AR ENG 2002 2003.Pdf

NISSIN FOOD PRODUCTS CO.,LTD.

ANNUAL REPORT2003 Whenever, Wherever, However Nissin Food Products Co., Ltd. and its Consolidated Subsidiaries Financial Highlights

Thousands of Percent Millions of yen U.S. dollars change For the years ended March 31: 2003 2002 2003 Net sales ...... ¥315,279 ¥308,463 $2,622,953 2.2 Operating income ...... 26,400 24,816 219,634 6.4 Net income...... 14,422 11,936 119,983 20.8

As of March 31: Total assets...... ¥331,994 ¥326,913 $2,762,013 1.6 Shareholders’ equity ...... 233,708 230,582 1,944,326 1.4

Per share (yen, U.S. dollars): Net income...... ¥ 115.65 ¥ 93.91 $ 0.96 23.1 Cash dividends applicable to earnings of the year...... 30.00 30.00 0.25 — Shareholders’ equity ...... 1,892.89 1,835.04 15.75 3.2

Value & performance indicators: 2003 2002 2001 Operating margin (%)...... 8.4 8.0 9.1 Return on assets (%)...... 4.4 3.7 4.8 Return on equity (%) ...... 6.2 5.2 6.8 Inventory turns (times) ...... 13.6 14.1 14.9

Notes: 1. U.S. dollar amounts represent translations of yen, for convenience only, at US$1=¥120.20, the approximate rate prevailing on March 31, 2003. 2. Inventory turns = Cost of sales/Average total inventory

Contents Nissin in Perspective ...... 1 An Interview with President Koki Ando...... 2 Chairman Momofuku Ando...... 6 Review of Operations ...... 7 Instant Noodles...... 7 Chilled and Frozen Foods...... 9 Other Foods...... 10 Building Brands Through R&D...... 11 Review of Global Operations...... 12 Americas...... 13 P.R.C./Hong Kong ...... 14 Elsewhere in Asia...... 16 Europe ...... 17 Community Support, Environmental Protection and Food Safety...... 18 Forward-Looking Statements Board of Directors ...... 20 This report contains forward-looking statements Consolidated Six-Year Summary of regarding the Company’s plans, outlook, strategies and Selected Financial Data...... 21 results for the future that are based on management's Financial Review...... 22 estimates, assumptions and projections at the time of Consolidated Balance Sheets ...... 26 publication. Certain risks and uncertainties could cause Consolidated Statements of Income ...... 28 the Company’s actual results to differ materially from any Consolidated Statements of Shareholders’ Equity...... 29 projections presented in this report. These risks and Consolidated Statements of Cash Flows ...... 30 uncertainties include, but are not limited to, the domestic Notes to Consolidated Financial Statements ...... 31 and international economic circumstances surrounding Independent Auditors’ Report ...... 35 the Company’s businesses, competitive activity, related Worldwide Network ...... 36 laws and regulations, product development programs Corporate Data ...... 38 and changes in exchange rates. Investor Information...... 39 Nissin in Perspective

Net Sales (¥ Billions) Nissin Food Products Co., Ltd. created the instant 315.3 301.1 308.5 290.9 292.5 noodle market with the introduction of Chicken Ramen in 1958. Since then, the Company has steadily developed a series of market-making hit products that offer new value, becoming the leader in the instant noodle market. Examples include the 1971 introduction of Cup Noodle, the world’s first cup-type instant noodle product, and the 1992 launch of

1999 2000 2001 2002 2003 Rao, a technologically innovative long-life fresh-type noodle product that can be stored at room temperature for five months. Operating Income (¥ Billions) In Japan, demand for instant noodles totals 5.3 billion servings 27.6 27.3 26.4 24.7 24.8 annually, with a market scale of ¥511.1 billion, and the global market has grown to 54.7 billion servings annually and continues to expand (according to data from the International Ramen Manufacturers Association). In the Japanese market, where more than 800 new products are launched every year, Nissin’s market share has risen to

1999 2000 2001 2002 2003 more than 40 percent. Supporting the Company’s dominant market position are its strong brand power, innovative and Net Income (¥ Billions) unique technology and product development 16.9

15.5 15.2 capabilities, and safe, reliable, high-quality products. 14.4 Nissin first began production overseas in the U.S. in 1970, 11.9 and today has 25 factories in eight countries worldwide. In the future, the Company will focus on strengthening its operations in North America and The People’s Republic of China, a booming market of 19.1 billion servings

1999 2000 2001 2002 2003 annually, to promote further growth and development.

Nissin Food Products Co., Ltd. 1 An Interview with President Koki Ando

During fiscal 2003, the year ended March 31, 2003, Nissin’s consolidated net sales rose for the fourth consecutive year, increasing 2.2 percent from the previous fiscal year to ¥315,279 million. Operating income was up 6.4 percent to ¥26,400 million, and net income grew 20.8 percent to ¥14,422 million. Net income per share was ¥115.65, compared to ¥93.91 for the previous fiscal year. In the following interview, President Koki Ando explains the factors behind Nissin’s continued success despite falling sales prices and intensifying competition due to prolonged deflationary conditions in Japan. He also discusses Nissin’s plans to continue meeting the expectations of its shareholders and investors.

During fiscal 2003, Nissin achieved increases in both sales and earnings. How were you able to achieve such strong performance amid Japan’s deflationary environment?

The logic of consumers is very simple: they’ll buy delicious products even if they are expensive, but they would much prefer it if those same products were more reasonably priced. The way to escape the effects of deflation is to thoroughly address the needs of consumers. However, the tendency of consumers to seek out lower prices for the same products results in a continuing decline in product prices year after year. This goes hand-in-hand with the ongoing deflationary spiral, resulting in a significant decline in brand value. Therefore, we are continuing to build a global procurement system using our overseas network, and to reduce costs by improving productivity through technological innovation and raising distribution efficiency. At the same time, we are constantly working to accommodate consumers’ willingness to pay higher prices for the things they want by continuing to swiftly offer them innovative products. Nissin GooTa, a hit product that contributed to this year’s results, is an example of the success of these efforts. Marketed under the concept, “A Cup-Type Noodle with Astonishing Ingredients,” Nissin GooTa achieved record-breaking first-year sales, primarily in the convenience store channel, despite a retail price of ¥300, which is high for an instant noodle product. By May 2003, net sales had broken the ¥10 billion mark, making Nissin GooTa a solid hit. There are several reasons behind this success. First, product development has traditionally focused on the quality of noodles and soup, with ingredients as a secondary concern. We moved swiftly to respond to growing consumer demand for improvements in ingredients by developing ingredients that will satisfy everyone in terms of both quality and price. Second, we made use of our retailing system. In particular, by compiling point of sale (POS) data at

2 Nissin Food Products Co., Ltd. President Koki Ando convenience stores, we are able to weed out products that do not post high enough weekly sales figures. Generally, cup-type instant noodle products feature different-colored packaging depending on their flavor, but all of the flavor and ingredient variations for the Nissin GooTa series share the same package design with the prominent red band. Giving all varieties the same appearance regardless of the flavor or ingredients is an innovative marketing strategy that attracts attention to the GooTa brand on store shelves as we continue to launch new additions to the series. This has allowed us to establish the GooTa brand as a fixture in the market.

One of Nissin’s medium-term objectives is to raise its share of the domestic instant noodle market to 50 percent. Are you on track to accomplish this goal?

Nissin’s management objective is to become a company that can provide value-added products to consumers, which will result in stronger earnings. Management needs to be at a certain scale, but it’s not just the size that is the key issue. The important thing is an internal system that generates added value. That means nurturing excellent personnel and assigning them to appropriate positions. Increasing the number of employees who never stop working toward a higher ideal — in other words, people with a sense of crisis who are skilled at predicting future trends and have a good grasp of strategy — will enhance our strength as a corporation. We have set numerical targets for this goal, and raising our share of the domestic instant noodle market to 50 percent will be one indicator of how far we have come toward its achievement.

Speaking of using your internal system and personnel, Nissin introduced initiatives such as weekly accounting and the Strategic Business Unit system some time ago. What effect have they had?

I want all employees to play a managerial role. In 1998, Nissin introduced the Strategic Business Unit (SBU) system as part of efforts to create an environment where all employees can demonstrate creativity and initiative in their work. This is a result-oriented management system designed to engender motivation toward achieving company-wide objectives, characterized by team-based business management. The Company is divided into 187 Strategic Business Units, each composed of six or seven employees, that work to achieve their respective yearly plans. The budget of each SBU is monitored weekly, with incentives provided at the end of the year for successful performance. As a result, employees become more aware of revenues and expenses, and act in a more managerial fashion. In the current fiscal year, the fifth year since the SBU system was introduced, the system will evolve one step further, making company-wide evaluation criteria more profit-oriented and introducing the actual cost method in all divisions through the use of financial accounting rather than management accounting. This helps us get results by working together toward the single objective of profit in every division from production to R&D and sales. We expect this to further strengthen the capabilities of our organization.

The success of Nissin’s overseas operations has been essential to its growth. The Company has been working to improve profitability in North America. Can you discuss your future strategies in this region?

We foresee substantial growth in the North American instant noodle market. In the thirty years since Nissin introduced Cup Noodles in North America, we have concentrated on product quality, enhancing our production facilities, and cultivating new markets. In the North American market, there is a strong tendency for companies to focus on competitive

Nissin Food Products Co., Ltd. 3 pricing of products. Nissin, which instead emphasizes high quality, got off to somewhat of a late start in this regard. However, recently Nissin has seen growth in sales volume and earnings. Total demand in North America has increased to about three billion servings annually, and we anticipate a shift from quantitative expansion to qualitative growth, making it a market with enormous potential. The North American Free Trade Agreement (NAFTA) covers the U.S., Canada and Mexico, and MERCOSUR has also been established to connect markets from Latin America to Brazil. Nissin relies on its strengths in the areas of product development and distribution in order to respond to the diverse needs of consumers in each of these countries.

Nissin has targeted the market of the People’s Republic of China (P.R.C.) as a strategic priority. What are your advantages and challenges in this region, as well as your strategies for the future?

In the P.R.C., demand for instant noodles totals 19.1 billion servings annually, making it one of the world’s largest markets. Last year, Nissin’s 12 subsidiaries and affiliates in the region were organized under Nissin Foods (China) Holding Co., Ltd., thus centralizing product development, marketing activities and personnel development. This has strengthened our competitiveness in the market and enabled us to expand our operations from metropolitan areas, which had been our initial focal point, to the entire country. In May 2003 Nissin reached a basic agreement regarding a business tie-up in the instant noodle market with Uni-President Enterprises Corporation, one of Taiwan’s largest food manufacturers, and equity participation in Kunshan President Enterprises Food Co., Ltd., a company in the Uni-President Group. Uni-President is a world-class company involved in the production of everything from ingredients such as flour, cooking oil and dairy products to all areas of processed foods such as instant noodles and beverages. We hope to gain a competitive edge in the Chinese market through our alliance with our new partner, which has a grand vision for further expansion from Taiwan, with its population of 20 million, into the P.R.C., with a population of 1.3 billion.

As companies face stronger demands from society for food safety and compliance with laws and regulations, Nissin has redoubled its efforts to provide safe products. What are your thoughts on these issues?

The instant noodle industry, which Nissin created, is a relative newcomer to the field of processed foods, and it is also a fiercely competitive industry. There are not yet any established common practices in the industry, so we make a habit of thinking about our products from the standpoint of the customer. Nissin’s theory of management places customer satisfaction as the highest priority. We are deeply conscious of our social responsibility as a good corporate citizen, and formulated the Nissin Code of Ethics in February 2002 to govern the behavior of all directors and employees. Consumers are stricter than any laws, and we at Nissin place their demands first, even ahead of laws and regulations. Of course, we comply strictly with antimonopoly and food labeling laws, and we have established our own more rigorous standards based on marketing concepts that emphasize customer satisfaction, which we systematically apply in all of our business activities. As a result, Nissin has an extremely low likelihood of problems with compliance occurring. Regarding the issue of food safety, the Food Safety Research Institute was established under my direct authority in June 2002, which has further strengthened Nissin’s quality management system and improved the safety of our products. Unlike other sectors of the food industry, the instant noodle industry faces very few food safety issues. There have been hardly any problems with genetically modified organisms (GMO), bovine spongiform encephalopathy (BSE), additives or

4 Nissin Food Products Co., Ltd. pesticides. Nissin has paid close attention to food safety since its establishment, giving us a head start on other industries and enabling us to quickly resolve any problems before they occur. We have also carried out extensive tests to confirm that our products offer no risks from endocrine disruptors. Under these circumstances, safety-related expenses have increased, but these costs have been absorbed through various means such as the development of value-added products and increased sales volume. In addition, Japan’s Food Sanitation Law and overseas and international institutions such as the Food and Drug Administration (FDA), the Federation of Economic Organizations (FEO), and the World Health Organization (WHO) each have their own safety standards. In the future, companies will have to go above and beyond these standards, establishing their own criteria for what constitutes safety. It’s difficult to come up with the right answer immediately, but we are using the latest scientific technology to examine what sort of standards we consider the safest.

Nissin has long stressed the importance of corporate governance. What have the results of this attitude been, and what are the Company’s strategies to strengthen corporate governance in the future?

Nissin is committed to offering safe and reliable products, while ensuring that our operations provide the maximum benefit to our shareholders, consumers and other stakeholders. To achieve this aim, Nissin has already taken steps to revitalize management, in addition to including several directors and auditors from outside the Company in the Board of Directors. In 1998, we established a corporate executive officer system to separate the duties of the Board of Directors, who formulate basic management policies and strategies, and the corporate executive officers, who implement them. This initiative substantially increased the speed of management decision-making. In the future, Nissin will work to strengthen corporate governance under its existing management system.

Do you have a closing message for shareholders?

Founded under the philosophy, “People Can Only Be Content When There Is Enough Food,” Nissin has established a corporate philosophy of bringing enjoyment to people’s lives through the creation and development of new foods. For instant noodles, which are eaten all over the world, the Company will work to develop creative products and technologies in order to offer full satisfaction to all people in all countries. Furthermore, in the face of global competition, Nissin continually works to increase brand value, further strengthen its operating base, and raise corporate value. Nissin places top priority on increasing shareholder value, working to maintain a target payout ratio of 30 percent on a nonconsolidated basis and continue to provide stable dividends. Over the medium- to long-term, we will work to satisfy expectations and increase value for our shareholders and all our stakeholders. I would like to express my appreciation to our shareholders, and hope I can count on their continued support as everyone in the Company joins forces to fulfill our corporate philosophy and achieve our management goals.

Koki Ando President

Nissin Food Products Co., Ltd. 5 Chairman Momofuku Ando

Chairman More than 300,000 people have visited the Momofuku Ando Momofuku Ando Instant Ramen Museum, which celebrated its third anniversary in November 2002.

