Sumitomo Heavy Industries, Ltd.
CONSOLIDATED FINANCIALREPORTFor the Full Year ended March 31, 2007

All financial information has been prepared in accordance with generally accepted accounting principles in Japan. This
document has been translated from the Japanese original as a guide to non-Japanese investors and contains forwardlooking statements that are based on managements’ estimates, assumptions and projections at the time of publication. A
number of factors could cause actual results to differ materially from expectations. Amounts shown in this financial
statement have been rounded down to the nearest million yen.

Consolidated Results for the Full Year
Ended March 31, 2007

Summary of Consolidated Financial Results
For the Full Year Ended March 31, 2007
Presented May 8, 2007

Sumitomo Heavy Industries, Ltd.
Listed Exchanges

Tokyo Stock Exchange, Osaka Securities Exchange

Stock Code6302

Head OfficeTokyo

President

Yoshinobu Nakamura

URL

www.shi.co.jp

Inquiries

Hideo Oshima,
General Manager, Corporate Communications Dept.

Telephone+81 3 5488 8219

Scheduled date of Ordinary Shareholders’ Meeting

June 28, 2007

Scheduled date of filing Yukashoken-Hokokusho

June 28, 2007

Scheduled date of payment of cash dividends

June 29, 2007

1. FY 2007 Consolidated Results (April 1, 2006 to March 31, 2007)(1) Business Results
Present Full Term

(Millions of yen)Previous Full Term

April 1, 2006

April 1, 2005

to March 31, 2007

to March 31, 2006

% change% change
Net Sales

600,2568.9

551,339

5.8

Operating Income

64,22435.2

47,505(2.6)

Ordinary Income

65,341

37.3

47,585(0.6)

Net Income

37,352

25.6

29,74230.5

Net Income per Share (yen)

61.99

49.45

--

--

Return on Equity (ROE)

20.1

19.5

Return on Assets (%)

11.1

8.3

Ordinary Income to Net Sales (%)

10.7

8.6

Fully Diluted Net Income per Share*Notes:Equity method investment profit and loss:
Fiscal year ended March 31, 2007:
Fiscal year ended March 31, 2006:

4,584 million yen
4,303 million yen

1Consolidated Results for the Full Year
Ended March 31, 2007

(2) Financial Position(Millions of yen)
End of Present
Full YearAs of March 31, 2007

End of Previous
Full YearAs of March 31, 2006

Total Assets

600,890579,233

Stockholders’ Equity

206,010

167,740

34.1

29.0

338.95279.02Equity Ratio (%)
Net assets per Share (yen)* Note: Equity:
Fiscal year ended March 31, 2007:
Fiscal year ended March 31, 2006:

204,691 million yen-- million yen(3) Cash Flows(Millions of yen)
Present Full Year
April 1, 2006 to
March 31, 2007

Previous Full Year
April 1, 2005 to
March 31, 2006

Cash Flows from Operating Activities

56,78950,023

Cash Flows from Investing Activities(12,461)(7,024)

Cash Flows from Financing Activities(41,193)(48,812)

Cash and Cash Equivalents at Period End

47,52343,644

2. Dividends
As of March 31,
2008 (forecast)

As of March 31, 2006

As of March 31, 2007

Interim (yen)

2.50

3.50

5.00

End of Term (yen)

2.50

3.50

5.00

Annual Dividends (yen)

5.00

7.00

10.00

Total Dividends (millions of yen)

3,007

4,217

--

Payout ratio (consolidated)

10.1%

11.3%

14.0%

Net assets dividend yield (consolidated)

2.0%

2.3%

--

Annual Dividends per Share

3. FY 2007 Consolidated Forecasts (April 1, 2007 to March 31, 2008)(Millions of yen)Interim
April 1, 2007 to Sept. 31, 2007

Full Year
April 1, 2007 to March 31, 2008

Net Sales

300,000

9.7

650,000

8.3

Operating income

30,00012.1

74,00015.2

Ordinary Income

29,0004.7

73,00011.7

Net Income

17,0001.8

43,000

15.1

Projected net income per share

28.15

71.20

* Please consult page 8, ‘Outlook for Fiscal Year through March 31, 2008’, for further information concerning the
projections.

2Consolidated Results for the Full Year
Ended March 31, 2007

4. Additional Notes(1) Transfers of important subsidiaries during the fiscal period (moves of specific subsidiary due to change in scope of
consolidation):

None(2) Changes in principles, procedures and presentation of accounting treatment in preparing consolidated financial
statements:(i) Changes resulting from revisions to accounting standards, etc.:

Yes(ii) Changes other than (i):None

* Please refer to “Important items that are fundamental to the preparation of consolidated financial statements” on page
23 for more details.

(3) Number of shares issued (common shares)(i) Number of shares issued end of fiscal period (including treasury stock):
As of March 31, 2007

605,726,394 shares

As of March 31, 2006

602,625,585 shares(ii) Number of treasury stock at end of fiscal period
As of March 31, 2007

1,832,402 shares

As of March 31, 2006

1,439,859 shares* Please refer to “Per Share Information” for the number of shares used as the basis for calculating net income(consolidated) per share for the term.

3Consolidated Results for the Full Year
Ended March 31, 2007

I. Business Results and Financial Position
1. Business Results
The Japanese domestic economy continued to expand during the year under review (‘the period’) as corporate
business results have been broadly favorable, aided by private and corporate capital investment and growth in exports
with stable exchange rates, and despite the continuing trend of decline in public works investment. Overseas
economies remain firm despite a trend of mild deceleration seen in some sectors of the U.S. economy. High growthcontinues in China and promising markets such as Southeast Asia and India are expanding. The world economy
remains strong on the whole.

The Sumitomo Heavy Industries Group has actively pursued management policies based on our “Leap to
Excellence ’07” medium-term management plan, as implemented in fiscal 2005. This period saw the Group achieve thegoals of the plan - namely, operating income of 60.0 billion yen or more, interest-bearing debt balance of 100.0 billion
yen or less, and post-tax ROIC* of 10% or greater - one year ahead of schedule, in a firm economic environment.
The ROIC (Return on Invested Capital) for the Group is calculated from the formula below.

ROIC

=

(Operating income + Interest earned, dividends) x 55% (= 1 – Effective tax rate)(Average stockholders’ equity at start and end of fiscal period +average interest-bearing debt at start and end of fiscal period)

Key Issues in the Period, the Second Year of the “Leap to Excellence ’07”
(1) Enhancing competitive edge of products
Believing that continual creation of globally competitive first class products is necessary to achieve sustainable growth,
the Group has engaged in investment for the development and active marketing of promising products. We have been
particularly active in introducing new models to the market for power transmissions, plastic machinery, andconstruction machinery.

