Osaka office
Kogin Bldg.
4-1-1 Koraibashi, Chuo-ku
Osaka 541-0043, Japan
Telephone 81-6-6223-9111
Facsimile 81-6-6201-3716
Tokyo office
Hibiya Dai Bldg.
1-2-2 Uchisaiwai-cho, Chiyoda-ku
Tokyo 100-0011, Japan
Telephone 81-3-3506-7475
Facsimile 81-3-3506-7598

1999

FINANCIAL REPORT'99 Aug.,2000,Printed in JapanCOMPANY PROFILE
Established in 1941, Nippon Shokubai has continued to focus research and development efforts
in four key areas: catalyst technology which is our most fundamental technology, polymer synthesis
technology, environmental purification technology and organic synthesis technology. Our leadingknow-how and technology have helped us develop a host of innovative products that contributeto people, industry and society.
The company's mainstay basic chemicals such as acrylic acid, methacrylic acid and ethylene oxide,and fine and specialty chemicals such as super-absorbent polymers and higher-alcohol products,
and polymers and resins are raw materials that are processed into a wide variety of vital everyday
products, including textiles, detergents, paints, foods, pharmaceuticals, plastic products, electronicparts and paper diapers. Catalysts and environmental products made by Nippon Shokubai havereceived high praise from our customers. Our industrial catalysts are used not only in chemical
production, but also to control environmental pollutants such as acid rain and dioxins in countries
around the world.
In overseas countries, Nippon Shokubai's technology for manufacturing chemical products is as
well-respected as our products. We export technologies for manufacturing acrylic acid, acrylic ester,
methacrylic acid and methacrylic ester to countries all around the world, including Asia, Europe andthe United States.
In recent years we have increased our focus on developing overseas businesses. These efforts have
paid off in the establishment of production facilities in North America and Southeast Asia
for the manufacture of acrylic acid and acrylic ester, and in Europe for the production of superabsorbent polymers.
Nippon Shokubai sees the 21st century as an era in which chemical technology will develop
in closer harmony with the environment. Accordingly, in 1991 we adopted "TechnoAmenity"
as our corporate philosophy. This concept, which will serve as our foundation for the newmillennium, points us in a new business direction. We plan to allocate managerial resources more
effectively, while working to strengthen our core businesses, promote new product development, andexpand our environmental business.
Preservation of the global environment has become a critical concern. Standing firmly
on our "TechnoAmenity" philosophy, Nippon Shokubai is committed to holding its position as oneof the chemical industry leaders in environmentally sound activities, as we continue to promotea more comfortable and affluent society.

Nippon Shokubai Co.,Ltd. Years ended March 31, 1999 and 1998

FINANCIAL HIGHLIGHTS
Thousands of
U.S.dollars

Millions of yen

1999

1998

1999

￥128,998￥141,755

6,055
6,565
4,115

7,821
10,146
5,546$1,070,078
50,22854,45834,135￥203,537￥193,178

109,533

106,113

For the YearNet Sales ..........................................................................
Operating Income ...............................................................
Income before Income Taxes .................................................
Net Income........................................................................
At Year-End
Total Assets.........................................................................
,
Total Shareholders Equity.....................................................

$1,688,403
908,610Yen

Per Share Amounts
Net Income........................................................................
Cash Dividends...................................................................

￥

20.90
7.00

￥

U.S.dollars

28.17
7.00

$

0.17
0.06

Net Sales (Billions of yen)
'95 5938'96 6141'97* 20

14

Basic Chemicals Group10 12819

12 1355 6 46'98 63'99 5119

46
47

Fine and Specialty Chemicals Group

15
14

15
15

141

128

Polymers Environment Business
andand Catalysts Group
Resins GroupNet Income (Billions of yen)
'95

4.8
5.3

'96
'97*

1.3
5.5

'98

4.1

'99

Shareholders' Equity (Billions of yen)
'95

97.2

'96

101.1

'97*

101.7

'98
'99

106.1
109.5

* The year 1997 covers only four months, from December 1, 1996, to March 31, 1997, since the company changed its fiscal year
and accounting period at the 84th annual general meeting of shareholders.

1

2

COMPANY PROFILE
Established in 1941, Nippon Shokubai has continued to focus research and development efforts
in four key areas: catalyst technology which is our most fundamental technology, polymer synthesis
technology, environmental purification technology and organic synthesis technology. Our leadingknow-how and technology have helped us develop a host of innovative products that contributeto people, industry and society.
The company's mainstay basic chemicals such as acrylic acid, methacrylic acid and ethylene oxide,and fine and specialty chemicals such as super-absorbent polymers and higher-alcohol products,
and polymers and resins are raw materials that are processed into a wide variety of vital everyday
products, including textiles, detergents, paints, foods, pharmaceuticals, plastic products, electronicparts and paper diapers. Catalysts and environmental products made by Nippon Shokubai havereceived high praise from our customers. Our industrial catalysts are used not only in chemical
production, but also to control environmental pollutants such as acid rain and dioxins in countries
around the world.
In overseas countries, Nippon Shokubai's technology for manufacturing chemical products is as
well-respected as our products. We export technologies for manufacturing acrylic acid, acrylic ester,
methacrylic acid and methacrylic ester to countries all around the world, including Asia, Europe andthe United States.
In recent years we have increased our focus on developing overseas businesses. These efforts have
paid off in the establishment of production facilities in North America and Southeast Asia
for the manufacture of acrylic acid and acrylic ester, and in Europe for the production of superabsorbent polymers.
Nippon Shokubai sees the 21st century as an era in which chemical technology will develop
in closer harmony with the environment. Accordingly, in 1991 we adopted "TechnoAmenity"
as our corporate philosophy. This concept, which will serve as our foundation for the newmillennium, points us in a new business direction. We plan to allocate managerial resources more
effectively, while working to strengthen our core businesses, promote new product development, andexpand our environmental business.
Preservation of the global environment has become a critical concern. Standing firmly
on our "TechnoAmenity" philosophy, Nippon Shokubai is committed to holding its position as oneof the chemical industry leaders in environmentally sound activities, as we continue to promotea more comfortable and affluent society.

Nippon Shokubai Co.,Ltd. Years ended March 31, 1999 and 1998

FINANCIAL HIGHLIGHTS
Thousands of
U.S.dollars

Millions of yen

1999

1998

1999

￥128,998￥141,755

6,055
6,565
4,115

7,821
10,146
5,546$1,070,078
50,22854,45834,135￥203,537￥193,178

109,533

106,113

For the YearNet Sales ..........................................................................
Operating Income ...............................................................
Income before Income Taxes .................................................
Net Income........................................................................
At Year-End
Total Assets.........................................................................
,
Total Shareholders Equity.....................................................

$1,688,403
908,610Yen

Per Share Amounts
Net Income........................................................................
Cash Dividends...................................................................

￥

20.90
7.00

￥

U.S.dollars

28.17
7.00

$

0.17
0.06

Net Sales (Billions of yen)
'95 5938'96 6141'97* 20

14

Basic Chemicals Group10 12819

12 1355 6 46'98 63'99 5119

46
47

Fine and Specialty Chemicals Group

15
14

15
15

141

128

Polymers Environment Business
andand Catalysts Group
Resins GroupNet Income (Billions of yen)
'95

4.8
5.3

'96
'97*

1.3
5.5

'98

4.1

'99

Shareholders' Equity (Billions of yen)
'95

97.2

'96

101.1

'97*

101.7

'98
'99

106.1
109.5

* The year 1997 covers only four months, from December 1, 1996, to March 31, 1997, since the company changed its fiscal year
and accounting period at the 84th annual general meeting of shareholders.

1

2

TO OUR SHAREHOLDERS
Outline of Business Performance

Future Topics

In the latter half of the fiscal year, the prolonged economic recession that has gripped Japan
has apparently bottomed out, as the government implemented measures to stimulate the economy
and the Bank of Japan enacted new financial deregulation policies. Despite these efforts,
however, consumer spending and investment in facilities remained sluggish throughout the fiscal
year.
The chemical industry experienced poor sales due to low domestic demand and the continued
economic stagnation in Southeast Asia. Business performance thus remained weak.
Product prices dropped, and so did our sales volumes. Total net sales amounted to 128,998
million yen, a decrease of 12,756 million yen (9.0 percent) from the previous term.
Ordinary profits totaled 6,870 million yen, down 2,276 million yen (24.9 percent)from the previous term. This decline was partially due to a decrease in revenues from receiving
royalties and an increase in depreciation expenses. Net profits for the term were 4,115 million
yen, down 1,431 million yen (25.8 percent) from the previous fiscal year.

While Japan's overall economic slump seems to be improving, private-sector
investment in facilities and the employment situation show no upward signs.
In this unfavorable environment, we are focusing companywide efforts
on strengthening our management foundation with the aim of maintaining
stable, long-term growth.
By reinforcing our core businesses and allocating managerial resources
more effectively, we intend to strengthen our specialty chemicals product line,
bring new products to market, and reactivate our existing businesses. We will
also focus on "Responsible Care" activities and improving our systems
for obtaining ISO certification.
As for overseas activities, in November 1998 we began full-scale productionof acrylic acid and acrylic ester at the P.T. Nisshoku Tripolyta Acrylindo plantin Indonesia. Marketing of these products has also begun. At the start of fiscal
year 1999, our joint venture company, Singapore MMA Monomer Pte.Ltd.
plant began production of methacrylic ester.
We are planning to construct a super-absorbent polymer plant in Europe,and in the United States our joint-venture company, American Acryl NA, LLC,
is energetically making preparations to construct an acrylic acid production
plant.
As the year 2000 approaches, the company is working to prevent
any so-called Y2K computer problems. We have taken measures to makeour own computers Y2K compliant, while also investigating the Y2K readinessof our clients' systems. In March 1999 we set up Computer System Year 2000
Readiness Committee to spearhead these efforts. The committee is preparing
a crisis containment plan designed to minimize adverse business effects,
should any Y2K problems occur.
We look forward to the continued support of our shareholders in the fiscal
year ahead.

Dividend Policy
Nippon Shokubai considers shareholder dividends as a top corporate priority, and our policy
is to ensure a pay-out of continuous, stable dividends to our shareholders. At the same time,
the company must maintain its competitive edge and follow practices that promote sustainablegrowth, and this requires judicious investment in facilities and research and development. It isthus vital that we retain some of the profits within the company.
Based on the current business environment and the results in the fiscal year just ended,
the company has decided to pay an annual dividend of ￥7.00 per share, including the ￥3.50
paid as an interim dividend, which is equivalent to a pay-out ratio of 33.5 percent.
The company plans to use its retained earnings for future projects to boost production
capacity, improve operating efficiency, and engage in new research and development activities.
In these efforts our aim will be to promote steady and continuous business growth in the years
ahead.

