Outline of Financial Results for the 1st Quarterof Fiscal 2007 (Consolidated)
July 31, 2006

For Immediate Release
Company Name: Fuji Heavy Industries Ltd.

(Code No.: 7270 :Tokyo Stock Exchange First Section)(URL http://ir.fhi.co.jp/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 quarter(1) Adoption of simplified accounting practices：Yes
Income taxes are calculated using a simplified accounting method.

(2) Accounting change from prior year：No(3) Changes in scope of consolidation and application of the equity method: Yes— The number of consolidated subsidiaries decreased 5 subsidiaries to 63 subsidiaries. This is because 10 Subaru
exclusive dealers companies in Hokkaido and 4 other areas were integrated into 5 companies.
— The number of companies accounted for by the equity method increased 7 companies to 18 companies. From
this 1st quarter, Robin service Co., Ltd., Fuji Special Purpose Vehicle Co., Ltd., Robin Europe GmbH and 4 othercompanies have been accounted for by the equity method due to their increased influence on the consolidated
financial statements.

2. Performance in the 1st Quarter of Fiscal 2007 (from April 1, 2006 to June 30, 2006)
Note that all amounts have been rounded off to the nearest million yen, unless otherwise specified(1) Consolidated Results of Operations
Net sales
1st Quarter of FY 2007

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

Operating income

Ordinary income

Net income¥ 329,534(9.9%)¥10,768(834.7%)¥ 9,645(—)¥ 4,598(—)

1 Quarter of FY 2006

¥ 299,948(-2.5%)¥ 1,152(—)¥ 423(-82.9%)(¥1,177)(—)

Fiscal 2006

¥ 1,476,368—¥ 58,339—¥ 46,768—¥ 15,611—

stNet income (loss) per
share, basic (Yen)

Net income (loss) per
share, diluted (Yen)

1st Quarter of FY 2007

¥ 6.42¥ 6.41

1st Quarter of FY 2006(¥ 1.51)(¥ 1.51)

Fiscal 2006

¥ 20.66¥ 20.66

Note: Percentage figures in the net sales, operating income, ordinary income and net income columns represent changes from prior
1st quarter period.

－1－Qualitative Information on Progress of Consolidated Operating Performance
Consolidated net sales for the first quarter of FY2007 were up 9.9% or 29.6 billion yen over the same period ofprevious fiscal year at 329.5 billion yen thanks to a net increase in the sales of the B9 Tribeca in the North
American market as well as steady sales volume increases in Europe and Australia despite decreased sales inthe domestic market for the Automobile division. Profits were up on a year-on-year basis with foreign exchange
gains on a weak yen, an increase in sales volume and product mix as well as efforts to reduce material costs andSG&A and other expenses pushing operating income up 9.6 billion yen or 834.7% to 10.8 billion yen, andordinary income up 9.2 billion yen to 9.6 billion yen. Despite an increase in taxes expense, net income totaled 4.6
billion yen, a 5.8 billon yen jump over the same period of previous fiscal year, in which a loss of 1.2 billion yen wasreported.

(2) Financial Position(Unit: Millions of yen, except for per share figures)
Total assets

Net asstets

Shareholders’ equity tototal assets (%)

Net assets per share(Yen)

1st Quarter of FY 2007

¥ 1,357,007¥ 465,996

34.2 %¥ 647.09

Fiscal 2006

¥ 1,348,400¥ 465,522

34.5 %¥ 649.41

Note: Net assets in Fiscal 2006 have described total shareholder’s equity.

Qualitative Data on the Progress of Consolidated Financial Condition
Total assets as of the end of the first quarter of FY2007 increased by 8.6 billion yen to 1,357 billion yen comparedwith the end of the previous fiscal year. Major contributing factors included increases in both work-in-progress for
new projects at the Aerospace division and inventory assets at the Automobile division for the preparation ofseasonal demand.
Liabilities increased by 10.4 billion yen to 891 billion yen from the end of the previous fiscal year primarily due toan increase in interest-bearing debt.
Net assets including minority interest in consolidated subsidiaries fell 1.8 billion yen from the end of the previous
fiscal year to hit 466 billion yen due mainly to net unrealized holding gains on securities.

［Reference］

Projections for Fiscal 2007 (From April 1, 2006 to March 31, 2007)
Unchanged from the latest forecast (announced on May 9, 2006)
The above projections are made based on available information and assumptions as of July 31, 2006, 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)st

1 Quarter of 2007

Fiscal 2006

Changes(as of June 30, 2006)(as of March 31, 2006)

Increase/(Decrease)639,523

619,183

20,340Cash and time deposits

52,40965,524(13,115)

Notes and accounts receivable, trade91,109104,972(13,863)

ASSETS

Current assets

Marketable securities

38,30137,444857

Inventories

257,498

216,396

41,102

Short—term loans

114,513

118,414(3,901)

Deferred tax assets

32,762

32,992

(230)

Other

55,01045,604

9,406

Allowance for doubtful accounts(2,079)(2,163)84

Fixed assets

717,484

729,217(11,733)

