from long-term debt incurred to cover the acquisition costs for the LEWA Group and fund procurement through equity offerings via a public stock offering and the disposal of treasury stock.
As a result of the above, cash and cash equivalents at year end were ¥11,298 million, an increase of ¥1,468 million from one year earlier.
ROE and ROA
The return on equity rose from 3.6% to 7.8% by year-end and the return on assets grew from 1.6% to 3.3%—both more than doubling during the year.
Basic Policy on Profit Distribution and Dividends for Fiscal 2010Nikkiso’s basic policy is to return profits to shareholders after comprehensive consideration for business performance, management conditions and other pertinent factors, while paying due attention to a stable dividend payment. Moreover, the Company endeavors to maintain a sufficient level of internal reserves to fund future long-term business development and to fortify its financial standing.
Based on this policy, we paid a year-end dividend of ¥6.00 per share. Including the interim dividend, this brought the dividend per share for the full business year to ¥12.00. The consolidated payout ratio at year-end was 25.3% compared with 55.9% one year earlier, and the dividend on equity ratio stood at 2.1%, up from 2.0%.
Cautionary Statement Regarding Forward-Looking Statements and Business Risks
The following are recognized as the main risk factors that could adversely affect the business results, stock price and financial condition of the Nikkiso Group. Please note also that forward-looking statements herein represent the expectations of the Group as of the end of the consolidated fiscal year described in this report.
Changes in Markets for Nikkiso Products
In addition to the risks of decreased demand or intensified competition affecting our major customers in the petrochemical industry, IT-related industries and electric power industry, there is risk of a terrorist attack greatly impacting demand in the aircraft industry.
Medical Insurance
There are risks of direct or indirect effects on the hemodialysis systems and other related product markets and prices due to government regulations on medical insurance.
Fluctuations in Currency Exchange Rates
There are risks from fluctuations in the exchange rates of the U.S. dollar and the euro, the main non-yen currencies that are converted to yen in consolidated financial reports.
Overseas Production
There are risks that normal company operations and production activities of overseas subsidiaries, located in Vietnam, Thailand, Germany, North America, China, and Taiwan, could be affected by changes in laws and regulations or changes in political and financial factors in those regions.
ROE and ROA
The return on equity rose from 3.6% to 7.8% by year-end
Basic Policy on Profit Distribution and Dividends for Fiscal 2010
22 NIKKISO Co., Ltd.
Financial Section
Millions of YenThousands of U.S. Dollars
(Note 1)
2010 20 0 9 2010ASSETS
Current assets:
Cash and cash equivalents (Note 15) ¥ 11,298 ¥ 9,830 $ 121,485
Short-term investments (Note 4) 374 418 4,024
Notes and accounts receivable:
Unconsolidated subsidiaries and affiliated companies 1,308 1,244 14,069
Trade (Note 15) 26,564 24,099 285,636
Other 1,041 1,458 11,195
Allowance for doubtful accounts (555) (394) (5,969)
Inventories (Note 6) 13,861 14,198 149,038
Deferred tax assets (Note 11) 1,236 1,036 13,290
Other current assets 471 801 5,067
Total current assets 55,599 52,690 597,835
Property, plant and equipment (Note 8):
Land 4,264 3,635 45,852
Buildings and structures 24,414 22,894 262,517
Machinery and equipment 16,086 14,498 172,963
Lease assets 313 290 3,366
Construction in progress 399 170 4,289
Others 8,956 7,566 96,306
Accumulated depreciation (33,755) (30,017) (362,955)
Property, plant and equipment, net 20,677 19,036 222,338
Investments and other assets:
Investment securities (Notes 5 and 15) 7,332 6,087 78,840
Investments in and advances to unconsolidated subsidiaries and affiliated companies 1,473 1,736 15,839
Long-term loans receivable 13 16 135
Goodwill (Note 3) 25,586 689 275,117
Prepaid pension expense (Note 9) 1,071 1,035 11,525
Lease assets 95 142 1,023
Deferred tax assets (Note 11) 318 377 3,415
Other assets 2,992 1,897 32,167
Allowance for doubtful accounts (25) (17) (269)
Total investments and other assets 38,855 11,962 417,792
Total ¥115,131 ¥ 83,688 $1,237,965
Consolidated Balance SheetsNIKKISO CO., LTD., and Consolidated SubsidiariesAs of March 31, 2010 and 2009
See notes to consolidated financial statements.
24 NIKKISO Co., Ltd.
Millions of YenThousands of U.S. Dollars
(Note 1)
2010 20 0 9 2010LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank loans (Notes 8 and 15) ¥ 7,824 ¥ 6,579 $ 84,127
Current portion of long-term debt (Notes 8 and 15) 3,684 2,221 39,612
Notes and accounts payable :
Unconsolidated subsidiaries and affiliated companies 13 18 144
Trade (Note 15) 11,268 10,138 121,163
Construction and other (Note 15) 1,608 1,797 17,294
Income taxes payable 1,262 258 13,567
Accrued expenses 3,096 2,143 33,293
Deposits received
Unconsolidated subsidiaries and affiliated companies 85 177 915
Other 283 320 3,036
Other current liabilities 1,715 1,006 18,441
Total current liabilities 30,838 24,657 331,592
Long-term liabilities:
Long-term debt (Notes 8 and 15) 34,936 21,310 375,655
Liability for employees' retirement benefits (Note 9) 472 215 5,074
Allowance for retirement benefit for directors and corporate auditors 39 52 419
Deferred tax liabilities (Note 11) 1,162 719 12,498
Other long-term liabilities 167 13 1,789
Total long-term liabilities 36,776 22,309 395,435
Commitments and contingent liabilities (Notes 13 and 16)
Equity (Notes 10 and 19):
Common stock no par value, authorized, 249,500,000 shares; issued, 80,286,464 shares in 2010 and 72,611,464 shares in 2009 6,544 6,095 70,369
Capital surplus 10,701 10,266 115,061
Retained earnings 30,508 29,471 328,046
Unrealized gain on available-for-sale securities 833 98 8,951
Foreign currency translation adjustments (1,166) (1,412) (12,537)
Treasury stock-at cost, 999,384 shares in 2010 and 9,986,018 shares in 2009 (826) (8,275) (8,880)
Total 46,594 36,243 501,010
Minority interests 923 479 9,928
Total equity 47,517 36,722 510,938
Total ¥115,131 ¥83,688 $1,237,965
25Annual Report 2010
Millions of YenThousands of U.S. Dollars
(Note 1)
2010 20 0 9 2010Net sales (Note 17) ¥78,020 ¥72,395 $838,919
Cost of sales (Notes 9, 12, 13 and 17) 53,772 51,301 578,185
Gross profit 24,248 21,094 260,734
Selling, general and administrative expenses (Notes 9, 12, 13 and 14) 18,585 16,323 199,843
Operating income 5,663 4,771 60,891
Other income (expenses):
Interest and dividend income 213 249 2,289
Interest expense (820) (592) (8,821)
Gain on sale of investment securities — 1 —
Gain on sale of property, plant and equipment 11 16 122
Loss on write down of investment securities — (1,605) —
Loss on sale and disposal of property, plant and equipment (110) (150) (1,182)
Equity in earnings of affiliated companies 261 145 2,812
Foreign exchange gain (loss), net 135 (673) 1,450
Business purchasing expenses (842) — (9,056)
Other, net (Note 17) 516 165 5,547
Other expenses - net (636) (2,444) (6,839)
Income before income taxes and minority interests 5,027 2,327 54,052
Income taxes (Note 11):
Current 1,501 485 16,142
Deferred 129 420 1,384
Total income taxes 1,630 905 17,526
Minority interests in Net Income 157 54 1,690
Net Income ¥ 3,240 ¥ 1,368 $ 34,836
Per Share of Common Stock (Note 18):Yen U.S. Dollars (Note 1)
2010 20 0 9 2010Basic net income ¥47.49 ¥21.46 $0.51
Cash dividend applicable to the year 12.00 12.00 0.13
Consolidated Statements of Income NIKKISO CO., LTD., and Consolidated SubsidiariesFor the years ended March 31, 2010 and 2009
See notes to consolidated financial statements.