3

Kenji Aida
President

4

TO OUR SHAREHOLDERS
Outline of Business Performance

Future Topics

In the latter half of the fiscal year, the prolonged economic recession that has gripped Japan
has apparently bottomed out, as the government implemented measures to stimulate the economy
and the Bank of Japan enacted new financial deregulation policies. Despite these efforts,
however, consumer spending and investment in facilities remained sluggish throughout the fiscal
year.
The chemical industry experienced poor sales due to low domestic demand and the continued
economic stagnation in Southeast Asia. Business performance thus remained weak.
Product prices dropped, and so did our sales volumes. Total net sales amounted to 128,998
million yen, a decrease of 12,756 million yen (9.0 percent) from the previous term.
Ordinary profits totaled 6,870 million yen, down 2,276 million yen (24.9 percent)from the previous term. This decline was partially due to a decrease in revenues from receiving
royalties and an increase in depreciation expenses. Net profits for the term were 4,115 million
yen, down 1,431 million yen (25.8 percent) from the previous fiscal year.

While Japan's overall economic slump seems to be improving, private-sector
investment in facilities and the employment situation show no upward signs.
In this unfavorable environment, we are focusing companywide efforts
on strengthening our management foundation with the aim of maintaining
stable, long-term growth.
By reinforcing our core businesses and allocating managerial resources
more effectively, we intend to strengthen our specialty chemicals product line,
bring new products to market, and reactivate our existing businesses. We will
also focus on "Responsible Care" activities and improving our systems
for obtaining ISO certification.
As for overseas activities, in November 1998 we began full-scale productionof acrylic acid and acrylic ester at the P.T. Nisshoku Tripolyta Acrylindo plantin Indonesia. Marketing of these products has also begun. At the start of fiscal
year 1999, our joint venture company, Singapore MMA Monomer Pte.Ltd.
plant began production of methacrylic ester.
We are planning to construct a super-absorbent polymer plant in Europe,and in the United States our joint-venture company, American Acryl NA, LLC,
is energetically making preparations to construct an acrylic acid production
plant.
As the year 2000 approaches, the company is working to prevent
any so-called Y2K computer problems. We have taken measures to makeour own computers Y2K compliant, while also investigating the Y2K readinessof our clients' systems. In March 1999 we set up Computer System Year 2000
Readiness Committee to spearhead these efforts. The committee is preparing
a crisis containment plan designed to minimize adverse business effects,
should any Y2K problems occur.
We look forward to the continued support of our shareholders in the fiscal
year ahead.

Dividend Policy
Nippon Shokubai considers shareholder dividends as a top corporate priority, and our policy
is to ensure a pay-out of continuous, stable dividends to our shareholders. At the same time,
the company must maintain its competitive edge and follow practices that promote sustainablegrowth, and this requires judicious investment in facilities and research and development. It isthus vital that we retain some of the profits within the company.
Based on the current business environment and the results in the fiscal year just ended,
the company has decided to pay an annual dividend of ￥7.00 per share, including the ￥3.50
paid as an interim dividend, which is equivalent to a pay-out ratio of 33.5 percent.
The company plans to use its retained earnings for future projects to boost production
capacity, improve operating efficiency, and engage in new research and development activities.
In these efforts our aim will be to promote steady and continuous business growth in the years
ahead.

3

Kenji Aida
President

4

From April 1, 1998, to March 31, 1999

REVIEW OF OPERATIONS

11%
of Net Sales

The year 1997 covers only four months, from December 1, 1996, to March 31, 1997, since the company changed
its fiscal year and accounting period at the 84th annual general meeting of shareholders.

Polymers and Resins Group40%
of Net Sales

TM

Sales of unsaturated polyester resins (product name: EPOLAC ) continued to fall, as housing investment
and private-sector investment in facilities remained low. Coupled with a continued decline in market prices,
this led to lower revenues.
Market prices of ultra weather-resistant paint resins and electrical insulating coating showed an upward
trend. However, sales of other resins for paints and adhesives declined, due to a fall in their use for houses
and automobiles.
As a result, overall sales of the Polymers and Resins Group dropped 10.1 percent from the previous year,
to 14,158 million yen.

Basic Chemicals Group
Demand for acrylic acid and acrylic ester for use in super-absorbent polymers remained strong, but exports to Asian
countries of products for other uses in paints and adhesives dropped. This decline, coupled with falling prices, resulted in lower
revenues. Sales of methacrylic acid and methacrylic ester also fell, due to lower market prices and sluggish demand for theiruse in resins and paints.
The international market price of ethylene glycol also plummeted, and revenues suffered accordingly. Sales of ethyleneoxide and its derivatives also fell, due to low domestic and overseas demand for their use in surface-active agents andurethanes.
Domestic demand remained stagnant for phthalic anhydride for use in plasticizers, and the market price fell. Consequently,
sales volumes and revenues declined. Sales of maleic anhydride for use in polymers and resins also failed to grow.
As a result, sales of the Basic Chemicals Group fell 18.7 percent from the previous term, to 51,908 million yen.
'95

61

'97

19

'97
'98
'99

19
5
15
14
Net Sales by the Polymers and Resins Group (Billions of yen)

12%of Net Sales

59

'96

'95
'96

20

'98
'99

63
Net Sales by the Basic Chemicals Group (Billions of yen)

Environment Business and Catalysts Group

51

Sales of industrial catalysts through technology licensing fell overall, because new
demand was concentrated in the previous term. Sales of automotive catalysts grew, but
sales of wet-air oxidation catalysts and processing systems (product name: NS-LC ) wastewater treatment systems) declined due to sluggish overseas demand. De-NOx catalysts
suffered slow sales due to lower demand for their use in power-generating plants.
Dioxin decomposition catalysts and their related systems enjoyed higher sales, mainly
for their use in municipal waste incineration facilities.
As a result, overall sales of the Environment Business and Catalysts Group fell
3.7 percent from the previous term, to 15,269 million yen.
TM

37%
of Net Sales

Fine and Specialty Chemicals GroupThe end-user super-absorbent polymer market saw stiff competition, but demand increased on the world
market. The result was an overall increase in sales volumes and revenues.
Exports of higher-alcohol products (product name: SOFTANOL ) for use as a raw material for detergentsfell, and sales dipped accordingly. End-user demand for other raw materials used for detergents also
remained low, but sales of new products increased. This resulted in higher overall revenues.
Regarding other fine chemicals, products used as concrete admixtures saw a steady upward trend
in sales, but sales of raw materials for paints, resins and medical intermediates remained low.
Consequently, overall sales of the Fine and Specialty Chemicals Group increased 3.0 percent
over the previous term, to 47,661 million yen.
TM

'95

'98
'99

5

10

'97
'98
'99

12
6
15
15
Net Sales by the Environment Business and Catalysts Group (Billions of yen)

38

'96
'97

'95
'96

41
14
46
47
Net Sales by the Fine and Specialty Chemicals Group (Billions of yen)6

From April 1, 1998, to March 31, 1999

REVIEW OF OPERATIONS

11%
of Net Sales

The year 1997 covers only four months, from December 1, 1996, to March 31, 1997, since the company changed
its fiscal year and accounting period at the 84th annual general meeting of shareholders.

Polymers and Resins Group40%
of Net Sales

TM

Sales of unsaturated polyester resins (product name: EPOLAC ) continued to fall, as housing investment
and private-sector investment in facilities remained low. Coupled with a continued decline in market prices,
this led to lower revenues.
Market prices of ultra weather-resistant paint resins and electrical insulating coating showed an upward
trend. However, sales of other resins for paints and adhesives declined, due to a fall in their use for houses
and automobiles.
As a result, overall sales of the Polymers and Resins Group dropped 10.1 percent from the previous year,
to 14,158 million yen.

Basic Chemicals Group
Demand for acrylic acid and acrylic ester for use in super-absorbent polymers remained strong, but exports to Asian
countries of products for other uses in paints and adhesives dropped. This decline, coupled with falling prices, resulted in lower
revenues. Sales of methacrylic acid and methacrylic ester also fell, due to lower market prices and sluggish demand for theiruse in resins and paints.
The international market price of ethylene glycol also plummeted, and revenues suffered accordingly. Sales of ethyleneoxide and its derivatives also fell, due to low domestic and overseas demand for their use in surface-active agents andurethanes.
Domestic demand remained stagnant for phthalic anhydride for use in plasticizers, and the market price fell. Consequently,
sales volumes and revenues declined. Sales of maleic anhydride for use in polymers and resins also failed to grow.
As a result, sales of the Basic Chemicals Group fell 18.7 percent from the previous term, to 51,908 million yen.
'95

61

'97

19

'97
'98
'99

19
5
15
14
Net Sales by the Polymers and Resins Group (Billions of yen)

12%of Net Sales

59

'96

'95
'96

20

'98
'99

63
Net Sales by the Basic Chemicals Group (Billions of yen)

Environment Business and Catalysts Group

51

Sales of industrial catalysts through technology licensing fell overall, because new
demand was concentrated in the previous term. Sales of automotive catalysts grew, but
sales of wet-air oxidation catalysts and processing systems (product name: NS-LC ) wastewater treatment systems) declined due to sluggish overseas demand. De-NOx catalysts
suffered slow sales due to lower demand for their use in power-generating plants.
Dioxin decomposition catalysts and their related systems enjoyed higher sales, mainly
for their use in municipal waste incineration facilities.
As a result, overall sales of the Environment Business and Catalysts Group fell
3.7 percent from the previous term, to 15,269 million yen.
TM

37%
of Net Sales

Fine and Specialty Chemicals GroupThe end-user super-absorbent polymer market saw stiff competition, but demand increased on the world
market. The result was an overall increase in sales volumes and revenues.
Exports of higher-alcohol products (product name: SOFTANOL ) for use as a raw material for detergentsfell, and sales dipped accordingly. End-user demand for other raw materials used for detergents also
remained low, but sales of new products increased. This resulted in higher overall revenues.
Regarding other fine chemicals, products used as concrete admixtures saw a steady upward trend
in sales, but sales of raw materials for paints, resins and medical intermediates remained low.
Consequently, overall sales of the Fine and Specialty Chemicals Group increased 3.0 percent
over the previous term, to 47,661 million yen.
TM

'95

'98
'99

5

10

'97
'98
'99

12
6
15
15
Net Sales by the Environment Business and Catalysts Group (Billions of yen)

38

'96
'97

'95
'96

41
14
46
47
Net Sales by the Fine and Specialty Chemicals Group (Billions of yen)6

NEWS & TOPICS
Strengthening Our Super-Absorbent Polymer Business□Nippon Shokubai Europe N.V. Established in Belgium

Mr.Van den Brande the minister-president, governmentof Flanders and Aida president

us meet the growth in global demand we expect in the future, while also supporting

The company expects to see growing worldwide demand for super-absorbent
polymers, which are used primarily in paper diapers and sanitary napkins.

(fiscal year)

ANTWERPGERMANY
BRUSSELS

a wholly owned subsidiary, will play a significant role in building an even stronger
position for Nippon Shokubai in this core business area.

0

Nippon Shokubai Europe N.V. plans to construct a plant capable
FRANCELUXEMBOURG(fiscal year)

absorbent polymer business. This solidifies Nippon Shokubai's position as the world's leading

1998

manufacturer of super-absorbent polymers and will allow us to provide a stable supply

1999

of products with advanced functions.

