Summary Report on Financial Results for Fiscal Year Ended March 2008

May 19, 2008
Company name: Fukuda Denshi Co., Ltd.
Code No.:6960(http://www.fukuda.co.jp)
Listing:

JASDAQ

Representative: Kotaro Fukuda, President & CEO
Inquiries:

Masayuki Iwamoto, Managing DirectorTel:+81-3-3815-2121 (main)

Scheduled date of the ordinary general meeting of shareholders:June 26, 2008

Scheduled date of commencement of dividend payment:

June 27, 2008

Scheduled date of filing the securities report:

June 27, 2008

(Amounts less than one million yen are discarded)
1.

Consolidated financial results for fiscal 2007 (April 1, 2007 through March 31, 2008)(1) Consolidated operating results
Net sales
millionyen
Year ended
March 2008
Year ended
March 2007

Year ended
March 2008
Year ended
March 2007

(percentages represent increases or decreases from the previous year)%

Operating income
million%yen

Ordinary income
million%yen

Net income
millionyen%

88,568

(0.3)

5,370

(-9.6)

5,684(-9.8)

3,174(-5.3)

88,270

(1.9)

5,943

(10.1)

6,302(12.9)

3,353(453.6)yen

Ratio of net
income toshareholders’equity%Ratio ofordinary
income to total
assets%Ratio ofoperatingincome to net
sales%

164.98

-

4.3

5.6

6.1

174.90

-

4.5

6.0

6.7

Net income per
share

Fully diluted
net income per
share

yen

(Reference) Profit or loss on equity method investments:
Year ended March 2008: - million yen
Year ended March 2007: - million yen-1-(2) Consolidated financial situation

million yen

million yen

Shareholders’ equity
ratio%

99,58573,83374.1

3,835.32

103,682

74,58171.9

3,888.67

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

million yen

million yen

million yen

Cash and cash
equivalents at theend of the year
million yen

5,855-7,006-1,117

21,958

8,298-7,122-1,327

24,297

Total assets
Year ended
March 2008
Year ended
March 2007

Net assets

Net assets per shareyen(Reference) Shareholders’ equity:Year ended March 2008: 73,821 million yen
Year ended March 2007: 74,570 million yen(3) Consolidated cash flows

Year ended
March 2008
Year ended
March 2007
2. Dividends

Record dateYear ended
March 2007
Year ended
March 2008
Year ending
March 2009
(estimate)

yen

yen

Total
dividends(for theyear)
million yen

40.00

40.00

80.00

40.00

40.00

80.00

40.00

40.00

80.00

End of theinterimperiodyen

End of theterm

Annual%Ratio ofdividends to
net assets(consolidated)
%

1,534

45.7

2.1

1,539

48.5

2.1

Payout ratio(consolidated)

-

51.0

-

3. Forecast of consolidated financial results for fiscal 2008 (April 1, 2008 through March 31, 2009)(percentages represent increases or decreases from the year under review for the full-year figures, andfrom the second quarter of the year under review for the accumulated figures by the consolidated second
quarter.)
Net sales

Consolidated
second quarter
Full-year

Operatingincomemillion%yen

Ordinary
incomemillion%yen

millionyen%

Net income
per shareyen

Net income

millionyen%

42,300

1.0

2,500

0.2

2,550

1.5

1,370

-9.9

71.20

90,000

1.6

5,300

-1.3

5,500

-3.2

3,020

-4.9

156.94-2-

4.

Others(1) Change in significant subsidiaries during the year ended March 2008: None

(2) Changes in accounting principles and procedures, and presentation related to the preparation of
consolidated financial statements (described in changes in basis of preparation for the consolidated
financial statements):(i) Changes owing to adoption of revised accounting standards or such like: Yes(ii) Changes other than (i) above: Yes
Note: For further details, please refer to “Basis of preparation for the consolidated financial
statements” on p. 18.

(3) Number of outstanding issues (common stock)(i) Number of outstanding shares at the year-end (including treasury stock)
Year ended March 2008: 19,588,000 sharesYear ended March 2007: 19,588,000 shares(ii) Number of shares of treasury stock at the year-end:
Year ended March 2008: 340,139 sharesYear ended March 2007: 411,595 shares
Note: For details of the number of shares, the basis of calculation of net income per share(consolidated), please refer to “Per share information” on p. 31.

(Reference) Overview of non-consolidated financial results1.

Non-consolidated financial results for fiscal 2007 (April 1, 2007 through March 31, 2008)(1) Non-consolidated operating results(percentages represent increases or decreases from the previous year)
Net sales
millionyen
Year ended
March 2008
Year ended
March 2007

Year ended
March 2008
Year ended
March 2007%

Operating income
million%yen

Ordinary income
million%yen

Net income
million%yen

56,100

(3.8)

2,053

(70.4)

3,661(46.1)

2,679(145.8)54,064(-4.7)

1,205(83.7)

2,505(14.4)

1,090(-)

Net income per
share
yen

Fully diluted net
income per shareyen

139.27

-

56.85

-

-3-

(2) Non-consolidated financial situation

million yen
80,129million yen
58,350Shareholders’ equity
ratio
%
72.8

85,29359,66069.9

Total assets
Year ended
March 2008
Year ended
March 2007

Net assets

Net assets per shareyen
3,031.52
3,111.14(Reference) Shareholders’ equity:Year ended March 2008: 58,350 million yen
Year ended March 2007: 59,660 million yen

2.

Forecast of non-consolidated financial results for fiscal 2008 (April 1, 2008 through March 31, 2009)
The Company omitted the description of the forecast of non-consolidated financial results based on

its conclusion that such non-consolidated information is not important as investment information.

*Explanation about appropriate use of the forecasts of financial results, and other noteworthy matters
The forecasted financial results and other future projections in this material are based on information
available at present, and entail potential risks and uncertainties.
Accordingly, readers should be aware that actual results may differ from the forecast figures dependingon the future business environment.
With respect to the assumption for the forecast of financial results and points to note in using suchforecast, please refer to p. 4 of the appendix.

-4-

1.

Operating results(1) Analysis of operation results(i) Overview of performance for the consolidated fiscal year under review
Year ended March
2007

Year ended March2008

AmountAmountNet sales(million yen)
Operating income(million yen)
Ordinary income(million yen)Net
income(million yen)
Net income pershare (yen)Comparison with the previous year

88,27088,568298

Rate of change
(%)
0.3

5,943

5,370

-572

-9.6

6,302

5,684

-617

-9.8

3,353

3,174

-179

-5.3

174.90164.98

-9.92

-5.7

ChangeDuring the fiscal year under review, the feeling began to spread in Japan that the economy would
slow from now on, reflecting the effects of the subprime mortgage problem in the U.S. on theinternational financial market, price hikes of oil and raw materials, and abrupt exchange rate fluctuations.
In the medical equipment industry, various items have been changed, including: the revision of
official reimbursement rates for medical treatment fees, drug prices and specific medical materials
covered by insurance; and expansion of the adoption of the comprehensive medical fee payment system,
called DPC (diagnosis procedure combination), at medical institutions. Additionally, medical system
reforms led to a further division between hospitals and clinics and an expansion of the field of home
medical treatment.
Under such circumstances, the Group posted consolidated net sales of 88,568 million yen in the fiscal
year under review (up 0.3% from the previous year).
Gross profit margin also rose thanks to the efforts to increase sales while reducing the costs.
However, profits decreased owing to an increase in payment handling fees and depreciation expenses
associated with capital investments, for example, in the introduction of a system to integrate core
operations. Operating income was 5,370 million yen (down 9.6%), ordinary income was 5,684 million
yen (down 9.8%), and net income was 3,174 million yen (down 5.3%).

(ii) Overview of performance for the consolidated fiscal year under review by segment
Business segment

Physiologicaldiagnostic equipment
Patient
monitoring
equipment

Year ended March 2007

Year ended March 2008

Amount(millionyen)

Amount(millionyen)

Ratio (%)

Ratio (%)

Comparison with theprevious year
ChangeRate of(millionchangeyen)(%)

26,78930.3

23,90727.0-2,881

-10.8

7,644

8.7

7,301

8.2

-342

-4.5

-5-

Medicaltreatment
equipment
Other products andaccessories
Total

31,122

35.3

35,083

39.6

3,961

12.7

22,71325.7

22,274

25.2

-439

-1.9

88,270100.0

88,568

100.0

298

0.3

(1) In the Physiological diagnostic equipment segment, sales of Vascular Screening System increased
because we launched new models and they were well received in the market. Meanwhile, sales ofultrasound diagnostic imaging systems dropped substantially, affected by our sale of an overseas
subsidiary. As a result, sales were 23,907 million yen (down 10.8% from the preceding year) on aconsolidated basis.
(2) In the Patient monitoring equipment segment, sales rose overseas, but this still failed to offset a
decline in domestic sales. As a result, sales were 7,301 million yen (down 4.5%).
(3) In the Medical treatment equipment segment, the business of renting medical equipment for hometreatment (including oxygen-concentrator devices, equipment used to treat sleep apnea syndrome andhomecare ventilators) remained steady. In addition, sales of automated external defibrillators (AEDs)
increased substantially. As a result sales were 35,083 million yen (up 12.7%).
(4) In the Other products and accessories segment, we mainly handle recording paper, disposable
electrodes and accessories, as well as consumables used for devices handled by the other segments.
Sales for this segment were 22,274 million yen (down 1.9%).

(iii) Outlook for fiscal 2008

Net sales(million yen)
Operating income(million yen)
Ordinary income(million yen)Net
income(million yen)
Net income pershare (yen)Year ended March
2008

Year ending
March 2009

AmountAmountComparison with the previous year

88,56890,0001,432

Rate of change
(%)
1.6

5,370

5,300

-70

-1.3

5,684

5,500

-184

-3.2

3,174

3,020

-154

-4.9

164.98156.94

-8.04

-4.9

ChangeFor the current fiscal year, economies in emerging countries are expected to grow, but we expect the
subprime mortgage problem in the U.S. will continue to have adverse effects on the real economy and we
think prices of oil and raw materials will continue to rise. Given this, it is likely that consumer spending
will slow down and companies will curtail capital expenditures.
The Group forecasts will post consolidated net sales of 90.0 billion yen, operating income of 5.3
billion yen and ordinary income of 5.5 billion yen. We expect a net income of 3,020 million yen.

-6-(2) Analysis of financial situation(i) Assets, liabilities and net assets
Total assets were 99,585 million yen at the end of the fiscal year under review, down 4,096
million yen from the previous year, mainly due to a decrease in cash, deposits and investment
securities, despite an increase in inventories.
Liabilities amounted to 25,752 million yen, down 3,348 million yen, chiefly due to a decrease intrade notes and accounts payable.
Net assets were 73,833 million yen in total, down 748 million yen, owing primarily to a decline
in net unrealized gains on other securities, despite an advance in retained earnings.

(ii) Consolidated cash flows

Cash flows from operating
activities (million yen)
Cash flows from investing
activities (million yen)
Cash flows from financing
activities (million yen)
Effect of exchange rate changes(million yen)
Increase (decrease) in cash andcash equivalents (million yen)
Cash and cash equivalents at theend of the fiscal years (million
yen)Year ended March
2007
8,298

Year ended March
2008
5,855

-7,122-7,006116-1,327-1,117

209

31

-7

-38

-120

-2,276-2,15624,297

21,958-2,339Change-2,443

Cash flows from operating activities
In the fiscal year under review, net cash provided by operating activities was 5,855 million yen, down
2,443 million yen from the previous year, reflecting net income before taxes of 6,143 million yen,depreciation of 5,139 million yen and a decrease in accounts payable of 2,609 million yen.

Cash flows from investing activities
Net cash used in investing activities was 7,006 million yen, down 116 million yen. Payments for theacquisition of tangible fixed assets amounted to 4,576 million yen and securities and investment securities
were 2,713 million yen.