Innovative Pioneer and Father of an Industry significant effects instant noodles have had on food culture The history of instant noodles, which have become a in the twentieth century. One of the museum’s most part of people’s daily lives throughout the world, began 45 popular features is the opportunity to make instant noodles years ago with the invention of Chicken Ramen by from scratch by hand. Approximately 100,000 people visit Momofuku Ando, Nissin’s founder and chairman. His the museum annually, and the number of visitors passed development in 1971 of Cup Noodle, the world’s first cup- the 300,000 mark in November 2002, the museum’s third type instant noodle product, created a new food that could anniversary. be eaten anytime, anywhere by simply adding boiling water, which not only established a new market but also A Vision for the Instant Noodle Industry and for revolutionized eating habits worldwide. Humankind In developing Chicken Ramen, Mr. Ando concentrated To promote the development of the instant noodle on satisfying five criteria that still form the basis of every industry, in 1964 Mr. Ando founded the Instant Food Nissin product today: good taste, easy storage, Industry Association, which establishes guidelines for fair convenience, reasonable price and safety. A firm belief in competition and product quality. In 1994, in his vision and a process of trial and error led to the commemoration of the Association’s thirtieth anniversary, discovery of a new method of dehydrating noodles Mr. Ando endowed a fund that was used in 1996 to through flash-frying, which is the basis for instant noodle establish an organization within the Association called the manufacturing. The three concepts proposed by Mr. Ando Shokusokai. Every year, the Shokusokai presents an as Nissin’s corporate philosophy — People Can Only Be award named after Mr. Ando in recognition of R&D Content When There Is Enough Food; Intelligent Eating For activities that contribute to the advancement of food Beauty And Health; Creating Foods to Serve Society — as culture through the creation of unique and innovative well as his spirit of innovation remain the foundation for all foods. In May 2002, to encourage further progress in the Nissin’s operating activities and product development. area of food development, the Ando Foundation provided additional support to the Shokusokai. Momofuku Ando Instant Ramen Museum Furthermore, in 1997, in order to improve the quality of Out of a desire to communicate to the younger instant noodles, the Instant Food Industry Association generation, who will be the leaders of tomorrow, that formed the International Ramen Manufacturers Association superior research and development can be accomplished (IRMA) together with major Japanese companies and with a defined goal and tireless commitment to innovation, global instant noodle manufacturers. The current Mr. Ando opened the world’s first museum membership of IRMA includes ten instant noodle commemorating the invention of instant noodles in Ikeda manufacturers from nine countries and regions around the City in November 1999. The museum tells the story of the world, who come together once every two years at the development of Chicken Ramen and Cup Noodle, and World Ramen Summit to discuss common concerns, such includes a replica of the shed where Mr. Ando invented as ideas for improving product quality as well as Chicken Ramen. There are also exhibits related to the environmental and technical issues. instant noodle industry, such as a chronology detailing the

6 Nissin Food Products Co., Ltd. Review of Operations

Chicken Ramen, the Nissin product that created the instant noodle industry, Instant remains a best-seller in Japan. Promotions during 2003 include a campaign Noodles celebrating Chicken Ramen’s 45 years of satisfying consumers.

In Japan, which accounts for approximately 85 percent of Cup-type Noodles Nissin’s sales, the prolonged deflationary economy In the mainstay Cup Noodle line, the Sekai no Aji series of continued. Competition intensified in the retail industry and flavors from countries around the world was a hit, and sales consumption slowed, resulting in further downward pressure of established products were also strong. In addition, sales on prices. Moreover, as consumers have become were strong for the Donbei line of Japanese-style bowl-type accustomed to paying lower prices, they are showing an dishes and Nissin Menshokunin, Chinese-style bowl-type increasing tendency to seek out added value. Nissin dishes that offer the delicious taste of non-fried noodles, for responded by developing high-value-added products that which demand is increasing. offer consumer satisfaction, which quickly demonstrated that Higher-priced menu-type product Nissin Yakibutaya and consumers are receptive to higher-priced products even in a products developed jointly with convenience stores also deflationary environment. continued to perform well. Nissin GooTa, launched in October 2002, has received strong support from customers Pillow-type Noodles for its unprecedented volume of ingredients, despite being a The market for pillow-type noodles in Japan has steadily higher-priced cup-type instant noodle product retailing for contracted over the past few years. However, there has been ¥300 — about double the price of most instant noodle a re-evaluation of delicious, reasonably priced pillow-type products — in a deflationary economy. Sales to March 2003 noodles, and this, coupled with demands from consumers totaled ¥8.5 billion, exceeding initial projections and making for greater safety and reliability from food products, Nissin GooTa a major hit product that has contributed contributed to double-digit growth in sales of long-selling significantly to sales. mainstay brand Chicken Ramen and an increase in domestic In overseas markets, Nissin successfully increased sales sales of pillow-type noodles. volume in all regions, particularly in the People’s Republic of In overseas markets, sales increased substantially in North China (P.R.C.) and North America, supported by the launch America, where Nissin employed aggressive marketing of U.F.O. cup-type yakisoba (fried noodles) in Shanghai, but strategies, and sales of Demae Itcho were solid in Europe. the effect of the stronger yen had a negative effect on sales Consequently, revenue increased on a local currency basis, upon translation. although net sales upon translation were down compared As a result, net sales of cup-type instant noodles with the previous year due to the effect of the stronger yen. increased 0.7 percent compared with the previous fiscal year As a result, net sales of pillow-type instant noodles to ¥202,612 million. decreased 1.0 percent compared with the previous fiscal year to ¥43,262 million. Whenever...... Nissin Strong at 24-Hour Convenience Stores Consumers appreciate that Nissin products are a healthy and delicious meal that’s quick and easy. As shown by the increasing importance of 24-hour convenience stores in Japan’s distribution system, consumers also appreciate the ability to buy a Nissin product whenever they want. Not surprisingly, convenience stores have become a critical distribution channel. We therefore created Nissin GooTa using point-of-sale data from convenience stores and other channel-specific information that helped us to precisely meet consumer needs. This approach has boosted sales in convenience stores, and has supported Nissin’s strong presence in this channel.

Nissin Food Products Co., Ltd. 7 Cup Noodle product together with Psyllium Noodles at outlets More than 17.5 billion servings such as mass retailers and drugstores has created a of core product Cup Noodle have synergistic effect that has resulted in a steady increase been sold worldwide since its launch in sales. In the future, as consumers become even more in 1971. In fiscal 2003, new variations launched in Japan such concerned about health-related issues, demand for these as spicy Korean flavor and Chinese flavor were successful, products is expected to rise. and established products also performed strongly. Strengthening of the Brand Manager System Non-fried Cup-type Noodle Products Introduced in 1990, the Brand Manager System has been a Non-fried cup-type noodle products include key factor supporting Nissin’s ability to promote the the Men-no-Tatsujin series, popular for its high- development of new products through intracompany quality noodles, and a line competition, stimulate the market and cultivate strong brands extension of the Gyoretsu-no- within each of the product lines. In May 2001, the Brand Fight Dekiru-Mise-no-Ramen series, System was added, enabling brand managers to “borrow” and which has built a strong “lend” each other the brands they are responsible for. Nissin is reputation in its chilled format for working to revitalize brands and strengthen brand marketing by its authentic taste. Other examples stepping up the competition among brand managers. are Nissin Yakibutaya, a menu-type product that features a large volume of tasty ingredients, and IT-Driven Proposal-Based Marketing Nissin Menshokunin. Demand for these products continues to The use of mobile phones and laptop computers allows sales rise each year due to their high quality. In addition to these staff to keep important information at their fingertips whether in products, Nissin GooTa was launched in fiscal 2003, gaining the office or on location, from product and customer data and strong support among consumers despite its higher price of sales updates to information on production plans and inventory ¥300. Marketed under the concept, “A Cup-Type Noodle with manufacturing dates. By keeping track of customer purchasing Astonishing Ingredients,” Nissin GooTa, which offers a patterns and trends as well as product sales, Nissin staff can thorough portion of select ingredients, is expected to provide this information to retailers in carrying out proposal- contribute to growth as part of Nissin’s new product strategy. based marketing, which maximizes the profitability of sales activities. Nissin’s Shelf Management System, which offers Long-life Fresh Noodle Products marketing proposals to more than 150 retail chains, substantially The Rao series celebrates its tenth increased the efficiency of sales operations during 2003 by anniversary this year. Customers making shelf space data available in a digital format, enabling favorably received a renewal of the sales staff to edit and send the information to clients via e-mail. line, in which the noodles were given In addition, for more flexible and speedy marketing activities, a a firmer texture and the container was new weekly management system for sales and earnings has changed from a slip-off lid to a new been introduced. type of packaging with small holes for quick, simple draining of water. Effective Promotions One of Nissin’s strengths is its effective promotions Jointly Developed Products employing a variety of media. The Company’s activities as an Nissin has continued to add new products and expand official supplier for the 2002 FIFA World Cup™ held in June sales channels since the introduction in 2000 of the Nissin 2002 contributed significantly to sales. Promotions in 2003 Meiten Jikomi series, a line of cup-type noodle products that include campaigns to celebrate the 45th anniversary of Chicken recreates the distinctive flavors of famous ramen shops, Ramen, the world’s first instant noodle product and the basis for developed together with convenience stores. The introduction the establishment of the Company, as well as the 40th of an expanded lineup of flavor variations for products such as anniversary of Nissin Yakisoba, the 35th anniversary of Demae Sumire and Ippudo, which have remained hit products since Itcho, and the 7th anniversary of Ramenyasan. they were launched, contributed to continued sales growth in fiscal 2003. Objectives for Fiscal 2004 Efforts to increase sales will focus on strengthening Foods for Specified Health Use promotional activities, such as the development of various Nissin responded to the increasingly health-conscious campaigns for the 45th anniversary of Chicken Ramen. In attitudes of consumers by launching the Chitosan Noodles addition, for blockbuster product Nissin GooTa, Nissin aims to series to join Psyllium Noodles in its lineup of products firmly establish the new brand by regularly introducing products designated as a Food for Specified Health Use by Japan’s with high added value that will satisfy customers. Ministry of Health, Labour and Welfare. Marketing the new

8 Nissin Food Products Co., Ltd. Chilled and Frozen Foods

Nissin’s broad product lineup of chilled and frozen foods consists largely of During fiscal 2003, Nissin displayed its superiority in the value-added line extensions of popular instant noodle products. domestic market for chilled and frozen foods as it shifted away from low-priced sales toward the development of During fiscal 2003, the three-serving pack of Nissin high-quality products with high added value and worked to Yakisoba fried noodles received an enthusiastic response build a brand-based business that extends established for its improved noodle quality and became a fixture on instant noodle product lines. store shelves, particularly at mass retail outlets, recording In the chilled food business, established product lines substantial sales growth. Sales of mainstay products such generated stable sales, and the three-serving pack of Nissin as Donbei, Ramenyasan and Gyoretsu-no-Dekiru-Mise-no- Yakisoba fried noodles, which offers improved noodle Ramen were also strong. In addition, chilled ingredients quality, saw its sales increase. In frozen foods, sales of were developed under the GooTa brand, as an extension of existing products were strong, and new product Nissin the high-value-added instant noodle product Nissin GooTa. Yakisoba Spicy Sauce also performed favorably. As a Operating income for the segment improved considerably, result, net sales for the chilled and frozen food segment supported by substantial increases in sales as well as totaled ¥39,081 million, an increase of 5.5 percent efforts to reduce operating losses through careful profit compared with the previous fiscal year. management for each item and cost reductions in the areas of materials and distribution. Chilled Foods It was also a year of successful new developments in the Nissin first entered the chilled noodle market twenty chilled foods business. Responding to rising demand for years ago, and has built this business into a profitable and fresh cup-type noodles, particularly at convenience stores, growing operation. Mainstay products include the long- Nissin entered this market with the launch of Nama Cup selling Nissin Yakisoba fried noodle series, Gyoretsu-no- Donbei in June 2002. Nama Cup Donbei has an expiration Dekiru-Mise-no-Ramen, a brand popular for its authentic date two days later than previous products due to the ramen taste, and Ramenyasan, which has achieved a high “Super-Fresh Process,” which combines Nissin’s unique level of recognition thanks to an innovative production blend of basic ingredients and noodle manufacturing process that produces thick, wavy noodles and flavorful technology. Nissin has only recently entered the market and soup full of quality ingredients. Other products extend is already offering innovative new value. By earning popular brands from other formats, such as chilled versions recognition in the field of pre-prepared noodles, which of long-life fresh noodle product Spa-O spaghetti and bowl- dominate the convenience store business, Nissin has type instant noodle product Donbei. established a foothold for full penetration of the market.

However...... Customer Delight in Every Temperature Format However consumers care to enjoy noodles, Nissin has a product that suits their taste. Our offerings cover the full continuum from non-fried instant and long-life fresh noodles to chilled and frozen products that take a bit more time to make in return for even better flavor. As a result, consumers encounter the Nissin brand throughout retail stores, a comprehensive strength enhanced by our effective Shelf Management System for making proposals that bolster retailer profits. Leadership in every temperature format contributes strongly to brand equity, so that consumers tend to choose the Nissin brand that will satisfy them at any given time, rather than selecting a competing brand.

Nissin Food Products Co., Ltd. 9 Nissin has enhanced brand equity by launching chilled versions of several of its leading brands. Nissin’s technological capabilities support success in the chilled segment by allowing the creation of noodles and ingredients that give chilled products an even more authentic taste.

Frozen Foods products have earned a high reputation for use in noodle Frozen food operations in Japan center on line menu items at supermarket delicatessen counters, and extensions of popular noodle products from other formats demand is expected to grow. to generate synergy with instant and chilled lineups. Nissin During fiscal 2004, Nissin aims to capture the leading is working to build its frozen noodle product lineup into a share of the frozen noodle market in urban areas, and to new generation of core products to join the likes of Chicken increase sales while pursuing profitability through cost Ramen and Cup Noodle. reductions and the rationalization of production and Core products include Ramenyasan and the Donbei line distribution. of traditional Japanese noodles such as udon and soba. In fiscal 2003, the performance of a series of regional flavors in the Ramenyasan line contributed to sales. In addition, sales of Donbei Sanuki Udon, part of the Donbei line, increased significantly in the Tokyo metropolitan area due in part to the boom in popularity of Sanuki udon. In the Nissin Yakisoba line, emphasis shifted from box-type noodles to pillow-type noodles, and a positive response to the higher quality led to higher sales. In the institutional sector, Nissin introduced three new products, Hogure Yasui Chukamen #20, Hogure Yasui Hoso Udon #12 and Hogure Yasui Nihon Soba #18. These Nissin’s frozen noodle products have received solid consumer support because of their quality, excellent flavor and convenience.

Other

Nissin’s expanding lineup of cereals, instant soups, snacks and Foods confectioneries, and beverages are generating steady sales growth.

