Annual Report 1998 - nyk.com · merger with Showa Line, then the fifth largest shipping firm in Japan and a company that focused on tramp ... a financial and currency crisis followed

NIPPON YUSEN KABUSHIKI KAISHA

Annual Report 1998

2

Established September 29, 1885

Paid-in Capital ¥ 80,487,756,643

Main Activities

1. Marine transportation

2. Land transportation

3. Agency business for marine and land transportation

4. Warehousing

5. Harbour transportation

6. Combined transportation by sea, land and air, and agencybusiness connected therewith

7. Marine-related business development

8. Sale and purchase of vessels

9. Consulting related to building and repair of vessels and marine structures

10. Business related to information on transportation

11. Loans, guarantees and investments in businesses other than thoseenumerated above

12. Sale, purchase and lease of real estate

13. Possession, lease, maintenance and management of marine leisure facilities

14. Business related to travel pursuant to the Travel Agency Law

15. Other undertakings incidental to or connected with the above items

Employees Land 1,403 Sea 626 Total 2,029

Head Office 3-2, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-0005, JapanMailing Address: C.P.O. Box 1250, Tokyo 100-8613, JapanTelephone: +81-3-3284-5151Facsimile: +81-3-3284-6361Telex: J22236, J22465, J22466, J24473, J24479

Company Information (As of March 31, 1998)

33

Contents

Company Information 2

The Message from the Management 4

Newbuildings Delivered in Fiscal 1997- in Highlights 8

Investor Information 10

Financial Review 11

Operational Review

Liner 16

Tramp and Specialized Carriers 18

Tankers 20

Logistics 21

Sefety Management 21

Subsidiaries and Affiliates 22

Six-Year Summary 24

Consolidated Statements of Income 25

Consolidated Balance Sheets 26

Consolidated Statements of Shareholders’ Equity 28

Notes to Consolidated Financial Statements 29

Report of Independent Certified Public Accountants 35

Directors and Auditors 36

Corporate Structure 36

Major Consolidated Subsidiaries and Affiliates 38

Fleet : NYK Group Companies 40

Worldwide Service Network 42

4

Container Line (OOCL), to form a major new consor-

tium. The largest of such consortium in history and

employing almost 100 first-class container

ships, the new alliance was organized to reduce costs,

provide a wide choice of comprehensive and competi-

tive services, and offer a fast, direct port-to-port

connections in the Asia/North America and Asia/

Europe lines. Following the agreement, the new

alliance began full-fledged operation in the spring of

1998. The new alliance aims to establish a strong

reputation and

position in all

areas - at sea, in

port as well as

inland; and to

enhance its cost

competitiveness in

container inventory.

In order to turn the

business of the

Liner sector into a

profitable one during fiscal 1999, the Company is

making best effort to rationalizing its business by

cutting costs, maximizing space utilization and

balancing container inventory between inward and

outward voyages.

Merger with Showa Line

On March 27, 1998, the Company announced its

merger with Showa Line, then the fifth largest shipping

firm in Japan and a company that focused on tramp

and specialized carriers. When the merger takes effect

on October 1, 1998, it will solidify NYK's position in

those areas.

The Global Economy and thePosition of the Company Business

n 1997, many Asian nations experienced

a financial and currency crisis followed

by economic stagnation. It is difficult to

predict the future for the Japanese and

other Asian economies, in particular because Japan

has failed to recover as had been expected. Fortu-

nately, NYK, the Company, was helped by the rela-

tively strong economies of the U.S. and Europe, which

attracted increasing exports from Asia. On the other

hand, however, cargo movement from the U.S. and

Europe to Asia dropped markedly, unfavorably

affecting the Company’s management situation.

During the year, Japan-Asia trade decreased

drastically. Especially prominent was the reduced

amount of exports from Japan. The cargo volume

from other Asian nations to Japan also continued to

decline. Consequently, the Company reorganized its

liner operations in the area.

In spite of such circumstances, however, revenue

for the Company in fiscal 1997 reached 1,078.4

billion yen on a consolidated basis, showing a 5.3%

increase over fiscal 1996.

Gross operating tonnage for the NYK group

companies, reached 687 vessels in number and

31,078,783 kilotons in deadweight.

Service Begin for the New Alliance

In November 1997, NYK Line, together with other

members of the former “Grand Alliance” Hapag-

Lloyd and P&O Nedlloyd, signed an agreement with

two additional partners: Malaysia International

Shipping Corporation (MISC) and Orient Overseas

The Message from the Management

I

Revenue reaches 1,078.4billion yen, showing a5.3% increase overfiscal 1996. NewAlliance starts itsservice, and merger withthe Showa Line createsbeneficial synergies.

5

Jiro Nemoto, Chairman (right) and Kentaro Kawamura, President (left)

At the same time, the merger will create beneficial

synergies, as Showa Line has historically maintained

a very strong position with regard to the transport of

energy resources and raw materials such as iron ore,

coal, wood chip and crude oil.

Apart from the merger, the Tramp and Specialized

Carriers sector also showed brisk demand for car

carriers throughout fiscal 1997, and export of

completed cars from Japan to North America and

Europe was high, backed in part by the weak yen. In

order to avoid a shortage in the capacity of car

carrier fleet, active charters were conducted and

three new vessels were delivered.

Other services also maintained their respective

business goals for the year, despite slackening market

conditions, by transporting highly profitable cargoes.

Total Logistics Service

Currently, management strategy for the Company is

focused on the provision of total logistics services. In

fiscal 1997, the Company’s efforts to promote further

development with an expanded coverage of Europe

including the East/Central Europe and Scandinavia,

and a firm foothold in key Asian locations, plus

further investment in the USA and in the Oceania

region successfully resulted in the securing of a base

for operation in each of these areas. For the coming

years, together with reinforced efforts to upgrade the

quality of service, the Company intends to pursue

further regional expansion in the remaining parts of

6

Europe such as Russia, France and Spain as well as

Central/South America plus the Middle East. From

now on, the Company will also work to offer chain-

of-supply services for retailers, in addition to produc-

tion logistics for which the Company already has

accumulated long years of experience. To do so, the

Company must accumulate further know-how on

state-of-the-art data and information-processing

technologies.

Enhanced Navigation Safety forNYK Vessels

On July 2, 1997, the DIAMOND GRACE, a VLCC

owned by the Company's Panamanian subsidiary

and managed by the Company's Japanese subsidiary,

had an accident involving an oil spill in the Naka-no-

Se reef of Tokyo Bay, known as a difficult area to sail

through. The amount of oil spilt was limited and the

clean up was completed in three days. The accident

occurred despite the Company’s existing program

requiring that all its vessels, both owned and char-

tered, satisfy the rigid safety standards which was

certifiable for conforming with the ISM (Interna-

tional Safty Management) Code set out by the UN’s

IMO (International Maritime Organization). After the

incident, the Company renewed its efforts to further

promote safe navigation for all vessels operated. At

the same time, rigorous safety checks were con-

ducted, especially for tankers in which NYK’s top

captains were put on board as inspectors when the

vessels sailed through heavy traffic routes and

channels. Such inspection assures that the pilot is in

complete concurrence with the actual captain at

helm concerning navigational plans while it made

sure that other crew members carried out their

regular checks on the position of vessel during

passage. Meanwhile, studies and research have been

continued since

the accident in

order to grasp the

influence of the

accident on the

natural environ-

ment. July 2nd

has now been

deemed as the "Remember Naka-no-Se" day, so that

no NYK crew or staff will forget or repeat that

accident.

Strain on Consolidated FinancialResults

The Company is proud of the financial conditions

of all the group companies and firmly believes that

the consolidated financial results demonstrate the

true strength of the Company. In fiscal 1997, no

subsidiary encountered any serious problem, and

many contributed in an extremely positive fashion to

the consolidated financial results. Especially

prominent was the growth recorded by our air

forwarders as well as our cruise ship operators.

Outlook

In 1986, the Company laid the bases for middle

and long-term vision of its management called "NYK

21,” which has been reviewed every four years since.

Twelve years after it was originally announced, the

NYK 21 is now almost at the end of its third phase

and the next phase is currently under review as the

Focus on the provisionof total logisticsservices, and renewedefforts to promote safenavigation of all vessels.

7

Kentaro KawamuraPresident

Jiro NemotoChairman

year 2000 is in sight.

Quantitatively, the subject of this latest review

strains on the importance of the Company's consoli-

dated results, stressing on the profit rate rather than

scale as an important international judgment

standard. According to such understanding, the

subject includes highlighting of the significance of

group management promoted according to a

specific group strategy, re-evaluation of any depart-

ment not yielding profit, as well as the need to

conduct strategic, focal investment activities. Com-

bining these efforts, the Company aims to achieve

expected growth, set forth as its target, in terms of

group revenue, recurring

profit margin, gross

return on assets and net

return on equity at

earliest stage in the first

decade of the coming

century in order to truly

become a globally

respected entity.

Qualitatively, six main business areas – 1)ocean

shipping, 2)logistics, 3)cruise, 4)domestic shipping,

5)real estate and 6)transportation technology

innovation/marine development -are stressed as

being expected to provide further growth of the

Company in the coming century, which emphasize

the following points, respectively:

1. Strengthening global competitiveness and provid-

ing safe and reliable services to worldwide clients

in shipping

2. Constructing sales and network strength in

response to the logistics strategies of customers

3. Upgrading the quality of life through cruise

business

4. Enhancing the competitive power of the domestic

shipping services that are being deregulated

5. Maintaining steady profits in the real estate

business

6. Innovating transportation and marine develop-

ment technologies while promoting safety and

preserving the natural environment

Upon announcement of the fourth phase of the

NYK 21, NYK members should be guided in order to

further nurture global managers, establish new group

strategies, upgrade and promote “informationalization,”

reinforce overall control of the Group's financial

functions, revise the organization structures of local

subsidiaries and reduce costs.NYK 21 is nowalmost at the end ofits third phase andthe next phase iscurrently underreview as the year2000 is in sight.

8

Newbuildings Delivered in Fiscal 1997- in Highlights

NYK VIRGO … Container Ship● Delivery: October 25, 1997● Gross Tonnage: 18,602 tons● Capacity: 1,613 TEUs

NYK ANTARES … Container Ship● Delivery: October 31, 1997● Gross Tonnage: 75,637 tons● Capacity: 5,700 TEUs

NYK CASTOR … Container Ship● Delivery: January 30, 1998● Gross Tonnage: 76,847 tons● Capacity: 5,700 TEUs

HARAMACHI MARU … Coal Carrier● Delivery: October 3, 1997● Gross Tonnage: 58,103 tons● Capacity: 89,933 long tons (DWT)

CHIHIRO … Ore-Bulk Carrier (Capesize)● Delivery: April 25, 1997● Gross Tonnage: 85,849 tons● Capacity: 168,947 metric tons (DWT)

OGISHIMA … Ore -Bulk Carrier (Capesize)● Delivery: August 5, 1997● Gross Tonnage:87,383 tons● Capacity: 172,904 metric tons (DWT)

8

9

MERMAID DREAM … Bulk Carrier (Handysize)● Delivery: February 19, 1998● Gross Tonnage: 25,969 tons● Capacity: 47,245 metric tons (DWT) / 59,387 cubic meters

AQUARIUS LEADER … Car Carrier (Pure Car and Truck Carrier)● Delivery: March 25, 1998● Gross Tonnage: 57,623 tons● Capacity: 5,980 units (of standard cars)

TERN SPIRIT … Wood Chip Carrier● Delivery: May 20, 1997● Gross Tonnage: 36,801 tons● Capacity: 3,224,576 cubic feet

CROWN OPAL … Reefer Carrier● Delivery: April 9, 1997● Gross Tonnage: 10,519 tons● Capacity: 547,633 cubic feet

AMAN SENDAI … LNG Carrier● Delivery: May 18, 1997● Gross Tonnage: 16,336 tons● Capacity: 19,928 cubic meters

9

ALIOTH LEADER … Car Carrier (Pure Car and Truck Carrier)● Delivery: January 12, 1998● Gross Tonnage: 51,790 tons● Capacity: 5,140 units (of standard cars)

10

Investor Information (As of March 31, 1998)

Closing Date

The Company's books are closed on March 31 each year.

Regular General Meeting

The regular general meeting of shareholders is held in June each year.

1998 Regular General Meeting : June 26

Common Stock

Number of authorized shares: 3,000,000,000 shares

Number of issued and outstanding shares: 1,179,470,138 shares

PRINCIPAL SHAREHOLDERS

The Tokio Marine and Fire Insurance Company, Limited 57,912 4.91

Mitsubishi Heavy Industries, Limited 54,472 4.62

The Tokyo Mitsubishi Bank, Limited 52,825 4.48

The Meiji Mutual Life Insurance Company 51,899 4.40

The Mitsubishi Trust and Banking Corporation 49,321 4.18

The Sumitomo Trust and Banking Company, Limited 44,755 3.79

The Industrial Bank of Japan, Limited 41,646 3.53

The Long-Term Credit Bank of Japan, Limited 31,403 2.66

The Toyo Trust and Banking Company, Limited 29,660 2.51

The Chase Manhattan Bank NA, London 27,770 2.35

Total 441,665 37.45

LISTING OF SHARES

NYK's shares are listed for trading on the following stock exchanges:

Domestic -

Tokyo, Osaka, Nagoya, Fukuoka, Hiroshima,Kyoto, Niigata and Sapporo

Overseas -

Frankfurt

STOCK TRANSACTION UNITS

The Company's stock is traded in units of 1,000 shares each.

