F INANCIAL R EVIEW

Operating Results
On a consolidated basis, net sales for fiscal 2000, ended 31st March, 2000,
totaled ¥227,452 million (US$2,166 million), an increase of 0.3% overfiscal 1999.
During fiscal 2000, the textiles segment faced a difficult businessenvironment due to continued weak consumer spending, and was
effected by the liquidation of Nisshinbo California Inc. (NCI), a joint
venture textile subsidiary in the U.S. Textiles sales amounted to ¥83,804
million (US$798 million), a decrease of 7.1% from fiscal 1999 andaccounting for 36.8% of total sales, down 3.0 percentage points.
Operating income recovered, due mainly to a decrease in the price of raw
cotton and our drive to reduce operating costs and selling, general andadministrative expenses. Non-textiles sales totaled ¥143,648 million(US$1,368 million), an increase of 5.2% over fiscal 1999 and accountingfor 63.2% of total sales, up 3.0 percentage points. This increase in nontextile sales was due mainly to good performances in the automobile
brakes, papers and real estate fields. Operating income also increased*.
Cost of sales decreased 2.0% to ¥197,408 million (US$1,880 million).
The ratio of cost of sales to net sales decreased 2.0 percentage points to
86.8%. Selling, general and administrative expenses increased 3.7% to¥25,904 million (US$247 million). As a result, costs and expenses
decreased 1.4% to ¥223,312 million (US$2,127 million). Operating
income increased ¥3,767 million to ¥4,140 million (US$39 million).
Gain on sale of securities decreased ¥3,076 million to ¥6,144 million(US$59 million). Loss on disposal of a segment of a business amounted to¥2,331 million (US$22 million) on NCI’s liquidation. As a result, otherincome (net) decreased 79.4% to ¥1,271 million (US$12 million). Income
before income taxes and minority interests was ¥5,411 million (US$52
million), a decrease of 17.5%. Income taxes in an amount of ¥2,452
million (US$23 million) and minority interests in net income in an
amount of ¥311 million (US$3 million) were deducted. Consequently, net
income was ¥2,648 million (US$25 million), a decrease of 36.4% fromfiscal 1999. Net income per share was ¥11.36 (US$0.11), down ¥6.24.
Return on equity decreased 0.8 percentage points to 1.3%.
The total dividend per share for fiscal 2000 was ¥7.00 (US$0.07), thesame as for fiscal 1999. Cash dividends totaled ¥1,624 million (US$15
million), representing a payout ratio of 61.3%, up 21.5 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.”
Financial Position
Total assets as of 31st March, 2000 stood at ¥344,814 million (US$3,284
million), down 4.1% over fiscal 1999. Current assets decreased 6.4% to¥154,429 million (US$1,471 million). Notes receivable, trade andaccounts receivable, trade each increased, but cash and cash equivalents,time deposits, marketable securities, receivables from unconsolidated
subsidiaries and affiliates, and inventories each decreased. The decreasein marketable securities was due to the transfer of certain securities fromcurrent assets to investments and other assets. Property, plant andequipment decreased 5.7% to ¥106,200 million (US$1,011 million).
Investments and other assets decreased 1.6 % to ¥78,744 million (US$750
million).
Short-term bank loans and the current portion of long-term debt
decreased. Notes and accounts payable, trade increased. As a result,current liabilities decreased 5.5% to ¥91,284 million (US$869 million).
Long-term liabilities decreased 17.0% to ¥50,367 million (US$480
million), due to a decrease in other long-term liabilities arising from themethod used to account for the proceeds from the sale of the land of theTokyo Plant.
Total current and long-term liabilities amounted to ¥141,651 million(US$1,349 million), down 9.9%. Minority interests in consolidated
subsidiaries increased ¥1,668 million to ¥3,037 million (US$29 million).
In fiscal 2000, the Company bought back a total of nine million of its
shares for an amount of ¥4,575 million and cancelled them. Shareholders’equity was ¥200,126 million (US$1,906 million), down 0.3%.
Shareholders’ equity ratio was 58.0%, up 2.1 percentage points.
Shareholders’ equity per share was ¥881.01 (US$8.39) an increase of¥37.84.
Cash Flows
Despite gain on sale of investment securities and investments in andadvances to unconsolidated subsidiaries and affiliates and cash and cash
equivalents of newly consolidated subsidiaries, cash and cash equivalents
at year-end decreased ¥2,569 million to ¥33,165 million (US$316
million), due to an increase in capital investments and expenses incurredin payment for purchase of treasury stock and repayment of long-term
debt.
Net cash provided by operating activities decreased ¥9,680 million to¥10,983 million (US$105 million). This was due mainly to a substantial
increase in notes and accounts receivable, trade, and a decrease inincome before income taxes and minority interests.
Net cash used in investing activities decreased ¥1,868 million from fiscal
1999 to ¥10,316 million (US$98 million). This was due mainly to asignificant decrease in payment for purchase of investment securities andinvestments in and advances to unconsolidated subsidiaries andaffiliates, which outweighed an increase in payment for purchase ofproperty, plant and equipment and a decrease in proceeds from sale ofproperty, plant and equipment.
Net cash used in financing activities increased ¥6,908 million to ¥8,796
million (US$84 million). This was due mainly to payment for purchase oftreasury stock and repayment of long-term debt.

