Consolidated Financial Statements

November 25, 2004
For the Six Months Period ended September 30, 2004(Fiscal Year ending March 31, 2005)
Company name: NIPRO CORPORATION
Code No:
8086(URL: http://www.nipro.co.jp/)
Representative:
Contact:

Tokyo and Osaka
Osaka, Japan

Stock Exchange where listed:

Head Office:Minoru Sano, President and Representative Director
Akihiko Yamabe, Director, General Manager of Accounting & Corporate Planning Division

TEL (06) 6372-2331
Date of the meeting of the Board of Directors for approval of the financial statements: November 25, 2004
Adoption of U.S. GAAP: No
1.

Consolidated Results for the Six Months ended September 30, 2004(From April 1 to September 30, 2004)(1) Consolidated Results of Operations
Net Sales(Note: Amounts are rounded off per 1 million yen)
Operating Income
Recurring Income

Millions of yen%

Millions of yen%

Millions of yen%

95,68392,029188,700

4.0
2.9
4.6

6,019
5,678
12,557

6.0(23.1)(15.7)

5,589
4,234
9,539

32.0
(23.0)(16.3)

Six months ended Sept. 30, 2004
Six months ended Sept. 30, 2003
Year ended March 31, 2004

Net Income

Diluted Earnings
per Share
Yen

Earnings per Share

Millions of yen%
Yen
Six months ended Sept. 30, 2004
3,776
100.1
59.37
Six months ended Sept. 30, 2003
1,887
(27.2)
29.66
Year ended March 31, 2004
4,216
(17.0)
64.90
Notes: 1. Equity in losses of affiliate for the six months ended September 30, 2004, 2003 and for the fiscal year ended March 31, 2004 was(382) million yen, (486) million yen and (771) million yen, respectively.
2. The weighted average number of shares outstanding for the six months ended September 30, 2004, 2003 and for the fiscal year
ended March 31, 2004 was 63,607,103 shares, 63,639,242 shares and 63,631,774 shares, respectively.
3. Change in accounting methods: N/A
4. Percentages in the above table for Net Sales, Operating Income, Recurring Income and Net Income are based on the previous
interim period.

(2) Consolidated Financial Position
Total Assets

Shareholders’EquityShareholder’ Equity
per Share

Ratio of Shareholders’Equity to Total Assets

Millions of yen
Millions of yen%
Yen
Six months ended Sept. 30, 2004
283,150
93,65233.1
1,472.64
Six months ended Sept. 30, 2003
267,283
87,12932.6
1,369.33
Year ended March 31, 2004
279,701
94,71133.9
1,487.50
Note: 1. The number of shares outstanding as of September 30, 2004, 2003 and March 31, 2004 was 63,594,527 shares, 63,629,277
shares and 63,613,567 shares, respectively.

(3) Consolidated Cash Flows
Cash flows fromoperating activities
Six months ended Sept. 30, 2004
Six months ended Sept. 30, 2003
Year ended March 31, 2004

Cash flows frominvesting activities

Cash flows fromfinancing activities

Millions of yen

Millions of yen

Millions of yen

7,494
6,679
15,432(4,772)(5,185)(12,786)

2.

Millions of yen

4,774
12,94910,400(4) Matters related to scope of consolidation and application of equity method
Number of consolidated subsidiaries:
Number of unconsolidated subsidiaries accounted for by the equity method:
Number of affiliate company accounted for by the equity method:(5) Change of reporting entities
Number of consolidated companies
Number of companies accounted for by the equity
methodCash and cash
equivalents

Added:
Added:

1
049,82543,90942,22815
01Removed:Removed:00Projected Consolidated Financial Results for the Fiscal Year ending March 31, 2005
(From April 1, 2004 to March 31, 2005)

Net Sales

Recurring Income

Millions of yen

Year ending March 31, 2005

194,000

Net Income

Millions of yen

10,900Millions of yen

6,300(Reference) Projected Earnings per Share for the Fiscal Year ending March 31, 2005: 99.07 yen* The projections shown above are prepared based on information available as of the issuing date of thisreport. The actual results may differ from the projected figures due to various factors. Concerning thematters related to the above projections, please refer to the Page 8.
-1-

Corporate GroupOur group consists of the Reporting Company (“the Company”), its 19 subsidiaries and 1 affiliate, and isprimarily engaged in manufacture and sales of medical equipment, pharmaceutical products and glass andmaterial products as well as the management of supermarkets and drugstores.
Positioning of each company in connection with the businesses of our group and the relation to the businesssegments are as follows:<Medical Division>
Domestic:
The Company and Nipro Medical Industries, Ltd., a consolidated subsidiary, manufacture
medical equipment, and the Company sells medical equipment manufactured by its foreignsubsidiaries.
Overseas:
Consolidated subsidiaries Nipro (Thailand) Corporation Ltd. (Thailand), Fuzhou Nipro
Co., Ltd. (China), Nipro (Shanghai) Co., Ltd. (China) and Nipro Medical LTDA. (Brazil)purchases some of raw materials for their production as well as production machinery fromthe Company, manufacture medical equipment, sell through the Company and its
subsidiaries as well as locally on their own.
Consolidated subsidiaries Nipro Europe N.V. (Belgium), Nipro Medical Corporation(U.S.A.), Nipro Medical Panama S.A. (Panama) and Nipro Medical de Mexico S.A. DE C.V.
(Mexico), and unconsolidated subsidiaries Nipro Asia Pte. Ltd. (Singapore) and Nipro
Trading (Shanghai) Co., Ltd. (China) sell medical equipment etc. in the areas of theirlocations.
A consolidated subsidiary Nipro Diabetes Systems, Inc. (U.S.A.) develops and sells
portable diabetes-related products such as Insulin Pump.
<Pharmaceutical Division>
The Company, Nipro Pharma Corporation, consolidated subsidiary and Takeshima
Pharmaceutical Co., Ltd., an unconsolidated subsidiary, manufacture and sell
pharmaceutical products.
Bipha Corporation, an affiliate accounted for by the equity method, is engaged inresearch and development, manufacture and sales of pharmaceutical products such as
blood products.
<Glass and Materials Division>
Domestic:
The Company sells glass tubes in the Kansai area as well as manufactures and sells
other glass products.
In the Kanto area, Shinwa Shoji Co., Ltd., a consolidated subsidiary, purchases glass
tubes as raw materials, and manufactures and sells glass products.
Overseas:
Shanghai Nissho Vacuum Flask Refill Co., Ltd. (China) manufactures internal glass
sections of vacuum flask and other glass products, and sells locally as well as exports.
<Supermarket Division>
Nissho Corporation, a consolidated subsidiary, operates supermarkets in the Keihanshin
region, selling fresh produce etc.
Nissho Drug Co., Ltd., a consolidated subsidiary, carries out drugstores mainly inHanshin region, retailing medicine and general grocery, etc.
<Other>
The Company manufactures (purchases, in some cases) and sells machinery for
manufacture of medical equipment.
The Company and Nissho Corporation lease real estate properties.
Nissho Insurance Services Co., Ltd. operates non-life insurance agency mainly for thegroup companies.
Sanri Kosan Co., Ltd., an other affiliate company, is engaged in leasing of real estate
properties.
The above explanations are illustrated as follows:-2-

(Domestic)(Overseas)

Medical Division

Medical Division<Manufacturing><Manufacturing and Sales>◎Nipro Medical Industries, Ltd.

◎Nipro (Thailand) Corporation Ltd.
◎Fuzhou Nipro Co., Ltd.
◎Nipro (Shanghai) Co., Ltd.
◎Nipro Medical LTDA.

Pharmaceutical Division<Manufacturing and Sales><Sales>◎Nipro Pharma Corporation◎Nipro Europe N.V.
◎Nipro Medical Corporation◎Nipro Medical Panama S.A.
◎Nipro Medica de Mexico, S.A. DE C.V.
○Nipro Asia Pte. Ltd.
○Nipro Trading (Shanghai) Co., Ltd.

<Manufacturing and Sales>

Nipro Corporation○Takeshima Pharmaceutical Co., Ltd.
<Development, Manufacturing
and Sales>□Bipha Corporation

Glass & Materials Division<Manufacturing and Sales>◎Shinwa Shoji Co., Ltd.

<Development and Sales>◎Nipro Diabetes Systems, Inc.

Glass & Materials Division

Supermarket Division<Manufacturing and Sales><Supermarket management>◎Shanghai Nissho Vacuum
Flask Refill Co., Ltd.

◎Nissho Corporation<Drugstore management>◎Nissho Drug Co., Ltd.

Supply of raw materials
Other

Supply of products andmerchandises
Other transactions<Non-life insurance agency>○Nissho Insurance Services Co., Ltd.

Other
<Rental of real estate>△Sanri Kosan Co., Ltd.