Cash flows from financing activities
Net cash used in financing activities was 1,117 million yen, down 209 million yen, mainly due to thepayment of dividends of 1,530 million yen.
As a result, the outstanding balance of cash and cash equivalents was 21,958 million yen at the end of
the fiscal year, down 2,339 million yen.

-7-

(Reference) Trends in cash flow indicators for the fiscal year under review

Shareholders’equity ratio (%)
Marketvalue-based
shareholders’equity ratio (%)
Years needed to
repay debts
Interest
coverage ratio

Year
ended
March 2004
69.3

Year
ended
March 2005
72.7

Year
ended
March 2006
70.1

Year
ended
March 2007
71.9

Year
ended
March 2008
74.1

50.8

87.4

77.8

76.8

47.2

0.8

0.6

0.5

0.4

0.6

134.7

117.6

173.2

124.3

69.1

Note: Shareholders’ equity ratio = Shareholders’ equity ÷ Total assets
Market value-based shareholders’ equity ratio = Market capitalization ÷ Total assets
Years needed to repay debts = Interest-bearing debts ÷ Operating cash flows
Interest coverage ratio = Operating cash flows ÷ Interest payments*Each indicator is calculated using consolidated financial data.
*Market capitalization is calculated by multiplying stock closing prices at the end of the fiscal year by the
number of outstanding shares (excluding treasury shares) at the end of the fiscal year.
Interest-bearing debts represent total debts recorded in the consolidated balance sheets on which interestis paid.
For interest payments, data on interest expenses in the consolidated cash flow statement are used.

(3) Basic policies for profit distribution, and dividends for fiscal 2007 and 2008
The Company regards the returning of profits to shareholders as one of its key managerial measures,and makes it a basic policy to continuously provide shareholders with stable returns, by improving andreinforcing its corporate structure and expanding competitive businesses while securing the necessaryinternal reserves.
The Company has set the minimum trading unit at 100 shares, aiming to have its shares spreadfurther among investors and to have its shares more widely circulated on the market.
We will continue to provide an environment where investors can easily invest in our stock, andimplement and work out measures for enhancing the liquidity of our shares on the market.

-8-(4) Business risks(1) High dependence on certain business partners with which continuation of transactions is unstable
The Company imports and sells artificial ventilators, pacemakers, defibrillators, heart
catheters and other devices and equipment. We strive to ensure we can securely continue making
transactions while taking sufficient care to avoid excessive reliance on such transactions.
(2) Legal regulations
In Japan, the Company is subject to regulations under the Pharmaceutical Affairs Law,
which require us to establish a department that takes care of the safety of the equipment after
sales and appoint a safety manager, as well as compiling manuals forpostmarketingcompliance procedures.
The Company has established a department specializing in the central management ofsafety-related information, through which we will further strengthen our safety management
systems so that customers can use our equipment without anxiety.
In addition, the Company’s domestic sales activities are governed by the Fair Competition
Regulations according to the Law for the Prevention of Unreasonable Premiums andMisrepresentation Concerning Products and Services.
Furthermore, the Company owns customer information and confidential sales-related data in
relation to the implementation of its businesses. The Company carefully handles that information
to ensure that it is not compromised. To this end, we are striving to step up the surveillance of
in-house networks while limiting access to such information.
(3) Time required to commercialize new products and technologies
The manufacture and sales of medical equipment are subject to regulations prescribed in the
Pharmaceutical Affairs Law. Consequently, there are cases where a certain period of time isrequired before approval is granted by the relevant independent administrative corporation.
In addition, some medical equipment requires clinical trials, and significant time is needed
to bring it to market.
(4) Effect of medical administration
The government is proceeding to improve the quality of medical care and curtail medical
treatment expenses. Hence, the medical equipment industry must adapt to the changes in theoperating environment brought about by major shifts in the policies of medical authorities.
Moreover, once nearly every two years, the government implements official revisions
affecting treatment payments, pharmaceutical prices, and the official prices of specific medical
materials covered by insurance. Such revisions may lead to intensified price competition,
causing a reduction in sales prices.
(5) Risks accompanying overseas businesses
The Company not only supplies products to distributors overseas, but also has its own
overseas sales, development and production bases. Hence, it is possible that unforeseen changes-9-

to laws and regulations in foreign countries, as well as terrorist acts, natural disasters, or otherincidents could adversely affect the Company’s business performance and financial position.
(6) Important business relationships between the Company and its executives or shareholders withvoting rights
Basic policy on relations with related parties
Relationship with Atomic Sangyo Co., Ltd.
Fukuda Denshi’s shareholder Atomic Sangyo Co., Ltd. holds 12.93% of the Company’s
voting rights (as of March 31, 2008). Kotaro Fukuda, President and CEO of the Company, andhis close relatives own 100% of the shares in Atomic Sangyo.
Atomic Sangyo produces and sells electrocardiogram recording paper, and also engages inthe business of renting real estate. The Company purchases recording paper and accounting slips
and rents offices from Atomic Sangyo.
Decisions on the prices of recording paper and accounting slips are based on negotiations
and consideration of market prices, and payment terms are the same as those generally adopted
in the marketplace.
Office rental contracts are based on actual transactions in nearby locations.

- 10 -

2.

The Fukuda Denshi GroupThe Company consists of 57 subsidiaries and 1 affiliate, the Fukuda Denshi Group is engaged mainlyin the manufacture, purchase and sales of medical electronic equipment, and conducts related logistics
and services operations.
The relationship between Group companies and business segments are as follows:- Physiological diagnostic equipment segment
Production, purchase and sales of electrocardiographs; phonocardiographs; polygraphs; ultrasounddiagnostic imaging systems; and other items which convert physical phenomena generated byphysiological functions, such as electric potentials caused by heart action, cardiac sound, pulse waves,blood pressure, respiration, and organic movement, into electric signals and measures and records thesignals.
Major affiliates involved
Production: Fukuda Denshi; Fukuda Denshi Tagajo Co., Ltd.; Fukuda Denshi USA, Inc.; and Beijing
Fukuda Denshi Medical Instruments Co., Ltd.
Purchase:

Fukuda Denshi

Sales:

Fukuda Denshi; Fukuda Life Tech Co., Ltd.; Fukuda Cardiac Laboratory Co., Ltd.; Fukuda
Denshi Hokkaido and other sales subsidiaries; and Beijing Fukuda Denshi Medical
Instruments Co., Ltd.

- Patient monitoring equipment segment
Production, purchase and sales of electrocardiogram monitors that monitor various physiological
functions over a long period of time; and physiological monitors that combine various measuring
parameters. Both monitors are used for serious cases after patients’ have undergone operations and forpatients with acute cardiac disease.
Major companies involved
Production: Fukuda Denshi; Fukuda Denshi Tagajo Co., Ltd.; Fukuda Denshi USA, Inc.; and Beijing
Fukuda Denshi Medical Instruments Co., Ltd.
Purchase:

Fukuda Denshi

Sales:

Fukuda Denshi; Fukuda Denshi Hokkaido and other sales subsidiaries; and Beijing Fukuda
Denshi Medical Instruments Co., Ltd.

- Medical treatment equipment segment
Production, purchase and sales of defibrillators, which are used to resuscitate patients with cardiac
arrest and treat abnormal heart rhythm by delivering electric impulses to the heart; pacemakers; artificial
ventilators, which help patients with respiratory insufficiency breathe easier; and other equipment.
Major companies involved- 11 -

Production: Fukuda Denshi, Fukuda Denshi Tagajo Co., Ltd.
Purchase:

Fukuda Denshi

Sales:

Fukuda Denshi, Fukuda Life Tech Co., Ltd., Fukuda Cardiac Laboratory Co., Ltd., Fukuda
Denshi Hokkaido and other sales subsidiaries- Other products and accessories segment
Production, purchase and sales of recording paper, accessories and parts for medical electronicequipment
Major companies involved
Production: Fukuda Denshi; Fukuda Denshi Tagajo Co., Ltd.
Purchase:

Fukuda Denshi

Sales:

Fukuda Denshi; Fukuda Life Tech Co., Ltd.; Fukuda Cardiac Laboratory Co., Ltd.; Fukuda
Denshi Hokkaido and other sales subsidiaries- 12 -

Diagram of the Group’s business structure

Major customers
Japan

Overseas
Products

Products andmerchandise

Consolidated subsidiaryBeijing Fukuda
Denshi Medical
Instruments Co., Ltd.

Products andmerchandise

Consolidated
subsidiary
Fukuda Cardiac
Laboratory Co.,
Ltd.

Consolidated
subsidiary
Fukuda Life
Tech Co.,Ltd.

Rental

Products andmerchandise*2.
Consolidated
subsidiary
Fukuda Denshi
Switzerland AG

Repairs

Products andmerchandise

Repairs in Japan
Consolidated subsidiary
Fukuda Electronic
Technology Service

Products andmerchandise

Domestic warehousemanagement andpacking/shipping
Consolidated subsidiaries
Fukuda Logistics
CenterEntrustment of
warehousemanagement andpacking/shipping

Parts

Supply of materials

Rental

Products and merchandise

Products and merchandise

Consolidated subsidiaries
Fukuda Denshi Hokkaido and other sales subsidiaries

Entrustment ofresearch anddevelopment

Fukuda Denshi
Medical treatment
equipment segment

Outsourcing of processing

Consolidated subsidiary
Fukuda Denshi USA,Inc.

Supply of materials

Outsourcing ofprocessing

Patient monitoring
equipment segment
Supply of materials

Outsourcing ofprocessing

Supply of materials

Outsourcing of processing

Supply of materials

Physiological diagnostic
equipment segment

Other products andaccessories segment

Supply ofmaterials

Products*1.
Related party
Atomic Sangyo
Co., Ltd.

Consolidated subsidiary
Fukuda Denshi Tagajo Co., Ltd.

Publication, sales, and other processing of medical books

Unconsolidated subsidiaries
ME Times
Miyagi Prefecture Medical Information ResearchCenterNiigata Medical Information Development Center
IVAC
Affiliated company not accounted for by the equity
methodFukuda Pulmo

Products

Non-life insurance
agency operations
Unconsolidated
subsidiaries
Fukushin*1. Related party Atomic Sangyo Co., Ltd. manufactures recording paper for medical electronic equipment andsupplies it to the Other products and accessories segment in Fukuda Denshi.
*2. Kontron Medical AG of Switzerland was renamed Fukuda Denshi Switzerland AG on May 15, 2007.

- 13 -

3.

Management policy(1) Basic policies for corporate management
Since its foundation in 1935, the Company has contributed significantly to the advancement ofpeople’s health through the production and sale of a wide range of medical equipment, centering on
respiratory and circulatory systems such as electrocardiographs, under our corporate philosophy to“Contribute to medical advances by fulfilling our social mission and developing medical equipment.”
Responding to significant changes in the social environment, medical equipment has increasingly
been expected to play roles not only in the conventional diagnostics and treatment of diseases but also inthe maintenance and improvement of health and the enhancement of quality of life (QOL).
Against this backdrop, under the slogan of “safety, reliability and comfort,” the Company will makeevery effort to raise the quality of products to offer to customers, develop products that provide
differentiation from our competitors, and carry out product strategies that meet varying medical needs,
aiming to become a company that is trusted by customers.

(2) Targeted management indices
The Company basically aims for continued growth and securing certain profitability, targeting a
consolidated ordinary income of 10.0 billion yen, an ordinary income margin of 10% or more and apayout ratio of 30% or more by fiscal 2012.

(3) Medium- to long-term management strategies
As its medium-term goal, the Company continuously formulates a three-year medium-term businessplan, under which it examines group-wide issues when necessary, and implements solutions to the issues.
The basic management strategies for the new three-year medium term business plan starting from theyear ending March 2009 are as follows:(i) Policies of the medium-term business planTo establish a further solid management structure based on the customer-first principle,
responding to the progress of an aging society with fewer children and changes in the medical
environment following medical system reforms, in Japan.