S IX-YEAR S UMMARY(millions of yen)

Net Sales
Operating Income
Net Income
Shareholders’ Equity
Total Assets
Shareholders’ Equity Ratio (%)
Return on Equity (%)
Capital Investment
Depreciation and Amortization

1995
224,269
5,250
1,708
197,509345,88657.1
0.9
17,441
13,105

1996
216,721
1,100
2,195
198,139
325,75460.8
1.1
19,925
13,936

1997
234,268
4,541
2,359
198,758
328,42760.5
1.2
12,697
13,266

1998
240,249
3,989
1,087
199,373
329,10260.6
0.5
13,385
13,634

1999
226,800
373
4,161
200,779
359,390
55.9
2.1
23,002
13,411

2000
227,452
4,140
2,648
200,126
344,81458.0
1.3
23,232
14,228Per Share (in yen):
Net Income
Shareholders’ Equity
Cash Dividends

7.22
835.367.00

9.28
838.037.00

9.98
840.627.00

4.60
843.21
7.00

17.60
843.177.00

11.36
881.01
7.00

Number of Employees

8,209

8,127

8,067

8,452

8,452

8,235

Operating Income(Billions of yen)
6

Total Assets(Billions of yen)

Shareholders’ Equity
Ratio (%)

400

80

300

60

Return on Equity
(%)
3

4

2
200

40

100

20

2

1

0

0

0
’95

’96

’97

’98

’99 2000

Capital Investment(Billions of yen)

30

’95

’96

’97

’98

0

’99 2000

Depreciation andAmortization(Billions of yen)

’95

’96

’97

’98

’95

’99 2000Net Income
per Share (Yen)

’96

’97

’98

’99 2000

Shareholders’ Equity
per Share (Yen)

20

20

1,000

15

15

750

10

10

500

5

5

250

20

10

0

0
’95

’96

’97

’98

’99 2000

0

0
’95

’96

’97

’98

’99 2000

’95

’96

’97

’98

’99 2000

’95

’96

’97

’98

’99 2000Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Consolidated Balance Sheets
31st March, 2000 and 1999

(millions of yen)
2000
1999

(thousands of
US dollars)(Note 1)
2000

33,1654,130

35,7349,013$ 315,857
39,333

1,076

12,947

10,24813,47443,801
5,428
8,572
71,275(1,655)69,62043,9601,780
698
154,429

11,91530,543
14,5691,089
58,116(505)
57,611
48,819—897
165,021

128,324
417,152
51,695
81,638678,809(15,762)
663,047
418,667
16,952
6,648
1,470,752

15,77593,591
201,800
719
311,885(205,685)
106,200

14,984
91,487200,394
7,200
314,065(201,467)
112,598

150,238
891,343
1,921,905
6,848
2,970,334(1,958,905)
1,011,429

43,64831,338415,695

25,8432,393
6,860
78,744

34,178—14,50280,018

246,124
22,791
65,333749,943

5,441

1,753

51,819¥ 344,814¥ 359,390$ 3,283,943

ASSETS
Current assets:
Cash and cash equivalents..................................................................................
Time deposits......................................................................................................
Marketable securities (Note 4) ..........................................................................
Receivables
Notes receivable, trade...................................................................................
Accounts receivable, trade .............................................................................
Unconsolidated subsidiaries and affiliates....................................................
Other...............................................................................................................
Less allowance for doubtful accounts ...........................................................
Inventories (Note 3)...........................................................................................
Deferred tax assets (Note 7)...............................................................................
Other current assets............................................................................................
Total current assets....................................................................................

Property, plant and equipment:
Land.....................................................................................................................
Buildings and structures ....................................................................................
Machinery, equipment and tools.......................................................................
Construction in progress ...................................................................................
Less accumulated depreciation ..........................................................................

