Financial Overview

in millions of JPY	FY2006	FY2005	R.C.(%)	Factors
Overall
Sales	405,139	363,423	11.5	Sales increased due to the Company developing as well as making sales promotions of its sophisticated components such as a smart keys and a steering switches. In addition, another contributing factor was the Company further expanding its business operations in the global market.
Operating income	24,899	19,795	25.8
Ordinary profit	26,500	21,671	22.3
Current net income	17,948	14,846	20.9
Automotive component business
Sales	398,372	356,825	11.6	The segment saw an increase both in sales and profits as a result of the Company's vigorous efforts to expand sales of switches, seat belts, keys and locks, and shift levers.

( R.C. : Rate of Change )

By Region
<Japan>
- Sales in Japan increased to 294,831 million yen (an 8.0% increase year-on-year) due to a strong growth in sales of switches, keys and locks, seat belts, and shift levers, resulting from an increase in vehicles produced by the Company's customers as well as to its efforts to further expand the sales of those products.
- Operating income increased 48.5% to 17,330 million yen, compared to the previous fiscal year. This increase is attributed to greater revenues, the Company's efforts to streamline its business operations, and a weak-yen, despite negative factors such as the soaring prices of raw materials impacting its revenue. 

<North America>
- Sales in this region were 83,949 million yen (a 3.2% increase year-on-year).
- Operating income decreased 48.1% to 1,915 million yen, compared to the previous fiscal year, due to favorable currency translation resulting from a strong Canadian dollar.

<Asia>
- Sales increased to 47,150 million yen (a 10.2% increase year-on-year), resulting from increased sales at the Company's subsidiaries in China.
- In spite of greater overall revenues, the operating income decreased 15.9% to 4,460 million yen, compared to the pervious fiscal year. This decrease stems from the Company's paying the initial start-up expenses connected with the launch of its subsidiary in China, making a one-lump payment; and a decline in sales volume in the Taiwan market. 

<Other regions>
- Sales increased to 28,047 million yen (a 65.3% increase year-on-year), resulting from increased sales at the Company's subsidiary in the Czech Republic.
- Operating income  was 976 million yen due to greater revenues.  

Business objectives until 2015
1. To reduce the number of critical functional quality issues to zero
2. To earn 600 billion yen or more at the Company's consolidated sales
3. To sustain a ROE (Return on Equity) higher than 10%

R&D Expenditure

in millions of JPY	FY2006	FY2005	FY2004
R&D	17,734	17,820	16,836
Automotive component	17,496	17,622	16,633

Achievements of R&D activities
The Company developed the following products in FY2006:
-Switch module: With various switch functions integrated in the center arm rest of the backseat, this switch module improved the level of comfort for of passengers seated on backseat
-Paddle Switch: By leveraging its technology on magnesium die casting and upholstery such as leather coverings, the Company developed this switch mounted on steering wheels to improve the steering feel and the steering wheel texture
-Production of Smart entry system: The Company developed this system for compact cars and light-duty vehicles.
- Thin emergency key: A mechanical key for emergency use. This was developed to deal with rising needs for thin, card-shaped portable devices.
- Seat belt buckle with white lamp attached:  This enhanced design and functionality
- Different types of lead-free connectors developed from the viewpoint of environmental protection

The Company also developed the following products as a result of its aggressive R&D activities in collaborations among industry, academia and government:
-Leveraging its micro-machining technology, the Company developed night illumination parts for switches. These consume only one tenth of the electric power that conventional light emitting devices consume.
- The Company developed basic software, which comes with a protective feature, for automotive control systems.


The Company announced a joint development with Matsumura Oil Research Corp. (Kobe City) of a photocatalytic disinfection apparatus for the cogeneration coolant water. As this eliminates use of chemicals, which had been inevitable for disinfection, cost and environmental burdens will be reduced. The company plans to complete introduction of the new apparatus to its headquarters plant within FY 2006, aiming to employ it at all other plants by the end of 2007. (From an article in the Nikkan Jidosha Shimbun on Aug. 29, 2006)


Licensing of technology from other companies (as of March 2007)

Company	Partner	Country	Outline of tie-ups	Contract period
Tokai Rika	Nikon	Japan	Licensing use of the patent on EC anti-glare mirrors	2000.10.01- the patent expiry date
	TOTO Frontier Research	Japan	Agreement to patent use for hydrophilic mirror	1999.08.01- 2009.07.31
	Toyota	Japan	Agreement to development and sales of overseas CA products for Toyota Motor	2003.07.01- 2007.06.30
	Donnelly Corporation	U.S.A.	Licensing of the patent on automotive mirrors	2000.04.07 -the patent expiry date
	Mazda	Japan	Agreement to joint patent filing for steering lock device	2005.07.28 -the patent expiry date
TAC Mfg., Co., Ltd.	Miroku Technowood	Japan	Licensing of the patent on automobile steering wheels	2002.06.05, for five years from the date of start of production or until the patent  expiration date (whichever comes later).
			Licensing use of the  technology on the shift lever knobs for automobiles	2005.05.23, for three years from the date of start of production

Licensing of technology to other companies (as of March 2007)

