Consolidated Financial Statements

May 20, 2004

For the Fiscal Year ended March 31, 2004
Company name: NIPRO CORPORATION
Code No:
8086(URL: http://www.nipro.co.jp/)

Tokyo and Osaka
Osaka, Japan

Stock Exchange where listed:

Head Office Location:

Representative:
Contact:

Minoru Sano, President and Representative Director
Akihiko Yamabe, Director, General Manager of Accounting andTEL (06) 6372-2331
Corporative Planning Division
Date of the meeting of the Board of Directors for approval of the financial statements: May 20, 2004
Adoption of U.S. GAAP: No
1.

Consolidated Results for the Fiscal Year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)(1) Consolidated Results of Operations
Net SalesYear ended March 31, 2004
Year ended March 31, 2003

(Note: Amounts are truncated to 1 million yen)
Operating Income
Recurring Income

Millions of yen%

Millions of yen%

Millions of yen%

188,700
180,369

4.6
5.3

12,557
14,899(15.7)
3.2

9,539
11,397(16.3)(15.1)Net Income

Earnings
per Share
Yen

Diluted Earnings
per share

Ratio of Net Income
to Shareholders’EquityRatio of Recurringincome to Total
AssetsRatio of Recurring
Income to Net
Sales

Millions of yen
%
Yen
%
%
%
Year ended March 31, 2004
4,216 (17.0)
64.90
4.7
3.6
5.1
Year ended March 31, 2003
5,077 (13.1)
84.25
78.48
6.4
4.6
6.3
Notes: 1. Equity in losses of affiliate for the fiscal year ended March 31, 2004 and 2003 was (771) million yen and (657) million yen,respectively.
2. The weighted average number of outstanding shares (consolidated) for the fiscal year ended March 31, 2004 and 2003 was
63,631,774 shares and 58,949,626 shares, respectively.
3. Change in accounting method: N/A
4. Percentages in the above table for Net Sales, Operating Income, Recurring Income and Net Income represent changes from theprevious fiscal year.

(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
Year ended March 31, 2004
279,701
94,71133.9
1,487.50
Year ended March 21, 2003
252,847
83,53233.0
1,310.72
Notes:The number of outstanding shares (consolidated) as of March 31, 2004 and 2003 was 63,613,567 shares and 63,645,860
shares, respectively.

(3) Consolidated Cash Flows
Cash flows fromoperating activities
Year ended March 31, 2004
Year ended March 31, 2003

Cash flows frominvesting activities

Cash flows fromfinancing activities

Millions of yen

Millions of yen

Millions of yen

15,432
5,453(12,786)(30,107)

2.

Millions of yen

10,40011,469(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:

0042,22829,39314
0
1
Removed: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
Six months ending Sept. 30, 2004

Year ending March 31, 2005

98,500200,000

Net Income

Millions of yen

4,850
10,400Millions of yen

2,550
5,300

(Reference) Projected Earnings per Share for the Fiscal Year ending March 31, 2005: 81.95 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 18 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 thebusiness segments 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 Medica de Mexico S.A. DE C.V.
(Mexico), and unconsolidated subsidiary Nipro Asia Pte. Ltd. (Singapore) and Nipro Trading(Shanghai) Co., Ltd. (China) sell medical equipment etc. in the areas of their locations.
Nipro Diabetes Systems, Inc. (U.S.A.), an unconsolidated subsidiary, develops portablediabetes-related products such as Insulin Pump.
<Pharmaceutical Division>
The Company and Nipro Pharma Corporation (previous company name: Hishiyama
Pharmaceutical Co., Ltd.) 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 in the
Hanshin 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.

<Development, Manufacturing
and Sales>

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

Nipro Corporation□Bipha Corporation<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 products andmerchandises
Other

Supply of raw materials<Non-life insurance agency>
Other transactions○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 throughcorporate activities, especially focusing on developing new products in the field of medical andpharmaceutical products.
As a management structure in pursuit of compatibility between “stability” and “growth”, which areessential for an enterprise, we implement the “performance-linked remuneration system” that is the rule ofprofit sharing among shareholders, employees and management, and carry out active business
operations, holding the employees 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
the business performance of the Company.
Retained earnings are to be invested in the sales and production facilities as well as in research anddevelopment, in view of establishing the firm management basis and long-term business developments,
so as 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
and lead to the vitalization of securities market. However, as the implementation would incur a large
amount of costs, we would rather watch the situation of, among other things, the introduction of
non-issuance of share certificates.

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 (ratio of net income to shareholders’ equity)
by the fiscal year 2010.
In the Medical Division, we, as a general medical equipment manufacturer, will seek to enhance theadded-value of Nipro-branded products and increase the market share by strengthening the sales in thefield of dialysis-related products such as dialyzers and maintaining the leading share in the market, as
well as forging ahead to the field of catheters and artificial organs, reinforcing the product line-up, andconducting active sales and marketing in the overseas markets.
In the Pharmaceutical Division, we will further promote commercialization of kit products and increase
sales of double-bag kits, powdered dialysate solutions, as well as expand the infusion-drug-related
business and develop the products that would take the leading position in the market.
In the Glass and Materials Division, we will secure stable profit by reducing manufacturing costs
based on our peerless glass processing technologies and global marketing.
In the Supermarket Division, we will make attractive product offerings for fresh food and medicine etc.
and bear closely on the daily needs of neighborhood customers.

-4-5. Medium- and Long-term Management Strategies
We manage four distinct businesses, a medical division, a pharmaceutical division, a glass andmaterials division, and a supermarket division. In order to enhance the complementary effects on theother divisions’ businesses and to secure the stable profits, we will devote our resources on
strengthening production capacity, sales and marketing capabilities and research & development.
As regards production capacity, we will reinforce cost competitiveness by utilizing overseas
manufacturing bases of medical equipment, and equip with and expand the production facilities to meetthe expected demands on outsourced production of pharmaceutical products as a result of revised
Pharmaceutical Affairs Law.
Concerning the research & development, we will take a long-term view and carry out research workof advanced medical technologies such as regenerative medicine and recombinant human serum
albumin.

6. Issues and Challenges that the 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. We will seek to increase the market share by responding to the market
needs, development and marketing of new products, improving product quality and reinforcing the sales
ability. In the field of disposable medical equipment such as injection, infusion and catheters, we will
increase the market share of injection- and infusion-related products such as infusion sets and syringes,
and promote development, marketing and sales of products with safety features. As regards the
products related to circulatory organs, we will promote sales and marketing of thrombus vacuum
aspiration catheter and PTCA balloon. In addition, as for the examination-related products, we will
market and promote blood glucose monitoring system for diabetic patients and test reagents, as well as
sterilized blood collection tubes.
For the international business, as the world is rapidly becoming a single market, we consider pricingof our products to be the most critical issue. In response to the globalization with regard to the quality
assurance, we implement the group-wide quality system so that we can provide safety-first products,
promptly collecting detailed information on claims that occur anywhere in the world. Reacting to theunification of world markets, we have set about rearrangement of sales organization since last year; wehave agreed with one of the major customers on a tie-up of manufacturing and sales of dialysis-related
disposables and machines, which would enable us to extend our presence in the increasingly oligopolistic
market. As for the medical-related commodity products, we will strengthen our sales capability by
improving the sales organization and by joining forces with the local leading companies. The market ofthe diabetes-related products are changing in connection with the development of new drugs, but our
products, used mainly for the symptomatic treatment, will continue to have steady demands, and we willfurther market in this field by completing the wide product range. The clinical trials of implantable left
ventricular assist system (VAS) has finished and we will serve it to the treatment as soon as an approvalis granted, but in the meantime we will promote external VAS and related products. Placing greater
importance on establishing competitiveness in the global market, we will develop stronger sales structureof the overseas subsidiaries as we have done in the Latin American countries, in accordance with the
expansion of European Union and the economic growth of Asian countries.
In the Pharmaceutical Division, we will broaden the product line-up of kit products such as“liquid-and-powder” double-bag kits for antibiotics and pre-filled syringes. We are working on numerous
new products, especially pre-filled syringes, and we will accelerate the speed of development. In
addition, we will continue the development of pharmaceutical products in application of recombinanthuman serum albumin such as artificial blood and Drug Delivery System (DDS) and products related torecombinant protein for the renal diseases. We will newly develop oral medicines as well as injection
drugs, and expand our pharmaceutical business.
In the Glass and Materials Division, we will expand our sales of glass for pharmaceutical purposes toabroad, promote applied uses of large-sized vials, and produce glass pre-filled syringes. In the area ofglass for lighting purposes, we will increase sales of glass for liquid crystal display (LCD) backlight andrelated materials and processed products of colored glass. As for glass for lighting purposes, we will
see to it that we manufacture and sell environment-friendly glasses.