Investments and other assets:
Investment securities (Note 4)...........................................................................
Investments in and advances to unconsolidated
subsidiaries and affiliates (Note 4)................................................................
Deferred tax assets (Note 7)...............................................................................
Other ...................................................................................................................

Adjustments on foreign currency statement translation................................................................

See Notes to Consolidated Financial Statements.



¥

¥

(millions of yen)
2000
1999

(thousands of
US dollars)(Note 1)
2000

50,2201,279

55,3334,359$ 478,286
12,181

22,559794
4,536
27,889
4,811
3,912
2,135
1,038
91,284

18,773
1,102
5,634
25,509
5,092
3,873
1,527
872
96,565

214,847
7,562
43,200265,60945,81937,257
20,333
9,886
869,371

8,583
22,514
190
19,08050,367

8,916
21,703—30,05860,677

81,743
214,419
1,810
181,714479,686

3,037

1,369

28,924

27,58820,401
152,198
200,187(61)
200,126¥ 344,814

27,58820,401
152,791
200,780(1)
200,779¥ 359,390

262,743
194,295
1,449,505
1,906,543(581)
1,905,962$ 3,283,943

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:
Short-term bank loans (Note 5).......................................................................
Current portion of long-term debt (Note 5) ...................................................
PayablesNotes and accounts payable, trade ..............................................................
Unconsolidated subsidiaries and affiliates ..................................................
Other .............................................................................................................
Employees’ savings deposits .............................................................................
Accrued expenses ..............................................................................................
Accrued income taxes (Note 7) ........................................................................
Other current liabilities.....................................................................................
Total current liabilities ............................................................................

Long-term liabilities:
Long-term debt (Note 5) ..................................................................................
Accrued severance benefits (Note 6)................................................................
Deferred tax liabilities (Note 7)........................................................................
Other long-term liabilities ................................................................................

Minority interests in consolidated subsidiaries...............................................................................

¥¥

Commitments and contingencies (Note 11)
Shareholders’ equity (Notes 9 and 12):
Common stock:
Authorised
2000 — 391,000,000 shares
1999 — 400,000,000 shares
Issued with par value of ¥50 per share2000 — 227,443,939 shares
1999 — 236,443,939 shares.....................................................................
Additional paid-in capital.................................................................................
Retained earnings .............................................................................................
Less shares in treasury.......................................................................................



Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Consolidated Statements of Income
Years ended 31st March, 2000 and 1999

(thousands of
US dollars)(Note 1)
2000

(millions of yen)
2000
1999

Net sales .......................................................................................................................................

¥ 227,452¥ 226,800$ 2,166,209

Cost of sales .......................................................................................................
Selling, general and administrative expenses ..................................................

197,408
25,904
223,312201,447
24,980226,427

1,880,076
246,705
2,126,781

Operating income ...............................................................................................................................

4,140

373

39,4282,428(1,526)
(296)
665
1,271

2,533
(1,780)(2,048)
7,478
6,183

23,124(14,533)(2,819)6,333
12,105

5,411

6,556

51,533

3,591(1,139)
2,452

2,466
—
2,466

34,200(10,848)
23,352

2,959
(311)
2,648

4,090
71
4,161

28,181(2,962)
25,219Costs and expenses:

Other income (expenses):
Interest and dividend income ..........................................................................
Interest expenses ...............................................................................................
Equity in losses of affiliates ...............................................................................
Other, net (Note 10) .........................................................................................

Income before income taxes and minority interests .......................................................................
Income taxes (Note 7)
Current ..............................................................................................................
Deferred .............................................................................................................

Income before minority interests......................................................................................................
Minority interests in net income.......................................................................................................
Net income...........................................................................................................................................

¥

¥

(yen)

$

(US dollars)

Per share:
Net income ........................................................................................................
Cash dividends ..................................................................................................

See Notes to Consolidated Financial Statements.



¥

11.36
7.00

¥

17.60
7.00

$

0.11
0.07

Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Consolidated Statements of Shareholders’ Equity
Years ended 31st March, 2000 and 1999

(millions of yen)
2000
1999

(thousands of
US dollars)(Note 1)
2000¥

27,588¥27,588$ 262,743¥

27,588¥27,588$ 262,743

Additional paid-in capital:
Balance at beginning of year .............................................................................

¥

20,401¥

20,401$ 194,295

Balance at end of year .......................................................................................