26 NIKKISO Co., Ltd.
Consolidated Statements of Changes in EquityNIKKISO CO., LTD., and Consolidated SubsidiariesFor the years ended March 31, 2010 and 2009
Millions of Yen
Outstanding number of shares of common
stock
Common stock
Capital surplus
Retained earnings
Unrealized gain on
available-for-sale
securities
Foreign currency
translation adjustments
Treasury stock Total Minority
interests Total equity
Balances, April 1, 2008 64,621,759 ¥6,095 ¥10,272 ¥29,083 ¥845 ¥552 ¥(7,158) ¥39,689 ¥592 ¥40,281
Adjustment of retained earnings due to the adoption of PITF No.18 (Note2(2))
(147) (147) (147)
Change of scope of equity method (63) (63) (63)
Net income 1,368 1,368 1,368
Cash dividends, ¥12.00 per share (770) (770) (770)
Net decrease in unrealized gain on available-for-sale securities (747) (747) (747)
Net increase in foreign currency translation adjustments (1,964) (1,964) (1,964)
Purchase of treasury stock (2,017,332) (1,135) (1,135) (1,135)
Disposal of treasury stock 21,019 (6) 18 12 12
Net change in the year (113) (113)
Balances, March 31, 2009 62,625,446 6,095 10,266 29,471 98 (1,412) (8,275) 36,243 479 36,722
Net income 3,240 3,240 3,240
Issuance of new stock (Note 10) 7,675,000 449 449 898 898
Cash dividends, ¥12.00 per share (751) (751) (751)
Net decrease in unrealized gain on available-for-sale securities 735 735 735
Net increase in foreign currency translation adjustments 246 246 246
Purchase of treasury stock (17,784) (11) (11) (11)
Disposal of treasury stock (Note 10) 9,004,418 (14) (1,452) 7,460 5,994 5,994
Net change in the year 444 444
Balances, March 31, 2010 79,287,080 ¥6,544 ¥10,701 ¥30,508 ¥833 ¥(1,166) ¥(826) ¥46,594 ¥923 ¥47,517
Thousands of U.S. Dollars (Note 1)
Common stock
Capital surplus
Retained earnings
Unrealized gain on
available-for-sale
securities
Foreign currency
translation adjustments
Treasury stock Total Minority
interests Total equity
Balances, March 31, 2009 $65,537 $110,385 $316,896 $1,054 $(15,190) $(88,976) $389,706 $5,151 $394,857
Net income 34,836 34,836 34,836
Issuance of new stock (Note 10) 4,832 4,832 9,664 9,664
Cash dividends, $0.12 per share (8,080) (8,080) (8,080)
Net decrease in unrealized gain on available-for-sale securities 7,897 7,897 7,897
Net increase in foreign currency translation adjustments 2,653 2,653 2,653
Purchase of treasury stock (119) (119) (119)
Disposal of treasury stock (Note 10) (156) (15,606) 80,215 64,453 64,453
Net change in the year 4,777 4,777
Balances, March 31, 2010 $70,369 $115,061 $328,046 $8,951 $(12,537) $(8,880) $501,010 $9,928 $510,938
27Annual Report 2010
Millions of YenThousands of U.S. Dollars
(Note 1)
2010 20 0 9 2010Cash flows from operating activities:
Income before income taxes and minority interests ¥ 5,027 ¥ 2,327 $ 54,052
Adjustments for:
Income taxes paid (798) (2,958) (8,576)
Income taxes refund 1,131 — 12,157
Depreciation and amortization 3,798 3,409 40,840
Gain on sale of investment securities — (1) —
Loss on write-down of investment securities — 1,605 —
Gain on sale of property, plant and equipment (11) (16) (122)
Loss on sale and disposal of property, plant and equipment 110 150 1,182
Equity in earnings of affiliated companies (261) (145) (2,812)
Provision for doubtful accounts 87 263 941
Increase in liability for employees' retirement benefits 12 17 127
Foreign exchange loss (gain), net 6 (101) 63
Changes in assets and liabilities:
Decrease in notes and accounts receivable 423 1,892 4,549
Decrease (increase) in inventories 2,417 (618) 25,987
Decrease in interest and dividends receivable 302 22 3,243
( Increase) decrease in notes and accounts payable (177) 333 (1,905)
Other (392) (1,769) (4,200)
Net cash provided by operating activities 11,674 4,410 125,526
Cash flows from investing activities:
Decrease (increase) in short-term investments, net 59 (108) 630
Payments for purchases of property, plant and equipment (2,467) (3,017) (26,529)
Proceeds from sales of property, plant and equipment 47 109 507
Payments for purchases of other assets (217) — (2,328)
Payments for sales and purchases of investment securities (0) (938) (2)
Proceeds from sales and redemptions of investment securities 0 16 4
Payment for acquisition of shares of newly consolidated subsidiaries (22,573) — (242,722)
Collection of loans receivable 18 28 189
Payments for loans receivable (75) (13) (804)
Proceeds from sales of shares of an affiliated company — 2 —
Net cash used in investing activities (25,208) (3,921) (271,055)
Cash flows from financing activities:
Increase (decrease) in short-term bank loans 1,181 (116) 12,701
Proceeds from long-term debt 29,260 3,059 314,624
Repayment of long-term debt (21,554) (1,936) (231,766)
Proceeds from issuance of shares 898 — 9,664
Repurchase of treasury stock (8) (1,123) (90)
Disposal of treasury stock 5,991 — 64,424
Cash dividends paid (751) (770) (8,080)
Cash dividends paid to minority shareholders (12) — (130)
Net cash provided by (used in) financing activities 15,005 (886) 161,347
Foreign currency translation adjustments (16) (339) (172)
Net increase (decrease) in cash and cash equivalents 1,455 (736) 15,646
Cash and cash equivalents at beginning of year 9,830 10,566 105,701
Increase in cash and cash equivalents from newly consolidated subsidiaries 13 — 136
Cash and cash equivalents at end of year ¥ 11,298 ¥ 9,830 $ 121,485
Consolidated Statements of Cash FlowsNIKKISO CO., LTD., and Consolidated SubsidiariesFor the years ended March 31, 2010 and 2009
See notes to consolidated financial statements.
28 NIKKISO Co., Ltd.
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in
(1) ConsolidationThe consolidated financial statements as of March 31, 2010 include the accounts of the Company and its 43 (21 in 2009) significant subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influence are accounted for by the equity method.
Investments in eight (six in 2009) affiliated companies are accounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and affiliated companies are stated at cost. If the equity method of accounting had been applied to the investments in these companies, the effect on the accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Group is eliminated.
(2) Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements
In May 2006, the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Practical Issues Task Force (PITF) No.18, “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements”. PITF No.18 prescribes: (1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated financial statements, (2) financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States of America tentatively may be used for the consolidation process, (3) however, the following
the 2009 consolidated financial statements to conform to the classifications used in 2010.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Nikkiso Co., Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥93 to $1, the approximate rate of exchange at March 31, 2010. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
Notes to Consolidated Financial StatementsNIKKISO CO., LTD., and Consolidated SubsidiariesFor the years ended March 31, 2010 and 2009
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
items should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP unless they are not material: 1) amortization of goodwill; 2) scheduled amortization of actuarial gain or loss of pensions that has been directly recorded in the equity; 3) expensing capitalized development costs of R&D; 4) cancellation of the fair value model of accounting for property, plant, and equipment and investment properties and incorporation of the cost model of accounting; 5) recording the prior years’ effects of changes in accounting policies in the income statement where retrospective adjustments to financial statements have been incorporated; and 6) exclusion of minority interests from net income, if included. PITF No.18 was effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted.
The Company applied this accounting standard effective April 1, 2008. In addition, the Company adjusted the beginning balance of retained earnings at April 1, 2008 as if this accounting standard had been retrospectively applied.
(3) Business CombinationsIn October 2003, the Business Accounting Council (BAC) issued a Statement of Opinion, “Accounting for Business Combinations,” and in December 2005, the ASBJ issued ASBJ Statement No.7, “Accounting Standard for Business Divestitures”, and ASBJ Guidance No.10,“Guidance for Accounting Standard for Business Combinations and Business Divestitures”.
The accounting standard for business combinations allows companies to apply the pooling of interests method of accounting only when certain specific criteria are met such that the business combination is essentially regarded as a uniting-of-interests.
For business combinations that do not meet the uniting-of-interests criteria, the business combination is considered to be an acquisition and the purchase method of accounting is required. This standard also prescribes the accounting for combinations of entities under common control and for joint ventures.
