Financial Overview

in millions of JPY	FY2007	FY2006	R.C.(%)	Factors
Overall
Sales	440,001	405,139	8.6	-
Operating income	33,376	24,899	34.0	-
Ordinary profit	34,414	26,500	29.9	-
Current net income	21,282	17,948	18.6	-
Automotive component business
Sales	434,574	398,372	9.1	- Sales increased, thanks to greater sales of switches, seatbelts, key locks, and shift levers.

( R.C. : Rate of Change )

Contracts
The Company has won a new order from Fuji Heavy Industries for shift levers, one of the supplier's main products. The company will start delivering shift levers for the next-generation Legacy to Subaru's production base in North America, Subaru of Indiana Automotive, Inc. (SIA). The Company will design the products jointly with one of Subaru's main suppliers in Japan Chiyoda Kogyo in Isezaki-shi, Gunma prefecture, and the new products will be produced in Japan by Chiyoda Kogyo and in the U.S. by TAC Manufacturing, Inc., one of US subsidiaries of the Company, who will deliver the products to SIA. SIA currently produces approximately 100,000 units of the Legacy a year. TAC Manufacturing will be a sole supplier of Legacy shift levers to SIA. The Company having supplied switches and seatbelts to Subaru will sell shift levers for the first time to the automaker.(From an article in the Nikkan Jidosha Shimbun on Jan. 25, 2008)

Domestic business

Strengthening development and production structure
- The Company established Tokai Rika Northeast Technological Center in Yamagata Prefecture, Japan. 

>>>See R&D for more details

- The company started operations at the Radiowave Experimental Center No.2, its new testing facility built within the site of its headquarters. It also opened the Manufacturing Systems Research Center, which integrates functions to develop new engineering technologies, make prototypes, and conduct testing using these latest technologies and production methods.
- The Company renewed its plating and heat treatment facilities at its plant in Toyota City. 

Tokai Rubber Industries, Ltd. changed its organization as of February 6 to newly establish four research centers including "Manufacturing system research center." Creating a production technology development office within the center, the new manufacturing system research center will promote development of the production technology based on unified philosophy, to work toward supplying innovative facilities, equipment, and systems. It also creates a production support office which is aimed at handing over the production technologies to the next generation. Other three research centers established by the change of organization are the elemental technology research center, the material technology research center, and the product development research center. These four centers are a flat organization, intended to speed up the development process.


>>>See Investment for more details

Overseas business

Strengthening development and production structure

<Asia>
- The Company expanded its production subsidiary in China. 
- In Oct., 2007, the Company announced that it will expand its operations in Thailand and boost its seatbelt and key lock production capacity to increase supply to Japanese automakers' Thai manufacturing bases.
- In Nov. 2007, the Company announced that it will establish Tokai Rika ASEAN Co., Ltd. (TRA) in Thailand as a holding company in the ASEAN region.

<North America>
- In Mar., 2008, the Company announced that it will augment manufacturing capabilities at TAC Manufacturing, Inc. in Michigan, U.S., the company's production subsidiary.

>>>See Investment for more details


Business objectives until 2015 (TOKAI RIKA GROUP 2015 VISION)
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	FY2007	FY2006	FY2005
R&D	18,324	17,734	17,820
Automotive component	18,106	17,496	17,622

R&D Structures

- In Sept., 2007, the Company announced that it will establish a new technical development center in Yamagata City, Yamagata Prefecture in the northern part of Japan. The Tokai Rika Tohoku Technical Center will conduct designing and assessment of automotive electronics devices such as switches and smart key systems, starting in January, 2008. This new facility will become the group's first R&D center outside Aichi Prefecture in central Japan, where the company's headquarters is situated. The company, which aims to strengthen its software development structure in order to support increasing applications of integrated vehicle control systems, decided to locate a new facility in the Tohoku region (northern Japan), where recruitment of excellent engineers is relatively easy. (From an article in the Nikkan Jidosha Shimbun on Sep. 6, 2007)

R&D achievements

The Company developed the following new products in FY2007: 
- Steering switches: The Company, in applying panel in-mold technology, succeeded in manufacturing   switches with complicated designs.    
- Low-cost heater control switches: Using hard-coated panels enabled the Company to develop low-cost switches, without compromising on the level of quality. 
- Leather-covered MMT shift levers: Using non-contact sensors enabled the company to improve the product reliability of these levers.
- Interior mirrors with built-in ETC systems, and which are equipped with antennas and card slots
- Outer mirrors with ultra-quiet electric retractable systems

Elemental technology
- The company developed three-dimensional transcription technology, which enables designs and patterns to be more evenly applied on items having complex shapes. This technology was used to embellish steering wheels. 

Licensing of technology from other companies (as of March 2008)

Company	Partner	Country	Outline of tie-ups	Contract period
Tokai Rika
	TOTO Frontier Research	Japan	Agreement to patent use for hydrophilic mirror	1999.08.01- 2009.07.31
	Mazda	Japan	Agreement to joint patent filing for steering lock device	2005.07.28 -the patent expiry date
	Donnelly Corporation	U.S.A.	Licensing of patent on automotive mirrors	2000.04.07 -the patent expiry date
	Autoliv Development AB	Sweden	Licensing of the patent on automotive seatbelts	2007.12.01- - the patent expiry date
TAC Mfg., Co., Ltd.	Miroku Technowood	Japan	Licensing of 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  technology on 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 2008)