Stock Transfer Agent

The Mitsubishi Trust and Banking Corporation

Head Office: 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan

PUBLICATION FOR PUBLIC NOTICES

The Company's public notices appear in the Nihon Keizai Shimbun published in Tokyo, Japan.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

Chuo Audit Corporation

Head Office: Kasumigaseki Bldg., 32nd Floor, 2-5 Kasumigaseki 3-chome, Chiyoda-ku, Tokyo 100-6032, Japan

10

Number of shares held(thousands)

Percentage of totalshares outstanding (%)

11

For fiscal 1997 ending March 31, 1998, Nippon

Yusen Kabushiki Kaisha (the “Company”) had

214 consolidated companies and 39 equity

method-applied companies. In fiscal 1997,

revenues reached 1,078.4 billion yen, showing a 5.3 %

increase over the previous year. The 1,000 billion yen mark

had been exceeded for the second time following fiscal 1996,

since the Company started announcing its consolidated

financial results in 1977. Recurring profit (profit before

income taxes and special items), also reached the highest

amount in ten years, 24.2 billion yen, showing 1.7 % growth.

Meanwhile, net profit after tax totaled 7.16 billion yen,

showing a 47.4 % decrease over the previous year. Net return

on sales (net profit divided by total revenues), decreased from

1.3 % in 1996 to 0.7 %, and the ratio of net return on equity

declined from 5.8 % of the previous year to 3.0 %.

These decreases were mainly caused by intensified fare

competition in the liner business of the Shipping segment,

stagnant sales for the Oil Wholesaling and Real Estate

segments, thereby resulting in the flagging domestic market.

The decreases were also due to a large amount of tax

payments resulting from a reverse in capital allowances for

the acquisition of newly built vessels caused by a decrease in

the number of new vessel constructions by the Company, and

a drop in value of certain US assets. Recurring profit margin

reached 2.2 %, showing a slight decrease from the previous

year’s 2.3 %. In spite of a prevailing economic slump in

Japan, relatively favorable overall results were achieved by

securing relatively profitable cargoes, and by more effectively

operating vessels for the Company’s semi-liner and tanker

services within the Shipping segment.

From fiscal 1996, the revenue recognition standard for

containerships was changed from that used by the Company

until fiscal 1995. The revenue and profits for fiscal 1996 were,

consequently, inflated by the amount reflecting the gaps

resulted from the adoption of the new standard. When

comparing the ratios and figures based on the newly adopted

standard as mentioned below, both the operating profit and

recurring profit for fiscal 1997 increased over the respective

figures for the previous year.

As of the end of fiscal 1997, the total amount of interest-

bearing debt increased by 0.7 % to 955.7 billion yen.

However, the amount of interest paid decreased by 3.1 % to

36.6 billion yen. During 1997, the average yen/dollar

exchange rate was 122.73 yen, with the value of the yen

dropping by 10.83 yen over 1996. The depreciation of the

yen contributed to an increase in the yen-denominated value

of earnings outside Japan, and enhanced the international

competitiveness of the transportation service of the NYK

Group as a whole. This is because the portion of yen-

denominated costs are much higher for the NYK Group than

for its competitors.

11

Financial Review

Operational Results and Financial Analysis

(unit: ¥ billion/%)

FY 1997 1996 (based on the new standard) Growth rate/difference %

Revenues 1,078.4 1,011.2 6.6

Operating profit 46.3 45.2 2.4

Recurring profit 24.2 20.4 18.5

Net profit 7.2 12.1 (40.9)

Recurring profit margin 2.2 2.0 0.2

Net return on sales 0.7 1.2 (0.5)

Net return on equity 3.0 5.2 (2.2)

Yearly Results on New Standard

12

Revenues

Transportation and sales revenues in fiscal 1997 reached

1,078.4 billion yen, showing a 5.3 % increase over 1996. By

segment, Shipping revenue reached 798.1 billion yen, up 8.9

% over the previous year or 10.8 % when comparing figures

according to the newly adopted revenue recognition stan-

dard. Such growth was mainly the result of the depreciation

of the yen and the increase of transportation cargo volume.

In contrast, revenue for the Oil Wholesale segment decreased

by 18.8 % to 113.5 billion yen, heavily influenced by the 1996

deregulation of imports of petroleum and related products.

Again owing to the economic slump in Japan, the Real Estate

segment was sluggish, with the sales dropping by 20.9 %

over fiscal 1996 to 12.7 billion yen. Sales from the Others

segment increased by 13.9 % to 154.1 billion yen, helped

greatly by the favorable market conditions for air cargo

transport.

By region, sales increased for all regions except Japan.

Sales for North America reached 283.0 billion yen, for Europe

149.2 billion yen, for Asia excluding Japan 159.8 billion yen,

and for the other regions 188.7 billion yen. Sales for Japan,

however, dropped by 3.6 % to 297.7 billion yen. The de-

crease in Japan’s sales was mainly due to unfavorable

business conditions for the Oil Wholesaling and Real Estate

segments. Outside Japan, most revenues were earned from

trans-oceanic shipping.

121212

Revenue by Industry Segment (1997)

(unit: ¥ billion)

Others 154.1 (14.2%)

Total 1,078.4

798.1 (74.0%)Shipping

12.7 (1.1%)Real Estate

113.5 (10.5%)Oil Wholesaling

Sales by Region (1997)

(unit: ¥ billion)

149.2 (13.8%)

Japan

159.8 (14.8%)

297.7 (27.6%)

283 (26.2%)

Europe

Asia (excl. Japan)

North AmericaTotal 1,078.4

188.7 (17.4%)Others

733.2 (71.5%)

Others

Revenue by Industry Segment (1996)

(unit: ¥ billion)

135.3 (13.2%)

Shipping

Total 1,024.3

139.8 (13.6%)Oil Wholesaling

16 (1.5%)Real Estate

13

Costs and Profits

An overall increase in sales pushed up shipping expenses

and costs of sales by 5.9 % to 924.2 billion yen. This rise was

mainly caused by the increase of cargo volume in shipping,

by which expenses rose by roughly 10.8 %, together with the

decreased value of the yen. Although the Oil Wholesale and

Real Estate segments were also influenced by the weakening

of the yen, overall expenses decreased as sales dropped.

The cost increase of the Others segment was absorbed by

improving profitability with increased sales. As a whole, the

gross profit margin reached 14.3 %.

Gross Profit Margin

FY 1997 1996 1995 1994 1993

% 14.3 14.8 14.9 14.0 13.1

Selling, general and administrative expenses rose by 4.5 %

to 107.9 billion yen, equivalent to 10.0 % of sales, showing a

0.1 % decrease over the previous year. Costs and expenses

associated with the studies, research and development on

marine transportation safety guidelines and environmental

issues conducted mainly at the NYK Logistics Technology

Institute fall under this category as well.

Selling, General and Administrative Expenses

FY 1997 1996 1995 1994 1993

% 10.0 10.1 11.0 10.2 10.7

The amount of depreciation of assets reached 54.1 billion

yen. This is included in the transportation expenses, sales

cost, as well as selling, general and administrative

expenses, and showed a slight decrease over the previous

year. As a result, the ratio of depreciation to total revenue fell

to 5.0 % from the 5.3 % of the previous year.

FY 1997 1996 1995 1994 1993

Depreciation (¥ billion) 54.1 54.6 49.4 42.0 42.1

to total revenue (%) 5.0 5.3 5.5 4.8 4.9

13

Although operating profit decreased by 4.7 % to 46.3 billion

yen, such profit increased by 2.4 % over fiscal 1996 when

both are based on the new revenue recognition standard. The

operating profit margin was 4.3 %, compared with 4.7 % (or

4.5 % under the new standard) recorded in fiscal 1996.

Operating Profit Margin

FY 1997 1996 1995 1994 1993

% 4.3 4.7 3.9 3.8 2.4

Interest paid was 36.6 billion yen, down 1.1 billion yen over

the previous year in spite of an increase in interest-bearing

debt. Thanks to lower interest rates in the market and more

efficient financing of capital, net interest expense (interest

expenses minus the interest and the dividend income),

decreased by 2.0 % to 25.6 billion yen. As a result, the

effective interest rate for interest-bearing debt declined to 3.8

% from 4.1 % for the previous year. The ratio of interest paid

to total revenue also declined to 3.4 % from 3.7 % of the

previous year. Meanwhile, the interest coverage ratio (the

sum of operating profit, interest and dividend income divided

by interest expense) remained the same as 1996 at a factor

of 1.6.

Effective Interest Rate, Ratio of Interest Paid toTotal Revenue, Interest Coverage

FY 1997 1996 1995 1994 1993

Effective interest rate (%)

3.8 4.1 4.1 4.0 4.3

Ratio of interest paid to total revenue (%)

3.4 3.7 4.0 3.9 3.9

Interest coverage (times)

1.6 1.6 1.3 1.3 1.0

Ratio of depreciation

Depreciation and Ratio of Depreciation to Total Revenue

1414

93 94 95 96 97

33

48.6

46.3

34.9

20.3

Operating Profit, Recurring Profit and Net Profit 1993 - 1997 (unit: ¥ billion)

15

23.8 24.2

18.4

5.6

3.1

13.6

7.2

3.3

6.1

Recurring Profit

Operating Profit

Current Profit

Recurring Profit Margin, Net Profit Margin, Returnon Equity and Return on Assets

FY 1997 1996 1995 1994 1993

Recurring Profit Margin (%) 2.2 2.3 2.1 1.7 0.7

Net Profit Margin (%) 0.7 1.3 0.4 0.4 0.7

Return on Equity (%) 3.0 5.8 1.5 1.4 2.7

Return on Assets (%) 0.5 1.0 0.2 0.2 0.5

Recurring profit increased by 1.7 % (or 18.5% under the

new standard) to 24.2 billion yen. Meanwhile, profit before

income taxes, minority interest, amortization of consolidation

difference and equity in earnings of non-consolidated

subsidiaries and affiliates totaled 16.8 billion yen, decreasing

by 14.2 % over the previous year. The profit under the new

standard showed a 0.6 billion yen increase after excluding

the influence from the change in the revenue recognition

standard. Net profit decreased by 47.4 % (or 40.5 % under

the new standard) to 7.2 billion yen. Net profitper share was

6.07 yen, compared to 11.55 yen in fiscal1996.

FY

15

Financial Position

In fiscal 1997, NYK concentrated on improving its financial

position, and shareholders’ equity increased by 1.3 % to

243.1 billion yen, as a result of an increased surplus. How-

ever, at the end of fiscal 1997, the equity ratio decreased by

0.1 % over 1996 to 16.7 %. Such decrease resulted from an

increase in total assets by 2.0 % to 1,455.1 billion yen.

Interest-bearing debt reached 955.7 billion yen, showing a

marginal increase over the fiscal 1996 figure that stood at

948.7 billion yen. The debt to equity ratio (total interest-

bearing debt divided by shareholders’ equity) improved to

3.93 from 3.96 for the previous year.

15

Debt-to-Equity Ratio

FY 1997 1996 1995 1994 1993

(times) 3.93 3.96 3.93 3.79 3.52

Total assets increased by 2.0 % to 1,455.1 billion yen as a

result of the increase in long-term assets, including vessels,

real estate and others, as well as short-term loans to non-

consolidated subsidiaries. Current assets increased by 12.6

% to 420.3 billion yen due to the increase in short-term loans

mentioned above, although the balance of marketable

securities decreased. The amount of tangible fixed assets

after deducting depreciation increased by 2.7 % to 679.9

billion yen. Of this amount, the undepreciated balance of

depreciable assets including vessels, property and equip-

ment, increased by 2.7 % to 568.8 billion yen. The deprecia-

tion ratio of depreciable assets (the cumulative amount of

depreciation divided by acquisition cost), was 46.3 %,

showing a steady increase in spite of active investments

made by the Company.

The amount invested in tangible fixed assets during fiscal

1997 amounted to 68 billion yen. By segment, 60 billion yen

was invested in Shipping, 0.002 billion yen in Oil Wholesaling,

1.9 billion yen in Real Estate, and 6.1 billion yen in the Others

segment.

Investment in Tangible Fixed Assets (investment

amount on a payment basis)

FY 1997 1996 1995 1994 1993

Amount invested (¥billion) 68 79.8 50.1 n.a. n.a.