Products in the Other Foods segment include sector, hit product Fruits & Vitamins contributed to cereals, instant soups, snacks and confectioneries, and sales. As a result, net sales for this segment increased beverages. In the snacks and confectioneries sector, 13.9 percent compared with the previous fiscal year to sales of biscuits increased, and in the beverages ¥30,322 million.

10 Nissin Food Products Co., Ltd. Building Brands Through

Research and development revolving around nutrition and flavor has been a key R&D factor in Nissin’s ability to launch hit products. Research and Development Nissin focuses on instant noodles’ unlimited potential to evolve, from innovative noodles, satisfying ingredients and delicious soup to improved packaging. Research and development activities at Nissin are divided competition intensifies, it is necessary to consistently offer between the Central Research Institute, which focuses on fresh ideas. Rather than resting on its laurels, Nissin regularly instant noodles, powdered soups and other new products, the develops improvements and line extensions under the Brand Cryogenic Development Division, which is responsible for Manager System. chilled and frozen foods and other noodle products, and the Technology Development Division, which creates new Products Aimed at Convenience Stores production technologies. Additionally, to ensure an even higher Nissin is developing higher-priced premium instant noodle level of food safety, in June 2002, Nissin created the Food dishes jointly with convenience stores, which are conducting Safety Research Institute by establishing the Central Research aggressive team marketing efforts based on consumer Institute’s Food Safety Center as a more responsive segmentation. During fiscal 2003, Nissin developed new independent body controlled directly by the President. variations for Sumire and Ippudo, which have been hit products since their launch in the previous fiscal year, and launched new Product Development products Homura and Santoka. Nissin will continue working to Instant noodles developed at the Central Research Institute development instant noodle dishes for convenience stores, encompass all genres from Japanese and Chinese to Western- including products created through a tie-up with a TV program style noodles. Based on the solid foundation of Nissin’s strict and a travel magazine’s series on noteworthy noodle shops. quality management system, the Institute uses Nissin’s global procurement system for low-cost, safe and stable purchasing High-Quality, Amazing Ingredients of the noodles, seasonings and ingredients necessary for Under the slogan “Ingredient Innovation = Amazing product development. In developing products, Nissin aims not Ingredients,” Nissin aims to provide unprecedented only to anticipate consumer preferences, but also to contribute improvements in quality, volume and cost. While continually to their health and well-being, with a special interest in working to develop premium products and improve established functional ingredients. ones through higher noodle quality and more flavorful soup, Nissin also focuses on ingredients, based on the awareness Strengthening and Improving Major Brands that instant noodles are constantly evolving. The blockbuster Nissin has established a broad lineup of powerful brands, hit product Nissin GooTa, launched in fiscal 2003, was the including Chicken Ramen, Cup Noodle and Donbei. However, successful result of ingredient technology developed at the as consumer preferences become more diverse and Central Research Institute.

Wherever...... Space Ram Crosses a New Frontier

Research and development has been a consistent source of growth for Nissin, and our push into outer space is opening up new opportunities for people to eat Nissin products wherever they want. The National Space Development Agency of Japan (NASDA) selected Nissin's proposal to conduct experiments on Space Ram, an instant ramen product for astronauts living in space, in the International Space Station. Of the 32 experiments selected by NASDA, Nissin’s proposal was the only one related to food, and Nissin has begun collaborating with NASDA on the development of food products for space.

© NASDA

Nissin Food Products Co., Ltd. 11 Review of Global Operations

P. R.C./Hong Kong Americas The People’s Republic of China (P.R.C.) is a market Total consumption in North and South America has of 19.1 billion servings annually, making it a top reached 5.3 billion servings annually. Expansion of priority in Nissin’s overseas operations. Currently, distribution channels, gains in production efficiency Nissin holds an 80 percent share of the instant and effective allocation of selling expenses noodle market in Hong Kong. The product supported increased sales and continued development, marketing and advertising functions of profitability at Nissin Foods (U.S.A.) Co., Inc. Another Nissin’s seven subsidiaries in the P.R.C. were U.S. subsidiary, Camino Real Foods, Inc., is active in organized into holding company Nissin Foods North America’s frozen Mexican food market. Nissin- (China) Holding Co., Ltd. in October 2001, in order to Ajinomoto Alimentos Ltda. in Brazil maintained its accelerate development of the entire Chinese strong position in an increasingly competitive market. market, and moved forward with the launch of new products.

Great Taste Is an International Language

Elsewhere in Asia Europe India is a market of 230 million servings annually that In Europe, where demand totals 695 million servings is expected to grow, and Indo Nissin Foods Ltd. is annually, flexibility is the key to satisfying the large actively working to conduct promotional campaigns variety of culinary traditions and consumer for major brands and launch new products. In preferences. Nissin Foods B.V. in the Netherlands, Thailand, Nissin Foods (Thailand) Co., Ltd. aims to Nissin’s production base in Europe, holds HACCP capture the leading share of the domestic cup-type and ISO 9002 certification and accreditation from the noodle market, while Nissin-Universal Robina European Food Safety Inspection Service (EFSIS). Corporation, Nissin’s affiliate in the Philippines, Nissin Foods GmbH in Germany is cultivating new focused on launching new products and revitalizing markets throughout Europe. existing ones as a means of increasing sales year- on-year.

12 Nissin Food Products Co., Ltd. Review of Global Operations

Americas While flavors and packaging may vary in order to meet regional tastes, the Cup Noodles brand is a constant throughout the Americas.

Nissin’s first overseas subsidiary, Nissin Foods (U.S.A.) Consolidated subsidiary Camino Real Foods, Inc. (CRF) is a Co., Inc., was established in 1970, creating the North leader in North America’s frozen Mexican food market, with a American market for instant noodles. After introducing Cup product lineup centered on frozen burritos. In 2002, the Noodles in the United States in 1973, Nissin established frozen burrito market grew steadily as it benefited from the production facilities in Los Angeles, California and Lancaster, popularity of Mexican food, but competition intensified with Pennsylvania, which support U.S. sales as well as exports to the entry of major manufacturers into the market. In this Canada, Mexico, Central America, and other countries. challenging operating environment, CRF maintained its During 2002, as demand in the U.S. instant noodle market number-one share at supermarkets, improved efficiency in grew steadily, Nissin Foods (U.S.A.) worked to establish a allocating promotional outlays, and acquired new distribution sales structure tailored to the local market in order to channels. As a result, net sales increased compared with the improve market share and operating income. As a result, the previous year. Operating income also rose year-on-year due company’s sales volume increased at a rate exceeding that to successful efforts to optimize the product mix and reduce of the growth in overall demand due to the steady progress costs. of efforts in fast-growing markets such as one-dollar stores, In 2003, CRF will work to actively develop sales at mass as well as a year-on-year increase in sales of pillow-type and merchandisers and expand sales channels in order to cup-type noodles. Operating income also rose year-on-year, maintain the leading share of the frozen burrito category. supported by the increase in net sales coupled with cost Another priority will be developing export outlets in Central revisions, improvements in production efficiency, and America. effective investment in marketing expenses. Objectives for 2003 include steadily boosting net sales by Brazil tailoring operating activities to local markets, based on sales Nissin-Ajinomoto Alimentos Ltda., a joint venture with strategies that allow for changes in retail conditions. In terms Ajinomoto Co., Inc., has established a powerful position in of production, the company will upgrade plant facilities and the increasingly competitive instant noodle market in Brazil. expand supply capabilities to deal with higher sales, while During 2002, demand for instant noodles in the Brazilian pursuing further cost reductions. In addition, a complete market grew to 1.2 billion servings. Nissin-Ajinomoto review of operations in all divisions, from production and Alimentos maintained a market share of more than 60 sales to distribution and management, will aim to determine percent despite price wars with competitors. In 2002, pillow- where improvements in overall efficiency can be made. type noodle product Cremoso was a steady contributor to

Whenever...... A Major League Player in the United States With the start of the U.S. Major League Baseball season on April 1, 2003, Nissin suited up Cup Noodles in a Los Angeles Dodgers uniform. The Dodgers selected Cup Noodles as their official cup-type instant ramen, and Nissin created shrimp and chicken flavors in a package bearing the Dodgers logo. These special products are available at Dodger Stadium and in the surrounding Los Angeles area. Instant ramen, a product created in Japan, thus joined hot dogs, peanuts and crackerjack as favorite foods to eat whenever people go out to the old ball game.

Nissin Food Products Co., Ltd. 13 sales, and Cup Noodles, which the company began manufacturing and selling in March 2002, received strong support from consumers and exceeded initial sales projections. As a result, net sales increased compared with the previous year. However, a sharp rise in the U.S. dollar against the Brazilian real starting in the middle of the year resulted in higher costs for imported ingredients such as wheat and packaging materials compared with the previous year, which drove manufacturing costs up significantly. Consequently, operating income declined year-on-year. Nissin manufactures Cup Noodles in Brazil, and has added to During 2003, Nissin-Ajinomoto Alimentos will work to this brand with the February 2003 launch of Cup Noodles maintain its large share of the pillow-type noodle segment Creamy-Type (Cup Noodles Cremoso). and to further expand sales in order to firmly establish the presence of Cup Noodles Creamy-Type (Cup Noodles Cremoso) launched in February as well as the rest of the burgeoning Cup Noodles line.

Review of Global Operations

From Beijing in the north to Shanghai in the south, Nissin is P.R.C./Hong Kong steadily expanding mind share in the P.R.C. market.

Together, the People’s Republic of China (P.R.C.) and In Hong Kong, Nissin holds an 80 percent share of the Hong Kong are a market of an estimated 19.1 billion servings instant noodle market and a large share of the frozen food annually, according to 2002 data from the International market as well. During 2002, consumption declined in the Ramen Manufacturers Association (IRMA), and comprise one instant noodle market due to a prolonged downturn in the of the most important regions in Nissin’s overseas strategy. economy. However, consolidated subsidiary Nissin Foods Operations had previously been concentrated in the major Co., Ltd. was able to achieve its projections for net sales and coastal cities of Guangdong, Shanghai and Beijing, but in operating income through efforts to reduce costs, strengthen October 2001, Nissin’s subsidiaries in the region were relationships with retailers and mass merchandisers, develop organized into holding company Nissin Foods (China) a third major product line and cultivate export markets. Holding Co., Ltd. to accelerate development of the entire In 2003, with economic conditions expected to intensify P.R.C. market by consolidating product development, sales further due to the effect of SARS (Severe Acute Respiratory and advertising functions. Syndrome), Nissin Foods aims to promote cooperation with During 2002, the market for instant noodles continued to the Winner Food Products Group and further improve its grow, although the business climate was challenging due to market share by making the most of its competitive edge in falling retail prices caused by a deflationary trend and the market. In addition, continued efforts will be made to intensifying competition. In this difficult environment, Nissin’s strengthen the export business in order to expand sales in initiative to expand into new markets contributed to results the Oriental food markets of North America and Australia. through continued efforts to develop new products, Amid a deflationary trend in the market, consumers in the strengthen marketing, improve production and distribution southern P.R.C. are increasingly seeking out products that efficiency, and reduce costs. offer not only low prices, but also high quality. Zhuhai Golden

14 Nissin Food Products Co., Ltd. Coast Winner Food Products Ltd. managed to expand its share of the southern P.R.C. market in 2002 by targeting wholesalers with sales promotions focused on main product Doll Bowl Mini Cup, while gearing consumer-oriented campaigns at retailers toward middle-market and premium products. In 2003, the company aims to further increase market share by renewing mainstay products Doll Bag Noodles and Doll Bowl Noodles, expanding its sales staff, and strengthening promotional activities at retailers. Guangdong Shunde Nissin Foods Co., Ltd., which also operates in the southern P.R.C., focused on expanding its sales staff to improve selling power and developing the Fun, friendly promotions strengthen ties with consumers and retailers in lower-priced noodle market during 2002. Plans for 2003 Hong Kong, where Nissin holds an 80 percent share of the instant noodle include maintaining profitability by increasing sales of major market. brands Demae Itcho, Cup Noodles and U.F.O. In addition, the company will concentrate on increasing market share increase sales volume by developing effective sales and reducing costs by expanding sales volume through the promotions primarily for U.F.O. and Cup Noodles, which are development of new sales channels in the lower-priced significant contributors to profits. noodle market. Shandong Nissin Foods Co., Ltd., which supplies dried Shanghai Nissin Foods Co., Ltd. recorded an increase in vegetables and other ingredients to Nissin plants, worked to sales volume in 2002 due to efforts to strengthen sales lower costs and improve product quality. In 2003, with the promotions and build an operating base aimed at raising issue of food safety gathering worldwide attention, the brand recognition. During 2003, the company will focus on company will focus on stricter management of the entire strengthening existing brands and begin full-scale growing process by carefully screening the farmers it development of the pillow-type noodle category while purchases from and offering advice on cultivation methods in enhancing follow-up activities at retailers and wholesalers. order to increase product quality. Other core themes include expanding the sales area and In May 2003, Nissin reached a basic agreement regarding opening new sales channels by achieving in-depth a business alliance in the instant noodle market with Uni- penetration of markets in Shanghai and neighboring areas President Enterprises Corporation, a major company in such as Jiangsu and Zhejiang provinces, and developing Taiwan’s food, distribution and retail industry, and equity markets in the cities of nearby areas such as Anhui and participation in Uni-President’s subsidiary Kunshan President Shandong provinces. Enterprises Food Co., Ltd. With total demand at 19.1 billion Nissin Foods (Huabei) Co., Ltd. servings and growing by approximately 10 percent a year, increased its market share in the competition in the instant noodle market of the P.R.C. Beijing area during 2002, continues to intensify. This tie-up will be helpful in building supported by stronger sales of strategic relationships that will give Nissin an edge in the pillow-type noodles and efforts world’s largest market. to build a sales organization. In 2003, the company aims to

Wherever...... Making Nissin the Instant Noodle of Choice in the P.R.C. The P.R.C. is a large country, and Nissin has made excellent progress in covering its various regional markets so that consumers can buy a Nissin product wherever they may be. From Beijing in the north to Hong Kong in the south, Nissin is expanding its coverage of channels, packaging choices and price points to make Nissin the instant noodle of choice in the P.R.C. Nissin’s operations are vertically integrated from ingredient production to retailer under a holding company structure that has increased the efficiency with which the Company serves a widely dispersed retail network. Enhanced sales capabilities and unified brand building programs will also support Nissin’s growth in the critical P.R.C. market.