29Annual Report 2010
(4) Cash EquivalentsCash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits, certificate of deposits, commercial paper and bond funds, all of which mature or become due within three months of the date of acquisition.
(5) InventoriesInventories are stated at the lower of cost, determined by the moving average method with the exception of certain finished products and work in process by the specification method, or net selling value.
(6) Marketable and Investment SecuritiesMarketable and investment securities are classified and accounted for, depending on management’s intent, as follows:
i) held-to-maturity debt securities, which are expected to be held to maturity with the positive intent and ability to hold to maturity, are reported at amortized cost and ii) marketable available-for-sale securities, which are not classified as the aforementioned securities, are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other than temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.
(7) Property, Plant and EquipmentProperty, plant and equipment are stated at cost. Depreciation of property, plant and equipment of the Company and its consolidated domestic subsidiaries is computed substantially by the declining-balance method based on the estimated useful lives of the assets. The straight-line method is applied to certain buildings of the Company and its consolidated domestic subsidiaries, and all property, plant and equipment of consolidated foreign subsidiaries. The range of useful lives is principally from 3 to 50 years for buildings and structures, and from 4 to 8 years for machinery.
Under certain conditions such as exchanges of fixed assets of similar kinds and cash subsidies granted from governmental or municipal authorities, Japanese tax laws permit an entity to defer the recognition of profit arising from such transactions by reducing the cost of the assets acquired or by providing a special reserve in the equity section. The reduction of the cost of the assets as of March 31, 2010 was ¥990 million ($10,646 thousand), and the special reserve in the equity section as a part of retained earnings as of March 31, 2010 was ¥377 million ($4,053 thousand).
(8) Long-Lived AssetsThe Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. An impairment
loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, being either the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition, whichever is higher.
(9) Goodwill Goodwill, which was recognized by the Group, is subject to amortization over a period not to exceed 20 years and a test for impairment.
(10) Retirement and Pension PlansThe Company and certain domestic consolidated subsidiaries have non-contributory defined benefit pension plans. The Group accounts for the liability for employees’ retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. Certain consolidated subsidiaries have defined contribution pension plans.
(11) Retirement Allowances for Directors and Corporate AuditorsRetirement benefits to directors and corporate auditors under the unfunded retirement allowance plans were provided at the amount that would be required if all directors and corporate auditors of the Company and certain domestic subsidiaries retired at the balance sheet date. However, effective the date of the stockholders’ meeting of the Company in 2007, and of certain domestic subsidiaries in 2008, the unfunded retirement allowance plans were terminated. The outstanding balances of retirement allowances for directors and corporate auditors as of March 31, 2010 and 2009 were ¥39 million ($419 thousand) and ¥52 million, respectively.
(12) Research and Development CostsResearch and development costs are charged to income as incurred.
(13) LeasesIn March 2007, the ASBJ issued ASBJ Statement No.13, “Accounting Standard for Lease Transactions,” which revised the previous accounting standard for lease transactions issued in June 1993. The revised accounting standard for lease transactions is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted for fiscal years beginning on or after April 1, 2007.
Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to the lessee were to be capitalized. However, other finance leases were permitted to be accounted for as operating lease transactions if certain “as if capitalized” information was disclosed in the notes to the lessee’s financial statements. The revised accounting standard requires that all finance lease transactions should be capitalized to recognize lease assets and lease obligations in the balance sheet.
30 NIKKISO Co., Ltd.
In addition, the revised accounting standard permits leases which existed at the transition date and do not transfer ownership of the leased property to the lessee to be measured at the obligations under finance leases less interest expense at the transition date and recorded as acquisition cost of lease assets.
(14) Bonuses to Directors and Corporate AuditorsBonuses to directors and corporate auditors are accrued at the year-end to which such bonuses are attributable.
(15) Income TaxesThe provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to temporary differences.
(16) Foreign Currency TransactionsAll short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated income statement.
(17) Foreign Currency Financial StatementsThe balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historical rate.
Differences arising from such translation are shown as “Foreign currency translation adjustments” as a separate component of equity.
Revenue and expense accounts of consolidated foreign subsidiaries are translated into yen at the average exchange rate.
(18) Derivatives and Hedging ActivitiesThe Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange and interest rates. Foreign exchange forward contracts and interest rate swaps are utilized by the Group to reduce foreign currency exchange and interest rate risks. The Group does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows: a) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated income statement and b) for derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.
The foreign currency forward contracts employed to hedge foreign exchange exposures are measured at the fair value and the
unrealized gains/losses are recognized in income.The interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not re-measured at market value, but the differential paid or received under the swap agreements are recognized and included in interest expense or income.
(19) Per Share InformationBasic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common stocks outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common stock. Diluted net income per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of the year (or at the time of issuance) with an applicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.
Diluted net income per share of common stock for the years ended March 31, 2010 is not disclosed because no potentially dilutive shares have been issued.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year.
(20) New Accounting PronouncementsBusiness Combinations—In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement No.21, “Accounting Standard for Business Combinations.” Major accounting changes under the revised accounting standard are as follows; (1) The current accounting standard for business combinations allows companies to apply the pooling of interests method of accounting when certain specific criteria are met such that the business combination is essentially regarded as a uniting-of-interests. The revised standard requires to account for such business combinations by the purchase method and the pooling of interests method of accounting is no longer allowed.(2) The current accounting standard accounts for the research and development costs to be charged to income as incurred. Under the revised standard, an in-process research and development (IPR&D) acquired by the business combination is capitalized as an intangible asset.(3) The current accounting standard accounts for a bargain purchase gain (negative goodwill) to be systematically amortized within 20 years. Under the revised standard, the acquirer recognizes a bargain purchase gain in profit or loss on the acquisition date after reassessing whether it has correctly identified all of the assets acquired and all of the liabilities assumed with a review of such procedures used.
This standard is applicable to business combinations undertaken on or after April 1, 2010 with early adoption permitted for fiscal years beginning on or after April 1, 2009.
31Annual Report 2010
Unification of Accounting Policies Applied to Foreign Affiliated Companies for the Equity Method—The current accounting standard requires to unify accounting policies within the consolidation group. However, the current guidance allows to apply the equity method for the financial statements of a foreign affiliated company which have been prepared in accordance with generally accepted accounting principles in their respective jurisdictions without unification of accounting policies.
In March 2008, the ASBJ issued ASBJ Statement No.16, “Accounting Standard for Equity Method of Accounting for Investments.” The new standard requires adjustments to be made to conform the affiliate’s accounting policies for similar transactions and events under similar circumstances to those of the parent company when the affiliate’s financial statements are used in applying the equity method unless it is impracticable to determine adjustments. In addition, financial statements prepared by foreign affiliated companies in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States tentatively may be used in applying the equity method if the following items are adjusted so that net income is accounted for in accordance with Japanese GAAP unless they are not material: 1) amortization of goodwill; 2) scheduled amortization of actuarial gain or loss of pensions that has been directly recorded in the equity; 3) expensing capitalized development costs of R&D; 4) cancellation of the fair value model of accounting for property, plant, and equipment and investment properties and incorporation of the cost model of accounting; 5) recording the prior years’ effects of changes in accounting policies in the income statement where retrospective adjustments to the financial statements have been incorporated; and 6) exclusion of minority interests from net income, if contained.
This standard is applicable for fiscal years beginning on or after April 1, 2010 with early adoption permitted for fiscal years beginning on or after April 1, 2009.
Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement No. 24, “Accounting Standard for Accounting Changes and Error Corrections,” and ASBJ Guidance No. 24, “Guidance on Accounting Standard for Accounting Changes and Error Corrections.” Accounting treatments under this standard and guidance are as follows:
(1) Changes in Accounting PoliciesWhen a new accounting policy is applied with a 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 PresentationsWhen the presentation of financial statements is changed, prior period financial statements are reclassified in accordance with the new presentation. (3) Changes in Accounting EstimatesA change in an accounting estimate is accounted for in the period of the change if the change affects that period only, and is accounted for prospectively if the change affects both the period of the change and future periods.(4) Corrections of Prior Period ErrorsWhen an error in prior period financial statements is discovered, those statements are restated.
This accounting standard and the guidance are applicable to 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.