30 60 90 120 150 (thousand tons)

Super-absorbent polymer production
capacity per year in Japan

The increased production capacity in both Japan and the United States combines with our
new production base in Europe to greatly strengthen our tri-polar (Japan-U.S.-Europe) super-

BELGIUM140

1999

capacity for super-absorbent polymers now totals 140,000 tons.

by establishing Nippon Shokubai Europe N.V. in Belgium. The new company,

100

1998

the manufacture of new types of products. The company's annual domestic production

NETHERLANDSOn February 25, 1999, we took an important step to meet future demandof manufacturing 30,000 tons of super-absorbent polymers per year. The plant,

The super-absorbent polymer production facility
at our Himeji Plant

48
60
0 10 20 30 40 50 60 (thousand tons)

Production capacity per year in the United States

to be built in an industrial district in Antwerp, is scheduled to begin operation

Indonesian Acrylic Acid and Acrylic Ester Manufacturing Facility Begins Operation

in autumn 2001.

In August 1998 P.T. Nisshoku Tripolyta Acrylindo, our joint-venture company□Production Capacity Increased in Both the United States and Japanin Indonesia, completed construction of a manufacturing line for acrylic acid andIn December 1998, NA Industries, Inc., our wholly owned subsidiaryin the United States, completed installation of a facility that boosts production
capacity by 12,000 tons per year. Total annual production capacity in the United

acrylic ester. Commercial operation began in November. The facility represents

Super-absorbent polymers usedin paper diapers

the fulfillment of a goal set when the joint-venture company was established.
Working in cooperation with our Himeji Plant, the center of our acrylic acid

States is now 60,000 tons.

business, P.T. Nisshoku Tripolyta Acrylindo will help ensure a stable supply

In March 1999 we completed expansion of a super-absorbent polymer
production facility at our Himeji Plant. The new manufacturing unit allows
the production of 40,000 tons per year. The higher production capacity will help

7of high-quality products. The company is working to solidify its business
The acrylic acid and acrylic ester manufacturing facility"P.T.NisshokuTripolyta Acrylindo"foundation and places a high priority on employee safety.

8NEWS & TOPICS
Strengthening Our Super-Absorbent Polymer Business□Nippon Shokubai Europe N.V. Established in Belgium

Mr.Van den Brande the minister-president, governmentof Flanders and Aida president

us meet the growth in global demand we expect in the future, while also supporting

The company expects to see growing worldwide demand for super-absorbent
polymers, which are used primarily in paper diapers and sanitary napkins.

(fiscal year)

ANTWERPGERMANY
BRUSSELS

a wholly owned subsidiary, will play a significant role in building an even stronger
position for Nippon Shokubai in this core business area.

0

Nippon Shokubai Europe N.V. plans to construct a plant capable
FRANCELUXEMBOURG(fiscal year)

absorbent polymer business. This solidifies Nippon Shokubai's position as the world's leading

1998

manufacturer of super-absorbent polymers and will allow us to provide a stable supply

1999

of products with advanced functions.

30 60 90 120 150 (thousand tons)

Super-absorbent polymer production
capacity per year in Japan

The increased production capacity in both Japan and the United States combines with our
new production base in Europe to greatly strengthen our tri-polar (Japan-U.S.-Europe) super-

BELGIUM140

1999

capacity for super-absorbent polymers now totals 140,000 tons.

by establishing Nippon Shokubai Europe N.V. in Belgium. The new company,

100

1998

the manufacture of new types of products. The company's annual domestic production

NETHERLANDSOn February 25, 1999, we took an important step to meet future demandof manufacturing 30,000 tons of super-absorbent polymers per year. The plant,

The super-absorbent polymer production facility
at our Himeji Plant

48
60
0 10 20 30 40 50 60 (thousand tons)

Production capacity per year in the United States

to be built in an industrial district in Antwerp, is scheduled to begin operation

Indonesian Acrylic Acid and Acrylic Ester Manufacturing Facility Begins Operation

in autumn 2001.

In August 1998 P.T. Nisshoku Tripolyta Acrylindo, our joint-venture company□Production Capacity Increased in Both the United States and Japanin Indonesia, completed construction of a manufacturing line for acrylic acid andIn December 1998, NA Industries, Inc., our wholly owned subsidiaryin the United States, completed installation of a facility that boosts production
capacity by 12,000 tons per year. Total annual production capacity in the United

acrylic ester. Commercial operation began in November. The facility represents

Super-absorbent polymers usedin paper diapers

the fulfillment of a goal set when the joint-venture company was established.
Working in cooperation with our Himeji Plant, the center of our acrylic acid

States is now 60,000 tons.

business, P.T. Nisshoku Tripolyta Acrylindo will help ensure a stable supply

In March 1999 we completed expansion of a super-absorbent polymer
production facility at our Himeji Plant. The new manufacturing unit allows
the production of 40,000 tons per year. The higher production capacity will help

7of high-quality products. The company is working to solidify its business
The acrylic acid and acrylic ester manufacturing facility"P.T.NisshokuTripolyta Acrylindo"foundation and places a high priority on employee safety.

8

Nippon Shokubai Co., Ltd. As of March 31,1999 and 1998

NON-CONSOLIDATED BALANCE SHEETSMillions of yen

Thousands of
U.S.dollars(Note 2)

ASSETS
1999
1999
1998
Current Assets:
Cash ........................................................... ￥ 2,055 ￥ 1,684 $ 17,046
178,506
Time deposits ...............................................
21,51915,3645,400
Marketable securities....................................
651
527
Notes and accounts receivable (Note 1):
221,360
26,68532,480Trade........................................................
9,492
8,187
78,739Subsidiaries and affiliates..........................
(183)
(262)
(1,518)
Allowance for doubtful accounts (Note 1) ..
298,581
35,99440,405Inventories (Notes 1 and 3) .........................
Other current assets .....................................
Total current assets ..............................
Investments and Other Assets:
Investments in securities (Notes 1, 4 and 5) .
Investments in and advances tosubsidiaries and affiliates (Notes 1 and 4) ..
Other ............................................................
Allowance for doubtful accounts (Note 1) ....
Total investments and other assets ........

22,606
5,058
87,88623,541
4,272
85,796

187,523
41,957729,041

16,456

15,357

136,507

15,0483,943(501)
34,946

13,916
4,874(769)
33,378124,827
32,708(4,155)289,888

Property, Plant and Equipment (Notes 1 and 5):
Buildings and structures................................
380,51445,87143,363
151,154 1,343,293
Machinery and equipment ........................... 161,934
Accumulated depreciation ........................... (161,537) (151,108) (1,340,000)
383,80746,26843,410219,767
26,49325,965Land ............................................................
65,8897,943
4,627
Construction in progress...............................
669,464
80,70474,003
Total property, plant and equipment .....
Total assets.......................................... ￥203,537 ￥193,178 $1,688,403

Millions of yen,
LIABILITIES AND SHAREHOLDERS EQUITY 1999
1998
Current Liabilities:
Short-term bank loans and current portionof long-term debt (Note 5) .......................... ￥ 21,202 ￥ 13,127
Notes and accounts payable (Note 1):
22,338Trade ......................................................... 16,541
7,956
7,021
Construction ...............................................
Subsidiaries and affiliates...........................
4,772
6,657
29,26936,017

Thousands of
U.S.dollars(Note 2)

1999$ 175,877
137,21265,99739,585
242,795

Accrued expenses .........................................
Accrued income taxes (Notes 1 and 6) ........
Other current liabilities...................................
Total current liabilities ............................

994
878
4,306
56,651

925
2,311
4,560
56,942

8,245
7,283
35,719469,937

Long-Term Liabilities:
Long-term debt (Notes 1 and 5) ....................
Accrued severance indemnities (Notes 1 and 8) ...
Other long-term liabilities ...............................
Total long-term liabilities........................

27,5769,611
164
37,352

19,44810,504
168
30,121

228,751
79,726
1,360
309,846,
Shareholders Equity:
Common stock, ￥50 par value:
Authorized: 426,000,000 shares
Issued and outstanding:1999--- 196,881,287 shares
16,5291998--- 196,881,287 shares .................. 16,529
13,562
Additional paid-in capital ............................. 13,562
3,542
3,393
Legal reserve (Note 11) ................................
72,628Retained earnings (Note 1) ........................... 75,899,
106,113
Total shareholders equity ...................... 109,533,
Total liabilities and shareholders equity .. ￥203,537 ￥193,178

137,113
112,501
29,381
629,605
908,610$1,688,403

Contingent Liabilities (Note 12)

See accompanying notes to non-consolidated financial statements.

910

Nippon Shokubai Co., Ltd. As of March 31,1999 and 1998

NON-CONSOLIDATED BALANCE SHEETSMillions of yen

Thousands of
U.S.dollars(Note 2)

ASSETS
1999
1999
1998
Current Assets:
Cash ........................................................... ￥ 2,055 ￥ 1,684 $ 17,046
178,506
Time deposits ...............................................
21,51915,3645,400
Marketable securities....................................
651
527
Notes and accounts receivable (Note 1):
221,360
26,68532,480Trade........................................................
9,492
8,187
78,739Subsidiaries and affiliates..........................
(183)
(262)
(1,518)
Allowance for doubtful accounts (Note 1) ..
298,581
35,99440,405Inventories (Notes 1 and 3) .........................
Other current assets .....................................
Total current assets ..............................
Investments and Other Assets:
Investments in securities (Notes 1, 4 and 5) .
Investments in and advances tosubsidiaries and affiliates (Notes 1 and 4) ..
Other ............................................................
Allowance for doubtful accounts (Note 1) ....
Total investments and other assets ........

22,606
5,058
87,88623,541
4,272
85,796

187,523
41,957729,041

16,456

15,357

136,507

15,0483,943(501)
34,946

13,916
4,874(769)
33,378124,827
32,708(4,155)289,888

Property, Plant and Equipment (Notes 1 and 5):
Buildings and structures................................
380,51445,87143,363
151,154 1,343,293
Machinery and equipment ........................... 161,934
Accumulated depreciation ........................... (161,537) (151,108) (1,340,000)
383,80746,26843,410219,767
26,49325,965Land ............................................................
65,8897,943
4,627
Construction in progress...............................
669,464
80,70474,003
Total property, plant and equipment .....
Total assets.......................................... ￥203,537 ￥193,178 $1,688,403

Millions of yen,
LIABILITIES AND SHAREHOLDERS EQUITY 1999
1998
Current Liabilities:
Short-term bank loans and current portionof long-term debt (Note 5) .......................... ￥ 21,202 ￥ 13,127
Notes and accounts payable (Note 1):
22,338Trade ......................................................... 16,541
7,956
7,021
Construction ...............................................
Subsidiaries and affiliates...........................
4,772
6,657
29,26936,017

Thousands of
U.S.dollars(Note 2)

1999$ 175,877
137,21265,99739,585
242,795

Accrued expenses .........................................
Accrued income taxes (Notes 1 and 6) ........
Other current liabilities...................................
Total current liabilities ............................

994
878
4,306
56,651

925
2,311
4,560
56,942

8,245
7,283
35,719469,937

Long-Term Liabilities:
Long-term debt (Notes 1 and 5) ....................
Accrued severance indemnities (Notes 1 and 8) ...
Other long-term liabilities ...............................
Total long-term liabilities........................

