Financial overview

(in millions of JPY)

	FY2006	FY2005	Rate of Change (%)	Factors
Overall
Sales	511,958	441,498	16.0	-The Company saw a rise in sales as a result of increased production capacity at its overseas manufacturing facilities and as a result of continued restructuring of its domestic operations in order to strengthen its businesses.
Operating Profit	15,866	9,729	63.1	-The Company's operating profit increased overall for the full fiscal year 2006, although revenue deteriorated in the first half because of a sharp rise in materials costs, particularly copper and petrochemical products. This increase was due to the group-wide efforts to reduce manufacturing and fixed costs and pass the higher materials costs onto the selling prices of its products. It was also due to the benefits achieved from increased revenue.
Ordinary income	18,146	15,519	16.9
Current net income	11,020	8,120	35.7	-The current net income increased because the Company no longer needed to report an extraordinary loss of 1 billion yen, which had been posted to implement the voluntary early retirement package it offered in the preceding fiscal year.

Establishing new subsidiaries
-The Company announced an establishment of a new company that performs all mold business for wiring harness components, from design through mass production launches. The new company "SumiDenso Precision Co., Ltd." Will be located in the parent company's Suzuka plant. It is capitalized at 80 million yen, 100% funded by the parent company. The Company consigns component designs to the new company with an initial workforce of 120, then the new company will perform all mold production phases, including design, fabrication, procurement and maintenance for the Company and its group companies. This makes it possible to fabricate molds in a shorter period of time, strengthen its mold related technologies and establish flexible production system that can better respond to changes in parts demand. The new company is expected to generate the sales of 7.5 billion yen in fiscal 2008. (From a story in the Nikkan Jidosha Shimbun on Jul. 13, 2006)

-The Company and Suzuki Co., Ltd., a supplier of connecting terminals for electronics devices, reached a joint venture agreement to establish S&S Components to manufacture automotive wire harness connectors in Suzaka City, Nagano Prefecture. The new company will be set up in December 2006 with a start up capital of 80 million yen, 51 percent of which to be provided by Suzuki. S&S Components will launch production in January 2007, targeting sales of 3.5 million yen for the fiscal year ending June 2008. The Company is working on increasing production of automotive wiring harness connectors, demand for which is expected to grow. In an aim to enhance its supply capacity, the company has decided to develop an alliance with Suzuki, which is setting up more automotive connector plants to strengthen the business line. (From an article in the Nikkan Jidosha Shimbun on Nov.21, 2006)

R&D Expenditure

(in millions of JPY)

	FY2006	FY2005	FY2004
Total	212	210	179

R&D Structure
-The Company develops new products and new technology related to the harness business. In addition it conducts R&D to systematize and modularize automobile parts jointly with AutoNetworks Technologies, Ltd., which is a joint venture the Company set up with Sumitomo Electric Industries, Ltd.

-The Company announced completion of Technical Center at its headquarters in Yokkaichi, Mie Prefecture. The center will play a major role in technology development for global operations. The company has enhanced functions of its engineering centers at Toyota, Utsunomiya, Atsugi, Hamamatsu, Osaka and Hiroshima for R&D at domestic operations, taking the opportunity of the 90th anniversary of its founding next year. The new Technical Center will finalize these efforts serving as a global center for both domestic engineering centers and 12 overseas development and design centers in 9 countries.(From a story in the Nikkan Jidosha Shimbun on May. 25, 2006)


New product developments
1) Activities for making in-car electric devices IT oriented, more highly functional, and network-enabled: The Company worked on developing electronic devices such as PDs (Power Distributors), CDU (Center Display Unit) systems, next-generation in-car LANs (Local Area Networks), and software for its products. Along with the R&D activities themselves, the Company worked on developing harness systems designed for those products.

2) Responding to environmental concerns:
The Company is conducting R&D activities to develop lightweight wire harnesses; high voltage harnesses for HEVs (Hybrid Electric Vehicles); and environmentally friendly products  such as halogen-free electric cables, lead-free solder, and solderless connecting terminals.

