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|-----------------------------------------------------------
|Index to Consolidated Financial Statements and Information.

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2007

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-5238

Nihon Densan Kabushiki Kaisha

(Exact name of registrant as specified in its charter)

NIDEC CORPORATION

(Translation of Registrants name into English)

|Japan                                           | 338 Kuzetonoshiro-cho,
      Minami-ku, Kyoto 601-8205 Japan
|----------------------------------------------- | ------------------------------------------------------------
|(Jurisdiction of incorporation or organization) | (Address of principal executive offices)                    

Securities registered or to be registered pursuant to Section 12(b) of the Act:

|Title of Each Class | Name of Each Exchange On Which Registered
|------------------- | -----------------------------------------
|                    |                                          
|Common Stock*       | New York Stock Exchange                  

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.

As of March 31,  2007, 144,735,526 shares of common stock were
outstanding, including 8,125,004 shares represented by 32,500,016 American
Depositary Shares .

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes x   No o

If this report is an annual transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  Yes o   No x

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b 2 of the Exchange Act. (Check One):

Large accelerated filer  x   Accelerated filer  o    Non-accelerated filer  o

Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17  o   Item 18x

If this is an annual report, indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x



*

Not for trading, but only in connection with the listing of the American
Depositary Shares, each representing one-fourth of one share of Common
Stock.



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|                                                            | TABLE OF CONTENTS                                                             |     
|----------------------------------------------------------- | ----------------------------------------------------------------------------- | ----
|                                                            |                                                                               |     
|                                                            |                                                                               | Page
|PART I                                                      |                                                                              
|Item  1.                                                    | Identity of Directors, Senior Management and Advisors.                        | 3   
|Item  2.                                                    | Offer Statistics and Expected Timetable.                                      | 3   
|Item  3.                                                    | Key Information.                                                              | 4   
|Item  4.                                                    | Information on the Company.                                                   | 16  
|Item  4A.                                                   | Unresolved Staff Comments                                                     | 43  
|Item  5.                                                    | Operating and Financial Review and Prospects.                                 | 44  
|Item  6.                                                    | Directors, Senior Management and Employees.                                   | 77  
|Item  7.                                                    | Major Shareholders and Related Party Transactions                             | 83  
|Item  8.                                                    | Financial Information                                                         | 84  
|Item  9.                                                    | The Offer and Listing.                                                        | 86  
|Item 10.                                                    | Additional Information.                                                       | 89  
|Item 11.                                                    | Quantitative and Qualitative Disclosures about Market Risk.                   | 104 
|Item 12.                                                    | Description of Securities Other Than Equity Securities.                       | 107 
|PART II                                                     |                                                                              
|Item 13.                                                    | Defaults, Dividend Arrearages and Delinquencies.                              | 107 
|Item 14.                                                    | Material Modifications to the Rights of Security Holders and Use of Proceeds. | 107 
|Item 15.                                                    | Controls and Procedures.                                                      | 108 
|Item 16A.                                                   | Audit Committee Financial Expert.                                             | 109 
|Item 16B.                                                   | Code of Ethics.                                                               | 109 
|Item 16C.                                                   | Principal Accountant Fees and Services.                                       | 109 
|Item 16D.                                                   | Exemptions from the Listing Standards for Audit Committees.                   | 110 
|Item 16E.                                                   | Purchases of Equity Securities by the Issuer and Affiliated Purchases         | 112 
|PART III                                                    |                                                                              
|Item 17.                                                    | Financial Statements                                                          | 112 
|Item 18.                                                    | Financial Statements                                                          | 112 
|Item 19.                                                    | Exhibits.                                                                     | 113 
|                                                            |                                                                              
|Index to Consolidated Financial Statements and Information. | F-1                                                                           |     
|                                                            |                                                                              
|                                                            |                                                                               |     

As used in this annual report, unless otherwise specified, references to Nidec are to Nidec Corporation, and references to we, our and us are to Nidec Corporation and, except as the context otherwise requires, its consolidated subsidiaries.

As used in this annual report, U.S. dollar or $ means the lawful currency of the United States of America, and yen or ¥ means the lawful currency of Japan.

As used in this annual report, U.S. GAAP means accounting principles generally accepted in the United States, and Japanese GAAP means accounting principles generally accepted in Japan.

As used in this annual report, ADS means an American Depositary Share, and ADR means an American Depositary Receipt.

In tables appearing in this annual report, figures may not add up to totals due to rounding.

2



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PART I

Item 1.

Identity of Directors, Senior Management and Advisors.

Not applicable.

Item 2.

Offer Statistics and Expected Timetable.

Not applicable.

Item 3. Key Information.

A. Selected Financial Data.

The following table include selected historical financial data as at and for the years ended March 31, 2003 through 2007 derived from our consolidated financial statements prepared in accordance with the U.S. GAAP. You should read the selected financial data below in conjunction with Item 5 of this annual report and our audited consolidated financial statements which are included in this annual report.



| |                                              | Year ended March 31,                                                                                            
| | -------------------------------------------- | ----------------------------------------------------------------------------------------------------------------
| |                                              | 2003                                                                                                            
| |                                              | (Yen in millions and U.S. dollars in thousands,
      except number of shares outstanding and per share amounts)
| | Income statement data:                       |                                                                                                                 
| | Net sales                                    | ¥ 231,836                                                                                                       
| | Cost of products sold                        | 187,306                                                                                                         
| | Selling, general and administrative expenses | 21,302                                                                                                          
| | Operating income                             | 16,404                                                                                                          
| | Income before provision for income taxes     | 10,911                                                                                                          
| | Net income                                   | 10,680                                                                                                          
| | Balance sheet data (period end):             |                                                                                                                 
| | Total assets                                 | ¥ 257,932                                                                                                       
| | Short-term borrowings                        | 64,597                                                                                                          
| | Current portion of long-term debt            | 8,951                                                                                                           
| | Long-term debt                               | 16,388                                                                                                          
| | Total shareholders equity                   | 88,557                                                                                                          
| | Common stock                                 | 26,485                                                                                                          
| | Number of shares outstanding (1)             | 127,149,458                                                                                                     
| | Per share data:                              |                                                                                                                 
| | Net income per share-basic (1)               | ¥ 84.01                                                                                                         
| | Net income per share-diluted (1)             | 79.91                                                                                                           
| | Cash dividends paid per share                | 10.00                                                                                                           



Notes:

(1) Calculated using the average number of shares outstanding for the period (excluding shares held by Nidec). Number of shares outstanding and all per share amounts have been restated to reflect the retroactive effect of the 2 for 1 stock split that took effect on November 18, 2005.

More detailed information regarding diluted shares outstanding is included in Note 20 in our consolidated financial statements included in this annual report.

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We increased our interests in Nidec Copal Corporation and Nidec Copal Electronics Corporation to over fifty percent each in January and February 2004, and they became our consolidated subsidiaries. Their results of operations are reflected in our financial statements for the year ended March 31, 2005 from the time of their consolidation.

We acquired an approximately 40% share in Nidec Sankyo Corporation in October 2003 and increased our share to over 50% in February 2004. As a result, the results of operations of this subsidiary are included in our consolidated results of operations from February 2004.

Fluctuations in exchange rates between the Japanese yen and U.S. dollar and other currencies will affect the U.S. dollar and other currency equivalents of the yen price of our shares and ADSs and the U.S. dollar amounts received on conversion of cash dividends. We have translated some Japanese yen amounts presented in this annual report into U.S. dollars solely for your convenience. Unless otherwise noted, the rate used for the translations was ¥118.05 per $1.00, which was the approximate exchange rate in Japan on March 31, 2007.

|                     |               | High     |  | Low |          | Average |  | Period-end
|-------------------- | ------------- | -------- |  | --- | -------- | ------- |  | ----------
|Year ended March 31, |               |          |  |     |          |         |  |           
|                     | 2003          | ¥ 133.41 |  |     | ¥ 115.71 |         |  | ¥ 121.95  
|                     | 2004          | 120.55   |  |     | 104.18   |         |  | 113.07    
|                     | 2005          | 114.30   |  |     | 102.26   |         |  | 107.49    
|                     | 2006          | 120.93   |  |     | 104.41   |         |  | 113.15    
|                     | 2007          | 121.81   |  |     | 110.07   |         |  | 116.92    
|Calendar period      |               |          |  |     |          |         |  |           
|                     | January 2007  | 121.81   |  |     | 118.49   |         |  | 120.45    
|                     | February 2007 | 121.77   |  |     | 118.33   |         |  | 120.50    
|                     | March 2007    | 118.15   |  |     | 116.01   |         |  | 117.26    
|                     | April 2007    | 119.84   |  |     | 117.69   |         |  | 118.93    
|                     | May 2007      | 121.79   |  |     | 119.77   |         |  | 120.77    
|                     | June 2007     | 124.09   |  |     | 121.08   |         |  | 122.69    

The above table presents the noon buying rates for Japanese yen per $1.00 in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York for and as of the end of each period indicated. These translations do not imply that the yen amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars at these rates or at all.

As of July 16, 2007, the noon buying rate was ¥121.90 per $1.00.

B. Capitalization and Indebtedness.

Not applicable.

C. Reasons for the Offer and Use of Proceeds.

Not applicable.

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D. Risk Factors.

If any of the risks described below actually occurs, our business, financial condition or results of operations could be adversely affected.

Our customer base is highly concentrated, and our sales would suffer if one or more of our significant customers substantially reduce or cancel orders for our products



We are dependent on a limited number of large customers for a substantial portion of our net sales. Sales to our largest customer, Seagate, were approximately 8%, 11% and 11% of total net sales for the years ended March 31, 2005, 2006 and 2007, respectively. Sales to our six largest customers represented approximately 29%, 34% and 37% of our net sales for the years ended March 31, 2005, 2006 and 2007, respectively and the six customers also represented ¥33.6 billion, or 30%, ¥37.0 billion, or 29% and 49.1 billion, or 33% of our gross accounts receivable at March 31, 2005, 2006 and 2007, respectively. As a result of customer concentration, our net sales could be significantly impacted in the event of:

•

a significant reduction, delay or cancellation of orders from one or more of our significant customers;

•

a decision by one or more significant customers to select products manufactured by a competitor, or its own internally developed components, for inclusion in future product generations; or

•

financial difficulties affecting one or more significant customers.

We expect that, for the foreseeable future, sales to a limited number of customers will continue to account for a high percentage of our net sales. If current customers do not continue to place orders, we may not be able to replace these orders with orders from new customers, and this would significantly impact our business, operating results and financial condition.

We depend on the computer industry for sales of our products, and our business may be adversely affected by a decline in the computer market

Our precision motor and fan products are components used primarily in computer systems. A substantial portion of our net sales in turn depends on sales of computers and computer peripherals that incorporate our products. Revenues from hard disk drive spindle motors accounted for 24.5%, 30.7% and 31.5% of our net sales for the years ended March 31, 2005, 2006 and 2007, respectively. Although we have been diversifying our products and entering into new markets, such as motors for use in household appliances, automobiles and home entertainment equipment, we expect to continue to derive a significant portion of our revenues from the sale of products for use in computers and computer peripherals. The markets for computers and computer peripherals are cyclical and have been characterized by:

•

rapid technological change;

•

frequent new product introductions and short product life cycles;

•

significant price competition and price erosion;

•

fluctuating inventory levels;

•

alternating periods of over-capacity and capacity constraints due, in part, to cyclical and seasonal market patterns;

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•

variations in manufacturing costs and yields; and

•

significant expenditures for manufacturing equipment and product development.

The computer market grew substantially in the late 1990s and then experienced a significant downturn from which it is only now continuing to recover. The downturn was characterized by lower product demand and accelerated reductions of product prices. These conditions prompted restructuring of operations by hardware manufacturers, including makers of hard disk drives, including our customers. Such restructurings involving our customers may result in our customers seeking to reduce costs and inventories, which could in turn reduce our margins or sales volumes. These customers may also switch to suppliers other than us. Such restructuring or similar moves by hard disk drive manufacturers in the future could have a material negative impact on our results of operations if we are unable to increase sales to other hard disk drive manufacturers or increase sales of spindle motors for non-desktop use.

The rate of decline in average selling price accelerates when, as is currently the case in the hard disk drive industry, competitors lower prices to absorb excess capacity, liquidate excess inventories, restructure or attempt to gain market share. During an industry downturn, manufacturers may abruptly stop purchasing additional inventory from suppliers such as us. And because many of our customers have adopted just-in-time inventory management processes, we often maintain up to more than two months inventory at or near the customers production facility, a practice which may force us to absorb excess inventories when growth slows. Our inventory was ¥49.0 billion at March 31, 2005, ¥60.5 billion at March 31, 2006 and ¥64.3 billion at March 31, 2007. Maintaining inventory increases our capital requirements and costs, complicates our inventory management strategies and makes it more difficult to match manufacturing plans with customer demand, thereby increasing the risk of inventory obsolescence and price erosion during periods of reduced demand, which could in turn have a material adverse effect on our business, financial condition and results of operations.



The hard disk drive industry is fast extending its reach into the realm of digital consumer electronics. The prospect of rapid expansion of the digital consumer electronics market is intensifying the competition between hard disk drive manufacturers and manufacturers of other data-storage alternatives such as semiconductor memory devices.

Excessive competition in the data-storage market, combined with the volatile nature of the digital consumer electronics market, could force hard disk drive manufacturers to exercise unexpectedly drastic production adjustments. Such event could reduce demand for our products, eventually affecting our business, financial condition and results of operations.

We are facing downward pricing pressure in our main product markets, and price declines could reduce our revenues and gross margins

We expect downward pricing pressure in our main product markets to continue. The hard disk drive industry, in particular, is characterized by rapidly declining average selling prices over the life of a product even for those products which are competitive and timely to-market. Our average selling price for hard disk drive spindle motors fell by approximately 9% during the year ended March 31, 2005, and although it increased by approximately 4% during the year ended March 31, 2006, it decreased again by approximately 1% during the year ended March 31, 2007. In general, the average selling price for a given product in the hard disk drive market decreases over time as increases in the supply of competitive products and cost reductions occur and as technological advancements are achieved. There is also intense price competition among hard disk drive manufacturers and, as a result, our principal customers pressure us to lower the prices of our spindle motors. Falling prices reduce our margins, cause operating results to suffer and may make it difficult for us to maintain profitability. If we are not able to achieve such cost reductions, develop new customized products or increase our unit sales volume, our business, financial condition and results of operations could be materially and adversely impacted.

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If our third party suppliers experience capacity constraints or production failures, our production could be significantly harmed



We rely on third party suppliers for some of the materials and equipment used in our manufacturing processes, including connectors and electric circuit unit assemblies. Our production capacity would nevertheless be limited if one or more of these materials were to become unavailable or available in reduced quantities or if we were unable to find alternative suppliers. If our source of materials and supplies were unavailable for a significant period of time, our operating results would be adversely affected.

We face aggressive competition both in the spindle motor market and in the markets into which we are attempting to expand our business, which could have a material adverse effect on our business and results of operations

Our major competitors in the area of hard disk drive spindle motors have aimed to maintain or expand their market share in recent periods, which has resulted in intensified competition and a reduction in prices. This trend of severe competition is likely to intensify as our competitors offer very competitive prices in order to grab larger market shares. It is also possible that ball bearing or other subcomponent manufacturers will try to enter the spindle motor market. In the area of mid-size motors for automobiles and household appliances, some of our competitors have substantially greater financial, engineering, manufacturing, marketing, service and support resources than we do and may have substantially greater name recognition, manufacturing expertise and capability and longer standing customer relationships than we do.

To remain competitive in our core business area of spindle motors and to increase our competitiveness in other motor markets in which we are attempting to expand our business, we believe that we must maintain a substantial investment in research and development and expand our manufacturing capability, marketing, sales efforts and customer service and support. We must also develop new products and enhance our existing products in a timely manner. We may not compete successfully in all or some of our markets in the future, and we may not have sufficient resources to continue to make such investments. We may not make the technological advances necessary to maintain our competitive position so that our products will receive industry acceptance. We anticipate that we may have to adjust prices on many of our products to stay competitive, and our profit margins may fall. In addition, technological changes, manufacturing efficiencies or development efforts by our competitors may render our products or technologies obsolete or uncompetitive. Our failure to maintain our competitive position could have a material adverse effect on our business and results of operations.

We may be unable to commercialize customized products that satisfy customers needs in a timely manner and in sufficient quantities, which could damage our reputation and reduce sales

Many of our customers work directly with component suppliers such as us to design and build customized products for specific needs. A significant portion of our contracts with these customers require us to provide customized products within a set delivery timetable. If we are unable to commercialize new product lines including design, manufacture and delivery of customized products, we may not be able to meet our customers product needs or timetables. Although we have not had such problems in the past, any future failure to meet significant customer requirements could damage our reputation and impede our ability to expand our business in markets for these products.

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We could experience losses or damage to our reputation if any of the end-products in which our motors or other products are incorporated malfunction, causing damage to persons, property or data



Our small precision motors and other products are a key component in many
consumer electronics devices, particularly data storage devices such as
hard disk drives. Widespread malfunction of such devices could lead to
consumer dissatisfaction, recalls and, potentially, lawsuits. If such problems
are caused by or attributed or alleged to be attributed to defects in our
motors, we might be drawn into disputes with our customers, our reputation
could be damaged and our results of operations might be adversely affected
by lost sales or costs associated with recalls or defending ourselves against
legal claims. We may suffer such losses or damage regardless of whether
our products were defective.

Our operating results may fluctuate significantly because of a number of factors, many of which are beyond our control



We have experienced, and expect to continue to experience, fluctuations in sales and operating results from one quarter to the next. As a result, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful, and that such comparisons cannot be relied upon as indicators of future performance. Our operating results may be subject to significant quarterly fluctuations as a result of the following principal factors:

•

fluctuations in product demand as a result of the cyclical and seasonal nature of the industries in which our motor and drive technology products are sold and used, including the computer industry;

•

translation effect of exchange rate fluctuations on the results of our overseas subsidiaries;

•

the availability and extent of utilization of our manufacturing capacity;

•

changes in our product or customer mix;

•

entry of new competitors;

•

cancellation or rescheduling of significant orders, which can occur on short notice;

•

deferrals of customer orders in anticipation of new products or enhancements;

•

component and raw material costs and availability, particularly with respect
to components obtained from sole or limited sources;

•

system failures, caused for example by power outages; and

•

natural and man-made disasters, including earthquakes, warfare and acts of terrorism, in Japan or elsewhere.

Reductions in our unit sales will not typically correspond with reductions in these relatively fixed costs. Therefore, such reductions in our unit sales will generally result in reduced or negative margins for our products. Any or all of the above factors could have a material adverse effect on our business, financial condition and results of operations.

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Our growth has been based in part on acquisitions, and our future growth could be adversely affected if we make acquisitions that turn out to be incompatible with our existing business or unsuccessful, or if we are unable to find suitable acquisition targets



We have achieved much of our growth by acquiring other companies that have provided us with complementary technologies and product lines. To the extent that we are unable to make successful acquisitions, we may not be able to continue to expand our product range and our growth rates could be adversely affected. Critical to the success of our acquisitions is the ordered, efficient integration of acquired businesses into our organization, which has in the past required, and may continue to require, significant resources. There can be no assurance that our investments will generate the operational and financial returns we expect. The success of future acquisitions will depend upon factors such as:

•

our ability to manufacture and sell the products of the businesses acquired;

•

continued demand for these acquired products by our customers;

•

our ability to integrate the acquired businesses operations, products and personnel;

•

our ability to retain key personnel of the acquired businesses;

•

our ability to extend our financial and management controls and reporting
systems and procedures to acquired businesses; and

•

accuracy of financial due diligence.

Failure to succeed in acquisitions, or an inability to find suitable acquisition targets, could have a material adverse effect on our business results of operations and financial condition.

Our growth places strains on our managerial, operational and financial resources

Our future success depends on our ability to expand our organization in line with the growth of our business, including the integration of recently added subsidiaries within the Nidec group. However, our growth has placed, and is expected to continue to place, a significant strain on our managerial, operational and financial resources. Our recent acquisitions and any further growth by us or our subsidiaries or affiliates, or an increase in the number of our strategic relationships, will increase this strain on our managerial, operational and financial resources. This strain may inhibit our ability to achieve the rapid execution necessary to successfully implement our business plan.

We could be harmed by litigation involving patents and other intellectual property rights

We have patent protection on certain aspects of our technology and also rely on trade secret, copyright and trademark laws, as well as contractual provisions, to protect our proprietary rights. We face the following risks:

•

we could incur substantial costs in defending against claims of infringement of the intellectual property of others and such claims could result in damage awards against us, in orders to pay for the use of previously unrecognized third-party intellectual property or in injunctions preventing us from continuing aspects of our business, which could in turn have a material adverse effect on our business, financial condition and results of operations;

•

our protective measures may not be adequate to protect our proprietary rights;

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•

other parties, including competitors with substantially greater resources, may independently develop or otherwise acquire equivalent or superior technology, and we may be required to pay royalties to license intellectual property of those parties;

•

patents may not be issued pursuant to our current or future patent applications, and patents issued pursuant to such applications, or any patents we own or have licenses to use, may be invalidated, circumvented or challenged;

•

the rights granted under any such patents may not provide competitive advantages to us or adequately safeguard and maintain our technology;

•

we could incur substantial costs in seeking enforcement of our patents against infringement or the unauthorized use of our trade secrets, proprietary know how or other intellectual property by others; and

•

the laws of foreign countries in which our products are manufactured and sold may not protect our products and intellectual property rights to the same extent as the laws of Japan and the United States, and such laws may not be enforced in an effective manner.

For specific information relating to two intellectual properties disputes that could have an adverse effect on our results of operations, see Item 4.B. Business OverviewLegal Proceedings.

Because our sales to overseas customers are denominated predominantly in U.S. dollars, we are exposed to exchange rate risks that could harm our results of operations

Sales to customers outside Japan accounted for 63.6%, 69.1% and 69.1% of
our consolidated net sales during the years ended March 31, 2005,
2006 and 2007, respectively. A significant portion of our overseas sales
is denominated in currencies other than the Japanese yen, primarily the
U.S. dollar. As a result, appreciation of the Japanese yen and other currencies
against the U.S. dollar will generally have a negative effect on our operating
income and net income. We experience volatility in our results of operations
as a result of foreign currency exchange rate fluctuations when or result
of operations of subsidiaries operating in currencies other than the yen
are consolidated into our financial statements, which are reported in yen.
We also experience foreign exchange risk to the extent that our sales and
expenses or those of our subsidiaries are denominated in different currencies.
In order to mitigate against this risk, in recent years we have attempted
to offset a portion of our foreign currency revenue by matching the currency
of revenue with the currency of expense. For example, if revenue for a
particular product is in U.S. dollars, we attempt to purchase the supplies
and resources used to produce that product in U.S. dollars. We also enter
into forward exchange contracts to hedge portions of our transactional
exposure to fluctuations in the value of foreign currencies as compared
to the Japanese yen. Nevertheless, we remain exposed to the effects of
foreign exchange fluctuations.





We rely on monthly financial data from operating segments that are not prepared on a U.S. GAAP basis and are not comparable between segments, which potentially reduces the usefulness of this data to us in making management decisions.



We assess our performance and make operating decisions based on financial information received from the fourteen operating segments that we report in our consolidated financial statements
: Nidec Corporation, Nidec Electronics (Thailand) Co., Ltd., Nidec (Zhejiang) Corporation, Nidec (Dalian) Limited, Nidec Singapore Pte. Ltd., Nidec (H.K.) Co., Ltd., Nidec Philippines Corporation, Nidec Sankyo Corporation, Nidec Copal Corporation, Nidec Tosok Corporation, Nidec Copal Electronics Corporation, Nidec Shibaura Corporation, Nidec-Shimpo Corporation and Nidec Nissin Corporation. This segmental information is prepared in accordance with the accounting principles in each segments respective country of domicile.

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For example, Nidec Corporations operating profit or loss is determined using Japanese GAAP while Nidec Singapore Pte. Ltd. applies Singaporean accounting principles. Therefore, our segmental data has not been prepared under U.S. GAAP on a basis that is consistent with the consolidated financial statements or on any other single basis that is consistent between segments. In addition, year-end closing adjustments and other items are not included in segment totals. These aspects of our segment data could make it more difficult for us to evaluate the relative performance of individual segments and our overall operations in a timely manner, as compared with segment data compiled on a uniform U.S. GAAP basis.





We rely on production in developing countries which may become politically or economically unstable and face risks affecting international operations

We produce and sell a large percentage of our products at locations in the following developing countries: China, Thailand, Malaysia, Indonesia, the Philippines, Vietnam and Mexico. In particular, we are growing increasingly reliant on our production bases in China, where we continue to move manufacturing operations in order to take advantage of more competitive production and supply costs. These countries are still in the process of developing their economic, social and other infrastructures and are susceptible to various uncertainties. The political, social and economic situations of these countries may not continue to provide an environment in which we would be able to continue to manufacture our products cost-efficiently or at all. The governmental authorities of those areas may impose regulations or restrictions that would make it difficult, impractical or impossible, whether economically, legally or otherwise, for us to conduct our business there. Dependence on overseas production, especially in developing countries, and managing international operations expose us to a number of additional risks associated with foreign commerce, including the following:

•

economic slowdown or downturn in the relevant industries in foreign markets;

•

international currency fluctuations;

•

general strikes or other disruptions in working conditions;

•

political instability or, terrorist activities;

•

trade restrictions or changes in tariffs;

•

outbreaks, such as avian flu, that inhibit international or regional commerce;

•

the difficulties associated with staffing and managing international operations;

•

generally longer receivables collection periods;

•

unexpected changes in or imposition of new legislative or regulatory requirements;

•

relatively limited protection for intellectual property rights in some countries;

•

potentially adverse taxes; and

any or all of these risks could adversely affect our business, financial condition and results of operations.

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We may become subject to more stringent environmental regulations in the future

Our business activities are subject to a wide range of environmental laws
and regulations in Japan, Asia, North America, Europe and other areas.
These regulations may become more stringent over time. In such a case,
the amount of capital expenditures and other expenses which might be required
to complete remedial actions and to continue to comply with applicable
environmental laws could increase and be significant, which would materially
and adversely affect our business, financial condition and results of operations.

We rely on our founder, President and CEO, Mr. Shigenobu Nagamori, the loss of whom could have a material adverse effect on our business

Our continued success will depend to a significant extent on the efforts and abilities of our founder and current President and CEO, Mr. Shigenobu Nagamori. Mr. Nagamori is actively engaged in our management and determines our strategic direction, especially with regard to acquisition activity. While we are in the process of establishing a management structure designed to reduce our dependence on Mr. Nagamori, his sudden departure or reduced attention to us could have a material adverse effect on our operations, financial condition and operating results.

For our business to continue effectively, we will need to attract and retain qualified personnel

Our business depends on the continued employment of our senior management, engineering and other technical personnel, many of whom would be extremely difficult to replace. To maintain our current market position and support future growth, we will need to hire, train, integrate and retain significant numbers of additional highly skilled managerial, engineering, manufacturing, sales, marketing, support and administrative personnel. Competition worldwide for such personnel is extremely intense, and there can be no assurance that we and our affiliates will be able to attract and retain such additional personnel.

A substantial number of our shares of common stock are eligible for future sale, and the sale of these shares may cause our stock price to decline, even if our business is doing well

As of March 31, 2007, there were 144,735,526 shares of our common stock issued and outstanding, including 23,420,284 shares beneficially owned by our President and CEO, Mr. Shigenobu Nagamori, representing 16.1% of the outstanding shares. These shares and, generally, the shares owned by other shareholders, can be disposed of on the Osaka Securities Exchange Co., Ltd., the Tokyo Stock Exchange, Inc. and otherwise in Japan. Additional sales of a substantial amount of our common stock in the public market, or the perception that sales may occur, could cause the market price of our common stock to decline. This could also impair our ability to raise additional capital through the sale of our securities. Also, in the future, we may issue securities to raise cash for additional capital expenditures, working capital, research and development or acquisitions. We may also pay for interests in additional subsidiary or affiliated companies by using cash, common stock or both. We may also issue securities convertible into our common stock. Any of these events may dilute your ownership interest in us and have an adverse impact on the price of our common stock.

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Japans unit share system imposes restrictions in holdings of our common stock that do not constitute whole units



Our Articles of Incorporation provide that 100 shares of our stock constitute one unit. The Company Law imposes significant restrictions and limitations on holdings of shares that constitute less than a whole unit. Holders of shares constituting less than a unit do not have the right to vote. A shareholder who owns shares representing less than one unit will not be able to exercise any rights relating to voting rights, such as the right to participate in a demand for the resignation of a director, the right to participate in a demand for the convocation of a general meeting of shareholders and the right to join with other shareholders to propose an agenda item to be addressed at a general meeting of shareholders. In addition, a holder of shares constituting less than one unit does not have the right to require us to issue share certificates for those shares. Accordingly the transferability of our shares constituting less than one unit is significantly limited. Under the unit share system, holders of shares constituting less than a unit have the right to require us to purchase their shares. However, holders of ADSs that represent other than multiples of whole units cannot withdraw the underlying shares representing less than one unit and, therefore, they will be unable to exercise the right to require us to purchase the underlying shares. As a result, holders of ADSs representing shares in lots of less than one unit may not have access to the Japanese markets to sell their shares through the withdrawal mechanism.

Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions



Our Articles of Incorporation, Regulations of the Board of Directors and the Company Law govern our corporate affairs. Legal principles relating to such matters as the validity of corporate procedures, directors and officers fiduciary duties and shareholders rights may be different from those that would apply if we were a non-Japanese company. Shareholders rights under Japanese law may not be as extensive as shareholders rights under the laws of other countries or jurisdictions within the United States. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in another jurisdiction. In addition, Japanese courts may not be willing to enforce liabilities against us in actions brought in Japan which are based upon the securities laws of the United States or any U.S. state.

A holder of our ADSs will have fewer rights than a shareholder has and will have to act through the depositary to exercise those rights

The rights of the shareholders under Japanese law to take actions including voting their shares, receiving dividends and distributions, bringing derivative actions, examining the companys accounting books and records and exercising appraisal rights are available only to holders of record. Because the depositary, through its custodian agent, is the record holder of the shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying ADSs as instructed by the ADS holder and will pay to ADS holders the dividends and distributions collected from us. However as an ADS holder you will not be able to bring a derivative action, examine our accounting books and records or exercise appraisal rights in your capacity as ADS holder.

Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell your shares of our common stock at a particular price on any particular trading day, or at all

Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each stock, based on the previous days closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular trading day, or at all.

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Foreign exchange fluctuations may affect the dollar value of our ADSs and dividends payable to holders of our ADSs



Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In addition, the U.S. dollar amount of cash dividends and other cash payments made to holders of our ADSs would be reduced if the value of the yen declines against the U.S. dollar.

It may not be possible for investors to effect service of process within the United States upon us or our Directors or Corporate Auditors or to enforce against us or these persons judgments obtained in United States courts predicated upon the civil liability provisions of the federal securities laws of the United States



We are a limited liability, joint-stock corporation incorporated under the laws of Japan. Most of our Directors and Corporate Auditors reside in Japan. All or substantially all of our assets and the assets of these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for investors to effect service of process within the United States upon us or these persons or to enforce against us or these persons judgment obtained in United States courts predicated upon the civil liability provisions of the federal securities laws of the United States. There is doubt as to the enforceability in Japan, in original actions for enforcement of judgments of United States courts, of liabilities predicated solely upon the federal securities laws of the United States.

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Special Note Regarding Forward-looking Statements

This annual report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our business, our industry and capital markets around the world. These forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as may, will, expect, anticipate, estimate, plan or similar words. These statements discuss future expectations, identify strategies, contain projections of results of operations or of our financial condition, or state other forward-looking information. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from those contained in any forward-looking statement. We cannot promise that our expectations expressed in these forward-looking statements will turn out to be correct. Our actual results could be materially different from and worse than our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are set forth in Risk Factors and elsewhere in this annual report and include, but are not limited to:

•

our ability to design, develop, mass produce and win acceptance of our products, particularly those that use the hard disk spindle motor technology, which are offered in highly competitive markets characterized by continual new product introductions and rapid technological development;

•

abrupt changes in our customers market position, particularly as a result of mergers and acquisitions;

•

general economic conditions in the information technology, consumer electronics and related product markets, particularly levels of consumer spending;

•

exchange rate fluctuations, particularly between the Japanese yen and the U.S. dollar and other currencies in which we make significant sales or in which our assets and liabilities are denominated;

•

our ability to acquire and successfully integrate companies with complementary technologies and product lines;

•

adverse changes in laws, regulations or economic policies in any of the countries where we have manufacturing operations, especially China; and

•

any negative impacts on our businesses from outbreaks of diseases in the countries where we have production plants, such as avian flu.

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Item 4. Information on the Company.



A. History and Development of the Company.

Nidec is a joint stock corporation that was incorporated and registered under the Commercial Code (in May 2006, the Commercial Code was replaced by the new Company Law) of Japan on July 23, 1973 under the name of Nihon Densan Kabushiki Kaisha. Our corporate headquarter is at 338 Kuzetonoshiro-cho, Minami-ku, Kyoto 601-8205, Japan. Our telephone number is 81-75-935-6140.  We currently operate through 117 subsidiaries located in 17countries, and four affiliated companies located in four countries. As of March 31, 2007, we had 89,070 employees worldwide, 91.0% of which were employed outside Japan.

During the fiscal year ended March 31, 2007, we consolidated three new companies, Fujisoku Corporation, Nidec Motor & Actuators group and Brilliant Manufacturing Limited, thus adding to the scope of our business strategies for further intra-group synergies and the expansion of our overseas business.  We acquired 98.9% of the outstanding shares of Fujisoku Corporation in November 2006 and 100.0% of the voting rights of the Motors & Actuators business of Valeo S.A., France in December 2006.  In addition, we acquired 87.1% of the outstanding shares of Brilliant Manufacturing Limited in February 2007.

The following list presents a selected history of our major acquisition activities related the expansion of our small precision motors, mid-size motors, machinery, electronics and optical components and other products businesses:



Small Precision Motors, Machinery and Other Products



|Year       |  | Event                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|1989       |  | We acquired Shinano Tokki Co., Ltd., a major manufacturer of spindle motors for hard disk drives, from Teac Corporation, a then major manufacturer of audio equipment and magnetic recording devices for PCs. As a result, we gained the largest market share of spindle motors in the world.                                                                                                                                                                     
|1995       |  | We acquired 38.5% of Kyoritsu Machinery Co., Ltd. and changed its name to Nidec Machinery Corporation. We subsequently increased our ownership to 60.0%. This company manufactures factory automation equipment for small precision motor assemblies and automated measuring instruments.                                                                                                                                                                         
|1995/
2003 |  | We acquired newly issued shares of Shimpo Industries Co., Ltd., currently Nidec-Shimpo Corporation, constituting 36.7% of its then outstanding shares. We subsequently increased our ownership to 51% and have consolidated its results since February 2002. Nidec-Shimpo became a wholly-owned subsidiary of Nidec by way of share exchange, effective as of October 1, 2003. Nidec-Shimpo is a major manufacturer of stepless automatic transmission mechanisms.

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|Year       |  | Event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|1997/
2002 |  | Our subsidiary, Nidec-Shimpo Corporation, acquired 90.0% of the outstanding shares of Read Corporation, currently Nidec-Read Corporation, from Nippon Steel Chemical Co., Ltd. Nidec-Read manufactures engineering inspection equipment for electronics components, including printed circuit boards, ceramics, semiconductors and automotive parts. Nidec-Read became our majority-owned subsidiary in February 2002 as a result of our acquisition of additional shares of Nidec-Shimpo Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|1998/
2004 |  | We acquired 17.7% of the outstanding shares of Copal Co., Ltd. in 1998, currently Nidec Copal Corporation, from Fujitsu Limited. Later in 1998, we increased our ownership of Nidec Copal to 42.8%. We then increased our ownership of Nidec Copal to 51.3% in February 2004. Nidec Copal is a leading manufacturer of camera shutters and other optical and electronics instruments. Nidec Copal also manufactures information terminals, laboratory system instruments and automated manufacturing systems. In connection with our acquisition of Copals shares, we acquired from Copal 32.3% of the outstanding shares of Copal Electronics Corporation, currently Nidec Copal Electronics Corporation. Nidec Copal Electronics is a manufacturer of small electronic precision instruments, including semi-fixed gas registers, trimmer capacitators, small precision motors and gas and liquid pressure sensors. We subsequently increased our ownership of Nidec Copal Electronics to 40.0%, also in 1998. We increased our ownership of Nidec Copal Electronics to 51.0% in January 2004.
|1998       |  | We acquired the assets relating to the motor division of Shibaura Engineering Works Co., Ltd. and established a joint venture, Nidec Shibaura Corporation, with Toshiba Corporation and Shibaura Engineering. We owned 40.0% of the joint venture. We subsequently dissolved the joint venture and purchased the other 60.0% from our former joint venture partners, and Nidec Shibaura became our wholly-owned subsidiary from September 2000. Nidec Shibaura develops and manufactures precision motors for electric appliances and automobiles. Through Nidec Shibaura, we aim to accelerate the pace of development of new, highly competitive products in the worldwide market of motors for household appliances and automobiles.                                                                                                                                                                                                                                                                                                                                                          
|1999       |  | In October 1999, we acquired 71.0% of the outstanding shares of Nemicon Corporation, currently Nidec Nemicon Corporation. Later that year we acquired an additional 2.1%. Nidec Nemicon produces optical rotary encoders, proximity sensors and other electronic equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2000       |  | We acquired 67.0% of the outstanding shares of Y-E Drive Corporation, currently Nidec Power Motor Corporation, from Yasukawa Electric Corporation. Nidec Power Motor designs, develops, manufactures and services mid-size motors for industrial equipment and home electrical appliances. This acquisition is in line with our strategic plan to expand our business into the field of mid-size motors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2004       |  | In October 2003, we acquired approximately 40% of the outstanding shares of Sankyo Seiki Mfg. Co., Ltd., currently Nidec Sankyo Corporation. We subsequently increased our ownership of Nidec Sankyo to approximately 51% in February 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2006       |  | In November 2006, we acquired 98.9% of the outstanding shares of Fujisoku Corporation, manufactures and sells industrial switches, memory cards, panel switches and electronic measuring instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



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|Year |  | Event                                                                                                                                                                                                                                                                                                                                                                                                       
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                             
|2006 |  | In December 2006, we acquired all of the voting rights of the Motors & Actuators business of Valeo S.A., France. As a result, we have included the Nidec Motor & Actuators group (consisting of seven companies) wholly-owned subsidiaries. These companies manufacture motors and actuators for automobiles such as air flow systems, body closure systems, occupant positioning systems and brake systems.
|2007 |  | In February 2007, we acquired 87.1% of the outstanding shares of Brilliant Manufacturing Limited. Brilliant Manufacturing Limited is engaged in manufacturing and sales of base place die-casting and top covers used in hard disk drives.                                                                                                                                                                  



For the years ended March 31, 2005, 2006 and 2007, our capital expenditures, as shown in our consolidated statements of cash flows for those years, were ¥37,257 million, ¥43,185 million and ¥39,144 million, respectively. Major capital expenditures for the last three fiscal years included the acquisition of plants and equipments for hard disk spindle motors that have fluid dynamic bearings in Thailand and the Philippines. We have had no recent significant divestiture and no significant divestitures are currently being planned.

B. Business Overview.



Overview

We believe we are the worlds leading manufacturer of spindle motors for computer hard disk drives and also produce a variety of other small precision brushless DC motors. We ship our spindle motors to hard disk drive manufacturers throughout the world. For the year ended March 31, 2007, our net sales of hard disk drive spindle motors amounted to ¥198,196 million, representing 31.5% of total net sales of ¥629,667 million. For the year ended March 31, 2006, our net sales of hard disk drive spindle motors amounted to ¥164,575 million, representing 30.7% of total net sales of ¥536,858 million. For the year ended March 31, 2005, our net sales of hard disk drive spindle motors amounted to ¥119,233 million, representing 24.5% of total net sales of ¥485,861 million.

In addition to spindle motors, we focus on the production of:

•

other small precision brushless DC motors used in high-speed, continuous-duty applications, such as CD-ROM drives, CD-read/write, or R/W, DVD drives, high-capacity floppy disk drives, as well as in office equipment, such as facsimile machines, laser printers and photocopy machines;

•

brushless DC fans, which are incorporated in computers, game consoles and other electronic equipment to disperse heat and lower the temperature of critical components;

•

mid-size brushless DC motors used in household appliances, automobiles and industrial equipment;

•

machinery;

•

electronic and optical components; and

•

other products.

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In order to better respond to pricing pressure and customer demands, we have established various overseas operations for research and development, production and sales. We currently have research and development facilities, production facilities and sales offices located in Japan, Asia, North America and Europe. Most of our research and development facilities are concentrated in Japan, where we focus on the development of next-generation motor and drive technology products. Most of our production facilities outside Japan are located in Asian countries such as China, Thailand, the Philippines, Singapore and Vietnam. This allows us to take advantage of lower labor costs while also gaining more direct access to our customers production facilities in these regions.

In recent years, we have sought to grow and expand the range of our products by investing in or acquiring companies with technologies in motor, drive and other related products. These investments and acquisitions have provided us with ready access to markets for new products and personnel who can work with us in developing products that incorporate their technologies and ours. The products and operating results of recently acquired consolidated subsidiaries are covered within the description of our business.

Basic Characteristics of Electric Motors



The following description of basic characteristics of electric motors is meant to provide some background information that will help you understand recent trends relating to electric motors, our primary products.

In the first half of the twentieth century, electric motors had a limited number of uses such as driving industrial machinery and pumps. However, with the proliferation of household appliances after World War II, electric motors came to be used in a wider variety of applications and products such as air conditioners, washing machines, refrigerators and other household appliances. Today, sophisticated motors are required by many of the electronic products including computers, information technology equipment and home electronics. Electronic products are becoming increasingly sophisticated, offering greater features through the use of microprocessors, micro disk drives and other components. This increasing complexity requires more precise power quality and greater power reliability. In addition, the increasing costs of electricity, coupled with government regulations and environmental concerns, have contributed to increased demand for more energy-efficient motors. All these trends are contributing to increased demand for more advanced electric motors and rotational equipment technology.