Acquisition Cost, Undepreciated Balance and Depre-

ciation Ratio of Depreciable Assets

FY 1997 1996 1995 1994 1993

Acquisition Cost (¥ billion)

1,059.6 1,016 965.8 883.3 751.4

Undepreciated Balance (¥ billion)

568.9 553.8 531.3 495.2 396.9

Depreciation Ratio (%)

46.3 45.5 45.0 43.9 47.2

Shareholders’ Equity and Total Assets (unit: ¥ billion)

OutlookThe Company predicts the revenues for fiscal 1998 to

increase by 5.7 % and reach 1,140 billion yen, with recurring

profit expected at 25.0 billion yen. Such expectations are

based on anticipated improved business results from the 1998

merger with Showa Line. Net profit is expected to increase by

39.8 % to 10 billion yen. This estimate was made based on a

yen-dollar conversion rate of 125 yen per US$1.00.

Looking back on the oil spill accident of the VLCC Diamond

Grace in July 1997, the Company will maximize efforts to

ensure safe navigation of all its vessels. As part of a continu-

ing effort to ensure further safety, the Company will modernize

its fleet by ordering six double-hull VLCCs during fiscal 1998

on a long-term contract basis. At the same time, the Company

plans to modernize its facilities and equipment through efficient

and appropriate capital investment. This will be done by

considering the cash flow reflecting the amount of deprecia-

tion together with the disposal fees of facilities and equipment.

1,426.3

1,363.41,276.4

1,403.31,455.1

93 94 95 96 97

Total assets

Shareholders’equity239.9228.2229.7 227.8 243.1

FY

Operational Review

Liner

We generally refer to the routes of the

container ships in the Liner sector that

links the three major areas of the world --

Asia, North America and Europe-- as the “Trunk Line”, a

name that is appropriate for the enormous volume of

containers flowing through these ocean routes.

Besides the Trunk Line, NYK's worldwide coverage

using fully containerized vessels includes Asia/Oceania,

Intra-Asia and Asia/Central-South America and South

Africa.

Trunk Line: Asia/North America andAsia/Europe Lines

The new consortium formed by Hapag-Lloyd, Malaysia

International Shipping Corporation (MISC), Orient Overseas

Container Line (OOCL), P&O Nedlloyd and NYK Line began

full operations in the spring of 1998. Two recent M & A

within the industry influenced shaping of the new alliance.

In September 1996, two former companies of P&O Nedlloyd,

British P&O Containers and Dutch Nedlloyd Lines, an-

nounced their merger. Neptune Orient Lines, a longtime, ex-

consortium member with NYK, decided to leave our

previous consortium after it announced the acquisition of a

major U.S. shipping line, American President Lines, in April

1997.

43 vessels operate to provide seven separate services on the

Asia/North America portion of the Trunk Line. Out of these

services, the Pacific Atlantic Express service via the Panama

Canal handles the transatlantic routes as well. Similarly, there

are six services for the Asia/Europe portion of the Trunk Line.

Of the total, five are focused in North Europe, while the

remaining one serves the Mediterranean, utilizing 48 vessels

traveling through the Suez Canal. The fundamental purpose of

the new alliance is to provide the most competitive services

with the most cost efficient operations not only over the

ocean, but also at ports and inland as well as in such aspects

as container inventories, cooperating with the members

wherever possible in order to acquire better performance.

Excessive competition among the shipping companies

over the recent years has deteriorated freight rates to a point

where the Trunk Line business may become economically

unviable. Overall, financial performance in this sector did

not recover in 1997. However, sales were brisk for outbound

cargo from the Asian region as exports increased due to the

devaluation of their currencies, while imports from such

Asian countries increased for North America and Europe as

their economies continued to be steady. Under such

I n fiscal 1997, NYK's administration focused on six major sectors of business:

Liner, Tramp and Specialized Carriers, Tankers, Logistics, Safety Management and

Subsidiaries and Affiliates. Major movements in these six businesses were as follows.

■LinerNYK provides transportation services, mostly of

containerized cargo, worldwide under a regularschedule, which is fixed down to a level of days ofthe week.

■TankersNYK transports crude oil, liquefied natural and

petroleum gases, as well as clean petroleumproducts and chemicals, using tankers specificallydesigned for such cargo.

■Safety ManagementNYK provides the support necessary to ensure

the safety of all of the vessels under its operationand to prevent any accidents such as the oil spillby VLCC DIAMOND GRACE that occurred in TokyoBay in July 1997.

■Tramp and Specialized CarriersNYK transports virtually any kind of cargo to any

destination around the world, whether its customersmake their requirements at any given time, or itscustomers make their shipments on a regular basis.

■LogisticsNYK handles various logistical needs of all types

for international shippers, from consolidating towarehousing and distribution.

■ Subsidiaries and AffiliatesNYK manages a large number of subsidiaries and

affiliates around the world.

16

conditions, recovery came into sight as the freight rates

began to pick up; a slight increase but still a small step

forward for continuing recovery. Freight rates were raised:

for cargoes from Asia to Europe in January 1998, except for

Japan which took effect in April; and for North America

in May.

Needless to say, freight rate increases cannot be relied

upon as the only means of turning loss into profit. As one

means to further reduce costs, five 5,700-TEU (Twenty-foot

Equivalent Unit) class new container ships were delivered

from 1997 through 1998 for the Asia/Europe lines. About 20%

larger in capacity than the

previous series of vessels,

these over-Panamax

container ships with

increased capacity will give

lower per TEU operating

costs.

During the course of the

year, the so-called "FMC

Dispute" came to an end in

October 1997. Originally

dating back to November

1996, the issue involved

disputes between Japan

and the United States over

Japan's port practices and

business licensing system

for terminal operators. This

has been resolved through

an agreement reached

between Japanese and the U.S. governments and also

through a payment of US$1.5 million by the three Japanese

shipping companies, including NYK.

Asia/Oceania Line

23 vessels operated during fiscal 1997 in four services on

the Asia/Oceania line through a number of consortiums with

other shipping companies.

One of the services extends as far west as the Persian/

Arabian Gulf countries. NYK restructured the existing direct

service between northeast Asia and western Australia by

switching to tranship service via Singapore, since the

Australia Asia Express service already provides the shortest

direct link between Singapore and western Australia. This

movement simultaneously improved performance and

shipping economy.

Intra-AsiaThere are 14 vessels operating in five services in the Intra-

Asia sector, covering northeast and southeast Asia as well as

Viet Nam, the Indian Subcontinent Countries and the Persian/

Arabian Gulf. However, NYK’s network in the Intra-Asia sector

dose not stop at the end of these routes. Overall, the Intra-

Asia sector also serves the feeder functions for other services

that link Asia with practically the rest of the world.Its

coverage continues with its affiliate, Tokyo Senpaku Kaisha,

Ltd. (TSK Line), which operates nine vessels in three services

in the northeast and southeast region.

In contrast with favorable results in the first half of 1997,

the second half was disastrous due to the currency crisis in

Asia which had a major impact on the volume of traffic,

especially imports. Freight rates dropped sharply and without

immediate measures, NYK and TSK Line would have suffered

heavy losses. Both NYK and TSK Line took counteractions

almost immediately.

A prime example of such measures by NYK was the

restructuring of the three services between Japan and

Thailand into two, without adverse consequences to service.

TSK Line also reduced its four services into three, but offering

the same coverage. It maintained capacity for the most part

by replacing its fleet with larger vessels.

Recently, intra-Asia traffic patterns have changed due to

new logistical needs to link multiple locations in Asia in

situations in which parts are manufactured in one place and

assembled in another. The assembly location must also be

17

NYK ANDROMEDA … Container Ship (Over-Panamax 5,700-TEU Series)

Operational Review

Tramp and SpecializedCarriers

NYK’s fleet of Tramp and Specialized Carriers

is engaged in transportation of indispensable

commodities for Japan, such as ore and coking

coal for steel mills, steaming coal for electric power

plants, wood chip for paper mills, and various natural

resources and raw materials including perishables. It is

also engaged in Japan’s key industrial exports, ranging

from cars and trucks to various steel products. NYK has

been able to create consistent stable growth in this sector

year after year by strategically combining long-term

contracts with high-yield, on-demand business and

thereby efficiently allocating its fleet. NYK’s operations in

this sector are also offered by its subsidiaries and

affiliates such as Shinwa Kaiun Kaisha, Ltd. (bulk carri-

ers), Toho Shipping Co., Ltd. (log carriers), and Hachiuma

Steamship Co., Ltd. (wood chip carriers) .

Ore and Coking Coal Carriers

In fiscal 1997, NYK operated 25 Capesize bulkers of 147,000

DWT and over as ore and coking coal carriers, transporting

approximately 14% of the total amount of these raw materials

for steel mills in Japan. Fiscal 1997 showed mixed results as

fairly stable exports from Japan and its domestic demand

sustained favorable results in the first half, but the slow

recovery of troubled economies of Japan and other Asian

countries had negative effects in the second half. Overall,

however, partly because the Japanese steel industry kept its 100

million-ton production level, total turnover exceeded the

previous year’s results.

Steaming Coal Carriers

NYK’s fleet of specially designed over-Panamax coal

carriers and Panamax bulk carriers serves Japan’s lifelines for

its major energy resource, steaming coal, and is engaged in

transportation based on long-term contracts. In fiscal 1997, the

fleet transported nearly 30% of the total amount of steaming

coal for electric power plants imported by the electricity

companies in Japan. Overall, total turnover showed a slight

increase as NYK recorded more voyages due to demand for a

larger volume of coal.

Wood Chip Carriers

Most of NYK’s fleet of wood chip carriers is engaged in

transportation based on long-term contracts with paper mills

in Japan. In fiscal 1997, NYK operated 23 wood chip carriers,

and it is estimated that roughly 25% of the total amount

imported to Japan was transported by NYK. Cross trade of

wood chip between countries other than Japan yielded about

5% of NYK’s total turnover for this section. Overall, the results

remained much the same as for the previous year.

Bulk Carriers: Panamax

In fiscal 1997, NYK operated an equivalent of around 14

Panamax bulk carriers, out of which the majority were

70,000 DWT class vessels. The ratio of cargo volume with

Japan as the origin or destination to cargo volume in a cross

trade between countries other than Japan was approxi-

mately 3:1. Coal, occupying almost 50% of total cargo

volume, was the most common cargo, with ores second

occupying slightly over 20%, and grain third with slightly less

than 20%. Various other commodities comprised the balance.

Total turnover was up more than 20% as NYK succeeded in

further expanding its share of cargo to and from Japan as

well as securing new contracts in cross trade between

countries other than Japan.

linked with yet another location where products are ware-

housed prior to being shipped to consumer markets around

the world. The Asia Pendulum Express service, which swings

fully containerized vessels back and forth among Singapore,

Indonesia and Thailand on a fixed-day-of-the-week weekly

schedule, commenced in August 1997 to meet such demand.

Due to increased trade for countries in the Persian/Arabian

Gulf and its hinterland, the Gulf Karachi Express commenced

service to Bandar Abbas, Iran in March 1998, bringing the total

ports of call in the Persian/Arabian Gulf to four.

Asia/Central and South America and SouthAfrica Lines

On the Asia/Central and South America and South Africa

lines, 27 vessels operated in three services. Newly constructed

vessels, specially designed by NYK's R&D and called multipur-

pose container ships, are fully containerized vessels that can

combine almost any kind of non-containerized cargo. In

January 1998, NYK reviewed the routes for one of the services

in this trade, the Asia Andes Express service for the South

American Pacific coast countries plus Mexico, and enhanced

the previous single-loop operation by making it a double-loop

operation in order to improve service to and from Asian

countries other than Japan. The above innovations are the

reasons NYK is able to maintain its leading role in customer

relations, as well as its cooperative ties among the other

shipping companies, both partners and competitors alike.

18

Bulk Carriers: Handysize

In fiscal 1997, NYK operated approximately 90 Handysize

bulk carriers, some two-thirds of which were long-term time

charters, with the remaining one-third consisting of spot

charters. The fleet consisted of a well-balanced combination

of 20,000/32,000 DWT-range “Small Handy” bulkers and 40,000/

48,000 DWT-range “Handy Max” bulkers, the average age of

which in either case is roughly five years. The ratio of cargo

volume with Japan as the origin or destination to cargo

volume for cross trade between countries other than Japan

was estimated at 10:1. Forest products, grain and coal

comprised roughly 15% each of total volume of cargo

transported by NYK, while various other bulk cargo consti-

tuted more than 50%. The results in the first half was favorable

as fairly stable exports from Japan and its domestic demand

continued from the previous term. However, the economic

slump of Japan and other Asian countries had negative

impact in the second half. Overall, total turnover resulted in a

slight increase over the previous fiscal year.

Car Carriers

In fiscal 1997, NYK’s fleet of car carriers consisted of

approximately 70 vessels. Three new generations of “Pure Car

and Truck Carriers” (PCTC), formerly known as “Pure Car

Carriers” (PCC), were delivered during fiscal 1997 and six

more are scheduled for delivery in fiscal 1998, according to

a scrap-and-build fleet maintenance program. The ratio of

cargo volume with Japan as the origin or destination to

cargo volume in cross trade between countries other than

Japan was 7:3. Higher exports from Japan partly due to a

depreciated yen caused a fleet shortage. Such conditions

were eased by aggressively chartering available PCCs in

the market.