-3-◎

Consolidated subsidiary○

Unconsolidated subsidiary□

Affiliate accounted for by theequity method△

Other related company

Management Policies
1. Basic Policies of Management
Since our foundation, we have based ourselves on “technology” and aimed at manufacturing better
products at lower costs. We set our management objective in contributing to the society through corporate
activities, especially focusing on developing new products in the field of medical and pharmaceuticalproducts.
As a management structure in pursuit of compatibility between “stability” and “growth”, which areessential for an enterprise, we implement the “Sliding wage scale system” that is the rule of profit sharing
among shareholders, employees and management, and carry out active business operations, holding theemployees responsible for boosting the performance of individual businesses.
2. Basic Policies on Distribution of Profits
Our policy is that 50% of the non-consolidated net income is to be distributed to the shareholders.
Employees’ bonuses are determined according to the business performance of the division where theemployees belong, and the bonuses of the directors and the statutory auditors are determined based on thebusiness performance of the Company.
Retained earnings are to be invested in sales and production facilities as well as in research anddevelopment for establishing the management structure and future expansion of the business is based on along-term view., in order to ensure stable profits for the future,
3. Position and Policy on Reduction of Trading Unit of Stock
We consider that reduction of trading unit of stock will promote individual investors into the market andlead to the vitalization of the securities market.
For the future, in view of the large amount of implementation costs, we consider to reduce the trading
unit at the occasion of implementing the non-issurance of share certificate.
4. Target Management Indicators
Our performance targets are to achieve 300 billion yen of consolidated net sales, 20 billion yen of
consolidated recurring income and 10% of return on equity by the fiscal year 2010.
As a fundamental perspective for achieving these targets, we will continuously strengthen research anddevelopment, production capacity, and sales force to expand the business, while seeking the mutual
complement among Medical Division, Pharmaceutical Division, Glass & Materials Division andSupermarket Division.
Especially as for research and development, we will progress research of cutting-edge medical
technologies, such as regenerative medicine and recombinant pharmaceutical formulations, etc. based ona long-term view.
On the other hand, about strengthening of production capacity, we will carry out expansion andutilization of domestic and overseas production bases of medical equipment and expand the production
facilities for outsourcing at the Pharmaceutical business.

5. Medium- and Long-term Management Strategies
In the Medical Division, we, as a general medical equipment manufacturer, will seek to enhance theadded-value of Nipro brand and increase the market share by strengthening the sales in the field of
dialysis-related products such as dialyzers and maintaining the leading share in the market, as well as
forging ahead to the field of advanced medical technologies such as catheters and artificial organs,reinforcing the line-up of new products, and conducting active marketing in the overseas markets.
In the Pharmaceutical Division, we devote efforts to developments of pharmaceutical products andresearch of new formulation technologies in the fields of kidney disease, blood, and nutrition infusion. At thesame time, we will promote commercialization of kit products that integrate container, device, drug andsolution, expand sales of double-bag kits and powdered dialysate solutions, start the infusion-related
business in earnest, and focus on development of products that would take the leading share.
In the Glass and Materials Division, we will increase competitiveness by reducing manufacturing costsof various glass products based on our peerless glass processing technologies, conduct global sales
activities and strive to secure stable profit.
In the Supermarket Division, we will strive to make attractive product offerings for fresh food andmedicine etc. and bear closely on the daily needs of neighborhood customers.

-4-6. Issues and challenges that the Nipro Group faces
In the domestic business of the Medical Division, we will focus on dialysis-related products such as
dialyzers, blood tubing sets, substitution fluid for hemofiltration and hemodiafiltration, powdered dialysate
solutions and dialysis machines, endeavor to react to the market needs promptly, develop and market new
products, improve the product quality, strengthen sales activities and increase the market share. In thefield of injection, infusion and catheters, we will attempt to increase our market share of injection andinfusion-related products such as infusion sets and syringes, as well as to develop market and promote
new products such as intravascular catheters. With regard to the products related to circulatory organs,
we will introduce market and promote new products such as thrombus vacuum aspiration catheter and
PTCA Balloon, and increase our market share. In addition, as for the examination-related products, wewill market and promote blood glucose monitoring system for diabetic patients and test reagents, introduce
new products of blood collection tubes and enlarge our market share.
For the international business, since the market is becoming oligoplisitc and price competition isintensifying further, we strengthen market competitiveness to expand business. In order to correspond tointernationalization of products, we standardize the quality. Especially as for CE marking, it is becoming
obligatory in the countries outside EU and the requirement for high quality is increasingly stern, we willobtain CE marking for all the products for overseas markets. Concerning the supply of general purpose
medical products, we attempt to establish cooperation with foreign manufacturers by technical assistanceand aim at expanding further. In the field of dialysis where we provide some staple products, we actively
promote to the major customers not only supply of consumables but also OEM production of hardware ofdialysis machines. With regard to the products related to circulatory organs, introduction to the market is inprogress and we will expand the sales channel. Concerning the sales activities, we will get recruits forstrengthening sales activities of foreign subsidiaries and expand the direct sales organization. In Europe, inorder to promote sales activities, we will actively open the branch offices at the areas where the market isexpanding.
In the Pharmaceutical Division, we are adding to products such as “liquid-and-powder” double-bag kits
for antibiotics and pre-filled syringes and we will be engaged in development of new kit products with new
functions. With regard to development of oral drugs, we will increase in product numbers and at the sametime proceed with development of new type of drug designed elaborating in view of pharmaceutics, forinstance, drugs with prominent easiness to drink. We will make efforts for early materialization ofpharmaceutical products in application of recombinant human serum albumin such as artificial blood andDrug Delivery System (DDS) and products related to recombinant protein for the renal diseases. We will
endeavor to expand our pharmaceutical business, performing interrelated development of both injection
drugs including kit products and oral drugs.
In the Glass and Materials Division, we will develop applied uses of large-sized glass tubes and expand
production of the glass pre-filled syringes. With regard to the glass for lighting, we will strive to increase
sales of glass materials for LCD backlights following the market expansion of FPD (Flat Panel Display) andprocessed goods of colored glass.
In the food supermarkets of the Supermarket Division, in the highly competitive situation by othercompanies’ openings of new stores and renewals, we will reduce opportunity losses and strengthen the
management ability by the “Weekly Change System”. We will also enhance self-supportiveness of all stores,
make up the selling places based closely on the needs of neighboring customers, reinforce promotion bymember card system (FSP: Fregnent Shoppers Program), and develop differentiated goods. Moreover, we
will control the proper level of labor costs and improve the productivity by coupling the new personnel
management system and the work schedule system (LSP) and secure profit by reducing expenses.
In the drugstores, we will strive to improve profitability aiming at further increase in customers, whilestrengthening the specialty nature of health care sections such as medicines and health food and attaining
differentiation from the competitors and also promoting rationalization.

-5-

7. Basic Perspective on Corporate Governance and Implementation of Related Measures(1) Basic Perspective on Corporate GovernanceWe consider improvement of Corporate Governance to be one of the most critical issues in view of acorporate social responsibility (CSR), and we endeavor to strengthen our administration system and to
make sound and efficient management structure.
(2) Implementation of Measures Related to Corporate Governancea. Current Condition of the Corporate Governance System
・ Our management administration organization related to the Company’s management decision
making, policy execution, and supervision is basically in accordance with the systems of board of
directors and board of auditors, as set forth in the Japanese Commercial Code. Specifically, we
have established a self-sufficient management administration framework for each business division,
which clearly define the responsibilities and improve the administration system.
・ All of the current three auditors are outside auditors as provided in the paragraph 1 of the Article 18
of “Law for Special Exceptions to the Commercial Code Concerning Audit etc. of Joint Stock
Corporations (Kabushiki-kaisha)”. Currently, no outside directors are appointed. Although outside
auditors do not have the full-time staff, they cooperate closely with the staff of the Internal Audit
Section through internal auditing and endeavor to execute proper audit.
・ Structure of the Company’s business execution, supervision and internal control
Shareholders Meeting(Appointment)

Accounting
AuditorPresident(Auditors)(Directors)
Board ofAuditors

Board ofDirectors

Committees(Decision Making)Accounting
Audit

Operational
Audit

Third
partiessuch aslawyersandaccountants etc.

Rewards andPunishments
Committee

Directors

Management
Risk Control
Committee

Division Managers
General Managers,
Section Managers,
etc.

Audit ofDirectors’
policy・ The Company retains lawyers, accountants; tax accountants, patent attorneys and otherprofessionals under advisory contracts with regard to law, labor, accounting, taxation, andintellectual property etc. so that we can conduct our business properly and timely and havemanagerial advices from an objective viewpoint.
・ In order to establish the promotion system about control of management risks and compliance withcorporate ethics, including laws and ordinances, we set up “the Management Risk Control
Committee” in April 2003. A booklet (the Code of Conduct for Compliance with Laws, Ordinances
and Corporate Ethics) is distributed to directors and employees and we are striving forconsciousness-raising and thorough enlightenment of each member by giving lectures, education by
the company’s newsletter and installation of the Compliance Hotline, etc. In addition, we set up “theReward and Punishments Committee”, whose chairman is the President of the Company, andendeavor to bring up sound management through fair and proper operation as regardscommendations and penalties.
b. Personal, Capital or Transactional Relationships, and/or Other Interests Between the Company andits Outside Directors and Auditors
There are no such special relationships between the Company and its outside auditors.
c.

