Financial overview

( in millions of JPY )

-	FY 2007	FY 2006	R.C.	Factors
Overall
Sales	36,462	34,656	5.2%	Sales increased because of brisk demand resulting from steady growth in the automotive industry and strong sales at its global operations in general.
Operating income	3,806	3,879	(1.9%)	Income was down because of a rise in costs due to soaring materials prices, an increase in depreciation costs, and negative currency translation.
Ordinary income	4,138	4,335	(4.6%)
Current net income	1,972	2,273	(13.2%)	Current net income was down because of a rise in minority interests in conjunction with the company's expanding its global operations
Automotive components
Sales	29,269	28,057	4.3%	See 1) below
Operating income	3,392	3,278	3.5%

( R.C. : Rate of Change )

Factors

1)
The Company experienced a decrease in orders for some of its products because auto manufacturers made model changes, which resulted in customers' migrating to new model vehicles; and because of sluggish demand in the U.S. market. However this was offset by increased sales to customers outside Japan, which required the company to respond to brisk demand. Also contributing to the increase were  greater new orders, thanks to effective marketing activities; and strong sales in general at its operations globally.

Sales by Product
-The Company experienced a decrease in orders for some vehicle engine valves produced in Japan due to weakened sales of motor sports products and a migration by customers to new vehicle models. Overall, sales remained strong as a result of the Company's launching new products, an increase in products destined to overseas markets, and greater volumes produced outside Japan. 
-The Company posted greater sales of precision forged gears for automotive applications,  thanks to a greater amount of production volume destined for markets outside Japan, despite weakened demand in Japan.
- Sales of valve lifters were down because of consumers' switching to newer models; sluggish sales in the U.S.A.; and decreased production overseas, which had been brisk.
- The revenue generated from sales of NT-VCPs jumped, following the launch of a new a model vehicle.

R&D Expenditure

( in millions of JPY )

-	FY 2007	FY 2006	FY 2005
Group	1,194	1,007	1,004
Automotive components	N.A	N.A	452

Major R&R Activities
- The Company continuously worked on developing components for valve operating systems, improving their performance and reducing their weight. It also conducted development activities on heat-resistant alloys and new materials.   
- The Company was engaged in improving forging methods and forging processes for precision forged parts, particularly automotive drive parts.
- The Company conducted R&D activities to improve the performance of  the NT-VCP (variable valve timing systems), which is compatible with exhaust emission regulations; in addition to improving fuel efficiency and manufacturing methods.



Product Under Development
ULV (Ultra Light Valve)
- The company is currently developing an Ultra Light Valve (ULV) in efforts to reduce the weight of engines. It is a next generation engine valve based on a completely new way of being formed. Reducing the engine weight as much as possible will contribute to lessening friction and NVH and optimizing the valve temperature. 

Technical Alliances ( as of March 2008 )

Partner	Country	Content of agreement	Project Period
			From	To
Eaton Corporation	U.S.A.	License agreement on small engine valves	Sep.1, 1996	Dec.31, 2010
Eaton Corporation	U.S.A.	License agreement on oil pressure valve lifters	Sep.1,1996	Dec. 31, 2010
Eaton Est Spa	Italy	Contract on sales of automotive engine valves and technical assistance for production within specified regions.	Oct. 23, 1993	the date specified in the contract
P.T. Federal Nittan Industries	Indonesia	License agreement on small engine valves	Jun. 1, 2005	5 years from the  aforementioned date
Shinwa Precision Co., Ltd.	Korea	License agreement on oil pressure valve lifters	Aug. 1, 2005	5 years from the aforementioned date
Nittan (Thailand) Co., Ltd.	Thailand	Technical assistance agreement on small engine valves	Jan. 1, 2003	10years from the aforementioned date
Eaton Corporation	U.S.A.	License agreement on Nittan New Technology Variable Cam Phaser (NT-VCP)	Dec.18, 2000	Dec.9, 2007
Shinwa Precision Co., Ltd.	Korea	License agreement on mechanical tappets	Dec. 5, 2002	10years from the aforementioned date

 

Investment Expenditure

( in millions of JPY )

-	FY 2007	FY 2006	FY 2005
Group	3,233	3,647	4,777
Automotive components	2,671	2,633	4,223

Breakdown of capital investment by affiliate company of the automotive components business (for the year ended March, 2008) (in millions of JPY)

-	Amount of investment	Description of capitalization
Nittan Valve Co., Ltd.	2,041	Expansion of plant building due to improvements made at the headquarters plant; modification and rationalization of equipment used to produce engine valves
Nittan (Thailand) Co., Ltd.	266	Increase in equipment used to manufacture engine valves
P.T. Federal Nittan Industries	213	Increase in equipment used to manufacture engine valves

Installment of New Equipment

( in millions of JPY )

Plant	Equipment to be installed	Estimated amount of investment	From	To	Increase in production capacity (%)
Nittan Valve Co., Ltd.
Headquarters (Kanagawa Pref., Japan)	Manufacturing equipment for engine valves, NT-VCP etc.	1,287	2008.04	2009.03	No effect on production capacity, as the purpose is for rationalization, updating, and research & development.
Sanyo Plant (Yamaguchi Pref., Japan)	Manufacturing equipment for engine valves and valve lifters	1,019	2008.04	2009.03
Headquarters (Kanagawa Pref., Japan)	Manufacturing equipment for engine valves and gears	694	2008.04	2009.03
P.T. Federal Nittan Industries
Headquarters (Indonesia)	Manufacturing equipment for engine valves	450	2008.01	2008.12	10% increase in production capacity
Nittan Thailand Co.,Ltd
Headquarters (Thailand)	Manufacturing equipment for engine valves	350	2008.01	2008.12	No effect on production capacity, as the purpose is for rationalizing and revamping its operations as well as enhancing its   research & development capabilities.
Shinwa Precision Co., Ltd.
Headquarters (Daegu, Korea)	Manufacturing equipment for valve lifters	290	2008.01	2008.12	No effect on production capacity, as the purpose is for rationalizing and revamping its operations as well as enhancing its   research & development capabilities.