Segment Information Disclosures—In March 2008, the ASBJ revised ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures,” and issued ASBJ Guidance No. 20, “Guidance on Accounting Standard for Segment Information Disclosures.” Under the standard and guidance, an entity is required to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. This accounting standard and the guidance are applicable to segment information disclosures for the fiscal years beginning on or after April 1, 2010.
32 NIKKISO Co., Ltd.
Effective August 13, 2009 the Company’s consolidated subsidiary located in Germany, Nikkiso Pumps Europe GmbH, acquired 100% of the shares of LEWA Management GmbH and subsidiaries (the “LEWA Group”), manufacturing and trading companies of industrial metering pumps and pump systems, for a purchase price of ¥24,141 million ($259,578 thousand). The Company used the
3. BUSINESS COMBINATION
purchase method of accounting for the acquisition of the LEWA Group and accordingly, the purchase price has been allocated to the current and fixed assets of the Company based on the estimated fair value of such assets. The amount of consideration paid in excess of the estimated fair value of the assets acquired of ¥25,679 million ($276,119 thousand) has been recorded as goodwill and amortized over 20 years.
The estimated fair values of the assets acquired and the liabilities assumed at the acquisition date are as follows:
If the business acquisition had been completed as of April 1, 2009, the beginning of the current fiscal year, the unaudited condensed pro forma information of the operations of the LEWA Group for the year ended March 31, 2010 would be as follows:
Millions of Yen Thousands of U.S. Dollars
Current assets ¥ 7,262 $ 78,093
Fixed assets 3,077 33,083
Total ¥10,339 $111,176
Current liabilities ¥11,325 $121,772
Fixed liabilities 243 2,619
Total ¥11,568 $124,391
Millions of Yen Thousands of U.S. Dollars
Sales ¥8,454 $90,901
Net loss (880) (9,461)
Short-term investments as of March 31, 2010 and 2009 consisted of the following:
4. SHORT-TERM INVESTMENTS
Millions of Yen Thousands of U.S. Dollars
2010 20 0 9 2010Time deposits ¥374 ¥418 $4,024
Marketable and investment securities as of March 31, 2010 and 2009 consisted of the following:
5. MARKETABLE AND INVESTMENT SECURITIES
Millions of Yen Thousands of U.S. Dollars
2010 20 0 9 2010Non-current:
Equity securities ¥7,305 ¥6,056 $78,550
Trust fund investments and other 27 31 290
Total ¥7,332 ¥6,087 $78,840
33Annual Report 2010
Thousands of U.S. Dollars
March 31, 2010 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale:
Equity securities $63,074 $25,449 $10,329 $78,194
Millions of Yen
March 31, 2009 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale:
Equity securities ¥5,866 ¥1,343 ¥1,186 ¥6,023
Carrying amount
Millions of Yen
20 0 9Available-for-sale:
Equity securities ¥33
Other 31
Total ¥64
Available-for-sale securities whose fair value is not readily determinable as of March 31, 2009 were as follows. The similar information for 2010 is disclosed in Note 15.
Inventories as of March 31, 2010 and 2009 consisted of the following:
6. INVENTORIES
Millions of Yen Thousands of U.S. Dollars
2010 20 0 9 2010Merchandise ¥ 2,047 ¥ 2,295 $ 22,007
Finished products 2,013 2,476 21,639
Work in process 3,354 3,134 36,066
Raw materials and supplies 6,447 6,293 69,326
Total ¥13,861 ¥14,198 $149,038
The carrying amounts and aggregate fair values of marketable and investment securities at March 31, 2010 and 2009 were as follows:
Millions of Yen
March 31, 2010 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale:
Equity securities ¥5,866 ¥2,367 ¥961 ¥7,272
34 NIKKISO Co., Ltd.
The Group reviewed its long-lived assets for impairment. No impairment loss was recognized in 2010 and 2009.
7. LONG-LIVED ASSETS
8. SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2010 and 2009 consisted of notes to banks and bank overdrafts.The annual interest rate applicable to the short-term bank loans ranged from 1.19% to 1.96% and 1.96% to 2.46% at March 31, 2010 and
2009, respectively. Long-term debt at March 31, 2010 and 2009 consisted of the following:
Millions of Yen Thousands of U.S. Dollars
2010 20 0 9 2010Unsecured loans from banks and other financial institutions due serially to 2019 with interest rates of Tokyo Interbank Offered Rate plus a certain spread ranging from 1.36% to 2.46% (2010) and from 1.4% to 7.0% (2009) ¥32,348 ¥17,172 $347,832
1.73% yen unsecured straight bonds, due 2012 6,000 6,000 64,516
Lease obligations 272 359 2,919
Total 38,620 23,531 415,267
Less current portion (3,684) (2,221) (39,612)
Long-term debt, less current portion ¥34,936 ¥21,310 $375,655
Annual maturities of long-term debt at March 31, 2010 were as follows:
Year ending March 31 Millions of Yen Thousands of U.S. Dollars
2011 ¥ 3,684 $ 39,612
2012 3,645 39,195
2013 10,048 108,043
2014 7,969 85,689
2015 7,567 81,361
2016 and thereafter 5,707 61,367
Total ¥38,620 $415,267
The carrying amounts of assets pledged as collateral for bank loans of ¥13,111 million ($140,978 thousand) as of March 31, 2010 were as follows:
The consolidated subsidiary shares of ¥24,141 million ($259,578 thousand) before elimination under consolidation were pledged at March 31, 2010.
Millions of Yen Thousands of U.S. Dollars
Land ¥1,825 $19,626
Buildings and structures 6,187 66,520
Machinery and equipment 540 5,810
Total ¥8,552 $91,956
35Annual Report 2010
9. EMPLOYEES’ RETIREMENT AND PENSION PLANS
Millions of Yen Thousands of U.S. Dollars
2010 20 0 9 2010Projected benefit obligation ¥ 15,653 ¥ 16,040 $ 168,307
Fair value of plan assets (13,797) (11,809) (148,357)
Unrecognized prior service cost 1,440 793 15,482
Unrecognized actuarial loss (3,895) (5,844) (41,883)
Prepaid pension expense 1,071 1,035 11,525
Liability ¥472 ¥215 $5,074
Millions of Yen Thousands of U.S. Dollars
2010 20 0 9 2010Service cost ¥ 586 ¥ 569 $ 6,299
Interest cost 376 369 4,048
Expected return on plan assets (233) (256) (2,510)
Recognized actuarial loss 957 742 10,294
Amortization of prior service cost (302) (278) (3,244)
Net periodic retirement benefit costs ¥1,384 ¥1,146 $14,887
2010 20 0 9Discount rate 2.4% 2.4%
Expected rate of return on plan assets 2.0% 2.0%
Amortization period of prior service cost 10 years 10 years
Recognition period of actuarial gain/loss 10 years 10 years
The Company and certain of its consolidated subsidiaries have non-contributory defined benefit plans for employees.
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service and certain other factors. These retirement benefits are comprised of a lump-sum severance payment from the Company or consolidated subsidiaries together with annuity payments from trustees. Employees are entitled to larger payments if the termination is involuntary such as when it results from retirement
at the mandatory retirement age or death, but not for employees who take voluntary retirement at certain specific ages prior to the mandatory retirement age.
During 2010, the Company revised its Pension Plan from the plan with whole life annuity to that with fixed-term annuity. This systemic revision was decided in January, 2010 and became effective April 1, 2010. The effect of this revision was to decrease unrecognized prior service cost by ¥949 million ($10,201 thousand) for the year ended March 31, 2010.
The liability for employees’ retirement benefits at March 31, 2010 and 2009 consisted of the following:
The components of net periodic retirement benefit costs for the years ended March 2010 and 2009 were as follows:
Assumptions used for the years ended March 31, 2010 and 2009 were set forth as follows:
Certain consolidated subsidiaries have defined contribution pension plans.
36 NIKKISO Co., Ltd.
10. EQUITY
Since May 1, 2006, Japanese companies have been 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. If 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 articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.
(b) Increases/decreases and transfer of common stock, reserve and surplusThe Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve
(a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total aggregate amount of the legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rightsThe Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by a specific formula.
Under the Companies Act, stock subscription rights are presented as a separate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.
Based on a resolution of the Board of Directors on November 10, 2009, the Company issued and publicly offered 5,500,000 shares at ¥413 per share, and disposed of 9,000,000 treasury stocks at ¥413 per share on November 26, 2009. The amounts of the issuance of shares and the disposal of treasury stocks were in total ¥5,991 million ($64,424 thousand).