Implementation in the Past Year of Measures Designed to Strengthen the Company’s Corporate
Governance・ In order to establish the promotion system about control of management risks and compliance withcorporate ethics including laws and ordinances, we set up the Compliance Hotline in February 2004,
and endeavor to discover management risks at an early stage and to prevent such risks.
・ The Act for Protection of Personal Information will be in force in April 2004 and also revisions of thePharmaceutical Affairs Law, the Japanese Commercial Code and other related laws, etc. arescheduled, and at this occasion we reviewed, maintenance and build up operation system. We
conduct business activities with Corporate Social Responsibility (CSR) in mind as the fundamental
principle, corresponding to the increasing interests in environment protection issues, measures forsaving resources and energy, and the measures for quality and safety of products.
-6-

Business Results and Financial Conditions
1. Business Results(1) Summary of Overall Business and Results by Segments
The Japanese economy for the six months period under review generated the improved mood ofrecovery, led by exports and capital investments. However the prospects have been increasing opacity
due to decelerating economy of the U.S.A. and China and a jump in crude oil price. Under suchconditions, the Company continued to focus on reinforcement of production capacity and sales capability
to improve business performance.
As a result, the consolidated net sales for the period under review increased to 95,683 million yen (up4.0% compared with the same period of the previous fiscal year). By segments, although Medical Division
and Pharmaceutical Division grew in good condition, Glass & Materials Division and Supermarket
Division were in a slump.
On the other hand, operating income increased to 6,019 million yen (up 6.0% compared with thesame period of the previous fiscal year) due to increase in net sales of Medical and Pharmaceutical
Divisions and recurring income increased to 5,589 million yen (up 32.0% compared with the same periodof the previous fiscal year) due to exchange gains etc. Net income increased to 3,776 million yen (up100.1% compared with the same period of the previous fiscal year) due additionally to gain on sales ofinvestment securities etc.
The results by segments were as follows:a. Medical Division
For the domestic business, the environment has been difficult as price competition in the market was
intensified further as the controls on medical expenditures became ever harder after the substantial
downward revision of the drug prices this year. Under these circumstances, we sought to enhance theefficiency of sales activities and reinforce the sales bases. We also made efforts to develop and market
new products in the fields of dialysis, injection and infusion, treatment on circulatory organs andexamination, promote expansion of the business by means of product offerings in the systematizedpackage, etc., and expanded both our market shares and sales.
As for the international business, sales of OEM products expanded in terms of dialysis–related
products, blood-collection-related products and transfer needles and so on. Nipro-branded products
trended relatively well, as we received large orders supported by enhanced quality and pricecompetitiveness. The condition was severe on the other hand, as we have been obliged to reduce theprices following the decline in market prices.
As a result, net sales of this division increased to 40,843 million yen (up 8.2% compared with thesame period of the previous fiscal year) due to increase in net sales of dialysis-related products andinjection and infusion products.
b. Pharmaceutical Division
The market of the pharmaceutical business has been awfully harsh, due to governmental controls tosuppress medical expenditures such as promotion of prospective payment system, etc. and the intense
price war with competing products. Under these circumstances, we endeavored to increase sales ofpowdered dialysate solutions and substitution fluid for hemofiltration and hemodiafiltration, etc. We
also exerted ourselves to expand sales of “liquid-and-powder” double-bag kits and pre-filled syringe kits,etc.
As a result, net sales of this division increased to 13,015 million yen (up 9.4% compared with thesame period of the previous fiscal year).
c.

Glass & Materials Division
In the Glass & Materials Division, although demands for glass materials for liquid crystal display(LCD) backlight bulbs grew significantly along with the expansion of the market, the sales of glass forpharmaceutical purposes decreased by changes in types of medical containers, such as the shift toampoules made of plastic, pre-filled syringes, and the use of plastic bags to replace vials, and the salesof general consumer products were in a downward trend.
As a result, net sales of this division decreased to 5,584 million yen (down 1.0% compared with thesame period of the previous fiscal year).

-7-

d. Supermarket Division
In the Supermarket Division, while constantly sluggish personal consumption, the competition was
extremely severe due to the competitors’ opening new stores and redecorating existing stores. Moreover,
we were affected by the tax-inclusive price indication obligated in April this year, which caused theconsumers to feel rise in prices, and the unit purchase per customers and the number of purchased
items dropped. In addition, although the heat wave from the end of July brought good sales of summer
items such as drinking water and ice cream, net sales were less than the corresponding period of lastyear by the influence of large scale typhoons from the end of August.
Despite such circumstances, our food supermarkets strived to obtain returning customers by creative
actions such as collaboration with suppliers in use of FSP (Frequent Shoppers Program), and to review
the sales promotion strategy drastically to improve profitability. As a result, we could maintain thenumber of customers as the previous year. However largely affected by the above-mentioned factors,
net sales decreased compared with the same period of the previous fiscal year.
Drugstores, on the other hand, although we were affected by sluggish consumptions and the effect ofheat wave for the sales of summer items was limited, net sales increased due to the effect of opening
new stores.
As a result, net sales of this division increased to 35,717 million yen (down 1.1% compared with thesame period of the previous year).
e. Other Division
Net sales of this division, consisting mainly of sales of machine for manufacture of medical equipment
and real estate rentals, decreased to 522 million yen (down 18.8% compared with the same period of
the previous year).
(2) Prospects for the Fiscal Year Ending March 31, 2005
The business environment is anticipated to remain severe, as the uncertainty for the future isspreading due to appreciation of yen and rise of interest rates as well as stalled foreign economy andjump in crude oil price.
Under the conditions, we will strive to improve the business performance by focusing on developmentof new products and reinforcement of production capacity and sales capability.
For the fiscal year ending March 31, 2005, we project the consolidated net sales of 194,000 million
yen (up 2.8% compared with the previous fiscal year), recurring income of 10,900 million yen (up 14.3%
compared with the previous fiscal year), and net income of 6,300 million yen (up 49.4% compared withthe previous fiscal year).

2. Financial Conditions(1) Analysis of the conditions of assets, liability, shareholders’ equity and cash flows
Total assets as of September 30, 2004 increased by 3,449 million yen from the end of the previous
fiscal year to 283,150 million yen. Current assets increased by 6,427 million yen to 131,361 million yen,and fixed assets increased by 2,977 million yen to 151,789 million yen. Current assets increased mainly
due to increase in cash on hand and in banks by 7,655 million yen caused by increase in fixed liabilities,
and fixed assets decreased mainly due to decrease in investment securities by 5,345 million yen caused
by fall in stock prices, etc.
Total liabilities increased by 4,594 million yen from the end of the previous fiscal year to 187,889
million yen. Current liabilities decreased by 4,170 million yen to 92,193 million yen, and fixed liabilities
increased by 8,764 million yen to 95,696 million yen. Commercial paper decreased by 6,500 million yen
in the current liabilities, and long-term borrowings increased by 7,386 million yen in the fixed liabilities.
Total shareholders’ equity decreased by 1,059 million yen from the end of the previous fiscal year to93,652 million yen. In this section, earned surplus increased by 2,450 million yen to 33,060 million yen,and valuation differences of other securities decreased by 2,605 million yen to 9,857 million yen.
Net cash provided by operating activities was 7,494 million yen, net cash used in investing activities
was 4,772 million yen, net cash provided by financing activities was 4,774 million yen, and cash and cash
equivalents increased by 7,597 million yen to 49,825 million yen. Net cash provided by operating
activities mainly reflected net income before adjustment for taxes and depreciation and amortization. Net
cash used in investing activities mainly reflected the payments for acquisition of fixed assets for 6,487
million yen. Net cash provided by financing activities was mainly from the proceeds from long-termborrowings for 12,694 million yen.

-8-(2) Trend of the cash flow indicators

Shareholders’ equity ratio (%)
Ratio of market value ofshareholders’ equity (%)
Debt redemption (years)
Interest coverage ratio

Fiscal Year
ended March
31, 2003
33.0

Six Months
ended Sept.
30, 2003
32.6

Fiscal Year
ended March
31, 2004
33.9

Six Months
ended Sept.
30, 2004
33.1

45.7

45.4

35.5

36.2

21.7
3.1

8.2

7.3
9.4

9.2

Note: Shareholders’ equity ratio = Shareholders’ equity / Total Assets
Ratio of market value of shareholders’ equity = Aggregate market value of the outstanding
shares / Total Assets
Debt redemption = Interest-bearing liabilities / Cash flow from operating activities (omitted forthe six months periods)
Interest coverage ratio = Cash flow from operating activities / Interest payments- Each indicator is calculated from consolidated financial data.
- Aggregate market value of the outstanding shares is calculated as the share price at the fiscal
year-end multiplied by the number of issued shares (excluding treasury stock).
- Cash flow from operating activities is taken from cash flows from operating activities on the
consolidated statements of cash flows. Interest-bearing liabilities represent all liabilities on the
consolidated balance sheets for which interest is payable. The amount of interest payments is thetaken from the payments of interests on the consolidated statements of cash flows.