27,5769,611
164
37,352

19,44810,504
168
30,121

228,751
79,726
1,360
309,846,
Shareholders Equity:
Common stock, ￥50 par value:
Authorized: 426,000,000 shares
Issued and outstanding:1999--- 196,881,287 shares
16,5291998--- 196,881,287 shares .................. 16,529
13,562
Additional paid-in capital ............................. 13,562
3,542
3,393
Legal reserve (Note 11) ................................
72,628Retained earnings (Note 1) ........................... 75,899,
106,113
Total shareholders equity ...................... 109,533,
Total liabilities and shareholders equity .. ￥203,537 ￥193,178

137,113
112,501
29,381
629,605
908,610$1,688,403

Contingent Liabilities (Note 12)

See accompanying notes to non-consolidated financial statements.

910

Nippon Shokubai Co., Ltd. For the years ended March 31,1999 and 1998

Nippon Shokubai Co., Ltd.

NON-CONSOLIDATED STATEMENTS OF INCOMENOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS

Thousands of
U.S.dollars(Note 2)

Millions of yen

1999
1999
1998
Net Sales..................................................... ￥128,998 ￥141,755 $1,070,078
Cost of Sales ............................................... 96,772 109,020
802,754
Gross Profit .................................................. 32,226
267,324
32,735
Selling, General and Administrative
Expenses (Notes 1 and 9)..........................
Operating Income........................................
Other Income (Expenses):
Interest and dividend income.......................
Interest expenses..........................................
Royalty income.............................................
Other, net....................................................
Income before Income Taxes........................
Income Taxes (Notes 1 and 6) .....................
Net Income ..................................................
Unappropriated Retained Earnings
Carried Forward from the Previous Period .......
Interim Cash Dividends Paid ........................
Transfer to Legal Reserve .............................
Unappropriated Retained Earnings Transferredfrom merged company .....................................
Unappropriated Retained Earnings
Carried Forward to the Next Period .......... ￥26,170
6,055

24,9137,821

217,088
50,228

1,042(1,132)
1,279
(680)
509

881
(947)
2,227
164
2,324

8,643
(9,390)10,609(5,640)
4,222

6,565
2,450
4,115

10,1464,600
5,546

54,45820,32334,135

1,106
689
68

1,097
689
68

9,174
5,715
564

120

------

995

4,584 ￥

5,886 $

U.S.dollars(Note 2)Yen

Per Share (Note 7):
Net income .................................................. ￥Cash dividends applicable to the period .......
See accompanying notes to non-consolidated financial statements.

11

20.90 ￥
7.00

38,02528.17 $
7.00

0.17
0.06

1. Summary of Significant
Accounting Policies(1) Basis of presenting financial statements
The original non-consolidated financial statementsof Nippon Shokubai Co., Ltd. (the Company ) areprepared under the generally accepted accounting
principles and practices in Japan and the Securities
and Exchange Law of Japan. The financial statements
mentioned in this financial report have been madefor the readers outside Japan, rearranging
the original non-consolidated financial statements.
Since amounts less than ￥1 million have been
omitted, as permitted by the Securities and Exchange
Law of Japan, total or subtotal amounts appearing
in the accompanying non-consolidated financial
statements and notes there to do not necessarily
agree with the sum of the individual accountbalances.

(2) Valuation of securities andinvestments in and advances
to subsidiaries and affiliates
Marketable and other non-marketable securities arestated at cost, as determined by the periodic-average
cost method.
The Commercial Code of Japan requires suchinvestments to be written down where there has been
persistent decline in the value of investments. Where
considered necessary, the Company has written down
the value of such investments.

(3) Valuation of inventories
Inventories are stated at the lower of cost or market.
The cost of inventories are determined by the last-in,
first-out method.

(4) Depreciation and amortization
Property, plant and equipment is principally
computed on the declining-balance method basedon the estimated useful lives of assets stipulatedby the Japanese Corporation Tax Law. However,a portion of machinery is computed based on useful
lives estimated by the Company, equivalent to 75%
of statutory useful lives.
Amortization of intangible assets and other assets
is computed on the straight-line method overthe period stipulated by the Commercial Codeof Japan or the Japanese Corporation Tax Law.
Significant renewals and additions of property,
plant and equipment are capitalized at cost. Normal
repairs and maintenance, including minor renewals
and improvements, are charged to income as
incurred.

(5) Foreign currency translation
All short-term monetary receivables and liabilities
in foreign currency are translated into Japanese yen
at appropriate year-end current rates.
All revenues and expenses arising fromtransactions in foreign currencies are translated
into Japanese yen at the rates of exchange prevailingwhen such transactions are made.
Gains or losses resulting from the translations are
credited or charged to income as incurred.

(6) Accrued severance indemnities
An employee whose employment is terminated isentitled, in most cases, to a lump-sum severance
payment, the amount of which is determinedby reference to the basic rate of pay, length of service
and the conditions under which the termination
occurs.
The Company is employing the Welfare Pension
Plan to cover some portion of the lump-sum severance
payment plan. The cost of the pension plan isdetermined actuarially, and the amortization of priorservice costs is charged to income. These prior service
costs are amortized over a period of seven years.
Accrued severance indemnities for employees arestated at amounts equivalent to 100% of that which
would be required to be paid if all eligible employees
covered by the plan mandatorially terminated theiremployment with the Company at the balance sheet
date, less the estimated balances coveredby the Welfare Pension Plan at the balance sheet
date.
Retirement benefits to directors and corporate
auditors are stated at an amount determinedby the Company s bylaws at the end of the fiscal
year.

(7) Accounting for allowances and reserves
The Company has provided certain allowances andreserves, including allowance for doubtful accounts
and a reserve for employee bonuses, and a reserve

12

Nippon Shokubai Co., Ltd. For the years ended March 31,1999 and 1998

Nippon Shokubai Co., Ltd.

NON-CONSOLIDATED STATEMENTS OF INCOMENOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS

Thousands of
U.S.dollars(Note 2)

Millions of yen

1999
1999
1998
Net Sales..................................................... ￥128,998 ￥141,755 $1,070,078
Cost of Sales ............................................... 96,772 109,020
802,754
Gross Profit .................................................. 32,226
267,324
32,735
Selling, General and Administrative
Expenses (Notes 1 and 9)..........................
Operating Income........................................
Other Income (Expenses):
Interest and dividend income.......................
Interest expenses..........................................
Royalty income.............................................
Other, net....................................................
Income before Income Taxes........................
Income Taxes (Notes 1 and 6) .....................
Net Income ..................................................
Unappropriated Retained Earnings
Carried Forward from the Previous Period .......
Interim Cash Dividends Paid ........................
Transfer to Legal Reserve .............................
Unappropriated Retained Earnings Transferredfrom merged company .....................................
Unappropriated Retained Earnings
Carried Forward to the Next Period .......... ￥26,170
6,055

24,9137,821

217,088
50,228

1,042(1,132)
1,279
(680)
509

881
(947)
2,227
164
2,324

8,643
(9,390)10,609(5,640)
4,222

6,565
2,450
4,115

10,1464,600
5,546

54,45820,32334,135

1,106
689
68

1,097
689
68

9,174
5,715
564

120

------

995

4,584 ￥

5,886 $

U.S.dollars(Note 2)Yen

Per Share (Note 7):
Net income .................................................. ￥Cash dividends applicable to the period .......
See accompanying notes to non-consolidated financial statements.

11

20.90 ￥
7.00

38,02528.17 $
7.00

0.17
0.06

1. Summary of Significant
Accounting Policies(1) Basis of presenting financial statements
The original non-consolidated financial statementsof Nippon Shokubai Co., Ltd. (the Company ) areprepared under the generally accepted accounting
principles and practices in Japan and the Securities
and Exchange Law of Japan. The financial statements
mentioned in this financial report have been madefor the readers outside Japan, rearranging
the original non-consolidated financial statements.
Since amounts less than ￥1 million have been
omitted, as permitted by the Securities and Exchange
Law of Japan, total or subtotal amounts appearing
in the accompanying non-consolidated financial
statements and notes there to do not necessarily
agree with the sum of the individual accountbalances.

(2) Valuation of securities andinvestments in and advances
to subsidiaries and affiliates
Marketable and other non-marketable securities arestated at cost, as determined by the periodic-average
cost method.
The Commercial Code of Japan requires suchinvestments to be written down where there has been
persistent decline in the value of investments. Where
considered necessary, the Company has written down
the value of such investments.

(3) Valuation of inventories
Inventories are stated at the lower of cost or market.
The cost of inventories are determined by the last-in,
first-out method.

(4) Depreciation and amortization
Property, plant and equipment is principally
computed on the declining-balance method basedon the estimated useful lives of assets stipulatedby the Japanese Corporation Tax Law. However,a portion of machinery is computed based on useful
lives estimated by the Company, equivalent to 75%
of statutory useful lives.
Amortization of intangible assets and other assets
is computed on the straight-line method overthe period stipulated by the Commercial Codeof Japan or the Japanese Corporation Tax Law.
Significant renewals and additions of property,
plant and equipment are capitalized at cost. Normal
repairs and maintenance, including minor renewals
and improvements, are charged to income as
incurred.

(5) Foreign currency translation
All short-term monetary receivables and liabilities
in foreign currency are translated into Japanese yen
at appropriate year-end current rates.
All revenues and expenses arising fromtransactions in foreign currencies are translated
into Japanese yen at the rates of exchange prevailingwhen such transactions are made.
Gains or losses resulting from the translations are
credited or charged to income as incurred.

(6) Accrued severance indemnities
An employee whose employment is terminated isentitled, in most cases, to a lump-sum severance
payment, the amount of which is determinedby reference to the basic rate of pay, length of service
and the conditions under which the termination
occurs.
The Company is employing the Welfare Pension
Plan to cover some portion of the lump-sum severance
payment plan. The cost of the pension plan isdetermined actuarially, and the amortization of priorservice costs is charged to income. These prior service
costs are amortized over a period of seven years.
Accrued severance indemnities for employees arestated at amounts equivalent to 100% of that which
would be required to be paid if all eligible employees
covered by the plan mandatorially terminated theiremployment with the Company at the balance sheet
date, less the estimated balances coveredby the Welfare Pension Plan at the balance sheet
date.
Retirement benefits to directors and corporate
auditors are stated at an amount determinedby the Company s bylaws at the end of the fiscal
year.

(7) Accounting for allowances and reserves
The Company has provided certain allowances andreserves, including allowance for doubtful accounts
and a reserve for employee bonuses, and a reserve

12

Allowance for doubtful accounts
The Company has provided an amount equivalent
to the limit stipulated in the Japanese Corporation Tax
Law. In addition, regarding individual receivables,
the Company has provided the amounts that are
expected to be uncollectable.
Reserve for employee bonuses
At fiscal year-end, the Company provided
estimated amounts equivalent to those applicableto the current fiscal year to cover employee bonuses
to be paid in the next period.
Reserve for repairs
In order to equalize the burden of regular
maintenance and repair expenses for large-scale
manufacturing equipment over the operating period,
the Company has provided the estimated amounts
required on a monthly prorated basis.
This reserve is offset by expenses as incurredon completion of maintenance and repair.

