Outline of Financial Results for the 3rd Quarter of Fiscal 2005 (Consolidated)Feb.14, 2005

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 quarter(1) 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, for forward
exchange contracts hedging future transactions, the Company deferred recognition of gains or losses
resulting from changes in fair value of the foreign exchange contracts until related gains or losses on thest
hedged items are recognized. However, the Company stopped applying the hedge accounting since 1
quarter of fiscal 2005.
As a result of this change, operating income increased by ¥195 million and ordinary income and income
before income taxes and minority interest increased by ¥465 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: Yes
Consolidated subsidiaries:
Companies accounted for by the equity method:
Newly included:
1
Newly included:5

2. Performance in the 3rd Quarter of Fiscal 2005 (from April 1, 2004 to Dec 31, 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¥ 1,050,410 (2.1%)¥ 26,473 (-25.7%)¥ 28,622(-33.7%)¥ 20,723(-27.9%)¥ 1,028,357—¥ 35,646—¥ 43,197—¥ 28,743—¥ 1,439,451—¥ 50,324—¥ 56,614—¥ 38,649—rd

3 Quarter of
FY 2005
3rd Quarter of
FY 2004
Fiscal 2004

Net income per share,basic (Yen)
3rd Quarter of
FY 2005
3rd Quarter of
FY 2004
Fiscal 2004Net income per share,diluted (Yen)¥ 26.60¥ 26.60¥ 38.48¥ 37.10¥ 50.62¥ 49.66

Note: Percentage figures in the net sales, operating income, ordinary income and net income columns represent changes fromprior 3rd quarter period.

1

Information on the Progress of Consolidates Operating Results
Consolidated net sales for the first nine months of this fiscal year increased to ¥150.4 billion, up ¥22.1 billion, or2.1%, from the same period of previous fiscal year. This rise attributes to the large increase in the domestic minicar
sales volume, led by the Subaru R2, over the same period of the previous year. Also, another factor is thecontinuation of solid sales in the overseas markets of Europe and Australia.
Despite our efforts to reduce material cost and various expenses, operating income was ¥26.5 billion, down
¥9.2 billion, or 25.7%, compared to the corresponding period due to the negative impact of the appreciation of theyen and deterioration of model mix. Ordinary income was ¥28.6 billion, down ¥14.6 billion, or 33.7%. Net income
for the nine months fell to ¥20.7 billion, down ¥8.0 billion, or 27.9%.

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

Shareholders’ equity

Shareholders’ equity tototal assets (%)

Shareholders’ equity
per share (Yen)

3rd Quarter ofFY 2005

¥ 1,357,870¥ 480,987

35.4 %¥ 617.25

Fiscal 2004

¥ 1,349,727¥ 453,708

33.6 %¥ 582.60

Information on the Consolidated Financial Condition
Total assets as of the end of the first nine months of this fiscal year increased to 1,357.9 billion yen, up ¥8.1billion, compared to the end of the previous fiscal year. Tangible fixed assts and marketable investment securities
increased, while current assets decreased.
Liabilities fell to ¥873.5 billion, down ¥19.2 billion, from the end of the previous fiscal year. The main contributing
factors were a decrease in current liabilities and the amortization of the consolidation adjustments.
Shareholders’ equity rose to ¥481.0 billion, up ¥27.3 billion from the end of the previous fiscal year. The main
contributing factor was increase of retained earnings including net income of ¥20.7 billion.

[Reference]
Projections for Fiscal 2005 (From April 1, 2004 to March 31, 2005)(Unit: Millions of yen)

Full year

Net sales

Ordinary income

Net income¥ 1,450,000¥ 43,000¥ 28,000

Reference: Projected net income per share (full year): ¥ 35.93
Information on the forecast of financial performance
Net sales is proceeding along with the previous projection, which was announced on November 12, 2004. Yet, Thecompany revises the forecasts of Ordinary income from ¥47 billion to ¥43 billion and Net income from ¥32 billion to¥28 billion, respectively, due to the negative impact of deterioration of model mix in the domestic market, and slower
progress of expense reduction programs than the plan.
The above projections are made based on available information and assumptions as of Feb.14, 2005, 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)rd

3 Quarter of 2005

Fiscal 2004

Changes(as of Dec 31, 2004)(as of March 31, 2004)

Increase/(Decrease)

ASSETS

Current assets

631,643654,879(23,236)

Cash and time deposits65,767

46,68419,083

Notes and accounts receivable, trade

97,867

122,724(24,857)

Marketable securities

70,875

113,490(42,615)

Inventories

190,386

179,338

11,048

Short-term loans

107,929

101,871

6,058

Deferred tax assets

33,60934,149

(540)

Other

66,02057,284

8,736

Allowance for doubtful accounts

(810)

(661)

(149)

Fixed assets

726,227

694,848

31,379Property, plant and equipment, net

531,732

509,743

21,989Buildings and structures

130,036

117,446

12,590Machinery, equipment and vehicles

169,347

161,950

7,397

Land169,667

166,518

3,149

Construction in progress

13,61920,935(7,316)