¥

20,401¥

20,401$ 194,295

Balance at beginning of year .............................................................................
Adjustment due to the adoption of deferred tax .............................................
Adjustments due to decrease in 2000 and increase in 1999
in consolidated subsidiaries .........................................................................
Adjustments due to decrease in 20%~50% owned affiliates ..........................
Adjustments due to decrease in ownership interest in
20%~50% owned affiliates ......................................................................
Net income ........................................................................................................
Cash dividends ..................................................................................................
Directors’ and statutory auditors’ bonuses......................................................
Retirement of treasury stock.............................................................................

¥ 152,791
4,364¥ 151,385—$ 1,455,153
41,562

(873)
(99)

(959)
—

(8,314)
(943)

(319)
2,648
(1,653)(86)(4,575)¥ 152,198

(48)
4,161
(1,656)(92)—¥ 152,791(3,038)25,219(15,743)(819)(43,572)$ 1,449,505

Common stock:
Balance at beginning of year
(2000 and 1999 — 236,443,939 shares).......................................................
Balance at end of year
(2000 — 227,443,939 shares; 1999 — 236,443,939 shares)........................

Retained earnings:

Treasury stock at cost:
Balance at beginning of year .............................................................................
Add: acquired ....................................................................................................
Balance at end of year .......................................................................................

(¥
(¥

1) (¥
(60)
61) (¥

1) ($
—
1) ($

10)
(571)
581)

See Notes to Consolidated Financial Statements.

Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
Years ended 31st March, 2000 and 1999

(millions of yen)
2000
1999

Cash flows from operating activities:
Income before income taxes and minority interests ...................................................
Adjustments to reconcile net income to net cash provided by operating activities:
Income taxes-paid.................................................................................................
Depreciation and amortization............................................................................
Equity in losses of affiliates ..................................................................................
Provision for doubtful receivables .......................................................................
Provision for severance benefits ..........................................................................
Payment of severance benefits .............................................................................
Directors’ and statutory auditors’ bonuses paid .................................................
(Gain) loss on sale of property, plant and equipment ........................................
Gain on sale of marketable securities...................................................................
Gain on sale of investment securities and investments inand advances to unconsolidated subsidiaries and affiliates ...........................
Write-down of marketable securities and investment securities .......................
Loss on disposal of a segment of a business ........................................................
Other .....................................................................................................................
Changes in operating assets and liabilities:
Receivables ...........................................................................................................
Inventories ............................................................................................................
Payables .................................................................................................................
Other......................................................................................................................
Net cash provided by operating activities .........................................

¥Cash flows from investing activities:
Proceeds from sale of property, plant and equipment ................................................
Proceeds from sale of marketable securities.................................................................
Proceeds from sale of investment securities and investments
in and advances to unconsolidated subsidiaries and affiliates................................
Payment for purchase of property, plant and equipment ...........................................
Payment for purchase of marketable securities ...........................................................
Payment for purchase of investment securities andinvestments in and advances to unconsolidated subsidiaries and affiliates ..........
Decrease in loans receivable..........................................................................................
Decrease (increase) in time deposits ............................................................................
Other, net .......................................................................................................................
Net cash used in investing activities ...................................................

5,411

¥

6,556

(thousands of
US dollars)(Note 1)
2000$

51,533(3,032)
14,228
296
849
1,986
(1,718)
(92)
33
(733)

(2,238)13,411
2,048
10
1,889
(1,449)(92)(5)(1,848)(28,876)
135,505
2,819
8,086
18,914(16,362)(876)
314(6,981)(5,411)
657
2,331
(336)

(7,372)
810
—
(780)

(51,533)
6,257
22,200(3,200)(11,044)
4,092
3,583
(117)
10,983

6,992
3,816
(814)
(271)
20,663(105,181)
38,972
34,124(1,115)
104,600

569
1,405

14,377
9,938

5,419
13,381

13,381(24,447)
(449)

7,780
(15,481)(4,932)

127,438(232,829)(4,276)(1,607)(2,039)3,159(288)(10,316)(23,404)
(147)
(193)
(122)
(12,184)(15,305)(19,419)30,086(2,743)(98,248)

Cash flows from financing activities:
Proceeds from issuance of long-term debt...................................................................
Repayment of long-term debt.......................................................................................
Increase (decrease) in other long-term liabilities ........................................................
Increase (decrease) in short-term bank loans ..............................................................
Cash dividends paid ......................................................................................................
Payment for purchase of treasury stock .......................................................................
Other ..............................................................................................................................
Net cash used in financing activities ..................................................

