BUSINESS REPORT 2007
December 1, 2006 to November 30, 2007

NACHI-FUJIKOSHI CORP.
Stock Code: 6474

TO OUR SHAREHOLDERS
I am delighted to report to you about NACHIFUJIKOSHI’s business performance for the
fiscal year ended November 30, 2007.
Business Environment
During the period under review, Japan’s
economy continued to make a modest recovery.
This reflected increased corporate earnings
supported by strong exports, although crude
oil and raw material prices rose and capital
expenditure was postponed in certain sectors.
Overseas economic growth was also robust
overall, mainly due to expansion in Asian markets and a rebound in the European economy,
although the U.S. economy has slowed.
Business Progress and Results
In this environment, the NACHI-FUJIKOSHI
Group improved and augmented its systems
on the marketing, manufacturing and development fronts, and vigorously promoted“NACHI Business.” The latter enabled us toprovide linked products, technologies and services in response both to increasing worldwide
automobile production centered on Japanesemanufacturers and to the growing markets of
the industrial machinery sectors, including
construction equipment and aircraft.
These actions resulted in record net sales
and earnings on a consolidated basis for thesecond consecutive term.

About the Cover Design
The triangle symbolizes the notion of “SeiHan-Go,” or “Fusing discrete and opposing
ideas into one,” the Group corporate philosophy implicit in the meaning of “Fuji” inour name.

01

Net sales amounted to ¥193.6 billion, up
3.7% from the previous fiscal year. Sales to
the Japanese market accounted for ¥129.5
billion (up 0.8% year on year), while overseas
sales climbed 10.1% to ¥64.1 billion.
Turning to earnings, operating income
increased ¥1.2 billion, or 7.8% year on year,to ¥16.7 billion, ordinary income rose 7.9% to¥15.2 billion, and net income for the year
under review increased 7.6% to ¥7.8 billion.
These improvements were posted despite rising raw material and component prices, higher
fixed expenses due to expansion of the production system and other factors. Such concerns were largely offset by improved capacity
utilization stemming from increased sales andproduction, as well as enhanced productivity
and other total cost reduction efforts.
Cash Dividends
In recognition of business performance during the year and of projected business growthin the future, the Company paid a cash dividend of ¥8 per share, the same amount as in
the previous fiscal year.
Future Action
Looking ahead, firm growth is expected tocontinue in the automobile and industrial
machinery sectors against the backdrop of
expanding markets in newly emerging econo-mies. Meanwhile, issues fueling future uncertainty also abound: economic slowdown in the
U.S., fluctuations in the yen-dollar currency
exchange market, and price trends in crude
oil and raw material markets all contribute toa business environment in which we must
proceed cautiously.
Given these circumstances, the NACHIFUJIKOSHI Group will strive to establish astable earnings base by reinforcing the linkage between every aspect of our operations.
Moreover, we will strive to boost corporate
value by upholding the NACHI brand, a nametrusted across the globe in the manufacturing field.
I thank all of our shareholders for your continued support and understanding.
February 2008

Kensuke Imura, President

RESULTS OF OPERATIONS (Consolidated)
Sales by Business Segments

Overseas Sales

Special Steels/
Industrial Furnaces
and Others

Cutting Tools

9%
HydraulicEquipment

Europe16%

20%¥193.6billion17%
11%

Machine Tools/
Precision Machinery¥64.1
billion9%40%

America43%

Robots35%
Asia, Oceania,
and the Middle East

Bearings

Net Sales

Operating Income(¥ billions)(¥ billions)

186.7

Overseas Sales(¥ billions)

15.5

176.0

58.2

13.2

2005

2006

64.1

16.7

193.6

2007

2005

49.5

2006

2007

2005

2006

2007

02

THE NACHI BUSINESS NETWORK—Contributing to the Progress of theAutomobiles Products for a safe, comfortable and smooth ride

Aircraft Achieving high productivity and high-precision
processing for jet engine components

Steering

Turbine discs
and blades

Bullet Trains

Utility (Small Shovels)

Ensuring high speed,
safety and comfort

Massive power in an energy
efficient, compact package

Engines

Transmissions

Constant-velocity(CV) joints
Undercarriages

Products used in everything from automobiles, aircraft, bullet trains, small— Technologies that create, handle and drive everything. And there’s
Machining & Robots

Components

Supporting production line automation with the required highperformance and high precision

In pursuit of greater safety andPrecision tools
Machine tools

03

Ultra-precise processing
machinery with nano-level
precision

Large-sized glass substratetransfer robot

High-performance
bearings

World of Product Manufacturing
Industrial Machinery Realizing outstanding precision and efficiency

