Integration
IntegrationofofIntelligenceIntelligence
Using Strength to Breed New Strengths
ANNUAL REPORT 2001
Year Ended March 31, 2001

Japan

NIPPON LIGHT METAL COMPANY, LTD.

Profile

Nippon Light Metal Company, Ltd. (NLM) has been the industry leader for
62 years. Japan’s only fully integrated aluminum manufacturer, NLM’soperations are comprehensive: conversion of bauxite into alumina;
generation of electric power for aluminum plants; smelting of aluminumfrom alumina; manufacturing, distribution and marketing of semifinishedand finished aluminum and nonaluminum-based products, and production
and sales of industrial chemicals.
In fiscal 2000, ended March 31, 2001, NLM focused on bolstering
growth and profitability by implementing structural reforms to flatten theorganization and streamlining operations to enhance efficiency. In
addition, the Company integrated production activities to eliminate
businesses generating low profits or losses, and collaborated on
development projects to meet evolving market demand.

Contents
1
2
6
10
12
14
16
17
18
19
30
31
32
33

Consolidated Six-Year Summary
To Our Shareholders
FAQ (Q & A with the President)
Review of Operations
Financial Review
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Report of Independent Accountants
Overseas Network
Board of Directors
Corporate Data

Cautionary Statement
This annual report contains various projections and estimates. Important factors that could alter these projections and estimates include changes in the balance of aluminum supply and demand, fluctuations in the price ofaluminum ingot and foreign exchange rates, as well as shifts in Japanese government policies and regulations.
The Company cautions, therefore, that the projections and estimates contained herein involve risk and uncertainty, and that actual results could differ materially from those expressed or implied.

32

Consolidated Six-Year Summary
Nippon Light Metal Company, Ltd. and its consolidated subsidiaries
Years ended March 31

Thousands of
U.S. dollars

Millions of yen
1996

1997

1998

1999

2000

2001

2001

For the year:
Net sales ............................................ ¥608,804 ¥626,787 ¥617,595 ¥569,036 ¥549,194 ¥565,223 $4,561,929
Operating profit (loss) ...................... 13,430 16,727(574) (4,153)
2,150 12,205
98,507
Net income (loss) .............................
130 (1,516) (11,846) (19,248) (14,096) (21,905) (176,796)
At year-end:
Total assets ........................................ 682,000 668,954 716,753
Shareholders’ equity.......................... 146,756 144,405 131,836
Short-term borrowings andlong-term debt, includingcommercial paper (Note 4) ............ 274,628 279,596 333,052

640,989
93,481

605,346 600,373
100,509 81,478

4,845,626
657,611

340,445 310,891 298,256 2,407,231

Per share data (yen and dollars):
Net income (loss) ............................. ¥ 0.24..¥ (2.82) ¥ (22.07) ¥ (40.98) ¥ (31.01) ¥ (41.22) $Cash dividends ..................................
2.00
2.00
2.00
2.00
2.00
—
Shareholders’ equity.......................... 273.38 269.00 245.59
232.18198.45 149.96(0.33)—)
1.21

Stock information (TSE) (yen and dollars):
Stock price:
High ............................................ ¥Low .............................................

0.94
0.56

680 ¥
370

690 ¥
367

480 ¥
133

199 ¥
112

199 ¥
66

116 $
69

Note: U.S. dollar amounts have been translated, for convenience only, at the exchange rate of ¥123.90=U.S.$1.00. See Note 2 of the Notes to the Consolidated
Financial Statements.

Net Sales (Billions of yen)

Operating Profit (Loss) (Billions of yen)

Total Assets (Billions of yen)

750

20

750

600

15

600

450

10

450

300

5

300

150

0

150

0

0

–5
1996 1997 1998 1999 2000 2001
Years ended March 31

1996 1997 1998 1999 2000 2001
Years ended March 31

1996 1997 1998 1999 2000 2001
As of March 31

1

To Our Shareholders

Shigesato Sato
President and CEO

Changes in the Board of Directors of Nippon Light Metal Company, Ltd. (NLM), resulted
in the selection of Shigesato Sato as NLM’s new President and CEO, effective April 1, 2001.
Operating Results
Solid Demand in the Industry
In fiscal 2000, ended March 31, 2001, despite a fall-off in exports owing to economic slowdowns in the United States and Asia, shipments of aluminum products to the transportationindustry increased in line with the increasing use of aluminum in automobiles. This and otherfactors in the trend toward economic recovery helped the industry remain strong. On theother hand, harsh market conditions continued, especially in the building and construction
materials field, where increasing competition is adversely affecting profitability.
Reformation to Bolster Revenues
We have continued efforts to improve profitability by intensively implementing the strategies
set out in the NLM Group Organizational Reform program, which was introduced in December 1999. The first major item of the plan is to rationalize the poorly performing businesses
throughout the NLM Group. Following our complete withdrawal from the market for aluminum substrates for computer memory disks in fiscal 1999, in fiscal 2000 we focused on
downsizing our extrusion business by reducing plants and equipment. We disposed of extrusion equipment at our Osaka plant, as well as at Nikkei Extrusions, Co., Ltd., our wholly
owned subsidiary in Yamagata Prefecture.
On August 1, 2000, we acquired 100% of the stock of Shin Nikkei Company, Ltd.(SNC), thecore NLM Group company for construction materials, through a stock exchange offer, so that
we could lay the foundations to manage our construction materials business under closely2integrated policies. Under this integrated organization, we are implementing, with help fromother NLM business units, various measures and strategies to achieve efficiency, rationalization and other improvements in SNC.
The second major item of the reformation plan is to make our strong core businesses evenstronger and to create growth. We are actively investing in facilities and equipment for ourstrong businesses, including aluminum capacitor foil, aluminum powders and pastes, andchemicals. At the same time, in markets such as automobiles and railcars we are marketing aseries of products by combining both our marketing and technological strengths.Our focus inthis field is to penetrate the market through differentiation.
The third major item of the plan is to improve the functional performance of NLM’s management, and to create a system under which management decisions can be more quickly
implemented. At its meeting in June 2000, the Board of Directors voted to reduce its membership from 31 to 10. This is to facilitate its decision-making and control over management.
At the same time, we introduced a system of corporate officers in which their authority andresponsibility for carrying out the Board’s decisions is clarified and agile management will be
realized.
Dividend Payments
Revenues recovered well, but in view of the significant special losses, we had no choice but
to stop paying dividends. Consolidated net sales rose 3.0%, to ¥565.2 billion.
Various improvements from our reformation activities helped to boost revenues, and consolidated operating profit amounted to ¥12.2 billion, up from ¥2.2 billion the previous year.
Nonetheless, because we applied the new Japanese accounting standard for financial
instruments in fiscal 2000, we suffered a net loss of ¥22.0 billion. This loss was caused
primarily by a valuation loss from investments.
Factors such as these forced NLM to forego payment of a dividend to shareholders in fiscal
2000. We would appreciate the understanding of our shareholders on this matter.

Dealing with Management Issues
Creating Strong Products
We will continue to actively promote our business strategies in such promising markets as
automobiles, trucks, railcars, electronics and structural materials for housing and buildings,
where aluminum will realize its potential as a basic structural material.
3

Our firm belief is that the growth of the NLM Group can be attained only by providing
unique and differentiated products and services that properly correspond to changes in themarket and to the important emerging needs of customers.
To promote the above-mentioned strategies, we have implemented a quite significant
organizational change. In addition to the conventional line organization, in which eachbusiness unit in the NLM Group is supposed to concentrate only on such assigned business as
is basically defined by the production process, a cross-divisional business/product development organization has been introduced. Activities under the new organization are called
development by yoko-gushi (i.e, cross-divisional development) whereby all the related
divisions work closely to address certain markets, so that we may be able to offer to customers in such markets the best of what we have.
Yoko-gushi activities have resulted, for example, in the development and supply of thematerial for the Nozomi 700 series shinkansen (bullet trains), for which we merged extruding and welding technologies. In another development for railway cars, we combined ourpaint know-how with our knowledge of technologies for alloys, rolling and processing tocreate material for a new type of window frame for commuter trains. We have successfully
replaced plastic with our material.
In the automobile-related market, which is becoming an increasingly important focus for
product development, yoko-gushi development has proven to be effective. Our expertise inaluminum alloy, casting and extrusion all played an important part in developing what iscurrently the most sophisticated brake caliper system, jointly with Sumitomo Electric Industries, Ltd.
Another success from yoko-gushi is the cylinder liner for Yamaha motorcycles, which wehave developed in collaboration with Yamaha Motor Co., Ltd. We provided the accumulated
technical know-how of our Group, that is, NLM’s alloy and extrusion technologies and thepowder and paste technologies of Toyo Aluminium, Co., Ltd., a wholly owned NLM subsidiary. The
liner’s key feature is its use of the extrusion, which is made of atomized aluminum alloy
powder. The high performance requirements of the liner have been attained with this extrusion.
For the purpose of keeping yoko-gushi activities going, and delivering unique products, wehave made an organizational change. On April 1, 2001, a horizontal organization was introduced in our Technology and Development Group so that the entire organization would be
exposed to market needs and changes, and would be able to respond to them more promptly.
We also formed the Strategic Office for the Creation of New Products and Business to lead all
the development activities being conducted throughout our Group. A detailed description of
the office’s role will be provided later.
Focusing on Cash-Flow Management
We will continue to emphasize cash-flow management. The planned profit from our products
and businesses can be secured only through proper management and control of cash flow
4

that will accrue from these plans. Without this, the planned profit cannot be realized, nomatter how strong new products are.
These plans must also be feasible. A hands-on approach is required when plans areworked out. Our management and leaders are required to be in constant touch with themarket in which they are conducting business, so as to be responsible for the growth of theirassigned business and for securing the planned profit. I would like to lead our management
team in this manner.
In order to increase future net cash flow through growth, thus promoting our shareholders’ interests in the Company, proper implementation and management of growth policy is
crucial. This is the reason why the Strategic Office for the Creation of New Products andBusiness was positioned directly under the Executive Committee.
Upgrading Corporate Culture—Innovation and Challenge
In order for the NLM Group to continue growing through the supply of a series of “strong
products”, we should be much more market-oriented and much more deeply in touchwith our markets. Among other things, we should comprehensively change our corporate
culture. It is hoped that the new culture will transform our corporate climate into one inwhich creative innovations and challenges are consistently fostered throughout every
corner of the organization.
For this purpose, we have flattened our organization to promote mobilization and will
operate our human resource management system more extensively and effectively so thatpeople with innovative and challenging mentality may be motivated and rewarded inaccordance with their achievement.
I would like to improve our financial performance substantially by implementing suchmeasures to fully realize our growth and profitability potential, while paying due attention tovarious risks surrounding us. I believe this will result in the restart of dividend payments,
which is an issue of immediate urgency, and in meeting the overall expectations that ourshareholders extend to us now and hereafter.
June 29, 2001

Shigesato Sato
President and CEO

5

FAQ (Q & A with the President)
Q. What do you mean by “integration of intelligence?”
A. Integration of intelligence is the catch phrase that I am using in initiating and promoting a campaign that will lead to the generation of “strong
products” and to the renovation of our corporate culture.
For reasons referred to later, the NLM Group has failed in making full useof intelligence, in other words, strengths in the form of human resources,
technologies, customer base and others that the Group has long been
accumulating, for the purpose of improving its profitability. The NLM Group
has not been living up to its potential.
In the campaign led by the “integration of intelligence”, we try to utilize
our potential to the maximization of the entire Group’s benefit, instead ofaiming at just simple aggregation of benefits from individual divisions. By
doing this, we can improve efficiency in offering new products to the market
and customers.