Partner	Country	Outline of tie-ups	Contract period
Shinchang Electrics Co., Ltd.	Korea	Licensing use of patent and technology on switches and steering locks for automobiles	1978.09.02 - 2008.12.31
		Licensing use of 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 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 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 patent and technology on seat belts for automobiles	2005.01.01 - 2008.12.31
TAC Manufacturing, Inc.	U.S.A.	Licensing use of tpatent and  technology on steering wheels, key sets, and shift levers for automobiles	1998.01.01 - 2008.12.31
TRMI, Inc.	U.S.A.	Licensing use of patent and  technology on key switches and key sets for automobiles	1998.01.01 - 2008.12.31
TRIN, Inc.	U.S.A.	Licensing use of the patent and technology on switches for automobiles	1998.01.01 - 2008.12.31
TRB Limited	U.K.	Licensing use of patent and technology on switches for automobiles	1999.12.01 - 2008.11.30
Tokai Rika (Thailand) Co., Ltd.	Thailand	Licensing use of patent and technology on key sets for automobiles	2000.03.01 - 2009.02.28
TRP, Inc.	Philippines	Licensing use of patent and  technology on switches for automobiles	1996.03.05 - 2009.03.04
Thai Seat Belt Co., Ltd.	Thailand	Licensing use of patent and technology on seat belts for automobiles	1994.06.02 - 2009.06.01
Mindarika Private Limited	India	Licensing use of patent and technology on switches for automobiles	2003.10.03 - 2013.10.02
		Licensing use of 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 patent and technology on child safety seats	2004.04.01 - for 10 years from the contract start date, or until the patent expiration date (whichever comes later)
		Licensing use of patent and  technology on key switches and key sets for automobiles	2005.01.01 - 2008.12.31
Tianjin Tokairika Automotive Parts Co,. Ltd.	China	Licensing use of patent and technology on switches for automobiles	2005.01.01 - 2010.12.31
Wuxi Risho Technology Co., Ltd.	China	Licensing use of atent and technology on seat belts for automobiles	2005.01.01 - 2010.12.31
Foshan Tokairika Automotive Parts Co,. Ltd.	China	Licensing use ofpatent 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 patent and technology on switches and seat belts for automobiles	2003.04.29 - 2009.04.28
Ashimori Industry Co., Ltd.	Japan	Licensing use of patent on seat belts for automobiles	2007.02.02 - the patent expiry date
		Licensing use of  international patent on seat belts for automobiles	2007.02.02 - the patent expiry date

Investment Expenditure

in millions of JPY	FY2007	FY2006	FY2005
Investment	21,189	20,368	21,304

<Investments in FY2007>

Domestic investments
- The company started operations at the Radiowave Experimental Center No.2, its new testing facility built within the site of its headquarters. It also opened the Manufacturing Systems Research Center, which integrates functions to develop new engineering technologies, make prototypes, and conduct testing using these latest technologies and   production methods.
- The Company renewed its plating and heat treatment facilities at its plant in Toyota City. 

Investments in overseas facilities
<Thailand>
- In Oct. 2007, the Company announced that it will expand its operation in Thailand and boost its seatbelt and key lock production capacity to increase supply to Japanese automakers' Thai manufacturing bases. It is now studying the feasibility of the capacity expansion as well as the establishment of its local management company. In Thailand, sales of Japanese pickup trucks, including the Toyota IMV series, are likely to increase steadily. The Company, therefore, will expand its local production capacity to respond to the growing needs. It also has a plan to extend the role of the facilities in Thailand by starting to supply products to areas outside Asia, such as North America in the future. (From an article in the Nikkan Jidosha Shimbun on Oct. 18, 2007)

- In Nov., 2007, the Company announced that it will establish Tokai Rika ASEAN Co., Ltd. (TRA) in Bang Na, Samut Prakan Province, Thailand as a holding company in the ASEAN region. TRA, capitalized at approx. 140 million yen, will be responsible for operations including marketing, procurement, accounting, production technologies and quality assurance and will control the overall businesses in the ASEAN countries including the company's three production bases in Thailand and the Philippines. (From an article in the Nikkan Jidosha Shimbun on Nov. 2)

<USA>
- In Mar. 2008, the Company announced that it. will augment manufacturing capabilities at TAC Manufacturing, Inc. in Michigan, U.S., the company's production subsidiary. To cope with brisk needs for shift levers, the company will add new facilities at TAC Manufacturing to start production at the end of 2008. Tokai Rika will increase output for Toyota Motor, its major customer, and for Ford Motor. The company has been supplying mainly switches to Ford, but orders for shift levers have been on the increase due to enhanced competitiveness of Tokai Rika products. (From an article in the Nikkan Jidosha Shimbun on Mar. 12, 2008)

Investment projects for FY2008
*Approximately 25,000 million JPY is planned for FY2008 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.	7,200	Apr. 2008	Mar. 2009
Nishibiwajima Plant (Aichi Pref., Japan)	Test, assembly facilities for switches etc.	200	Apr. 2008	Mar. 2009
Toyota Plant (Aichi Pref., Japan)	Parts production, processing, assembly facilities for seat belts, decorating products	2,500	Apr. 2008	Mar. 2009
Otowa Plant, Hagi Plant (Aichi Pref., Japan)	Parts production, assembly facilities for key locks, steering wheels etc.	4,000	Apr. 2008	Mar. 2009
Consolidated subsidiaries
Foshan Tokairika Automotive Parts Co., Ltd. (Foshan, China)	Plant construction, manufacturing facilities	1,750	Apr. 2008	Mar. 2009
Tokai Rika Thailand Co., Ltd. (Chonburi, Thailand)	Plant construction	900	Apr. 2008	Mar. 2009
Tianjin Tokairika Automotive Parts Co., Ltd. (Tianjin, China)	Plant construction	900	Jan. 2008	Dec. 2008
Wuxi Risho Technology Co., Ltd.）(Wuxi, China)	Plant construction	800	Jan. 2008	Dec. 2008