Overview

(in millions of JPY)	FY2006	FY2005	Rate of Change	Factors
Group
Sales	544,244	425,092	28.0	see note 1) below
Operating income	22,983	10,967	110.0	see note 2) below
Ordinary income	20,449	12,042	70.0
Net income	8,662	4,940	75.0	see note 3) below
Wires and cables
Sales	286,518	204,264	40.0	see note 4) below
Supplicated materials
Sales	204,093	160,278	27.0	see note 5) below

Factors
1) Sales increased due to the Company raising the prices of its electric wires, cables, copper alloys, and other products as a result of a sharp rise in copper prices; as well as to strong demand for electric wires and cables.

2) Income increased due to the high demand for electric wires and cables. Also contributing to the rise in income was the Company's ability to reduce the impact of expenses, as it was able to pass a sharp rise in copper prices onto the selling prices of its products.

3) The Company posted 1.337 billion JPY in business structure improvement costs and an extraordinary loss of 3.338 billion JPY.

4) The sales of winding wires increased mainly due to greater volume of sales of parts used in the field of automotive information transmission.

5) Sales of automotive parts increased to 38.5 billion JPY due to the strong sales of the Company's mainstay products, hose parts; and other factors.

Withdrawal of subsidiary overseas
The Company announced that its Philippines subsidiary, Hitachi Cable Philippines Inc., will withdraw from the manufacture and sales of vinyl insulated wires for automotive (AV wiring), effective Oct. 31, 2006. Company cited much intensifying competition in the automotive wiring business market in the Philippines and anticipated decline of profit in the future as the primary reason for its decision to withdraw from this business sector. (From a press release by the company on Aug. 8 2006)

R&D Expenditures

(in millions of JPY)	FY2006	FY2005	FY2004
Group	10,000	10,832	9,592
Wires and cables	2,016	2,887	2,486
Supplicated materials	4,238	3,722	3,490

R&D structure
-The Company has positioned the Research and Development Group as the core framework for conducting its R&D activities. The Group consists of the Materials Technology Research and Development Center, the Electronic Materials Research and Development Center, the Photonics Research and Development Center, and the Cross Technology Development Center. Under this framework, the Company's R&D activities are conducted mainly in the ITS (Intelligent Transport System) Development Project Room and at the design and development divisions of each business headquarters.  

- 繝ｻMaintains close cooperation and collaboration with R&D centers in the Hitachi Group, of course including Hitachi itself. On occasion, it conducts joint research with R&D centers operated by its customers and the government. 

High-performance Material Division < automotive component field>
- Research and development of automotive hoses including brake hoses and power steering hoses, electronic components, and components for information devices.
- The major achievement in fiscal year 2006 that ended March 2007 was developing a two-layer separation roller for scanners.

Investment Expenditure

(in millions of JPY)	FY2006	FY2005	FY2004
Group	21,455	19,691	17,669
Wires and cables	5,521	4,917	5,278
Supplicated materials	13,296	11,739	9,405

Capital investments were made to reinforce production facilities, improve labor-saving, and rationalize facilities, with an emphasis on the growth of products.

Wires and Cables Division
- Capital investments were made mainly to improve and expand the production facilities that produce electric wires for equipment; wiring parts; and winding wires.

High-performance materials Division
- Capital investments were made mainly to improve and expand the production facilities that produce semiconductor package materials and automotive parts.