Financial Overview

(in millions of JPY)

	FY2010	FY2009	Rate of Change(%)	Factors
Overall
Sales	127,026	107,816	17.8	1)
Operating income	12,767	5,616	127.3	-
Ordinary profit	12,705	5,898	115.4	-
Net income	9,185	3,561	157.9	-

Factors
1）
- The Company strived to achieve its business plans through various measures.

<Japan>
- Sales totaled 35,161 (up 8.6 percent year-on-year) and operating profit reached 1,904 million yen (up 136.8 percent year-on-year), thanks to growth in sales to its major customers, which increased their production volumes.

<North America>
- Sales totaled 22,962 million yen (up 24.1 percent year-on-year) and operating profit reached 326 million yen, supported by a rise in sales of automotive components.

<Europe>
- Sales were 6,271 million yen (up 4.7 percent year-on-year) and operating profit reached 603 million yen, thanks to increased sales automotive components.

<Asia>
- Sales reached 43,361 million yen (up 28.0 percent year-on-year) and operating profit totaled 6,558 million yen (up 76.8 percent year-on-year), because sales of motorcycle components increased.

<South America>
- Sales totaled 19,267 million yen (up 12.9 percent year-on-year) and operating profit reached 2,521 million yen (up 65.9 percent year-on-year), supported by increased sales of motorcycle components.

Contracts

-Musashi Hungary Mfg. Ltd. has secured a contract to supply camshafts which are intended for Jaguar V6DOHC engines. The Hungarian unit will commence the shipment in May 2012. Under the program, 216,000 units or 54,000 sets of camshafts will be delivered annually. (From a press release on April 28, 2010)

-Musashi Auto Parts Co., Ltd. in Thailand has been awarded new OE programs. It has received an order from Nissan to supply steering wheel ball joints for its global car. The delivery, through JTEKT (Thailand) Co., Ltd., began in February 2010 with expected shipment volume of 320,000 units or 80,000 set per year. The Thai unit has also won a contract to supply bevel gears to Ford for its pickup trucks. The gears, 300,000 units per year, will be shipped through Dana, starting May 2011. (From a press release on April 28, 2010)

R&D Expenditure

(in millions of JPY)

	FY2010	FY2009	FY2008
Overall	1,337	1,240	1,346

R&D Structure

Division	Business in charge	Number of engineers	R&D cost
Development Div.	-Developing new suspension systems and researching new applications for existing products -Maintaining and administering patents -Management of product drawings -Developing new car and motorcycle drivetrains and researching new applications for existing products -Developing advanced technology for next-generation products	81	880 million JPY
Production Technology Dept.	-Conducting R&D work on new production technology	59	74 million JPY
Production technology Dept., Technology Div., Kyushu Musashi Seimitsu Co., Ltd.	-Conducting R&D work on production technology for motorcycle and general-purpose gears, camshafts, etc.	32	382million JPY

R&D Activities

 - In April 2010, the Company integrated its Development Division 1 and Development Division 2 into a single unit called the Development Division. 

Development of suspension system components
- The Company's suspension system business conducted development activities to deal with vehicle model changes at its customers. It proceeded with its development programs according to schedule. In India, the Company has developed new ball joints using locally procured steel materials, and engineered and tested production methods for the new products. The company, which worked on various exploratory R&D products focused on cost reduction, has entered a phase of moving to mass production in many areas. It is looking to introduce new technologies as practical business solutions in steps on the occasion of model change and other opportunities.

Development of engine system components
- The Company's engine system component sector developed and started mass-producing  a new camshaft assembly that features the Company’s proprietary methods for cam-forming and linking.

Development of drivetrain system components
- The Company developed and launched series production of 2-pinion type lightweight differential assemblies that boast cases having an optimum shape. The new assemblies have smaller and high precision bevel gears, featuring a unique three-dimensional shape.
- The Company has already won a contract for the new differential assemblies from its major customers. It is now preparing for launching mass production.  

Development of advanced technologies
- In the area of elemental technologies, the Company is working hard on development of multi materials technology, which combines the plastic forming technology, the Company’s area of expertise, with other materials.
- The Company joined the “Knowledge Hub” project promoted by Aichi Prefecture through its development program for engineering environmentally friendly nano/micro processing technology for the next generation.    
- The Company began developing new products and technologies for hybrid vehicles, electric cars, and motorcycles.

