Our COMFORT PROPOSAL direct marketingbusiness offers a broad rangeof quality products

TextilesIn fiscal 1999, ended March 31, 1999, theJapanese textile industry faced an extremely difficult business environment,
due mainly to a sharp drop in consumer
spending and depressed selling prices.
In response, the Textile Division accelerated its efforts to develop new products
and intensify sales activities, and sought toreduce inventory and cut production, sales
and general administrative costs.
Despite these efforts,
lower selling prices and adrop in production volume, raising unit costs, adversely affected the Textile
Division’s performance.
Sales of the Textile Division
totaled ¥81,786 million(US$682 million), down

7.6% from fiscal 1998 andaccounting for 50.3% of
total sales, down 1.6 percentage points. Domestic
sales decreased 6.4% to¥73,158 million (US$610million), and export sales
were down 16.2% to ¥8,627 million(US$72 million).
Domestic sales of yarns, knitted products, and household textiles were generally
weak due to lower consumer spending. However,sales of specialty yarns,
originally-developed yarns,and knitted products targeting young consumers andchildren showed somegrowth. Export sales oflightweight textiles wereEntry at Annual Nisshinbo
Fashion Contest

10strong in the first half as we
took advantage of a depreciation of the yen. They decreased in the second half as
the yen appreciated and demand in the U.S. and Europe consequently weakened. Sales of materials for shirts, casual
wear and uniforms were also low due todepressed demand, but sales of SSP shirt
materials remained at the same level as thatof fiscal 1998. SUPER SOFT materials forcasual wear showed steady sales growth.
Demand for basic blue denim was weak
globally, but sales of SUPER SOFT denim
held up, so our total sales in this segment
decreased only slightly.
Domestic and overseas sales of
MOBILON spandex for panty hose wereweak, though there was an upturn inOur disc brakes are renowned
for their quality

Japan toward the end of fiscal 1999. Domestic sales of woven textiles and sales ofstretch textiles in the U.S. and European
markets increased. Overall sales in this segment increased slightly.
We expanded the range of applicationsof OIKOS non-woven all-cotton fabrics inthe fields of household goods and medical materials, including sanitary materials,
wet towels, gauze materials and operatinggowns. We met a steady rise in demand for
OIKOS in the agricultural materials field,
such as for seedbeds.
We ran a strong 10th anniversary sales
campaign for COMFORT PROPOSAL,
our direct marketing business, and sales
increased as a result. Steady sales of ouroriginal SUPER SOFT yarns products also
contributed to the COMFORT PROPOSAL results.

Non-textiles
Sales of the Non-textiles Division, adversely affected bycontinued recession in Japan,
totaled ¥80,876 million(US$674 million), down 1.2%
from fiscal 1998. The ratio ofnon-textiles to total sales was 49.7%, up
1.6 percentage points. Sales of ABS andhousehold paper increased. Export salesof automobile brakes and machine tools
also increased, contributing to a 19.0%
increase in total export sales to ¥6,298
million (US$52 million).
Automobile Brakes
Sales of automobilebrakes, at ¥39,565 million (US$330 million),were almost the same as

for fiscal 1998. Salesof ABS and exports
increased, but thesegains were offset by
the effects of reduced
domestic automobile production.
Sales of friction materials and foundation brakes decreased, as did profit, reflecting the difficult conditions in the industry.
Sales of ABS increased 10.0% to¥14,777 million (US$123 million),
helped by the greater usage of ABS generally and an increase in the number ofcar models fittedwith our ABS.
However, intensifying price competition led to lower
profit.

Our ABS is fitted in the Honda CAPA(©Honda Motor Co., Ltd.)

11We’ve got it covered. AIRLITEFRU high-strength, corrosionresistant glass fiber-reinforced
polyurethane foamMachine Tools
We increased export sales of machine tools,
mainly to the U.S. and European markets.
However, domestic sales decreased due toa reduction in capital investment on thepart of our major client industries. Salesof machine tools decreased 9.2% to ¥7,565
million (US$63 million).
In the customized machine tool field,
delayed capital investment by the automobile industry, one of our major client industries, resulted in lower sales and profit.
Domestic demand for general-purpose
machine tools was sluggish, reflecting therecession in the domestic economy. However, exports increased,
helped by strong demandin the U.S., and overall sales were up.

