Outline of Financial Results for the 3rd Quarterof Fiscal 2007 (Consolidated)

February 2, 2007

For Immediate Release
Company Name(Code No.: 7270
: Tokyo Stock Exchange First Section): Fuji Heavy Industries Ltd.

(URL http://ir.fhi.co.jp/english/index.html）
Representative: Mr. Ikuo Mori, President and CEO

Contact for Inquiries: Mr. Kazuto Sakamoto, General Manager of Administration Department
TEL (03) 3347-2005

1. Basis for preparation of financial results of this quarterⅠ.

doption of simplified accounting practices:Yes
Income taxes are calculated using a simplified accounting method.

Ⅱ.

Accounting policy change from prior year:Yes

In this fiscal year, Fuji Heavy Industries Ltd. (the Company) and consolidated subsidiaries
adopted the provisions of "Accounting standard for director’s bonus", "Accounting standard forbusiness combination", and "Accounting standard for presentation of net assets in the balancesheet". The adoption of these standards had no effect on income.
Ⅲ.

Changes in scope of consolidation and application of the equity method:Yes･ The number of consolidated subsidiaries decreased from 6 to 62. This is because 10 Subaru
distributors in Hokkaido and 4 other areas were integrated into 5. And WAKAYAMA SUBARU
MOTORS INC. was excluded from the scope of consolidation because the importance of its inthe consolidated financial statements declined due to the transfer of its business to OSAKASUBARU, INC.
･ The number of companies applied for the equity method increased from 7 to 18. From this fiscal
year, Robin service Co., Ltd., Fuji Special Purpose Vehicle Co., Ltd., Robin Europe GmbH and 4other companies have been applied for the equity method due to their increased importance onthe consolidated financial statements.
2. Performance in the 3rd Quarter of Fiscal 2007 (from April 1, 2006 to December 31, 2006)
Note that all amounts have been rounded off to the nearest million yen, unless otherwise specified(1) Consolidated Results of Operations
Net sales

Operating income

Ordinary income(1.9%)¥35,753(-4.8%)¥ 30,188(-3.2%)¥ 24,669(92.5%)¥ 1,039,490(-1.0%)¥ 37,568(41.9%)¥ 31,178(8.9%)¥ 12,814(-38.2%)¥ 1,476,368-¥ 58,339-¥ 46,768-¥ 15,611-rd¥ 1,058,733rd

3 Quarter of FY 2006
Fiscal 2006

3 Quarter of FY 2007

Net income (loss) pershare, basic (Yen)
3rd Quarter of FY 2007

(Unit: Millions of yen, except for per share figures)

Net income (loss) pershare, diluted (Yen)¥ 34.40¥ 34.38

3 Quarter of FY 2006

¥ 16.85¥ 16.85

Fiscal 2006

¥ 20.66¥ 20.66

rdNet income

Note: Percentage figures in the net sales, operating income, ordinary income and net income columns representchanges from prior 3rd quarter period.

-1-Qualitative Information on Progress of Consolidated Operating Performance
As for the Automobile division, sales units for the third quarter of FY2007 were lower than the same
period of previous fiscal year due to weaker passenger cars sales, although sales volume for minicars
increased thanks to new "Stella" introduced in Japanese market. Meanwhile, sales units for overseas
markets were up over the same period of previous fiscal year thanks to favorable sales in Europe,
Australia, and others areas. As for the Non-automobile division, net sales for the Aerospace division
greatly improved over the same period of previous fiscal year. As a result, taking into account theoverseas subsidiaries' exchange rate conversion differences, consolidated net sales was up 19.2
billion yen or 1.9% over the same period of previous fiscal year to 1,058.7 billion yen.
Profits were down on a year-on-year basis due to foreign exchange losses on a weak yen anddeteriorated product sales and mix in the Automobile division, in spite of efforts to reduce material
costs and SG&A and other expenses, pushing operating income down 1.8 billion yen or 4.8% to 35.8
billion yen, and ordinary income down 1 billion yen or 3.2% to 30.2 billion yen over the same period ofprevious fiscal year. Despite a decrease in gain on sale of investment securities, net income totaled
24.7 billion yen, a 11.9 billion yen or 92.5% jump over the same period of previous fiscal year, mainly
due to an increase in gain on sale of fixed assets as well as additional retirement payments and loss
on termination of development projects being not listed, which were reported in the same period ofprevious fiscal year as extraordinary losses.
(2) Financial Position(Unit: Millions of yen, except for per share figures)
Total assets

Net assets

Shareholders’ equity tototal assets (%)

Net assets per share(Yen)

3rd Quarter of FY 2007

¥ 1,325,744¥ 488,963

36.7 %¥ 678.28

Fiscal 2006

¥ 1,348,400¥ 465,522

34.5 %¥ 649.41

Note: The amounts under Net assets as of Fiscal 2006 represent the amounts of total shareholders’ equity.