Small precision motors can be classified into three broad categories based on the underlying technology: AC motors, general-purpose brush DC motors and special purpose brushless DC motors. Hard disk drive spindle motors, which are our main product, are a type of special purpose brushless DC motor.

DC Motors and AC Motors

At the most basic level, electric motors are devices that convert electric power into rotating mechanical energy. An electric motor can be powered by alternating current, commonly known as AC, or direct current, commonly known as DC. AC power is supplied to homes, offices and industrial sites directly by power companies, whereas DC power is supplied either through the use of batteries or by converting AC power to DC power.

Both AC motors and DC motors can be used to power most applications. The determination as to which motor is most appropriate depends on considerations of factors such as power source availability, speed variability requirements, torque needs, noise constraints and cost. Torque is a measure of the amount an object will rotate when a given force is applied.

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Because of their simple design, AC motors offer reliable, low maintenance-cost operation for heavy applications. This is why AC motors are preferred for fixed speed applications in the industrial context and for commercial and domestic applications where AC line power can be easily provided. Many machines that require heavy power inputs such as air conditioners, washers, dryers, industrial machinery, fans, blowers, vacuum cleaners, elevators and escalators use AC motors. However, AC motors are not ideal for products that require delicate or precise control because the electronics required to control an AC motor are considerably more expensive than those required to control a DC motor. In addition, due to heat considerations, AC motors usually cannot be operated at low speeds.

DC motors are ideal for products that are more dependent on the precision of speed than power. Controlling the speed of a DC motor is simple. The higher the current becomes, the faster the rotation becomes. Most DC motors will operate over a wider range of speeds and provide better performance than comparable AC motors. The superior performance is partly due to the simplicity of control, but it is also due in part to the fact that most DC motors are designed with variable speed operation in mind, and have added heat dissipation features that allow lower operating speeds. It is also easy to control the motors torque because it is proportional to current. By limiting the current, the torque is also limited. This makes DC motors ideal for delicate applications. DC motors have become the motor of choice in the majority of variable speed and torque control applications such as hard disk drives, CD-ROM drives, DVD drives and floppy disk drives. In the area of household appliances, such as cordless vacuum cleaners and other products that have traditionally used AC motors, manufacturers are beginning to switch from AC motors to DC motors due to the need for more energy-efficient and precisely controlled motors that support more sophisticated product features.

Brush DC Motors and Brushless DC Motors



There are two kinds of DC motors: brush and brushless. Brushless DC motors differ from conventional, brush DC motors in that the current which produces mechanical energy is applied to stationary coils via electronic switches without physical contact with the rotor, rather than by stationary rods brushing against the rotating coil. Conventional brush DC motors have several limitations: brush life, brush residue, maximum speed, and electrical noise. By avoiding friction, sparks and the wearing and fragmenting of the brush rods, brushless DC motors provide cleaner, faster, more efficient, quieter operation and longer maintenance-free life than conventional brush DC motors. These characteristics make brushless DC motors suitable for applications such as hard disk drives, for which clean operation is critical, and audio-visual equipment, for which low-noise operation is an important factor.

Although brushless DC motors have many advantages over brush DC motors, the use of brushless DC motors is still primarily confined to precision applications in disk drives and industrial motion equipment that require high efficiency, smooth operation and precise speed control. The higher price of brushless DC motors has been the primary factor slowing their broader adoption. DC motors require not only motor parts, but also drive electronics that currently can cost more than motor parts. Nevertheless, we believe that over time brushless DC motors will be more widely adopted among manufacturers of household appliances, audio-visual equipment and even larger heating, ventilation and air conditioning systems. As consumers come to demand more sophisticated and energy-efficient appliances, and as the production of brushless DC motors for such products reaches higher volumes, prices may fall to levels competitive enough to encourage more users to switch from brush DC motors to the more efficient and longer-lasting brushless DC motors.

Fluid Dynamic Bearing Technology in Hard Disk Drive Spindle Motors

Although products vary, all hard disk drives incorporate the same basic technology. One or more rigid disks are attached to a spindle motor assembly that rotates the disks at a high constant speed around a hub. The disks are the components on which data is stored and from which it is retrieved. Read/write heads, mounted on an arm assembly similar in shape to that of a record player, fly extremely close to each disk surface and record data on and retrieve it from concentric tracks in the magnetic layers of the rotating disks. In a hard disk drive, with a gap of less than 0.01 microns (10nm) between the disk and the read/write head, even the smallest error can result in disastrous data damage or loss.

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The most significant technological challenges facing hard disk drive manufacturers today are associated with market demand for increased storage capacity, speed, precision and durability. Storage capacity is measured by areal density, which represents the number of bits of information on a linear inch of the recording track, multiplied by the number of recording tracks on a radial inch of the disk. As the size of computer software and data files has increased and the use of graphic and video files has proliferated, the need has grown for higher capacity, higher performance, smaller size and lighter weight hard disk drives. To achieve these goals, spindle motors capable of higher speeds and greater rotational precision need to be continually developed. Accordingly, the disk drive spindle motor has become an increasingly critical component of disk drive technology.

Ball bearing technology, which was used in conventional disk drive motors, had limitations. Ball bearings are not perfectly round and both ball bearings and their races can deform slightly under load. Any imperfections in roundness or in raceways will cause what are known as non-repeatable run-out errors that prevent tracks written to the disk from being regular. From the point of view of design, future increases in storage capacity may need to come largely from increasing the number of recording tracks on a radial inch of the disk.

In fluid dynamic bearings, the bearing function is taken over by a layer of lubricant less than one-tenth the thickness of a human hair. The rotating spindle supported by the lubricant essentially floats in the bearing unit. The non-existence of metal-to-metal friction in fluid dynamic bearings substantially reduces non-repeatable run-out errors caused by surface imperfections of ball bearings. That makes it possible to increase rotational speed, reduce track spacing and increase the number of tracks per inch on the disk. Fluid dynamic bearing hard disk drive spindle motors offer other advantages over conventional ball bearing hard disk drive spindle motors, including better shock absorbance and vibration dampening, less noise and an extended fatigue life. Our fluid dynamic bearing hard disk drive spindle motors can rotate at over 20,000 revolutions per minute compared with the 12,000 to 15,000 revolutions per minute for conventional motors with ball bearings. Fluid dynamic bearings reduce operation noise by three to ten decibels compared with ball bearings.

Markets for DC Motors





Markets for Small Precision DC Motors

Small precision motors have many applications across a broad spectrum of industries. Though often not readily visible to consumers, since they are incorporated into other equipment as components, they serve a vital function. Small precision DC motors currently have uses as components in five major types of equipment:

•

computers and office equipment;

•

audio-visual equipment, home appliances and other consumer products;

•

motor vehicles;

•

heating and cooling machinery; and

•

various industrial machines.

The demand for small precision motors fluctuates chiefly in response to trends in the key end-user industries whose products incorporate these motors.
Consumer spending and capital investments are two important drivers of demand for the end-user industries. The 1990s saw expansion of the major markets for small precision motors, with computers and office equipment the major category of expansion, followed by audio-visual equipment, home appliances, other consumer products and heating and cooling machinery.

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The industrial machinery sector also grew primarily as result of an increase in capital investment. From late 2000 until recently, there was a significant deterioration of economic conditions, particularly with respect to capital investment and consumer spending in the computer, information technology and related product markets, which had a negative impact on sales. However, more recently there have been indications that economic conditions may have stabilized. There has also been an increase in the range of applications for our small precision DC motors, such for as mobile phones and digital cameras, and an increase in demand for spindle motors. As a result, demand for our small precision DC motors has shown improvement.

Hard Disk Drive Spindle Motors for Computer-Based Information Storage and Retrieval Devices. Most computer applications require access to a greater volume of information than can be stored economically in the random access memory, or RAM, of the computers central processing unit. This information can be stored on a variety of storage devices, including hard disk drives, both fixed and removable, floppy disk drives, magnetic tape drives, optical disk drives and semiconductor memory, including RAM and flash memory. Semi-conductor memory does not require rotating parts and accordingly has lower power requirements. However, among all of these storage devices, hard disk drives provide a balance between high volume and fast access speeds that makes them an attractive choice for many computer products. Hard disks are also available at substantially lower prices than high-speed semiconductor memory and are now being produced in comparable sizes (with much higher capacity). Semi-conductor memory is becoming more widespread, particularly in applications such as digital cameras and mobile phones.

Currently, hard disk drives, which incorporate our motors and other components such as pivot assemblies, comprise the largest sector of the information storage industry based on Techno Systems Research Co., Ltd., a market research company. The amount of data stored and accessed electronically has been growing due to the increased amount of data created as a result of the growth of the Internet. The increased volume of shared information was made possible by the growth of high speed broadband communications and the development of sophisticated software applications to generate and manage increasing volumes of data.

Traditionally, hard disk drive motors have been integrated into computer products in three primary categories:

•

Enterprise. This category consists of high performance workstations, servers, mini-computers, mainframes and backup drive subsystems. Applications that run on enterprise systems are usually data-intensive. Servers mainly use 3.5-inch hard disk drives.

•

Desktop. This category consists of desktop PCs. These PCs are used in a number of environments, ranging from homes to small and large businesses. Typically, these PCs use 3.5-inch hard disk drives.

•

Portable. This category consists of portable notebook PCs and hand-held computers, which typically use 1.0-inch, 1.8-inch or 2.5-inch hard disk drives.

Hard Disk Drive Spindle Motors for New Consumer Electronics and Home Entertainment Applications. In addition to the growth in demand for PCs, and Internet- and network-related servers and storage, the widespread use and transmission of graphic images and high-fidelity audio and video in digital format is creating a need for greater storage capacity in consumer electronic devices. As a result, new generations of consumer electronics are expected by us to incorporate hard disk drives for data storage and retrieval functions.  In recent years, demand for storage devices has been on increase in non-PC markets such as home appliances, and Techno System Research, estimates non-PC products share in 2006s HDD market to be 17%.  As a new driving force of the HDD market, non-PC applications (e.g. mobile digital video/audio players, handycams, car navigators, DVD recorders, and home video machine games) are expected to contribute to the stable growth of our companys spindle motor business toward the future.

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Other Small Precision Brushless DC Motors.Other small precision brushless DC motors are designed for quiet performance in high-speed, continuous-duty applications such as CD-ROM, CD-R/W and DVD players and recorders, as well as in office equipment such as facsimile machines, laser printers and photocopy machines.

There has been a growing consumer demand for multimedia products such as CD-ROM, CD-R/W, DVD-ROM and DVD-R/W drives that incorporate brushless DC motors. CD-ROM technology combines audio, video, text, and graphics in one medium with the capability to store, search, and retrieve large quantities of information. One CD-ROM can contain up to 650 megabytes of data. During the 1990s, CD-ROM became the dominant medium for software distribution. DVDs are a type of optical disk that can hold up to 17 gigabytes of information. DVD video has already gained acceptance as a new medium for home video distribution. We believe the DVD video format is replacing the VHS format over time, because DVDs experience no image or sound degradation from normal usage and offer greater storage capacity, indexing, random access and lower manufacturing costs. DVD data storage devices have also been rapidly replacing CD-ROMs in the computer industry. DVD-W is again growing rapidly this year, its monthly production volume reaching a 12 million-level.  While existing CD-ROM and CD-R/W are recording continuous production decline, DVD-W has experienced significant growth, occupying more than 50% of the market share.  This trend is based on the demand in the computer industry, and even though its growth rate fluctuates, DVD-W is expected to maintain its momentum, and to reach a monthly production volume level of 16 million and occupy 65% of the market share by the next fiscal year.  The sale of products using the new HD-DVD and Blue-Ray technology has started, but demand for them will not increase significantly until 2010.  DVD-W is expected to sustain its growth in multimedia-related markets.

Markets for Brushless DC Fans

As more electronics components, at higher densities, are incorporated into household appliances, computers, telecommunications and consumer electronics devices, medical and audio-visual equipment and home video game consoles, the benefits of brushless DC fans are creating greater interest and demand for their use in traditional AC fan applications. Beyond providing superior airflow, brushless DC fans can be controlled more easily. Operating a fan or blower at full speed continuously or cycling it on and off is not ideal for most cooling and ventilating applications. Variable speed DC fans offer several benefits. First, reducing fan speed provides energy savings from lower electrical power consumption. Second, noise can be reduced with variable-speed fans by automatically adjusting airflow as needed. Noise is an important factor in the perceived quality of a product. Third, DC fans significantly extend product life and, in turn, extend the operating life of the fan.

We expect that the advantages of DC fans over AC fans will lead to their inclusion in even more applications and that this trend will continue to contribute to an increase in our future sales. Three of the major fan applications where we expect future growth are discussed below.

•

Cooling Fans for Computers. Virtually every computer in operation requires a fan to cool itself as it heats up during operation. Heat represents one of the biggest obstacles to building more powerful PCs than todays PCs. The demand for increased cooling in smaller spaces with less noise has continued to grow as manufacturers seek to incorporate more components, particularly faster central processing units, into smaller, more powerful systems.

•

High-Performance Fans for Use in Game Machines. Currently, we supply fans used in home video game consoles produced by the three major manufacturers.

•

Fans for Audio-Visual Equipment.This market has entered a growth phase, driven by factors that include the introduction of digital technology, the addition of communications functions, and the linkage of audiovisual products with PCs.

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Fans for Audio-Visual Equipment. This market has entered a growth phase, driven by factors that include the introduction of digital technology, the addition of communications functions, and the linkage of audiovisual products with PCs.

Markets for Mid-size Brushless DC Motors for Use in Household Appliances and Automobiles



Electric motors are basic components of most appliances. Control of these motors has become a critically important issue as new applications arise, higher performance is demanded, environmental concerns mount, and power becomes more expensive. Electric motors typically consume most of the power needed by appliances. One means of economizing energy usage by appliances is improving motor design. The on-off, single-speed operation of the motors in common appliances such as refrigerators, washers, dryers and vacuum cleaners leads to inefficient energy usage.

Demand is also growing for advanced electric motors in automobiles. Electronic motor-powered power steering systems, engine cooling, active suspensions and brake systems have become increasingly commonplace in cars. Automotive manufacturers are also focusing on developing energy-efficient electrical power steering systems. Conventional power steering systems use a hydraulic pump driven by the vehicles engine to provide the required assistance for the driver. The biggest disadvantage of this system is that the pump has to work continuously, wasting power. Fuel consumption can be improved by as much as 2% by switching the power source from the engine to a high-efficiency, mid-size motor, which activates only when needed just for enough power. Brushless DC motors also provide more quiet operation and a longer life. For mid-size brushless DC motors in power steering systems, we expect steady market growth in Europe and expanding in the United States. Also, hybrid vehicles have already established their positions in the market, and their share is expected to grow as environmental awareness increases.  Various motors, including the drive motor which replaces the engine, are used in hybrid cars, and such motors play roles in the battery cooling blower, the water pomp, the electric compressor and other parts.  These components either have not been installed in engine-driven cars, or have functions already been by the engine system, and thus they are part of the new market that was born as hybrid cars emerged. As increased demand for hybrid cars generates the need for more motors, the quantity of car motors to be produced will likely increase.

Markets for Machinery

Principal products in this market include industrial robots, card readers, power transmission equipment, high-speed pressing machines, semiconductor production equipment such as die bonders, and circuit board testers.

In the field of industrial robots, demand for LCD panel substrate-handling robots is increasing. Demand for large LCD panels has grown in recent years with the increasing demand for large-screen PC monitors and LCD televisions, and demand from LCD manufacturers in Korea, Taiwan, and Japan is strong. Demand for seventh generation LCD substrate-handling robots, which yield more panels from one substrate, was particularly strong in the year ended March 31, 2006. However, the price decrease of panels in the year that ended on March 31, 2007 forced all but some top manufacturers to review their investment.  Also, South Korea and Taiwan saw, among other things, manufacturers either significantly delay or freeze their investment for new production lines.  On the other hand, production is expected to expand in China, where fifth-generation production lines have become fully operational.

In the field of card readers, demand for use in bank automatic teller machines (ATMs) is brisk. In Brazil, Russia, India and China, the so-called BRICs market, demand for ATMs is rising and, in Japan, replacement demand for ATMs with biometrics-based security solutions is emerging. We expect the need for card readers in hotels, amusement facilities, transportation services and the distribution market to expand.

In the field of semiconductor-related equipment, we supply die bonders that paste semiconductor chips on lead frames, and testers for the burn-in of semiconductor packages. Demand for high-speed, high-precision semiconductor-related equipment is expanding as a result of the striking miniaturization and increasing functionality of mobile phones, PCs, digital cameras, and a variety of other digital consumer electronic products.

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Market for Electronic and Optical Components

Principal products in the electronic and optical components segment include camera shutters, lens units, precision-molded plastic case parts for digital cameras and mobile phone cameras, optical pickup units and polygon scanners for optical disk drive devices, electronic circuit components such as actuators, drive motor units, and trimmer potentiometers used in office equipment and home appliances.

In the optical equipment-related market, the digital camera market grew significantly, with shutter and lens units shipped and sold more than ever before. With respect to components for single-lens reflex cameras, especially, manufacturers active introduction of new models resulted in significantly increased shipments of Nidecs focal plane shutters.  Orders for cell phone shutters are also rapidly increasing, with five times more units shipped this fiscal year than in the last.  Blu-ray-related products, which were released this fiscal year, are also experiencing steadily increasing sales.

Demand for optical pickup units for PCs and digital consumer appliances is expanding. In particular, demand for optical pickup units for DVD burners and low-profile devices for notebook PCs is expanding in step with the increasing use of those products.

In the field of actuators for polygon scanners, demand for actuators with high-speed, high-precision air bearing motors is growing, as a result of the ever-improving image quality offered by copiers and color printers.

Drive motor units for consumer electronic goods and appliances contribute to the added value of such products as refrigerators, by improving their ice-making functions, and washing machines, by enhancing drainage. Demand for drive motor units in the BRICs market is expected to rise steadily with improvement in the standard of living and the expansion of the middle and upper classes in these countries.

Electronic components such as trimmer potentiometers and switches are used in printed circuit boards, and demand for these products mirrors the silicon cycle (the cyclical ups and downs in the semiconductor industry).

Market for Others

The Others segment consists mainly of automobile transmission parts, pivot assemblies for hard disk drives, music box related products, the transportation industry, and other service industries.

The auto parts we supply include control valves, which are the heart of automatic transmissions, electromagnetic valves, and valve spools. All these require extreme precision to achieve high-accuracy control of hydraulic transmissions. Recent years have seen growing demand for continuously variable transmissions (CVTs), which offer smooth acceleration and superior fuel consumption, and demand for enhanced controllability has fueled rising demand for control valves.

Pivot assemblies support and control the arm of the magnetic head in hard disk drives. Because they are used in hard disk drives, shipments of pivot assembly units are steadily increasing.

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Our Business Strategy

We seek to pursue high business growth, high profitability and high stock value by establishing a position as the leading provider of brushless motors and other drive technology products. We intend to accomplish these goals based on the following strategies.

1) Maintaining the dominant position in the hard disk drive (HDD) spindle motor market for profitability enhancement

The HDD motor business as part of Nidecs core operations represented approximately 75% of the global market and 31.5% of our sales mix in the fiscal year ended March 31, 2007. In this field of operation, our primary focus is on profitability enhancement is underpinned by our dominant market position.

With a widespread broadband internet network and diversified broadcast services stable medium- to long-term growth is expected for the HDD market, with greater enterprise data backup needs and robust private demand for high-density audiovisual data contents. Meanwhile, the HDD industry has undergone a string of market consolidations in recent years and is currently experiencing cross-industry competition with electronic storage devices (flash memory drives) on the small-form-factor front.

The following outlines our recent progress in our strategic approach to the HDD motor market.

i) Technological leadership conducive to profitability enhancement



a) Sintered-alloy-metal fluid dynamic bearing units

As part of efforts to increase profitability of the HDD motor business, we are accelerating the development and production of spindle motors built with sintered-alloy-metal fluid dynamic bearing units (sintered-alloy FDB), which require fewer machining processes and therefore reduce production time and costs. Having gained recognition of the major HDD manufacturers for their practicality, the HDD motors equipped with sintered-alloy FDB constituted a significant part of the shipments in the fiscal year ended March 31, 2007.



b) Perpendicular recording technology

In the meantime, we have given added value to our HDD motors by meeting new quality requirements arising from the adoption of perpendicular recording technology (PMR) ahead of our competitors. In PMR, data bits are oriented vertically on the disc platter (perpendicular to the disc surface), rather than flat to the surface as with the existing longitudinal recording. This new data orientation enables a dramatic rise in the per-platter capacity of HDD, technically underpinning the industrys pursuit of greater storage capacity going forward. We saw a notable increase in the number of our spindle motors shipped to PMR-based HDDs in the fiscal year ended March 31, 2007, contributing to the industrys ongoing shift toward higher HDD capacity.

ii) Internal manufacturing

Expanding in-house manufacturing capacity for HDD motor parts and components is also a crucial key to profitability enhancement. In the fiscal year ended March 31, 2007, we took major steps forward in this direction by building a new component factory in Thailand and acquiring a Singaporean HDD parts manufacturer, Brilliant Manufacturing Limited. The new factory in Thailand is granted long-term tax benefits in line with the Thai governments preferential treatment for foreign HDD component manufacturers operating in the country's designated economic zone. Brilliant Manufacturing Limited, formerly listed on the SGX (Stock Exchange of Singapore), has a proven track record as an industry-leading supplier of HDD base plates and top covers.

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2) Expanding the market share of small precision brushless DC motors for non-HDD applications

In line with efforts to maintain a strong position in the market for HDD motors, we also seek greater presence in a broad range of small- to mid-size motor markets by extensive use of our technological and manufacturing resources related to brushless DC motors.

Our non-HDD-oriented brushless DC motors are mainly directed to optical disk drives, cooling fans, office equipment, home electric appliances, automotive systems and other product areas in which there is a shift to new generation products.

i) For optical disk drives and cooling fans

At the forefront of the high-end optical disk drive market, particularly in Japan, a transition to next-generation DVD formats referred to as Blu-ray and HD DVD is underway in response to the diffusion of high-definition broadcast. As the dominant supplier of brushless DC motors for high-end optical disk drives, we look to the emerging market for new revenue opportunity. In the meantime, we have also been extending our reach into the low-end Asian markets, taking advantage of our technological and scale advantages already established in the high-end field. For the cooling fan business, we are working on new product rollout to explore access to the major U.S. and Asian PC markets. In June 2006, we launched a full-scale production of fan motors at Nidec Vietnam Corporation located in the Saigon High-tech Park (SHTP),Vietnam.

ii) Office equipment, home appliances and automotive systems

The common thread running through our approach to the motor market for office equipment, home appliances and automotive systems is helping to replace traditional motors with brushless DC motors. The centerpiece of our effort is diversifying our product portfolio and expanding our addressable market with particular emphasis on brushless DC motors distinguishing technical advantages and eco-friendly features. On the office equipment front, we have largely increased sales to copier/ laser printer customers with a renewed focus on motor configuration saving the customers switching costs. In the home appliance market (the Japanese market, in particular), our brushless DC motors are finding ways into new-generation products (such as refrigerators, washing machines and air-conditioning system) which stress operating quietness, power efficiency and controllability.



As part of our efforts to strengthen the motor-drive technology and broaden product portfolio, we acquired Japan Servo Co., Ltd., a former subsidiary of Hitachi, Ltd., in April 2007.



In pursuit of enhanced driving safety, fuel efficiency and environmental friendliness, the automobile industry is steering a phased technological transition toward highly-sophisticated, electronically-controlled automobile drive systems. These new control systems require a greater number of electric motors than the existing mechanically-controlled system. We view the automotive motor market as a major source of our future growth and have been proactively investing research and development resources in this area. Automotive applications using our brushless DC motors are currently limited to hydraulic/electric power steering system and seat/fuel-cell cooling fans. Going forward, we are expanding into a wider range of riding and handling system, such as electric active suspension/brakes, and more critical driving sources including the engine drive motor system of gas-electric hybrid cars.



In December 2006 we acquired the Motors & Actuator business of Valeo S.A., an automotive components manufacturer based in France, to extend our reach into the European and North American automotive components market.

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3) Mergers and acquisitions for technological enhancement

Effectively shortening the research and development period is increasingly important for us to constantly get to market fast with new products and maintain market leadership. In this respect, corporate acquisitions aimed to strengthen product development capabilities have been and will continue to be an essential element to our business growth. Since 1995, we have acquired a total of twenty-seven companies with world-class drive technologies and manufacturing expertise and have utilized these resources to augment our core, small precision motor business. We consider that further steps towards more integrated product development environment will require technologies relating to semiconductor and electronic control unit. From a broader strategic perspective, acquiring access to the large-size motor market, where brush/AC motors are still the mainstream, is also an option to meet our aim to increase replacement demand for brushless DC motors.

4) Production presence in all key regional markets

We seek to develop our competitive advantage by increasing presence in the worlds key geographical markets: Asia, North America and Europe. The Asian region, as illustrated by the rapid rise of the Chinese and Indian economies, is assuming greater prominence today not only as the world's manufacturing center, but also as huge consumer market with enormous growth potential. Building upon advances thus far made in Southeast Asian countries, we have established and strengthened our manufacturing, logistical and sales capabilities in China over the past few years in step with our customers' production shift to China. In the Pinghu Economic Development Zone in Zhejiang, we have 12 companies in operation and one in the making on a group-wide basis today. In order to maintain an optimal balance in overseas production, we are increasing presence in Vietnam's Saigon High-tech Park (SHTP).

Our Principal Products, Customers and Competition



The following table presents net sales in each of our major categories of products for each of the three years ended March 31, 2005, 2006 and 2007:

|           |                                           | Yen in millions             |  | U.S. dollars
      in thousands             
|---------- | ----------------------------------------- | --------------------------- |  | --------------------------------------------
|           |                                           | For the year ended March 31 |  | For the year
      endedMarch 31,
      2007
|           |                                           | 2005                        |  | 2006                                        
|Net sales: |                                           |                             |  |                                             
|           | Small precision motors:                   |                             |  |                                             
|           | Hard disk drives spindle motors           | ¥ 119,233                   |  |                                             
|           | Other small precision brushless DC motors | 61,066                      |  |                                             
|           | Small precision brush DC motors           | 7,980                       |  |                                             
|           | Brushless DC fans                         | 34,435                      |  |                                             
|           |                                           |                             |  |                                             
|           | Sub-total                                 | 222,714                     |  |                                             
|           | Mid-size motors                           | 35,564                      |  |                                             
|           | Machinery                                 | 76,957                      |  |                                             
|           | Electronic and optical components         | 128,417                     |  |                                             
|           | Others                                    | 22,209                      |  |                                             
|           |                                           |                             |  |                                             
|           | Consolidated total                        | ¥ 485,861                   |  |                                             
|           |                                           |                             |  |                                             

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Hard Disk Drive Spindle Motors

We have been providing fluid dynamic bearing hard disk drive spindle motors, offering such motors for 3.5-inch, 2.5-inch, 1.8-inch and 1.0-inch hard disk drives. As shown in the table above, our net sales of hard disk drive spindle motors were ¥119,233 million for the year ended March 31, 2005 and ¥164,575 million for the year ended March 31, 2006. For the year ended March 31, 2007, our net sales of hard disk drive spindle motors amounted to ¥198,196 million, representing 31.5% of total net sales.

We currently have six main customers for our hard disk drive spindle motors. All of these customers are major hard disk drive manufacturers. Our six customers are Seagate, Western Digital, Hitachi GST, Fujitsu, Toshiba and Samsung. For the year ended March 31, 2005, sales of hard disk drive spindle motors to our top five customers constituted over 24% of our net sales. For the year ended March 31, 2006, sales of hard disk drive spindle motors to our top five customers constituted over 30% of our net sales. For the year ended March 31, 2007, sales of hard disk drive spindle motors to our top five customers constituted over 27% of our net sales. For the year ended March 31, 2007, Seagate, the worlds largest disk drive manufacturer, represented 13.4% of our net sales, with ¥72,022 million, and Hitachi GST represented 7.6% of our net sales, with ¥40,906 million. We currently supply Seagate, our largest customer, and all of other leading hard disk drive manufacturers with most of their hard disk drive spindle motors.

Currently, there are four major producers of spindle motors for hard disk drives in the world, including us, who together account for almost all of the worldwide market. While we face competition from the other three producers, Minebea, Victor Company of Japan, or JVC, and Panasonic, particularly in the 1.8-inch, 2.5-inch and 3.5-inch hard disk drive motor segments, we currently have a dominant share of the hard disk drive spindle motor market by unit volume.

We seek to compete by working closely with our customers to design and develop motors that meet their specifications. We have already developed a strong background in manufacturing both 2.5-inch models for notebook applications and 3.5-inch models for desktop applications as well as 3.5-inch models for high-end applications. Aside from producing Seagate models, we have been developing a wide range of our own fluid dynamic bearing spindle motors in all categories from 1.0- to 3.5-inch models. Seagate was formerly a competitor. However, we no longer expect them to be engaged in mass production of fluid dynamic bearing motors, because they sold their fluid dynamic bearing production facilities in Rangsit, Thailand to us in November 2000.

We believe that our development activities, which enable us to provide high speed, precision rotation motors and our move to lower-cost, overseas production will maintain and potentially strengthen our competitive position in the market for hard disk drive spindle motors. We have built a new plant in Rangsit, Thailand as part of our strategy to produce hard disk drive spindle motors on a larger scale, at lower cost and to have closer contact to our customers. We are competing with electronic storage device manufacturers on the small-form-factor front HDD market.

Other Small Precision Brushless DC Motors

In addition to our hard disk drive spindle motors and small precision brushless DC fans, our small precision brushless DC motors are used in both computer related devices (including CD-ROM drives, CD-R/W drives, DVD recorders and players and DVD-multi drives) and office equipment (including computer peripherals, copiers, printers and fax machines). Color copiers in particular require a sensitive and smooth dram spin to achieve high-grade printing. Our power transmission drives and brushless motors work together to provide a high-accuracy spin.
We are in fierce competition with Matsushita Electric Industrial, LG Innotek and Samsung Electric in this market, though we hope to increase our market share through the introduction of new products. Our net sales of other small precision brushless DC motors were ¥61,066 million for the year ended March 31, 2005, ¥66,463 million for the year ended March 31, 2006 and ¥74,445 million for the year ended March 31, 2007. The market trend for optical disk drive units, especially slim-types incorporated mainly into laptop computers, is steadily shifting to value-added, DVD writable drives (super multi drives) which can write and read DVDs and CDs.

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We are a supplier of super multi drive units to two major makers, Hitachi-LG Data Storage Inc. and Toshiba Samsung Storage Technology Corporation. We believe that we are in a good position to increase our share in this slim optical disk drive market because spindle motors for these products are required to demonstrate a high degree of rotation accuracy. We have been expanding our market share both in terms of slim and thick types, by targeting products at the higher end of the quality spectrum.

Manufacturers in Korea and Taiwan currently lead the manufacturing market for CD-ROM drives, CD-R/W and DVD devices. We supply a large portion of brushless DC motors to manufacturers in these countries. In order to expand our market share, we are making efforts to further reduce our production costs by standardizing our products and by generating scale efficiencies.

We have been increasing our monthly production of brushless DC motors for use in office equipment such as laser printers, fax machines and multimedia equipment, including CD-ROM and CD-R/W drives and DVD drives, to up to sixteen million motors per month during the year ended March 31, 2007. Because we are intentionally expanding our market shares both in slim and thick types, our sales have been steadily increasing since the second half of the year ended March 31, 2001 despite of the severe competition with low-cost manufacturers in Korea and Taiwan. In order to respond to this competition, we have attempted to lower our costs by shifting our production bases to overseas, especially to China where we have established our subsidiary, Nidec (Dongguan) located nearby Shenzhen.

Brushless DC Fans

Our brushless DC fans are used in many types of products, including computers and video game consoles, for the purpose of lowering the temperature of central processing units in these products. In addition, they are used in household appliances, including bidet-toilets, rice cookers, microwave ovens and plasma displays. Our net sales of brushless DC fans accounted for ¥34,435 million for the year ended March 31, 2005, ¥34,872 million for the year ended March 31, 2006 and ¥38,656 million for the year ended March 31, 2007.

Customers for our brushless DC fans include manufacturers of central processing units, computers, computer cases and computer peripherals, laser printers, photocopy machines, projectors, audio/visual equipment, household appliances, game consoles, telecommunications equipment, automobile seats and automobile air conditioners. Overseas, a substantial portion of our sales is to manufacturers of central processing units, computers and computer peripherals. We also have a major position in the fan market for color printers, projectors and mini-component stereo sets. We are also expanding sales of our fans into new markets such as automobile seats and telecommunications equipment. We began selling fans for video game consoles in March 2000, and we believe that we are currently the main supplier to each of the three major game console manufacturers. In Japan, our primary competitors for brushless DC fans are Minebea-Matsushita and Sanyo Denki. We also face competition from Papst in Germany and Taiwanese companies such as Delta, Sunon and Chenhome, which are generally providing less expensive fans. We are also selling our fans and motors to the manufacturers of digital laser projectors. We expect that we will be able to capture a large share of the market for fans and motors in digital laser projectors.

We do not sell large quantities of brushless DC fans to overseas customers in the household appliance industry. Overseas markets in this industry still favor AC fans, which are less expensive than DC fans. On the other hand, there is greater demand in Japan for our small precision brushless DC fans within the Japanese appliance industry, because Japanese households tend to demand better quality and more fully featured household appliances that require precisely regulated power control. We believe that we have the largest share of the domestic fan motor market with respect to household appliance products.

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Mid-size Motors



Our Mid-size motors are used in automobiles, various electric household appliances and industrial equipment. Our net sales of mid-size motors accounted for ¥35,564 million for the year ended March 31, 2005, ¥37,767 million for the year ended March 31, 2006 and ¥57,389 million for the year ended March 31, 2007.

Through Nidec Shibaura, which was originally a joint venture among Nidec, Shibaura Mechatronics and Toshiba and which became a wholly-owned subsidiary in September 2000, we produce mid-size brushless DC motors for household appliances such as washing machines and air conditioners. We are combining the technology and expertise of Nidec Shibaura in household appliance motors with other technologies we have developed through our experience in the spindle motor field. In the area of household appliance DC motors, our principal competitors are Matsushita Electric, Hitachi and several Chinese manufacturers. We also design, develop, manufacture and service mid-size motors for industrial equipment such as pumps and elevators as well as home electrical appliances through Nidec Power Motor.

One area into which we have diversified is mid-size motors for power steering. We are currently selling such motors to five car manufacturers through three major power steering manufacturers. We are actively exploring possibilities for collaboration with other suppliers to the automotive industry and plan to enter the U.S. market. We face competition from companies that supply auto parts to the major car manufacturers such as Globe in the United States and Bosch and Siemens VD in Europe. We acquired Motors & Actuators business of Valeo S.A., France, which we believe is highly recognized in the in-car motor market, in December 2006.

Machinery

Machinery we design and manufacture includes semiconductor production equipment, such as robots, card readers, die bonders and board testers, high-speed press machines, machine tool equipment for the manufacture of motors, measuring equipment, power transmission equipment and factory automation systems.

Our net sales of machinery accounted for ¥76,957 million for the year ended March 31, 2005, ¥73,243 million for the year ended March 31, 2006 and ¥82,944 million for the year ended March 31, 2007.

An active demand for LCD (liquid-crystal-display) TVs drove capital spending by LCD panel makers in Japan, Korea and Taiwan, leading to an increase in sales of Nidec Sankyo's LCD-substrate transfer robots. However, a sharp decline in demand for LCD-related robots in the second half fiscal year caused decreasing sales.

Nidec Sankyo's card readers were also in high demand, benefiting from the expanded BRICs market and banks' replacement need for biometric automatic teller machines.

The majority of our die bonders and board testers are shipped directly to information technology and semiconductor industry plants. Nidec Tosok's semiconductor equipment business exhibited different product-specific trends. In contrast with die bonders, the sales of testers declined sharply due to market adjustments in inventories.

Electronic and Optical components

Our Electronic and optical components include camera shutters, camera lends units, encoders, switches, trimmer potentiometers, motor driven actuator units, optical pickup units, processing and precision plastic mold products.

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Our net sales of electronic and optical components accounted for ¥128,417 million for the year ended March 31, 2005, ¥128,791 million for the year ended March 31, 2006 and ¥144,651 million for the year ended March 31, 2007.

Sales of Nidec Sankyo's optical pickup units decreased due to a withdrawal from unprofitable product lines and a start-up delay of a new product.

Sales of Nidec Copal's digital camera shutters and lens units increased as a result of significant expansion in the digital camera market. In particular, the sales of our focal-plane shutter for single-lens reflex has increased due to the introduction of new models by makers. Moreover, orders of shutters for mobile phones increased rapidly. In addition, a new blue-ray related product that started this term has also expanded well.

Sales of Nidec Copal Electronics's electronic circuit components and pressure sensors increased due to the prosperity of the IT industry, the industrial equipment industry and the semiconductor-fabrication equipment industry, while sales of actuators decreased due to declining demand in the entertainment devices market. In addition, we acquired Fujisoku, which produces industrial operation/detection switches and accurate measuring instruments in November 2006.

Other products

Our Others products include automobile parts, pivot assemblies, other components and other services.

Our net sales of other products accounted for ¥22,209 million for the year ended March 31, 2005, ¥23,298 million for the year ended March 31, 2006 and ¥26,702 million for the year ended March 31, 2007.

Sales of Nidec Singapores pivot assemblies for use in hard disk drives increased as the share increased.

Sales

We regard a timely response to consumer demands as the most important aspect of service. By establishing a sales base in many regions, both inside and outside Japan, we have established a global sales network which covers the worlds key motor markets.

In Japan, products are mainly sold to customers directly through Sales Departments, which employed 1,043 staff members as of March 31, 2007. Some products are also sold through sales representatives. We have sales bases and sales branches in various regions in Japan. Since most of our customers have a technical development department in Japan, we work to expand new demand by meeting the diversified needs of our customers through these sales departments and seek to quickly respond to changes in the market.

Overseas, generally, products are sold to customers through subsidiaries and affiliates. In the United States and Canada, a portion of our products is sold through sales representatives. In Europe, products are mainly sold directly to customers through sales subsidiaries. In Asia, such as Singapore, China, Hong Kong, Taiwan, and South Korea, sales subsidiaries are responsible for directly selling products to customers in their area. As for manufacturing subsidiaries in Asia, such as Thailand, the Philippines, Singapore, China and Vietnam, products are generally sold through parent companies, although, some products are sold through sales subsidiaries in these areas or directly to customers.

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The following table presents a breakdown of total revenues by geographic market for the three years ended March 31, 2005, 2006 and 2007:

|                             |                    | Yen in millions             |  | U.S. dollars
      in thousands              
|---------------------------- | ------------------ | --------------------------- |  | ---------------------------------------------
|                             |                    | For the year ended March 31 |  | For the year
      ended
      March 31, 2007
|                             |                    | 2005                        |  | 2006                                         
|Sales and operating revenue: |                    |                             |  |                                              
|                             | Japan              | ¥ 292,822                   |  |                                              
|                             | U.S.A.             | 8,200                       |  |                                              
|                             | Singapore          | 59,989                      |  |                                              
|                             | Thailand           | 42,653                      |  |                                              
|                             | The Philippines    | 5,557                       |  |                                              
|                             | China              | 23,771                      |  |                                              
|                             | Other              | 52,869                      |  |                                              
|                             |                    |                             |  |                                              
|                             | Consolidated total | ¥ 485,861                   |  |                                              
|                             |                    |                             |  |                                              

Because our hard disk drive spindle motors are components used in information technology equipment, the market for which is subject to rapid technological change, it is critical to provide in-depth support, including by locating production, sales and service operations as close as possible to customers. Success in our business depends on the ability to quickly understand and respond to market needs, including product trends, features and specifications, as well as production capacity and pricing. Our Sales Department is constantly evaluating the market in search of new opportunities. Feedback on identified needs is quickly passed on to our Development and Production Departments, and the entire team works together to further the commercialization effort of new products. The rapid acquisition of information and action by our Sales Department enables our Development and Production Departments to respond quickly, so that products meeting customer requirements can be launched in a timely manner.

Production



We specialize in the field of Everything that Spins and Moves centering on drive technology products, namely motors, and have acquired large market share for many of our products by reinforcing motor-related technology and application engineering through mergers and acquisitions. As a result, we have been successful in expanding sales and profits by taking advantage of new market opportunities and demand trends. We divide operations into the five business segments discussed below. While development and design engineering are mostly conducted in Japan, production of small precision motors is conducted in various Asian countries, including Thailand, the Philippines, Singapore, China and Vietnam, based on our basic policy of producing products close to the production sites of our customers. Production of mid-size motors is also conducted in various countries, including Japan, China, Thailand, Spain, Poland and Mexico. Machinery is still produced mostly in Japan.

Small Precision Motors

We produce most of our small precision motors, such as spindle motors for
HDDs, brushless DC motors and fan motors in our overseas manufacturing
subsidiaries in Thailand, the Philippines, Singapore, China and Vietnam.
In addition, we established joint ventures with NTN Corporation in China
in August 2002, then in Thailand in November 2005. The joint ventures are
producing fluid dynamic bearing units using oil impregnated sintered-alloy
metal for our spindle motors for HDDs. These production operations in Asia
have resulted in cost reductions in relation to such factors as capital
expenditure, labor costs and taxes. Also, as part of efforts to facilitate
production cost reduction, we are promoting the internalization of motor
parts in these sites.

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We have established research and development centers in Japan, which develop
new designs and more efficient processing/production technology in order
to create advanced new products. In particular, our technical development
centers in Kyoto, Shiga, Nagano and Tottori have been engaged in design
and prototype production for new-products and are promoting the a full
transfer of their technical expertise, including formation of mass production
lines, to our overseas plants.

Mid-Size Motors



The design and development of the mid-size motors is conducted in Japan. Nidec Corporation handles mid-size brushless DC motors for vehicles responding to an increase in the demand for fuel-efficient vehicles generating less emission. Nidec Shibaura Corporation deals with mid-size brushless DC motors for consumer electronics and housing facilities, which are equipped with energy-saving, low noise and longer life features. Nidec Power Motor Corporation handles mid-size motors for energy-efficient machinery. Production of those products is conducted in Japan, China, Thailand, Spain, Poland and Mexico. Production bases in Japan provide technical support to manufacturing subsidiaries in China, Thailand, Spain, Poland and Mexico.

