Financial Overview

In million JPY	FY2006	FY2005	Rate of Change (%)	Factors
Overall
Sales	127,905	117,553	8.8	-
Operating income	14,443	14,197	1.7	-
Ordinary income	15,430	14,908	3.5	-
Net income	8,454	8,789	(3.8)	-Net income decreased due to increased amount of income taxes that the Company deferred; and other factors.
Vehicle Clutch Division
Sales	52,171	47,857	9.0	-Sales increased as a result of strong sales of clutches that were used in automatic-transmissions in Honda vehicles, except those destined for export. (Honda is the Company's major customer.) In addition, positive currency translation and increased sales of clutches for Ford's automatic vehicles that went into commercial production in May 2005 also contributed to the sales increase.
Operating income	4,108	3,501	17.3	-Operating income increased due to a decrease in the amount of loss incurred at FCC Adams, LLC.; and other factors.

Challenges for FY2007
-Strengthening its quality assurance program to achieve a level of quality that is unsurpassed in the industry.
-Strengthen the capabilities of its R&D activities, which form the basis on which its future business will grow.

-The main challenge in the short-term is ensuring that that the start-ups go smoothly at FCC (Vietnam) Co., Ltd., which was established in November 2005 and which plans to start mass-producing in August 2006; and at China FCC Foshan Co., Ltd., which was established in January 2006.

R&D

Capital investment in FY2006 was 9,870 million yen.

Capital investments by geographical region

(In million yen)	FY2006	FY2005
Japan	2,294	4,661
U.S.A.	2,944	2,335
Asia	4,302	3,337
Other regions	330	277
Total	9,870	10,611

Overseas Investment
FCC (Thailand) Co., Ltd. signed a contract to acquire a lot in Amata Nakorn Industrial Estate, Chonbri Province, Thailand, for building a new plant. The lot covers 50,182 square meters and the purchasing cost was approximately 350 million yen. The construction of the new plant, where FCC will manufacture clutches and metal fittings, is due to start within 2007. The Company decided to acquire the land due to much restrained space availability at its existing plant in Bangkok. following a repeated extension of the facility. (From a press release by the company on Jan. 17 2007)

< New facilities >

Name (Location)	Business segment	Type of facility	Planned total investment (million yen)	Start	Planned completion
Ryuyo Plant (Shizuoka, Japan)	Motorcycle clutches Automobile clutches Others	Production facility for clutches	528	2007.04	2008.03
Tenryu Plant (Shizuoka, Japan)	Motorcycle clutches Automobile clutches Others	Production facility for clutches	431	2007.04	2008.03
Technological Research Center (Shizuoka, Japan)	Research Institute	Testing and measuring equipment	336	2007.04	2008.03
Hamakita Plant (Shizuoka, Japan)	Motorcycle clutches Automobile clutches	Production facility for clutches	260	2007.04	2008.03
Suzuka Plant (Mie, Japan)	Motorcycle clutches Automobile clutches Others	Production facility for clutches	241	2007.04	2008.03
China FCC Foshan Co., Ltd. (Guangdong, China)	Automobile clutches	Building, production facility for clutches	3,322	2007.01	2007.12
FCC (Indiana) Mfg., L.L.C. (Indiana, USA)	Automobile clutches	Production facility for clutches	1,794	2007.04	2008.03
FCC (Thailand) Co., Ltd. (Bangkok, Thailand)	Motorcycle clutches Automobile clutches	Building, production facility for clutches	1,641	2007.01	2008.12
FCC Adams , LLC. (Indiana, USA)	Motorcycle clutches Automobile clutches	Building, production facility for clutches	866	2007.04	2008.03
PT. FCC Indonesia (Karawang, Indonesia)	Motorcycle clutches Automobile clutches	Production facility for clutches	842	2007.01	2007.12