Shigesato Sato,
President and CEO

Q. How can such potential be materialized?
A. A detailed analysis of why our financial performance is not satisfactory tells us that ourinterface with our markets had been limited and narrow. This comes from the disadvantageof the line organization. Under this organization, each division is supposed to address markets where they may be able to find customers for their own products. They tend to fail inbringing back customers’ needs that other divisions may properly address, thus ending up
with a loss of business opportunities at the corporate level.
In view of fully utilizing our intelligence, we have introduced a matrix organization in which
several sales and development groups have been formed for important market segments, inaddition to the conventional line organization that is basically defined by the production process.
This has enabled us to correspond to customers and markets more flexibly and comprehensively and to use our intelligence effectively and consistently.

Q. Could you elaborate on the new organization?
A. On April 1, 2001, we eliminated the headquarters that used to cover several divisions anddepartments so that each business unit directly reports to the CEO, and introduced a flat organization to our Technology and Development Group to promote mobilization of its staff in customer contact.
On the same occasion, the Strategic Office for the Creation of New Products and Business(SOCNPB) was formed to oversee and coordinate overall development activities in the Group
organization. Approximately 100 staff members belong to this office, with a majority of themconcurrently working for the line organization.
6

Q. Please explain the role of the SOCNPB in greater detail.
A. The missions of this office are to identify, under its own role, new products and businesses
that have the potential to secure premiums, as well as to lead and harmonize, in its coordinating capacity, various development activities running throughout the entire NLM Group.
In the development of products, it is important to acquire intelligence as to future requirements for our materials and products, as well as to know existing market needs. The former
role is assigned to the office.

Q. Please outline the main points that will be promoted in yoko-gushi and
SOCNPB activities.

A. Basically, our focus is on the following three areas:

NLM’s powder metallurgy
aluminum alloy extrusionmaterial for motorcycle
cylinders resulted from acollaboration with Yamaha
Motor Co., Ltd.

1. Make full use of the management resources we have
In our yoko-gushi activities, we will make full use of the management resources owned byour line operations to meet the needs of the marketplace. Such efforts will expand business
opportunities for the entire NLM Group.
2. Enhance awareness of NLM as “the aluminum company”
We will organize our yoko-gushi and SOCNPB activities in such a way that our corporate image
as a company with excellence in aluminum materials and products will be reinforced.
3. Respond quickly to market needs and changes
Building up customers’ confidence through quick response and smooth dialogue is vitaland prerequisite in providing them with appropriate solutions. To do this our R&D staff will
be more heavily involved in the dialogue with our customers.

Product-out products

Yoko-gushi development

Single-function
products

Single-function
products

Single-function
products

Business division
structure by
product group

Business division
structure by
product group

Business division
structure by
product groupMarket-in products

Automobile market

Compound needs

Compoundproducts

Rail & Road market

Multifunctional needs

Multifunctional
products
Resources

Resources

Resources

Electronics market

Niche-market
products

Specialized needs

7

Q. How will “strong products” contribute to the NLM Group’s profit?
A. Since taking office as President and CEO, I have repeatedly reminded our people to think
and manage their activities in terms of cash flow. The cash we have spent in development,
testing, production, equipment and other activities will not be recouped until the products
are well accepted by the market and the planned margins are secured.
The tendency is that the review and observation of how the cash is being recouped from an
investment is not properly done, while much attention is paid at the planning stage.
Another point is that only strong products can bring in enough return to cover the expenditure for their creation, as well as to provide funding for the payment of dividends and for new
investments. In other words, any products that we place on the market should be strong andunique enough to secure a premium. The premiums that strong products earn enable us tobe profitable and to keep growing.

Q. Please tell us about the cultural innovation you are conducting in R&D?
A. In order to implement the above-mentioned integration of intelligence, it is desirable that
our R&D staff be placed much closer to the markets. The resources that they have will bebetter and more efficiently utilized when they are directly exposed to customers and theirneeds. Further, through their contacts with the market and their involvement in marketing
activities, they will be more conscious about cost performance. Regrettably, they have notbeen so conscious about how their study and development is related to the required cash
flow. I am urging them to relate their activities to our real businesses and cash flow.
In line with these policies, our Research and Development Center will work more closelywith the line operations and has selected five motivated staff members, each of whom is
supposed to lead the assigned team in exploring markets.
To use a soccer analogy, our R&D staff is now expected to move forward to the front line fromthe defense position, to manage the ball in the front and to make goals when the chance arises.

Q. You have said that NLM subsidiary Shin Nikkei has been detracting fromGroup value. What, then, were the reasons for putting Kazuyuki
Hasegawa at the helm of the company?

A. We chose Hasegawa because of his strong track record in aluminum panel operations.
Before he took charge of our panel business, more than 20 companies were operating in thefield, and the market was fiercely competitive. Today, only three remain, and we are wellahead of the pack. This is thanks to Hasegawa’s very pragmatic approach to management. He
is the best fit for our idea of the kind of leader needed by Shin Nikkei.
Kazuyuki Hasegawa,President of Shin Nikkei Company, Ltd.

8

Q. At the end of March, NLM reported ¥304.6 billion in interest-bearing debt.
This is somewhat excessive given the Company’s current profitability level.
How will this amount be reduced?

A. We have tried to reduce our outstanding interest-bearing debt by focusing on cash-flow
management, and carefully controlling plant and equipment investment. Interest-bearing debt
peaked at ¥315.0 billion at the end of March 1999, but we have now cut that by ¥10.4 billion.
Our goal after fiscal 2001 is to begin to ensure appropriate funding for our business activities
while reducing interest-bearing debt by increasing cash flows from operating activities, andthereby to improve our balance sheets.

Q. What kind of thought is behind your statement that dialogues with shareholders
should be enhanced? And how do you manage corporate governance?

A. The most important mandate for NLM management, I believe, is to meet our shareholders’ expectations. To be more specific, we have to financially perform at least better than the
average companies on the market. In the course of pursuing this target, we must explain to
our shareholders and investors what we are doing and what we intend to do, and we would
like to get feedback from them.
The owners of a company are its shareholders. The management must live up to their
expectations. One of the most important ways to meet this requirement is to properly manage
corporate governance and to establish necessary systems in the company.
In June 2000, the number of directors was reduced to 10 from 31 to help strengthen the
Board’s control function and to increase speed in decision-making, while the system of corporate
officers was introduced to clearly divide the functions and roles between the Board and officers.

Q. Would you outline the direction in which NLM is heading?
A. We are seeking out necessary changes and creating a corporate culture that appreciates
innovations and challenges. The NLM Group will focus on the following:A) Contribute to the preservation of natural resources and energy by supplying aluminumproducts that are superior in terms of recyclability. This will meet the requirements of ourresource-circulating society for manufacturing, that is, friendly to the earth’s environment.
B) Keep supplying aluminum-plus-one products, namely aluminum products with uniqueproperties or functions added, to such areas that require advanced technology andmaterials, like information and communication, energy and nanotechnology.
C) Expand the scope of our materials to cover not only aluminum but also other materials,
such as alumina and carbon, and expand our business intensively into added-value
fabrication, whereby we contribute to the promotion of society’s welfare and the growthof industries as a whole.
9Review of Operations

Aluminum Ingot and Chemicals

Aluminum Sheet and Extrusion

Consolidated sales in
the chemicals categoryrose to ¥28.4 billion in
fiscal 2000, a 2.7%
increase over theprevious fiscal year.
Robust domestic
demand for alumina andaluminum hydroxidebrought general
shipment recovery,
High-purity aluminum ingots
driven by demand insuch product areas as iron and steel, pulp and paperand electronics materials. Low-soda alumina used inelectro-ceramics performed particularly strongly.
Shipments were strong for caustic soda and fluorine
chemicals and functional materials used in organic
chlorides. Production of alumina and aluminumhydroxide rose 4.8%, to 365,774 tons.
Sales in the aluminum ingot category totaled ¥62.8
billion, a 6.4% increase. Although shipments toSoutheast Asia decreased, demand from automobile
manufacturers, the core users of these products, andother sectors increased, and the price of aluminum
ingots came in at a high level for the year. Production
volume fell 1.9%, to 93,959 tons.
As a result, consolidated sales of the division
climbed ¥4.5 billion (5.2%), to ¥91.2 billion, andoperating profits were up ¥995 million (13.2%), to¥8.5 billion.

Consolidated sales in thealuminum sheet category
grew 51.8% in fiscal
2000, surging to ¥44.1
billion. Despite lackluster
exports and lower supply
sales volumes, shipments
increased dramaticallyowing to factors such as
strong demand for foil
used in condensers. In
Aluminum extrusions are used for addition, sales ofthe exteriors of Nozomi 700
aluminum printing sheets
series shinkansen carsrose, mainly owing to
demand from related industries and efforts to raise ourmarket share, including marketing activities closely
matched to customer needs and high evaluations of ourtechnologies.
We achieved growth in shipments of other products andmaterials because of a strong capital investment
environment in the semiconductor industry. Furthermore,
Alcan Nikkei China Limited became a consolidated
subsidiary from the period under review, which alsosustained the rise in sales of aluminum sheet products.
On a unit basis, production volumes rose 3.6%, to101,764 tons.
In the aluminum extrusion category, sales dropped
7.6% to ¥24.9 billion. Despite a drop in demand from theconstruction industry, sales in such areas as pipe stockand railway products remained high, following on theprevious fiscal period. We also promoted endeavors to
improve the profitability of this division, including
production integration activities initiated in line with therevamping of our management structure, which led to theelimination of excess equipment and fixed assets.
Favorable results were garnered through our yoko-gushi
activities, as motorcycle engine components made with
our newly released powder metallurgy aluminum alloy
extrusions sold well. Production volume slipped 4.4%, to58,242 tons.
Divisional sales increased by ¥13.0 billion (23.2%),
rising to ¥69.0 billion. Operating profit climbed to ¥1.4
billion, a ¥734 million improvement from last year.

