Financial overview

(in millions of JPY)

	FY2007	FY2006	Rate of Change (%)	Factors
Sales	49,529	50,840	(2.6)	-Sales of clutches for transportation equipment dropped 5.7 percent from the previous year due to weaker sales by automakers in North America and other factors.
Operating income	548	1,210	(54.7)	-Operating income dropped as the Company could not cover fixed costs due to the decrease in operating rate at its US subsidiary.
Ordinary profit	214	1,556	(86.2)	-Ordinary profit decreased, impacted by foreign exchange loss and other factors.
Net profit	(626)	816	-	-Net profit decreased due to the loss from write-down of securities and the increase in corporate tax adjustment.

Recent development outside Japan
<Asia>
-The Company will rev up production of car air conditioning clutches in Asia. The Company plans to increase by 60 percent the volume of such clutches it makes in China to 900,000 units in 2008 by running its lines at full capacity. In order to respond to moves made by global automakers and suppliers to grow production in Asia, it will also mull expansion into Thailand and India to optimize its supply structure. The Company is a leading supplier of car air conditioning clutches, having one-third of share in the worldwide market. By leveraging its expertise and investing more heavily in Asia, the Company will reinforce its business structure. (From a story in the Nikkan Jidosha Shimbun on Apr. 9, 2007)

<U.S.A.>
-In June 2007, the Company announced that it will consolidate its two U.S. subsidiaries located in the State of Michigan, which mainly produce clutches for automotive air conditioning compressors and forged parts, in 2007. The Company intends to streamline their local operations as orders from main customers are on a decline. After the consolidation, the supplier will have two production bases in the U.S., one in Michigan and another in New Jersey. The two subsidiaries to be merged are a compressor clutch manufacturer Ogura Corporation (OC) and a forged parts supplier Huron Precision Parts Corporation (HPPC). OC will become a surviving corporation of the merger scheduled to be completed on December 31. HCCP has been experiencing continuous declines in both sales and profit. The newly merged company will take drastic restructuring measures to ensure low-cost operation. (From a story in the Nikkan Jidosha Shimbun on Jun.1, 2007)

R&D Expenditure

(in millions of JPY)

	FY2007	FY2006	FY2005
Overall	459	445	389

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:
-Clutches for super-chargers and automobile reinforced clutches (at an affiliated company).
-Clutches for automotive power slide doors
-Clutches for rear doors
-Clutches for trunk
-PTO clutches for hybrid and electric automobiles.
-Clutches/brakes for differential locks
-Fan clutches

Capital investment

(in millions of JPY)

	FY2007	FY2006	FY2005
Transportation-equipment clutch division	427	396	624

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	374	Apr., 2008	Mar., 2009	Practically none, as this is to improve product quality
Kohbayashi Plant (Isezaki City, Gumma Pref., Japan)
Production facility for transportation-equipment clutches	62	Apr., 2008	Mar., 2009	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	152	Apr., 2008	Mar., 2009	Capacity increase to raise the ratio of in-house production