Financial overview

(in millions of JPY)	FY2006	FY2005	Rate of Change (%)	Factors
Overall
Sales	37,602	34,589	8.7	-
Operating income	1,271	1,449	(12.3)	-
Ordinary income	1,196	1,184	1.0	Ordinary income increased due to increased earnings at its overseas operations.
Net income	793	595	33.3
Powder metallurgy product business
Sales	35,564	32,690	8.8	The sales in this segment increased due to an increase in orders the Company won from its major customers.
Operating profit	2,531	2,480	2.1	Operating profit declined as a result of higher raw-material prices as well as increased overhead costs.

Domestic business
Sales for the fiscal year ended March, 2007 were 34,287 million yen, supported by strong sales in the automotive industry.
Operating income dipped to 1,185 million yen due to higher raw-material prices.

In January 2007, the Company concluded the following land contract:

Location	Akechi-cho, Kasugai City, Aichi Pref.
Amount of acquisition price	735 million yen
Acquired from:	Aichi Public Enterprise Bureau
Reason for the acquisition	(1) To integrate the Company's headquarters functions and enhance information sharing (2) To establish a development experiment zone and a pilot production line so that the Company can improve its competitive edge in technology

Overseas Business:

Asia
Sales increased to 2,467 million yen because the production volume in Thailand increased steadily.
The operating income in this region was 29 million yen.

In China, the Company increased the production capacity at Precision Sintered Products (Wuxi) Co., Ltd., which started production in November 2005.

North America
The sales in this region rose to 1,587 million yen. The increase in orders for the Company's automotive parts in the U.S. contributed to the increased sales.
Operating income was 52 million yen as a result of the Company's efforts to improve its production structure and reduce manufacturing costs.

Challenges for the future
The Company will strengthen its earning capacity by boosting productivity and reducing manufacturing costs.

At its overseas operations, the Company will restore its business operations in China to profitability, following those in Thailand, in order to quickly recover its capital investment  
As a top priority, it will work to clear the cumulative losses at its North American business as soon as possible.

R&D Expenditures

(in millions of JPY)	FY2006	FY2005	FY2004
Overall	363	370	553
Powder metallurgy product business	363	370	547

Overall
The Technical Development Center and the Production Technology department is playing a central role in the development of highly profitable products such as simple and competitive materials; and products manufactured with high precision, which do not require machining, based on elemental technology. 
In the CAPSII, a company-wide activity, the Company is constructing production lines which are dedicated to one product group, in order to increase the competitive edge of its products.

Powder metallurgy product business
In the area of materials, the Company developed inexpensive and simple composition material for valve seats. From now on, after promoting the use of this material to its customers, it will start mass-producing them.
In terms of its equipment and facilities, the Company plans to put to commercial use a press machine that it developed internally for the purpose of producing only simplified CNC press valve seats.  The Company plans to start mass production of the valve seats from the 2007 fiscal year. 

Investment Expenditures

(in millions of JPY)	FY2006	FY2005	FY2004
Overall	5,317	4,544	3,589
Powder metallurgy product business	5,302	4,539	3,572

Overall
The Technical Development Center and the Production Technology department is playing a central role in the development of highly profitable products such as simple and competitive materials; and products manufactured with high precision, which do not require machining, based on elemental technology. 
In the CAPSII, a company-wide activity, the Company is constructing production lines which are dedicated to one product group, in order to increase the competitive edge of its products.

Powder metallurgy product business
In the area of materials, the Company developed inexpensive and simple composition material for valve seats. From now on, after promoting the use of this material to its customers, it will start mass-producing them.
In terms of its equipment and facilities, the Company plans to put to commercial use a press machine that it developed internally for the purpose of producing only simplified CNC press valve seats.  The Company plans to start mass production of the valve seats from the 2007 fiscal year. 

Capital investment currently under way

(in millions of JPY)

Plant (Location)	Details	Planned investment	Start	Completion	Enhanced production capacity after completion
Akechi (tentative name)	Offices and technical buildings	1,350	Jun. 2007	Dec. 2007	-
American Fine Sinter Co., Ltd. (Ohio, USA)	Manufacturing facility for powder metallurgy products	478	May, 2007	Sep. 2007	15% increase in production capacity