Nissin Food Products Co., Ltd. 15 Review of Global Operations Elsewhere in Asia In the Philippines, India and Thailand, Nissin bases market- specific consumer offerings on the global Cup Noodles brand. India In India, a country with to improve sales and profits by strengthening sales of pillow- a vast area of land and a type noodles, particularly in the yakisoba category, and population of one billion, investing actively in marketing. the market for instant In Thailand, domestic demand for cup-type instant noodles currently totals noodles is growing in line with the economic recovery. about 230 million Exports to Europe and the U.S. also flourished, and the servings annually. country is becoming one of Nissin’s key bases for export and However, economic OEM supply due to its ability to offer high quality at low cost. growth is projected to In 2002, Nissin Foods (Thailand) Co., Ltd. was supported by spur a rapid increase in a strong export business, despite a challenging operating demand. Indo Nissin environment due to intensive media campaigns waged by Foods Ltd., which is other companies. During 2003, the company aims to capture closely observing these the leading share of the cup-type noodle market by actively demand trends, operates investing in domestic marketing activities. In the export two production facilities business, the company will rely on its advantages of high near the major quality and low cost to develop relationships with new population centers of overseas customers. Delhi and Bangalore and conducts marketing activities throughout the country. During the second half of 2002, the company worked to further stimulate demand by introducing a four-serving package of Top Ramen, while updating the package design of Cup Noodle, the only cup-type product in the market, and expanding into new categories. Initiatives for 2003 will include vigorously conducting promotional campaigns and launching new products.

Other Countries Affiliates in the Philippines, Thailand and Indonesia are also working to develop Nissin’s instant noodle business. The instant noodle market in the Philippines grew strongly, with total demand of some two billion servings. With the continued economic slowdown in the Philippines, overall consumption has decreased, and the market has seen a shift in consumer purchasing patterns from regular-sized cup- type noodles to mini-cup noodles, and from mini-cup Grassroots promotions and effective noodles to pillow-type noodles and other lower-priced product displays have been two keys to Nissin's growing share of the Thai products. Under these conditions, Nissin-Universal Robina instant noodle market. Corporation focused on launching new products and revitalizing the product lineup through renewals of existing products as a means of expanding sales. As a result, net sales increased year-on-year, due to higher sales of Mini Cup Noodles and pillow-type products, especially new product Nissin Yakisoba. During 2003, the company will work

16 Nissin Food Products Co., Ltd. Review of Global Operations Europe Versions of Cup Noodles available in the Netherlands (left) and Germany (right)

Europe is a market that requires a great deal of variety due ideas and taking advantage of all potential business to its diversity of languages, cultures and culinary tastes. opportunities. Furthermore, in light of the growing popularity Nissin’s flexibility in precisely tailoring its products to varying of ethnic foods, the company plans to promote products consumer preferences is a key competitive strength. currently marketed to Asians living in Europe such as Demae Effective marketing and creating an efficient logistics Ramen among the general public. organization remain core management themes in building Nissin’s solid share of the European instant foods market. Two companies work together to conduct Nissin’s operations throughout Europe. Nissin Foods B.V. in the Netherlands develops products for Europe in-market and operates a production facility, and Nissin Foods GmbH in Germany is a sales and marketing organization that supports Nissin’s progress in expanding the European instant foods market. The plant at Nissin Foods B.V. holds HACCP and ISO 9002 certification and accreditation from the European Food Safety Inspection Service (EFSIS), underscoring Nissin’s commitment to offering healthy, high-quality products. Nissin Foods GmbH uses these highly reliable products to open new sales channels and develop untapped markets throughout Europe. During 2002, both sales and earnings grew, supported by the strong performance of Demae Ramen and the acquisition In-market production and marketing capabilities have supported steady increases in Nissin’s presence on the shelves of retailers throughout Europe. of new OEM customers throughout Europe. In 2003, efforts will focus on increasing sales by proposing new product

However...... A Global Product Lineup Tailored to Local Tastes Nissin has 25 factories in eight countries besides Japan (the United States, Brazil, the Netherlands, the P.R.C., Indonesia, the Philippines, Thailand and India). One reason our instant noodle products have become universally popular around the world is our ability to understand and satisfy consumers in various regions. Nissin uses its in-market production capabilities to efficiently customize its products to the local tastes, culinary traditions and eating habits of each country where it does business.

Nissin Food Products Co., Ltd. 17 Community Support, Environmental Protection and Foo

Support for the Next Generation Chairman Ando personally provided the grant that was used to establish the Nissin Sports Promotion Foundation (now the Ando Foundation) in 1983. Since then, Nissin has provided support for a variety of activities through the Foundation, which are based on the relationship between food and sports and aimed at encouraging the healthy development of young children, who hold the key to the future. One of the Foundation’s primary activities is the sponsorship of the Tom Sawyer School, which offers children throughout Japan the opportunity to participate in athletic events and other outdoor activities. The Foundation holds track and field competitions, designed to foster physical strength and a “can-do” spirit through running, the Sports, nature and outdoor activities are key themes at the Nissin- sponsored Tom Sawyer School, which children from all over Japan visit for most basic of sports activities, and also offers scholarship fun and personal growth. programs for disabled children. During fiscal 2003, in response to revisions to the all over Japan attended the awards ceremony and Fundamental Law of Education implemented last year symposium held in January 2003, where they discussed requiring educational facilities to encourage nature-based ideas for reviving outdoor activities in Japan in the twenty- activities, Nissin held the Tom Sawyer School Contest to first century. accept submissions of ideas for activity plans. Of all the entries received, three of the best were selected to receive Protecting the Environment and Safety awards. Educators and physical education instructors from In accordance with the Nissin Environmental Charter implemented in 1999, Nissin helps to protect the environment by developing products with low environmental impact and promoting the shift toward a recycling-oriented society. A broad range of initiatives

includes cutting CO2 emissions to curb global warming, reducing waste output, and complying with the Pollutant Release and Transfer Register (PRTR) Law and the Container and Packaging Recycling Law. All plants in Japan have received ISO 14001 certification for their environmental management systems, and Nissin’s head offices in Osaka and Tokyo obtained certification in March and May 2003, respectively. Nissin is committed to offering safe products and will continue working to protect the environment by designing

The Ando Foundation holds track and field competitions to help young environmentally friendly products, minimizing loss, people develop their strength and determination. reducing waste output, and conserving resources and energy.

18 Nissin Food Products Co., Ltd. d Safety

Nissin publishes an annual Japanese-language environmental report, which is also available on the Company’s web site.

The Shizuoka Plant, which began operations in 1996, is Nissin’s most recently constructed domestic plant. ISO 14001 certification

Ensuring Food Safety testing and evaluation system. With a staff of around 60, the As a manufacturer of foods that contribute to people’s Institute is directly managed by President Ando to ensure health, product safety is Nissin’s foremost concern. Over the quick decision-making and responsiveness to consumers. past several years, companies have had to move quickly to Nissin’s proprietary high-speed inspection method for the respond to a number of issues that have arisen in Japan, bacteria that cause food poisoning has been presented at such as product labeling for allergies, genetically modified scientific conferences, and is highly respected. Other organisms (GMO), bovine spongiform encephalopathy (BSE), research developments are also rapidly being put to use in concern over pesticide residues, the use of antibiotics in quality control at Nissin’s manufacturing plants. At the same livestock, and international labeling standards for food time, all Nissin plants are governed by a strict two-pronged additives. It is important for manufacturers to ensure that quality control system based on the ISO 9000 series of food is processed in a safe environment and keep to a high standards and HACCP procedures. ethical standard. Nissin, which has been committed to food In the future, Nissin will continue to conduct scientific safety since its establishment, established the Food Safety research in order to respond to consumers’ concerns about Research Institute in June 2002 to improve efforts to resolve food safety. these issues by building an advanced inspection, analysis,

Environmental Preservation Costs for Fiscal 2003 (April 1, 2002 to March 31, 2003) (¥ Thousands) Type of Cost Main Activities Investment Cost Pollution Prevention Maintenance of waste water facilities and boilers to reduce pollutants ¥ 38,819 ¥ 320,919 Global Environmental Preservation Energy-saving, reduction of greenhouse gases, CFC measures 17,009 14,614 Resource Recycling Furnace maintenance, repair/ Reduction, recycling of wastes/Reuse of noodle 352,450 306,808 production by-products as animal feed Reducing Environmental Product and packaging recycling Impact of Production under Container and Package Recycling Law 0 224,731 (Upstream/Downstream) Management Activities Environmental management, measurement/ Obtaining, maintaining ISO 14001 certification 0 142,642 R&D Activities Study of reuse of incineration ash as cement material/Development of biodegradable containers 0 3,899 Social Contribution Activities Green, beautification activities 0 390 Dealing with Environmental Damage Assessed charges for fuel oil boiler 0 2,759 Total ¥408,278 ¥1,016,757

Notes: 1. Facilities covered: Four directly-managed domestic plants of Nissin Food Products Co., Ltd., the Central Research Institute, the Food Safety Research Institute, and the Osaka and Tokyo Head Offices 2. Items under “Type of Cost” conform to Ministry of the Environment standards. 3. Only costs that are specifically intended to preserve the environment, or have a clear effect in preserving the environment, are included in Environmental Preservation Costs. 4. Includes the proportion of personnel expenses directly related to environmental preservation.

Nissin Food Products Co., Ltd. 19 Board of Directors

From left: Tokio Sekine, Yukitaka Tsutsui, Hayato Togami, Momofuku Ando, Koki Ando, Shoichi Nakayama, Susumu Nakagawa, Akihide Matsuo (Inset: Seiji Toda, Takayuki Naruto)

Chairman & Representative Director Directors CORPORATE EXECUTIVE OFFICERS Momofuku Ando Yukitaka Tsutsui Nobuyuki Akamatsu In charge of General Affairs, Legal and Corporate Deputy General Manager of Central Research Institute Communications President & Representative Director Kenkichi Morishita Susumu Nakagawa General Manager of Technical Engineering Division Koki Ando General Manager of Central Research Institute Toshio Shigeta Managing Director & Representative Director Tokio Sekine Vice President of Nissin Foods (U.S.A.) Co., Inc. General Manager of Chilled and Frozen Foods Division Hayato Togami Masahiro Sasaki In charge of Corporate Planning and Auditing Akihide Matsuo General Manager of Personnel Division General Manager of Corporate Production Planning Division Managing Director Taiji Matsumura Seiji Toda General Manager of Purchasing Division Shoichi Nakayama Chairman of Nissin Foods (China) Holding Co., Ltd. Ken Sasahara General Manager of Sales Division Takayuki Naruto General Manager of International Division President of Nissin Foods (U.S.A.) Co., Inc. Shunsaku Makizono Mikio Sasaki* General Manager of General Affairs Division President & CEO, Mitsubishi Corp. Takahisa Yanagida Uichiro Niwa* General Manager of Financial Division President & CEO, ITOCHU Corp. Toshihiro Yamada Standing Corporate Auditors General Manager of Food Safety Research Institute Yuichi Terada Masami Nishio General Manager of Corporate Planning Division Masaru Chiba Yasuhiro Matsuyama Corporate Auditors General Manager of Osaka Sales Division Toru Horinouchi Takashi Takahashi General Manager of Shizuoka Plant Hiroshi Takano

*Non-executive director

(As of June 27, 2003)

20 Nissin Food Products Co., Ltd. Nissin Food Products Co., Ltd. and its Consolidated Subsidiaries Consolidated Six-Year Summary of Selected Financial Data

Millions of yen (except per share information) Years ended March 31 2003 2002 2001 2000 1999 1998 For the year Net sales...... ¥315,279 ¥308,463 ¥301,082 ¥292,541 ¥290,878 ¥297,552 Cost of sales...... 160,258 157,663 152,652 150,055 157,871 162,921 Gross profit...... 155,021 150,800 148,430 142,486 133,007 134,631 Selling, general and administrative expenses ...... 128,621 125,984 121,146 114,854 108,332 110,781 Operating income ...... 26,400 24,816 27,284 27,632 24,675 23,850 Other income (expenses) ...... (880) (4,741) (2,388) 21 (5,607) (7,462) Income before income taxes and minority interests . . . 25,520 20,075 24,896 27,653 19,068 16,388 Income taxes ...... 10,901 7,613 9,810 12,094 2,468 7,783 Minority interests in earnings of consolidated subsidiaries ...... 197 526 (117) 40 (271) 34 Equity in earnings of affiliates1 ...... — ————1,113 Net income ...... 14,422 11,936 15,203 15,519 16,871 9,684 Per share Net income ...... ¥ 115.65 ¥ 93.91 ¥ 119.32 ¥ 120.39 ¥ 129.90 ¥ 73.36 Cash dividends applicable to earnings of the year. . . . 30.00 30.00 24.00 27.00 24.00 24.00 Shareholders’ equity...... 1,892.89 1,835.04 1,812.45 1,710.88 1,587.33 1,488.13 At year-end Working capital...... ¥ 60,044 ¥ 71,086 ¥ 45,175 ¥ 74,109 ¥ 90,976 ¥ 75,876 Property, plant and equipment — net...... 87,537 82,444 94,568 96,931 97,093 102,131 Total assets ...... 331,994 326,913 326,196 312,076 288,850 296,196 Total long-term liabilities...... 11,739 11,118 9,464 2,885 3,786 3,722 Total shareholders’ equity ...... 233,708 230,582 230,930 217,992 205,896 194,271 R&D expenses ...... ¥ 2,757 ¥ 2,579 ¥ 2,541 ¥ 2,515 ¥ 2,283 ¥ 3,302 Capital expenditures...... 6,965 6,312 4,891 4,763 10,251 6,154 Value & performance indicators Operating margin (%) ...... 8.4 8.0 9.1 9.4 8.5 8.0 Return on assets (%) ...... 4.4 3.7 4.8 5.2 5.8 3.3 Return on equity (%)...... 6.2 5.2 6.8 7.3 8.4 5.0 Inventory turns (times)2...... 13.6 14.1 14.9 15.3 14.6 14.0 Notes: 1. Equity in earnings of affiliates is included in Other income (expenses) from the fiscal year ended March 31, 1999. 2. Inventory turns = Cost of sales/Average total inventory

21 Financial Review

NET SALES helped keep the year-on-year increase in cost of sales

For fiscal 2003, ended March 31, 2003, consolidated below the rate of increase in net sales. The ratio of cost

net sales of Nissin Food Products Co., Ltd. (the of sales to net sales was 50.8 percent, compared to

“Company”) and its consolidated subsidiaries (together, 51.1 percent for the previous fiscal year.

the “Group”) increased 2.2 percent year-on-year to

¥315,279 million (US$2,623 million). The Company’s Costs and Expenses as Percentages of Net Sales net sales, which accounted for 81.7 percent of Years ended March 31 2003 2002 2001 consolidated net sales, increased 2.6 percent. Sales at Cost of sales ...... 50.8% (-0.3) 51.1%(+0.4) 50.7% SG&A expenses ...... 40.8 (—) 40.8 (+0.6) 40.2 overseas subsidiaries increased in local currencies due Promotional expenses. . . 22.8 (+0.4) 22.4 (-0.6) 23.0 Advertising expenses . . . 4.4 (-0.3) 4.7 (+0.4) 4.3 to enhanced marketing efforts and productivity gains. R&D expenses ...... 0.9 (+0.1) 0.8 (—) 0.8

An increase in the value of the yen against North Note: Figures in parentheses represent change in percentage points from the previous year. American and Asian currencies, however, resulted in a

decrease in overseas sales when translated into yen. SG&A expenses increased 2.1 percent year-on-year,

Sales from overseas operations therefore decreased to or ¥2,637 million, to ¥128,621 million (US$1,070

¥46,976 million (US$391 million). On a local currency million). Advertising and personnel expenses decreased,

basis excluding the currency translation effect, however, due in part to reduced expenses in connection with

overseas sales increased year-on-year. pension benefit obligations included in SG&A expenses.