(ii)

Business strategies
To proactively make investments while focusing on efficient management;
To promote the expansion of businesses by domain;
To strengthen the corporate structure in order to improve the efficiency of development
processes; andTo increase productivity by pursuing overall optimum solutions from development to production.

- 14 -

(iii) Sales strategies
To capture the acute care market;
To enhance operations in the homecare market; andTo expand the maintenance service business.

(iv) Improvement of the management system
To strengthen the corporate governance and compliance structure;
To revitalize the overall organization through personnel training and education for employees;
andTo enhance the group management system.

(v)

Increase of corporate value
To establish a stable earnings structure and return profits to shareholders;
To actively tackle environmental issues; andTo contribute to society through our medical equipment.

(4) Issues to be addressed
In Japan, various medical system reforms have been carried out, including: the revision of official
reimbursement rates for medical treatment fees, drug prices and specific medical materials covered byinsurance; an increasing adoption of the comprehensive medical fee payment system, called diagnosis
procedure combination (DPC); and the implementation of a new medical insurance system for elderly
persons aged 75 or over.
Given the above and possible future reforms, we expect our market environment to remain severe.
Against this backdrop, the Company will continue to strive to raise its corporate value, develop productsthat provide differentiation from our rivals, strengthen the maintenance service and supplies sales
businesses to secure profits, make investments for enhancing the sales system, and reduce costs tobecome more price competitive than our rival manufacturers at home and abroad.
Furthermore, the Company will continuously strengthen and maintain its quality control and safety
management systems so that customers can use our products without anxiety, and improve the internal
control system to ensure managerial soundness and transparency.

(5) Status of improvement and implementation of the internal control system
The status of improvement and implementation of the internal control system is described in “Basic
stance on the internal control system and the status of its improvement” in the report concerning corporate
governance.

(6) Other important managerial matters of the Company- 15 -

(i)Acquisition of treasury stock

The Company may purchase its own shares by resolution of the Board of Directors, in accordancewith the provisions of Article 165, Paragraph 2 of the Company Law. This was determined upon theapproval of amendment to the Articles of Incorporation at the Ordinary General Meeting of
Shareholders held in June 2006. However, the Company did not acquire any treasury stock during the
fiscal year under review, except for the purchase of shares less than a trading unit, comprehensively
taking into account the economic situation, trends in the Company’s stock price and its financial
conditions.
The Company owns 340,139 shares of treasury stock as of the end of March 2008.

(ii) Important contracts concerning management
There are no applicable matters.

- 16 -

4.

Consolidated financial statements(1) Consolidated balance sheets

Item
AssetsI. Current assets
1. Cash and deposits
2. Trade notes and accounts
receivable
3. Securities
4. Inventories
5. Deferred tax assets
6. Other
Allowance for doubtful
accounts
Total current assets
II. Fixed assets
1. Tangible fixed assets(1) Buildings
andstructures
Accumulated
depreciation
andimpairment losses(2) Machinery
anddelivery equipment
Accumulated
depreciation
andimpairment losses(3) Tools, instruments
and fixtures
Accumulated
depreciation
andimpairment losses(4) Land(5) Construction
inprogress
Total tangible fixed assets
2. Intangible fixes assets
3. Investments and otherassets(1) Investment
securities(2) Deferred tax assets(3) Other
Allowancefordoubtful accounts
Total investments and otherassetsTotal fixed assets
Total assets

Note
No.

Previous fiscal year
(as of March 31, 2007)

Fiscal year under review(as of March 31, 2008)

Amount(million yen)Amount(million yen)

*3

Ratio
(%)

24,45524,171

22,54023,710-1,915-460

999
13,126
2,745
1,655
-369

999
13,386
1,928
1,240
-308

-0
260
-817
-414
61

66,784

64.4

8,441
4,031

4,409

4,360

247

417

-3,287

4,250

-158

238

-9

7,993

146

5,997
17

536
1

21,433
7,846

13,4395,461
15
17,980
3,580

*1

63.8

655

19,55011,704

63,497

8,610

645
397

Ratio
(%)

Comparison withthepreviousyear
Change(million
yen)

17.3
3.5

18,496
3,295

18.6
3.3

516
-284

10,825

7,891-2,933

2,126
2,417
-32

3,351
3,102
-49

1,225
684
-17

15,337

14.8

14,29614.3-1,04036,897
103,682

35.6
100.0

36,08899,585

36.2
100.0

-809
-4,096- 17 -

Item
Liabilities
I. Current liabilities
1. Tradenotesandaccounts payable
2. Short-term borrowings
3. Income tax payable,
etc.
4. Allowance for bonuses
to employees
5. Allowance for bonuses
to officers
6. Allowance for losses
on restructuring
7. Other
Total current liabilities
II. Long-term liabilities
1. Long-term borrowings
2. Allowancefor
retirement benefits
3. Allowancefor
retirement benefits toofficers
4. Negative goodwill
5. Other
Total long-term liabilities
Total liabilities
Net assets
I. Shareholders’ equity
1. Common stock
2. Capital surplus
3. Retained earnings
4. Treasury stock
Total
shareholders’equityII. Valuation and translation
adjustments
1. Evaluation differenceon other securities
2. Foreign
currencytranslation adjustment
account
Total
valuationandtranslation adjustments
III. Minority interests
Total net assets
Total liabilities and net
assets

Note
No.

*3

Previous fiscal year
(as of March 31, 2007)

Fiscal year under review(as of March 31, 2008)

Amount(million yen)Amount(million yen)

Ratio
(%)

Ratio
(%)

Comparison
with thepreviousyear
Change(millionyen)

14,917

12,465-2,452

3,552
926

3,500
884

-52
-41

1,697

1,666

-30

59

98

38

653

112

-541

2,818
24,62623.8

2,620
21,34721.5-197-3,278

40
3,161

183
3,097

142
-64

1,213

197

-1,015

1
57
4,474
29,100

4.3
28.1

1
925
4,404
25,752

4.4
25.9

-0
867
-70
-3,3484,621
9,851
57,843-932
71,383

4.4
9.5
55.8
-0.9
68.8

4,621
9,982
59,473-766
73,311

4.7
10.0
59.7
-0.8
73.6

131
1,629
165
1,927

3,197

3.1

447

0.4

-2,750

-11

-0.0

63

0.1

74

3,186

3.1

510

0.5

-2,676

11
74,581
103,682

0.0
71.9
100.0

11
73,833
99,585

0.0
74.1
100.0

0
-748
-4,096- 18 -

(2) Consolidated statements of income

Amount (million
yen)

Ratio
(%)

Amount (million
yen)

Ratio
(%)

88,27052,242
36,02730,084

100.0
59.2
40.8
34.1

88,56851,26037,30831,937

100.0
57.9
42.1
36.0

Comparison
with thepreviousyear
Change(million
yen)
298
-982
1,280
1,852

5,943

6.7

5,370

6.1

-572

445

0.5

-51

131
5,684

0.2
6.4

-6
-617

749

0.8

-569

290

0.3

-743

6,143

6.9

-443

2,966

3.3

-265

Previous fiscal year
(as of March 31, 2007)

Item
I.
II.

Net sales
Cost of sales
Gross profit
III. Selling,
generalandadministrative expenses
Operating income
IV. Non-operating income
1. Interest income
2. Dividend income
3. Foreign exchange gains
4. OtherV. Non-operating expenses
1. Interest expenses
2. OtherOrdinary income
VI. Extraordinary gains
1. Gainson
saleof
investment securities
2. Gains on sale of fixed
assets
3. Gainson
insurance
surrender
4. Compensationfordamages received
5. Gains on reversal of
allowance for losses on
restructuring
6. Gains on reversal of
allowance for doubtful
accounts
VII. Extraordinary losses
1. Losses on sale of fixed
assets
2. Losses on disposal of
fixed assets
3. Losses on devaluation of
investment securities
4. Impairment losses
5. Losses on sale of golfclub memberships
6. Losses on restructuring
7. Losses on sale ofinvestment securities
Net income before taxes
Corporate,
inhabitants’and enterprise taxes
Corporatetax
adjustments
Minority interests inearnings of consolidated
subsidiaries
Net income

Note
No.
*2
*1
*2

21
140
29
305
66
70

*3

*4

496

0.6

137
6,302

0.2
7.1

Fiscal year under review(as of March 31, 2008)

18
128
1
296
82
48

111

427

3

10

55

285

35

-

1,113

5

-

1,318

1.5

20

*5

7

0

*6

41

75

473

-

*7

22
20

31
-

*8

469
-

1,034

1.1

6,587

7.5

1,476
1,755

182

1,482
3,231

3.7

1

0.0

1

0.0

0

3,353

3.8

3,174

3.6

-179

- 19 -

1,483

(3) Statements of changes in shareholders’ equity
Previous fiscal year (from April 1, 2006 to March 31, 2007)
Shareholders’ equity
Commonstock
Balance as of March 31, 2006
(million yen)
Changes during the fiscal year
Dividends paid (Note 1)
Bonuses to officers
Bounties and welfare funds for
employees (Note 2)
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes in items other thanshareholders’ equity during the
fiscal year (net)Total changes during the fiscal
year (million yen)
Balance as of March 31, 2007
(million yen)

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equity

4,621

9,851

56,087-931

69,629---1,534-55--1,534
-55

-

-

-8

-

-8

-

-

3,353
-

-1
0

3,353
-1
0

-

-

-

-

-

-

-

1,756

-1

1,754

4,621

9,851

57,843-932

71,383

Minority
interests

Total net
assetsValuation and translation adjustments
Foreign
Total
Evaluation
currency
valuationdifferencetranslation
andon otheradjustment
translation
securities
account
adjustments
Balance as of March 31, 2006
(million yen)
Changes during the fiscal year
Dividends paid (Note 1)
Bonuses to officers
Bounties and welfare funds for
employees (Note 2)
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes in items other thanshareholders’ equity during the
fiscal year (net)Total changes during the fiscal
year (million yen)
Balance as of March 31, 2007
(million yen)

3,926

85

4,012

10

73,652-----1,534
-55

-

-

-

-

-8

-

-

-

-

3,353
-1
0

-728

-96

-825

0

-825

-728

-96

-825

0

929

3,197

-11

3,186

11

74,581

Note 1: Of this amount, 767 million yen is an item of appropriation of retained earnings approved at theOrdinary General Meeting of Shareholders held in June 2006.
Note 2: Bounties and welfare funds for employees were provided by a subsidiary in China in accordancewith local laws and regulations.

- 20 -

Fiscal year under review (from April 1, 2007 to March 31, 2008)
Shareholders’ equity
Commonstock
Balance as of March 31, 2007
(million yen)
Changes during the fiscal year
Dividends paid
Bounties and welfare funds for
employees (Note)
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes in items other thanshareholders’ equity during the
fiscal year (net)Total changes during the fiscal
year (million yen)
Balance as of March 31, 2008
(million yen)

Balance as of March 31, 2007
(million yen)
Changes during the fiscal year
Dividends paid
Bounties and welfare funds for
employees (Note)
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes in items other thanshareholders’ equity during the
fiscal year (net)Total changes during the fiscal
year (million yen)
Balance as of March 31, 2008
(million yen)

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equity

4,621

9,851

57,843-932

71,383---1,536--1,536

-

-

-8

-

-8

-

131

3,174
-

-2
168

3,174
-2
300

-

-

-

-

-

-

131

1,629

165

1,927

4,621

9,982

59,473-766

73,311

Valuation and translation adjustments
Total
Foreign
Evaluation
valuation
currency
differenceandtranslationon othertranslation
adjustmen
securities
adjustmentt accounts

Minority
interests

Total net
assets

3,197

-11

3,186

11

74,581-----1,536

-

-

-

-

-8

-

-

-

-

3,174
-2
300

-2,75074-2,6760-2,675-2,75074-2,676

0

-748

447

63

510

11

73,833

Note: Bounties and welfare funds for employees were provided by a subsidiary in China in accordancewith local laws and regulations.