Reefer Carriers

In fiscal 1997, NYK’s fleet of reefer carriers was composed

of approximately 40 vessels. Despite the well-publicized El

Niño, which had a devastating effect on fruit crops

especially in Chile and South Africa, areas in which NYK has

had a major interest in recent years, a newbuilding program

continued for the promising future, with three new vessels

delivered in fiscal 1997 and a new series of five vessels

called WILD-series (499,500 cubic-foot) is scheduled for fiscal

1998. As of fiscal 1997, NYK’s core fleet of reefer carriers

consisted of:

• Six “CROWN”-series and five “MERMAID”-series (540,000/

550,000 cubic-foot range) vessels

• Three “ORION”-class (455,000/500,000 cubic-foot range) vessels

• Six “HARVEST”-series (430,000/440,000 cubic-foot range) vessels

• Seven “PHOENIX”-series (390,000/400,000 cubic-foot range) vessels

NYK maintains the top fleet of reefer carriers in the world,

from deep-frozen to controlled-atmosphere type.

Semi-/Neo-Liners

The Semi-Liner fleet consists of conventional vessels.

Conventional vessels are more versatile than container and

other ships in terms of kinds of cargo that can be handled

and in terms of versatility with regard to origin, destination

and scheduling. In fiscal 1997,NYK continued to handle all

kinds of customer requests, transporting everything from a

single steel pipe to industrial plant equipment, and calling on

any port anywhere worldwide, on a schedule suited to the

needs of the customer.

Meanwhile, Neo-Liner’s pair of vessels equipped with

on-board cranes capable of lifting up to 240 MTs, was a

success in intra-Asia’s heavyweight cargo market.

19

CHIHAYA … Ore-Bulk Carrier (Capesize)

Operational Review

Tankers

NYK’s operations in the tankers sector

constitute a lifeline for Japan and other

countries by transporting energy, such

as crude oil and petroleum products,

liquefied natural and petroleum gases, as well as

various other indispensable chemical products. Long-

term contracts in this sector assure dependable

services for customers and a reliable source of revenue

for NYK. These operations are also offered by Taiheiyo

Kaiun Kaisha, Ltd. and Kyoei Tanker Co., Ltd. (both in

crude oil), which are major affiliates of NYK.

Crude Oil

In fiscal 1997, NYK operated 25 tankers, two of which were

double-hull tankers. NYK had nine double-hull tankers on

order as of fiscal 1997. NYK transported close to 13% of all of

the crude oil imported by Japan and approximately the same

amount for worldwide trade between countries other than

Japan in fiscal 1997. Hence, it was unfortunate that one of

NYK’s VLCCs had an oil spill accident in Tokyo Bay in July,

1997.

Clean Petroleum Products and Chemicals

NYK operated eight tankers for transporting clean petro-

leum products such as naphtha, gasoline, kerosene and so on.

The ratio of cargo volume with Japan as the origin or

destination to cargo volume in cross trade between countries

other than Japan was estimated at 6:4. Total turnover in fiscal

1997 increased slightly over the previous year as the fleet was

continued to be expanded, with three more vessels to be

delivered during fiscal 1998.

On the other hand, NYK maintained a strong tie with the

world’s largest chemical carrier, Stolt-Nielsen. NYK’s joint

venture with Stolt-Nielsen in the Asia and Oceania regions

operated 12 vessels during fiscal 1997. Also, NYK put five

vessels in Stolt’s worldwide chemical tanker pool.

Gas Carriers

In fiscal 1997, NYK operated 19 LNG (Liquefied Natural

Gas) carriers and four LPG (Liquefied Petroleum Gas)

carriers, including chartered vessels. NYK transported

approximately one-tenth of the total LNG imported by Japan,

and slightly less than 5% of Japan’s total LPG. Most of the LNG

was destined for Japan, as opposed to LPG, which was more

often destined to countries other than Japan. Two new LNG

vessels were delivered with eight more on order, including

one new contract signed in October 1997 for a joint project to

build and manage a vessel for transporting 660,000 MTs of

LNG annually over a 25-year period beginning November,

2000. Altogether, NYK in fiscal 1997 transported LNG from

four countries to six electricity companies and five gas

companies. Total turnover for both LNG and LPG showed a

slight increase over the previous year as new vessels com-

menced operation and the charter rate was raised with the

renewal of contracts.

20

TAJIMA … Tanker (Double-hull VLCC)

Logistics

Logistics services cover such areas as inven-

tory management, processing at distribution

centers and transportation management for

providing just-in-time delivery to the final destination

of the customer.

Logistics expansion included providing services to regions

in Central and East Europe through the establishment of a

new office in Budapest, Hungary, and starting new services in

Poland and Czech Republic. NYK’s presence in the Scandina-

vian region was reinforced with the start of the Nordic

Safety ManagementOutline of the “Diamond Grace” Accident

On July 2, 1997, the VLCC DIAMOND GRACE, owned by a

subsidiary of NYK, had an oil spill inside Tokyo Bay, the ocean

gateway for the Tokyo metropolis inhabited by 12 million

people, at a shallow seabed called Naka-no-Se. Fortunately, the

volume of oil spilt was measured at 1,556 kiloliters, rather than

over 10,000 kiloliters as was initially estimated. Due to the

relatively limited amount of oil spilt, the clean up operation

was completed in three days by 340 ships and numerous

people including 366 NYK employees. After receiving tempo-

rary repairs, the vessel proceeded to a dockyard and under-

went a full-scale repair in early September.

NYK Safety Promotion Activities

Marine casualties result not only in tremendous damage to

the financial status of the firm, but also in untold difficulties for

the community and the environment, not to mention loss of

customer confidence in the reliability of NYK. Since NYK

established a central command, the “Marine Safety Headquar-

ters,” and put together the document “Guidelines for Safe Vessel

Operations and Pollution Prevention” in 1992, all NYK staff

members have continued to do their best to maintain safe

vessel operations.

To ensure the safety of all vessels operated by NYK, the

Marine Safety Headquarters have established concrete policy

that is reflected in fleet operations. This includes the execution

of the annual exercise known as the “Safety Promotion

Campaign”; continuous vessel inspection by our specially

assigned NYK’s “Safety Superintendents,” who verify whether the

NYK policy is reflected in operations; as well as the conduct of

21

Distribution Center in Gothenburg, Sweden. Meanwhile, in

the Oceanian region a local office started operations in

Auckland, New Zealand, and in Australia, the acquisition of

new customers resulted in the expansion of the scale of

service by relocating the warehouse in Sydney. Consolida-

tion services were started in intra-Asia trade at such areas as

Thailand, Hong Kong and the Shenzhen area in the

Guangdong province of China in response to the trend on

the part of Japanese, U.S. and European companies to review

and relocate their production bases.

In North America, a swift delivery service was commenced

for high-value products with strict delivery deadlines, such as

computers and electronics. Also during the fiscal year, the

NYK’s transloading service, more generally known as

cross-dock service, showed a rapid demand in growth in

this region. A large volume of miscellaneous domestic

goods shipped from the Asian nations were unloaded

and sorted out on the West Coast for reloading and

transporting to their final destinations.

On the agenda for fiscal 1998, the Logistics sector will focus

more on exported-oriented rather than import-oriented

companies for commodity distribution in the Asian market in

order to swiftly respond to the rapid change of market

conditions as well as parts distribution in which future growth

is expected. Plans are also being made to enhance: the cross-

dock function at West Coast gate ports in the U.S.; warehouse

facilities in Germany; and also investment plans to reinforce

its information system. As a longer term goal, the sector seeks

to further expand its service to South Europe, particularly

Spain, France and Russia, as well as Central and South

American regions plus the Middle East.

Distribution centers in UK (right, top and bottom) Thailand (left, top) andUSA (left, bottom) represent NYK's global network in the Logistics sector

Operational Review

various other safety measures. Furthermore, NYK has

complied with the International Safety Management (ISM)

Code adopted by the International Maritime Organization

(IMO) of the United Nations well ahead of the deadline of

July 1998.

In response to the incident involving the DIAMOND GRACE

accident, NYK has entrusted an investigation committee with

the Japan Captains’ Association in order to study safe

navigation procedures for NYK large tankers when proceed-

ing northbound along the west area of the Naka-no-Se reef in

Tokyo Bay. NYK has undertaken the following preventive

measures in preventing the recurrence of a similar incident,

referring to suggestions submitted from the above committee:

1. Execution of the Bridge Resource Management Training

NYK began this training course using a ship-maneuvering

simulator in February 1998, in order to enforce good team-

work in the Bridge Resource Management, a concept for

safety management which has been in existence and

practiced in the airline industry.

2. Inspection and Check for the Bridge Resource Management

This special inspection has been conducted in heavy

Japanese traffic areas while the pilot is on board, by our

highly experienced captains since July 28,1997.

3. Standard Maneuvering

NYK introduced mutual standard maneuvering with pilots

and instructed all NYK’s VLCCs to enforce standard maneuver-

ing when proceeding northbound along the west area of

Naka-no-Se reef in Tokyo Bay. NYK is confirming enforcement

of the above instructions on each VLCC when it carries out

the inspection and check the Bridge Resource Management.

In addition, NYK made and instructed the standard maneuver-

ing in other heavy Japanese traffic areas.

4. Support Systems for Safe Navigation

NYK is investigating suitable ECDISs (Electric Chart Display

and Information System) with the manufacturer of this

system. This system will be incorporated on all NYK’s VLCCs

after the investigation. Before the above implementation, the

alarm function for preventing grounding has been added to

the chart plotter of NYK’s VLCCs as a temporary measure.

In addition to the above, NYK investigated the effects of the

DIAMOND GRACE accident on the marine ecosystem of Tokyo

Bay and issued comprehensive report, which includes

simulations on crude oil spills and dispersion, studies on oil

dispersants, etc. This report states that the marine ecosystem

of Tokyo Bay has not been influenced by the DIAMOND

GRACE accident. NYK will continue to investigate the

influence of the DIAMOND GRACE accident on the marine

ecosystem on a constant basis.

Subsidiaries and AffiliatesShipping Segment

NYK Cruises Co., Ltd., a 100%-owned Japanese subsidiary

of NYK, operates cruise ship ASUKA. During fiscal 1997,

ASUKA completed its second round-the-world cruise in June

1997 and sailed for the third round-the-world cruise in March

1998, both with full complement. On the second voyage,

ASUKA visited a total of 18 countries and called at 29

different ports during its 96-day trip, while on the third, it

visited a total of 23 countries and called at 32 different ports

during its 98-day trip.

ASUKA is highly esteemed for its luxury and elegance,

and is taking all possible measures to ensure safety. In

February 1998, ASUKA received the Safety Management

Certificate (SMC) from the Japanese government and fully

complied with the requirements of the International Safety

Management Code. This was the first time for any Japanese

cruise ship to receive the SMC, which requires an inspec-

tion by the Ministry of Transport of Japan covering the

following items:

• Safety of Human Life at Sea

• Safe Operations of Ships

• Environmental Protection

Crystal Cruises Inc., NYK’s wholly-owned U.S. subsidiary

based in Los Angeles, operates two cruise ships of NYK, the

Six-Star CRYSTAL HARMONY and her sister ship, CRYSTAL

SYMPHONY. During fiscal 1997, the company gathered

numerous top honors from various US travel magazines,

including two top cruise awards in the “Travel & Leisure”

magazine’s 1997 World’s Best Awards, which are based on an

annual readers’ poll. For the second consecutive year, the

company won the highly acclaimed World’s Best Cruise Line

award, while CRYSTAL HARMONY won the World’s Best Cruise

Ship award for the first time. The company also earned the

highest scores in the poll for shipboard entertainment and

activities. Meanwhile, the company also received the Best

Large-Ship Cruise Line award from the “Condé Nast Traveler”

magazine in the annual Readers’ Choice Awards, well

outscoring other companies in the categories of staff and

service, food, recreations and activities, and night life and

entertainment.

In other diversified business areas of the Shipping segment,

both sales and profit of tug boat services offered by NYK’s

subsidiaries in major ports of Japan went down despite

showing relatively stable business conditions, as they had less

ships to handle due to decreased volume of vessels entering

Japan as a result of its sluggish economy.

22

Real Estate Corp. and Yusen Tennoz Building Inc. Business

conditions were relatively stable, despite the fact that

sluggish Japanese economy had negative impact on its

financial results.

NYK Logistics Technology Institute is one of the most

advanced private shipping laboratories in the world, and is

engaged in the research and development on the marine

transportation environment, information communications

and marine research. It became an independent subsid-

iary of NYK in July of 1997 in order to specialize even

further in logistics research.

During fiscal 1997, the Japan Marine

Science and Technical Center under the

Japanese government’s Science Technology

Oil Wholesaling Segment

Hikawa Shoji, one of the subsidiaries of NYK, is engaged in

domestic wholesale of oil products and the retail sale to gas

stations, sales of LPG and petrochemical products to indus-

tries and households, and international services for marine

fuel oil and lubricants. Hikawa Shoji actively rationalized and

restructured its organization in order to counter the harsh

economic conditions of Japan.