1,455(3,495)3,130(26,496)

13,857(33,285)(519)(1,653)(4,575)(9)(8,796)23,134(1,656)——(1,888)(4,942)(15,743)(43,572)(86)(83,771)

Effect of exchange rate changes on cash ...........................................................................................
Net increase (decrease) in cash and cash equivalents......................................................................
Cash and cash equivalents of newly consolidated subsidiaries at beginning of year...................
Cash and cash equivalents at beginning of year...............................................................................

(336)(8,465)
5,896
35,734

(39)
6,552
66
29,116(3,200)(80,619)
56,152
340,324

Cash and cash equivalents at end of year..........................................................................................

¥

33,165¥35,734$ 315,857

Noncash investing and financing activities :Assets acquired by incurring accounts payable ...........................................................

¥

1,324

¥

2,537

$

See Notes to Consolidated Financial Statements.

12,610Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

1. BASIS OF PRESENTING FINANCIAL STATEMENTS:
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles andpractices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements ofInternational Accounting Standards. The consolidated financial statements are not intended to present the financial position,
results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries andjurisdictions other than Japan.
Effective 1st April, 1999, consolidated statements of cash flows are required to be prepared under Japanese accounting
standards, and such statements for the years ended 31st March 2000 and 1999 are presented herein.
In addition, the accompanying footnotes include information which is not required under generally accepted accounting
principles and practices in Japan but is presented herein as additional information.
The United States dollar ($) amounts included herein are given solely for convenience and are stated, as a matter ofarithmetical computation only, at the rate of ¥105 = $1, the approximate exchange rate at 31st March, 2000. The translations
should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be,converted into United States dollars.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:(a) Basis of consolidation
The accompanying consolidated financial statements include the accounts of Nisshinbo Industries, Inc. (“Nisshinbo”) and its
majority-owned subsidiaries (for the year ended 31st March 1999).
Effective 1st April, 1999, the Company and its consolidated subsidiaries changed its consolidation scope from the applicationof the ownership concept to the control concept.
Investments in 20%~50% owned affiliates were accounted for by the equity method.
Intercompany transactions and accounts have been eliminated.
(b) Foreign currency transactions
Short-term receivables, payables and short-term bank loans in foreign currencies are translated into Japanese yen at the current
exchange rates as of the balance sheet dates.
Investments in and advances to subsidiaries and affiliates in foreign currencies are translated at the historical rates effective at
the dates of transaction from which such accounts were originated.
(c) Foreign currency financial statements
Assets, liabilities, income and expenses of foreign subsidiaries are translated into Japanese yen at the current exchange rates asof the balance sheet date.
(d) Cash and cash equivalents
In reporting cash flows, Nisshinbo and its consolidated subsidiaries consider cash and time deposits with maturities of six
months or less to be cash and cash equivalents. Such time deposits may be withdrawn on demand without diminution ofprincipal.
(e) Investments
Current and non-current portfolios of marketable debt and equity securities are stated at the lower of cost or market. Other
investments are stated at cost.
(f) Inventories
Inventories are stated principally at the lower of cost or market, cost being substantially determined by the average cost
method.
(g) Property, plant and equipment
Property, plant and equipment is stated at cost. Depreciation is computed principally on the declining balance method overtheir estimated useful lives.
(h) Accrued severance benefits
The annual provision for severance payments is calculated to state the liability at the amount that would be required if all
employees eligible for severance payments should terminate their employment at the balance sheet date, less amounts funded.
With minor exceptions, such provision includes those for directors and statutory auditors of Nisshinbo and its consolidated
subsidiaries. Normal and prior service costs of Nisshinbo and its consolidated subsidiaries’ non-contributory pension plans arecharged to income and funded currently.

(i) Income taxes
Effective 1st April, 1999, Nisshinbo and its consolidated subsidiaries adopted an accounting method for the allocation ofincome taxes based on the asset and liability method. The cumulative effect of the application of interperiod tax allocation inprior years in the amount of ¥4,364 million ($41,562 thousand) is included as an adjustment to retained earnings as of 1st April,
1999. Such cumulative effect is calculated by applying the income tax rate stipulated by enacted tax laws as of 1st April, 1999.
Deferred income taxes are recorded to reflect the impact of temporary differences between assets and liabilities recognized forfinancial reporting purposes and such amounts recognized for tax purposes. These deferred taxes are measured by applying
currently enacted tax laws to the temporary differences.
3. INVENTORIES:
Inventories at 31st March, 2000 and 1999 were as follows:

Finished products..............................................................................................................
Work in process.................................................................................................................
Materials and supplies.......................................................................................................