Electrical & Electronic Devices
From home appliances to IT

Injection molding
machines

Machinetools

Homes & Lifestyle Familiar parts of everyday life

DIY products
Aspheric lenses usedin digital equipment
Seismic isolator

Moveable roof domes

shovels, and machine tools to mobile phones, digital cameras and LCD TVs
always something new on the horizon. “Wonders from NACHI, Art in NACHI”
Materials & Heat Treatment
comfortSupporting high performance andsuperb quality

Special steels

Hydraulic equipment
for construction andindustrial machines

Solenoid valves forautomobiles

Coating, carburizing and other surface
modification technologies
04

FINANCIAL STATEMENTS
Consolidated Balance Sheets
Item(¥ millions)2007(As of November
30, 2007)

2006(As of November
30, 2006)

ASSETS:2006(As of November
30, 2006)

LIABILITIES:
99,83390,894

Cash and cash equivalents

20,996

13,406

Notes and accounts receivable

41,149Inventories

Current assets

Item

2007
(As of November
30, 2007)

100,815

91,259Notes and accounts payable

38,83035,98842,220

Short-term bank loans

33,78933,86731,32630,097

Other accounts payable

10,982

9,282

Deferred tax assets

3,660

3,047

Other

17,211

12,120

Other

2,979

2,417

39,52339,989Allowance for doubtful accounts

(279)

(294)

Bonds and long-term debt

28,201

26,619Fixed assets

101,946

95,213

Allowance for retirement benefits

7,226

8,171

Property, plant and equipment

82,024

72,393

Other

4,096

5,197

Buildings and structures

28,643

21,744140,338

131,248

Machinery and equipment

43,22939,731

Land

7,659

7,226

Construction in progress

1,018

1,852

Shareholders’ equity

56,22349,918

Other

1,473

1,838

Common stock

16,074

16,074

Intangible fixed assets

402

429

Additional paid-in capital

11,571

11,452

Software335

332

Retained earnings

28,76022,548

Other

66

96

(183)

(157)

Investments and advances

19,51922,390

2,854

3,283

Investment securities

16,255

19,230Long-term loans receivable

149

150

available-for-sale securities

6,067

7,531

Deferred tax assets

837

866

Translation adjustments(3,212)(4,247)

2,305

2,181

Minority interests

2,362

1,656

(28)

(38)

Total net assets

61,44054,859201,779

186,107

Total liabilities and net assets

201,779

186,107

Current liabilities

Long-term liabilities

Total liabilities
NET ASSETS:

Other
Allowance for doubtful accounts
Total assets

05

Treasury stock
Revaluations and translation adjustments
Unrealized gains on

Consolidated Statements of Income
Item(¥ millions)

2007(For the year ended
November 30, 2007)

2006(For the year ended
November 30, 2006)

193,670
16,774
15,286
1,045
2,765

186,722
15,555
14,161624
1,594

13,567
7,858

13,191
7,304

Net sales
Operating income
Ordinary income
Extraordinary income
Extraordinary losses
Income before income taxes
and minority interests
Net income

Consolidated Statements of Cash FlowsItem(¥ millions)

2007(For the year ended
November 30, 2007)

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase in cash and cash
equivalents
Cash and cash equivalents
at beginning of the year
Cash and cash equivalents
at end of the year

2006
(For the year ended
November 30, 2006)

20,769(11,060)(1,469)10,221(18,812)
11,627

8,322

3,186

12,643

9,231

20,965

12,643

Consolidated Statement of Changes in Shareholders’ Equity (For the year ended November 30, 2007)
Item

Balance as of November 30, 2006

Commonstock

Shareholders’ equity
Additional
Retained
Treasurypaid-inearnings
stock
capital16,074

11,452

Changes during the fiscal year
Dividends from retained earnings
Net income
Acquisition of treasury stock
Disposal of treasury stock
Increase due to consolidation of equity
method affiliates
Minimum pension liability adjustmentsof overseas subsidiary
Other
Net changes in items other thanshareholders’ equity

22,548(¥ millions)

Revaluations and translation adjustments
Total
Unrealized gains
Total revaluations
shareholders’ on available-for- Translation and translation
adjustments
sale securities
adjustments
equity

3,283

1,656

54,85949,918(58)
33(1,989)
7,858
(58)
152

(1,989)
7,858
(58)
152

15

15

15

279
47

279
47

279
47

119

(4,247)Total
net assets(157)(1,989)
7,858

7,531

Minority
interests(1,464)