(2) Strengthening collaboration between businesses and expanding component business
The Group is working to integrate its machinery business through the components business, which is our forte, by
pursuing vertical integration. More specifically, we have fostered the growth of motion control drives for functional
integration of our top-ranked power transmissions and precision control technology.

(3) Expanding orders and improving profitability for the Industrial Machinery
The industrial machinery, that is material handling system, turbines and pumps, and forging presses remains strong
due to the favorable climate for the shipping, steel, energy, and the automotive businesses, contributing to improved
profitability for the entire group. The Group has continued to invest in meeting client needs in order to sustain stable
income for these businesses.

4

Consolidated Results for the Full Year
Ended March 31, 2007

(4) Making structural transition from public demand to private demand
The Group continued its efforts of the last period to achieve a structural shift in demand from largely public demand to
private demand for the Environmental Protection Facilities and Plant segment and the Steel Structure and Other
Specialized Equipment segment. The water treatment business was spun off to enable swift decision making andflexible management of the business. This enhanced our ability to respond to demand in the water treatment businessfor non-public market.

(5) Expanding overseas sales
The Group has improved marketing power overseas through active expansion of sales and achieved this by expanding
sales and service for the power transmission business, establishing a molding technology center in China, andimproving local customer support.

(6) Production innovations
The Group made headway in establishing a global supply chain and overseas manufacturing sites. This included thecompletion of a motor manufacturing plant in Vietnam for the power transmission business. We also pursued initiatives
to improve production efficiency in domestic plants for many businesses, including the material handling systembusiness and the shipbuilding business.

(7) Augmenting human resource training
The Group worked to develop human resources that can contribute to the creation of “first class products” byenhancing the training program with the goal of increasing specialization, in addition to existing training programs
designed for current top management and future leaders.

(8) Efforts to prevent global warming
The Group waged a campaign to reduce paper consumption after reducing the consumption of electricity. Goals havebeen set for a 10% reduction in electricity usage by fiscal 2007 (compared to fiscal 2004) and a 30% reduction in paper
use by fiscal 2008 (compared to fiscal 2005). We are currently working to achieve these.

(9) Developing internal control system
The Group has been working systematically to establish a system of internal controls to further improve complianceand enable us to respond to revisions in and stricter application of laws and changes in the social environment, in
addition to measures to address the legal requirements for a system of internal controls under the Company Law and
the Financial Instruments and Exchange Law.

Work on the forgoing operating policies enabled the Group to achieve a 17% increase in orders received over lastperiod, marking an historical high of 705.3 billion yen, and sales of 600.3 billion yen, an increase of 9% over last period.
On the profit front, historical highs were recorded for both operating income at 64.2 billion yen and ordinary income at65.3 billion yen. Net income for the period also rose 26% over last period to 37.4 billion yen, achieving an historicalhigh for the fourth, consecutive period.

5Consolidated Results for the Full Year
Ended March 31, 2007

Parent results for the period were 322.2 billion yen in orders received, 259.4 billion yen in sales, 18.2 billion yen in
operating income, 21.3 billion yen in ordinary income, and 12.8 billion yen in net income.

Group Results by Business Segment
Mass-Produced Machinery Segment
Operating results strong for the power transmission and control business, both domestically and overseas, due toactive new product introduction, and expanding business by establishing a global supply chain and other means.

In the plastics machinery business there was a pause in demand for the automotive and electronic component
industries, causing a slight decline in both orders received and sales compared with last period. Orders received forcryocoolers and cyclotrons for medical treatment, however, recorded growth, primarily for overseas.

As a result, total segment orders received rose 7% over last period to 234.7 billion yen, sales rose 1% over last period
to 222.9 billion yen, and operating income declined 4% from last period to 28.8 billion.
Environmental Protection Facilities, Plants, and Others Segment
Orders received for multi-fuel boilers have been strong for the energy plant business, but sales for the entire segment
declined slightly due to a decline in sales for the water treatment business. Resulting orders received for the division asa whole were 90.0 billion yen, up 8% over last period; sales were 79.4 billion yen, down 3% from last period, andoperating income was 4.5 billion yen, up 8% from last period.
Ship, Steel Structure and Other Specialized Equipment Segment
Orders received for the shipping business showed a two-ship increase over last period to 13 ships and delivery of eighttankers was completed on the sales side. These results were due to marketing activities being restricted to Aframax
tankers to match market needs with our shipbuilding capacity under a favorable market environment. Orders received
for the reactor vessel business recorded strong growth due to active capital investments in the oil and chemical plant
industries amidst expanding demand for energy and high oil prices.

As a result, segment orders received as a whole rose 27% over last period to 121.0 billion, sales rose 6% over lastperiod to 69.5 billion yen, and operating income rose to 6.7 billion, versus an operating loss of 1.0 billion yen last period.
Industrial Machinery Segment
The business for material handling system expanded, mainly for large cranes, as we raised our capacity to handle
investment in increased capacity for the domestic shipbuilding and steel companies. This resulted from detailed market
forecasts and timely expansion of production facilities.
The turbine and pump business was favorable as investment in biomass generation plant and oil and petrochemicalplant increased, primarily in overseas markets. Sales for the forging press business rose on sustained production of
forging presses for the automotive industry.
This resulted in 36% year-on-year growth in orders received for the segment as a whole to 93.6 billion yen, sales
growth of 22% year-on-year to 68.3 billion, and 63% growth in operating income over last year to 9.5 billion.

6

Consolidated Results for the Full Year
Ended March 31, 2007

Construction Machinery Segment
Business for hydraulic excavators was favorable both domestically and overseas, due to measures such as theintroduction of a new type of hydraulic excavators to the market to address the Phase III gas emission restrictions andincreased production capacity. Of particular note was the growth in both sales and orders received concentrated inEurope and Asia.

Both orders received and sales for the construction crane business recorded strong growth amid continued dynamismof the North American market due to the ongoing introduction of new models and expansion of production at North
American sites.

