Non-consolidated Semi-annual Financial Results for Fiscal 2007 Oct. 31, 2006
For Immediate Release
Company Name
: Fuji Heavy Industries Ltd.
Name of Stock Exchange : Tokyo Stock Exchange (First Section)
Code No.

: 7270Location of Head Office: Tokyo, JapanURL: http://ir.fhi.co.jp/index.html

Representative
Contact for Inquiries: Mr. Ikuo Mori, President and CEO: Mr. Kazuto Sakamoto, General Manager of Administration Department
Tel: (03) 3347-2005
Date of the Board of Directors Meeting Held for Approving the Financial Results: October 31, 2006
Date of Interim Dividends: November 30, 2006
Provision for Interim Dividends: Provision exists
Number of Shares in Unit Share System: 1,000 shares

1. Performance in 1st Half of Fiscal 2007 (from April 1, 2006 to September 30, 2006)
Note that all amounts have been rounded off to the nearest million yen, unless otherwise specified.

(1) Results of Operations(Unit: Millions of yen, except for per share figures)
Operating income
Ordinary income¥18,667(-30.3%)¥13,660(-38.3%)¥26,764(34.1%)¥22,154(31.1%)¥52,123¥41,379

1st Half of FY 2007
1st Half of FY 2006
Fiscal 2006

Net sales¥482,537(1.4%)¥475,863(-2.2%)¥976,143

1st Half of FY 2007
1st Half of FY 2006
Fiscal 2006

(Unit: Millions of yen, except for per share figures)
Net income per share,
Net income
basic (Yen)¥ 6,192(-53.2%)¥ 8.64¥ 13,218(97.1%)¥ 16.96¥ 10,274¥ 13.60

Notes: 1. Average number of shares
outstanding during the periods: 1st Half of FY 2007 : 717,005,397 shares
1st Half of FY 2006 : 779,490,154 sharesFiscal 2006
: 750,628,190 shares

2. Accounting change: See “Changes in Accounting Policies” section
3. Percentage figures in the net sales, operating income, ordinary income and net income
columns represent changes from prior semi-annual period.

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(2) Financial Position

1st Half of FY 2007
1st Half of FY 2006
Fiscal 2006

Total assets¥936,728¥955,054¥905,010(Unit: Millions of yen, except for per share figures)
Net assets to total
Net assets per share
Net assets
assets(Yen)¥476,04150.8%¥663.88¥514,780
53.9%¥660.43¥474,631
52.4%¥661.91

Notes: 1. Number of shares outstanding at : 1st Half of FY 2007
end of the periods
1st Half of FY 2006
Fiscal 2006

: 717,063,936 shares: 779,467,307 shares: 716,968,667 shares

2. Number of treasury stock at end : 1st Half of FY 2007
1st Half of FY 2006of the periods
Fiscal 2006

: 65,801,937 shares: 3,398,566 shares: 65,897,206 shares

3.The amounts under Net assets as of 1st Half of FY 2006 and Fiscal 2006 represent
the amounts of total shareholders’ equity.

2. Projections for Fiscal 2007 (from April 1, 2006 to March 31, 2007)
Net sales
Full year¥950,000(Unit: Millions of yen)
Ordinary income Net income¥31,000¥14,000

Reference: Projected net income per share (full year): ¥19.52

3. Cash Dividends(Unit: Yen)

FY 2006 (Result)
FY 2007 (Result)
FY 2007 (Projection)

Cash dividends per share
Semi-annual
Year-end
Full year
¥4.50
¥4.50
¥9.00
¥4.50
¥9.00
–
¥4.50

The above projections are made based on available information and assumptions as of Oct.31,
2006, and are subject to the uncertainties of future operations. Therefore, actual results could differ
materially from those anticipated. The assumptions used for the above projections are stated on
page 8.