(8) Income taxes
Income taxes provided on an accrual basis, butdeferred income taxes pertaining to timing differences
between financial and tax reporting are notrecognized.

(9) Research and development expenses
Research and development expenses are charged
to income as incurred and are included in selling,
general and administrative expenses.

(10) Net income and dividends per share
Net income per share is based on the weighted
average number of common shares outstanding
during each fiscal year.
Cash dividends per common share represent
the amounts applicable to the respective year,
including dividends to be paid after the endof the fiscal year.

after the end of each fiscal year.
Therefore, such appropriation is not reflectedin the respective financial statements.

2. U.S.Dollar Amounts
Amounts shown in U.S.dollars are included solely
for convenience and are not intended to imply thatyen amounts have been or could be readily converted
into, realized in or settled in dollars.
The rate of ￥120.55 to US$1, being
the approximate exchange rate on March 31, 1999,
has been used.

3. Inventories
Inventories on March 31, 1999 and 1998, wereas follows:

Millions of yen

Thousands of
U.S.dollars

1999
1999
1998
Merchandise andfinished products ...... ￥ 9,200 ￥ 9,753 $ 76,316
Raw materials ............ 7,407
61,443
5,473Work in process ......... 4,687
38,8806,689
Supplies..................... 1,311
10,875
1,624￥22,606 ￥23,541 $187,523

4. Investments in Securities
and Investments in andAdvances to Subsidiaries
and Affiliates
Investments in securities and advances heldby the Company at March 31, 1999 and 1998,
consisted of the following:Thousands of
U.S.dollars

Millions of yen

1999
Investments in securities:
Corporate shares ....... ￥16,335
104
Bonds and debentures..
Investments in
17
portfolios and others..
￥16,456
Investments in andadvances to subsidiaries
and affiliates:
Non-listed corporateshares ..................... ￥12,726
Investments incontributions............ 1,162
Long-term loans ......... 1,160￥15,048

1998

1999

￥15,197 $135,503

129

862

30

141

￥15,357 $136,507￥11,333 $105,566

9,639
1,093
9,622
1,490
￥13,916 $124,827

5. Short-Term Bank Loans
and Long-Term Debt
Short-term bank loans are unsecured and basedon an overdraft contract, bearing interest at 1.338%
per annum, as of March 31, 1998 and 0.994%
per annum, as of March 31, 1999.
At March 31, 1999 and 1998, long-term debt
consisted of the following:

Millions of yen

Thousands of
U.S.dollars

1999
1998
1999
Loans from banks,
insurance companies
and others due from1999 to 2008 withinterest ranging from
1.07% to 5.15% ........ ￥18,307 ￥11,959 $151,862
5.9% unsecured
debentures due 1999.. 6,000
49,7716,000
5.7% unsecured
debentures due 1999.. 4,000
33,1814,000
1.425% unsecured
debentures due 2002.. 5,000
41,476-----1.85% unsecured
debentures due 2004.. 5,000
41,476-----￥38,307 ￥21,959 $317,768
Less-portion due within
one year ................... 10,731
89,017
2,511￥27,576 ￥19,448 $228,751
The aggregate annual maturities of long-term debt
are as follows:Year ending March 31

2000 ...................................
2001 ...................................
2002 ...................................
2003 and thereafter..............

Thousands ofMillions of yen U.S.dollars￥

731 $ 6,063
28,4283,427
31,5553,804
85,806
10,344(11) Appropriation of retained earnings
Under the Commercial Code of Japan and
the Articles of Incorporation of the Company,
the appropriation of retained earnings, primarily
for cash dividend payments, with respect to a fiscal
year is made by resolution of the shareholders
at a general meeting to be held within three months

13

14

Allowance for doubtful accounts
The Company has provided an amount equivalent
to the limit stipulated in the Japanese Corporation Tax
Law. In addition, regarding individual receivables,
the Company has provided the amounts that are
expected to be uncollectable.
Reserve for employee bonuses
At fiscal year-end, the Company provided
estimated amounts equivalent to those applicableto the current fiscal year to cover employee bonuses
to be paid in the next period.
Reserve for repairs
In order to equalize the burden of regular
maintenance and repair expenses for large-scale
manufacturing equipment over the operating period,
the Company has provided the estimated amounts
required on a monthly prorated basis.
This reserve is offset by expenses as incurredon completion of maintenance and repair.

(8) Income taxes
Income taxes provided on an accrual basis, butdeferred income taxes pertaining to timing differences
between financial and tax reporting are notrecognized.

(9) Research and development expenses
Research and development expenses are charged
to income as incurred and are included in selling,
general and administrative expenses.

(10) Net income and dividends per share
Net income per share is based on the weighted
average number of common shares outstanding
during each fiscal year.
Cash dividends per common share represent
the amounts applicable to the respective year,
including dividends to be paid after the endof the fiscal year.

after the end of each fiscal year.
Therefore, such appropriation is not reflectedin the respective financial statements.

2. U.S.Dollar Amounts
Amounts shown in U.S.dollars are included solely
for convenience and are not intended to imply thatyen amounts have been or could be readily converted
into, realized in or settled in dollars.
The rate of ￥120.55 to US$1, being
the approximate exchange rate on March 31, 1999,
has been used.

3. Inventories
Inventories on March 31, 1999 and 1998, wereas follows:

Millions of yen

Thousands of
U.S.dollars

1999
1999
1998
Merchandise andfinished products ...... ￥ 9,200 ￥ 9,753 $ 76,316
Raw materials ............ 7,407
61,443
5,473Work in process ......... 4,687
38,8806,689
Supplies..................... 1,311
10,875
1,624￥22,606 ￥23,541 $187,523

4. Investments in Securities
and Investments in andAdvances to Subsidiaries
and Affiliates
Investments in securities and advances heldby the Company at March 31, 1999 and 1998,
consisted of the following:Thousands of
U.S.dollars

Millions of yen

1999
Investments in securities:
Corporate shares ....... ￥16,335
104
Bonds and debentures..
Investments in
17
portfolios and others..
￥16,456
Investments in andadvances to subsidiaries
and affiliates:
Non-listed corporateshares ..................... ￥12,726
Investments incontributions............ 1,162
Long-term loans ......... 1,160￥15,048

1998

1999

￥15,197 $135,503

129

862

30

141

￥15,357 $136,507￥11,333 $105,566

9,639
1,093
9,622
1,490
￥13,916 $124,827

5. Short-Term Bank Loans
and Long-Term Debt
Short-term bank loans are unsecured and basedon an overdraft contract, bearing interest at 1.338%
per annum, as of March 31, 1998 and 0.994%
per annum, as of March 31, 1999.
At March 31, 1999 and 1998, long-term debt
consisted of the following:

Millions of yen

Thousands of
U.S.dollars

1999
1998
1999
Loans from banks,
insurance companies
and others due from1999 to 2008 withinterest ranging from
1.07% to 5.15% ........ ￥18,307 ￥11,959 $151,862
5.9% unsecured
debentures due 1999.. 6,000
49,7716,000
5.7% unsecured
debentures due 1999.. 4,000
33,1814,000
1.425% unsecured
debentures due 2002.. 5,000
41,476-----1.85% unsecured
debentures due 2004.. 5,000
41,476-----￥38,307 ￥21,959 $317,768
Less-portion due within
one year ................... 10,731
89,017
2,511￥27,576 ￥19,448 $228,751
The aggregate annual maturities of long-term debt
are as follows:Year ending March 31

2000 ...................................
2001 ...................................
2002 ...................................
2003 and thereafter..............

Thousands ofMillions of yen U.S.dollars￥

731 $ 6,063
28,4283,427
31,5553,804
85,806
10,344(11) Appropriation of retained earnings
Under the Commercial Code of Japan and
the Articles of Incorporation of the Company,
the appropriation of retained earnings, primarily
for cash dividend payments, with respect to a fiscal
year is made by resolution of the shareholders
at a general meeting to be held within three months

13

14

The assets pledged as collateral for long-term debt
at March 31, 1999, were as follows:
Thousands ofMillions of yen U.S.dollars

Land......................................
Investments in securities...........

￥ 451

8,201

$ 3,741
68,029

9. Research andDevelopment Expenses
Research and development expenses incurred andcharged to income for the years ended March 31,
1999 and 1998, were as follows:
Thousands of
U.S.dollars

Millions of yen

6. Income Taxes
Income taxes applicable to the Company comprisea corporation tax, inhabitants, taxes andan enterprise tax, which in the aggregate produced
a normal tax rate of approximately 48% in 1999 and
51% in 1998. The effective tax rates on the statements
of income differ from the normal tax rates primarily
because of the effect of timing differencesin the recognition of certain income and expenses
for tax and financial reporting purposes, the effectof permanent non-deductible expenses, the lower tax
rate applied to the portion of income distributed
as dividends and tax credit for research anddevelopment expenses.

7. Net Income per Share
The computation of net income per share is basedon the weighted average number of sharesof common stock during the respective fiscal year.

1999

1998

1999

￥9,544￥9,214$79,170

11. Legal Reserve

13. Subsequent Event

The Commercial Code of Japan provides thatan amount equivalent to at least 10% of appropriations
paid in cash be appropriated as a legal reserve
until such reserve equals 25% of the stated amountof common stock. This reserve is not available
for the payment of dividends, but it may be used
to reduce or eliminate a deficit by resolutionof the shareholders or may be capitalized by resolutionof the Board of Directors.

On June 25, 1999, at the general meetingof shareholders, the following appropriationsof retained earnings were approved:

12. Contingent Liabilities
10. Transactions with Subsidiaries
Transactions with subsidiaries for the years ended
March 31, 1999 and 1998, were as follows:
Millions of yen

1999
Net sales .................. ￥17,476
Purchases ................. 21,778
Transactions
other than operatingtransactions ............ 2,652

Thousands of
U.S.dollars

1998
1999
￥15,604 $144,968
27,519 180,655

2,367

At March 31, 1999, the Company had the following
contingent liabilities:
Thousands ofMillions of yen U.S.dollars

As guarantor for indebtednessof subsidiaries and affiliates .. ￥11,408
As guarantor for housing loansof employees........................
71￥11,479$94,632
588$95,221

Thousands ofMillions of yen U.S.dollars

Balance at beginning of the year

￥4,584$38,025

Add:
Reversal of voluntary reserve..

32

265

689
80

5,715
663

77
2,568

638
21,302￥1,202$ 9,970

Appropriations:
Cash dividends(￥3.5-US$0.029 per share) ...
Transfer to legal reserve ........
Bonuses to directors andstatutory auditors...............
Transfer to general reserve ....
Carried forward
to the next period...............

21,9998. Accrued Severance Indemnities
The charges to income for severance indemnities
for the years ended March 31, 1999 and 1998,
were as follows:
Millions of yen

Thousands of
U.S.dollars

1999

1998

1999

￥606

￥864

$5,026

The assets of the Welfare Pension Plan at March 31,
1999, were ￥9,702 million (US$80,481 thousand).

15

16

The assets pledged as collateral for long-term debt
at March 31, 1999, were as follows:
Thousands ofMillions of yen U.S.dollars

Land......................................
Investments in securities...........

