Outline of Financial Results for the 1st Quarter of Fiscal 2005
August 6, 2004

For Immediate Release
Company Name: Fuji Heavy Industries Ltd.

(Code No.: 7270 : Tokyo Stock Exchange First Section)(URL: http://www.fhi.co./jp/fina/index.html)
Representative: Mr. Kyoji Takenaka, President and CEO

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

1. Basis for preparation of financial results of this quarter1)

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

2)

Accounting change from prior year: Yes
Previously, for foreign exchange contracts used as hedges and which meet certain hedging criteria, theCompany translated hedged foreign currency receivables using the contracted forward rates, and forforward exchange contracts hedging future transactions, the Company deferred recognition of gains orlosses resulting from changes in fair value of the foreign exchange contracts until related gains or losses on
the hedged items are recognized. However, the Company stopped applying the hedge accounting sincest
1 quarter of fiscal 2005.
As a result of this change, ordinary income and income before income taxes and minority interest for thest
1 quarter increased by ¥1,694 million as compared with amounts assumed by application of previous
hedge accounting policy.

3)

Changes in scope of consolidation and application of the equity method: No

2. Performance in the 1st Quarter of Fiscal 2005 (from April 1, 2004 to June 30, 2004)
Note that all amounts have been rounded off to the nearest million yen, unless otherwise specified(1) Consolidated Results of Operations(Unit: Millions of yen, except for per share figures)

Net sales

Operating income

Ordinary income

Net income(-99.9%)¥ 2,479(-78.9%)¥ 619(-89.7%)¥ 9,226—¥ 11,755—¥ 5,994—¥ 50,324—¥ 56,614—¥ 38,649—

st¥ 307,543(8.5%)¥ 12st

1 Quarter of FY 2004

¥ 283,345—

Fiscal 2004

¥ 1,439,451—

1 Quarter of FY 2005

Net income pershare, basic (Yen)
1st Quarter of FY 2005

Net income pershare, diluted (Yen)¥ 0.80¥ 0.80

1 Quarter of FY 2004

¥ 8.08¥ 8.08

Fiscal 2004

¥ 50.62¥ 49.66

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

−1−

Qualitative Data on the Progress of Consolidated Operating Results
Consolidated net sales for the first quarter was 307.5 billion yen, 24.2 billion yen increase from the same period of
the previous year. It is due to the increase in sales units such as minicar in Japan and the Saab OEM cars in theUnited States. Operating income was 12 million yen, which is 9.2 billion yen decrease from the previous year.
The decrease attributes to some special factors such as exchange rate impact and the costs associated withmodel change of the Legacy in the United States, which were greater than the various cost reduction efforts.
Ordinary income was 2.5 billion yen with 9.3 billion decrease from the previous year. Net income for the quarter
was 0.6 billion yen, or 5.4 billion yen less than the previous year.

(2) Financial Position(Unit: Millions of yen, except for per share figures)
Shareholders’equity tototal assets (%)

Shareholders’equity per share(Yen)

Total assets

Shareholders’equity1st Quarter of FY 2005

¥ 1,389,334¥ 451,00032.5 %¥ 579.34

Fiscal 2004

¥ 1,349,727¥ 453,708

33.6 %¥ 582.60

Qualitative Data on the Progress of Consolidated Financial Condition
Total assets were 1,389.3 billion yen, an increase of 39.6 billion yen from the end of the previous fiscal year. Themain factor was the vehicle inventory increase prepared for July, which is a typically strong sales month in Japan.
Liabilities were 935 billion yen, 42.3 billion yen increase from the previous year, of which the main factor is theissuance of corporate bonds.

[Reference]
Projections for Fiscal 2005 (From April 1, 2004 to March 31, 2005)
Unchanged from the latest forecast (announced on May 14, 2004)
The above projections are made based on available information and assumptions as of Aug. 6, 2004, and are
subject to the uncertainties of future operations. Therefore, actual results could differ materially from thoseanticipated.