Machinery

Semiconductor manufacturing equipment, automatic measuring equipment, image processing equipment, high-speed press machines, printed-circuit-boards inspection equipment, industrial robots and card readers, have mainly been designed, developed and manufactured in Japan. Some of our measuring equipment and high-speed press machines are being manufactured in China.



Electronic and optical components

We produce encoders, optical components such as camera shutters, lens units and optical pick-up units, electronic parts including pressure sensors, electronics circuit parts and actuators in our subsidiaries ,Nidec Copal Corporation, Nidec Copal Electronics Corporation and Nidec Sankyo Corporation. Shutters and lens units for various cameras are developed and designed by Nidec Copal Corporation in Japan and produced in Japan, Thailand and China. Nidec Sankyo Corporation develops, designs and manufactures electronic components such as actuators and optical pick-up units, which are being produced in Singapore and China. Electronic components such as pressure sensors and electronics circuit parts are being developed, designed by Nidec Copal Electronics Corporation in Japan and manufactured in Japan and China.

Others



Others consists of pivot assemblies and automotive parts. Our manufacturing subsidiary in Singapore conducts the development, design and manufacture of pivot assemblies. Automotive parts are developed and designed in Japan and produced in Japan and Vietnam.

Suppliers

We purchase components, raw materials, equipment relevant to the manufacture of our products from various suppliers selected on the basis of superiority in product price, product quality, production lead-time, and associated services. We believe that this policy encourages suppliers to develop technological expertise and cost competitiveness. A large portion of such procurements, except some components for printed circuits, is locally available. We believe that the materials and components necessary for our manufacturing operations are presently available both in quantity and quality.

Key motor parts outsourced are, pressing and stamping parts for the production of hubs, stator cores, and die casts used in brackets motors are mounted on. Other products outsourced include printed-circuit components, including integrated circuits and electromagnetic steel sheets, as well as other electronic parts. In the past, we purchased base plates for motors from suppliers, but now we produce such base plates. Once in the past, an increase in demand for printed circuits caused shortage of relevant electronic components, including integrated circuits. If similar difficulties should occur in the future, we would be compelled to build stock to meet demand.

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Government Regulation and Environmental Standards

In Japan, we are subject to environmental regulation under the Air Pollution Control Law, the Water Pollution Control Law, the Wastes Disposal and Public Cleaning Law, the Law for the Promotion of Effective Utilization of Resources, the Basic Law for Establishing a Recycling-based Society and other laws. We are also subject to local regulations which in some cases impose requirements more stringent than the national requirements. However, we do not use large volumes of hazardous or toxic chemicals in our manufacturing operations. Moreover, our operations do not require the disposal of large amounts of waste into the environment. Our emissions are sufficiently low so that we are not required to report their amount under the Pollutant Release and Transfer Register.

Our overseas operations are also subject to environmental regulation. Our operations in the United States, for example, are subject to extensive environmental regulation under a number of laws, including the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental, Response, Compensation and Liability Act and the Toxic Substances Control Act. We are also subject to substantial state legislation that parallels, and in some cases imposes more stringent obligations than, federal requirements.  Any electronic or electrical equipment sold in the EC are subject to the Restriction of Hazardous Substances Directive (RoHS) 2002/95/EC.  The Directive indicates only products entering the EU must be in compliance.  Still, we consider the Directive to essentially cover our whole lines of products because of the possibility that products we make and sell elsewhere could be eventually destined for the EU as components of other companies' products.

We believe that leadership in environmental protection is an important competitive factor in the markets for our products. We have given and will continue to give high management priority to environmental matters. We believe that our operations are in substantial compliance with regulatory requirements affecting our facilities and products in each of the markets in which we operate. We monitor these requirements and adjust affected operations and products to ensure that we remain in substantial compliance with these requirements. Almost all our plants and production bases, in Japan and overseas, have either received, or are scheduled to receive within the next several years, certifications under the ISO 14001 standards on environmental management systems of the International Organization for Standardization. Also, we have established a committee to investigate ways that we might eliminate the use of lead in our manufacturing processes. As a result, almost all of our current products use lead-free solder, with a few exceptions because of specific customers individual requirements.

Our Employees



The following table shows the number of our employees as of the dates indicated:

| |                         | As of March 31,
| | ----------------------- | ---------------
| |                         | 2005           
| |                         |                
| | Japan                   | 7,222          
| | North America           | 284            
| | Asia (other than Japan) | 62,647         
| | Europe                  | 16             
| |                         |                
| | Total                   | 70,169         
| |                         |                



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Japan

In Japan, as of March 31, 2007, we had 7,989 employees. 3,566 of these employees were engaged in manufacturing operations, 1,889 in research and development and 1,043 in sales activities.

Most of our employees receive compensation on the basis of fixed annual salaries and twice-a-year bonuses. In addition, we have a separate bonus system to reward employees who make significant technological contributions to our operations as reflected primarily by patent registrations. We emphasize and reward individual skills and performance. We have started to incorporate performance-linked elements into our domestic compensation and promotion systems to make us more competitive in Japan in recruiting and retaining highly-skilled individuals. Under our retirement allowance system, eligible employees are entitled to a lump-sum allowance and a retirement annuity upon their retirement.

In Japan, although Nidec has no labor union, labor unions have been organized in some of our subsidiaries. No substantial strikes and/or labor disputes have occurred so far. We consider that the relationship between the company and employees is favorable.

Overseas

As of March 31, 2007, we had 81,081 employees overseas. 71,694 of these employees were engaged in manufacturing operations, 504 in research and development and 542 in sales activities.

No material strikes and/or labor disputes have occurred overseas and we believe that the relationship between us and our employees is favorable.

Intellectual Property

As of March 31, 2007, we owned approximately 1,570 issued patents, 39 utility model registrations and 251 trademarks in Japan as well as 548 issued patents and 17 trademarks in the United States. Every year, we file additional patent applications in Japan, some of which we also file in the United States. We also seek patent protection in various other foreign jurisdictions where we manufacture or sell our products. As of March 31, 2007, we had a total of 4,347 patent and utility model applications pending in Japan and in foreign jurisdictions. While we believe that our patents are important, in general, no single or group of related patents is essential to us or any of our principal business segments.

We have two strategies for enhancing the protection of our intellectual property rights. First, we distribute descriptions of our patented technology, with schematics, to our development and sales personnel who have more frequent contact with our competitors and their products. By keeping our development and sales personnel informed about the current status and content of our patent and utility model applications and registrations, they are better able to evaluate whether any of our competitors products might be infringing our technology. Second, we are putting more effort into obtaining samples of our competitors products so that our technical and legal teams can conduct detailed analysis regarding possible patent infringement. Information gained from this process also helps us to obtain more favorable terms during the negotiation of license agreements.

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Legal Proceedings

On February 15, 2005, we filed a patent infringement lawsuit with the Northern District of California in U.S. A against Victor Company of Japan, Limited and its subsidiary, JVC Components (Thailand) Co., Ltd., and their sales agents, Kabushiki Kaisha Agilis and Agilis Technology Inc. (collectively JVC), charging them with infringing ourits U.S. Patent Nos. 5,667,309, 6,554,476, 6,343,877 and 6,793,394. The four patents cover our fluid dynamic bearing technology used in spindle motors found in computer hard disc drives. JVC has supplied and continues to supply spindle motors to hard disc drive manufacturers without a license under these patents. We brought this action to prevent JVC from selling, distributing or importing infringing spindle motors in the United States, and from selling or distributing such motors for incorporation into hard disc drives sold, distributed or imported in the United States. In addition, we seek compensatory damages for JVCs infringement, as well as treble damages for willful infringement and recovery of our attorneys' fees, as permitted under United States Patent law.

On March 6, 2007, we filed a patent infringement lawsuit in the United States District Court for the Eastern District of Texas against LG Innotek Co., Ltd. (LGIT) and its subsidiaries for infringement of U.S. Patent No. 6,242,830, which relates to our bearing technology used for spindle motors in CD and/or DVD drives.

We are also involved in a number of other actions and proceedings in Japan and overseas in the ordinary course of our business. Based upon the information currently available to us and our domestic and overseas legal counsel, we believe that the ultimate resolution of such actions and proceedings will not, in the aggregate, have a material adverse effect on our financial condition or results of operations.

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C. Organizational Structure.



The following table and the discussion that follows present summary information on our major consolidated subsidiaries as of March 31, 2007:



|Name                                             |  | Country     |  | Principal business                                                                                                               |  | Percentage
      owned by us
      as of March 31, 2007
|------------------------------------------------ |  | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------
|                                                 |  |             |  |                                                                                                                                  |  | (%)                                                    
|Consolidated subsidiaries                        |  |             |  |                                                                                                                                  |  |                                                        
|Nidec Automobile Motor (Zhejiang) Corporation    |  | China       |  | Manufacturing of motor for automobiles                                                                                           |  | 100.0%                                                 
|Nidec America Corporation                        |  | U.S.A       |  | Sales of fans and precision motors                                                                                               |  | 100.0%                                                 
|Nidec (Zhejiang) Corporation                     |  | China       |  | Manufacture of spindle motors for hard disk drives                                                                               |  | 100.0%                                                 
|Nidec (Dalian) Limited                           |  | China       |  | Manufacture of small brushless DC motors and fan motors                                                                          |  | 100.0%                                                 
|Nidec (Dongguan) Limited                         |  | China       |  | Manufacture of small brushless DC motors                                                                                         |  | 100.0%                                                 
|Nidec Electronics GmbH                           |  | Germany     |  | Sales of spindle motors for hard disk drives and fans                                                                            |  | 100.0%                                                 
|Nidec Philippines Corporation                    |  | Philippines |  | Manufacture of spindle motors for hard disk drives                                                                               |  | 99.9%                                                  
|Nidec (H.K.) Co., Ltd.                           |  | Hong Kong   |  | Sales of parts for our products and sales of spindle motors                                                                      |  | 99.9%                                                  
|Nidec Singapore Pte. Ltd.                        |  | Singapore   |  | Manufacture and sales of pivot assemblies                                                                                        |  | 100.0%                                                 
|Nidec Taiwan Corporation                         |  | Taiwan      |  | Sales of small brushless DC motors and fans                                                                                      |  | 100.0%                                                 
|Nidec Vietnam Corporation                        |  | Vietnam     |  | Manufacturing of fan motor                                                                                                       |  | 100.0%                                                 
|Nidec Electronics (Thailand) Co., Ltd.           |  | Thailand    |  | Manufacture and sales of spindle motors for hard disk drives                                                                     |  | 99.9%                                                  
|Nidec Subic Philippines Corporation              |  | Philippines |  | Manufacture of spindle motors for hard disk drives                                                                               |  | 100.0%                                                 
|Nidec (Shanghai) International Trading Co., Ltd. |  | China       |  | Sales of small brushless DC motors                                                                                               |  | 100.0%                                                 
|Nidec Nemicon Corporation                        |  | Japan       |  | Manufacture and sales of rotary encoders, proximity sensors and other electronic equipment                                       |  | 99.7%                                                  
|Nidec Power Motor Corporation                    |  | Japan       |  | Manufacture and sales of mid-size motors and small AC motors                                                                     |  | 92.2%                                                  
|Nidec Shibaura Corporation                       |  | Japan       |  | Manufacture and sales of small AC motors                                                                                         |  | 100.0%                                                 
|Nidec Copal Electronics Corporation *            |  | Japan       |  | Manufacture and sales of electronic circuit components, pressure sensors, actuators and potentiometers                           |  | 59.2%                                                  
|Nidec Copal Corporation *                        |  | Japan       |  | Manufacture and sales of optical, electronic and information equipment, photo laboratory system and factory automation equipment |  | 57.4%                                                  
|Nidec-Kyori Corporation                          |  | Japan       |  | Manufacture and sales of high speed automatic presses, feed devices and other industrial machinery                               |  | 100.0%                                                 



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|Name                                            |  | Country   |  | Principal business                                                                                                                                                                                                                           |  | Percentage
      owned by us
      as of March 31, 2007
|----------------------------------------------- |  | --------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------
|                                                |  |           |  |                                                                                                                                                                                                                                              |  | (%)                                                    
|Nidec System Engineering (Zhejiang) Corporation |  | China     |  | Manufacture of factory automation equipment                                                                                                                                                                                                  |  | 100.0%                                                 
|Nidec Logistics Corporation                     |  | Japan     |  | Transportation, warehousing, import and export business, packing, environment
      business, distribution processing and physical distribution                                                                                              |  | 100.0%                                                 
|Nidec Machinery Corporation                     |  | Japan     |  | Manufacture and sales of automatic assembly line machinery and testers                                                                                                                                                                       |  | 60.0%                                                  
|Nidec-Shimpo Corporation                        |  | Japan     |  | Manufacture and sales of power transmission drives, control devices, measuring and factory automation equipment, ceramic and wood art equipment, and others                                                                                  |  | 100.0%                                                 
|Nidec Tosok Corporation *                       |  | Japan     |  | Manufacture and sales of precision automotive parts, automatic measuring equipment, semiconductor manufacturing machinery, air/electronic gauges, precision ball screws, and other precision measuring devices and manufacture of fan motors |  | 65.0%                                                  
|Nidec Total Service Corporation                 |  | Japan     |  | Insurance agency, real estate business, merchandising, building maintenance and others                                                                                                                                                       |  | 100.0%                                                 
|Nidec Sankyo Corporation *                      |  | Japan     |  | Manufacture and sales of motors, optical pickup units, automated teller
      machines, home appliance components and factory automation equipment                                                                                           |  | 63.5%                                                  
|Nidec Motors & Actuators                        |  | France    |  | Manufacturing and sales of air flow system, seat positioning system, body
      closure system, braking, drive-line and steering system                                                                                                      |  | 100.0%                                                 
|Brilliant Manufacturing Limited                 |  | Singapore |  | Manufacturing and sales of hard disk drives base plate, bracket and top
      cover                                                                                                                                                          |  | 87.1%                                                  



Note:  * - Listed on one or more stock exchanges in Japan



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Joint Venture with NTN Corporation

On August 28, 2002, Nidec and NTN Corporation established a joint venture, NTN-Nidec (Zhejiang) Corporation, in Pinghu City located near Shanghai, China.

Nidec hold 40% and NTN holds 60% of the equity of the joint venture. The breakdown of initial paid-in capital of $6.5 million was $2.6 million from Nidec and $3.9 million from NTN. The purpose of the new joint venture company is to manufacture and sell fluid dynamic bearing units made of sintered alloy metal for hard disk drive motors. Production started in April 2003.

A sintered-alloy-based fluid dynamic bearing units by the new joint venture will be used in our fluid dynamic bearing motors for hard disk drives.  Those motors are sold mainly to the computer/server market through Nidec Corporation.  And in order to expand the market further, the joint ventures have turned their eyes to promising markets such as the audio-visual market and the mobile market, as the demand of hard disk drives in those markets is increasing.

In January 2004, NTN-Nidec (Zhejiang) Corporation increased its paid-in capital to $21 million US dollars from $13 million US dollars in lieu of an exchange of ownership of shares between Nidec and NTN Corporation. This capital investment was used for capital improvements to achieve increased production capability to 8 million pieces per month from the original 3 million.

After the success of the joint venture NTN-Nidec (Zhejiang) Corporation in China, Nidec and NTN Corporation established second joint venture, NTN-Nidec (Thailand) Corporation, in Rayong Province located at the south of Bangkok Metropolis, Thailand on November 9, 2005.

Nidec hold 40% and NTN holds 60% of the equity of the new joint venture. The first capital of 360 million Baht is paid by NTN in November 2005. In March 24, 2006, Nidec paid the increased capital of 240 million Baht.

Same as the first joint venture in China, the purpose of the second joint venture is to manufacture and sell fluid dynamic bearing units made of sintered alloy metal for hard disk drive motors. Production started in June 2006.

As of March 2007, production capability of NTN-Nidec (Zhejiang) Corporation is 8 million pieces per month, and the capacity of NTN-Nidec (Thailand) Corporation is 6 million pieces per month. In the end, the capacity of NTN-Nidec will be increased to 18.5 million pieces per month in total.

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D. Property, Plants and Equipment.



Our principal executive offices are located in Kyoto, Japan and occupy approximately 36,119 square meters of office space. At March 31, 2007, we operated manufacturing and sales facilities through 24 Japanese subsidiaries and 93 foreign subsidiaries. These facilities are located in Japan, China, Europe, Thailand, the United States, Singapore, Vietnam, the Philippines, Indonesia, South Korea, Malaysia, Taiwan and Mexico.

The following table sets forth information, as of March 31, 2007, with respect to our principal manufacturing facilities and other facilities:



|Facility name                                                 |  | Location |  | Floor space
      (square meters) |  | Principal products and function                                                                                                                                                       
|------------------------------------------------------------- |  | -------- |  | --------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                              |  |          |  |                                   |  |                                                                                                                                                                                       
|In Japan                                                      |  |          |  |                                   |  |                                                                                                                                                                                       
|Corporate Headquarters and Central Technical Laboratories (1) |  | Japan    |  | 36,119                            |  | Basic research and development and fluid dynamic bearing technology development                                                                                                       
|Nidec-Shimpo Corporation (1)                                  |  | Japan    |  | 29,322                            |  | Manufacturing of power transmission equipments and measuring equipment                                                                                                                
|Nidec Power Motor Corporation (1)                             |  | Japan    |  | 27,459                            |  | Manufacturing and sales of mid-size motors                                                                                                                                            
|Nidec Shibaura Corporation Head Office (2)                    |  | Japan    |  | 24,600                            |  | Manufacturing and sales of mid-size motors                                                                                                                                            
|Nidec Copal Corporation Koriyama Technical Center (1)         |  | Japan    |  | 23,665                            |  | Development design and material procurement                                                                                                                                           
|Nidec Tosok Corporation Head Office and Technical Center (1)  |  | Japan    |  | 20,949                            |  | Manufacturing of measuring equipments and semiconductor equipment                                                                                                                     
|Shiga Technical Development Center (1)                        |  | Japan    |  | 20,596                            |  | Research and development and manufacturing of spindle motors for hard disk drives, DC motors for PC peripheral devices, mid-size motors for automobiles and pumps and precision motors
|Nidec Copal Electronics Corporation Sano Factory (1)          |  | Japan    |  | 16,873                            |  | Manufacturing and sales of precision automotive parts                                                                                                                                 
|Nidec Copal Corporation Shiojiri Factory (1)                  |  | Japan    |  | 16,452                            |  | Manufacturing of mini-laboratory system                                                                                                                                               
|Nidec Tosok Corporation Yamanashi Factory (1)                 |  | Japan    |  | 15,044                            |  | Manufacturing of components for automobiles                                                                                                                                           
|Nidec Sankyo Komagane Facility (1)                            |  | Japan    |  | 14,279                            |  | Manufacturing of motor-driven actuator units and DC motors for PC peripheral devices                                                                                                  
|Nidec Sankyo Ina Facility (1)                                 |  | Japan    |  | 14,208                            |  | Manufacturing of robots                                                                                                                                                               
|Nidec Copal Precision Parts Corporation Koriyama Factory (1)  |  | Japan    |  | 13,592                            |  | Manufacturing of precision dies, press stamping components, injection molding components and surface treatment processing components                                                  



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|Facility name                                                |  | Location    |  | Floor space
      (square meters) |  | Principal products and function                                                                                                    
|------------------------------------------------------------ |  | ----------- |  | --------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------
|                                                             |  |             |  |                                   |  |                                                                                                                                    
|Outside Japan                                                |  |             |  |                                   |  |                                                                                                                                    
|Nidec Philippines Corporation (3)                            |  | Philippines |  | 76,658                            |  | Manufacturing of spindle motors for hard disk drives                                                                               
|Nidec Sankyo (H.K.) Co., Limited Shilong Factory (4)         |  | China       |  | 68,800                            |  | Machining of small motors, stepping motors, stepping motor units, and related part                                                 
|Nidec Shibaura (Zhejiang) Co., Ltd. (2)                      |  | China       |  | 64,600                            |  | Manufacturing of mid-size motors                                                                                                   
|Nidec (Dalian) Limited                                       |  | China       |  | 48,265                            |  | Manufacturing of spindle motors for hard disk drives, DC motors for PC peripheral devices, fans and components for precision motors
|Nidec Motors & Actuators (Mexico) S. de R.L. de C.V (1)      |  | Mexico      |  | 46,769                            |  | Manufacturing of motors for automotive and industrial applications                                                                 
|Nidec Tosok (Vietnam) Co., Ltd. (1)                          |  | Vietnam     |  | 42,584                            |  | Manufacturing of fans and components for automobiles                                                                               
|Nidec (Dong Guan) Corporation (2)                            |  | China       |  | 39,880                            |  | Manufacturing of small brushless DC motors for PC peripheral devices and office automation equipment                               
|Nidec Electronics (Thailand) Co., Ltd. Rojana Factory (1)    |  | Thailand    |  | 38,600                            |  | Manufacturing of spindle motors for hard disk drives                                                                               
|Brilliant Technology (Suzhou) Co., Ltd. (1)                  |  | China       |  | 37,124                            |  | Precision machining, die casting and electric coating of base plate for hard disk drives                                           
|Nidec Subic Philippines Corporation (2)                      |  | Philippines |  | 35,786                            |  | Manufacturing of spindle motors for hard disk drives                                                                               
|Nidec Motors & Actuators (Germany) GmbH (1)                  |  | Germany     |  | 31,120                            |  | Manufacturing of motors for automotive and industrial applications                                                                 
|Nidec Electronics (Thailand) Co., Ltd. Rangsit Factory (1)   |  | Thailand    |  | 29,700                            |  | Manufacturing of spindle motors for hard disk drives                                                                               
|Nidec (Zhejiang) Corporation                                 |  | China       |  | 29,000                            |  | Manufacturing of spindle motors for hard disk drives and assembling motors and accessories                                         
|Nidec Copal (Zhejiang) Co.,Ltd . (2)                         |  | China       |  | 28,698                            |  | Manufacturing of components and lens cones for digital still cameras and mini-laboratory systems                                   
|Nidec Copal Electronics (Zhejiang) Co., Ltd.                 |  | China       |  | 26,000                            |  | Manufacturing of actuator                                                                                                          
|Nidec Vietnam Corporation (2)                                |  | China       |  | 21,740                            |  | Manufacturing of fan motor                                                                                                         
|Nidec Sankyo (Fuzhou) Co.,Ltd. (2)                           |  | China       |  | 20,540                            |  | Manufacturing of optical pickup units                                                                                              
|Nidec Precision (Thailand) Co., Ltd. (1)                     |  | Thailand    |  | 19,560                            |  | Manufacturing of components for hard disk drive spindle motors                                                                     
|Nidec Copal (Thailand) Corporation (1)                       |  | Thailand    |  | 18,506                            |  | Manufacturing of camera components and micro motors                                                                                
|Nidec-Shimpo (Zhejiang) Co., Ltd.                            |  | China       |  | 17,910                            |  | Manufacturing of power transmission drives                                                                                         
|Brilliant Manufacturing Limited (4)                          |  | Singapore   |  | 17,866                            |  | Precision machining of base plate for hard disk drives                                                                             
|Nidec Sankyo (H.K.) Co., Limited Shanghan Electric Plant (4) |  | China       |  | 16,000                            |  | Manufacturing of DC motors                                                                                                         
|Nidec System Engineering (Zhejiang) Corporation              |  | China       |  | 14,690                            |  | Manufacturing of factory automation equipment                                                                                      
|Nidec Pigeon (H.K.) Co., Ltd. (4)                            |  | Hong Kong   |  | 14,254                            |  | Manufacturing and sales of Mechanism for audio                                                                                     
|Nidec Automobile Motor (Zhejiang) Corporation (4)            |  | China       |  | 13,745                            |  | Manufacturing of motor for automobiles                                                                                             

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|Facility name                                 |  | Location    |  | Floor space
      (square meters) |  | Principal products and function                                                                                
|--------------------------------------------- |  | ----------- |  | --------------------------------- |  | ---------------------------------------------------------------------------------------------------------------
|                                              |  |             |  |                                   |  |                                                                                                                
|Nidec Power Motor (Zhejiang) Co., Ltd. (2)    |  | China       |  | 13,500                            |  | Manufacturing of industrial mid-size motors                                                                    
|Nidec Nissin (Dalian) Corporation (4)         |  | China       |  | 13,391                            |  | Manufacturing of engineering plastic dies and moldings                                                         
|Nidec Sankyo (Zhejiang) Corporation (4)       |  | China       |  | 13,383                            |  | Manufacturing of motor-driven actuator unit                                                                    
|Nidec Copal Philippines Corporation (2)       |  | Philippines |  | 13,219                            |  | Manufacturing of precision mini-motors, press stamping parts, molding parts, surface treatment processing parts
|Nidec Sankyo Electronics (Shaoguan) Co., Ltd. |  | China       |  | 13,132                            |  | Manufacturing of motor-driven actuator units                                                                   
|Nidec Sankyo Singapore Pte. Ltd. (4)          |  | Singapore   |  | 13,046                            |  | Manufacturing of stepping motors and motor-driven actuator units                                               

Notes:

(1) We own both the property and the facilities.

(2) We lease the property and own the facilities.

(3) Nidec Philippines Corporation leases the property from Nidec Development Philippines Corporation, a joint venture company with Prudential BK established for the purpose of purchasing land in the Philippines. We own the facilities.

(4) We lease both the property and the facilities.



In addition to the above facilities, we have a number of other smaller factories located worldwide. In Japan, we also have sales and service offices which are located primarily in Tokyo, Machida, Osaka, Nagoya, Fukuoka, Zama and Hiroshima.

As of March 31, 2007, the aggregate book value of the land and buildings we owned was ¥92.8 billion, and the aggregate book value of machinery and equipment we owned was ¥ 100.7 billion. We lease other equipment that we use in our operations.

Item 4A. Unresolved Staff Comments

We are a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934. There are no written comments which have been provided by the staff of the Securities and Exchange Commission regarding our periodic reports under that Act not less than 180 days before the end of the fiscal year ended March 31, 2007 and which remain unresolved as of the date of the filing of this Form 20-F with the Commission.

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Item 5. Operating and Financial Review and Prospects



A. Operating Results.



You should read the following discussion of our financial condition and results of operations together with our consolidated financial statements and information included in this annual report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under Item 3.D and elsewhere in this annual report.





Overview



Market Environment for Hard Disk Drive Spindle Motors



Sales of hard disk drive spindle motors, mainly to major hard disk drive manufacturers account for the most significant portion of our sales, and constituted 31.5% of our total sales for the year ended March 31, 2007.



According to Techno Systems Research Co., Ltd. (TSR), a Japanese research institute specializing in technological industries, 82.9% of hard disk drives were used for PCs and the rest were used for non-PC products such as game consoles, DVD recorders and portable audio units for the calendar year ended December 31, 2006.

Reflecting the recent rapid worldwide expansion in demand for digital devices, such as PCs, hard disk drives (HDD) recorders, digital audio players, car navigation systems and game machines demand for HDDs has increased dramatically. According to TSR, world-wide HDD shipments increased by around 20% in calendar year 2006 compared to calendar year 2005, although the average sales price of HDDs declined by approximately 7%. Our average sales price of hard disk drive spindle motors fell by approximately 1% in Japanese Yen terms and fell by approximately 4% in US Dollar terms during the year ended March 31, 2007 due to the depreciation of the Japanese Yen against the US Dollar. During the year ended March 31, 2007, our shipments of hard disk drive spindle motors increased by 22% and our sales increased by 20%. Reasons for this included a decline in sales volume and sales prices of 1.8 inch and smaller micro drives, together with a reduction in the sales prices of 3.5-inch hard drives of approximately 6% on a dollar basis.

The increase in the shipments of HDDs was attributable to the strong demand for notebook PCs and consumer electronics. We have seen an increasing number of our customers establish their hard disk drive production centers in Asia, as they have been attracted by these countries low production cost environment. We believe that the migration of our customers production facilities to Asian and Southeast Asian countries will continue for the next several years.

We have been responding to the trends described above by taking the following steps:

•

We are expanding manufacturing and assembly operations in China and other low-cost production locations, such as Thailand and the Philippines.

•

We are expanding the manufacture of a new type of fluid dynamic bearing spindle motor using oil-impregnated, sintered-alloy metal. The use of sintered-alloy metal, due to its fitness for molding and press work, significantly lessens dependence on the comparatively lengthy machining process during production of other spindle motors, and therefore substantially reduces processing cost per unit.

•

We are expanding the percentage of components we produce in-house.

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We believe that, by taking these steps, we are achieving cost savings that outweigh the decrease in average unit prices. In addition, we have been increasing total revenue from fluid dynamic bearing spindle motors in new non-computer markets, a trend we believe will continue. This, we believe, reflects strong demand for our hard disk drive motors, especially from manufacturers of new consumer electronics and home entertainment applications.

Market Environment for Other Small Precision Brushless DC Motors

Most of our revenues from sales of other DC motors, which accounted for 11.8% of our total net sales for the year ended March 31, 2007, are derived from the sales to manufacturers of CD-ROM, COMBO (CD-R/W drive combined with DVD-ROM drive) drives and writable DVD drives.

We believe that the market for CD-ROM drives is reaching maturity. On the other hand, the markets for COMBO drives and writable DVD drives are growing, in part as replacements for CD-ROM drives. Despite a recent strong demand for computers, especially for notebook PCs, there is significant downward pressure on the pricing for these drives. Accordingly, some of our small precision brushless DC motors, particularly for use in CD-ROM drives, have been experiencing downward pricing pressure, while the demand for other uses, particularly in COMBO drives and writable DVD drives in non-computer products, has been growing. We expect to become more competitive in these markets, as our production costs decline as a result of standardizing our product lines and we achieve the effects of mass production.

Market Environment for brushless DC Fans

We sell our brushless DC fans, which accounted for 6.1% of our total net sales for the year ended March 31, 2007, to various manufacturers of computers, computer peripheral, game consoles, photocopy machines, projectors and household appliances such as refrigerators. We also sell brushless DC fans, which are used to cool automobile seats.

Sales of brushless DC fans are primarily affected by the general market demand for the products that incorporate them. For several years prior to calendar year 2003, the demand for brushless DC fans used for game consoles increased substantially. However, during the last three fiscal years ended March 31, 2004 to 2006, such demand dropped substantially, mainly due to a peak in the global demand for game machines, which had a negative effect on the market for brushless DC fans. Despite significant decreases in sales of brushless DC fans, we have seen strong demand for fans directed to the high-end segments of the PC, server, and MPU cooler markets. Demand for our brushless DC fans is also increasing in the market for household electric appliances, as represented by microwave ovens, warm water toilet seats and refrigerators. In addition, sales of  our brushless DC fans for use in next generation game consoles increased this fiscal year ended March 31, 2007.

Market Environment for Mid-size Motors

We sell mid-size motors, which accounted for approximately 9.1% of our total net sales for the year ended March 31, 2007, to home electric appliance, industrial machine and automobile power steering system manufacturers.

The demand for power steering systems that incorporate mid-size brushless DC motors and help conserve energy has been increasingly growing. An increasing number of power steering system manufacturers have shifted to producing such power steering systems, as opposed to the conventional engine-driven type that uses belts. Although this shift in demand has been increasing, we believe that it will take some more time before the acceptance of power steering systems that use mid-size brushless DC motors reaches a high level of our mass production of these motors, since the evaluation of samples that must take place prior to the introduction of a new product takes a comparatively long period of time in this industry.

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Also, in recent years there has been increased demand for mid-size brushless DC motors for automobiles for use engine rooms and hybrid engine systems. To comply with those demands and to secure the orders for the coming year , we have made significant expenditures for research and development. In addition, there has recently been increased demand for mid-size brushless DC motors for household appliance products, including air conditioners and dish washers that use mid-size brushless DC motors.

Net sales in the mid-size motor business increased approximately ¥19,600 million (52%) to ¥57,389 million. Sales growth at Nidec Motors & Actuators,which we acquired during the fiscal year ended March 31, 2007 accounted for approximately ¥9,100 million of this growth. In addition, sales of motors for power steering units increased approximately ¥2,900 million. Sales of motors for home appliances and others increased by more than 20%. This segment suffered a loss in the previous fiscal year, as weak net sales and increased prices for steel, copper, and aluminum hurt profit margins. This fiscal year, growth in sales, sales price corrections, and the reduction of costs at overseas manufacturing facilities allowed the segment to move back into profitability and record on operating income of ¥600 million. Operating incomes of Nidec Motors & Actuators had minimal influence .

Market Environment for Machinery

Sales of our machinery, which accounted for approximately 13.2% of our total net sales for the year ended March 31, 2007, include sales of industrial robots, card readers, high-speed pressing machines and die bonders. In the first half of the fiscal year ended March 31, 2007, due to capital investment-related demand including demand for Nidec Sankyos LCD-related robots and card readers, net sales were up approximately 29% in comparison to the first half of the previous fiscal year. This contributed to growth in revenues, but a sharp decline in demand for LCD-related robots caused sales to stay flat in the second half in comparison to the same period of the previous year. However, sales of Nidec Copal, Nidec-Read, Nidec-Shimpo and Nidec-Kyori increased by over 20% in comparison to the same period of the previous fiscal year. Operating income for the fiscal year grew approximately ¥4,500 million (40%) to ¥15,583 million. We expect the demand for liquid crystal substrate handling robots and the increase in sales of card readers to increase further because demand for flat panel TVs which use liquid crystal substrates is rapidly increasing world-wide and demand for card readers are increasing significantly in Brazil, Russia, India and China.

Market Environment for Electronic and Optical Components

We sell electronic and optical components, which accounted for approximately 23.0% of our total net sales for the year ended March 31, 2007, to digital camera and optical disk drive manufacturers.

Growth of approximately ¥13,100 million, or 65%, in sales of Nidec Copals electronic and optical components, including camera shutters and plastic lens units for digital cameras and mobile telephones, played a particularly large role in the increase in sales in this business. Sales of Nidec Copal Electronics electronics components also expanded, rising by ¥4,300 million, or 21%. The increase of Nidec Copal Electronics includes that attributable to our acquisition of Fujisoku Corporation. Sales of Nidec Sankyo decreased by approximately 40%. This was mainly due that Nidec Sankyo turned in strong sales of unit products for home electronics and appliances, but did not achieve adequate sales growth in new optical pick-up units and lens actuator products. As a result, operating income in this business declined by approximately ¥1,700 million, to ¥8,060 million. This decline in income was due to higher costs related to the launch of new Nidec Sankyo products, including optical pick-up units and plastic-mold products for electronic equipment, as well as the acquisition and development of new technology needed to enter new markets, together with slow growth in sales.

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Effects of Our Recent Acquisitions Activities on Our Financial Statements

As discussed under Item 4.A of this annual report, we have sought growth by investing in or acquiring companies with motors, drives and other related products and technologies. Depending on the circumstances, we acquire a majority interest or a substantial minority interest in the target companies we seek to acquire. Our approach has been to identify underperforming companies with advanced products and technologies. In the past years, we have acquired substantial interests in a number of major companies, several of which were public companies in Japan.

In connection with our acquisition of subsidiaries, we had an aggregate amount of goodwill of ¥3,611 million as of March 31, 2002. This goodwill was originally scheduled to be amortized over a period of five years. In accordance with Statement of Financial Standards No. 142, Goodwill and Other Intangible Assets (SFAS No. 142), amortization of goodwill ceased beginning on April 1, 2002. Goodwill is now to be tested for impairment at least annually.

In February 2002, we made an additional acquisition of approximately 1.1% of the common stock of Nidec-Shimpo Corporation and made it our majority-owned subsidiary. As a result of this acquisition, Nidec Read Corporation, Nidec Tosok Corporation and other affiliated companies also became our majority-owned subsidiaries.

We acquired additional shares of common stock of Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd.(currently named Nidec Sankyo Corporation), which had previously been accounted for by the equity method, in January and February 2004. Our ownership interests in these companies increased to over 50%, and our consolidated financial statements now include the accounts of these majority-owned subsidiaries from their acquisition dates.

During the years ended March 31, 2004 and 2005, our equity-method affiliates recorded contributed ¥156,818 million and ¥10,319 million to net sales, ¥22,291 million and ¥1,088 million to gross profit (net sales minus and cost of products sold), and ¥5,069 million and ¥45 million to net income, respectively. Earnings (loss) from equity-method investment in affiliated companies amounted to ¥2,522 million and ¥(34) million for the year ended March 31, 2004 and 2005, respectively. The decrease in net sales, gross profit, net income and earnings from equity-method investments in affiliated companies for the year ended March 31, 2005 compared with the previous year was primarily due to the consolidation of Nidec Copal Corporation and Nidec Copal Electronics Corporation as subsidiaries in January and February 2004, respectively.

On November 8, 2006, we acquired a 98.9% share in Fujisoku Corporation (FSKC). FSKC manufactures and sells industrial switches, memory cards, panel switches and electronic measuring instruments.

On December 27, 2006, we acquired all of the voting rights of the Motors & Actuators business of Valeo S.A., France. As a result, we have included it and seven additional companies (NMA group) in its scope of consolidation as our wholly owned subsidiaries,. NMA group manufactures motors and actuators for automobiles such as air flow system, body closure system, occupant positioning systems and brake systems.

On February 23, 2007, we acquired a 87.1% share in Brilliant Manufacturing Limited (BML). BML is engaged in manufacturing and sales of base plate die-casting and top cover used in hard disk drives. By acquiring BML, we increased its manufacturing capability in Asia and consequently.

On April 27, 2007, we acquired a 51.8% share in Japan Servo Co., Ltd. (Japan Servo). Japan Servo has long been engaged in the manufacture and sale of small motors and motor applied products.

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Effects of Foreign Currency Fluctuations

A significant portion of our business is conducted in currencies other than the yen, most significantly, the U.S. dollar. Our business is thus sensitive to fluctuations in foreign currency exchange rates, especially the yen-U.S. dollar exchange rate. Our consolidated financial statements are subject to both translation risk and transaction risk. Translation risk is the risk that our consolidated financial statements for a particular period or for a particular date are affected by changes in the prevailing exchange rates of the currencies in those countries in which we conduct business against the Japanese yen. The translation effect, even if it is substantial, is a reporting consideration and does not reflect our underlying results of operations.

Transaction risk arises when the currency structure of our costs and liabilities deviates from the currency structure of our sales proceeds and assets. A substantial portion of our overseas sales are made in U.S. dollars. While sales denominated in U.S. dollars are, to a significant extent, offset by U.S. dollar denominated costs, we generally have had a significant net long U.S. dollar position. With respect to costs not denominated in U.S. dollars, we believe that we have been able to reduce the level of transaction risk to the extent that our overseas subsidiaries incur costs in currencies that generally follow the U.S. dollar. Transaction risk remains for products sold in U.S. dollars to the extent that we must purchase parts for our products from Japan, the costs for which are denominated in yen.

Changes in the fair values of our foreign exchange forward contracts and changes in option prices under our foreign currency option agreements are recognized as gains or losses on derivative instruments in our consolidated statement of income. For a more detailed discussion of these instruments, you should read Note 21 to our consolidated financial statements included in this annual report.

Trends for the Year Ending March 31, 2008

We believe that we face multiple factors of uncertainty surrounding our businesses for the fiscal year ending March 31, 2008. Although a large number of Japanese corporations, including in the industries in which we operate, reported high operating profits for the fiscal year ended March 31, 2007, mainly due to strong demand from Asian countries, especially from China, it remains unclear how the Chinese economy will respond to exchange fluctuations and whether such strong demand will last.

Further, there is a concern that political instability, including the situation concerning North Korean situation, may give rise to adverse effects on corporate activities. In addition, our business will be significantly affected depending on whether the recent divergence between product prices and raw material prices will be corrected or expand.

Under such changing circumstances, it is rather difficult to accurately forecast demand, but our group will continuously seek to pursue the growth of businesses in both motors and related applications. We expect that the machinery segment and electronics and optical components segment of the group companies will gradually improve for the year ended March 31, 2008 and continue to grow in accordance with overall economic recoveries in their respective markets.

The foregoing statements regarding the year ending March 31, 2008 are forward-looking statements based on our assumptions and beliefs as to economic and market conditions. Our performance under those conditions and other factors are subject to the qualifications set forth in the Special Note Regarding Forward-looking Statements under Item 3.D of this annual report. Our actual results of operations could vary significantly from those described above, as a result of factors such as:

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•

a decline in the demand for computer hard disk drives and related information technology products and consumer home electronics contained hard disk drives that incorporate our motors, or a longer than expected delay in the recovery of such demand;

•

a downward movement in the pricing of our motors due to efforts by competing manufacturers to reduce excess inventory or to gain market share;

•

a general decline in the global economy, particularly levels of consumer spending and capital investment;

•

our ability to mass produce and win market acceptance of our products, particularly those that use new motor technology;

•

the appreciation of the Japanese yen against the U.S. dollar and other currencies in which we make significant sales or in which our assets and liabilities are denominated; and

•

other factors discussed under Item 3.D of this annual report.

In addition to the above, unanticipated events and circumstances could affect our results of operations.