- 21 -

(4) Consolidated statements of cash flows
Previous fiscal year
(April 1, 2006 to
March 31, 2007)
Item
I. Cash flows from operating
activities
Net income before taxes
Depreciation and amortization
Losses on restructuring
Increaseordecreaseinallowance
for lossesonrestructuring
Impairment losses
Increaseordecreaseinallowance for doubtful accounts
Increaseordecreaseinallowance for bonuses to
employees
Increaseordecreaseinallowance for bonuses to
officers
Increaseordecreaseinallowanceforretirement
benefits to employees
Increaseordecreaseinallowanceforretirement
benefits to officers
Interest and dividend income
Interest expenses
Gains on sale of fixed assets
Losses on sale of fixed assets
Losses on disposal of fixed
assetsCompensation for damages
received
Gains or losses on sale ofinvestment securities
Losses on devaluation of
investment securities
Gains on insurance surrender
Increase or decrease in accounts
receivable
Increaseordecreaseininventories
Increase or decrease in accounts
payableIncreaseordecreasein
consumption tax payable, etc.
Bonuses to officers paid
Other
SubtotalInterest and dividends received
Interest paid
Compensation for damages
received
Insurance received
Corporate tax, etc. paid
Net cash provided by operating
activities

Note
No.

Amount(million yen)*2

- 22 -

Fiscal year underreview(April 1, 2007 to
March 31, 2008)
Amount(million yen)Comparison with theprevious year
Change(million yen)

6,587
4,016
-1,656
-

6,143
5,139
-541

-443
1,122
1,656
-541

22
38

31
-43

8
-82

47

-25

-72

59

38

-20

-42

-64

-22

-6

-1,015-1,009

-161
66
-3
7
41

-146
82
-10
0
75

14
15
-7
-6
34

-35

-

35

-111

-245

-133

473

-

-473

-55
624

-285
453

-229
-171

946

-281

-1,228-140-2,609-2,468

200

-222

-423

-55
-583
10,280
154
-66
35

447
6,920
95
-84
-

55
1,030
-3,359-59-18-35-2,105
8,298

99-1,175
5,855

99
929
-2,443

Previous fiscal year
(April 1, 2006 to
March 31, 2007)
Item

Note
No.

Amount(million yen)

Cash flows from investing
activities
Net increase or decrease intime deposits
Acquisition of tangible fixed
assetsAcquisition of intangible
fixed assets
Purchase of securities andinvestment securities
Proceeds from sale ofsecurities and investment
securities
Payments for short-term
loans
Paymentsforinsurance
reserve
Proceeds from reversal of
insurance reserve
Other
Net cash used in investing
activities
III. Cash flows from financing
activities
Net increase or decrease in
short-term borrowings
Proceeds from long-termborrowings
Repayment of long-termborrowings
Purchase of treasury stock
Sale of treasury stock
Dividends paid
Dividends paid to minority
shareholders
Net cash used in financing
activities
IV. Effect of exchange rate changes
on cash and cash equivalents
V. Increase or decrease in cash andcash equivalents
VI. Cash and cash equivalents at the
beginning of the fiscal year
VII. Increase or decrease in cash anddeposits owing to changes inthe scope of consolidation
VIII.Cash and cash equivalents at theend of the fiscal year

Fiscal year underreview(April 1, 2007 to
March 31, 2008)
Amount(million yen)Comparison with theprevious year
Change(million yen)II.

- 23 -

-6

-423

-417

-5,081-4,576505-1,300-521

779-1,616-2,713-1,096

1,311

1,428

116

-0

-2

-2

-480

-644

-164

128

235

106

-77
-7,122212-7,006

289
116

344

-

-344

-

200

200

-135

-83

51

-1
0
-1,534-1-2
300-1,530
-1

-0
299
3
0

-1,327-1,117

209

31

-7

-38

-120

-2,276-2,15624,32824,297

-30

90

-62

-152

24,297

21,958-2,339(5) Basic significant matters regarding the preparation of consolidated financial statements

1. Scope
consolidationofPrevious fiscal year
(April 1, 2006 to March 31, 2007)(1) Numberofconsolidated
subsidiaries: 53
Major consolidated subsidiaries
are as follows:
Fukuda Life Tech Co., Ltd.
Fukuda Cardiac Laboratory Co.,Ltd.
Fukuda Denshi Hokkaido
Fukuda Denshi Tokyo Chuo
Co., Ltd.; Fukuda Denshi Sangi
Co., Ltd.; Fukuda Cardiac
Laboratory Kanto Co., Ltd.; andFukudaCardiacLaboratory
Kansai Co., Ltd. were included in
the scope of consolidation, as
they were newly established inthis fiscal year.
Fukuda Intervention Systems
Co., Ltd. was renamed Fukuda
Cardiac Laboratory Co., Ltd. on
April 1, 2006.
(2) Names and other details of major
unconsolidated subsidiaries
Of the subsidiaries, ME
Times, Fukushin and six othercompanies were not included in
the scope of consolidation,
because their business sizes are
small, and their total assets, net
sales, net income and loss
(amount corresponding to theowned interest), retained earnings(amount corresponding to theowned interest) had no material
effect on the consolidated
financial statements.

- 24 -

Fiscal year under review(April 1, 2007 to March 31, 2008)(1) Numberofconsolidated
subsidiaries: 52
Major consolidated subsidiaries
are as follows:
Fukuda Life Tech Co., Ltd.
Fukuda Cardiac Laboratory Co.,Ltd.
Fukuda Denshi Hokkaido
Kontron Medical SAS was
excluded from the scope of
consolidation,
becausethecompany was sold to Esaote
France SARL, a subsidiary of theEsaote Group (Italy), on April 30,
2007.
Kontron Medical AG was
renamedFukudaDenshi
Switzerland AG on May 15, 2007.

(2) Names and other details of major
unconsolidated subsidiaries
Of the subsidiaries, ME Times,
Fukushin
and
three
other
companies were not included in
the scope of consolidation,
because their business sizes are
small, and their total assets, net
sales, net income and loss
(amount corresponding to theowned interest), retained earnings(amount corresponding to theowned interest) had no material
effect on the consolidated
financial statements.

2. Application
equity methodof

3. Accounting period,
etc. of consolidated
subsidiaries

Previous fiscal year
(April 1, 2006 to March 31, 2007)(1) Number of affiliated companies
accounted for by equity method
eVent Medical Ltd., which was anaffiliated company accounted forby the equity method in theprevious fiscal year, was excluded
from the application of the equity
method because this fiscal year
we sold all of the shares we held
in it.
(2) Names and other details of
unconsolidated subsidiaries andaffiliates that are not accounted
for by equity method
The
eight
unconsolidated
subsidiaries and affiliate company
Fukuda Pulmo had no material
effect on consolidated income andloss and retained earnings, andthey were not important as awhole in terms of material
influence on the consolidated
interim financial statements.
Accordingly, we did not apply
equity method accounting tothem.
The accounts of consolidated
subsidiaries Fukuda Denshi USA,
Inc.; Kontron Medical SAS; andKontron Medical AG close on
December 31 of each year. In
the preparation of consolidated
financial statements, consolidated
subsidiaries’ financial statements
as of the said date were used, andwith respect to significant
transactions
thatoccurred
between the said date and theconsolidated
book-closing,adjustments
necessaryforconsolidation were made.

- 25 -

Fiscal year under review(April 1, 2007 to March 31, 2008)(1) Number of affiliated companies
accounted for by equity method-(2) Names and other details of
unconsolidated subsidiaries andaffiliates that are not accounted
for by equity methodThe
fiveunconsolidated
subsidiaries and affiliate company
Fukuda Pulmo had no material
effect on consolidated income andloss and retained earnings, andthey were not important as awhole in terms of material
influence on the consolidated
interim financial
statements.
Accordingly, we did not apply
equity method accounting tothem.
The accounts of consolidated
subsidiaries Fukuda Denshi USA,
Inc.;
and
FukudaDenshi
Switzerland AG close on
December 31 of each year. In
the preparation of consolidated
financial statements, consolidated
subsidiaries’ financial statements
as of the said date were used, andwith respect to significant
transactions
thatoccurred
between the said date and theconsolidated
book-closing,adjustments
necessaryforconsolidation were made.

4. Accounting
standards

Previous fiscal year
(April 1, 2006 to March 31, 2007)(1) Valuation standards and methods
for principle assets(i) Securities
Held-to-maturity securities- Amortized cost method
Other securities
Marketable securities- Stated at fair value based on themarket price as of the end of thisfiscal year.
(Unrealized holding gains orlosses are reported in acomponent of net assets, while
the cost of securities sold is
calculated by the moving averagemethod.)Non-marketable securities- Stated at cost based on themoving average method.
For investments in theinvestment enterprise limited
liability association and similar
associations (deemed to be
securities pursuant to Article 2,
Paragraph 2 of the Securities andExchange Law), the net amountcorresponding to the ownership
percentage is used, based on themost recent financial statements
available as of the reporting dateand other material stipulated in
the partnership contract.
(ii) Inventories
Merchandise and products- Mainly stated at cost determinedby the first-in, first-out method.
Raw materials- Mainly stated at cost determinedby the gross average method.
Work in progress- Mainly stated at cost based on
the specific cost method.
Supplies- Stated based on the last purchaseprice method.

- 26 -

Fiscal year under review(April 1, 2007 to March 31, 2008)(1) Valuation standards and methods
for principle assets(i) Securities
Held-to-maturity securities
Same as on the left
Other securities
Marketable securities
Same as on the left

Non-marketable securities
Same as on the left
For investments in theinvestment enterprise limited
liability association and similar
associations (deemed to be
securities pursuant to Article 2,
Paragraph 2 of the Financial
Instruments and Exchange Law),
the net amount corresponding tothe ownership percentage is used,based on the most recent financial
statements available as of thereporting date and other material
stipulated in the partnershipcontract.
(ii) Inventories
Merchandise and products
Same as on the left
Raw materials
Same as on the left
Work in progress
Same as on the left
Supplies
Same as on the left

Previous fiscal year
(April 1, 2006 to March 31, 2007)(2) Depreciation
methodforsignificant depreciable assets(i) Tangible fixed assets
Depreciated primarily by
the declining balance method.
However, buildings (except forbuilding attachments) acquired on
or after April 1, 1998 weredepreciated using the straight-line
method.
Major useful life:
Buildings
andstructures:
3–60 years
Machineryanddeliveryequipment:
4–12 years
Tools, instruments and fixture:
2–20 years
Assets with an acquisition
cost of 100,000 yen or more but
less than 200,000 yen were
evenlyamortizedoverathree-year period.
Of the tools, instruments
andfixtures,theoxygenconcentrator devices (assets forrental) were depreciated using thestraight-line method with theestimated rental period (fouryears) used as the number ofdepreciation years.
-- 27 -

Fiscal year under review(April 1, 2007 to March 31, 2008)(2) Depreciation
methodforsignificant depreciable assets(i) Tangible fixed assets
Same as on the left

(Changes in accounting policies)
In accordance with the revision of
the Corporate Tax Law, from thisfiscal year, the Company has changed
the depreciation method for tangible
fixed assets acquired on or after April
1, 2007 to the method stipulated in therevised Corporate Tax Law.
This change had little effect on
our consolidated earnings for thisfiscal year.

Previous fiscal year
(April 1, 2006 to March 31, 2007)-(ii) Intangible fixed assets
Depreciated by the straight-line
method.
Software for internal use isamortized by the straight-line
method over its useful life of five
years.
As for software for sale in themarket, the Company records thelarger of an amortization based on
projected sales volume for theeffective sales period (no longer
than three years) or a uniform
amortization over the effective
remaining sales period.
(3) Basis for provision of allowances(i) Allowance for doubtful accounts
To prepare for losses incurredby bad debts, the amount ofpotential loss is calculated byusing the historical loss ratio in
the case of general loans or
receivables. Potential loss for
specific loans or receivables, forwhich we have concerns
regarding their collectability, iscalculated by assessing thepossibility of collection for eachindividual account.