￥ 451

8,201

$ 3,741
68,029

9. Research andDevelopment Expenses
Research and development expenses incurred andcharged to income for the years ended March 31,
1999 and 1998, were as follows:
Thousands of
U.S.dollars

Millions of yen

6. Income Taxes
Income taxes applicable to the Company comprisea corporation tax, inhabitants, taxes andan enterprise tax, which in the aggregate produced
a normal tax rate of approximately 48% in 1999 and
51% in 1998. The effective tax rates on the statements
of income differ from the normal tax rates primarily
because of the effect of timing differencesin the recognition of certain income and expenses
for tax and financial reporting purposes, the effectof permanent non-deductible expenses, the lower tax
rate applied to the portion of income distributed
as dividends and tax credit for research anddevelopment expenses.

7. Net Income per Share
The computation of net income per share is basedon the weighted average number of sharesof common stock during the respective fiscal year.

1999

1998

1999

￥9,544￥9,214$79,170

11. Legal Reserve

13. Subsequent Event

The Commercial Code of Japan provides thatan amount equivalent to at least 10% of appropriations
paid in cash be appropriated as a legal reserve
until such reserve equals 25% of the stated amountof common stock. This reserve is not available
for the payment of dividends, but it may be used
to reduce or eliminate a deficit by resolutionof the shareholders or may be capitalized by resolutionof the Board of Directors.

On June 25, 1999, at the general meetingof shareholders, the following appropriationsof retained earnings were approved:

12. Contingent Liabilities
10. Transactions with Subsidiaries
Transactions with subsidiaries for the years ended
March 31, 1999 and 1998, were as follows:
Millions of yen

1999
Net sales .................. ￥17,476
Purchases ................. 21,778
Transactions
other than operatingtransactions ............ 2,652

Thousands of
U.S.dollars

1998
1999
￥15,604 $144,968
27,519 180,655

2,367

At March 31, 1999, the Company had the following
contingent liabilities:
Thousands ofMillions of yen U.S.dollars

As guarantor for indebtednessof subsidiaries and affiliates .. ￥11,408
As guarantor for housing loansof employees........................
71￥11,479$94,632
588$95,221

Thousands ofMillions of yen U.S.dollars

Balance at beginning of the year

￥4,584$38,025

Add:
Reversal of voluntary reserve..

32

265

689
80

5,715
663

77
2,568

638
21,302￥1,202$ 9,970

Appropriations:
Cash dividends(￥3.5-US$0.029 per share) ...
Transfer to legal reserve ........
Bonuses to directors andstatutory auditors...............
Transfer to general reserve ....
Carried forward
to the next period...............

21,9998. Accrued Severance Indemnities
The charges to income for severance indemnities
for the years ended March 31, 1999 and 1998,
were as follows:
Millions of yen

Thousands of
U.S.dollars

1999

1998

1999

￥606

￥864

$5,026

The assets of the Welfare Pension Plan at March 31,
1999, were ￥9,702 million (US$80,481 thousand).

15

16

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries As of March 31, 1999 and 1998

C ON SO LI D A T E D B A L A N C E S H E E TS

Millions of yen

Thousands of
U.S.dollars(Note 2)

ASSETS
1999
1999
1998
Current Assets:
Cash............................................................ ￥ 4,061 ￥ 4,410 $ 33,687..
Time deposits................................................
23,256
16,646
192,915
Marketable securities....................................
738
629
6,121
Notes and accounts receivable (Note1):
41,547300,414
Trade ........................................................ 36,215
Unconsolidated subsidiaries and affiliates ....
6,996
5,807
58,034
Allowance for doubtful accounts................
(334)
(399)
(2,770)46,95542,877355,678
Inventories (Note 3) ...................................... 27,638
Other current assets ......................................
5,045
Total current assets ................................ 103,618
Investments and Other Assets:
Investments in securities ...............................
Investments in and advances tounconsolidated subsidiaries and affiliates...
Other ............................................................
Allowance for doubtful accounts ...................
Total investments and other assets.........

28,2793,964
100,886

229,265
41,849859,543

16,607

14,892

137,760

12,261
6,993(2,290)33,572

11,7287,819(2,379)32,061

101,708
58,009(18,996)
278,490

Property, Plant and Equipment:
Buildings and structures................................. 55,960
53,913
Machinery and equipment............................ 186,033 174,732
Accumulated depreciation ............................ (185,500) (175,641)
53,00456,493

464,205
1,543,201(1,538,780)
468,627

26,460223,890
Land ............................................................ 26,990
6,540
83,533
Construction in progress ............................... 10,070
Total property, plant and equipment ..... 93,555
86,005776,068
Foreign Currency Translation Adjustments ..
-----335
2,778
Total assets ........................................... ￥231,081 ￥218,953 $1,916,889

Thousands of
U.S.dollars(Note 2)

Millions of yen,
LIABILITIES AND SHAREHOLDERS EQUITY 1999
1999
1998
Current Liabilities:
Short-term bank loans and current portionof long-term debt...................................... ￥ 27,395 ￥ 18,939 $ 227,250
Notes and accounts payable (Note 1):25,55731,433
212,003
Trade .......................................................
7,541
8,473
70,286
Construction .............................................
Unconsolidated subsidiaries and affiliates ...
1,978
2,128
16,408
41,103298,704
36,009Accrued income taxes ...............................
Other current liabilities .................................
Total current liabilities ..........................

1,313
6,788
71,5082,982
7,035
70,06010,89156,308593,181Long-Term Liabilities:
Long-term debt .............................................
Accrued severance indemnities (Note 4) .....
Other long-term liabilities .............................
Total long-term liabilities ......................

32,18910,876
183
43,25023,463
11,762
177
35,403

267,017
90,2191,518
358,772

Foreign Currency Translation Adjustments..

------

247------

1,568
1,665
13,811
Minority Interests .........................................
,
Shareholders Equity:
Common stock, ￥50 par value:
Authorized: 426,000,000 shares
Issued and outstanding:1999--- 196,881,287 shares
16,52916,529137,113
1998--- 196,881,287 shares ................
13,562
13,562
112,501
Additional paid-in capital............................
81,582
84,569701,526
Consolidated Retained Earnings..................
(0)
(2)
(24)
Less common stock in treasury, at cost ........
,
Total shareholders equity .................... 114,658 111,673
951,124
Total liabilities, Minority Interests,and shareholders equity .................... ￥231,081 ￥218,953 $1,916,889

See accompanying notes to consolidated financial statements.

17

18

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries As of March 31, 1999 and 1998

C ON SO LI D A T E D B A L A N C E S H E E TS

Millions of yen

Thousands of
U.S.dollars(Note 2)

ASSETS
1999
1999
1998
Current Assets:
Cash............................................................ ￥ 4,061 ￥ 4,410 $ 33,687..
Time deposits................................................
23,256
16,646
192,915
Marketable securities....................................
738
629
6,121
Notes and accounts receivable (Note1):
41,547300,414
Trade ........................................................ 36,215
Unconsolidated subsidiaries and affiliates ....
6,996
5,807
58,034
Allowance for doubtful accounts................
(334)
(399)
(2,770)46,95542,877355,678
Inventories (Note 3) ...................................... 27,638
Other current assets ......................................
5,045
Total current assets ................................ 103,618
Investments and Other Assets:
Investments in securities ...............................
Investments in and advances tounconsolidated subsidiaries and affiliates...
Other ............................................................
Allowance for doubtful accounts ...................
Total investments and other assets.........

28,2793,964
100,886

229,265
41,849859,543

16,607

14,892

137,760

12,261
6,993(2,290)33,572

11,7287,819(2,379)32,061

101,708
58,009(18,996)
278,490

Property, Plant and Equipment:
Buildings and structures................................. 55,960
53,913
Machinery and equipment............................ 186,033 174,732
Accumulated depreciation ............................ (185,500) (175,641)
53,00456,493

464,205
1,543,201(1,538,780)
468,627

26,460223,890
Land ............................................................ 26,990
6,540
83,533
Construction in progress ............................... 10,070
Total property, plant and equipment ..... 93,555
86,005776,068
Foreign Currency Translation Adjustments ..
-----335
2,778
Total assets ........................................... ￥231,081 ￥218,953 $1,916,889

Thousands of
U.S.dollars(Note 2)

Millions of yen,
LIABILITIES AND SHAREHOLDERS EQUITY 1999
1999
1998
Current Liabilities:
Short-term bank loans and current portionof long-term debt...................................... ￥ 27,395 ￥ 18,939 $ 227,250
Notes and accounts payable (Note 1):25,55731,433
212,003
Trade .......................................................
7,541
8,473
70,286
Construction .............................................
Unconsolidated subsidiaries and affiliates ...
1,978
2,128
16,408
41,103298,704
36,009Accrued income taxes ...............................
Other current liabilities .................................
Total current liabilities ..........................

1,313
6,788
71,5082,982
7,035
70,06010,89156,308593,181Long-Term Liabilities:
Long-term debt .............................................
Accrued severance indemnities (Note 4) .....
Other long-term liabilities .............................
Total long-term liabilities ......................

32,18910,876
183
43,25023,463
11,762
177
35,403

267,017
90,2191,518
358,772

Foreign Currency Translation Adjustments..

------

247------

1,568
1,665
13,811
Minority Interests .........................................
,
Shareholders Equity:
Common stock, ￥50 par value:
Authorized: 426,000,000 shares
Issued and outstanding:1999--- 196,881,287 shares
16,52916,529137,113
1998--- 196,881,287 shares ................
13,562
13,562
112,501
Additional paid-in capital............................
81,582
84,569701,526
Consolidated Retained Earnings..................
(0)
(2)
(24)
Less common stock in treasury, at cost ........
,
Total shareholders equity .................... 114,658 111,673
951,124
Total liabilities, Minority Interests,and shareholders equity .................... ￥231,081 ￥218,953 $1,916,889

See accompanying notes to consolidated financial statements.

17

18

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries For the years ended March 31,1999 and 1998

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries

C ON SO LI D A T E D S T A T E M EN TS O F IN CO ME

NOT ES TO C ONSOLIDATED FINANC IAL STAT EM ENT S

Thousands of
U.S.dollars(Note 2)

Millions of yen

1999
1999
1998
Net Sales ................................................... ￥160,190 ￥171,805 $1,328,826
Cost of Sales .............................................. 120,613 130,450 1,000,522
39,57741,354
328,303
Gross Profit .................................................
Selling, General and Administrative
Expenses.....................................................
Operating Income ......................................

30,671
8,906

30,251
11,103

254,425
73,878766(1,361)955

757(1,114)
1,851

6,354
(11,289)
7,922

142

122

1,177

97
(1,580)(980)

1(2,297)(678)

804(13,106)(8,129)

Income before Income Taxes and Minority
Interests ..............................................
Income Taxes ..........................................
Income before Minority Interests ...............
Minority Interests .....................................

7,925
3,155
4,770
(319)

10,425
5,732
4,692
533

65,74026,171
39,568(2,646)Net Income ................................................. ￥4,450 ￥

5,226 $

36,914

Other Income (Expenses):
Interest and dividend income ......................
Interest expenses .........................................
Royalty income ............................................
Equity in Earnings of Unconsolidated
Subsidiaries and Affiliates.......................
Amortization of Consolidation
Adjustments ...........................................
Other, net ...................................................

