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

NIPPONSHOKUBAI

1998

FINANCIAL REPORT'98 Sept.,2000,Printed in JapanNIPPONSHOKUBAI

Nippon Shokubai Co.,Ltd. Years ended March 31,1998, 1997 and November 30,1996

COM P A NY P R O F I L E

FIN AN CIAL HIGHLIGHTS

Since its establishment in 1941, Nippon Shokubai Co., Ltd. has been supplying a wide

range of industries with consistently high quality products such as phthalic anhydride,
Thousands of
U.S.dollars

Millions of yen

maleic anhydride, ethylene oxide, acrylic acids and methacrylic acid using its proprietary

1998

1997*

1996

1998

￥ 46,782￥135,006

2,358
3,404
1,394

10,114
10,1695,319$1,073,088
59,20576,80541,983￥183,600￥184,303

101,743

101,115

For the Yearcatalytic oxidation processes.

Net Sales.................................................... ￥141,755
7,821
Operating Income......................................
10,146
Income before Income Taxes .....................
5,546
Net Income................................................

Using its expertise in advanced catalytic processes and polymer technologies,

At Year-End
Total Assets................................................ ￥193,178,
Total Shareholders Equity......................... 106,113

Nippon Shokubai also manufactures a variety of synthetic resins and fine and specialty

chemical products, including unsaturated polyester resins, superabsorbent polymers, resins$1,462,361
803,277

Yen

Per Share Amounts
Net Income................................................ ￥ 28.17
Cash Dividends..........................................
7.00

￥

7.08
2.35

U.S.dollars￥ 27.02

$

7.00

0.21
0.05

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

for paint and adhesive production, and intermediates for pharmaceutical and agricultural

products. The Company also makes substantial contributions to environmental preservation
141
135

through development of catalysts for automotive applications, exhaust gas cleaning systems,

5.5

5.3

93.9

97.2

101.1 101.7

106.1

4.8

128
118

3.3

waste water treatment systems and other pollution control related products and systems.
46

Nippon Shokubai, operating under a corporate policy of

We Create Technology for

Better Lives , recognizes its responsibilities as a corporate citizen and is determined to

1.3

'94

'95

'96

'97

Net Sales(Billions of yen)

'98

'94

'95 '96'97'98

Net Income(Billions of yen)

'94

'95 '96'97'98

Shareholders' Equity(Billions of yen)continue working for the global society.
12Nippon Shokubai Co.,Ltd. Years ended March 31,1998, 1997 and November 30,1996

COM P A NY P R O F I L E

FIN AN CIAL HIGHLIGHTS

Since its establishment in 1941, Nippon Shokubai Co., Ltd. has been supplying a wide

range of industries with consistently high quality products such as phthalic anhydride,
Thousands of
U.S.dollars

Millions of yen

maleic anhydride, ethylene oxide, acrylic acids and methacrylic acid using its proprietary

1998

1997*

1996

1998

￥ 46,782￥135,006

2,358
3,404
1,394

10,114
10,1695,319$1,073,088
59,20576,80541,983￥183,600￥184,303

101,743

101,115

For the Yearcatalytic oxidation processes.

Net Sales.................................................... ￥141,755
7,821
Operating Income......................................
10,146
Income before Income Taxes .....................
5,546
Net Income................................................

Using its expertise in advanced catalytic processes and polymer technologies,

At Year-End
Total Assets................................................ ￥193,178,
Total Shareholders Equity......................... 106,113

Nippon Shokubai also manufactures a variety of synthetic resins and fine and specialty

chemical products, including unsaturated polyester resins, superabsorbent polymers, resins$1,462,361
803,277

Yen

Per Share Amounts
Net Income................................................ ￥ 28.17
Cash Dividends..........................................
7.00

￥

7.08
2.35

U.S.dollars￥ 27.02

$

7.00

0.21
0.05

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

for paint and adhesive production, and intermediates for pharmaceutical and agricultural

products. The Company also makes substantial contributions to environmental preservation
141
135

through development of catalysts for automotive applications, exhaust gas cleaning systems,

5.5

5.3

93.9

97.2

101.1 101.7

106.1

4.8

128
118

3.3

waste water treatment systems and other pollution control related products and systems.
46

Nippon Shokubai, operating under a corporate policy of

We Create Technology for

Better Lives , recognizes its responsibilities as a corporate citizen and is determined to

1.3

'94

'95

'96

'97

Net Sales(Billions of yen)

'98

'94

'95 '96'97'98

Net Income(Billions of yen)

'94

'95 '96'97'98

Shareholders' Equity(Billions of yen)continue working for the global society.
12

TO O U R S HA R E H O L D E R S

We hope all our shareholders are enjoying good health and prosperity, and would like tothank each of you for your continued support.
The following is a business performance report for Nippon Shokubai's 86th fiscal term, which
ended March 31, 1998. Because the previous fiscal term spanned only four months due toa change in our fiscal year and accounting period, we do not numerically compare the term justended with the previous term.

The Fiscal Year in Review
The Japanese economy slumped in the fiscal year just ended, as domestic demand was held
down by such factors as decreased consumer spending, instability in the nation's financial
system, and a currency crisis caused by Asia's stagnant economies.
Conditions were extremely harsh in the chemical industry. The prices of raw materials such as
naphtha were consistently high, and the latter half of the term saw demand for our main
petrochemical products drop, both domestically and in Southeast Asia.
The company's total net sales amounted to 141.7 billion yen. Ordinary profit totaled 9.1
billion yen, thanks to increased production and increased sales by volume, and higher revenues
from royalties. Net profit was 5.5 billion yen.

Future Views
Under these circumstances, we are making companywide efforts to strengthen ourmanagement foundation so we can better maintain stable future growth.
We will create and implement new policies for strengthening our core businesses, and wewill streamline our systems for developing new products and commercializing new processes.
We will also examine our corporate structure and reinforce our ability to respond to change.
These efforts will keep us focused on improving the efficiency and effectiveness of all ourbusiness operations.
Overseas, in January 1998 we incorporated our representative's office in Singapore in order
to extend the scope of our activities. We also expanded the superabsorbent polymer
manufacturing facility of our U.S. subsidiary. In joint venture company news, our acrylic acidand ester plant in Indonesia and our methyacrylate monomer plant in Singapore arescheduled to begin operation this fiscal year, while our acrylic acid company in the UnitedStates is preparing to start construction. These developments are helping us improve ourcompetitiveness and meet needs in the international marketplace.
In these efforts we hope we can count on the continued support of our shareholders.
June,1998

In view of this environment and business performance, the company decided to pay
a dividend of ￥3.50 per share. We plan to allocate the retained earnings to constructionthat will increase production capacity while further streamlining operations, and to research anddevelopment. These investments will further boost our competitiveness and promote
the continued steady growth of the company.
Prospects in the domestic economy are not promising. If consumer spending and commodity
prices continue to drop, many companies will see lower profits and have to cut back production
and investment, which will eventually lead to higher unemployment and less income for
consumers. This can start a vicious cycle toward further economic recession.
The environment is expected to worsen in the chemical industry, too. The market is likely to

Kenji Aida
President

suffer from the turmoil in Asia's currencies and economies, and a number of new and expanded
manufacturing plants are expected to be in operation, so competition will be tighter.
34

TO O U R S HA R E H O L D E R S

We hope all our shareholders are enjoying good health and prosperity, and would like tothank each of you for your continued support.
The following is a business performance report for Nippon Shokubai's 86th fiscal term, which
ended March 31, 1998. Because the previous fiscal term spanned only four months due toa change in our fiscal year and accounting period, we do not numerically compare the term justended with the previous term.

The Fiscal Year in Review
The Japanese economy slumped in the fiscal year just ended, as domestic demand was held
down by such factors as decreased consumer spending, instability in the nation's financial
system, and a currency crisis caused by Asia's stagnant economies.
Conditions were extremely harsh in the chemical industry. The prices of raw materials such as
naphtha were consistently high, and the latter half of the term saw demand for our main
petrochemical products drop, both domestically and in Southeast Asia.
The company's total net sales amounted to 141.7 billion yen. Ordinary profit totaled 9.1
billion yen, thanks to increased production and increased sales by volume, and higher revenues
from royalties. Net profit was 5.5 billion yen.

