Financial overview

(in millions of yen)	FY2006	FY2005	Rate of change	Factors
Overall
Sales	3,855,745	3,604,185	7.0%	Sales rose at all the business segments.
Operating income	233,002	157,718	47.7%	-
Net income	123,080	95,692	28.6%	-
Industrial automation systems division
Sales	956,930	860,111	11.3%	The Automotive Equipment Group achieved greater sales year-on-year, thanks to increased orders for alternators and starters from Japanese and non-Japanese automakers.
Operating income	126,227	95,967	31.5%

Business Strategy (announced in May, 2007)
Under the aim of increasing its market share in the global auto industry, the Automotive Equipment Group will work on strengthening its product competitiveness, focusing on the following sectors:  

- Compact and light alternators and starters designed for use in environmentally friendly, fuel-efficient vehicles; 
- Electronic power steering motors; and
- Car multimedia products such as car navigation systems and car audio devices.

The Auto Equipment Group will continue to expand its production structure and capacity in Japan, the U.S., Europe, Thailand, the Philippines, China, and India.

Financial targets

	Target	FY2006	Past results
			FY2005	FY2004
Operating profit ratio	More than 5%	6.0% (the target was met)	4.4%	3.5%
ROE (Return on equity)	More than 10%	12.3% (the target was met)	11.5%(the target for the year was met)	10.8% (the target for the year was met)
Ratio of debts payable	Less than 20%	18.6% (the target was met)	20.9%	23.9%

Having achieved all its financial targets in FY2006, the Company now aims to reduce the ratio of debts payable, down to less than 15 percent. 

R&D Structure
- The Company conducts its development activities, which include areas from basic research, application research, product planning, up to production engineering at its research centers in Japan, the U.S., and Europe, and in addition, at the development divisions at its plants and consolidated subsidiaries. It also carries out joint development activities with universities and research organizations at home and abroad.  
 
R&D facilities in Japan (Automotive business) 

Facility	Location	Remarks
Automotive Electronics Development Center	Himeji, Hyogo Pref.	Application research
Himeji works	Himeji, Hyogo Pref.	Product development
Sanda works	Sanda, Hyogo Pref.	Product development
Fukuyama works	Fukuyama, Hiroshima Pref.	Product development

R&D expenses (FY2006)

-	R&D spending  (in billion yen)
Overall	132.7
Industrial automation systems	28.2
%	21.3%

Recent developments
- The Industrial Automation Systems Division focuses its development activities in the areas of automotive electric equipment, electric power steering systems and related products, and car multimedia products. 

- The Company developed Japan's first Monolithic Microwave Integrated Circuit (MMIC) system, which integrates into a single chip the analog circuits used in  5.8GHz wireless technology to support on-board electronic toll collection system. As the whole analog circuits other than filter circuits are incorporated into one chip, the MMIC makes it easy to design wireless devices with a compact and simple packaging. (From a press release on June 7, 2006)

Capital Expenditure(FY2006)

-	Amount (in millions of yen)
Overall	153,423
Industrial automation systems	43,358
%	28.3%

The Industrial Automation Systems Division focused its investment activities on increasing production of automotive equipment, and on factory automation systems. 

Capital investment projects for FY2007

-	Amount (in millions of yen)
Overall	160,000
Industrial automation systems	48,000
%	30.0%

The Industrial Automation Systems Division will continue its investment focus on expanding production at the Automotive Equipment Group and the Factory Automation Systems Group.