Qualitative Data on the Progress of Consolidated Financial Condition
Total assets as of the end of the third quarter of FY2007 decreased by 22.7 billion yen to 1,325.7
billion yen compared with the end of the previous fiscal year. Major contributing factors included
decreases both in current assets and tangible fixed assets.
Liabilities decreased by 43.8 billion yen to 836.8 billion yen from the end of the previous fiscal year
primarily due to a decrease in current liabilities.
Net assets including minority interest in consolidated subsidiaries increased by 21.2 billion yen fromthe end of the previous fiscal year to hit 489 billion yen mainly due to an increase in retained earnings.
［Reference］
Projections for Fiscal 2007 (From April 1, 2006 to March 31, 2007)
Unchanged from the latest forecast (announced on October 31, 2006)
The above projections are made based on available information and assumptions as of February 2,
2007, and are subject to the uncertainties of future operations. Therefore, actual results could differ
materially from those anticipated.

-2-

[Consolidated Financial Statements](1) Summary of Consolidated Balance Sheets(Unit: Millions of yen)rd3 Quarter of 2007

Fiscal 2006

Changes(as of Dec. 31, 2006)(as of March 31, 2006)

Increase/(Decrease)605,681619,183(13,502)

Cash and time deposits

35,361

65,524(30,163)

Notes and accounts receivable, trade96,225

104,972(8,747)ASSETS
Current assets

Marketable securities

31,93637,444(5,508)Inventories

241,122

216,396

24,726

Short-term loans

122,919

118,414

4,505

Deferred tax assets

25,63632,992(7,356)

Other54,51945,604

8,915

Allowance for doubtful accounts(2,037)(2,163)126

Fixed assets

720,063

729,217(9,154)

Property, plant and equipment, net

547,413555,973(8,560)

Buildings and structures

126,689

128,727(2,038)

Machinery, equipment and vehicles

120,831

184,582(63,751)

Land

173,785

172,338

1,447

Construction in progress

19,421

7,396

12,025

Leased assets

62,876-62,876

Other

43,81162,930(19,119)

Intangible assets

35,59538,211(2,616)

Investments and other assets

137,055

135,033

2,022

Investment securities

86,81780,316

6,501

Long-term loans

3,799

8,141

(4,342)

Deferred tax assets

22,68023,612

(932)

Other

27,10825,312

1,796

Allowance for doubtful accounts(3,349)(2,348)(1,001)

1,325,744

1,348,400(22,656)

Total assets

Note: From this fiscal year, "Leased assets" in Property, plant and equipment, net have been presented as a separate
line item, whereas in fiscal 2006, "Leased assets" of ¥56,766 million and ¥7,485 million are included in Machinery,equipment and vehicles and Other, respectively.

-3-3rd Quarter of 2007

Fiscal 2006

Changes(as of Dec. 31, 2006)(as of March 31, 2006)

Increase/(Decrease)580,371628,113(47,742)

Notes and accounts payable, trade191,495

211,412(19,917)

Short-term borrowings

195,445

195,507(62)

Commercial paper

14,0008,000

6,000Current portion of bonds

10,50020,500(10,000)

Accrued income taxes

3,997

11,472(7,475)

Accrued expenses

48,937

61,744(12,807)

Accrued bonus

7,589

15,427(7,838)

Accrued warranty claims

23,40023,496

(96)

Other

85,00880,555

4,453

256,410

252,501

3,909

Bonds

90,00080,00010,000Long-term debts
Deferred tax liabilities on revaluation oflandAccrued pension and severance liability
Accrued directors’ severance andretirement benefits
Consolidation adjustments

62,19570,072(7,877)

703

703

-

50,02352,322(2,299)

932

971

(39)

-

2,995

(2,995)

Goodwill

1,364

-

1,364

Other

51,19345,438

5,755

836,781880,614(43,833)

LIABILITIES AND NET ASSETS
Current liabilities

Long-term liabilities

Total liabilities-4-

Minority interest in consolidated
subsidiaries
Shareholders' equity

3rd Quarter of 2007

Fiscal 2006

Changes(as of Dec. 31, 2006)(as of March 31, 2006)

Increase/(Decrease)

-

2,264

-

Common stock-

153,795-

Capital surplus-

160,071-Retained earnings-

189,996-

Revaluation reserve for landNet unrealized holding gains
securities
Translation adjustments