¥¥(millions of yen)
2000
1999

(thousands of
US dollars)
2000

26,711
8,533
8,716
43,960$ 254,390
81,267
83,010$ 418,667¥¥

29,832
8,691
10,296
48,8194. MARKETABLE EQUITY SECURITIES:At 31st March, 2000 and 1999, the aggregate cost and market value of current and non-current portfolios of marketable equity
securities included in marketable securities, investment securities and investments in unconsolidated subsidiaries and affiliates
were summarised as follows:(thousands of
US dollars)
2000(millions of yen)
2000
1999

Current portfolios:
Cost and carrying amount ............................................................................................
Market value ..................................................................................................................
Non-current portfolios:
Cost and carrying amount ............................................................................................
Market value ..................................................................................................................

¥

571
1,571

¥

58,341
202,975

12,67742,872$

45,983
129,630

5,438
14,962555,629
1,933,095

5. SHORT-TERM BANK LOANS AND LONG-TERM DEBT:
Short-term bank loans at 31st March, 2000 and 1999 were principally represented by 180 to 365 days notes issued by Nisshinbo
and its consolidated subsidiaries to banks. The annual interest rates applicable to the short-term bank loans at 31st March, 2000
and 1999 were 0.8% to 8.8% and 0.7% to 8.8%, respectively.
Long-term debt at 31st March, 2000 and 1999 consisted of the following:(thousands of
US dollars)
2000(millions of yen)
2000
1999

Long-term debt with collateral:
Loans from banks maturing serially to 2007, ranging from 1.6% to 4.7% ................
Non-interest bearing loan from a governmental institutematuring serially to 1999 ..........................................................................................
Long-term debt without collateral:
Loans from banks maturing serially to 2005, ranging from 1.4% to 6.6% ................
8.3% notes, due in 1999 ................................................................................................
Capital lease obligations, due through 2010 ................................................................

¥

Less current portion ..........................................................................................................



¥

1,562

¥

1,590

$

14,876

—

107

—

2,539
—
5,761
9,862
(1,279)
8,583

2,089
3,519
5,970
13,275(4,359)8,916

24,181—
54,867
93,924(12,181)$ 81,743¥

Annual maturities of long-term debt were as follows:Year ending 31st March,
2001............................................................................................................................
2002 .........................................................................................................................................
2003............................................................................................................................
2004............................................................................................................................
2005 and thereafter ...................................................................................................

(millions of yen)¥¥(thousands of US dollars)

1,279
994
968
2,212
4,409
9,862

$

$

12,181
9,467
9,219
21,067
41,99093,924

At 31st March, 2000 and 1999, net book value of assets pledged as collateral for short-term bank loans and long-term loans
from banks and a governmental institute was as follows:(thousands of
US dollars)
2000(millions of yen)
2000
1999

Property, plant and equipment ........................................................................................
Investment securities.........................................................................................................

¥

7,341
—
7,341

¥

¥
¥

4,559
85
4,644

$
$

69,914—
69,914

6. RETIREMENT AND PENSION PLANS:
Under most circumstances, employees terminating their employment are entitled to lump-sum severance payments based on
the rate of pay at termination, years of service and certain other factors.
Provisions for severance payments charged to income for the years ended 31st March, 2000 and 1999 were ¥1,986 million($18,914 thousand) and ¥1,889 million, respectively.
In addition to the lump-sum severance payments described above, most employees are covered by Nisshinbo and its
consolidated subsidiaries’ non-contributory pension plans. Pension costs charged to income for the years ended 31st March, 2000
and 1999 were ¥383 million ($3,648 thousand) and ¥347 million, respectively.
7. INCOME TAXES:
The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at
31st March, 2000 are as follows:
millions of yen

Deferred tax assets:
Property, plant and equipment ................................................................................
Tax loss carryforwards.........................................................................................................
Allowance for doubtful accounts......................................................................................
Accrued employees’ bonuses....................................................................................
Accrued severance benefits.......................................................................................
Other..........................................................................................................................
Less valuation allowance...........................................................................................

¥

617
1,939
493
436
6,288
1,340
(2,259)
8,854

$

$

¥

4,843
28
4,871

$

46,124267
46,391

¥

3,983

$

37,933¥
Deferred tax liabilities:
Deferred gains on sale of property ...........................................................................
Other .......................................................................................................................................