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Non-consolidated Balance Sheets
1st Half Year
Fiscal 2007(as of September 30,
2006)

Fiscal 2006
(as of March 31, 2006)(Unit: Millions of yen)
1st Half Year
Fiscal 2006
Changes
Increase/(as of September 30,
2005)(Decrease)

ASSETS
Current assets
Cash and time deposits
Notes receivable, trade
Accounts receivable, tradeMarketable securities
Finished products
Raw materials
Work in process
Supplies
Advances paid
Prepaid expenses
Deferred tax assets
Accounts receivable, other
Short-term loans
Other
Allowance for doubtful accounts

415,176
23,7391,785
111,269
16,68935,2999,539
78,582
1,305
13,366
3,802
16,533
26,21075,6392,613(1,194)364,049
37,7891,859
113,7632
24,847
8,827
69,819
1,228
9,912
2,641
17,633
19,68654,995
1,987(939)

51,127(14,050)(74)(2,494)
16,687
10,452
712
8,763
77
3,454
1,161
(1,100)6,524
20,644626(255)

405,739
60,023
1,949
106,567
26,82528,5097,765
55,1901,269
28,692
2,683
19,94015,46249,141
1,766(42)Fixed assets
Property, plant and equipment,
net
Buildings
Structures
Machinery and equipment
Aircrafts
VehiclesTools
Land
Construction in progress

521,552

540,961(19,409)549,315

233,556
52,0207,026
71,56613
1,251
11,92382,824
6,933

234,053
52,132
6,905
72,91714
1,261
12,53882,274
6,012

(497)
(112)
121
(1,351)
(1)
(10)
(615)
550
921

233,083
51,382
6,671
76,482
15
1,283
9,438
82,102
5,710

Intangible assets
Industrial rights
SoftwareOther

14,461
109
13,1091,243

16,065
118
14,243
1,704(1,604)(9)(1,134)(461)

21,100102
15,471
5,527

Investments and other assets
Investment securities
Investments in subsidiaries andaffiliated companies
Investment securities, other thanstock
Investments in subsidiaries andaffiliated companies, other thanstock
Long-term loans
Long-term prepaid expenses
Deferred tax assets
Other
Allowance for devaluation of
investments
Allowance for doubtful accounts
Total assets

273,535
50,737

290,843
52,852(17,308)(2,115)295,132
43,434

141,277

142,662(1,385)

147,538

28

27

1

27

1,056

453

603

453

52,154
2,244
27,424
7,574

67,004
2,382
24,621
7,635(14,850)
(138)
2,803
(61)

67,1492,724
32,086
7,668

(382)

(744)

362

(316)

(8,577)936,728(6,049)905,010(2,528)31,718(5,631)
955,054-37-

(Unit: Millions of yen)
1st Half Year
Changes
Fiscal 2006
Increase/ (as of September 30,
2005)(Decrease)

1st Half Year
Fiscal 2007

Fiscal 2006

(as of September 30,
2006)(as of March 31,
2006)

303,461
3,586
178,442
16,5409
10,00022,432
28,326
3,991
13,941
1,723
182
9,917
7,347
1,311
5,714
157,226
90,00024,7336,797
1,169
33,045

289,452
3,804
172,129
12,14011
20,00010,52334,356
5,677
5,378
1,248
172
10,060
7,063
1,428
5,463
140,92780,00024,7412,148
1,394
31,30814,009
(218)
6,313
4,400
(2)
(10,000)
11,909(6,030)(1,686)
8,563
475
10
(143)
284
(117)
251
16,29910,000
(8)
4,649
(225)
1,737

303,059
3,825
174,692
7,500
3,714
20,0008,122
36,291
9,804
12,334
1,147
174
9,869
7,631
2,019
5,937
137,21580,00013,554
2,073
1,456
39,991

158

170

(12)

141

1,322
2
460,687

1,163
3
430,379159(1)30,3080440,274-

153,795
160,071160,071
182,364
7,901
687
85,33588,441
19,920(41,519)474,631905,010-

153,795
160,071160,071
188,823
7,901
687
85,335
94,90014,313(2,222)514,780
955,054457,656
153,795
160,071160,071
185,251
7,901
687
85,33591,328(41,461)---