Based on the same resolution, the Company also issued 2,175,000 shares to a third party at ¥413 per share through over allotment on December 22, 2009. The amount of the issuance of shares in total was ¥898 million ($9,664 thousand).
37Annual Report 2010
Millions of Yen Thousands of U.S. Dollars
2010 20 0 9 2010Deferred tax assets:
Inventories ¥337 ¥91 $3,619
Accrued bonuses to employees 554 601 5,958
Accrued business taxes 110 12 1,183
Tax loss carryforwards 283 540 3,040
Investment securities 31 31 337
Liability for employees' retirement benefits 67 25 720
Others 342 302 3,673
Less valuation allowance (80) (88) (856)
Total ¥1,644 ¥1,514 $17,674
Deferred tax liabilities:
Business taxes refunded 76
Unrealized gain on available-for-sale securities 572 64 6,153
Reserve for deferred income on fixed assets 259 259 2,781
Prepaid pension expense 435 421 4,677
Others (12) (144)
Total ¥1,254 ¥820 $13,467
11. INCOME TAXES
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 40.7% for the years ended March 31, 2010 and 2009, respectively.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31, 2010 and 2009 were as follows:
A reconciliation between the effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statements of income for the years ended March 31, 2010 and 2009 was as follows:
2010 20 0 9Effective statutory tax rate 40.7% 40.7%
Expenses not deductible for income tax purposes 1.7 5.0
Inhabitants’ tax-per capita levy 1.1 2.5
Dividend income, non-taxable 1.9 0.5
Equity in earnings of affiliated companies (2.1) (2.5)
Variance of tax rate for consolidated subsidiaries (9.3) (1.8)
Increase (decrease) in valuation allowance 1.7 (9.6)
Tax credit for research and development costs of domestic companies (1.2) (5.5)
Unrecognizable amount of tax effects unrealized profit (4.1) 9.7
Amortization of goodwill 6.1
Others, net (4.1) (0.1)
Actual effective tax rate 32.4% 38.9%
38 NIKKISO Co., Ltd.
As of March 31, 2010, certain subsidiaries had tax loss carryforwards aggregating to approximately ¥928 million ($9,989 thousand) which are available to be offset against taxable income of such subsidiaries in future years. These tax loss carryforwards of ¥79 million ($844 thousand), if not utilized, will expire as follows:
Remaining tax loss carryforwards of ¥849 million ($9,145 thousand) do not have an expiration date.
Year ending March 31 Millions of Yen Thousands of U.S. Dollars
2012 ¥(13) $(139)
2013 28 297
2014 64 686
Total ¥ 79 $ 844
Research and development costs charged to income were ¥1,230 million ($13,222 thousand) and ¥1,013 million for the years ended March 31, 2010 and 2009, respectively.
The Group leases certain machinery, computer equipment, office space and other assets.Total lease and rental expenses for the years ended March 31, 2010 and 2009 were ¥1,277 million ($13,733 thousand) and ¥1,108 million,
respectively.
Total amortization of goodwill for the years ended March 31, 2010 and 2009 was ¥816 million ($8,775 thousand) and ¥236 million, respectively.
12. RESEARCH AND DEVELOPMENT COSTS
13. LEASES
14. AMORTIZATION OF GOODWILL
15. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
On March 10, 2008, the ASBJ revised ASBJ Statement No. 10, “Accounting Standard for Financial Instruments,” and issued ASBJ Guidance No.19, “Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” This accounting standard and the guidance are applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010 with early adoption permitted from the beginning of the fiscal years ending before March 31, 2010. The Group applied the revised accounting standard and the new guidance effective March 31, 2010.
(1) Group Policy for Financial InstrumentsThe Group uses financial instruments, mainly bank loans and bonds, based on its capital investment plan. Cash surpluses, if any, are invested in low risk financial assets. Short-term bank loans are used to fund its ongoing operations. Derivatives are used, not for speculative purposes, but to manage exposure to financial risks as described in (2) below.
(2) Nature and Extent of Risks Arising from Financial InstrumentsReceivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, the position, net of payables in foreign currencies, is hedged by using forward foreign currency contracts. Marketable and investment securities are exposed to the risk of market price fluctuations.
39Annual Report 2010
Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, those risks are netted against the balance of receivables denominated in the same foreign currency as noted above.
Maturities of bank loans and bonds are less than nine-and-a-half years after the balance sheet date. Although a part of such bank loans and bonds are exposed to market risks from changes in variable interest rates, those risks are mitigated by using derivatives of interest-rate swaps.
(3) Risk Management for Financial InstrumentsCredit risk managementCredit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include monitoring of payment terms and balances of major customers by each business division to identify the default risk of customers at an early stage. Counterparties to the derivatives are limited to major international financial institutions to reduce counterparty risk.
The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31, 2010.
Market risk management (foreign exchange risk and interest rate risk)Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations in foreign currency exchange rates. The Company and certain consolidated subsidiaries manage to hedge such risk principally by forward foreign currency contracts.
Interest-rate swaps are used by the Company and certain consolidated subsidiaries to manage exposure to market risks from changes in interest rates of loans payable and bonds payable.
Investment securities are managed by monitoring market values and financial position of issuers on a regular basis.In accordance with internal policies which regulate the authorization and credit limit amount, transactions and reconciliation of the
transaction and balances with customer are made by the finance department.
Liquidity risk managementLiquidity risk comprises the risk that the Company cannot meet its contractual obligations in full on maturity dates. The Company manages its liquidity risk by adequate financial planning based on reports from each department.
(4) Fair values of Financial InstrumentsFair values of financial instruments are based on a quoted price in active markets. If a quoted price is not available, other rational valuation techniques are used instead. Also, please see Note 16 for the detail of fair value for derivatives. The contract amount shown in Note 16 is not the amount of derivative transactions exposed to the market risk.
(a) Fair value of financial instruments
Millions of Yen
March 31, 2010 Carrying amount Fair value Unrealized gain (loss)
Cash and cash equivalents ¥11,298 ¥11,298
Notes and accounts receivable
Trade 26,564 26,564
Investment securities
Equity securities 7,272 7,272
Total ¥45,134 ¥45,134
Notes and accounts payable
Trade ¥11,268 ¥11,268
Construction and other 1,608 1,608
Short-term bank loans 7,824 7,824
Income taxes payable 1,262 1,262
Long-term debt 38,620 38,811 (191)
Total ¥60,582 ¥60,773 ¥ (191)
40 NIKKISO Co., Ltd.
Thousands of U.S.Dollars
March 31, 2010 Carrying amount Fair value Unrealized gain (loss)
Cash and cash equivalents $121,485 $121,485
Notes and accounts receivable
Trade 285,636 285,636
Investment securities
Equity securities 78,194 78,194
Total $485,315 $485,315
Notes and accounts payable
Trade $121,163 $121,163
Construction and other 17,294 17,294
Short-term bank loans 84,127 84,127
Income taxes payable 13,567 13,567
Long-term debt 415,267 417,321 (2,054)
Total $651,418 $653,472 $(2,054)
Cash and cash equivalentsThe carrying values of cash and cash equivalents approximate fair value because of their short maturities.
Marketable and investment securitiesThe fair values of marketable and investment securities are measured at the quoted market price of the stock exchange for the equity instruments, and at the quoted price obtained from the financial institution for certain debt instruments. The information of the fair value for the marketable and investment securities by classification is included in Note 5.
Receivables and payablesThe fair values of receivables and payables are measured at the amount to be received or paid at maturity discounted at the Group’s assumed corporate discount rate.
Short-term bank loans and long-term debtThe fair values of short-term bank loans and long-term debt are determined by discounting the cash flows related to the debt at the Group’s assumed corporate borrowing rate.
DerivativesThe information of the fair value for derivatives is included in Note 16.
(b) Financial instruments whose fair value cannot be reliably determined
Carrying amount
March 31, 2010 Millions of Yen Thousands of U.S. Dollars
Investments in equity instruments that do not have a quoted market price in an active market ¥1,501 $16,135
Trust fund investments and other 27 299
Total ¥1,528 $16,434
41Annual Report 2010
(c) Maturity analysis for financial assets and securities with contractual maturities
(d) Maturity analysis for corporate bond, long-term loan and debt with interest with contractual maturitiesPlease see Note 8 for annual maturities of long-term debt.
