Financial overview

(in millions of JPY)	FY2006	FY2005	Rate of Change (%)	Factors
Sales	134,814	135,758	(0.7)	Sales fell slightly year-on-year due to decreased volume of car production at the Company's major customers.
Operating income	3,272	4,575	(28.5)	Operating income and ordinary income declined year-on-year because of decreased sales in Japan, soaring materials prices, and rising design costs.
Ordinary income	2,912	4,191	(30.5)
Net income	2,138	1,727	23.8	Net income rose from what it was last year, as the Company posted gains on sales of investments in securities.

New subsidiaries
The Company will establish a joint venture with Teck See Plastic Sdn. Bhd. (Malaysia) to manufacture and sell automotive interior products in Ayuthaya, Thailand. With a workforce of some 100 employees, production at the new plant is slated to begin in August 2007 to supply auto parts to Japan and other neighboring countries. The new company will hold a registered capital of 500 million yen, with 75% invested by the Company and the remaining 25% by Teck See Plastic. The sales target for the first year is set at 200 million yen, going up to 2 billion yen for 2009 and later. (From an article in the Nikkan Jidosha Shimbun on Sep. 20, 2006)

Joint venture in North America
The Company will consolidate its two subsidiaries in the U.S., M-TEK INC and M-TEK Mississippi Inc owned by M-TEK INC, on March 1, 2007. By improving the supervisory function in North America, the Company aims to reinforce its operating structure in its most important market. While M-TEK Mississippi will be taken over by M-TEK, which will become a surviving company, it will continue its operation as the "M-TEK Mississippi Division" as before the consolidation. (From an article in the Nikkan Jidosha Shimbun on Dec. 27, 2006)

Business alliance with Tachi-S 
Tachi-S Co., Ltd., a major automotive seat supplier, and the Company announced a business tie-up on joint product development and mutual consignment of manufacturing, in a bid to strengthen their business foothold and increase the corporate value. The two suppliers, having concluded a capital tie-up this spring, will step up their partnership. This business alliance is aimed at enhancing services for their customers by complementing frame processing and sewing techniques for seat production of Tachi-S with plastic processing technology of the Company. Both companies said that synergy effect can be expected by mutual use of each other's facilities, including overseas production bases.(From an article in the Nikkan Jidosha Shimbun on Nov. 15, 2006)

R&D
R&D spending was focused on the Development Division and the Production Division. 
The total R&D expenses in fiscal 2006 were 544 million yen. 

Major research challenges
-Reduction of weight and costs to win over the competition in the small car sector.
-Eliminate the use of solvent-based mediums and polyvinyl chloride; and switch to non-petroleum materials in response to greater demand for environmental conservation.
-Develop next generation Technology such as modules and crash safety analysis. 

Specific activities

1. The Company developed a new production process called Kasai Synchro Press (KSP) that reduces weight and thereby contributes to reducing fuel consumption.  The Company presented this as a solution for producing door trims used on mass-produced vehicles. Also, the Company developed a technology called Kasai Press Molding (KPM)  that is applied in the injection molding process to produce foam molding that does not need any coating. In the area of headlining products, the Company developed interior parts made of light-weight foaming materials, and turned the technology into a practical business solution. 

2. The Company successfully created injection molded parts that are capable of absorbing energy, thus contributing to safety inside vehicles. These parts, which are characterized by their unique design structure, are being used in mass-produced vehicles. The accuracy of the Company's technology to analyze lateral collisions has reached the stage to where it can be put to practical use. This technology, which uses CAE (computer simulation),  was supported by validations conducted on bench tests. 

3. The Company is replacing glue and cleaning agents that contain VOC (Volatile Organic Compounds). The Company instead will use standard and water-based adhesives, in addition to materials, that are free of VOCs. As to the use of vinyl chloride materials, the Company is switching over to olefin-based thermoplastic elastomer (TPO) and urethane based thermoplastic elastomer (TPU). The Company also developed an alternative to mineral fiber in order to eliminate the use of glass fiber in ceiling trims, presenting the new fiber as a solution for use in mass-produced models. Also, the Company is working on developing plant-based materials as alternatives to petroleum-based materials. 