18,385
18,385476,041---

936,728---

LIABILITIES AND NET ASSETS
Current liabilities
Notes payable, trade
Accounts payable, trade
Short-term borrowings
Current portion of long-term debts
Current portion of bonds
Accounts payable, otherAccrued expenses
Accrued income taxes
Advances received
Deposits received
Income in advanceAccrued bonus
Accrued warranty claims
Notes payable for acquisition of fixed assets
Other
Long-term liabilities
Bonds
Long-term debts
Long-term accounts payable, other
Long-term deposits received
Accrued pension and severance liability
Accrued directors’ severance and retirement
benefits
Accrued losses on guarantees
Other
Total liabilities
Shareholders’ equity
Common stock
Capital surplus
Capital reserve
Retained earnings
Legal reserve
Advanced depreciation reserve
General reserve
Unappropriated retained earnings
Net unrealized holding gains on securities
Less treasury stock, at cost
Total shareholders' equity
Total liabilities and shareholders' equity
Net assets
Shareholders' equity
Common stock
Capital surplus
Capital reserve
Retained earnings
Legal reserve
Advanced depreciation reserve
General reserve
Unappropriated retained earnings
Less-treasury stock, at cost
Valuation, translation and otheradjustments
Net unrealized holding gains on securities
Total net assets

Total liabilities and net assets-38-

Non-consolidated Statements of Incomest

Net sales
Cost of sales
Gross profit
Selling, general and administrative
expenses
Operating income
Non-operating income
Interest and dividend income
Other
Non-operating expenses
Interest expenses
Loss on revaluation of derivatives
Other
Ordinary income
Extraordinary gains
Gain on sale of fixed assets
Gain on sale of investment securities
Reversal of allowance for doubtful
accounts
Reversal of allowance for devaluationof investments
Prior period adjustment
Extraordinary losses
Loss on sale and disposal of properly,plant and equipment
Loss on sale of investment securities
Loss on devaluation of securities
Impairment loss of property, plant andequipment
Allowance for losses on guarantees
Allowance for devaluation of
investments
Allowance for doubtful accounts
Loss on liquidation of affiliatedcompanies
Additional retirement payments
Loss on termination of joint
development projects
Income before income taxes
Income taxes-current
Income taxes-deferred
Net income
Unappropriated retained earnings
brought forward
Loss on disposal of treasury stock
Interim dividends
Unappropriated retained earnings
at end of the period(Unit: Millions of yen)st

1 Half Year
Fiscal 2007

1 Half Year
Fiscal 2006

(ended September 30,
2006)(ended September 30,
2005)

Changes
Increase/(Decrease)

Fiscal 2006
(ended March 31, 2006)

AmountRatio of
Total (%)

AmountRatio of
Total (%)

AmountAmountRatio of
Total (%)

482,537
390,759
91,778

100.0
81.0
19.0

475,863
379,022
96,841

100.0
79.6
20.4

6,674
11,737(5,063)

976,143778,248
197,895

100.0
79.7
20.3

73,111
18,667
3,942
1,413
2,529
8,949
793
246
7,910
13,660
1,591
132
-

15.1
3.9
0.8

70,077
26,764
3,960
1,497
2,463
8,570
761
3,244
4,565
22,154
5,678
44
5,231

14.8
5.6
0.9

3,034
(8,097)
(18)
(84)
66
379
32
(2,998)3,345(8,494)(4,087)88(5,231)

145,772
52,123
7,863
2,664
5,199
18,607
1,454
2,983
14,17041,379
5,786
534
5,243

15.0
5.3
0.8

1.9

2.8
0.3

1.8

4.7
1.2

0

8

(8)

9

8

395

(387)

0

1,451
(2,681)

28,0042–(1,630)

1,881
2,216
6,608

1,451
6,364

1.3

9,045

2.0

712
–
742

710
–
2,372

39

321

159

–

(282)
159

329
1,163

382

29

353

744

2,523

–

2,523

-

1,807

–

1,807

-

–

–

–

7,969

–

5,613

(5,613)

7,094(9,900)(6,589)3,715(7,026)

