Financial Overview

(in millions of JPY)	FY2006	FY2005	Rate of Change (%)	Factors
Overall
Sales	11,956	13,472	(11.3)	Overall sales decreased due to the decreased sales of automotive devices and general-purpose carburetors exported to the U.S.
Operating income	(152)	817	-	-
Ordinary income	(53)	986	-	Ordinary income decreased due to initial costs involved with the Company's setting up a manufacturing subsidiary in the United States.
Current net income	(472)	673	-	Current net income decreased mainly because the Company reversed deferred tax assets.
Automotive device business
Sales	3,128	3,848	(18.7)	Sales decreased due to decreased sales of automotive carburetors.
Operating income	97	265	(63.4)	-
Gas device business
Sales	3,839	3,743	2.6	Sales increased due to increased exports to South Korea
Operating income	(169)	202	-	The operating income declined due to higher manufacturing costs

Challenges for FY2007
Enhancing its earnings' capacity or profitability is the Company's first priority. Based on this, the Company will increase the level of the added value it provides and also minimize costs. For that purpose, by increasing sales activities that enable it to propose solutions to its customers, and creating strategic new products, the Company will increase sales. At the same time, to implement a lean manufacturing structure, it will further curtail expenses, and optimize both its procurement processes and manufacturing facilities. By relying on these measures, it will  work on developing its profit structure and improve its corporate value.

R&D
R&D expenses in FY2006 were 203 million yen. 

<Currently running R&D activities>
Fuel Systems
- In response to activities to increase market penetration and promote clean energy vehicles by the Japanese government, the Company is conducting R&D activities on fuel systems for CNG powered vehicles and alternative diesel LPG vehicles; and activities on fuel supply systems for industrial engines, which use natural gas and LPG. It is selling these products in and outside Japan. Since July 2006, the Company has been conducting R&D activities as a company given a special grant to promote further market penetration of fuel efficient LPG vehicles because the New Energy and Industrial Technology Development Organization (NEDO), an independent administrative agency, specified these types of activities as eligible since the previous fiscal year.
- The Company is working on R&D activities designed to respond the rigorous anti-air pollution measurements under the new long-term exhaust emissions regulations that went into effect.

Automotive Devices
The Company is working on R&D activities involving electronically controlled air intake devices such as variable intake valves that improve engine combustion and valves that improve the flow of gas to the combustion chamber. Its R&D activities include valves that respond to next-generation products.

ECU
- The Company works on developing new control logics that respond to new micro computers; and modeling solutions. It also promotes R&D activities by adopting technologies that were developed externally.
- The Company is working on R&D activities that respond to exhaust emissions regulations worldwide, as well as on OBD (On Board Diagnosis) II. In addition it is involved in developing fuel application technology that responds to customer requirements.

Capital investment
- Capital investment in FY2006 was 1,658 million JPY.

- For the Automotive device business, 154 million JPY was invested to streamline the manufacturing processes of automobile devices.
- For the Gas device business, 188 million JPY was invested mostly to streamline ECU (electronic control unit) assembly and inspection apparatuses.

New facilities

Site Name	Location	Segment	Purpose	Planned investment (million JPY)	Start	Planned completion
Atsugi Plant	Atsugi city, Kanagawa Pref.	Automotive device business	To streamline manufacturing facilities, etc.	6	2007.04	2008.03
		Gas device business	To streamline manufacturing facilities, etc.	56	2007.04	2008.03