Promotional expenses rose, but the rate of increase as Net Sales (¥ Billions) a percentage of net sales was lower than in the 2003 43.3 202.6 69.4 315.3

2002 43.7 201.1 63.7 308.5 previous fiscal year. Research and development

2001 44.2 197.4 59.5 301.1 expenses, which are primarily included in SG&A 2000 43.6 188.1 60.8 292.5 expenses, increased ¥178 million to ¥2,757 million 1999 45.2 185.8 59.9 290.9

Pillow-type noodles (US$23 million). Cup-type noodles Other products

Cost of Sales and Selling, General and Operating Income

Administrative (SG&A) Expenses Operating income increased 6.4 percent year-on-

Cost of sales increased 1.6 percent year-on-year, or year, or ¥1,584 million, to ¥26,400 million (US$220

¥2,595 million, to ¥160,258 million (US$1,333 million). million). The ratio of operating income to net sales was

Lower raw material costs and increased productivity 8.4 percent, compared to 8.0 percent for the previous

fiscal year. 22 Operating Income percent for the previous fiscal year. Net income per (¥ Billions) 2003 26.4 share was ¥115.65 (US$0.96), compared to ¥93.91 for

2002 24.8 the previous fiscal year. 2001 27.3

2000 27.6

1999 24.7 Net Income, Dividends & Payout Ratio (¥ Billions; %) 14.4 2003 3.7 25.7 11.9 2002 Other Income (Expenses) 3.8 31.6 15.2 2001 3.1 20.1 Other expenses, net decreased by ¥3,861 million to 15.5 2000 3.4 22.2 16.9 1999 ¥880 million (US$7 million). Interest and dividend 3.1 18.5

Net income income decreased by ¥795 million to ¥1,684 million Dividends Payout ratio (US$14 million). Interest expenses decreased by ¥78 million to ¥49 million. Loss from devaluation of LIQUIDITY AND CAPITAL RESOURCES investment securities decreased to ¥2,649 million Cash Flows (US$22 million) from ¥8,108 million for the previous Net cash provided by operating activities increased fiscal year. The absence of a one-time loss in 1.0 percent, or ¥218 million, to ¥23,028 million connection with the devaluation of land in the previous (US$192 million). Income before income taxes and fiscal year was another factor supporting the minority interests increased by ¥5,445 million, which improvement in other expenses, net. was offset by the absence of the positive adjustment to

cash flow in the previous fiscal year in connection with Net Income the non-cash loss on devaluation of investment Income taxes, after adjustment for deferred income securities. The net effect of these factors and taxes, increased 43.2 percent, or ¥3,288 million, to adjustments to current assets and liabilities resulted in ¥10,901 million (US$91 million). Minority interests in the moderate year-on-year increase in net cash earnings of consolidated subsidiaries totaled ¥197 provided by operations. million (US$2 million), compared to ¥526 million for the Net cash used in investing activities totaled ¥29,031 previous fiscal year. As a result of the factors above, net million (US$242 million); in the previous fiscal year, income increased 20.8 percent, or ¥2,486 million, to investing activities provided net cash of ¥5,434 million. ¥14,422 million (US$120 million). The ratio of net Payment for purchases of investment securities totaled income to net sales was 4.6 percent, compared to 3.9 ¥38,313 million, a result of Nissin’s emphasis on using

23 investment securities in its cash management program. Total Assets & ROA (¥ Billions; %) 4.4 Payment for purchases of property, plant and 2003 332.0 3.7 2002 326.9 equipment and others increased 8.4 percent, or ¥529 4.8 2001 326.2

5.2 million, to ¥6,832 million (US$57 million). 2000 312.1

5.8 Net cash used in financing activities increased 1999 288.9 Total assets ¥2,975 million to ¥10,375 million (US$86 million). The ROA

primary factor in the year-on-year change was the use Current assets decreased 7.1 percent, or ¥10,663 of ¥5,404 million (US$45 million) to repurchase shares million, from a year earlier to ¥139,733 million of Nissin Food Products Co., Ltd. common stock. (US$1,163 million). Primary factors included the Repayment of short-term borrowings by consolidated ¥27,368 million decrease in cash and deposits. Nissin subsidiaries also increased the use of cash in financing shifted cash from deposits to investment securities to activities. Cash dividends paid totaled ¥3,770 million increase cash management efficiency. Marketable (US$31 million). securities also reflected the shift, increasing by ¥16,317 Cash and cash equivalents at the end of the year million to ¥20,697 million (US$172 million). decreased 18.9 percent from a year earlier, or ¥17,240 Working Capital & Current Ratio million, to ¥73,882 million (US$615 million). (¥ Billions; Times) 1.8 2003 60.0

1.9 2002 71.1 Cash Flow Highlights (¥ Millions) 2001 1.6 45.2 Years ended March 31 2003 2002 2001 Net cash provided by 2000 1.9 74.1 operating activities ...... ¥ 23,028 ¥22,810 ¥21,960 1999 2.2 91.0 Net cash provided by (used in) investing activities ...... (29,031) 5,434 (1,149) Working capital Current ratio Net cash used in financing activities ...... (10,375) (7,400) (4,246) Cash and cash equivalents at end of year ...... 73,882 91,122 68,767 Net property, plant and equipment increased 6.2

percent from a year earlier, or ¥5,093 million, to

Assets, Liabilities and Shareholders’ Equity ¥87,537 million (US$728 million). Additions to land and

As of March 31, 2003, total assets increased ¥5,081 buildings and structures in connection with the increase

million to ¥331,994 million (US$2,762 million). Return on in the scope of consolidation, the addition of high-

average total assets (ROA) was 4.4 percent, compared speed production lines to improve productivity and

to 3.7 percent a year earlier. projects to improve product safety further accounted for

a substantial portion of the increase.

24 Investments and other assets increased ¥10,651 The Group had no long-term debt on its balance million from a year earlier to ¥104,724 million (US$871 sheet as of March 31, 2003. Total capital, the sum of million). The addition of ¥12,679 million to investment short-term borrowings and shareholders’ equity, was securities as per the discussions of cash and deposits ¥238,954 million (US$1,988 million), of which above was the primary reason for the increase. shareholders’ equity accounted for 97.8 percent.

Total liabilities increased ¥1,000 million from a year Return on average total shareholders’ equity (ROE) was earlier to ¥91,428 million (US$761 million). Current 6.2 percent, compared to 5.2 percent for the previous liabilities increased marginally to ¥79,689 million fiscal year.

(US$663 million). Working capital decreased to ¥60,044 Total Capital million (US$500 million) from ¥71,086 million a year (1) Shareholders’ Equity & ROE (¥ Billions; %) 6.2 earlier, primarily due to the use of internal capital 2003 233.7 5.2 2002 230.6 resources to fund the share repurchase and the shift of 2001 6.8 230.9

7.3 cash to investment securities. The current ratio 2000 218.0

8.4 decreased to 1.75 to 1 from 1.90 to 1 a year earlier. 1999 205.9 Shareholders’ equity Shareholders’ equity increased ¥3,126 million from a ROE (2) Debt Included in Total Capital year earlier to ¥233,708 million (US$1,944 million). The (¥ Billions) 2003 5.2 calculation of retained earnings increased shareholders’ 2002 7.1 equity by ¥10,914 million. The inclusion of ¥6,700 2001 7.5 2000 6.6 0.3 0.3 million (US$56 million) in adjustment due to revaluation 1999 7.8 0.7 of land as per regulations adopted in the previous fiscal Long-term debt Current portion of long-term debt year and an increase in treasury stock to ¥9,743 million Short-term borrowings

(US$81 million) due to the repurchase of shares of

Nissin Food Products Co., Ltd. had the effect of reducing shareholders’ equity.

Debt/Asset Ratio (Times)

2003 0.275

2002 0.277

2001 0.278

2000 0.287

1999 0.280

25 Nissin Food Products Co., Ltd. and its Consolidated Subsidiaries Consolidated Balance Sheets As of March 31, 2003 and 2002

Thousands of Millions of yen U.S. dollars ASSETS 2003 2002 2003 Current assets: Cash and deposits ...... ¥ 64,264 ¥ 91,632 $ 534,642 Marketable securities ...... 20,697 4,380 172,188 Receivables: Trade notes ...... 231 423 1,922 Trade accounts ...... 36,978 37,051 307,637 Other ...... 1,735 1,267 14,434 Less: Allowance for doubtful receivables ...... (339) (257) (2,820) Inventories (Note 4) ...... 11,896 11,632 98,968 Deferred tax assets...... 3,428 3,720 28,519 Other current assets ...... 843 548 7,014 Total current assets...... 139,733 150,396 1,162,504

Property, plant and equipment (Note 2): Land ...... 30,784 28,178 256,107 Buildings and structures ...... 70,177 65,237 583,835 Machinery and equipment...... 81,099 78,882 674,700 Construction in progress ...... 928 912 7,720 Other ...... 1,992 — 16,573 184,980 173,209 1,538,935 Less: Accumulated depreciation ...... (97,443) (90,765) (810,674) Property, plant and equipment – net ...... 87,537 82,444 728,261

Investments and other assets: Investment securities ...... 80,850 68,171 672,629 Investments in unconsolidated subsidiaries and affiliates...... 8,552 9,294 71,148 Long-term loans to unconsolidated subsidiaries and affiliates ...... 250 250 2,080 Long-term loans ...... 21 21 175 Less: Allowance for doubtful receivables...... (21) (21) (175) Deferred tax assets...... 7,333 8,215 61,007 Deferred tax assets related to revaluation of land (Note 3)...... 4,517 4,684 37,579 Other assets ...... 3,222 3,459 26,805 Total investments and other assets...... 104,724 94,073 871,248

Total assets ...... ¥331,994 ¥326,913 $2,762,013

The accompanying notes to the consolidated financial statements are an integral part of these balance sheets.

26 Thousands of Millions of yen U.S. dollars LIABILITIES AND SHAREHOLDERS’ EQUITY 2003 2002 2003 Current liabilities: Short-term borrowings (Note 5) ...... ¥ 5,246 ¥ 7,056 $ 43,644 Payables: Trade notes ...... 1,472 1,546 12,246 Trade accounts ...... 34,092 33,139 283,627 Other ...... 21,832 22,801 181,631 Accrued expenses...... 5,937 6,391 49,393 Accrued income taxes...... 6,476 6,825 53,877 Other current liabilities ...... 4,634 1,552 38,552 Total current liabilities ...... 79,689 79,310 662,970

Long-term liabilities: Guarantee deposits received ...... 147 184 1,223 Reserve for employees’ retirement benefits ...... 9,769 9,087 81,273 Reserve for directors’ retirement benefits ...... 1,603 1,518 13,336 Other long-term liabilities ...... 220 329 1,830 Total long-term liabilities ...... 11,739 11,118 97,662

Minority interests ...... 6,858 5,903 57,055

Shareholders’ equity: Common stock Authorized – 394,301,700 shares; Issued: March 31, 2003 – 127,463,685 shares March 31, 2002 – 127,463,685 shares ...... 25,123 25,123 209,010 Additional paid-in capital ...... 48,370 48,370 402,413 Retained earnings ...... 175,366 164,452 1,458,952 Adjustment due to revaluation of land (Note 3) ...... (6,700) (6,559) (55,740) Unrealized gain on securities (Note 2) ...... 1,407 1,543 11,705 Translation adjustment account ...... (115) 2,049 (957) Treasury stock, at cost – March 31, 2003 – 4,029,817 shares March 31, 2002 – 1,808,671 shares ...... (9,743) (4,396) (81,057) Total shareholders’ equity ...... 233,708 230,582 1,944,326

Contingent liabilities (Note 7)

Total liabilities and shareholders’ equity ...... ¥331,994 ¥326,913 $2,762,013

27 Nissin Food Products Co., Ltd. and its Consolidated Subsidiaries Consolidated Statements of Income For the years ended March 31, 2003, 2002 and 2001

Thousands of Millions of yen U.S. dollars 2003 2002 2001 2003 Net sales ...... ¥315,279 ¥308,463 ¥301,082 $2,622,953 Cost of sales (Note 8) ...... 160,258 157,663 152,652 1,333,261 Gross profit ...... 155,021 150,800 148,430 1,289,692

Selling, general and administrative expenses (Note 8) ...... 128,621 125,984 121,146 1,070,058 Operating income ...... 26,400 24,816 27,284 219,634

Other income (expenses): Interest and dividend income...... 1,684 2,479 3,240 14,010 Interest expenses ...... (49) (127) (151) (408) Equity in earnings of affiliates (Note 2) ...... 291 526 611 2,421 Loss from devaluation of investment securities...... (2,649) (8,108) (1,848) (22,038) Loss from devaluation of land ...... — (1,086) — — Gain on sales of investment securities ...... 394 1,229 40 3,278 Other, net...... (551) 346 (4,280) (4,584) Income before income taxes and minority interests ...... 25,520 20,075 24,896 212,313

Income taxes: Current...... 10,930 12,147 13,003 90,932 Deferred...... (29) (4,534) (3,193) (241) 10,901 7,613 9,810 90,691 Income before minority interests ...... 14,619 12,462 15,086 121,622 Minority interests in earnings of consolidated subsidiaries...... 197 526 (117) 1,639 Net income...... ¥ 14,422 ¥ 11,936 ¥ 15,203 $ 119,983

Yen U.S. dollars 2003 2002 2001 2003 Per share of common stock (Note 6): Net income...... ¥115.65 ¥93.91 ¥119.32 $0.96 Cash dividends applicable to earnings of the year ...... 30.00 30.00 24.00 0.25 The accompanying notes to the consolidated financial statements are an integral part of these statements of income.