-

290

-

-

21,145--(18,230)--(41,545)-

Total shareholders’ equity-

465,522-

Total liabilities and shareholders' equity-

1,348,400-

Shareholders' equity

482,509--

Common stock

153,795--

Capital surplus

160,106--

Retained earnings

209,113--

Less treasury stock, at cost
Valuation, translation and otheradjustments
Net unrealized holding gains
securities
Revaluation reserve for land

(40,505)

-

-

4,656

-

-

onLess treasury stock, at cost

Net assetson

22,403290--(18,037)

--

1,798

-

-

Total net assets

488,963--

Total liabilities and net assets

1,325,744--

Translation adjustments
Minority interest inconsolidated subsidiaries-5-(2) Summery of Consolidated Statements of Income(Unit: Millions of yen)
3rd Quarter of
FY 2007(ended Dec.
31 ,2006)

3rd Quarter ofFY 2006
(ended Dec.
31 ,2005)

AmountAmountAmount%AmountNet sales

1,058,733

1,039,490

19,2431.9

1,476,368

Cost of sales

796,228

789,249

6,979

0.9

1,125,293

Gross profit

262,505

250,241

12,2644.9

351,075

226,752

212,673

14,0796.6

292,736

Operating income

35,75337,568(1,815)(4.8)

58,339Non-operating income

9,608

9,581

27

0.3

12,356

Interest and dividends income

2,581

2,441

140

3,421

Amortization of negative goodwill
Amortization of consolidation
adjustments
Equity income from affiliated companies

1,631

-

1,631--

2,616(2,616)

3,296

1,393

1,317

76

1,446

Other

4,003

3,207

796

4,193

Non-operating expenses

15,173

15,971(798)

Interest expenses

2,994

2,308

686

3,18199

4,721(4,622)

2,983

Other

12,080

8,942

3,138

17,763

Ordinary income

30,18831,178

(990)

(3.2)

46,768Extraordinary gains

10,528

6,074

4,454

73.3

9,253

6,492

625

5,867

3,872

8

5,262

(5,254)

5,274

1,451

-

1,451

-

2,423

-

2,423

-

154

187

(33)

107

4,637

17,081(12,444)

3,306

1,735

1,571

-

-

-

2,253

290

-

290

-

108

1,811

(1,703)

4,064

914

-

914

-

-

7,875

(7,875)

7,991

-

5,613

(5,613)

7,094

19

47

(28)

1,672

36,07920,17115,908

78.9

28,674

11,259

7,363

3,896

52.9

12,928

151

-

151-

135-

6(6)

--

24,66912,814

11,85592.5

15,611

Selling, general administration expenses

Loss on revaluation of derivatives

Gain on sale of fixed assets
Gain on sale of investment securities
Prior period adjustment
Gain on transfer of the substitutional
portion of the employees’ pension
fund
Other
Extraordinary losses
Loss on sale and disposal of property,
plant and equipment
Loss on sale of investment securities
Loss on devaluation of investment
securities
Impairment loss on property, plant andequipment
Loss on liquidation of affiliatedaffiliated companies
Additional retirement payments
Loss on termination of development
projects
Other
Income before income taxes and minority
interest
Tax expense
Minority interest in income of consolidated
subsidiaries
Minority interest in loss of consolidated
subsidiaries
Net income-6-Fiscal 2006
Changes
Increase/(Decrease)(5.0)(72.9)(ended March
31 ,2006)

23,927

27,347
4,273

(3) Segment Information［Business segment information］(Unit: Millions of yen)

3rd Quarter of FY2007 （from April 1, 2006 to December 31, 2006）
Automobiles

Industrial
Aerospace Other
products

Total

Elimination
Consolidatedand
total
corporate

I. Sales and operating income
Sales(1) Outside customer(2) Inter-segment
Total sales
Operating cost and expense
Operating income

945,930
2,255
948,185
920,366
27,81938,261
16
38,27736,653
1,624

65,548 8,994 1,058,733
13 1,851
4,135
65,561 10,845 1,062,868
61,420 9,078 1,027,517
4,141 1,767
35,351

1,058,733
1,058,733
1,022,980
35,753(Unit: Millions of yen)

3rd Quarter of FY2006 （from April 1, 2005 to December 31, 2005）
Automobiles(4,135)(4,135)(4,537)402

Industrial
Aerospace Otherproducts

Total

Elimination
Consolidated
andtotalcorporate

I. Sales and operating income
Sales(1) Outside customer(2) Inter-segment
Total sales
Operating cost and expense
Operating income

940,049
2,797
942,846
909,916
32,93037,990100
38,09036,882
1,208

52,080 9,371 1,039,490
27 1,976
4,900
52,107 11,347 1,044,390
50,137 10,483 1,007,418
1,970
864
36,972［Segment information by geographic area］
3rd Quarter of FY2007 （from April 1, 2006 to December 31, 2006）