Millions of Yen
March 31, 2010 Due in one year or less Due after one year through five years
Due after five years through ten years Due after ten years
Cash and cash equivalents ¥11,298
Notes and accounts receivable
Trade 26,564
Total ¥37,862
Millions of Yen
At March 31, 2010 Contract Amount Contract Amount due after One Year Fair Value Unrealized Gain (Loss)
Foreign currency forward contracts:
Buying U.S.$ ¥2,005 ¥8 ¥8
Buying EUR 864 11 11
Selling U.S.$ 186 0 0
Selling GBP 75 (0) (0)
Interest rate swaps: (fixed rate payment, floating rate receipt) 7,937 ¥6,933 (325) (325)
Option trading: (interest rate cap) 42 42 (12) (12)
Thousands of U.S.Dollars
March 31, 2010 Due in one year or less Due after one year through five years
Due after five years through ten years Due after ten years
Cash and cash equivalents $121,485
Notes and accounts receivable
Trade 285,636
Total $407,121
16. DERIVATIVES
The Group enters into foreign currency forward contracts to hedge foreign exchange risk associated with certain assets and liabilities denominated in foreign currencies. The Group also enters into interest rate swap contracts to manage its interest rate exposures on certain assets and liabilities.
All derivative transactions are entered into to hedge interest and foreign currency exposures incorporated within its business. Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged assets or liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions, the Group does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Company have been made in accordance with internal policies which regulate the authorization and credit limit amount.
As noted in Note 15, the Group applied ASBJ Statement No. 10, “Accounting Standard for Financial Instruments,” and ASBJ Guidance No.19, “Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” The accounting standard and the guidance are applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010; therefore, the required information is disclosed only for 2010.
Derivative transactions to which hedge accounting is not applied at March 31, 2010
42 NIKKISO Co., Ltd.
Millions of Yen
At March 31, 2009 Contract Amount Contract Amount due after One Year Fair Value Unrealized Gain (Loss)
Foreign currency forward contracts:
Buying U.S.$ ¥1,476 ¥1,473 ¥ (3)
Selling EUR 854 777 77
Millions of Yen
At March 31, 2010 Hedged item Contract Amount Contract Amount due after One Year Fair Value
Interest rate swaps: (fixed rate payment, floating rate receipt) Long-term debt ¥11,000 ¥10,000 ¥(342)
Thousands of U.S. Dollars
At March 31, 2010 Hedged item Contract Amount Contract Amount due after One Year Fair Value
Interest rate swaps: (fixed rate payment, floating rate receipt) Long-term debt $118,280 $107,527 $(3,680)
Thousands of U.S. Dollars
At March 31, 2010 Contract Amount Contract Amount due after One Year Fair Value Unrealized Gain (Loss)
Foreign currency forward contracts:
Buying U.S.$ $21,561 $81 $81
Buying EUR 9,287 115 115
Selling U.S.$ 2,003 3 3
Selling GBP 802 (3) (3)
Interest rate swaps: (fixed rate payment, floating rate receipt) 85,339 $74,553 (3,499) (3,499)
Option trading: (interest rate cap) 450 450 (132) (132)
Derivative transactions to which hedge accounting is applied at March 31, 2010
The following is the fair value information for foreign currency forward contracts to which hedge accounting is not applied at March 31, 2009. Foreign currency forward contracts which qualify for hedge accounting are excluded from the information below.
The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.The contract or notional amounts of derivatives which are shown in the above table do not represent the amounts exchanged by the
parties and do not measure the Group’s exposure to credit or market risk.
43Annual Report 2010
Information to compute basic net income per share (“EPS”) for the years ended March 31, 2010 and 2009 was as follows:
18. NET INCOME PER SHARE
Millions of Yen Thousands of shares Yen U.S. Dollars
Net income Weighted average shares EPS
For the year ended March 31, 2010:
Basic EPS
Net income available to common shareholders ¥3,240 68,221 ¥47.49 $0.51
For the year ended March 31, 2009:
Basic EPS
Net income available to common shareholders ¥1,368 63,726 ¥21.46
The Group had the following transactions with unconsolidated subsidiaries and affiliated companies for the years ended March 31, 2010 and 2009:
17. RELATED PARTY TRANSACTIONS
Millions of Yen Thousands of U.S. Dollars
2010 20 0 9 2010Sales ¥2,769 ¥1,710 $29,780
Purchases 124 99 1,336
Other income, net 308 19 3,306
44 NIKKISO Co., Ltd.
Appropriations of Retained EarningsAt the Company’s Board of Directors meeting held on May 21, 2010, the Company’s Board of Directors approved the following:
Establishment of a joint-venture companyAiming to further the Company’s objective of making inroads into the dialysis machine market in China, which is slated for high future growth, the Company signed a basic agreement on April 12, 2010, over the formation of a strategic business alliance regarding dialysis machines in China with the Weigao Group, a leading Chinese manufacturer of medical appliances, and its core operating company Shandong Weigao Group Medical Polymer Co. Ltd.
19. SUBSEQUENT EVENTS
Millions of Yen Thousands of U.S. Dollars
Year-end cash dividends, ¥6.00 ($0.06) per share ¥476 $5,115
As part of this arrangement, the Company and Weigao Group company, Weihai Weigao Blood Purification Products Co., Ltd., established a joint-venture company for the manufacture, sales and maintenance of hemodialysis equipment in China. The outline of the joint venture company is as follows:
(a) Name Weigao Nikkiso (Weihai) Dialysis Equipment Co., Ltd.(b) Address Weihai City, Shandong Province, China(c) Representative director Liebo Xia(d) Business Manufacture, sale and maintenance of dialysis equipment(e) Capital USD11,000,000.00(f) Incorporation May 21, 2010(g) Fiscal year From January 1 to December 31(h) Nikkiso’s share of the investment USD5,390,000.00(i) Share holding ratio Nikkiso Co., Ltd. 49% Weihai Weigao Blood Purification Products Co., Ltd. 51%
45Annual Report 2010
Millions of Yen
20 0 9Industrial Division Medical Division Eliminations/Corporate Consolidated
Sales to customers ¥35,000 ¥37,395 ¥72,395
Operating expenses 31,186 33,730 ¥ 2,708 67,624
Operating income ¥3,814 ¥3,665 ¥(2,708) ¥4,771
a. Sales and Operating Income
Thousands of U.S. Dollars
2010Industrial Division Medical Division Eliminations/Corporate Consolidated
Sales to customers $400,359 $438,560 $838,919
Operating expenses 363,316 382,364 $ 32,348 778,028
Operating income $37,043 $56,196 $(32,348) $60,891
Thousands of U.S. Dollars
2010Industrial Division Medical Division Eliminations/Corporate Consolidated
Total assets $723,729 $293,727 $220,509 $1,237,965
Depreciation 14,087 16,059 1,920 32,066
Capital expenditures 15,602 11,718 3,418 30,738
a. Sales and Operating Income
b. Total Assets, Depreciation and Capital Expenditures
Millions of Yen
2010Industrial Division Medical Division Eliminations/Corporate Consolidated
Total assets ¥67,307 ¥27,317 ¥20,507 ¥115,131
Depreciation 1,310 1,493 179 2,982
Capital expenditures 1,451 1,090 318 2,859
b. Total Assets, Depreciation and Capital Expenditures
The Group operates in the following industry segments: Industrial Division consists of production, sale and maintenance of industrial pumps, water conditioning equipment, carbon fiber reinforced plastics and other various industrial equipment. Medical Division consists of production, sale and maintenance of artificial kidney machines, dialyzers, blood tubings and powder dialysate.