Price competition intensified in 1997 particularly in the

area of oil wholesaling, as a result of difficult economic

conditions and the full

deregulation of

petroleum and

petrochemical

products from 1996.

Efforts were therefore

focused on expanding

its sales channels by

cultivating new

demand and finding

new sales routes for

new products.

Segment - Others

Yusen Air & Sea Service Co., Ltd. (YAS) was established in

1955 as an international travel agency. The company

became a full-fledged air cargo forwarder in 1984, and

started specializing in cargo service from 1994.

As the third largest air cargo fowarder in Japan, YAS’s

main line of businesses includes the forwarding of air and

marine cargo, as well as cargo delivery and warehousing.

Currently, the company is focused on globalizing its

operations to respond to a wide range of customer needs

through its strong foothold in five major regions around the

world: Japan, the U.S,. Europe, Southeast Asia and Oceania.

YAS is also working to improve the quality of its delivery

services through incorporation of the internationally

acclaimed ISO 9002 standard in major cities around the

world.

In fiscal 1997, revenue well exceeded the figure for the

previous year, due to an increased amount of handled

cargo destined for Europe and the U.S. However, the

surge in cargo volume, in turn, increased expenses such

as the rise in air cargo freight rate, thus affecting its

profit.

In the area of real estate service, the group focused on

the active and maximum utilization of its real estate

holdings, managed mainly by two main subsidiaries, Yusen

23

Agency assigned Global Ocean Development Inc., a joint

venture between NYK and Fukada Salvage & Marine Works

Co. Ltd., to operate the oceanographic research vessel

MIRAI. With a crew of 34 of which 27 are NYK seamen,

MIRAI engages in surveys and research in the Pacific and

Indian Oceans in order to shed light on the thermal and

physical circulation patterns and ecosystems of the oceans

and the dynamics of plate tectonics of the ocean bed.

Eventually, MIRAI hopes to clarify the relationship between

the marine ecosystem and the global environment,

including the causes of El Niño.

Yusen Marine Science Inc. is a fully-owned subsidiary of

NYK providing comprehensive marine consulting services

on all aspects of ship operations and transport technology,

and also conducts research and development on systems

and technology in order to assure safe navigation. The

company was involved in a number of joint development

projects such as the LNG Carrier Turbine Plant Simulator

and a shiphandling simulator for the “Bridge Resource

Management” .

MCS (Multi Cargo Simulator) at NYK LogisticsTechnology Institute, one of NYK's subsidiariesand affiliates, can save damage to cargo BEFOREit leaves customers' hands

24

¥ Million

Six-Year Summary (Consolidated)

NIPPON YUSEN KABUSHIKI KAISHA AND SUBSIDIARIES

24

1998 1997 1996 1995 1994 1993For the years ended March 31:Revenues . 1,078,358 1,024,322 891,729 867,711 857,842 896,676Costs and expenses 924,182 872,480 759,034 746,489 745,416 759,875Selling, general and administrative expenses 107,888 103,250 97,760 88,251 92,175 99,400

Operating profit 46,288 48,592 34,935 32,971 20,251 37,401Other income and expenses (losses) (22,075) (24,773) (16,519) (17,957) (14,637) (21,681)

Profit before income taxes and special items 24,213 23,819 18,416 15,014 5,614 15,719Special items (losses) (7,461) (4,300) (7,512) (2,484) 3,102 (575)

Profit before income taxes 16,752 19,519 10,904 12,530 8,716 15,144Income taxes 10,879 8,225 9,338 9,207 2,876 8,562Minority interests (losses) (569) (152) 606 (403) 102 132Amortization of consolidation difference (172) (321) (256) (314) (5) (291)Equity in earning of non-consolidatedsubsidiaries and affiliates 2,023 2,778 1,418 541 160 1,008

Net profit 7,155 13,599 3,334 3,147 6,097 7,431

As at March 31:Current assets 420,250 373,093 373,910 362,561 388,599 393,281Current liabilities 428,078 480,276 463,975 446,764 387,651 470,617Vessels, property and equipment, net of depreciation 679,897 661,903 636,385 592,028 499,505 479,615Total assets 1,455,085 1,426,276 1,403,289 1,363,447 1,276,437 1,261,924Long-term debt 751,542 674,329 681,980 656,185 628,365 523,945Shareholders' equity 243,070 239,888 227,754 228,233 229,680 231,557Retained earnings 77,276 74,094 64,100 64,672 74,463 76,482

Per unit share of common stock (1,000 shares):Profit before income taxes and special items 20,529 20,226 15,685 12,903 4,848 13,578Net profit 6,066 11,548 2,840 2,704 5,265 6,419Shareholders' equity 206,085 203,387 193,944 194,393 198,314 200,002Dividends 4,000 4,000 4,000 4,000 4,000 4,000

"Per unit share of common stock" are calculated based on a weighted average number of common stock outstanding during each fiscal year.

¥

2525

¥ Million US$ Thousand

Consolidated Statements of Income

NIPPON YUSEN KABUSHIKI KAISHA AND SUBSIDIARIES(For the years ended March 31, 1998 and 1997)

The accompanying notes to consolidated financial statements are an integral part of this statement.

1998 1997 1998Revenues:

Freight and transportation services 940,360 857,571 7,118,544Net sales of goods and products 137,998 166,751 1,044,651

Total revenues 1,078,358 1,024,322 8,163,195

Cost and expenses:Expenses for transportation services 787,307 710,263 5,959,931Cost of sales goods and products 136,875 162,217 1,036,146

Total cost and expenses 924,182 872,480 6,996,077

Gross profit 154,176 151,842 1,167,118Selling, general and administrative expenses 107,888 103,250 816,718

Operating profit 46,288 48,592 350,400

Other income and expenses:Interest and dividend income 10,917 11,559 82,645Interest expenses 36,556 37,713 276,734Others, net 3,564 1,381 26,979

Total other income and expenses (losses) (22,075) (24,773) (167,110)

Profit before income taxes and special items 24,213 23,819 183,290

Special items:Gains (losses) on sales and disposal of vessels, property, equipment and investment securities 6,564 5,297 49,695Others, net (losses) (14,025) (9,597) (106,171)

Total special items (losses) (7,461) (4,300) (56,476)

Profit before income taxes 16,752 19,519 126,814

Income taxes 10,879 8,225 82,353Minority interest (losses) (569) (152) (4,308)Amortization of consolidation difference (losses) (172) (321) (1,301)Equity in earnings of non-consolidated subsidiaries and affiliates 2,023 2,778 15,313

Net profit 7,155 13,599 54,165

¥ US$

Per share of common stock:

Net profit - primary 6.07 11.55 0.046

- fully diluted 5.97 11.20 0.045

Dividends applicable to the year 4 4 0.030

2626

ASSETS

1998 1997 1998Current assets:

Cash and time deposits 67,339 58,675 509,758Marketable securities 80,154 95,776 606,768Notes and accounts receivable - trade (note 10) 136,737 133,144 1,035,103Allowance for doubtful accounts (1,101) (1,060) (8,332)Inventories (note 4) 21,378 20,325 161,831Deferred vessel and voyage expenses 8,835 9,700 66,882Other current assets 106,908 56,533 809,295

Total current assets 420,250 373,093 3,181,305

Investments and long-term receivables:Investments in securities 189,978 230,224 1,438,139Long-term loans receivable (note 8) 9,354 4,109 70,814Insured pension fund 98,804 107,322 747,951Other long-term receivables, at cost (note 8) 48,773 39,527 369,209Allowance for doubtful accounts (783) (790) (5,927)

Total investments and long-term receivables 346,126 380,392 2,620,186

Vessels, property and equipment, net of depreciation (notes 5 and 6):Vessels 459,316 445,091 3,477,033Buildings and structures 103,595 103,346 784,213Equipment and fixtures 5,903 5,345 44,685Land 59,922 55,725 453,613Construction in progress 41,802 43,582 316,445Others 9,359 8,814 70,849

Total vessels, property and equipment, net of depreciation 679,897 661,903 5,146,838

Other assets 7,479 7,810 56,604

Currency translation adjustments 1,044 2,723 7,907

Consolidation difference 289 355 2,188

Total assets 1,455,085 1,426,276 11,015,028

The accompanying notes to the consolidated financial statements are an integral part of this statement.

Consolidated Balance Sheets

NIPPON YUSEN KABUSHIKI KAISHA AND SUBSIDIARIES(As at March 31, 1998 and 1997)

¥ Million US$ Thousand

2727

NIPPON YUSEN KABUSHIKI KAISHA AND SUBSIDIARIES(As at March 31, 1998 and 1997)

¥ Million US $ Thousand

Consolidated Balance Sheets

LIABILITIES AND SHAREHOLDERS' EQUITY

1998 1997 1998Current liabilities:

Short-term bank loans 207,847 230,301 1,573,410Notes and accounts payable 119,324 114,898 903,281Income taxes payable 8,354 4,874 63,240Unearned freight 22,641 18,486 171,396Employees' bonuses accrued 5,789 5,732 43,821Other current liabilities 64,123 105,985 485,415

Total current liabilities 428,078 480,276 3,240,563

Long-term debt (notes 7 and 8) 751,542 674,329 5,689,193

Employees' severance indemnities accrued 18,617 18,867 140,929

Reserve for periodical dry docking of vessels 1,832 1,398 13,867

Directors' retirement benefits accrued 749 818 5,667

Minority interest 11,197 10,700 84,763

Total liabilities 1,212,015 1,186,388 9,174,982

Commitments and contingent liabilities (note10)

Shareholders' equity:Common stock, par value ¥50 per share; authorized 3,000,000,000 shares, issued and outstanding 1,179,470,138 shares at March 31, 1998 and 1997 80,488 80,488 609,294Additional paid-in capital 85,308 85,308 645,783Retained earnings:

Legal reserve 10,991 10,469 83,205Other retained earnings 66,285 63,625 501,781

243,072 239,890 1,840,063Treasury stock (2) (2) (17)

Total shareholders' equity 243,070 239,888 1,840,046

Total liabilities and shareholders' equity 1,455,085 1,426,276 11,015,028

US$

Shareholders' equity per share 206.08 203.39 1.560

¥

2828

Consolidated Statements of Shareholders’ Equity

NIPPON YUSEN KABUSHIKI KAISHA AND SUBSIDIARIES(For the years ended at March 31, 1998 and 1997)

Shares of common stock Common stock Additional Legal reserve Other retained(Thousands) paid-in capital earnings

1997:Balance at beginning of the year 1,174,334 79,643 84,014 10,008 54,092Due to increase in the number of consolidated subsidiaries 704Due to decrease in the number of consolidated subsidiaries 666Due to decrease in the number of consolidated subsidiaries (1,320)Due to increase in the number of affiliates 276Due to the capital increase of consolidated subsidiary 1,018Transfer from legal reserve (60) 60Transfer to legal reserve 521 (521)Cash dividends (4,697)Directors' bonuses (252)Net profit for the year 13,599Shares issued upon conversion of convertible bonds and exercise of warrants 5,136 845 1,294

Balance at end of the year 1,179,470 80,488 85,308 10,469 63,625

1998:Balance at beginning of the year 1,179,470 80,488 85,308 10,469 63,625Due to increase in the number of consolidated subsidiaries 1,133Due to increase in the number of affiliates (227)Due to the merger of consolidated subsidiary 76Transfer to legal reserve 522 (522)Cash dividends (4,718)Directors' bonuses (237)Net profit for the year 7,155

Balance at end of the year 1,179,470 80,488 85,308 10,991 66,285

US $ Thousand

Shares of common stock Common stock Additional Legal reserve Other retained(Thousands) paid-in capital earnings

1998:Balance at beginning of the year 1,179,470 609,294 645,783 79,254 481,640Due to increase in the number of consolidated subsidiaries 8,577Due to increase in the number of affiliates (1,722)Due to the merger of consolidated subsidiary 577Transfer to legal reserve 3,951 (3,951)Cash dividends (35,714)Directors' bonuses (1,791)Net profit for the year 54,165

Balance at end of the year 1,179,470 609,294 645,783 83,205 501,781

¥ Million

2929

Notes to Consolidated Financial Statements

3. Summary of Significant Accounting Policies:A. Consolidation policies

(1) The consolidated financial statements include the accounts ofthe Company and the 214 major subsidiaries. In the year endedMarch 31, 1998, 11 subsidiaries including Orient ConsolidationService (Hong Kong) Ltd. have been newly included in this consoli-dation as their effect on the consolidated financial statements wasconsidered to be material.

(2) The accounts of the non-consolidated subsidiaries (189companies and 167 companies for the years ended March 31, 1998and 1997, respectively) of the Company were not included in thefinancial statements, because of the fact that the aggregate assets,revenues, equity in net income and equity in surplus of thesesubsidiaries were minor relative to the totals of the consolidatedcompanies, and the effect of exclusion from consolidation was notconsidered to be material.

(3) Investments in non-consolidated subsidiaries and affiliates arecarried at either cost or equity, depending on the extent of controland materiality.

(4) The differences between the cost of investments and underlyingnet assets are amortized on a straight-line method over five years.