- 28 -

Fiscal year under review(April 1, 2007 to March 31, 2008)(Additional information)
In accordance with the revision of
the Corporate Tax Law, as for assets
acquired on or before March 31, 2007
that were fully depreciated to the
maximum allowable amount using thedepreciation method stipulated in the
Corporate Tax Law before its
revision, the Company evenly
depreciated the residual book value up
to the reminder value over five years,
from the next consolidated fiscal year
to the consolidated fiscal year inwhich those assets were depreciatedto the maximum allowable amount.
This practice had little effect on
our consolidated earnings for thisfiscal year.
(ii) Intangible fixed assets
Depreciated by the straight-line
method.
Same as on the left

(3) Basis for provision of allowances(i) Allowance for doubtful accounts
Same as on the left

Previous fiscal year
(April 1, 2006 to March 31, 2007)(ii) Allowance for bonuses to
employees
To prepare for the paymentof bonuses to employees, anamount corresponding to thisfiscal year’s portion of estimatedbonus payments was reserved.
(iii) Allowance for bonuses to
officers
To prepare for the paymentof bonuses to directors andcorporate auditors, an amountcorresponding to this fiscal
year’s portion of estimated bonus
payments was reserved.
(Changes in accounting policies)
Beginning this fiscal year, theCompany adopted the AccountingStandards for Directors’ Bonuses(Corporate Accounting Standards No.
4, November 29, 2005).
As a result, operating income,ordinary income and net income
before taxes have all decreased by 59
million yen.
(iv) Allowance forlosses on
restructuring
To prepare for losses on
restructuring, the amount of theestimated losses was reserved.

- 29 -

Fiscal year under review(April 1, 2007 to March 31, 2008)(ii) Allowance for bonuses to
employees
Same as on the left(iii) Allowance for bonuses to officers
Same as on the left-(iv) Allowanceforlossesrestructuring
Same as on the lefton

Previous fiscal year
(April 1, 2006 to March 31, 2007)(v) Allowance for retirement benefits
to employees
To prepare for the payment of
retirement benefits to employees,
the amount recognized as
accruing at the end of this fiscal
year was reserved, based on theestimated
retirement
benefitobligation and pension assets at
the end of this fiscal year.
Prior service costs areamortized, using the straight-line
method over a certain number ofyears (10 years), which are lessthan the average remaining yearsof service of the employees when
they incurred.
Actuarial differences areamortized, using the straight-line
basis over a certain number ofyears (10 years), which are lessthan the average remaining yearsof service of the employees when
they incurred, from the fiscal year
after the one in which they arise.
(f) Allowance for retirement benefits
to officers
To prepare for the payment of
retirement benefits to directors
and corporate auditors, theestimated amount to be paid at theend of the fiscal year was
reserved, in accordance with theinternal regulations.
However, the Company
abolished such retirement benefit
program on June 29, 2005, andthe estimated amount to be paid
to directors and corporate
auditors, who are in office on the
day of abolishing the program,
was reserved as Allowance forretirement benefits to officers.

- 30 -

Fiscal year under review(April 1, 2007 to March 31, 2008)(v) Allowance for retirement benefits
to employees
Same as on the left(f) Allowance for retirement benefits
to officers
To prepare for the payment of
retirement benefits to directors
and corporate auditors, someconsolidated subsidiaries reserve
the estimated amount to be paid atthe end of the fiscal year, in
accordance with the internal
regulations.

5. Valuation of assets
and liabilities of
consolidated
subsidiaries
6. Depreciationofnegative goodwill
7. Cash in consolidated
cash flow statements

Previous fiscal year
(April 1, 2006 to March 31, 2007)(4) Standards for translation ofimportantforeigncurrency-based
assetsor
liabilities in to Japanese yen
Monetary credits and debts
denominated in foreign currencies aretranslated into yen based on thecurrent exchange rates at the end ofeach fiscal year. Differences arisingfrom such translation are stated as
profits or losses. Assets, liabilities,
revenue and expenses of overseas
subsidiaries, and other financial items
are translated into yen based on thecurrent exchange rates at the end ofeach fiscal year. The resulting
differences are recorded as Foreign
currency translation adjustment
account and Minority interests,
under Net assets.
(5) Lease transactions accounting
methodFinance lease transactions otherthan those in which the ownership ofthe leased property is recognized ashaving transferred to the lessee, arebased on the accounting method forordinary lease transactions.
(6) Other important matters for
preparation of consolidated
financial statements
Accounting
treatmentofconsumption tax and other taxes
Consumption tax and other taxes
are excluded from profits and losses.
Assetsandliabilitiesofconsolidated subsidiaries are valued
using the full-fair-value method.
Negative goodwill is amortizedover a five-year period.
Cash (cash and cash equivalents)
in the consolidated statements of cash
flows consists of cash on hand,readily-available
deposits,
andshort-term investments with amaturity not exceeding three months
at the time of purchase that are readily
convertible to cash and not exposed tosignificant risk in value fluctuations.

- 31 -

Fiscal year under review(April 1, 2007 to March 31, 2008)(4) Standards for translation ofimportant foreign currency-based
assets or liabilities in to JapaneseyenSame as on the left

(5) Lease transactions accounting
methodSame as on the left

(6) Other important matters for
preparationof
consolidated
financial statements
Same as on the left

Same as on the left

Same as on the left
Same as on the left

(6) Changes in basic significant matters regarding the preparation of consolidated financial statements
Previous fiscal year
(April 1, 2006 to March 31, 2007)(Accounting standards for presentation of net
assets in the balance sheets)
Beginning this fiscal year, the Company
adoptedthe“AccountingStandards
forPresentation of Net Assets in the Balance Sheets”(Corporate Accounting Standards No. 5, December
9, 2005) and the “Guidelines for the Application of
the Accounting Standards for Presentation of Net
Assets in the Balance Sheets” (Guidelines for the
Application of Corporate Accounting Standards
No. 8, December 9, 2005).
This adoption has little effect on profits andlosses.
The
amountcorrespondingtotheconventional Total shareholders’ equity in thebalance sheets was 74,570 million yen.
Along with the revision to the Regulations on
Consolidated
Financial
Statements,
theconsolidated financial statements for this fiscal
year were prepared in accordance with the revised
regulations.

Fiscal year under review(April 1, 2007 to March 31, 2008)-

Change in presentation
Previous fiscal year
(April 1, 2006 to March 31, 2007)(Consolidated balance sheets)
Under Long-term liabilities, the item
reported as Consolidated adjustment account in
the previous fiscal year was presented as Negative
goodwill from this fiscal year.

-

Fiscal year under review(April 1, 2007 to March 31, 2008)(Consolidated balance sheets)
Allowance for retirement benefits toofficers, which was separately reported in theprevious fiscal year, was presented as Other underLong-term liabilities from this fiscal year. Thischange was made because the First Audit
Committee Report No. 42, “Audit Treatment for
Reserves of Special Taxation Measures Law,
Allowances or Reserves of Special Law, andAllowances for Retirement Benefits to Officers,”
was announced on April 13, 2007.
The amount of retirement benefits to officers
included in Other for this fiscal year was 854
million yen.
(Consolidated statements of cash flows)
Increase or decrease in allowance for losses
on restructuring, which was included in Losses
on restructuring in the previous fiscal year, wasseparately presented from this fiscal year.
In the previous fiscal year, Increase or decrease
in allowance for losses on restructuring was
minus 2,126 million yen.

- 32 -

(7) Notes to consolidated financial statements(Consolidated balance sheets)
Previous fiscal year
(as of March 31, 2007)*1. Notes to unconsolidated subsidiaries andaffiliated companies
Unconsolidated subsidiaries and affiliatedcompanies:
Investment securities: 48 million yen(Stocks)
2. Discount on bills: 380 million yen(Discount on export bills)*3. Bills maturing at the end of a fiscal year are
settled on the clearance day.
Because the last day of this fiscal year was aholiday for financial institutions, the following
bills, which matured at the end of the fiscal year,
are included in the balance as of the end of the
fiscal year.
Trade notes receivable: 283 million yen
Trade notes payable: 4 million yen

Fiscal year under review(as of March 31, 2008)*1. Notes to unconsolidated subsidiaries andaffiliated companies
Unconsolidated subsidiaries and affiliatedcompanies:
Investment securities: 48 million yen(Stocks)
2. Discount on bills: 448 million yen(Discount on export bills)*3-- 33 -

(Consolidated statements of income)Previous fiscal year
(April 1, 2006 to March 31, 2007)*1. Major items and amounts of Selling, generaland administrative expenses are as follows:
Provision of allowance for doubtful accounts:
190 million yen
Salaries, benefits, and other monies to officers
and employees:
10,953 million yen
Bonuses and provision of allowance forbonuses:
2,690 million yen
Provision of allowance for retirement benefits
to officers:
38 million yen
Retirement benefit expenses: 554 million yen
Depreciation:
777 million yen
Provision of allowance for bonuses to officers:
59 million yen

Fiscal year under review(April 1, 2007 to March 31, 2008)*1. Major items and amounts of Selling, generaland administrative expenses are as follows:*2. Research and development expenses included
in general and administrative expenses andmanufacturing expenses for this fiscal year
were 1,755 million yen.
*3. Breakdown of gains on sale of fixed assets
Machinery and delivery equipment:
2 million yen
Tools, instruments and fixtures: 0 million yen
Total
3 million yen*4. On April 30, 2007, an agreement was reachedon the sale of shares in Kontron Medical SAS.
And as a result of offsetting the provision that
arose from additional expenses with thereversal of the allowance that occurred inrelation to the decrease in the burden of
retirement payments to employees following
the resultant withdrawal from business, werecorded a reversal of allowance for losses on
restructuring.
*5. Breakdown of losses on sale of fixed assets
Buildings and structures:
3 million yen
Machinery and delivery equipment:
4 million yen
Total:
7 million yen*6 Breakdown of losses on disposal of fixed
assetsBuildings and structures:
0 million yen
Machinery and delivery equipment:
2 million yen
Tools, instruments and fixtures: 37 million yen
Intangible fixed assets:
0 million yen
Total
41 million yen*2. Research and development expenses included
in general and administrative expenses andmanufacturing expenses for this fiscal year
were 2,093 million yen.
*3 Breakdown of gains on sale of fixed assets
Machinery and delivery equipment:
0 million yen
Tools, instruments and fixtures: 10 million yen
Total
10 million yen*4-

Salaries, benefits, and other monies to officers
and employees:
11,103 million yen
Bonuses and provision of allowance forbonuses:
2,677 million yen
Provision of allowance for retirement benefits
to officers:
37 million yen
Retirement benefit expenses: 544 million yen
Depreciation:
1,359 million yen
Provision of allowance for bonuses to officers:
98 million yen*5. Breakdown of losses on sale of fixed assets
Machinery and delivery equipment:
0 million yen*6 Breakdown of losses on disposal of fixed assets- 34 -

Buildings and structures:
3 million yen
Machinery and delivery equipment:
1 million yen
Tools, instruments and fixtures: 11 million yen
Intangible fixed assets:
60 million yen
Total
75 million yen

Previous fiscal year
(April 1, 2006 to March 31, 2007)*7. Impairment losses
The Company groups its operations bybusiness segment, and consolidated subsidiaries
form their grouping with each company oroffice as one unit. Impairment losses onleased real estate and idle assets are recognizedseparately.
Because of a decrease in cash flows caused
by a declined operating income, we havewritten down the book values of the following
assets to recoverable values. These write-offs
have resulted in impairment losses (of 22
million yen), which were booked as
extraordinary losses.
These impairment losses consist of thelosses on buildings and structures of 1 million
yen; on tools, instruments and fixtures of 11
million yen; and on other assets of 10 million
yen.
The recoverable value was assessed
according to the net sale value, and the market
prices were evaluated according to roadsideland prices or the assessed value of fixed asset
tax, with reasonable adjustments.
Use ofassetsLocation ofassetsType ofassetsOperational
assetsChiba City,
Chiba
Prefecture
and
two
other
locations

Buildings
andstructures,and tools,
instruments
and fixtures

Fiscal year under review(April 1, 2007 to March 31, 2008)*7. Impairment losses
The Company groups its operations bybusinesssegment,
andconsolidated
subsidiaries form their grouping with eachcompany or office as one unit. Impairment
losses on leased real estate and idle assets arerecognized separately.
Because of a decrease in cash flows
caused by a declined operating income, wehave written down the book values of thefollowing assets to recoverable values.
These write-offs have resulted in impairment
losses (of 31 million yen), which were booked
as extraordinary losses.
These impairment losses consist of thelosses on tools, instruments and fixtures of 15
million yen; and on other assets of 16 million
yen.
The recoverable value was assessed
according to the net sale value, and the market
prices were evaluated according to roadsideland prices or the assessed value of fixed asset
tax, with reasonable adjustments.