High-quality Alumina

10Fabricated Products and Others
In the aluminum foil andaluminum powders andpastes category, sales
climbed 4.1%, to ¥75.1
billion. Shipments ofhigh-purity aluminum foil
for use in condensers
were favorable.
Sales of aluminum
powders and pastes,
which have applications
Anodized aluminum foil for
including metallic paints
electrolytic capacitors
for automobiles andhome appliances, benefited from the popularity of
products with metallic coloring during the year. We
enhanced our production capacity to meet new demand,
which contributed to increased sales for the year.
In transportation-related business, sales rose 12.7%, to¥48.0 billion. The chief factors in this increase were thebeneficial effects of organizational improvement activities
in our truck body business and expanded demandfollowing the easing of government regulations. Sales ofshaped parts increased during the year, owing to successin generating new orders for automotive products in thesecond half. Another factor relating to shaped parts was
the increase in sales of brake calipers subsequent tomodel changes by automobile manufacturers. Sales also
increased owing to new orders for condensers for car air
conditioners.
Sales of electronic materials totaled ¥20.6 billion, adecrease of 10.3% from the previous year. The principle
cause of this decline was our withdrawal last year fromthe business of aluminum substrates for computer
memory disks.
Strong market conditions for information andcommunications products led to continued high demandfor condensers and anodized aluminum foil for electrolytic
capacitors. We were able to capitalize on market trends
and to increase sales by boosting plant capacity.
Our other related fabricated materials category saw
sales slide 2.5%, to ¥82.1 billion. On August 1, 2000, we
transferred the operations of our landscape engineering
division to Sumikei Nikkei Engineering Co., Ltd., our 50-

50 joint venture with Sumikei Light Metal Industries, Ltd.,
which is accounted for under the equity method. Because
our landscape engineering sales are now handled by
Sumikei Nikkei Engineering, NLM’s related sales fell
considerably for the fiscal year as a whole.
Sales of refrigerator and freezer panels increased,
owing chiefly to demand for medium and small-scale
items for supermarkets and convenience stores. Activeplant and equipment investments for clean rooms, bothby cellular telephone makers and the semiconductor
industry, generated considerable increases in sales.
In this situation, the division as a whole posted sales of¥225.8 billion, and operating profit of ¥10.8 billion. Sales
rose ¥3.9 billion (1.8%), and operating income climbed¥11.0 billion to erase last year’s loss.
Building Materials
Sales of construction
materials for buildings
and stores dropped
1.3%, to ¥95.6 billion, as
the market environment
remained bleak. The
operating environment
was severe, owing tofactors such as acontraction in the total
floor space of new
construction projects
Aluminum structural materials
are used in the NTT DoCoMousing nonwood materials.
Nagano Building
In this atmosphere, we
focused on introducing new products and gaining newcustomers. However, intense price competition had amajor impact on our operations.
In addition to a drop in new housing projects from theprevious year, prices decreased owing to fierce competition
for construction orders. As a result, sales of housing
construction materials slipped 1.3%, to ¥95.6 billion.
Under these circumstances, sales of the building
materials division fell ¥5.4 billion (2.9%), to ¥179.3
billion, and the division posted an operating loss of ¥5.3
billion, an increase of ¥3.5 over the previous year’s loss.
On a consolidated basis (including Shin Nikkei), thevalue of production amounted to ¥68.6 billion.
11

Financial Review

Overview

fiscal year. By curtailing labor and other costs, selling,

In fiscal 2000, ended March 31, 2001, despite a fall-off

general and administrative expenses declined 7.3%, toin exports owing to economic slowdowns in the United¥91.6 billion ($739 million).

States and Asia, shipments of aluminum products to the

NLM posted operating profit of ¥12.2 billion ($99transportation industry increased in line with themillion), continuing its upward movement and more thanincreasing use of aluminum in automobiles. This andquadrupling the previous fiscal year’s amount. NLM

other factors in a trend toward economic recovery

incurred higher non-operating expenses, owing to thehelped the industry remain strong. On the other hand,adoption of the new Japanese accounting standard forharsh market conditions continued, especially relating toretirement benefits. However, because of the amortization

construction-related materials, increasing competitionof negative goodwill in non-operating profit, in addition

and adversely affecting profitability.

to the increase in operating profit, NLM achieved ordinary
profit of ¥2.9 billion ($23 million), and moved into the

Earnings and Expenses

black for the first time in four years.

Under these economic conditions, Nippon Light Metal

In terms of special gains, NLM posted a ¥0.6 billion

Company, Ltd., achieved consolidated net sales of ¥565.2

decrease in its gain on sales of fixed assets compared tobillion ($4,562 million), up 2.9% from the previous

the previous fiscal year, and recorded a ¥0.5 billion ($4fiscal year. The cost of sales also increased 2.9%, rising tomillion) gain on sales of investment securities. Special¥461.4 billion ($3,724 million). The cost of sales ratio

losses more than doubled, rising to ¥25.0 billion ($202

remained at 81.6%, the same ratio as in the previous

million). Although the loss on disposal of fixed assets fell

Net Sales By Segment (Billions of yen)

Total Shareholders' Equity (Billions of yen)

Equity Ratio (%)

800

160

28

600

120

21

400

80

14

200

40

7

0

0
1997 1998 1999
Years ended March 31

2000

2001

■ Aluminium Ingot and Chemicals■ Aluminium Sheet and Extrusions■ Fabricated Products and Others■ Building Materials

1201997 1998 1999
As of March 31

2000

2001

1997 1998 1999
As of March 31

2000

2001

¥5.7 billion compared with the previous fiscal year, NLM

numbered 543,350,370, up from 506,457,651 at the end

suffered equity in the loss of an affiliated company and aof fiscal 1999. As a result, shareholders’ equity per shareloss on devaluation of investment securities, as well as anof common stock amounted to ¥149.96 ($1.21), down

exchange loss on investment securities. In addition, NLM¥48.49 from the preceding fiscal year-end.

paid out early retirement benefits. NLM is now
implementing a restructuring plan to withdraw from

Cash Flows

unprofitable business areas, reduce resource use and cut

Cash and cash equivalents at the end of the fiscal year fell

fixed costs, principally those related to employees.

to ¥41.7 billion ($336 million), down ¥0.2 billion from

Consequently, NLM posted a net loss of ¥21.9 billion

the end of the preceding term. This figure includes ¥0.6($177 million), ¥7.8 billion greater than the net loss inbillion ($2.1 million) from the cash and cash equivalents

the preceding term. Net loss per share of common stockof newly consolidated subsidiaries.

was ¥41.22 ($0.33). Under these circumstances, NLM

Net cash provided by operating activities totaled ¥22.7

was unable to pay dividends for the fiscal 2000 term.

billion ($183 million), up ¥22.2 billion from fiscal 1999.
This result generated net cash, despite a loss before

Assets, Liabilities and Shareholders’ Equity

income taxes and others of ¥20.0 billion ($162 million),

Total assets declined a slight 0.8%, to ¥600 billion

up from ¥18.6 billion in fiscal 1999. The main reasons($4,846 million). Increases in inventory and in accounts

for this were non-cash-out losses, such as depreciation,

receivable boosted current assets, but these were offset byequity in loss of affiliated companies and loss on disposala reduction in fixed assets, led by decreases in property,of fixed assets, as well as the fact that the amount of cash-

plant and equipment.

generated items, including an increase in notes andTotal liabilities rose 5.9%, climbing ¥28.9 billion, toaccounts receivable, and accounts payable, trade, was¥514.7 billion ($4,154 million). NLM required a negativelarger than the amount of cash-using items, such as the

goodwill of ¥9.2 billion, owing to the acquisition of wholedecrease in inventories.

ownership of Shin Nikkei Company, Ltd., and to a holiday

Net cash used for investing activities amounted to ¥9.3

falling on the last day of the fiscal year. NLM aims tobillion ($75 million), an increase of ¥1.7 billion fromreduce interest-bearing liabilities while maintaining

fiscal 1999. Funds used for the purchase of fixed assets

adequate liquidity to restore a healthy balance to our

totaled ¥14.2 billion ($114 million), up ¥1.4 billion fromfinancial statements. Interest-bearing liabilities peaked at

the previous fiscal year. Proceeds from sales of fixed¥339.5 billion at the end of March 1999, but over theassets fell to ¥3.3 billion ($27 million) from ¥5.4 billion

next two years NLM reduced this by ¥34.9 billion.

in the previous fiscal year.

Shareholders’ equity dropped 19.0%, to ¥81.5 billion

Net cash used for financing activities for fiscal 2000 fell($658 million), owing primarily to the ¥22.1 billion¥27.6 billion from the previous fiscal year, to ¥14.3

reduction in retained earnings. The shareholders’ equity

billion ($115 million). This reduction is principally

ratio decreased 3.0 percentage points, to 13.6%. Sharesowing to the decrease in repayment of long-term debt andoutstanding at the end of the term (excluding treasury

short-term borrowings.

stock and shares held by subsidiaries in the parent)

13Consolidated Balance Sheets
Nippon Light Metal Company, Ltd. and its consolidated subsidiaries
As of March 31, 2000 and 2001

Thousands of
U.S. dollars(Note 2)Millions of yen
2000
ASSETS
Current assets:
Cash and deposits (Notes 4 and 7) ................................................................. ¥ 41,215
Marketable securities (Notes 4 and 6) ...........................................................
7,547
Notes and accounts receivable - trade (Notes 7 and 13) ............................... 188,992
Inventories (Note 5)....................................................................................... 69,952
Deferred icnome taxes (Note 9) .....................................................................
5,171
Other current assets (Note 4) ........................................................................ 10,254
Allowance for doubtful accounts ...................................................................
(2,539)

2001

2001

¥ 40,497—
196,792
78,133
3,932
15,486(3,462)$ 326,852—
1,588,313
630,614
31,735
124,988(27,942)

320,592

331,378

2,674,560

Fixed assets:
Property, plant and equipment (Notes 7 and 11):
Buildings and structures ........................................................................... 137,605
Machinery and equipment ....................................................................... 301,802
Land ......................................................................................................... 62,618
Construction in progress ..........................................................................
2,924
Accumulated depreciation ....................................................................... (296,188)

135,090
297,498
64,1983,888(299,010)

1,090,315
2,401,114
518,143
31,380(2,413,317)

208,761

201,664

1,627,635

Intangible fixed assets ...................................................................................

4,255

3,436

27,732

Investments and other assets:
Investment securities (Notes 6 and 7) ......................................................
Long-term loans receivable.......................................................................
Deferred income taxes (Note 9) ...............................................................
Other assets .............................................................................................
Allowance for doubtful accounts...............................................................

44,7003,177
8,232
15,839(7,127)40,175
2,974
10,126
17,471(6,851)

324,254
24,00381,727141,009(55,294)

64,821

63,895515,699

277,837

268,995

2,171,066

6,917

—

—

¥605,346¥600,373$4,845,626

Total current assets .............................................................................

Foreign currency translation adjustments............................................................

The accompanying notes are an integral part of these statements.