This resulted in a 22% year-on-year increase in orders received for the segment as a whole to 166.1 billion yen, 27%
year-on-year growth in sales to 160.2 billion, and 69% year-on-year growth in operating income to 14.4 billion yen.
Sumitomo Heavy Industries was indicted on suspicion of violating the Antimonopoly Act with respect to steel bridge
construction and sludge recycling plant. We were adjudged guilty. The Fair Trade Commission also ordered us to pay
a surcharge on the sludge recycling plant and watergate construction, based on the Antimonopoly Act. Sumitomo
Heavy Industries regards these events as very serious. The entire group will continue to work on further strengthening
our compliance structure and on preventing a reoccurrence.

2. Outlook for the Fiscal Year through March 31, 2008
We expect demand to remain firm both domestically and overseas for the present despite a gradual trend of decline insome sections of the U.S. economy, and expect demand from capital investment to remain strong overall due to risingdemand for basic materials and energy from sustained growth of the BRICs and increased production of materials andcomponents attendant to expanding diffusion of and demand for such things as cars and flat panel televisions.

The Group will continue managerial efforts to seize the excellent opportunity presented by this market environment toachieve the tasks set for the “Leap to Excellence ‘07” medium term management plan without allowing the strong
growth and development of the past few years to die out and will work to ensure a smooth transition to the next
medium term management plan.
The present Group forecast for fiscal 2007 is as follows:(Millions of yen)

Consolidated

AmountCompared to fiscal 2007

Net sales

650.0

Increase by 8%

Operating income

74.0

Increase by 15%

Ordinary income

73.0

Increase by 12%

Net income

43.0

Increase by 15%* Based on an assumed exchange rate of 115 yen for the first half and 110 yen for the second half.

The Company regards the forecasts and projections for the future operating results mentioned above to be reasonable,
based on obtainable information at present. Actual operating results may therefore differ from the forecasts andprojections noted above due to changes in various factors. Please see Business Risks section for detailed information
about those factors.

7

Consolidated Results for the Full Year
Ended March 31, 2007

3. Analysis of Financial Status
Total assets increased by 21.7 billion yen over last period to 600.9 billion yen due to an increase in fixed assets from
active capital investment and increased inventory owing to steady growth in orders received. Interest bearing debt
decreased by 37.5 billion yen from the end of last period to 88.0 billion yen due to efforts to repay loans. The debtequity ratio improved to 14.7%. Stockholders’ equity increased 37.0 billion yen compared to last period to 204.7 billion
on strong operating results for the period.

Cash inflows from operating activities increased 6.8 billion yen compared with last period to 56.8 billion yen. This
increase was mainly due to an increase in net profit before taxes and other adjustments and a reduction in accounts
receivable. Cash outflows from investment activities rose 5.4 billion yen compared with last period to 12.5 billion yen
from increased capital investment and other factors. Cash flows from financing activities declined 7.6 billion yen fromlast period to 41.2 billion yen owing to debt repayment efforts.

Cash Flow Indicators
2006

2005

2004

2003

2002

Stockholders’ equity ratio (%)

34.1

29.0

24.1

19.7

15.2

Stockholders’ equity ratio at market value (%)

118.0

117.4

44.6

30.7

7.6

Years to debt redemption (year)

1.6

2.5

3.7

2.8

9.3

Interest coverage ratio (times)

34.1

21.0

15.0

19.5

6.3

(Notes)
1. Indicators calculated using the following formulae.
Stockholders’ equity ratio: Stockholders’ equity/Total assets
Stockholders’ equity ratio at market value: Market capitalization/Total assets
Years to debt redemption: Interest-bearing debt/Operating cash flow
Interest coverage ratio: Operating cash flow/Interest payments
2. All are calculated based on consolidated financial figures.
3. Market capitalization is calculated based on the number of shares issued, less treasury stock.
4. Interest-bearing debt indicates all liabilities posted in the balance sheets on which the Company pays
interest.

4. Basic Policies Relating to Profit Distribution
The Company's basic policy is to pay stockholder dividends according to periodic income and to continue to increase
these dividends, while replenishing internal reserves necessary for stable, long-term business development.

Combined with an interim dividend of 3.50 yen per share, the dividend for this period is projected at seven yen, a two
yen increase over last period.

8

Consolidated Results for the Full Year
Ended March 31, 2007

II. State of the Group
Disclosure of the “Diagram of Business Affiliations” and “Status of Affiliated Companies” has been omitted since there
have been no significant changes from the most recent financial statements, published June 29, 2006.

9

Consolidated Results for the Full Year
Ended March 31, 2007

III. Management Policies
1. Basic Management Policies
The Group believes that securing long term customer trust through continuously "creating value for consumer" isinterconnected with the Group's efforts to maintain sustained development and increase business worth, and reflects
the desires of stockholders, employees, and the local community.

In order to realize high, stable growth on a global level, the Group intends to be an "organized, knowledge-creatingcompany" that provides first class quality products to customers. Then, the Group will strengthen marketing, researchand development, and production, and focus even more closely on the product itself.

2. Medium and Long-term Management Strategies
Under “Leap to Excellence ’07,” the medium-term, three-year management plan that began from fiscal 2005, thecompany is aiming for sustainable growth and development built on the three core features outlined below.

(1) The Group will strive to become an organized knowledge-creating company launching first-class products inthe market.
(2) The Group’s businesses will be vertically integrated to pursue synergy.
(3) The Key Component business will be expanded and reinforced.
During fiscal 2007, we will make the vision targeted in “Leap to Excellence ‘07” a reality by further promoting the value
chain through the vertical integration of our businesses.

3. Key Tasks for Fiscal 2007
The Group will work to the following tasks to put the finishing touches on the “Leap to Excellence ‘07” medium-term
management plan during the financial year through March 2008, the final year of the plan:(1) Enhance the Competitive Edge of Products and Bring First Class Products to Market

The Group will strive to engage in continual technological innovation and to apply the latest technology in order tocreate first class products that will always be well received worldwide and to bring these to market. We will strive toimprove our capabilities in product development and to market products aggressively.

(2) Strengthen Collaboration between Businesses and Expand the Components Business

Establishing a competitive position through creating compatibility in precision control technology for the product lines
such as the Mass-produced Machinery segment and Construction Machinery - this is the Group’s strength. We will
promote the growth and diffusion of new products such as motion control drives and new businesses in thesemiconductor and liquid crystal sectors as we continue to provide results for the market based on these strengths.

10Consolidated Results for the Full Year
Ended March 31, 2007

(3) Improving Capacity to Handle Production in the Industrial Machinery Business

The Group has received overwhelming acclaim for large cranes, forging presses, reactor vessels and other products in
the Industrial Machinery business both domestically and overseas due to the superior technology and trust we havebuilt as a group. We will expand production capacity in line with the expansion of demand and will continue to meet the
expectations of our customers.