1,034

(429)

705

276

Total changes during the fiscal year

–

119

6,211

(25)

6,304

(1,464)

1,034

(429)

705

6,580

Balance as of November 30, 2007

16,074

11,571

28,760(183)

56,223

6,067(3,212)

2,854

2,362

61,44006

TOPICS
Topics1 Bolstering the Engineering Business in World Markets
NACHI Engineering establishedWe set up NACHI Engineering Co., Ltd. as a corebase for various engineering services, including
the re-sharpening and recoating of precision
cutting tools and robot maintenance.
NACHI-FUJIKOSHI is expanding its engineering business in many parts of the world, providing our customers with total support ranging fromconsulting services to products, technologies andafter-sales services.

NACHI (Shanghai) Precision Tools Co., Ltd.
(Shanghai, China)

NACHI Engineering(Ayase City, Kanagawa Prefecture, May 2007)

NACHI Precision North Carolina Inc.
(North Carolina, U.S.)

Topics2 Broadening Alliances
Joint development in magnesium alloy business with Sankyo Tateyama Aluminium

We have succeeded in commercializing the
production of high-quality magnesium alloy
sheets by combining our processing technologies with those of Sankyo Tateyama
Aluminium, Inc.
Going forward, we will expand the market formagnesium alloys in a wide range of sectors,
from electrical and electronic devices to automobiles and industrial machinery. (May 2007)

GS MILL cutting tools awarded “Monodzukuri Manufacturing Award(Machine Parts Award)”
With their superior resource- andenergy-saving characteristics as well as
high productivity, GS MILL cutting tools
are developed, manufactured and soldin cooperation with Sumitomo Electric
Hardmetal Corp.
High-quality manufacturing requires
precision cutting tools that meet global
standards, and as such GS MILL cutting tools are highly acclaimed by themarket and won this coveted award forthe third consecutive year.
(Award sponsored by The Nikkan Kogyo
Shimbun, March 2007)

Topics3 Focusing on the Development of Materials Technology
Establishment of R&D Material

Developing FM ALLOY, a high-performance super-alloy

We have established R&D Material at
the Higashi-Toyama Plant as a NACHI
business base for R&D for materials,
heat treatment and coatings.
At the plant, we are focusing on thedevelopment of materials for new
applications, and on saving resources.

We have succeeded in commercializing this high-performance super-alloy
through the development of a new
manufacturing technique and theinstallation of special melting furnaces.
FM ALLOY will be used in sectors
requiring new types of functional parts
such as aircraft and ultra-precision
machinery.

(Higashi-Toyama Plant, May 2007)

07(Higashi-Toyama Plant, October 2007)

FM ALLOY: An alloy suited to numerous applications.

Topics4 Strengthening Our Robot BusinessAt the 2007 International Robot Exhibition, we introduced the Presto MR20,
a new platform robot featuring 7-axes and multiple joints
We recently developed this new-concept robot that can movewith human-like flexibility and exhibited it at the 2007 International Robot Exhibition, where it attracted much attention.
Presto MR20 can carry out a variety of the complex operations involved in a wide range of processes, including
assembly, processing and transportation. We will use thisrobot to develop new markets centered on the industrial
machinery sector.
The Japan Robot Association (Chairman: Kensuke Imura,president of NACHI-FUJIKOSHI) hosted the world’s first“Robot Summit.” The summit comprised the world’s sevenmajor robot manufacturers who assembled to discuss the
future potential of robots and the business strategies ofeach company.
(November 2007)

Topics5 Proactive Investment in Competitive Products
Expanding the production system of the NACHI-FUJIKOSHI GroupStrengthening the production system
for high-performance bearings at
three bases worldwide

Established a new hydraulic drive
motor factory for utility (small
construction machinery) makers.
(Namerikawa Plant, Toyama
Prefecture, June 2007)

Expanded Yachi Plant of NACHI
Tohoku Seiko Co., Ltd.
Increased production of rotary
center joints for utility makers (forlargest market share in the world).
(Yamagata City, October 2007)

Nachi Technology (Thailand) Co., Ltd.
(Thailand)

Nachi Do Brasil Industria E Comercio
Ltda. (Sao Paulo, Brazil)

Built a new factory of gearcutting tools for precision gears.
(Toyama Plant, August 2007)

Built a new machine parts processing factoryat NACHI Machinery Engineering Co., Ltd.
(Nagaresugi Plant, Toyama Prefecture,
May 2007)

Dongguan Nachi C.Y. Corporation(Guangdong, China)

08SHAREHOLDER INFORMATION (As of November 30, 2007)
Number of Shares Issued: 249,193,436
Number of Shareholders:
34,961
Major Shareholders:Shareholders

Toyota Motor Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
NACHI WANEI Stockholding
Employees Stock Ownership Plan
Japan Trustee Services Bank, Ltd.