Future Views
Under these circumstances, we are making companywide efforts to strengthen ourmanagement foundation so we can better maintain stable future growth.
We will create and implement new policies for strengthening our core businesses, and wewill streamline our systems for developing new products and commercializing new processes.
We will also examine our corporate structure and reinforce our ability to respond to change.
These efforts will keep us focused on improving the efficiency and effectiveness of all ourbusiness operations.
Overseas, in January 1998 we incorporated our representative's office in Singapore in order
to extend the scope of our activities. We also expanded the superabsorbent polymer
manufacturing facility of our U.S. subsidiary. In joint venture company news, our acrylic acidand ester plant in Indonesia and our methyacrylate monomer plant in Singapore arescheduled to begin operation this fiscal year, while our acrylic acid company in the UnitedStates is preparing to start construction. These developments are helping us improve ourcompetitiveness and meet needs in the international marketplace.
In these efforts we hope we can count on the continued support of our shareholders.
June,1998

In view of this environment and business performance, the company decided to pay
a dividend of ￥3.50 per share. We plan to allocate the retained earnings to constructionthat will increase production capacity while further streamlining operations, and to research anddevelopment. These investments will further boost our competitiveness and promote
the continued steady growth of the company.
Prospects in the domestic economy are not promising. If consumer spending and commodity
prices continue to drop, many companies will see lower profits and have to cut back production
and investment, which will eventually lead to higher unemployment and less income for
consumers. This can start a vicious cycle toward further economic recession.
The environment is expected to worsen in the chemical industry, too. The market is likely to

Kenji Aida
President

suffer from the turmoil in Asia's currencies and economies, and a number of new and expanded
manufacturing plants are expected to be in operation, so competition will be tighter.
34

From April 1, 1997, to March 31, 1998

REV IEW O F O P E R A T I O N S
The year 1997 covers only four months, from December 1, 1996 to March 31, 1997 since the company has changed
its fiscal year and accounting period at the 84th regular shareholders meeting.

asic Chemicals Group

olymers and Resins Group45.1%
of Net Sales

While overseas market conditions for acrylic acid and esters showed signs of
weakening, sales held steady due to growing demand for the use of these products insuperabsorbent polymers, paints and adhesives. Sales of methacrylic acid and esters
were stable in Japan, but they fell in Asia in the latter half of the fiscal year.
63
61
59
Asian demand for ethylene glycol grew over most of the fiscal year, improving
49
the demand-and-supply balance. Sales rose slightly, then tailed off near year-end
when market conditions weakened. Ethylene oxide and its derivatives enjoyed mostly
steady overall sales, particularly for use in surface active agents. However, demand
became less stable in the latter part of the year.
20
Sales of phthalic anhydride slumped due to lower domestic demand for their use inplasticizers and paints. Sales of maleic anhydride remained favorable both domesticallyand overseas, as the demand-and-supply balance tightened in world markets.
'94 '95 '96 '97 '98
Net Sales by Basic Chemicals GroupAs a result, sales in the basic chemicals group amounted to 63.8 billion yen.
(Billions of yen)

11.1%
of Net Sales

Our EPOLACTM unsaturated polyester resins saw lower sales
for their use in housing and industrial materials, due to a sharp
decline in housing investment.
Sales of electrical insulating coatings also fell, as lower overseas
demand created extremely tough market conditions, and sales ofpolymers for paints and adhesives remained sluggish. Sales ofpolymers for ultra weather-resistant coatings, however, madesteady gains.
As a result, sales of the polymers and resins group totaled 15.7
billion yen.

19

19

19

15

5

'94 '95 '96 '97 '98
Net Sales by Polymers and Resins Group(Billions of yen)

11.2%
of Net Sales

nvironment Business and Catalysts Groupine and Specialty Chemicals Group

32.6%
of Net Sales

Competition was quite stiff in the end-user superabsorbent polymer
market, but demand showed a steady upward trend in world markets. Sales
remained favorable which, together with the yen's weakness, led to higher revenues.
In Asia, exports of SOFTANOLTM , our higher-alcohol product used as a raw
material for detergents, gradually declined. But sales held steady in Japan and overseasof our other fine chemical products, including raw materials for detergents (other than
SOFTANOLTM ), medical intermediates, concrete admixtures, raw materials for paints
and resins, and resin additives.
As a result, sales in the fine and specialty chemicals
group totaled 46.2 billion yen.
5

Sales of catalysts through technical licensing climbed steadily,
thanks to strong new demand. Sales of exhaust catalysts forlean-burn automobile engines were also favorable, even thoughfewer automobiles were sold. Exports of wet-air oxidation
catalysts and NSLC

46
40

38

41

14

waste-water treatment systems grew, as did
sales of incineration catalysts for waste gases and their systems.
Sales of denitration catalysts dropped, however, as demand for
new and replacement units weakened and competition stiffened.
Consequently, sales of this group totaled 15.8 billion yen.

15

TM

12
9

10

6

'94 '95 '96 '97 '98
Net Sales by Environment Business
and Catalysts Group (Billions of yen)

'94 '95 '96 '97 '98
Net Sales by Fine and Specialty Chemicals Group(Billions of yen)6

From April 1, 1997, to March 31, 1998

REV IEW O F O P E R A T I O N S
The year 1997 covers only four months, from December 1, 1996 to March 31, 1997 since the company has changed
its fiscal year and accounting period at the 84th regular shareholders meeting.

asic Chemicals Group

olymers and Resins Group45.1%
of Net Sales

While overseas market conditions for acrylic acid and esters showed signs of
weakening, sales held steady due to growing demand for the use of these products insuperabsorbent polymers, paints and adhesives. Sales of methacrylic acid and esters
were stable in Japan, but they fell in Asia in the latter half of the fiscal year.
63
61
59
Asian demand for ethylene glycol grew over most of the fiscal year, improving
49
the demand-and-supply balance. Sales rose slightly, then tailed off near year-end
when market conditions weakened. Ethylene oxide and its derivatives enjoyed mostly
steady overall sales, particularly for use in surface active agents. However, demand
became less stable in the latter part of the year.
20
Sales of phthalic anhydride slumped due to lower domestic demand for their use inplasticizers and paints. Sales of maleic anhydride remained favorable both domesticallyand overseas, as the demand-and-supply balance tightened in world markets.
'94 '95 '96 '97 '98
Net Sales by Basic Chemicals GroupAs a result, sales in the basic chemicals group amounted to 63.8 billion yen.
(Billions of yen)

11.1%
of Net Sales

Our EPOLACTM unsaturated polyester resins saw lower sales
for their use in housing and industrial materials, due to a sharp
decline in housing investment.
Sales of electrical insulating coatings also fell, as lower overseas
demand created extremely tough market conditions, and sales ofpolymers for paints and adhesives remained sluggish. Sales ofpolymers for ultra weather-resistant coatings, however, madesteady gains.
As a result, sales of the polymers and resins group totaled 15.7
billion yen.

19

19

19

15

5

'94 '95 '96 '97 '98
Net Sales by Polymers and Resins Group(Billions of yen)

11.2%
of Net Sales

nvironment Business and Catalysts Groupine and Specialty Chemicals Group

32.6%
of Net Sales

Competition was quite stiff in the end-user superabsorbent polymer
market, but demand showed a steady upward trend in world markets. Sales
remained favorable which, together with the yen's weakness, led to higher revenues.
In Asia, exports of SOFTANOLTM , our higher-alcohol product used as a raw
material for detergents, gradually declined. But sales held steady in Japan and overseasof our other fine chemical products, including raw materials for detergents (other than
SOFTANOLTM ), medical intermediates, concrete admixtures, raw materials for paints
and resins, and resin additives.
As a result, sales in the fine and specialty chemicals
group totaled 46.2 billion yen.
5

Sales of catalysts through technical licensing climbed steadily,
thanks to strong new demand. Sales of exhaust catalysts forlean-burn automobile engines were also favorable, even thoughfewer automobiles were sold. Exports of wet-air oxidation
catalysts and NSLC

46
40

38

41

14

waste-water treatment systems grew, as did
sales of incineration catalysts for waste gases and their systems.
Sales of denitration catalysts dropped, however, as demand for
new and replacement units weakened and competition stiffened.
Consequently, sales of this group totaled 15.8 billion yen.

15

TM

12
9

10

6

'94 '95 '96 '97 '98
Net Sales by Environment Business
and Catalysts Group (Billions of yen)

'94 '95 '96 '97 '98
Net Sales by Fine and Specialty Chemicals Group(Billions of yen)

6

TOP IC S

New Joint Venture Established in the United States
On June 16, 1997, NA Industries, Inc., our wholly owned U.S.
subsidiary, signed a contract to establish a new joint venture company
that will produce acrylic acid. The new company, called American Acryl
NA LLC, was established exactly one month later and locatednear Houston, Texas. NA Industries and its joint venture
partner, Elf Atochem North America Inc., a U.S. subsidiary of
Elf Atochem S.A., a major chemical company in France, eachhave a 50 percent stake. The agreement was signed at
Elf Atochem's head office in Paris.
The signing of the joint venture contract
By the end of the year 2000, a new plant is expected to have(June 16, 1997)
the capacity to produce 120,000 tons of crude acrylic acid and90,000 tons of refined acrylic acid annually. The product will be used by
NA Industries as a raw material for superabsorbent polymers, and by
the butyl ester plant that Elf Atochem plans to construct at the newcompany's 400-acre site in the Bayport industrial district. Land waspurchased for the facility in March 1998.
Our company and Elf Atochem have worked together in a variety ofareas, including the licensing of acrylic acid technology.