−2−

[Consolidated Financial Statements](1) Summary of Consolidated Balance Sheets(Unit: Millions of yen)
st1 Quarter of 2005

Fiscal 2004

Changes(as of June 30, 2004)(as of March 31, 2004)

Increase/(Decrease)

ASSETS
Current assets

679,068

654,87924,189

Cash and time deposits

48,90846,6842,224

Notes and accounts receivable, trade105,733

122,724(16,991)

Marketable securities

112,403

113,490(1,087)

Inventories

213,422

179,338

34,084

Short-term loans

101,180

101,871(691)

Deferred tax assets

33,54634,149

(603)

Other

64,40257,284

7,118

Allowance for doubtful accounts

(526)

(661)

135

Fixed assets

710,266

694,848

15,418Property, plant and equipment, net

520,759

509,743

11,016

Buildings and structures

128,948

117,446

11,502

Machinery, equipment and vehicles

169,952

161,950

8,002

Land

167,510

166,518

992

Construction in progress

7,792

20,935(13,143)

Other

46,55742,894

3,663

Intangible assets

40,07940,453(374)

Investments and other assets

149,428

144,652

4,776

Investment securities

61,10757,045

4,062

Long-term loans

7,304

4,918

2,386

Deferred tax assets

28,11029,707(1,597)

Other

57,89357,938(45)

Allowance for devaluation of investments

(280)

(280)

—(4,706)(4,676)(30)

1,389,334

1,349,727

39,607

Allowance for doubtful accounts

Total assets−3−st1 Quarter of 2005

Fiscal 2004

Changes(as of June 30, 2004)(as of March 31, 2004)

Increase/(Decrease)618,062

603,231

14,831

Notes and accounts payable, trade202,123

193,186

8,937

Short-term borrowings

228,727

227,917810

Commercial paper

20,00010,00010,000Current portion of bonds—

10,000(10,000)

Accrued income taxes

6,143

5,092

1,051

Accrued expenses

67,63669,784(2,148)

Accrued bonus

25,522

17,165

8,357

Accrued warranty claims

27,764

26,959805

Other40,147

43,128(2,981)

316,983

289,469

27,514

Bonds

110,800

90,80020,000Long-term debts
Deferred tax liabilities on revaluation oflandAccrued pension and severance liability
Accrued directors’ severance andretirement benefits
Consolidation adjustments

47,70440,279

7,425

478

478

—

63,37061,654

1,716

1,168

1,228

(60)

42,191

44,027(1,836)

Other

51,27251,003269

935,045892,700

42,345

3,289

3,319

(30)

Common stock

153,795

153,795—

Capital surplus

160,107

160,107—

Retained earnings

162,266

165,192(2,926)

421

421

—

LIABILITIES ANDSHAREHOLDERS’ EQUITYCurrent liabilities

Long-term liabilities

Total liabilities

Minority interest in consolidated
subsidiaries
Shareholders’ equity

Revaluation reserve for land
Net unrealized holding gains on
securities
Translation adjustments

12,312

10,291

2,021(35,097)(33,300)(1,797)Less treasury stock, at cost

(2,804)(2,798)(6)

Total shareholders’ equity

451,000

453,708(2,708)

Total liabilities and shareholders’ equity

1,389,334

1,349,727

39,607−4−

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

1 Quarter of
FY 2005

1 Quarter of
FY 2004(ended June
30 ,2004)(ended June30 ,2003)

AmountAmountNet sales

307,543

283,345

24,1988.5

1,439,451

Cost of sales

235,819

204,997

30,82215.0

1,085,716

Gross profit

71,72478,348(6,624)(8.5)

353,735

71,712

69,122

2,590

3.7

303,41112

9,226(9,214)(99.9)

50,324

4,972

4,477

495

11.1

17,943

717

821

(104)

(12.7)

2,081

1,836

1,680

156

9.3

4,912

2,419

1,976

443

22.4

10,950Non-operating expenses

2,505

1,948

557

28.6

11,653

Interest expenses

578

672(94)(14.0)

2,416

Other

1,927

1,276

651

51.0

9,237

Ordinary income

2,479

11,755(9,276)(78.9)

56,614Extraordinary gains

270

790

(520)

(65.8)

8,353

Gain on sale of fixed assets

50

86(36)(41.9)

2,600

Gain on sale of investment securities

220

619

(399)

(64.5)

4,564

Gain on prior period adjustment

—

——

—

1,049

Other

—

85(85)(100.0)140

Selling, general and administrative
expenses
Operating income
Non-operating income
Interest and dividends income
Amortization of consolidation
adjustments
Other

Fiscal 2004
Changes
Increase/(Decrease)
Amount%(ended March31 ,2004)
AmountExtraordinary losses
Loss on sale and disposal offixed assets
Loss on sale of investment securities

476

934

(458)

(49.0)

8,701

476

911

(435)

(47.7)