-9-Consolidated Balance Sheets

PeriodAccount

As of
September 30, 2003
Amount(ASSETS)
Current Assets
Cash on hand and in banks

Trade notes and accounts
receivable
Inventories
Deferred tax assets
Other current assets
Allowance for doubtful
accounts
Fixed Assets
Tangible fixed assets
Buildings andstructures
Machinery, equipment
and vehicles
Land
Construction in progress

OthersIntangible fixed assets
Consolidation adjustments

Others

As of
September 30, 2004

Ratio

AmountRatio%
126,181(Unit: Millions of yen)
As ofMarch 31, 2004
Amount

Ratio

%

47.2

131,36146.4%
124,934

45,90952,89745,24140,80633,763
1,903
3,958

40,694
31,973
1,833
4,171

41,52432,541
1,734
4,100

(159)

(208)

(208)

141,101

52.8

151,78953.6

154,767

55.3

92,712

34.7

96,81634.2

94,00433.6

40,511

41,94340,545

20,58522,474
5,844
3,296

23,232
22,460
4,976
4,202

21,01822,456
6,143
3,840

1,147

0.4

921

131
1,016

0.3

2
918

Investment securities
Long-term loans
receivable
Deferred tax assets
Lease deposits
Other assets
Allowance for doubtful
accounts

30,387

37,17742,522

2,712
192
11,805
2,833

2,496
225
11,696
3,088

2,843
193
11,774
3,085

(689)

(632)

(670)

(Notes)1. Accumulated depreciation of tangible
fixed assets
2. Notes receivable discounted
3. Obligations under guarantee contracts
4. Pledged assets

54,052100.0

283,150

0.4

54
958

47,241

267,283

17.7

1,012

Investments and other assets

Total Assets

44.7

19.1

100.0

59,749279,701

21.3

100.0

As of
September 30, 2003

As of
September 30, 2004

As ofMarch 31, 2004

87,3648
3,000
16,481

93,04725
2,455
14,371

89,92251
2,728
15,795

mil.yenmil.yenmil.yenmil.yen- 10 -

mil.yenmil.yenmil.yenmil.yenmil.yenmil.yenmil.yenmil.yen

Consolidated Balance Sheets

PeriodAccount

As of
September 30, 2003
Amount(LIABILITIES)Current liabilities
Trade notes and accounts
payableShort-term borrowings
Current portion of bonds
Other payables
Accrued income taxes
Accrued bonuses
Notes payable for plantand equipment
Commercial paper
Other current liabilities

As of
September 30, 2004

Ratio

AmountRatio%
84,757(Unit: Millions of yen)
As ofMarch 31, 2004
Amount%31.7

92,19332.6%
96,36329,14035,680
3,711
1,517
1,793

27,68937,875
10,000
3,751
3,250
1,586

29,04835,503
10,000
4,769
1,580
1,444

3,485
6,500
2,928

3,685
4,355

4,207
6,500
3,310

Fixed liabilities

93,612

Bonds

36,00029,00026,00014,00035,6322,086

14,00041,5704,887

14,00034,183
6,688

2,445
3,447

2,724
3,513

2,528
3,531

Convertible-bond-type bonds
with stock acquisition rights

Long-term borrowings
Deferred tax liabilities
Accrued pension andseverance cost
OthersTotal liabilities

35.0

95,696

33.8

Ratio

86,931

34.4

31.1

178,370

66.7

187,88966.4

183,295

65.5

1,783

0.7

1,609

0.5

1,693

0.6

28,66329,972
28,981

10.7
11.2
10.8

28,66329,97233,060

10.1
10.6
11.7

28,66329,972
30,610

10.2
10.7
10.9

(MINORITY INTERESTS)
Minority interests(SHAREHOLDERS’ EQUITY)

CapitalCapital surplus
Earned surplus
Valuation differences ofother securities
Foreign currencytranslation adjustments
Treasury stock

5,374

2.0

9,857

3.5

12,462

4.5(5,378)
(482)

(2.0)
(0.1)

(7,364)
(537)

(2.6)
(0.2)

(6,489)
(506)

(2.3)
(0.1)

Total shareholders’ equity

87,12932.6

93,652

33.1

94,711

33.9

Total liabilities, minority interests,
and shareholders’ equity

267,283

100.0

283,150

100.0

279,701100.0(Notes)5. Number of treasury stock
Common stock

As of
September 30, 2003

As of
September 30, 2004

249,228 shares

283,978 shares- 11 -

As ofMarch 31, 2004

264,938 shares

Consolidated Statements of Income
PeriodAccount

From April 1, 2003
To September 30, 2003
AmountFrom April 1, 2004
To September 30, 2004

Ratio
%

Amount

Ratio%(Unit: Millions of yen)
From April 1, 2003
To March 31, 2004
AmountRatio%

Net sales
Cost of goods sold92,02966,979100.0
72.8

95,683
69,146

100.0
72.3

188,700
137,153

100.0
72.7

Gross profit

25,05027.2

26,536

27.7

51,54727.3

Selling, general andadministrative expenses

19,37221.0

20,51721.4

38,989

20.6

Operating income

5,678

6.2

6,019

6.3

12,557

6.7

Non-operating income
Interest income
Dividend income
Gain on sale of investment
securities

520
85
93

0.5

873
58
112

0.9

963
160
184

0.5

139

-

139

Exchange gains
OthersNon-operating expenses
Interest expenses
Equity in loss of affiliate
Exchange loss
OthersRecurring income

200
1,963
830
486
534
112
4,234

4.6

531
171
1,303
808
382
111
5,589

5.8

479
3,982
1,635
771
1,429
145
9,539

Extraordinary gains
Reversion of allowance for
doubtful accounts
Subsidies received
Gain on sale of investment
securities
OthersExtraordinary losses

151

0.1

1,268

1.3

573

Losses on sales anddisposals of fixed assets
Loss on devaluation of
investment securities
Advanced depreciation
deductions
Abnormal manufacturing cost
Amortization of transitional
difference from change inaccounting standards of pension
and severance benefits

Loss from bad debts
Settlement by reconciliation
regarding sales rights
Others
Net income before
adjustment of taxes
Corporate, inhabitants andenterprise taxes
Adjustment for deferred taxes
Minority shareholders’ sharein net income of consolidated
subsidiaries
Minority shareholder’ share in
net loss of consolidated
subsidiaries
Net income

2.1

1.4

109
-

48
-

108
445

41
852

1,108
111
350

18
2,068

0.9

0.3

216

105

427

98

-

102

155

137

445
271

38
290

38
-

76
290

51

68

272
180

2.1

5.1
0.3

1.1

3,533

3.8

6,508

6.8

8,043

4.3

1,476
154

1.6
0.1

3,011
(161)

3.1
(0.1)

3,765
85

2.0
0.1

15

0.0

-

-

-

-

1,887

2.1

118
3,776

0.1
3.9

23
4,216

0.0
2.2

- 12 -

Consolidated Statements of Surplus

PeriodAccount

From April 1, 2003
To September 30, 2003

From April 1, 2004
To September 30, 2004

AmountAmount(Unit: Millions of yen)
From April 1, 2003
To March 31, 2004
Amount(CAPITAL SURPLUS)
Beginning balance of capitalsurplus29,972

29,972

29,972Ending balance of capitalsurplus29,972

29,972

29,972

27,90430,61027,904

1,887
1,887

3,778
3,776

4,216
4,216

-

1

-

811
700

1,327
1,240

1,511
1,400

111

86

111

[5]

[2]

[5]

28,98133,06030,610(EARNED SURPLUS)
Beginning balance of earned
surplus

Increase in earned surplus
Net income
Increaseinsurplusresulting from adding a
consolidated subsidiary
Decrease in earned surplus
Dividends
Bonuses to directors andcorporate auditors[Bonuses to corporate
auditors, inclusive]
Ending balance of earned
surplus- 13 -

Consolidated Statements of Cash Flows(Unit: Millions of yen)
PeriodAccount

From April 1, 2003
To September 30, 2003

From April 1, 2004
To September 30, 2004

From April 1, 2003
To March 31, 2004

AmountAmountAmountCash flows from operating activities
Net income before adjustment for taxes
Depreciation and amortization
Amortization of consolidation
adjustments
Equity in loss of affiliate
Loss from bad debts
Increase (decrease) in allowance for
doubtful accounts
Interest and dividend income
Interest expenses
Exchange loss (gain)
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in other assets
Increase (decrease) in other liabilities
Bonuses to directors and corporate
auditors
Other non-operating income/expenses
and extraordinary gains/losses

SubtotalInterest and dividends received
Interest paid
Other revenues
Other expenditures
Income taxes paid
Cash flows from operating activities

3,533
4,606

6,508
4,822

8,043
9,819

82
486
290

52
382
-

159
771
290

(43)
(179)
830
534
1,557
(2,312)
1,957(187)(1,256)

(39)
(170)
808
(518)
1,200
510
(1,391)(224)(1,377)

(13)
(344)
1,635
502
1,093
(1,515)
2,172
(981)
(133)

(111)

(86)

(111)

