Financial overview

In million yen	FY2007	FY2006	Rate of Change (%)	Factors
Overall
Sales	692,656	708,126	(2.2)	-
Operating income	19,876	22,077	(10.0)	-
Ordinary income	13,123	24,631	(46.7)	Income declined because of an increased exchange loss resulting from a sudden appreciation of the yen.
Net income	4,418	4,918	(10.2)	-
Electronic components
Sales	391,424	396,447	(1.3)	The Company, which is planning to discontinue HDD head production, saw a large decline in sales of this particular product. But sales in four other segments including automotive electronic components were strong. As a whole, sales declined a little but operating income improved 20%.
Operating income	6,318	5,264	20.0

Automotive business at the Electronic Component Division
1. Electronic Component Business
- Sales stood at 99,900 million yen, up 7.9% from the previous year.
- Sales increased in the area of sensors and switches that improve driving safety and fuel efficiency.

2. Communication Device Business
- Sales stood at 56,100 million yen, up 3.4% from the previous year.
- Automotive Business: The Company grew sales of automotive BluetoothTM modules for handsfree communication devices and car navigation units, thanks to a law banning the use of mobile phones while driving. The module was developed taking advantage of its technology in high-frequency communication and automotive electronic components.

3. Electronics Component Business
- Sales were 109,000 million yen, up 12.3% from the previous year.
- Sales increased from what they were the previous year, thanks to greater sales of the Company's proprietary products such as steering modules, which were designed to meet market demand for multi-functional devices; and front panel modules.

R&D Expenditures

(in millions yen)	FY2007	FY2006	FY2005
Overall	42,255	46,804	42,829
Electronic components	15,015	18,002	16,604

Electronic Components Division
It's Electronic Components Division is engaged in various R&D activities with Japanese and foreign universities and laboratories including Kenbridge University in the U.K and Massachusetts Institute of Technology in the U.S.A. In addition, Alps is working to build a main business development office which will conduct R&D on process and electronic parts. In addition, it is forming a business unit engaged in developing more customer-oriented products in each product area.

1. Electronic Component Business
In the area of opto-electronics, the Company has its focus on development of automotive camera modules as well as FTTH optical communication modules. It also has started mass production of 360-degree security cameras.

2. Communication Device Business: In the area of automotive products, the Company has developed high-performance BluetoothTM modules embedded with software required by handsfree in-vehicle devices. It has also developed high-speed wireless LAN modules and BluetoothTM wireless LAN combination modules. Mass production of these products has already started.

3. Automotive Electronics Division
It's automotive Electronics Division is working on general R&D activities, from developing parts, on up to complete systems in the area of HMI (Human Machine Interface. This will be based on products which make full use of the Group's proprietary as well as elemental technology. These parts will be focused around input, communications, and sensor devices.

<Development Areas>
The Company is working on promoting technology and product development in the following areas:
-Developing its AI (Alps Innovative) cockpit that makes use of the Company's proprietary technologies such as haptic technology, electrostatic capacity detection technology; and camera technology in four areas on vehicles, namely instrument panels, steering systems, center consoles, and overhead consoles.
-Conducing advanced R&D activities on by-wire technology.
-Developing high-precision rudder-angle magnetic sensors that are capable of responding to vehicle control systems.
-Working on basic development activities to engineer tire pressure monitoring systems that do not require batteries.
-Developing actual samples of non-contact power window modules and steering modules that use magnetic sensors.
-Promoting improvement of software technology and development of auto-programming technology using its MBTDD (Model Base Test Driven Development) technology, in order to improve efficiency in producing software to be embedded in automotive electronic components.

