Financial Overview

(in million JPY)	FY2006	FY2005	Rate of Change(%)	Factors
Sales	21,614	22,055	(2.0)	Sales of automotive products including engine valves, the Company's main product, were 19,242 million yen, down 3.9% year-on-year.
Operating income	1,800	2,735	(34.2)	Income was down due to automakers' heavy demands to cut their costs. In addition, the Company was not able to directly pass price hikes of nonferrous metals, especially nickel, onto the selling prices of its products.
Ordinary income	1,937	3,423	(43.4)
Net income	1,134	2,185	(48.1)

Business in Japan
The Company will transfer its valve production line in the Fujisawa Plant (Fujisawa City, Kanagawa Prefecture) to the Shizuoka Plant (Kikukawa City, Shizuoka Prefecture) in order to streamline its operations; the Shizuoka Plant will be the company's only facility that makes valves in Japan. The production consolidation was originally planned to be completed by the end of last fiscal year. The plan has been postponed, however, since additional capacity was required at the Fujisawa Plant for supporting valve production of TRW Automotive Holdings Corp. (U.S.A.), its business partner. After transferring operations from the Fujisawa Plant, the Company intends to consider ways to make efficient use of the idle facility including the possibility of cashing it out in the future.(From a story in the Nikkan Jidosha Shimbun on Feb. 20, 2007)

Plan for the fiscal year ending Mar. 2008
The Company will shorten production leadtime of engine valves, its main product, as one of priority items in fiscal 2007. It will introduce a new surface treatment method to a model production line at its Shizuoka plant (Kikugawa city, Shizuoka prefecture) and will further reduce the number of processes, aiming to shorten the leadtime from the present five days to two days during FY2007, eventually to one in the future. To meet the needs of its major customers, including automakers, the Company will establish a flexible production system to fully respond to fluctuation of production volume within a short period of time. (From a story in the Nikkan Jidosha Shimbun on Mar. 07, 2007)

R&D Expenditure

(in millions JPY)	FY2006	FY2005	FY2004
Overall	142	142	151

R&D Activities
During fiscal year 2006 that ended March 2007, the Company worked on strengthening its R&D structure, developing valve production technology that relies on the use of high-intensity materials,  and enhancing its R&D capabilities in terms of making parts lighter in weight.  

R&D Structure
OOZX technical center was completed in December 2006 within the Company's Shizuoka plant. 

Technical Agreements (As of Mar. 2007)

1) Mutual Technical Assistance Agreements

Partner	Country	Items	Contents	Period
TRW Automotive U.S.LLC	U.S.A.	Engine valves	Approval for non-Exclusive rights for manufacturing, sales and use	1996.01.01 ~ (Automatic renewal)
TRW Automotive GmbH.	Germany

2) Licensor

Partner	Country	Items	Contents	Period
Wuchou Valve Industry Co., Ltd.	Taiwan	Engine valves	Approval for non-exclusive rights for manufacturing, sales and use of technology	2005.03.14 ~ (Automatic renewal)
		Cotters	Approval for exclusive rights for manufacturing, sales and use of technology	2006.06.30 ~ 2011.6.29
Shin Han Valve Ind. Co., Ltd.	Korea	Engine valves	Approval for exclusive rights for manufacturing, sales and use of technology	2005.09.29 ~ 2008.09.28
TRW Fuji Serina Co., Ltd.	Thailand	Engine valves	Approval for non-exclusive rights for manufacturing, sales and use of technology	2007.01.01 ~ 2011.12.31
TRW Fuji Valve Inc.	U.S.A.	Engine valves	Approval for non-exclusive rights for manufacturing, sales and use of technology	1988.09.15 ~ dissolution of JV
Shriram Pistons & Rings	India	Engine valves	Approval for non-exclusive rights for manufacturing, sales and use of technology	2005.12.05 ~ 2012.12.04

Capital Expenditure

(in million JPY)	FY2006	FY2005	FY2004
Overall	1,084	1,702	477
Product Division	1,024	1,463	405

-The Company invested  to install machinery and equipment in order to rationalize manufacturing lines producing small valves at its Shizuoka factories.

New facilities:

Location	Division	Facility type	Planned Investment Amount (millions JPY)	Start	Scheduled Completion
Shizuoka Factory (Kikukawa-shi Shizuoka Pref.)	Products business division	Facilities for small valves used in engines	800	Mar. 2007	Mar. 2008
		Maintenance and renewal	259	Mar. 2007	Mar. 2008