171
9,961
115
(819)
454
(447)
(2,585)
6,679

(975)
9,498
121
(811)
292
(278)
(1,328)7,494

512
21,902261(1,637)911(1,195)(4,809)15,432(1,214)
2,393
(14)
447
(7,017)
219
(1)
26
(23)
(5,185)(2,257)
2,183
(119)
1,737
(6,487)
146
(2)
27
0
(4,772)(3,064)
3,117
(516)
448
(13,244)
578
(134)
53
(23)
0
(12,786)(2,028)1,684(1,763)

(500)
3,566
(3,307)
13,965(2,000)(6,500)12,694(4,621)
2,979
-

(500)
6,126
(7,734)
13,921(2,000)

(31)

(31)

(54)

(156)
(700)

(193)
(1,237)(336)(1,399)4,141
12,949

4,774

4,141
10,400

71

80

(211)

14,515

7,577

12,83529,39342,22829,393-19-

43,90949,82542,228Cash flows from investing activities
Deposits in time deposits
Proceeds from matured time deposits
Payments for purchases of securities
Proceeds from sales of securities
Payments for acquisition of fixed assets
Proceeds from sales of fixed assets
Lending of loans
Collections of loans receivable
Expenditures for other investments
Revenues from other investments

Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in short-termborrowings
Net increase (decrease) in commercial
paper
Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of bonds
Payments for redemption of bonds
Payments for purchases of treasury
stock
Repayments for finance leaseobligations
Payments for dividends
Reimbursement of funds for redemptionof convertible bonds

Cash flows from financing activities
Effect of exchange rate changes oncash and cash equivalents
Increase (decrease) in cash and cash
equivalents
Balance of cash and cash equivalents
at the beginning of the period
Effect of new consolidated subsidiary on
cash and cash equivalents at the beginningof the period

Balance of cash and cash equivalents
at the end of the period- 14 -

Basis of Preparation for the Consolidated Financial Statements
1. Scope of Consolidation
1) Consolidated subsidiaries: 15
・
・
・
・
・
・

・
・
・
・

Nipro Medical Industries, Ltd.
Fuzhou Nipro Co., Ltd.
Nipro Medical LTDA.
Nipro Medical Corporation
Nipro Medica de Mexico S.A. DE C.V.
Nipro Pharma Corporation

・ Shanghai Nissho Vacuum Flask Refill Co., Ltd.

Nipro (Thailand) Corporation Ltd.
Nipro (Shanghai) Co., Ltd.
Nipro Europe N.V.
Nipro Medical Panama S.A.
・ Nipro Diabetes Systems,Inc.
・ Shinwa Shoji Co., Ltd.
・ Nissho Corporation

・ Nissho Drug Co.,Ltd.
Considering materiality, we decided to include Nipro Diabetes Systems,Inc. in the scope of
consolidation from this accounting period.
2) Unconsolidated subsidiaries: 4
The unconsolidated subsidiaries, Nissho Insurance Services Co., Ltd., Nipro Asia Pte. Ltd., Nipro
Trading (Shanghai) Co., Ltd., and Takeshima Pharmaceutical Co., Ltd., are small-sized companies,
whose combined total assets, net sales, net income and earned surplus in the aggregate (averaged forrecent 5 years) are not material to the consolidated financial statements.
2. Application of Equity Method
Number of affiliate accounted for by the equity method: 1

Bipha Corporation

The equity method is not applied to the 4 unconsolidated subsidiaries, since they are not material tothe consolidated net income and earned surplus etc., either individually or in the aggregate.
3. Date of Interim Closing of Consolidated Subsidiaries
Among the consolidated subsidiaries, Nipro (Thailand) Corporation Ltd. (Thailand), Fuzhou Nipro
Co., Ltd. Nipro (Shanghai) Co., Ltd., Shanghai Nissho Vacuum Flask Refill Co., Ltd. (China), Nipro
Medical LTDA. (Brazil), Nipro Europe N.V. (Belgium), Nipro Medical Corporation, Nipro Diabetes
System,Inc (U.S.A.), Nipro Medical Panama S.A. (Panama) and Nipro Medica de Mexico S.A. DE C.V.
(Mexico) close their interim accounts on June 30. Significant transactions occurred between June 30
and September 30 is reflected properly in preparing for the consolidated financial statements.
4. Accounting Principles and Practices
1) Valuation standards and methods for significant assets
a. Securities
Other securities:
Securities with market
quotations ·························Valued at the market price quoted on the balance sheet date.
(Differences in valuation are presented as a component ofshareholders’ equity. Costs are determined by the weighted
average method.)
Securities withoutmarket quotations ·············Valued at cost by the weighted average method
b. Inventories
Medical, Pharmaceuticaland Glass & Materials
Divisions ···························Valued at cost principally by the weighted average method.
Partially first-in first-out method is used.
Supermarket Division ·······Valued at cost by the retail method- 15 -

2) Method of depreciation and amortization for significant depreciable assets
Tangible fixed assets:·······Declining-balance method
Durable years and residual values are based on the same
standards as provided by the Corporate Income Tax Law.
Buildings acquired after April 1, 1998 (excluding attachedstructures), are depreciated by straight-line method.
The 10 foreign subsidiaries use straight-line method in
accordance with the tax laws of their countries.
3) Standards for recognition of significant allowancesa. Allowance for doubtful
accounts ··························· In order to cover the probable losses on collection, an allowancefor doubtful accounts is provided for the estimated amount of
uncollectible receivables. For general receivables, the amount ofprovision is based on historical write-off rates, and for the doubtfulreceivables, based on the specific collectibility.
b. Accrued bonuses·············· In order to cover the payment of bonuses to employees, anallowance is provided for the estimated amount of bonuses to be
paid, prorated for the consolidated accounting period.
c.

Accrued pension andseverance cost ·············· An allowance is provided for employees’ pension and severance
payments based on the estimated amounts of projected benefit
obligation and plan assets at the end of the fiscal year.
The transitional difference that arose from the change inaccounting standards (519 million yen) is amortized for five years
by the straight-line method.
Actuarial difference is expensed in the following fiscal years after
the year of such recognition, using the straight-line method for five
years.

4) Standards for translation of significant assets and liabilities denominated in foreign currencies into
Japanese Yen
Monetary assets and liabilities denominated in foreign currencies are translated to Japanese
yen using the spot exchange rate of the consolidated balance sheet date, and translationdifferences are recognized as gains or losses. The assets and liabilities of foreign subsidiaries etc.
are translated to Japanese yen using the spot exchange rate of their balance sheet date, while
revenues and expenses are translated using the average rate for the period. Translationdifferences are included in foreign currency translation adjustments in the Shareholders’ Equity
section.
5) Accounting method for lease transactions
Finance leases, except for those where ownership of the leased assets is deemed to betransferred to the lessee, are accounted for by the method similar to that applicable to ordinary
operating leases.
6) Other significant basis on preparation for consolidated financial statements
Consumption Taxes
Consumption taxes are excluded from revenues and expenses accounts.
5. Scope of Funds in the Consolidated Statements of Cash Flows
Funds (cash and cash equivalents) in the consolidated statements of cash flows are comprised of
cash in hand, bank deposits that can be withdrawn on demand, and short-term investments
redeemable within three months from the date of acquisition and ready to be converted into cash withlittle risk against change in value.

- 16 -

(Additional Information)
Presentation of factor-based portion of corporate enterprise tax in the consolidated statement of income
In accordance with the Practical Issues Tasks Force Report No.12 Presentation of factor-based
portion of corporate enterprise tax in an income statement” (published on February 13, 2004 by the
Accounting Standard Board of Japan), as from this consolidated accounting period, theadded-value portion and capital portion of the corporate enterprise tax amounting to 166 million yen
was accounted for in the selling, general and administrative expenses.

(Lease Transactions)
Finance lease transactions, except for those where ownership of the leased assets is deemed to betransferred to the lessee

Acquisition price equivalent
Accumulated depreciationequivalentBook value equivalent
Lease commitments
Due within one year
Due after over one year
Total
Lease payments
Depreciation equivalentInterest expense equivalent

Six Months ended
Sept. 30, 2003

Six Months
ended Sept. 30,
2004

Fiscal Year
ended
March 31, 2004

9,116

mil.yen7,224

mil.yen9,435

mil.yen5,177

mil.yen4,429

mil.yen6,456

mil.yen3,939

mil.yen2,795

mil.yen2,978

mil.yen

1,428
3,205
4,633

mil.yenmil.yenmil.yen

1,585
1,234
2,820

mil.yenmil.yenmil.yen

1,162
2,370
3,533

mil.yenmil.yenmil.yen

827
670
83

mil.yenmil.yenmil.yen

673
535
57

mil.yenmil.yenmil.yen

2,150
1,883
152

mil.yenmil.yenmil.yen

Method of calculation of depreciation equivalent
For the tangible fixed assets, ten ninth of the amount computed by the declining-balance methodwith 10% of hypothetical residual value for the lease term as remaining life is allocated to each period
over the lease term.
Method of calculation of interest equivalent
Difference between total lease payments and acquisition cost equivalent of leased assets
comprises interest expense equivalent, and interest expense equivalent is allocated to each period overthe lease term by the interest method.