14

Thousands of
U.S. dollars(Note 2)Millions of yen

LIABILITIES AND SHAREHOLDERS’ EQUITY

2000

2001

2001

Current liabilities:
Short-term borrowings and current portion of long-term debt (Note 7) ........ ¥131,910
Notes and accounts payable-trade ................................................................. 113,010
Other current liabilities .................................................................................. 38,000¥152,333
136,401
44,132$1,229,483
1,100,896
356,191

Total current liabilities .......................................................................

282,920332,866

2,686,570

Long-term liabilities:
Long-term debt (Note 7) ................................................................................ 178,981
Accrued severance indemnities (Note 8) ....................................................... 17,171
Negative goodwill (Note 3) ............................................................................
—
Other long-term liabilities .............................................................................
6,751

145,923
18,654
9,166
8,065

1,177,748
150,557
73,97965,093202,903

181,808

1,467,377

19,014

4,221

34,06837,458—30,837493
32,123—(402)
100,509—
39,08532,300493
10,032(432)(0)
81,478—315,456
260,694
3,979
80,969(3,487)(0)657,611¥605,346¥600,373$4,845,626

Minority interest in consolidated subsidiaries ..........................................

Shareholders’ equity:
Common stock, ¥50 par value;
Authorized: 1,600,000,000 shares
Issued: 2000—510,825,514 shares ......................................................
2001—543,350,370 shares (Note 3) ........................................
Additional paid-in capital (Note 3) .................................................................
Revaluation surplus ........................................................................................
Retained earnings (Note 10) ..........................................................................
Foreign currency translation adjustments ......................................................
Less—common stock in treasury, at cost ......................................................

Contingent liabilities (Note 13)15

Consolidated Statements of Operations
Nippon Light Metal Company, Ltd. and its consolidated subsidiaries
For the years ended March 31, 2000 and 2001

Thousands of
U.S. dollars(Note 2)Millions of yen
2000

2001

Net sales .......................................................................................................... ¥549,194 ¥565,223
Cost of sales ..................................................................................................... 448,255
461,413Gross profit ................................................................................................. 100,939
103,810
Selling, general and administrative expenses ............................................ 98,789
91,605
Operating profit .........................................................................................
2,150
12,205Non-operating income:Interest income .............................................................................................
146
249
Amortization of negative goodwill ..................................................................
—
2,594
Equity in earnings of affiliated companies ......................................................
—
751
Foreign currency exchange gain, net .............................................................
—
1,106
Other ..........................................................................................................
3,316
3,658
Total non-operating income .....................................................................
3,462
8,358
Non-operating expenses:
Interest expense .............................................................................................
7,242
6,519
Equity in loss of affiliated companies .............................................................
1,559—
Amortization of transition obligation for employee retirement benefits ..........
—
4,499
Other ..........................................................................................................
6,310
6,639
Total non-operating expenses ................................................................. 15,111
17,657
Ordinary profit (loss) ................................................................................ (9,499)
2,906
Special gains:
Gain on sales of fixed assets ...........................................................................
2,172
1,531
Gain on sales of investment securities............................................................
—
529
Gain on sales of common stock owned by a consolidated subsidiary ..............
578—
Total special gains ......................................................................................
2,750
2,060
Special losses:
Equity in loss of an affiliated company ...........................................................
—
8,682
Loss on disposal of fixed assets ...................................................................... 10,202
4,471
Exchange loss on investment securities ..........................................................
—
4,415
Loss on devaluation of investment securities..................................................
627
4,222
Additional retirement allowance for early retirement program .......................
—
2,335
Suspension expenses ......................................................................................
470
872
Pension premiums for prior service cost, net ofreversal of related allowance for severance indemnities ...............................
518—
Total special losses ................................................................................... 11,817
24,997
Loss before income taxes and minority interest ................................... 18,566
20,031
Income taxes (Note 9)—current ......................................................................
1,811
3,293
—deferred ..................................................................... (4,448)(640)(2,637)
2,653
Minority interest .............................................................................................
(1,833)(779)
Net loss ........................................................................................................ ¥ 14,096 ¥ 21,905
Per share of common stock:
Net loss .........................................................................................................
Cash dividends ..............................................................................................
The accompanying notes are an integral part of these statements.

16$4,561,929
3,724,076
837,853739,346
98,5072,010
20,936
6,061
8,927
29,52467,45852,615—36,31253,584
142,51123,454
12,357
4,269—
16,62670,07336,08535,63334,076
18,846
7,038—
201,751
161,671
26,578(5,166)
21,412(6,287)$ 176,796
U.S. dollars(Note 2)

Yen

¥31.01¥ 2.002001¥41.22
¥31.—

$0.33
$0.—

Consolidated Statements of Shareholders’ Equity
Nippon Light Metal Company, Ltd. and its consolidated subsidiaries
For the years ended March 31, 2000 and 2001

Millions of yen

Number ofshares issued

Balance at March 31, 1999 ...................................
Cumulative effect of changes in accounting
for income taxes ..............................................
Net loss ..........................................................
Cash dividends ...................................................
Directors’ and statutory auditors’ bonuses ..........
Merger with a consolidated subsidiary ................
Redemption of common stock in treasury
taken over at merger .......................................
Inclusion in consolidation of unconsolidated
subsidiaries .....................................................
Affiliated company newly accounted forby the equity method .......................................
Equity on revaluation gain for land of anaffiliated company ...........................................
Net decrease in common stock in treasury ..........
Balance at March 31, 2000 ...................................
Net loss ..........................................................
Cash dividends ...................................................
Directors’ and statutory auditors’ bonuses ..........
Stock issued under exchange offering (Note 3) .....
Inclusion in consolidation of unconsolidated
subsidiaries .....................................................
Affiliated company newly accounted forby the equity method .......................................
Foreign currency translation adjustments ............
Net decrease in common stock in treasury ..........
Balance at March 31, 2001 ...................................

Commonstock

Additional
Revaluation
paid-in capitalsurplus536,823,002 ¥ 48,039 ¥ 29,382

83,192,994

4,159

1,237

(109,190,482) (14,740)

218

Retainedearnings

Foreign
Common stock
currency
owned by atranslation Common stock consolidated
adjustments
in treasury
subsidiary¥ — ¥ 34,176

¥ —

6,068
(14,096)
(940)
(9)
7,534

¥00,0(0)¥(18,116)(15,370)

15,37014,522
37
(647)
493

510,825,514

37,45830,83732,524,856

1,627

1,463

493

32,123(21,905)(1,013)
(37)

—

446
(402)

2,746
—

358
506
(432)
543,350,370 ¥39,085 ¥32,300

402¥(432) ¥00,0(0)¥493 ¥10,032¥—

Thousands of U.S. dollars (Note 2)

Number ofshares issued

Balance at March 31, 2000 ..............................
Net loss ..........................................................
Cash dividends ...................................................
Directors’ and statutory auditors’ bonuses ..........
Stock issued under exchange offering (Note 3) .....
Inclusion in consolidation of unconsolidated
subsidiaries .....................................................
Affiliated company newly accounted forby the equity method .......................................
Foreign currency translation adjustments ............
Net decrease in common stock in treasury ..........
Balance at March 31, 2001 ...................................

Commonstock

Additional
Revaluation
paid-in capitalsurplus510,825,514 $ 302,324 $ 248,886

32,524,856

13,132Retainedearnings

Common stock
Foreignowned by acurrencytranslation Common stock consolidated
subsidiaryadjustment
in treasury$ 3,979 $259,266 $(176,796)(8,176)(299)—$(3,245)

$—

3,245
$ (0)

$—

11,8082,890
4,084(3,487)543,350,370 $315,456 $260,694$3,979$80,969$(3,487)

The accompanying notes are an integral part of these statements.

17

Consolidated Statements of Cash Flows
Nippon Light Metal Company, Ltd. and its consolidated subsidiaries
For the years ended March 31, 2000 and 2001

Thousands of
U.S. dollars(Note 2)Millions of yen
2000

Cash flows from operating activities:
Loss before income taxes and minority interest ......................................................... ¥(18,566)
Depreciation and amortization ..................................................................................
23,047
Amortization of negative goodwill ..............................................................................
—
Loss on disposal of fixed assets ..................................................................................
10,765Gain on sales of fixed assets, net ................................................................................
(2,367)
Gain on sales of common stock owned by a consolidated subsidiary .........................
(578)
Gain on sales of investment securities ........................................................................
—
Exchange loss on investment securities ......................................................................
—
Loss on devaluation of investment securities ..............................................................
627
Increase in accrued severence indeminities ...............................................................
—
Interest and dividend income ....................................................................................
(488)
Interest expense ........................................................................................................
7,242
Equity in loss of affiliated companies .........................................................................
1,559
Increase in notes and accounts receivable - trade ......................................................
(1,360)(Increase) decrease in inventories ............................................................................
3,207
Increase in notes and accounts payable - trade ..........................................................
3,162
Other .........................................................................................................................
3,356
Sub total .....................................................................................................
29,606
Interest and dividend income received ......................................................................
815
Interest paid ..............................................................................................................
(7,178)
Income taxes paid .....................................................................................................
(1,010)Net cash provided by operating activities .............................................
22,233
Cash flows from investing activities:
Decrease in time deposits ..........................................................................................
109
Payment for purchase of marketable securities ..........................................................
(1,948)Proceeds from sales of marketable securities ............................................................
1,419
Payment for purchase of investment securities ...........................................................
—
Proceeds from sales of investment securities .............................................................
—
Payment for purchase of fixed assets ......................................................................... (12,803)
Proceeds from sales of fixed assets ............................................................................
5,391(Increase) decrease in long-term loans receivable ....................................................
(305)
Other .....................................................................................................................
508
Net cash used for investing activities .....................................................
(7,629)Cash flows from financing activities:
Decrease in short-term borrowings ........................................................................... (26,949)
Decrease in commercial paper ..................................................................................
(5,000)
Proceed from long-term debt ....................................................................................
36,202
Repayments of long-term debt ................................................................................... (33,417)
Proceed from sales of common stock in tresury ........................................................
306
Proceed from sales of common stock owned by a consolidated subsidiary ....................
3,093
Cash dividends paid by the Company .........................................................................
(804)
Cash dividends paid to minority interest ....................................................................
(701)
Other .....................................................................................................................
(290)
Net cash used for financing activities .................................................... (27,560)
Effect of exchange rate changes on cash and cash equivalents ...................................
(93)
Net decrease in cash and cash equivalents ................................................................. (13,049)
Cash and cash equivalents at beginning of year ..........................................................
54,736
Cash and cash equivalents of newly consolidated subsidiaries ...................................
225
Cash and cash equivalents at end of year (Note 4) ............................... ¥ 41,912
The accompanying notes are an integral part of these statements.