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Results of Operations

The following table sets forth selected information relating to our income and expense items for each of the three years in the period ended March 31, 2007.



| |                                                                                | Yen in millions             |   | U.S. dollars in thousands   
| | ------------------------------------------------------------------------------ | --------------------------- | - | ----------------------------
| |                                                                                | For the year ended March 31 |   | For the year ended March 31,
| |                                                                                | 2005                        |   | 2006                        
| | Net sales                                                                      | ¥ 485,861                   |   |                             
| | Operating expenses:                                                            |                             |   |                             
| | Cost of products sold                                                          | 370,938                     |   |                             
| | Selling, general and administrative expenses                                   | 35,340                      |   |                             
| | Research and development expenses                                              | 25,918                      |   |                             
| |                                                                                |                             |   |                             
| |                                                                                | 432,196                     |   |                             
| | Operating income                                                               | 53,665                      |   |                             
| | Other income (expense):                                                        |                             |   |                             
| | Interest and dividend income                                                   | 929                         |   |                             
| | Interest expense                                                               | (871                        | ) |                             
| | Foreign exchange gain, net                                                     | 2,377                       |   |                             
| | (Loss) gain on derivative instruments, net                                     | (175                        | ) |                             
| | Gain from marketable securities, net                                           | 1,586                       |   |                             
| | Other, net                                                                     | (221                        | ) |                             
| |                                                                                |                             |   |                             
| |                                                                                | 3,625                       |   |                             
| | Income before provision for income taxes                                       | 57,290                      |   |                             
| | Provision for income taxes                                                     | (12,847                     | ) |                             
| |                                                                                |                             |   |                             
| | Income before minority interest and equity in earnings of affiliated companies | 44,443                      |   |                             
| | Minority interest in income of consolidated subsidiaries                       | 10,954                      |   |                             
| | Equity in net losses of affiliated companies                                   | 34                          |   |                             
| |                                                                                |                             |   |                             
| | Net income                                                                     | ¥ 33,455                    |   |                             
| |                                                                                |                             |   |                             

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Results of Operations  Year Ended March 31, 2007 Compared to Year Ended March 31, 2006

Net Sales

| |                                           | Yen in millions |  |     
| | ----------------------------------------- | --------------- |  | ----
| |                                           | 2006            |  | 2007
| | Net sales:                                |                 |  |     
| | Small precision motors:                   |                 |  |     
| | Hard disk drives spindle motors           | ¥ 164,575       |  |     
| | Other small precision brushless DC motors | 66,463          |  |     
| | Small precision brush DC motors           | 7,849           |  |     
| | Brushless DC fans                         | 34,872          |  |     
| |                                           |                 |  |     
| | Sub-total                                 | 273,759         |  |     
| | Mid-size motors                           | 37,767          |  |     
| | Machinery                                 | 73,243          |  |     
| | Electronic and optical components         | 128,791         |  |     
| | Others                                    | 23,298          |  |     
| |                                           |                 |  |     
| | Consolidated total                        | ¥ 536,858       |  |     
| |                                           |                 |  |     

Details are described by segment below.

Net sales of our hard disk drive spindle motors increased ¥33,621million, or 20.4%, from ¥164,575 million for the year ended March 31, 2006 to ¥198,196 million for the year ended March 31, 2007. Sales volume of hard disk drive spindle motors increased by 21.9% compared to the same period of the previous fiscal year. This increase was primary due to an increase in net sales of 2.5-inch motors and 3.5-inch motors, reflecting strong demand in the information technology industry and consumer electronics.

Net sales of hard disk drive spindle motors accounted for 30.7% of total net sales for the year ended March 31, 2006 and 31.5% of total net sales for the year ended March 31, 2007.

Net sales of our other small precision brushless DC motors increased ¥7,982 million, or 12.0%, from ¥66,463 million for the year ended March 31, 2006 to ¥74,445 million for the year ended March 31, 2007. This increase was primarily due to an increase in sales of brushless DC motors for optical disk drives, office equipment and home appliance.

Net sales of our other small precision brushless DC motors accounted for 12.4% of total net sales for the year ended March 31, 2006 and 11.8% of total net sales for the year ended March 31, 2007.

Net sales of our brushless DC fans increased ¥3,784 million, or 10.9%, from ¥34,872 million for the year ended March 31, 2006 to ¥38,656 million for the year ended March 31, 2007.

Net sales of our brushless DC fans accounted for 6.5% of total net sales for the year ended March 31, 2006 and 6.1% of total net sales for the year ended March 31, 2007.

Net sales of our mid-size motors increased ¥19,622 million, or 52.0%, from ¥37,767 million for the year ended March 31, 2006 to ¥57,389 million for the year ended March 31, 2007. This increase was primarily due to an increase in net sales of motors for automobiles and for home appliances such as air conditioners. The increase of motors for automobiles includes the net sales of Nidec Motors & Actuators, which we acquired during for the year ended March 31, 2007, of ¥9,082 million.

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Net sales of our mid-size motors accounted for 7.0% of our total net sales for the year ended March 31, 2006 and 9.1% of total net sales for the year ended March 31, 2007.

Net sales of our machinery increased ¥9,701 million, or 13.2%, from ¥73,243 million for the year ended March 31, 2006 to ¥82,944 million for the year ended March 31, 2007. This increase was primarily due to an increase in net sales of power transmission drives, card readers and high-speed pressing machines, reflecting the effect of new products and strong demand from increased capital investment by our customers.

Net sales of our machinery accounted for 13.6% of our total net sales for the year ended March 31, 2006 and 13.2% of total net sales for the year ended March 31, 2007.

Net sales of our electronic and optical components increased ¥15,860 million, or 12.3%, from ¥128,791 million for the year ended March 31, 2006 to ¥144,651 million for the year ended March 31, 2007. This increase was primary due to an increase in net sales of optical component such as shutters and lens units for digital cameras and mobile phones, offsetting a decrease in the net sales of optical pickup units. Net sales of electronic circuit also increased, including the net sales of Fujisoku Corporation which we acquired activities for the year ended March 31, 2007.

Net sales of our electronic and optical components accounted for 24.0% of our total net sales for the year ended March 31, 2006 and 23.0% of total net sales for the year ended March 31, 2007.

Net sales of our other products increased ¥3,404 million, or 14.6%, from ¥23,298 million for the year ended March 31, 2006 to ¥26,702 million for the year ended March 31, 2007. This increase was primarily due to an increase in net sales of pivot assemblies.

Cost of Products Sold

Our cost of products sold increased ¥73,615 million, or 17.8%, from ¥413,012 million for the year ended March 31, 2006 to ¥486,627 million for the year ended March 31, 2007 due primarily to increased sales. As a percentage of net sales, cost of sales increased from 76.9% for the year ended March 31, 2006 to 77.3% for the year ended March 31, 2007.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased ¥5,088 million, or 12.4%, from ¥41,188 million for the year ended March 31, 2006 to ¥46,276 million for the year ended March 31, 2007. This increase was due to increases in salaries, bonus and loss on fixed assets, which more than off set decreases in loss on bad debts for the year ended March 31, 2006, when there was the insolvency of AgfaPhoto GmbH. As a percentage of net sales, selling, general and administrative expenses decreased from 7.7% for the year ended March 31, 2006 to 7.3% for the year ended March 31, 2007.

Research and Development Expenses

Our research and development expenses increased ¥3,523 million, or 12.1%, from ¥29,232 million for the year ended March 31, 2006 to ¥32,755 million for the year ended March 31, 2007. This was primarily due to an increase in expenses for our research and development related mid-sized motors, mainly used for automobile steering systems, and hard disk spindle motors. As a percentage of net sales, research and development expenses decreased from 5.4% for the year ended March 31, 2006 to 5.2% for the year ended Mach 31, 2007.

Operating Income

As a result of the foregoing factors, our operating income increased ¥10,583 million, or 19.8%, from ¥53,426 million for the year ended March 31, 2006 to ¥64,009 million for the year ended March 31, 2007. As a percentage of net sales, operating income increased from 10.0% for the year ended March 31, 2006 to 10.2% for the year ended March 31, 2007.

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Other Income (Expenses)



Other income decreased ¥9,366 million, or 85.5%, from ¥10,952 million for the year ended March 31, 2006 to ¥1,586 million for the year ended March 31, 2007.

Interest and dividend income increased ¥901 million from ¥1,664 million for the year ended March 31, 2006 to ¥2,565 million for the year ended March 31, 2007. This was primarily due to interest income attributable to the increased average balance of our foreign currency deposits and increases of interest rates.

Interest expense increased ¥660 million from ¥1,362 million for the year ended March 31, 2006 to ¥2,022 million for the year ended March 31, 2007. This was primarily due to an increase of our borrowings for M&A transactions, additional investment in subsidiaries and increased interest rates.

A gain from marketable securities, net decreased ¥2,926 million from ¥3,869 million for the year ended March 31, 2006 to ¥943 million for the year ended March 31, 2007. This decrease was mainly due to decrease in gain on the sales of marketable securities as compared with the year ended March 31, 2006. This decrease primarily relates to the gain of ¥1,123 million based on the business combination of Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., during fiscal year ended March 31, 2006. we recognized this gain in accordance with the Emerging Issues Task Force 91-5 (EITF 91-5). On the other hand, there was no such case during fiscal year ended March 31, 2007.

Foreign exchange gain decreased ¥6,109 million from ¥7,866 million for year ended March 31, 2006 to ¥1,757 million for the year ended March 31, 2007. This was principally due to depreciation in the value of the yen against relevant foreign currencies compared to the same period of the previous fiscal year. The exchange rate of the yen against the U.S. dollar as March 31, 2005, 2006 and 2007 was ¥107.39, ¥117.47 and ¥118.05, respectively.

Income before Provision for Income Taxes

As a result of the foregoing, our income before income taxes increased ¥1,217 million, or 1.9%, from ¥64,378 million for the year ended March 31, 2006 to ¥65,595 million for the year ended March 31, 2007.

Provision for Income Taxes

Our provision for income taxes increased ¥2,247 million, or 14.8%, from ¥15,213 million for the year ended March 31, 2006 to ¥17,460 million for the year ended March 31, 2007.

The effective income tax rate for the year ended March 31, 2007 was higher compared to the effective income tax rate for the year ended March 31, 2006.

This was mainly due to the effect of additional tax expenses based on transfer price taxation of ¥2,850 million.

Minority Interest in Income of Consolidated Subsidiaries

Minority interest in income of our consolidated subsidiaries decreased ¥40 million, or 0.5%, from ¥8,170 million for the year ended March 31, 2006 to ¥8,130 million for the year ended March 31, 2007. Minority interest of group companies such as Nidec Sankyo Corporation and certain of its subsidiaries decreased ¥852 million due primarily to a decrease in their profitability, which more than offset an increase in minority interest in income of other companies such as Nidec Copal Corporation and certain of its subsidiaries of ¥812million. As a result, minority interest in income of consolidated subsidiaries decreased slightly.

Equity in Net Losses of Affiliated Companies

Equity in net losses of our affiliated companies increased ¥27 million, or 58.7%, from ¥46 million for the year ended March 31, 2006 to ¥73 million for the year ended March 31, 2007.

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Net Income

As a result of the foregoing, our net income decreased ¥1,017 million, or 2.5%, from ¥40,949 million for the year ended March 31, 2006 to ¥39,932 million for the year ended March 31, 2007.

Results of Operations  Year Ended March 31, 2006 Compared to Year Ended March 31, 2005

Net Sales

| |                                           | Yen in millions |  |     
| | ----------------------------------------- | --------------- |  | ----
| |                                           | 2005            |  | 2006
| | Net sales:                                |                 |  |     
| | Small precision motors:                   |                 |  |     
| | Hard disk drives spindle motors           | ¥ 119,233       |  |     
| | Other small precision brushless DC motors | 61,066          |  |     
| | Small precision brush DC motors           | 7,980           |  |     
| | Brushless DC fans                         | 34,435          |  |     
| |                                           |                 |  |     
| | Sub-total                                 | 222,714         |  |     
| | Mid-size motors                           | 35,564          |  |     
| | Machinery                                 | 76,957          |  |     
| | Electronic and optical components         | 128,417         |  |     
| | Others                                    | 22,209          |  |     
| |                                           |                 |  |     
| | Consolidated total                        | ¥ 485,861       |  |     
| |                                           |                 |  |     

Details will be described by segment below.

Net sales of our hard disk drive spindle motors increased ¥45,342 million, or 38.0%, from ¥119,233 million for the year ended March 31, 2005 to ¥164,575 million for the year ended March 31, 2006. This increase was primary due to an increase of 32.5% in the sales volume of hard disk drive spindle motors compared to the same period of the previous fiscal year, resulting primarily from an increase in net sales of 2.5-inch and 3.5-inch motors for notebook PCs, new consumer electronics and home entertainment applications.

Net sales of hard disk drive spindle motors accounted for 24.5% of total net sales for the year ended March 31, 2005 and 30.7 % of total net sales for the year ended March 31, 2006.

Net sales of our other small precision brushless DC motors increased ¥5,397 million, or 8.8%, from ¥61,066 million for the year ended March 31, 2005 to ¥66,463 million for the year ended March 31, 2006, primary due to an increase in net sales of Nidec (Dalian) Limited.

Net sales of our other small precision brushless DC motors accounted for 12.6% of total net sales for the year ended March 31, 2005 and 12.4% of total net sales for the year ended March 31, 2006.

Net sales of our brushless DC fans increased ¥437 million, or 1.3%, from ¥34,435 million for the year ended March 31, 2005 to ¥34,872 million for the year ended March 31, 2006. This slight increase was primary due to the fact that our top customer has adopted just-in-time management processes, which delayed our sales recognition..

Net sales of our brushless DC fans accounted for 7.1% of total net sales for the year ended March 31, 2005 and 6.5% of total net sales for the year ended March 31, 2006.

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Net sales of our mid-size motors increased ¥2,203 million, or 6.2%, from ¥35,564 million for the year ended March 31, 2005 to ¥37,767 million for the year ended March 31, 2006. This increase was primarily due to an increase in net sales of motors for power steering in automobiles and for home appliances. Net sales of motors for power steering in automobiles increased ¥1,190 million compared to the same period of the previous fiscal year.

Net sales of our mid-size motors accounted for 7.3% of our total net sales for the year ended March 31, 2005 and 7.0% of total net sales for the year ended March 31, 2006.

Net sales of our machinery decreased ¥3,714 million, or 4.8%, from ¥76,957 million for the year ended March 31, 2005 to ¥73,243 million for the year ended March 31, 2006. This decrease was primarily due to a decrease in sales of photo laboratory systems manufactured by Nidec Copal Corporation and of semiconductor manufacturing machinery by Nidec Tosok Corporation, which more than offset a substantial increase in net sales of industrial robots manufactured by Nidec Sankyo Corporation.

Net sales of our machinery accounted for 15.8% of our total net sales for the year ended March 31, 2005 and 13.6% of total net sales for the year ended March 31, 2006.

Net sales of our electronic and optical components increased ¥374 million, or 0.3%, from ¥128,417 million for the year ended March 31, 2005 to ¥128,791 million for the year ended March 31, 2006. This slight increase was primary due to an increase in net sales of optical pickup units and home appliance components manufactured by Nidec Sankyo Corporation, which more than off set decreases in net sales of optical components manufactured by Nidec Copal Corporation and actuators manufactured by Nidec Copal Electronics Corporation.

Net sales of our electronic and optical components accounted for 26.4% of our total net sales for the year ended March 31, 2005 and 24.0% of total net sales for the year ended March 31, 2006.

Net sales of our other products increased ¥1,089 million, or 4.9%, from ¥22,209 million for the year ended March 31, 2005 to ¥23,298 million for the year ended March 31, 2006. This increase was primarily due to an increase in net sales of pivot assemblies by Nidec Singapore Pte. Ltd and automobile components manufactured by Nidec Tosok Corporation.

Cost of Products Sold

Our cost of products sold increased ¥42,074 million, or 11.3%, from ¥370,938 million for the year ended March 31, 2005 to ¥413,012 million for the year ended March 31, 2006 due primarily to increased sales. As a percentage of net sales, cost of sales increased slightly from 76.3% to 76.9%, due primarily to a cost increase caused by a rise in materials prices such as steel and copper.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased ¥5,848 million, or 16.5%, from ¥35,340 million for the year ended March 31, 2005 to ¥41,188 million for the year ended March 31, 2006. This increase was due in part to a ¥1,059 million loss on bad debts at Nidec Copal Corporation resulting from the insolvency of AgfaPhoto GmbH. In addition, during the previous year, we had a gain from reversal of accrued retirement benefit to directors amounting to ¥1,001 million and from the termination of the employees pension fund at Nidec Copal Corporation amounting to ¥2,312 million, which were recognized as a decrease in selling, general and administrative expenses, which we did not experience in the year ended March 31. 2006. We also had an increase in personnel expenses of ¥1,460 million due mainly to an increase in our employees. As a percentage of net sales, selling, general and administrative expenses increased from 7.3% for the year ended March 31, 2005 to 7.7% for the year ended March 31, 2006.

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Research and Development Expenses



Our research and development expenses increased ¥3,314 million, or 12.8%, from ¥25,918 million for the year ended March 31, 2005 to ¥29,232 million for the year ended March 31, 2006. This was primarily due to an increase in expenses for our research and development with respect to sub-1.8 inch hard disk drive spindle motors, mainly used for portable music players, and mid-size motors, mainly used for automobile steering systems. An increase in expenses related to research and development resources, including labor costs for technical personnel, was another contributing factor.

Operating Income

As a result of the foregoing factors, our operating income decreased ¥239 million, or 0.4%, from ¥53,665 million for the year ended March 31, 2005 to ¥53,426 million for the year ended March 31, 2006. As a percentage of net sales, operating income decreased from 11.0% to 10.0%.

Other Income (Expenses)

Other income increased ¥7,327 million, or 202.1%, from ¥3,625 million for the year ended March 31, 2005 to ¥10,952 million for the year ended March 31, 2006.

Interest and dividend income increased ¥735 million, or 79.1%, from ¥929 million for the year ended March 31, 2005 to ¥1,664 million for the year ended March 31, 2006. This was primarily due to interest income attributable to the increased average balance of our foreign currency deposits and increases of interest rates.

Gain from marketable securities, net increased ¥2,283 million, or 143.9%, from ¥1,586 million for the year ended March 31, 2005 to ¥3,869 million for the year ended March 31, 2006. This increase was attributable to profitable sales of marketable securities, reflecting favorable stock prices.

Foreign exchange gain increased ¥5,489 million, or 230.9%, from ¥2,377 million for year ended March 31, 2005 to ¥7,866 million for the year ended March 31, 2006. This was principally due to an increase in the balance of our foreign currency denominated assets during the year ended March 31, 2006 and a further depreciation in the value of the yen against relevant foreign currencies, as compared to the year ended March 31, 2005. The exchange rate of the yen against the U.S. dollar as of March 31, 2005 and 2006 was 107.39 yen and 117.47 yen, respectively.

Income before Provision for Income Taxes

As a result of the foregoing, our income before income taxes increased ¥7,088 million, or 12.4%, from ¥57,290 million for the year ended March 31, 2005 to ¥64,378 million for the year ended March 31, 2006.

Provision for Income Taxes

Our provision for income taxes increased ¥2,366 million, or 18.4%, from ¥12,847 million for the year ended March 31, 2005 to ¥15,213 million for the year ended March 31, 2006.

The effective income tax rate for the year ended March 31, 2006 was higher compared to the effective income tax rate for the year ended March 31, 2005. This was mainly because of changes in the valuation allowance for the year ended March 31, 2006 at Nidec Sankyo Corporation as its recovery in profitability was less than in the previous year.

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Minority Interest in Income of Consolidated Subsidiaries

Minority interest in income of our consolidated subsidiaries decreased ¥2,784 million, or 25.4%, from ¥10,954 million for the year ended March 31, 2005 to ¥8,170 million for the year ended March 31, 2006.

This was due primarily to a decrease in income of group companies and a decrease in minority interest as a result of an increase in interests held in subsidiaries such as Nidec Copal Corporation and Nidec Tosok Corporation.

Equity in Net Losses of Affiliated Companies

Equity in net losses of our affiliated companies increased ¥12 million, or 35.3%, from ¥34 million for the year ended March 31, 2005 to ¥46 million for the year ended March 31, 2006. This was primarily due to an increase in net losses of affiliates accounted for by the equity method.

Net Income

As a result of the foregoing, our net income increased ¥7,494 million, or 22.4%, from ¥33,455 million for the year ended March 31, 2005 to ¥40,949 million for the year ended March 31, 2006.

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Segment Information

Based on the applicable criteria set forth in the Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS No. 131), we have fourteen reportable operating segments which we report in our consolidated financial statements. These reportable operating segments are legal entities. One of them is Nidec Corporation, while the others are Nidecs thirteen consolidated subsidiaries: Nidec Electronics (Thailand) Co., Ltd., Nidec (Zhejiang) Corporation, Nidec (Dalian) Limited, Nidec Singapore Pte. Ltd., Nidec (H.K.) Co., Ltd., Nidec Philippines Corporation, Nidec Sankyo Corporation, Nidec Copal Corporation, Nidec Tosok Corporation, Nidec Copal Electronics Corporation, Nidec Shibaura Corporation, Nidec-Shimpo Corporation, and Nidec Nissin Corporation. For the information required by SFAS No. 131, see Note 25 to our consolidated financial statements included in this annual report.

We evaluate our financial performance based on segmental profit and loss, which consists of sales and operating revenues less operating expenses. Segmental profit or loss is determined using the accounting principles in the segments country of domicile. Nidec Corporation, Nidec Sankyo Corporation, Nidec Copal Corporation, Nidec Tosok Corporation, Nidec Copal Electronics Corporation, Nidec Shibaura Corporation, Nidec-Shimpo Corporation, and Nidec Nissin Corporation apply Japanese GAAP. Nidec Electronics (Thailand) Co., Ltd. applies Thai accounting principles. Nidec (Zhejiang) Corporation and Nidec (Dalian) Limited apply Chinese accounting principles. Nidec (H.K.) Co., Ltd. applies Hong Kong accounting principles. Nidec Singapore Pte. Ltd. applies Singaporean accounting principles, and Nidec Philippines Corporation applies Philippine accounting principles. Thus, our segmental data has not been prepared under U.S. GAAP on a basis that is consistent with our consolidated financial statements or on any other single basis that is consistent between segments. While there are several differences between U.S. GAAP and the underlying accounting principles used by the operating segments, the principal differences that affect segmental operating profit or loss are accounting for pension and severance costs, directors bonuses and leases. We believe that the monthly segmental information is available on a timely basis and that it is sufficiently accurate at the segment profit and loss level for us to manage our business.

The first of the following two tables shows revenues from external customers and other operating segments by reportable operating segment for the years ended March 31, 2005, 2006 and 2007. The second table shows operating profit or loss by reportable operating segment, which includes intersegment revenues, for the years ended March 31, 2005, 2006 and 2007:

| |                              | Year ended March 31                            
| | ---------------------------- | -----------------------------------------------
| |                              | 2005                                           
| |                              | (Yen in millions and U.S. dollars in thousands)
| | Nidec                        |                                                
| | External revenues            | ¥ 56,602                                       
| | Intersegment revenues        | 73,749                                         
| |                              |                                                
| | Sub total                    | 130,351                                        
| | Nidec Electronics (Thailand) |                                                
| | External revenues            | 36,891                                         
| | Intersegment revenues        | 21,240                                         
| |                              |                                                
| | Sub total                    | 58,131                                         
| | Nidec (Zhejiang)             |                                                
| | External revenues            | ¥ 13,037                                       
| | Intersegment revenues        | 1,052                                          
| |                              |                                                
| | Sub total                    | 14,089                                         

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| |                         | Year ended March 31                                  
| | ----------------------- | -----------------------------------------------------
| |                         | 2005                                                 
| |                         | (Yen in millions and U.S. dollars
      in thousands)
| | Nidec (Dalian)          |                                                      
| | External revenues       | 754                                                  
| | Intersegment revenues   | 38,678                                               
| |                         |                                                      
| | Sub total               | 39,432                                               
| | Nidec Singapore         |                                                      
| | External revenues       | 45,442                                               
| | Intersegment revenues   | 1,363                                                
| |                         |                                                      
| | Sub total               | 46,805                                               
| | Nidec (H.K.)            |                                                      
| | External revenues       | 17,114                                               
| | Intersegment revenues   | 2,003                                                
| |                         |                                                      
| | Sub total               | 19,117                                               
| | Nidec Philippines       |                                                      
| | External revenues       | 1,094                                                
| | Intersegment revenues   | 21,131                                               
| |                         |                                                      
| | Sub total               | 22,225                                               
| | Nidec Sankyo            |                                                      
| | External revenues       | 68,880                                               
| | Intersegment revenues   | 19,313                                               
| |                         |                                                      
| | Sub total               | 88,193                                               
| | Nidec Copal             |                                                      
| | External revenues       | 54,067                                               
| | Intersegment revenues   | 9,351                                                
| |                         |                                                      
| | Sub total               | 63,418                                               
| | Nidec Tosok             |                                                      
| | External revenues       | 23,992                                               
| | Intersegment revenues   | 657                                                  
| |                         |                                                      
| | Sub total               | 24,649                                               
| | Nidec Copal Electronics |                                                      
| | External revenues       | 20,653                                               
| | Intersegment revenues   | 2,355                                                
| |                         |                                                      
| | Sub total               | 23,008                                               
| | Nidec Shibaura          |                                                      
| | External revenues       | 14,449                                               
| | Intersegment revenues   | 9,348                                                
| |                         |                                                      
| | Sub total               | 23,797                                               
| | Nidec-Shimpo            |                                                      
| | External revenues       | 10,317                                               
| | Intersegment revenues   | 2,326                                                
| |                         |                                                      
| | Sub total               | 12,643                                               
| | Nidec Nissin            |                                                      
| | External revenues       | 12,641                                               
| | Intersegment revenues   | 1,041                                                
| |                         |                                                      
| | Sub total               | 13,682                                               

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| |                                | Year ended March 31                                  
| | ------------------------------ | -----------------------------------------------------
| |                                | 2005                                                 
| |                                | (Yen in millions and U.S. dollars
      in thousands)
| | All Others                     |                                                      
| | External revenues              | 109,700                                              
| | Intersegment revenues          | 166,350                                              
| |                                |                                                      
| | Sub total                      | 276,050                                              
| | Total                          |                                                      
| | External revenues              | 485,633                                              
| | Intersegment revenues          | 369,957                                              
| |                                |                                                      
| | Adjustments(*)                 | 228                                                  
| | Intersegment elimination       | (369,957                                             
| |                                |                                                      
| | Consolidated total (net sales) | ¥ 485,861                                            
| |                                |                                                      

(*) See Note 25 to the consolidated financial statements included in this annual report.

|                        |                              | Year ended March 31                                  
|----------------------- | ---------------------------- | -----------------------------------------------------
|                        |                              | 2005                                                 
|                        |                              | (Yen in millions and U.S. dollars
      in thousands)
|Segment profit or loss: |                              |                                                      
|                        | Nidec                        | ¥ 2,351                                              
|                        | Nidec Electronics (Thailand) | 8,649                                                
|                        | Nidec (Zhejiang)             | 107                                                  
|                        | Nidec (Dalian)               | 2,436                                                
|                        | Nidec Singapore              | 1,935                                                
|                        | Nidec (H.K.)                 | 362                                                  
|                        | Nidec Philippines            | (379                                                 
|                        | Nidec Sankyo                 | 7,624                                                
|                        | Nidec Copal                  | 3,195                                                
|                        | Nidec Tosok                  | 1,053                                                
|                        | Nidec Copal Electronics      | 3,583                                                
|                        | Nidec Shibaura               | 1,356                                                
|                        | Nidec-Shimpo                 | 1,397                                                
|                        | Nidec Nissin                 | 946                                                  
|                        | All Others                   | 13,252                                               
|                        |                              |                                                      
|                        | Total                        | 47,867                                               
|                        |                              |                                                      
|                        | Adjustments (*)              | 5,798                                                
|                        |                              |                                                      
|                        | Consolidated total           | ¥ 53,665                                             
|                        |                              |                                                      

(*) See Note 25 to the consolidated financial statements included in this annual report.

Net sales of Nidec increased ¥12,376 million, or 7.4%, from ¥168,220
million for the year ended March 31, 2006 to ¥180,596 million
for the year ended March 31, 2007. External revenues of Nidec increased
¥20,853 million, or 30.4%, from ¥68,613 million for the year ended
March 31, 2006 to ¥89,466 million for the year ended March 31,
2007. This increase resulted primarily from an increase in net sales in
our core business, hard disk drive spindle motors, reflecting continued
strong demand in the information technology and consumer electronics industries.
The increase also resulted from an increase in sales of hard disk drive
spindle motors as a result of a transfer of a large customer from Singapore
to China in the current fiscal year, sales to which were previously made
through Nidec Singapore Pte. Ltd. but are now made through direct transactions
with Nidec Corporation.

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Intersegment revenues of Nidec decreased ¥8,477 million, or 8.5%, from
¥99,607 million for the year ended March 31, 2006 to ¥91,130
million for the year ended March 31, 2007. This decrease resulted
primarily from a decrease in sales of hard disk drive spindle motors to
the large customer mentioned above through Nidec Singapore Pte. Ltd.  Operating
profit of Nidec increased ¥2,389 million, or 27.0%, from ¥8,852
million for the year ended March 31, 2006 to ¥11,241 million for
the year ended March 31, 2007. This increase was due primarily to
the increase in net sales of hard disk drive spindle motors and an increase
in royalty and commission fees from subsidiary companies.



Net sales of Nidec increased ¥37,869 million, or 29.1%, from ¥130,351 million for the year ended March 31, 2005 to ¥168,220 million for the year ended March 31, 2006. External revenues of Nidec increased ¥12,011 million, or 21.2%, from ¥56,602 million for the year ended March 31, 2005 to ¥68,613 million for the year ended March 31, 2006. This increase resulted primarily from an increase in net sales in our core business, hard disk drive spindle motors, reflecting strong demand in the IT industry and consumer electronics. Intersegment revenues of Nidec increased ¥25,858 million, or 35.1%, from ¥73,749 million for the year ended March 31, 2005 to ¥99,607 million for the year ended March 31, 2006. This increase resulted primarily from an increase in sales of hard disk drives spindle motors to one of our main customers through Nidec Singapore Pte. Ltd. Operating profit of Nidec increased ¥6,501 million, or 276.5%, from ¥2,351 million for the year ended March 31, 2005 to ¥8,852 million for the year ended March 31, 2006. This increase was due primarily to an increase in commission income from subsidiary companies.

Net sales of Nidec Electronics (Thailand) Co., Ltd. increased ¥11,763 million, or 15.2%, from ¥77,477 million for the year ended March 31, 2006 to ¥89,240 million for the year ended March 31, 2007 due primarily to an increase in sales of hard disk drive spindle motors to main customers. Operating profit decreased ¥513 million, or 4.5%, from ¥11,335 million for the year ended March 31, 2006 to ¥10,822 million for the year ended March 31, 2007. This decrease resulted primarily from a delay in cost efficiency improvements in production relative to declines in sales prices.

Net sales of Nidec Electronics (Thailand) Co., Ltd. increased ¥19,346 million, or 33.3%, from ¥58,131 million for the year ended March 31, 2005 to ¥77,477 million for the year ended March 31, 2006 due primarily to an increase in sales of hard disk drive spindle motors to main customers. Operating profit increased ¥2,686 million, or 31.1%, from ¥8,649 million for the year ended March 31, 2005 to ¥11,335 million for the year ended March 31, 2006 due primarily to the large increase in sales.

Net sales of Nidec (Zhejiang) Corporation increased ¥801 million, or 4.1%, from ¥19,372 million for the year ended March 31, 2006 to ¥20,173 million for the year ended March 31, 2007. This increase resulted from increased sales of hard disk drive spindle motors, reflecting strong demand. Operating profit increased ¥167 million, or 154.6%, from ¥108 million for the year ended March 31, 2006 to ¥275 million for the year ended March 31, 2007. The increase in operating profit was resulted primarily from a shift to more efficient mass production of our hard disk drive spindle motors.

Net sales of Nidec (Zhejiang) Corporation increased ¥5,283 million, or 37.5%, from ¥14,089 million for the year ended March 31, 2005 to ¥19,372 million for the year ended March 31, 2006. This increase resulted from increased sales of hard disk drive spindle motors, reflecting strong demand. Operating profit increased slightly by ¥1 million from ¥107 million for the year ended March 31, 2005 to ¥108 million for the year ended March 31, 2006. The comparatively lower increase in operating profit compared with sales was resulted primarily from a delay in shifting to a more efficient mass production of our hard disk drive spindle motors.

Net sales of Nidec (Dalian) Limited increased ¥1,792 million, or 3.7%, from ¥48,673 million for the year ended March 31, 2006 to ¥50,465 million for the year ended March 31, 2007. This increase was due primarily to an increase in customer demand for other small precision brushless DC motors used in DVD drives. Operating profit increased ¥842 million, or 22.6% from ¥3,718 million for the year ended March 31, 2006 to ¥4,560 million for the year ended March 31, 2007. This increase was due primarily to improvements in production cost efficiency reflecting one more efficient mass production of our other small precision brushless DC motors and fans.

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Net sales of Nidec (Dalian) Limited increased ¥9,241 million, or 23.4%, from ¥39,432 million for the year ended March 31, 2005 to ¥48,673 million for the year ended March 31, 2006. This increase was due primarily to an increase in customer demand for other small precision brushless DC motors used in DVD drives. Operating profit increased ¥1,282 million, or 52.6% from ¥2,436 million for the year ended March 31, 2005 to ¥3,718 million for the year ended March 31, 2006. This was due primarily to the large increase in sales.

Net sales of Nidec Singapore Pte. Ltd. decreased ¥12,964 million, or 20.5%, from ¥63,188 million for the year ended March 31, 2006 to ¥50,224 million for the year ended March 31, 2007 resulting primarily from a decrease in sales of hard disk drive spindle motors to a large customer, which transferred from Singapore to China in the current fiscal year. However, operating profit of Nidec Singapore Pte. Ltd. increased ¥340 million, or 28.2%, from ¥1,205 million for the year ended March 31, 2006 to ¥1,545 million for the year ended March 31, 2007, due to an increase in sales of pivot assemblies with higher margins.

Net sales of Nidec Singapore Pte. Ltd. increased ¥16,383 million, or 35.0%, from ¥46,805 million for the year ended March 31, 2005 to ¥63,188 million for the year ended March 31, 2006 due primarily to an increase in sales of hard disk drives spindle motors to main customers. However, operating profit of Nidec Singapore Pte. Ltd. decreased ¥730 million, or 37.7%, from ¥1,935 million for the year ended March 31, 2005 to ¥1,205 million for the year ended March 31, 2006, due primarily to the continued decrease of sales with higher margins.

Net sales of Nidec (H.K.) Co., Ltd. increased ¥11,780 million, or 43.1%, from ¥27,302 million for the year ended March 31, 2006 to ¥39,082 million for the year ended March 31, 2007. This increase was due primarily to an increase in sales of hard disk drive spindle motors and other small precision brushless DC motors to a few customers. Operating profit of Nidec (H.K.) Co., Ltd. increased ¥39 million, or 11.2%, from ¥347 million for the year ended March 31, 2006 to ¥386 million for the year ended March 31, 2007. This increase was due primarily to an increase in sales.

Net sales of Nidec (H.K.) Co., Ltd. increased ¥8,185 million, or 42.8%, from ¥19,117 million for the year ended March 31, 2005 to ¥27,302 million for the year ended March 31, 2006. This was due primarily to an increase in sales of hard disk drive spindle motors and other small precision brushless DC motors to main customers. However, operating profit of Nidec (H.K.) Co., Ltd. decreased ¥15 million, or 4.1%, from ¥362 million for the year ended March 31, 2005 to ¥347 million for the year ended March 31, 2006. This was due to an increase in sales with lower margins and increased selling, general and administrative expenses.

Net sales of Nidec Philippines Corporation increased ¥15,920 million, or 49.3%, from ¥32,307 million for the year ended March 31, 2006 to ¥48,227 million for the year ended March 31, 2007. This increase resulted primarily from an increase in sales of hard disk drive spindle motors to our main customer in China and a few other main customers through Nidec Corporation.  Operating profit of Nidec Philippines Corporation increased ¥3,348 million, or 316.1%, from ¥1,059 million for the year ended March 31, 2006 to ¥4,407 million for the year ended March 31, 2007. This increase was due primarily to an increase in sales of high-price and high-margin goods, namely 2.5 inches hard disk drive spindle motors, reflecting volume efficiency resulting primarily from the large increase in sales.

Net sales of Nidec Philippines Corporation increased ¥10,082 million, or 45.4%, from ¥22,225 million for the year ended March 31, 2005 to ¥32,307 million for the year ended March 31, 2006. This increase resulted primarily from an increase in sales of hard disk drive spindle motors to our main customer in Singapore through Nidec. Nidec Philippines Corporation had an operating loss of ¥379 million for the year ended March 31, 2005 and operating profit of ¥1,059 million for the year ended March 31, 2006. This increase in operating profit was due to an increase in sales of high-price and high-margin goods, namely 2.5 inches or smaller hard disk drive spindle motors.

Net sales of Nidec Sankyo Corporation decreased ¥10,156 million, or 11.5%, from ¥88,172 million for the year ended March 31, 2006 to ¥78,016 million for the year ended March 31, 2007 due primarily to a decrease in sales of optical pickup units by withdrawal from low-margin products. Operating profit of Nidec Sankyo decreased ¥1,941million, or 21.4%, from ¥9,050 million for the year ended March 31, 2006 to ¥7,109 million for the year ended March 31, 2007. The major reason for this decrease was a decrease in sales of industrial robots and a drop in sales prices of stepping motors.

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Net sales of Nidec Sankyo Corporation decreased ¥21 million from ¥88,193 million for the year ended March 31, 2005 to ¥88,172 million for the year ended March 31, 2006. Operating profit of Nidec Sankyo increased ¥1,426 million, or 18.7%, from ¥7,624 million for the year ended March 31, 2005 to ¥9,050 million for the year ended March 31, 2006. The major reason for this increase was improvements in production cost efficiency.

Net sales of Nidec Copal Corporation increased ¥16,083 million, or 29.0%, from ¥55,385 million for the year ended March 31, 2006 to ¥71,468 million for the year ended March 31, 2007. This increase was due primarily to an increase in sales of shutters and lens units for digital cameras and mobile phones reflecting strong customer demand. Operating profit of Nidec Copal Corporation increased ¥1,532 million, or 60.7%, from ¥2,524 million for the year ended March 31, 2006 to ¥4,056 million for the year ended March 31, 2007 due primarily to the increase in sales of shutters and lens units for digital cameras and mobile phones.

Net sales of Nidec Copal Corporation decreased ¥8,033 million, or 12.7%, from ¥63,418 million for the year ended March 31, 2005 to ¥55,385 million for the year ended March 31, 2006. This was due primarily to a decrease in sales of shutters, optical units and lenses as a result of a delay in the launch of some new products. The decrease also partially resulted from the insolvency of AgfaPhoto GmbH, a purchaser of the companys photo lab systems. Operating profit of Nidec Copal Corporation decreased ¥671 million, or 21.0%, from ¥3,195 million for the year ended March 31, 2005 to ¥2,524 million for the year ended March 31, 2006 due primarily to the decrease in sales of shutters, optical units and lenses.

Net sales of Nidec Tosok Corporation increased ¥179 million, or 0.8%, from ¥22,488 million for the year ended March 31, 2006 to ¥22,667 million for the year ended March 31, 2007. This increase was due primarily to an increase in sales of semiconductor fabrication equipment due to increased customer investment in facilities in the semiconductor industry. Operating profit increased ¥995 million, or 228.7%, from ¥435 million for the year ended March 31, 2006 to ¥1,430 million for the year ended March 31, 2007. This increase was due primarily to an increase in sales and cost efficiency improvements in production of semiconductor fabrication equipment.

Net sales of Nidec Tosok Corporation decreased ¥2,161 million, or 8.8%, from ¥24,649 million for the year ended March 31, 2005 to ¥22,488 million for the year ended March 31, 2006. This was due primarily to a decrease in sales of semiconductor fabrication equipment as a result of decreased volume of orders starting from the second half of the previous year due to decreased customer investment in facilities in the semiconductor industry. Operating profit decreased ¥618 million, or 58.7%, from ¥1,053 million for the year ended March 31, 2005 to ¥435 million for the year ended March 31, 2006. This was due primarily to the decrease in sales of semiconductor fabrication equipment and a drop in sales prices resulting from severe price competition.

Net sales of Nidec Copal Electronics Corporation increased ¥1,189 million, or 5.5%, from ¥21,793 million for the year ended March 31, 2006 to ¥22,982 million for the year ended March 31, 2007. This increase was primarily due to an increase in sales of trimmer potentiometers, switches and pressure sensors, reflecting increased demand in the information technology industry and the semiconductor fabrication equipment industry. However, operating profit decreased ¥261 million, or 8.9%, from ¥2,949 million for the year ended March 31, 2006 to ¥2,688 million for the year ended March 31, 2007. This increase resulted primarily from an increase in research and development expenses and increased personnel expenses.

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Net sales of Nidec Copal Electronics Corporation decreased ¥1,215 million, or 5.3%, from ¥23,008 million for the year ended March 31, 2005 to ¥21,793 million for the year ended March 31, 2006. This decrease was primarily due to a decrease in sales of stepping motors and a delay in the launch of some new products. Operating profit decreased ¥634 million, or 17.7%, from ¥3,583 million for the year ended March 31, 2005 to ¥2,949 million for the year ended March 31, 2006. This was due primarily to the decrease in sales of stepping motors.

Net sales of Nidec Shibaura Corporation increased ¥3,381 million, or 20.9%, from ¥16,204 million for the year ended March 31, 2006 to ¥19,585 million for the year ended March 31, 2007 due primarily to an increase in sales of mid-size motors for air conditioners. Nidec Shibaura Corporation had operating loss of ¥274 million for the year ended March 31, 2006 and operating profit of ¥136 million for the year ended March 31, 2007. This increase resulted primarily from increased royalty fees from its subsidiary companies as compared to the same period of the previous fiscal year.

Net sales of Nidec Shibaura Corporation decreased ¥7,593 million, or 31.9%, from ¥23,797 million for the year ended March 31, 2005 to ¥16,204 million for the year ended March 31, 2006 due primarily to a decrease in sales of machinery and mid-size motors for air conditioners. Nidec Shibaura Corporation had operating profit of ¥1,356 million for the year ended March 31, 2005 and operating loss of ¥274 million for the year ended March 31, 2006 due primarily to a decrease in sales of machinery and mid-size motors for air conditioners.

Net sales of Nidec-Shimpo Corporation increased ¥2,063 million, or 18.5%, from ¥11,133 million for the year ended March 31, 2006 to ¥13,196 million for the year ended March 31, 2007. This increase was due primarily to an increase in sales of power transmission equipment reflecting an increase in customer demand. Operating profit of Nidec-Shimpo Corporation increased ¥914 million, or 183.5%, from ¥498 million for the year ended March 31, 2006 to ¥1,412 million for the year ended March 31, 2007. This increase was due primarily to the increase in sales and cost reduction.