Amount(millionyen)
22

Use of assets
Operational
assets*8. Losses on restructuring
The losses on restructuring occurred as aresult of business liquidation of Kontron
Medical SAS on or after December 31, 2006,
its book-closing day.

Location ofassetsMatsuyama
City, Ehime
Prefecture
and anotherlocation

Type ofassetsTools,
instrume
nts andfixtures*8- 35 --

Amount(million yen)
31

(Statements of changes in shareholders’ equity)
Previous fiscal year (from April 1, 2006 to March 31, 2007)
1.

Type and total number of issued shares and type and number of shares of treasury stock
Number of sharesat the end of
previous fiscal
year(1,000 shares)

Increased numberof shares for fiscal
year under review(1,000 shares)

Decreased numberof shares for fiscal
year under review(1,000 shares)

Number of sharesat the end of the
fiscal year underreview(1,000 shares)

19,58819,588--19,58819,588

411

0

0

411

411

0

0

411

Number of issued
sharesCommon stock
Total
Treasury stock
Commonstock(Note)
Total

Note: The increase of 0 in treasury stock of common stock reflects the increase of 0 shares owing to therepurchase of shares less than a trading unit.
The decrease of 0 in treasury stock of common stock reflects the decrease of 0 shares owing to theadditional purchase of shares less than a trading unit by shareholders.

2.

Stock acquisition rights and treasury stock acquisition rights
Not applicable.

3.

Dividends(1) Dividend payment amount(Resolution)

Ordinary
GeneralMeetingof
Shareholders held on
June 29, 2006
Board of Directors’
meeting held on
November 17, 2006

Type of shares

Total dividend
amount (million
yen)

Dividends per
share (in yen)

Recorddate

Effective
date

Common stock

767

40

March 31,2006

June 29,
2006

Common stock

767

40

September
30, 2006

December
8, 2006(2) Of the dividends whose record date belongs to the fiscal year under review, and those whose
effective date of the dividends will be in the current fiscal year

(Resolution)

Type ofsharesTotal
dividend
amount(millionyen)

Ordinary
GeneralMeetingof
Shareholders held on
June 28, 2007

Commonstock

767

Source fordividends

Dividends
per share(in yen)Recorddate

Effective
date

Retainedearnings

40

March 31,2007

June 29,2007- 36 -

Fiscal year under review (from April 1, 2007 to March 31, 2008)
1.

Type and total number of issued shares and type and number of shares of treasury stock
Number of sharesat the end of
previous fiscal
year(1,000 shares)

Number of issued
sharesCommon stock
Total
Treasury stock
Commonstock(Note)
Total
Note:

Increase in
number of sharesfor fiscal year
under review(1,000 shares)

Decrease in
number of sharesfor fiscal year
under review(1,000 shares)

Number of sharesat the end of the
fiscal year underreview(1,000 shares)

19,58819,588--19,58819,588

411

0

72

340

411

0

72

340

The increase of 0 in treasury stock of common stock reflects the increase of 0 shares owing to
the repurchase of shares less than a trading unit.
The decrease of 72,000 in treasury stock of common stock reflects the decrease of 72,000 sharesowing to the additional purchases of shares less than a trading unit by shareholders.

2.

Stock acquisition rights and treasury stock acquisition rights
Not applicable.

3.

Dividends(1) Dividend payment amount(Resolution)

Ordinary
GeneralMeetingof
Shareholders held on
June 28, 2007
Board of Directors’
meeting held on
November 16, 2007

Type ofsharesTotal
dividend
amount(million yen)

Dividends per
share(in yen)Record date

Effective dateCommon
stock

767

40

March 31,2007

June 29,
2007

Common
stock

769

40

September
30, 2007

December 7,
2007(2) Of the dividends whose record date belongs to the fiscal year under review, and those whose
effective date of the dividends will be in the current fiscal year

(Resolution)

Type ofsharesTotal
dividend
amount(millionyen)

Ordinary
GeneralMeetingof
Shareholders held on
June 26, 2008

Commonstock

769

Source fordividends

Dividends
per share(in yen)Recorddate

Effective
date

Retainedearnings

40

March 31,2008

June 27,
2008- 37 -

(Consolidated statements of cash flows)
Previous fiscal year
(April 1, 2006 to March 31, 2007)
1. Relationship between the balance of cash andcash equivalents at the end of the fiscal year andamounts stated in the consolidated balance sheets(as of March 31, 2007)
Cash and deposits:
24,455 million yen
Time deposits with a-158 million yen
deposit period of overthree months:
Cashandcash 24,297 million yen
equivalents:

Fiscal year under review(April 1, 2007 to March 31, 2008)
1. Relationship between the balance of cash andcash equivalents at the end of the fiscal year andamounts stated in the consolidated balance sheets(as of March 31, 2008)
Cash and deposits:
22,540 million yen
Time deposits with a-581 million yen
deposit period of overthree months:
Cashandcash 21,958 million yen
equivalents:*2. Expenses for restructuring
Breakdown of amounts stated as Expenses for
restructuring is as follows.
Losses on restructuring:
469 million yen
Decrease in allowance for -2,126 million yen
losses on restructuring:-1,656 million yen*2- 38 --

(Lease transactions)Disclosure of lease transactions is omitted, as there is no significant necessity of such disclosure in
the summary report on financial results.

(Securities)
Disclosure of securities is omitted, as there is no significant necessity of such disclosure in thesummary report on financial results.

(Derivative transactions)
Previous fiscal year (from April 1, 2006 to March 31, 2007) and fiscal year under review (from April
1, 2007 to March 31, 2008):
There are no applicable items, as the Group did not use derivative transactions.

(Retirement benefits)
Disclosure of retirement benefits is omitted, as there is no significant necessity of such disclosure in
the summary report on financial results.

(Stock options, etc.)
Previous fiscal year (from April 1, 2006 to March 31, 2007):
Not applicable.

Fiscal year under review (from April 1, 2007 to March 31, 2008):
Not applicable.

(Tax effect accounting)Disclosure of tax effect accounting is omitted, as there is no significant necessity of such disclosurein the summary report on financial results.

(Segment information)a.

Segment information by business typePrevious fiscal year (from April 1, 2006 to March 31, 2007) and fiscal year under review (from
April 1, 2007 to March 31, 2008):
Segment information by business type is omitted because the amounts of sales, operating
income and assets of the medical electronic equipment business account for over 90 percent of
the total sales, total operating income and total assets of all segments.

b.

Segment information by geographical area

- 39 -

Previous fiscal year (from April 1, 2006 to March 31, 2007) and fiscal year under review (from
April 1, 2007 to March 31, 2008):
Segment information by geographical area is omitted because the amounts of sales andassets in Japan account for over 90 percent of the total sales and total assets of all segments.

c.

Overseas sales
Previous fiscal year (from April 1, 2006 to March 31, 2007) and fiscal year under review (from
April 1, 2007 to March 31, 2008):
Overseas sales are omitted because such sales accounted for less than 10 percent ofconsolidated sales.

(Transactions with related partied)
Disclosure of transactions with related partied is omitted, as there is no significant necessity of suchdisclosure in the summary report on financial results.

(Business combinations, etc.)
Previous fiscal year (from April 1, 2006 to March 31, 2007):
Not applicable.

Fiscal year under review (from April 1, 2007 to March 31, 2008):
Not applicable.

- 40 -

(Per share information)

Net assets per share
Net income per share
Fully diluted net income per
share

Previous fiscal year
(April 1, 2006 to March 31,
2007)
3,888.67 yen
174.90 yen
Not stated, as there is nopotential dilution.

Fiscal year under review(April 1, 2007 to March 31,
2008)3,835.32 yen
164.98 yen
Not stated, as there is nopotential dilution.

Note: The basis for calculation of net income per share and fully diluted net income per share is asfollows:
Item

Previous fiscal year
(April 1, 2006 to March 31,
2007)

Net income per share
Net income (million yen)Amount not belonging toordinary shareholders (million
yen)
Net income in relation tocommon stock (million yen)
Average number of shares
during the fiscal year (1,000
shares)Fully diluted net income pershare
Net income adjustment amount
Increase in the number ofcommon shares (1,000 shares)(stock options by way of thetreasury stock acquisition
method)Outline of the potential sharesthat are not included in thecalculation of fully diluted net
income per share owing to thelack of dilutive effect(Significant subsequent events)
Not applicable.

- 41 -

Fiscal year under review(April 1, 2007 to March 31,
2008)

3,353
-

3,174
-

3,353

3,174

19,176

19,242

-

-

(-)

(-)

5.

Non-consolidated financial statements(1) Balance sheets
Previous fiscal year
(as of March 31, 2007)

Item
AssetsI. Current assets
1. Cash and deposits
2. Trade notes receivable
3. Accounts receivable
4. Securities
5. Merchandise
6. Products
7. Raw materials
8. Work in progress
9. Supplies
10. Advance payments
11. Prepaid expenses
12. Deferred tax assets
13. Short-term
loans
toaffiliates
14. Other accounts receivable
15. Other
Allowance for doubtful
accounts
Total current assets
II. Fixed assets
1. Tangible fixed assets(1) Buildings
Accumulated
depreciation(2) Structures
Accumulated
depreciation(3) Machineryandequipment
Accumulated
depreciation(4) Vehicles and delivery
equipment
Accumulated
depreciation(5) Tools,
instruments
and fixtures
Accumulated
depreciation(6) Land(7) Construction
inprogress
Total tangible fixed assets

Note
No.

Amount (million
yen)

Ratio
(%)

Fiscal year under review(as of March 31, 2008)
Amount (million
yen)

Ratio
(%)

Comparison
with thepreviousyear
Change(millionyen)

15,49098
18,469
999
1,535
2,201
1,447
132
159
146
255
1,754
6,020

9,838
89
19,699
999
2,260
1,984
2,154
39
166
149
290
680
4,913

-5,651
-9
1,230
-0
725
-216
706
-93
7
2
35
-1,074-1,106851
105-2,216857
130-1,1115
25
1,104

47,45455.6

43,14453.8-4,309

5,824
2,855

2,968

5,991
3,047

2,944

-24

291
216

75

291
226

65

-9

55

0

5

-2

7,118

-82

5,009
17

538
12

106
51

117
55

62

64

61

56

8

56

19,11011,90918,5687,200

11,4494,471
414,785- 42 -

17.4

15,21519.0

429

Previous fiscal year
(as of March 31, 2007)

Item
2. Intangible fixes assets(1) Leasehold rights(2) Software(3) Other
Total intangible fixed assets
3. Investments
and
other
assets(1) Investment securities(2) Stocks of affiliates(3) Investments in capital(4) Investments
inaffiliates(5) Long-term loans toemployees(6) Long-term loans toaffiliates(7) Long-term
prepaid
expenses(8) Deferred tax assets(9) Insurance reserves(10) Other
Allowance for doubtful
accounts
Allowance
forvaluationofinvestments
Total investments and otherassetsTotal fixed assets
Total assets

Note
No.

