Financial Overview

(in millions of JPY)

	FY2008	FY2007	Rate of Change (%)	Factors
Overall
Sales	400,232	470,648	(15.0)	-Sales decreased due to a substantial decrease in revenue in its mainstream automotive lighting business division, which was affected by reduced automobile production.
Operating income	9,131	28,959	(68.5)	-
Ordinary income	9,275	30,397	(69.5)	-
Current net income	4,042	15,581	(74.1)	-
Automotive Lighting-related
Sales	413,735	517,114	(20.0)	-The Company received more orders than the previous year supported by a strong demand for automobiles in the first half of the fiscal year. In the second half, production volume of automobiles substantially decreased throughout the world especially in Japan, North America and Europe. The Company's award volume also dropped sharply and the sales decreased.
Operating income	6,524	26,981	(75.8)

Recent Developments in Japan
-In September 2008, the Company announced that the No.2 plant at its subsidiary Koito Kyushu Ltd. has began operations as of September 1, 2008. This new plant is dedicated to the manufacturing and sales of automotive lighting. The Company is aiming at achieving an annual headlamp production capacity of 1 million units at this facility in 2009. (From a press release on Sep. 2, 2008)

-In February 2009, the Company announced its consolidated forecasts for the fiscal year ending March 2009, largely revised downwardly, and temporary closure of its two plants in Japan as emergency measures. Since production cut by automakers has been prolonged, it has decided to close Kikkawa Plant, one of its four plants in Shizuoka Pref., Japan, from June. The production items there will be manufactured at Sagara Plant, Shizuoka Pref. At Koito Kyushu Ltd., its consolidated subsidiary, the Plant No. 2 will be closed in March and its operations will be consolidated into the Plant No. 1. Excess workers will be laid-off and fixed costs including the power expense will be squeezed. (From an article in the Nikkan Jidosha Shimbun on Feb. 28, 2009)

Recent Developments Outside Japan
<Thailand>
-In May 2008, the Company announced that it will postpone completion of its fourth Thai plant, scheduled at the end of FY 2008, for one year. It has decided to complete the construction in January 2010 to start mass production in the spring of 2010. The Company acquired the site in the beginning of 2007 and has advanced the project, while growth has been expected for orders and production volume including those for exports. It has, therefore, started to review the project including its production scale. The new plant will be an integrated plant to manufacture headlamps and rear combination lamps. With the new plant start-up, the Company aims to raise its FY 2011 operating scale in Thailand to 27 billion yen, up 40% from FY 2007. (From an article in the Nikkan Jidosha Shimbun on May 15, 2008)

<China>
-In September 2008, the Company has decided to start production in North China as early as mid-2010. It has already purchased a plant site in the vicinity of Tianjin, where Toyota produces small vehicles, and started studies to begin mass production in mid-2010. The final decision will be made by mid-2009 based on assessment of China market future growth and development of manufacturers in North China. Currently the Company has automotive lamp plants in three regions of China; Shanghai, Guangzhou and Fuzhou. Another plant in North China will be established as its production and supply base for the coastal provinces, where most of vehicle demand in China originated. (From an article in the Nikkan Jidosha Shimbun on Sep. 26, 2008)

R&D Expenditure

(in millions of JPY)

	FY2008	FY2007	FY2006
Overall	18,800	20,889	20,716
Automotive business	17,500	19,750	18,883

R&D Structure
Automotive lighting related business
-Research and development activities are performed globally at the Company's four principle R&D facilities: the production engineering division and research laboratory of Koito Manufacturing which plays a central role of these activities, the Technical center of North America Lighting Inc. in the United States, Koito Europe NV technical section in Belgium, and the  Technical center  of Shanghai Koito Automotive Light, Inc. in China.

-Furthermore, to improve skills of the Company's R&D staff, a technical conference is held annually and attended by the technical staff from eight nations.

-The number of R&D staff in the entire Group is 2,042.


R&D Activities
Automotive lighting-related business
1. Development of core automotive lighting technologies such as optical technology, electronics, and mechanism. 
2. Development of manufacturing technology
3. Development of simulation technologies, etc.


Licensing of Technology from Other Companies (As of Mar. 2009)

Company	Products	Associates	Contract Period
Electro Optica, S.A. de C.V (Mexico)	Automotive Lighting and Accessories	Provide technological information, sales and manufacturing license	17 years from Apr. 18, 1992
Industrias Arteb S.A (Brazil)			5 years from Jun. 8, 2006
Farba Otomotiv Aydinlatma ve Plastik Fabrikalari A.S. (Turkey)			12 years from Oct. 24, 1997
Automotive Lighting UK Ltd. (UK)			18 years from Feb. 24, 1993
Hella Australia Pty Ltd. (Australia)			20 years from May 1, 1994
Hella (South Africa) (Pty.) Ltd. (South Africa)			5 years from May 4, 2006
EP Polymers (M) Sdn. Bhd. (Malaysia)			15 years from Apr. 29, 1995
AuVitronics Ltd. (Pakistan)			5 years from Mar. 7, 1995

Capital Expenditure

(in millions of JPY)

	FY2008	FY2007	FY2006
Overall	31,100	27,677	34,489
Automotive business	29,200	26,295	33,283

-The company invested in its facilities to increase production capacity in response to both new products and model changes of vehicle manufacturers, improve product quality, rationalize its production, and reduce costs.


New Equipment Installment (Selected) (As of Mar. 2009)

Company / Plant	Equipment to be introduced	Estimated amount of investment (in million JPY)	Project Period
			From	To
Shizuoka Plant (Shizuoka Pref., Japan)	Manufacturing equipment for automotive lamps, etc	2,324	Mar. 2009	Mar. 2010
Haibara Plant (Shizuoka Pref., Japan)	Manufacturing equipment for automotive lamps, etc	1,802	Apr. 2009	Mar. 2010
Koito Kyushu Ltd. (Saga Pref., Japan)	Manufacturing equipment for automotive lamps, etc	2,468	Mar. 2009	Mar. 2010
North American Lighting Inc. (Illinois, USA)	Manufacturing equipment for automotive lamps, etc	1,436	Mar. 2009	Mar. 2010
Shanghai Koito Automotive Lamp Co., Ltd. (Shanghai, China)	Manufacturing equipment for automotive lamps, etc	1,565	Mar. 2009	Mar. 2010