Financial Overview

(in millions of JPY)

	FY2009	FY2008	Rate of Change (%)	Factors
Overall
Sales	38,232	40,677	(6.0)	-
Operating income	2,536	838	202.6	-
Ordinary income	3,260	1,210	169.4	-
Current net income	1,980	500	296.0	-
Automotive Products
Sales	34,953	38,472	(9.1)	-Sales of automotive products decreased year-on-year, because automakers largely reduced their inventory levels and production volumes, hit by slowing sales of vehicles in the global market.
Operating income	2,268	728	211.5	-

Business Restructuring

-The Company announced that it has decided to terminate its joint-venture business in Taipei, Taiwan for the production and sales of automotive plastic fasteners. The Company will transfer all the shares it holds in Piolax of Taiwan Inc. to its joint-venture partner, San Long Industrial Co., Ltd. Piolax of Taiwan was created in 1987, with 51 percent of the capital invested by San Long and 49 percent by the Company. Yearly sales at Piolax of Taiwan Inc. reached 34.5 million Taiwan dollars or 99.7 million yen. Given that the initial objective of the project has been accomplished with some positive results, Piolax and San Long have been discussing their future plans. They have come to an agreement that moving on to develop business on their own, respectively, will lead to the promotion of mutual benefit. (From an article in the Nikkan Jidosha Shimbun on Apr. 22, 2009)

-The Company plans to enhance its business in Mexico. It will separate Piolax, S.A. de C.V., Mexico from its parent U.S. company (Piolax, Inc.'s subsidiary) to make it a solely Mexican operation as early as 2010. In addition to the fact that local Japanese automakers, its customers, are strengthening their production operations, the local currency exchange rate has been stable. The Company, therefore, has decided to make this Mexican operation a subsidiary of Piolax, Inc. itself. The Company aims to increase profits in Mexico and to reduce the burden on the U.S. subsidiary as well for its early recovery from deteriorating profits. (From an article in the Nikkan Jidosha Shimbun on Oct. 5, 2009)

-The Company announced reorganization of its subsidiaries in the U.K. Its local sales company "Piolax Ltd." and manufacturing firm "Piolax Manufacturing Ltd." will merge as of Dec. 31, 2009. Piolax Ltd., which will be a surviving company, will take over manufacturing-related operations that have been conducted by Piolax Manufacturing in a bid to increase efficiency in management of the operations in the U.K. (From an article in the Nikkan Jidosha Shimbun on Dec. 9)

New Company

-The Company announced its plan to establish an auto parts sales company in India as early as Nov. 2009. The Group, which is eying the possibility of setting up a production facility there when demand expands in the future, will position the new unit also as a research center for the Indian market. The subsidiary will be called Piolax India Private Ltd. It will be established in Chennai, Tamil Nadu, India, with a start-up capital of 35 million rupees, of which 99 percent will be provided by the Company. and 1 percent by its sales subsidiary, KHK Sales Co., Ltd. Piolax India Private Ltd., practically the Company's wholly owned subsidiary, will sell fasteners for industrial use and small component units for automobiles. (From an article in the Nikkan Jidosha Shimbun on Sep. 9, 2009)

>>>Financial Forecast for the Next Fiscal Year(Sales, Operating Income etc.)

R&D Expenditure

(in millions of JPY)

	FY2009	FY2008	FY2007
Overall	642	515	544
Automotive Products	347	396	427

R&D Structure

-R&D activities were conducted by the design department, development groups in each SBU, and the development division of the Company's subsidiary, Pilolax Medical Devices, Inc.

R&D Facilities

Yokohama Technical Center

Kanagawa Pref., Japan

R&D Activities

Precision springs
-The Company developed low-cost materials for coil springs used in transmissions and engines.
-The Company developed and started mass-producing smaller, lighter, and more cost-efficient transmission units by using technology to analyze product stress and behavior in order to optimize the design.
-The Company put increased emphasis on developing composite springs designed to raise efficiency when being installed in transmission units.
-The Company also worked closely with assembly plants of its customers in order to develop products that best meet the requirements of the customers, while offering the Company's designing expertise.
-The Company increased joint development activities with and deliveries to automakers in emerging nations, while stepping up development programs with Korean automakers.

Industrial fasteners
-The Company developed fasteners designed for sheets that run in size from thin to thick. Its new products include fasteners which require a minimum level of strength to be installed in vehicles and include those with strong fastening power, and those that make dismantling of scrapped vehicles more efficient.
-The Company is considering migrating to materials that emit less odor in vehicle interiors. In addition, it is working to develop environmentally friendly products and ones that enhance interior comfort.
-The Company developed user-friendly net hooks for vehicle interiors.
-The Company is actively exchanging information with its subsidiaries outside Japan, with a goal of developing and supplying low priced yet high-quality products for the global market.

Small units
-The Company developed side locks for glove boxes. These are now being equipped on an increasing number of vehicle models, improving performance and workability.
-The Company worked on developing new dampers.
-The Company developed mechanical hinges for installation on console box lids; as well as floor boards for rear trunks.