19,161
7,303
1,584
10,274

8,887
3,353
(658)
6,192

1.8
0.6
(0.1)
1.3

18,787
9,942(4,373)
13,218

3.9
2.0
(0.9)
2.8

–

81,683–

81,683

–
–

1
–

–
–

8
3,508

–

94,900–88,441

-39-

1.9

4.2
0.6

2.8

2.0
0.7
0.2
1.1

Non-consolidated Statements of Net Assets
1st Half Year Fiscal 2007 (from April 1, 2006 to September 30, 2006)(Unit: Millions of yen)

Shareholders’ equity
Capital surplus

Retained earnings
Other

Commonstock

Capitalreserve

Legal Ad.dep.
reserve reserve

Total

Balance, March 31, 2006 153,795 160,071 160,071

7,901

Unapprop
riatedretainedearnings

Generalreserve

687 85,335

Total

88,441 182,364

Increase (decrease)during the period
Dividends paid

-

-

-

-

-

-

(3,226)(3,226)

Payment of bonus todirectors and statutory
auditors

-

-

-

-

-

-

(66)

(66)

Net income

-

-

-

-

-

-

6,192

6,192

Increase in treasury stock

-

-

-

-

-

-

-

-

Disposal of treasury stock

-

-

-

-

-

-

(13)

(13)

Changes (other thanshareholders’ capital), net

-

-

-

-

-

-

-

-

Total

-

-

-

-

-

-

2,887

2,887

153,795 160,071 160,071

7,901

Balance, September 30,
2006

Balance, March 31, 2006

91,328 185,251

Valuation, translation and otheradjustments

Shareholders’ equity

Treasury stock

687 85,335

Net unrealized
holding gains on
securities

Total

Total

Net assets
total(41,519)454,711

19,92019,920474,631

Dividends paid-

(3,226)--(3,226)

Payment of bonus todirectors and statutory
auditors

-

(66)

-

-

(66)

Net income

-

6,192

-

-

6,192

Increase in treasury stock

(29)

(29)

-

-

(29)

Disposal of treasury stock

87

74

-

-

74

Changes (other thanshareholders’ capital), net--(1,535)(1,535)(1,535)58

2,945(1,535)(1,535)

1,410(41,461)

457,656

18,385

18,385476,041

Increase (decrease)during the period

Total
Balance, September 30,
2006

-40-

Summary of Significant Accounting Policies
1. Method and Basis for Valuation of Marketable Securities and Investment Securities(1) Held-to-maturity debt securities: The amortized cost method (straight-line amortization)(2) Investments in subsidiaries and affiliated companies: Stated at cost determined by the movingaverage method.
(3) Other securities:(1) Securities for which fair market value is available: Stated at fair value as of the balance
sheet date with unrealized holding gains and losses included as a component of net assets
until realized. Realized gains and losses on sale of securities are computed using themoving-average method.
(2) Securities for which fair market value is not available: Stated at cost determined by themoving-average method, after devaluation for any permanent impairment.

2. Method and Basis for Valuation of Derivative Instruments
Derivative financial instruments are stated at fair value.

3. Method and Basis for Valuation of Inventories(1) Finished products: Stated at cost determined by the moving-average method (the first-in, firstout method is used for certain items).
(2) Raw materials, work in process and supplies: Stated at cost determined by the first-in, first-out
method (the moving-average method is used for certain items).

4. Depreciation/Amortization Method of Fixed Assets(1) Property, plant and equipment:
Depreciation of the property, plant and equipment is computed by the declining-balance method,
except for the buildings (excluding building improvements) acquired on or after April 1, 1998, forwhich the straight-line method is applied.
Estimated useful lives for depreciable assets are as follows:
Building and structures:
Machinery, equipment and vehicles:

8-50 years
4-12 years(2) Intangible assets:
Intangible assets are amortized by the straight-line method. Computer software used internally by
the Company is amortized by the straight-line method over the relevant economic useful lives of 3
or 5 years.

5. Basis for Significant Accruals and Reserves(1) Allowance for doubtful accounts:
Allowance for doubtful accounts is provided based on the amount calculated as the actual ratio ofbad debt for ordinary receivables, and an estimated amount of uncollectible account for specificover-due receivables.