Catalytic dioxins decomposition system

Company Develops Catalytic Dioxins decomposition system

Dioxins (polyhalogenated compounds), which are produced when certain types of garbage
and other waste are incinerated, cause considerable harm to the environment and have becomea major social issue.
Using technology developed through many years of R&D, we have recently developed
a catalyst and system that decompose and remove dioxins at a high rate of over 99 percent.
The system can be installed along the exhaust gas passageway of an incinerator. The catalyst
decomposes dioxins into carbon dioxide and water. By injecting ammonia into exhaust gas,
nitrogen oxides can also be removed. The system can be installed in a new or existing
incinerator.
We plan to market the catalyst and system to local governments in Japan and towaste processing companies through incinerator makers.

TENNESSEEOKLAHOMA

ARKANSASSOUTH
CAROLINAGEORGIAALABAMA

TEXAS

Dioxins decomposition catalysts

MISSISSIPPILOUISIANA

HOUSTONFLORIDA

Site of American Acryl's future plant
78

TOP IC S

New Joint Venture Established in the United States
On June 16, 1997, NA Industries, Inc., our wholly owned U.S.
subsidiary, signed a contract to establish a new joint venture company
that will produce acrylic acid. The new company, called American Acryl
NA LLC, was established exactly one month later and locatednear Houston, Texas. NA Industries and its joint venture
partner, Elf Atochem North America Inc., a U.S. subsidiary of
Elf Atochem S.A., a major chemical company in France, eachhave a 50 percent stake. The agreement was signed at
Elf Atochem's head office in Paris.
The signing of the joint venture contract
By the end of the year 2000, a new plant is expected to have(June 16, 1997)
the capacity to produce 120,000 tons of crude acrylic acid and90,000 tons of refined acrylic acid annually. The product will be used by
NA Industries as a raw material for superabsorbent polymers, and by
the butyl ester plant that Elf Atochem plans to construct at the newcompany's 400-acre site in the Bayport industrial district. Land waspurchased for the facility in March 1998.
Our company and Elf Atochem have worked together in a variety ofareas, including the licensing of acrylic acid technology.

Catalytic dioxins decomposition system

Company Develops Catalytic Dioxins decomposition system

Dioxins (polyhalogenated compounds), which are produced when certain types of garbage
and other waste are incinerated, cause considerable harm to the environment and have becomea major social issue.
Using technology developed through many years of R&D, we have recently developed
a catalyst and system that decompose and remove dioxins at a high rate of over 99 percent.
The system can be installed along the exhaust gas passageway of an incinerator. The catalyst
decomposes dioxins into carbon dioxide and water. By injecting ammonia into exhaust gas,
nitrogen oxides can also be removed. The system can be installed in a new or existing
incinerator.
We plan to market the catalyst and system to local governments in Japan and towaste processing companies through incinerator makers.

TENNESSEEOKLAHOMA

ARKANSASSOUTH
CAROLINAGEORGIAALABAMA

TEXAS

Dioxins decomposition catalysts

MISSISSIPPILOUISIANA

HOUSTONFLORIDA

Site of American Acryl's future plant78

Nippon Shokubai Co., Ltd. As of March 31,1998 and 1997

NON-CONSOLIDATED BALANCE SHEETS

Thousands of
U.S.dollars(Note 2)

Millions of yen

ASSETS
1998
Current Assets:
Cash...................................................................... ￥ 1,684
Time deposits........................................................
15,364Marketable securities............................................
527
Notes and accounts receivable (Note 1):
32,480Trade .................................................................
8,187
Subsidiaries and affiliates .................................
(262)
Allowance for doubtful accounts (Note 1) .....
40,405Inventories (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 ............

23,541
4,272
85,796

1998

1997
￥

1,526
13,2293,506$

12,747116,305
3,989

32,1098,198(369)
39,938245,874
61,975(1,983)305,866

18,1804,225
80,606

178,205
32,339649,477

15,357

15,104116,252

13,916
4,874(769)
33,378

11,885
5,055(848)
31,197

105,344
36,896(5,821)
252,672

Property, Plant and Equipment (Notes 1 and 5):
Buildings and structures.......................................
43,363
Machinery and equipment................................... 151,154
Accumulated depreciation ................................... (151,108)
43,41041,178144,781(143,998)
41,961

328,258
1,144,239(1,143,890)
328,61425,965Land......................................................................
4,627
Construction in progress .....................................
74,003
Total property, plant and equipment ........
Total assets .................................................. ￥193,178

26,047
3,788
71,797￥183,600

196,555
35,026560,204$1,462,361

Thousands of
U.S.dollars(Note 2)

Millions of yen,
LIABILITIES AND SHAREHOLDERS EQUITY
1998
Current Liabilities:
Short-term bank loans and current portionof long-term debt (Note 5)................................ ￥ 13,127
Notes and accounts payable (Note 1):
22,338Trade .................................................................
7,021
Construction .....................................................
Subsidiaries and affiliates..................................
6,657
36,017

1998

1997￥ 10,967$

99,371

23,7807,133
5,800
36,714

169,099
53,14950,393
272,649

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

925
2,311
4,560
56,942

1,326
2,317
4,080
55,406

7,002
17,49434,519431,052

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 ..........................

19,44810,504
168
30,121

15,45910,771
218
26,449147,22179,515
1,271
228,016,
Shareholders Equity:
Common stock, ￥50 par value:
Authorized: 426,000,000 shares
Issued and outstanding:
1998196,881,287 shares
16,5291997196,881,287 shares ..........................
13,562
Additional paid-in capital....................................
3,393
Legal reserve (Note 11)........................................
72,628Retained earnings (Note 1)..................................
,
Total shareholders equity........................... 106,113,
Total liabilities and shareholders equity.. ￥193,178

16,52913,562
3,274
68,377
101,743￥183,600

125,124
102,664
25,685549,795
803,277$1,462,361

Contingent Liabilities (Note 12)

See accompanying notes to non-consolidated financial statements.

910

Nippon Shokubai Co., Ltd. As of March 31,1998 and 1997

NON-CONSOLIDATED BALANCE SHEETS

Thousands of
U.S.dollars(Note 2)

Millions of yen

ASSETS
1998
Current Assets:
Cash...................................................................... ￥ 1,684
Time deposits........................................................
15,364Marketable securities............................................
527
Notes and accounts receivable (Note 1):
32,480Trade .................................................................
8,187
Subsidiaries and affiliates .................................
(262)
Allowance for doubtful accounts (Note 1) .....
40,405Inventories (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 ............

23,541
4,272
85,796

1998

1997
￥

1,526
13,2293,506$

12,747116,305
3,989

32,1098,198(369)
39,938245,874
61,975(1,983)305,866

18,1804,225
80,606

178,205
32,339649,477

15,357

15,104116,252

13,916
4,874(769)
33,378

11,885
5,055(848)
31,197

105,344
36,896(5,821)
252,672

Property, Plant and Equipment (Notes 1 and 5):
Buildings and structures.......................................
43,363
Machinery and equipment................................... 151,154
Accumulated depreciation ................................... (151,108)
43,41041,178144,781(143,998)
41,961

328,258
1,144,239(1,143,890)
328,61425,965Land......................................................................
4,627
Construction in progress .....................................
74,003
Total property, plant and equipment ........
Total assets .................................................. ￥193,178

26,047
3,788
71,797￥183,600

196,555
35,026560,204$1,462,361

Thousands of
U.S.dollars(Note 2)

Millions of yen,
LIABILITIES AND SHAREHOLDERS EQUITY
1998
Current Liabilities:
Short-term bank loans and current portionof long-term debt (Note 5)................................ ￥ 13,127
Notes and accounts payable (Note 1):
22,338Trade .................................................................
7,021
Construction .....................................................
Subsidiaries and affiliates..................................
6,657
36,017

1998

1997￥ 10,967$

99,371

23,7807,133
5,800
36,714

169,099
53,14950,393
272,649

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

925
2,311
4,560
56,942

1,326
2,317
4,080
55,406

7,002
17,49434,519431,052

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 ..........................

