Financial overview

(in million JPY)	FY2006	FY2005	Rate of Change (%)	Factors
Overall
Sales	72,090	74,489	(3.2)	-
Operating income	4,813	5,415	(11.1)	-
Ordinary profit	5,884	6,318	(6.9)	-
Net profit for the year	3,777	4,640	(18.6)	-
Belt Division
Sales	49,120	48,385	1.5	Automotive belts Japan: - Although sales of timing belts decreased due to a shift by automakers to use chain timing belts, sales slightly increased year-on-year. The Company achieved this by launching auto tensioners and boosting sales of belts sold in the aftermarket, which offset the loss in timing belts.  Europe, the U.S.A., and Asia: Sales rose year-on-year as a result of the Company's aggressive marketing activities in line with its investment projects. Sales were also supported by the appreciation of the euro, and strong demand for its variable-speed belts for motorcycles.
Operating income	6,886	8,156	(15.6)	-
Chemical products Division
Sales	15,628	19,642	(20.4)	Automotive interior and exterior business - Although sales of new car models, in which the Company's products are installed, were strong after they were launched last year, sales at the chemical products division declined from what they were last year. This is because the Company sold off all the equity in Mitsuboshi Belting Kaseihin Co., Ltd. in September 2006. (Sales of Mitsuboshi Belting after Sep. 2006 are not included in the Company's consolidated financial statements.)
Operating income	449	198	126.8	-

Selling off the automotive interior and exterior parts business
The Company announced that it will transfer all the equity it has in Mitsuboshi Belting Kaseihin Co., Ltd., its wholly-owned subsidiary manufacturing and supplying automotive interior and exterior parts, to International Automotive Components Group Japan LLC (IACJ,  headquarted in Delaware). Mitsuboshi Belting Kaseihin Co., Ltd., upon the completion of the transaction, is due to change its name to Mitsuboshi Kaseihin Co., Ltd. The IAC Group intends to consolidate automotive interior parts suppliers worldwide and position itself as a global leader in the field. (From a press release by the company on Sep. 12, 2006)

R&D structure
-R&D is conducted through cooperation among the R&D Department, engineering departments of other divisions, as well as development departments in subsidiaries.
-R&D is conducted also through closely cooperating with universities and research institutes and through jointly developing products with other companies, especially on advanced technologies.

Recent Developments (FY2006)

Division	R&D expenses (in million JPY)	Areas of Development Activities	Major achievements
Overall	2,731
Belt	1,572	- Development activities are lead by the Company and Mitsuboshi Belting Giken Co., Ltd.  - The aim of development activities are to engineer highly functional driving systems and conveyer systems	- Auto pretensioners developed by the Company are used in a growing number of car models.  - Ribbed belts designed to reduce noise were developed based on sophisticated materials and enhanced structural designing. - Variable speed belts for snowmobiles. - Rubber back ribbed belts that create more freedom of design in the engine.  -Environmentally friendly timing belts which contain the least amount possible of environmentally controlled substances. -Environmentally friendly flat belts.
Chemical products	486	- Major development activities are carried out at Mitsuboshi Belting Kaseihin Co., Ltd.  - Developing automotive interior and exterior products	- Environmentally friendly instrument panels using highly recyclable TPU skins. - Light-weight and environmentally friendly instrument panels and glove boxes made through an integration of various welding technologies.

Capital investment projects (FY2006)

Division	Investment  (in million JPY)	Projects
Overall	5,524	- Enhancing development and testing facilities for new production systems - Increasing capacity to make belts at facilities overseas
Belt	4,738	- Expanding the Ayabe plant (524 million yen) - Installing development equipment to engineer production systems at Mitsuboshi Belting Gikien Co., Ltd. (1,605 million yen) - Installing equipment to manufacture belts at Stars Technologies Industrial Limited (605 million yen)
Chemical products	592	- Installing new dies (579 million yen)
Company-wide	166	- Installing testing facilities at the headquarters in Kobe (104 million yen)

Future investment plans
The Company will invest a total of 13 billion yen in 2007 and 2008 to increase production capabilities of automotive and industrial products by 30% from the current level. The gain from sale of its chemical products subsidiary in September, 2006 will be added to the regular investment to upgrade production facilities at its existing plants, mainly overseas, in two years starting from FY2007. (From an article in the Nikkan Jidosha Shimbun on Nov. 24, 2006)

Planned investment projects (major items)

Company (Location)	Segment	Projects	Planned amount of investment (in million yen)	Project period
				From	To
Mitsuboshi Belting Ltd. Kobe Head Office (iHyogo, Japan)	Company-wide	Improving testing equipment	91	May 2007	Jan. 2008
	Company-wide	Streamlining routine office work	145	May 2007	Mar. 2008
Mitsuboshi Belting Ltd. Nagoya Plant (iAichi, Japan)	Belts	Improving equipment to manufacture belts	50	Feb. 2007	Sep. 2007
	Company-wide	Enhancing the working environment	55	Jun. 2007	Nov. 2007
Mitsuboshi Belting Ltd. Shikoku Plant (kagawa, Japan)	Belt	Improving equipment to manufacture belts	190	Jan. 2005	Jul. 2007
		Improving and revamping refining equipment	70	Jun. 2006	Sep. 2007
		Improving and revamping refining equipment	170	May 2007	Dec. 2007
Mitsuboshi Belting Ltd. Ayabe Plant (Kyoto, Japan)	Belt	Developing production systems to produce driving belts	289	Apr. 2007	Dec. 2007
		Developing production systems to produce driving belts	150	Sep. 2006	Dec. 2007
		Developing production systems to produce driving belts	100	Jul. 2007	Mar. 2008
		Improving testing equipment	294	Feb. 2007	Jan. 2008
		Improving testing equipment	151	Dec. 2006	May 2007
Mitsuboshi Belting Giken Co., Ltd. Ayabe Production System Development Center (Kyoto, Japan)	Belt	Improving equipment to manufacture belts	174	Dec. 2007	Nov. 2007
Mitsuboshi Cord Co., Ltd. Head Office Plant Shiga, Japan	Belt	Improving equipment to manufacture belts	94	May 2007	Dec. 2007
MBL (USA) Corp. Head Office Plant, iIllinois, USA	Belt	Improving equipment to manufacture belts	547	Feb. 2007	Dec. 2007
		Improving and revamping refining equipment	344	May 2007	Mar. 2008
		Enhancing the working environment	260	Apr. 2007	Feb. 2008
P.T. Seiwa Indonesia Hrad Office Plant (Indonesia)	Belt	Improving equipment to manufacture belts	393	Feb. 2007	Dec. 2007

Note: No significant increase is expected in terms of production capacity.