Amount (million
yen)
3
3,417
15
3,435

Fiscal year under review(as of March 31, 2008)

Ratio
(%)

Amount (million
yen)

4.0

5
3,098
15
3,118

Ratio
(%)

3.9

Comparison
with thepreviousyear
Change(million
yen)
1
-318
0
-316

10,773
4,830
1
403

7,843
4,289
1
403

-2,930
-541
-

23

14

-9

1,260

1,215

-45

0

44

43

1,765
1,573
241
-5

3,083
2,185
244
-3

1,318
611
3
2

-1,251-672

579

19,61823.0

18,65023.3-968

37,83985,29344.4
100.0

36,98480,129

46.2
100.0

-855
-5,164- 43 -

Item
Liabilities
I. Current liabilities
1. Trade notes payable
2. Accounts payable
3. Short-term borrowings
4. Other accounts payable
5. Income tax payable, etc.
6. Advances received
7. Deposits received
8. Allowance for bonuses to
employees
9. Allowance for bonuses to
officers
10. Allowance for losses on
liquidation of affiliates
11. Other
Total current liabilities
II. Long-term liabilities
1. Allowance for retirement
benefits to employees
2. Allowance for retirement
benefits to officers
3. Long-term other accounts
payableTotal long-term liabilities
Total liabilities
Net assets
I. Shareholders’ equity
1. Common stock
2. Capital surplus(1) Capital reserves(2) Other capital surplus
Total capital surplus
3. Retained earnings(1) Legal income reserves(2) Other retained earnings
Reserve for businessexpansion
Reserve for advanced
depreciation of fixed
assetsSpecial reserves
Retainedearnings
brought forward
Total retained earnings
4. Treasury stock
Total shareholders’ equity
II. Valuation and translation
adjustments
1. Evaluation difference onother securities
Total valuation and translation
adjustments
Total net assets
Total liabilities and net assets

Note
No.

Previous fiscal year
(as of March 31, 2007)

Fiscal year under review(as of March 31, 2008)

Amount (million
yen)

Amount (million
yen)

Ratio
(%)

Ratio
(%)

Comparison
with thepreviousyear
Change(million
yen)

5,479
6,216
3,500
1,500
21
75
5,375
510

5,002
4,308
3,500
1,539
75
107
4,607
500

-476
-1,907
39
54
32
-767
-10

-

43

43

653

112

-541

252
23,582

71
19,867

27.7

24.8

-181
-3,714

1,117

1,056

-61

932

-

-932

-

854

854

2,050
25,633

2.4
30.1

1,911
21,779

2.4
27.2

-139
-3,854

4,621

5.4

4,621

5.8

-

12.5

131
131

8,946
904

8,946
1,036
9,851

11.6

9,982

1,171

1,171

-

300

300

-

49

49

-

37,5003,902

37,500
5,045

1,142

42,923-932
56,463

50.3
-1.1
66.2

3,197

44,066-766
57,903

55.0
-1.0
72.3

446

1,142
165
1,440

-2,750

3,197

3.7

446

0.5

-2,75059,66085,29369.9
100.0

58,35080,12972.8
100.0-1,310-5,164- 44 -

(2) Statements of income

Item
I. Net sales
1. Sales of products
2. Sales of merchandise
3. Other sales
II. Cost of sales
1. Product inventories at the
beginning of the fiscal year
2. Product manufacturing costs
Total
3. Transfer to other accounts
4. Finished product inventories
at the end of the fiscal year
Cost of sales of products
1. Merchandise inventories at the
beginning of the fiscal year
2. Purchases of merchandise
Total
3. Transfer to other accounts
4. Merchandise inventories at theend of the fiscal year
Cost of sales of merchandise
Other cost of sales
Gross profit

Note
No.

Comparison
with thepreviousyear
Change(millionyen)

Previous fiscal year
(April 1, 2006 to March
31, 2007)

Fiscal year under review(April 1, 2007 to March
31, 2008)

Amount (million
yen)

Ratio
(%)

Amount (million
yen)

Ratio
(%)

100.0

15,451
32,528
8,121

56,100

100.0

2,036

41,372
14,728

73.7
26.3

-348
2,384

18,26328,213
7,586

54,064

2,941

2,201

13,10916,0511,551
2,201

12,096
14,297
1,615
1,984

12,298
1,914

10,697
1,535

26,22828,142
801
1,535

28,09329,62841
2,260

25,8053,616

41,72012,343- 45 -

77.2
22.8

27,3273,348

Item
III. Selling,
generalandadministrative expenses
1. Advertising expenses
2. Packing and freightcharges
3. Service
andrepairexpenses
4. Provision of allowancefor doubtful accounts
5. Salaries and benefits
6. Bonuses
7. Provision of allowancefor bonuses
8. Retirement
benefitexpenses
9. Provision of allowancefor bonuses to officers
10. Commission expenses
11. Premiums
12. Lease expenses
13. Researchanddevelopment
expenditures
14. Depreciation
15. Other
Operating income
IV. Non-operating income
1. Interest income
2. Dividend income
3. Real estate rental income
4. Foreign exchange gains
5. OtherV. Non-operating expenses
1. Interest income
2. Foreign exchange losses
3. Provision of allowanceforvaluationofinvestments
4. Investment partnershiplosses5. OtherOrdinary income

Note
No.

Previous fiscal year
(April 1, 2006 to March
31, 2007)

Fiscal year under review(April 1, 2007 to March
31, 2008)

Amount(million yen)Amount(million yen)

Ratio
(%)

721
730

662
695

465

465

58

-

1,784
272
270

1,860
258
270

99

85

-

43

1,635
577
269
1,351

1,756
773
255
1,940

383
2,518

80
1,097
279
82

11,138
1,205

1,538

20.6
2.2

2.8

1,032
2,576

88
1,234
283
7
105

85
68
65

99
-

-

11

19

238
2,505

- 46 -

0.4
4.6

0

Ratio
(%)

Comparison
with thepreviousyear
Change(millionyen)

12,675
2,053

22.6
3.7

1,536
848

1,719

3.0

181

111
3,661

0.2
6.5

-126
1,155

Item
VI. Extraordinary gains
1. Gainson
insurance
surrender
2. Gainson
saleof
investment securities
3. Gains on sale of shares inaffiliates
4. Gains on reversal of
allowance for valuationof investments
5. Gains on reversal of
allowance for doubtful
accounts
6. Gains on reversal of
allowance for losses on
liquidation of affiliates
7. Compensationfordamages received
VII. Extraordinary losses
1. Losses on disposal of
fixed assets
2. Losses on sale of fixed
assets
3. Losses on devaluation of
investment securities
4. Impairment losses
5. Provision of allowancefor doubtful accounts
Net income before taxes
Corporate,
inhabitants’and enterprise taxes
Corporatetax
adjustments
Net income

Note
No.

Previous fiscal year
(April 1, 2006 to March
31, 2007)

Fiscal year under review(April 1, 2007 to March
31, 2008)

Amount(million yen)Amount(million yen)

Ratio
(%)

55

285

-

427

111

-

90

38

-

34

1,547

5

35

1,840

3.4

-

24

39

3

-

469

-

46
685

1,228

2.3

3,117

5.7

10
2,017

-

Ratio
(%)

Comparison
with thepreviousyear
Change(million
yen)

790

1.4

-1,04939

0.0-1,189

4,412

7.9

1,295

1,732

3.1

-294

2,679

4.8

1,589

90
2,027

3.7

1,090

2.0

- 47 -

1,642

8,584
511

59.2
3.5

8,495
-

61.8
-

Comparison
with thepreviousyear
Change(million
yen)
-88
-511

1,363

9.4

2,415

17.5

1,052

2,830
13,74120.7
100.0-1,208-756

Previous fiscal year
(April 1, 2006 to March 31,
2007)
Item
I. Materials expenses
II. Subcontracted processing
expenses
III. Labor expenses
IV. Other expenses
Subcontracted designing
expensesandtrial
manufacture expenses
OthersTotalmanufacturing
expensesWork
inprogress
inventories
atthebeginning of the fiscal
year
Transfer from otheraccounts
Total
Work-in-progress
inventories at the end of
the fiscal year
Transfertootheraccounts
Product manufacturing
costs

Note
No.

Amount(million yen)

Ratio
(%)

2,604

1,434

Fiscal year under review(April 1, 2007 to March
31, 2008)
Amount(million yen)

Ratio
(%)

1,387

4,038
14,497

27.9
100.0

1,442

318

132

-185

50

46

-3

14,865132

13,920
39

-944
-93

1,622

1,785

162

13,10912,096-1,013*2*3(Footnotes)
Previous fiscal year
(April 1, 2006 to March 31, 2007)

1.

Fiscal year under review(April 1, 2007 to March 31, 2008)

Cost calculation method
The Company calculates cost of products by
way of job-order cost system (projection). Cost
variances are allocated to cost of sales, products
and work in progress at the end of the fiscal year.
*2 Breakdown of transfer from other accounts
Current assets and others
46 million yen(Trialmanufactureandresearch in progress)
Others3 million yen
Total
50 million yen*3 Breakdown of transfer to other accounts
Research
and1,309 million yen
development expenses
Current assets and others
44 million yen(Trial manufacture andresearch in progress)
Others
268 million yen
Total
1,622 million yen

1. Cost calculation method
Same as on the left

*2 Breakdown of transfer from other accounts
Current assets and others
43 million yen(Trial manufacture andresearch in progress)
Others3 million yen
Total
46 million yen*3 Breakdown of transfer to other accounts
Research
and1,383 million yen
development expenses
Current assets and others
39 million yen(Trial manufacture andresearch in progress)
Others362 million yen
Total
1,785 million yen- 48 -

(3) Statements of changes in shareholders’ equity
Previous fiscal year (from April 1, 2006 to March 31, 2007)
Shareholders’ equity
Retained earnings
Other retained earnings

Capital surplus

Capitalreserve

Other
capitalsurplusTotal
capitalsurplusLegalreserve

Reserveforbusiness
expansion

Reserve foradvanceddepreciationof fixed
assetsSpecialreserves

Retainedearnings
brought
forwardTotal
retainedearnings

Treasury
stock

Total
shareholders’equity

4,621

8,946

904

9,851

1,171

300

49

41,500346

43,367-931

56,908

-

-

-

-

-

-

-

-4,000

4,000

-

-

-

-

-

-

-

-

-

-

-

-1,534
1,090-1,534
1,090--1,534
1,090

Commonstock

Balance as of March 31,
2006 (million yen)
Changes during the fiscal
year
Reversalof
specialreserves
Dividends paid (Note)
Net income
Acquisition of treasury
stock
Disposal of treasury stock
Changes in items otherthan shareholders’ equity
during the fiscal year(net)
Total changes during the
fiscal year (million yen)
Balance as of March 31,
2007 (million yen)

-

-

-

-

-

-

-

-

-

-

-1

-1

-

-

-

-

-

-

-

-

-

-

0

0

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-4,000

3,556

-443

-1

-445

4,621

8,946

904

9,851

1,171

300

49

37,5003,902

42,923-932

56,463

Valuation and translation adjustments
Total valuation and translation
adjustments
3,925
3,925

Evaluation difference on other securities
Balance as of March 31, 2006 (million
yen)Changes during the fiscal year
Reversal of special reserves
Dividends paid (Note)
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes
in
items
other
than
shareholders’ equity during the fiscal
year (net)Total changes during the fiscal year
(million yen)
Balance as of March 31, 2007 (million
yen)

Total net assets
60,834-728-728-1,534
1,090
-1
0
-728

-728

-728

-1,173

3,197

3,197

59,660Note: Of this amount, 767 million yen is of appropriation of retained earnings approved at the Ordinary
General Meeting of Shareholders held in June 2006.