19,44810,504
168
30,121

15,45910,771
218
26,449147,22179,515
1,271
228,016,
Shareholders Equity:
Common stock, ￥50 par value:
Authorized: 426,000,000 shares
Issued and outstanding:
1998196,881,287 shares
16,5291997196,881,287 shares ..........................
13,562
Additional paid-in capital....................................
3,393
Legal reserve (Note 11)........................................
72,628Retained earnings (Note 1)..................................
,
Total shareholders equity........................... 106,113,
Total liabilities and shareholders equity.. ￥193,178

16,52913,562
3,274
68,377
101,743￥183,600

125,124
102,664
25,685549,795
803,277$1,462,361

Contingent Liabilities (Note 12)

See accompanying notes to non-consolidated financial statements.

910

Nippon Shokubai Co., Ltd. For the years ended March 31,1998, 1997 and November 30, 1996

Nippon Shokubai Co., Ltd.

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

Thousands of
U.S.dollars(Note 2)

Millions of yen

1998
1997
1998
1996
Net Sales ................................................. ￥141,755 ￥ 46,782 ￥135,006 $1,073,088
Cost of Sales ........................................... 109,020
35,943 101,326
825,283
32,735
10,83933,680247,804
Gross Profit .............................................
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 fromthe Previous Period ..............................
Interim Cash Dividends Paid ................
Transfer to Legal Reserve ......................

24,913
7,821

8,480
2,358

23,565
10,114

188,591
59,205

881
(947)
2,227
164
2,324

424
(344)
1,033
(69)
1,045

1,000
(1,148)
1,074
(871)
55

6,669
(7,168)16,8581,241
17,592

10,146
4,600
5,546

3,404
2,010
1,394

10,1694,850
5,319

76,80534,822
41,983

1. Summary of Significant Accounting
Policies

maintenance, including minor renewals andimprovements, are charged to income as incurred.

(1) Basis of presenting financial statements(5) Foreign currency translation

The original non-consolidated financial statements of
Nippon Shokubai Co., Ltd. (the Company ) areprepared under the generally accepted accounting
principles and practices in Japan and the Securities andExchange Law of Japan. The financial statements
mentioned in this financial report have been made forthe 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
account balances.

All short-term monetary receivables and liabilities inforeign currency are translated into Japanese yen
at appropriate year-end current rates.
All revenues and expenses arising from transactions inforeign currencies are translated into Japanese yenat the rates of exchange prevailing when such transactions
are made.
Gains or losses resulting from the translations are
credited or charged to income as incurred.

(2) Valuation of securities and investments in andadvances to subsidiaries and affiliates
Marketable and other non-marketable securities are statedat 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

1,097
689
68

1,215
-

1,190
689
68

Unappropriated Retained Earnings
Carried Forward to the Next Period .. ￥ 5,886 ￥ 2,609 ￥ 5,751 $Yen

Per Share (Note 7):
Net income............................................... ￥ 28.17 ￥7.00
Cash dividends applicable to the period..

7.08 ￥ 27.02 $
2.35
7.00

8,304
5,215
514
44,557
U.S.dollars(Note 2)

0.21
0.05

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 based on the estimateduseful lives of assets stipulated by the JapaneseCorporation 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 iscomputed on the straight-line method over the period
stipulated by the Commercial Code of Japan or
the Japanese Corporation Tax Law.
Significant renewals and additions of property, plantand equipment are capitalized at cost. Normal repairs and(6) Accrued severance indemnities
An employee whose employment is terminated is entitled,
in most cases, to a lump-sum severance payment,
the amount of which is determined by reference tothe 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 is determined
actuarially, and the amortization of prior service costs is
charged to income. These prior service costs are amortizedover a period of seven years.
Accrued severance indemnities for employees are stated
at amounts equivalent to 100% of that which would be
required to be paid if all eligible employees coveredby the plan mandatorially terminated their employment
with the Company at the balance sheet date, lessthe estimated balances covered by the Welfare Pension
Plan at the balance sheet date.
Retirement benefits to directors and corporate auditors
are stated at an amount determined by 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 anda reserve for employee bonuses, and a reserve for repairs
for financial purposes.

See accompanying notes to non-consolidated financial statements.

11

12

Nippon Shokubai Co., Ltd. For the years ended March 31,1998, 1997 and November 30, 1996

Nippon Shokubai Co., Ltd.

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

Thousands of
U.S.dollars(Note 2)

Millions of yen

1998
1997
1998
1996
Net Sales ................................................. ￥141,755 ￥ 46,782 ￥135,006 $1,073,088
Cost of Sales ........................................... 109,020
35,943 101,326
825,283
32,735
10,83933,680247,804
Gross Profit .............................................
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 fromthe Previous Period ..............................
Interim Cash Dividends Paid ................
Transfer to Legal Reserve ......................

24,913
7,821

8,480
2,358

23,565
10,114

188,591
59,205

881
(947)
2,227
164
2,324

424
(344)
1,033
(69)
1,045

1,000
(1,148)
1,074
(871)
55

6,669
(7,168)16,8581,241
17,592

10,146
4,600
5,546

3,404
2,010
1,394

10,1694,850
5,319

76,80534,822
41,983

1. Summary of Significant Accounting
Policies

maintenance, including minor renewals andimprovements, are charged to income as incurred.

(1) Basis of presenting financial statements(5) Foreign currency translation

The original non-consolidated financial statements of
Nippon Shokubai Co., Ltd. (the Company ) areprepared under the generally accepted accounting
principles and practices in Japan and the Securities andExchange Law of Japan. The financial statements
mentioned in this financial report have been made forthe 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
account balances.

All short-term monetary receivables and liabilities inforeign currency are translated into Japanese yen
at appropriate year-end current rates.
All revenues and expenses arising from transactions inforeign currencies are translated into Japanese yenat the rates of exchange prevailing when such transactions
are made.
Gains or losses resulting from the translations are
credited or charged to income as incurred.

(2) Valuation of securities and investments in andadvances to subsidiaries and affiliates
Marketable and other non-marketable securities are statedat 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

1,097
689
68

1,215
-

1,190
689
68

Unappropriated Retained Earnings
Carried Forward to the Next Period .. ￥ 5,886 ￥ 2,609 ￥ 5,751 $Yen

Per Share (Note 7):
Net income............................................... ￥ 28.17 ￥7.00
Cash dividends applicable to the period..

7.08 ￥ 27.02 $
2.35
7.00

8,304
5,215
514
44,557
U.S.dollars(Note 2)

0.21
0.05

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 based on the estimateduseful lives of assets stipulated by the JapaneseCorporation 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 iscomputed on the straight-line method over the period
stipulated by the Commercial Code of Japan or
the Japanese Corporation Tax Law.
Significant renewals and additions of property, plantand equipment are capitalized at cost. Normal repairs and(6) Accrued severance indemnities
An employee whose employment is terminated is entitled,
in most cases, to a lump-sum severance payment,
the amount of which is determined by reference tothe 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 is determined
actuarially, and the amortization of prior service costs is
charged to income. These prior service costs are amortizedover a period of seven years.
Accrued severance indemnities for employees are stated
at amounts equivalent to 100% of that which would be
required to be paid if all eligible employees coveredby the plan mandatorially terminated their employment
with the Company at the balance sheet date, lessthe estimated balances covered by the Welfare Pension
Plan at the balance sheet date.
Retirement benefits to directors and corporate auditors
are stated at an amount determined by 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 anda reserve for employee bonuses, and a reserve for repairs
for financial purposes.

See accompanying notes to non-consolidated financial statements.

11

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 estimatedamounts equivalent to those applicable to 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 maintenanceand 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 incurred oncompletion of maintenance and repair.

(8) Income taxes
Income taxes provided on an accrual basis, but deferredincome taxes pertaining to timing differences between
financial and tax reporting are not recognized.

(9) Research and development expenses
Research and development expenses are charged to income
as incurred and are included in selling, general andadministrative 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 end of the fiscal year.

(11) Appropriation of retained earnings
Under the Commercial Code of Japan and the Articles ofIncorporation of the Company, the appropriation ofretained 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 after the end of each fiscal year.
Therefore, such appropriation is not reflected in

13

4. Investments in Securities andInvestments in and Advances to
Subsidiaries and Affiliates

the respective financial statements.

2. U.S.Dollar Amounts
Amounts shown in U.S.dollars are included solely forconvenience and are not intended to imply that yen
amounts have been or could be readily converted into,
realized in or settled in dollars.
The rate of ￥132.10 to US$1, being the approximate
exchange rate on March 31, 1998, has been used.