Property, plant and equipment, net

550,927555,973(5,046)

Buildings and structures

128,965

128,727

238

Machinery, equipment and vehicles

127,585

184,582(56,997)

Land

172,615

172,338

277

Construction in progress

5,816

7,396

(1,580)

Leased assets

63,896—63,896

Other

52,05062,930(10,880)

Intangible assets

37,16038,211(1,051)

Investments and other assets

129,397135,033(5,636)

Investment securities

76,25580,316(4,061)

Long—term loans

4,793

8,141

(3,348)Deferred tax assets

24,78823,612

1,176

Other

25,93625,312624

Allowance for doubtful accounts(2,375)(2,348)(27)

1,357,007

1,348,400

8,607

Total assets

Note: From this 1st quarter of 2007, “Leased assets” in Property, plant and equipment, net have been described separately, whereas infiscal 2006 “Leased assets” are included in Machinery, equipment and vehicles (¥56,766 million) and Other (¥7,485 million).

－3－1st Quarter of 2007

Fiscal 2006

Changes(as of June 30, 2006)(as of March 31, 2006)

Increase/(Decrease)614,667

628,113(13,446)

Notes and accounts payable, trade

199,909

211,412(11,503)

Short—term borrowings

197,253

195,507

1,746

Commercial paper

16,000

8,000

8,000

LIABILITIES AND NET ASSETS
Current liabilities

Current portion of bonds

500

20,500(20,000)

Accrued income taxes

6,547

11,472(4,925)

Accrued expenses

56,67861,744(5,066)

Accrued bonus

23,03915,427

7,612

Accrued warranty claims

23,53323,49637

Other91,20880,555

10,653276,344

252,501

23,843

Bonds

100,000

80,00020,000

Long—term debts

Long—term liabilities

69,66470,072(408)

Deferred tax liabilities on revaluation of land

703

703

—

Accrued pension and severance liability
Accrued directors’ severance and retirement
benefits
Consolidation adjustments

53,72752,322

1,405

900

971

(71)

2,451

2,995

(544)

Other48,899

45,4383,461

891,011880,614

10,397

Total liabilities－4－Minority interest in consolidated subsidiaries

1st Quarter of 2007

Fiscal 2006

Changes(as of June 30, 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 land
Net 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

464,636——

Common stock

153,795——

Capital surplus

160,071——Retained earnings

192,303——

Less treasury stock, at cost

(41,533)——

Revaluation, adjustments

(870)

—

—

Revaluation reserve for land
Net unrealized holding gains
securities
Translation adjustments
Minority interest inconsolidated subsidiaries

290

—

—

17,795——(18,955)

—

—

2,230

—

—

Total net assets

465,996——

Total liabilities and net assets

1,357,007——

Shareholders' equityonLess treasury stock, at cost

Net assets

on－5－(2) Summery of Consolidated Statements of Income(Unit: Millions of yen)
stst

1 Quarter ofFY 2007
(ended June30 ,2006)

1 Quarter ofFY 2006
(ended June30 ,2005)

AmountAmountAmountNet sales

329,534

299,948

Cost of sales

247,044

Fiscal 2006
Changes
Increase/(Decrease)(ended March31 ,2006)%

Amount29,5869.9

1,476,368

231,069

15,9756.9

1,125,293

82,49068,87913,61119.8

351,075

71,722

67,7273,995

5.9

292,736

Operating income

10,768

1,152

9,616

834.7

58,339Non—operating income

4,337

3,366

971

28.8

12,356

1,027

1,055

(28)

(2.7)

3,421

544

700

(156)

(22.3)

3,296

Gain on revaluation of derivatives

1,634

470

1,164

247.7

513

Other

1,132

1,141

(9)

(0.8)

5,126

5,460

4,095

1,365

33.3

23,927

Interest expenses

945

726

219

30.2

3,181

Loss on revaluation of derivatives

565

2,375

(1,810)(76.2)

2,983

Other

3,950

994

2,956

297.4

17,763

Ordinary income

9,645

423

9,222

—

46,768Extraordinary gains

4937

1232.4

9,253

Gain on sale of fixed assets

49

445

—

3,872

Gain on sale of investment securities—

33(33)(100.0)5,274

Other—

—

—

—

107

332

259

73

28.2

27,347

332

259

73

28.2

4,273

—

—

—

—

2,253

—

—

—

—

4,064

—

—

—

—

7,991

—

—

—

—

7,094

Gross profit
Selling, general and administrative expenses

Interest and dividends income
Amortization of consolidation adjustments

Non—operating expenses

Extraordinary losses
Loss on sale and disposal of property,
plant and equipment
Loss on sale of investment securities
Impairment loss on property, plant andequipment
Additional retirement payments
Loss on termination of development
projects
Other—

—

—

—

1,672

Income before income taxes and minority
interest

9,362

201

9,161

—

28,674

Tax expense

4,769

1,397

3,372

241.4

12,928

—

—

—

—

135

5

19

(14)

(73.7)—

4,598(1,177)

