Financial overview

In million JPY	FY2006	FY2005	Rate of Change (%)	Factors
Sales	50,840	48,609	4.6	- Sales of clutches for transportation equipment dropped 1.3 percent from what they were the previous year due to weaker domestic sales by Japanese automakers.
Operating income	1,210	133	809.8	- Income rose year-on-year supported by improved capacity utilization rates and profitability, as well as by the Company's cost reduction initiatives, which offset the loss that stemmed from soaring materials prices.
Ordinary profit	1,556	877	77.4
Net profit	816	419	94.7

Challenges for FY 2007
<U.S.A.>
- The Company is faced with harsh conditions as GM and Ford, which are the major end users of its car air conditioner clutches, are losing their shares in the U.S. market. Since sales are continuing to fall from the peak year by year at Ogura Clutch's U.S. subsidiary, the Group's U.S. unit is working on winning new business, targeting Japanese automakers that are increasing their presence in the country. 


<China>
- Ogura Clutch (Dong Guan) Co., Ltd., which is gradually improving its profitability, aims to increase its market share in China. Ogura Clutch (Dong Guan) was established in Dong Guan City, Guangdong Province, China to make car air conditioner clutches. 

R&D Expenditure

(in millions JPY)	FY2006	FY2005	FY2004
Overall	445	389	413

Electromagnetic clutch division/transportation-equipment clutch division
The Company was mainly involved in developing clutches used in air conditioners for motor vehicles and in developing torque limiters for lightweight clutches, silent clutches and external control compressors; power-saving clutches for hybrid vehicles and power cells; and clutches for vehicles equipped with the idle-stop feature.

In addition to above, the Company worked on the following developments at the transportation-equipment clutch division:
-Developing clutches for super-chargers and automobile reinforced clutches (at an affiliated company).
-Automotive power slide doors
-Rear doors
-Clutches for trunk
-Developing PTO clutches for hybrid and electric automobiles.
-Developing brakes for differential locks and fan clutches.

The Company will strengthen its development activities by establishing a research and development section at the beginning of fiscal 2007. Staff in the new R&D section will carry out comprehensive studies on friction materials and production technology now carried out at several facilities. In line with this plan, the Company will construct a new building at its headquarters in Kiryu City, Gunma Prefecture to accommodate these functions. By integrating and disseminating to each of the company's facilities the know-how on developing and manufacturing clutches for automobiles and industrial machinery, the clutch supplier will strengthen its capability to develop leading-edge technology to make quality products that meet new needs and requirements in the industry. Also, the Company intends to initiate development of automotive friction components, which are not included in its product lineup at the moment. Construction work of the new facility and the integration of related functions will follow the planning and launch of concrete research projects. (From a story in the Nikkan Jidosha Shimbun on Mar. 29 2007)

Capital Investment

(in millions JPY)	FY2006	FY2005	FY2004
Transportation-equipment clutch division	396	624	1,104

Transportation-equipment clutch division
- The Company focused its investment activities on measures to enhance environmental responsiveness, improve production equipment, streamline operations, and purchase new dies at the Akabori Plant and Kohbayashi Plant

New facilities (related to transportation-equipment clutches)

Type of facility	Planned total investment (million JPY)	Starting month	Planned completion	Capacity increase upon completion
Ogura Clutch Co., Ltd.
Akabori Plant (Isezaki City, Gumma Pref., Japan)
Production facility for transportation-equipment clutches	529	Apr., 2007	Mar., 2008	Practically none, as this is to improve product quality
Kohbayashi Plant (Isezaki City, Gumma Pref., Japan)
Production facility for transportation-equipment clutches	130	Apr., 2007	Mar., 2008	Practically none, as this is to improve product quality
Subsidiaries
Ogura Techno Co., Ltd. Head office plant (Kitaibaraki City, Ibaraki Pref., Japan)
Production facility for transportation-equipment clutches and their parts	96	Apr., 2007	Mar., 2008	Capacity increase to raise the ratio of in-house production
Ogura Corporation Head office plant (Michigan, USA)
Production facility for transportation-equipment clutches and facility for sales and office duties	206	Jan., 2007	Dec., 2007	Capacity increase to raise the ratio of in-house production
Ogura Clutch do Brasil Ltda. Head office plant (Sao Paulo, Brazil)
Production facility for transportation-equipment clutches and facility for sales and office duties	16	Jan., 2007	Dec., 2007	Capacity increase to raise the ratio of in-house production
Ogura Clutch Malaysia SDN. BHD. Head office plant (Selangor, Malaysia)
Production facility for transportation-equipment clutches and facility for sales and office duties	2	Jan., 2007	Dec., 2007	Capacity increase to raise the ratio of in-house production
Ogura Clutch (Dong Guan) CO., LTD. Head office plant (Guang Dong, China)
Production facility for transportation-equipment clutches and facility for sales and office duties	44	Jan., 2007	Dec., 2007	Capacity increase to raise the ratio of in-house production