-5-

In the food supermarket of the Supermarket Division, we will improve productivity by “Weekly Change
System” and restructuring of work schedule system (LSP), and foster an ability-based evaluation byintroducing new personnel management system. We will also strive to differentiate ourselves from thecompetitors by developing products that meet changing customers’ needs. Furthermore, in order toreflect the experience of the store managers and make up our stores based on the needs of neighboringcustomers, we grant larger authority to the store managers and set up supporting system at theheadquarters. On the other hand, drugstores will improve profitability by developing differentiated stores,
renovation of aged stores, and development and sales of high added-value products.

7. Basic Perspective on Corporate Governance and Implementation of Related Measures(1) Basic Perspective on Corporate Governance
Since we consider improvement of Corporate Governance to be one of the most critical issues inview of an enterprise’s social responsibility, 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 businessdivision, 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. Outside
auditors do not have full-time staff, but collaborate closely with the staff of Internal Audit Section
through internal auditing.
・ Structure of the Company’s business execution, supervision and internal control

Shareholders Meeting
President(Appointment)

Accounting
Auditor(Auditors)(Directors)

Board ofAuditors

Board ofDirectors

Committees

Making)Operational
Audit

Directors

Management
Risk Control
Committee

Division Managers
General Managers,
Section Managers,
etc.

(Decision

Accounting
Audit

Third
partiessuch aslawyersandaccountants etc.

Rewards andPunishments
Committee

Audit ofDirectors’
policyexecution

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 April 2003, “the Management Risk Control Committee” is set up in order to establish a structure
to control management risks and promote compliance with laws, ordinances and corporate ethics.
We enlighten our employees by distributing a booklet (“the Code of Conduct for Compliance with
Laws, Ordinance and Corporate Ethics”) to directors and employees, placing articles in thecorporate magazines, and setting up the Compliance Hotline.
We also set up “the Rewards and Punishments Committee”, whose chairman is the President of
the Company, for the purpose of managing commendations and penalties.

-6-b. Personal, Capital or Transactional Relationships, and/or Other Interests Between the Company
and Its 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 April 2003, “the Management Risk Control Committee” is set up in an effort to establish a
structure to control management risks and promote compliance with corporate ethics includinglaws and ordinances. We enlighten our employees by distributing a booklet titled “the Code of
Conduct for Compliance with Laws, Ordinances and Corporate Ethics” to our employee and byplacing the articles in the corporate magazines. In February 2004, we launched the Compliance
Hotline, so as to discover management risks at an early stage as well as to prevent such risks.
We will effectively implement the Committee so that the operations of the Company will be run
properly.

Business Results and Financial Conditions
1. Business Results(1) Summary of Overall Business and Results by Segments
Japanese economy has turned to a recovery stage, pulled around mainly by exports and capital
investments. However, appreciation of yen and severe condition of individual income still remained,
and the mood of recession generally remained for the period under review.
Under suchcircumstances, the Company continued to focus on research & development, and to conduct active
sales activities.
As a result, the consolidated net sales for the period under review increased to 188.7 billion yen, up
4.6% compared with the previous fiscal year, operating income decreased to 12,557 million yen, down
15.7% compared with the previous fiscal year, due to increase in selling, general and administrative
expenses, recurring income decreased to 9,539 million yen (down 16.3% compared with the previous
fiscal year) and net income decreased to 4,216 million yen (down 17.0% compared with the previous
fiscal year).
The results by segments were as follows:a. Medical Division
For the domestic business, while the governmental controls on medical expenditures wereincreasingly severe, we sought to enhance the efficiency 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 and examination, as well as to sell those products incomprehensive package. However, the cost competition has been further intensified, and there werealso adjustments on distributors’ inventories.
As for the international business, on the other hand, we were able to achieve steady results by ourcontinuous efforts for the market penetration of Nipro-branded products. Especially in terms of
dialysis-related products, OEM (original equipment manufacturer) products, sales of which decreased
last year due to market changes, have recovered substantially. Products related to blood collection
and diabetes showed steady increase, and we have also launched some new products of safety AVF
and blood tubing sets. Despite the fluctuation of exchange rates, the results were generally
satisfactory for the period.
As a result, net sales of this division increased to 78,726 million yen (up 3.6% compared with theprevious fiscal year).

-7-

b. Pharmaceutical Division
The market of the pharmaceutical business has been awfully harsh, due to the intense pricecompetition driven by the governmental controls on drug prices.
Under such circumstances, we strove to increase sales of powdered dialysate solutions andsubstitution fluid for hemofiltration and hemodiafiltration, etc. We also exerted ourselves to expand
sales of “liquid-and-liquid” double-bag kits and pre-filled syringe kits, etc., and all of these products
showed an outstanding growth.
As a result, net sales of this division increased to 25,338 million yen (up 15.3% compared with theprevious fiscal year).
c.

Glass & Materials Division

In the field of glass for pharmaceutical purposes, despite the shift from glass ampoules to plastic
ampoules or pre-filled syringes and the change from glass vials to plastic bags, the sales showedsteady growth, owing to increase in exports of glass tubes and large-sized vials such as nursing
bottles. As for the other glass materials, sales of glass for thermos bulbs remained steady both athome and abroad, garnering favorable reception on quality. For the glass for lighting purposes, salesof glass for liquid crystal display (LCD) backlight and related materials were in an upward trend, alongwith the expansion of the market of LCD televisions.
As a result, net sales of this division increased to 11,890 million yen (up 7.5% compared with theprevious fiscal year).
d. Supermarket Division
Despite there have been some signs of economic recovery in the latter half of the period, individual
consumption remained tight due to deteriorated conditions of employment and income. Furthermore,
we were affected by various factors such as a bird influenza problem, a BSE issue in the U.S., badweathers and the intensified competition arising from foreign and domestic competitors’ opening of
new stores. Under such circumstances, we endeavored to improve the profitability by increasing thenumber of stores with liquor sales license, giving more privileged offers to the point card members,
and other measures to increase sales. However, the results were generally low-toned, due todecrease in number of customers coming to stores.
As regards drugstores, openings of new stores contributed to the increase in sales, though theseasonal items were in a slump, influenced by cool summer, warm winter and less pollens causing
hay fever.
As a result, net sales of this division increased to 71,357 million yen (up 2.6% compared with theprevious fiscal 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 1,386 million yen (down 21.2% compared with theprevious fiscal year).