Breakdown of Shareholders

Number of shares
held (thousand)Shareholding
ratio (%)

13,182
11,888
11,032
10,704
9,325

5.29
4.77
4.43
4.30
3.74

ForeignInvestors
31,080,000
shares(12.5%)

Financial
Institutions
80,106,000
shares(32.2%)
Other
Japanese
Corporations
39,480,000
shares(15.8%)DIRECTORS (As of March 1, 2008)
President andRepresentative Director

Kensuke Imura
Executive Vice President
and Representative Director

Hiroo Honma
Executive Vice President
and Representative Director

Masahiro Nagao

Individuals
69,271,000
shares(27.8%)

Stock Ownership
Associations
25,027,000
shares
(10.0%)
Securities
Companies
4,227,000 shares(1.7%)

Managing Director

Managing Director

DirectorStanding Corporate Auditor

Hideki Kasahara

Kiyoshi Nakagawa

Hideo Terakoshi

Naoto Nakano

Managing Director

Managing Director

DirectorStanding Corporate Auditor

Yukihiko Tanaka

Masayuki Higeukon

Zenshiro Kaneko

Atsushi Saguchi*

Managing Director

Director

DirectorStanding Corporate Auditor

Noriyasu Shiba

Masao Motobayashi*

Hiroshi Yamada

Teruo Akashi

Managing Director

Director

Director

Corporate Auditor

Kenji Ishiguro

Makoto Sasaki

Keiichi Ogino

Eiichi Fukushima**Outside director or outside
corporate auditor

Origin of the Corporate Name “FUJIKOSHI”
NACHI-FUJIKOSHI CORP. was founded in the city of Toyama in 1928.
Kohki Imura, the founder, named the company FUJIKOSHI in orderto give concrete expression to his creed that self sufficiency in machine tool supply is indispensable to Japan’s economic prosperity.
The first two characters “ 不二 ” which read “Fuji” were pickedfrom the Buddhist scriptures. A passage in the scriptures says
“Justice and injustice appear to be different things. The truth is thatthey are “Fuji” (not two). They are one and the same”.
In other words, the true comprehension of objects is attainable
only through penetrating observation from high above, ignoring thesuperficial appearances of such objects.
The third Chinese character “越” which reads “koshi,” has the samepronunciation as “高志” which means the general area along the Japan
Sea since old days, and leads to the “Art” which we are aiming.
With these words, we are also aiming to improve technologies
and to enhance the corporate value.
09

Origin of the Trademark “NACHI”
NACHI brand name comes from “KUMANO-NACHI-TAISHA,” theGrand Shrine, that is the origin of Japan. It expresses strong entrepreneurial will.
In 1929, the Emperor Showa made a tour of the Kansai district
to inspect industries as part of the encouragement of domestic
production, and personally inspected a FUJIKOSHI hacksaw bladethat was on display as an example of an outstanding domestic product at the Osaka Prefectural Office.
Overjoyed at the honor of entertaining the Emperor’s special
attention, Kohki Imura decided to name his product “NACHI” after
the name of the latest naval cruiser to be made in Japan, the verysame vessel that the Emperor was sailing on for his tour.
Fujikoshi, in the early days of Showa, was still a fledging machine
tool supplier. For Imura, “NACHI” was the word that best identified
FUJIKOSHI products with the dignity of the Emperor.

CORPORATE INFORMATION (As of November 30, 2007)
Foundation:
Capital:Number of Employees:
Major Products:
Machining

December 21, 1928
¥16 billion
5,802 (Consolidated)

2,734 (Non-consolidated)