- 17 -

(Segment information)
1. Segment information by business category(1) Six Months ended September 30, 2003 (From April 1, 2003 to September 30, 2003)
MedicalPharmaceutical

Glass &
Materials

Supermarket(1) Sales to third parties

37,745

11,893

5,637

36,110643(2) Inter-segment sales
and transfers

254

-

1,340

-

Total

37,99911,893

6,977

Operating expenses

32,55010,805

Operating income

5,449

1,088

(Millions of yen)
Eliminations/Corporate

Consolidated

92,029-92,029297

1,892(1,892)-

36,110941

93,922(1,892)

92,0296,090

35,778698

85,923428

86,351

887

331

242

7,999

(2,321)

5,678

Other

Total

Net sales and operating
incomeNet sales(2) Six Months ended September 30, 2004 (From April 1, 2004 to September 30, 2004)
MedicalPharmaceutical

Glass &
Materials

Supermarket(1) Sales to third parties

40,84313,015

5,584

35,717522(2) Inter-segment sales
and transfers

517

-

1,141

15

Total

41,361

13,015

6,725

Operating expenses

35,23011,688Operating income (loss)

6,131

1,326

(Millions of yen)
Eliminations/Corporate

Consolidated

95,683-

95,683283

1,958(1,958)-35,733806

97,641(1,958)95,683

5,766

35,767

640

89,092571

89,663

959

(33)

165

8,549

(2,530)

6,019

Other

Total

Net sales and operating
incomeNet sales(3) Fiscal Year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)
MedicalPharmaceutical

Glass &
Materials

Supermarket(1) Sales to third parties

78,72625,338

11,89071,3571,386(2) Inter-segment sales
and transfers

639

-

2,356

-

Total

79,36525,33814,247

Operating expenses

67,24822,868Operating income

12,1172,470(Millions of yen)
Eliminations/Corporate

Consolidated

188,700-

188,700

596

3,592

(3,592)-

71,357

1,983

192,292(3,592)

188,700

12,42870,937

1,578

175,061

1,081

176,142

1,818

420

404

17,231(4,673)

12,557

Other

Total

Net sales and operating
incomeNet sales- 18 -

Note:

1.

Classification of business categories and main products in each business category
Business categories are classified based on the proximity in terms of purposes and manners
of usage of the products in the market.
Main products belonging to each business categories are as follows
Business
category

Main products

MedicalDialyzes, blood tubing sets, injection needles, syringes, and infusion sets, etc.

Pharmaceutical

Half-type and full-type kits, double-bag kits, pre-filled syringes, dialysate
solution, and circulatory drugs, etc.

Glass & Materials

Glass for pharmaceutical containers, glass for thermos bottles, glass forlighting purposes, stoppers for plastic containers and rubber stoppers, etc.

Supermarket

Fresh meat and fish, vegetables, fruits, processed food, daily foods, frozen
foods, general groceries and medicine, etc.

Other

Machinery for manufacture of medical equipment and real estate rental
income, etc.

2.

Operating expenses of “Eliminations/Corporate” for the six months ended September 30,
2003, 2004 and the previous fiscal year ended March 31, 2004 included unallocated corporate
costs of 2,321 million yen, 2,530 million yen and 4,673 million yen, respectively. The
unallocated corporate costs consisted primarily of the parent companys’ research anddevelopment costs and headquarters administration costs.

- 19 -

2. Segment information by geographical area
(1) Six Months ended September 30, 2003 (From April 1, 2003 to September 30, 2003)
Japan

America

Asia

Europe

Total(Millions of yen)
Eliminations/Corporate

Consolidated

Net sales and operating
incomeNet sales(1) Sales to third parties

86,005

2,090

3,019

913

92,029-92,029(2) Inter-segment sales
and transfers

4,677

175

0

4,304

9,158

(9,158)-

Total

90,683

2,266

3,020

5,217

101,188(9,158)92,029Operating expenses

82,796

2,558

3,271

4,486

93,113(6,761)86,351

Operating income (loss)

7,887

(292)

(251)

730

8,074

(2,396)

5,678(2) Six Months ended September 30, 2004 (From April 1, 2004 to September 30, 2004)
Japan

America

Asia

Europe

Total(Millions of yen)
Eliminations/Corporate

Consolidated

Net sales and operating
incomeNet sales(1) Sales to third parties

87,899

4,385

2,962

435

95,683-

95,683(2) Inter-segment sales
and transfers

5,898

160

1

4,924

10,985(10,985)-

Total

93,798

4,545

2,964

5,360

106,668(10,985)

95,683Operating expenses

85,707

4,628

2,822

5,122

98,282(8,618)89,663Operating income (loss)

8,090

(83)

141

237

8,386

(2,366)

6,019(3) Fiscal Year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)
Japan

America

EuropeAsia(Millions of yen)

Total

Eliminations/Corporate

Consolidated

Net sales and operating
incomeNet sales(1) Sales to third parties

176,373

4,707

5,922

1,696

188,700-

188,700(2) Inter-segment sales
and transfers

9,609

377

27

8,470

18,485(18,485)-

Total

185,983

5,085

5,949

10,167207,185(18,485)

188,700

Operating expenses

169,172

5,265

5,833

9,755

190,026(13,883)

176,142

Operating income (loss)

16,810

(180)

116

412

17,159(4,602)

12,557

Note:

1.
2.

3.

Classification of countries or areas is based on geographical proximity.
The major countries included in each geographical area are as follows
America ……..
The United States of America and Brazil
Europe ………
Belgium
Asia ………….
China and Thailand
Operating expenses of “Eliminations and Corporate” for the six months ended September 30,
2003 and 2004, and the previous fiscal year ended March 31, 2004 included unallocatedcorporate costs of 2,321 million yen, 2,530 million yen and 4,673 million yen, respectively.
The unallocated corporate costs consisted primarily of the parent company’s research anddevelopment costs and the headquarters administration costs.

- 20 -

3. Overseas sales(1) Six months ended September 30, 2003 (From April 1, 2003 to September 30, 2003)
America1.

Overseas sales

2.

Consolidated net sales

3.

Percentage of overseas sales
against consolidated net
sales (%)

Europe

9,851

9,527

Asia

Total

2,732

10.7%

America
Overseas sales

2.

Consolidated net sales

3.

Percentage of overseas sales
against consolidated net
sales (%)

10.3%

3.0%

Europe14,255

9,318

Asia

2.

Consolidated net sales

3.

Percentage of overseas sales
against consolidated net
sales (%)

Note:

1.
2.

3.

(Millions of yen)

2,467

26,04095,683

14.9%

America
Overseas sales

24.0%

Total

9.7%

2.6%

(1) Fiscal Year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)

1.

22,111

92,029(2) Six months ended September 30, 2004 (From April 1, 2004 to September 30, 2004)

1.

(Millions of yen)

Europe21,136

18,861

27.2%(Millions of yen)
Asia

Total

5,425

45,422

188,700

11.2%

10.0%

2.9%

24.1%

Classification of countries or areas is based on geographical proximity.
The major countries included in each geographical area are as follows
America ……..
The United States of America, Canada and Brazil
Europe ………
Belgium, Denmark and Germany
Asia ………….
China, Taiwan and Thailand
Overseas sales represent those of the Company and the consolidated subsidiaries tocountries and areas outside of Japan.

- 21 -

(Securities)
1. Other securities with market quotations(Unit: Millions of yen)
As of September 30, 2003

As of September 30, 2004

As of March 31, 2004

Acquisition cost

Carrying
value onconsolidated
B/S

Difference

Acquisition cost

Carrying
value onconsolidated
B/S

Difference

Acquisition cost

Carrying
value onconsolidated
B/S

Difference

Stocks12,41820,005

7,586

11,786

26,914

15,12812,41531,937

19,522

Bonds

-

-

-

-

-

-

-

-

-

Others

60

47

(12)

60

50

(9)

60

54

(5)

12,47820,052

7,574

11,84625,965

15,11812,47531,991

19,516Classification

Total(Note)

Impairment losses for the six months ended September 30, 2003 and the previous fiscal year
ended March 31, 2004 were 98 million yen and 102 million yen, respectively. No impairment
loss was posted for the six months ended September 30, 2004.
Impairment losses are recorded on the securities whose fair values at the end of the period
have declined by more than 50%, unless the values are reasonably considered to be
recoverable.