Net sales of Nidec-Shimpo Corporation decreased ¥1,510 million, or 11.9%, from ¥12,643 million for the year ended March 31, 2005 to ¥11,133 million for the year ended March 31, 2006. This was due primarily to a decrease in sales of factory automation equipment as a result of decreased customer demand. Operating profit of Nidec-Shimpo Corporation decreased ¥899 million, or 64.4%, from ¥1,397 million for the year ended March 31, 2005 to ¥498 million for the year ended March 31, 2006. This resulted primarily from a decrease in sales of factory automation equipment and a decrease in sales of high-price and high-margin power transmission equipment.

Net sales of Nidec Nissin Corporation decreased ¥1,272 million, or 9.8%, from ¥12,929 million for the year ended March 31, 2006 to ¥11,657 million for the year ended March 31, 2007. This decrease was primarily due to a delay in complying with requirements of customers, such as quality and delivery, and a decline of sales prices. Operating profit of Nidec Nissin Corporation decreased ¥138 million, or 20.2%, from ¥683 million for the year ended March 31, 2006 to ¥545 million for the year ended March 31, 2007 due to a decrease in sales of plastic lenses.

Net sales of Nidec Nissin Corporation decreased ¥753 million, or 5.5%, from ¥13,682 million for the year ended March 31, 2005 to ¥12,929 million for the year ended March 31, 2006. This decrease was primarily due to a decrease in sales of plastic lenses for mobile phones. Operating profit of Nidec Nissin Corporation decreased ¥263 million, or 27.8%, from ¥946 million for the year ended March 31, 2005 to ¥683 million for the year ended March 31, 2006 due to a decrease in sales of plastic lenses for mobile phones and an increase in research and development cost.

Within the All Others segment, net sales increased ¥49,899 million, or 16.5% from ¥302,134 million for the year ended March 31, 2006 to ¥352,033 million for the year ended March 31, 2007. This increase was primarily due to an expansion in sales of Nidec Copal (Thailand) Co., Ltd. and an increase in sales of our newly consolidated subsidiaries such as Nidec Motors & Actuators. However, operating profit slightly increased ¥131 million, or 1.1% from ¥12,179 million for the year ended March 31, 2006 to ¥12,310 million for the year ended March 31, 2007. This decrease was primarily due to small profit of Nidec Motors & Actuator and furthermore a decrease in profitability of Nidec Tosok (Vietnam) Co., Ltd. and Nidec Hi-Tech Motor (Thailand) Co., Ltd.

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Within the All Others segment, net sales increased ¥26,084 million, or 9.4% from ¥276,050 million for the year ended March 31, 2005 to ¥302,134 million for the year ended March 31, 2006. This was primarily due to the expansion in sales of Nidec Subic Philippines Corporation and Nidec (Dongguan) Limited. Operating profit decreased ¥1,073 million, or 8.1% from ¥13,252 million for the year ended March 31, 2005 to ¥12,179 million for the year ended March 31, 2006. This was primarily due to a decrease in profitability in Nidec Power Motor Corporation, Nidec Sankyo Fuzhou (Hong Kong) Co., Ltd. and Nidec Copal (Thailand) Co., Ltd.

Accounting Changes

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB 108), Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on how prior year misstatements should be taken into consideration when quantifying misstatements in current year financial statements for purposes of determining whether the current years financial statements are materially misstated. SAB 108 is effective for fiscal years ending after November 15, 2006. We adopted SAB 108 in the year ended March 31, 2007. SAB108 did not have a material impact on our current process for assessing and quantifying financial statement misstatements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158 (SFAS 158), Employers Accounting for Defined Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a single-employer defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in comprehensive income in the year in which the changes occur. SFAS 158 also requires that the measurement of plan assets and benefit obligations be as of the date of the employers statement of financial position, not up to three months earlier as had been permitted by Statements 87 and 106. The measurement date provision of SFAS 158 is effective for fiscal years ending after December 15, 2008. We adopted recognition and related disclosure provisions at the end of this fiscal year, as discussed in note No. 15 Pension and severance plans.

Recent Accounting Pronouncements to be adopted in future periods

In July 2006, the Financial Accounting Standards Board (the FASB) released FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement 109 (FIN 48). The Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Interpretation is effective for fiscal years beginning after December 15, 2006. We are currently evaluating the potential impact from adopting FIN 48 on our consolidated financial position, consolidated results of operations, or liquidity.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (SFAS 157), Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the potential impact from adopting SFAS 157 on our consolidated financial position, results of operation or liquidity.

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In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities including an amendment of FASB Statement No. 115. SFAS 159 enables entities to choose measure eligible financial assets and financial liabilities at fair value, with changes in value recognized in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the potential impact from adopting SFAS 159 on our consolidated financial position, results of operation or liquidity.

Application of Critical Accounting Policies

The Company and its subsidiaries in Japan maintain their records and prepare their financial statements in accordance with accounting principles generally accepted in Japan, and its foreign subsidiaries in conformity with those of their countries of domicile. Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results may differ from these estimates, judgments and assumptions.

An accounting estimate in our financial statements is a critical accounting estimate if it requires us to make assumptions about matters that are highly uncertain at the time the accounting estimate is made, and either different estimates that we reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. We have identified the following critical accounting policies with respect to our financial presentation.

Inventories

Our inventories, which consist primarily of finished products such as hard disk drive spindle motors, are stated at the lower of cost or market value. Cost is determined principally using the weighted average cost method and the market value is mainly based on net realizable value less direct sales costs. These products are exposed to frequent innovation, the introduction of new products to the market and short product life cycles due to rapid technological advances and model changes. We periodically assess the market value of our inventory, based on sales trends and forecasts and technological changes and write off inventories with no movement for one year or when it is apparent that there is no possibility of future sales or usage. We may have to recognize large amounts of inventory write-off as a result of an unexpected decline in market conditions, changes in demand or our product line.

Other-than-temporary Losses on Marketable Securities

We review the market value of our marketable securities at the end of each fiscal quarter. Our marketable securities consist of available-for-sale securities. Other-than-temporary losses on individual marketable securities are charged to income in the period as incurred. Losses on available-for-sale securities are classified as other-than-temporary based on the length of time and the extent to which the fair value has been less than the carrying amount. Our management employs a systematic methodology to assess the recoverability of such investments by reviewing the financial position of underlying companies and prevailing market conditions in which these companies operate to determine if our investment in each of these companies is impaired and whether the impairment is other-than-temporary.

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We believe that the accounting estimate related to investment impairment is a critical accounting policy because:

•

it is highly susceptible to change from period to period because it requires our management to make assumptions about future financial condition and cash flows of investees; and

•

the impact that recognizing an impairment would have on the total assets reported on our balance sheet as well as our operating income would be material.

As of March 31, 2007, the estimated fair value of our marketable securities was ¥20,118 million. We recorded gain on marketable securities in the amount of ¥943 million for the years ended March 31, 2007.

Allowance for Doubtful Accounts

We maintain a general allowance for doubtful accounts based on the historical rate of credit losses experienced. We additionally provide allowances for specific customer accounts deemed uncollectible. Management assesses the need for specific allowances based on changes in the customers financial condition and length of time the account has remained overdue. As our customer base is highly concentrated, the nonfulfillment or delay in payment caused by even one of our major customers may require us to record a significant additional allowance. For the year ended March 31, 2007, sales to our six largest customers represented approximately 37% of our net sales. Our accounts receivable are likewise concentrated. At March 31, 2007, six customers represented ¥49,097 million, or 33%, of our gross accounts receivable. In addition, during economic downturns, certain number of our customers may have difficulty with their cash flows.

Although we believe that we can make reliable estimates for doubtful accounts, customer concentrations as well as overall economic conditions may affect our ability to accurately estimate the allowance for doubtful accounts. Our allowance for doubtful accounts amounted to ¥1,270 million as of March 31, 2007. Our trade notes and accounts receivable balance was ¥164,332 million, net of allowance for doubtful accounts, as of March 31, 2007.

Deferred Tax Assets

As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process requires us to estimate our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as deferred revenue, for tax and accounting purposes. These differences resulted in deferred tax assets and liabilities, which were included within our consolidated balance sheet. As of March 31, 2007 we had deferred tax assets in the amount of ¥19,417 million. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in our income statement.

Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We have recorded a valuation allowance of ¥4,279 million as of March 31, 2007, due to uncertainties related to our ability to utilize some of our deferred tax assets, primarily consisting of certain net operating losses carried forward for tax purposes incurred by our subsidiaries. Our determination to record valuation allowances is based on a history of unprofitable periods by the subsidiaries and their estimated future profitability. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to establish an additional valuation allowance which could have an adverse effect on our financial position and results of operations.

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Impairment of Long-lived Assets

Long-lived assets, consisting primarily of property, plant and equipment, comprised approximately 31% of our total assets as of March 31, 2007. We carefully monitor the appropriateness of the estimated useful lives of these assets. Since the fiscal year ended March 31, 2003, the first year we adopted impairment of long-lived assets, whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable, we have reviewed the respective assets for impairment. An impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows. We review idle assets for possible impairment based on their condition or based on the probability of future use. Changes in technology, market demand, our planned product mix, or in our intended use of these assets, may cause the estimated period of use or the value of these assets to change. In addition, changes in general industry conditions such as increased competition could cause the value of a certain amount of these assets to change. Estimates and assumptions used in both estimating the useful life and evaluating potential impairment issues require a significant amount of judgment. As such, our judgment as to the recoverability of capitalized amounts and the amount of any impairment will be significantly impacted by such factors.

Acquisitions

In recent years, we have made a number of significant business acquisitions, which have been accounted for using the purchase method of accounting. The purchase method requires that the net assets, tangible and identifiable intangible assets less liabilities of the acquired company be recorded at fair value, with the difference between the cost of an acquired company and the fair value of the acquired net assets recorded as goodwill. Application of the purchase method requires our management to make complex judgments about the allocation of the purchase price to that of the fair value of the net assets we acquire and estimation of the related useful lives. The determinations of fair value of assets and liabilities are primarily based on factors such as independent appraisers cash flow analysis and quoted market prices, if available.

Valuation of Goodwill

We assess the impairment of acquired goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:

•

significant underperformance relative to expected historical or projected future operating results;

•

significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

•

significant negative industry or economic trends;

•

significant decline in the stock price of the acquired entity for a sustained period; and

•

market capitalization of the acquired entity relative to its net book value.

When we determine that the carrying value of goodwill and other intangibles may not be recoverable, based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a projected discounted cash flow determined by our management to be commensurate with the risk inherent in our current business model. Changes in the projected discounted cash flow could negatively affect the valuations. Goodwill amounted to ¥67,780 million as of March 31, 2007.

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Pension Plans

We account for our defined benefit pension plans based on actuarial valuations. For periodic pension calculation, we are required to assume some components, which include expected return on plan assets, discount rate, rate of increase in compensation levels and average remaining years of service. We use long-term historical actual return information and estimated future long-term investment returns by reference to external sources to develop our expected rate of return on plan assets. The discount rate is assumed based on the rates available on high-quality fixed-income debt instruments (rated AA by a recognized rating agency) for which the timing and amount of cash inflows approximates the estimated outflows of the defined benefit plan. We assume a rate of increase in compensation levels and average remaining years of service based on our historical data. Changes in these assumptions will have an impact on our net periodic pension cost.

The following table shows the sensitivity to a change in discount rates and the expected rate of return on plan assets, holding all other assumptions constant.

|                                       | Yen in millions                  
|-------------------------------------- | ---------------------------------
|                                       | Effect on pre-tax income         
|                                       | For the year ended March 31, 2008
|Discount rates                         |                                  
|0.5% decrease                          | ¥ (41                            
|0.5% increase                          | 29                               
|Expected rate of return on plan assets |                                  
|0.5% decrease                          | ¥ (36                            
|0.5% increase                          | 36                               

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B. Liquidity and Capital Resources.

Our principal needs for cash are:

 payments for the purchase of parts and raw materials;

 payments for the purchase of equipment for our production facilities;

 selling, general and administrative expenses such as research and development expenses;

 payments for the purchase of shares of companies targeted under our acquisitions strategy;

 employees salaries, wages and other payroll costs;

 repayment of short-term debt;

 payments of dividends to our shareholders; and

 taxes.

We fund our growth primarily with funds generated from operations, proceeds from issuances of new shares, unsecured bonds, including convertible bonds, and borrowings from banks. We believe that these funding sources, as well as future sources of external funding, will be sufficient to meet our capital requirements for the current fiscal year. The uses of funds raised are capital expenditures, investment in and financing of affiliated companies and repayment of borrowings from banks. We intend to implement additional funding programs as the need arises to further strengthen our capital base, and thus enhance the balance between borrowings and equity capital. Part of the funds raised are reserved and utilized for potential mergers and acquisitions.

We actively seek to implement group financing strategies within the Nidec Group in order to improve our cash efficiencies on a consolidated basis and reduce capital costs. We prepared a Cash management system during the fiscal year ended March 31, 2006 and introduced it in April 2006. Our subsidiaries actively repay loans with higher interest rates from banks and we extend loans with lower interest rates to these subsidiaries. We work to reduce finance costs on a consolidated basis by thoroughly reviewing and managing the groups financing costs and allocating surplus cash effectively within the group through balancing cash flows and investment activities including mergers and acquisitions.

Total assets increased ¥96,653 million from ¥565,970 million to ¥662,623 million for the year ended March 31, 2007. Property, plant and equipment increased ¥31,014 million due primarily to newly consolidated subsidiaries, such as Nidec Motors & Actuators, Brilliant Manufacturing Litmited and certain other consolidated subsidiaries, and additional machinery and equipment acquired to meet increased production in overseas companies. Trade accounts receivable and inventories increased ¥19,016 million and ¥3,834 million, respectively, due to the newly consolidated subsidiaries and an increase in sales. Cash and cash equivalents decreased ¥3,295 million, as mentioned under Cash Flows below.

Total liabilities increased ¥51,821 million from ¥239,333 million to ¥291,154 million for the year ended March 31, 2007. This was mainly due to increases of short-term borrowings of ¥35,227 million to finance M&A activities in the year ended March 31, 2007 and trade notes and accounts payable of ¥8,612 million.

Working capital, defined as current assets less current liabilities, decreased ¥22,124 million from ¥125,417 million to ¥103,293 million as of March 31, 2007 as compared to March 31, 2006. This was due primarily to the increases in short-term borrowings for the M&A activities.

Our receivable turnover ratio is calculated by dividing net sales for the fiscal year by the fiscal year-end trade notes and accounts receivable balance. Our receivable turnover ratio was 3.8 for the year ended March 31, 2007, which was almost same as the ratio for the year ended March 31, 2006. The inventory turnover ratio is calculated by dividing cost of products sold for the year ended March 31 by the year-end inventory balance. Our inventory turnover ratio was 7.6 for the year ended March 31, 2007, compared to 6.8 for the year ended March 31, 2006. We have been trying to reduce production levels to enable us to reduce our excess inventory levels and avoid write-offs.

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Total shareholders equity increased ¥41,357 million from ¥263,659 million for the year ended March 31, 2006 to ¥305,016 million for the year ended March 31, 2007. This increase was mainly due to an increase in retained earnings of ¥34,146 million and foreign currency translation adjustments of ¥6,949 million. The increase in foreign currency translation adjustments was due to the depreciation of the yen to the Thai baht. The ratio of stockholders equity to total assets decreased 0.6% from 46.6% as of March 31, 2006 to 46.0% as of March 31, 2007.

Cash Flows

Net cash provided by operating activities increased ¥8,791 million from ¥55,932 million for the year ended March 31, 2006 to ¥64,723 million for the year ended March 31, 2007.

Cash flow from changes in operating assets and liabilities was improved by ¥1,177 million compared to previous fiscal year due primarily to positive impact from decrease in inventories in this fiscal year ended March 31, 2007, while large increase in inventories in the previous fiscal year.

In addition, cash flow from the adjustments to reconcile net income to net cash provided by operating activities was improved by ¥11,594 million due mainly to;



¥4,605 million of positive impact from foreign currency adjustments compared to previous fiscal year;



¥2,926 million of positive impact from decrease in gain from marketable securities, net compared to previous fiscal year; and



¥3,712 million of positive impact from increase in depreciation compared to previous fiscal year.

Net cash provided by operating activities increased ¥11,599 million from ¥44,333 million for the year ended March 31, 2005 to ¥55,932 million for the year ended March 31, 2006. This was mainly due to an increase in net income of ¥7,494 million. Accrual for pension and severance costs, net payment increased ¥6,428 million, due to the absence of a transfer to the Japanese Government of Substitutional Portion of Employee Pension Fund Liabilities, which occurred the previous fiscal year. In addition, changes in operating assets and liabilities increased ¥3,597 million mainly due primarily to an increase in notes and accounts receivable, inventories, notes and accounts payable as compared to the prior year. On the other hand, the total non-cash income statement items decreased ¥6,579 due to decreases in foreign currency adjustments, minority interest in income of consolidated subsidiaries, gain from sales of marketable securities and loss on disposal of property and equipment of ¥3,485 million, ¥2,784 million, ¥2,251 million and ¥1,356 million, respectively, while depreciation increased ¥4,757 million.

Net cash used in investing activities increased ¥34,960 million from ¥43,975 million for the year ended March 31, 2006 to ¥78,935 million for the year ended March 31, 2007. This mainly resulted from an increase in acquisition of consolidated subsidiaries, net of cash acquired of ¥25,322 million and an increase in payments for additional investments in subsidiaries of 11,305 million

Net cash used in investing activities decreased ¥1,913 million from ¥45,888 million for the year ended March 31, 2005 to ¥43,975 million for the year ended March 31, 2006. This mainly resulted from a decrease in payments for additional investments in subsidiaries of ¥6,820 million and an increase in additions to property, plant and equipment to meet increased production in overseas companies of ¥5,928 million.

Net cash provided by financing activities increased ¥3,599 million from ¥5,344 million for the year ended March 31, 2006 to ¥8,943 million for the year ended March 31, 2007

This was mainly because short-term borrowings increased more than other payments such as repayments of long-term debt and dividends paid this year.

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Net cash provided by financing activities was ¥5,344 million for the year ended March 31, 2006, while net cash used in financing activities was ¥2,494 million for the year ended March 31, 2005. This was mainly because short-term borrowings increased more than other payments such as repayments of long-term debt and dividends paid this year, while short-term borrowings, long-term debt and dividends paid decreased more than proceeds from issuance of new shares last year.

As a result of the foregoing factors and the effect of exchange rate changes, our total outstanding balance of cash and cash equivalents decreased ¥3,295 million from ¥92,079 million as of March 31, 2006 to ¥88,784 million as of March 31, 2007.

C. Research and Development, Patents and Licenses, etc.

An important requirement for success in the highly competitive markets in which we operate is the ability to supply products that incorporate cutting-edge technology and quality. Given that competition has been intensifying, one of the major aims of our research and development activities in recent years has been to reduce the cost of designing without affecting the quality of our products.

As of March 31, 2007, we employed approximately 1,493 people engaged in research and development activities mainly in Japan as well as in China, Thailand, Singapore, Taiwan, Germany, Poland, Spain, France and U.S.A..

Our position as the leading supplier of hard disk drive spindle motors to the major hard disk drive manufacturers provides us with access to information regarding the industry needs, which we seek to incorporate into our research and development activities. We seek to proactively develop products that meet the precise needs of each customer.

Based on the precision engineering expertise gained throughout our history of making motors, we have concentrated our research and development activities on drive motor technologies; However, we conduct research in many areas, including basic technologies of spindle motors to be used in information equipment, and technologies for new types of motors such as fluid dynamic bearing technology, which we have been developing for the past over 15 years.

We are diversifying our research and development activity, which was heavily concentrated on small motor technology in the field of spindle motors, to motor and drive technologies. For example, through Nidec Shibaura Corporation and Nidec Tosok Corporation, we focus on the research and development of motors for home electric appliances and motors for automobile parts. Through Nidec-Shimpo Corporation, our subsidiary specializing in power transmission drives and variable speed drives, we have been focusing on the research and development of geared motors for color copiers. By doing so, we have been able to develop and market new products through our integrated sales design and production system.

In January and February 2004, Nidec Copal, Nidec Copal Electronics and Nidec Sankyo became our consolidated subsidiaries. Nidec Copal has a substantial market share in shutters for digital cameras and has been developing shutters and lens units. It has developed vibration motors for mobile phones and laboratory systems equipment, among other industrial equipment related products. Nidec Copal Electronics has developed ultra-precision fixed resistors for its circuit parts business and coreless type polygon laser scanners for its actuator business. It has also promoted the development of sensors for its pressure sensor business, mainly for the semiconductor equipment industry. Nidec Sankyo has developed intelligent mechanism products, which have merged fine mechatronics and software, coupled with the development of ultra-precision processing technology. These activities include research and development of multimedia equipment and information accessory equipment such as computers, industrial equipment, home electronics and housing equipment.

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In April 2005, we opened Motor Engineering Research Laboratory in our Tokyo Office. Motor Engineering Research Laboratory develops basic research for various types of motors and aims to establish the foundation of motor technology going forward for our motor-related business.

Recently, our principal research and development activities have included the following:

•

the development of fluid dynamic bearing spindle motors, including technology for installing fluid dynamic bearing spindle motors in hard disk drives smaller than 1.8 inches and fluid dynamic bearing spindle motors using sintered-alloy metal;

•

the development and improvement of basic motor characteristics. For example, in order to achieve a higher transfer rate of memory written on hard disks, higher rotation speeds are required of spindle motors. As a result, spindle motors which were formerly required to generate 5,400 rotations per minute are now required to generate 7,200 to 15,000 rotations per minute. These higher speeds can, however, produce more vibration. Such vibration, as well as the higher density of disks, can disrupt the read-write function of hard disk drives. Accordingly, rotation precision has become more important, and we are conducting research and development with a view to improving such precision;

•

the improvement of analysis and material technologies, including (1) improving technologies for investigating the impact of spindle motors on hard disks, (2) improving the cleanliness of materials and of manufacturing technology and (3) research into the development of uses of new materials for spindle motors;

•

the development of spindle motors smaller than a 1.0-inch disc, used for digital still cameras, selected mobile phones, car navigation systems and digital video cameras;

•

the development and improvement of spindle motors for DVDs;

•

the development and improvement of DC fan motors with a high airflow capacity that helps disperse heat inside end products such as computers, game machines and audio-visual equipments;

•

the development and improvement of optical components including shutters and lens unit for digital cameras and lens products for blue-ray, vibration motors, stepping motors, dye sublimation printer, printer for IC cards and geared motors by Nidec Copal;

•

the development and improvement of actuator, pressure sensors and RF (radiofrequency) components by Nidec Copal Electronics;

•

the development and improvement of LCD panel handling robots for large LCD, micro lens actuator units for mobile phone and card readers by Nidec Sankyo; and

•

the development and improvement of compact motors in automobiles for comfort and safety, such as seat adjuster, sunroof closure, windows closure, engine cooling, ABS etc by Nidec Motors and Actuators.

The core of our research and development activities is our Central Technical Laboratory, located at our headquarters in Kyoto. In addition to basic and applied research, the Central Technical Laboratory supports the development of products that incorporate the latest technology. Market requirements are becoming more demanding. To respond in a reliable and timely matter to these requirements we have established research and development bases in various countries and regions. Nidec operate technical centers most notably in Kyoto, and also in Tokyo, Shiga, Nagano and Tottori Prefectures in Japan. These operations carry out research and development relating not only to the development of new products, but also to improve the quality of and production technology for existing products.

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Utilizing state-of-the-art testing, inspection and measurement equipment, we are increasing our understanding and use of various basic technologies, not only precision motor machining technology, but also in fields such as mechanical and materials engineering and applied chemistry. Accurate and prompt inspection, analysis and measurement performed using state-of-the-art equipment are an integral element of our product and process development. The manufacture of precision motors requires high precision, measurement and analysis at the level of hundredths of a micron. Each material must be analyzed at the molecular level in order to prevent contamination, dust and gases, which are generated by adhesives and other materials and which can infiltrate minute gaps between the disk surface and the head. Using the latest equipment, our Research and Development Department conducts rigorous inspection, measurement and analysis, and utilizes the results to improve product design and process capabilities.

Similarly, we respond to challenges such as noise reduction, using advanced equipment and our own methods. Today, noise reduction is a significant issue in the computer and consumer electronics fields. In order to address this issue, we have constructed acoustic test rooms, consisting of reverberation and sound anechoic chambers which conform to international standards, where we conduct tests, measurement and analysis.

In addition to its motor business, Nidec Copal operates technology development centers in Itabashi, Tokyo and Koriyama, Fukushima Prefecture. Nidec Copal Electronics has technology development centers in Tajiri, Miyagi Prefecture and Sano, Tochigi Prefecture. Nidec Sankyo operates its technology development centers in Shimosuwa, Komagane and Chino in Nagano Prefecture and Itabashi, Tokyo.

We incurred research and development expenses of ¥25,918 million for the year ended March 31, 2005, ¥29,232 million for the year ended March 31, 2006 and ¥32,755 million for the year ended March 31, 2007.

Much of our research and development is conducted by our domestic subsidiaries, which we then reimburse for costs incurred. We also cooperate with our affiliates to conduct significant research and development. We anticipate spending approximately ¥38,000 million on research and development in the year ending March 31, 2008. We believe that our research and development expenses are sufficient for sustaining our competitiveness in the motor industry and other industries.

D. Trend Information.

The information required by this item is set forth in Item 5.A of this annual report.

E. Off-Balance Sheet Arrangements.

We have guaranteed approximately ¥296 million ($2,507 thousand) of bank loans for employees for their housing costs. If an employee defaults on his/her loan payments, we are required to perform under such guarantees. The undiscounted maximum amount of our obligation to make future payments in the event of defaults is approximately ¥296 million ($2,507 thousand). The current carrying amount of the liabilities for our obligations under the guarantees is zero.

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F. Tabular Disclosure of Contractual Obligations.

The following tables represent our contractual obligations and other commercial commitments as of March 31, 2007.

|                                      |                        | (Yen in millions)                  
|------------------------------------- | ---------------------- | -----------------------------------
|Contractual Obligations               |                        | Payments Due by Period             
|Total                                 |                        | Less than
      1 year             
|Long-term Debt                        |                        | ¥ 28,923                           
|Capital Lease Obligations             |                        | 5,853                              
|Interest on debt *1                   |                        | 354                                
|Operating Leases                      |                        | 4,457                              
|Purchase Commitments for Fixed Aseets |                        | 3,317                              
|                                      |                        |                                    
|Total Contractual Cash Obligations    |                        | ¥ 42,904                           
|Contribution under pension plans *2   |                        | ¥ 2,222                            
|                                      |                        |                                    
|                                      |                        |                                    
|Other CommercialCommitments           |                        | Total
      Amounts
      Committed
|                                      | Less than
      1 year |                                    
|Guarantees                            |                        | ¥ 296                              
|Total Commercial Commitments          |                        | ¥ 296                              
|                                      |                        |                                    
|                                      |                        |                                    
|                                      |                        | (U.S. dollars in thousands)        
|Contractual Obligations               |                        | Payments Due by Period             
|Total                                 |                        | Less than
      1 year             
|Long-term Debt                        |                        | $ 245,006                          
|Capital Lease Obligations             |                        | 49,581                             
|Interests on debt *1                  |                        | 2,999                              
|Operating Leases                      |                        | 37,755                             
|Purchase Commitments for Fixed Aseets |                        | 28,098                             
|                                      |                        |                                    
|Total Contractual Cash Obligations    |                        | $ 363,439                          
|Contribution under pension plans *2   |                        | $ 18,822                           
|                                      |                        |                                    
|                                      |                        |                                    
|Other Commercial
      Commitments    |                        | Total
      Amounts
      Committed
|                                      | Less than
      1 year |                                    
|Guarantees                            |                        | $ 2,507                            
|Total Commercial Commitments          |                        | $ 2,507                            



*1 Interests at variable interest rates are assumed based on the current applicable rate, ranging from 1.5% to 2.5%.

*2 Amounts are only available for payments due in less than one year.

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Our capital commitments as of March 31, 2007 principally consisted of commitments to purchase property, plant and equipment. Commitments outstanding for the purchase of property, plant and equipment and other assets increased from approximately ¥1,630 million on March 31, 2006 to approximately ¥3,317 million on March 31, 2007, and decreased from approximately ¥4,925 million on March 31, 2005 to approximately ¥1,630 million on March 31, 2006, respectively. The increase for the year ended March 31, 2007 was due mainly to an increase in investments in facilities equipment compared to the previous year, and the decrease for the year ended March 31, 2006 was due mainly to a reduction in investments in facilities equipment compared to the previous year. See Note 24 to our consolidated financial statements included in this annual report. We expect to make capital expenditures in addition to those for which we have outstanding commitments.

Annual maturities on long-term debt and lease obligations during the next five years are as follows:

|Year ending March 31 |                     | (Yen in millions) |  | (U.S. dollars in thousands)
|-------------------- | ------------------- | ----------------- |  | ---------------------------
|                     | 2008                |                   |  | ¥ 3,216                    
|                     | 2009                |                   |  | 28,924                     
|                     | 2010                |                   |  | 1,628                      
|                     | 2011                |                   |  | 606                        
|                     | 2012                |                   |  | 226                        
|                     | 2013 and thereafter |                   |  | ¥ 176                      

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Item 6. Directors, Senior Management and Employees.



A. Directors and Senior Management.

Directors, Executive Officers and Corporate Auditors

The following table provides information about our Directors, Executive Officers and Corporate Auditors as of the date of this annual report:

|Name                |  | Position                                                                      |  | Date of birth      |  | Month in which current term expires |  | Number of  Nidec shares owned as of March 31, 2007 |  | Percentage of common stock outstanding as of March 31, 2007
|------------------- |  | ----------------------------------------------------------------------------- |  | ------------------ |  | ----------------------------------- |  | -------------------------------------------------- |  | -----------------------------------------------------------
|                    |  |                                                                               |  |                    |  |                                     |  | (in thousands)                                     |  |                                                            
|Shigenobu Nagamori  |  | President, Chief Executive Officer and Representative Director                |  | August 28, 1944    |  | June 2008                           |  | 23,420                                             |  | 16.1%                                                      
|Hiroshi Kobe        |  | Executive Vice President, Chief Operating Officer and Representative Director |  | March 28, 1949     |  | June 2008                           |  | 235                                                |  | *                                                          
|Yasunobu Toriyama   |  | Executive Vice President, Chief Financial and Accounting Officer and Director |  | September 18, 1938 |  | June 2008                           |  | 15                                                 |  | *                                                          
|Kenji Sawamura      |  | Executive Vice President and Director                                         |  | February 15, 1942  |  | June 2008                           |  | 8                                                  |  | *                                                          
|Juntaro Fujii       |  | Executive Vice President and Director                                         |  | February 20, 1945  |  | June 2008                           |  | 2                                                  |  | *                                                          
|Yasuo Hamaguchi     |  | Senior Managing Director                                                      |  | September 27, 1949 |  | June 2008                           |  | 277                                                |  | *                                                          
|Seizaburo Kawaguchi |  | Managing Director                                                             |  | October 27, 1953   |  | June 2008                           |  | 21                                                 |  | *                                                          
|Tadaaki Hamada      |  | Managing Director                                                             |  | August 14, 1948    |  | June 2008                           |  | 1                                                  |  | *                                                          
|Seiichi Hattori     |  | Director                                                                      |  | December 30, 1953  |  | June 2008                           |  | 20                                                 |  | *                                                          
|Tetsuo Inoue        |  | Director                                                                      |  | June 22, 1948      |  | June 2008                           |  | 5                                                  |  | *                                                          
|Takashi Iwata       |  | Director                                                                      |  | April 9, 1947      |  | June 2008                           |  | 2                                                  |  | *                                                          
|Akira Kagata        |  | Director                                                                      |  | March 7, 1943      |  | June 2008                           |  | 1                                                  |  | *                                                          
|Kiyoyoshi Takegami  |  | Director                                                                      |  | December 28, 1954  |  | June 2008                           |  | 49                                                 |  | *                                                          
|Toru Kodaki         |  | Director                                                                      |  | September 13, 1949 |  | June 2008                           |  | 0                                                  |  | *                                                          
|Norimasa Goto       |  | Director                                                                      |  | March 1, 1947      |  | June 2008                           |  | 0                                                  |  | *                                                          
|Osamu Narumiya      |  | Director                                                                      |  | August 6, 1951     |  | June 2008                           |  | -                                                  |  | *                                                          
|Hideo Asahina       |  | Corporate Auditor                                                             |  | March 28, 1938     |  | June 2011                           |  | 0                                                  |  | *                                                          
|Ryoji Takahashi     |  | Corporate Auditor                                                             |  | April 22, 1941     |  | June 2011                           |  | 14                                                 |  | *                                                          
|Shiro Kuniya        |  | Corporate Auditor                                                             |  | February 22, 1957  |  | June 2010                           |  | -                                                  |  | *                                                          
|Yoshiro Kitano      |  | Corporate Auditor                                                             |  | September 30, 1935 |  | June 2010                           |  | -                                                  |  | *                                                          
|Susumu Ono          |  | Corporate Auditor                                                             |  | November 12, 1948  |  | June 2011                           |  | -                                                  |  | *                                                          

__________

Note: The asterisk represents beneficial ownership of less than 1%.

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|Shigenobu Nagamorihas been serving as Nidec Corporations President, Chief Executive Officer and Representative Director since the companys establishment in July 1973.  In June 1995, Mr. Nagamori became Chairman and Director of Simpo Industries Co., Ltd. (the current Nidec-Shimpo Corporation), and became Chairman and Representative Director of Nidec-Shimpo Corporation in October 2003. Mr. Nagamori became Chairman and Director of Tosok Corporation (the current Nidec Tosok Corporation) in June 1997, and Read Electronics Corporation (the current Nidec-Read Corporation) in April 1997.  He joined Kyori Kogyo Co., Ltd. (the current Nidec-Kyori Corporation) as Chairman and Representative Director in June 1997, and became Chairman and Director of Copal Co., Ltd. (the current Nidec Copal Corporation) in June 1998.  Mr. Nagamori became Chairman and Representative Director of Nidec Machinery Corporation and Shibaura Nidec Corporation (the current Nidec Shibaura Corporation) in January 1998 and October 1998, respectively.  In March 2004, Mr. Nagamori became Chairman and Representative Director of Sankyo Seiki Mfg. Co., Ltd. (which changed its name to Nidec Sankyo Corporation in October 2005), Sankyo Shoji Co., Ltd. (which changed its name to Nidec Sankyo Shoji Corporation in October 2005), Sankyo Ryutsu Kogyo Co., Ltd. (which changed its name to Nidec Logistics Corporation in April 2004), Tokyo Pigeon Co., Ltd. (which changed its name to Nidec Pigeon Corporation in October 2005), and Nissin Kohki Co., Ltd. (which changed its name to Nidec Nissin Corporation in October 2005).  Mr. Nagamori became Chairman and Director of Nidec Copal Electronics Corporation in September 2004, and he was appointed as Chief Executive Advisor of Japan Servo Co., Ltd. in May 2007, and its Chairman and Director the flowing month.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Hiroshi Kobe has been serving as Nidec Corporations Chief Operating Officer since April 2005, and as Executive Vice President and Representative Director since 2006.  He joined Nidec in 1973, and has served as Managing Director, Director of Sales, Domestic Business and Senior Managing Director in charge of overall business operations.  He has been serving as Chairman and Representative Director of Nidec Korea Corporation since December 1999, and as Chairman and Representative Director of Nidec Total Service Corporation since June 2006.  He manages Motor Engineering Research Laboratory and SPM Corporate Quality Control Department.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Yasunobu Toriyamahas been serving as Nidec Corporations Executive Vice President since April 2002, Chief Financial and Accounting Officer since April 2005, and Director since June 1991.  He became Nidecs Managing Director in 1996, and has been serving as General Manager of Administrative Departments since then.  He became Senior Managing Director in 1997.  Mr. Toriyama has been General Manager of various departments since 1998, and in June 2004, he was appointed as General Manager of Investor Relations, Public Relations & Advertising, Accounting, Finance and Systems Departments.  Mr. Toriyama was appointed to manage the Risk Management Office in June 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Kenji Sawamurajoined Nidec Corporation in October 1998 as Executive Director. He was appointed as Senior Managing Director in April 2002, has been serving as Executive Vice President since June 2006.  Mr. Sawamura supervises the overall operations of the DC/FAN motor business, Shiga Technical Center, Tottori Technical Center, Corporate Purchasing Department, ADF Corporate Quality Control Department and Molds Preparation Department.  Mr. Sawamura became Chairman and Director of Nidec (Dalian) Limited in April 2002, and Nidec (Dongguan) Limited in June 2002.  He became Chairman, Chief Executive Officer and Director of Nidec America Corporation in July 2004.  Mr. Sawamura became Chairman and Representative Director of Nidec Nemicon Corporation in November 2005.  He became Chairman and Representative Director of Nidec Shibaura Corporation and Nidec Power Motor Corporation, and Chairman and Director of Nidec Automobile Motor (Zhejiang) Corporation and Nidec Vietnam Corporation in April 2006.  He became Chairman and Representative Director of Nidec Electronics GmbH in June 2006, and has been serving as Director and Chairman of Nidec Motors and Actuators since December 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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|Juntaro Fujii, who, prior to his joining Nidec Corporation, worked for Mitsubishi UFJ Research and Consulting Co., Ltd. as Deputy President, and he joined Nidec in June 2006 as Executive Consultant.  In June 2006, he was appointed as Executive Vice President and Director, and became General Manager of the Corporate Strategy Office.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Yasuo Hamaguchibecame Managing Director in June 1998, and has been supervising the spindle motor business since April 2000.  He has been serving as Senior Managing Director since April 2002.  Mr. Hamaguchi became Chairman and Representative Director of Nidec Electronics (Thailand) Co., Ltd., and Chairman and Director of Nidec (Zhejiang) Corporation in April 2003. In July 2004, he became Chairman and Representative Director of Nidec Philippines Corporation, and Chairman and Representative Director of Nidec Singapore Pte. Ltd. in October 2004.  Mr. Hamaguchi became Managing Director of Brilliant Manufacturing Limited in February 2007.                                                                                                                                                                                                                                                                                                                                                                           
|Seizaburo Kawaguchi was appointed as Director in June 2000.  Between March 1989 and March 2003, he served as President and Representative Director of Nidec Singapore Pte. Ltd.  Mr. Kawaguchi became President and Representative Director of Nidec Electronics (Thailand) Co., Ltd. in April 2003, and has been serving as Managing Director of Nidec Corporation since April 2004.  Mr. Kawaguchi has been supervising Nidec's Sales Division and the purchasing functions of the spindle motor business since April 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Tadaaki Hamada, who previously worked for Bank of Tokyo-Mitsubishi (the current The Bank of Tokyo-Mitsubishi UFJ, Ltd.), joined Nidec Corporation in February 2000 as Executive Director, and has served as General Manager of Corporate Planning since March 2000.  From August 2001 to March 2003, Mr. Hamada was Executive Vice President of Nidec America Corporation, and then became General Manager of International Projects Administration Department in April 2003.  He has been serving as Director since June 2004, and has been serving as Managing Director since April 2005.  Mr. Hamada has been presiding over Intellectual Property and Legal Departments since June 2006, was appointed to manage Management of Overseas Affiliates Department in April 2007, has been supervising International Projects Administration and Management of Overseas Affiliates Departments, and has under his management the Secretarial Office, and the Corporate Planning, General Affairs, and Personnel Departments since June 2007.
|Seiichi Hattorihas been serving as Director since June 1999.  He was General Manager of Sales Department from October 1996 to March 1998.  From April 1998 to June 1999, Mr. Hattori served as Executive Director for Sales Department.  He was appointed to supervise domestic sales operations in April 2002.  Mr. Hattori has been serving as the deputy to supervise Sales Department since April 2005.  He became President and Director of Nidec (H.K.) Co., Ltd. and Nidec (Shanghai) International Trading Co., Ltd. in April 2003.  Mr. Hattori became Chairman and Director of Nidec Taiwan Corporation, Nidec (H.K.) Co., Ltd. and Nidec (Shanghai) International Trading Co., Ltd. in June 2006.                                                                                                                                                                                                                                                                                                                               
|Tetsuo Inouehas been serving as Director since June 2002.  He joined Nidec Corporation in December 1999, and has been serving as General Manager of Management of Affiliated Companies Department since then.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



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|Takashi Iwata, who previously worked for Matsushita Electric Industrial Co., Ltd., joined Nidec Corporation in December 2003 as Executive Director.  He was then appointed as General Manager of Internal Audit & Management Advisory Department in April 2004.  Mr. Iwata has been serving as Director since June 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Akira Kagata, who previously worked for Matsushita Electric Industrial Co., Ltd., joined Nidec in March 2002, and became Executive Director in April 2003.  He became General Manager of Central Technical Laboratory in April 2004, and has been serving as Director since June 2005.  Mr. Kagata was appointed to manage the research and development of the spindle motor business in June 2005, and serves as General Manager of Process Engineering Department in Central Technical Laboratory in August 2006.                                                                                                                                                                                                                                                                                                                                                                                                              
|Kiyoyoshi Takegamijoined Nidec in April 1978, and has held important positions on various engineering sections.  He became General Manager of Development of Shiga Factory in April 1991, and from April 1994 to March 2003, he was Vice President of Nidec Electronics (Thailand) Co., Ltd.  Mr. Takegami became General Manager of Nagano Technical Center in April 2003, and has been serving as Director since June 2004.  In April 2005, he was appointed to serve as both General Manager of Nagano Technical Center and its Quality Assurance Department.                                                                                                                                                                                                                                                                                                                                                                 
|Toru Kodaki, who previously worked for the Japan Foundation (an independent administrative institution) as Executive Vice President, joined Nidec Corporation in June 2006.  He has been serving as Director and managing the Intellectual Property and Legal Departments since June 2006, and managing the Compliance Office since the beginning of June 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Norimasa Goto joined Nidec Corporation in February 2000, and became Deputy General Manager of Shiga Technical Center and General Manger of its No. 3 Project Support Department in April of the same year.  He became General Manager of the Center in October 2003, and Vice President of Nidec (Dalian) Limited in April 2005, and has been serving as Director and President of Nidec (Dalian) Limited since April 2006, and Vice Chairman of Nidec (Dongguan) Limited since July 2006.  Mr. Goto became a Director in June 2007.                                                                                                                                                                                                                                                                                                                                                                                             
|Osamu Narumiya joined Japans Ministry of International Trade and Industry (MITI = the current Ministry of Economy, Trade and Industry = METI) in April 1976, and served as First Secretary at the Japanese Embassy in Singapore for Japans Ministry of Foreign Affairs from April 1987.  Mr. Narumiya then became Manager of Information Systems Division, Ministers Secretariat in May 1995, and Deputy Director-General for Trade Policy Bureau of the Ministry in July 2002.  Mr. Narumiya became Executive Director of Japan Keirin Association in September 2003, and Senior Director of National Federation of Small Business Associations in June 2004.  After joining Nidec in June 2007, Mr. Narumiya has managed the International Projects Administration and Management of Overseas Affiliates Departments, and serves as General Manager of the International Projects Administration Department and as Director.
|Hideo Asahinahas served as full-time Corporate Auditor since June 2003.  He became Director of Kobe Customs, Ministry of Finance in June 1985, and Finance Ministers Secretariat Councilor for International Finance Bureau in June 1986.  He became Director of Finance Corporation of Local Public Enterprise in October 1988, and President of Osaka Securities Finance Co., Ltd. in June 1991.  He has been serving as Director General of Commemorative Association for the Japan World Exposition 1970 since July 1996.                                                                                                                                                                                                                                                                                                                                                                                                   
|Ryoji Takahashi joined Nidec in March 1994, and was appointed as General Manager of General Affairs Department in April of the same year.  Mr. Takahashi became General Manager of Intellectual Property Department in October 1998, General Manager of Compliance Office and Risk Management Office in May 2003, and full-time Corporate Auditor in June 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Shiro Kuniya was enrolled in the Osaka Bar Association and joined Oh-Ebashi Law Office (the current Oh-Ebashi LPC & Partners) in April 1982.  He is a Senior Partner at Oh-Ebashi LPC & Partners.  He has been serving as Nidec Corporations Corporate Auditor since June 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



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|Yoshiro Kitano became a registered certified public accountant in September 1980 and a licensed tax accountant in December 1990.  He established Yoshiro Kitano Certified Public Accountant Office in January 2001.  He has been serving as Nidec Corporations Corporate Auditor since June 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Susumu Ono started his career as a prosecutor for the Osaka District Public Prosecutors Office in April 1974, and was seconded to the Ministry of Foreign Affairs to serve as First Secretary at the Japanese Embassy in the Peoples Republic of China.  Mr. Ono returned to his work as a prosecutor for the Osaka District Public Prosecutors Office in April 1988, became Deputy General Manager of the Offices Criminal Investigations Department in April 1995, and General Manager of Criminal Investigations Department of the Kyoto District Public Prosecutors Office in July 1996, and General Manager of General Affairs Department of the Osaka District Public Prosecutors Office in April 1998.  Mr. Ono became a registered attorney in May 1999, and started serving as Nidecs Corporate Auditor in June 2007.