3. Inventories
Inventories on March 31, 1998 and 1997, were as follows:

Millions of yen

1998

1997

Thousands of
U.S.dollars

1998

Merchandise andfinished products............ ￥ 9,753 ￥ 6,888 $ 73,830
Raw materials................... 5,473
4,639
41,430Work in process ............... 6,689
5,464
50,635
Supplies............................ 1,624
1,188
12,293￥23,541 ￥18,180 $178,205

Millions of yen

Investments in securities and advances held by
the Company at March 31, 1998 and 1997, consisted of
the following:

Millions of yen

1998
1997
Investments in securities:
Corporate shares............. ￥15,197 ￥14,940
Bonds and debentures ....
129
129
Investments in
portfolios and others......
30
35￥15,357 ￥15,104
Investments in andadvances to subsidiaries
and affiliates:
Non-listed corporateshares............................ ￥11,333 ￥ 9,262
Investments incontributions................ 1,093
1,093
Long-term loans ............. 1,490
1,530￥13,916 ￥11,885

Thousands of
U.S.dollars

1998$115,041
976
227$116,252$ 85,791
8,274
11,279$105,344

5. Short-Term Bank Loans andLong-Term Debt
Short-term bank loans are unsecured and based onan overdraft contract, bearing interest at 1.338% perannum, as of March 31, 1997 and 1.039% per annum, as
of March 31, 1998.
At March 31, 1998 and 1997, long-term debt consistedof the following:Thousands of
U.S.dollars

1998
1997
1998
Loans from banks,
insurance companies andothers due from 1999 to2008 with interest
ranging from 2.19% to7.6% .............................. ￥11,959 ￥ 7,524 $ 90,530
5.9% unsecured
debentures due 1999....... 6,000
6,000
45,4205.7% unsecured
debentures due 1999....... 4,000
4,000
30,280￥21,959 ￥17,524 $166,230
Less-portion due within
one year.......................... 2,511
2,064
19,008￥19,448 ￥15,459 $147,221
The 5.9% debentures were issued at ￥99.75 witha par value of ￥100, and the 5.7% debentures were issued
at ￥99.25 with a par value of ￥100.
For both the 5.9% and the 5.7% debentures, after
July 28, 1997, the Company may conduct advanced
redemption in full for the principal on the interest
payment date. In this case, the redemption price will be￥100.50 per par value of ￥100 on January 27, 1998, andJuly 27,1998, and ￥100 per par value of ￥100 on
January 27, 1999.
In addition, both the 5.9% and 5.7% debentures may
be purchased at the option of the Company anytime fromthe day after the issuing date.
The aggregate annual maturities of long-term debt are
as follows:Year ending March 31

Millions of yen

1999............................................. ￥2,511
2000.............................................
373
2001.............................................
1,938
2002 and thereafter ......................
7,137

Thousands of
U.S.dollars$19,008
2,823
14,67054,02714

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 estimatedamounts equivalent to those applicable to 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 maintenanceand 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 incurred oncompletion of maintenance and repair.

(8) Income taxes
Income taxes provided on an accrual basis, but deferredincome taxes pertaining to timing differences between
financial and tax reporting are not recognized.

(9) Research and development expenses
Research and development expenses are charged to income
as incurred and are included in selling, general andadministrative 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 end of the fiscal year.

(11) Appropriation of retained earnings
Under the Commercial Code of Japan and the Articles ofIncorporation of the Company, the appropriation ofretained 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 after the end of each fiscal year.
Therefore, such appropriation is not reflected in

13

4. Investments in Securities andInvestments in and Advances to
Subsidiaries and Affiliates

the respective financial statements.

2. U.S.Dollar Amounts
Amounts shown in U.S.dollars are included solely forconvenience and are not intended to imply that yen
amounts have been or could be readily converted into,
realized in or settled in dollars.
The rate of ￥132.10 to US$1, being the approximate
exchange rate on March 31, 1998, has been used.

3. Inventories
Inventories on March 31, 1998 and 1997, were as follows:

Millions of yen

1998

1997

Thousands of
U.S.dollars

1998

Merchandise andfinished products............ ￥ 9,753 ￥ 6,888 $ 73,830
Raw materials................... 5,473
4,639
41,430Work in process ............... 6,689
5,464
50,635
Supplies............................ 1,624
1,188
12,293￥23,541 ￥18,180 $178,205

Millions of yen

Investments in securities and advances held by
the Company at March 31, 1998 and 1997, consisted of
the following:

Millions of yen

1998
1997
Investments in securities:
Corporate shares............. ￥15,197 ￥14,940
Bonds and debentures ....
129
129
Investments in
portfolios and others......
30
35￥15,357 ￥15,104
Investments in andadvances to subsidiaries
and affiliates:
Non-listed corporateshares............................ ￥11,333 ￥ 9,262
Investments incontributions................ 1,093
1,093
Long-term loans ............. 1,490
1,530￥13,916 ￥11,885

Thousands of
U.S.dollars

1998$115,041
976
227$116,252$ 85,791
8,274
11,279$105,344

5. Short-Term Bank Loans andLong-Term Debt
Short-term bank loans are unsecured and based onan overdraft contract, bearing interest at 1.338% perannum, as of March 31, 1997 and 1.039% per annum, as
of March 31, 1998.
At March 31, 1998 and 1997, long-term debt consistedof the following:Thousands of
U.S.dollars

1998
1997
1998
Loans from banks,
insurance companies andothers due from 1999 to2008 with interest
ranging from 2.19% to7.6% .............................. ￥11,959 ￥ 7,524 $ 90,530
5.9% unsecured
debentures due 1999....... 6,000
6,000
45,4205.7% unsecured
debentures due 1999....... 4,000
4,000
30,280￥21,959 ￥17,524 $166,230
Less-portion due within
one year.......................... 2,511
2,064
19,008￥19,448 ￥15,459 $147,221
The 5.9% debentures were issued at ￥99.75 witha par value of ￥100, and the 5.7% debentures were issued
at ￥99.25 with a par value of ￥100.
For both the 5.9% and the 5.7% debentures, after
July 28, 1997, the Company may conduct advanced
redemption in full for the principal on the interest
payment date. In this case, the redemption price will be￥100.50 per par value of ￥100 on January 27, 1998, andJuly 27,1998, and ￥100 per par value of ￥100 on
January 27, 1999.
In addition, both the 5.9% and 5.7% debentures may
be purchased at the option of the Company anytime fromthe day after the issuing date.
The aggregate annual maturities of long-term debt are
as follows:Year ending March 31

Millions of yen

1999............................................. ￥2,511
2000.............................................
373
2001.............................................
1,938
2002 and thereafter ......................
7,137

Thousands of
U.S.dollars$19,008
2,823
14,67054,027

14

The assets pledged as collateral for long-term debt at
March 31, 1998, were as follows:
Millions of yen

Land............................................. ￥ 451
Investments in securities...............
5,468

Thousands of
U.S.dollars

9. Research and Development Expenses

11. Legal Reserve

13. Subsequent Event

Research and development expenses incurred and charged
to income for the years ended March 31, 1998 and 1997,
November 30, 1996, were as follows:

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

On June 26, 1998, at the general meeting of shareholders,the following appropriations of retained earnings wereapproved:$ 3,414
41,392
1998￥9,214

6. Income Taxes
Income taxes applicable to the Company comprisea corporation tax, inhabitants, taxes and an enterprise tax,
which in the aggregate produced a normal tax rate of
approximately 51% in 1998, 51% in 1997 and 51% in
1996. The effective tax rates on the statements of income
differ from the normal tax rates primarily because of
the effect of timing differences in the recognition of certain
income and expenses for tax and financial reporting
purposes, the effect of permanent non-deductible
expenses, the lower tax rate applied to the portion ofincome distributed as dividends and tax credit for researchand development expenses.

7. Net Income per ShareThousands of
U.S.dollars

Millions of yen

1997￥3,1491996￥8,556

1998$69,750

12. Contingent Liabilities

10. Transactions with Subsidiaries
Transactions with subsidiaries for the years ended
March 31, 1998 and 1997, were as follows:

Millions of yen

Thousands of
U.S.dollars

1998
1997
1996
1998
Net sales ........... ￥15,604 ￥ 5,573 ￥14,834 $118,128
Purchases.......... 27,519
7,827 21,458 208,319
Transactions
other than operatingtransactions..... 2,367
1,405
1,230
17,918At March 31, 1998, the Company had the following
contingent liabilities:

As guarantor for indebtednessof subsidiaries and affiliates.......
As guarantor for housing loansof employees.............................