2. Securities that do not have market quotations
Carrying value on
Consolidated
Balance Sheet
As of Sept. 30, 2003
Other securities
Unlisted stocks (excluding
those traded on theover-the-counter market)
Stocks of subsidiaries andaffiliates
Stocks of unconsolidated
subsidiaries
Stocks of affiliated companies
Total

Carrying value on
Consolidated
Balance Sheet
As of Sept. 30, 2004

(Unit: Millions of yen)
Carrying value on
Consolidated
Balance Sheet
As of March 31, 2004

4,437

4,447

4,417

186

722

687

5,710

5,042

5,425

10,334

10,212

10,530(Derivative transactions)
No transactions to be noted- 22 -

Production, Orders received and Sales
1. Production(1) Six months ended September 30, 2003 (From April 1, 2003 to September 30, 2003)(Unit: Millions of yen)
Business segment

Amount produced

Ratio of change
from t the same
period of theprevious fiscal year(%)

Medical28,201(3.3)

Pharmaceutical

12,664

15.2

Glass & Materials

1,835

12.2

Other

496

24.6

Total

43,1982.4(2) Six months ended September 30, 2004 (From April 1, 2004 to September 30, 2004)(Unit: Millions of yen)
Business segment

Amount produced

Ratio of change
from t the same
period of theprevious fiscal year(%)

Medical29,036

3.0

Pharmaceutical

12,6900.2

Glass & Materials

1,812

(1.2)

Other

381

(23.2)

Total

43,922

1.7(3) Fiscal Year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)(Unit: Millions of yen)
Business segment

Amount produced

Ratio of change
from t the same
period of theprevious fiscal year(%)

Medical57,577

0.2

Pharmaceutical

24,785

7.2

Glass & Materials

3,829

12.7

Other

720

(41.9)

Total

86,913

2.0

Note:

1.
2.
3.

Amounts produced are calculated based on average selling prices.
The above amounts are after eliminations of the intersegment transactions.
The above amounts do not include the related consumption taxes etc.

2. Orders received
Since we adopt the production system based on estimated orders, there is nothing applicable hereto
regarding the amount and the balance of orders received.

- 23 -

3. Sales(1) Six months ended September 30, 2003 (From April 1, 2003 to September 30, 2003)(Unit: Millions of yen)
Business segment

Ratio of change
from t the same
period of theprevious fiscal year(%)

Amount soldMedical37,745(1.4)

Pharmaceutical

11,893

18.3

Glass & Materials

5,637

5.9

Supermarket

36,110

3.3

Other

643

(20.6)

Total

92,0292.9(2) Six months ended September 30, 2004 (From April 1, 2004 to September 30, 2004)(Unit: Millions of yen)
Business segment

Ratio of change
from t the same
period of theprevious fiscal year(%)

Amount soldMedical40,843

8.2

Pharmaceutical

13,015

9.4

Glass & Materials

5,584

(1.0)

Supermarket

35,717

(1.1)

Other

522

(18.8)

Total

95,683

4.0(3) Fiscal Year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)(Unit: Millions of yen)
Business segment

Ratio of change
from t the same
period of theprevious fiscal year(%)

Amount soldMedical78,726

3.6

Pharmaceutical

25,33815.3

Glass & Materials

11,890

7.5

Supermarket

71,357

2.6

Other

1,386

(21.2)

Total

188,700

4.6

Note:

1.
2.

The above amounts are after eliminations of the intersegment transactions.
The above amounts do not include the related consumption taxes etc.

- 24 -

Summary of Non-consolidated Financial Statements

November 25, 2004
For the Six Months Period ended September 30, 2004 (Fiscal Year ending March 31, 2005)
Company name: NIPRO CORPORATIONTokyo and Osaka
Stock Exchange where listed:
Code No:
8086
Head Office:Osaka, Japan(URL: http://www.nipro.co.jp/)
Representative:
Minoru Sano, President and Representative Director
Contact:
Akihiko Yamabe, Director, General Manager of Accounting & Corporate Planning Division
TEL (06) 6372-2331
Date of the meeting of theInterim dividend plan: Adopted
Board of Directors for approvalof the financial statements:
Date of commencement of
payment of interim dividends:

Unit share system:

November 25, 2004

Adopted (1,000 shares/unit)

December 10, 2004

1. Results for the Six Months ended September 30, 2004 (From April 1 to September 30, 2004)(1) Results of Operations(Note: Amounts are rounded off per one million yen)
Net Sales
Operating Income
Recurring Income
Six months ended Sept. 30, 2004
Six months ended Sept. 30, 2003
Year ended March 31, 2004

Millions of yen%

Millions of yen%

Millions of yen%

53,79250,579106,119

6.4
2.0
5.4

4,498
3,853
9,227

16.8
(24.4)
(9.9)

4,634
2,990
7,807

55.0
(32.8)(11.8)Net Income
Millions of yen

Earnings per Share
%

Yen

3,256
132.5
51.20
1,400
(44.5)
22.00
4,060
(1.1)
62.46
Notes: 1. The weighted average number of shares outstanding for the six months ended September 30, 2004,for thesix months ended September 2003 and for the fiscal year ended March 31, 2004 was 63,607,103 shares,
63,639,242 shares and 63,631,774 shares respectively.
2. Change in accounting method: N/A
3. Percentages in the above table for Net Sales, Operating Income, Recurring Income and Net Income representchanges from the corresponding period of the previous fiscal year.
Six months ended Sept. 30, 2004
Six months ended Sept. 30, 2003
Year ended March 31, 2004

(2) Dividends
Interim dividendper Share

Annual dividendper Share

Yen
Six months ended Sept. 30, 2004
Six months ended Sept. 30, 2003
Year ended March 31, 2004

Yen

25.50
11.00
-

30.50

(3) Financial Position
Shareholders’EquityTotal Assets
Millions of yen

Ratio of Shareholders’Equity to Total Assets

Shareholder’ Equity
per Share%

Yen

Millions of yen

249,639
105,69742.3
1,662.06
239,053
97,68840.9
1,535.27
252,413106,37042.1
1,670.78
Notes: 1. The number of shares outstanding as of September 30, 2004, 2003 and March 31, 2004 was 63,594,527 shares,
63,629,277 shares and 63,613,567 shares, respectively.
2. The number of treasury stock as of September 30, 2004, 2003 and March 31, 2004 was 283,978 shares, 249,228
shares and 264,938 shares, respectively
Six months ended Sept. 30, 2004
Six months ended Sept. 30, 2003
Year ended March 31, 2004

2. Projections for the Results for the Fiscal Year ending March 31, 2005
(From April 1, 2004 to March 31, 2005)
Net Sales
Millions of yen

Year ending March 31, 2004

109,000

Recurring Income

Net Income

Millions of yen

Millions of yen

9,100

5,750

Annual dividend per Share
Year-end
Dividend
Yen
Yen

19.50

45.00

(Reference) Projected Earnings per Share for the Fiscal Year ending March 31, 2005: 90.42 yen*

The projections shown above are prepared based on information available as of the issuing date of thisreport. The actual results may differ from the projected figures due to various factors. Concerning
the matters related to the above projections, please refer to the Page 8.
- 25 -

Balance Sheets

PeriodAccount

As of
September 30, 2003
AmountRatio(ASSETS)
Current Assets
Cash on hand and in banks

Trade notes receivable
Accounts receivable
Inventories
Deferred tax assets
Other current assets
Allowance for doubtful
accounts
Fixed Assets
Tangible fixed assets
Buildings
Machinery and equipment

Land
OthersIntangible fixed assets

As of
September 30, 2004
AmountRatio%
96,72940.5(Unit: Millions of yen)
As ofMarch 31, 2004
AmountRatio%
103,569

41.5%
95,31535,41015,35024,321
18,748526
2,376

42,587
13,36725,75915,840758
5,260

34,932
14,86824,76317,083681
2,.990

(5)

(5)

(5)

37.8

142,32459.5

146,07058.5

157,097

62.2

32,81813.7

33,23313.3

32,733

12.9

10,874
6,728
12,4402,775

10,1437,434
12,4403,214

10,506
6,621
12,440
3,165

271

0.1

209

0.1

241

0.1

Investments and other assets

109,233

45.7

112,62745.1

124,122

49.2

Investment securities

23,00929,402

34,34251,55853,69253,584

10,79010,79010,79017,6106,749

12,781
6,424

19,271
6,618

(485)

(464)

(486)

Investment in subsidiaries
and affiliates - stock
Investment in subsidiaries
and affiliate – other thanstock
Long-term loans
receivable

Other assets
Allowance for doubtful
accounts
Total Assets

239,053

100.0- 26 -

249,639100.0

252,413100.0

Balance Sheets

PeriodAccount

As of
September 30, 2003
Amount(LIABILITIES)Current liabilities
Trade notes payable
Accounts payable
Short-term borrowings
Current portion of bonds
Accrued income taxes
Accrued bonuses
Commercial paper
Other current liabilities

As of
September 30, 2004

Ratio

Amount%61,27325.6

14,17910,914
23,622
965
974
6,500
4,118

Ratio

Amount%70,18828.1

14,244
10,706
26,74010,000
2,730
830
4,935

%
74,40329.5

15,097
11,312
24,313
10,000
1,300
704
6,500
5,175

80,091

Bonds

36,00029,00026,00014,00025,9881,671

14,00023,852
4,331

14,00023,037
6,113

Lease deposits received

1,461
970

1,589
979

1,517
969

Total liabilities

141,36459.1

143,94157.7

146,042

57.9

CapitalCapital surplus
Capital reserve
Earned surplus
Revenue reserve
Voluntary reserve
Unappropriated income
Valuation differences of othersecurities
Treasury stock