Development production technologies
- The Company reorganized its production engineering operations so that the Production Technology Division and the Kyushu Musashi Seimitsu Co., Ltd. can collaborate to develop technologies that meet the changing global market environments quickly and flexibly. It further strengthened its competitiveness in its ability to carry out plastic forming, processing, heat treatment, and assembly in a seamless manner.
- The Company developed compact and lightweight differential pinion gears made from high strength materials by using cold forging method.
- The Company introduced cell system for camshaft assemblies by adopting combined processing technology.  
- The Company is developing advanced technology to design and manufacture dies in-house. It developed forming technology for DOG gear with opposite taper shape.
- In the area of suspension products, the Company developed a new technology to integrate production processes from machining of rack end stud through surface treatment.
- The Company integrated piercing and trimming processes by advancing the hot forging technology for volt on ball joint housings, introducing this technology to its plants overseas.

Contracts for Technical Assistance

(As of Mar. 31, 2010)

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
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 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 2009.11.01-2014.11.01
Musashi Auto Parts (Zhongshan) Co., Ltd. (China)	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	10 years from 2006.0101- 2015.12.31

Capital Investment

(in millions of JPY)

	FY2010	FY2009	FY2008
Overall	9,705	6,669	12,646
facility for ball joints	-	251	598
facility for cam shafts	-	858	1,661
facility for gears and other parts	-	4,124	7,927

 - The Company invested 9,705 million yen in total during FY2010 to set up production operations to handle new products, streamline operations, and increase production capacity.

Breakdown of investments:
<Japan>
- The Company invested 1,979 million yen in Japan, which included 477 million yen to set up production lines to handle new products, 286 million yen to streamline operations, and 271 million yen to increase production capacity.

<North America>
- The Company invested 1,030 million yen in North America. It spent 370 million yen in streamlining operations and 179 million yen to set up production lines to handle new products.

<Europe>
- The Company invested 115 million yen in Europe, which included 48 million yen to increase production capacity, 28 million yen to set up production lines to handle new products.

<Asia>
- The Company invested 5,501 million yen in Asia, which included 2,589 million yen to increase production capacity, 355 million yen to set up production lines to handle new products, and 345 million yen to streamline operations.

<South America>
- The Company invested 1,078 million yen in South America, which included 204 million yen for retooling its facilities, 196 million yen for increasing capacity, 79 million yen for setting up production lines to handle new products, and 71 million yen for streamlining operations.

Investment Outside Japan

<India>
-Expand the manufacturing facility at its Indian subsidiary, Musashi Auto Parts (India) Pvt. Ltd. (MAP-ID). MAP-ID currently manufactures gears and camshafts for motorcycles. The decision is based on the company's intention to enter into the automotive parts market in India as early as possible. Factory expansion is scheduled to be completed by the end of 2011. (From a press release on October 29, 2010)

<China>
-Chinese subsidiary, Musashi Auto Parts (Zhongshan) Co., Ltd. (MAP-CH) will expand its production capacity. MAP-CH, based in Zhongshan, Guangdong, produces automatic transmission gears for automobiles. Plant expansion is scheduled to be completed by the end of 2011. MAP-CH plans to ensure capacity to produce gears for 800,000 vehicles a year by the end of 2013. (From a press release on October 29, 2010)

<Indonesia>
-Its subsidiary P.T. Musashi Auto Parts Indonesia started operation of its second manufacturing facility in Karawang. Production of automotive automatic transmission, which is currently conducted at its Bekasi plant, will be transferred and consolidated into the new Karawang facility in the first half of 2011. (From a press release on October 29, 2010)

Capital Investment Plan

(As of Mar. 31, 2011)

Region	Planned investment (million yen)	Major details and objectives of production facility
Japan	2,200	- Setting up production operations to handle new products, enhancing product development capabilities, and promote laborsaving
North America	900	- Setting up production operations to handle new products, streamlining operations, and increasing production capacity
Europe	250	- Retooling production equipment, and streamlining operations
Asia	8,200	- Increasing production capacity, and setting up production operations to handle new products
South America	1,450	- Streamlining operations, and increasing production capacity