The Furukawa Electric Co., Ltd. - Financial Overview

(in million JPY)	FY2007	FY2006	Rate of Change (%)	Factors
Overall
Sales	1,174,247	1,104,709	6.3	Sales increased as a result of the strong recovery in demand for information-communications products mainly outside Japan. The increase was also due to strong sales of electronics components and automotive products, and higher prices for raw ore such as copper and aluminum.
Operating income	48,447	53,632	(9.7)	Operating income decreased because cost increases for materials and oil price hikes could not be offset by passing increased costs to product prices, or through reducing production costs. Increased depreciation costs due to tax revision also adversely affected operating income.
Ordinary income	40,831	49,589	(17.7)	Ordinary income decreased due to foreign currency translation losses which resulted from appreciation of the yen against the dollar.
Current net income	15,291	29,765	(48.6)	-
Electronics and Automotive Systems
Sales	268,561	240,943	11.5	Sales increased thanks to increased sales of automotive parts such as wire harnesses.
Operating income	9,072	8,716	4.1	-

Restructuring business

As of October 1, 2007, the Company (Furukawa Electric Co., Ltd.) separated its auto parts division electric components business for consolidation into Furukawa Automotive Parts Inc. (Furukawa AP). It also changed the name of Furukawa AP, a surviving company, to Furukawa AS Inc., as of October 1, 2007. Furukawa AP will become a wholly-owned subsidiary of Furukawa Electric by swap of shares. Before the consolidation, Furukawa AP developed and produced wire harnesses, and the Company developed and produced other automotive parts. From now on, the new consolidated company will develop and produce wire harnesses and electric components. (Press release July 27, 2007)

Establishing subsidiaries

-India

The Company (The Furukawa Electric Co., Ltd.) announced establishment of a joint venture named Minda Furukawa Electric Private Ltd. with Minda Group, a leading group of automobile components suppliers in Delhi, India. It will manufacture and sell wiring harnesses for growing Japanese automakers in India such as Maruti Suzuki India Ltd. The new company is targeting at five billion yen sales in FY 2010 and plans to expand its business in the future to include manufacturing and sales of steering roll connectors (SRC) for the airbag system and other automotive parts. Minda Furukawa Electric is capitalized at 385 million Indian rupees (approx. 1.16 billion yen), with the Group holding 51% of shares and Minda Group holding 49%. The plant will be constructed in Bawal Industrial Park, Haryana state, India to start operations in Sep. 2008. (From an article in the Nikkan Jidosha Shimbun on Aug. 9, 2007)

R&D Structure

Facility	Location	Overview
The Furukawa Electric Co., Ltd. Automotive Research Center	Kanagawa Pref. Japan	Automotive Research Center conducts R&D of technologies for in-vehicle power and information transmission systems.  Major development themes: -Automotive electric source management system  -In-vehicle sensors -Next generation wire harness systems -Automotive parts simulation technologies

The Furukawa Electric Co., Ltd. - R&D Expense

(in million JPY)	FY2007	FY2006	FY2005
Overall	19,789	19,976	18,017
Electronics and Automotive Systems	4,288	3,603	3,544

R&D activities (Electronics and Automotive Systems - FY2007)

The Company conducts development to add new functions to antenna products which integrate automotive GPS/VICS/ETC/telephone, etc. It has also put some of them into practical use.

The Company (The Furukawa Electric Co., Ltd.) has developed a new automotive lighting system combining a flat cable and a high-intensity LED (light-emitting diode). Its unique fixing method has made it possible to directly fix any number of LEDs on any part of the flat cable's insulating film. In addition to higher productivity, the new system has been improved in cost, possibility of design and energy-savings. To replace the conventional lighting devices using bulbs, the Company aims to win orders for the new system early. For fixing LEDs in automotive lighting devices, methods using basbars or cables, and direct mounting of base plates have been in practical use. All these, however, have limits in heat release, moldings, productivity and design possibility. The new lighting system with a flat cable has solved all these problems and is the most cost-competitive of all. Taking advantage of a flat cable's feature that it can be used also as a harness, number of part items can be greatly decreased as well. (From an article in the Nikkan Jidosha Shimbun on Oct. 12, 2007)

Furukawa Automotive Systems Inc. - Recent R&D achievements

In order to improve productivity, recyclability and  the ease of mounting wire harnesseson vehicles, the Company succeeded in developing a unit product for electronic parts integration in an instrument panel. It also reduced the period of time which was required for processing wire terminals and wiring by 70%, from about 25sec/circuit, by consolidating units and using a single type of electric wire and terminal. The Company's world first development will significantly automate production processes enabling it to produce low cost products as well as reduce the length of time required for delivery.   

The Company successfully developed a sub-assembly machine which automated processes from cutting wires to press bonding terminals to sub-assembly. This allowed the Company to completely automate the first four out of seven processes on the conventional harness module production line. It contributed to reducing costs and production lead time, as well as improving quality. The Company successfully developed this type of automated machine for the first time in the world.

The Furukawa Electric Co., Ltd. - Capital Expenditure

(in million JPY)	FY2007	FY2006	FY2005
Overall	45,264	41,800	30,900

Capital investments (Electronics and Automotive Systems - FY2007)

The Company mainly invested in facility enhancement to increase production volume of enamel wires for electric components and to prepare for mass production and increased production volumes of automotive electric components.

Capital investment plan (FY2008)

(in million JPY)	Planned amount of investment	Objective
Overall	49,800	-
Electronics and Automotive Systems	10,900	Mass production of automotive electric components, etc.