Partner	Country	Outline of tie-ups	Contract period
Shinchang Electrics Co., Ltd.	Korea	Licensing use of the patent and technology on switches and steering locks for automobiles	1978.09.02 - 2007.12.31
		Licensing use of the patent and know-how on switches for automobiles	Apr. 2, 2001, for 10 years from provision of technology data or until the patent expiry date (whichever comes later)
		Licensing use of the patent and technology on steering locks and slots for automobiles	2006.02.21, for 10 years from the time the technology is provided or until the date the patent expires expiry date (whichever comes later).
Samsong Industries, Ltd.	Korea	Licensing use of the patent and know-how on seat belts for automobiles	1998.04.01 - the patent expiry date
			Nov. 19, 2003, for 10 years from the the time the agreement was made, or until the patent expiration date (whichever comes later)
			2004.02.17, for 10 years from the time the agreement was made, or until the date the patent expires (whichever comes later).
Quality Safety Systems Company	Canada	Licensing use of the patent and technology on seat belts for automobiles	2005.01.01 - 2007.12.31
TAC Manufacturing, Inc.	U.S.A.	Licensing use of the patent and  technology on steering wheels, key sets, and shift levers for automobiles	1998.01.01 - 2007.12.31
TRMI, Inc.	U.S.A.	Licensing use of the patent and  technology on key switches and key sets for automobiles	1998.01.01 - 2007.12.31
TRIN, Inc.	U.S.A.	Licensing use of the patent and technology on switches for automobiles	1998.01.01 - 2007.12.31
TRB Limited	U.K.	Licensing use of the patent and technology on switches for automobiles	1999.12.01 - 2007.11.30
Tokai Rika (Thailand) Co., Ltd.	Thailand	Licensing use of the patent and technology on key sets for automobiles	2000.03.01 - 2008.02.29
TRP, Inc.	Philippines	Licensing use of the patent and  technology on switches for automobiles	1996.03.05 - 2008.03.04
Thai Seat Belt Co., Ltd.	Thailand	Licensing use of the patent and technology on seat belts for automobiles	1994.06.02 - 2008.06.01
Mindarika Private Limited	India	Licensing use of the patent and technology on switches for automobiles	2003.10.03 - 2013.10.02
		Licensing use of the patent and  technology on outer rear view mirrors in mirror assemblies for the automobiles	2006.03.22 - 2016.03.21
Rica Auto Parts Co,. Ltd.	Taiwan	Licensing use of the patent and  technology on key switches and key sets for automobiles	2005.01.01 - 2007.12.31
Tianjin Tokairika Automotive Parts Co,. Ltd.	China	Licensing use of the patent and technology on switches for automobiles	2005.01.01 - 2010.12.31
Wuxi Risho Technology Co., Ltd.	China	Licensing use of the patent and technology on seat belts for automobiles	2005.01.01 - 2010.12.31
Foshan Tokairika Automotive Parts Co,. Ltd.	China	Licensing use of the patent and know-how on switches, key sets and shift-levers for automobiles	2006.08.01 - 2016.07.31
TRCZ s.r.o	Czech Republic	Licensing use of the patent and technology on switches and seat belts for automobiles	2003.04.29 - 2008.04.28
Ashimori Industry Co., Ltd.	Japan	Licensing use of the patent on seat belts for automobiles	2007.02.02 - the patent expiry date
		Licensing use of the international patent on seat belts for automobiles	2007.02.02 - the patent expiry date

Investment Expenditure

in millions of JPY	FY2006	FY2005	FY2004
Investment	20,368	21,304	19,320

<Investments in FY2006>
The Company invested on its domestic and overseas manufacturing facilities to increase its production capacity and respond to switching over to new products. Moreover, the Company strengthened its R&D and manufacturing structure by starting construction of its electric-wave experimental facility, distribution center and multi-level car parking facility at the headquarters plant; and by constructing a heat treatment facility and plating building at the Toyota plant.

The planned capital investment for FY2007
*Approximately 21,000 million JPY is planned for FY2007 mainly for the automotive parts business.

Company Location	Purpose	Planned total investment (million JPY)	Starting	Planned completion
TOKAI RIKA CO., LTD.
Head Office Plant (Aichi Pref., Japan)	Parts production, assembly, test facilities for electronics products, switches etc.	5,000	Apr. 2007	Mar. 2008
Nishibiwajima Plant (Aichi Pref., Japan)	Test, assembly facilities for switches etc.	100	Apr. 2007	Mar. 2008
Toyota Plant (Aichi Pref., Japan)	Parts production, processing, assembly facilities for seat belts, decorating products	2,500	Apr. 2007	Mar. 2008
Otowa Plant, Hagi Plant (Aichi Pref., Japan)	Parts production, assembly facilities for key locks, steering wheels etc.	4,500	Apr. 2007	Mar. 2008
Leased asset to Ena Tokai Rika Co., Ltd. (Gifu Pref., Japan)	Parts production facilities for shift levers, mirrors etc.	900	Apr. 2007	Mar. 2008
Consolidated subsidiaries
Foshan Tokairika Automotive Parts Co., Ltd. ( Foshan, China)	Plant construction, manufacturing facilities	2,000	Apr. 2007	Mar. 2008
Tokai Rika Thailand Co., Ltd. (Chonburi, Thailand)	Plant construction	1,000	Apr. 2007	Mar. 2008
Tianjin Tokairika Automotive Parts Co., Ltd. (Tianjin, China)	Plant construction	1,000	Jan. 2007	Dec. 2007