18

2001

2001

¥(20,031)
19,368(2,594)
4,471(1,531)
—
(529)
4,415
4,222
1,438
(494)
6,519
7,931
(3,396)(5,796)
16,304202
30,499986(6,555)(2,232)
22,698$(161,671)
156,320(20,936)
36,086(12,357)—(4,270)35,63434,076
11,606(3,987)52,61564,011(27,409)(46,780)
131,590
1,630
246,158
7,958(52,906)(18,014)183,196

198
—
—
(640)
1,542
(14,167)
3,347
181
219
(9,320)1,598——(5,166)
12,446(114,342)
27,0141,461
1,767(75,222)(1,113)—
13,829(25,925)447—(1,012)(42)(472)(14,288)96(814)
41,912585¥ 41,683(8,983)—
111,614(209,241)
3,608—(8,168)(339)(3,810)(115,319)
775(6,570)338,273
4,722$ 336,425

Notes to the Consolidated Financial Statements
Nippon Light Metal Company, Ltd. and its consolidated subsidiaries

1. SIGNIFICANT ACCOUNTING POLICIES(a) Basis of presenting financial statements
The accompanying consolidated financial statements of Nippon Light Metal Company, Ltd. (“the Company”) and its consolidated subsidiaries(together “the Companies”) are prepared in accordance with accounting principles generally accepted in Japan, which are different in certain
respects from the application and disclosure requirements of International Accounting Standards. The notes to the consolidated financial
statements include financial information which is not required under accounting principles generally accepted in Japan, but is presented herein as
additional information. In addition, the consolidated statements of shareholders’ equity are not required in Japan, but are presented herein as
additional information. The accompanying consolidated financial statements include certain reclassifications and modifications in order topresent them in a form which is more familiar to readers outside Japan.
(b) Consolidation and investments in affiliated companies
The consolidated financial statements include the accounts of the Company and, with minor exceptions, companies substantially controlled by theCompany. All significant intercompany transactions and accounts were eliminated.
Investments in significant companies where the Company has significant influence over management are stated at cost plus the Company’s
share of equity which is included in undistributed earnings.
The difference between the cost and underlying net equity of investments in consolidated subsidiaries or affiliates accounted for by the equity
method was allocated to identifiable assets based on the fair market value at the date of acquisition. The unassigned residual amount of the excessof the cost over the underlying net equity is recognized as goodwill and deferred or amortized on a straight-line basis within the effective period,
with the exception of minor amounts which are charged to income in the year of acquisition.
Negative goodwill recognized on the integration of a subsidiary company, Shin Nikkei Company, Ltd., is being amortized on a straight -line
basis over a 3-year period.
(c) Translation of foreign currencies
Until the year ended March 31, 2000, foreign currency amounts were translated into Japanese yen at appropriate year-end rates for current
monetary assets and liabilities and at historical rates for long-term assets and liabilities and non-monetary current assets and liabilities. Resulting
exchange gains or losses were credited or charged to income as incurred. Long-term receivables and payables in foreign currency hedged byforward exchange contracts were translated into Japanese yen at the contracted rates of exchange. Gains or losses resulting from forward exchange
contracts were deferred and amortized over the contract periods.
Effective from the year ended March 31, 2001, the Company and its subsidiaries adopted the new Japanese accounting standard for foreign
currency translation, which is effective for years beginning on or after April 1, 2000. Under the new standard, all monetary assets and liabilities
denominated in foreign currencies, whether long-term or short-term, are translated into Japanese yen at the exchange rates prevailing at thebalance sheets date. Resulting gains and losses are included in net profit or loss for the period. The adoption of the new method had no impact on
the accompanying consolidated financial statements.
Assets and liabilities of foreign subsidiaries and affiliates are translated into Japanese yen at the exchange rates prevailing at the balance sheetsdate. Shareholders’ equity at the beginning of the year is translated into Japanese yen at historical rates. Profit and loss accounts for the year aretranslated into Japanese yen using the average exchange rate during the year. Previously, until the year ended March 31, 2000, the aggregate
amount of “Foreign currency translation adjustments” (cumulative translation adjustments) were presented as a part of assets or liabilities. The
new accounting standard requires that cumulative translation adjustments be allocated to “Minority interest in consolidated subsidiaries” and theCompany portion be presented as a part of “Shareholders’ equity” on the balance sheets. At March 31, 2001, cumulative translation adjustments
amounting to ¥25 million ($202 thousand) were allocated to “Minority interest in consolidated subsidiaries” on the balance sheets.
(d) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows are composed of cash on hand, bank deposits available for withdrawal on
demand and short-term investments with an original maturity of three months or less and which represent a minor risk of fluctuations in value.
(e) Inventories
Inventories are principally stated at cost, as determined by the moving-average method, except for costs related to construction-type-contracts
which are specifically identified.
(f) Financial Instruments
Effective from the year ended March 31, 2001, the Company and its subsidiaries adopted the new Japanese accounting standard for financial
instruments, which is effective for years beginning on or after April 1, 2000. As a result of adoption of the new standard, “Loss before income taxes
and minority interest” for the year ended March 31, 2001 increased by ¥4,076 million ($32,897 thousand) , as compared with the amount which
would have been reported if the previous standard had been applied consistently.
19i) Derivatives
Under the new standard all derivatives are stated at fair value with changes in fair value included in net profit or loss for the year in which theyarise, except for derivatives that are designated as “hedging instruments” (see iii) Hedge accounting).
ii) Securities
Until the year ended March 31, 2000, marketable equity securities were stated principally at the lower of cost or market value, determined by themoving average method. Marketable securities other than marketable equity securities and investment securities were stated at cost, except for
those which have been written down as a result of the permanent impairment of their underlying value.
Under the new standard, securities held by the Company and its subsidiaries are classified into three categories:
Held-to-maturity debt securities, that the Company and its subsidiaries intend to hold to maturity, are stated at cost after accounting for any
premium or discount on acquisition, which are amortized over the period to maturity.
Investments of the Company in equity securities issued by unconsolidated subsidiaries and affiliates are accounted for by the equity method.
Exceptionally, investments in certain unconsolidated subsidiaries and affiliates are stated at cost because the effect of application of the equity
method would be immaterial.
“Other securities” for which market quotations are available are stated at cost. Under the new standard, mark-to-market accounting of suchsecurities is allowed to be implemented in the next fiscal year. With respect to marketable securities included in “Other securities”, the carrying
value, market value, unrealized gain, net of tax to be recorded, deferred tax liabilities and minority interest would be as follows.
Millions of yen

Thousands of
U.S. dollars

2001

2001

Carrying amount ............................................................................................................................................................ ¥ 7,816$63,083
Market value ................................................................................................................................................................... 10,426
84,149Unrealized gain, net of tax .............................................................................................................................................
1,409
11,372
Deferred tax liabilities .....................................................................................................................................................
1,147
9,257
Minority interest ..............................................................................................................................................................
54
436“Other securities” for which market quotations are unavailable are stated at cost, except as stated in the paragraph below.
In cases where the fair value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and affiliates, orother securities has declined significantly and such impairment of value is not deemed temporary, those securities are written down to fair value
and the resulting losses are included in the net profit or loss for the period.
Under the new standard, securities due within one year are presented as “current” and all the other securities are presented as “non-current.”
The securities held by the Company and its subsidiaries have been reclassified as of April 1, 2000 (the beginning of the year). As a result of thereclassification, the securities in the current portfolio have decreased by ¥4,564 million ($36,836 thousand) and the securities in the non-current
portfolio have increased by the same amount.
iii) Hedge accounting
Gains or losses arising from changes in the fair value of the derivatives designated as “hedging instruments” are deferred as an asset or liability
and included in net profit or loss in the same period in which the gains and losses on the hedged items or transactions are recognized. Someinterest swap contracts with fixed cash flows, are not stated at fair value, but are treated as an adjustment to interest on the designated assets or
liabilities.
The derivatives designated as hedging instruments by the Companies are principally forward exchange contracts, interest swap contracts andaluminum ingot forward contracts. The related hedged items are trade accounts receivable and payable, long-term bank loans, debt securities
issued by the Companies, and sales or purchases of aluminum ingot. The Companies have a policy to utilize the above hedging instruments inorder to reduce the Companies’ exposure to the risk of fluctuations in foreign exchange rates, interest rates, and price of aluminum ingot in themarket. Thus, the Companies’ purchases of the hedging instruments are limited to, at maximum, the amounts of the hedged items.
The Companies evaluate effectiveness of its hedging activities by reference to the accumulated gains or losses on the hedging instruments andthe related hedged items from the commencement of the hedges.
(g) Allowance for doubtful accounts
The allowance for doubtful accounts is estimated at the average percentage of actual bad debt in the past, which is then applied to the balance ofreceivables. In addition, an amount deemed necessary to cover uncollectable receivables is provided on an individual account basis.

20

(h) property, plant and equipment and depreciation
Property, plant and equipment are stated at cost. Depreciation is computed principally by the straight-line method at rates based on the estimateduseful lives of the respective assets.
(i) Accrued severance indemnities and pension plan
Until the year ended March 31, 2000, benefits for severance indemnities were reserved for or funded through accruals for employees’ severance
indemnities or tax-qualified pension plans. In accordance with prevailing accounting practices in Japan, provisions were made mainly at 40% of
the liability which would be required if all qualified employees were to leave the companies voluntarily at the balance sheets date, excluding a
portion covered by tax-qualified pension plans. Premiums for tax-qualified pension plans were charged to income when paid. As a result of
establishment of a tax-qualified pension plan, which fully covers severance indemnities, excess accrued severance indemnities at the transitiondate, as defined under accounting principles generally accepted in Japan, are being reversed over the period of amortization applicable to priorservice costs. Pension premiums relating to the amortization of prior service costs, net of reversal of excess accrued severance indemnities, were
presented separately in the accompanying consolidated statements of operations.
Effective from the year ended March 31, 2001, the Company and its subsidiaries adopted the new Japanese accounting standard for retirement
benefits, which is effective for years beginning on or after April 1, 2000. In accordance with the new standard, the reserve for retirement benefits asof March 31, 2001 represents the estimated present value of projected benefit obligations in excess of the fair value of the plan assets except that, as
permitted under the new standard, the unrecognized transition amount arising from adopting the new standard and unrecognized actuarial
differences. The unrecognized transition amount of ¥29,566 million ($238,628 thousand) at April 1, 2000 is being amortized on a straight-line
basis over 12 years, except for the unrecognized transition amount in respect of employees who retired in this fiscal year of ¥2,098 million ($16,933
thousand) which was amortized at the time of their retirement. The unrecognized actuarial differences are being amortized on a decliningbalance basis over a period of 12 years from the year following that in which they arise. As a result of adopting the new standard, the net pension
expense for the year ended March 31, 2001 increased by ¥4,520 million ($36,481 thousand) and “Net loss before income taxes and minority
interest” increased by ¥4,432 million ($35,771 thousand), as compared with the amounts which would have been reported if the previous standard
had been applied consistently.
(j) Lease transactions
Under Japanese accounting practices, financing leases are capitalized in principle. However, financing leases without options to transfer ownershipof leased assets to lessees may be accounted for as operating leases subject to appropriate footnote disclosure. Therefore, the Companies charge or
credit periodic lease payments and receipts to income as incurred.
(k) Income taxes
Income taxes of the Company and its domestic subsidiaries consist of corporate income taxes, local inhabitants taxes and enterprise taxes. The
Company and its subsidiaries adopted the deferred tax accounting method. Income taxes were determined using the asset and liability approach,whereby deferred tax assets and liabilities were recognized in respect of temporary differences between the tax basis of assets and liabilities andthose as reported in the financial statements.
(l) Research and development expenses and computer software
Research and development expenses are charged to income as incurred. Expenditure relating to computer software developed for internal use ischarged to income as incurred, except if it contributes to the generation of income or to future cost savings, in which case it is capitalized andamortized using the straight-line method over its estimated useful life, which is no longer than 5 years.
(m) Appropriation of retained earnings
The Japanese Commercial Code provides that appropriations of retained earnings require the approval of the shareholders at an ordinary general
meeting. The appropriations of retained earnings are, therefore, not reflected in the consolidated financial statements for the year to which they
relate but are recorded in the consolidated financial statements in the subsequent fiscal year after shareholders’ approval has been obtained.
(n) Net loss and dividends per share
Net loss per share of common stock, shown in the accompanying consolidated statements of operations, is computed based on the weighted
average number of shares outstanding during each year. “Cash dividends per share”, shown in the accompanying consolidated statements ofoperations, represents dividends declared and paid as applicable to the respective fiscal year.
(o) Reclassifications
Certain reclassifications of previously reported amounts have been made to conform with current classifications.