Millions of yen

Thousands of
U.S.dollars

2,253

17,05572

545$17,600￥ 2,325

Millions of yen

Thousands of
U.S.dollars

Balance at beginning of the year

￥ 5,886$44,557

Add:
Reversal of voluntary reserve.....

66

499

689
80

5,215
605

77
4,000

582
30,280￥ 1,106$ 8,372

Appropriations:
Cash dividends(￥3.5-US$0.026 per share).......
Transfer to legal reserve............
Bonuses to directors andstatutory auditors ..................
Transfer to general reserve........
Carried forward to
the next period ......................

The computation of net income per share is based on
the weighted average number of shares of common stockduring the respective fiscal year.

8. Accrued Severance Indemnities
The charges to income for severance indemnities forthe three years ended March 31, 1998 and 1997, andNovember 30, 1996, were as follows:
Thousands of
U.S.dollars

Millions of yen

1998

1997

1996

￥864

￥796

￥168

1998
($6,540)

The assets of the Welfare Pension Plan at March 31,
1998, were ￥9,427 million (US$71,362 thousand).

15

16

The assets pledged as collateral for long-term debt at
March 31, 1998, were as follows:
Millions of yen

Land............................................. ￥ 451
Investments in securities...............
5,468

Thousands of
U.S.dollars

9. Research and Development Expenses

11. Legal Reserve

13. Subsequent Event

Research and development expenses incurred and charged
to income for the years ended March 31, 1998 and 1997,
November 30, 1996, were as follows:

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

On June 26, 1998, at the general meeting of shareholders,the following appropriations of retained earnings wereapproved:$ 3,414
41,392
1998￥9,214

6. Income Taxes
Income taxes applicable to the Company comprisea corporation tax, inhabitants, taxes and an enterprise tax,
which in the aggregate produced a normal tax rate of
approximately 51% in 1998, 51% in 1997 and 51% in
1996. The effective tax rates on the statements of income
differ from the normal tax rates primarily because of
the effect of timing differences in the recognition of certain
income and expenses for tax and financial reporting
purposes, the effect of permanent non-deductible
expenses, the lower tax rate applied to the portion ofincome distributed as dividends and tax credit for researchand development expenses.

7. Net Income per ShareThousands of
U.S.dollars

Millions of yen

1997￥3,1491996￥8,556

1998$69,750

12. Contingent Liabilities

10. Transactions with Subsidiaries
Transactions with subsidiaries for the years ended
March 31, 1998 and 1997, were as follows:

Millions of yen

Thousands of
U.S.dollars

1998
1997
1996
1998
Net sales ........... ￥15,604 ￥ 5,573 ￥14,834 $118,128
Purchases.......... 27,519
7,827 21,458 208,319
Transactions
other than operatingtransactions..... 2,367
1,405
1,230
17,918At March 31, 1998, the Company had the following
contingent liabilities:

As guarantor for indebtednessof subsidiaries and affiliates.......
As guarantor for housing loansof employees.............................

Millions of yen

Thousands of
U.S.dollars

2,253

17,05572

545$17,600￥ 2,325

Millions of yen

Thousands of
U.S.dollars

Balance at beginning of the year

￥ 5,886$44,557

Add:
Reversal of voluntary reserve.....

66

499

689
80

5,215
605

77
4,000

582
30,280￥ 1,106$ 8,372

Appropriations:
Cash dividends(￥3.5-US$0.026 per share).......
Transfer to legal reserve............
Bonuses to directors andstatutory auditors ..................
Transfer to general reserve........
Carried forward to
the next period ......................

The computation of net income per share is based on
the weighted average number of shares of common stockduring the respective fiscal year.

8. Accrued Severance Indemnities
The charges to income for severance indemnities forthe three years ended March 31, 1998 and 1997, andNovember 30, 1996, were as follows:
Thousands of
U.S.dollars

Millions of yen

1998

1997

1996

￥864

￥796

￥168

1998
($6,540)

The assets of the Welfare Pension Plan at March 31,
1998, were ￥9,427 million (US$71,362 thousand).

15

16

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries As of March 31, 1998 and 1997

CONSOLIDATED BALANCE SHEETS

Thousands of
U.S.dollars(Note 2)

Millions of yen

ASSETS
1998
Current Assets:
Cash...................................................................... ￥ 4,410
Time deposits ........................................................
16,646
Marketable securities............................................
629
Notes and accounts receivable (Note1):
41,547
Trade .................................................................
Unconsolidated subsidiaries and affiliates.......
5,807
Allowance for doubtful accounts .....................
(399)
46,955Inventories (Note 3) .............................................
Other current assets ..............................................
Total current assets ......................................
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

1998

1997
￥

3,264
13,981
3,668$

33,383126,010
4,761

42,0995,557(505)
47,151

314,511
43,959(3,020)355,450

22,422
3,278
93,766

214,072
30,007763,709

14,892

15,254

112,732

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

9,397
5,740
(223)
30,16988,781
59,190(18,009)242,70253,913
174,732(175,641)
53,00451,470167,155(166,177)
52,448408,122
1,322,725(1,329,606)
401,241

26,46026,378Land......................................................................
6,540
3,856
Construction in progress......................................
Total property, plant and equipment ........
86,00582,683Foreign Currency Translation Adjustments .....
128￥206,748
Total assets................................................... ￥218,953

200,30249,507651,059$1,657,479

Property, Plant and Equipment:
Buildings and structures.......................................
Machinery and equipment...................................
Accumulated depreciation ...................................

Thousands of
U.S.dollars(Note 2)

Millions of yen,
LIABILITIES AND SHAREHOLDERS EQUITY
1998
Current Liabilities:
Short-term bank loans and current portionof long-term debt.............................................. ￥ 18,939
Notes and accounts payable (Note 1):
31,433
Trade .................................................................
7,541
Construction .....................................................
Unconsolidated subsidiaries and affiliates ......
2,128
41,103
1,411
Accrued expenses ..................................................
2,982
Accrued income taxes ........................................
5,624
Other current liabilities........................................
70,060Total current liabilities................................

1997

1998

￥ 14,487$ 143,368

31,9288,348
2,058
42,335
1,720
2,790
4,810
66,144

237,948
57,085
16,109311,150
10,681
22,57342,573
530,355

23,463
11,762
177
35,403

18,661
11,940256
30,858

177,615
89,0381,339
268,001

247
Foreign Currency Translation Adjustments ....
1,568
Minority Interests................................................
,
Shareholders Equity:
Common stock, ￥50 par value:
Authorized: 426,000,000 shares
Issued and outstanding:
1998------ 196,881,287 shares
16,5291997------ 196,881,287 shares ..........................
13,562
Additional paid-in capital ...................................
3,393
Legal reserve.........................................................
78,188Retained earnings.................................................
(0)Less common stock in treasury, at cost .............
,
Total shareholders equity........................... 111,673,
Total liabilities and shareholders equity.. ￥ 218,953

2,120

1,869
11,869Long-Term Liabilities:
Long-term debt ....................................................
Accrued severance indemnities (Note 4) ............
Other long-term liabilities ...................................
Total long-term liabilities ..........................

16,529125,124
13,562
102,664
3,274
25,68574,260591,884(1)(4)
107,625845,367￥ 206,748 $1,657,479

See accompanying notes to consolidated financial statements.

17

18

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries As of March 31, 1998 and 1997

CONSOLIDATED BALANCE SHEETS

Thousands of
U.S.dollars(Note 2)

Millions of yen

ASSETS
1998
Current Assets:
Cash...................................................................... ￥ 4,410
Time deposits ........................................................
16,646
Marketable securities............................................
629
Notes and accounts receivable (Note1):
41,547
Trade .................................................................
Unconsolidated subsidiaries and affiliates.......
5,807
Allowance for doubtful accounts .....................
(399)
46,955Inventories (Note 3) .............................................
Other current assets ..............................................
Total current assets ......................................
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

1998

1997
￥

3,264
13,981
3,668$

33,383126,010
4,761

42,0995,557(505)
47,151

314,511
43,959(3,020)355,450

22,422
3,278
93,766

214,072
30,007763,709

14,892

15,254

112,732

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

9,397
5,740
(223)
30,16988,781
59,190(18,009)242,70253,913
174,732(175,641)
53,00451,470167,155(166,177)
52,448408,122
1,322,725(1,329,606)
401,241

26,46026,378Land......................................................................
6,540
3,856
Construction in progress......................................
Total property, plant and equipment ........
86,00582,683Foreign Currency Translation Adjustments .....
128￥206,748
Total assets................................................... ￥218,953

200,30249,507651,059$1,657,479

Property, Plant and Equipment:
Buildings and structures.......................................
Machinery and equipment...................................
Accumulated depreciation ...................................