(2) Prospects for the Fiscal Year Ending March 31, 2005
Japanese economy is anticipated to remain unpredictable, due to the concerns in appreciation of
yen and rise of interest rates, while the conditions of individual income continue to be severe.
Under the conditions, we will continue to improve the business performance by focusing on
research & development and sales & marketing.
For the fiscal year ending March 31, 2005, we project the consolidated net sales of 200,000 million
yen (increase by 6.0% compared with the previous fiscal year), recurring income of 10,400 million yen(increase by 9.0% compared with the previous fiscal year), and net income of 5,300 million yen(increase by 25.7% compared with the previous fiscal year).
Projections on net sales by segments are as follows:
Medical Division: 81,900 million yen (increase by 4.0% compared with the previous fiscal year),
Pharmaceutical Division: 27,250 million yen (increase by 7.5% compared with the previous fiscal
year), Glass and Materials Division: 12,050 million yen (increase by 1.3% compared with theprevious fiscal year), Supermarket Division: 77,700 million yen (increase by 8.9% compared withthe previous fiscal year), and Other Division: 1,100 million yen (decrease by 20.6% compared withthe previous fiscal year).

-8-(3) Matters related to Appropriation of Earnings
Annual dividends are calculated to be 30.50 yen per share, in accordance with the 50% pay-out
ratio as a criterion. As we already paid interim dividends of 11 yen per share, year-end dividends areto be 19.50 yen per share; this will be proposed to the Company’s 51st ordinary general meeting ofshareholders.

2. Financial Conditions(1) Analysis of the conditions of assets, liabilities, shareholders’ equity and cash flows
Total assets increased by 26,853 million yen from the end of the previous fiscal year to 279,701
million yen. Current assets increased by 8,502 million yen to 124,934 million yen, and fixed assets
increased by 18,350 million yen to 154,767 million yen. Main reason for the increase in current assets
was that cash on hand in banks increased by 12,701 million yen as a result of issuance of
convertible-bond-type bond with stock acquisition rights, and main reason for the increase in fixed
assets was that investment securities increased by 15,504 million yen due to the rise in stock prices.
On the other hand, liabilities increased by 15,749 million yen from the end of the previous fiscal
year to 183,295 million yen. Current liabilities increased by 7,474 million yen to 96,363 million yen,and fixed liabilities increased by 8,274 million yen to 86,931 million yen. Main reason for the increasein current liabilities was that current portion of bonds increased by 8,000 million yen, and main reason
for the increase in fixed liabilities was that convertible-bond-type bonds with stock acquisition rights
increased by 14,000 million yen.
Shareholders’ equity increased by 11,178 million yen from the end of the previous fiscal year to
94,711 million yen. In this section, earned surplus increased by 2,705 million yen to 30,610 million yen,and valuation differences of other securities increased by 9,611 million yen to 12,462 million yen.
Net cash provided by operating activities was 15,432 million yen, net cash used in investing
activities was 12,786 million yen, net cash provided by financing activities was 10,400 million yen, andcash and cash equivalents increased by 12,835 million yen to 42,228 million yen.
Net cash used in investing activities mainly reflected the payments for acquisition of fixed assets for
13,244 million yen. Net cash provided by financing activities was mainly from the proceeds fromissuance of the bonds for 13,921 million yen.

-9-(2) Trend of the cash flow indicators

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

The 48th period
Year ended
March 31, 2001

The 49th period
Year ended
March 31, 2002

The 50th period
Year ended
March 31, 2003

The 51st period
Year ended
March 31, 2004

30.2

31.0

33.0

33.9

24.4

41.8

45.7

35.5

15.4
3.8

14.1
4.3

21.7
3.1

7.3
9.4

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 / Cashflow from operating activities
Interest coverage ratio = Cashflow 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).
- Cashflow 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 istaken from the payments of interests on the consolidated statements of cash flows.

- 10 -

Consolidated Balance Sheets(Unit: Millions of yen)
PeriodAccount

As ofMarch 31, 2003

As ofMarch 31, 2004

AmountAmountRatio(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 and structures
Machinery, equipment andvehiclesLand
Construction in progress

OthersIntangible fixed assets
Consolidation adjustments

OthersInvestments and other assets

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

Total Assets(Notes)1. Accumulated depreciation of tangible fixed
assets

2. Notes receivable discounted
3. Obligations under guarantee contracts
4. Pledged assets

Ratio

%
116,43146.0

Changein amount%
124,934

44.7

8,502

32,53945,241

12,701

42,761
31,213
2,244
7,873
(201)

41,52432,541
1,734
4,100
(208)

(1,236)
1,327(509)(3,772)(7)

136,41654.0

154,767

55.3

18,35091,14636.1

94,004

33.6

2,857

38,84140,545

1,703

19,74822,4596,852
3,245

21,01822,456
6,143
3,840

1,269
(2)
(708)
595

1,271

0.5

213
1,057
43,998

0.4

54
958
17.4

27,0182,601
175
12,234
2,660(692)
252,847

1,012

59,749

(159)
(99)
21.3

42,522
2,843
193
11,774
3,085
(670)
100.0

As of
March 31, 2003

83,90835
3,273
18,090- 11 -

279,701(258)

15,75015,504
242
18
(460)
424
21

100.0

As of
March 31, 2004
(Millions of yen)

89,92251
2,728
15,79526,853

Consolidated Balance Sheets(Unit: Millions of yen)
PeriodAccount

As ofMarch 31, 2003

As ofMarch 31, 2004

AmountAmountRatio(LIABILITIES)Current liabilities
Trade notes and accounts payable

Short-term borrowings
Current portion of bonds
Other payables
Accrued income taxes
Accrued bonuses
Allowance for price reduction
Notes payable for plant andequipment
Commercial paper

Other current liabilities

Ratio

%
88,88835.2

Changein amount%
96,363

34.4

7,474

27,08536,257
2,000
3,783
2,619
1,587
1,359

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

1,962
(754)
8,000
985
(1,038)(143)(1,359)

3,356
7,000
3,838

4,207
6,500
3,310

851
(500)
(528)

Fixed liabilities

78,657

Bonds

36,00026,000(10,000)

36,821541

14,00034,183
6,688

14,000(2,637)
6,147

Other fixed liabilities

1,977
3,317

2,528
3,531

551
214

Total liabilities

167,54666.3

183,295

65.5

15,749

1,768

0.7

1,693

0.6

(74)

28,66329,972
27,904

11.3
11.9
11.0

28,66329,972
30,610

10.2
10.7
10.9

2,705

2,850

1.1

12,462

4.5

9,611

Treasury stock(5,406)
(451)

(2.1)
(0.2)

(6,489)
(506)

(2.3)
(0.1)

(1,083)(54)

Total shareholders’ equity

83,53233.0

94,711

33.9

11,178

Total liabilities, minority interests, andshareholders’ equity

252,847100.0

279,701

100.0

26,853

Convertible-bond-type bonds withstock acquisition rights

Long-term borrowings
Deferred tax liabilities
Accrued pension and severance
cost

31.1

86,931

31.1

8,274

(MINORITY INTERESTS)
Minority interests(SHAREHOLDERS’ EQUITY)

CapitalCapital surplus
Earned surplus
Valuation differences of othersecurities
Foreign currency translation
adjustments(Notes)As ofMarch 31, 2003

As ofMarch 31, 2004

5. Number of treasury stock
Common stock
6. Accounts related to unconsolidated

232,645 shares

264,938 shares

6,383 million yen

6,113 million yen

subsidiaries and affiliate companies
Investment securities (stock)- 12 -

Consolidated Statements of Income(Unit: Millions of yen)
PeriodAccount

From April 1, 2002
To March 31, 2003

From April 1, 2003
To March 31, 2003

AmountAmount

Ratio
%

Ratio
%

Changein amount

Net sales
Cost of goods sold180,369
128,775

100.0
71.4

188,700
137,153

100.0
72.7

8,330
8,377

Gross profit

51,59428.6

51,54727.3(47)