Information about industry segments, geographical segments and sales to foreign customers of the Group for the years ended March 31, 2010 and 2009, is as follows:
(1) Industry Segmentsa. Sales and Operating Income
20. SEGMENT INFORMATION
Millions of Yen
2010Industrial Division Medical Division Eliminations/Corporate Consolidated
Sales to customers ¥37,234 ¥40,786 ¥78,020
Operating expenses 33,789 35,560 ¥ 3,008 72,357
Operating income ¥3,445 ¥5,226 ¥(3,008) ¥5,663
46 NIKKISO Co., Ltd.
Millions of Yen
20 0 9Industrial Division Medical Division Eliminations/Corporate Consolidated
Total assets ¥35,825 ¥26,016 ¥21,847 ¥83,688
Depreciation 1,459 1,513 201 3,173
Capital expenditures 1,204 1,710 205 3,119
b. Total Assets, Depreciation and Capital Expenditures
Millions of Yen
2010
Japan Asia North America Europe Eliminations/Corporate Consolidated
Sales to customers ¥57,221 ¥6,012 ¥3,185 ¥11,602 ¥78,020
Interarea transfer 4,848 4,270 1,126 885 ¥(11,129)
Total sales 62,069 10,282 4,311 12,487 (11,129) 78,020
Operating expenses 56,023 8,873 3,829 12,014 (8,382) 72,357
Operating income ¥6,046 ¥1,409 ¥482 ¥473 ¥(2,747) ¥5,663
Total assets ¥78,508 ¥9,509 ¥4,047 ¥13,932 ¥9,135 ¥115,131
Millions of Yen
20 0 9
Japan Asia North America Europe Eliminations/Corporate Consolidated
Sales to customers ¥61,013 ¥3,596 ¥1,946 ¥5,840 ¥72,395
Interarea transfer 5,591 3,522 1,646 5 ¥(10,764)
Total sales 66,604 7,118 3,592 5,845 (10,764) 72,395
Operating expenses 59,620 6,687 3,300 6,324 (8,307) 67,624
Operating income ¥6,984 ¥431 ¥292 ¥(479) ¥(2,457) ¥4,771
Total assets ¥59,464 ¥6,397 ¥3,048 ¥5,731 ¥9,048 ¥83,688
Thousands of U.S. Dollars
2010
Japan Asia North America Europe Eliminations/Corporate Consolidated
Sales to customers $615,277 $64,643 $34,252 $124,747 $838,919
Interarea transfer 52,124 45,919 12,105 9,517 $(119,665)
Total sales 667,401 110,562 46,357 134,264 (119,665) 838,919
Operating expenses 602,391 95,414 41,175 129,182 (90,134) 778,028
Operating income $65,010 $15,148 $5,182 $5,082 $(29,531) $60,891
Total assets $844,177 $102,244 $43,517 $149,803 $98,224 $1,237,965
(2) Geographical SegmentsThe geographical segments of the Group for the years ended March 31, 2010 and 2009 are summarized as follows:
(3) Sales to Foreign CustomersSales to foreign customers for the years ended March 31, 2010 and 2009 amounted to ¥34,355 million ($369,413 thousand) and ¥28,410 million, respectively.
47Annual Report 2010
Independent Auditors’ Report
48 NIKKISO Co., Ltd.
Board of Directors and Auditors As of June 22, 2010
President & Chief Executive Officer Toshihiko Kai
Directors Hiroshi Kinoshita
Hiroshi Nakamura
Hiroshi Nogami
Akira Nishiwaki
Shigeo Maruo
Hisashi Homma
Corporate Auditors Mitsuyoshi Yamamoto
Yasushi Kunimasa
Kenjiro Nakane
Yutaro Kikuchi
Number of Shares Held (Thousands)
Percent of Total Shares Outstanding
Japan Trustee Services Bank, Ltd. (Trust Account)
5,922 7.37%
The Master Trust Bank of Japan, Ltd. (Trust Account)
3,165 3.94
Mizuho Bank, Ltd. 3,102 3.86
Mizuho Corporate Bank, Ltd. 2,577 3.21
Nikkiso Shareholders Association 2,036 2.53
Mitsui Sumitomo Insurance Company, Limited
1,966 2.44
Nikkiso Employee Shareholders Association
1,944 2.42
Bank of New York GCM Client Account JPRD AC ISG (FE-AC)
1,840 2.29
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
1,822 2.27
Nippon Life Insurance Company 1,500 1.86
Corporate Data As of March 31, 2010
Company Name NIKKISO CO., LTD.
Date of Establishment December 26, 1953
Paid-in Capital ¥6,544,339,191
Number of Employees 4,691 (Consolidated)
1,372 (Non-Consolidated)
Authorized Number of Shares 249,500,000
Issued Number of Shares 80,286,464
(Contained Treasury Stocks) 999,384
Number of Shareholders 9,266
Major Shareholders
Executive OfficersAs of June 22, 2010
Hatsuo Tashiro
Shoichi Nagato
Nobuhiko Ban
Toshiaki Chiba
Seishu Hayashi
Hiroaki Miyata
Tetsuo Kurebayashi
Naota Shikano
Yasuo Murase
49Annual Report 2010
Offices and PlantsDomestic
▶ Head Office3-43-2, Ebisu, Shibuya-ku,Tokyo 150-8677, JapanPhone: +81-3-3443-3711Fax: +81-3-3473-4963
Industrial DivisionInternational Sales Department (Pumps)Phone: +81-3-3443-3726Fax: +81-3-3444-2438
Industrial DivisionInternational Sales Department (Water Conditioning System, Measuring Equipments)Phone: +81-3-3443-3732Fax: +81-3-3473-5473
Aerospace DivisionPhone: +81-3-3443-3734Fax: +81-3-3443-9863
Medical DivisionPhone: +81-3-3443-3727Fax: +81-3-3440-0681
▶ Plants
Higashimurayama Plant2-16-2, Noguchi-cho, Higashimurayama,Tokyo 189-8520, JapanPhone: +81-42-392-3311Fax: +81-42-393-2201
Shizuoka Plant498-1, Shizutani, Makinohara-shi,Shizuoka 421-0496, JapanPhone: +81-548-22-5801Fax: +81-548-22-5886
Kanazawa Plant3-1, Hokuyohdai, Kanazawa,Ishikawa 920-0177, JapanPhone: +81-76-257-4181Fax: +81-76-257-4250
Overseas
▶ Offices
Nikkiso Cryogenic Pump Representative Office(Nikkiso Cryo. Europe)Fountain Court 2, Victoria Square, Victoria Street, St Albans, Hertfordshire AL1 3TF, U.K.Phone: +44-1727-884-949Fax: +44-1727-884-800
Nikkiso Beijing Representative OfficeRoom 908, No. 1 Building, Madian Jingdian Jiayuan, No. 8A Qijiahuozi, Chao Yang Qu, Beijing, 100029, ChinaPhone: +86-10-6202-0066Fax: +86-10-6202-0055
Nikkiso Singapore Representative Office101 Cecil Street, #18-11 Tong Eng Building,Singapore 069533Phone: +65-6221-1235Fax: +65-6221-3244
Nikkiso Pumps Middle East7F, Al Yasat Tower-Baniyas Street,P.O. Box 97, Abu Dhabi, U.A.E.Phone: +971-2-6720730Fax: +971-2-6742422
Subsidiaries & AffiliatesDomesticNikkiso Eiko Co., Ltd.Phone: +81-42-390-6540Fax: +81-42-390-6541Manufacture, sale and after-sales service of small type pumps, sand filters, etc.
Nikkiso Ryuki Techno Co., Ltd.Phone: +81-42-396-9110Fax: +81-42-396-5767Technical service and parts sales for our ownindustrial products (pumps, compressors and other equipment).
Nikkiso Technica Co., Ltd.Phone: +81-42-394-7900Fax: +81-42-394-1181Technical service and installation of industrialproducts (systems).
Nikkiso-Therm Co., Ltd.Phone: +81-422-37-9811Fax: +81-422-37-9820Manufacture and sales of precision thermistors and thermistor-applied products.
Nikkiso M.E.S. Co., Ltd.Phone: +81-3-5791-2581Fax: +81-3-5791-2582Technical service for medical products.
Nikkiso Tohoku Medical Co., Ltd.Phone: +81-22-262-0421Fax: +81-22-263-2640Sales and after-sales service of medical products in the Tohoku area in Japan.
Nikkiso Technical Research InstitutePhone: +81-42-392-3087Fax: +81-42-392-3134Research and development of Nikkiso productsand manufacturing technology.
NIKKISO GROUP
NIKKISO GROUPLEWA GROUP
ASIA
EUROPEEUROPE
AMERICAAMERICAAMERICAAMERICA
Global Network As of July 31, 2010
50 NIKKISO Co., Ltd.
Overseas
Nikkiso America, Inc.Suite 110, 5910 Pacific Center Boulevard,San Diego, CA 92121, U.S.A.Phone: +1-858-222-6300Fax: +1-858-222-6301Administration and management of business planning of the Company and its subsidiaries, as well as promotion and management of Nikkiso product businesses in North, Central and South America.