Net deferred tax assets.......................................................................................................

thousands of US dollars

¥

5,876
18,467
4,695
4,152
59,886
12,762(21,514)$ 84,324A reconciliation between the normal effective statutory tax rate for the year ended 31st March, 2000 and the actual effective tax
rates reflected in the acompanying consolidated statement of income is as follows:
Normal effective statutory tax rate.....................................................................................................................................
Dividend income not taxable .....................................................................................................................................
Tax benefits not recognized on operating losses of subsidiaries.......................................................................................
Equity in losses of affiliates........................................................................................................................................................
Lower income tax rates applicable to income in certain foreign countries....................................................................
Tax credit.......................................................................................................................................................................................
Other...............................................................................................................................................................................................
Actual effective tax rate........................................................................................................................................................................

42.0%(10.5)
16.6
2.3
(3.7)
(2.6)
1.2
45.3%

8. LEASING ARRANGEMENTS:
The Company and its consolidated subsidiaries lease machinery and other facilities under non-cancellable agreements.
Future minimum rental payments on the above leases are as follows:Year ending 31st March,
2001............................................................................................................................
2002 .........................................................................................................................................
2003 .........................................................................................................................................
2004............................................................................................................................
2005 and thereafter ...................................................................................................

(millions of yen)¥(thousands of US dollars)

610
511
349
120
37

$

5,810
4,867
3,324
1,143
352

Rental expenses charged to income for the years ended 31st March, 2000 and 1999 were ¥733 million ($6,981 thousand) and¥900 million, respectively.

9. SHAREHOLDERS’ EQUITY:The Japanese Commercial Code provides that an amount equal to at least 10% of all cash payments which are made as an
appropriation of retained earnings be appropriated as a legal reserve until such reserve equals 25% of stated value of capital stock.
This reserve is not available for dividends but may be used to reduce a deficit by resolution of the shareholders or may becapitalised by resolution of the Board of Directors.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividend is applicable.
In addition, a semi-annual interim dividend may be paid upon resolution of the Board of Directors, subject to limitations
imposed by the Code.
The computation of net income per share is based on the weighted average number of shares of common stock outstanding
during each fiscal year.
10. OTHER INCOME (EXPENSES) — OTHER, NET:
Other income (expenses) — Other, net consisted of the following:(millions of yen)
2000
1999

Gain (loss) on sale of property, plant and equipment ...................................................
Gain on sale of securities...................................................................................................
Write-down of securities ..................................................................................................
Loss on disposal of a segment of a business.....................................................................
Other, net ..........................................................................................................................

(¥

¥



33)
6,144
(657)
(2,331)(2,458)665¥¥(thousands of
US dollars)
2000

5 ($
314)
9,220
58,514(810)(6,257)—(22,200)(937)(23,410)
7,478 $
6,333

11. COMMITMENTS AND CONTINGENCIES:
Contingent liabilities at 31st March, 2000 and 1999 for trade notes discounted with banks and trade-notes delivered with endorsementsfor payments amounted to ¥1,806 million ($17,200 thousand) and ¥1,540 million, respectively. Contingent liabilities at 31st March, 2000
and 1999 for loans guaranteed amounted to ¥1,539 million ($14,657 thousand) and ¥1,048 million, respectively.
Commitments for capital expenditures outstanding at 31st March, 2000 and 1999 were in the approximate amounts of ¥4,563 million($43,457 thousand) and ¥11,021 million, respectively.
12. SUBSEQUENT EVENTS:
On 29th June, 1999, Nisshinbo’s shareholders authorised the appropriation of retained earnings as follows:(millions of yen)

Cash dividends (¥3.50 per share) .....................................................................................
Directors’ bonuses.............................................................................................................

¥

796
50

(thousands of US dollars)

$

7,581
476

Independent Auditors’ Report
To the Board of Directors of
Nisshinbo Industries, Inc.
We have audited the consolidated balance sheets of Nisshinbo Industries, Inc. and consolidated subsidiaries as of
31st March, 2000 and 1999, and the related consolidated statements of income, shareholders’ equity, and cash flows
for the year then ended, all expressed in Japanese yen. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with auditing standards, procedures and practices generally accepted andapplied in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of Nisshinbo Industries, Inc. and consolidated subsidiaries as of 31st March, 2000 and 1999, and theresults of their operations and their cash flows for the year then ended, in conformity with accounting principles andpractices generally accepted in Japan applied.
The United States dollar amounts shown in the consolidated financial statements have been translated solely forconvenience. We have reviewed this translation and, in our opinion, the consolidated financial statements expressedin Japanese yen have been translated into US dollars on the basis described in Note 1.

