Financial Overview

(in millions of JPY)

	FY2008	FY2007	Rate of Change(%)	Factors
Overall
Sales	145,499	161,302	(9.8)	-
Operating income	8,589	16,482	(47.9)	-
Ordinary profit	5,856	14,841	(60.5)	-
Net income	(4,381)	8,580	-	-Net income decreased as a result of posting an extraordinary loss connected with closing plants in North America, Europe and Japan; and due to reorganizing its production operations.

Business Performance by Region
<Japan>
-Sales and income decreased as a result of a substantial decline in sales due to major customers adjusting their inventory and production volumes in the second half of the fiscal year.

<North America>
-Sales and income decreased as a result of a decline in automobile sales, a change in product mix focusing on smaller cars, and a decline in demand for ATVs.

<Europe>
-Sales and income decreased as a result of a rapid decline in sales of automotive products to major customers in the second half of the fiscal year;  and to negative currency translation resulting from the appreciation of the yen.

<Asia>
-Despite the increased sales of products used in motorcycles to major customers in Indonesia and India, lower sales and income were reported due to negative foreign currency translation as a result of the appreciation of the yen.

<South America>
-Sales increased as a result of greater sales of motorcycle products to major customers. However, operating income decreased as a result of added costs associated with launching new product models, soaring materials prices, and other factors.


Contracts
-The Company, through its global units, has been awarded several OE programs. Musashi Autoparts Co., Ltd. (Thailand) received an order to supply 90,000 sets of steering wheel ball joints annually for Nissan's small vehicles. The ordered products will be shipped through JTEKT (Thailand) Co., Ltd., starting August 2008. Musashi Hungary Mfg. Ltd. has won two separate contracts: it will commence the shipment of steering wheel ball joints in October 2009, 350,000 sets a year, via ZF Lenksysteme GmbH for mid-sized cars by BMW and an additional order of aluminum suspension assemblies for Audi A4 models, possibly boosting the total volume from approx. 350,000 to 600,000 sets/year in 2009. Musashi Auto Parts Michigan Inc. plans to supply Honda North America with 220,000 sets of bevel gears (the Company's strategic product) to be installed in 2008 Accord models produced locally during the current year while Musashi Auto Parts Canada Inc. will start supplying 250,000 sets of camshafts annually intended for Hyundai's L4 engines, starting July 2008. (From a press release on Apr. 25, 2008)


Business Restructuring
-The Company consolidated the automotive parts business of Musashi Auto Parts UK Ltd. into Musashi Hungary Mfg. Ltd. The Company will close Musashi Auto Parts UK Ltd. after the operations have been moved.

-The Company consolidated the automotive parts business of Musashi South Carolina Inc. in the USA into both Musashi Auto Parts Michigan Inc. and Musashi Auto Parts Canada Inc.


The 10th Mid-term Plan (from Apr. 2008 to Mar. 2011)
Consolidated business target (FY2010 ended March 2011)
1.Sales: 200 billion yen
2.Operating profit: 20 billion yen
3.ROE 15 %
4.ROA 15 %

R&D Expenditure

(in millions of JPY)

	FY2008	FY2007	FY2006
Overall	1,346	1,324	1,104

R&D Structure

Division	Development Div. No.1	Development Div. No.2	Development Div. of Kyushu Musashi Seimitsu Co., Ltd.	Production technology Dept., Technology Div., Kyushu Musashi Seimitsu Co., Ltd.
Business in charge	-Developing new products including new ball joints etc. and further applications of existing components	-Development activities involved with creating new cam shafts, gears, and other products; and R&D activities on new production technology -Maintaining and administering patents -Management of product drawings	-R&D activities on new products such as gears for motorcycles and general -purpose gears.	-R&D activities involved with production technology used to produce gears for motorcycles and general -purpose gears.
Number of engineers	24	43	12	38
R&D cost	582 million JPY	165 million JPY	171 million JPY	427 million JPY

Musashi Global Center
-Construction of Musashi Global Center was completed in September, 2008. The Company is developing new products under the concept of "smaller, lighter, and less friction" in order to respond to the needs for improving fuel efficiency and reducing CO2 emissions, while at the same time  making sure products maintain their same level of functionality.


Product Development
Development of suspension system components
-The Company continuously worked to develop and mass-produce ball joints which simultaneously achieve both low-torque and a high level of durability. It also tackles the development of environment-responsive technologies, such as core technology to commercialize a small, light-weight ball joint, and new manufacturing technologies that enable production with lower energy consumption. 