Thousands of
U.S.dollars(Note 2)

Millions of yen,
LIABILITIES AND SHAREHOLDERS EQUITY
1998
Current Liabilities:
Short-term bank loans and current portionof long-term debt.............................................. ￥ 18,939
Notes and accounts payable (Note 1):
31,433
Trade .................................................................
7,541
Construction .....................................................
Unconsolidated subsidiaries and affiliates ......
2,128
41,103
1,411
Accrued expenses ..................................................
2,982
Accrued income taxes ........................................
5,624
Other current liabilities........................................
70,060Total current liabilities................................

1997

1998

￥ 14,487$ 143,368

31,9288,348
2,058
42,335
1,720
2,790
4,810
66,144

237,948
57,085
16,109311,150
10,681
22,57342,573
530,355

23,463
11,762
177
35,403

18,661
11,940256
30,858

177,615
89,0381,339
268,001

247
Foreign Currency Translation Adjustments ....
1,568
Minority Interests................................................
,
Shareholders Equity:
Common stock, ￥50 par value:
Authorized: 426,000,000 shares
Issued and outstanding:
1998------ 196,881,287 shares
16,5291997------ 196,881,287 shares ..........................
13,562
Additional paid-in capital ...................................
3,393
Legal reserve.........................................................
78,188Retained earnings.................................................
(0)Less common stock in treasury, at cost .............
,
Total shareholders equity........................... 111,673,
Total liabilities and shareholders equity.. ￥ 218,953

2,120

1,869
11,869Long-Term Liabilities:
Long-term debt ....................................................
Accrued severance indemnities (Note 4) ............
Other long-term liabilities ...................................
Total long-term liabilities ..........................

16,529125,124
13,562
102,664
3,274
25,68574,260591,884(1)(4)
107,625845,367￥ 206,748 $1,657,479

See accompanying notes to consolidated financial statements.

17

18

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries For the years ended March 31,1998, 1997 and November 30, 1996

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries

CONSOLIDATED STATEMENTS OF INCOMENOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Thousands of
U.S.dollars(Note 2)

Millions of yen

1998
1997
1998
1996
Net Sales ................................................. ￥171,805 ￥ 56,272 ￥158,460 $1,300,567
Cost of Sales ........................................... 130,450
42,452 117,388
987,50941,354
13,82041,071
313,050
Gross Profit .............................................
Selling, General and Administrative
Expenses ..................................................
Operating Income ..................................
Other Income (Expenses):
Interest and dividend income ..................
Interest expenses ......................................
Royalty income ........................................
Other, net ................................................

30,251
11,103757(1,114)
1,851(2,297)(803)

Income before Income Taxes, Minority Interests
and Equity in Earnings of Unconsolidated
Subsidiaries and Affiliates..................
10,300
Income Taxes.......................................
5,732
Income before Minority Interests and Equity
in Earnings of Unconsolidated
Subsidiaries and Affiliates..................
4,568
Minority Interests................................
533
Equity in Earnings of Unconsolidated
Subsidiaries and Affiliates..................
122
Amortization of Consolidation
1
Adjustments.......................................
Foreign Currency Translation
Adjustments.......................................
Net Income.............................................. ￥ 5,226 ￥

10,2403,579

28,554
12,517

246
(397)
843
(356)
337

765
(1,323)875(1,558)(1,241)

5,730(8,433)14,012(17,388)(6,078)

3,916
2,312

11,276
5,843

77,971
43,391

1,603
(130)

5,432
(175)

34,579
4,034

60

170

923

-

52

7

9
1,533 ￥ 5,488 $Yen

Per Share:
Net income............................................... ￥ 26.54 ￥Cash dividends applicable to the period..
7.00
See accompanying notes to consolidated financial statements.

229,000
84,0497.79 ￥ 27.88 $
2.35
7.00

39,560U.S.dollars(Note 2)

0.20
0.05

1. Summary of Significant Accounting
Policies

March 31.

The accompanying consolidated financial statements areprepared on the basis of the same accounting policies asmentioned in Note 1 of the notes to non-consolidated
financial statements except for the following principles:

Translation into Japanese yen of the financial statementsof the consolidated foreign subsidiaries were made inaccordance 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.

(1) Principles of consolidation and accounting forinvestments in unconsolidated subsidiaries andaffiliates
The consolidated financial statements include the accounts of
Nippon Shokubai Co., Ltd. (the Company ) and its ninesignificant subsidiaries. All significant intercompany
balances and transactions have been eliminated on
consolidation.
The accounts of the 14 other subsidiaries are notconsolidated with the Company. The total assets, net sales,
net income and retained earnings of the unconsolidated
subsidiaries,in the aggregate, are so small as to havean insignificant effect on the Company s consolidated
accounts.
Two unconsolidated subsidiaries and three affiliatedcompanies are accounted for by the equity method.
From this fiscal year, American Acryle NA LLC,
established by NA Industries, Inc. and other in June 1997,
is added as an affiliated company and accounted forby the equity method.
Consolidated net income includes the Company sequity in the current net income of such companies, after
elimination of unrealized intercompany profits.
12 subsidiaries and 11affiliated 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 and retained earnings are
immaterial.
Investments in unconsolidated subsidiaries andin the affiliated companies which are not accounted foron an equity method are carried at cost or less.Where there
has been a persistent decline in the value of suchinvestments,
the Company has written down its investments.
The difference between the cost and underlying net
equity of investments in consolidated and other companies
accounted for by the equity method is charged 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.
and American Acryl NA LLC, which have a balance sheet
date of December 31.
The Companies have made consolidation adjustments
for significant transactions between itself and them,incurred up to and including the consolidation date of

19(3) Foreign currency translation of consolidated
foreign subsidiaries(4) Tax-effect accounting
Tax-effect accounting pertaining to timing differences on
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 tonon-consolidated financial statements has been used.

3. Inventories
Inventories on March 31, 1998 and 1997, were as follows:
Millions of yen

Thousands of
U.S. dollars

1998
1997
1998
Merchandise andfinished products............ ￥13,188 ￥10,029 $ 99,833
Raw materials................... 6,090
5,172
46,101Work in process ............... 7,178
5,875
54,337
Supplies............................ 1,821
1,344
13,785￥28,279 ￥22,422 $214,072

4. Accrued Severance Indemnities
The Company has a Welfare Pension Plan, and four of its
consolidated subsidiaries have a qualified pension plan.
The prior service costs for the Welfare Pension Plan andthe qualified pension plan are amortized over a period ofseven years and five to ten years, respectively. The assets ofthe pension plans amounted to ￥11,133 million(US$84,277 thousand) at March 31, 1998.

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 31,1998, 1997 and November 30, 1996

Nippon Shokubai Co., Ltd. and its consolidated subsidiaries

CONSOLIDATED STATEMENTS OF INCOMENOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Thousands of
U.S.dollars(Note 2)

Millions of yen

1998
1997
1998
1996
Net Sales ................................................. ￥171,805 ￥ 56,272 ￥158,460 $1,300,567
Cost of Sales ........................................... 130,450
42,452 117,388
987,50941,354
13,82041,071
313,050
Gross Profit .............................................
Selling, General and Administrative
Expenses ..................................................
Operating Income ..................................
Other Income (Expenses):
Interest and dividend income ..................
Interest expenses ......................................
Royalty income ........................................
Other, net ................................................

30,251
11,103757(1,114)
1,851(2,297)(803)

Income before Income Taxes, Minority Interests
and Equity in Earnings of Unconsolidated
Subsidiaries and Affiliates..................
10,300
Income Taxes.......................................
5,732
Income before Minority Interests and Equity
in Earnings of Unconsolidated
Subsidiaries and Affiliates..................
4,568
Minority Interests................................
533
Equity in Earnings of Unconsolidated
Subsidiaries and Affiliates..................
122
Amortization of Consolidation
1
Adjustments.......................................
Foreign Currency Translation
Adjustments.......................................
Net Income.............................................. ￥ 5,226 ￥

10,2403,579

28,554
12,517

246
(397)
843
(356)
337

765
(1,323)875(1,558)(1,241)

5,730(8,433)14,012(17,388)(6,078)

3,916
2,312

11,276
5,843

77,971
43,391

1,603
(130)

5,432
(175)

34,579
4,034

60

170

923

-

52

7

9
1,533 ￥ 5,488 $Yen

Per Share:
Net income............................................... ￥ 26.54 ￥Cash dividends applicable to the period..
7.00
See accompanying notes to consolidated financial statements.