(4) Accelerating Overseas Expansion

The Group will accelerate expansion overseas even further as the march of globalization advances.

The Mass-produced Machinery segment has led globalization for the group thus far. The Group will further accelerate
globalization next period and will expand and build new manufacturing, sales, and service facilities as we
simultaneously work to reduce costs as far as possible.

Demand for the superior products offered by the Group in the Industrial Machinery segment has expanded among, notonly domestic clients, but overseas clients as well. We will establish a stable supply structure overseas for productgroups such as material handing system and forging presses in addition to products such as turbines and pumps which
are already being marketed overseas.

As for Construction Machinery segment, the Group will strive to further expand sales to the Chinese and Asian markets
that are experiencing growth in demand, in addition to the European and U.S. markets where we have long manifested
our strength.

(5) Expanding Production Capacity

The Group will continue to engage actively in capital investment to expand sales of rapidly growing products and toenhance overseas development and will establish a structure that will enable us to achieve the high goals of the next
medium-term management plan without trouble as the global increase in demand requires further expansion of
production capacity. We will concentrate our focus on expanding production capacity for reactor vessels, the Industrial
Machinery segment and the Construction Machinery segment, where we expect to expand sales overseas, and on
reinforcing overseas production for the Mass-produced Machinery segment.

(6) Training and Development of Human Resources

In order to develop human resources utilizable worldwide, the Group will make further improvements to training
programs for training specialized personnel and training programs for improving the abilities of top management andfuture leaders at strategic conceptualization. We will also initiate a lateral system of training to ensure that the technicalexpertise and skills of veterans are handed down.

(7) Initiatives to Prevent Global Warming

The Group will promote green distribution with the intent of improving the efficiency of product transport in addition to
engaging in activities to reduce consumption of electricity and paper.

11

Consolidated Results for the Full Year
Ended March 31, 2007

(8) Ensuring a Strong System of Internal Controls

While the Group has long been active in promoting compliance and risk management, we have made greater progressin establishing a framework of internal controls to address the requirements of the Company Law and the Financial
Instruments and Exchange Law this period.

Next term we will concentrate our focus on implementing a system of internal controls for financial reporting and on
establishing a format for evaluation. We will also work to further fortify compliance and risk management.

Next Medium-term Management Plan
The Group strove to reform operational structure through the “Leap to Excellence ‘07” medium-term management planand established a strong financial base. As we achieve the final goals of “Leap to Excellence ’07,” we will work on
creating the next three-year, medium-term management plan, which will begin in fiscal 2008, with the goal of achieving
the “globalization of Sumitomo Heavy Industries.” We will dare to set even higher goals, to search for sources ofgrowth overseas, and to take on the challenge of markets where intense competition awaits us. We will continuallyoffer first class products to customers throughout the world and will contribute by continually improving value for ourclients in order to achieve further growth.

12Consolidated Results for the Full Year
Ended March 31, 2007

IV - (1) Consolidated Income Statements(Millions of yen)
Present Full Year

Previous Full Year

April 1, 2006 to

April 1, 2005 to

March 31, 2007

March 31, 2006

Amount%AmountY/Y
Change%AmountNet sales

600,256100.0

551,339

100.0

48,917

Cost of sales

464,07177.3

434,904

78.9

29,166Gross income

136,186

22.7

116,435

21.1

19,751

Selling, general & administrative expenses

71,961

Operating income

64,224

68,93010.7

47,505

3,031
8.6

16,720Non-operating Income:Interest income

191

220

(29)

Dividend income

675

367

308

Equity in earnings of unconsolidated
subsidiaries and affiliated companies

4,584

4,303

281

Other-net

2,774

3,305

(532)

8,223

8,195

28

Interest expense

1,666

2,384

(719)

Loss on disposal of property, plant andequipment

1,012

836

176

Other-net

4,429

4,894

(465)

Total Non-operating expenses

7,107

8,114

(1,008)Non-operating income/loss

1,116

81

1,035

Ordinary income

65,341

Total Non-operating income
Non-operating expenses

10.9

47,585

8.6

17,755Extraordinary gains
Gain on sale of securities

1,398

906

492

Gain on business transfer

294

--

294

1,693

906

787

Total extraordinary gains(Millions of yen)13

Consolidated Results for the Full Year
Ended March 31, 2007

Extraordinary losses
Loss from reorganization of business

1,870

--

1,870

Loss on business transfer

1,270

--

1,270

Loss on breach of antitrust law

746

705

42

Impairment losses

208

229

(21)

Loss on sale of property, plant andequipment

--

686

(686)

Loss on valuation of investment securities

--

471

(471)

Provision for retirement benefits todirectors, corporate auditors and executive
officers

--

257

(257)

Loss on liquidation of subsidiaries

--

70

(70)

Loss on valuation of shares of subsidiaries

--

7

(7)

Total extraordinary losses

4,093

2,425

1,668

Income before income taxes

62,940

Corporate income tax current

26,463

15,735

10,728

Corporate income tax deferred(1,493)135(1,628)

618

454

164

Minority interests
Net income

37,352

14

10.5

6.2

46,06629,742

8.4

5.4

16,874

7,610

Consolidated Results for the Full Year
Ended March 31, 2007

VI - (2) Consolidated Statements of Surplus(Millions of yen)

Current Full Year
April 1, 2006 to March 31, 2007
Capital Surplus

16,803

Capital surplus at the beginning of term

5

Increase in capital surplus

5

Gain on disposition of treasury stock

16,808

Capital surplus at the end of term
Retained earnings
Retained earnings at the beginning of term

42,677

Increase in retained earnings

30,41929,742

Net income
Increase owing to merger

278

Increase from transfer from revaluation reserve for land

399
4,248

Decrease in retained earnings

3,308

Dividends
Bonuses for directors

42

Return of retirement allowance of subsidiaries in U.K.