-41-

(2) Allowance for devaluation of investments:
Allowance for devaluation of investments is provided for losses from declines in the value ofinvestment securities for which fair value is not readily available and investments in subsidiaries
and affiliated companies, based on the evaluation of the investees’ financial conditions, such as
net assets and the probability of recovering the value.

(3) Accrued bonus:
Accrued bonus is recorded based on the estimated future payments pro-rated for employee
services rendered during the current semi-annual period.

(4) Accrued warranty claims:
The Company provides for accrued warranty claims on products sold based on its pastexperiences of warranty services and estimated future warranty costs.

(5) Accrued pension and severance liability:
Accrued pension and severance liability for employees is provided based on the estimatedamounts of projected pension and severance obligation and the fair value of plan assets at end of
the current semi-annual period. Prior service cost is being amortized by the straight-line method
over the period (18 years) which is shorter than the average remaining service periods of theeligible employees. Actuarial gains and losses are amortized from the following fiscal year by thestraight-line method over the period (18 years), which is shorter than the average remaining
service periods of the eligible employees.

(6) Accrued directors’ severance and retirement benefits:
Directors and statutory auditors of the Company are entitled to receive a lump-sum payment at thetime of severance or retirement, subject to the approval of the shareholders. The liabilities forsuch benefits are determined based on the Company’s internal rules.

(7) Accrued losses on guarantees:
In preparation for losses on financial guarantees, an amount is estimated taking into account thefinancial conditions of guaranteed parties.

6. Revenue recognition
Revenues of the Aerospace Division’s production contracts with the production term exceeding one
year and the amount each contract exceeding ¥ 5,000 million are recognized by the percentage-ofcompletion method.

7. Basis for translation of foreign currency-denominated accounts
Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yenat the exchange rates prevailing at each semi-annual balance sheet date with the resulting gain orloss included currently in the statements of income.

8. Accounting for Leases
Finance leases which do not transfer ownership of the leased assets to lessees are accounted for
as operating leases.

-42-

9. Accounting for hedging activities(1) Method of hedge accounting:Principally, the deferred hedge accounting method is applied.
For interest rate swap contracts used as hedges which meet certain hedging criteria, the net
amount to be paid or received under the interest rate swap contract is added to or deductedfrom the interest on the assets or liabilities for which the swap contract is executed.
(2) Derivative financial instruments qualifying as a hedge, along with the hedged transactions,assets and liabilities, are as follows:
Financial instrument
Interest swaps

Transactions, assets and liabilities
Borrowings(3) Hedge policy:
The risk exposures to movements in interest rates are hedged according to the Company’srisk management policy.
(4) Method for evaluating hedge effectiveness:
An evaluation of hedge effectiveness is not considered necessary as the terms and notionalamounts of these hedging instruments are the same as those of the hedged transactions,assets and liabilities, and therefore they are presumed to be highly effective in offsetting theeffect of movements in interest rates at their inception as well as during their term.

10. Other significant matters in preparation of the semi-annual financial statements(1) Consumption taxes are excluded from the related transaction amounts and are accounted forseparately.
(2) All amounts for this semi-annual period and the fiscal year 2006 have been rounded off to thenearest million yen, whereas all amounts for prior semi-annual period have been rounded down
to the nearest million yen, unless otherwise specified.

Changes in Accounting Policies(Accounting standard for director’s bonus)
Effective this semi-annual period, the Company adopted the provisions of “Accounting Standard for
Director’s Bonus “(Business Accounting Standards Committee, November 29, 2005, BusinessAccounting standard No. 4).
The adoption of this standard had no effect on income.

(Accounting standard for presentation of net assets in the balance sheet)
Effective this semi-annual period, the Company adopted the provisions of “Accounting Standard for
Presentation of Net Assets in the Balance Sheet“ (Business Accounting Standard Committee,
December 9, 2005, Business Accounting Standard No. 5) and “Implementation guidance for theaccounting standard for presentation of net assets in the balance sheet” (Business AccountingStandard Committee, December 9, 2005, Financial Accounting Standard Implementation Guidance
No. 8).
The adoption of this standard had no effect on income.
The amount that would have otherwise been reported as total “shareholders’ equity” is ¥ 476,041
million.