U.S.dollars(Note 2)Yen

Per Share:
Net income ................................................. ￥Cash dividends applicable to the period......

22.61 ￥
7.00

26.54 $
7.00

See accompanying notes to consolidated financial statements.
Reclassification:
Certain reclassifications of previously reported amounts have been made to conform with current classifications.

0.19
0.06

1. Summary of Significant
Accounting Policies
The accompanying consolidated financial statements
are prepared on the basis of the same accounting
policies as mentioned in Note 1 of the notes to nonconsolidated financial statements except
for the following principles:(1) Principles of consolidation and accounting
for investments in unconsolidated
subsidiaries and affiliates
The consolidated financial statements include
the accounts of Nippon Shokubai Co., Ltd.
(the Company ) and its eight significant subsidiaries.
All significant intercompany balances andtransactions have been eliminated on consolidation.
The accounts of the 15 other subsidiaries are notconsolidated with the Company. The total assets, net
sales, net income and retained earningsof the unconsolidated subsidiaries,in the aggregate,
are so small as to have an insignificant effecton the Company s consolidated accounts.
Two unconsolidated subsidiaries and four affiliatedcompanies are accounted for by the equity method.
From this fiscal year, American Acryle L.P.,
established by NA Industries, Inc. and otherin December 1997, is added as an affiliatedcompany and accounted for by the equity method.
Consolidated net income includes the Company sequity in the current net income of such companies,
after elimination of unrealized intercompany profits.
13 subsidiaries and 8 affiliated companies (20%
to 50% owned) are not accounted for by the equity
method as the effects of these companies
on the Company s consolidated net income andretained earnings are immaterial.
Investments in unconsolidated subsidiaries andin the affiliated companies which are not accounted
for on an equity method are carried at cost or less.
Where there has been a persistent decline in the valueof such investments, the Company has written down
its investments.
The difference between the cost and underlying net
equity of investments in consolidated and othercompanies accounted for by the equity method ischarged or credited to income in the year of acquisition.

(2) Balance sheet date
The balance sheet date of all consolidated
subsidiaries is the same as the Company,s, except
NA Industries, Inc., American Acryl NA LLC, andAmerican Acryl L.P., which have a balance sheet
of December 31.
The Companies have made consolidation

19

adjustments for significant transactions between itself
and them, incurred up to and including
the consolidation date of March 31.

(3) Foreign currency translation of
consolidated foreign subsidiaries
Translation into Japanese yen of the financial
statements of the consolidated foreign subsidiaries weremade in accordance with the Accounting Standards
for Transactions Denominated in Foreign Currencies ,reported in June 1979, revised in May 1995 by Japan s
Financial Accounting Deliberation Council.
Translation differences are shown as Foreign
Currency Translation Adjustments in the accompanying
consolidated financial statements.

(4) Tax-effect accounting
Tax-effect accounting pertaining to timing differenceson corporation taxes is not applied.

2. U.S.Dollar Amounts
The same method of translating yen amounts
as described in Note 2 of the notes to non-consolidated
financial statements has been used.

3. Inventories
Inventories on March 31, 1999 and 1998, wereas follows:

Millions of yen

1999

Thousands of
U.S. dollars

1998

1999

Merchandise andfinished products........￥12,916 ￥13,188 $107,142
Raw materials .............. 5,207
43,193
6,090
Work in process........... 7,973
66,138
7,178
Supplies ...................... 1,541
12,783
1,821￥27,638 ￥28,279 $229,265

4. Accrued Severance Indemnities
The Company has a Welfare Pension Plan, andfour of its consolidated subsidiaries have a qualified
pension plan. The prior service costs for the Welfare
Pension Plan and the qualified pension plan areamortized over a period of seven years and fiveto ten years, respectively. The assets of the pension
plans amounted to ￥11,432 million(US$94,832 thousand) at March 31, 1999.

5. Subsequent Event
See Note 13 of the notes to non-consolidated
financial statements.
20

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries For the years ended March 31,1999 and 1998

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries

C ON SO LI D A T E D S T A T E M EN TS O F IN CO ME

NOT ES TO C ONSOLIDATED FINANC IAL STAT EM ENT S

Thousands of
U.S.dollars(Note 2)

Millions of yen

1999
1999
1998
Net Sales ................................................... ￥160,190 ￥171,805 $1,328,826
Cost of Sales .............................................. 120,613 130,450 1,000,522
39,57741,354
328,303
Gross Profit .................................................
Selling, General and Administrative
Expenses.....................................................
Operating Income ......................................

30,671
8,906

30,251
11,103

254,425
73,878766(1,361)955

757(1,114)
1,851

6,354
(11,289)
7,922

142

122

1,177

97
(1,580)(980)

1(2,297)(678)

804(13,106)(8,129)

Income before Income Taxes and Minority
Interests ..............................................
Income Taxes ..........................................
Income before Minority Interests ...............
Minority Interests .....................................

7,925
3,155
4,770
(319)

10,425
5,732
4,692
533

65,74026,171
39,568(2,646)Net Income ................................................. ￥4,450 ￥

5,226 $

36,914

Other Income (Expenses):
Interest and dividend income ......................
Interest expenses .........................................
Royalty income ............................................
Equity in Earnings of Unconsolidated
Subsidiaries and Affiliates.......................
Amortization of Consolidation
Adjustments ...........................................
Other, net ...................................................

U.S.dollars(Note 2)Yen

Per Share:
Net income ................................................. ￥Cash dividends applicable to the period......

22.61 ￥
7.00

26.54 $
7.00

See accompanying notes to consolidated financial statements.
Reclassification:
Certain reclassifications of previously reported amounts have been made to conform with current classifications.

0.19
0.06

1. Summary of Significant
Accounting Policies
The accompanying consolidated financial statements
are prepared on the basis of the same accounting
policies as mentioned in Note 1 of the notes to nonconsolidated financial statements except
for the following principles:(1) Principles of consolidation and accounting
for investments in unconsolidated
subsidiaries and affiliates
The consolidated financial statements include
the accounts of Nippon Shokubai Co., Ltd.
(the Company ) and its eight significant subsidiaries.
All significant intercompany balances andtransactions have been eliminated on consolidation.
The accounts of the 15 other subsidiaries are notconsolidated with the Company. The total assets, net
sales, net income and retained earningsof the unconsolidated subsidiaries,in the aggregate,
are so small as to have an insignificant effecton the Company s consolidated accounts.
Two unconsolidated subsidiaries and four affiliatedcompanies are accounted for by the equity method.
From this fiscal year, American Acryle L.P.,
established by NA Industries, Inc. and otherin December 1997, is added as an affiliatedcompany and accounted for by the equity method.
Consolidated net income includes the Company sequity in the current net income of such companies,
after elimination of unrealized intercompany profits.
13 subsidiaries and 8 affiliated companies (20%
to 50% owned) are not accounted for by the equity
method as the effects of these companies
on the Company s consolidated net income andretained earnings are immaterial.
Investments in unconsolidated subsidiaries andin the affiliated companies which are not accounted
for on an equity method are carried at cost or less.
Where there has been a persistent decline in the valueof such investments, the Company has written down
its investments.
The difference between the cost and underlying net
equity of investments in consolidated and othercompanies accounted for by the equity method ischarged or credited to income in the year of acquisition.

(2) Balance sheet date
The balance sheet date of all consolidated
subsidiaries is the same as the Company,s, except
NA Industries, Inc., American Acryl NA LLC, andAmerican Acryl L.P., which have a balance sheet
of December 31.
The Companies have made consolidation

19

adjustments for significant transactions between itself
and them, incurred up to and including
the consolidation date of March 31.

(3) Foreign currency translation of
consolidated foreign subsidiaries
Translation into Japanese yen of the financial
statements of the consolidated foreign subsidiaries weremade in accordance with the Accounting Standards
for Transactions Denominated in Foreign Currencies ,reported in June 1979, revised in May 1995 by Japan s
Financial Accounting Deliberation Council.
Translation differences are shown as Foreign
Currency Translation Adjustments in the accompanying
consolidated financial statements.

(4) Tax-effect accounting
Tax-effect accounting pertaining to timing differenceson corporation taxes is not applied.

2. U.S.Dollar Amounts
The same method of translating yen amounts
as described in Note 2 of the notes to non-consolidated
financial statements has been used.

3. Inventories
Inventories on March 31, 1999 and 1998, wereas follows:

Millions of yen

1999

Thousands of
U.S. dollars

1998

1999

Merchandise andfinished products........￥12,916 ￥13,188 $107,142
Raw materials .............. 5,207
43,193
6,090
Work in process........... 7,973
66,138
7,178
Supplies ...................... 1,541
12,783
1,821￥27,638 ￥28,279 $229,265

4. Accrued Severance Indemnities
The Company has a Welfare Pension Plan, andfour of its consolidated subsidiaries have a qualified
pension plan. The prior service costs for the Welfare
Pension Plan and the qualified pension plan areamortized over a period of seven years and fiveto ten years, respectively. The assets of the pension
plans amounted to ￥11,432 million(US$94,832 thousand) at March 31, 1999.

5. Subsequent Event
See Note 13 of the notes to non-consolidated
financial statements.
20

C ORPO RA TE D A T A

DIR EC TOR YNIPPON SHOKUBAI CO., LTD.

Board of Directors

Incorporated
August 21, 1941
Common Stock
Authorized: 426,000,000 shares
Issued: 196,881,287 shares
Capital￥16,529,413,238
Number of Employees
2,258
Stock Listings
First Section, Tokyo Stock ExchangeFirst Section, Osaka Securities ExchangeFirst Section, Nagoya Stock Exchange
Transfer Agent
The Toyo Trust & Banking Co., Ltd.
1-4-3 Marunouchi, Chiyoda-ku,
Tokyo 100-0005, Japan

President
Kenji Aida
Executive Vice Presidents
Takahisa Sato
Tadashi Kimura
Senior Managing Director
Kiyoshi Nakagawa
Managing Directors
Tetsuji Ono
Kinya Hasegawa
Yasumasa Oba
Yoshinori Sano
Takeo Munehiro
Tatsuo Konishi
Hiroshi Yanagida

Directors
Hisayoshi Jono
Kazunosuke Nagai
Takahiro Toyohama
Keizo Maruyama
Tsumoru Yamada
Yutaka Morimoto
Yuji Noma
Norimitsu Konno
Corporate Auditors
Masaru Abe
Keishi Oyama
Setsuya Kitabatake
Kazuaki Hata
(as of June 25, 1999)

HEAD OFFICESLABORATORIESOsaka office

Materials & Functions Research Laboratory

Kogin Bldg.
4-1-1 Koraibashi, Chuo-ku
Osaka 541-0043, Japan
Telephone: 81-6-6223-9111
Facsimile: 81-6-6201-3716

Tokyo Office
Hibiya Dai Bldg.
1-2-2 Uchisaiwai-cho, Chiyoda-ku
Tokyo 100-0011, Japan
Telephone: 81-3-3506-7475
Facsimile: 81-3-3506-7598

SALES OFFICES
Nagoya Sales Office

Consolidated Subsidiaries
Name
Nippoh Chemicals Co., Ltd.*￥ 517

EquityOwnership(%)

Principal BusinessPresident

67.9

Manufacture and sale of iodine, iodic
compounds, and natural gas

Tsuneo Tsubakimoto
Takahiro Ito

Nippon Polyester Co., Ltd.*

400

96.7

Manufacture and sale of synthetic resins
and related additives

Daiko Kaiun Co., Ltd.*

100

64.9

Transport

Katsunobu Kaneko

100.0

Manufacture and sale of superabsorbent polymers
Technical liaison and business development

Yuji Noma

￥ 80

66.2

Manufacture and sale of stabilizer of vinyl
chloride resin and anti-freeze

Masatoshi Tsuchino

Chugoku Kako Co., Ltd.*

75

74.3

Manufacture and sale of synthetic resins andheat insulator

Noboru Shimizu

ICT Co., Ltd.*

60

50.0

Sale of automobile exhaust catalyst

Kazuo Koshida

100.0Management of golf driving range andnon-life insurance agent

Goro Kijima

Principal BusinessPresident

NA Industries, Inc.*Tokyo Fine Chemical Co., Ltd.*

Nisshoku Kosan Co., Ltd.*

US$1,025

32

EquityOwnership(%)

Nihon Jyoryu Kogyo Co., Ltd.