839

Decrease due to increase in numbers of consolidated subsidiaries

12

Decrease due to decrease in numbers of consolidated
subsidiaries and companies accounted for by the equity method

43

Other

4
68,848Retained earnings at the end of term

15

Consolidated Results for the Full Year
Ended March 31, 2007

Consolidated Statements of Changes to Stockholders' Equity(Millions of Yen)

Stockholders’ Equity

Balance as of March 31, 2006

CommonCapitalEarnedTreasurystock

surplussurplusstock

30,872

16,80868,848

Total
stockholders’equity(544)

115,983

Fluctuations in the period
Dividends (*Note)(1,503)(1,503)

Dividends(2,104)

16,703

Net income

37,35237,352Acquisition of treasury stock
Disposal of treasury stock

182

Difference from transfer of

(457)

(457)

78

259

1,731

revaluation reserve for land
Stock exchange with consolidated

3,521

subsidiaries

1,731
(73)

3,448

Increase from increase of
consolidated subsidiaries with

634

634

7

(7)

--

3,710

36,103(452)

39,361

20,518104,950(996)

155,344change in scope of consolidation
Correction of capital allotment after
merger of parent company andconsolidated subsidiaries
Fluctuations other than stockholders’equity in the period (net)Total fluctuation in the period
Balance as of March 31, 2007

30,872* Note: This item was a profit distribution item in the general stockholders meeting in June 2006.

16

Consolidated Results for the Full Year
Ended March 31, 2007

Appraisal and Translation Differences
A
Balance as of March 31, 2006

B

10,269

C
--

--

D

E

F

42,142(654)

51,757

Minority
interests

Total
net assets

3,752

171,492

Fluctuations in the period
Dividends (*Note)(1,503)

Dividends(2,104)

Net income

37,352Acquisition of treasury stock(457)

Disposal of treasury stock259

Difference from transfer of

1,731

revaluation reserve for land
Stock exchange with

3,448

consolidated subsidiaries
Increase from change in634

scope of consolidation
Correction of capital allotment
after merger of parent--

company and consolidated
subsidiaries
Fluctuations other than stock926(1,652)(772)(1,731)820(2,409)(2,433)(4,843)

Total fluctuation in the period

926(1,652)(772)(1,731)820(2,409)(2,433)34,518

Balance as of March 31, 2007

11,195(1,652)(772)

40,411

166

49,3481,319

206,010

hokders’ equity in the
period (net)* Note: This item was a profit disposal item in the general stockholders meeting in June 2006.

Segments:
A. Unrealized holding gains on other securities
B. Gain/ loss on deferred hedge
C. Adjustment of pension obligation for overseas subsidiaries
D. Difference from transfer of revaluation reserve for land
E. Foreign exchange translation adjustments
F. Total appraisal and translation differences

17

Consolidated Results for the Full Year
Ended March 31, 2007

VI - (3) Consolidated Balance Sheets for the FY 2007 Full Year
(Millions of yen)
End of Full YearEnd of Full YearAs of March 31, 2007

As of March 31, 2006

AmountAmountY/Y Change

AmountAssetsCash and deposits

48,15543,917

4,238

Notes and account receivable

158,376

158,893(517)

Inventories

100,519

92,981

7,538

Deferred income taxes

10,342

7,844

2,498

Other

15,893

14,971

922

(776)

(794)

18

332,509317,813

14,697

Buildings and structure

40,73440,918(184)

Machinery and transportation tools

24,576

18,881

5,695

Land

111,468

114,115(2,648)Construction in progress

3,714

3,525

189

Other

4,653

4,041

612

Tangible assets

185,145

181,4803,664

Intangible assets

6,276

4,789

1,487

Rights to use facilities

6,276

4,789

1,487

Investment securities

60,791

54,972

5,819

38

97

(59)

Deferred income taxes

7,288

7,400

(112)

Other

10,435

14,985(4,550)Allowance for doubtful accounts(1,593)(2,302)710

76,96075,152

1,808

Fixed assets

268,380

261,421

6,960

Total assets

600,890579,233

21,656

Allowance for doubtful accounts

Current assets

Long-term loans

Investments and other assets

18

Consolidated Results for the Full Year
Ended March 31, 2007

(Millions of yen)
End of Full YearEnd of Full YearAs of March 31, 2007

As of March 31, 2006

150,874

142,778

8,096

Short-term bank loans

21,711

28,188(6,477)

Commercial paper

15,00020,000(5,000)Long-term loans due within one year

14,28530,529(16,243)

Income tax payable

15,2649,129

6,135,

Advance payments received oncontracts

40,502

31,976

8,526

Allowance for guaranteed construction

4,801

3,410

1,391

13

45

(31)

596

--

596

161

--

161

34,00533,493512

297,213299,547(2,334)

Bond

10,00010,000--Long-term debt due after one year

27,04936,787(9,737)

Employees’ severance and retirement
benefits

24,11022,578

1,532

Allowance for directors’ retirement benefits

896

921

(25)

Allowance for loss on product liability

262

--

262

Deferred income taxes on revaluation

32,30633,505(1,199)

Other

3,044

4,405

(1,360)Long-term liabilities

97,667108,195(10,528)

Total liabilities

394,880

407,742(12,862)

--

3,752

--

Paid in capital--

30,872--

Capital surplus--

16,808--Retained earnings--

68,848--

Revaluation reserve for land--

42,142--

Unrealized gains on securities--

10,269--Foreign currency translation adjustments

--

(654)

--

Treasury stock

--

(544)

--

Total stockholders’ equity--

167,740--

Liabilities minority interest, andstockholders’ equity--

579,233--

Y/Y change

Liabilities
Notes and accounts payable

Allowance for loss on ordered
construction
Allowance for loss on reorganization ofbusiness
Allowance for loss on business transfer
Other

Current liabilities

Minority interests
Stockholders’ equity
Common stock:19Consolidated Results for the Full Year
Ended March 31, 2007

Net Assets
Common stock

30,872----

Capital surplus

20,518----Retained earnings

104,950

--

--

(996)

--

--

155,344----

Unrealized gains on securities

11,195----

Profit/loss on deferred hedge(1,652)

--

--

(772)

--

--

40,411

--

--

166

--

--

Appraisal and Translation Differences

49,348----

Minority interests

1,319

--

--

Total net assets

206,010----

Liabilities and net assets

600,890----

Treasury stock
Stockholders’ equity

Adjustment regarding pension obligations ofconsolidated overseas subsidiaries
Revaluation reserve for land
Foreign currency translation adjustments

20Consolidated Results for the Full Year
Ended March 31, 2007

VI - (4) Consolidated Cash Flows Statement(Millions of yen)Previous
Full Year

Current
Full Year
April 1, 2006 to

April 1, 2005 to

March 31, 2007

March 31, 2006

Cash flows from operating activities
Income before income taxes

62,94046,066

Depreciation

10,649

9,072

208

229

Gain on sale of fixed assets

(227)

(89)

Loss on sale of fixed assets

68

686

1,012

836

Gain on sale of investment securities(1,398)(906)