36,69520.3

38,989

20.6

2,294

14,8998.3

12,5576.7(2,341)

755
207
190

0.4

963
160
184

0.5

208
(46)
(6)

Selling, general and administrative
expenses

Operating income
Non-operating income
Interest income
Dividend income
Gain on sale of investment
securities
OthersNon-operating expenses
Interest expenses
Equity in loss of affiliate
Exchange losses
OthersRecurring income
Extraordinary gains
Reversion of allowance for
doubtful accounts

Subsidies received
Lease termination fees received

OthersExtraordinary losses
Losses on sales and disposals of
fixed assets
Loss on devaluation of investment
securities
Advanced depreciation on fixed
assetsAbnormal manufacturing cost
Loss on claims
Amortization of transitional difference
from change in accounting standardsof pension and severance benefits

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

Net income(Notes)Research and development expenses included inselling, general and administrative expenses

357
4,256
1,671
657
1,749
177
11,397
1,334

6.3
0.7

139
479
3,982
1,635
771
1,429
145
9,539
573

2.2

108
445
18
2,068

2.4

42
1,129
85
77
3,951

5.1
0.3

139
121
(274)
(35)
114
(320)
(32)
(1,858)
(761)

1.1

66
(683)
(85)
(58)
(1,882)

2.1

341

427

86

628

102

(526)

1,129
111
308

445
271
24

(683)
160
(283)

76
-

76
290

290

1,178

-

(1,178)

177

272
155

272
(21)

8,780

4.8

8,043

4.3

(736)

4,957
(1,340)

2.7
(0.7)

3,765
85

2.0
0.1

(1,192)
1,426

85
5,077

0.0
2.8

(23)
4,216

(0.0)
2.2

(109)
(861)

From April 1, 2002
To March 31, 2003

From April 1, 2003
To March 31, 2004

2,328 million yen

3,074 million yen- 13 -

Consolidated Statements of Surplus(Unit: Millions of yen)
PeriodAccount

From April 1, 2002
To March 31, 2003

From April 1, 2003
To March 31, 2004

AmountAmountChangein amount(CAPITAL SURPLUS)
Beginning balance of capital surplus
Beginning balance of additional
paid-in capital

24,434

Increase in capital surplus

29,972

5,537

5,537
5,537

-

(5,537)(5,537)

29,972

29,972-Beginning balance of earned surplus

25,81027,9042,094

Beginning balance of consolidated
retained earnings

25,810Conversion of convertible bonds
Ending balance of capital surplus

24,434(EARNED SURPLUS)

Increase in earned surplus
Net income

5,077
5,077

4,216
4,216

(861)
(861)

Decrease in earned surplus
Dividends

2,983
2,814

1,511
1,400

(1,472)(1,414)

Bonuses to directors andcorporate auditors

168

111

(57)

[Bonuses to corporate auditors,
inclusive]

[7]

[5]

[ (2) ]

27,90430,6102,705Ending balance of earned surplus- 14 -

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

From April 1, 2002
To March 31, 2003

From April 1, 2003
To March 31, 2004

AmountAmountChangein amount

Cash 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 losses (gains)
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 andextraordinary gains/losses

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

8,780
8,766
222
657
-

8,043
9,819
159
771
290

(736)
1,052
(63)
114
290

(15)
(397)
1,671
1,039
(3,883)(4,517)(1,004)
(675)
436
(168)

(13)
(344)
1,635
502
1,093
(1,515)
2,172
(981)
(133)
(111)

1
52
(35)
(536)
4,977
3,001
3,176
(306)
(570)
57

2,727
13,639362(1,755)736(1,702)(5,826)5,453

512
21,902261(1,637)911(1,195)(4,809)15,432(2,214)
8,262
(100)
118
175
506
1,016
9,978

(3,493)
1,373(4,060)20(23,886)
143
(257)
56
(4)
1
(30,107)(3,064)
3,117
(516)
448
(13,244)
578
(134)
53
(23)
0
(12,786)

429
1,743
3,543
428
10,641
435
122
(3)
(19)
(1)
17,3203,718
7,000
23,598(8,181)
5,966(13,122)
105
(396)
(268)
(2,810)(1,763)(500)
6,126(7,734)
13,921(2,000)(54)(336)(1,399)(5,482)(7,500)(17,471)447
7,954
11,122
(105)
341
(68)
1,410

(4,141)(0)
11,4694,141
10,400

4,141
4,141
0
(1,068)(206)(13,391)(211)
12,835(4)
26,22642,78429,393(13,391)

29,39342,228

12,835

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
Proceeds from issuance of common stock
Payments for acquisitions of treasury stock

Repayments of finance lease obligations
Payments for dividends
Reimbursement of funds for redemption of
convertible bonds
Deposit of funds for redemption of convertible bonds

OthersCash flows from financing activities
Effect of exchange rate changes on cash and cash
equivalents
Increase (decrease) in cash and cash equivalents

Balance of cash and cash equivalents at the
beginning of the period
Balance of cash and cash equivalents at theend of the period- 15 -

Basis of Preparation for the Consolidated Financial Statements
1. Scope of Consolidation
1) Consolidated subsidiaries: 14
・
・
・
・
・
・
・

・
・
・
・
・

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

Nipro (Thailand) Corporation Ltd.
Nipro (Shanghai) Co., Ltd.
Nipro Europe N.V.
Nipro Medical Panama S.A.
Nipro Pharma Corporation

・ Shanghai Nissho Vacuum Flask Refill Co., Ltd.

・ Nissho Drug Co., Ltd.

(Note) On April 1, 2003, Hishiyama Pharmaceutical Co., Ltd. changed its company name to Nipro
Pharma Corporation.
2) Unconsolidated subsidiaries: 4
The unconsolidated subsidiaries, Nissho Insurance Services Co., Ltd., Nipro Asia Pte. Ltd., Nipro
Diabetes Systems, Inc. and Nipro Trading (Shanghai) 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
to the 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 (U.S.A.), Nipro
Medical Panama S.A. (Panama) and Nipro Medica de Mexico S.A. DE C.V. (Mexico) close theirinterim accounts on December 31. Significant transactions occurred between December 31 andMarch 31 are 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 of shareholders’ equity. Costs are determined by theweighted average method.
Securities without market quotations:
Valued at cost by the weighted average method
b. Inventories
Medical, Pharmaceutical and Glass & Materials Divisions:
Valued at cost principally by the weighted average method.
method is used.
Supermarket Division:
Valued at cost by the retail method- 16 -

Partially First-In First-Out

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 attached structures), are depreciatedby straight-line method.
The 9 foreign subsidiaries use straight-line method in accordance with the tax laws of
their countries.
3) Accounting method for deferred assets
Bond issue cost:
Expensed at the time of expenditure4) Standards for recognition of significant allowancesa. Allowance for doubtful accounts:
In order to cover the probable losses on collection, an allowance for doubtful accounts isprovided for the estimated amount of uncollectible receivables. For general receivables, theamount of provision is based on historical write-off rates, and for the doubtful receivables,
based on the specific collectibility.
b. Accrued bonuses
In order to cover the payment of bonuses to employees, an allowance is provided for theestimated amount of bonuses to be paid, prorated for the consolidated accounting period.
c.

Accrued pension and severance cost
An allowance is provided for employees pension and severance payments based on theestimated amounts of projected benefit obligation and plan assets at the end of the fiscal year.
The transitional difference that arose from the change in accounting 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.