Our Board of Directors has the ultimate responsibility for the administration of our affairs. Our Articles of Incorporation provide for not more than twenty Directors. Directors are elected at a general meeting of shareholders, and the normal term of office of Directors is one year, although they may serve any number of consecutive terms. The Board of Directors elects one or more Representative Directors, who have the authority individually to represent us. The Board of Directors may also elect one Chairman of the Board of Directors, one President, one or more Executive Vice Presidents, Senior Managing Directors and Managing Directors. Shigenobu Nagamori is the President and Chief Executive Officer, Hiroshi Kobe is the Executive Vice President and Chief Operating Officer and Yasunobu Toriyama is the Executive Vice President and Chief Financial and Accounting Officer. Our Executive Officers serve at the discretion of the Board of Directors.

Corporate Auditors

Our Articles of Incorporation provide for not more than five Corporate Auditors. Currently, we have five Corporate Auditors: Hideo Asahina, Ryoji Takahashi, Shiro Kuniya, Yoshiro Kitano and Susumu Ono. The Corporate Auditors may not at the same time be directors, officers or employees of us or any of our subsidiaries, and at least one-half of them must be a person who has never been a director, officer or employee of us or any of our subsidiaries at any time prior to their election as a Corporate Auditor. Corporate Auditors are elected at a general meeting of shareholders, and the normal term of office of a Corporate Auditor is four years, although they may serve any number of consecutive terms.

Two of our Corporate Auditors, Hideo Asahina and Ryoji Takahashi, are full-time Corporate Auditors. Except Ryoji Takahashi, all of our Corporate Auditors are from outside the Nidec group. Our five Corporate Auditors form our Board of Corporate Auditors. Corporate Auditors are under a statutory duty to review the administration of our affairs by the Directors, to examine our financial statements and business reports to be submitted by the Board of Directors to the general meetings of shareholders and to report their opinions thereon to the shareholders. They are required to attend meetings of the Board of Directors and are entitled to express their opinions, but they are not entitled to vote. Corporate Auditors also have a statutory duty to provide their report to the Board of Corporate Auditors, which must submit its auditing report to the Representative Directors. The Board of Corporate Auditors also determines matters relating to the duties of the Corporate Auditors, such as auditors policy and methods of investigation of our affairs.

In addition to Corporate Auditors, we must appoint independent certified public accountants, who have the statutory duties of examining the financial statements to be submitted by the Board of Directors to the annual general meetings of shareholders, reporting thereon to the Board of Corporate Auditors and the Representative Directors, and examining the financial statements to be filed with the Minister of Finance of Japan.

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B. Compensation.

The aggregate compensation, including bonuses, paid by us to our Directors and Corporate Auditors as a group during the year ended March 31, 2007 was ¥2,060 million. In accordance with customary Japanese business practices, a retiring Director or Corporate Auditor receives a lump-sum retirement payment, which is subject to the approval of the general meeting of shareholders. In the year ended March 31, 2007, retirement payments in the aggregate amount of ¥34 million were made.

We are currently authorized to issue rights to subscribe for or purchase up to 593,400 shares (after an adjustment to reflect the effect of the stock split discussed below) of our common stock to our directors, corporate auditors and employees for no consideration for the purposes of increasing their incentive and motivation to enhance our business performance and to promote shareholder-oriented management. On November 18, 2005, we completed a two-for-one stock split. As a result, the exercise price changed to ¥3,675 per share of common stock.

C. Board Practices.

The information required by this item is set forth in Item 6.A and 6.B of this annual report.

D. Employees.

The information required by this item is set forth in Item 4.B of this annual report.

E. Share Ownership.

The information required by this item is set forth in Item 6.A of this annual report. On May 14, 2003, we issued rights to purchase 296,700 shares of our common stock to directors, corporate auditors and certain employees for no consideration. These rights were exercisable under certain conditions for the period between July 1, 2004 and June 30, 2007 and the exercise price was set at ¥7,350 per share of common stock, subject to certain adjustments. On November 18, 2005, we completed a two-for-one stock split. As a result, the exercise price changed to ¥3,675 per share of common stock.

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Item 7. Major Shareholders and Related Party Transactions.

A. Major Shareholders.

To our knowledge, as of March 31, 2007, the following persons beneficially owned more than 5% of our outstanding common stock:

|Shareholders                 |  | Number of shares of common stock owned (thousands) |  | Percentage of
      common stock
      outstanding
|---------------------------- |  | -------------------------------------------------- |  | --------------------------------------------------
|Shigenobu Nagamori           |  | 23,420                                             |  |                                                   
|Fidelity Investments Japan * |  | 12,441                                             |  |                                                   

__________

*: As of March 31, 2007, and based on the report filed on that date by Fidelity Investments Japan with the Financial Services Agency in Japan, which disclosed its and its affiliates beneficial ownership of our common stock.

The voting rights of the shareholders described above are identical to those of our other shareholders.

As of March 31, 2007, there were 144,780,492 shares of our common stock outstanding held by 26,116 shareholders of record, including 103 shareholders of record with addresses in the United States who held 19,817,047 shares, representing approximately 13.7% of our outstanding common stock as of that date.

To our knowledge, we are not, directly or indirectly, owned or controlled by any other corporation or by any government or by any other natural or legal persons, severally or jointly. We know of no arrangements the operation of which may at a later time result in a change of control of Nidec.

B. Related Party Transactions.

Since April 1, 2003, except as described below, we have not entered into any material transactions with our directors, officers, corporate auditors or their respective family members or enterprises over which they can exert significant influence.

As of March 31, 2007, President Nagamori held of record 8.2% and S. N Kohsan, a business entity indirectly owned by him, held of record 6.1% of our outstanding shares. President Nagamori’s immediate family held an additional 1.8% of our outstanding shares as of the same date.

We have entered into various manufacturing, sales and purchase arrangements with our affiliates, most of which involve the production of components or products that we sell.

C. Interests of Experts and Counsel.

Not applicable.

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Item 8. Financial Information.



A. Consolidated Statements and Other Financial Information.

Financial Statements

The information required by this item is set forth in our consolidated financial statements included in this annual report.

Legal or Arbitration Proceedings

The information on legal or arbitration proceedings required by this item is set forth in Item 4.B. of this annual report.

Dividend Policy

We normally pay cash dividends twice per year. Our Board of Directors resolves the dividend to be paid following the end of each fiscal year. We pay the dividend to holders of record as of the immediately preceding March 31. In addition to these year-end dividends, we normally pay interim dividends in the form of cash distributions from our retained earnings to our shareholders also of record as of September 30 in each year by resolution of our Board of Directors. We normally pay the interim dividend in December and the year-end dividend in June.

The following table sets forth the year-end and interim dividends paid to holders of record of our common stock for each of the record dates shown. Yen per share dividend amounts are translated solely for your convenience into U.S. dollars at the noon buying rate for Japanese yen announced by the Federal Reserve Bank of New York on the dividend payment date.

|Record date        |  | Dividends per share
|------------------ |  | -------------------
|                   |  | Yen                
|September 30, 2002 |  | ¥                  
|March 31, 2003 **  |  |                    
|September 30, 2003 |  |                    
|March 31, 2004 **  |  |                    
|September 30, 2004 |  |                    
|March 31, 2005 **  |  |                    
|September 30, 2005 |  |                    
|March 31, 2006 **  |  |                    
|September 30, 2006 |  |                    
|March 31, 2007     |  | ¥                  



* A two-for-one stock split on the Companys common stock effective November 18, 2005 was implemented for shareholders of record as of September 30, 2005. Therefore the dividends per share have been accordingly adjusted to reflect the effect of the stock split.

** Our Board of Directors recommended the dividend to be paid the end of each fiscal year. This recommended dividend must then been approved by shareholders at the general meeting of shareholders required to be held in June of each year under the Commercial Code of Japan (in May 2006, the Commercial Code was replaced by the new Company Law).

It is the present intention of the Board of Directors to continue to pay cash dividends on a semiannual basis and to provide a stable level of dividends to our shareholders. The declaration and payment of dividends are, however, subject to our future earnings, financial condition and other factors, including statutory and other restrictions with respect to the payment of dividends.

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Dividends paid to shareholders outside Japan on shares of common stock or ADSs are generally subject to a Japanese withholding tax at the temporary rate of 7% (applicable until March 31, 2009) or standard rate of 15% (applicable on April 1, 2009 and thereafter). Reduced rates for withholding apply to shareholders in some countries which have income tax treaties with Japan. U.S. holders are generally subject to a maximum withholding rate of 10%. If the applicable tax rate under the domestic tax law is lower than that promulgated under the applicable income tax treaty, then the domestic tax rate is still applicable due to the so-called preservation doctrine.

B. Significant Changes.

We are not aware of any significant change in our financial position since March 31, 2007, the date of our last audited financial statements.

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Item 9. The Offer and Listing.

A. Offer and Listing Details.

In Japan, our common stock is listed on the First Section of the Osaka Securities Exchange, Co., Ltd. and the First Section of the Tokyo Stock Exchange, Inc. both of which are reserved for larger, established companies.

The following table sets forth, for the periods indicated, the closing high and low sales prices, as adjusted to reflect the 2-for-1 stock split that took effect on November 18, 2005 but excepting the 4-for-1 ratio change that took effect on January 1, 2004, and the average daily trading volume of our common stock on the Osaka Securities Exchange, and the closing highs and lows of the Nikkei Stock Average:

|                     |  | Price Per Share |  | Average Daily
      Trading
      Volume |         | Nikkei Stock Average
|-------------------- |  | --------------- |  | ---------------------------------------- | ------- | --------------------
|                     |  | High            |  | Low                                      |         |                     
|                     |  |                 |  |                                          |         |                     
|Year ended March 31, |  |                 |  |                                          |         |                     
|2003                 |  | ¥ 4,920         |  |                                          | ¥ 2,750 |                     
|2004                 |  | 5,700           |  |                                          | 2,800   |                     
|2005                 |  | 6,675           |  |                                          | 4,795   |                     
|2006                 |  |                 |  |                                          |         |                     
|First Quarter        |  | 6,720           |  |                                          | 5,735   |                     
|Second Quarter       |  | 6,900           |  |                                          | 5,810   |                     
|Third Quarter        |  | 10,330          |  |                                          | 6,360   |                     
|Fourth Quarter       |  | 10,930          |  |                                          | 8,520   |                     
|2007                 |  |                 |  |                                          |         |                     
|First Quarter        |  | 9,660           |  |                                          | 7,500   |                     
|Second Quarter       |  | 8,910           |  |                                          | 7,030   |                     
|Third Quarter        |  | 9,400           |  |                                          | 8,140   |                     
|Fourth Quarter       |  | 9,230           |  |                                          | 7,200   |                     
|2008                 |  |                 |  |                                          |         |                     
|First Quarter        |  | 7,860           |  |                                          | 6,890   |                     
|Calendar period      |  |                 |  |                                          |         |                     
|January 2007         |  | 9,230           |  |                                          | 8,510   |                     
|February 2007        |  | 8,370           |  |                                          | 7,750   |                     
|March 2007           |  | 7,890           |  |                                          | 7,200   |                     
|April 2007           |  | 7,860           |  |                                          | 7,040   |                     
|May 2007             |  | 7,480           |  |                                          | 6,900   |                     
|June 2007            |  | ¥ 7,350         |  |                                          | ¥ 6,890 |                     

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The following table sets forth, for the periods indicated, the closing high and low sales price in U.S. dollars as adjusted to reflect the 2-for-1 stock split that took effect on November 18, 2005, and the average trading volume of our ADSs on the New York Stock Exchange:

|                     |  | Price Per ADS |  | Average Daily
      Trading
      Volume |         | Dow Jones
      Industrial  Average
|-------------------- |  | ------------- |  | ---------------------------------------- | ------- | -----------------------------------
|                     |  | High          |  | Low                                      |         |                                    
|                     |  |               |  |                                          |         |                                    
|Year ended March 31, |  |               |  |                                          |         |                                    
|2003                 |  | $ 9.78        |  |                                          | $ 5.47  |                                    
|2004                 |  | 13.31         |  |                                          | 5.88    |                                    
|2005                 |  | 16.20         |  |                                          | 11.05   |                                    
|2006                 |  |               |  |                                          |         |                                    
|First Quarter        |  | 15.63         |  |                                          | 13.25   |                                    
|Second Quarter       |  | 15.38         |  |                                          | 13.01   |                                    
|Third Quarter        |  | 22.56         |  |                                          | 14.08   |                                    
|Fourth Quarter       |  | 23.32         |  |                                          | 18.31   |                                    
|2007                 |  |               |  |                                          |         |                                    
|First Quarter        |  | 20.82         |  |                                          | 16.73   |                                    
|Second Quarter       |  | 18.99         |  |                                          | 15.28   |                                    
|Third Quarter        |  | 20.00         |  |                                          | 17.39   |                                    
|Fourth Quarter       |  | 19.47         |  |                                          | 15.39   |                                    
|2008                 |  |               |  |                                          |         |                                    
|First Quarter        |  | 16.53         |  |                                          | 14.25   |                                    
|Calendar period      |  |               |  |                                          |         |                                    
|January 2007         |  | 19.47         |  |                                          | 17.55   |                                    
|February 2007        |  | 17.62         |  |                                          | 15.97   |                                    
|March 2007           |  | 16.93         |  |                                          | 15.39   |                                    
|April 2007           |  | 16.53         |  |                                          | 14.80   |                                    
|May 2007             |  | 15.45         |  |                                          | 14.29   |                                    
|June 2007            |  | $15.21        |  |                                          | $ 14.25 |                                    

* The Ratio of ADS to shares was changed from each ADS representing on share to each ADS representing one-fourth of one share, effective January 1, 2004. Accordingly price per ADS information has been restated for all prior periods presented to reflect this ratio change.

B. Plan of Distribution.

Not applicable.

C. Markets.

See Item 9.A. of this annual report for information on the markets on which our common stock is listed or quoted.

D. Selling Shareholders.

Not applicable.

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E. Dilution.

Not applicable.

F. Expenses of the Issue.

Not applicable.

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Item 10. Additional Information.

A. Share Capital.

Not applicable.

B. Memorandum and Articles of Association.

Objects and Purposes in Our Articles of Incorporation

Article 2 of our Articles of Incorporation, which are attached as an exhibit to this annual report, states our objects and purposes.

Provisions Regarding Our Directors

There is no provision in our Articles of Incorporation as to a Directors power to vote on a proposal in which the Director is materially interested but, under the Company Law of Japan and our Regulations of the Board of Directors, a Director is required to refrain from voting on such matters at meetings of the Board of Directors.

The Company Law provides that compensation for directors is determined at a general meeting of shareholders of a company. Within the upper limit approved by the shareholders meeting, the board of directors will determine the amount of compensation for each director. The board of directors may, by its resolution, leave such decision to the discretion of the companys representative director.

The Company Law requires directors to perform their duties faithfully on behalf of the company, thus subjecting directors to a duty of loyalty (chujitsu gimu). This duty is supplemented by other duties such as to avoid self-dealing and competition with the corporation as well as to abide by all laws and regulations, articles of incorporation and resolutions of general meetings of shareholders.

Directors can be held liable for damages caused by their negligence in performing their duties, including any action to violate a law, an ordinance or articles of incorporation. For example, directors can be liable for damages caused by declaring an unlawful dividend or distribution of money or by offering some benefit to a shareholder in exchange for the exercise of that shareholders rights as shareholder.

There is no mandatory retirement age for our Directors under the Company Law or our Articles of Incorporation.

There is no requirement concerning the number of shares one individual must hold in order to qualify him or her as a Director either under the Company Law or our Articles of Incorporation.

Holding of Our Shares by Foreign Investors

There are no limitations on the rights of non-residents or foreign shareholders to hold or exercise voting rights on our shares imposed by the laws of Japan or our Articles of Incorporation or our other constituent documents.

Rights of Our Shareholders

Set forth below is information relating to our common stock, including brief summaries of the relevant provisions of our Articles of Incorporation and Share Handling Regulations, as currently in effect, and of the Company Law and related legislation.

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General

Our authorized share capital is 480,000,000 shares, of which 144,780,492 shares were issued and outstanding as of March 31, 2007. Under the Company Law, shares must be registered and are transferable by delivery of share certificates. In order to assert shareholders rights against us, a shareholder must have its name and address registered on our register of shareholders in accordance with our Share Handling Regulations. The registered beneficial holder of deposited shares underlying the ADSs is the depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert shareholders rights such as the right to bring a derivative action, examine our accounting books and records or exercise appraisal rights.

A holder of shares may choose, at its discretion, to participate in the central clearing system for share certificates under the Law Concerning Central Clearing of Share Certificates and Other Securities of Japan. Participating shareholders must deposit certificates representing all of the shares to be included in this clearing system with the Japan Securities Depository Center. If a holder is not a participating institution in the Securities Center, it must participate through a participating institution, such as a securities company or bank having a clearing account with the Securities Center. All shares deposited with the Securities Center will be registered in the name of the Securities Center on our register of shareholders. Each participating shareholder will in turn be registered on our register of beneficial shareholders and be treated in the same way as shareholders registered on our register of shareholders. For the purpose of transferring deposited shares, delivery of share certificates is not required. Entry of the share transfer in the books maintained by the Securities Center for participating institutions, or in the book maintained by a participating institution for its customers, has the same effect as delivery of share certificates. The registered beneficial owners may exercise the rights attached to the shares, such as voting rights, and will receive dividends (if any) and notices to shareholders directly from us. The shares held by a person as a registered shareholder and those held by the same person as a registered beneficial owner are aggregated for these purposes. Beneficial owners may at any time withdraw their shares from deposit and receive share certificates, subject to the limitations caused by the Japanese unit share system described below.

A new law to establish a new central clearing system for shares of listed companies and to eliminate the issuance and use of certificates for such shares was promulgated in June 2004 and the relevant law will come into effect within five years of the date of promulgation.  On the effective date, a new central clearing system will be established and the shares of all Japanese companies listed on any Japanese stock exchange, including our shares, will be subject to the new central clearing system.  On the same day, all existing share certificates for share of all Japanese companies listed on any Japanese stock exchange, including our shares, will become null and void and the transfer of such shares will be effected through entry in the books maintained under the new central clearing system.

Shareholders Rights to Bring Actions Against Directors

The Company Law provides for the Japanese shareholder derivative action mechanism, which allows any shareholder who has held a share for the previous six months to demand that the corporation take action to protect the company and enforce a directors duties. Derivative actions may be brought to enforce the liability of directors which refers to situations including, but not limited to, that where directors engage in self-interested transactions, or violate any law, ordinance or the articles of incorporation. If the board has not instituted an action within sixty days, the plaintiff-shareholder may initiate a lawsuit as a derivative action. The Company Law provides an exception to the sixty day waiting period, however, for cases in which waiting sixty days might cause the company irreparable damage. In such cases, the shareholder may institute the action immediately, but after having brought the action must notify the company without delay. So, for example, if a company might suffer irreparable damage from an illegal act of a director, a shareholder who has owned a share (in our case, under our Articles of Incorporation, excluding a holder of shares representing less than one unit under the unit share system described below) continuously for the previous six months may seek a provisional injunction prohibiting the director from performing the illegal act.

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Distribution of Surplus

General

Under the Company Law, distributions of cash or other assets by joint stock corporations to their shareholders, so called dividends, are referred to as distributions of Surplus (Surplus is defined in Restriction on Distributions of Surplus below). We may make distributions of Surplus to the shareholders any number of times per fiscal year, subject to certain limitations described in Restriction on Distributions of Surplus. Under the Company Law, distributions of Surplus are required to be authorized by a resolution of a general meeting of shareholders unless the board of directors is so authorized under the articles of incorporation.  Our Articles of Incorporation provide that the Board of Directors has the authority to decide to make distribution of Surplus except for limited exceptions as provided by the Company Law, since we have satisfied the following requirements:

(a)

the normal term of office of our Directors terminates on or prior to the date of conclusion of the ordinary general meeting of shareholders relating to the last fiscal year ending within the period of one year from the election of the Directors; and

(b)

our non-consolidated annual financial statements and certain documents for the last fiscal year present fairly our assets and profit or loss, as required by the ordinances of the Ministry of Justice.

Under our Articles of Incorporation, year-end dividends and interim dividends, if any, may be distributed to shareholders (or pledgees) appearing in the register of shareholders as of March 31 and September 30 of each year, respectively, pursuant to a resolution of our Board of Directors. In addition, as stated above, under the Company Law and our Articles of Incorporation, we may make further distributions of Surplus by resolution of our Board of Directors. Under our Articles of Incorporation, we are not obliged to pay any dividends in the form of cash that are left unclaimed for a period of three years after the date on which they first became payable.

Distributions of Surplus, may be distributed in cash or in kind in proportion to the number of shares held by each shareholder. A resolution of our Board of Directors authorizing a distribution of Surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders, and the effective date of the distribution. If a distribution of Surplus is to be made in kind, we may, pursuant to a resolution of our Board of Directors, grant a right to our shareholders to require us to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the relevant distribution of Surplus must be approved by a special resolution of a general meeting of shareholders.

Restriction on Distributions of Surplus

When we make a distribution of Surplus, we must, until the aggregate amount of our additional paid-in capital and legal reserve reaches one-quarter of our stated capital, set aside in our additional paid-in capital and/or legal reserve an amount equal to one-tenth of the amount of Surplus so distributed.

A + B + C + D  (E + F + G)

In the above formula:

A = the total amount of other capital surplus and other retained earnings, each such amount being that appearing on our non-consolidated balance sheet as of the end of the last fiscal year;

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B = (if we have disposed of our treasury stock after the end of the last fiscal year) the amount of the consideration for such treasury stock received by us less the book value thereof;

C = (if we have reduced our stated capital after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to additional paid-in capital or legal reserve (if any);

D = (if we have reduced our additional paid-in capital or legal reserve after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to stated capital (if any);

E = (if we have cancelled our treasury stock after the end of the last fiscal year) the book value of such treasury stock;

F = (if we have distributed Surplus to our shareholders after the end of the last fiscal year) the total book value of the Surplus so distributed;

G = certain other amounts set forth in the ordinances of the Ministry of Justice, including (if we have reduced Surplus and increased our stated capital, additional paid-in capital or legal reserve after the end of the last fiscal year) the amount of such reduction and (if we have distributed Surplus to our shareholders after the end of the last fiscal year) the amount set aside in our additional paid-in capital or legal reserve (if any) as required by the ordinances of the Ministry of Justice.

The aggregate book value of Surplus distributed by us may not exceed a prescribed distributable amount (the Distributable Amount), as calculated on the effective date of such distribution. The Distributable Amount at any given time shall be equal to the amount of Surplus less the aggregate of the followings:

(a)

the book value of our treasury stock;

(b)

the amount of consideration for our treasury stock disposed of by us after the end of the last fiscal year; and

(c)

certain other amounts set forth in the ordinances of the Ministry of Justice, including (if the sum of one-half of good will and the deferred assets exceeds the total of stated capital, additional paid-in capital and legal reserve, each such amount being that appearing on our non-consolidate balance sheet as of the end of the last fiscal year) all or certain part of such exceeding amount as calculated in accordance with the ordinances of the Ministry of Justice.

If we have become at our option a company with respect to which consolidated balance sheets should also be taken into consideration in the calculation of the Distributable Amount (renketsu haito kisei tekiyo kaisha), it will be required to further deduct from the amount of Surplus the excess amount, if any, of (x) the total amount of shareholders equity appearing on our non-consolidated balance sheet as of the end of the last fiscal year and certain other amounts set forth in the ordinances of the Ministry of Justice over (y) the total amount of shareholders equity and certain other amounts set forth in the ordinances of the Ministry of Justice appearing on our consolidated balance sheet as of the end of the last fiscal year.

If we have prepared interim financial statements as described below, and if such interim financial statements have been approved by the Board of Directors or (if so required by the Company Law) by a general meeting of shareholders, the Distributable Amount must be adjusted to take into account the amount of profit or loss, and the amount of consideration for our treasury stock disposed of by us, during the period in respect of which such interim financial statements have been prepared.

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We may prepare non-consolidated interim financial statements consisting of a balance sheet as of any date subsequent to the end of the last fiscal year and an income statement for the period from the first day of the current fiscal year to the date of such balance sheet. Interim financial statements so prepared by us must be approved by the Board of Directors and audited by our independent auditors, as required by the ordinances of the Ministry of Justice.

For information as to Japanese taxes on dividends, see “Tax Considerations ― Japanese Taxation.”

Capital and Reserves

When we issue new shares, the entire amount of cash or other assets paid or contributed by subscribers for those new shares is required to be accounted for as stated capital, although we may account for an amount not exceeding one-half of the amount of such cash or assets as additional paid-in capital by resolution of the Board of Directors.

We may reduce our additional paid-in capital or legal reserve generally by resolution of a general meeting of shareholders, and in the case of reduction of additional paid-in-capital and if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as stated capital. On the other hand, we may reduce our stated capital generally by special resolution of a general meeting of shareholders and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as additional paid-in capital. In addition we may reduce our Surplus and increase either (i) stated capital or (ii) additional paid-in capital and/or legal reserve by the same amount, in either case by resolution of a general meeting of shareholders.

Stock Splits

We may at any time split the issued shares into a greater number of shares by resolution of our Board of Directors. When a stock split is to be made, so long as the only class of our outstanding stock is our common stock, we may increase the number of authorized shares to the extent that the ratio of such increase in authorized shares does not exceed the ratio of such stock split by amending our Articles of Incorporation, which amendment may be made without approval by shareholders.

Generally, shareholders do not need to exchange share certificates for new ones following a stock split, but certificates representing the additional shares resulting from the stock split will be issued to shareholders. Before a stock split, we must give public notice of the stock split, specifying the record date therefor, not less than two weeks prior to such record date.

Japanese Unit Share System

Our Articles of Incorporation provide that 100 shares of common stock constitute one unit. The Company Law permits us, by resolution of our Board of Directors, to reduce the number of shares that constitutes one unit or abolish the unit share system, and amend our Articles of Incorporation to this effect without the approval of a shareholders meeting. The number of shares constituting a unit may not exceed 1,000 shares.

Transferability of Shares Representing Less Than One Unit

Our Articles of Incorporation and Share Handling Regulations provide that no share certificates shall, in general, be issued with respect to any shares constituting less than one unit. Because the transfer of shares normally requires delivery of the share certificates for the shares being transferred, any shares constituting less than one unit for which no share certificates are issued will not be transferable.

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Because transfer of ADRs does not require a change in the ownership of the underlying shares, holders of ADRs evidencing ADSs that constitute less than one unit of shares are not affected by these restrictions in their ability to transfer the ADRs. However, because transfers of less than one unit of the underlying shares are normally prohibited under the unit share system, the deposit agreement provides that the right of ADR holders to surrender their ADRs and withdraw the underlying shares for sale in Japan may only be exercised as to whole units.

Right of a Holder of Shares Representing Less Than One Unit to Require Us to Purchase Its Shares

A holder of shares representing less than one unit may at any time require us to purchase our shares. These shares will be purchased at:

•

the closing price of the shares reported by the Osaka Securities Exchange Co., Ltd. (the Osaka Securities Exchange) on the day when the request to purchase is made; or

•

if no sale takes place on such stock exchange on that day, the closing price of the shares reported by the Tokyo Stock Exchange, Inc. (the Tokyo Stock Exchange) on such day; or

•

if no sale takes place on either of such stock exchanges on such day, the price at which the shares are first traded on the Osaka Securities Exchange on the next day; or

•

if no sale takes place on such stock exchange on such day, the price at which the shares are first traded on the Tokyo Stock Exchange on such day; or

•

if no sale takes place on either of such stock exchanges on such day, the price at which the shares are first traded on either of such stock exchanges, provided that, if the shares are traded on both such exchanges on the same day, the relevant price shall be the price at which the shares are first traded on the Osaka Securities Exchange.

In such case, we will request payment of an amount equal to the brokerage commission applicable to the shares purchased. However, because holders of ADSs representing less than one unit are not able to withdraw the underlying shares from deposit, these holders will not be able to exercise this right as a practical matter.

Voting Right of a Holder of Shares Representing Less Than One Unit

A holder of shares representing less than one unit cannot exercise any voting rights pertaining to those shares. In calculating the quorum for various voting purposes, the aggregate number of shares representing less than one unit will be excluded from the number of outstanding shares. A holder of shares representing one or more whole units will have one vote for each unit of shares, except as stated in  Voting Rights below.

A holder of shares representing less than one unit does not have any rights relating to voting, such as the right to participate in a demand for the resignation of a director, the right to participate in a demand for the convocation of a general meeting of shareholders and the right to join with other shareholders to propose an agenda item to be addressed at a general meeting of shareholders. In addition, a holder of shares constituting less than one unit does not have the right to institute a representative action by shareholders.

Other Rights of a Holder of Shares Representing Less Than One Unit

In accordance with the Company Law, our Articles of Incorporation provide that a holder of shares representing less than one unit does not have any other rights of a shareholder in respect of those shares, other than those provided by our Articles of Incorporation including the following rights:

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•

to receive distribution of dividends;

•

to receive shares, cash or other assets in case of consolidation or split of shares, exchange or transfer of shares or corporate merger;

•

to be allotted rights to subscribe for new shares and other stock acquisition rights when such rights are granted to shareholders; and

•

to participate in any distribution of surplus assets upon liquidation.

Ordinary General Meeting of Shareholders

We normally hold our annual general meeting of shareholders in June of each year. In addition, we may hold an extraordinary general meeting of shareholders whenever necessary by giving at least two weeks advance notice. Under the Company Law, notice of any shareholders meeting must be given to each shareholder having voting rights or, in the case of a non-resident shareholder, to his resident proxy or mailing address in Japan in accordance with our Share Handling Regulations, at least two weeks prior to the date of the meeting.

Voting Rights

A shareholder is generally entitled to one vote per one unit of shares, as described under  Japanese Unit Share System above. In general, under the Company Law, a resolution can be adopted at a general meeting of shareholders by a majority of the voting rights represented at the meeting. The Company Law and our Articles of Incorporation require a quorum for the election of Directors and Corporate Auditors of not less than one-third of the voting rights. Our shareholders are not entitled to cumulative voting in the election of Directors. A corporate shareholder whose outstanding voting rights are in turn more than one-quarter directly or indirectly owned by us does not have voting rights. Shareholders may exercise their voting rights through proxies, provided that those proxies are also shareholders who have voting rights.

The Company Law and our Articles of Incorporation provide that certain important matters shall be approved by a special resolution of general meeting of shareholders.  Our Articles of Incorporation provide that the quorum for a special resolution is one-third of the total number of voting rights and the approval of at least two-thirds of the voting rights presented at the meeting is required for adopting a special resolution. Such important matters include:

(a)

reduction of the stated capital;

(b)

amendment of the Articles of Incorporation;

(c)

establishment of a 100% parent-subsidiary relationship by way of share exchange or share transfer;

(d)

dissolution, merger or consolidation;

(e)

company split;

(f)

transfer of the whole or an important part of our business;

(g)

taking over of the whole of the business of any other corporation;

(h)

removal of a Corporate Auditor;

(i)

any issuance of shares or transfer of existing shares as treasury stock to persons other than the shareholders at a specially favorable price;

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(j)

any issuance of stock acquisition rights (including those incorporated in bonds with stock acquisition rights) to persons other than the shareholders under specially favorable conditions;

(k)

purchase of shares by us from a specific shareholder other than our subsidiary;

(l)

consolidation of shares;

(m)

distribution of Surplus in kind with respect to which shareholders are not granted the right to require us to make such distribution in cash instead of in kind; and

(n)

exemption from a portion of liability of the Directors, Corporate Auditors or independent auditors.

However, under the Company Law, no shareholder approval, whether by an ordinary resolution or a special resolution at a general meeting of shareholders, is required for any matter described in (a) through (g) above, and such matter may be decided by the Board of Directors, if it satisfies certain criteria prescribed by the Company Law as are necessary to determine that its impact is immaterial.

The voting rights of holders of ADSs are exercised by the depositary based on instructions from those holders. With respect to voting by holders of ADRs, please see Item 10 of our registration statement on Form 20-F filed on September 18, 2001.

Subscription Rights

Holders of shares have no pre-emptive rights. Authorized but unissued shares may be issued at such times and upon such terms as our Board of Directors determines, subject to the limitations as to the issue of new shares at a specially favorable price in which case a special resolution of general meeting of shareholders is required as described in - Voting Rights above. The Board of Directors may, however, determine that shareholders be given subscription rights in connection with a particular issue of new shares. In this case, such rights must be given on uniform terms to all shareholders as of a specified record date of which not less than two weeks prior public notice must be made. Each of the shareholders to whom such rights are given must also be given at least two weeks prior notice of the date on which such rights will expire.

Stock Acquisition Rights

We may issue stock acquisition rights (shinkabu yoyakuken) or bonds with stock acquisition rights (shinkabu yoyakuken-tsuki shasai). Except where the issue would be on specially favorable conditions, the issue of stock acquisition rights or bonds with stock acquisition rights may be authorized by a resolution of the Board of Directors. Subject to the terms and conditions thereof, holders of stock acquisition rights may acquire a prescribed number of shares by exercising their stock acquisition rights and paying the exercise price at any time during the exercise period thereof. Upon exercise of stock acquisition rights, we will be obliged to either issue the relevant number of new shares or transfer the necessary number of existing shares held by us as treasury stock to the holder.

Pursuant to the resolution of the Board of Directors held on September 30, 2003, 15,000 stock acquisition rights were issued on October 17, 2003, in connection with the public offering of ¥30 billion zero coupon convertible bonds due 2008 with an issue price of 103% of the principal amount of the bonds. As of March 31, 2007, there were 13,500 outstanding stock acquisition rights, which represent rights to acquire 4,022,040 shares of common stock with the conversion price of ¥6,914.40 per share (as adjusted).

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Liquidation Rights

In the event of liquidation, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among the shareholders in proportion to the number of shares they own.

Liability to Further Calls or Assessments

All of our currently outstanding shares, including shares represented by the ADSs, are fully paid and nonassessable.

Share Registrar

The Sumitomo Trust and Banking Company, Limited is the share registrar for the shares. Sumitomo Trusts office is located at 5-33, Kitahama 4-chome, Chuo-ku, Osaka, 540-0041, Japan. Sumitomo Trust maintains our register of shareholders and records transfers of record ownership upon presentation of share certificates.

Record Date

The close of business on March 31 is the record date for our year-end dividends, if paid, and the close of business on September 30 is the same for our interim dividends, if paid. A holder of shares constituting one or more units who is registered as a holder on our register of shareholders at the close of business as of March 31 is also entitled to exercise shareholders voting rights at the annual general meeting of shareholders with respect to the fiscal year ending on March 31. In addition, we may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks public notice.

The shares generally trade ex-dividend or ex-rights in the Japanese stock exchanges on the third business day before a record date (or if the record date is not a business day, the fourth business day prior thereto), for the purpose of dividends or rights offerings.

Repurchase by Nidec of Shares

Under the Company Law and our Articles of Incorporation, we may acquire our shares (i) by soliciting all our shareholders to offer to sell our shares held by them (in this case, the certain terms of such acquisition, such as the total number of the shares to be purchased and the total amount of consideration, shall be set by an ordinary resolution of a general meeting of shareholders in advance, and acquisition shall be effected pursuant to a resolution of the Board of Directors), (ii) from a specific shareholders other than any of our subsidiaries (pursuant to a special resolution of a general meeting of shareholders), (iii) from any of our subsidiaries (pursuant to a resolution of our Board of Directors), or (iv) by way of purchase on any Japanese stock exchange on which our shares are listed or by way of tender offer (in either case pursuant to an ordinary resolution of a general meeting of shareholders). In the case of (ii) above, any other shareholder may make a request to the Board of Directors that such other shareholder be included as a seller in the proposed purchase, provided that no such right will be available if the purchase price or any other consideration to be received by the relevant specific shareholder will not exceed the last trading price of the shares calculated in a manner set forth in the ordinances of the Ministry of Justice.

These acquisitions are subject to the condition that the aggregate amount of the purchase price must not exceed the Distributable Amount as described in  Distribution of Surplus above. We may hold our shares acquired in compliance with the provisions of the Company Law, and may generally dispose of or cancel such shares by resolution of the Board of Directors.

In addition, we may acquire our shares by means of repurchase of any number of shares constituting less than one unit upon the request of the holder of those shares, as described under “― Japanese Unit Share System” above.

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American Depositary Receipts

For information regarding American Depositary Receipts and our depositary, please see Item 10 of our registration statement on Form 20-F filed on September 18, 2001.

Reporting of Substantial Shareholdings

The Securities and Exchange Law of Japan and its related regulations require any person who has become, solely or jointly, a holder of more than 5% of the total issued shares with voting rights of a company that is listed on any Japanese stock exchange to file a report with the Director of the competent Local Finance Bureau of the Ministry of Finance within five business days. With certain exceptions, a similar report must also be filed in respect of any subsequent change of 1% or more in the holding of shares with voting rights or of any specified changes set out in any previously-filed reports. For this purpose, shares issuable to such person upon exercise of stock acquisition rights are taken into account in determining both the number of shares with voting rights held by the holder and the issuers total issued shares with voting rights.

Daily Price Fluctuation Limits under Japanese Stock Exchange Rules

Share prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each share, based on the previous days closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell shares at such price on a particular trading day, or at all.

On July 16, 2007, the closing price of our shares on the Osaka Securities Exchange was ¥7,260 per share. The following table shows the daily price limit for a stock on the Osaka Securities Exchange with a closing price of between ¥5,000 and ¥10,000 per share, as well as the daily price limit if our per share price were to rise to between ¥10,000 and ¥20,000, or fall to between ¥3,000 and ¥5,000. Other daily price limits would apply if our per share price moved to other ranges.

Selected Daily Price Limits

|Selected Daily Price Limits                   |         |                                   
|--------------------------------------------- | ------- | ----------------------------------
|Previous Days Closing Price or Special Quote |         | Maximum Daily
      Price Movement
|Over                                          | ¥ 3,000 |                                   
|Over                                          | 5,000   |                                   
|Over                                          | 10,000  |                                   

For a history of the trading price of our shares on the Osaka Securities Exchange, see Item 9.A of this annual report.

C. Material Contracts.

We have not entered into any material contracts, other than in the ordinary course of business, within the two years immediately preceding the date of this document or any contract, other than in the ordinary course of business, which contains any provision under which we have any obligation or entitlement which is material to us as at the date of this document.

D. Exchange Controls.

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Acquisition or Disposition of Shares or ADS

Under the Foreign Exchange and Foreign Trade Law, all aspects of regulations on foreign exchange and foreign trade transactions are, with minor exceptions relating to inward direct investments which are not generally applicable to our shares, only subject to post transaction reporting requirements. Nonresidents of Japan, including foreign corporations not resident in Japan, who acquire or dispose of shares of common stock or ADSs, are generally not required to submit such post transaction reports.