Loss on sale of investment securities

3

1

136

471

Loss from liquidation of subsidiaries--

70

Loss from write-down of shares of affiliated companies--

7

Loss on business reorganization

1,870

--

Gain on business transfer

(294)

--

Loss on business transfer

1,270

--

746

705

(329)

1,315

(21)

292

(4,584)(4,303)616(5,227)

Interest and dividend income

(866)

(587)

Interest expense

1,666

2,384

(Increase) decrease in notes and accounts receivable

10,394

3,028(Increase) decrease in deposits received(4,119)3,544

Increase in inventories(7,213)(1,634)

7,106

6,533

(3,028)

5,956

76,60568,451

1,617

679

Interest expenses(1,535)(2,258)

Payments for income taxes(19,898)(16,848)

56,78950,023

Impairment losses

Loss on disposal of fixed assets

Loss from write-down of investment securities

Loss on breach of antitrust law
Increase in employees’ severance and retirement benefits
Increase in provision for retirement benefits to directors, corporate
auditors and executive officers
Equity in earnings of unconsolidated subsidiaries and affiliatedcompanies
Increase (decrease) in allowances

Increase (decrease) in notes and accounts payable
Other-net
Sub-totalInterest and dividend received

Net cash provided by operating activities

21

Consolidated Results for the Full Year
Ended March 31, 2007

(Millions of yen)
Cash flows from investing activities

(10)

278

(5,577)(1,295)

4,017

1,280

Disbursements for investment in affiliated company--(1,080)

Proceeds from liquidation of subsidiaries

--

1,528

(16,657)(11,497)

1,769

2,202

--

1,462

Payments for long-term loans receivable

(43)

(44)

Collection of long-term loans receivable

78

332

5,895

--

(1,934)(190)(12,461)(7,024)

Net decrease in short-term loans(6,516)(18,074)

Net increase (decrease) in commercial paper(5,000)8,500

Proceeds from long-term debt

4,500

17,990

Repayments for long-term debt

(30,482)(52,540)

Payments for redemption of bonds--(1,000)

Proceeds from sale of treasury stock

379

8

(454)

(352)

(3,607)(3,308)

(14)

(36)

(41,193)(48,812)260

343

Net decrease in cash and cash equivalents

3,395(5,470)Cash and cash equivalents at beginning of year

43,644

49,108485

3

Increase due to merger and acquisition

--

215

Net decrease from the change in consolidated companies

--

(212)

47,52343,644(Increase) decrease in time deposits
Payments for securities
Proceeds from sale of securities

Payments for purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from refund of investment

Proceeds from business transfer
Other-net
Net cash used in investing activities

Cash flows from financing activities

Disbursement for acquisition of treasury stock
Cash dividends paid
Payment of dividends for minority stockholders
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents

Increase due to new consolidated company

Cash and cash equivalents at end of year

22Consolidated Results for the Full Year
Ended March 31, 2007

Significant Items Forming the Basis for Preparation of Consolidated Financial
Statements
There have been no material changes to the “Significant Items Forming the Basis for Preparation of the Consolidated
Financial Statements” since the most recent financial statements (published June 29, 2006). Disclosure has therefore
been omitted.

Revisions to Significant Items Forming the Basis for Preparation of theConsolidated Financial Statements
Accounting Standards for Presentation of Net Assets in the Balance Sheet
Accounting Standards for Presentation of Net Assets in the Balance Sheet (ASBJ Statement No. 5; December 9, 2005)
and Guidance on Accounting Standards for Presentation of Net Assets in the Balance Sheet (ASBJ Implementation
Guidance No. 8; December 9, 2005) have been applied from the current consolidated fiscal year. The amountequivalent to total Stockholders’ Equity as heretofore recorded is 207.12 billion yen. This has had no effect on income.

Accounting and Other Standards for Corporate Mergers
The Accounting Standards for Business Combination (Business Accounting Council; October 31, 2003), the
Accountings Standard for Business Divestitures (ASBJ Statement No. 7; December 27, 2005) and the Implementation
Guidance on Accounting Standards for Business Combinations and Accounting Standard for Business Divestitures(ASBJ Implementation Guidance No. 10; latest revision on December 22, 2006) are effective from the current
consolidated fiscal year. This has had no effect on income.

Items of Special Note Concerning the Consolidated Financial Statements
Disclosure of leases transactions, transactions with interested parties, tax effect accounting, marketable securities,
derivative transactions and retirement benefits has been omitted since the need to disclose these has been determined
to have little significance for the financial statements.

23

Consolidated Results for the Full Year
Ended March 31, 2007

Segment Information
1. Segment Information by BusinessCurrent Full Year (April 1, 2006 to March 31, 2007)(Millions of yen)Segment

Consolid
ation

A

B

C

D

E

Total

(1) Sales toexternal customers

222,906

79,397

69,491

68,286160,177

600,256--

600,256(2) Internal sales
between segments
or exchanges

2,160

2,490

511

423

31

5,615

5,615

--

Total

225,066

81,88770,002

68,709160,208605,8725,615

600,256

Operatingexpenses

196,222

77,39363,28759,182

145,812541,897

5,865

536,032

Operatingincome/loss

28,844

4,494

6,714

9,527

14,396

63,975250

64,224

239,031

59,21388,76050,451

123,991

561,446

39,444

600,890

5,601

892

1,250

1,240

1,666

10,649--10,649

--

--

--

25

183

208

--

208

9,188

1,124

1,606

2,497

2,842

17,257--

17,257F

Item
Net sales

Assets,depreciation,
impairment loss
and capital
expenditure
AssetsDepreciation

Impairment loss

Capital expenditure

Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general24Consolidated Results for the Full Year
Ended March 31, 2007

Previous Full Year (April 1, 2005 to March 31, 2006)(Millions of yen)Segment

Consolid
ation

A

B

C

D

E

Total

(1) Sales toexternal customers

218,798

82,74067,372

56,054

126,375

551,339--551,339(2) Internal sales
between segments
or exchanges

2,059

2,902

421

335

56

5,774

5,774

--

Total

220,857

85,642

67,79456,389126,431557,113

5,774

551,339

Operatingexpenses

191,519

81,36568,27350,542

117,898

509,598

5,763

503,834

Operatingincome/loss

29,338

4,277

(479)

