MODEC, INC. and Subsidiaries

CONSOLIDATED BALANCE SHEETSMarch 31, 2006ASSETS

Thousands of Japanese yen
March 31,
March 31,
December 31,2006
2005
2005
CURRENT ASSETS:
Cash and time deposits
Accounts receivable – trade
Inventories
Short-term loans receivable
Other current assets
Less- Allowance for bad debts
Total current assets
PROPERTY AND EQUIPMENT:
Machinery and equipment
Other, net

INTANGIBLE ASSETS:
Consolidated difference
Other intangible assets

OTHER ASSETS:
Investment securities
Long-term loans receivable fromunconsolidated subsidiaries and affiliatedcompanies
Long-term lease receivable
Other, net
Less- Allowance for bad debts

Total assets¥ 28,530,894
17,524,070
1,889,708
3,178,518
5,247,433(3,283)56,367,342¥ 10,466,700
12,084,807
1,113,501
8,960,975
3,930,541(4,892)36,551,634¥ 25,061,948
16,409,320
2,237,994
255,826
4,870,109(3,013)
48,832,185

3,721,825
577,236
4,299,062

5,626,783
1,075,979
6,702,762

3,168,283
3,926,656
7,094,939

4,155,712
1,358,399
5,514,111

3,869,490
1,334,009
5,203,499

3,866,432
1,380,255
5,246,687

9,040,162

5,003,780

8,463,478

45,975,142
4,592,530
1,426,706(6,400)61,028,142

1,797,610
6,158,669
1,443,272(6,923)
14,396,409

28,289,633
5,043,800
1,734,329(6,400)43,524,842¥127,208,659¥ 62,854,306¥104,698,654

LIABILITIES AND SHAREHOLDERS’ EQUITY

Thousands of Japanese yen
March 31,
March 31,
December 31,2006
2005
2005
CURRENT LIABILITIES:
Accounts payable - trade
Short-term loans payable
Current portion of long-term loans payableAccrued expenses
Income taxes payable
Other current liabilities
Total current liabilities¥ 18,797,346
49,650,255
1,947,231
2,807,070
475,083
6,421,882
80,098,869¥ 7,318,865
16,126,279
1,918,774
1,252,823
254,005
3,887,772
30,758,520¥ 18,889,959
27,960,409
3,107,315
1,644,540
345,593
4,483,298
56,431,117

LONG-TERM LIABILITIES:Long-term loans payable
Severance and retirement benefits
For employees
For directors and corporate auditors
Deferred tax liabilities
Other long-term liabilities
Total long-term liabilities

5,469,163

5,639,129

6,478,169

118,978
135,107
1,692,346
456,929
7,872,525

107,916
120,430
1,407,191－
7,274,667

113,839
120,9441,548,181
355,674
8,616,808

MINORITY INTERESTS IN CONSOLIDATEDSUBSIDIARIES

1,261,626

1,611,304

1,807,072

12,391,600
13,121,672
10,686,351
1,051,199
725,527(712)
37,975,637

7,159,000
7,675,150
8,079,472
614,139(317,562)(384)
23,209,814

12,391,600
13,121,672
10,434,177
865,195
1,031,557(546)
37,843,656¥127,208,659¥ 62,854,306¥104,698,654

SHAREHOLDERS’ EQUITY:
Common stock;
Authorized – 102,868,000 shares
Issued – 37,408,000 shares at March 31,
2006 and December 31, 2005; 34,008,000
shares at March 31, 2005
Capital surplus
Retained earnings
Net unrealized holding gains on securities
Foreign currency translation adjustments
Less-Treasury stock at cost
Total liabilities and shareholders’equity

MODEC, INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME
For 3 months ended March 31, 2006
Thousands of Japanese yen
January 1, 2006 thru
March 31, 2006

January 1, 2005 thru
March 31, 2005

January 1, 2005 thru
December 31, 2005

¥ 26,180,964
24,261,575
1,919,389¥ 9,394,592
7,500,791
1,893,800¥ 71,614,166
63,053,293
8,560,872

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
Operating profit

1,299,555
619,834

988,186
905,614

4,665,333
3,895,539

OTHER INCOME (EXPENSES):Interest income and dividend income
Interest expense
Foreign exchange gain (loss), net
Equity in earnings of affiliates
Other, net
Total other income (expenses)

813,547(620,175)(237,370)
255,471
84,324
295,797

205,085(203,963)
227,658
61,483
69,681359,945

1,287,726(1,261,365)
580,713763,396
142,047
1,512,517

INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS

915,6311,265,559

5,408,057

INCOME TAXES:
Current
Deferred

384,633
45,212

139,761
205,304

1,010,252
841,902

INCOME BEFORE MINORITY INTERESTS

485,786

920,494

3,555,903

MINORITY INTERESTS

28,574232,236

342,900¥ 457,212¥ 688,257¥ 3,213,002

SALES
COST OF SALES
Gross profit

NET INCOME

Japanese yen
Net income per share¥12.22¥20.23¥93.46