5) 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.
6) 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.
7) Other significant basis on preparation for consolidated financial statements
Consumption Taxes
Consumption taxes are excluded from revenues and expenses accounts.
5. Valuation of assets and liabilities of consolidated subsidiaries
Partial fair market value method is used for valuation of assets and liabilities of consolidated
subsidiaries.

- 17 -

6. Amortization of consolidation adjustment accountConsolidation adjustment account is amortized using the straight-line method for five years.
7. Appropriation of retained earnings
Consolidated statements of shareholders’ equity are prepared based on appropriation of earnings
determined during the fiscal year.
8. 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.

(Lease Transactions)
Finance lease transactions, except for those where ownership of the leased assets is deemed to betransferred to the lessee
Year ended
March 31, 2003

Acquisition price equivalentYear ended
March 31, 2004
(Millions of Yen)
9,435
6,456
2,978

Book value equivalent

9,687
4,772
4,915

Lease commitments
Due within one year
Due after over one year
Total

1,477
4,022
5,500

1,162
2,370
3,533

Lease payments
Depreciation equivalentInterest expense equivalent

1,748
1,527
207

2,150
1,883
152

Accumulated depreciation equivalent

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
over the lease term by the interest method.

- 18 -

(Segment information)
1. Segment information by business category(1) Year ended March 31, 2003 (From April 1, 2002 to March 31, 2003)
yen)
MedicalPharmaceutical

Glass &
Materials

Supermarket(1) Sales to third parties

76,00821,97911,06369,5591,758(2) Inter-segment sales
and transfers

534

-

2,473

0

Total

76,542

21,97913,536

Operating expenses

62,36819,997

Operating income

14,174

Assets(Millions of

Eliminations/Corporate

Consolidated

180,369-

180,369

667

3,674

(3,674)-69,5592,425

184,044(3,674)

180,369

11,76068,4502,277

164,854615

165,470

1,981

1,776

1,109

147

19,189(4,290)14,89984,726

51,191

13,603

41,8792,044

193,444

59,403

252,847

Depreciation

3,649

2,828

559

1,151

40

8,228

538

8,766

Capital expenditures

7,852

9,645

1,476

1,327

69

20,371403

20,774

Other

Total

1. Net sales andoperating income
Net sales

2. Assets, depreciationand capital expenditures(2) Year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)(Millions of yen)

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

12,117

AssetsEliminations/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

2,470

1,818

420

404

17,231(4,673)

12,557

83,78554,037

13,207

43,102

1,155

195,288

84,412279,701

Depreciation

3,833

3,637

630

1,164

31

9,298

520

9,819

Capital expenditures

5,231

6,747

625

1,450

4

14,059441

14,500

Other

Total

1. Net sales andoperating income
Net sales

2. Assets, depreciationand capital expenditures- 19 -

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

MedicalDialyzers, 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.

3.

4.

Operating expenses of “Eliminations/Corporate” for the year ended March 31, 2003 and 2004
included unallocated corporate costs of 4,290 million yen and 4,673 million yen, respectively.
The unallocated corporate costs consisted primarily of the parent company’s research anddevelopment costs and headquarters administration costs.
Assets of “Eliminations/Corporate” as of March 31, 2003 and 2004 included corporate assetsof 59,672 million yen and 84,557 million yen, respectively. The corporate assets consisted
mainly of parent company’s surplus operating funds (cash on hand and in banks), long-term
investment funds (investment securities) and assets related to research and development, as
well as of the assets belonging to the headquarters administration department.
Depreciation and capital expenditures included long-term prepaid expenses and its
amortization.

- 20 -

2. Segment information by geographical area
(1) Year ended March 31, 2003 (From April 1, 2002 to March 31, 2003)
yen)
Japan

America

EuropeAsia(Millions of

Total

Eliminations/Corporate

Consolidated

1. Net sales andoperating income
Net sales(1) Sales to third parties

168,847

4,544

5,360

1,617

180,369-

180,369(2) Inter-segment sales
and transfers

8,801

419

34

8,234

17,488(17,488)-

Total

177,648

4,963

5,394

9,851

197,858(17,488)

180,369

Operating expenses

159,549

4,710

5,239

8,966

178,467(12,996)

165,470

Operating income

18,098

253

154

884

19,391(4,492)

14,899

2. Assets

172,740

4,840

3,075

18,119198,775

54,072

252,847(2) Year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)
yen)
Japan

America

EuropeAsia(Millions of

Total

Eliminations/Corporate

Consolidated

1. Net sales andoperating income
Net 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

2. Assets

174,610

6,081

3,345

17,210201,247

78,453279,701

Note:

1.
2.

3.

4.

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 year ended March 31, 2003 and2004 included unallocated corporate costs of 4,290 million yen and 4,673 million yen,respectively. The unallocated corporate costs consisted primarily of the parent company’s
research and development costs and the headquarters administration costs.
Assets of “Eliminations/Corporate” as of March 31, 2003 and 2004 included corporate assetsof 59,672 million yen and 84,557 million yen, respectively. The corporate assets consisted
mainly of parent company’s surplus operating funds (cash on hand and in banks), long-term
investment funds (investment securities) and assets related to research and development, as
well as of the assets belonging to the headquarters administration department.

- 21 -

3. Overseas sales(1) Year ended March 31, 2003 (From April 1, 2002 to March 31, 2003)
America1.

Overseas sales

2.

Consolidated net sales

3.

Percentage of overseas sales
to consolidated net sales (%)

Europe19,031

17,364(Millions of yen)
Asia

Total

5,427

180,369
10.6%

9.6%

3.0%

(2) Year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)
America1.

Overseas sales

2.

Consolidated net sales

3.

Percentage of overseas sales
to consolidated net sales (%)

Note:

1.
2.

3.

41,822Europe21,136

18,861

23.2%(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.

(Related Party Transactions)
N/A(Derivative Transactions)
N/A- 22 -

(Deferred Taxes)
1. Major components of deferred tax assets and liabilities
As ofMarch 31, 2004
(Millions of yen)
Deferred tax assets (current)
Elimination of unrealized profits
Accrued enterprise tax
Accrued bonuses
Accrued price reductions
Excess of inventory book value over tax basis
Tax loss carryforwards
OthersSubtotal
Valuation allowance
Gross deferred tax assets (current)
Offset with deferred tax liabilities (current)
Net deferred tax assets (current)
Deferred tax liabilities (current)
Reserve for special depreciation
OthersSubtotal
Offset with deferred tax assets (current)
Net deferred tax liabilities (current)

429
140
586
246
111
170
199
1,884
(90)
1,794
(59)
1,734

32
27
59
(59)
-

Deferred tax assets (fixed)
Valuation difference of land
Excess of allowance for doubtful accounts overtax-allowable amount
Excess of accrued pension and severance cost overtax-allowable amountBad debt losses
Tax loss carryforwards
OthersSubtotal
Valuation allowance
Gross deferred tax assets (fixed)
Offset with deferred tax liabilities (fixed)
Net deferred tax assets (fixed)

901
117
1,568
204
3,100
(1,543)
1,556(1,362)
193

Deferred tax liabilities (fixed)
Valuation differences of other securities
OthersGross deferred tax liabilities (fixed)
Offset with deferred tax assets (fixed)
Net deferred tax liabilities (fixed)