Nikkiso Pumps America, Inc.Suite C-1, 600 Kenrick Drive, Houston, TX 77060, U.S.A.Phone: +1-281-310-6747Fax: +1-281-310-6771Manufacture, sale and after-sales service of pumps.
Nikkiso Cryo, Inc.4661 Eaker Street, North Las Vegas, NV 89081-2746, U.S.A.Phone: +1-702-643-4900Fax: +1-702-643-0391Service of testing and analysis of submergedcryogenic pumps and other cryogenic components and systems for liquefied gases.
Microtrac, Inc.148 Keystone Drive, Montgomeryville, PA 18936, U.S.A.Phone: +1-215-619-9920Fax: +1-215-619-9932Manufacture and sale of Microtrac Particle SizeAnalyzer for the powder fluid industry.
Nikkiso-KSB GmbHPhilipp-Reis-Strasse 13, 63486 Bruchkoebel, GermanyPhone: +49-6181-30010-0Fax: +49-6181-30010-99Manufacture, sale and after-sales service of pumps.
NIKKISO Europe GmbH(Head Office)Desbrocksriede 1, D-30855, Langenhagen, GermanyPhone: +49-511-679999-0Fax: +49-511-679999-11
(R&D department)Beneckeallee 30, D-30419, Hannover, GermanyPhone: +49-511-679999-0Fax: +49-511-679999-266(Sales department)Alte Landstraβe 284, D-22391, Hamburg, GermanyPhone: +49-40-414629-0Fax: +49-40-414629-49Manufacture, sale and after-sales service of medical products (dialysis equipments, disposable products, etc.) in the European market.
Nikkiso (Shanghai) Consulting Co., Ltd.27F, Huamin Empire Plaza, 728 Yan An WestRoad, Shanghai, 200050, ChinaPhone: +86-21-5239-9959Fax: +86-21-5239-3639A regional headquarters (in China), for businesspromotion, investment management and relevant management consulting for the affiliates in China.
Shanghai Nikkiso Non-Seal Pump Co., Ltd.19#-21# Zhenxian Industrial Park, Lane 18 East,Huancheng Road, Fengxian District, Shanghai201401, ChinaPhone: +86-21-6710-3258Fax: +86-21-6710-3250Manufacture, sale and after-sales service of Nikkiso Non-Seal pumps.
Shanghai Nikkiso Trading Co., Ltd.27F, Huamin Empire Plaza, 728 Yan An WestRoad, Shanghai 200050, ChinaPhone: +86-21-5239-3637Fax: +86-21-5239-3639Sale and after-sales service of dialysis equipment in the Chinese domestic market.
Nikkiso Pumps Korea Ltd.603, 6F, Ilshin Building, 541 Dowha-Dong,Mapo-Gu, Seoul, KoreaPhone: +82-2-719-1446Fax: +82-2-719-1440Sale and after-sales service of Nikkiso Non-Sealpumps, Nikkiso Metering pumps and sale of other Nikkiso products.
Taiwan Nikkiso Co., Ltd.75 Section 4, Nanking East Road, Taipei, TaiwanPhone: +886-2-2713-9906Fax: +886-2-2713-9936Engineering and design, manufacture, sale and aftersales service of Boiler-water conditioning systems for Asian region.
(Medical Devices Division)6F–6, No.179, Fusing North Road,Songshan District, Taipei, TaiwanPhone: +886-2-2718-5759Fax: +886-2-2718-5739Consultant of sale and afterservice of dialysisequipment in Taiwan.
M. E. Nikkiso Co., Ltd.74 Suwintawong Road, Saladang,Bangnumpeo Chacheongsao 24000, ThailandPhone: +66-38-593-207Fax: +66-38-593-208Manufacture and sale of disposable products for medical equipment.
Nikkiso Medical (Thailand) Co., Ltd.663 On-nuch Road (Sukhumvit 77) Suanluang,Bangkok 10250, ThailandPhone: +66-2-311-5736Fax: +66-2-716-2895Sale and after-sales service of medical products(dialysis equipment, disposable products, etc.) in Thailand and neighboring countries.
Nikkiso Vietnam MFG Co., Ltd.Road 19, Tan Thuan Export Processing Zone,Tan Thuan Dong Ward, District 7,Ho Chi Minh City, VietnamPhone: +84-8-37701320Fax: +84-8-37701640Manufacturing of medical equipment (blood tubes, etc.) for dialysis treatments.
Nikkiso Vietnam, Inc.Plot No. C6&C7, Thang Long Industrial Park II, Yen My District, Hung Yen Province, VietnamPhone: +84-321-397-4520Fax: +84-321-397-4521Manufacturing of aircraft parts
LEWA GmbH/HeadquarterUlmer Str. 10, 71229 Leonberg, GermanyPhone: +49 7152 14-0Fax: +49 7152 14-1303
LEWA Pumpen GmbHDiefenbachgasse 35/3/9, 1150 Vienna, AustriaPhone: +43 1 8773 040-0Fax: +43 1 8773 040-29
LEWA Bombas Ltda.Rua Georg Rexroth 609 Bloco E Conj. 2, 09951-970 Diadema/SP, BrazilPhone: +55 11 4075 9999Fax: +55 11 4071 9920
LEWA Pumps (Dalian) Co., Ltd.No. 86 Liaohedong Road DD Port, 11 6600 Dalian, ChinaPhone: +86 411 8758-1477Fax: +86 411 8758-1478
LEWA Pumpen spol. s.r.o.Sedlákova 19, 602 00 Brno, Czech RepublicPhone: +420 5 432360-52Fax: +420 5 432360-53
LEWA S.A.S.Z.A. des Sureaux 5-9 Rue d’Estienne d’Orves, 78500 Sartrouville, FrancePhone: +33 1 308674-80Fax: +33 1 308674-97
LEWA HOV GmbH + Co. KGNeue Ramtelstr. 48, 71229 Leonberg, GermanyPhone: +49 7152 6091-0Fax: +49 7152 6091-59
LEWA S.R.L.Via Vincenzo Monti 52, 20017 Mazzo di Rho (Mi), ItalyPhone: +39 02 93468-61Fax: +39 02 93468-62
LEWA ASWelhavens vei 1, 4319 Sandnes, NorwayPhone: +47 529091-00Fax: +47 529091-01
LEWA Sp. z o.o.ul. Andersa 13, 00-159 Warsaw, PolandPhone: +48 22 6358-204Fax: +48 22 6358-988
LEWA Romania s.r.l.Str. Dr. Draghiescu Dimitrie Nr. 10 sector 5, 050579 Bucharest, RomaniaPhone: +40 21 4107-340Fax: +40 21 4107-598
LEWA PTE LTD, SingaporeBlk 1 Clementi Loop Clementi West Logispark #02-06, Singapore 129808Phone: +65 686-17127Fax: +65 686-16506
LEWA Hispania, S.L.Via Trajana 50-56, Nave 49, 08020 Barcelona, SpainPhone: +34 93 22477-40Fax: +34 93 22477-41
LEWA Pumpen AGNenzlingerweg 5, 4153 Reinach 1, SwitzerlandPhone: +41 61 7179 4-00Fax: +41 61 7179 4-01
LEWA Ukraine LC15-A, Prospekt 40-richya Zhovtnya, 03039 Kiev, UkrainePhone: +380 44 52796-31Fax: +380 44 52796-05
LEWA Inc.132 Hopping Brook Road, Holliston, MA 01746, USAPhone: +1 508 429-7403Fax: +1 508 429-8615
CPE Holdings, Inc.Suite 400, 3433 N. Sam Houston Parkway West, Houston, TX 77086, USAPhone: +1 713 673-5161Fax: +1 713 673-5113
LEWA GROUP
51Annual Report 2010
NIKKISO CO., LTD.3-43-2, Ebisu, Shibuya-ku, Tokyo 150-8677, JapanPhone +81-3-3443-3711Fax +81-3-3473-4963
http://www.nikkiso.com
Printed in Japan
This report is printed on paper certified by the Forest Stewardship Council (FSC) as produced from materials from well-managed forests.
Out of consideration for the environment, this report was printed using vegetable-based ink containing no volatile organic compounds (VOCs).
Taking the environment into consideration, this report was printed using a waterless printing process to prevent the emission of VOCs during printing.