28,66329,972
29,97235,6691,196
32,732
1,740

12.0
12.6

11.5
12.0
15.8

28,66329,972
29,972
37,6291,196
32,732
3,700

11.3
11.9

14.9

28,66329,972
29,97239,5591,196
34,743
3,619

3,866

1.6

8,040

3.2

1,0,611

4.2

(482)

(0.2)

(537)

(0.2)

(506)

(0.2)

Total shareholders’ equity

97,68840.9

105,69742.3

106,370

42.1

Total liabilities andshareholders’ equity

239,053

100.0

249,639100.0

252,413100.0

Long-term borrowings
Deferred tax liabilities
Accrued pension andseverance cost

73,753

Ratio

Fixed liabilities
Convertible-bond-type bonds
with stock acquisition rights

33.5(Unit: Millions of yen)
As ofMarch 31, 2004

29.6

71,63928.4(SHAREHOLDERS’ EQUITY)- 27 -

14.9

Statements of Income
PeriodAccount

From April 1, 2003
To September 30, 2003
AmountFrom April 1, 2004
To September 30, 2004

Ratio

Amount

Ratio%(Unit: Millions of yen)
From April 1, 2003
To March 31, 2004
Amount

Ratio

%

%

Net sales
Cost of goods sold

50,57938,583100.0
76.3

53,792
40,980100.0
76.2

106,119
80,813100.0
76.2

Gross profit

11,996

23.7

12,811

23.8

25,305

23.8

Selling, general andadministrative expenses

8,142

16.1

8,312

15.4

16,077

15.1

Operating income

3,853

7.6

4,498

8.4

9,227

8.7

446
148
87

0.9

829
170
106

1.5

864
320
168

0.8

Non-operating income
Interest income
Dividend income
Gain on sale of investment
securities
Exchange gain
OthersNon-operating expenses
Interest expenses
Interest on bonds
Exchange loss
OthersRecurring income
Extraordinary gains
Gain on sales of investment
securities

OthersExtraordinary losses
Loss on sales anddisposals of fixed assets
Loss on devaluation of
investment securities
Loss from bad debts
Settlement by reconciliation
regarding sales rights

Others
Net income before
adjustment of taxes
Corporate, inhabitants andenterprise taxes
Adjustment for deferredtaxes
Net income
Retained earnings at the
beginning of the period
Interim dividends paid
Unappropriated income

139
70
1,310
215
453
552
88
2,990
138

5.9

504
48
693
195
459
39
4,634

8.6

139
235
2,285
411
905
866
101
7,807

0.3

1,165

2.2

113

2.6

138
585

1.3

1,108
1.2

57
99

2.1

7.4
0.1

0.2

113
1,015

195

78

328

98
290

-

102
290

1

20

272
20

1.0

2,542

5.0

5,700

10.6

6,905

6.5

932

1.8

2,552

4.7

2,937

2.8

210

0.4

(108)

(0.2)

(93)

(0.1)

1,400

2.8

3,256

6.1

4,060

3.8

339
-

363
-

339
699

1,740

3,619

3,700

- 28 -

Basis of Preparation for the Interim Financial Statements
1. Valuation standards and methods for significant assets
a. Securities
Stocks issued by subsidiaries
and affiliated companies ·············Valued at cost by the weighted average method
Other securities
Securities with market
quotations································Valued at market price quoted on the balance sheet date.
(Differences in valuation are presented as a component ofshareholders’ equity. Costs of sales are determined by theweighted average method.)
Securities without market
quotations································Valued at cost by the weighted average method
b. Inventories
Merchandises, Finished goods
and Semi-finished goods·············Valued at cost by the weighted average method
Raw materials and Supplies········Valued at cost by the First-in First-Out method
2. Method of depreciation and amortization for significant depreciable assets
Tangible fixed assets: ·················Declining-balance method
Durable years and residual values are based on the same
standards as provided by the Corporate Income Tax Law.
Buildings acquired after April 1, 1998 (excluding attachedstructures), are depreciated by straight-line method.
Intangible fixed assets·················Straight-line method
Durable years are based on the same standards as provided by
the Corporate Income Tax Law.
However, the software for internal use is amortized by thestraight-line method for the period during which it is available in the
Company (5 years).
3. Standards for recognition of significant allowances
Allowance for doubtful
accounts ······································ In order to cover the probable losses on collection, an allowancefor doubtful accounts is provided for the estimated amount of
uncollectible receivables. For general receivables, the amount ofprovision is based on historical write-off rates, and for the doubtfulreceivables, based on the specific collectibility.
Accrued bonuses ························ In order to cover the payment of bonuses to employees, anallowance is provided for the estimated amount of bonuses to be
paid, prorated for the consolidated accounting period.
Accrued pension andseverance cost ···························· An allowance is provided for employees’ pension and severance
payments based on the estimated amounts of projected benefit
obligation and plan assets at the end of the fiscal year.
The transitional difference that arose from the change inaccounting standards (147 million yen) is amortized for five years
by the straight-line method.
Actuarial difference is expensed in the following fiscal years after
the year of such recognition, using the straight-line method for five
years.
4. Accounting method for lease transactions
Finance leases, except for those where ownership of the leased assets is deemed to be transferredto the lessee, are accounted for by the method similar to that applicable to ordinary operating leases.
5. Other significant basis on preparation for consolidated financial statements
Consumption Taxes
Consumption taxes are excluded from revenues and expenses accounts.

- 29 -

(Additional Information)
Presentation of factor-based portion of corporate enterprise tax in the consolidated statement of income
In accordance with the Practical Issues Tasks Force Report No.12 Presentation of factor-based
portion of corporate enterprise tax in an income statement” (published on February 13, 2004 by the
Accounting Standard Board of Japan), as from this consolidated accounting period, theadded-value portion and capital portion of the corporate enterprise tax amounting to 111 million yen
was accounting for in the selling, general and administrative expenses.

Notes to the Interim Financial Statements(Balance Sheet)
As of
As of
September 30, 2003 September 30, 2004

1. Accumulated depreciation of tangible fixed
assetsAs ofMarch 31, 2004

45,000 mil.yen

45,918 mil.yen

45,250 mil.yen

5,773 mil.yen

5,378 mil.yen

5,590 mil.yen

2. Pledged assets
Buildings
Land

2,714

〃

2,714

〃

2,714

〃

3. Obligations under guarantee contracts

17,629 mil.yen

14,767 mil.yen

15,657 mil.yen

4. Obligations as a co-surety

1,979 mil.yen

1,834 mil.yen

1,917 mil.yen

8 mil.yen

25 mil.yen

51 mil.yen

249,228 shares

283,978 shares

264,938 Shares

5. Notes receivable discounted
6. Number of treasury stock(Statement of Income)From April 1, 2003
From April 1, 2004
To September 30, 2003 To September 30, 2004

From April 1, 2003
To March 31, 2004

Amount of depreciation
Tangible fixed assets

1,451 mil.yen

1,515 mil.yen

3,186 mil.yen

Intangible fixed assets

44 mil.yen

34 mil.yen

85 mil.yen

Net Sales by Division and the Proportion to the Total(Unit: Millions of yen)
PeriodSegment

From April 1, 2003
To September 30, 2003
AmountFrom April 1, 2004
To September 30, 2004

Ratio

Amount

Ratio%

From April 1, 2003
To March 31, 2004
Amount%

Ratio%

Medical Division

36,46872.1

39,091

72.7

76,17971.8

Pharmaceutical Division

7,252

14.4

8,236

15.3

16,01815.1

Glass & Materials Division

5,727

11.3

5,656

10.5

11,919

11.2

Other

1,131

2.2

807

1.5

2,002

1.9

Total

50,579100.0

53,792100.0

106,119

100.0[Exports, inclusive][16,086]31.8[18,257]

33.9[33,106]

31.2- 30 -

(Lease Transactions)
Finance lease transactions, except for those where ownership of the leased assets is deemed to betransferred to the lessee
Six Months
ended Sept. 30,
2003

Six Months
ended Sept. 30,
2004

Accumulated depreciation equivalent

885
555

mil.yen〃947
540

mil.yen〃899
612

mil.yen〃Book value equivalent

330

〃

407

〃

286

〃

Lease commitments
Due within one year
Due after over one year

172
273

mil.yen〃189336

mil.yen〃159
245

mil.yen
〃

Total

446

〃

526

〃

405

〃

101
82
5

mil.yenmil.yenmil.yen

109
104
5

mil.yenmil.yenmil.yen

205
184
10

mil.yenmil.yenmil.yenAcquisition price equivalent

Lease payments
Depreciation equivalentInterest expense equivalentFiscal Year
ended
March 31, 2004

Method of calculation of depreciation equivalent
For the tangible fixed assets, ten ninth of the amount computed by the declining-balance methodwith 10% of hypothetical residual value for the lease term as remaining life is allocated to each period
over the lease term.
Method of calculation of interest equivalent
Difference between total lease payments and acquisition cost equivalent of leased assets
comprises interest expense equivalent, and interest expense equivalent is allocated to each period overthe lease term by the interest method.

(Securities)
As of September 30, 2003 2004and March 31, 2004 there was no stock issued by subsidiaries oraffiliated companies that have market quotations.

- 31 -