7,909
141
8,051
(1,362)
6,688

149
159

2. Reconciliation of the difference between statutory tax rate and effective tax rate after adoption oftax-effect accounting
Statutory tax rate
(Adjustments)
Permanently disallowed items such as entertainment expenses
Permanently tax-exempted items such as dividends received
Unrecognized tax benefits of loss-making subsidiaries
Per capita charges of inhabitants taxes
Unrecognized tax benefits of equity in loss of affiliate
Tax credits on research and development expenses, etc.
Utilization of tax loss carryforwards
Amortization of consolidation adjustment account
Others
Effective tax rate after adoption of tax-effect accounting- 23 -

41.9 %
2.3
(0.8)
3.5
2.3
4.0
(3.5)
(4.5)
0.8
1.9
47.9

(Securities)
1. Other securities with market quotations(Unit: Millions of yen)
As of March 31, 2003
Acquisition
cost

Carrying
value onconsolidated
B/S

Stock
Bonds
Others4,361-

Subtotal

As of March 31, 2004

Difference

Acquisition
cost

Carrying
value onconsolidated
B/S

Difference

8,706
-

4,344
-

12,329-31,856-

19,526
-

4,361

8,706

4,344

12,32931,856

19,526Stock
Bonds
Others

8,040
367

7,010
344

(1,029)
(23)

85
60

80
54

(4)
(5)

Subtotal

8,407

7,354

(1,052)

145

135

(10)

Total

12,76916,061

3,291

12,47531,991

19,516Classification

Securities whose carrying value
exceeds their acquisition cost

Securities whose carrying value donot exceed their acquisition cost

(Note)

Impairment losses for the year ended March 31, 2003 and 2004 were 628 million yen and 102
million yen, respectively.
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. Other securities sold during the periods(Unit: Millions of yen)
From April 1, 2003
To March 31, 2004

From April 1, 2002
To March 31, 2003
Sales
proceeds

Total gains

5

Total losses

-

Sales
proceeds-

448

Total gains

Total losses

1390

3. Securities that do not have market quotations
Carrying value on
Consolidated
Balance Sheet
As of March 31, 2003
Other securities
Unlisted stock (excluding those
traded on the over-the-countermarket)Stocks of subsidiaries andaffiliates
Stocks of unconsolidated
subsidiaries
Stocks of affiliated companies
Total(Unit: Millions of yen)
Carrying value on
Consolidated
Balance Sheet
As of March 31, 2004

4,573

4,417

186

687

6,197

5,425

10,957

10,530- 24 -(Employees Pension and Severance Benefits)
1. Outline of the adopted pension and severance benefit plan
The Company and its domestic consolidated subsidiaries have defined benefit plans, such as
tax-qualified pension plan and lump-sum severance benefit plan.
Certain foreign subsidiaries also have defined benefit plans.
2. Matters related to pension and severance liabilities
As ofMarch 31, 2003
(1) Pension and severance liabilities(2) Pension plan assets(3) Unfunded pension and severance liabilities (1)+(2)(4) Unamortized transitional difference that arose fromchange in accounting standards(5) Unrecognized actuarial differences(6) Unrecognized prior service cost(7) Net amount on the consolidated balance sheet(3)+(4)+(5)+(6)(8) Prepaid pension cost(9) Accrued pension and severance cost(7)-(8)(Unit: Millions of yen)
As ofMarch 31, 2004

(8,678)
4,883(3,794)(8,793)
5,794(2,998)

207

103

1,609
-

366
-

(1,977)(2,528)(1,977)(2,528)(Note) Certain subsidiaries adopt a simplified method in calculation of their pension and severance
liabilities.
3. Matters related to pension and severance benefit expenses(Unit: Millions of yen)
From April 1, 2002
To March 31, 2003

(1) Service cost(2) Interest cost(3) Expected return on plan assets(4) Amortization of transitional difference that arose fromchange in accounting standards(5) Amortization of actuarial differences(6) Amortization of prior service cost(7) Pension and severance benefit expenses(1)+(2)+(3)+(4)+(5)+(6)From April 1, 2003
To March 31, 2004

535
231
(180)

600
215
(73)

103

103

192
882

393
1,240

(Note) Pension and severance benefit expenses of consolidated subsidiaries that adopt a simplified
method are included in “(1) Service cost”.
4. Matters related to the basis of calculations of pension and severance liabilities, etc.
As ofMarch 31, 2003

As ofMarch 31, 2004

(1) Method of allocating expected pension andseverance benefits to reporting periods(2) Discount rate

Fixed base for period

Fixed base for period

Mainly 2.5%
(mainly 3.0% at the
beginning of theperiod)Mainly 2.5%

(3) Expected rate of return on plan assets(4) Amortization period of actuarial differences

1.5 – 4.0%

1.5%

5 years bystraight-line methodfrom the following
fiscal years after theyear of recognition ofdifference

5 years bystraight-line methodfrom the following
fiscal years after theyear of recognition ofdifference

5 years

5 years(5) Amortization period of transitional difference that
arose from change in accounting standards- 25 -

Production, Orders received and Sales
1. Production(Unit: Millions of yen)
From April 1, 2002
To March 31, 2003

Business segment
Amount produced

From April 1, 2003
To March 31, 2004

Ratio of change fromthe previous fiscal
year (%)

Amount produced

Ratio of change fromthe previous fiscal
year (%)

Medical57,473

1.3

57,577

0.2

Pharmaceutical

23,12642.1

24,785

7.2

Glass & Materials

3,396(14.4)

3,829

12.7

Other

1,239

94.7

720

(41.9)

Total

85,236

9.8

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.

3. Sales(Unit: Millions of yen)
From April 1, 2002
To March 31, 2003

Business segment
Amount soldFrom April 1, 2003
To March 31, 2004

Ratio of change fromthe previous fiscal
year (%)

Amount sold

Ratio of change fromthe previous fiscal
year (%)

Medical

76,008(2.0)

78,726

3.6

Pharmaceutical

21,97937.8

25,33815.3

Glass & Materials

11,063(1.5)

11,890

7.5

Supermarket

69,5597.4

71,357

2.6

Other

1,758

3.4

1,386

(21.2)

Total

180,369

5.3

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.

- 26 -

Summary of Non-consolidated Financial Statements

May 20, 2004

For the Fiscal Year ended March 31, 2004
Company name: NIPRO CORPORATIONTokyo and Osaka
Stock Exchange where listed:
Code No:
8086
Head Office Location:
Osaka, Japan(URL: http://www.nipro.co.jp/)
Representative:
Minoru Sano, President and Representative Director
Contact:
Akihiko Yamabe, Director, General Manager of
TEL (06) 6372-2331
Accounting and Corporate Planning Division
Date of the meeting of theInterim dividend plan: Adopted
Board of Directors for approvalof the financial statements:
Date of the annual general
meeting of shareholders

Unit share system:

May 20, 2004

Adopted (1,000 shares/unit)

June 29, 2004

1. Results for year ended March 31, 2004 (From April 1, 2003 to March 31, 2004)(1) Results of Operations(Note: Amounts are truncated to one million yen)
Net Sales
Operating Income
Recurring Income
Year ended March 31, 2004
Year ended March 31, 2003

Millions of yen%

Millions of yen%

Millions of yen%

106,119
100,664

5.4
(3.5)

9,227
10,238

(9.9)
2.2

7,807
8,851

(11.8)(12.1)

Millions of yen%

Earnings
per Share
Yen

4,060
4,105

(1.1)
(23.6)

62.46
67.82

Net Income
Year ended March 31, 2004
Year ended March 31, 2003

Ratio of Recurringincome to Total
AssetsRatio of Net Income
to Shareholders’EquityRatio of Recurring
Income to Net
Sales

Diluted Earnings
per share

Yen

%

%

%

63.31

4.0
4.5

3.3
4.0

7.4
8.8

Notes: 1. The weighted average number of shares outstanding for the year ended March 31, 2003 and 2004 was 58,949,626
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 previous fiscal year.