5,689

—

—

—

—

411

Loss on devaluation of securities

—

—

—

—

221

Pension and severance cost—

—

—

—

1,268

Other
Income before income taxes andminority interest

—

23

(23)

(100.0)

1,112

2,273

11,611(9,338)(80.4)

56,266

1,662

5,689

(4,027)(70.8)

17,633872(64)(88.9)

16619

5,994

(5,375)(89.7)

38,649Tax expense
Minority interest in loss of consolidated
subsidiaries
Net income−5−(3) Segment Information[Business segment information]
1st Quarter of FY2005 (from April 1, 2004 to June 30, 2004)(Unit: Millions of yen)

Automobiles

Industrial
products

Aerospace

278,136892
279,028
278,693335

10,74092
10,832
10,918(86)

13,731
12
13,743
13,907
(164)

Other

Total

Elimination
Consolidated
andtotal
corporate

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

4,936
735
5,671
5,867
(196)

307,543
1,731
309,274309,385(111)

1st Quarter of FY2004 (from April 1, 2003 to June 30, 2003)—(1,731)(1,731)(1,854)
123

307,543—
307,543
307,531
12(Unit: Millions of yen)

Automobiles

Industrial
products

Aerospace

257,446894
258,340
249,322
9,018

9,457
4
9,461
9,869
(408)

11,336163
11,49910,241
1,258

Other

Total

Elimination
Consolidated
andtotal
corporate

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

5,106
950
6,056
6,774(718)283,345
2,011
285,356
276,206
9,150—(2,011)(2,011)(2,087)76[Overseas sales]st

1 Quarter of FY2005 (from April 1, 2004 to June 30, 2004)(Unit: Millions of yen)Overseas sales

North America
126,577

Europe20,643

Other
23,751

Consolidated net sales
Percentage of overseas sales overconsolidated sales (%)

Total
170,971
307,543

41.2%

6.7%

7.7%

55.6%

st

1 Quarter of FY2004 (from April 1, 2003 to June 30, 2003)(Unit: Millions of yen)Overseas sales

North America
119,547

Europe19,082Other18,709

Consolidated net sales
Percentage of overseas sales overconsolidated sales (%)

Total
157,338
283,345

42.2%

−6−

6.7%

6.6%

55.5%

283,345—
283,345
274,1199,226

<Reference for the 1st Quarter of FY2005 Consolidated Financial Results>(August 6, 2004)

Fuji Heavy Industries Ltd.

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

ACTUAL RESULTS
1st Quarter of FY 2004

ACTUAL RESULTS
1st Quarter of FY 2005

Apr.2003 to Jun.2003

Apr.2004 to Jun.2004

Net Sales

2,833
1,260

Domestic
Overseas
Margin Percentage
Operating income

1,573
3.3%
4.1%

Margin Percentage
Net income

2.1%

Apr.2004 to Mar.2005

3,075
1,365

8.5 %
8.4 %

1,709

8.7 %

0.0%
92

Margin Percentage
Ordinary income

FORECAST
FY20050-99.0 %5924-78.9 %119145Interest bearing debt
Performance of—

6Gain factors
Reduction in costs
Decrease in R&D expenses-89.7 %
3722

Domestic sales units

450-10.6 %

470-17.0 %

320-17.2 %Gain factors
Reduction in costs
162
Increase in sales mix
27
Increase of expenses and others 6

Loss factors
Foreign exchange
Increase in R&D expenses

107
123
4,072

238
10107
585
4,100

Net sales to increase
Net income to decrease

operation-2.7 %2.2%

Loss factors
Increase of expenses and others 68
Foreign exchange
56
Decrease in sales mix
27

Exchange rate YEN/US$
R&D expenses

7,900

3.2%

0.2%

Analysis ofincrease/decreasein operating income

2.1 %
8.3 %

3.1%

0.8%
117

14,7006,800

Net sales to increase
Net income to decrease

49202954
203410.3 %-0.7 %
18.0 %

282110172

14.8 %-1.4 %
28.2 %

North America

57366744

18.7 %
22.2 %

329
222

7.7 %
7.6 %

EuropeOthers
Total sales units

1110106

11121220.4 %25.3 %
14.8 %

5850611

7.5 %
7.9 %
10.8 %SIA Isuzu SUVs units76-5.5 %13-47.9 %Small Cars
Minicars
Overseas sales units*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.
*Analysis of increase/decrease in operating income and sales units for the fiscal year ending in March 2005
include the update to the plan in May,reflecting the recent situations.