Our CNC turret punch cell

12

Chemical Products
Sales of chemical products fell
12.5% to ¥10,008 million (US$83million), affected by weakness inthe construction and automobiles
industries, our major client industries.
Polyurethane foams, our majorline in this sector, faced stagnant
demand and both sales and profitdecreased.
We increased our production capacity
for polyurethane elastomers in the second
half of fiscal 1999 in response to an increasein demand, and sales showed a modest
increase. Profit decreased due to a rise indepreciation costs.
We faced an adverse business environment for carbon

products as demandin the semiconductor industry, our major client industry,fell. We responded
by developing new
applications and creating new markets,and sales held up asa consequence. Profit decreased due to adrop in selling prices.
In November 1998, we completed construction of the Chiba Plant’s No. 2 production line for polyurethane foams, and the line
started operations in March 1999. Also inMarch 1999, we completed construction ofa building for the No. 3 production line, intended to further enhance our overall polyurethane foams production capacity. In November 1998, we completed construction of

FLEUVE, newly-developed,
high-quality fine paper

the Tokushima Plant’sNo. 2 production linefor polyurethane elastomers.
PapersSales of papers increased 4.7% to ¥20,131
million (US$168 million).
In the household papers field, sales ofroll products, such as toilet paper andkitchen towels, made from both pulp paper and recycled paper, grew steadily. Their
selling prices rose toward the end of fiscal
1999, compared with mid-fiscal 1999, leading to increases in both sales and profit.
Sales of fine papers decreased and prices
were low, reflecting both the economic recession and intensified competition. Salesand profit were down substantially.
We developed new applications for synthetic papers and made determined andsuccessful efforts toexpand sales. However, excessive development costs affectedprofit, which was almost the same as forfiscal 1998.
In the label printing field, sales of existing products remained weak. Sales of newproducts for a card application increased,contributing to slight increases in bothsales and profit.
OthersSales of this sector totaled ¥3,608 million(US$30 million), an increase of 10.9% overfiscal 1998. Sales broke down as follows:
Real estate leasing ¥2,435 million (US$20million), Computer Color Matching(CCM) systems (CHOSHOKU-SENKA)
and other products ¥1,173 million (US$10million).

In the real estate leasing sector, construction by the lessee of a shopping center on
the land previously occupied by factoryancillary facilities on the site of theShimada Plant was completed in March
1999. At Tosaki, the planning stage has
been completed for a new department
store and shopping mall for the lessee.
These are scheduled to be integrated into
the existing shopping center there in October 2000. At Tokushima, we plan to sella parcel of unused land to the local government. We are also planning to lease another parcel of land at the same location
to a shopping center.

Open for business, the new shopping
center within the Shimada Plant site13Non-Consolidated Operating Results
On a non-consolidated basis, net sales for fiscal 1999, ended 31stMarch, 1999, totaled ¥162,662 million (US$1,356 million), a decrease of 4.5% from fiscal 1998.
During fiscal 1999, the Textile Division faced a difficult businessenvironment due to continuing weak consumer spending and sluggish market conditions, and profit was down substantially. Textile sales
amounted to ¥81,786 million (US$682 million), a decrease of 7.6%
from fiscal 1998 and accounting for 50.3% of total sales, down 1.6
percentage points. Non-textile sales totaled ¥80,876 million (US$674million), a decrease of 1.2% from fiscal 1998 and accounting for 49.7%
of total sales, up 1.6 percentage points. Sales were down for most products, with these decreases owing to weak demand due to the stagnant
economy, and profit was down as a result*.
Cost of sales decreased 3.6% to ¥145,480 million (US$1,212 million). The ratio of cost of sales to net sales increased 0.8 percentage
points to 89.4%. Selling, general and administrative expenses increased 1.1% to ¥16,530 million (US$138 million). Despite a 4.5%
drop in net sales, costs and expenses decreased only 3.2% to ¥162,010
million (US$1,350 million), resulting in a 78.5% decrease in operating income to ¥652 million (US$5 million).
Gain on sales of securities amounted to ¥9,153 million (US$76million). There was a loss of ¥5,422 million (US$45 million) on
devaluation of securities, which included an amount of ¥4,631 million (US$39 million) on equity in Nisshinbo California Inc., a joint
venture textile subsidiary in the U.S. that performed poorly. As aresult, other income (net) increased 493.6% to ¥3,336 million(US$28 million). Income before income taxes was ¥3,988 million(US$33 million), an increase of 10.8%. Income taxes amounted to¥2,050 million (US$17 million). Consequently, net income was¥1,938 million (US$16 million), an increase of 7.2% over fiscal 1998.
Net income per share was ¥8.19 (US$0.07), up ¥0.55 (US$0.005).
Return on equity increased 0.1 percentage point to 1.2%.
The total dividend per share for fiscal 1999 was ¥7.00 (US$0.06),
the same as for fiscal 1998. Cash dividends totaled ¥1,656 million(US$14 million), representing a payout ratio of 85.4%, down 6.2
percentage points. Nisshinbo’s basic policy to maintain dividends
at a stable level remains unchanged.
* For details of divisional results, please see "Review of Operations."