Fuel systems
-In the area of valves for plastic tanks, the Company enhanced the performance and reduced the manufacturing costs of rollover valves and inlet check valves.
-The Company is developing metal tank valves, focusing on developing a standard type valve that can be sold at a lower price point; and a highly functional, composite valve.

Other products
-The Company is developing products (for batteries and motors) made from copper and frame-resistant resin materials. These products are for use on electric and hybrid electric vehicles.
-The Company has been working on developing environmentally friendly technologies compliant with the Japan Automobile Manufacturers Association's directive calling for voluntary reductions of volatile organic compounds and other environmentally harmful substances. It is also following both the End-of-Life (ELV) Vehicle Directive and the Restriction of Hazardous Substances (RoHS) in effect in Europe. Also, the Company has been working closely with its European operations in developing technologies that meet European REACH (Registration, Evaluation and Authorisation of CHemicals).

Licensing-in Technology from Other Companies

(As of Mar. 31, 2010)

Company	Product	Contract Detail	Term
Norma Germany GmbH	Automotive fuel delivery components	Approved use of patent	September 18, 1995 - August 17, 2000 This contract renews annually
Norma Germany GmbH	Plastic fuel tank components	Approved use of patent	Added to the contract above
Norma Germany GmbH	Plastic fuel tank components	Approved use of patent	December 13, 2001 - December 12, 2006 This contract renews annually

Licensing-out Technology to Other Companies

(As of Mar. 31, 2010)

Company	Product	Contract Details	Term
Piolax of Taiwan Inc. (Taiwan)	Metallic and plastic fasteners	Manufacturing technology	From October 6, 1987 through October 5, 1992. To be renewed every 10 years.
Taiwan Houmu Industrial Co., Ltd. (Taiwan)	Pressure springs, torsion springs and valve springs	Manufacturing technology	From November 1, 1978 through October 31, 1983. To be renewed every 5 years.
Piolax Corp. (USA)	Precision plastic clips, precision springs, and related assembly products for the automotive and electronics industry.	Covers technology, engineering and marketing services	For an indefinite period from April 1, 1993.
Piolax Ltd. (UK)	Precision plastic clips, precision springs, and related assembly products for the automotive and electronics industry.	Covers technology, engineering and marketing services	For an indefinite period from August 8, 1995.
Piolax Co., Ltd. (Korea)	Precision plastic clips, precision springs, and related assembly products for the automotive and electronics industry.	Covers technology, engineering and marketing services	From June 20, 1996 through June 19, 2006. To be renewed each year.
Piolax (Thailand) Ltd. (Thailand)	Precision plastic clips, precision springs, and related assembly products for the automotive and electronics industry.	Covers technology, engineering and marketing services	For an indefinite period from August 10, 2000.
Dongguan Piolax Co., Ltd. (China)	Precision plastic clips, precision spring, and related assembly products for the automotive and electronics industry.	Covers technology, engineering and marketing services	From July 1, 2004 through June 30, 2014. To be renewed each year.

Capital Investment

(in millions of JPY)

	FY2009	FY2008	FY2007
Overall	N.A.	N.A.	3,567
Automotive Products	2,365	2,876	N.A.

-The Company spent 1,517 million yen in Japan and 1,010 million yen outside Japan.

Investments Outside Japan

<Asia>
-The Company is stepping up efforts to expand operations in the Asian area. It plans to invest approx. 2.5 billion yen over the next three years from fiscal 2010 to 2012 in projects in Asia. In addition to construction of a new plant in Thailand scheduled for FY2010, the supplier will aggressively address capacity expansion in China with introduction of new equipment by using funds that have been diverted from Japan, Europe and the U.S. to Asia. The Company currently manufactures and sells resin fastener parts for automobiles in Korea, China and Thailand. On top of these operations, the Company has plans to establish a local sales subsidiary "Piolax India Private Ltd."in the city of Chennai, India to start the new parts business it has won from its leading customer Nissan Motor Co., Ltd. The operations are scheduled to start in Jan. 2010. (From an article in the Nikkan Jidosha Shimbun on Dec. 9, 2009)

New Facilities (automobile related facilities)

(As of Mar. 31, 2010)

Company Office	Business	Expected Investment (Thousands of yen)	From	To	Purpose of the investment
The Company	Production facilities and dies	1,539	Apr. 2010	Mar. 2011	Investment was focused on updating equipment, mainly to improve production efficiency. Only a minor increase was made in terms of production capacity.
Subsidiaries in Japan	Production facilities and dies	157	Apr. 2010	Mar. 2011	Investment was focused on updating equipment, mainly to improve production efficiency. Only a minor increase was made in terms of production capacity.
Subsidiaries outside Japan	Production facilities and dies	2,016	Jan. 2010	Dec. 2010	Since a wide range of products are made at facilities outside Japan, the level of increase in production capacity is unclear.