I. Sales and operating income
Sales(1) Outside customer(2) Inter-segment
Total sales
Operating cost and expense
Operating income

JapanNorth
AmericaOther638,653
187,601
826,254799,119
27,135

397,494
6,607
404,101
400,166
3,935

22,586205
22,791
22,110681

Total

1,058,733
194,413
1,253,146
1,221,395
31,751Elimination
andConsolidated
corporate
total(194,413)(194,413)(198,415)
4,002

1,058,733
1,058,733
1,022,980
35,753(Unit: Millions of yen)JapanNorth
AmericaOther636,889
194,312831,201
793,335
37,866

390,749
1,633
392,382
393,509(1,127)

11,852
230
12,082
11,858224-7-1,039,490
1,039,490
1,001,922
37,568(Unit: Millions of yen)

3rd Quarter of FY2006 （from April 1, 2005 to December 31, 2005）

I. Sales and operating income(loss)Sales(1) Outside customer(2) Inter-segment
Total sales
Operating cost and expense
Operating income (loss)(4,900)(4,900)(5,496)596

Total

1,039,490
196,175
1,235,665
1,198,702
36,963Elimination
andConsolidated
corporate
total(196,175)(196,175)(196,780)
6051,039,490
1,039,490
1,001,922
37,568

［Overseas sales］
3rd Quarter of FY2007 （from April 1,2006 to December 31, 2006）(Unit: Millions of yen)Overseas sales
Consolidated net sales
Percentage of overseas sales overconsolidated sales (%)

North
America
428,988

Europe106,998

Other
105,076

Total
641,062
1,058,733

40.5%

10.1%

9.9%

60.5%

3rd Quarter of FY2006 （from April 1, 2005 to December 31, 2005）(Unit: Millions of yen)Overseas sales
Consolidated net sales
Percentage of overseas sales overconsolidated sales (%)

NorthAmerica
421,446

Europe94,341

Other
95,637

Total
611,424
1,039,490

40.5%-8-9.1%

9.2%

58.8%

<Reference for the 3rd Quarter of FY2007(Apr. 2006 to Dec. 2006) Consolidated Financial Results>（Feb. 2, 2007）

Fuji Heavy Industries Ltd.
(in 100 millions of yen)

RESULTSRESULTSRESULTSFORECAST(in thousands of units)

3rd Quarter of FY2006

3rd Quarter of FY2007

FY2006

FY2007

Apr. 2005 to Dec. 2005

Apr. 2006 to Dec. 2006

Apr. 2005 to Mar. 2006

Apr. 2006 to Mar. 2007

Net Sales

10,395

10,587

1.9 ％

14,76415,000

1.6 ％Domestic

4,281

4,177(2.4) ％6,041

5,800(4.0) ％Overseas

6,114

6,411

4.8 ％

8,722

9,200

5.5 ％

500(14.2) ％420(10.2) ％300

92.2 ％

Margin Percentage

3.6%

Operating Income
Margin Percentage

Net Income

4.0%

358

376
3.0%

Ordinary Income
Margin Percentage

3.4%(4.8) ％

2.9%

(3.2) ％

2.3%
128

583
3.2%

302

312
1.2%

3.3%
2.8%
468

1.1%

247

92.5 ％

2.0%
156

Factors of Change

Gain factors

Gain factors

in Operating Income

Foreign exchange

111

Foreign exchange

96

Reduction in cost

60

Reduction in cost77

Decrease of expenses and others

14

Loss factors
Loss factors

Deterioration of sales volume & mixture 208

Deterioration of sales volume & mixture 161

Increases in R&D expenses

41

Increases in R&D expenses

Increases of expenses and others

742

Foreign Exchange Rate
YEN/US$
R&D Expenses
Interest bearing debt

116

111

115

112

332

374

469

510

3,911

3,722

3,741

3,500

Performance of operation

Net Sales to increase

Net Sales to increase

Net Income to increase

Net Income to increase

Best Net Sales

Domestic Sales

164

Best Net Sales

160(2.3) ％

230237

3.0 ％Passenger Cars

6956(19.2) ％9882(16.3) ％Minicars

95104

9.9 ％

132

155

17.2 ％

Export244

246

0.6 ％

341

345

1.1 ％

North America

146141(3.7) ％210

207(1.6) ％Europe

4752

9.9 ％

6569

7.0 ％

Other

5153

4.3 ％

6769

3.8 ％

Units Total

408

406(0.6) ％

571

582

1.8

* Figures of Total Sales are the sum of retail sales units of the Japanese subsidiary dealers,
wholesale units of the overseas subsidiary distributors, and wholesale units of FHI to other distributors/dearlers.
* Exchange rate is the non-consolidated base of Fuji Heavy Industries Ltd..