Non-Consolidated Financial Position
Total assets as of 31st March, 1999 stood at ¥273,693 million(US$2,281 million), up 9.6% over fiscal 1998. Despite an increasein time deposits, current assets decreased 4.4% to ¥124,602 million(US$1,038 million), due to a decline in marketable securities, accounts receivable trade, receivables from subsidiaries and affiliates,and inventory. The decreases in accounts receivable trade, and receivables from subsidiaries and affiliates was due mainly to sales ofsuch receivables. Property, plant and equipment increased 0.4% to¥78,214 million (US$652 million). Investments and other assets in14

creased 70.5% to ¥70,877 million (US$591 million). This rise wasdue mainly to increases in investment securities, up ¥7,634 million(US$64 million), investments in and advances to subsidiaries andaffiliates, up ¥8,976 million (US$75 million), and accounts receivable for the sale of the land of Tokyo Plant, ¥12,666 million (US$106million).
Although the current portion of long-term debt decreased, owing to the maturing of convertible bonds, current liabilities increased
2.6% to ¥58,188 million (US$485 million). This increase was due
mainly to a rise in short-term bank loans. Long-term liabilities increased 84.8% to ¥48,335 million (US$403 million), due mainly to
an increase in other long-term liabilities arising from the method
used to account for the proceeds from the sale of the land of TokyoPlant.
Total current and long-term liabilities amounted to ¥106,523 million (US$888 million), up 28.5%. Shareholders’ equity was ¥167,170million (US$1,393 million), up 0.1%. Shareholders’ equity ratio was
61.1%, down 5.7 percentage points. Shareholders’ equity per sharewas ¥707.02 (US$5.89), an increase of ¥0.94 (US$0.008).

Consolidated Results
On a consolidated basis, net sales for fiscal 1999 totaled ¥226,800million (US$1,890 million), down 5.6% from fiscal 1998 and representing 1.39 times the non-consolidated figure, lower than the1.41 recorded for fiscal 1998. Textile sales decreased 8.8% to ¥90,218
million (US$752 million). This was due to weak consumer spending and generally adverse market conditions, the same as for thenon-consolidated results. Sales of automobile brakes increased 0.4%to ¥39,998 million (US$333 million) due to an increase in sales ofABS products. Sales of papers totaled ¥26,933 million (US$224million), an increase of 4.0%, due mainly to a recovery in the market for household papers. Real estate sales totaled ¥3,617 million(US$30 million), down 0.1% from fiscal 1998. Sales of other businesses** decreased 8.2% to ¥66,033 million (US$550 million), due
to the negative impact of the ongoing recession. The ratios of textile, automobile brake, paper, real estate, and other sales to total sales
were 39.8%, 17.6%, 11.9%, 1.6% and 29.1%, respectively.
Operating income was ¥373 million (US$3 million), down 90.6%
and representing 0.57 times the non-consolidated figure, comparedto the 1.31 figure recorded for fiscal 1998. Both the Company andits subsidiaries had poor results. Other income (net) totaled ¥8,231
million (US$69 million), due mainly to gain on sales of securities of¥9,220 million (US$77 million).
As a result, net income was ¥4,161 million (US$35 million), an increase of 282.8% and representing 2.15 times the non-consolidated
figure. Net income per share was ¥17.60 (US$0.15). Return on equity
on a consolidated basis increased 1.6 percentage points to 2.1%.
** Other businesses include mechatronics, chemical products, electronic equipment, and otherbusinesses.

( millions of yen)
1994

1995

1996

1997

1998

1999

162,4102,317
2,934
162,442
263,903
61.6
1.8
10,38911,420166,194
4,721
3,067
163,897
267,791
61.2
1.9
16,023
11,416

155,360
910
3,723
165,905
248,48166.8
2.2
17,252
12,143

167,272
3,137
1,968
166,163
250,419
66.4
1.2
10,071
11,281

170,318
3,036
1,808
166,948249,82966.8
1.1
10,502
10,957

162,662
652
1,938
167,170
273,693
61.1
1.2
16,35010,562Per Share (in yen):
Net Income
Shareholders’ Equity
Cash Dividends

12.42
687.337.00

12.97
693.197.00

15.75
701.687.00

8.32
702.767.00

7.64
706.087.00

8.19
707.02
7.00

Number of Employees

6,134

6,051

5,445

5,145

5,102

4,935

219,870
4,252
3,924
194,412
328,881

224,269
5,250
1,708
197,509345,886

216,721
1,100
2,195
198,139325,754

234,268
4,541
2,359
198,758
328,427

240,249
3,989
1,087
199,373
329,102226,800
373
4,161
200,779
359,390

Non-Consolidated:
Net Sales
Operating Income
Net Income
Shareholders’ Equity
Total Assets
Shareholders’ Equity Ratio (%)
Return on Equity (%)
Capital Investment
Depreciation

Consolidated:
Net Sales
Operating Income
Net Income
Shareholders’ Equity
Total Assets

15