-43-

Due to certain revisions to the regulations concerning semi-annual financial statements, the semiannual financial statements in this semi-annual period have been prepared in conformity with therevised regulations concerning semi-annual financial statements.

Notes to Non-consolidated Semi-annual Financial Statements(Balance Sheets)
1. Accumulated depreciation for property, plant and equipment(Unit: Millions of yen)

1st Half Year
Fiscal 2007

Fiscal 2006

¥ 466,131¥ 459,276

2. Pledged assets(Unit: Millions of yen)
1 Half Year
Fiscal 2006
Fiscal 2007st

Buildings and structures
Machinery and equipment
Land
Total

¥ 5,891¥ [5,891]
2,487[2,487]
1,007[1,007]¥ 10,775¥ [10,775]
15,970[15,970]
1,014[1,014]¥ 9,385¥ [9,385]¥ 27,759¥ [27,759]

Note: The above amounts in parentheses represent a mortgage of the factory foundation assets.
(Statements of Income)1. Significant items of extraordinary gains:
Prior period adjustment
Period adjustment represents a gain due to final settlement on reversal of a portion of“Loss on termination of a joint development project (a joint development project for
new model vehicles)” which was recorded as an extraordinary loss in prior period.
2. Significant items of extraordinary losses:
Loss on liquidation of affiliated companies“Loss on liquidation of affiliated companies” consists of the following two components:(1) Integration of dealer subsidiaries
The Company has recorded ¥950 million for estimated losses as a result of integration ofdealer subsidiaries in Osaka prefecture and Wakayama prefecture.
(2) Liquidation of a joint venture-44-

The Company has recorded a ¥857 million loss on liquidation of Fuji AT Ltd, which was a joint
venture with JATCO Ltd.
Allowance for doubtful accounts
The allowance has been provided for affiliated companies.

3.

Depreciation/amortization expense:(Unit: Millions of yen)st

1 Half Year
Fiscal 2007
¥12,196¥ 2,700

Property, plant and equipment
Intangible assets

1st Half Year
Fiscal 2006
¥12,159¥ 2,886(Statements of Net Assets)
Number of treasury stockClass

At beginning of theperiod (as of March
31,2006)

Common stock

65,897,206

Increase

At end of theperiod (as of
September
30,2006)

Decrease

42,911138,180

Memo65,801,937(Securities and Investments)
Investments in subsidiaries and affiliated companies for which fair market value is available(1) 1st Half Year Fiscal 2007 (as of September 30, 2006)(Unit: Millions of yen)

Investment in subsidiaries
Total

Book value
1,759

Fair market
value
5,148

Difference
3,389

1,759

5,148

3,389

Book value
1,759

Fair market
value
6,034

Difference
4,275

1,759

6,034

4,275

(2) Fiscal 2006 (as of March 31, 2006)(Unit: Millions of yen)

Investment in subsidiaries
Total(Lease Transactions)This footnote is not presented herein for it will be disclosed in the EDINET filing.

-45-

Subsequent Event
The share exchange to make Fuji Machinery Co., Ltd. a wholly owned subsidiary
Fuji Machinery Co., Ltd., a consolidated subsidiary, accounts for approximately 90% of its sales
to Fuji Heavy Industries Ltd. (the Company). In order to enhance group management, theCompany, at its Board of Directors’ meeting on May 9, 2006, approved a share exchange (under
the simplified share exchange provisions), in which Fuji Machinery Co., Ltd. will become a wholly
owned subsidiary, and it executed a share exchange agreement with Fuji Machinery Co., Ltd.
1. Principal terms and conditions of the share exchange(2) Timetable
October 1, 2006: Closing date of share exchange (Deadline to submit stock certificate)
The Company will conduct this share exchange in accordance with the simplified shareexchange provisions in Article 796 of the Corporate Law, without seeking the approval at ashareholders’ meeting.
(2) Share exchange ratio
The Company (Future
100% parent company)
Share exchange ratio