Other

49,06342,894

6,169

Intangible assets

42,38940,453

1,936

Investments and other assets

152,106

144,652

7,454

Investment securities

68,791

57,045

11,746Long-term loans

5,067

4,918

149

Deferred tax assets

22,29529,707(7,412)

Other

58,95457,938

1,016

Allowance for devaluation of investments

(280)

(280)

—(2,721)(4,676)

1,955

1,357,870

1,349,727

8,143

Allowance for doubtful accounts

Total assets3

rd

3 Quarter of 2005

Fiscal 2004Changes(as of Dec 31, 2004)(as of March 31, 2004)

Increase/(Decrease)

LIABILITIES ANDSHAREHOLDERS' EQUITYCurrent liabilities

566,577

603,231(36,654)

Notes and accounts payable, trade

168,500

193,186(24,686)

Short-term borrowings

217,829

227,917(10,088)

Commercial paper

25,00010,00015,000Current portion of bonds

10,30010,000300

Accrued income taxes

6,842

5,092

1,750

Accrued expenses

57,99969,784(11,785)

Accrued bonus

8,277

17,165(8,888)

Accrued warranty claims

29,537

26,9592,578

Other42,293

43,128(835)306,910289,469

17,441

Bonds

100,500

90,8009,700Long-term debts

55,30940,27915,030

Deferred tax liabilities on revaluation of land

478

478

—

Accrued pension and severance liability

63,59561,654

1,941

Accrued directors’ severance andretirement benefits

1,064

1,228

(164)

Consolidation adjustments

28,53344,027(15,494)

Other

57,43151,003

6,428

Total liabilities

873,487

892,700(19,213)

Minority interest in consolidated subsidiaries

3,396

3,319

77

Common stock

153,795

153,795—

Capital surplus

160,071

160,107(36)

Retained earnings

180,462

165,192

15,270

421

421

—

Net unrealized holding gains on securities

15,538

10,291

5,247

Translation adjustments(27,085)(33,300)

6,215

Less treasury stock, at cost

(2,215)(2,798)583

Total shareholders’ equity

480,987453,708

27,279Total liabilities and shareholders' equity

1,357,870

1,349,727

8,143

Long-term liabilities

Shareholders' equity

Revaluation reserve for land4(2) Summery of Consolidated Statements of Income(Unit: Millions of yen)rdrd

3 Quarter ofFY 2005
(ended Dec
31 ,2004)

3 Quarter ofFY 2004
(ended Dec
31 ,2003)

AmountAmountNet sales

1,050,410

1,028,357

22,0532.1

1,439,451

Cost of sales

802,739766,220

36,5194.8

1,085,716

247,671

262,137(14,466)(5.5)

353,735

221,198

226,491(5,293)(2.3)

303,411

Operating income

26,47335,646(9,173)(25.7)

50,324Non-operating income

10,892

13,735(2,843)(20.7)

17,943

Interest and dividends income

1,613

1,707

(94)

2,081

Amortization of consolidation adjustments

5,327

5,040

2874,912

Other

3,952

6,988

(3,036)

10,950Non-operating expenses

8,743

6,184

2,559

Interest expenses

1,896

1,850

46

2,416

527

—

527

—

Other

6,320

4,334

1,986

9,237

Ordinary income

28,622

43,197(14,575)(33.7)

56,614Extraordinary gains

3,213

6,327

(3,114)(49.2)

8,353

Gain on sale of fixed assets

219

664

(445)

2,600

Gain on sale of investment securities

295

4,575

(4,280)4,564

Gain on prior period adjustment

—

887

(887)

1,049

2,699

201

2,498

140

2,762

5,652

(2,890)

1,819

4,692

(2,873)5,689

0405(405)

411

Loss on devaluation of securities

110

201

(91)

221

Other

833

354

479

2,380

Income before income taxes and minority
interest

29,07343,872(14,799)(33.7)

56,266

Tax expense

8,266

15,339(7,073)(46.1)

17,633

Minority interest in (income) loss ofconsolidated subsidiaries

(84)

210

(294)

—

16

20,72328,743(8,020)(27.9)

38,649Gross profit
Selling, general and administrative expenses

Equity loss from affiliated companies

Other
Extraordinary losses
Loss on sale and disposal of fixed assets
Loss on sale of investment securities

Net income

Fiscal 2004
Changes
Increase/(Decrease)
Amount%(ended March31 ,2004)
Amount41.4(51.1)

11,6538,701

Note: “Extraordinary gain-other” amounting to ¥2,699 million includes ¥2,525 million of gain, which is the amount after offsetting¥10,168 million of depreciation expense of the consolidation adjustments (credit side), arose from making Subaru of Indiana
Automotive, Inc. (SIA) a wholly owned subsidiary of the Company, against ¥7,643 million of losses related to operating leaseequipments in the Consignment Division of SIA.