B. Accounting periodThe accounting period of the Company begins on April 1, and ends

on March 31 of the following year.The accounts of 89 subsidiaries are closed on December 31 each

year. The accounts of 2 subsidiaries are closed on September 30each year. The account of 1 subsidiary is closed on January 31 eachyear. The account of 1 subsidiary is closed on the last day ofFebruary each year.

As to the above companies, necessary adjustments on consolida-tion are made.

C. Valuation of assetsInvestments in marketable and other securities, except for invest-

ments in subsidiaries and affiliates accounted for by the equitymethod, are generally stated at the lower of cost or market value onan individual investment basis, with cost determined by the movingaverage cost method. Money in trusts (mostly marketable securities)are stated at cost, which are determined on a "basket basis" (similarto a portfolio basis by each contract).

Inventories are generally stated at the lower of cost or market, withcost determined by the moving average cost method.

NIPPON YUSEN KABUSHIKI KAISHA AND SUBSIDIARIES

D. Depreciation and amortization(1) Vessels and buildings are depreciated generally by the straight-

line method. Other tangible fixed assets are depreciated generallyby the declining-balance method.

(2) Pre-operating costs of 3 subsidiaries, and organizational costsof 1 subsidiary are amortized by the straight-line method over fiveyears. Bond issue expenses of the Company are amortized by thestraight-line method over three years. Bond discounts and premiumof the Company are amortized by the straight-line method over theperiod from issue to maturity. Stock issue expenses of 1 subsidiary isamortized by the straight-line method over three years. Researchand development costs of 3 subsidiaries are amortized by thestraight-line method over five years.

E. Capitalization of interest expensesInterest expenses are generally charged to income as they are

incurred. However, interest expenses incurred in construction ofcertain assets, particularly projects of vessels, are capitalized andincluded in the costs of assets when a construction period is substan-tially long and an amount of interest incurred in such period issignificantly large.

F. Allowance for doubtful accountsThe allowance for doubtful accounts is provided to an estimated

amount of probable bad debts plus the maximum amount which canbe charged to income under Japanese Corporation Tax Law.

G. ProvisionsEmployees' bonuses accrued and reserve for periodic dry-docking

of vessels are provided at the maximum amounts allowed underJapanese Corporation Tax Law.

H. Retirement and severance benefitsEmployees with more than a certain year of service, upon retire-

ment or otherwise severing their connection with the Company and itssubsidiaries in Japan, are generally entitled to lump-sum severancebenefits based on current rates of pay, length of service and certainother factors. The Company and its consolidated subsidiaries inJapan provide for liabilities for lump-sum severance benefits, whenrequired. In addition, the Company and several subsidiaries havefunded non-contributory pension plans covering the employeesretiring at the age limit under certain conditions. The amount of

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The accompanying consolidated financial statements are anEnglish translation of the consolidated financial statements madepublic for filing with the Ministry of Finance and the Stock Exchangesin Japan. The original consolidated financial statements, which areprepared in accordance with generally accepted accountingprinciples in Japan, include the accounts of Nippon Yusen KabushikiKaisha (the "Company") and its consolidated subsidiaries.

2. United States Dollar Amounts:The accompanying consolidated financial statements are stated in

Japanese yen, and the dollar amounts represent the arithmeticalresults of translating yen to dollars using the exchange rate prevailingat March 31, 1998, which was ¥132.10 to US$1. The statement in

In the English translation, certain account reclassifications aremade and additional information is provided in order to present theconsolidated financial statements in a format familiar to the interna-tional readers. The results of these reclassifications do not affect thefinancial position or results of operation of the consolidated compa-nies as reported in the original consolidated financial statements.

such dollar amounts is solely for convenience and is not intended toimply that the yen amounts have been or could be readily converted,realized or settled in dollars at that rate or any other rates ofexchange.

1. Basis of Presenting Consolidated Financial Statements:

Real estate for sale is stated at cost individually.

30

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30

"employees' severance indemnities accrued" on the balance sheetsare mainly computed under the regulation of Japanese CorporationTax Law, which is 40 % of the liability being required if all employeesvoluntarily terminate their employment on the balance sheet dates.Further, in most cases of employees' retirement, the amount ofseverance benefits to be paid by the Company and its subsidiariesare reduced by the amount of benefits payable under the pensionplan. Value of the plan assets at the latest valuation date amountedto ¥35,129 million, (US$265,930 thousand).

I. Translation of currencies other than Japanese yenCurrent monetary assets and liabilities denominated in currencies

other than Japanese yen are translated into yen at the exchange rateprevailing at the balance sheet date. Long-term monetary items,property and equipment and related depreciation expenses aretranslated at the historical rates except those, including bonds andnotes denominated in currencies other than Japanese yen, hedgedby forward exchange contract. Such bonds and notes are translatedinto Japanese yen at the contracted exchange rates and the differ-ences between the amounts at the contracted forward exchangerates and the amounts at the spot rates at the date of issues aredeferred and amortized over the life of the forward exchangecontracts.

Revenues and expenses originating in transactions other thanJapanese yen are translated at the rates prevailing at the time oftransactions. Gains and losses resulting from translation are creditedor charged to income as earned or incurred.

J. Translation of financial statements in currencies other thanJapanese yenAll the items of the financial statements of subsidiaries and affiliates

in currencies other than Japanese yen are translated into yen at theapplicable year-end rates except for shareholders' equity and inter-

company transactions, which are translated at historical rates.Amounts of discrepancies arising from the translation are shown as"Currency translation adjustments" in the consolidated balance sheets.

K. Freight revenues and expenses recognitionFreight revenues and expenses are recognized by the two different

method depending on types of cargo transportation.(Transportation by containerships)Revenues and expenses arising from ocean transportation of

containers are recognized proportionately as shipments move fromorigin to destination.

(Transportation by vessels other than containerships)Revenues and expenses from transportation by vessels other than

containerships are recognized upon completion of unloading cargoesat final destination port. Revenues received before unloading ofcargoes are included in "Unearned freight" and the related transpor-tation expenses are included in "Deferred vessel and voyageexpenses."

L. Income taxesIncome taxes in the accompanying consolidated financial state-

ments consist of corporation and inhabitants taxes. Enterprise tax isalso levied on income but charged to profit before income taxes andspecial items and is deductible for computation of income taxes whenpaid. On an aggregate basis, the statutory income tax rate in Japanis approximately 51%. The actual tax rates differ from the statutory taxrates because of a number of reasons such as a special tax levied onthe profit of the vessel owning companies established in tax havenareas, entertainment and social expenses not deductible for theJapanese income taxes, etc. Deferred income taxes are not providedfor timing differences in profit or expenses recognition for tax andfinancial reporting purposes, except for 25 consolidated subsidiariesin the U.S.A., Australia, Singapore and Hong Kong.

4.Inventories:Inventories at March 31, 1998 consisted of the following:

¥ Million US$ ThousaundProducts and goods 3,020 22,863Real estate for sale 5,061 38,313Fuel and supplies 7,376 55,834Other inventories 5,921 44,821Total 21,378 161,831

5. Accumulated Depreciation:As of March 31, 1998 and 1997, accumulated depreciation amounted to ¥ 490,778 million ($3,715,199 thousand), and ¥ 462,215 million

($3,498,976 thousand), respectively.

6. Deferred Capital Gains:In accordance with corporation tax regulations and the opinion of the Japanese Institute of Certified Public Accountants, deferred capital gains

of ¥ 5,443 million ($ 41,204 thousand), and ¥ 5,726 million ($ 43,344 thousand), mainly from insurance claims, were deducted from the cost ofproperties acquired in replacement as of March 31, 1998 and 1997, respectively.

3131

7. Long-Term Debt:Long-term debt at March 31, 1998 consisted of the followings:

¥ Million US$ Thousand

Loans from banks and other financial institutions, with interest rates rangingfrom 0.23 percent to 11.63 percent due from 1998 to 2019 610,063 4,618,192

2.1 percent Convertible Bonds, due on March 29, 2002 (conversion price ¥461.50) 53 4015.3 percent Mortgage Bonds,due on January 25, 2000 2,000 15,1402.0 percent Convertible Bonds, due on September 29, 2000 (conversion price ¥525.00) 24,328 184,1642.5 percent Notes, due on September 22, 2000 30,000 227,1012.75 percent Notes, due on September 21, 2001 10,000 75,7003.00 percent Notes, due on September 20, 2002 10,000 75,7001.75 percent Notes, due on January 11, 1999 10,000 75,7002.35 percent Notes, due on January 7, 2005 10,000 75,7002.02 percent Notes, due on January 23, 2003 20,000 151,4005.1 percent Mortgage Bonds, due on February 25, 2000 200 1,5149.0 percent Nikkei-Linked Bear Bonds, due on June 21, 1999 17,232 130,4446.0 percent Notes, due on July 18, 2000 3,062 23,176Floating/fixed rate Euro Medium-Term Notes, due 1998 – 2008 85,230 645,193Other long-term debt 22,491 170,263

854,659 6,469,788Less portion due within one year (103,117) (780,595)Total 751,542 5,689,193

On June 9, 1998, the Company issued following notes:

1.7 percent Notes, due on June 9, 2003 10,000 75,7001.925 percent Notes, due on June 9, 2004 10,000 75,7002.1 percent Notes, due on June 9, 2005 20,000 151,400

At March 31, 1998, the following assets were pledged as collateral for certainNet Book Value

¥ Million US$ ThousandVessels 121,900 922,786Buildings 45,811 346,790Land 15,386 116,472Investment securities 7,966 60,305Others 4,247 32,148Total 195,310 1,478,501

At March 31, 1998, the aggregate annual maturities of long term loans frombanks and other financial institutions for years ending at March 31, ¥ Million US$ Thousand

1999 84,265 637,8912000 61,965 469,0732001 92,707 701,7942002 59,732 452,1752003 68,167 516,0292004 and after 243,227 1,841,230Total 610,063 4,618,192

The number of shares to be issued upon conversion of the convertible bonds was 60,133,889 at March 31, 1998

8. Long-Term Receivables and Debts Denominated in Currencies Other than Japanese Yen:The differences between the amounts stated in the Consolidated Balance Sheet as of March 31, 1998 and the amounts which would have

resulted from conversion at the fiscal year-end rate for the captioned items are as follows:

(1) Long-term receivables ¥ Million

Yen amount stated on the Consolidated Balance Sheet 657Yen amount translated at the fiscal year-end rate 685 Difference 28

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short-term and long-term borrowings:

3232

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(2) Long-term debt ¥ Million

Yen amount stated on the Consolidated Balance Sheet 57,290Yen amount translated at the fiscal year-end rate 66,878 Difference 9,588Long-term debt includes US dollar-denominated borrowing in the amount of US$453,078 thousand (¥51,224 million). The exchange risk of this borrowing is effectively hedged by future US

dollar income from the charterage of vessels in connection with the Qatar LNG transportation project.

9. Accounting for Leases:Finance leases, except those for which the ownership of leased assets are deemed to be transferred to lessees, are accounted for by the method

similar to that applicable to ordinary operating leases. Information on lease contracts for the year ended at March 31,1998 were as follows:

1.Finance leases accounted for as operating leasesAs lessees (1) Future lease rental payments ¥ Million Within one year 5,659 More than one year 15,491 Total 21,151

(2) Lease rental expenses for the year 6,899

As lessors (1) Future lease rental income ¥ Million Within one year ¥58 More than one year 532 Total 590

(2) Lease rental income for the year 44

2.Operating leasesAs lessees Future lease rental payments ¥ Million Within one year 5,051 More than one year 12,565 Total 17,616

As lessors Future lease rental income ¥ Million Within one year 31 More than one year - Total 31

10. Commitments and Contingent Liabilities:Commitments made by the Company and its consolidated subsidiaries amounted to ¥ 62,751 million ($ 475,026 thousand) for the construction

of vessels and amounted to ¥1,787 million ($ 13,524 thousand) for the equipments as of March 31, 1998.Contingent liabilities for notes receivable discounted and endorsed, loans guaranteed, joint debt of indebtedness and for debt assumption

agreements as of March 31, 1998 were as follows:¥ Million US$ Thousand

Notes receivable discounted and endorsed 472 3,576Loans guaranteed 33,342 252,401Joint debt of indebtedness 99,416 752,582Total 133,230 1,008,559

11. Retained Earnings:The Japanese Commercial Code provides that unappropriated retained earnings equivalent to at least 10% of cash dividends and directors'

bonuses paid by a company be appropriated as a legal reserve until such reserve equals 25% of its capital stock. This legal reserve may be usedto reduce a deficit upon approval of a general meeting of the shareholders, or transferred to capital stock upon approval of the Board of Directors,but is not available for payment of dividends.

In Japan, dividends proposed by the Board of Directors out of earnings accumulated as of the end of a year are approved at the generalshareholders' meeting in the following year. In the accompanying consolidated financial statements, dividends are shown as a reduction ofconsolidated retained earnings in the year approved and paid.

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3333

12. Financial Information by Segment:

1. Information by industry segment

The company and its consolidated subsidiaries operate principally in three businesses: Shipping, Oil Wholesaling and Real Estate.The following tabulation presents certain segment information for the years ended at March 31, 1998 and 1997.