￥ 90

46.6

Manufacture and sale of anthraquinone,
carbazole, and their derivatives

Kensuke Kumazawa

Nishinippon FRP
Shipbuilding Co., Ltd.

30

100.0

Manufacture and sale of FRP ship andfinished products

Terumitsu Mimura

Nippon Polymer Ind. Co., Ltd.

100

50.0

Manufacture and sale of acrylic emulsions

Yoshio Yasuda

45.0

Manufacture and sale of insulating varnish
and enamel

Nisshoku Schenectady Kagaku, Inc.

40

*Included in consolidation
Nisshoku Aro Chemicals Co., Ltd. was merged into Nippon Shokubai Co., Ltd. on April 1,1998.
American Acryl NA LLC, and American Acryl L.P., are consolidated into NA Industries, Inc. by the equity method.

Mitsui Bldg.
1-24-21 Meiekiminami, Nakamura-ku
Nagoya 450-0003, Japan

Fukuoka Sales Office
Hakata Bldg.
8-36 Chuogai Hakataeki, Hakata-ku
Fukuoka 812-0012, Japan

1-25-12 Kannondai, Tsukuba
Ibaraki 305-0856, Japan

Polymer Research Laboratory
5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, Japan

Process Development Laboratory
992-1 Aza Nishioki Okihama, Aboshi-ku
Himeji, Hyogo 671-1241, Japan

Kenji Aida(as of March 31, 1999)

992-1 Aza Nishioki Okihama, Aboshi-ku
Himeji, Hyogo 671-1241, Japan

Resins Research Laboratory
5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, Japan

Specialty Polymers Research Laboratory
5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, JapanOVERSEAS COMPANIESPLANTS
Suita Plant
5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, Japan

Kawasaki Chidori Plant

Paid-in Capital(millions of yen, unlessotherwise stated)

Name

Tsukuba Research Laboratory

Catalyst Research Laboratory(as of March 31, 1999)

Paid-in Capital(millions of yen, unlessotherwise stated)

5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, Japan

14-1 Chidori-cho, Kawasaki-ku
Kawasaki, Kanagawa 210-0865, Japan

Kawasaki Ukishima Plant
10-12 Ukishima-cho, Kawasaki-ku
Kawasaki, Kanagawa 210-0862, Japan

Himeji Plant
992-1 Aza Nishioki Okihama, Aboshi-ku
Himeji, Hyogo 671-1241, JapanNA Industries, Inc.
P.O. Box 5407
2651 Riverport Road
Chattanooga, TN 37406, U.S.A.

NIPPON SHOKUBAI GmbH
Niedenau 61-63
60325 Frankfurt am Main, Germany

NIPPON SHOKUBAI (ASIA)PTE LTD
138 Cecil Street, #05-04
Cecil Court Singapore 069538

ULTRASORB Chemikalien GmbH
Niedenau 61-63
60325 Frankfurt am Main, Germany

NIPPON SHOKUBAI EUROPE N.V.
Haven 1053
Nieuwe Weg 1B-2070 Zwijndrecht Belgium(as of July 1, 1999)

21

22

C ORPO RA TE D A T A

DIR EC TOR YNIPPON SHOKUBAI CO., LTD.

Board of Directors

Incorporated
August 21, 1941
Common Stock
Authorized: 426,000,000 shares
Issued: 196,881,287 shares
Capital￥16,529,413,238
Number of Employees
2,258
Stock Listings
First Section, Tokyo Stock ExchangeFirst Section, Osaka Securities ExchangeFirst Section, Nagoya Stock Exchange
Transfer Agent
The Toyo Trust & Banking Co., Ltd.
1-4-3 Marunouchi, Chiyoda-ku,
Tokyo 100-0005, Japan

President
Kenji Aida
Executive Vice Presidents
Takahisa Sato
Tadashi Kimura
Senior Managing Director
Kiyoshi Nakagawa
Managing Directors
Tetsuji Ono
Kinya Hasegawa
Yasumasa Oba
Yoshinori Sano
Takeo Munehiro
Tatsuo Konishi
Hiroshi Yanagida

Directors
Hisayoshi Jono
Kazunosuke Nagai
Takahiro Toyohama
Keizo Maruyama
Tsumoru Yamada
Yutaka Morimoto
Yuji Noma
Norimitsu Konno
Corporate Auditors
Masaru Abe
Keishi Oyama
Setsuya Kitabatake
Kazuaki Hata
(as of June 25, 1999)

HEAD OFFICESLABORATORIESOsaka office

Materials & Functions Research Laboratory

Kogin Bldg.
4-1-1 Koraibashi, Chuo-ku
Osaka 541-0043, Japan
Telephone: 81-6-6223-9111
Facsimile: 81-6-6201-3716

Tokyo Office
Hibiya Dai Bldg.
1-2-2 Uchisaiwai-cho, Chiyoda-ku
Tokyo 100-0011, Japan
Telephone: 81-3-3506-7475
Facsimile: 81-3-3506-7598

SALES OFFICES
Nagoya Sales Office

Consolidated Subsidiaries
Name
Nippoh Chemicals Co., Ltd.*￥ 517

EquityOwnership(%)

Principal BusinessPresident

67.9

Manufacture and sale of iodine, iodic
compounds, and natural gas

Tsuneo Tsubakimoto
Takahiro Ito

Nippon Polyester Co., Ltd.*

400

96.7

Manufacture and sale of synthetic resins
and related additives

Daiko Kaiun Co., Ltd.*

100

64.9

Transport

Katsunobu Kaneko

100.0

Manufacture and sale of superabsorbent polymers
Technical liaison and business development

Yuji Noma

￥ 80

66.2

Manufacture and sale of stabilizer of vinyl
chloride resin and anti-freeze

Masatoshi Tsuchino

Chugoku Kako Co., Ltd.*

75

74.3

Manufacture and sale of synthetic resins andheat insulator

Noboru Shimizu

ICT Co., Ltd.*

60

50.0

Sale of automobile exhaust catalyst

Kazuo Koshida

100.0Management of golf driving range andnon-life insurance agent

Goro Kijima

Principal BusinessPresident

NA Industries, Inc.*Tokyo Fine Chemical Co., Ltd.*

Nisshoku Kosan Co., Ltd.*

US$1,025

32

EquityOwnership(%)

Nihon Jyoryu Kogyo Co., Ltd.

￥ 90

46.6

Manufacture and sale of anthraquinone,
carbazole, and their derivatives

Kensuke Kumazawa

Nishinippon FRP
Shipbuilding Co., Ltd.

30

100.0

Manufacture and sale of FRP ship andfinished products

Terumitsu Mimura

Nippon Polymer Ind. Co., Ltd.

100

50.0

Manufacture and sale of acrylic emulsions

Yoshio Yasuda

45.0

Manufacture and sale of insulating varnish
and enamel

Nisshoku Schenectady Kagaku, Inc.

40

*Included in consolidation
Nisshoku Aro Chemicals Co., Ltd. was merged into Nippon Shokubai Co., Ltd. on April 1,1998.
American Acryl NA LLC, and American Acryl L.P., are consolidated into NA Industries, Inc. by the equity method.

Mitsui Bldg.
1-24-21 Meiekiminami, Nakamura-ku
Nagoya 450-0003, Japan

Fukuoka Sales Office
Hakata Bldg.
8-36 Chuogai Hakataeki, Hakata-ku
Fukuoka 812-0012, Japan

1-25-12 Kannondai, Tsukuba
Ibaraki 305-0856, Japan

Polymer Research Laboratory
5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, Japan

Process Development Laboratory
992-1 Aza Nishioki Okihama, Aboshi-ku
Himeji, Hyogo 671-1241, Japan

Kenji Aida(as of March 31, 1999)

992-1 Aza Nishioki Okihama, Aboshi-ku
Himeji, Hyogo 671-1241, Japan

Resins Research Laboratory
5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, Japan

Specialty Polymers Research Laboratory
5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, JapanOVERSEAS COMPANIESPLANTS
Suita Plant
5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, Japan

Kawasaki Chidori Plant

Paid-in Capital(millions of yen, unlessotherwise stated)

Name

Tsukuba Research Laboratory

Catalyst Research Laboratory(as of March 31, 1999)

Paid-in Capital(millions of yen, unlessotherwise stated)

5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, Japan

14-1 Chidori-cho, Kawasaki-ku
Kawasaki, Kanagawa 210-0865, Japan

Kawasaki Ukishima Plant
10-12 Ukishima-cho, Kawasaki-ku
Kawasaki, Kanagawa 210-0862, Japan

Himeji Plant
992-1 Aza Nishioki Okihama, Aboshi-ku
Himeji, Hyogo 671-1241, JapanNA Industries, Inc.
P.O. Box 5407
2651 Riverport Road
Chattanooga, TN 37406, U.S.A.

NIPPON SHOKUBAI GmbH
Niedenau 61-63
60325 Frankfurt am Main, Germany

NIPPON SHOKUBAI (ASIA)PTE LTD
138 Cecil Street, #05-04
Cecil Court Singapore 069538

ULTRASORB Chemikalien GmbH
Niedenau 61-63
60325 Frankfurt am Main, Germany

NIPPON SHOKUBAI EUROPE N.V.
Haven 1053
Nieuwe Weg 1B-2070 Zwijndrecht Belgium(as of July 1, 1999)

21

22

Osaka office
Kogin Bldg.
4-1-1 Koraibashi, Chuo-ku
Osaka 541-0043, Japan
Telephone 81-6-6223-9111
Facsimile 81-6-6201-3716
Tokyo office
Hibiya Dai Bldg.
1-2-2 Uchisaiwai-cho, Chiyoda-ku
Tokyo 100-0011, Japan
Telephone 81-3-3506-7475
Facsimile 81-3-3506-7598

1999

FINANCIAL REPORT'99 Aug.,2000,Printed in Japan