21

2. U.S. DOLLAR AMOUNTSThe U.S. dollar amounts are included solely for convenience. These translations should not be construed as representations that the yen amounts
actually represent, or have been or could be converted into, U.S. dollars. The amounts shown in U.S. dollars are not intended to be computed inaccordance with generally accepted translation procedures. The rate of ¥123.90 = U.S.$1, the approximate current rate prevailing on March 31,
2001, has been used for the purpose of presentation of the U.S. dollar amounts in the accompanying consolidated financial statements.
3. INTEGRATION OF A SUBSIDIARY COMPANY
On August 1, 2001, a subsidiary company, Shin Nikkei Company, Ltd., became a wholly owned subsidiary of the Company through exchange offer
procedures. The exchange was accounted for as a purchase method. As a result, “Negative goodwill” increased by ¥11,776 million ($95,044
thousand), “Minority interest in consolidated subsidiaries” decreased by ¥14,866 million ($119,984 thousand), “Common stock” increased by¥1,627 million ($13,132 thousand), and “Additional paid-in capital” increased by ¥1,463 million ($11,808 thousand). Negative goodwill on thistransaction is being amortized on a straight-line basis over a 3-year period.
4. CASH AND CASH EQUIVALENTS
Reconciliation of cash and cash equivalents to the accounts disclosed on balance sheets at March 31, 2000 and 2001 is as follows:
2001

Thousands of
U.S. dollars
2001¥40,497(1,343)
2,529¥41,683$326,852(10,839)
20,412$336,425

Millions of yen
2000

Cash and deposits ...............................................................................................................................
Time deposits with maturity in excess of 3 months ..........................................................................
Commercial paper included in “Marketable securities” in 2000 and in “Other current assets” in 2001 ...
Cash and cash equivalents.................................................................................................................

¥41,215(1,103)1,800¥41,912

5. INVENTORIESInventories at March 31, 2000 and 2001 comprised the following:Thousands of
U.S. dollars

Millions of yen

Finished products ...............................................................................................................................
Work in process, including costs related to construction-type-contracts .........................................
Raw materials and supplies ...............................................................................................................

2000

2001

2001

¥28,537
28,64812,767¥69,952¥26,184
38,72913,220¥78,133$211,332
312,583
106,699$630,614

6. MARKETABLE SECURITIES AND INVESTMENT SECURITIESThe following is certain information relating to the aggregate carrying amount and fair value of securities after the adoption of the new standard
in 2001.
(a) Held-to-maturity debt securities with available market value
The aggregate carrying amount, market value, gross unrealized gains and losses of held-to-maturity debt securities classified as “Other securities”,
for which market values were available at March 31, 2001 were as follows:
Millions of yen
2001
Carrying
amountMaturity debt securities .......................................................................................

¥2,005

Unrealized
gains

Unrealized
losses¥0¥33Marketvalue¥1,972Thousands of U.S. dollers
2001
Carrying
amountMaturity debt securities .......................................................................................
22$16,182

Unrealized
gains

Unrealized
losses$0$266Marketvalue$15,916(b) The realized gains and losses on sales of “Other securities” during the year ended March 31, 2001 were as follows:
Selling amount ...............................................................................................................................................................
Gains on sales of securities .............................................................................................................................................
Losses on sales of securities.............................................................................................................................................

Millions of yen

Thousands of
U.S. dollars

¥776
529
—

$6,2634,270—(c) The carrying amounts of “Other securities”, for which market values were not available at March 31, 2001 were as follows:
Millions of yen(1) Held-to-maturity securities
Domestic debt securities privately offered ...............................................................................................................
(2) Other securities
Equity investments in nonpublic companies ..........................................................................................................
Others ...................................................................................................................................................................

Thousands of
U.S. dollars¥ 125$ 1,009

11,3952,606

91,96921,033(d) Redemption schedules for maturity of debt securities at March 31, 2001 were as follows:
Due within
one year

Debt securities
Government and municipal bonds .............................................................
Corporate debt securities ..............................................................................
Other .............................................................................................................
Other ....................................................................................................................

¥ 128
2,000
500
209
¥2,837

Due within
one year

Debt securities
Government and municipal bonds .............................................................
Corporate debt securities ..............................................................................
Other .............................................................................................................
Other ....................................................................................................................

Millions of yen
Due after one year, but Due after five years, but
within five years
within ten years

¥ —
2,000
—
28
¥2,028

¥—
—
—
2
¥2

Thousands of U.S. dollars
Due after one year, but Due after five years, but
within five years
within ten years$ 1,033
16,142
4,035
1,687$22,897$—
16,142—
226$16,368

$—
—
—
16
$ 16

Due after morethan ten years

¥125
—
—
—
¥125

Due after morethan ten years$1,009———$1,009Disclosure of the above information for the fiscal year ended March 31, 2000 was not required.

23

7. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2001 bore interest at annual rates ranging from 0.578% to 6.400% and were represented generally by bankoverdrafts or short-term notes maturing at various dates within one year.
Long-term debt at March 31 comprised the following:Thousands of
U.S. dollars

Millions of yen

Loans, principally from banks and insurance companies due from 2000 to 2013
with interest rates ranging from 0.930% to 8.020%:
Secured ......................................................................................................................................
Unsecured ....................................................................................................................................
Loans, principally from banks and insurance companies due from 2001 to 2014
with interest rates ranging from 1.000% to 8.020%:
Secured ......................................................................................................................................
Unsecured ....................................................................................................................................
Unsecured 2.90% Bonds due November 7, 2002, redeemable before due date (A) ..........................
Unsecured 2.45% Bonds due December 5, 2001, redeemable before due date.................................
Unsecured 2.75% Bonds due December 5, 2002, redeemable before due date (B) ..........................
Unsecured 2.45% Bonds due January 10, 2002, redeemable before due date ..................................
Unsecured 2.65% Bonds due February 10, 2004, redeemable before due date ................................
Unsecured 2.40% Bonds due February 10, 2003, redeemable before due date ................................
Unsecured 2.45% Bonds due July 25, 2003, redeemable before due date.........................................
Unsecured 2.675% Bonds due August 20, 2004, redeemable before due date ..................................
Unsecured 2.175% Bonds due September 11, 2002, redeemable before due date ............................
Unsecured 2.00% Bonds due June 22, 2001, redeemable before due date........................................
Unsecured 2.00% Bonds due December 25, 2000, redeemable before due date ...............................
Unsecured 2.40% Bonds due July 19, 2002, redeemable before due date.........................................
......................................................................................................................................
Less—portion due within one year ...................................................................................................
Total long-term debt ..........................................................................................................................

2000

2001

2001

¥052,909
43,711¥000,0—.
—$0,000,0—.
———
10,00010,00010,00010,00010,00010,00010,00010,00010,000
5,000
5,000
7,000
203,620(24,639)¥178,981

43,164
46,825
10,00010,00010,00010,00010,00010,00010,00010,00010,000
5,000
—
7,000
191,989(46,066)¥145,923

348,378
377,926
80,71080,71080,71080,71080,71080,71080,71080,71080,71040,356—56,4981,549,548(371,800)$1,177,748(A) These 2.90% Bonds were issued at a price equal to 100.00% of the principal amount, with interest thereon swapped at the six-month yen
LIBOR rate until September 1998. After that, such interest rates were swapped at the fixed rate.
(B) These 2.75% Bonds, of ¥10,000 million ($80,710 thousand), were issued at a price equal to 99.90% of the principal amount, and interest of¥1,000 million ($8,071 thousand) out of the ¥10,000 million ($80,710 thousand) was swapped at the six-month yen LIBOR rate until
September 1998. After that, such interest rates were swapped at the fixed rate.
Differences between the issued price and the principal amount are credited or charged to income at the time of issue.

24

A summary of assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2001 is as follows:
Millions of yen

Cash and deposits ............................................................................................................................................................
Notes and accounts receivable—trade ..........................................................................................................................
Property, plant and equipment .......................................................................................................................................
Investment securities ......................................................................................................................................................

¥

408
394
119,181
148

Thousands of
U.S. dollars$ 3,293
3,180
961,913
1,195

The aggregate annual maturities of long-term debt after March 31, 2001 are as follows:
Years ending March 31
2002 .................................................................................................................................................................................
2003 .................................................................................................................................................................................
2004 .................................................................................................................................................................................
2005 .................................................................................................................................................................................
2006 .................................................................................................................................................................................
Thereafter ........................................................................................................................................................................

Millions of yen

Thousands of
U.S. dollars¥ 46,066
72,61537,70723,8046,352
5,445¥191,989$ 371,800
586,077
304,334
192,123
51,26743,947$1,549,548

8. RETIREMENT BENEFIT PLAN
The Company and its domestic subsidiaries have defined benefit tax qualified pension plans and non-contributory plans covering substantially all
employees. Additional benefits may be granted to employees according to the conditions under which termination occurs. Certain foreignsubsidiaries have defined contribution plans.
Accrued severance indemnities as of March 31, 2001 are analyzed as follows:
Projected benefit obligations ..........................................................................................................................................
Fair value of plan assets ..................................................................................................................................................
...................................................................................................................................................................
Unrecognized transition amount ...................................................................................................................................
Unrecognized actuarial differences ................................................................................................................................
Accrued severance indemnities .......................................................................................................................................