Dividends and Proceeds of Sale

Under the Foreign Exchange and Foreign Trade Law, dividends paid on, and the proceeds of sales in Japan of shares held by non-residents of Japan may in general be converted into any foreign currency and repatriated abroad. Under the terms of the deposit agreement pursuant to which our ADSs are issued, the depositary is required, to the extent that in its judgment it can convert yen on a reasonable basis into dollars and transfer the resulting dollars to the United States, to convert all cash dividends that it receives in respect of deposited shares into dollars and to distribute the amount received (after deduction of applicable withholding taxes) to the holder of ADSs. For additional information regarding our ADSs, please see Item 10 of our registration statement on Form 20-F filed on September 18, 2001.

E. Taxation.

This section describes the material United States federal income and Japanese tax consequences of owning shares or ADSs. It applies to you only if you hold your shares or ADSs as capital assets for tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:

•

a dealer in securities;

•

a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;

•

a tax-exempt organization;

•

a life insurance company

•

a person liable for alternative minimum tax;

•

a person that actually or constructively owns 10% or more of the voting stock of Nidec;

•

a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction; or

•

a person whose functional currency is not the U.S. dollar.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions and the laws of Japan all as currently in effect, as well as on the income tax treaty between the United States of America and Japan (the Treaty). These laws are subject to change, possibly on a retroactive basis. In addition, this section is based in part upon the representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

You are a U.S. holder if you are a beneficial owner of shares or ADSs and you are:

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•

a citizen or resident of the United States;

•

a domestic corporation;

•

an estate whose income is subject to United States federal income tax regardless of its source; or

•

a trust if a United States court can exercise primary supervision over the trusts administration and one or more United States persons are authorized to control all substantial decisions of the trust.

You should consult your own tax advisor regarding the United States federal state and local and the Japanese and other tax consequences of owning and disposing of shares and ADSs in your particular circumstances.

In general, and taking into account the earlier assumptions, for United States federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to United States federal income tax.

United States Federal Income Taxation

Taxation of Dividends

Under the United States federal income tax laws, and subject to the passive foreign investment company, or PFIC, rules as discussed below, if you are a U.S. holder, the gross amount of any dividend paid by Nidec out of its current or accumulated earnings and profits (as determined for United States federal income tax purposes) will be subject to U.S. federal taxation. If you are a noncorporate U.S. holder, dividends paid to you in taxable years beginning before January 1, 2011 that constitute qualified dividend income will be taxable to you at a maximum tax rate of 15% provided that you hold the shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meet other holding period requirements. Dividends we pay with respect to the shares or ADSs will be qualified dividend income. You must include any Japanese tax withheld from the dividend payment in this gross amount even though you do not in fact receive it. The dividend will be taxable to you when you, in the case of shares, or the depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the yen payments made, determined at the spot yen/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for United States federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the shares or ADSs and thereafter as capital gain.

Subject to generally applicable limitations on the ability to claim a credit on the foreign taxes paid, the Japanese tax withheld in accordance with the Treaty and paid over to Japan will be creditable against your United States federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 15% tax rate. To the extent a refund of the tax withheld is available to you under Japanese law or under the Treaty, the amount of tax withheld that is refundable will not be eligible for credit against your United States federal income tax liability.

Dividends will be income from sources outside the United States. Dividends paid in taxable years beginning before January 1, 2007 generally will be passive or financial services income, and dividends paid in taxable years beginning after December 31, 2006 will, depending on your circumstances, be passive or general income which, in either case, is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you.

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Taxation of Capital Gains

Subject to the PFIC rules as discussed below, if you are a U.S. holder and you sell or otherwise dispose of your shares or ADSs, you will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your shares or ADSs. Capital gain of a noncorporate U.S. holder that is recognized before January 1, 2011 is generally taxed at a maximum rate of 15% where the holder has a holding period greater than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

PFIC Rules

Nidec believes that shares and ADSs should not be treated as stock of a PFIC for United States federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change.  If Nidec were to be treated as a PFIC, unless a U.S. holder elects to be taxed annually on a mark-to-market basis with respect to the shares or ADSs, gain realized on the sale or other disposition of your shares or ADSs would in general not be treated as capital gain.  Instead, if you are a U.S. holder, you would be treated as if you had realized such gain and certain excess distributions ratably over your holding period for the shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. With certain exceptions, your shares or ADSs will be treated as stock in a PFIC if Nidec were a PFIC at any time during your holding period in your shares or ADSs. Dividends that you receive from Nidec will not be eligible for the special tax rates applicable to qualified dividend income if Nidec is treated as a PFIC with respect to you either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.

Japanese Taxation

The following is a summary of the principal Japanese tax consequences to owners of our shares who are non-resident individuals or non-Japanese corporations without a permanent establishment in Japan to which the relevant income is attributable. The changes are subject to changes in the applicable Japanese laws or double taxation conventions occurring after that date. This summary is not exhaustive of all possible tax considerations which may apply to a particular investor. Potential investors should satisfy themselves as to:

•

the overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including specifically the tax consequences under Japanese law;

•

the laws of the jurisdiction of which they are resident; and

•

any tax treaty between Japan and their country of residence, by consulting their own tax advisers.

Generally, a non-resident shareholder is subject to Japanese withholding tax on dividends on the shares paid by us. A stock split is not subject to Japanese income or corporation tax, as it is characterized merely as an increase of number of shares (as oppose to an increase of value of shares) from Japanese tax perspectives. A conversion of retained earnings or legal reserve (but other than additional paid-in capital, in general) into stated capital on a non-consolidated basis is not characterized as a deemed dividend for Japanese tax purposes, and therefore such a conversion does not trigger Japanese withholding taxation (Article 2 (16) of the Japanese Corporation Tax Law and Article 8 (1) (xv) of the Japanese Corporation Tax Law Enforcement Order).

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If we purchase our listed shares by way of a tender offer for the purpose of cancellation with retained earnings, the selling shareholders (both individuals and corporations) are in general required to recognize (i) deemed dividend corresponding to a price into share capital portion (including additional paid-in capital) and retained earnings portion on a non-consolidated basis under Article 24(1)(iv) of the Japanese Corporation Tax Law, and (ii) capital gain or loss computed as a difference between the basis of the shares subject to the tender offer at the shareholders level and the amount of the consideration for the tender offer (deducting the amount corresponding to the deemed dividend computed as (i) above) under Article 61-2(1) of the same law. On the other hand, no deemed dividend is required to recognize if we purchase our shares at/through the stock market due to the difficulty to identify each shareholder sold our shares (Articles 24(1) (iv) and 61-2(xi) of the Japanese Corporation Tax Law and Article 23(3) of the Japanese Corporation Tax Law Enforcement Order). In addition, in the case of individual shareholders who sell our shares on an over-the-counter basis, no deemed dividend is required to be recognized until March 31, 2009 (two years extension is promulgated under the 2007 Japanese tax legislation) due to the operation of a temporary measurement (Article 9-6 of the Japanese Special Tax Measures Law) and therefore they are only required to recognize capital gain or loss of the shares subject to the tender offer. In the meantime, when shares are acquired by us (whether by way of a tender offer or otherwise) for the purpose of cancellation with retained earnings, the shareholders (both individuals and corporations) whose shares were not canceled are not subject to the deemed dividend taxation (such a tax treatment is introduced under the 2001 tax legislation).

Unless an applicable tax treaty, convention or agreement reduces the maximum rate of withholding tax, the rate of Japanese withholding tax applicable to dividends on the listed shares such as those paid by us to non-resident shareholders is currently 7% which is applicable for the period from January 1, 2004 to March 31, 2009 (one year extension is promulgated under the 2007 Japanese tax legislation) and 15% rate will apply thereafter, except for dividends paid to any individual shareholder who holds 5% or more of the issued shares for which the applicable rate is 20%. Japan has income tax treaties, conventions or agreements whereby the above mentioned withholding tax rate is generally promulgated as 15% for portfolio investors with, among others, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, New Zealand, Norway, Singapore, Spain, Sweden and Switzerland. Under the tax treaty between the United States and Japan (the Treaty) of which withholding tax treatments is applicable effective from July 1, 2004, the withholding tax rate on dividends (those declared on or after July 1, 2004) is 10% for portfolio investors, if they do not have a permanent establishment in Japan and the shares with respect to which such dividends are paid are not related in-fact to such permanent establishment, and if they are qualified US residents eligible to enjoy treaty benefits. It shall be noted that, under the tax treaty between the US and Japan, withholding tax on dividends declared after July 1, 2004 is exempt from Japanese taxation by way of withholding or otherwise for pension funds which are qualified US residents eligible to enjoy treaty benefits unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension funds. The similar changes are made to the new tax treaty between the United Kingdom and Japan which is applicable to dividends declared on or after January 1, 2007. Non-resident shareholders who are entitled to a reduced rate of Japanese withholding tax on payment by us of dividends on the shares are required to submit an Application Form for Income Tax Convention regarding Relief from Japanese Income Tax on Dividends in advance through us to the relevant tax authority before payment of dividends. A standing proxy for non-resident shareholders may provide such application service. See Item 10.B. of this annual report. Non-resident shareholders who do not submit an application in advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate of an applicable tax treaty from the relevant Japanese tax authority. For Japanese tax purposes, the treaty rate normally applies superseding the tax rate under the domestic law. However, due to the so-called preservation doctrine under Article 1(2) of the Treaty, and/or under Article 3-2 of the Special Measures Law for the Income Tax Law, Corporation Tax Law and Local Taxes Law with respect to the Implementation of Tax Treaties, if the tax rate under the domestic tax law is lower than that promulgated under the applicable income tax treaty, then the domestic tax rate is still applicable. If the domestic tax rate still applies, no treaty application is required to be filed, consequently.

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Gains derived from the sale of shares outside Japan, or from the sale of shares within Japan by a nonresident shareholder as a portfolio investor, are generally not subject to Japanese income or corporation taxes.

Japanese inheritance and gift taxes may be assessed against an individual who has acquired shares as a legatee, heir or donee, even if the individual is not a Japanese resident.

F. Dividends and Paying Agents.

Not applicable.

G. Statement by Experts.

Not applicable.

H. Documents on Display.

We file periodic reports and other information with the Securities and Exchange Commission. You may read and copy any document that we file with the SEC at the SECs public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference room. The Securities and Exchange Commission also maintains a web site at www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the Securities and Exchange Commission.  You may also inspect our SEC reports and other information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. Some of this information may also be found on our website at www.nidec.co.jp/english/ir/index.html. Information on our website does not form part of this annual report.

As a foreign private issuer, we are exempt from the rules under the Securities Exchange Act of 1934 prescribing the furnishing and content of proxy statements to shareholders.

I. Subsidiary Information.

Not applicable.

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Item 11. Quantitative and Qualitative Disclosure About Market Risk.

We hold financial instruments in the normal course of business and are exposed to market risk, including changes in foreign exchange rates, interest rates and equity prices. We employ a variety of measures to manage market risk related to our financial instruments, including cash and cash equivalents, financial receivables, securities investments, long-term debt and short-term borrowings.

We do not have a policy of hedging all or a defined portion of specific risks. Accordingly, our decisions with regard to the use of derivative instruments are made on a case-by-case basis, and the nature and quantity of open derivative contracts can vary significantly over time. However, from time to time, we enter into derivative financial instruments which include foreign exchange forward contracts, foreign currency option agreements, interest rate swap agreements and interest rate cap agreements. Interest rate swap and cap agreements are designed to reduce our exposure to losses resulting from adverse fluctuations in interest rates on the underlying financial instruments. Foreign currency option agreements are designed to reduce our exposure to losses resulting from adverse fluctuations in foreign exchange rates on underlying accounts payable and anticipated purchase transactions in foreign currency. Foreign exchange forward contracts are designed to reduce our exposure to losses resulting from adverse fluctuations in foreign exchange rates on our foreign currency accounts receivables, other receivables and accounts payable.

Foreign currency exchange rate risk

Transaction risk

A significant portion of our business is conducted in currencies other than yen, most significantly the U.S. dollar. While sales denominated in U.S. dollars are, to a significant extent, offset by U.S. dollar denominated costs, we generally have had a significant net long U.S. dollar position. To the extent that there are any open foreign currency, i.e., U.S. dollar denominated positions, we are exposed to the risk of foreign currency fluctuations. Any gains and losses that result are recorded in our results of operations for the period. The foreign exchange gain (loss), net represents the differences between the value of monetary assets and liabilities when they are originated at exchange rates current when a purchase or sale occurs and their value at the prevailing exchange rate when they are settled or translated at year-end. Foreign currency denominated monetary assets may include bank deposits, trade receivables and other receivables and monetary liabilities may include trade and notes payable, borrowings and debt.

Translation risk

Our reporting currency is the Japanese yen. We have assets and liabilities outside Japan that are subject to fluctuations in foreign currency exchange rates. Our assets and liabilities that are outside Japan are primarily located in Singapore, Thailand, the Philippines and China. We prepare financial statements of our foreign operations in their functional currencies prior to consolidation in our financial statements. Translation gains and losses arising from changes in the value of the reporting currency relative to the functional currencies of the underlying operations are recorded outside of our statement of operations in other comprehensive income until we dispose of or liquidate (which has not occurred in the past, nor do we expect it to occur frequently in the future) the relevant foreign operation.

Foreign currency derivatives

As our investments in foreign subsidiaries with a functional currency other than the Japanese yen are generally considered long-term, we do not hedge these net investments.

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From time to time we utilize foreign currency forward contracts and foreign currency options derivative instruments to manage exposure to exchange rate volatility for accounts payable, accounts receivable and anticipated transactions denominated in foreign currencies. However, we do not use instruments with leverage, nor exotic options, to mitigate market risk. Changes in the fair values of our foreign exchange forward contracts and options are recognized as gains and losses on derivative instruments within our results of operations. The table below sets forth the aggregate contract amounts and weighted-average contracted forward rates for annual maturities of the foreign exchange forward contracts for the next five years.

Foreign currency derivatives at March 31, 2007

|                                                          |  | Maturity date                |  |      |  |     
|--------------------------------------------------------- |  | ---------------------------- |  | ---- |  | ----
|                                                          |  | For the year ending March 31 |  |      |  |     
|                                                          |  |                              |  |      |  |     
|                                                          |  | 2008                         |  | 2009 |  | 2010
|Foreign Exchange Forward Contracts                        |  |                              |  |      |  |     
|Sell U.S. dollars                                         |  |                              |  |      |  |     
|Contract amounts (in millions)                            |  | ¥ 201                        |  | -    |  | -   
|Weighted-average contracted forward Rate (yen per U.S.$1) |  | 118.07                       |  | -    |  | -   
|Sell EUR                                                  |  |                              |  |      |  |     
|Contract amounts (in millions)                            |  | ¥ 190                        |  | -    |  | -   
|Weighted-average contracted forward Rate (yen per EUR1)   |  | 158.18                       |  | -    |  | -   

Interest rate risk

We enter into interest rate swaps and other contracts to reduce our market risk exposure from changes in interest rates. We have long-term receivables and debt, with fixed and variable rates, and we enter into interest rate swaps and other contracts in order to stabilize the fair values and cash flows of those receivables and debts.

The table below sets forth information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates. For our debts and receivables, it indicates whether the interest component is fixed or variable, the amount of the cash flows and the expected weighted-average interest rate for the next five years and thereafter and the items' fair value. For our interest rate caps, the table presents payment type, notional principal amounts and weighted-average interest strike rates by expected (contracted) maturity dates and the items fair value. Notional amounts are used to calculate the contractual payments to be exchanged under the contracts.

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Interest rate risk at March 31, 2007

|(Yen in millions)             
|------------------------------
|                              
|                              
|Long-term Loan Receivable     
|Fixed Rate                    
|Principal cash flows          
|Weighted-average interest rate
|Floating Rate                 
|Principal cash flows          
|Weighted-average interest rate
|                              
|Long-term Debt                
|Fixed Rate (long-term loan)   
|Principal cash flows          
|Weighted-average interest rate
|Fixed Rate (convertible bonds)
|Principal cash flows          
|Weighted-average interest rate
|Floating Rate (long-term loan)
|Principal cash flows          
|Weighted-average interest rate
|                              
|Interest Rate Derivatives     
|Interest Rate Swaps           
|Fixed rate payments           
|Notional amounts              
|Weighted-average interest rate
|Floating rate receives        
|Notional amounts              
|Weighted-average interest rate
|Interest Rate Currency Swaps  
|Fixed rate payments           
|Principal cash flows (THB)    
|Notional amounts              
|Weighted-average interest rate
|Floating rate receives        
|Principal cash flows (JPY)    
|Notional amounts              
|Weighted-average interest rate

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Equity security price risk

We have marketable equity securities classified as available-for-sale securities. At March 31, 2006, the fair value of these securities was ¥19,676 million and at March 31, 2007 it was ¥20,118 million. If the fair value of these securities were to change by 10%, the impact on the carrying amount of those securities as of March 31, 2006 would be ¥1,968 million and as of March 31, 2007 would be ¥2,012 million, respectively.

Commodity price risk

We had no open commodity derivative positions for the year ended March 31, 2006 or 2007.

Item12. Description of Securities Other Than Equity Securities.

Not applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies.

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.

None.

107



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|Index to Consolidated Financial Statements and Information.

Item 15. Controls and Procedures.

Disclosure Controls and Procedures



Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of March 31, 2007. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2007, our disclosure controls and procedures were effective. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.

Managements Report on Internal Control over Financial Reporting

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management has evaluated the effectiveness of our internal control over financial reporting based upon criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this assessment, management determined that we maintained effective internal control over financial reporting as of March 31, 2007.

Management has excluded Motors and Actuators business of Valeo S.A., France and of Brilliant Manufacturing Limited from its assessment of internal control over financial reporting as of March 31, 2007, because the businesses were acquired in a business combination by us on December 27, 2006 and February 23, 2007, respectively. In aggregate, total assets and total revenues of the Motors & Actuators business of Valeo S.A., France and Brilliant Manufacturing Limited represent 8.8 %, and 1.4 %, respectively, of the related consolidated financial statement amounts as of and for the year ended March 31, 2007.

Management's assessment of the effectiveness of our internal control over financial reporting as of March 31, 2007 has been audited by MISUZU PricewaterhouseCoopers, an independent registered public accounting firm, as stated in their report included on page F-2 of this Form 20-F.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the fiscal year ended March 31, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

108



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Item 16A. Audit Committee Financial Expert.

The Board of Corporate Auditors of Nidec has determined that Nidec does not have an audit committee financial expert as defined in Item 16A of Form 20-F serving on the Board of Corporate Auditors. Nidec believes that the combined knowledge, skills and experience of the Board of Corporate Auditors enables them, as a group, to act effectively in the fulfillment of their tasks and responsibilities, including those under the Sarbanes-Oxley Act of 2002. In addition, the Corporate Auditors have the power and authority to engage outside experts as they deem appropriate to provide them with advice on matters related to their responsibilities.

Item 16B. Code of Ethics.

Nidec has adopted a written code of ethics for its chief executive officer, chief financial officer, chief accounting officer and other senior officers which has been effective as of April 1, 2004. Nidecs code of ethics is attached to this annual report on Form 20-F as exhibit 11.1.

Item 16C. Principal Accountant Fees and Services

Principal Accountant Audit Fees and Services Fees

The following table presents the fees paid or accrued by us for the audit and non-audit services rendered by our principal accountants, MISUZU PricewaterhouseCoopers, a network firm of PricewaterhouseCoopers International Limited (MISUZU PricewaterhouseCoopers changed its name from ChuoAoyama PricewaterhouseCoopers to its current name as of September 1, 2006), during the fiscal years ended March 31, 2006 and 2007.

|                       | Yen in millions              |  | U.S. dollars in thousands
|---------------------- | ---------------------------- |  | -------------------------
|                       | For the year ended March 31, |  | For the year ended       
|Type of Fee            | 2006                         |  | 2007                     
|Audit Fees (1)         | ¥ 424                        |  |                          
|Audit Related Fees (2) | 80                           |  |                          
|Tax Fees (3)           | 22                           |  |                          
|All Other Fees (4)     | 9                            |  |                          
|                       |                              |  |                          
|Total                  | ¥ 535                        |  |                          
|                       |                              |  |                          

(1) Audit fees consist of the fees for professional services provided in connection with the audit of our annual financial statements and review of our quarterly financial statements and audit services provided in connection with other statutory or regulatory filing.

(2) Audit related fees are fees for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements and were not otherwise included in Audit Fees. This includes fees for employment benefit plan audits, due diligence to related mergers and acquisitions, attestations by MISUZU PricewaterhouseCoopers (formerly ChuoAoyama PricewaterhouseCoopers) that are not required by statute or regulation, and consulting on financial accounting/reporting standards.

(3) Tax fees represent fees for professional services rendered by MISUZU PricewaterhouseCoopers (formerly ChuoAoyama PricewaterhouseCoopers) for tax compliance, tax advise and tax planning.

(4) All other fees include fees for products and services provided by MISUZU PricewaterhouseCoopers (formerly ChuoAoyama PricewaterhouseCoopers) other than the services reported above.

The Board of Corporate Auditors has concluded the provision of the non-audit services listed above is compatible with maintaining the independence of MISUZU PricewaterhouseCoopers (formerly ChuoAoyama PricewaterhouseCoopers).

109



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Pursuant to Rule 2-01(c)(7) of Regulation S-X, the Board of Corporate Auditors pre-approves the engagement of our principal accountants and their affiliates to render audit and non-audit services to us. As a general rule, the Board of Corporate Auditors specifically pre-approves the engagement of such services after examining the details of the proposal engagement submitted by our management. With respect to certain specified audit and non-audit services, once every year, the Board of Corporate Auditors generally pre-approves the engagement of our principal accountants and their affiliates to render such services pursuant to the Boards pre-approval policies and procedures. Under the pre-approval policies and procedures, services that are the subject of general pre-approval are specifically identified, together with the maximum aggregate fee amount that may be paid for each such service. The Board of Corporate Auditors reviews this list of specific services and related matters on an annual basis. All services to be rendered by our principal accountants or their affiliates that are not specifically identified must be specifically pre-approved by the Board of Corporate Auditors. Even for those services that are specifically identified, the rendering of such services for fees in excess of the maximum aggregate fee amount under the pre-approval policies and procedures must be specifically pre-approved by the Board of Corporate Auditors.

None of the services described above under this Item 16C were waived from the pre-approval requirement pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

Change of Our Independent Registered Public Accounting Firm

On May 30, 2007, MISUZU PricewaterhouseCoopers announced that it would terminate its business and dissolve effective July 31, 2007. In connection with this, the audit team of MISUZU PricewaterhouseCoopers that has been covering us will transfer to a newly established public accounting firm, Kyoto Audit Corporation, which registered with the Public Company Accounting Oversight Board on June 12, 2007. We have appointed Kyoto Audit Corporation as our new independent registered public accounting firm starting in the fiscal year ending March 31, 2008.

Item 16D. Exemptions from the Listing Standards for Audit Committees.

With respect to the requirements of Rule 10A-3 under the Securities Exchange Act of 1934 relating to listed company audit committees, which apply to us through Section 303A.06 of the New York Stock Exchanges Listed Company Manual, we rely on an exemption provided by paragraph (c)(3) of that Rule available to foreign private issuers with boards of corporate auditors meeting certain requirements. For a New York Stock Exchange-listed Japanese company with a Board of Corporate Auditors, the requirements for relying on paragraph (c)(3) of Rule 10A-3 are as follows:

(a)       The Board of Corporate Auditors must be established, and its members must be selected, pursuant to Japanese law expressly requiring such a board for Japanese companies that elect to have a corporate governance system with corporate auditors.

(b)       Japanese law must and does require the Board of Corporate Auditors to be separate from the board of directors.

(c)       None of the members of the Board of Corporate Auditors is elected by management, and none of the listed companys executive officers is a member of the Board of Corporate Auditors.

(d)       Japanese law must and does set forth standards for the independence of the members of the Board of Corporate Auditors from the listed company or its management.

110



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|Index to Consolidated Financial Statements and Information.

(e)       The Board of Corporate Auditors, in accordance with Japanese law or the listed companys governing documents, must be responsible, to the extent permitted by Japanese law, for the appointment, retention and oversight of the work of any registered public accounting firm engaged (including, to the extent permitted by Japanese law, the resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the listed company, including its principal accountant which audits its consolidated financial statements included in its annual reports on Form 20-F.

(f)       To the extent permitted by Japanese law:

-     the Board of Corporate Auditors must establish procedures for (i) the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

-     the Board of Corporate Auditors must have the authority to engage independent counsel and other advisers, as it determines necessary to carry out its duties; and

-     the listed company must provide for appropriate funding, as determined by its Board of Corporate Auditors, for payment of (i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for us, (ii) compensation to any advisers employed by the Board of Corporate Auditors, and (iii) ordinary administrative expenses of the Board of Corporate Auditors that are necessary or appropriate in carrying out its duties.

In our assessment, our Board of Corporate Auditors, which meets the requirements for reliance on the exemption in paragraph (c)(3) of Rule 10A-3 described above, is not materially less effective than an audit committee meeting all the requirements of paragraph (b) of Rule 10A-3 (without relying on any exemption provided by that Rule) at acting independently of management and performing the functions of an audit committee as contemplated therein.

111



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|Index to Consolidated Financial Statements and Information.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchases.

The following table sets forth information concerning purchases made by us during the fiscal year ended March 31, 2007.

|      |                 | Shares                           |  | Yen                          |         | Shares                                                                                 |   | Shares                                                                               
|----- | --------------- | -------------------------------- |  | ---------------------------- | ------- | -------------------------------------------------------------------------------------- | - | -------------------------------------------------------------------------------------
|      |                 | Total number of shares purchased |  | Average price paid per share |         | Total number of shares purchased as part of publicly announced plans or
      programs |   | Maximum numbers of shares that may yet be purchased under the plans or
      programs
|2006  |                 |                                  |  |                              |         |                                                                                        |   |                                                                                      
|      | April 1 - 30    | 472                              |  |                              | ¥ 9,126 |                                                                                        |   | -                                                                                    
|      | May 1 - 31      | 170                              |  |                              | 8,743   |                                                                                        |   | -                                                                                    
|      | June 1 - 30     | -                                |  |                              | -       |                                                                                        |   | -                                                                                    
|      | July 1 - 31     | 134                              |  |                              | 8,090   |                                                                                        |   | -                                                                                    
|      | August 1 - 31   | 140                              |  |                              | 7,864   |                                                                                        |   | -                                                                                    
|      | September 1- 30 | 84                               |  |                              | 8,403   |                                                                                        |   | -                                                                                    
|      | October 1 - 31  | 342                              |  |                              | 9,106   |                                                                                        |   | -                                                                                    
|      | November 1 - 30 | 664                              |  |                              | 8,613   |                                                                                        |   | -                                                                                    
|      | December 1- 31  | 244                              |  |                              | 9,132   |                                                                                        |   | -                                                                                    
|2007  |                 |                                  |  |                              |         |                                                                                        |   |                                                                                      
|      | January 1 - 31  | 437                              |  |                              | 9,002   |                                                                                        |   | -                                                                                    
|      | February 1 - 28 | 169                              |  |                              | 7,941   |                                                                                        |   | -                                                                                    
|      | March 1 - 31    | -                                |  |                              | -       |                                                                                        |   | -                                                                                    
|      |                 |                                  |  |                              |         |                                                                                        |  
|Total | 2,856           |                                  |  | ¥ 8,761                      |         |                                                                                        | - |                                                                                      
|      |                 |                                  |  |                              |         |                                                                                        |  

All of the purchase shown above represent with the purchase of fractional shares from fractional share owners under the Company Law. For an explanation of the right of such shareholders, see Japanese Unit Share System Right of a Holder of Shares Representing Less Than One Unit to Require Us to Purchase Its Shares. under Item 10.B of this Annual Report.

Currently, we dont have any publicly announced repurchase plans or programs.

PART III

Item 17. Financial Statements.

In lieu of responding to this item, we have responded to Item 18 of this annual report.

Item 18. Financial Statements.

The information required by this item is set forth in our consolidated financial statements included in this annual report.

112



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|Index to Consolidated Financial Statements and Information.

Item 19. Exhibits.

|Exhibit Number | Description                                                                                                                                                                                                                                  
|-------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1            | Articles of Incorporation of Nidec Corporation (English translation)                                                                                                                                                                         
|1.2            | Share Handling Regulations of Nidec Corporation (English translation)*                                                                                                                                                                       
|1.3            | Regulations of the Board of Directors of Nidec Corporation (English translation)*                                                                                                                                                            
|1.4            | Regulations of the Board of Corporate Auditors of Nidec Corporation (English translation)*                                                                                                                                                   
|2.1            | Specimen common stock certificates of Nidec Corporation (English translation)**                                                                                                                                                              
|2.2            | Form of Deposit Agreement among Nidec Corporation, Morgan Guaranty Trust Company of New York as Depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt***
|8.1            | Subsidiaries of Nidec Corporation                                                                                                                                                                                                            
|11.1           | Code of Ethics****                                                                                                                                                                                                                           
|12.1           | Certification of the Chief Executive Officer required by Rule 13a-14(a)                                                                                                                                                                      
|12.2           | Certification of the Chief Financial Officer required by Rule 13a-14(a)                                                                                                                                                                      
|13.1           | Certification of the Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code                                                                                                 
|13.2           | Certification of the Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code                                                                                                 

We have not included as exhibits certain instruments with respect to our long-term debt, the amount of debt authorized under each of which does not exceed 10% of our total assets, and we agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

____________

*       Incorporated by reference to Nidecs annual report on Form 20-F for the year ended March 31, 2006 filed on September 25, 2006.

**     Incorporated by reference to Nidecs annual report on Form 20-F for the year ended March 31, 2002 filed on July 5, 2002.

***   Incorporated by reference to the Registration Statement on Form F-6 (file no. 333-13894) filed on September 7, 2001.

**** Incorporated by reference to Nidecs annual report on Form 20-F for the year ended March 31, 2005 filed on August 12, 2005.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



|                     |  |  | NIDEC CORPORATION          |                                                                      
|-------------------- |  |  | -------------------------- | ---------------------------------------------------------------------
|                     |  |  |                            |                                                                      
|                     |  |  | By: /s/ Shigenobu Nagamori |                                                                      
|                     |  |  | Name:                      | Shigenobu Nagamori                                                   
|                     |  |  | Title:                     | President, Chief Executive Officer and
       Representative Director
|Date:  July 27, 2007 |  |  |                            |                                                                      



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|-----------------------------------------------------------
|Index to Consolidated Financial Statements and Information.

INDEX OF EXHIBITS

|Exhibit Number | Description                                                                                                                                                                                                                                  
|-------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1            | Articles of Incorporation of Nidec Corporation (English translation)                                                                                                                                                                         
|1.2            | Share Handling Regulations of Nidec Corporation (English translation)*                                                                                                                                                                       
|1.3            | Regulations of the Board of Directors of Nidec Corporation (English translation)*                                                                                                                                                            
|1.4            | Regulations of the Board of Corporate Auditors of Nidec Corporation (English translation)*                                                                                                                                                   
|2.1            | Specimen common stock certificates of Nidec Corporation (English translation)**                                                                                                                                                              
|2.2            | Form of Deposit Agreement among Nidec Corporation, Morgan Guaranty Trust Company of New York as Depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt***
|8.1            | Subsidiaries of Nidec Corporation                                                                                                                                                                                                            
|11.1           | Code of Ethics****                                                                                                                                                                                                                           
|12.1           | Certification of the Chief Executive Officer required by Rule 13a-14(a)                                                                                                                                                                      
|12.2           | Certification of the Chief Financial Officer required by Rule 13a-14(a)                                                                                                                                                                      
|13.1           | Certification of the Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code                                                                                                 
|13.2           | Certification of the Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code                                                                                                 

We have not included as exhibits certain instruments with respect to our long-term debt, the amount of debt authorized under each of which does not exceed 10% of our total assets, and we agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

____________

*       Incorporated by reference to Nidecs annual report on Form 20-F for the year ended March 31, 2006 filed on September 25, 2006.

**     Incorporated by reference to Nidecs annual report on Form 20-F for the year ended March 31, 2002 filed on July 5, 2002.

***   Incorporated by reference to the Registration Statement on Form F-6 (file no. 333-13894) filed on September 7, 2001.

**** Incorporated by reference to Nidecs annual report on Form 20-F for the year ended March 31, 2005 filed on August 12, 2005.



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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

| |                                                                                                                                         | Page
| | --------------------------------------------------------------------------------------------------------------------------------------- | ----
| | Report of Independent Registered Public Accounting Firm                                                                                 |     
| | Consolidated balance sheets at March 31, 2006 and 2007                                                                                  |     
| | Consolidated statements of income for the years ended March 31, 2005, 2006 and 2007                                                     |     
| | Consolidated statements of shareholders equity and comprehensive
      income (loss) for the years ended March 31, 2005, 2006 and 2007 |     
| | Consolidated statements of cash flows for the years ended March 31, 2005,
      2006 and 2007                                           |     
| | Notes to consolidated financial statements                                                                                              |     

F-1



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|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

Report of Independent Registered Public Accounting Firm



To the Shareholders and Board of Directors of

Nihon Densan Kabushiki Kaisha

(NIDEC Corporation):



We have completed an integrated audit of NIDEC Corporations 2007 consolidated financial statements and of its internal control over financial reporting as of March 31, 2007 and audits of its 2006 and 2005 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.



Consolidated financial statements



In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of NIDEC Corporation and its subsidiaries at March 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2007 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.



As discussed in Note 15, the company has adopted SFAS No. 158; Employers Accounting for Defined Benefit Pension and Other Postretirement Plans as of March 31, 2007.



Internal control over financial reporting



Also, in our opinion, managements assessment, included in Managements Report on Internal Control over Financial Reporting appearing under Item 15(b), that the Company maintained effective internal control over financial reporting as of March 31, 2007 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria.
Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the COSO.
The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on managements assessment and on the effectiveness of the Companys internal control over financial reporting based on our audit.

F-2



---

We conducted our audit of internal control over financial reporting in
accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects.
 An audit of internal control over financial reporting includes obtaining
an understanding of internal control over financial reporting, evaluating
managements assessment, testing and evaluating the design and operating
effectiveness of internal control, and performing such other procedures
as we consider necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinions.



A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



As described in Managements Report on Internal Control over Financial Reporting appearing under Item 15, management has excluded Motors & Actuators business of Valeo S.A., France and Brilliant Manufacturing Limited from its assessment of internal control over financial reporting as of March 31, 2007, because the businesses were acquired in a business combination by the Company on December 27, 2006 and February 23, 2007 respectively. We have also excluded the Motors & Actuators business of Valeo S.A., France and Brilliant Manufacturing Limited from our audit of internal control over financial reporting. In aggregate, total assets and total revenues of the Motors & Actuators business of Valeo S.A., France and Brilliant Manufacturing Limited represent 8.8 %, and 1.4 %, respectively, of the related consolidated financial statement amounts as of and for the year ended March 31, 2007.



/s/ MISUZU PricewaterhouseCoopers

Kyoto, Japan

June 22, 2007

F-3



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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

CONSOLIDATED BALANCE SHEETS

ASSETS

|                |                                                                                                                                                      | Yen in millions |   | U.S. dollars
      in thousands
|--------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- | --------------- | - | -------------------------------
|                |                                                                                                                                                      | March 31        |   | March 31,                      
|                |                                                                                                                                                      | 2006            |   | 2007                           
|Current assets: |                                                                                                                                                      |                 |   |                                
|                | Cash and cash equivalents                                                                                                                            | ¥92,079         |   |                                
|                | Trade notes and accounts receivable, net of allowance for doubtful accounts of   ¥538 million in 2006 and ¥1,270 million ($10,758 thousand) in 2007: |                 |   |                                
|                | Notes                                                                                                                                                | 15,740          |   |                                
|                | Accounts                                                                                                                                             | 127,998         |   |                                
|                | Inventories                                                                                                                                          | 60,474          |   |                                
|                | Other current assets                                                                                                                                 | 15,256          |   |                                
|                |                                                                                                                                                      |                 |   |                                
|                | Total current
      assets                                                                                                                           | 311,547         |   |                                
|                |                                                                                                                                                      |                 |   |                                
|                | Marketable securities and other securities
      investments                                                                                         | 21,328          |   |                                
|                | Investments in and advances to affiliated companies                                                                                                  | 2,868           |   |                                
|                |                                                                                                                                                      |                 |   |                                
|                |                                                                                                                                                      | 24,196          |   |                                
|                | Property, plant and equipment:                                                                                                                       |                 |   |                                
|                | Land                                                                                                                                                 | 36,088          |   |                                
|                | Buildings                                                                                                                                            | 89,039          |   |                                
|                | Machinery and equipment                                                                                                                              | 210,108         |   |                                
|                | Construction in progress                                                                                                                             | 8,780           |   |                                
|                |                                                                                                                                                      |                 |   |                                
|                |                                                                                                                                                      | 344,015         |   |                                
|                | Less - Accumulated depreciation                                                                                                                      | (167,787        | ) |                                
|                |                                                                                                                                                      |                 |   |                                
|                |                                                                                                                                                      | 176,228         |   |                                
|                |                                                                                                                                                      |                 |   |                                
|                | Goodwill                                                                                                                                             | 44,266          |   |                                
|                | Other non-current assets                                                                                                                             | 9,733           |   |                                
|                |                                                                                                                                                      |                 |   |                                
|                | Total assets                                                                                                                                         | ¥ 565,970       |   |                                
|                |                                                                                                                                                      |                 |   |                                

The accompanying notes are an integral part of these financial statements.

F-4



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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS EQUITY

|                                               |                                                                                                                                                       | Yen in millions |   | U.S. dollarsin thousands
|---------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | --------------- | - | ------------------------
|                                               |                                                                                                                                                       | March 31        |   | March 31,               
|                                               |                                                                                                                                                       | 2006            |   | 2007                    
|Current liabilities:                           |                                                                                                                                                       |                 |   |                         
|                                               | Short-term borrowings                                                                                                                                 | ¥ 43,621        |   |                         
|                                               | Current portion of long-term debt                                                                                                                     | 4,647           |   |                         
|                                               | Trade notes and accounts payable                                                                                                                      | 109,053         |   |                         
|                                               | Other current liabilities                                                                                                                             | 28,809          |   |                         
|                                               |                                                                                                                                                       |                 |   |                         
|                                               | Total current liabilities                                                                                                                             | 186,130         |   |                         
|Long-term liabilities:                         |                                                                                                                                                       |                 |   |                         
|                                               | Long-term debt                                                                                                                                        | 32,134          |   |                         
|                                               | Accrued pension and severance costs                                                                                                                   | 9,704           |   |                         
|                                               | Other long-term liabilities                                                                                                                           | 11,365          |   |                         
|                                               |                                                                                                                                                       |                 |   |                         
|                                               | Total long-term liabilities                                                                                                                           | 53,203          |   |                         
|                                               |                                                                                                                                                       |                 |   |                         
|Minority interest in consolidated subsidiaries | 62,978                                                                                                                                                |                 |   | 66,453                  
|                                               |                                                                                                                                                       |                 |   |                         
|Commitments and contingencies (Note 24)        |                                                                                                                                                       |                 |   |                         
|Shareholders equity:                          |                                                                                                                                                       |                 |   |                         
|                                               | Common stock authorized 2006 and 2007: 480,000,000 shares ; issued and outstanding: 
      2006 - 144,661,292 shares/
      2007 - 144,780,492 shares | 65,649          |   |                         
|                                               | Additional paid-in capital                                                                                                                            | 68,240          |   |                         
|                                               | Retained earnings                                                                                                                                     | 126,334         |   |                         
|                                               | Accumulated other comprehensive income                                                                                                                |                 |   |                         
|                                               | Foreign currency translation adjustments                                                                                                              | (75             | ) |                         
|                                               | Unrealized gains from securities                                                                                                                      | 3,863           |   |                         
|                                               | Minimum pension liability adjustment                                                                                                                  | (115            | ) |                         
|                                               | Pension liability adjustments                                                                                                                         | -               |   |                         
|                                               | Treasury stock, at cost: 
      2006 - 42,110 shares /
      2007 - 44,966 shares                                                                     | (237            | ) |                         
|                                               |                                                                                                                                                       |                 |   |                         
|                                               | Total shareholders equity                                                                                                                            | 263,659         |   |                         
|                                               |                                                                                                                                                       |                 |   |                         
|                                               | Total liabilities and shareholders equity                                                                                                            | ¥ 565,970       |   |                         
|                                               |                                                                                                                                                       |                 |   |                         

The accompanying notes are an integral part of these financial statements.

F-5



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

| |                                                                                      | Yen in millions             |          | U.S. dollarsin thousands    
| | ------------------------------------------------------------------------------------ | --------------------------- | -------- | ----------------------------
| |                                                                                      | For the year ended March 31 |          | For the year ended March 31,
| |                                                                                      | 2005                        |          | 2006                        
| | Net sales                                                                            | ¥ 485,861                   |          |                             
| | Operating expenses:                                                                  |                             |          |                             
| | Cost of products sold                                                                | 370,938                     |          |                             
| | Selling, general and administrative expenses                                         | 35,340                      |          |                             
| | Research and development expenses                                                    | 25,918                      |          |                             
| |                                                                                      |                             |          |                             
| |                                                                                      | 432,196                     |          |                             
| |                                                                                      |                             |          |                             
| | Operating income                                                                     | 53,665                      |          |                             
| |                                                                                      |                             |          |                             
| | Other income (expense):                                                              |                             |          |                             
| | Interest and dividend income                                                         | 929                         |          |                             
| | Interest expense                                                                     | (871                        | )        |                             
| | Foreign exchange gain, net                                                           | 2,377                       |          |                             
| | (Loss) gain on derivative instruments, net                                           | (175                        | )        |                             
| | Gain from marketable securities, net                                                 | 1,586                       |          |                             
| | Other, net                                                                           | (221                        | )        |                             
| |                                                                                      |                             |          |                             
| |                                                                                      | 3,625                       |          |                             
| |                                                                                      |                             |          |                             
| | Income before provision for income taxes                                             | 57,290                      |          |                             
| | Provision for income taxes                                                           | (12,847                     | )        |                             
| |                                                                                      |                             |          |                             
| | Income before minority interest and equity in
      earnings of affiliated companies | 44,443                      |          |                             
| | Minority interest in income of consolidated subsidiaries                             | 10,954                      |          |                             
| | Equity in net losses of affiliated companies                                         | 34                          |          |                             
| |                                                                                      |                             |          |                             
| | Net income                                                                           | ¥ 33,455                    |          |                             
| |                                                                                      |                             |          |                             
| |                                                                                      |                             |          |                             
| |                                                                                      | Yen                         |          | U.S. dollars                
| | Per share data:                                                                      |                             |          |                             
| | Net income                                                                           | - basic                     | ¥ 239.87 |                             
| |                                                                                      | - diluted                   | ¥ 228.29 |                             
| | Cash dividends                                                                       | ¥ 17.50                     |          |                             
| |                                                                                      |                             |          |                             

The accompanying notes are an integral part of these financial statements.