5(3) Segment Information[Business segment information]
3rd Quarter of FY2005 (from April 1, 2004 to Dec 31, 2004)

I.

(Unit: Millions of yen)

Automobiles

Industrial
products

Aerospace959,347

34,05041,334

2,843

200

31

Other

Total

Elimination
Consolidated
and
total
corporate

Sales and operating income (loss)
Sales(1) Outside customer(2) Inter-segment

15,679 1,050,410

—

2,291

(5,365)5,365—

962,190

34,25041,365

17,970 1,055,775(5,365)

1,050,410

Operating cost and expense

935,501

33,76942,02718,501 1,029,798(5,861)

1,023,937

Operating income (loss)

26,689

481

(662)

(531)

496

26,473

Total sales

25,977(Unit: Millions of yen)

3rd Quarter of FY2004 (from April 1, 2003 to Dec 31, 2003)

I.

1,050,410

Automobiles

Industrial
products

Aerospace

944,569

30,49235,944

2,885

112

208

Other

Total

Elimination
Consolidated
andtotal
corporate

Sales and operating income (loss)
Sales(1) Outside customer(2) Inter-segment

17,352 1,028,357

—

2,585

(5,790)5,790

1,028,357—

947,454

30,60436,152

19,937 1,034,147(5,790)1,028,357

Operating cost and expense

911,038

31,00335,312

21,424

998,777(6,066)

992,711

Operating income (loss)

36,416(399)

840(1,487)35,370276

35, 646

Total sales[Overseas sales]
3rd Quarter of FY2005 (from April 1,2004 to Dec 31, 2004)(Unit: Millions of yen)
North America
Overseas sales

437,323

Europe88,048OtherTotal

79,553

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

604,924
1,050,410

41.6 %

8.4 %

7.6 %

57.6 %

3rd Quarter of FY2004 (from April 1, 2003 to Dec 31, 2003)(Unit: Millions of yen)
North America
Overseas sales

459,342Europe73,978

Other62,153

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

Total
595,473
1,028,357

44.7 %

6

7.2 %

6.0 %

57.9 %

<Reference for the 3rd Quarter of FY2005 Consolidated Financial Results>(Feb. 14, 2005)

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

RESULTSRESULTSRESULTSFORECASTFORECAST(in thousands of units)

3rd Quarter of FY2004

3rd Quarter of FY2005

FY2004

FY2005FY2005

Apr. 2003 to Dec. 2003

Apr. 2004 to Dec. 2004

Apr. 2003 to Mar. 2004

(November 2004)

Apr. 2004 to Mar. 2005

Apr. 2004 to Mar. 2005

Net Sales

10,284

10,504

2.1 %

14,395

14,5000.7 %14,500

Domestic

4,329

4,455

2.9 %

6,279

6,400

1.9 %

6,500

Overseas

5,955

6,049

1.6 %

8,115

8,100

-0.2 %

Margin Percentage

3.5%

Operating Income
Margin Percentage

Net Income

3.5%

265

356
4.2%

Ordinary Income
Margin Percentage

2.5%-25.7 %

2.7%

-33.7 %

2.0%

4503.2%430566-27.9 %

-20.5 %

3.0%

2.7%

2072873.1%400503
3.9%

286

432
2.8%

8,000

2.8%

-24.0 %

470

1.9%

2.2%

280

386

-27.6 %

320

Factors of Change

Gain factors

Gain factors

in Operating Income

Reduction in cost

90

Reduction in cost

166 Reduction in cost

Decrease of expenses

42

Decrease in R&D expenses

25 Decrease of expenses

Gain factors

and others

Decrease of expenses

Decrease in R&D expenses 27

and others

7 Increase in R&D

Loss factors

Loss factors

Loss factors

and others

expenses151
99

Foreign exchange
Decrease in sales mix

Foreign exchangeDecrease in sales mix

163

2825

178 Foreign exchange
123 Decrease in sales mix

176

108

93

Exchange rate YEN/US$

118

109

116

108

R&D Expenses

427

400

575

550

550

3,894

4,089

3,790

4,100

4,100

Interest bearing debt
Performance of Operation

Net Sales to increase

Net Sales to increase

Net Income to decrease

Net Income to decrease
Best Net Sales

Domestic Sales

166

179

7.9 %

246

263

7.2 %

265

Small Cars

77

72

-5.5 %

111

108-2.6 %

110

Minicars

89

107

19.4 %

134

155

15.3 %

155

Overseas Sales

219

240

9.4 %

306

326

6.6 %

323

North America1461535.0 %

206

209

1.5 %

210

Europe4045

13.9 %

5460

12.2 %

59

Other3442

23.3 %

4657

22.5 %

54

Units Total

385

419

8.8 %

551

589

6.8 %

588

SIA Isuzu SUVs

1913-31.2 %2513-47.9 %13* 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..