28 Nissin Food Products Co., Ltd. and its Consolidated Subsidiaries Consolidated Statements of Shareholders’ Equity For the years ended March 31, 2003, 2002 and 2001

Thousands of Millions of yen U.S. dollars 2003 2002 2001 2003 Common stock: Opening and closing balance ...... ¥ 25,123 ¥ 25,123 ¥ 25,123 $ 209,010

Additional paid-in capital: Opening and closing balance ...... ¥ 48,370 ¥ 48,370 ¥ 48,370 $ 402,413

Retained earnings: Opening balance ...... ¥164,452 ¥155,636 ¥144,593 $1,368,153 Add: Net income...... 14,422 11,936 15,203 119,983 Retained earnings from consolidation of subsidiaries at the beginning of the year ...... 339 ——2,820 Deduct: Cash dividends paid...... (3,770) (3,058) (3,440) (31,364) Bonuses to directors ...... (62) (62) (69) (516) Decrease due to increase in consolidated subsidiaries ...... — — (651) — Reversal of adjustment due to revaluation of land...... (15) ——(124) Closing balance ...... ¥175,366 ¥164,452 ¥155,636 $1,458,952

Adjustment due to revaluation of land (Note 3): Opening balance ...... ¥ (6,559) ¥—¥—$ (54,567) Add ...... — —— — Deduct ...... (141) (6,559) — (1,173) Closing balance ...... ¥ (6,700) ¥ (6,559) ¥ — $ (55,740)

Unrealized gain on securities (Note 2): Opening balance ...... ¥ 1,543 ¥ 2,604 ¥ — $ 12,837 Add ...... — — 2,604 — Deduct ...... (136) (1,061) — (1,132) Closing balance ...... ¥ 1,407 ¥1,543 ¥ 2,604 $ 11,705

Translation adjustment account: Opening balance ...... ¥ 2,049 ¥ (704) ¥ — $ 17,047 Add ...... — 2,753 — — Deduct ...... (2,164) — (704) (18,003) Closing balance ...... ¥ (115) ¥2,049 ¥ (704) $ (957)

Treasury stock, at cost - March 31, 2003 - 4,029,817 shares: Opening balance ...... ¥ (4,396) ¥ (99) ¥ (94) $ (36,572) Add ...... — —— — Deduct ...... (5,347) (4,297) (5) (44,484) Closing balance ...... ¥ (9,743) ¥ (4,396) ¥ (99) $ (81,057) Total shareholders’ equity ...... ¥233,708 ¥230,582 ¥230,930 $1,944,326

Number of shares of common stock issued (thousands): Opening and closing balance ...... 127,464 127,464 127,464

The accompanying notes to the consolidated financial statements are an integral part of these statements of shareholders’ equity.

29 Nissin Food Products Co., Ltd. and its Consolidated Subsidiaries Consolidated Statements of Cash Flows For the years ended March 31, 2003, 2002 and 2001

Thousands of Millions of yen U.S. dollars 2003 2002 2001 2003 Cash flows from operating activities: Income before income taxes and minority interests...... ¥ 25,520 ¥ 20,075 ¥ 24,896 $ 212,313 Depreciation and amortization ...... 7,459 7,224 7,584 62,055 Amortization of goodwill ...... (154) 577 — (1,281) Increase (decrease) in reserve for doubtful accounts ...... 92 25 502 765 Increase (decrease) in reserve for retirement benefits...... 641 1,526 5,563 5,333 Interest and dividend income ...... (1,684) (2,479) (3,240) (14,010) Interest expenses ...... 49 127 151 408 Equity in earnings of affiliates ...... (291) (526) (611) (2,421) Loss (gain) on disposal and sales of property, plant and equipment . . . . 129 242 (401) 1,073 Loss (gain) on sales of investment securities ...... (204) (1,224) (30) (1,697) Foreign currency exchange (gain) loss ...... 264 (470) (1,596) 2,196 Devaluation of land ...... — 1,086 — — Devaluation of investment securities ...... 2,868 8,535 1,900 23,860 (Increase) decrease in notes and accounts receivable ...... (208) 542 381 (1,730) (Increase) decrease in inventories ...... (723) (458) (405) (6,015) Increase (decrease) in notes and accounts payable ...... 1,090 (3,170) 1,340 9,068 Increase (decrease) in accrued consumption tax...... 81 (168) (170) 674 Bonuses to directors...... (62) (62) (69) (516) Others ...... (2,371) 1,815 (624) (19,725) Subtotal...... 32,496 33,217 35,171 270,350 Cash received from interest and dividend income ...... 1,920 2,517 3,736 15,973 Cash paid for interest expenses...... (49) (127) (151) (408) Cash refund (paid) for income taxes ...... (11,339) (12,797) (17,455) (94,334) Others ...... — — 659 — Net cash provided by operating activities ...... 23,028 22,810 21,960 191,581 Cash flows from investing activities: Payment of funds into time deposits ...... (61) (694) (2,898) (507) Proceeds from redemption of time deposits...... 475 660 22,140 3,952 Payment for purchases of marketable securities ...... (7,001) (4,999) (1,148) (58,245) Proceeds from sales of marketable securities ...... 8,469 7,915 3,182 70,458 Payment for purchases of property, plant and equipment and others . . . . (6,832) (6,303) (4,278) (56,839) Proceeds from sales of property, plant and equipment and others ...... 332 154 2,615 2,762 Payment for purchases of investment securities ...... (38,313) (17,964) (39,161) (318,744) Proceeds from sales of investment securities ...... 13,866 27,206 18,528 115,358 Payment for purchases of additional shares of consolidated subsidiaries and others ...... (16) (577) (145) (133) Others ...... 50 36 16 416 Net cash provided by (used in) investing activities ...... (29,031) 5,434 (1,149) (241,522) Cash flows from financing activities: Proceeds from short-term borrowings ...... 328 119 486 2,729 Repayment of short-term borrowings ...... (2,011) (733) (993) (16,731) Proceeds from issuance of long-term debt...... — —51 — Repayment of long-term debt...... — — (319) — Proceeds from minority shareholdings ...... 497 583 — 4,135 Share repurchase expenses ...... (5,404) (4,297) (5) (44,959) Cash dividends paid ...... (3,770) (3,058) (3,440) (31,364) Others ...... (15) (14) (26) (125) Net cash provided by (used in) financing activities ...... (10,375) (7,400) (4,246) (86,315) Effect of exchange rate changes on cash and cash equivalents ...... (1,075) 1,511 1,571 (8,944) Increase (decrease) in cash and cash equivalents...... (17,453) 22,355 18,136 (145,200) Increase in cash and cash equivalents due to consolidation of additional subsidiaries ...... 213 — 111 1,772 Cash and cash equivalents at the beginning of the year...... 91,122 68,767 50,520 758,087 Cash and cash equivalents at the end of the year ...... ¥ 73,882 ¥ 91,122 ¥ 68,767 $ 614,659

30 The accompanying notes to the consolidated financial statements are an integral part of these statements of cash flows. Nissin Food Products Co., Ltd. and its Consolidated Subsidiaries Notes to Consolidated Financial Statements

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS The accompanying consolidated financial statements of Nissin manner of disclosure, however, have been modified, and the Food Products Co., Ltd. (the “Company”) and its consolidated consolidated statements of shareholders’ equity have been added subsidiaries are basically an English version of those which have for the purpose of this Annual Report. been filed with the Director of the Kanto Local Finance Bureau as In addition to the presentation of Japanese yen figures, which are required by the Japanese Securities and Exchange Law, which may identical with those in the original statements in Japanese, the differ in some material respects from accounting principles and prac- financial statements present monetary information in U.S. dollars, tices generally accepted in countries and jurisdictions other than which has been translated at the rate of ¥120.20=US$1, the Japan. In addition, the Notes to Consolidated Financial Statements approximate rate prevailing on March 31, 2003. It should be noted, include information which is not required under accounting principles however, that this translation is not intended to imply that the generally accepted in Japan but is presented herein as additional amounts shown have been or could have been converted into U.S. information. dollars at that rate. For comparative purposes, the above rate has Accounting policies used for the original statements remain been used throughout the U.S. dollar financial statements. unchanged in this English version. The information disclosed and the

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cial statements. Necessary adjustments are made on significant (a) Principles of consolidation and accounting for investments intercompany transactions that occurred from January 1, 2003 to the in unconsolidated subsidiaries and affiliates closing date for the consolidated financial statements. The consolidated financial statements include the accounts of the Uji Kaihatsu Development Co., Ltd. and Guangyougnan Food Company and its significant subsidiaries, defined as companies over Products (Shenzhen) Co., Ltd. have been included in the scope of which it is deemed to exercise substantial control (together, the consolidation beginning with the fiscal year ended March 31, 2003. “Group”). All significant intercompany balances and transactions have been eliminated on consolidation. (b) Consolidated statements of cash flows Investments in a certain affiliate (a company that is able to exert a For the purposes of cash flow statements, cash and cash significant influence on financial and operating policy decisions) are equivalents comprise cash in hand, deposits held at call with banks stated at their underlying net equity value (using the equity method), and all highly liquid investments with maturities of three months or after elimination of unrealized intercompany profits. less. Investments in other unconsolidated subsidiaries and affiliates Cash and cash equivalents as of the balance sheet dates are carried at cost or less, and the Company writes down invest- consisted of the following: ments of which the value has been permanently impaired. Differences between the cost and underlying net equity of invest- ments in consolidated subsidiaries and other companies accounted Thousands of for using the equity method are charged or credited to income as Millions of yen U.S. dollars they occur. 2003 2002 2003 Consolidated subsidiaries and an affiliate accounted for using the Cash and deposits...... ¥ 64,264 ¥ 91,632 $534,642 equity method in fiscal 2003 are as follows: Time deposits with maturities exceeding three months ...... (91) (510) (757) (Consolidated subsidiaries) Securities redeemable Sapporo Nissin Co., Ltd. Nissin Foods Co., Ltd. within three months ...... 9,709 — 80,774 Nissin F.D. Foods Co., Ltd. Miracle Foods Co., Ltd. Cash and cash equivalents ...... ¥ 73,882 ¥ 91,122 $614,659 Nissin Plastics Co., Ltd. Wing On Foods Co., Ltd. Nissin Frozen Foods Co., Ltd. Guangdong Shunde Nissin Gran Foods Co., Ltd. Foods Co., Ltd. (c) Inventories Nissin Yoke Co., Ltd. Winner Food Products Ltd. Finished goods and purchased goods are principally valued at Nissin Enterprise Corporation Wintai Food cost using the periodic average method. Raw materials and supplies Ajinihon Co., Ltd. Manufacturers Ltd. are principally valued at cost using the recent-purchase method. Nissin Cisco Co., Ltd. Zhuhai Golden Coast Winner Uji Kaihatsu Development Co., Ltd. Food Products Ltd. (d) Derivative financial instruments Nissin Foods (U.S.A.) Co., Inc. Guangyougnan Food Products With the objective of increasing investment efficiency, the Camino Real Foods, Inc. (Shenzhen) Co., Ltd. Company employs variable interest rate-fixed interest rate swap Nissin Foods B.V. Shanghai Nissin Foods Co., Ltd. transactions covering an underlying portion of its securities. Nissin Foods GmbH Indo Nissin Foods Ltd. However, as a matter of policy the Company does not enter into (Affiliate accounted for using the equity method) derivatives transactions for short-term trading or speculative purpos- Nissin-Ajinomoto Alimentos Ltda. es. In addition, the Company seeks to avoid counterparty risk by lim- Nissin Foods (U.S.A.) Co., Inc., Camino Real Foods, Inc., Nissin iting counterparties to highly creditworthy financial institutions. Foods B.V., Nissin Foods GmbH, Nissin Foods Co., Ltd., Miracle Derivatives transactions are managed and executed by the Finance Foods Co., Ltd., Wing On Foods Co., Ltd., Guangdong Shunde Division in accordance with the risk management policies approved Nissin Foods Co., Ltd., Winner Food Products Ltd., Wintai Food by the Executive Committee, which is composed of executive direc- Manufacturers Ltd., Zhuhai Golden Coast Winner Food Products tors of the Company. Derivative positions as of March 31, 2002 con- Ltd., Guangyougnan Food Products (Shenzhen) Co., Ltd., Shanghai sisted of interest rate swap contracts totaling ¥1,000 million Nissin Foods Co., Ltd., Indo Nissin Foods Ltd. and Nissin-Ajinomoto (US$7,505 thousand). Alimentos Ltda. use December 31 as the closing date for their finan- 31 (e) Property, plant and equipment (j) Income taxes Property, plant and equipment are principally depreciated using the Income taxes of the Company and its domestic consolidated sub- declining-balance method over the useful lives of the assets in confor- sidiaries are estimated based on taxable income. Income taxes of for- mity with the Corporation Tax Law. However, certain consolidated eign consolidated subsidiaries are based generally on the tax rates subsidiaries use the straight-line method. The straight-line method is applicable in their country of incorporation. also used for the head offices of the Company (Osaka and Tokyo) and Under the revised local tax legislation, the aggregate statutory tax the buildings and structures of the Central Research Institute. In addi- rate of the Company has been changed from 41.66% to 40.27% for tion, the straight-line method is used for buildings (excluding attached the years beginning April 1, 2004. The effect of this change is to facilities) acquired on or after April 1, 1998. decrease deferred tax assets (net of deferred tax liabilities) by ¥294 Repair and maintenance expenditures are charged to income as million ($2,446 thousand) at March 31, 2003 and to increase deferred incurred, although major improvements are capitalized. When income taxes by ¥326 million ($2,712 thousand) for the year ended properties are retired or otherwise disposed of, any resulting gain or March 31, 2003. loss is credited or charged to income. (k) Leases (f) Pension plan In Japan, finance leases other than those that are deemed to trans- The Company and its domestic consolidated subsidiaries have two fer the ownership of the leased assets to the lessee are accounted for types of employees’ benefit plans. One is a defined benefit pension by a method similar to that applicable to ordinary operating leases. plan, i.e. a contributory pension plan and a qualified pension plan. The other is a lump-sum retirement payment. The Company changed (l) Consumption tax accounting method from a qualified pension plan to a contributory pension plan in 1989. Consumption tax is withheld by the Company and its domestic con- The Company’s pensions are paid from age 60 for people with at solidated subsidiaries at the time of sale at a rate of 5%, in principle. least 20 years of service. Employees terminated with less than 20 years of service receive lump-sum payments, paid as fixed amounts (m) Treasury stock and reversal of legal reserves that reflect final base compensation, length of service and conditions “Accounting Standard for Treasury Stock and Reversal of Legal of termination. Reserves” (Accounting Standards Board of Japan Statement 1, issued The pension payment amounts are guaranteed for 15 years from on February 21, 2002) has been applied beginning in the fiscal year age 60. Pension payments will continue thereafter for the remainder of ended March 31, 2003. The adoption of this accounting change did the recipient’s life, at a rate of 60 percent of the original payment not have a material effect on income for the fiscal year. amount after age 75. (n) Net income per share (g) Reserve for employees’ retirement benefits “Accounting Standard for Net Income per Share” (Accounting The Company and its domestic consolidated subsidiaries provide Standards Board of Japan Statement 2, issued on September 25, for employees’ retirement benefits based on the projected benefit 2002) and “Implementation Guidance for Accounting Standard for Net obligation and the amount of pension plan assets at the end of the fis- Income per Share” (Accounting Standards Board of Japan cal year. Implementation Guidance 4, issued on September 25, 2002) have Actuarial differences, or unexpected gain or loss are charged to been applied beginning in the fiscal year ended March 31, 2003. income on a lump-sum basis in the fiscal year after they occur. Per share amounts for the previous fiscal year restated as per the new accounting standard and implementation guidance are as follows: (h) Reserve for directors’ retirement benefits Shareholders’ equity per share: ¥1,843.14 (US$15.26) In accordance with its bylaws, the Company maintains a reserve Net income per share: ¥93.40 (US$0.78) for retirement bonuses to directors under which it appropriates funding equal to the entire amount to be paid, at the end of the fiscal year. (o) Assets and liabilities of consolidated subsidiaries All of the assets and liabilities of consolidated subsidiaries are stat- (i) Allowance for doubtful receivables ed using the fair value method of accounting. The Group provides for losses on ordinary receivables based on historical loss ratios and for losses on doubtful receivables in the esti- mated uncollectable amount after examining each doubtful receivable to gauge the likelihood of recovery.