Product developments
The Company has completed development of a capacitance type pressure sensor (HSPC Series) to detect absolute pressure, which can be used to detect, for example, air pressure in tires, air pressure and blood pressure. Sample shipments are to commence in October 2007. The sensor detects air, blood and other pressures by means of changes in capacitance. Pressure is detected when pressure changes cause the membrane on the moveable electrodes known as a 'diaphragm' to flex, the capacitance between the fixed electrodes changes, and the degree of this change is converted into an electrical signal. The capacitance-type pressure sensor is generally characterized by high sensitivity and low current consumption. Furthermore, leveraging technologies cultivated over several years, the Company has realized the industry's smallest (4.8mm long x 4.8mm wide x 1.8 mm high) capacitance-type pressure sensor. Due to the ability of the ceramic packaging to withstand changes in temperature, its operation is possible in a wide range of operating temperatures. (From a press release on July 31, 2007)

The Company announced that it has developed "SPEF Series", a new line of push lock-type switches for car cabin interior map lamps and hazard switches. Sample shipments are expected to begin in November 2007. SPEF Series in-car switches feature a push-lock mechanism that moves into the locked position when pressed and returns to the initial position when pressed again. The moving part adopts the Company's proprietary ratchet cam structure. The damping performance has been achieved by smoothing out the ridges of the cam, which combines a rotating guide and a guide. This structure also brings out a smoother touch in operation. The Company has augmented the soldering methods it applies in the production of set products by offering surface mounting-type push switches in SPEF Series for the first time, in addition to existing products produced in 3 different dip methods. By taking advantage of the Company's microfabrication technology, the new series are designed to have a lower profile & more compact structure measuring 9.4mm (W), 9.0mm (D) and 6.9mm (H). (From a press release on Sep. 20, 2007)

The Company announced that it has developed a compact, high-resolution, piezoresistive type pressure sensor (HSPP) for detecting barometric pressure, air pressure, and water pressure. The Company says it will begin sample shipments of this world's smallest piezoresistive sensor in November, 2007. The Company will release two types of HSPP for use in car navigation systems, portable navigation systems (PND), and consumer electronics devices: one for absolute pressure detection; and the other type for gauge pressure detection. With its capability to detect differences in road elevation, the new sensor will provide added value to navigation systems, which display maps in vehicles and for use in hiking and bicycling. When used in car navigation devices, the sensor is expected to contribute to energy-saving driving. In addition, its optimum digital circuit and temperature correction circuit has enabled HSPP to perform high-resolution detection at pressure intervals of 0.01kPa, which is equivalent to 1 meter in altitude, and 1 millimeter in water level. (From an article in the Nikkan Jidosha Shimbun on Sep. 27, 2007)

The Company has developed terrestrial digital broadcast 4-diversity TV tuner "TSRN Series" for automotive applications such as car navigation systems and in-car TVs and has launched full-scale production starting January 2008. Leveraging its unique high-density mounting technology, the Company successfully put out the industry's smallest 4-diversity compatible tuner measuring 41.6 mm (W) x 55.1 mm (D) x 7.0 mm (H) to meet a challenge automakers face in their effort to reduce space where electronic components are mounted. With optimized internal devices and advanced circuit engineering, the Company has accomplished low power consumption of 2.4W. (From a press release on Jan. 24, 2008)

Capital Investment

(in millions yen)	FY2007	FY2006	FY2005
Overall	43,153	45,307	50,061
Electronic components	26,349	29,525	37,170

Electronic component division
- Automotive Business: The Company focused its investment activities on increasing production of automotive sensors and switches.



Capital investment projects

Name (Location)		Type of facility	Planned investment (million yen)	Start	Completion
Alps Electric Co., Ltd	Mechatronic Devices Division (Osaki, Miyagi Pref.) (Toda-Gun, Miyagi Pref.) (Tsunoda, Miyagi Pref.)	Manufacturing facilities	8,000	Apr. 2008	Mar. 2009
	Headquarters Offices,　Process Technology Development Center （Ota, Tokyo） （Sendai, Miyagi Pref.）他	Headquarters and branch facilities, R&D center facilities	9,131	Apr. 2008	Mar. 2009
	Automotive Devices Division （Osaki, Miyagi Pref.）	Facilities to produce automotive electronics parts	2,793	Apr. 2008	Mar. 2009