During the current interim period, Toyo Denki has developed new products and engaged in aggressive
marketing in order to secure a future of growth while also undertaking various environmental initiatives.

Capital expenditure aimed at expanding production capacity as well as
development and design capabilities
Orders in the company’s Transportation Business and Industrial Systems segments have been strong.
Therefore, Toyo Denki will be making capital expenditures to expand production capacity and development
and design capabilities at the main Yokohama Works between fiscal 2007 and fiscal 2009. With aninvestment of approximately 2.4 billion yen, the company will expand production space within the existing
facilities and build a new research, development and design building. As a result, total floor area will
increase by approximately 8000 square meters.

Electrical equipment order received for Chengdu subway line 1in Sichuan, China
Toyo Denki has received a joint order with four other companies (Mitsui & Co., Ltd., Mitsui & Co. Plant
Systems Ltd., Xiangtan Electric Manufacturing Co., Ltd., and Hunan XiangYang Electric Co., Ltd.) for a fullline of electrical equipment for driving (102 cars making up 17 trains) and a full line of equipment such as
brakes for subway line 1 in Chengdu, the provincial capital of China’s Sichuan Province, which will be thefirst subway line in Sichuan. The agreement was signed on October 12, 2007. This is the first full line orderfrom a city outside the capital, Beijing.
Toyo Denki has hitherto concentrated on subways in the capital, Beijing, and has so far received orders forelectrical equipment for more than 800 cars.

Delivery of electrical equipment for pantograph battery hybrid LRVToyo Denki manufactured and delivered converter units, drive inverter units, auxiliary power supply
apparatus, gear units, traction motors, and pantographs for the hybrid LRV (Light Rail Vehicle) unveiled
by Japan’s Railway Technical Research Institute on October 25, 2007.
The Railway Technical Research Institute developed the hybrid LRV under contract from Japan’s New
Energy and Industrial Technology Development Organization (NEDO), and it can run on sections oftrack with no pantograph using charged storage batteries.

Photo credit: Railway Technical Research Institute1

Exhibiting at exhibitions
System Control Fair 2007
Toyo Denki exhibited at the System Control Fair held at Tokyo Big Sight fromNovember 13 – 16, 2007. At its booth, the company displayed the ED motor,
UF motor, and ultra high-speed motors used in testing equipment for automotive
development which bring together the company’s motor drive technology,
showcasing its lineup of intelligent inverters as an “invertor family,”and also exhibited its on board drive systems.

Maintenance Techno Show 2007
Toyo Denki exhibited at the Maintenance Techno Show 2007 held at Tokyo Big
Sight from November 6 – 9, 2007. Demonstrations were given of measurements
for the radio facility data collection system and the remote monitoring system —(1) location information on mobile electronic lock, and (2) monitoring and control ofstatus of facilities and equipment) — which assist with labor saving for on site
inspections of electrical equipment. The company also exhibited its general
purpose PDA that has been adopted by many railroad companies as a mobile
terminal for conductors.

2

Feature

Railroad Market Trends

Today the role of the railroads is once again being re-evaluated amidst global concerns over thedepletion of fossil fuels.

Market Trends in JapanIn addition to Shinkansen network schemes and plans forthe construction of new lines in major cities, brisk demandfor the updating of existing lines is expected. According toToyo Denki’s latest research, JR Shinkansen rolling stock is 15 years
old while that on conventional JR lines and public and private railways
is between 15 and 30 years old. Toyo Denki forecasts demand for theupdating of about 1,800 cars annually for the time being.
The expansion in the new generation of JR Shinkansen trains,
including the debut of the N700 series in 2007, will continue forseveral years, and demand for the updating of conventional JR trains
will also be at high levels. Demand for updating at public and private
railroad companies is expected to remain firm despite regionaldisparities.

Actual production by demand category and fiscal year

■Export ■Public and private railroad companies■Conventional JR lines ■JR Shinkansen(Unit: Cars)

2,455
1,911

2,186

439

308

1,787
263

615

547

674

695

314

282

2002

2003

1,928

255

358

831

738

698
1,158

1,034
763
151
2004

35109
2005

2006

Source: Research by Japan Association of Rolling Stock Industries

Market Trends outside JapanW

hile the majority of overseas lines have not been electrified,electric trains form the core of urban transportation. It isestimated that approximately 140,000 electric train cars
are currently in operation worldwide. Of these, about 49,000 areoperating in Japan, with the majority of the remainder in Europe andthe US. Market expansion in the BRICs has been attracting attention
over the past few years. In particular, market expansion is proceedingat a rapid pace in China, where the Olympics will be held this year,with urban transportation, including subways, the quasi high-speed
railroad opened in 2006, and the high-speed railroad underconstruction. In addition, market expansion is expected to continue
for the time being, with Asiancountries, beginning with the Middle
Eastern oil producers, and Central
and South American countries aswell, making proactive efforts toestablish railroad networks, and a reevaluation of electric trains indeveloped nations in response toBeijing subway line 10 rolling stock
environmental problems.
(Joint production with Changchun
Passenger Car Factory)3

Toyo Denki’s CSR Activities
Delivering high-quality environmental
technologies that contribute to thefight against global warming

Actively expanding environmental
initiatives

Since its establishment, the Toyo Denki Group has been supplying motor

At its Yokohama Works, Toyo Denki is engaged in environmental

drives and related technologies. Today, in the “Century of theinitiatives, primarily providing environmentally friendly goods and systems,Environment,” Toyo Denki is playing an increasingly important role bycombating global warming, and reducing waste. Moreover, Toyo Denki

pursuing the development and manufacture of highly efficient motors andhas been taking part in Japan’s “Team Minus 6%” activities since August

inverters for use in the industrial field and applying its strengths

2007, and set up an environment page on its website in November 2007

in next-generation railroad technology toto inform the public about the details of these activities. Toyo Denki has

contribute to the fight against global

positioned environmental contribution as an important part of CSR

warming. As it actively expands its businessactivities, and the company will continue to be active in this area in thein China and Southeast Asia, where energy

future.

consumption is expected to grow in thefuture, Toyo Denki is supporting energy

Environment website:

conservation and CO2 reduction.
Intelligent invertor VF66

http://www.toyodenki.co.jp/html/kankyou.html(Japanese only)

Diverse social and community
contribution initiatives
As part of its community contribution program, Toyo Denki undertakes
initiatives such as opening up the sports field inside the Yokohama Works
for local baseball club teams on holidays and giving newspapers to local
elementary schools for students to read. Moreover, employees at theYokohama Works cooperative actively with the Japan Red Cross
Society’s blood donation campaign andhave received a letter of appreciationfrom the Society. Going forward, Toyo
Denki will also pursue international
contributions, fulfilling its responsibilities
as a good corporate citizen.
Letter of appreciation from JapanRed Cross Society4