For the year ended March 31, 1998:¥ Million

Shipping Oil Wholesaling Real Estate Others Total Elimination and Consolidated

Unallocation Total

Revenues:(1) Revenues from customers 798,115 113,535 12,638 154,070 1,078,358 - 1,078,358(2) Intersegment revenues 757 3,484 3,622 14,175 22,038 (22,038) -Total revenues 798,872 117,019 16,260 168,245 1,100,396 (22,038) 1,078,358

Operating costs and expenses 763,081 116,598 12,592 161,838 1,054,109 (22,039) 1,032,070Operating profit 35,791 421 3,668 6,407 46,287 1 46,288Assets 827,158 24,257 96,667 346,155 1,294,237 160,848 1,455,085Depreciation and amortization 48,703 40 2,548 2,820 54,111 - 54,111Capital expenditures 59,991 16 1,862 6,112 67,981 7 67,988

For the year ended March 31, 1998:US$ Thousand

Shipping Oil Wholesaling Real Estate Others Total Elimination and Consolidated

Unallocation Total

Revenues:(1) Revenues from customers 6,041,752 859,464 95,674 1,166,305 8,163,195 - 8,163,195(2) Intersegment revenues 5,734 26,374 27,421 107,300 166,829 (166,829) -Total revenues 6,047,486 885,838 123,095 1,273,605 8,330,024 (166,829) 8,163,195

Operating costs and expenses 5,776,541 882,653 95,328 1,225,112 7,979,634 (166,839) 7,812,795Operating profit 270,945 3,185 27,767 48,493 350,390 10 350,400Assets 6,261,605 183,626 731,771 2,620,403 9,797,405 1,217,623 11,015,028Depreciation and amortization 368,683 307 19,288 21,343 409,621 - 409,621Capital expenditures 454,133 126 14,097 46,256 514,612 59 514,671

For the year ended March 31, 1997:¥ Million

Shipping Oil Wholesaling Real Estate Others Total Elimination and Consolidated

Unallocation Total

Revenues:(1) Revenues from customers 733,164 139,851 15,983 135,324 1,024,322 - 1,024,322(2) Intersegment revenues 1,087 1,763 3,545 13,812 20,207 (20,207) -Total revenues 734,251 141,614 19,528 149,136 1,044,529 (20,207) 1,024,322

Operating costs and expenses 696,549 141,657 14,965 144,672 997,843 (22,113) 975,730Operating profit (losses) 37,702 (43) 4,563 4,464 46,686 1,906 48,592Assets 769,216 30,366 98,939 354,231 1,252,752 173,524 1,426,276Depreciation and amortization 49,304 47 2,805 2,438 54,594 - 54,594Capital expenditures 72,080 68 2,344 5,239 79,731 107 79,838

2. Information by geographic area

For the year ended March 31, 1998:¥ Million

Japan North America Europe Asia Others Total Elimination and Consolidated

Unallocation Total

Revenues:(1) Revenues from customers 905,458 105,089 40,596 23,683 3,532 1,078,358 - 1,078,358(2) Intersegment revenues 10,423 31,002 6,600 11,773 482 60,280 (60,280) -Total revenues 915,881 136,091 47,196 35,456 4,014 1,138,638 (60,280) 1,078,358

Operating costs and expenses 874,646 133,142 46,524 34,000 4,090 1,092,402 (60,332) 1,032,070Operating profit 41,235 2,949 672 1,456 (76) 46,236 52 46,288Assets 1,004,704 77,971 170,528 52,129 3,531 1,308,863 146,222 1,455,085

3434

US$ Thousand

Japan North America Europe Asia Others Total Elimination and Consolidated

Unallocation Total

Revenues: (1) Revenues from customers 6,854,337 795,527 307,314 179,282 26,735 8,163,195 - 8,163,195 (2) Intersegment revenues 78,905 234,686 49,961 89,121 3,649 456,322 (456,322) - Total revenues 6,933,242 1,030,213 357,275 268,403 30,384 8,619,517 (456,322) 8,163,195

Operating costs and expenses 6,621,092 1,007,889 352,194 257,387 30,949 8,269,511 (456,716) 7,812,795Operating profit 312,150 22,324 5,081 11,016 (565) 350,006 394 350,400Assets 7,605,632 590,242 1,290,901 394,618 26,730 9,908,123 1,106,905 11,015,028

For the year ended March 31, 1997:

Japan Overseas Countries Total Elimination and Consolidated

Unallocation Total

Revenues:(1) Revenues from customers, 880,376 143,946 1,024,322 - 1,024,322(2) Intersegment revenues 3,935 44,159 48,094 (48,094) -Total revenues 884,311 188,105 1,072,416 (48,094) 1,024,322

Operating costs and expenses 843,603 181,961 1,025,564 (49,834) 975,730Operating profit 40,708 6,144 46,852 1,740 48,592Assets 918,185 302,170 1,220,355 205,921 1,426,276

3. Information by area-wise revenue origin

For the year ended March 31, 1998:

Japan North America Europe Asia Others Consolidated

Total

Area-wise revenue 297,699 283,020 149,207 159,772 188,660 1,078,358

Japan North America Europe Asia Others Consolidated

Total

Area-wise revenue 2,253,588 2, 142,468 1, 129,500 1,209,478 1,428,161 8,163,195

Revenues from areas other than Japan consist principally of ocean-going vessel and voyage revenue.

For the year ended March 31, 1997:Revenues from areas other than Japan, which consist principally of ocean-going vessel and voyage revenues, were ¥715,395 million

($5,764,666 thousand),which is 69.8 % of consolidated revenues (¥1,024,322 million, $8,254,004 thousand).

13. Subsequent EventOn June 26, 1998, the shareholders approved the following appropriation of retained earnings of the Company:

Retained earnings at March 31, 1998 4,225 31,980 Transfer from general reserve 3,626 27,449 Cash dividends (4,718) (35,714) Transfer to legal reserve (479) (3,626) Directors' bonuses (70) (529) Transfer to general reserve (2,489) (18,840) Transfer to special reserve (90) (681)Retained earnings to be carried forward 5 38

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

¥ Million

¥ Million

US$ Thousand

For the year ended March 31, 1998:

¥ Million US$ Thousand

3535

Report of Independent Certified Public Accountants

35

Chuo Audit CorporationIndependent Certified Public Accountants

36

Directors and Auditors(as of June 26, 1998)

Jiro Nemoto Chairman

Hiroshi Ishikawa Vice Chairman

Kentaro Kawamura President

Michio Tanaka Senior Managing Director

Koichi Suzumura Senior Managing Director

Kuniaki Shirakuma Senior Managing Director

Teizo Tanaka Managing Director

Yoshikazu Sumi Managing Director

Tsuguji Yamaguchi Managing Director

Takao Kusakari Managing Director

Tsunenari Tokugawa Managing Director

Yuji Hirano Managing Director

Koji Toyoda Managing Director

Kazuhira Kamiya Director

Kin-ichi Hirayama Director

Mitsutoshi Nawa Director

Masanobu Ito Director

Saburo Kawahara Director

Akiharu Wakasa Director

Keiji Tabuchi Director

Tadatoshi Mamiya Director

Hiroshi Kobayashi Director

Seiji Meguro Director

Yoshihiro Uesu Director

Mitsutada Hinonishi Director

Tsuneyoshi Imai Corporate Auditor

Ken-ichi Shinya Corporate Auditor

Hisao Ohya Corporate Auditor

Jotaro Wada Corporate Auditor

Masao Takahashi Corporate Auditor

*Representative Director

Corporate Structure(As of July 1998)

Chairman of the Board of Directors

Vice Chairman of the Board of Directors

President

Executive Vice President

Senior Managing Director

Managing Director

Director

Corporate Auditor

Board of Corporate Auditors

General Meeting of Shareholders

Board of Directors

Board Counselor

Adviser to the President

Adviser

*

*

*

*

*

*

*

37

General Affairs Group

Corporate Communication Group

Human Resources Group

Business Management Group

Container Trade Management Group

Container Trade Coordination Group

Sales Support Group

Europe/Oceania Group

North America Group

Asia Group

Logistics Group

Tramp Co-ordination Group

Car Carrier Group (1)

Car Carrier Group (2)

Neo-Liner Group

Handy Bulker Group

Reefer Cargo Group

Open Hatch Bulker Group

Semi-Liner Group

Iron Ore and Coal Group

Panamax Bulker Group

Forest Products Group

Steaming Coal Group

Petroleum Group

Petroleum Product Group

Gas Carrier Group

Management Coordination Group

Planning Group

Harbour Group

Research Group

Cruise Group

Corporate Affiliate Management Group

Law and Insurance Group

Marine Technical Group

Manpower Development Group

Ship Administration Group

Marine Engineering Group

Technical Group

Finance Group

Accounting Group

Accounts Consolidation Group

Corporate Auditors’ Staff Chamber

Head Office Sapporo Branch

Kushiro Office

Muroran Office

Tomakomai Office

Yokohama Branch

Nagoya Branch

Osaka Branch

Kobe Branch

Kyushu Branch (Hakata)

Kyushu Branch (Moji)

Resident Representative, Seoul

Resident Representative, Beijing

Resident Representative, Shanghai

Resident Representative, Qingdao

Resident Representative, Taipei

Resident Representative, Kaohsiung

Resident Representative, Jakarta

Resident Representative, Ho Chi Minh

Resident Representative, Hanoi

Resident Representative, Dubai

Resident Representative, Mexico City

Resident Representative, São Paulo

Resident Representative, Buenos Aires

Home Branches

Resident Representatives Abroad

Vessels (See Page 40- 41)

Overseas Affiliate Offices for Shipping

NYK Line (China) Co., Ltd.

NYK Line (Hong Kong) Ltd.

NYK Shipping Service (Thailand) Co., Ltd.

NYK Agencies (M) Sdn. Bhd.

N.Y.K. Line 1993 (S) Pte., Ltd

P.T. NYK Line Indonesia

Tata NYK Transport Systems Ltd.

N.Y.K. Line Lanka (Private) Limited

NYK Bulkship (Asia) Pte., Ltd.

NYK Line (Canada) Inc.

NYK Line (North America) Inc.

NYK Sudamerica (Chile) S.A.

NYK Bulkship (USA) Inc.

NYK Line (Europe) Ltd.

NYK Line (Sverige) AB

NYK Line (Deutsuchland) GmbH

NYK Line (Benelux) B.V.

NYK Bulkship (Europe) Ltd.

NYK Line (Australia) Pty., Ltd.

NYK Shipping (New Zealand) Ltd.

38

Major Consolidated Subsidiaries and Affiliates

DOMESTIC

Shipowners and Vessel Operation

Company NYK’s Revenues Total Paid-inownership+ assets capital

(%) (¥ million) (¥ million) (¥ million)