(2) Dividends
Annual dividends per share
Yen
Year ended March 31, 2004
Year ended March 31, 2003

30.50
32.00

Annual totalof dividends

Interimdividends
Yen

Year-end
dividends
Yen

Millions of yen

11.00
21.00

19.50
11.00

1,940
1,957

Ratio of dividends
to shareholders’equityPay-out
ratio
%

48.8
47.2

%

1.8
2.1

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

Ratio of Shareholders’Equity to Total Assets

Shareholder’ Equity
per Share%

Yen

Millions of yen

252,413106,37042.1
1,670.78
225,456
94,84442.1
1,488.50
Notes: 1. The number of shares outstanding as of March 31, 2003 and 2004 was 63,645,860 shares and 63,613,567 shares,
respectively.
2. The number of treasury stock as of March 31, 2003 and 2004 was 232,645 shares and 264,938 shares,
respectively.
Year ended March 31, 2004
Year ended March 31, 2003

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

Six months ending Sept. 30, 2004

Year ending March 31, 2005

Net Sales

Recurring
IncomeNet Income

Millions of yen

Millions of yen

Millions of yen

4,400
9,100

2,500
5,150

53,000108,000

Annual dividends per Share
InterimYear-end
Dividends
Dividends
Yen
Yen
Yen

19.50
-

19.50

39.00

(Reference) Projected earnings per share for the year ending March 31, 2005: 79.61 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.

- 27 -

Balance Sheets(Unit: Millions of yen)
PeriodAccount

As ofMarch 31, 2003

As ofMarch 31, 2004

AmountAmountRatio(ASSETS)
Current Assets
Cash on hand and in banks

Trade notes receivable
Accounts receivable
Merchandise and finished products

Raw materials and supplies
Work in process
Prepaid expenses
Deferred tax assets
Other receivables
Other current assets
Allowance for doubtful accounts
Fixed Assets
Tangible fixed assets
Buildings
Structures
Machinery

VehiclesTools and equipment
Land
Construction in progress
Intangible fixed assets
Software
OthersRatio%
86,892

38.5

20,244
14,81627,275
14,678
1,951
1,286
153
895
4,722
932
(64)

Changein amount%
95,31537.8

34,932
14,86824,76314,002
1,864
1,215
158
681
1,127
1,704
(5)

8,423
14,68752(2,511)
(675)
(86)
(70)
5
(214)
(3,594)771
59

138,56461.5

157,097

62.2

18,53333,41514.8

32,733

12.9

(681)

11,391
358
7,454
35
1,567
12,440167

10,506
333
6,621
27
1,860
12,440
944

302

0.2

205
97

241

(885)
(25)
(832)
(7)
292
777
0.1

158
82

104,845

Investment securities

19,56551,55834,34253,584

14,776
2,026

10,766509

10,790
479

23
(30)

15,673
676
5,613
1,012
(531)

18,791
491
5,114
1,013
(486)

3,117
(184)
(498)
0
45

Long-term prepaid expenses
Lease deposits
Other assets
Allowance for doubtful accounts

Total Assets

225,456

100.0- 28 -

124,122(46)(15)

Investments and other assets

Stocks of related companies
Investment s other than stock in
related companies
Long-term loans receivable
Long-term loans receivable fromsubsidiaries

46.5

(61)

252,413

49.2

100.0

19,276

26,956

Balance Sheets(Unit: Millions of yen)
PeriodAccount

As ofMarch 31, 2003

As ofMarch 31, 2004

AmountAmountRatio(LIABILITIES)Current liabilities
Trade notes payable
Trade accounts payable
Short-term borrowings
Current portion of bonds
Current portion of long-term borrowings

Other payables
Accrued expenses
Accrued income taxes
Amounts withheld for income taxes, etc.

Accrued bonuses
Allowance for price reduction
Notes payable for plant and equipment

Commercial paper
Other current liabilities

Ratio

%
65,24928.913,736
10,906
17,400
2,000
5,725
2,147
627
1,660
116
803
1,359
1,622
7,000
143

%
74,40329.5

15,097
11,312
17,70010,000
6,613
2,813
623
1,300
50
704
1,002
6,500
685

1,360
405
300
8,000
887
666
(3)
(360)
(65)
(99)
(1,359)
(620)
(500)
541

65,363

Bonds

36,00026,000(10,000)

26,996
276
1,163
926

14,00023,037
6,113
1,517
969

14,000(3,958)
5,837
353
43

Long-term borrowings
Deferred tax liabilities
Accrued pension and severance cost

Lease deposits received
Total liabilities

71,639

9,154

Fixed liabilities
Convertible-bond-type bonds with stockacquisition rights

29.0

Changein amount

28.4

6,276

130,61257.9

146,04257.9

15,43028,66329,972
29,97235,076
1,196
30,597
16
164

12.7
13.3

28,66329,972
29,972
37,6291,196
32,732
16
182

11.3
11.9

2,552
2,134
17

(SHAREHOLDERS’ EQUITY)

CapitalCapital surplus
Capital reserve
Earned surplus
Revenue reserve
Voluntary reserves
Reserve for dividends
Reserve for special depreciation
Reserve for advanced depreciation of
fixed assets
Reserve for losses on overseas
investments

15.6

14.9

23

20

(3)

358
30,035
3,282
1,583
(451)

0.7
(0.2)

179
32,3353,700
10,611
(506)

4.2
(0.2)

(179)
2,300
417
9,028
(54)

Total shareholders’ equity

94,84442.1

106,370

42.1

11,525

Total liabilities and shareholders’ equity

225,456

100.0

252,413100.0

26,956

Special reserve
Unappropriated retained earnings
Valuation differences of other securities

Treasury stock- 29 -

Statements of Income(Unit: Millions of yen)
PeriodAccount

From April 1, 2002
To March 31, 2003

From April 1, 2003
To March 31, 2004

AmountAmount

Ratio

Ratio

%

Change inamountRatio ofchange%Net sales
Cost of goods sold

100,664
75,121

100.0
74.6

106,119
80,813

100.0
76.2

5,455
5,692

5.4
7.6

Gross profit

25,54325.4

25,305

23.8

(237)

(0.9)

15,30415.2

16,077

15.1

773

5.1

Operating income

10,238

10.2

9,227

8.7

(1,010)(9.9)

Non-operating income

1,011
185
676

1.0

864
320
168

0.8

(147)
134
(507)

(14.6)

Selling, general and administrative
expenses

Interest income
Dividend income
Gain on sale of investment
securities

OthersNon-operating expenses
Interest expenses
Interest on bonds
Bond issue cost
Exchange loss
OthersRecurring income
Extraordinary gains
Gains on sales of fixed assets
Gains on donated fixed assets
Reversion of allowance for
doubtful accounts

OthersExtraordinary losses
Losses on sales and disposals of
fixed assets
Loss on devaluation of
investment securities

Loss from bad debts
Compensation for breach ofcontract
Settlement by reconciliation
regarding sales rights
Others
Net income before income
taxes
Corporate, inhabitants andenterprise taxes
Adjustment for deferred taxes
Net income
Retained earnings at the
beginning of the period
Interim dividends
Unappropriated retained
earnings

149
2,398
356
1,047
34
879
80
8,851
108
1
67
34
4
1,993

2.4

8.8
0.1

2.0

139
235
2,285
411
905
78
866
23
7,807
113
9
103
1,015

2.1

7.4
0.1

1.0

139
86
(113)
54
(142)
44
(12)
(56)
(1,044)

69
(4)
(977)