Millions of yen

Thousands of
U.S. dollars¥(67,577)
21,161(46,416)
25,067
2,695¥(18,654)$(545,416)
170,791(374,625)
202,316
21,752$(150,557)

Millions of yen

Thousands of
U.S. dollars

The net pension expense related to the retirement benefits for the year ended March 31, 2001 was as follows:
Service cost ...................................................................................................................................................................
Interest cost ...................................................................................................................................................................
Expected return on plan assets .......................................................................................................................................
Amortization of transition amount ................................................................................................................................
Net pension expense ........................................................................................................................................................

¥3,797
1,793
(628)
4,499
¥9,461$30,646
14,471(5,069)36,312$76,360

Note 1: In addition to the above costs, additional benefits amounting to ¥2,335 million ($18,846 thousand) were charged to special losses for theyear ended March 31, 2001.
Note 2: The figures for “Amortization of transition amount” in the above table include an amount in respect of employees who retired in thefiscal year of ¥2,098 million ($16,933 thousand) which was amortized at the time of their retirement.
Assumptions used in calculation of the above information were as follows:
Discount rate ...................................................................................................................................................................
Expected rate of return on plan assets ............................................................................................................................
Method of attributing the projected benefits to periods of employee service .................................................................
Amortization of unrecognized actuarial differences......................................................................................................
Amortization of transition amount ................................................................................................................................

3.0%
3.0%
Straight-line basis
Mainly 12 years
12 years25

9. INCOME TAXESThe Company and its domestic subsidiaries are subject to a number of different taxes based on income which, in the aggregate, indicate a statutory
effective tax rate of approximately 42% for the year ended March 31, 2000 and 2001.
Tax losses can be carried forward for a five-year period for offset against future taxable income.
Significant components of deferred tax assets and liabilities at March 31, 2000 and 2001 were as follows:
Thousands of
U.S. dollars

Millions of yen
2000

Deferred tax assets:
Tax loss carry forwards ...............................................................................................................
Loss on write-down of investment securities ..............................................................................
Accrued severance indemnities ...................................................................................................
Loss on disposal of fixed assets ...................................................................................................
Allowance for doubtful accounts ................................................................................................
Others ......................................................................................................................................
Total gross deferred tax assets .............................................................................................
Valuation allowance ...................................................................................................................
Total deferred tax assets, net of valuation allowance .........................................................
Deferred tax liabilities:
Depreciation ................................................................................................................................
Others ......................................................................................................................................
Total gross deferred tax liabilities .......................................................................................
Net deferred tax assets ........................................................................................................................

2001

2001

¥22,859
—
3,038
3,200
1,971
5,297
36,365(21,046)
15,319¥20,199
6,571
5,270
3,425
2,399
8,413
46,277(31,782)
14,495$163,027
53,03542,534
27,64319,362
67,901
373,502(256,513)
116,989(1,519)(406)(1,925)¥13,394

(87)
(465)
(552)
¥13,943(702)(3,753)(4,455)$112,534

As a result of making a loss before income taxes and minority interest for the years ended March 31, 2000 and 2001, the breakdown of thedifference between the statutory tax rate and the effective income tax rate has not been presented.

10. APPROPRIATIONS OF RETAINED EARNINGS
No cash dividends were proposed and approved at the ordinary general meeting of shareholders of the Company held on June 28, 2001.
11. LEASE TRANSACTIONSThe Companies charge or credit to income periodic lease payments and receipts for financing leases which do not have options to transfer
ownership of leased assets to lessees. Such periodic lease payments and receipts under financing lease contracts totaled ¥2,148 million and ¥2,113
million ($17,054 thousand), ¥183 million and ¥142 million ($1,146 thousand), respectively, for the years ended March 31, 2000 and 2001. Futurelease payments and receipts under the Companies’ financing leases and non-cancelable operating leases, including amounts representing interest,
at March 31, 2000 and 2001 were as follows:
Thousands of
U.S. dollars

Millions of yen

Lease payments
Due within one year ....................................................................................................................
Due beyond one year ..................................................................................................................
......................................................................................................................................
Lease receipts
Due within one year ....................................................................................................................
Due beyond one year ..................................................................................................................
......................................................................................................................................

26

2000

2001

2001

¥2,4703,555¥6,025¥2,382
3,027¥5,409$19,225
24,431$43,656¥ 449
574¥1,023

¥ 288
294
¥ 582

$2,3242,373$4,697

Leased assets under the Companies’ financing leases, where lessors retain ownership of leased assets, are accounted for as operating leases by
the Companies. If such leases were capitalized, then the cost of the assets and the related accumulated depreciation at March 31, 2000 and 2001
would be as follows:
Millions of yen
2000
Cost

Buildings and structures .......................................................................................
Machinery and equipment ...................................................................................
Intangible fixed assets...........................................................................................

Accumulated
depreciation

¥ 229
8,733
152
¥9,114Net
amount

¥ 192
4,243
73
¥4,508

¥ 37
4,490
79
¥4,606
Thousands of
U.S. dollars

Millions of yen
2001
Cost

Buildings and structures .......................................................................................
Machinery and equipment ...................................................................................
Intangible fixed assets...........................................................................................

¥

74
8,890
156
¥9,1202001

Accumulated
depreciation

¥

59
4,793
77
¥4,929Net
amount

¥

15
4,097
79
¥4,191Net
amount$121
33,067
638$33,826

The depreciation amount for these leased assets computed on the straight-line method over the periods of the leases would have been ¥2,148
million and ¥2,113 million ($17,054 thousand) for the years ended March 31, 2000 and 2001, respectively.
Fixed assets excluding sub-leased assets, which are leased to other companies under financing leases without options to transfer ownership ofthe leased assets to lessees at March 31, 2000 and 2001, were as follows:
Millions of yen
2000
Cost

Machinery and equipment ...................................................................................

¥466

Accumulated
depreciation

¥318

Net
amount¥148
Thousands of
U.S. dollars

Millions of yen

Cost

Machinery and equipment ...................................................................................

¥153

2001
Accumulated
depreciation

¥107

Net
amount

¥46

2001
Net
amount$372

The depreciation amount of these leased assets computed on the straight-line method over the periods of the leases would have been ¥136
million and ¥105 million ($847 thousand) for the years ended March 31, 2000 and 2001, respectively.

27

12. DERIVATIVESIn the normal course of business, the Company and its subsidiaries enter into various derivative financial instruments in order to manage
exposure resulting from fluctuations in foreign currency exchange rates, interest rates and prices of aluminum ingot in the market.
The Companies do not hold or issue derivative financial instruments for trading purposes.
Effective from the year ended March 31, 2001, the Company and its subsidiaries adopted the new Japanese accounting standard for financial
instruments, which is effective for years beginning on or after April 1, 2000. Under the new standard, disclosure of the fair value of derivatives thatare regarded as the commencement or suspension of the hedges is required. The following are the interest rate swap agreement contracts at March
31, 2001 which are recognized as suspension of the hedges.
Thousands of
U.S. dollars

Millions of yen
2001
Contract
amountInterest rate swap agreements:
Variable-rate into fixed-rate obligations ............................
Fixed-rate into variable-rate obligations ...........................

¥11,000.*1
11,000.*1

2001

Estimated
fair value

Unrealized
gain/(loss)¥558.*2(132.)*2

¥138
(103)

Contract
amountEstimated
fair value

Unrealized
gain/(loss)$88,781
88,781$4,504(1,065)$1,114(831)*1 The “Contract amount” of interest rate swap agreements represent the nominal amount of the agreements.
*2 The fair values of interest rate swap agreements were estimated using quotes from brokers and represent the discounted amounts of net future cash flows.

13. CONTINGENT LIABILITIESContingent liabilities at March 31, 2001 for loans guaranteed and other guarantees given in the ordinary course of business amounted to ¥29,766
million ($240,242 thousand), including ¥6,511 million ($52,550 thousand) shared by other joint guarantors, and ¥6,313 million ($50,952
thousand) for notes discounted.
14. SEGMENT INFORMATIONThe Companies operate within four distinct industry segments mainly in Japan: aluminum ingot and chemicals, aluminum sheet and extrusions,fabricated products and others and building materials.
The “Aluminum ingot and chemicals” segment supplies aluminum primary and remelted ingot used for various industrial materials, andproduces a wide spectrum of aluminas and alumina hydrates ranging from raw materials to basic materials for ceramic compounds.
The “Aluminum sheet and extrusions” segment produces sheet, coil, and extrusion products consisting primarily of shapes, tubes and rods.
The “Fabricated products and others” segment produces a variety of products which include, among others, refrigerated warehouses,
aluminum foil and heat exchange radiators.
The “Building materials” segment produces a wide range of materials including sashes, curtain walls, and doors and fences for commercial
and residential construction.
Corporate items include general and administrative expenses and other expenses not specifically related to business segments.
Export sales and operations outside Japan are insignificant.
Information by industry segment for the years ended March 31, 2000 and 2001 were as follows:
Millions of yen
2000
Aluminumingot andchemicals

Sales:
Customers ...........................................
Intersegment ......................................
Total ............................................
Operating expenses ...................................
Operating profit (loss) ..............................
Identifiable assets ......................................
Depreciation ..............................................
Capital expenditures .................................

¥ 86,642
48,636135,278
127,750¥ 7,528¥ 96,759¥ 3,024¥ 2,666

Aluminum
sheet andextrusions¥55,990
26,66682,65682,011¥ 645¥84,993¥ 3,648¥ 2,110*1 Netting of corporate items...¥4,012 million *2 Netting of corporate items...¥21,379 million

28

Fabricatedproducts
and others

Building
materials¥221,849
18,011
239,860
240,076¥ (216)¥224,704¥ 9,094¥ 4,773¥184,713
3,400
188,113
189,911¥ (1,798)¥200,068¥ 7,278¥ 3,876

Eliminationor
corporate items¥—(96,713)(96,713)(92,704) *1¥ (4,009)¥ (1,178) *2¥
3¥ —Consolidated¥549,194—
549,194
547,044¥ 2,150¥605,346¥ 23,047¥ 13,425

Millions of yen
2001

Sales:
Customers ...........................................
Intersegment ......................................
Total ............................................
Operating expenses ...................................
Operating profit (loss) ..............................
Identifiable assets ......................................
Depreciation ..............................................
Capital expenditures .................................

Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts
and others

Building
materials¥ 91,172
51,026142,198
133,675¥ 8,523¥ 98,350¥ 2,849¥ 3,153¥69,006
26,39595,401
94,022¥ 1,379¥91,520¥ 3,289¥ 2,620¥225,763
20,731
246,494
235,683¥ 10,811¥213,424¥ 6,067¥ 7,198¥179,282
1,697
180,979
186,264¥ (5,285)¥200,581¥ 7,069¥ 4,644

Eliminationor
corporate items

Consolidated¥—¥565,223(99,849)—(99,849)565,223(96,626)*1 553,018¥ (3,223)¥ 12,205¥ (3,502)*2 ¥600,373¥
94¥ 19,368¥47¥ 17,662*1 Netting of corporate items...¥3,207 million *2 Netting of corporate items...¥26,484 million
Thousands of U.S. dollars

Sales:
Customers ..........................................
Intersegment ......................................
Total ............................................
Operating expenses ...................................
Operating profit (loss) ..............................
Identifiable assets .....................................
Depreciation ..............................................
Capital expenditures .................................