Arun LNG Transport, Inc.* 30.63 14,623 982 400

Asahi Shipping Co., Ltd.* 38.54 3,339 4,421 550

Badak LNG Transport, Inc.* 25 10,023 2.399 400

Camellia Line Co., Ltd. 51 3,509 619 400

Chiyoda Shipping Co., Ltd. 56.88 4,533 2.535 160

Hachiuma Steamship Co., Ltd. 68.72 9,442 5,017 500

Kinkai Yusen Kaisha, Ltd. 72.75 17,353 12,742 1,450

Kyoei Tanker Co., Ltd.* 30 11,799 14,987 2,850

Mitsubishi Ore Transport Co. Ltd.* 22.23 7,715 7,245 1,500

Mari-Tech Management Inc. 78.3 8,515 3,593 610

Ogasawara Kaiun Co., Ltd.* 50 1,886 4,241 10

Shinwa Kaiun Kaisha, Ltd.* 26.7 69,225 37,788 8,100

Taiheiyo Kaiun Co., Ltd.* 22.73 11,267 9,836 3,500

Taiheiyo Kisen Kaisha, Ltd.* 31.38 5,752 5,267 2,100

Tanda Sangyo Kisen Kaisha, Ltd.* 45 904 1,295 320

Toho Shipping Co., Ltd. 85 6,496 8,843 150

Tokyo Senpaku Kaisha, Ltd.* 39.7 49,838 13,665 1,299

Tugboat and Other Port Services

Kaiyo Kogyo Co., Ltd. 98 3,378 2,844 90

Kaiyo Sangyo Co., Ltd. 100 308 531 20

Naikai Tug Boat Service Co., Ltd.* 43.59 5,686 7,407 98

Nippon Kaiyosha, Ltd.* 50 4,667 8,995 480

Nishinihon Kaiun Kaisha, Ltd.* 30 3,330 3,072 50

Sanyo Kaiji Co., Ltd.* 48.61 5,590 6,873 90

Tomakomai Kaiun Co., Ltd. 95 1,203 932 40

Cruise & Marine Leisure

Asuka Ship Co., Ltd. 100 8,767 3,053 2,000

Crystal Yacht Club Inc. 100 630 392 300

NYK Cruises Co., Ltd. 100 2,196 650 490

Harbour Transportation and Stevedoring Services

Asahi Unyu Kaisha, Ltd.* 50 10,314 5,360 100

Chiba Kaiun Sangyo Co., Ltd. 100 383 936 30

Hirokura Co., Ltd. 72.22 1,098 889 90

Honma Corporation 91 3,294 2,454 50

Kitakyushu Transportation Co., Ltd.* 35 16,162 20,010 242

Nippon Container Terminal Co., Ltd. 51 82,959 5,509 250

Nippon Container Yuso Co., Ltd. 51 7,030 2,127 250

UNI-X Corporation 55.26 24,003 21,919 934

Yashio Kairiku Co., Ltd. 100 667 469 120

Yokohama Kyoritsu Warehose Co., Ltd. 70.9 2,239 3,769 446

Yusen Kairiku Unyu Kaisha Ltd. 55.25 3,110 1,563 50

Yusen Koun Co., Ltd. 76 7,739 2,559 100

Transportation and Logistics Services

Kyokuto Nenryo Yuso Co., Ltd. 100 2,081 987 60

Sanpo Unyu Co., Ltd.* 20 13,312 4,801 200

Yusen Air & Sea Service Co., Ltd. 66.26 54,903 39,178 1,789

Yusen Fresh Chain Co., Ltd. 91.67 1,535 475 300

Yusen Travel Co., Ltd. 100 5,208 5,054 450

Real Estate

Meiyu Real Estate Co., Ltd.* 50 336 1,377 225

NYK Tennoz Building Inc. 100 3,058 40,625 3,200

Yokohama Boeki Tatemono Kabushiki Kaisha 70.39 433 776 215

Yusen Real Estate Corp. 100 7,481 20,062 750

Shipping-Related Technology

NYK Engineering Co., Ltd. 100 766 1,204 10

Yusen Marine Science Inc. 100 1,286 1,300 420

Yusen Navtec Co., Ltd. 100 779 464 80

Computers and Communications

Nippon Denshin Kogyo Co., Ltd. 100 1,233 348 480

NYK Systems Research Institute (NSRI) 100 5,821 2,046 99

Yusen Computer System Co., Ltd. 100 1,487 674 33

Yusen Joho Kaihatsu Co., Ltd. 100 2,455 738 80

Manufacturing

Daito Marine Engineering Co., Ltd. 81 1,609 996 40

3939

Company NYK’s Revenues Total Paid-inownership+ assets capital

(%) (million) (million) (million)

Shipping Agencies

NYK Line (Hong Kong) Ltd. 100 HK$120 HK$288 HK$55

NYK Shipping Service (Thailand) Co., Ltd.* 39 B295 B444 B10

N.Y.K. Line 1993 (S) Pte., Ltd. 100 SP$19 SP$33 SP$1

NYK Line (North America) Inc. 100 US$57 US$61 US$32

NYK Line (Canada) Inc. 100 C$2 C$2 C$0.2

NYK Line (Europe) Ltd. 100 £24 £20 £2

NYK Line (Sverige) A. B. 100 SEK27 SEK17 SEK1

* Equity method applicable company*1 Consolidated with E. Pape & Co., GmbH and Pape & Meyer GmbH*2 Consolidated with United Warehouse & Distribution Corp.*3 Consolidated with NYK Finance (Cayman)*4 Consolidated with Centennial Stevedoring Services + Includes holdings of subsidiaries

Keihin Dock Co., Ltd. 100 2,088 634 30

Nippon Nozzle Seiki Co., Ltd.* 50.78 1,290 1,403 42

Nippon Yuka Kogyo Co., Ltd. 100 1,107 1,003 20

Yokohama Denko (Electric) Co., Ltd. 75 1,579 1,038 30

Merchandising

Asahi Mechatronic Corp. 59.67 11,588 6,909 150

Atsuta Oil Co., Ltd. 100 1,381 190 20

Fuso Sekiyu Co., Ltd.* 30 4,154 1,458 10

Hikawa Marine Co., Ltd. 100 2,739 1,109 50

Hikawa Sekiyu Co., Ltd. 60 1,434 217 50

Hikawa Shoji Kaisha, Ltd. 76.76 111,249 31,723 4,237

Kansai Hikawa Sekiyu Kaisha, Ltd. 66.12 4,284 1,105 90

Sanyo Trading Co., Ltd.* 42.25 7,693 6,118 100

Accounting and Finance

Yusen Accounting and Finance Co., Ltd. 100 1,531 28,774 99

Others

Hikawamaru Marine Tower Co., Ltd. 55.22 1,404 1,831 460

Taiyo Graphic Co., Ltd. 99.99 979 1,352 200

Yusen Building Technical Management Co., Ltd.100 821 269 30

NYK Line (Deutschland) GmbH 100 DM47 DM20 DM1

NYK Line (Benelux) B. V. 100 DFL33 DFL24 DFL1

NYK Line (Australia) Pty., Ltd. 100 A$12 A$13 A$1

Tramper Business

NYK Bulkship (Asia) Pte., Ltd. 100 SP$93 SP$183 SP$19

NYK Bulkship (USA) Inc. 100 US$10 US$13 US$1

NYK Bulkship (Europe) Ltd. 100 £27 £11 £2

Cruise & Marine Leisure

Crystal Cruises, Inc. 100 US$190 US$87 US$30

Dectar Pty., Ltd. 100 A$24 A$14 A$10

Logistics and Warehousing

GST Corporation 100 US$387 US$77 US$3

Milan Distribution Centre Spa. 98 LIT9,691 LIT17,900 LIT6,335

New Wave Transport (Italia) S.R.L. 100 LIT3,419 LIT1,024 LIT99

New Wave Enterprise (Belgium) N. V. 100 BFR592 BFR623 BFR236

New Wave Logistics (U.K.) Ltd. 100 £13 £23 £11

New Wave Spedition GmbH*1 100 DM56 DM36 DM5

New Wave Transport (Australia) Pty., Ltd. 100 A$23 A$8 A$7

NYK Distribution Systems (Americas), Inc.*2 100 US$16 US$37 US$7

NYK Transport Service (Thailand) Co., Ltd.* 28.93 B2,013 B1,093 B35

Orient Consolidation Service of America, Inc. 80 US$2 US$1 US$0.2

Orient Consolidation Service (H.K.) Ltd. 75 HK$158 HK$39 HK$2

UCI Logistics Ltd. 100 £53 £26 £30

Yusen Air & Sea Service (H.K.) Ltd. 100 HK$514 HK$202 HK$5

Yusen Air & Sea Service (Singapore) Pte., Ltd. 100 SP$76 SP$46 SP$8

Yusen Air & Sea Service (USA) Inc. 100 US$84 US$33 US$4

Others

Centennial Express Corp. 100 US$121 US$19 US$1

NSRI (U.S.A.) Inc. 100 US$13 US$2 US$0.1

NYK International (USA) Inc.*3 100 US$23 US$312 US$2

NYK International PLC. 100 US$14 US$76 US$34

NYK International (Netherlands) B. V. 100 DFL98 DFL1,851 DFL19

Yusen Teminals Inc.*4 100 US$167 US$52 US$18

A$ Australian Dollar HK$ Hong Kong DollarB Thai Baht LIT Italian LiraBFR Belgian Franc SEK Swedish KronaC$ Canadian Dollar SP$ Singaporian DollarDFL Dutch Florin US$ United States DollarDM Deutshe Mark £ Sterling Pound

OVERSEAS

40

Gross Operating Tonnage

Vessels KTs (DWT)

Owned 228 13,966,530

Chartered 459 17,112,253

Total 687 31,078,783

Container Ships

Semi-Container Ships

Bulk Carriers (Capesize)

Coal Carriers

BulkCarriers (Panamax and Handysize)

Wood Chip Carriers

Car Carriers

Reefer Carriers

Tankers

LNG Carriers

Cruise Ships

Others

Fleet : NYK Group Companies (As of March 31, 1998)

Type of Vessels○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

NOTE:1. Vessels owned by NYK group companies which include those owned bynon-consolidated companies2. Vessels owned or chartered by equity method applicable companies are notbased on equity ratio but 100% accounted for

4141

Owned Chartered Total○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

18

359,680

5

102,566

23

462,246

986,766 KTs (DWT)

33 Vessels

1,414,003 KTs (DWT)

74 Vessels

2,400,769 KTs (DWT)

9

1,476,000

18

3,102,420

27

4,578,420

--

9

849,264

9

849,264

202

8,953,117

35

1,370,690

237

10,323,807

16

728,689

14

566,181

30

1,294,870

57

752,667

29

420,296

86

1,172,963

33

310,266

6

54,848

39

365,114

33

3,364,885

43

4,629,392

76

7,994,277

--

19

1,165,075

19

1,165,075

--

3

20,180

3

20,180

52

378,345

12

73,453

64

451,798

41 Vessels

41

42

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NYK GroupMain Ports of Call and Agencies

KushiroTomakomaiSapporoMuroranTokyoYokohamaShimizuNagoya(Yokkaichi)OsakaKobeMojiHakataNahaBusanInchonSeoulKeelungTaipeiKaohsiungHong Kong

DalianBeijingTianjinQuindaoZhangjiagangNanjingShanghaiNingboXiamenShekouShenzhenGuangzhouSingapore Johor BahruKuala LumpurPort KlangPenangPanjangJakartaSemarang

SurabayaBalikpapanUjung PandangBangkokManilaCebuDavaoHanoiHaiphongDa NangHo Chi Minh ChittagongCalcuttaMadrasColomboMumbaiKarachiBandar AbbasBandar KhomeiniTehran

BasrahKuwaitDammanJubel AliAbu DhabiDubaiPort Sultan Qaboos AnchorageWrangellVancouverSeattlePortlandSan FranciscoOaklandLos AngelesLong BeachSan DiegoBoiseMinneapolisKansas City

DallasHoustonGalvestonBeaumontPort ArthurNew OrleansMobileMemphisCincinnatiCharlotteAtlantaTampaSavannahCharlestonMorehead CityNorfolkBaltimorePhiladelphiaSecaucusNew York

BostonHalifaxSt. John MontrealTorontoClevelandDetroitChicagoHonoluluEnsenadaGuaymasManzanilloMexico CityAcapulcoVeracruzSalina CruzChampericoPuerto QuetzalAcajutlaLa Union

San LorenzoCorintoPuerto CalderaCristobalPanamaKingstonPort-au-PrinceSanto DomingoSan JuanCuracaoPort of SpainBuenaventuraEsmeraldasMantaGuayaquilPaitaChimboteCallaoMataraniIIo

1317

49

50

52

54

5758

67

5961

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3843

42

157

124

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1011

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32

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33

39 40 41

2728

29

26

3031

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56

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170174

175

189 190

192193

194

195

196

198197

199

200

201 202203

204

206

207208

209210

211

212

213214

215216

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220

221

222 223224

225

226227

228 229230

231

233

234 235

236237

239

240

187188

185

165

166167168 169

171

172

176 177

178 179

180

181182183

184

186191

205

232

238

241

242243

245

247

250

253252

259260

261262 265

266

267268

269270

271

263

264

254

255

244

246248

249

251

173

3

2223 21

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42

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181182183184185186187188189190191192193194195196197198199200

241242243244245246247248249250251252253254255256257258259260

AricaIquiqueAntofagastaChanaralValparaisoSantiagoSan AntonioCartagenaSanta MartaPuerto CabelloLa GuairaGuantaGeorgetownBelémManausSalvadorVitóriaSão PauloRio de Janeiro Santos

ParanaguaRio GrandeMontevideoBuenos AiresGlasgowLiverpoolBirminghamSouthamptonLondonHelsinkiStockholmHelsingborgGothenburgOsloCopenhagenBremerhavenHamburgDüsseldorfFrankfurtMunich

BremenRotterdamAntwerpBrusselsLe HavreParisLisbonBarcelonaMarseillesGenoaMilanTriesteRijekaIstanbulConstantaOdessaNovorossiskTuapseIzmirMersin

LimassolLatakiaBeirutAqabaJeddahHodeidaAdenDjiboutiAssabMassawaPort SudanPort SaidSuezAlexandriaBenghaziTripoliVallettaAlgiersOranCasablanca

DakarAbidjanLagos/ApapaPort HarcourtDoualaPointe NoireMatadiCape TownPort ElizabethEast LondonDurbanJohannesburgMaputoBeiraTamataveDar es SalaamMombasaNairobiMogadiscioMahe

Port DarwinPort HedlandDampierFremantleBunburyAdelaideGeelongMelbourneSydneyNewcastleBrisbaneGladstoneTownsvilleCairnsHobartAucklandWellingtonChristchurchSaipanGuam

WewakMadangLaePort MoresbyKaviengRabaulKietaHoniaraSantoPort VilaNoumeaTarawaLautokaSuvaApiaPago PagoPapeete

68

69

74

7677

110 111

112

116

115

117118

119 120121 122

123124125

126 127128

129

131130

132133

134135

136

137

138

139 140141

142

143144

145147

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150151 152 153

154

156

157

159160161

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155

83

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103

79

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109

7071

72

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73

75

80

81

82 86

88

89

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272

273274 275 276

277

256

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43

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