4. The Company introduced CAE in its development activities to create cabin-interior products that improve anti-noise/soundproofing performance. These products offer a high degree of flexibility in their shape and come in a large selection of materials. They also are high precision, high quality products.  The Company is also making sales presentations of products that offer a high level of customer convenience, which were developed and planned based on benchmarking activities.

5. The Company developed an applied technology that better stabilizes the final appearance of exterior surfaces of plastic molded products, thus reducing the number of defective products created while being manufactured. 

6. The Company is in the process of developing designing, coloring, and decorating technology for decorative components such as door-waist embellishments. Also, based on the concept that the cabin interior is a place to feel at home, the Company intends to work on creating new added-value features for interior products by combining indirect lighting and decorative touches.

Investment
13,011 million JPY in capital investments was made in FY2006,mainly going to automotive interior parts, research and development on new parts related to vehicle model changes, quality control and production related areas.

Breakdown of investments 
The Company invested: 
- 5,040 million yen to build a new headquarters building; and to revamp equipment to cope with vehicle model changes.
- 1,177 million yen at Mie Kasai Co., Ltd. to purchase a piece of land in Shiga Prefecture and to build a new factory there.
- 1,557 million yen to build a new plant and install production equipment at Iwatekasai Co., Ltd.
- 2,788 million yen to expand the Mississippi Plant of M-TEK Inc. Alabama (U.S.A.).
- 651 million yen to install new equipment at R-TEK Ltd. (UK) 
- 641 million yen in Kasai Mexicana S.A. de C. V.
- 368 million yen in Guangzhou Kasai Automotive Interior Trim Parts Co., Ltd.

New facilities

Company name Site name	Location	Type of facility	Planned investment (million JPY)	Start	Planned completion
Head Office	Samukawa, Kanagawa, Japan	Quality measurement instruments, inspection tools	599	2007.4	2008.3
Samukawa Division	Samukawa, Kanagawa, Japan	New welders	27	2007.4	2008.3
		Facilities to assemble automotive interior parts, tools, and other items	122	2007.4	2008.3
Yorii Division	Yorii machi, Saitama, Japan	New machinery for KPM technology	272	2007.4	2008.3
		Facilities to assemble automotive interior parts, tools, and other items	532	2007.4	2008.3
Kyushu Division	Usa City, Ohita, Japan	Facilities to assemble automotive interior parts, tools, and other items	30	2007.4	2008.3
APM Co., Ltd.	Kanagawa, Japan	Facilities to assemble automotive interior parts, tools, and other items	18	2007.4	2008.3
Mie Kasai Co., Ltd. Head Plant	Hisai City, Mie, Japan	New injection molding machinery	436	2007.4	2008.3
		Facilities to assemble automotive interior parts, tools, and other items	574	2007.4	2008.3
Mie Kasai Co., Ltd. Shiga Plant	Shiga, Japan	Installing new injection molding machinery	419	2007.4	2008.3
		New plant building	477	2007.4	2008.3
Mikuni Seisakusyo Co., Ltd.	Nitta machi, Gunma, Japan	Facilities to assemble automotive interior parts, tools, and other items	107	2007.1	2007.6
KPK Co., Ltd.	Oura gun, Gunma, Japan	Facilities to assemble automotive interior parts, tools, and other items	430	2007.4	2008.3
Kasai-Tec Co., Ltd.	Fujinomiya City, Shizuoka, Japan	Facilities to assemble automotive interior parts, tools, and other items	18	2007.4	2008.3
M-TEK Inc.	Tennessee State, USA	Facilities to assemble automotive interior parts, tools, and other items	1,849	2007.4	2008.3
R-TEK Ltd.	Tyne and Wear, UK	Facilities to assemble automotive interior parts, tools, and other items	192	2007.4	2008.3
Kasai Mexicana S.A. de C. V.	Guanajuato, Mexico	Facilities to assemble automotive interior parts, tools, and other items	614	2007.4	2008.3
Guangzhou Kasai Automotive Interior Trim Parts Co., Ltd.	Guangzhou, China	Facilities to assemble automotive interior parts, tools, and other items	314	2007.4	2008.3
Kasai Teck See Co.,LTd.	Ayuttaya, Thailand	Facilities to assemble automotive interior parts, tools, and other items	114	2007.4	2008.3