Development of engine system components
-The Company focused on developing cam shafts, pioneering the idea for producing assembled cam shafts for automobiles. This technology is used in mass-production to form cam pieces with high precision while ensuring they are securely connected  with the shafts.

Development of drivetrain system components
-The Company is developing differential gears, for example, working on enhancing its original 3D (three-dimension) bevel gears from the standpoint of design and production technology. The Company has already commercialized these bevel gears. Utilizing their advantages and positioning them as a  core technology, the Company completed developing a proprietary, light-weight, differential gear assembly that was optimally shaped utilizing CAE technology and forged utilizing gear forming methods based on a new forging process. The Company, which is preparing to mass-produce these assemblies, succeeded in reducing their weight by 10 to 15% while still maintaining their current level of performance. 

-The Company enhanced design and evaluation technologies for planetary gears, and worked to improve existing products and verify the application of new technologies. In the technology development area, focusing on plastic processing, the Company worked to develop a processing method which combines planning and development of facilities.

Development of advanced technologies
-The Company also promoted development of advanced technologies which do not belong to existing product categories. Focusing on the plastic processing area, it conducted joint-development activities with universities and facility makers, mainly on new plan developments utilizing the servo press, surface reforming technology and conjugation technology.


Contracts for Technical Assistance (As of Mar. 2009)

Name of the partner company (Country)	Product items	Contents of contract	Term
Musashi Auto Parts Michigan Inc. (USA)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	1994.02.01-1999.01.31 (Automatically renewed annually after the term)
Musashi Auto Parts Co., Ltd. (Thailand)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	1987.12.28-1992.12.27 (Automatically renewed annually after the term)
Musashi Auto Parts UK Ltd. (UK)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	1995.01.01-1999.12.31 (Automatically renewed annually after the term)
P. T. Musashi Auto Parts Indonesia (Indonesia)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	1996.05.08-2001.05.07 (Automatically renewed annually after the term)
Musashi Auto Parts Canada Inc.(Canada)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	1998.01.01-2002.12.31 (Automatically renewed annually after the term)
Musashi South Carolina Inc. (USA)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	2001.01.01-2005.12.31 (Automatically renewed annually after the term)
Musashi Hungary Mfg. Ltd. (Hungary)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	2001.01.01-2005.12.31 (Automatically renewed annually after the term)
Musashi do Brasil Ltda. (Brazil)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	5 years from 2008.11.01-2013.10.31
Musasi Auto Parts India private Ltd. (India)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	2003.04.01-2004.03.31 (Automatically renewed annually after the term)
Musashi da Amazonia Ltda. (Brazil)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	5 years from 2004.11.01-2009.10.31

Capital Investment

(in millions of JPY)

	FY2008	FY2007	FY2006
Overall	12,646	13,303	16,991
facility for ball joints	598	1,204	2,096
facility for cam shafts	1,661	2,711	2,622
facility for gears and other parts	7,927	7,492	9,131

Production facilities for ball joints
-264 million yen to install new facilities at Musashi Hungary Mfg. Ltd.

Production facility for cam shafts
-372 million yen to install new facilities at the Horai plant
-636 million yen to install new facilities at Musashi Auto Parts Co., Ltd.

Production facility for gears and other parts
-341 million yen to install new facilities at the Ueda Plant
-1,281 million yen for Kyushu Musashi Seimitsu to increase production volume to cope with new orders
-1,105 million yen for Musashi Auto Parts Co., Ltd. to install new facilities
-835 million yen to install new facilities at P. T. Musashi Auto Parts Indonesia
-968 million yen to install new facilities components at Musashi do Brasil Ltda.
-1 billion 646 million yen to produce new components for new customers at Musashi da Amazonia Ltda


Capital Investment Plan for FY2009

Region	Planned investment as of March 2009 (million yen)	Main contents and objective of production facility
Japan	1,000	Renewal of existing production facilities; and conducting experiments and research
North America	400	Renewal of existing production facilities
Europe	300	Renewal of existing production facilities
Asia	3,200	Strengthening and renewing its ability to respond to new vehicle models and enhance its production capacity for producing motorcycle and automotive components
South America	1,100	To strengthen its ability to respond to new vehicle models being produced and enhance production capacity for motorcycle components