229,000
84,0497.79 ￥ 27.88 $
2.35
7.00

39,560U.S.dollars(Note 2)

0.20
0.05

1. Summary of Significant Accounting
Policies

March 31.

The accompanying consolidated financial statements areprepared on the basis of the same accounting policies asmentioned in Note 1 of the notes to non-consolidated
financial statements except for the following principles:

Translation into Japanese yen of the financial statementsof the consolidated foreign subsidiaries were made inaccordance 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.

(1) Principles of consolidation and accounting forinvestments in unconsolidated subsidiaries andaffiliates
The consolidated financial statements include the accounts of
Nippon Shokubai Co., Ltd. (the Company ) and its ninesignificant subsidiaries. All significant intercompany
balances and transactions have been eliminated on
consolidation.
The accounts of the 14 other subsidiaries are notconsolidated with the Company. The total assets, net sales,
net income and retained earnings of the unconsolidated
subsidiaries,in the aggregate, are so small as to havean insignificant effect on the Company s consolidated
accounts.
Two unconsolidated subsidiaries and three affiliatedcompanies are accounted for by the equity method.
From this fiscal year, American Acryle NA LLC,
established by NA Industries, Inc. and other in June 1997,
is added as an affiliated company and accounted forby the equity method.
Consolidated net income includes the Company sequity in the current net income of such companies, after
elimination of unrealized intercompany profits.
12 subsidiaries and 11affiliated 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 and retained earnings are
immaterial.
Investments in unconsolidated subsidiaries andin the affiliated companies which are not accounted foron an equity method are carried at cost or less.Where there
has been a persistent decline in the value of suchinvestments,
the Company has written down its investments.
The difference between the cost and underlying net
equity of investments in consolidated and other companies
accounted for by the equity method is charged 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.
and American Acryl NA LLC, which have a balance sheet
date of December 31.
The Companies have made consolidation adjustments
for significant transactions between itself and them,incurred up to and including the consolidation date of

19(3) Foreign currency translation of consolidated
foreign subsidiaries(4) Tax-effect accounting
Tax-effect accounting pertaining to timing differences on
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 tonon-consolidated financial statements has been used.

3. Inventories
Inventories on March 31, 1998 and 1997, were as follows:
Millions of yen

Thousands of
U.S. dollars

1998
1997
1998
Merchandise andfinished products............ ￥13,188 ￥10,029 $ 99,833
Raw materials................... 6,090
5,172
46,101Work in process ............... 7,178
5,875
54,337
Supplies............................ 1,821
1,344
13,785￥28,279 ￥22,422 $214,072

4. Accrued Severance Indemnities
The Company has a Welfare Pension Plan, and four of its
consolidated subsidiaries have a qualified pension plan.
The prior service costs for the Welfare Pension Plan andthe qualified pension plan are amortized over a period ofseven years and five to ten years, respectively. The assets ofthe pension plans amounted to ￥11,133 million(US$84,277 thousand) at March 31, 1998.

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

20

DIRECTORYCORPORATE DATA

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
2,217
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 26, 1998)

Equityownership(%)

Principal business

Nisshoku Aro Chemicals Co., Ltd.* (Note)

100

100.0

Nippon Polyester Co., Ltd.*

100

94.6

Manufacture and sale of iodine,
iodic compounds, and natural gas
Manufacture and sale ofsynthetic resins and related additives
Manufacture and sale of
FRP and PC products

Daiko Kaiun Co., Ltd.*

100

59.3

Transport

Tsuneo Tsubakimoto

Yasuji Nakagawa
Katsunobu Kaneko

US$775

100.0

Tokyo Fine Chemical Co., Ltd.*

￥

80

66.2

Chugoku Kako Co., Ltd.*

75

74.3

ICT Co., Ltd.*

60

51.0

Sale of automobile exhaust catalyst

Junzo Senba

Nisshoku Kosan Co., Ltd.*

32

100.0

Management of golf driving range andnon-life insurance agent

Goro Kijima

Principal businessPresident

Equityownership(%)

90

46.6

Nishinippon FRP Shipbuilding Co., Ltd.

30

100.0

Manufacture and sale of anthraquinone,
carbazole, and their derivatives
Manufacture and sale of FRP ship andfinished products

Nippon Polymer Ind. Co., Ltd.

100

50.0

Manufacture and sale of acrylic emulsions

45.0

Manufacture and sale of insulating varnish
and enamel

Nihon Jyoryu Kogyo Co., Ltd.

Nisshoku Schenectady Kagaku, Inc.

￥

40

*Included in consolidation(Note) Nisshoku Aro Chemicals Co., Ltd. was merged into Nippon Shokubai Co., Ltd. on April 1,1998.

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

Takahiro Ito

NA Industries, Inc.*

Name

21

President

Manufacture and sale of superabsorbent polymers
Yuji Noma
Technical liaison and business development
Manufacture and sale of stabilizer of vinyl
Masatoshi Tsuchino
chloride resin and anti-freeze
Manufacture and sale of synthetic resins andNoboru Shimizu
heat insulator

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

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

Fukuoka Sales Office

62.5

￥

Tokyo Office

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

517

Nippoh Chemicals Co., Ltd.*

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

Nagoya Sales Office

Consolidated Subsidiaries
Name

LABORATORIESOsaka office

SALES OFFICES(as of March 31, 1998)

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

HEAD OFFICES

Kensuke Kumazawa

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

Kawasaki Chidori Plant
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, Japan

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

Tsukuba Research Laboratory
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

Catalyst Research Laboratory
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 COMPANIESNA 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(as of July 1, 1998)

Terumitsu Mimura
Yoshio Yasuda
Kenji Aida(as of March 31, 1998)

22

DIRECTORYCORPORATE DATA

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
2,217
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 26, 1998)

Equityownership(%)

Principal business

Nisshoku Aro Chemicals Co., Ltd.* (Note)

100

100.0

Nippon Polyester Co., Ltd.*

100

94.6

Manufacture and sale of iodine,
iodic compounds, and natural gas
Manufacture and sale ofsynthetic resins and related additives
Manufacture and sale of
FRP and PC products

Daiko Kaiun Co., Ltd.*

100

59.3

Transport

Tsuneo Tsubakimoto

Yasuji Nakagawa
Katsunobu Kaneko

US$775

100.0

Tokyo Fine Chemical Co., Ltd.*

￥

80

66.2

Chugoku Kako Co., Ltd.*

75

74.3

ICT Co., Ltd.*

60

51.0

Sale of automobile exhaust catalyst

Junzo Senba

Nisshoku Kosan Co., Ltd.*

32

100.0

Management of golf driving range andnon-life insurance agent

Goro Kijima

Principal businessPresident

Equityownership(%)

90

46.6

Nishinippon FRP Shipbuilding Co., Ltd.

30

100.0

Manufacture and sale of anthraquinone,
carbazole, and their derivatives
Manufacture and sale of FRP ship andfinished products

Nippon Polymer Ind. Co., Ltd.

100

50.0

Manufacture and sale of acrylic emulsions

45.0

Manufacture and sale of insulating varnish
and enamel

Nihon Jyoryu Kogyo Co., Ltd.

Nisshoku Schenectady Kagaku, Inc.

￥

40

*Included in consolidation(Note) Nisshoku Aro Chemicals Co., Ltd. was merged into Nippon Shokubai Co., Ltd. on April 1,1998.

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

Takahiro Ito

NA Industries, Inc.*

Name

21

President

Manufacture and sale of superabsorbent polymers
Yuji Noma
Technical liaison and business development
Manufacture and sale of stabilizer of vinyl
Masatoshi Tsuchino
chloride resin and anti-freeze
Manufacture and sale of synthetic resins andNoboru Shimizu
heat insulator

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

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

Fukuoka Sales Office

62.5

￥

Tokyo Office

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

517

Nippoh Chemicals Co., Ltd.*

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

Nagoya Sales Office

Consolidated Subsidiaries
Name

LABORATORIESOsaka office

SALES OFFICES(as of March 31, 1998)

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

HEAD OFFICES

Kensuke Kumazawa

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

Kawasaki Chidori Plant
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, Japan

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

Tsukuba Research Laboratory
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

Catalyst Research Laboratory
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 COMPANIESNA 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(as of July 1, 1998)

Terumitsu Mimura
Yoshio Yasuda
Kenji Aida(as of March 31, 1998)

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

NIPPONSHOKUBAI

1998

FINANCIAL REPORT'98 Sept.,2000,Printed in JapanNIPPONSHOKUBAI