328

131

605
-

102
290

(502)
290

1,178

-

(1,178)

13

272
20

272
7

6,966

6.9

6,905

6.5

(61)

3,336
(475)

3.3
(0.5)

2,937
(93)

2.8
(0.1)

(398)
382

4,105

4.1

4,060

3.8

(45)

339
699

3,282

3,700

- 30 -(11.8)

5
8
(67)

196

434
1,257

(4.7)

417

(0.9)

(1.1)

Proposal for Appropriation of Retained Earnings(Unit: Millions of yen)
PeriodFrom April 1, 2002
To March 31, 2003

From April 1, 2003
To March 31, 2004

AmountAmountAccount

Changein amount

Unappropriated retained earnings

3,282

3,700

417

Disposal of voluntary reserves
Reserve for special depreciation
Reserve for advanced
depreciation on fixed assets
Reserve for losses on overseas
investments
Total

224
42

242
43

18
1

3

20

16

179
3,507

179
3,942

435

Appropriations of retained earnings
Cash dividends[per share]

3,167
700
[11.00 yen]

3,579
1,240
[19.50 yen]

Bonuses to directors and corporate
auditors[bonuses to corporate auditors,
inclusive]

107
[5]

85
[2]

(21)
[(2)]

Reserve for special depreciation
Special reserve
Retained earnings carried forward

59
2,300
339

53
2,200
363

(5)
(100)
23

412
540
[8.50 yen]

Notes: 1. Reserve for special depreciation, reserve for advanced depreciation on fixed assets and reserve forlosses on overseas investments are reserves under the Special Taxation Measures Law.
2. On December 10, 2003, the Company appropriated 699 million yen for interim dividends (11.00 yen
per share).

Net Sales by Division and Proportion to the Total(Millions of yen)
PeriodDivision

From April 1, 2002
To March 31, 2003

From April 1, 2003
To March 31, 2004

AmountAmountRatio%

Change inAmount

Ratio
%

Ratio
of
change%Medical Division

73,48573.0

76,179

71.8

2,694

3.7

Pharmaceutical Division

13,08913.0

16,018

15.1

2,928

22.4

Glass & Materials Division

10,942

10.9

11,919

11.2

977

8.9

Other

3,147

3.1

2,002

1.9

(1,145)(36.4)

Total

100,664100.0

106,119

100.0

5,455

5.4

[Exports, inclusive][30,300]

30.1[33,106]31.2[2,805]

9.3- 31 -

Significant Accounting Principles
1. Valuation standards and methods for 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 of shareholders’ equity.
Costs of sales are determined by the weighted average method.)
Securities without market quotations:
Valued at cost by the weighted average method
2. Valuation standards and methods for inventories
Merchandises, Finished products and Work in process:Valued at cost by the weighted average method
Raw materials and Supplies:
Valued at cost by the First-In First-Out method
3. Method of depreciation and amortization for fixed 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 attached structures), are depreciatedby 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 the straight-line method for theperiod during which it is available in the Company (5 years).
Long-term prepaid expenses
Straight-line method
Periods of amortization are based on the same standards as provided by the Corporate
Income Tax Law.
4. Accounting method for deferred assets
Bond issue cost:
Expensed at the time of expenditure
5. Standards for recognition of allowances
Allowance for doubtful accounts:
In order to cover the probable losses on collection, an allowance for doubtful accounts
is provided for the estimated amount of uncollectible receivables. For general
receivables, the amount of provision is based on historical write-off rates, and for the
doubtful receivables, based on the specific collectibility.
Accrued bonuses:
In order to cover the payment of bonuses to employees, an allowance is provided forthe estimated amount of bonuses to be paid, prorated for the consolidated accounting
period.
Accrued pension and severance 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 in accounting 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.
- 32 -

6. 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.
7. Other significant basis on preparation for financial statements
Consumption Taxes
Consumption taxes are excluded from revenues and expenses accounts.

(Lease Transactions)
Finance lease transactions, except for those where ownership of the leased assets is deemed to betransferred to the lessee
Year ended
March 31, 2003

Acquisition price equivalentYear ended
March 31, 2004
(Millions of Yen)
899
612
286

Book value equivalent

910
595
315

Lease commitments
Due within one year
Due after over one year
Total

171
272
443

159
245
405

Lease payments
Depreciation equivalentInterest expense equivalent

208
191
12

205
184
10

Accumulated depreciation equivalent

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
over the lease term by the interest method.

- 33 -

Notes to the Interim Financial Statements(Balance Sheet)
As ofMarch 31, 2003
1. Accumulated depreciation of tangible fixed assets(Millions of yen)
As ofMarch 31, 2004

44,39045,250

Short-term receivables

9,003

8,872

Long-term receivables

15,673

18,791

Short-term payables

9,666

10,196

Buildings

6,010

5,590

Land

2,714

2,714

4. Obligations under guarantee contracts

22,922

15,657

5. Obligations as a co-surety

2,083

1,917

35

51

232,645 shares

264,938 shares

2. Balances with related companies

3. Pledged assets

6. Notes receivable discounted
7. Number of treasury stock
Common stock
8. Contribution for subscription of new shares, paidon the balance sheet date, included in stocks ofrelated companies

Stocks of relatedcompanies included
501 million yen ofcontribution forsubscription of newshares of Takeshima
Pharmaceutical Co.,
Ltd.

---

(Statement of Income)(Millions of yen)
From April 1, 2002
To March 31, 2003

From April 1, 2003
To March 31, 2004

Sales

14,072

13,977Purchases

28,12929,399Other operational transactions

97

133

Non-operational transactions

859

1,135

1,960

2,316

1. Amounts of transactions with related companies

2. Research and development expenses included inselling, general and administrative expenses(Securities)
As of March 31, 2003 and 2004, there was no stock issued by subsidiaries or affiliated companies thathave market quotations.

- 34 -

(Deferred Taxes)
1. Major components of deferred tax assets and liabilities
As ofMarch 31, 2004
(Millions of yen)
Deferred tax assets (current)
Accrued enterprise tax
Accrued bonuses
Accrued price reductions
OthersGross deferred tax assets (current)
Offset with deferred tax liabilities (current)
Net deferred tax assets (current)

125
285
246
56
713
(32)
681

Deferred tax liabilities (current)
Reserve for special depreciation
Gross deferred tax liabilities (current)
Offset with deferred tax assets (current)
Net deferred tax liabilities (current)

32
32
(32)
-

Deferred tax assets (fixed)
Valuation difference of land
Difference in recorded amount of stock of relatedcompany from tax basis
Loss on devaluation of stock of related company
Excess of allowance for doubtful accounts overtax-allowable amount
Excess of accrued pension and severance cost overtax-allowable amountBad debt losses
OthersGross deferred tax assets (fixed)
Offset with deferred tax liabilities (fixed)
Net deferred tax assets (fixed)

511
117
49
1,208
(1,208)-Deferred tax liabilities (fixed)
Reserve for special depreciation
Valuation differences of other securities
Gross deferred tax liabilities (fixed)
Offset with deferred tax assets (fixed)
Net deferred tax liabilities (fixed)

98
7,223
7,321
(1,208)
6,113

149
193
68
119

2. Reconciliation of the difference between statutory tax rate and effective tax rate after adoption oftax-effect accounting
This note is omitted, because the difference between statutory tax rate and effective tax rate after
adoption of tax-effect accounting is less than 5% of statutory tax rate.

- 35 -

Changes in Directors and Corporate Auditors
1. Change in representative directors
N/A

2. Changes in other directors and/or corporate auditors
Retiring director (scheduled to retire on June 29, 2004)
Kiyoshi Fukui, director- 36 -