Aluminumingot andchemicals

Aluminum
sheet andextrusions$ 735,852
411,832
1,147,684
1,078,895$ 68,789$ 793,786$ 22,994$ 25,448$556,949
213,035
769,984
758,854$ 11,130$738,660$ 26,546$ 21,146

2001
Fabricatedproducts
and others$1,822,139
167,320
1,989,459
1,902,203$ 87,256$1,722,551$ 48,967$ 58,095

Building
materials$1,446,989
13,6971,460,686
1,503,341$ (42,655)$1,618,894$ 57,054$ 37,482

Eliminationor
corporate items

Consolidated$— $4,561,929(805,884)—(805,884) 4,561,929(779,871)*1 4,463,422$ (26,013) $ 98,507$ (28,265)*2 $4,845,626$
759 $ 156,320$
379 $ 142,550*1 Netting of corporate items...$25,884 thousand *2 Netting of corporate items...$213,753 thousand

As discussed in Note 1 (i), the Company and its subsidiaries adopted the new Japanese accounting standard for retirement benefits, which iseffective for years beginning on or after April 1, 2000. The effect of this change for the year ended March 31, 2000 was to decrease “Operating
profit” by approximately ¥176 million ($1,421 thousand) in the “Aluminum ingot and chemicals” segment, by approximately ¥151 million($1,219 thousand) in the “Aluminum sheet and extrusions” segment, and by approximately ¥45 million ($363 thousand) in the “Fabricatedproducts and others” segment, to increase “Operating loss” by approximately ¥275 million ($2,220 thousand) in the “Building materials”
segment, and to decrease “Operating loss” by approximately ¥8 million ($65 thousand) in the “Elimination or corporate items” column.

29Report of Independent Accountants

June 28, 2001
To the Board of Directors of
Nippon Light Metal Company, Ltd.
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, shareholders’ equity andof cash flows, expressed in Japanese yen, present fairly, in all material respects, the financial position of Nippon Light Metal Company, Ltd. andits consolidated subsidiaries at March 31, 2000 and 2001, and the results of their operations and their cash flows for the years then ended inconformity with accounting principles generally accepted in Japan. These consolidated financial statements are the responsibility of theCompany’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our auditsof these statements in accordance with auditing standards generally accepted in Japan which require that we plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the accompanying consolidated financial statements, effective from the year ended March 31, 2001, the Company andits subsidiaries adopted the new Japanese accounting standards for financial instruments, retirement benefits, and foreign currency translation.
The U.S. dollars amounts shown in the accompanying consolidated financial statements have been translated solely for convenience. We havereviewed this translation and, in our opinion, the consolidated financial statements expressed in Japanese yen have been translated into U.S.
dollars on the basis described in Note 2 to the consolidated financial statements.

Notice to Readers
The accompanying consolidated financial statements are not intended to present the financial position and the results of operations and of cash flows in accordance with accounting
principles and practices generally accepted in countries and jurisdictions other than Japan. Accordingly the accompanying consolidated balance sheets and the related consolidated
statements of operations, shareholders’ equity and of cash flows and their utilization are not designed for those who are not informed about Japanese accounting principles, procedures andpractices.
The standards, procedures and practices utilized in Japan to audit such financial statements may differ from those generally accepted in countries and jurisdictions other than Japan.

30

Overseas Network
Overseas Subsidiaries
and Affiliates
North America
Alpac Aluminium Inc.
Quebec, Canada
Phone: 1-514-848-8000
Aluminum smelting(50%)
Nikkei North America
Aluminum Inc.
Ohio, U.S.A.
Phone: 1-216-463-5565
Trading and marketing(100%)
Toyal America Inc.
Illinois, U.S.A.
Phone: 1-815-740-3037
Aluminum powder and paste(100%)
Alcan Nikkei Asia Holdings
LimitedBermudaPhone: 1-441-295-3550
Holding company for investment with
Alcan in Southeast Asia and China(40%)

EuropeToyal Europe Société Anonyme
Accous, France
Phone: 33-05-59-983535
Aluminum powder and paste(100%)

East Asia
Alcan Nikkei Korea Limited
Seoul, Korea
Phone: 82-2-777-9195
Trading and marketing(51%) 1
Nonfemet International(China-Canada-Japan)
Aluminium Co., Ltd.
Shenzhen, China
Phone: 86-755-661-1569
Extrusion 2
Alcan Nikkei China Limited
Hong Kong, SAR, China
Phone: 852-2522-3001
Trading and marketing(51%)
Nippon Light Metal (Hong Kong)
LimitedHong Kong, SAR, China
Phone: 852-2541-5563
Building materials(100%)Southeast Asia
Alcan Nikkei Asia Company
LimitedMalaysia
Phone: 60-3-7954-5286
Management of invested companies inSoutheast Asia
(40%)
Alcan Nikkei Siam Limited
Bangkok, Thailand
Phone: 66-2-260-8000
Aluminum sheet, foil 3
Alcan Nikkei Thai Limited
Bangkok, Thailand
Phone: 66-2-260-7000
Extrusions, aluminum alloys 4
Aluminium Company of
Malaysia Bhd.
Malaysia
Phone: 60-3-7956-1588
Aluminum sheet, foil, extrusions 5

Alcom Nikkei Specialty
Coatings Sdn. Bhd.
Malaysia
Phone: 60-3-3342-2234
Pre-coated finstock 6
Amalgamated Aluminium
and Alloys Sdn. Bhd.
Malaysia
Phone: 60-3-3341-9500
Aluminum alloys(35%)
Nikkei Singapore Aluminium
Pte. Ltd.
Singapore
Phone: 65-222-8991
Trading and marketing(100%)
Daiki Nikkei Thai Co., Ltd.
ThailandPhone: 66-3821-4631
Aluminum alloys(35%)
1Interest held through Nikkei Hong
Kong Aluminium Co., Ltd., which is
100% owned by Nippon Light Metal
Company, Ltd. (NLM)

2

45%; Interest held through Alcan
Nikkei Asia Holdings Limited (ANAH)

363%; Interest held through ANAH
37%; Interest held through Nikkei
Holdings Pte. Ltd., which is 100% owned
by ANAH

475%; Interest held through ANAH
2.6%; Interest held through Nikkei
Holdings Pte. Ltd., which is 100% owned
by ANAH

5

49.15%; Interest held through ANAH
10%; Interest held through Alcan Nikkei Siam
Limited

650%; Interest held through ANAH
50%; Interest held through Aluminium
Company of Malaysia Bhd.

(As of June 28, 2001)31

Directors and Officers

Directors

Officers

Yukoh Masuda

Shigesato Sato

Toshikazu Fujita

Chairman of the Board

President
Chief Executive Officer

Yoji Miyauchi

Shigesato Sato
President
Representative Director

Yoshisato Hiratsuka
Akihiko Hayashi
Kimihito Kakitani
Takashi Ishiyama

Yoshisato Hiratsuka
Executive Vice President
Senior Executive Officer

Koji Kawakami

Akihiko Hayashi

Toshikazu Wasa

Executive Vice President
Senior Executive Officer

Mitsuru Ishihara
Yoshiaki Kurihara

Senior Executive Officer

Hisao Kobayahi

Shigeru Kohmura

Glenn R. Lucas

Auditors
Hideaki Nagaoka(As of June 28, 2001)
Executive Officer

Michio Hara
Executive Officer

Takashi Ishiyama
Executive Officer

Motoi Kobayashi

Hajime Hosokawa

Executive Officer

Yasuyuki Wakahara

Yoshinobu Hiki

Seiichi Takeda

Executive Officer

Takamichi Sakai
Executive Officer

32

Tsuyoshi Nakajima

Kimihito Kakitani

Kazuyuki Hasegawa

Ariyoshi Okumura

Teruo Miyashita

Corporate Data
Head Office
NYK Tennoz Building
2-20, Higashi-Shinagawa 2-chome
Shinagawa-ku, Tokyo 140-8628, Japan
http://www.nikkeikin.co.jp
Phone: 03-5461-9281
Fax: 03-5461-9200
EstablishedMarch 30, 1939
Paid-In Capital¥39,084 million
Shares of Common Stock
Authorized: 1,600,000,000
Issued: 543,350,370
Number of Shareholders
57,392(As of March 31, 2001)
Stock Exchange Listings
Tokyo, Osaka and six other domestic
stock exchanges
Transfer Agent of Common Stock
The Chuo Mitsui Trust & Banking
Co., Ltd.
Last Shareholders’ Meeting
June 28, 2001

Major Shareholders
Alcan Nikkei Asia Holdings Ltd.
(8.39%)
Dai-Ichi Kangyo Bank, Ltd.
(3.72%)
Asahi Mutual Life Insurance Co.
(3.64%)
Industrial Bank of Japan, Ltd.
(3.46%)The Sumitomo Trust & Banking
Co., Ltd.
(3.22%)The Chuo Mitsui Trust & Banking Co., Ltd.
(3.08%)The Light Metal Educational
Foundation, Inc.
(2.74%)
Namekawa Aluminum Co., Ltd.
(2.06%)
Itochu Co., Ltd.
(2.05%)The Chuo Mitsui Trust & Banking Co., Ltd.
(Trust Accounts)(1.86%)
Major Domestic AffiliatedCompanies
Shin Nikkei Company, Ltd.
Aluminum sashes, construction materials(100%)
Nippon Fruehauf Co., Ltd.
Aluminum vans, trucks, trailers(51%)
Toyo Aluminium K.K
Aluminum foil, powder and paste(100%)

Riken Light Metal Industrial Co., Ltd.
Aluminum construction materials(100%)
Nippon Electrode Co., Ltd.
Carbon for iron and steel blast furnaces
and for aluminum smelting, and othertypes of carbon(100%)
Nikkei Sangyo Co., Ltd.
Aluminum welding rods, various kinds ofcontract work
(98.6%)
Nikkei Information Systems Co., Ltd.
Computer operation under contract,
marketing office(100%)
Nikkei Logistics Co., Ltd.
Transport, warehousing 1
Nikkei Products Co., Ltd.
Sales of household utensils(100%)
Nikkei Extrusions Co., Ltd.
Aluminum extruded products(100%)
146%; Direct interest by NLM
44%; Interest held through Shin
Nikkei Co., Ltd.
10%; Interest held through Nippon
Fruehauf Co., Ltd.

(As of June 28, 2001)

33

Nippon Light Metal Company, Ltd.
NYK Tennoz Building,
2-20, Higashi-Shinagawa 2-chome
Shinagawa-ku, Tokyo 140-8628, Japan
http://www.nikkeikin.co.jp

Printed in Japan