5,847

8,533

47,51510

47,505217,048

78,41789,54944,328106,618535,961

43,273579,233

4,722

975

1,355

609

1,411

9,072

--

9,072

--

--

--

--

--

--

229

229

5,316

1,458

1,206

1,010

1,295

10,285--

10,285F

Item
Net sales

Assets,depreciation,
impairment loss
and capital
expenditure
AssetsDepreciation

Impairment loss

Capital expenditure

Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general25Consolidated Results for the Full Year
Ended March 31, 2007

Notes:
1. Business segment depends on sales total segment
2. Main products of each business segment
Businesses

Main Products

Mass-Produced Machinery

Power Transmission & Control, Plastic Injection Molding Machines, Laser
Processing Systems, Cryogenic equipment, Precision XY Stages, Ion
Accelerators, Plasma Coating System for FPDs, Precision Forgings,
Control Components, Defense Equipment

Environmental Protection
Facilities, Plants & Others

Power Generation Systems, Industrial Waste Treatment Facilities, Waterand Sewage Treatment Systems, Real Estate, Software

Ship, Steel Structure &Other Specialized Equipment

Ships, Pressure Vessels, Bridge

Industrial Machinery

Forging Machines, Material Handling Systems, Logistics System,
Automated Parking System, Turbines, Pumps

Construction Machinery

Hydraulic Excavators, Mobile Cranes, Road Machinery

3. The value of assets eliminated or company-wide assets included in items for the company as a whole was
67.08 billion yen for the current fiscal year and 63.79 billion yen for the previous fiscal year. This mainly
consists of assets involving surplus funds invested (cash and deposits) and funds invested long-term (securities
for investment).
4. Changes in Segment Affiliation for the Current Consolidated Fiscal Year
Japan Electron Beam Irradiation Service Co., Ltd. and SHI Examination and Inspection Ltd. have beentransferred to the Mass-Produced Machinery segment from the current consolidated fiscal year due to changes
in organizational management of the company. These companies have been transferred from theEnvironmental Protection Facilities, Plants and Other segment and the Ship, Steel Structures and Other
Specialized Equipment segment, respectively, with which they were formerly affiliated.
Compared to the previous method, these changes have resulted in the following increases for the Massproduced Machinery segment and decreases in the Environmental Protection Facilities, Plants and Other, andShip, Steel Structures and Other Specialized Equipment segments:
Mass-produced Machinery Segment: An increase of 1.96 billion yen in sales, 1.42 billion in operating expenses,
537 million yen in operating profit, 1.72 billion in assets, 152 million in depreciation expenses, and 572 million incapital expenditures.
Environmental Protection Facilities, Plants and Other Segment: A decline of 745 million yen in sales, 593
million yen in operating expenses, 152 million yen in operating profit, 403 million yen in assets, 19 million yen in
depreciation expenses, and 72 million in capital expenditures.
Ship, Steel Structures and Other Specialized Equipment Segment: A decline of 2.41 billion yen in sales, 1.88
billion yen in operating expenses, 526 million yen in operating profit, 1.63 billion yen in assets, 133 million yen
in depreciation expenses, and 500 million yen in capital expenditures.

26

Consolidated Results for the Full Year
Ended March 31, 2007

Information by business segment for the previous consolidated fiscal year stated in post-revision terms is as follows:

Previous Full Year (April 1, 2005 to March 31, 2006)(Millions of yen)Segment

Consolid
ation

A

B

C

D

E

Total

(1) Sales toexternal customers

220,989

82,06265,85956,054

126,375

551,339--551,339(2) Internal sales
between segments
or exchanges

2,922

2,904

376

335

56

6,593

6,593

--

Total

223,91184,966

66,23556,389126,431557,932

6,593

551,339

Operatingexpenses

193,875

80,817

67,26450,542

117,898

510,396

6,561

503,834

Operatingincome/loss

30,0374,149(1,029)

5,847

8,533

47,53632

47,505

219,094

78,201

88,922

44,328106,618

537,164

42,070579,233

4,803

960

1,289

609

1,411

9,072

--

9,072

--

--

--

--

--

--

229

229

5,378

1,439

1,163

1,010

1,295

10,285--

10,285F

Item
Net sales

Assets,depreciation,
impairment loss
and capital
expenditure
AssetsDepreciation
Impairment loss
Capital expenditure
Segments:
A: Mass-Produced Machinery
B: Environmental Protection Facilities, Plants & Others
C: Ship, Steel Structure & Other Specialized Equipment
D: Industrial Machinery
E: Construction Machinery
F: Cancellation or general27Consolidated Results for the Full Year
Ended March 31, 2007

2. Segment Information by Geographical Area
Current Full Year (April 1, 2006 to March 31, 2007)(Millions of yen)Segment
Japan
Item

North
America

Others

Total

Cancellation or
generalConsolidation

Net sales(1) Sales to externalcustomers

494,178

71,26434,815600,256--

600,256(2) Internal sales
between segments or
exchanges

31,671

745

12,33044,74644,746--

Total

525,848

72,00847,145645,00244,746600,256

Operating expenses

472,246

64,054

44,200580,500

44,468536,032

Operating income

53,602

7,954

2,946

64,502278

64,224

481,001

43,13733,645557,783

43,107600,890

Previous Full Year (April 1, 2005 to March 31, 2006)(Millions of yen)Segment
Japan
Item

North
America

Others

Total

Cancellation or
generalConsolidation

Net sales(1) Sales to externalcustomers

465,769

56,672

28,898551,339--551,339(2) Internal sales
between segments or
exchanges

28,053856

2,894

31,80331,803--

Total

493,82257,52831,792

583,142

31,803551,339

Operating expenses

452,275

53,17629,984535,436

31,601

503,834

Operating income

41,547

4,352

1,808

47,706

202

47,505

471,752

37,707

21,763531,223

48,011

579,233

Notes:
1. Countries and regions classified by geographical proximity.
2. Countries and regions belonging to each classification:
North America:
USA, and Canada
Others:UK, Germany, Singapore, and China
3. The value and main contents included in the item “Cancellation or general” are the same as in “1. Segment
Information by Business” in Note 3.

28

Consolidated Results for the Full Year
Ended March 31, 2007

3. Overseas Sales
Current Full Year (April 1, 2006 to March 31, 2007)(Millions of yen)North
AmericaI. Overseas sales

Asia

112,282

Others83,81180,026

II. Consolidated sales
III. Overseas sales ratio（％）

Total
276,120600,256

18.7

14.0

13.3

46.0

Previous Full Year (April 1, 2005 to March 31, 2006)(Millions of yen)North
AmericaI. Overseas sales

Asia

94,903

Others73,514

61,889II. Consolidated sales
III. Overseas sales ratio（％）

Total
230,306
551,339

17.2

13.3

11.2

41.8

Notes:
1. Countries and regions classified by geographical proximity.
2. Countries and regions belonging to each classification:
North America:
USA, and Canada
Asia:
Singapore, and China
Others:UK, and Germany
3. Sales are from the Company and subsidiaries’ countries and regions other than Japan.