5,775—

15,611

Minority interest in income of consolidated
subsidiaries
Minority interest in loss of consolidated
subsidiaries
Net income (loss)－6－(3) Segment Information［Business segment information］
1st Quarter of FY2007 （from April 1, 2006 to June 30, 2006）(Unit: Millions of yen)

Automobiles

Industrial
products

Aerospace

297,672700
298,372
291,002
7,370

13,116
4
13,12012,492628

16,347
6
16,353
14,327
2,026

Other

Elimination
Consolidated
andtotal
corporate

Total

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

2,399
620
3,019
2,473
546

329,534
1,330
330,864
320,294
10,570

1st Quarter of FY2006 （from April 1, 2005 to June 30, 2005）—(1,330)(1,330)(1,528)
198

329,534—329,534
318,766
10,768(Unit: Millions of yen)

Automobiles

Industrialproducts

Aerospace

270,802916
271,718
271,618100

11,75746
11,803
11,648155

14,378914,387
13,756631

Other

Elimination
Consolidated
and
total
corporate

Total

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

3,011
672
3,683
3,675
8

299,948
1,643
301,591
300,697894［Segment information by geographic area］
1st Quarter of FY2007 （from April 1, 2006 to June 30, 2006）
Japan
I. Sales and operating income (loss)
Sales(1) Outside customer(2) Inter—segment
Total sales
Operating cost and expense
Operating income (loss)

192,892
62,876
255,768
244,355
11,413

North America

132,791647
133,438
134,325(887)

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

186,331
59,249245,580
239,151
6,429

North America

109,619528
110,147
113,747(3,600)－7－

299,948—299,948
298,796
1,152(Unit: Millions of yen)
Other

3,851
69
3,920
3,781139

Total

329,534
63,592
393,126
382,461
10,665

1st Quarter of FY2006 （from April 1, 2005 to June 30, 2005）
Japan—(1,643)(1,643)(1,901)
258

Elimination
Consolidated
and corporate
total—(63,592)(63,592)(63,695)
103

329,534—
329,534
318,766
10,768(Unit: Millions of yen)
Other

3,998
86
4,084
3,992
92

Total

299,948
59,863359,811356,890
2,921

Elimination
Consolidated
and corporate
total—(59,863)(59,863)(58,094)(1,769)299,948—
299,948
298,796
1,152［Overseas sales］
1st Quarter of FY2007 （from April 1,2006 to June 30, 2006）(Unit: Millions of yen)
North America
144,070

Overseas sales
Consolidated net sales
Percentage of overseas
consolidated sales (%)

Europe30,893

Other
33,239Total
208,202329,534

sales

over

43.7%

9.4%

10.1%

63.2%

1st Quarter of FY2006 （from April 1, 2005 to June 30, 2005）(Unit: Millions of yen)
North America
118,499

Overseas sales
Consolidated net sales
Percentage of overseas
consolidated sales (%)

Europe23,369

Other
28,876

Total
170,744
299,948sales

over39.5%－8－7.8%

9.6%

56.9%

<Reference for the 1st Quarter of FY2007 Consolidated Financial Results>(July 31,2006)

Fuji Heavy Industries Ltd.

(in 100 millions of yen)(in thousands of units)

Net Sales

ACTUAL RESULTS
1st Quarter of FY 2007

Apr.2005 to Jun.2005

Apr.2006 to Jun.2006

2,999
1,292
1,707

Domestic
Overseas
Margin Percentage

ACTUAL RESULTS
1st Quarter of FY 2006

0.4%
120.1%

96

R&D expenses
Interest bearing debt
Performance ofoperation
Domestic sales units
Small Cars
Minicars

46

Overseas sales units
North AmericaEuropeOthers
Total sales units

6.9 %

300

92.2 %－Gain factors

Gain factors

Foreign exchange
Increase in sales mix
Decrease of expenses and others
Reduction in costs

50
193171431216120500
1.9%

(12)

107
95
12597
4,124(14.3) %－52 Increase in sales mix
31 Reduction in costs
1611

Loss factors

Exchange rate YEN/US$
Capital investment
Depreciation and amortizati

500

834.7

1.4%

Net income
Analysis ofincrease/decreasein operating income

5.0 %
5.9 %
4.3 %

3.2%

4－

15,500
6,400
9,100
3.2%

108
2.9%

Ordinary income
Margin Percentage

Apr.2006 to Mar.2007

9.9 %(6.1) %
21.9 %

3.3%

Operating income
Margin Percentage

3,295
1,213
2,082

FORECAST
FY2007

Loss factors

Increase in R&D expenses

14 Increase of expenses and others
Increase in R&D expenses
Foreign exchange

115
87
146
111
3,835
Net sales to increase
Net income to increase110930
605
540
3,700
Net sales to increase
Net income to increase
Best net sales
264
97
167
347
220
6562611

45
16
2979
47
1617124

107
27(8.9) %(13.5) %(6.1) %11.7 %
7.9 %
32.5 %
6.6 %
3.2 %*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.

96715014.5 %(0.8) %
25.8 %
1.8 %
4.9 %
1.0 %
(7.3) %
6.9 %