3. REVALUATION OF LAND Based on the Law Concerning Revaluation of Land and the Law March 31, 2002. The book value of land before revaluation was Amending Parts of the Law Concerning Revaluation of Land, the ¥34,130 million and ¥22,887 million after revaluation. Company revalued the land it holds for use in the course of ongoing The difference between the book value as of March 31, 2002 of operations. The resulting land revaluation difference represents an land that had been revaluated and the book value of such land on unrealized devaluation of land and is debited directly, net of income March 31, 2003 following fair value revaluation is ¥2,627 million taxes, as “Adjustment due to revaluation of land” to the section of (US$21,855 thousand). shareholders’ equity. There is no effect on the statement of income. Land for own-use was revalued in accordance with the Law on

32 4. INVENTORIES Inventories as of March 31, 2003 and 2002 are summarized below: Thousands of Millions of yen U.S. dollars 2003 2002 2003 Finished goods and purchased goods ...... ¥7,138 ¥6,773 $59,384 Raw materials and supplies ...... 4,758 4,859 39,584

5. SHORT-TERM BORROWINGS Short-term borrowings, which amounted to ¥5,246 million The annual interest rates applicable to the borrowings at March (US$43,644 thousand) and ¥7,056 million as of March 31, 2003 and 31, 2003 ranged from 0.462% to 5.576%. 2002, respectively, generally represent notes.

6. PER SHARE OF COMMON STOCK The computation of net income per share is based on the Cash dividends per common share presented in the accompany- weighted average number of shares of common stock outstanding ing consolidated statements of income are dividends applicable to during the relevant fiscal year. the respective years, including dividends to be paid after the end of the year.

7. CONTINGENT LIABILITIES (1) The Group was contingently liable as a guarantor of loans to an commitments of Nissin Foods (China) Holding Co., Ltd. if this com- unconsolidated subsidiary in the aggregate amount of ¥494 million pany should fail to meet its obligations to make direct investments or (US$4,110 thousand) and ¥595 million at March 31, 2003 and 2002, to transfer technology to investees. respectively. As of March 31, 2003, there was no investment plan or technolo- (2) The Company has provided a guarantee to the Ministry of gy transfer plan that would cause the Company to assume the com- Foreign Trade and Economic Cooperation (now called the Ministry of mitments described above. Commerce) of the People’s Republic of China that it will assume the

8. RESEARCH AND DEVELOPMENT EXPENSES Expenses relating to research and development activities are totaled ¥2,757 million (US$22,937 thousand), ¥2,579 million and charged to income as incurred. R&D expenses, which are included ¥2,541 million at March 31, 2003, 2002 and 2001, respectively. in cost of sales and selling, general and administrative expenses,

9. SUBSEQUENT EVENTS The following appropriations of retained earnings of the Company, statements for the year ended March 31, 2003, were approved at the which have not been reflected in the consolidated financial general meeting of shareholders held on June 27, 2003.

Thousands of Millions of yen U.S. dollars Cash dividends (¥30=US$0.25 per share) ...... ¥3,704 $30,815 Bonuses to directors ...... 60 499 ¥3,764 $31,314

10. LITIGATION The Group is not currently engaged in major litigation.

33 11. SEGMENT INFORMATION (a) Sales by area Millions of yen North Other Year ended March 31, 2003 Japan America Areas Eliminations Consolidated I. Sales Sales to outside customers ...... ¥268,944 ¥26,373 ¥19,962 ¥ — ¥315,279 Inter-segment sales ...... 1,322 — — (1,322) — Total ...... 270,266 26,373 19,962 (1,322) 315,279 Operating expenses ...... 245,165 26,370 18,669 (1,325) 288,879 Operating income ...... ¥ 25,101 ¥ 3 ¥ 1,293 ¥ 3 ¥ 26,400 II. Assets ...... ¥307,310 ¥18,592 ¥23,273 ¥(17,181) ¥331,994

Thousands of U.S. dollars North Other Year ended March 31, 2003 Japan America Areas Eliminations Consolidated I. Sales Sales to outside customers ...... $2,237,471 $219,409 $166,073 $ — $2,622,953 Inter-segment sales ...... 10,998 — — (10,998) — Total ...... 2,248,469 219,409 166,073 (10,998) 2,622,953 Operating expenses ...... 2,039,642 219,384 155,316 (11,023) 2,403,319 Operating income ...... $ 208,827 $ 25 $ 10,757 $ 25 $ 219,634 II. Assets ...... $2,556,655 $154,676 $193,619 $(142,937) $2,762,013

Millions of yen North Other Year ended March 31, 2002 Japan America Areas Eliminations Consolidated I. Sales Sales to outside customers ...... ¥259,494 ¥28,277 ¥20,692 ¥ — ¥308,463 Inter-segment sales ...... 1,428 — — (1,428) — Total ...... 260,922 28,277 20,692 (1,428) 308,463 Operating expenses ...... 237,458 28,252 18,766 (829) 283,647 Operating income ...... ¥ 23,464 ¥ 25 ¥ 1,926 ¥ (599) ¥ 24,816 II. Assets ...... ¥303,593 ¥18,175 ¥24,640 ¥(19,495) ¥326,913

Millions of yen North Other Year ended March 31, 2001 Japan America Areas Eliminations Consolidated I. Sales Sales to outside customers ...... ¥257,772 ¥27,026 ¥16,284 ¥ — ¥301,082 Inter-segment sales ...... 1,361 28 981 (2,370) — Total ...... 259,133 27,054 17,265 (2,370) 301,082 Operating expenses ...... 233,136 26,970 16,031 (2,339) 273,798 Operating income ...... ¥ 25,997 ¥ 84 ¥ 1,234 ¥ (31) ¥ 27,284 II. Assets ...... ¥310,545 ¥13,278 ¥20,128 ¥(17,755) ¥326,196

34 (b) Overseas sales Thousands of Millions of yen U.S. dollars North Other Year ended March 31, 2003 America Areas Total Overseas sales ...... ¥27,151 ¥19,825 ¥ 46,976 $ 390,815 Consolidated sales ...... ——315,279 2,622,953 Ratio of overseas sales to consolidated sales ...... 8.6% 6.3% 14.9% 14.9%

Thousands of Millions of yen U.S. dollars North Other Year ended March 31, 2002 America Areas Total Overseas sales ...... ¥29,100 ¥20,587 ¥ 49,687 $ 372,886 Consolidated sales ...... — — 308,463 2,314,919 Ratio of overseas sales to consolidated sales ...... 9.4% 6.7% 16.1% 16.1%

Thousands of Millions of yen U.S. dollars North Other Year ended March 31, 2001 America Areas Total Overseas sales ...... ¥28,561 ¥16,991 ¥ 45,552 $ 326,513 Consolidated sales ...... — — 301,082 2,361,106 Ratio of overseas sales to consolidated sales ...... 9.5% 5.6% 15.1% 13.8% Note: Overseas sales represent the sum total of overseas sales of Nissin Food Products Co., Ltd. and its consolidated subsidiaries in Japan, and sales of its consolidated subsidiaries based overseas. (Sales between consolidated subsidiaries are not included.)

Independent Auditors’ Report

The Shareholders and the Board of Directors Nissin Food Products Co., Ltd.

We have audited the accompanying consolidated balance sheets of Nissin Food Products Co., Ltd. and consolidated subsidiaries as of March 31, 2003 and 2002, the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2003, all expressed in Japanese yen. These financial statements are the responsibility of the Company's management. Our responsibility is to independently 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 and applied in Japan. Those standards, procedures and practices 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 the accounting 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, the consolidated financial posi- tion of Nissin Food Products Co., Ltd. and consolidated subsidiaries as of March 31, 2003 and 2002, the consolidated results of their opera- tions and their cash flows for each of the years in the three-year period ended March 31, 2003 in conformity with accounting principles and practices generally accepted in Japan. The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2003 are present- ed solely for the convenience of the reader. Our audit also included the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1. of Notes to Consolidated Financial Statements.

Shin Nihon & Co. June 27, 2003

See Note 1. of Notes to Consolidated Financial Statements which explains the basis of presenting consolidated financial statements of Nissin Food Products Co., Ltd. under Japanese accounting principles and practices.

35 Worldwide Network

[AMERICAS] Winner Food Products Ltd. Nissin Foods (U.S.A.) Co., Inc. 11-13, Dai Shun Street, Tai Po Industrial Estates, (Head Office & Plant) Tai Po, N.T. Hong Kong 2001 West Rosecrans Avenue, Gardena, CA 90249 U.S.A. Telephone: 852-2667-3766 Fax: 852-2666-5173 Telephone: 1-323-321-6453 Fax: 1-310-515-3751 Web Site: http://www.nissinfoods.com Miracle Foods Co., Ltd. (Lancaster Plant) 19, Dai Shing Street, Tai Po Industrial Estates, Masako Place, 2901 Hempland Rd., Lancaster, PA 17601 U.S.A. Tai Po, N.T. Hong Kong Telephone: 1-717-291-5901 Fax: 1-717-299-9871 Telephone: 852-2666-0812 Fax: 852-2666-0600 NITEC (U.S.A.), Inc. Zhuhai Golden Coast Winner Food Products Ltd. 2001 West Rosecrans Avenue, Gardena, CA 90249 U.S.A. Golden Coast Food Industry City, Zhuhai, Telephone: 1-310-527-5762 Fax: 1-310-715-2766 Guangdong Province 519040, The People’s Republic of China Telephone: 86-756-776-4138 Fax: 86-756-776-4198 Camino Real Foods, Inc. (Head Office) Guangdong Shunde Nissin Foods Co., Ltd. 5785 Corporate Avenue, Suite 170, Cypress, CA 90630 U.S.A. (Head Office & Plant) Telephone: 1-714-816-7900 Fax: 1-714-816-7915 13, Gang Qian Road, Beijiao Industrial Park, Beijiao County, (Vernon Plant) Shunde City, Guangdong Province 528311, 2638 East Vernon Avenue, Vernon, CA 90058 U.S.A. The People’s Republic of China Telephone: 1-323-585-6599 Fax: 1-323-585-5420 Telephone: 86-765-633-0482 Fax: 86-765-665-2778 (Lancaster Plant) (Guangzhou Office) Masako Place, 2919 Hempland Rd., Lancaster, PA 17601 U.S.A. 7th Floor, Golden Lake Building, No. 2, Dong Hu Road, West, Telephone: 1-717-399-7637 Fax: 1-717-399-8908 Guangzhou 510100, The People’s Republic of China Telephone: 86-20-8384-4362 Fax: 86-20-8385-6181 Nissin-Ajinomoto Alimentos Ltda. (Head Office) Shandong Winner Food Products Co., Ltd. Av. Paulista, 1842-19° andar, Edificio Cetenco Plaza/Torre Norte, No. 86, Haiqu Mid Road, Rizhao City, Cerqueira César 01310-200, São Paulo/SP-Brasil Shandong 276800, The People’s Republic of China Telephone: 55-11-3145-5900 Fax: 55-11-3145-5901 Telephone: 86-633-822-3504 Fax: 86-633-822-3504 (Plant) Guangyougnan Food Products (Shenzhen) Co., Ltd. Rodovia Bunjiro Nakao, Km 57 - Bairro Votorantim 3rd Floor, No. 8, Road 5, Qingshuihe, Caixa Postal No. 57 Shenzhen, Guangdong Province, The People’s Republic of China Ibiúna - SP - Brasil CEP 18 150-000 Telephone: 86-755-2445649 Fax: 86-755-2445649 Telephone: 55-15-249-1100 Fax: 55-15-249-1255 Nissin Foods (China) Holding Co., Ltd. [EUROPE] 10F, Dongying Bld. 2570 Xietu Road, Xuhui District, Nissin Foods B.V. Shanghai 200030, The People’s Republic of China Trade Port West, Columbusweg 35 Telephone: 86-21-6468-7176 Fax: 86-755-21-6468-3295 5928 LA Venlo, The Netherlands Telephone: 31-77-3235353 Fax: 31-77-3235359 Shanghai Nissin Foods Co., Ltd. (Head Office) NITEC (Europe) B.V. 11F, Dongying Bldg., Dong Fang TV Station, 2570 Xietu Road, Trade Port West, Columbusweg 35 Xuhui District, Shanghai 200030, The People’s Republic of China 5928 LA Venlo, The Netherlands Telephone: 86-21-6464-8476 Fax: 86-21-6468-3325 Telephone: 31-77-3236565 Fax: 31-77-3236569 (Plant) Nissin Foods GmbH No. 1, Xinxiao Road, Xinqiao Zhen, Am Hohenstein 3-5 Songjiang District, Shanghai 201612, The People’s Republic of China 65779 Kelkheim, Germany Telephone: 86-21-5764-4070 Fax: 86-21-5764-4073 Telephone: 49-6195-6927 Fax: 49-6195-910019 Nissin Foods (Huabei) Co., Ltd. [ASIA] (Head Office & Plant) Nissin Foods (HK) Management Co., Ltd. Lang Fang Economic & Technical Development Zone, 065001, 9-13, Dai Cheong Street, Tai Po Industrial Estates, The People’s Republic of China Tai Po, N.T. Hong Kong Telephone: 86-316-608-8651/7544/7547 Fax: 86-316-608-7505 Telephone: 852-3406-6888 Fax: 852-2666-5173 (Beijing Office) Room No. 508, Cheng Yuan Building, No. 19, Jianhua South Road, Nissin Foods Co., Ltd. Jian Guo Men Wai Da Jie, Chaoyang District, (Head Office) Beijing 100022, The People’s Republic of China 21-23, Dai Shing Street, Tai Po Industrial Estates, Telephone: 86-10-6566-2370 Fax: 86-10-6566-2367 Tai Po, N.T. Hong Kong Telephone: 852-2665-0032 Fax: 852-2664-4189 Shandong Nissin Foods Co., Ltd. (Singapore Branch) No. 4, Zouchang Road, Zouping County, Shandong, 31 Jurong Port Road #02-11M, 256200, The People’s Republic of China Jurong Logistics Hub, Singapore 619115 Telephone: 86-543-432-8818 Fax: 86-543-432-3878 Telephone: 65-6-2681309 Fax: 65-6-2682758 Nissin-Universal Robina Corporation NITEC (H.K.) Ltd. (Head Office) 9-13, Dai Cheong Street, Tai Po Industrial Estates, Second Floor, CFC Administration Building, Tai Po, N.T. Hong Kong E. Rodriguez Jr. Ave., Bagong Ilog, Pasig City, 1600 Philippines Telephone: 852-2660-8418 Fax: 852-2660-8460 Telephone: 632-671-7176 Fax: 632-671-3978 (Cavite Plant) Block 7, Lot 8, First Cavite Industrial Estate, Bo. Langkaan, Dasmariñas Cavite, 4140 Philippines Telephone: 63-46-402-0662/1241 Fax: 63-46-402-0824 36 Nissin Foods (Thailand) Co., Ltd. (Delhi Plant) (Head Office & Plant) 91 Kms, Delhi-Jaipur Road, Village Deodhai, Tehsil Bawal, 631 Moo 11 Sukapiban 8, District Rewari-123401 Haryana, India Sriracha Chonburi 20280, Thailand Telephone: 91-12-8460732 Fax: 91-12-8460733 Telephone: 66-38-481-351 Fax: 66-38-481-353 (Bangkok Office) Accelerated Freeze Drying Co., Ltd. 807 Bangkok Tower, 2170 New Petchburi Road, (Head Office) Bangkok 10320, Thailand Amalgam House, Bristow Road, Telephone: 66-2-308-0360 Fax: 66-2-308-0363 Willingdon Island, Cochin-682-003, Kerala, India Telephone: 91-484-668680 Fax: 91-484-668130 Indo Nissin Foods Ltd. (Cochin Plant) (Head Office) EP/IV/513, Ezhupunna P.O. Alleppey District-688 548, Kerala, India Centenary Building 3rd Floor, 28, M.G. Road, Telephone: 91-478-873015 Fax: 91-478-873016 Bangalore-560 001, India (Bangalore Plant) Telephone: 91-80-5327900 Fax: 91-80-5599087 18 A/I, Jigani Industrial Area, Anekal Taluk, Bangalore-562 106 Karnataka, (Bangalore Plant) India Plot No. 18-A2, Jigani Industrial Area, Anekal Taluk, Bangalore, Telephone: 91-8110-25282 Fax: 91-8110-25283 District-562 106 India Telephone: 91-8110-25265 Fax: 91-8110-25279 P.T. NISSINMAS Jl. Jababeka Raya Blok N-1 Cikarang-Bekasi, Indonesia Telephone: 62-21-893-4130 Fax: 62-21-893-4129 Business Areas of Consolidated Subsidiaries and Affiliate