1

Fuji Machinery Co., Ltd.
(Future wholly-owned
subsidiary)
0.52

Note: Basis of determining the share exchange ratio
The Company and Fuji Machinery Co., Ltd. individually engaged third party
appraisers to analyze the exchange ratio. The analysis was performed based on themarket stock prices, the comparable-company comparisons, and the discounted cash
flows. The Company and Fuji Machinery Co., Ltd. have agreed to the above ratio,
taking into consideration the results of such third party appraisals and certain otherfactors.
(3) Share transfer payment in connection with the share exchange
No share transfer payment will be paid in connection with the share exchange.
2． Operations following the closing of the share exchange(1) Company name, nature of business, management, and location of the head office
There will be no change as a result of the share exchange.
(2) Common stock of the Company
There will be no change in the amount of common stock of the Company because theCompany intends to re-issue its treasury stock for all the shares to be exchanged.
(3) Effect on the results of the Company’s operation
The Company expects the share exchange will have no material effect on its results ofoperations.

-46-

<Reference for the First Half of FY2007(Apr. 2006 to Sep. 2006) Non-Consolidated Financial Results>(Oct. 31, 2006)

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

RESULTSRESULTSRESULTSFORECASTFORECAST(in thousands of units)

1st HALF of FY2006

1st HALF of FY2007

FY2006

FY2007

FY2007

Apr. 2005 to Mar. 2006

Apr. 2006 to Mar. 2007

Apr. 2006 to Mar. 2007

(May 2006)

Apr. 2005 to Sep. 2005 Apr. 2006 to Sep. 2006

Net Sales

4,759

4,825

1.4 %

9,761

9,500

(2.7) %

9,900

Domestic

2,155

2,067

(4.1) %

4,376

4,100

(6.3) %

4,500

2,758

5.9 %

5,400

0.3 %

Overseas
Margin Percentage

2,604Operating Income
Margin Percentage

268

Margin Percentage

Net Income

5.3%

187

(30.3) %222

137(38.3) %62

53.2 %

4.2%

132

Factors of Change

Gain factors

in Operating Income

Foreign exchange

3.1%

390

(25.2) %310(25.1) %140

36.3 %

310

3.3%
414

1.3%

2.8%

5,400

4.1%
521

2.8%

4.7%

Ordinary Income

5,386

3.9%

5.6%

1.1%

3.1%
310

1.5%
103

1.4%
140

Gain factors
88

Gain factors

Decrease of expenses

Decrease of expenses

Reduction in cost16

99

and others

and others

61

Foreign exchange

89

Reduction in cost

16

Reduction in cost

43
Loss factors

Loss factors

Loss factors

Decrease in sales mix

82

Decrease in sales mix

212

Decrease in sales mix

324 Increase in R&D expenses 68

Increases in cost34

Increase in cost

38 Foreign exchange

55

Decrease of expenses
and others

22

Foreign Exchange Rate
YEN/US$

109

115

112

115

110

Capital Investment

85

123

239

380

380

Depreciation and Amortization

122

122

249

255

270

R&D Expenses

215

249

467

505

535

Interest bearing debt

1,248

1,413

1,369

1,400

1,400

Performance of operation

Net Sales to increase

Net Sales to decrease

Operation Income to decrease

Operation Income to decrease

Domestic Production Volume

230

250

8.8 %

467

479

Domestic Sales

123

Small Cars

54

Minicars

2.7 %

484

120

(2.7) %

245

42

(22.2) %106

242(1.1) %

26483

(22.3) %69

78

12.4 %

96

138

159

15.2 %

168

Export106

121

North America

4754

14.8 %

225

232

3.3 %

219

14.7 %

100

100

0.0 %

102

Europe27

32

19.4 %

58

64

9.4 %

57

Other

31

35

11.1 %

66

68

2.8 %

61

Knock Down Parts

63

51(18.5) %120

101(15.6) %115