3) Responding to ensure quality, and shortening the development cycle of new products:
The Company is driving component-engineering and developing technology on testing, evaluation and analysis. The Company also  is upgrading and expanding its evaluation facilities. By upgrading simulation facilities that use CAE (Computer-Aided Engineering) technology, which can be used to estimate the product life of cable harnesses;  and also analyze the heat and vibration generated by electronic modules, the Company is implementing technological developments that eliminate the need for building physical prototypes.

4) Leveraging the potential of its EMC
By leveraging the potential of its EMC center (electric-wave anechoic room), the Company hopes to develop technology to evaluate electromagnetism noise. The Company see this as a means to improve the level of efficiency in its development activities and also enhance the quality of new products, which are becoming more systemized and high-frequency oriented.


New Production Technologies
1) Development of new production method:
The Company built a SPACE production line (or manufacturing equipment built as a single-unit). To improve productivity and shorten delivery time of products, the Company worked on developing automated subassemblies, enabling automatic transferring, and setting up in-line examinations.

2) Systems development:
The Company is enabling various manufacturing data to be displayed visually as well as enabling machining processes and conditions used for those processes to be checked for quality. The Company is deploying this system, known as its G-POP (Global Pop System), company wide. The Company is also improving the  G-POP system to enable it to handle the post-machining processes as well, planning to deploy the system from FY2007.

3) Development of VAS (Virtual Simulation):
The Company is developing VAS technology to strengthen its capability to design harnesses by performing additional analyses on how the harnesses should be routed. The Company is gathering the data and making 3D drawings of the harness routes  before the harnesses are released. Use of the VAS technology is being included in maintenance manuals. Moreover, to implement these types of analyses without producing prototypes, the Company improved the capability of its drawing-board analysis (drawing-board layout), and is expanding the use of this approach company-wide.

4) Parts and electronic devices:
The Company reduced the size and costs of JB related facilities, boosting their productivity. For inspection technologies, the Company enhanced inspections conducted on rubber plugs. It started using this inspection technique on corrugate manufacturing lines.  In its molding process, the Company is working to automate housing inspections. In addition, the Company is implementing low cost designs at its facilities to reduce manufacturing costs.


Technical assistant contract (as of March 2007)

Company	Contract item	Contract coverage	Period
Sumitomo Electric Wiring Systems Inc. (USA)	Wire harnesses/ components	Guidance on manufacturing technology	From Sep. 1993 to Dec. 2007
K& S Wiring Systems Inc (USA)	Wire harnesses	Guidance on manufacturing technology	From June 1996 to June 2006
SEWS-CABIND SpA. (Italy)	Wire harnesses	Guidance on manufacturing technology	N.A.
Sumitomo Electric Wiring Systems (Europe) Ltd. (UK)	Wire harnesses/components and automotive wires	Guidance on manufacturing technology	N.A.

Capital investment

(in millions of JPY)

	FY2006	FY2005	FY2004
Harness business	261	254	182
Electrical cable business	21	19	14
Overall	282	273	196

Harness division
-The Company made capital investments mainly to rationalize/reinforce production of wire harnesses and harness components.

-Some of the subsidiaries expanded their plants.

-Installation of new manufacturing facilities at Sumidenso Vietnam Co. Ltd., which was planned in the previous fiscal year, was completed in September, 2006.

Electrical wiring
-Mainly to rationalize the production of electrical wire.


New facilities

Company name	Type of facility	Planned total investment (million JPY)	Start	Planned completion
Sumitomo Wiring Systems, Suzuka plant (Suzuka-shi, Mie pref.)	Component manufacturing facilities for the harness business	477	Apr. 2006	Dec. 2007
Motherson Sumi Infotech and Design Ltd. (India)	Building for the harness business	550	Oct. 2005	Jul. 2007
Hartech, Inc. (USA)	Manufacturing facilities for the harness business	1,020	Jun. 2006	Sep. 2007
Suzhou Sumiden Automotive Wire Co., Ltd. (China)	Manufacturing facilities for the harness business	800	Apr. 2006	Sep. 2007
Sumidenso Vietnam Co., Ltd. (Vietnam)	Building and manufacturing facilities for the harness business	1,440	Dec. 2006	Aug. 2007
Kyohritsu Hiparts Co., Ltd.	Building Plant for the harness business	545	Dec. 2006	Jul. 2007