- 49 -

Fiscal year under review (from April 1, 2007 to March 31, 2008)
Shareholders’ equity
Retained earnings
Other retained earnings
Reserve forTreasury
Total
Reserve
Retained
advancedstockforSpecial earnings retained
depreciation
earnings
businessreserves broughtof fixed
expansion
forwardassetsCapital surplus
Commonstock

Balance as of March 31,
2007 (million yen)
Changes during the fiscal
year
Dividends paid (Note)
Net income
Acquisition of treasury
stock
Disposal of treasury stock
Changes in items otherthan shareholders’ equity
during the fiscal year (net)Total changes during the
fiscal year (million yen)
Balance as of March 31,
2008 (million yen)

Totalshareholders’equityCapitalreserve

Other
capitalsurplusTotal
capitalsurplusLegalreserve

4,621

8,946

904

9,851

1,171

300

49

37,5003,902

42,923-932

56,463

-

-

-

-

-

-

-

-

-1,536
2,679-1,536
2,679--1,536
2,679

-

-

-

-

-

-

-

-

-

-

-2

-2

-

-

131

131

-

-

-

-

-

-

168

300

-

-

-

-

-

-

-

-

-

-

-

-

-

-

131

131

-

-

-

-

1,142

1,142

165

1,440

4,621

8,946

1,036

9,982

1,171

300

49

37,5005,045

44,066-766

57,903

Valuation and translation adjustments
Total valuation and translation
adjustments
3,197
3,197

Evaluation difference on other securities
Balance as of March 31, 2007 (million
yen)Changes during the fiscal year
Dividends paid (Note)
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes
in
items
other
than
shareholders’ equity during the fiscal
year (net)Total changes during the fiscal year
(million yen)
Balance as of March 31, 2008 (million
yen)

Total net assets
59,660-2,750-2,750-1,5362,679-2300-2,750-2,750-2,750-1,310446

446

58,350Note: Of this amount, 767 million yen is of appropriation of retained earnings approved at the Ordinary
General Meeting of Shareholders held in June 2007.

- 50 -

(4) Significant accounting policies
Item
1. Valuation
standards
methods for securities

2. Valuation
standards
methods for inventories

and

and

Previous fiscal year (from April
1, 2006 to March 31, 2007)(1) Held-to-maturity bonds- Amortized cost method(2) Shares of subsidiaries andaffiliates- Stated at cost based on themoving average method.
(3) Other securities
Marketable securities- Stated at fair value basedon the market price as of theend of the fiscal year.
(Unrealized holding gains orlosses are reported in acomponent of net assets,with the cost of securities
sold is calculated by themoving average method.)
Non-marketable securities- Stated at cost based on themoving average method.
For investments in theinvestment enterprise limited
Liability association andsimilar associations (deemed
to be securities pursuant to
Article 2, Paragraph 2 of the
Securities and Exchange
Law), the net amountcorrespondingtotheownership percentage isused, based on the mostrecent financial statements
available as of the reporting
date and other materials
stipulated in the partnershipcontract.
Merchandise and products- Stated at cost determinedby the first-in, first-out
method.
Raw materials- Stated at cost determinedby the gross average method.
Work in progress- Stated at cost based on thespecific cost method.
Supplies- Stated based on the lastpurchase price method.

- 51 -

Fiscal year under review (from
April 1, 2007 to March 31, 2008)(1) Held-to-maturity bonds
Same as on the left
(2) Shares of subsidiaries andaffiliates
Same as on the left
(3) Other securities
Marketable securities
Same as on the left

Non-marketable securities
Same as on the left
For investments in theinvestment enterprise limited
Liability association andsimilar associations (deemed
to be securities pursuant to
Article 2, Paragraph 2 of the
Financial Instruments andExchange Law), the net
amount corresponding to theownership percentage isused, based on the mostrecent financial statements
available as of the reporting
date and other materials
stipulated in the partnershipcontract.
Merchandise and products
Same as on the left

Raw materials
Same as on the left
Work in progress
Same as on the left
Supplies
Same as on the left

Item
3. Depreciation method for fixed
assetsPrevious fiscal year (from April
1, 2006 to March 31, 2007)(1) Tangible fixed assets
Depreciated by the decliningbalance method.
However,buildings (except for building
attachments) acquired on or after
April 1, 1998 were depreciatedusing the straight-line method.
Major useful life:
Buildings:
3–50 years
Structures:
10–60 years
Machinery and equipment:
8–12 years
Vehicles and delivery equipment:
4–6 years
Tools, instruments and fixtures:
2–20 years
Assets with an acquisition
cost of 100,000 yen or more but
less than 200,000 yen were
evenlyamortizedoverathree-year period.
Of the tools, instruments andfixtures, the oxygen concentrator
devices (assets for rental) weredepreciated by the straight-line
method with the estimated rental
period (four years) as adepreciation year.
-- 52 -

Fiscal year under review (from
April 1, 2007 to March 31, 2008)(1) Tangible fixed assets
Same as on the left

(Changes in accounting policies)
In accordance with therevision of the Corporate Tax
Law, from this fiscal year, theCompany has changed thedepreciation method for tangible
fixed assets acquired on or after
April 1, 2007 to the method
stipulatedintherevisedFinancial
Instruments
andExchange Law.
This change had little effecton earnings for this fiscal year.

Item

Previous fiscal year (from April
1, 2006 to March 31, 2007)-(2) Intangible fixed assets
Depreciatedbythestraight-line method.
Software for internal use isamortized by the straight-line
method over its useful life of five
years.
As for software for sale inthe market, the Company records
the larger of an amortization
based on projected sales volume
for the effective sales period (nolonger than three years) or a
uniform amortization over theeffective remaining sales period.

- 53 -

Fiscal year under review (from
April 1, 2007 to March 31, 2008)(Additional information)
In accordance with therevision of the Corporate Tax
Law, from this fiscal year theCompany has changed thedepreciation method for tangible
fixed assets acquired on or
before March 31, 2007 that are
fully
depreciatedtothemaximum allowable amountusing the depreciation method
stipulated in the pre-revisionCorporate Tax Law. From thisfiscal year, the depreciation
method used by the Company is
the one in which it evenly
depreciates the residual bookvalue up to the reminder value
over five years, from the next
fiscal year of the fiscal year in
which
these
assetsaredepreciated to the maximum
allowable amount.
This practice had little effecton earnings for this fiscal year.
(2) Intangible fixed assets
Same as on the left

Item
4. Basisforallowances

provision

Previous fiscal year (from April
Fiscal year under review (from1, 2006 to March 31, 2007)
April 1, 2007 to March 31, 2008)of (1) Allowance for doubtful (1) Allowance for doubtful
accounts
accounts
To prepare for losses
Same as on the left
incurred by bad debts, theamount of potential loss iscalculated by using the historicalloss ratio in the case of generalloans or receivables. Potential
losses for specific loans or
receivables, for which we haveconcerns
regardingtheircollectability, are calculated byassessing the possibility ofcollection for each individual
account.
(2) Allowance for valuation of (2) Allowance for valuation of
investments
investments
To prepare for losses on
Same as on the left
investments in subsidiaries andsimilar organizations, we reserve
the necessary amount while
taking into account financial
conditions of subsidiaries andother factors.
(3) Allowance for bonuses to (3) Allowance for bonuses to
employees
employees
To prepare for the payment
Same as on the leftof bonuses to employees, wereserve an amount corresponding
to this fiscal year’s portion of
estimated bonus payments toemployees.
(4) Allowance for bonuses to (4) Allowance for bonuses to
officers
officers
To prepare for the payment
Same as on the leftof bonuses to directors andcorporate auditors, we reserve anamount corresponding to thisfiscal year’s portion of estimatedbonus payments to directors andcorporate auditors.
(Changes in accounting policies)
Beginning this fiscal year,
the Company adopted the
AccountingStandards
forDirectors’ Bonuses (Corporate
Accounting Standards No. 4,
November 29, 2005).
This adoption has little effecton profits and losses.

- 54 -

Previous fiscal year (from April
Fiscal year under review (from1, 2006 to March 31, 2007)
April 1, 2007 to March 31, 2008)(5) Allowance for losses on (5) Allowance for losses on
liquidation of affiliates
liquidation of affiliates
To prepare for losses on
Same as on the left
liquidation of affiliates, theamount of the estimated losses
was reserved.
(6) Allowance for retirement (6) Allowance for retirement
benefits to employees
benefits to employees
To prepare for the payment
Same as on the leftof
retirement
benefits
toemployees,theamountrecognized as accruing at the endof this fiscal year was reserved,
based on estimated retirement
benefit obligation and pension
assets at the end of this fiscal
year.
Actuarial differences areamortized, using the straight-line
basis over a certain number ofyears (10 years), which are lessthan the average remaining yearsof service of the employees when
they incurred, from the fiscal
year after the one in which theyarise.
(7) Allowance for retirement (7)benefits to officers
The We abolished theofficers’’ retirement benefit
program was abolished on June29, 2005.
“Allowance for retirement
benefits to officers” represents
the estimated amount to be paid
to directors and corporate
auditors, who were in office on
the day of abolishing the
program.
5. Lease transactions accounting
Finance lease transactions,
Same as on the left
methodother than those, in which theownership of the leased property
is recognized as having beentransferred to the lessee, arebased on the accounting method
for ordinary lease transactions.
6. Other important matters for Accounting
treatmentof Accounting
treatmentofpreparationoffinancial consumption tax, etc. and other consumption tax and other taxes,
statements
taxes
etc.
The Consumption tax and other Same as on the left
taxes, etc. are excluded fromprofits and losses.
Item- 55 -

Change in accounting methods
Previous fiscal year
(from April 1, 2006 to March 31, 2007)(Accounting standards for presentation of net
assets in the balance sheets)
Beginning this fiscal year, the Company
adoptedthe“AccountingStandards
forPresentation of Net Assets in the Balance Sheets”(Corporate Accounting Standards No. 5, December
9, 2005) and the “Guidelines for the Application of
the Accounting Standards for Presentation of Net
Assets in the Balance Sheets” (Guidelines for the
Application of Corporate Accounting Standards
No. 8, December 9, 2005).
This adoption has little effect on profits andlosses.
The amount corresponding to the conventional
Total shareholders’ equity in the balance sheets
was 59,660 million yen.
Along with the revision to the Regulations on
Financial Statements, the financial statements forthis fiscal year were prepared in accordance withthe revised regulations.

Fiscal year under review(from April 1, 2007 to March 31, 2008)-

Change in display method
Previous fiscal year
(from April 1, 2006 to March 31, 2007)--

Fiscal year under review(from April 1, 2007 to March 31, 2008)(Balance sheets)
Allowance for retirement benefits toofficers, which was separately reported in theprevious fiscal year, was presented as Long-termother accounts payable under Long-term
liabilities from this fiscal year. We made thischange because the First Audit Committee Report
No. 42, “Audit Treatment for Reserves of Special
Taxation Measures Law, Allowances or Reservesof Special Law, and Allowances for Retirement
Benefits to Officers,” was announced on April 13,
2007.
(Statements of income)Investment partnership losses, which was
included in Other under Non-operating expenses
in the previous fiscal year, was separately
presented from this fiscal year as the amount ofsuch losses exceeded 10/100th of non-operating
expenses.
In the previous fiscal year, Investment
partnership losses were 14 million yen.

- 56 -

6.

Others(1) Changes of officers(i) Representative director
Not applicable.

(ii) Other officers- Candidate for Director to be newly appointed
Director: Shuichi Fukuda (current position is Operating Officer and General Manager of
Accounting Division)- Director to retire
Managing Director: Masayuki Iwamoto (slated to be appointed as Adviser)(iii) Scheduled appointment dateJune 26, 2008

- 57 -