Financial Overview

(in million JPY)

	FY 2008	FY2007	Rate of Change (%)	Factors
Overall
Sales	31,693	36,462	(13.1)	-Even though the Company's business remained strong in Asia, sales decreased due to an overall decline in product demand and due to negative currency translation.
Operating income	1,279	3,806	(66.4)	-Income decreased as a result of the following factors: a decline in production volume and revenue, increased costs due to soaring material prices; increased depreciation costs, and negative currency translation.
Ordinary income	1,201	4,138	(71.0)
Current net income	(255)	1,972	(113.0)	-Current net income decreased because some of the Company's production facilities were impaired.
Automotive components
Sales	24,576	29,269	(16.0)	-Sales and income decreased as a result of the global decline in automotive demand due to the economic slowdown worldwide; and as a result of negative currency translation.
Operating income	995	3,392	(70.6)

Achievements by product
Vehicle engine valves
-Even though sales were strong in Asia, the Company's income decreased due to a drop in orders for products destined to Europe and for products used for motor sports in Japan.
<Precision forged gears for automotive use >
Orders for products destined to Europe and used in medium- and large-size vehicles   decreased substantially.

Valve lifters
-Sales of products shipped to Europe decreased because there was a shift in the market to successor engines and because there was an overall slowdown in the market. Also, the financial results of the Company's Korean manufacturing subsidiary previously had been reported in the consolidated financial statements, but because this subsidiary's status was changed from a consolidated subsidiary to an affiliate accounted for under the equity method of accounting, the company's income showed a decrease. As a result, income decreased.

NT-VCP
-Income decreased due to sluggish sales of products sold in North America.


New Company
-In August 2008, the Company and Eaton Corporation of the U.S.A. will jointly set up Nittan Global Tech Co., Ltd. in order to cater to the new needs and requirements of Japanese and Korean automakers, which are increasing their presence in the global market. The Company will become a majority shareholder of the new entity, which will be headquartered in Shinjuku Ward, Tokyo. Although Eaton is the largest shareholder of Nitta by owning 20 percent of its equity, the Eaton-Nittan alliance decided that it would be better that the new venture will be led by the Company.(From an article in the Nikkan Jidosha Shimbun on Aug. 7, 2008)

R&D Expenditure

(in million JPY)

	FY2008	FY2007	FY2006
Overall	1,346	1,194	1,007

R&D 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 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.

Next-generation engines
-In August 2008, the Company will strengthen developing parts for next-generation engines to cope with the needs of carmakers intent on making ultra low-emission and ultra fuel-efficient vehicles. Projecting fuel combustion temperature is getting higher to achieve both goals of developing a cleaner engine and reducing fuel consumption at a higher level, the Company will commercialize engine valves at low cost to follow this trend. Utilizing synergy with Eaton Corporation of the U.S. with which the company is enhancing cooperation seeking to receive new orders from Japanese and Korean automakers, the Company will complete technology development at an early date to launch marketing activities globally. (From an article in the Nikkan Jidosha Shimbun on Aug. 22, 2008)


Technical Alliances (As of Mar. 31, 2009)

Partner	Content of agreement	Project Period
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.	From Oct. 23, 1993 to the date specified in the contract
P.T. Federal Nittan Industries (Indonesia)	License agreement on small engine valves	5 years from Jun. 1, 2005
Shinwa Precision Co., Ltd. (Korea)	License agreement on oil pressure valve lifters	5 years from Aug. 1, 2005
Nittan (Thailand) Co., Ltd. (Thailand)	Technical assistance agreement on small engine valves	10years from Jan. 1, 2003
Shinwa Precision Co., Ltd. (Korea)	License agreement on mechanical tappets	10years from Dec. 5, 2002
Beijing Yoosung Shinhwa Automobile Parts Co., Ltd. (China)	License agreement on lash adusters	10years from Dec. 7, 2006
Beijing Yoosung Shinhwa Automobile Parts Co., Ltd. (China)	License agreement on mechanical tappets	10years from Jan. 1, 2008

Capital Expenditure

(in million JPY)

	FY2008	FY2007	FY2006
Overall	4,076	3,233	3,647
Automotive components	1,518	2,671	2,633

Capital Expenditure of the Automotive Components Business

(in million JPY)

Facilities	Amount of investment	Description of capitalization
Nittan Valve Co., Ltd.	1,518	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.	570	Increase in equipment used to manufacture engine valves
P.T. Federal Nittan Industries	826	Increase in equipment used to manufacture engine valves

Planned Capital Investments (As of Mar. 2009)

Plant	Equipment to be installed	Estimated amount of investment (in million JPY)	From	To	Increase in production capacity (%)
Headquarters (Kanagawa Pref., Japan)	Manufacturing equipment for engine valves, NT-VCP etc.	120	2009.04	2010.03	No effect on production capacity, as the purpose is for rationalizing and revamping its operations as well as enhancing its research & development capabilities.
Sanyo Plant (Yamaguchi Pref., Japan)	Manufacturing equipment for engine valves and valve lifters	240	2009.04	2010.03
Headquarters (Kanagawa Pref., Japan)	Manufacturing equipment for engine valves and gears	640	2009.04	2010.03
P.T. Federal Nittan Industries Headquarters (Indonesia)	Manufacturing equipment for engine valves	330	2009.01	2009.12	The purpose is for rationalizing and revamping its operations as well as enhancing its research & development capabilities.
U.S. Engine Valve(partnership) Headquarters (U.S.A.)	Manufacturing equipment for engine valves	123	2009.01	2009.12	The purpose is for rationalizing and revamping its operations as well as enhancing its research & development capabilities.
Nittan Thailand Co., Ltd. Headquarters (Thailand)	Manufacturing equipment for engine valves	249	2009.01	2009.12	The purpose is for rationalizing and revamping its operations as well as enhancing its research & development capabilities.