Equity Company Capital Business Area Ownership Consolidated Subsidiaries Sapporo Nissin Co., Ltd. ¥250 million Cup- and pillow-type noodles manufacturing and marketing 100.0% Nissin F.D. Foods Co., Ltd. ¥100 million Freeze-dried foods manufacturing and marketing 100.02 Nissin Plastics Co., Ltd. ¥450 million Container manufacturing and marketing 100.0 Nissin Frozen Foods Co., Ltd. ¥98 million Frozen foods and processed meat manufacturing and marketing 100.0 Gran Foods Co., Ltd. ¥80 million Frozen foods manufacturing and marketing 100.0 (Wholly owned subsidiary of Nissin Frozen Foods Co., Ltd.) Nissin Yoke Co., Ltd. ¥870 million Dairy products manufacturing and marketing 72.8 Nissin Enterprise Corporation ¥300 million Shipping and warehousing 100.0 Ajinihon Co., Ltd. ¥95 million Soup manufacturing and marketing 46.3 Uji Kaihatsu Development Co., Ltd. ¥850 million Golf course management 70.73 Nissin Cisco Co., Ltd. ¥2,600 million Confectionery manufacturing and marketing 63.8 Nissin Foods (U.S.A.) Co., Inc. US$83,500 thousand Cup- and pillow-type noodles manufacturing and marketing 90.0 Camino Real Foods, Inc. US$4,700 thousand Frozen foods manufacturing and marketing 100.0 Nissin Foods B.V. EUR 18,151 thousand Cup- and pillow-type noodles manufacturing and marketing 85.0 Nissin Foods GmbH EUR 25 thousand Cup- and pillow-type noodles marketing 100.0 Nissin Foods Co., Ltd. HK$61,900 thousand Cup- and pillow-type noodles manufacturing and marketing, marketing 100.0 of retort pouch food products Miracle Foods Co., Ltd. HK$21,000 thousand Container manufacturing and marketing 70.0 (70% owned subsidiary of Nissin Foods Co., Ltd.) Wing On Foods Co., Ltd.1 HK$10,000 thousand Cup- and pillow-type noodles manufacturing and marketing, marketing 100.0 of retort pouch food products (Wholly owned subsidiary of Nissin Foods Co., Ltd.) Guangdong Shunde Nissin Foods Co., Ltd. HK$130,000 thousand Cup- and pillow-type noodles manufacturing and marketing 61.74 Winner Food Products Ltd. HK$29,975 thousand Cup- and pillow-type noodles manufacturing and marketing, frozen foods 74.0 and beverages marketing Wintai Food Manufacturers Ltd.1 HK$6,160 thousand Frozen foods manufacturing and marketing 100.0 (Wholly owned subsidiary of Winner Food Products Ltd.) Zhuhai Golden Coast Winner Food Products Ltd. HK$84,000 thousand Cup- and pillow-type noodles and beverages manufacturing 70.5 (70.5% owned subsidiary of Winner Food Products Ltd.) Guangyougnan Food Products (Shenzhen) Co., Ltd. HK$11,000 thousand Frozen foods manufacturing and marketing 100.0 (Wholly owned subsidiary of Winner Food Products Ltd.) Shanghai Nissin Foods Co., Ltd. US$25,000 thousand Cup- and pillow-type noodles manufacturing and marketing 85.05 Indo Nissin Foods Ltd. INR 597,500 thousand Cup- and pillow-type noodles manufacturing and marketing 64.6 Affiliate Accounted for Using the Equity Method Nissin-Ajinomoto Alimentos Ltda. BRL 12,688 thousand Cup- and pillow-type noodles manufacturing and marketing 50.0

Notes: 1. Wing On Foods Co., Ltd. and Wintai Food Manufacturers Ltd. have transferred their operations to Nissin Foods Co., Ltd. and (As of March 31, 2003) Winner Food Products Ltd., respectively, and are in the process of liquidation as of March 31, 2003. 2. Indirect equity ownership through Sapporo Nissin Co., Ltd. 20.0%. 3. Indirect equity ownership through Nissin F.D. Foods Co., Ltd. 5.7% 4. Indirect equity ownership through Nissin Foods Co., Ltd. 50.0% and Nissin Foods (China) Holding Co., Ltd. 11.7%. 37 5. Indirect equity ownership through Nissin Foods Co., Ltd. 15.0% and Nissin Foods (China) Holding Co., Ltd. 42.5%. Corporate Data

NISSIN FOOD PRODUCTS CO., LTD. HISTORY

Head Office 1948 Chukososha Co., Ltd. established. 1-1, 4-chome, Nishinakajima, Yodogawa-ku 1958 Chicken Ramen, the world’s first instant ramen product, introduced; Osaka 532-8524 Japan Company name changed to Nissin Food Products Co., Ltd. Telephone: 81-6-6305-7711 1963 Listed on the Second Section of the Tokyo and Osaka Stock Exchanges. Fax: 81-6-6304-1288 1968 Demae Itcho (pillow-type noodles) introduced. Web Site: http://www.nissinfoods.co.jp 1970 Nissin Foods (U.S.A.) Co., Inc., the Company’s first overseas operation, established in Gardena, California. Tokyo Head Office 1971 Cup Noodle introduced; Kanto Plant began operation. 28-1, 6-chome, Shinjuku, Shinjuku-ku 1972 Listed on the First Section of the Tokyo, Osaka and Nagoya Stock Exchanges. Tokyo 160-8524 Japan 1973 Shiga Plant and General Research Center began operation. Telephone: 81-3-3205-5111 Fax: 81-3-3205-5059 1975 Shimonoseki Plant began operation; Nissin-Ajinomoto Alimentos Ltda. established in São Paulo, Brazil. 1977 Construction of new headquarters completed; Branches main office moved to its present location in Yodogawa-ku, Osaka. Sapporo, Sendai, Nagoya, Hiroshima, Fukuoka, Hong Kong, Mexico 1978 Lancaster, Pennsylvania Plant of Nissin Foods (U.S.A.) Co., Inc. began operation. 1984 Nissin Foods Co., Ltd. established in Hong Kong. 1988 Construction of Tokyo Head Office building completed; Domestic Offices acquired U.S. company Camino Real Foods, Inc.; Aomori, Morioka, Akita, Koriyama, Kita-kanto, Chiba, Yokohama, Niigata, Nagano, Kanazawa, Shizuoka, Tsu, Central Research Institute began operation. Kyoto, Kobe, Osaka-minami, Yonago, Okayama, 1989 Acquired Hong Kong company Winner Food Products Ltd. Yamaguchi, Takamatsu, Matsuyama, Kochi, Kita-kyushu, 1990 Capital participation in Yoke Co., Ltd. (now Nissin Yoke Co., Ltd.). Kumamoto, Kagoshima, Okinawa 1991 Capital participation in Pegui Foods Co., Ltd. (now Nissin Frozen Foods Co., Ltd.) and Cisco Co., Ltd. (now Nissin Cisco Co., Ltd.); Nissin Foods B.V. established in Plants the Netherlands. Kanto, Shizuoka, Shiga, Shimonoseki 1992 Long-life fresh noodles developed; Rao introduced; P.T. NISSINMAS established in Indonesia. Research Institutes 1993 Gonbuto udon introduced. Central Research Institute, Food Safety Research Institute 1994 Zhuhai Golden Coast Winner Food Products Ltd., the Company’s first production base in China, began operation in Guangdong. (As of April 1, 2003) 1995 Spa-O introduced; sales of Cup Noodle surpassed 10 billion units. 1996 Shizuoka Plant began operation; Shanghai Nissin Noodles Foods Co., Ltd. (now Shanghai Nissin Foods Co., Ltd.) began operation. 1997 International Ramen Manufacturers Association established in Tokyo, and Momofuku Ando elected chairman. 1998 Nissin Cofco Foods Co., Ltd. began operation in Beijing. 1999 Delhi Plant of Indo Nissin Foods Ltd. began operation; The Momofuku Ando Instant Ramen Museum in Ikeda City, Osaka Prefecture, the world’s first instant ramen museum, opened. 2001 Consolidated net sales exceeded ¥300 billion for the first time; contracted as official supplier to the 2002 FIFA World CupTM; Nissin Foods (China) Holding Co., Ltd. established in Shanghai. 2002 Food Safety Research Institute established; Nissin GooTa series introduced.

38 Investor Information

Date of Establishment Stock Listings September 1948 Tokyo, Osaka, Nagoya and Number of Employees Luxembourg stock exchanges 5,834 (consolidated basis) Ticker Code 1,440 (parent company) 2897 Common Stock Independent Auditors Authorized: 394,301,700 shares Shin Nihon & Co. Issued: 127,463,685 shares Transfer Agent Number of Shareholders: 19,211 Mizuho Trust & Banking Co., Ltd. (including 259 non-Japanese) 2-1, Yaesu 1-chome, Chuo-ku, Paid-in Capital Tokyo, Japan ¥25,123 million (US$209.0 million)

PRINCIPAL STOCKHOLDERS Number of Shares Percentage of Total Name Held (Thousands) Shares Outstanding

The Chase Manhattan Bank, NA London (Standing proxy: Mizuho Corporate Bank Ltd.) 7,382 5.79% Mizuho Corporate Bank Ltd. 6,279 4.93 The Master Trust Bank of Japan, Ltd. (trust account) 6,131 4.81 Mitsubishi Corp. 4,901 3.84 Ando Foundation 4,750 3.73 Japan Trustee Services Bank, Ltd. (trust account) 4,590 3.60 Ando International Y.K. 4,100 3.22 Japan Trustee Services Bank, Ltd. (Portion of ITOCHU Corporation Retirement Benefits Trust Account placed in trust by The Sumitomo Trust & Banking Co., Ltd.) 3,630 2.85 The Sumitomo Mitsui Banking Corporation 3,373 2.65 The Bank of Tokyo-Mitsubishi, Ltd. 3,085 2.42

Notes: 1. In addition to the above, the Company holds 4,005 thousand shares (3.14%) of treasury stock. 2. The Company has been sent a Report of Major Stockholder dated November 14, 2002 and a copy of a Notification of Change dated February 14, 2003 from Capital Research and Management Company and four of its affiliated companies, and has received notification that their shareholdings as of January 31, 2003 total 9,241 thousand shares (7.25% of total shares outstanding). However, because the Company is unable to determine the actual number of shares held as of March 31, 2003, they are not included in the list of principal stockholders above.

Stock Price (Tokyo Stock Exchange; Years ended March 31) FY 1999 2000 2001 2002 2003 2003 High ¥2,845 ¥3,560 ¥3,070 ¥3,030 ¥2,720 US$22.63 Low ¥2,000 ¥2,090 ¥2,280 ¥2,285 ¥2,275 US$18.93

Per Share Data (Times; ¥; Years ended March 31) 1999 2000 2001 2002 2003 Price/Earnings – High 21.9 29.6 25.7 32.3 23.5 Price/Earnings – Low 15.4 17.4 19.1 24.3 19.7 Price/Cash Flow – High 6.42 11.15 17.81 16.69 14.58 Price/Cash Flow – Low 4.51 6.55 13.23 12.59 12.19 Cash/Share 652 397 540 725 599 Net Assets/Share 1,587 1,711 1,812 1,835 1,893

Further Information For further information, please contact: Corporate Communications Division (Tokyo Head Office) Tel.: 81-3-3205-5252 Fax: 81-3-3205-5259 Regularly updated IR information in English is also available on Nissin’s web site at http://www.nissinfoods.co.jp (As of March 31, 2003)

Nissin Food Products Co., Ltd. 39 NISSIN FOOD PRODUCTS CO.,LTD.

28-1, 6-chome, Shinjuku, Shinjuku-ku, Tokyo 160-8524 Japan Telephone: 81-3-3205-5111 Fax: 81-3-3205-5059 http://www.nissinfoods.co.jp

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