Cutting Tools, Forming Tools, Cutting Saws, Precision Forming, Machine Tools,
Precision Machinery, Machining Systems
RobotsRobot Systems, Electronic Equipment
Components
Bearings, Hydraulic Equipment, Automotive Parts, Seismic Isolation Systems
Materials & Heat Treatment Special Steels, Industrial Furnaces, Coating
Major Domestic Offices and Plants:
Toyama Head Office
1-1-1, Fujikoshi-Honmachi, Toyama 930-8511, Japan
Tel: +81-76-423-5111
Tokyo Head Office
Shiodome Sumitomo Bldg. 17F,
1-9-2, Higashi-Shinbashi, Minato-ku, Tokyo 105-0021, Japan
Tel: +81-3-5568-5111
Eastern Japan Main Branch Shiodome Sumitomo Bldg. 17F,
1-9-2, Higashi-Shinbashi, Minato-ku, Tokyo 105-0021, Japan
Tel: +81-3-5568-5280
Central Japan Main Branch Nachi Nagoya Bldg., 2-120-3, Takayashiro, Meitou-ku, Nagoya 465-0095, Japan Tel: +81-52-769-6811
Western Japan Main Branch Nachi Osaka Bldg., 2-3-7, Honjo-nishi, Higashi-Osaka 578-8522, Japan
Tel: +81-6-6748-2510
Toyama Plant
1-1-1, Fujikoshi-Honmachi, Toyama 930-8511, Japan
Tel: +81-76-423-5111[Cutting Tools / Machine Tools / Robots / Bearings]
Higashi-Toyama Plant
3-1-1, Yoneda-machi, Toyama 931-8511, Japan [Special Steels]
Tel: +81-76-438-4411
3-2-1, Nakada, Toyama 931-8453, Japan [Hydraulic Equipment]
Tel: +81-76-438-8970
Namerikawa Plant
176, Ogake, Namerikawa 936-0802, Japan
Tel: +81-76-471-2101[Precision Machinery / Hydraulic Equipment / Automotive Hydraulics / Industrial Furnaces / Coating / Precision Forming]
Major Overseas Subsidiaries:
NACHI AMERICA INC.
17500 Twenty-Three Mile Road, Macomb, Michigan, 48044, U.S.A.
Tel: +1-586-226-5151
NACHI EUROPE GmbH
Bischofstrasse 99, 47809, Krefeld, GERMANY
Tel: +49-(0)2151-65046-0
NACHI TECHNOLOGY (THAILAND) CO., LTD.
3/16 M, 2, Rojana Industrial Estate Nongbua, Ban Khai, Rayong, 21120, THAILAND Tel: +66-38-961-682
NACHI (SHANGHAI) CO., LTD. Yitong Industry Zone 258, Fengmao Rd. Malu Town, Jiading,Shanghai 201801, CHINA
Tel: +86-(0)21-6915-2200

OVERSEAS OFFICESCZECH/Bearings
SHANGHAI/Tools & Bearings/Engineering
DONGGUAN/Bearings

AMERICA/Tools
KOREA/
Hydraulic Equipment
TAIWAN/Bearings

AMERICA/Bearings

AMERICA/
Robotic Systems
NORTH CAROLINA/
Engineering

THAILAND/Bearings
SINGAPORE/Tools

BRAZIL/Bearings & Tools

10

INVESTOR INFORMATION
Stock Code:6474

Record Date:

Voting rights at General
Meeting of Shareholders
Year-end dividendInterim dividend

Ordinary General Meetingof Shareholders:February

Unit:

1,000 shares

To Request Purchase of Additional Shares for
Holdings Less Than the Minimum Trading Unit
November 30
November 30
May 31

Shareholders’ Register Custodian: The Chuo Mitsui Trust and Banking Company, Ltd.
3-33-1, Shiba, Minato-ku, Tokyo 105-8574, Japan
Shareholders’ Register Custodian
Administrative Office:

The Chuo Mitsui Trust and Banking Company, Ltd.
Stock Transfer Agency Department
2-8-4, Izumi, Suginami-ku, Tokyo 168-0063, Japan
Toll-free: 0120-78-2031 (Toll-free in Japan)

Shareholders’ Register Custodian
Handling Office:

The Chuo Mitsui Trust and Banking Company, Ltd.,
Branches throughout Japan
Japan Securities Agents, Ltd.,
Head office and branches throughout Japan

Stock Transfer Fees:

Free

URL:

http://www.nachi-fujikoshi.co.jp/

Printed in JapanNACHI-FUJIKOSHI has introduced a system that allows
the purchase of additional shares for holdings lessthan the normal trading unit. This system enables
shareholders with holdings under trading unit (1,000
shares) to purchase the shares needed to meet thisminimum requirement.
Also, shareholders wishing to sell holdings of lessthan trading unit can follow procedures for the buybackof shares.
Please contact the Shareholders’ Register Custodian(see left) for more information. (Please note: Shareholders
using the securities depository system should contact
their securities firm.)