Per Share Information
Current fiscal year,
April 1, 2006 to
March 31, 2007

Previous fiscal year,
April 1, 2005 to
March 31, 2006

Net assets per share

338.95 yen

279.02 yen

Net income per share

61.99 yen

49.45 yen

Also note that EPS adjusted forfull dilution is not presented
because there are no residual
shares.

Also note that EPS adjusted forfull dilution is not presented
because there are no residual
shares.

Basis for calculation of net income per share is as follows.
Net income for the period

37,352 million yen

29,742 million yen----

37,352 million yen

29,742 million yen

602,538,000 shares

601,407, 000 shares

A value not attributable to common
stockholders
Net income for common stockholders
Average number of outstanding
shares for the term29Consolidated Results for the Full Year
Ended March 31, 2007

Orders Received, Sales and Balance of Orders Received by Segment
Orders Received
B u s i(Millions of yen)n e s se sApril 1, 2006 to
March 31, 2007

April 1, 2005 to
March 31, 2006

Y/Y Change

Amount%Amount%Amount%234,735

33.3

219,141

36.3

15,594

7.1

89,96312.8

83,605

13.9

6,359

7.6

120,97117.1

95,171

15.8

25,801

27.1

Industrial Machinery

93,615

13.3

68,693

11.4

24,922

36.3

Construction Machinery

166,06423.5

136,385

22.6

29,679

21.8

Total

705,349

100.0

602,995

100.0

102,354

17.0

Mass-Produced Machinery
Environmental Protection Facilities,
Plants & Others
Ship, Steel Structure & Other
Specialized Equipment

Sales
B

(Millions of yen)
u

s

i

n

e

s

s

e

s

April 1, 2006 to
March 31, 2007

April 1, 2005 to
March 31, 2006

Y/Y Change

Amount%Amount%Amount%222,906

37.1

220,989

40.1

1,916

0.9

79,39713.2

82,06214.9(2,665)(3.2)

69,491

11.6

65,859

11.9

3,632

5.5

Industrial Machinery

68,286

11.4

56,05410.2

12,232

21.8

Construction Machinery

160,177

26.7

126,375

22.9

33,802

26.7

Total

600,256100.0

551,339

100.0

48,9178.9

Mass-Produced Machinery
Environmental Protection Facilities,
Plants & Others
Ship, Steel Structure & Other
Specialized Equipment

Balance of Orders Received
B u s i n e s s e s(Millions of yen)
April 1, 2006 to
March 31, 2007

April 1, 2005 to
March 31, 2006

Y/Y Change

Amount%Amount%Amount

%76,937

16.3

66,36018.0

10,577

15.9

84,10317.8

73,536

19.9

10,56714.4

203,38743.0

151,90741.2

51,48033.9

Industrial Machinery

81,03317.1

55,70315.1

25,32945.5

Construction Machinery

27,405

5.8

21,518

5.8

5,888

27.4

Total

472,866

100.0

369,025

100.0

103,841

28.1

Mass-Produced Machinery
Environmental Protection Facilities,
Plants & Others
Ship, Steel Structure & Other
Specialized Equipment*Changes in Segment Affiliation
Japan Electron Beam Irradiation Service Co., Ltd. and SHI Examination and Inspection Ltd. were previously
affiliated with the Environmental Protection Facilities, Plants and Other segment and the Ship, Steel
Structures and Other Specialized Equipment segment, respectively. They have been re-affiliated with theMass-produced Machinery Segment from the current consolidated fiscal year. The segments for theprevious fiscal year stated in post-revision terms have therefore been shown.

30

Consolidated Results for the Full Year
Ended March 31, 2007

Important Subsequent Events
A resolution was passed at the board of directors meeting held on May 8, 2007 to make the two wholly owned
subsidiaries of Sumitomo Heavy Industries, Izumi Food Machinery Co., Ltd. (hereafter, “Izumi Food Machinery”) andSNM Fastener Co., Ltd. (hereafter, “SNM Fastener”), wholly owned subsidiaries of Nihon Spindle Manufacturing Co.,
Ltd. (hereafter, “Nihon Spindle Manufacturing”), an affiliate of Sumitomo Heavy Industries, through a share exchange.
Nihon Spindle Manufacturing is expected to become a subsidiary of Sumitomo Heavy Industries through this shareexchange.
A summary of this follows:
1. Summary of subsidiaries being transferred(1) Company nameNihon Spindle Manufacturing Co., Ltd.
(2) Nature of corporate business
Environmental machinery and equipment, air conditioning equipment, industrial machinery and equipment,
manufacture and sale of building materials(3) Key reasons for the share exchange
The acquisition of Izumi Food Machinery and SNM Fastener by Nihon Spindle Manufacturing can be
expected to accelerate the realization of strategic growth for Nihon Spindle Manufacturing and to facilitatebusiness expansion for the two companies. Synergistic benefits from Izumi Food Machinery and SNM
Fastener can also be expected. Sumitomo Heavy Industries will acquire 40.6% interest (including indirect
holdings) in Nihon Spindle Manufacturing Co., Ltd. on a voting rights basis by exchanging all shares held in
Izumi Food Machinery and SNM Fastener for shares of Nihon Spindle Manufacturing. Nihon Spindle
Manufacturing is expected to become a subsidiary of the company as of October 1, 2007, the effective date
for the share exchange. The acquisition of Nihon Spindle Manufacturing as a subsidiary is expected tobenefit the SHI Group as the group implements its strategy for growth and expansion.
(4) Effective date for the share exchange
October 1, 2007 (anticipated date)2.

Number of shares to be acquired and shareholding status post-acquisition(1) Pre-acquisition status
No. of shares held:
Percentage of voting rights:

9,312,180 shares (of this, indirectly held shares 198,000 shares)
24.4% (of this, percentage indirectly held 0.5%)(2) No. of shares to be acquired

10,380,000 shares(3) Post-acquisition status
No. of shares held:
Percentage of voting rights:

19,692,180 shares (of this, indirectly held shares 198,000 shares)
40.6% (of this, percentage indirectly held 0.4%)31