Masami Tsukeshiba

Etsuko Nagashima

Certified Public Accountant

Certified Public Accountant

29th June, 2000
Tokyo, JapanB OARDO F

D IRECTORSA N D

S TATUTORY A UDITORS

Chairman

Executive Director

DirectorStanding Statutory Auditor

Akihiro Mochizuki

Tsuyoshi Sugaizumi

Akira Baba

Shinsuke Takahashi

Executive Director

Director

Statutory Auditor

Yoshimasa Hasegawa

Kenji Tasaki

Masaaki Nagai

President

Executive Director

Director

Statutory Auditor

Yoshikazu Sashida

Kohshi Fujino

Takashi Iwashita

Tetsuo Furuya

Executive Director

Director

Statutory Auditor

Hisayoshi Arata

Kunihiro Toda

Hiroshi Yokomizo

Senior Executive Director

Executive Director

Director

Yukio Hosoya

Tadashi Nakai

Yasuo Takeuchi

Senior Executive Director

Executive Director

Director

Hisao Ishikawa

Hiroshi Nogami

Masao Kinoshita
Director

Hajime Takagiwa

C ORPORATE D ATA( A s

M a r c h

3 1 ,2 0 0 0 )Founded:February 5, 1907

Head Office:2-31-11, Ningyo-cho, Nihonbashi, Chuo-ku, Tokyo 103-8650
Tel: 03-5695-8833 Fax: 03-5695-8970
Url: http://www.nisshinbo.co.jp/

Osaka Branch:

2-4-2, Kitakyuhoji-machi, Chuo-ku, Osaka 541-0057
Tel: 06-6267-5501 Fax: 06-6267-5679

Nagoya Branch:

5-2-38, Sakae, Naka-ku, Nagoya 460-0008
Tel: 052-261-6151 Fax: 052-263-9480

Employees:

Parent Company
Subsidiaries
Total

4,752
3,483
8,235

Common Stock:
Par Value:¥50 — US$0.48

Authorized:

391,000,000 shares

Issued:227,443,939 shares¥27,588 million — US$263 million

Shareholders:



o f

16,039O RGANIZATION C HART

General Affairs Division

General Affairs Dept.
Secretary Dept.
Purchasing Dept.

Accounting and Finance Division

Finance Dept.
Accounting Dept.

Personnel Division

Personnel Dept.
Labor Administration Dept.
Health and Medicine Dept.

Engineering Administration Division

Utilities, Construction andEnvironmental Affairs Dept.

Research and Development Division

Research Planning Dept.
Research Administration Dept.
Market Development Dept.
Patent Dept.
Fuel Cell Dept.

Board of Directors

ChairmanPresident

Trademark Committee

Research and Development Center
Policy Board

Textile DivisionFirst Group

Yarns Dept.
Knits Dept.
Shirt Fabrics Dept.

Second Group

Spandex Dept.
Industrial Materials Dept.
Home Textiles Dept.

Third Group

Outer-Wear Fabrics Dept.

Fourth GroupTokyo Textiles Dept.

Board of
Statutory Auditors

Statutory
Auditors

Direct Marketing Dept.
Raw Materials Dept.
Textiles Control Dept.
Marketing Dept.
Engineering Dept.
Textile Research and Development Center
Hong Kong Representative Office

Mechatronics DivisionMarketing Dept.
Engineering Dept.

Brake DivisionMarketing Dept.
Engineering Dept.
Friction Material R&D Dept.

ABS DivisionMarketing Dept.
Research and Development Dept.
Engineering Dept.

Chemical Products DivisionMarketing Dept.
Engineering Dept.
New Carbon Dept.

Paper Products Division

Household Paper Sales Dept.
Specialty Paper Sales Dept.
Engineering Dept.
Color Systems Dept.
Administration Dept.

Osaka Branch

Nagoya BranchBusiness Planning OfficeInformation Systems OfficeEnvironmental Affairs Committee
Advertising Committee
Product Safety Committee

Information Dissemination
Committee

Hamamatsu Plant
Shimada Plant
Fujieda Plant
Toyama Plant
Nagoya Plant
Harisaki Plant
Notogawa Plant
Kawagoe Plant

Miai Plant
Miai Mechatronics Plant
Hamakita Plant
Tokushima Plant
Tokyo Plant
Tatebayashi Plant
Chiba Plant
Fuji PlantN I S S H I N B O A N N UA L R E P O RT 2 0 0 0

2-31-11, Ningyo-cho, Nihonbashi, Chuo-ku, Tokyo 103-8650, Japan
Tel: 03-5695-8833 / Fax: 03-5695-8970
URL: http://www.nisshinbo. co.jp/

Ye a r e n d e d M a r c h 3 1 , 2 0 0 0