F-6



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

AND COMPREHENSIVE INCOME

| |                                                                               | Yen in millions
| | ----------------------------------------------------------------------------- | ---------------
| |                                                                               | Common stock   
| |                                                                               | Shares         
| | Balance at March 31, 2004                                                     | 130,035,796    
| | Comprehensive income:                                                         |                
| | Net income                                                                    |                
| | Other comprehensive income (loss):                                            |                
| | Foreign currency translation adjustments                                      |                
| | Unrealized gains (losses) from securities, net of reclassification adjustment |                
| | Minimum pension liability adjustment                                          |                
| |                                                                               |                
| | Total comprehensive income                                                    |                
| |                                                                               |                
| | Dividends paid                                                                |                
| | Conversion of convertible debt                                                | 1,141,330      
| | Issuance of new shares                                                        | 11,240,000     
| | Exercise of stock option                                                      | 87,800         
| | Issuance cost of new stock                                                    |                
| | Treasury stock issued upon stock exchange                                     |                
| | Purchase of treasury stock                                                    |                
| |                                                                               |                
| | Balance at March 31, 2005                                                     | 142,504,926    
| |                                                                               |                
| | Comprehensive income:                                                         |                
| | Net income                                                                    |                
| | Other comprehensive income (loss):                                            |                
| | Foreign currency translation adjustments                                      |                
| | Unrealized gains from securities, net of reclassification adjustment          |                
| | Minimum pension liability adjustment                                          |                
| |                                                                               |                
| | Total comprehensive income                                                    |                
| |                                                                               |                
| | Dividends paid                                                                |                
| | Conversion of convertible debt                                                | 2,032,966      
| | Exercise of stock option                                                      | 123,400        
| | Issuance cost of new stock                                                    |                
| | Purchase of treasury stock                                                    |                
| |                                                                               |                
| | Balance at March 31, 2006                                                     | 144,661,292    
| |                                                                               |                

The accompanying notes are an integral part of these financial statements.

F-7



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

AND COMPREHENSIVE INCOME

| |                                                                               | Yen in millions
| | ----------------------------------------------------------------------------- | ---------------
| |                                                                               | Common stock   
| |                                                                               | Shares         
| | Balance at March 31, 2006                                                     | 144,661,292    
| | Comprehensive income:                                                         |                
| | Net income                                                                    |                
| | Other comprehensive income (loss):                                            |                
| | Foreign currency translation adjustments                                      |                
| | Unrealized gains (losses) from securities, net of reclassification adjustment |                
| | Minimum pension liability adjustment                                          |                
| | Total comprehensive income                                                    |                
| | Adjustment to initially apply SFAS No. 158, net of tax                        |                
| | Total                                                                         |                
| | Dividends paid                                                                |                
| | Exercise of stock option                                                      | 119,200        
| | Issuance cost of new stock                                                    |                
| | Purchase of treasury stock                                                    |                
| |                                                                               |                
| | Balance at March 31, 2007                                                     | 144,780,492    
| |                                                                               |                



| |                                                                               | U.S. dollars in thousands
| | ----------------------------------------------------------------------------- | -------------------------
| |                                                                               | CommonStock              
| |                                                                              
| | Balance at March 31, 2006                                                     | $556,112                 
| | Comprehensive income:                                                         |                          
| | Net income                                                                    |                          
| | Other comprehensive income (loss):                                            |                          
| | Foreign currency translation adjustments                                      |                          
| | Unrealized gains (losses) from securities, net of reclassification adjustment |                          
| | Minimum pension liability adjustment                                          |                          
| | Total comprehensive income                                                    |                          
| | Adjustment to initially apply SFAS No. 158, net of tax                        |                          
| | Total                                                                         |                          
| | Dividends paid                                                                |                          
| | Exercise of stock option                                                      | 1,855                    
| | Issuance cost of new stock                                                    |                          
| | Purchase of treasury stock                                                    |                          
| |                                                                               |                          
| | Balance at March 31, 2007                                                     | $557,967                 
| |                                                                               |                          



The accompanying notes are an integral part of these financial statements.

F-8



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                      |                                                                                   | Yen in millions             |   | U.S. dollars
      in thousands
|------------------------------------- | --------------------------------------------------------------------------------- | --------------------------- | - | -------------------------------
|                                      |                                                                                   | For the year ended March 31 |   | For the year ended March 31,   
|                                      |                                                                                   | 2005                        |   | 2006                           
|Cash flows from operating activities: |                                                                                   |                             |   |                                
|                                      | Net income                                                                        | ¥ 33,455                    |   |                                
|                                      | Adjustments to reconcile net income to net cash provided by operating activities: |                             |   |                                
|                                      | Depreciation                                                                      | 21,528                      |   |                                
|                                      | Amortization                                                                      | 577                         |   |                                
|                                      | Gain from marketable securities, net                                              | (1,586                      | ) |                                
|                                      | Loss on sales, disposal and impairment of property, plant and equipment           | 1,479                       |   |                                
|                                      | Deferred income  taxes                                                            | 2,537                       |   |                                
|                                      | Minority interest in income of consolidated subsidiaries                          | 10,954                      |   |                                
|                                      | Equity in net losses of affiliated companies                                      | 34                          |   |                                
|                                      | Loss (gain) on derivative instruments, net                                        | 175                         |   |                                
|                                      | Loss (gain) on sale of investments in affiliated companies                        | 3                           |   |                                
|                                      | Foreign currency adjustments                                                      | (752                        | ) |                                
|                                      | Accrual for pension and severance costs, net payments                             | (9,352                      | ) |                                
|                                      | Changes in operating assets and liabilities:                                      |                             |   |                                
|                                      | Increase in notes and accounts receivable                                         | (15,132                     | ) |                                
|                                      | (Increase) decrease in inventories                                                | (3,254                      | ) |                                
|                                      | Increase (decrease) in notes and accounts payable                                 | 968                         |   |                                
|                                      | Increase in accrued income taxes                                                  | 2,303                       |   |                                
|                                      | Other                                                                             | 396                         |   |                                
|                                      |                                                                                   |                             |   |                                
|                                      | Net cash provided by operating activities                                         | ¥ 44,333                    |   |                                
|                                      |                                                                                   |                             |   |                                

The accompanying notes are an integral part of these financial statements.

F-9



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                            |                                                                    | Yen in millions             |   | U.S. dollars
      in thousands
|------------------------------------------- | ------------------------------------------------------------------ | --------------------------- | - | -------------------------------
|                                            |                                                                    | For the year ended March 31 |   | For the year ended March 31,   
|                                            |                                                                    | 2005                        |   | 2006                           
|Cash flows from
      investing activities: |                                                                    |                             |   |                                
|                                            | Additions to property, plant and equipment                         | ¥ (37,257                   | ) |                                
|                                            | Proceeds from sales of property, plant and equipment               | 2,510                       |   |                                
|                                            | Purchases of marketable securities                                 | (3                          | ) |                                
|                                            | Proceeds from sales of marketable securities                       | 2,739                       |   |                                
|                                            | Investments in and advances to affiliated companies                | -                           |   |                                
|                                            | Proceeds from sales of investments in affiliated companies         | 344                         |   |                                
|                                            | Acquisitions of consolidated subsidiaries, net of cash acquired    | 23                          |   |                                
|                                            | Payments for additional investments in subsidiaries                | (12,103                     | ) |                                
|                                            | Proceeds from sale of investment in subsidiaries                   | -                           |   |                                
|                                            | Other                                                              | (2,141                      | ) |                                
|                                            |                                                                    |                             |   |                                
|                                            | Net cash used in investing activities                              | (45,888                     | ) |                                
|                                            |                                                                    |                             |   |                                
|Cash flows from financing activities:       |                                                                    |                             |   |                                
|                                            | (Decrease) increase in short-term borrowings                       | (57,824                     | ) |                                
|                                            | Proceeds from issuance of long-term debt                           | 2,868                       |   |                                
|                                            | Repayments of long-term debt                                       | (4,442                      | ) |                                
|                                            | Proceeds from issuance of new shares                               | 60,133                      |   |                                
|                                            | Dividends paid                                                     | (2,388                      | ) |                                
|                                            | Other                                                              | (841                        | ) |                                
|                                            |                                                                    |                             |   |                                
|                                            | Net cash (used in) provided by financing activities                | (2,494                      | ) |                                
|                                            |                                                                    |                             |   |                                
|                                            | Effect of exchange
      rate changes on cash and cash equivalents | 768                         |   |                                
|                                            | Net (decrease) increase in cash and cash equivalents               | (3,281                      | ) |                                
|                                            | Cash and cash equivalents at beginning of year                     | 73,392                      |   |                                
|                                            |                                                                    |                             |   |                                
|                                            | Cash and cash equivalents at end of year                           | ¥ 70,111                    |   |                                
|                                            |                                                                    |                             |   |                                

The accompanying notes are an integral part of these financial statements.

F-10



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of operations:

NIDEC Corporation (the Company) and its subsidiaries (collectively NIDEC) are primarily engaged in the design, development, manufacturing and marketing of i) small precision motors, which include spindle motors for computer hard disk drives, motors for optical disk drives, small precision fans and other small motors; ii) mid-size motors, which are used in automobiles, various electric household appliances and industrial equipment; iii) machinery, which includes, power transmission equipment, semi-conductor manufacturing supplies, test systems, measuring equipment, card readers, industrial robots and factory automation systems. iv) electronic and optical components, which include camera shutters, camera lends units, encoders, switches, trimmer potentiometers, motor driven actuator units, optical pickup units, processing and precision plastic mold products. v) other products, which include auto parts, pivot assemblies and other services. Manufacturing operations are located primarily in Asia (China, Singapore, Thailand and the Philippines), and NIDEC has sales subsidiaries primarily in Asia, North America and Europe.

The main customers for spindle motors are manufacturers of hard disk drives. NIDEC also sells its products to the manufacturers of various automation equipment, electric household appliances, home video game consoles, and telecommunication and audio-visual equipment.

2. Summary of significant accounting policies:

The Company and its subsidiaries in Japan maintain their records and prepare their financial statements in accordance with accounting principles generally accepted in Japan, and its foreign subsidiaries in conformity with those of their countries of domicile. Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conformity with accounting principles generally accepted in the United States of America. Significant accounting policies after reflecting adjustments for the above are as follows:

Estimates -

The preparation of NIDECs consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates include allowance for doubtful accounts, depreciation and amortization of long-lived assets, valuation allowance for deferred tax asset and pension liabilities. Actual results could differ from those estimates.



F-11



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Basis of consolidation and accounting for investments in affiliated companies -

The consolidated financial statements include the accounts of the Company and those of its majority-owned subsidiary companies. All significant intercompany transactions and accounts have been eliminated. Companies over which NIDEC exercises significant influence, but which it does not control, are classified as affiliated companies and accounted for using the equity method. Consolidated net income includes NIDECs equity in current earnings (losses) of such companies, after elimination of unrealized intercompany profits.

On occasion, a consolidated subsidiary or affiliated company accounted for by the equity method may issue its shares to third parties as either public or private offering or upon conversion of convertible debt to common stock at amounts per share in excess of or less than NIDECs average per share carrying value. With respect to such transactions, where the sale of such shares is not part of a broader corporate reorganization and the reacquisition of such shares is not contemplated at the time of issuance, the resulting gains or losses arising from the change in interest are recorded in income for the year when the change in interest transaction occurs. If reacquisition of such shares is contemplated at the time of issuance or realization of such gain is not reasonably assured (i.e., the entity is newly formed, non-operating, a research and development or start-up/development stage entity, or where the entitys ability to continue in existence is in question), the transaction is accounted for as a capital transaction.

NIDEC does not hold any interests in variable interest entities, therefore does not provide the disclosure required by FIN No.46R Consolidation of Variable Interest Entities  an interpretation of ARB No.51.

Translation of foreign currencies -

All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at the year-end exchange rates and all income and expense accounts are translated at exchange rates that approximate those prevailing at the time of the transactions. The resulting translation adjustments are included as a component of accumulated other comprehensive income in shareholders equity.

Assets and liabilities denominated in foreign currencies are translated at the year-end exchange rates and the resulting transaction gains or losses are taken into income.

Cash and cash equivalents -

Cash and cash equivalents include all highly liquid investments, with original maturities of three months or less that are readily convertible to known amounts of cash and are so near maturity that they present insignificant risk of changes in value because of changes in interest rates.



F-12



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Inventories -

Inventories are stated at the lower of cost or market. Cost is determined principally on the weighted average cost basis. Cost includes the cost of materials, labor and applied factory overhead. Projects in progress, which mainly relate to production of factory automation equipment based on contracts with customers, are stated at the lower of cost or estimated realizable value, cost being determined as the accumulated production cost.

Marketable securities -

Marketable securities consist of equity securities that are listed on recognized stock exchanges. Equity securities designated as available-for-sale are carried at fair value with changes in unrealized gains or losses included as a component of accumulated other comprehensive income in shareholders equity, net of applicable taxes. Realized gains and losses are determined on the average cost method and are reflected in the statement of income. Other than temporary declines in market value of individual securities classified as available-for-sale are charged to income in the period the loss occurs.



Derivative financial instruments -

NIDEC employs derivative financial instruments, including interest rate swaps, interest rate currency swaps, interest rate caps agreements and foreign exchange forward contracts to manage its exposure to fluctuations in foreign currency exchange rates and interest rates. Derivative contracts are marked to market and changes in value, both increases and decreases, are recognized directly in the consolidated statement of income. No derivatives are designated as hedges or accounted for as hedges.



Property, plant and equipment -

Property, plant and equipment are stated at cost. Major renewals and improvements are capitalized; minor replacements, maintenance and repairs are charged to current operations. Depreciation of property, plant and equipment is mainly computed on the declining-balance method to reflect the manner in which the machinery is used due to short product cycles and rapid technology changes by the Company, its Japanese subsidiaries and its Thai manufacturing subsidiary, which mainly produce high-end spindle motors for hard disk drives and are usually the first to commence production of new products, and on the straight-line method for foreign subsidiary companies (except for the Thai subsidiary manufacturing as described above) at rates based on the estimated useful lives of the assets. Estimated useful lives range from 10 to 20 years for most spindle motor factories, from 7 to 47 years for factories to produce other products, 50 years for the head office and sales offices, from 2 to 22 years for leasehold improvement, and from 2 to 15 years for machinery and equipment.

Depreciation expense amounted to ¥21,528 million, ¥26,285 million, and ¥29,997 million ($254,104 thousand) for the years ended March 31, 2005, 2006, and 2007, respectively.

F-13



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Lease-

NIDEC applies SFAS No.13 Accounting for Leases. Under SFAS No. 13, certain lease agreements of property, plant and equipment where NIDEC has substantially all the risks and rewards of ownership are classified as capital leases and related obligations are recorded as liabilities. Capital leases are capitalized at the commencement of the lease at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Goodwill -

Goodwill represents the excess of purchase price and related costs over the fair value of net assets of acquired businesses. Under SFAS No.142 Goodwill and Other Intangible Assets, goodwill acquired in business combinations is not amortized but tested annually for impairment. If, between annual tests, an event, which would reduce the fair value below its carrying amount, occurs, NIDEC would recognize impairment.

Long-lived assets -

NIDEC reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated as the excess of the assets carrying value over its fair value. Long-lived assets that are to be disposed of other than by sale are considered to be held and used until the disposal. Long-lived assets that are to be disposed of by sale are reported at the lower of their carrying value or fair value less costs to sell. Reductions in carrying value are recognized in the period in which long-lived assets are classified as held for sale.

Revenue recognition -

NIDEC recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assumed. For motors, these criteria are generally met at the time product is delivered to the customers site which is the time the customer has taken title to the product and the risk and rewards of ownership have been substantively transferred. These conditions are met at the time of delivery to customers in domestic sales (FOB destination) and at the time of shipment for export sales (FOB shipping point). Revenue for machinery and equipment sales is recognized upon receipt of final customer acceptance. At the time the related revenue is recognized, NIDEC makes provisions for estimated product returns.

F-14



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Research and development expenses-

Research and development expenses, mainly consist of personnel and depreciation expenses at research and development branches, are charged to operations as incurred.

Advertising costs -

Advertising and sales promotion costs are expensed as incurred. Advertising costs were ¥304 million, ¥277 million, and ¥337 million ($2,855 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively.

Income taxes -

The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

Earnings per share -

Basic net income per common share is calculated by dividing net income by the weighted-average number of shares outstanding during the reported period. The calculation of diluted net income per common share is similar to the calculation of basic net income per share, except that the weighted-average number of shares outstanding includes the additional dilution from potential common stock equivalents such as convertible bonds and warrants. All per share amounts have been restated to reflect the retroactive effect of stock splits.

Other comprehensive income -

Other comprehensive income refers to revenues, expenses, gains and losses that are included in comprehensive income, but are excluded from net income as these amounts are recorded directly as an adjustment to shareholders equity. NIDECs other comprehensive income is primarily comprised of unrealized gains and losses on marketable securities designated as available-for-sale, foreign currency translation adjustments and adjustments to recognize pension liabilities associated with NIDEC’s defined benefit pension plans.

F-15



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Stock-based compensation-

NIDEC elected to apply Accounting Principle Board Opinion (“APB”) No. 25 in accounting for its stock-based compensation plans approved on May 14, 2003. Under APB No.25, no compensation expense was recognized on the grant date, since at that date, the option price equals the market price of the underlying common stock.

In December 2004, the FASB issued SFAS No. 123R (SFAS 123R), revised 2004, Share-Based Payment. SFAS 123R requires measurement of compensation cost for all share-based payments (including employee stock options) at fair value for interim or annual periods beginning after June 15, 2005. NIDEC adopted FAS No. 123R using the modified-prospective transition method beginning April 1, 2006. The adoption of FAS 123R did not have any material impact on NIDECs consolidated financial position, consolidated results of operations, or liquidity.

The following table illustrates the effect of the stock options granted on May 14, 2003 on net income and net income per share over their vesting period for the years ended March 31, 2005, 2006 and 2007, if the fair value based method had been used.

| |                                        |  | Yen in millions
      (except for per share data) |   | U.S. dollars
      in thousands
      (except for per share data)
| | -------------------------------------- |  | ------------------------------------------------- | - | -----------------------------------------------------------------
| |                                        |  | For the year ended March 31                       |   | For the year ended March 31,                                     
| |                                        |  | 2005                                              |   | 2006                                                             
| | Net income, as reported                |  | ¥ 33,455                                          |   |                                                                  
| | Deduct:                                |  |                                                   |   |                                                                  
| | Stock-based employee compensation cost |  | (194                                              | ) |                                                                  
| |                                        |  |                                                   |   |                                                                  
| | Pro forma net income                   |  | ¥ 33,261                                          |   |                                                                  
| |                                        |  |                                                   |   |                                                                  
| | Net income per share:                  |  |                                                   |   |                                                                  
| | Basic-as reported                      |  | ¥ 239.87                                          |   |                                                                  
| | Basic-pro forma                        |  | ¥ 238.48                                          |   |                                                                  
| |                                        |  |                                                   |   |                                                                  
| | Diluted-as reported                    |  | ¥ 228.29                                          |   |                                                                  
| | Diluted-pro forma                      |  | ¥ 226.97                                          |   |                                                                  
| |                                        |  |                                                   |   |                                                                  

F-16



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassification

Certain reclassifications of previously reported amounts have been made to the consolidated statements of income and the consolidated statements of cash flows for the years ended March 31, 2005 and 2006 to conform to the current year presentation. Such reclassifications have no effect on income and cash flows.

Accounting Changes

In September 2006, the Securities and Exchange Commission (the SEC) issued Staff Accounting Bulletin No. 108 (SAB 108), Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on how prior year misstatements should be taken into consideration when quantifying misstatements in current year financial statements for purposes of determining whether the current years financial statements are materially misstated. SAB 108 is effective for fiscal years ending after November 15, 2006. NIDEC adopted SAB 108 in the year ended March 31, 2007. SAB108 did not have a material impact on its current process for assessing and quantifying financial statement misstatements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158 (SFAS 158), Employers Accounting for Defined Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a single-employer defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in comprehensive income in the year in which the changes occur. SFAS 158 also requires that the measurement of plan assets and benefit obligations be as of the date of the employers statement of financial position, not up to three months earlier as had been permitted by Statements 87 and 106. The measurement date provision of SFAS 158 is effective for fiscal years ending after December 15, 2008. NIDEC adopted recognition and related disclosure provisions at the end of this fiscal year and the effect is described in note No. 15 Pension and severance plans.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements to be adopted in future periods

In July, 2006, the Financial Accounting Standards Board (the FASB) released FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement 109 (FIN 48). The Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Interpretation is effective for fiscal years beginning after December 15, 2006. NIDEC is currently evaluating the potential impact from adopting FIN 48 on its consolidated financial position, consolidated results of operations, or liquidity.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (SFAS 157), Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 is effective for fiscal years beginning after November 15, 2007. NIDEC is currently evaluating the potential impact from adopting SFAS 157 on its consolidated financial position, results of operation or liquidity.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities including an amendment of FASB Statement No. 115. SFAS 159 enables entities to choose measure eligible financial assets and financial liabilities at fair value, with changes in value recognized in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. NIDEC is currently evaluating the potential impact from adopting SFAS 159 on its consolidated financial position, results of operation or liquidity.

3. U.S. dollar amounts:

U.S. dollar amounts presented in the consolidated financial statements and the related notes are included solely for the convenience of the reader and are unaudited. These translations should not be construed as representations that the yen amounts actually represent, or have been or could be converted into, U.S. dollars. For this purpose, the rate of ¥118.05 = U.S. $1, the approximate current exchange rate at March 31, 2007, was used for the presentation of the U.S. dollar amounts in the accompanying consolidated financial statements of NIDEC as of and for the year ended March 31, 2007.

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|Index to Consolidated Financial Statements and Information.

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

4. Acquisitions and dispositions:

NIDEC made no significant business acquisitions or disposal for the year ended March 31, 2005 and 2006.

On November 8, 2006, NIDEC acquired a 98.9% share in Fujisoku Corporation (FSKC). FSKC manufactures and sells industrial switches, memory cards, panel switches and electronic measuring instruments. The purchase consideration for FSKC was ¥1,031 million ($8,734 thousand) and acquired 145,956 shares and as the result, goodwill of ¥1,987 million ($16,832 thousand) was recognized at the acquisition date. NIDEC believes further synergies with FSKC in R&D activities, manufacturing and sales will significantly enhance NIDECs product portfolio and ability to meet increasing customer requirements as well as increasing corporate value of both companies. The total cost of the acquisition has been allocated to the assets acquired and the liabilities assumed based on their respective fair values in accordance with SFAS 141, Business Combinations.

On December 27, 2006, NIDEC acquired all of the voting rights of the Motors & Actuators business of Valeo S.A., France. As a result, NIDEC has included seven additional companies (NMA group) in its scope of consolidation as wholly owned subsidiaries of NIDEC. NMA group manufactures motors and actuators for automobiles such as air flow system, body closure system, occupant positioning system, brake system and etc. By acquiring NMA group NIDEC expects to enhance its business channel in automobile industry, assimilate motor engineers and expand overseas business.

The purchase consideration of NMA Group voting rights was ¥15,710 million ($133,079 thousand) at the acquisition date. Under the purchase method of accounting, the total cost of the acquisition has been allocated to NMA Groups acquired assets and assumed liabilities based on their respective fair values at the date of the acquisition and a goodwill of ¥6,772 million ($57,366 thousand) was recorded. NIDEC has obtained preliminary third-party valuations of property, plant and equipment, intangible assets, and certain other assets and liabilities. Because of the proximity of this transaction to year end, the values of certain assets and liabilities are based on preliminary valuations and are subject to adjustment as additional information is obtained.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

On February 23, 2007, NIDEC acquired a 87.1% share in Brilliant Manufacturing Limited (“BML”). BML is engaged in manufacturing and sales of base plate die-casting and top cover used in hard disk drives. By acquiring BML, NIDEC increased its manufacturing capability in Asia and consequently, expects to geographically supplement its synergy among manufacturing subsidiaries of NIDEC. NIDEC also expects to accelerate in-house manufacturing capability and strengthen NIDEC competitiveness to maximize corporate value. The purchase consideration for the acquisition of BML was ¥13,532 million ($114,629 thousand) and acquired 406,031,100 shares at the acquisition date. Under the purchase method of accounting, the assets and liabilities of BML were recorded at their estimated respective fair values as of the date of the acquisition. NIDEC recorded a goodwill of ¥8,134 million ($68,903 thousand). Because of the proximity of this transaction to year end, the values of certain assets and liabilities are based on preliminary management estimation and are subject to adjustment as additional information is obtained; therefore the allocation of the purchase price and the valuation of the assets and liabilities are subject to refinement.

NIDEC will have 12 months from the closing of the acquisitions to finalize the applicable valuations. Changes to the valuation may result in adjustments to the fair value of certain identifiable intangible assets acquired.

NIDEC has not identified any material unrecorded pre-acquisition contingencies. Prior to the end of the one-year purchase price allocation period, if information becomes available which would indicate it is probable that such events had occurred and the amounts can be reasonably estimated, such items will be included in the final purchase price allocation and may adjust goodwill.

The following represents the unaudited pro forma results of operations of NIDEC for the year ended March 31, 2006 and 2007, as if the acquisition in these companies had occurred on April 1, 2005. The unaudited pro forma results of operations are presented for comparative purposes only and are not necessarily indicative of the results of operations that may occur in the future or that would have occurred had the acquisitions been in effect on the dates indicated.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                                      | Yen in millions                        |          | U.S. dollars
      in thousands       
|------------------------------------- | -------------------------------------- | -------- | --------------------------------------
|                                      | For the year ended March 31(Unaudited) |          | For the year ended
      March 31,2007
|                                      | 2006                                   | 2007     |                                       
|                                      |                                        |          |                                       
|Pro forma net sales                   | ¥ 588,321                              |          | ¥ 665,328                             
|Pro forma net income                  | 38,424                                 |          | 38,012                                
|                                      |                                        |          |                                       
|                                      | Yen                                    |          | U.S. dollars                          
|Pro forma net income per common share |                                        |          |                                       
|                                      | -basic                                 | ¥ 267.86 |                                       
|                                      | -diluted                               | 258.10   |                                       
|                                      |                                        |          |                                       

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The assets acquired and liabilities assumed on consolidation are as follows:

| |                                                             | Yen in millions                   |   | U.S. dollars
in thousands              
| | ----------------------------------------------------------- | --------------------------------- | - | ---------------------------------------
| |                                                             | For the year ended March 31, 2007 |   | For the year ended
      March 31, 2007
| |                                                             | NMA                               |   | FSKC                                   
| | Cash and cash equivalents                                   | ¥ 3,681                           |   |                                        
| | Accounts receivable                                         | 6,043                             |   |                                        
| | Inventories                                                 | 1,901                             |   |                                        
| | Other current assets                                        | 787                               |   |                                        
| | Property, plant and equipment                               | 8,923                             |   |                                        
| | Goodwill                                                    | 6,772                             |   |                                        
| | Other non-current assets                                    | 10,688                            |   |                                        
| |                                                             |                                   |   |                                        
| | Total assets acquired                                       | 38,795                            |   |                                        
| |                                                             |                                   |   |                                        
| | Short-term borrowings and current portion of long-term debt | (7,936                            | ) |                                        
| | Accounts payable                                            | (5,303                            | ) |                                        
| | Other current liabilities                                   | (2,048                            | ) |                                        
| | Long-term debt                                              | (176                              | ) |                                        
| | Other non-current liabilities                               | (7,622                            | ) |                                        
| |                                                             |                                   |   |                                        
| | Total liabilities assumed                                   | (23,085                           | ) |                                        
| |                                                             |                                   |   |                                        
| | Minority interest                                           | -                                 |   |                                        
| | Purchase price                                              | 15,710                            |   |                                        
| | Cash acquired                                               | (3,681                            | ) |                                        
| |                                                             |                                   |   |                                        
| | Net cash paid (acquired)                                    | ¥ 12,029                          |   |                                        
| |                                                             |                                   |   |                                        

The ¥16,893 million of goodwill was assigned to each operating segments as follows.

|     | Yen in millions |  | U.S. dollars
in thousands
|---- | --------------- |  | -------------------------
|     | March 31,2007   |  | March 31,2007            
|NCJ  | ¥ 14,906        |  | $ 126,268                
|NCEL | 1,987           |  | 16,832                   
|     | ¥ 16,893        |  | $ 143,100                

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

A summary of the major identified capitalized intangible assets and related amortization is as follows.

|                       | Years                                |                        | Yen in millions |                          | U.S dollars in thousands
|---------------------- | ------------------------------------ | ---------------------- | --------------- | ------------------------ | ------------------------
|                       | weighted average amortization period |                        | March 31, 2007  |                          | March 31, 2007          
|                       |                                      | Gross carrying amounts |                 | Accumulated amortization |                         
|Proprietary technology | 10                                   |                        |                 | ¥ 2,364                  |                         
|Customer relationships | 12                                   |                        |                 | 7,277                    |                         
|Other                  | 2 to 10                              |                        |                 | 360                      |                         
|                       |                                      |                        |                 |                          |                         
|Total                  |                                      |                        |                 | ¥ 10,001                 |                         
|                       |                                      |                        |                 |                          |                         

Material intangible asset has not been identified to be disclosed with regard to the business acquisition of FSKC.

There was no material pre-existing contractual relationship under the Emerging Issues Task Force 04-1 Accounting for Preexisting Relationships between the Parties to a Business Combination”, in relation to these business acquisitions.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

5. Goodwill and other intangible assets

Intangible assets subject to amortization are summarized as follows:

| |                        | Yen in millions        |  | U.S dollars in thousands
| | ---------------------- | ---------------------- |  | ------------------------
| |                        | March 31               |  | March 31,               
| |                        | 2006                   |  | 2007                    
| |                        | Gross carrying amounts |  | Accumulated amortization
| | Patent rights          | ¥ 67                   |  |                         
| | Proprietary technology | -                      |  |                         
| | Customer relationships | -                      |  |                         
| | Software               | 2,276                  |  |                         
| | Other                  | 491                    |  |                         
| | Total                  | ¥ 2,834                |  |                         

The weighted average amortization period for patent rights, proprietary technology, customer relationships and software are 10 years, 10 years, 12 years and 5 years, respectively.

Total amortization of intangible assets for the year ended March 31, 2005, 2006 and 2007 amounted to ¥225 million, ¥192 million and ¥542 million ($4,591 thousand), respectively.

Total indefinite live intangible assets amounted to ¥70 million and ¥142 million ($1,203 thousand) for the year ended March 31, 2006 and 2007, respectively.

The estimated aggregate amortization expense for intangible assets for the next five years is as follows:

|Years ending March 31, |  | Yen in Millions |  | U.S. dollarsin thousands
|---------------------- |  | --------------- |  | ------------------------
|2008                   |  | ¥ 1,628         |  |                         
|2009                   |  | 1,614           |  |                         
|2010                   |  | 1,348           |  |                         
|2011                   |  | 1,231           |  |                         
|2012                   |  | 1,136           |  |                         



Goodwill represents the excess of purchase price and related costs over the fair value of net assets of acquired businesses. On April 1, 2002, NIDEC adopted SFAS No. 142 Goodwill and Other Intangible Assets. Under SFAS No. 142, goodwill acquired in business combinations is not amortized but tested annually for impairment. If, between annual tests, an event, which would reduce the fair value below its carrying amount, occurs, NIDEC would recognize an impairment.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

NIDEC has completed the annual impairment test for existing goodwill as required by SFAS No. 142. For the years ended March 31, 2005, 2006 and 2007, NIDEC has determined that the fair value of each reporting unit which includes goodwill has been in excess of its carrying amount. Accordingly, for the years ended March 31, 2005, 2006 and 2007, no goodwill impairment loss has been recorded.

The carrying amounts of goodwill by operating segment as of March 31, 2006 and 2007 are as follows. Operating segment information is described at note No.25 (2).

|     | Yen in Millions |  | U.S. dollars
      in thousands
|---- | --------------- |  | -------------------------------
|     | March 31        |  | March 31,                      
|     | 2006            |  | 2007                           
|NCJ  | ¥ 43,572        |  |                                
|NCPL | 312             |  |                                
|NSCJ | 81              |  |                                
|NTSC | 156             |  |                                
|NCEL | 78              |  |                                
|NSNK | 67              |  |                                
|     |                 |  |                                
|     | ¥ 44,266        |  |                                
|     |                 |  |                                

The changes in the carrying amount of goodwill for the year ended March 31, 2006 and 2007 are as follows:

|                                      | Yen in Millions |  | U.S. dollarsin thousands
|------------------------------------- | --------------- |  | ------------------------
|                                      | 2006            |  | 2007                    
|Balance as of April 1                 | ¥ 40,664        |  |                         
|Acquired during the year              | 3,602           |  |                         
|Purchase price allocation adjustments | -               |  |                         
|                                      |                 |  |                         
|Balance as of March 31                | ¥ 44,266        |  |                         
|                                      |                 |  |                         

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

6. Supplemental cash flow information:



Cash payments for income taxes were ¥8,007 million, ¥13,026 million and ¥15,965 million ($135,239 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively. Interest payments during the years ended March 31, 2005, 2006 and 2007 were ¥853 million, ¥1,348 million and ¥1,907 million ($16,154 thousand), respectively.

Tax benefits related to stock-based compensation plan of ¥23 million and ¥16 million ($136 thousand) were classified as an operating cash flow for the year ended March 31, 2006 and 2007, respectively.

Because of the merger of Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., on October 1, 2005, NIDECs shares of UFJ Holdings, Inc. were exchanged for the shares of the new company, Mitsubishi UFJ Financial Group. As a result of this share exchange, NIDEC recognized a gain of ¥1,123 million for the year ended March 31, 2006, which is included in ¥3,869 million of Gain from marketable securities, net.  Because of the share exchange of Sumitomo Mitsui Financial Group, Inc. and SMBC Friend Securities Co., LTD., on September 1, 2006, NIDECs shares of SMBC Friend Securities Co., LTD. were exchanged for the shares of the company, Sumitomo Mitsui Financial Group. As a result of this share exchange, NIDEC recognized a gain of ¥45 million ($381 thousand) for the year ended March 31, 2007, which is included in ¥943 million ($7,988 thousand) of Gain from marketable securities, net.

Capital lease obligations of ¥2,440 million, ¥1,995 million and ¥1,281 million ($10,851 thousand) were incurred for the years ended March 31, 2005, 2006 and 2007, respectively.

Conversions of convertible debt into common stock were ¥3,880 million and ¥8,482 million for the years ended March 31, 2005 and 2006, respectively. No impact for the year ended March 31, 2007.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

7. Allowance for doubtful accounts:



An analysis of activity within the allowance for doubtful accounts relating to trade notes and accounts receivable and notes receivable for the years ended March 31, 2005, 2006 and 2007 is as follows:

| |                                                      | Yen in millions |   | U.S. dollarsin thousands
| | ---------------------------------------------------- | --------------- | - | ------------------------
| |                                                      | March 31        |   | March 31,               
| |                                                      | 2005            |   | 2006                    
| | Allowance for doubtful accounts at beginning of year | ¥ 623           |   |                         
| | Provision for doubtful accounts                      | 281             |   |                         
| | Collection                                           | (2              | ) |                         
| | Write-offs                                           | (329            | ) |                         
| | Write-backs                                          | (100            | ) |                         
| | Acquisition and other                                | 3               |   |                         
| | Translation adjustment and other                     | 8               |   |                         
| | Allowance for doubtful
      accounts at end of year | ¥ 484           |   |                         

8. Inventories:

Inventories consist of the following:

|                    | Yen in millions |  | U.S. dollarsin thousands
|------------------- | --------------- |  | ------------------------
|                    | March 31        |  | March 31,               
|                    | 2006            |  | 2007                    
|Finished goods      | ¥ 25,924        |  |                         
|Raw materials       | 14,145          |  |                         
|Work in process     | 16,662          |  |                         
|Project in progress | 893             |  |                         
|Supplies and other  | 2,850           |  |                         
|                    | ¥ 60,474        |  |                         

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

9. Other current assets:

Other current assets as of March 31, 2006 and 2007 consist of the following:

|                              | Yen in millions |  | U.S. dollarsin thousands
|----------------------------- | --------------- |  | ------------------------
|                              | March 31        |  | March 31,               
|                              | 2006            |  | 2007                    
|Other receivable              | ¥ 3,999         |  |                         
|Deferred tax assets (Note 19) | 4,451           |  |                         
|Time deposit                  | 2,909           |  |                         
|Other                         | 3,897           |  |                         
|                              | ¥ 15,256        |  |                         

Other primarily consists of prepaid expenses, accrued tax and other.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

10. Marketable securities and other securities investments:

Marketable securities and other securities investments include debt and equity securities of which the aggregate fair value, gross unrealized gains and losses and cost are as follows:



|                                         | Yen in millions
|---------------------------------------- | ---------------
|                                         | March 31, 2006 
|                                         | Cost           
|Available-for-sale                       |                
|Equity securities                        | ¥ 7,636        
|Securities not practicable to fair value |                
|Equity securities                        | ¥ 1,652        
|                                         |                



|                                         | Yen in millions
|---------------------------------------- | ---------------
|                                         | March 31, 2007 
|                                         | Cost           
|Available-for-sale                       |                
|Equity securities                        | ¥ 7,361        
|Securities not practicable to fair value |                
|Equity securities                        | ¥ 1,687        
|                                         |                



|                                         | U.S. dollars in thousands
|---------------------------------------- | -------------------------
|                                         | March 31, 2007           
|                                         | Cost                     
|Available-for-sale                       |                          
|Equity securities                        | $62,355                  
|Securities not practicable to fair value |                          
|Equity securities                        | $ 14,291                 
|                                         |                          

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

During the year ended March 31, 2005, 2006 and 2007, the net unrealized gain on available-for-sale securities included as a component of accumulated other comprehensive income, net of applicable taxes, decreased by ¥195 million, increased by ¥1,086 million and decreased by ¥539 million ($4,566 thousand), respectively.

Proceeds from sales of available-for-sale securities were ¥2,739 million, ¥4,083 million and ¥1,611 million ($13,647 thousand) for the years ended March 31, 2005, 2006 and 2007, respectively. On those sales, gross realized gains were ¥1,618 million, ¥3,756 million and ¥1,118 million ($9,471 thousand) and gross realized losses were ¥0 million, ¥50 million and ¥0 million ($0 thousand), respectively.

Based on the business combination of Mitsubishi Tokyo Financial Group, Inc. and UFJ Holdings, Inc., as of October 1, 2005, NIDEC recorded a gain, amounting to ¥1,123 million from the exchange of NIDECs shares in UFJ Holdings to those of the new company, Mitsubishi UFJ Financial Group in accordance with the Emerging Issues Task Force 91-5 Nonmonetary Exchange of Cost-Method Investments (EITF 91-5).

Based on the business combination of Sumitomo Mitsui Financial Group, Inc. and SMBC Friend Securities Co., Ltd. as of September 1, 2006, NIDEC recorded a gain, amounting to ¥45 million ($381 thousand) from the exchange of NIDECs shares in SMBC Friend Securities to those of the new company, Sumitomo Mitsui Financial Group in accordance with EITF 91-5.

NIDEC holds long-term investment securities that are classified as marketable securities and other securities investments. The securities issued by various non-public companies are recorded at cost, as their fair values are not readily determinable. NIDECs management employs a systematic methodology to assess the recoverability of such investments by reviewing the financial position of the underlying companies and the prevailing market conditions in which these companies operate to determine if NIDECs investment in each individual company is impaired and whether the impairment is other-than-temporary. If any impairment is determined to be other-than-temporary, the cost of the investment is written-down by the impaired amount and the amount is recognized currently as a realized loss.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following table presents the gross unrealized losses on, and fair value of, NIDEC’s investment securities, aggregated by investment category and length of time that individual investment securities have been in a continuous unrealized loss position, at March 31, 2007.

| |                   | Yen in millions     |            | Yen in millions  
| | ----------------- | ------------------- | ---------- | -----------------
| |                   | Less than 12 months |            | 12 months or more
| |                   |                     | Fair value |                  
| | Equity securities |                     | ¥ 97       |                  
| |                   |                     |            |                  



| |                   | U.S. dollars in thousands |            | U.S. dollars in thousands
| | ----------------- | ------------------------- | ---------- | -------------------------
| |                   | Less than 12 months       |            | 12 months or more        
| |                   |                           | Fair value |                          
| | Equity securities |                           | $ 822      |                          
| |                   |                           |            |                          



NIDEC presumes a decline in value of investment securities is other-than-temporary if the fair value is 20% or more below the original cost for an extended period of time. The presumption of an other-than-temporary impairment may be overcome if there is evidence to support that the decline is temporary in nature due to the existence of other factors which overcome the duration or magnitude of the decline. On the other hand, there may be cases where impairment losses are recognized when specific factors indicate the decline in the fair value is other-than-temporary.As of March 31, 2007, NIDEC determined that the decline in value for investment securities with unrealized losses shown in the above table is temporary in nature.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

11. Investments in and transactions with affiliated companies:



Summarized financial information for affiliated companies accounted for using the equity method, which is presented based on accounting principles generally accepted in the United States of America, is shown below:

|                                                | Yen in millions |  | U.S. dollarsin thousands
|----------------------------------------------- | --------------- |  | ------------------------
|                                                | March 31        |  | March 31,               
|                                                | 2006            |  | 2007                    
|Current assets                                  | ¥ 5,736         |  |                         
|Non-current assets                              | 6,698           |  |                         
|Total assets                                    | ¥ 12,434        |  |                         
|Current liabilities                             | ¥ 4,382         |  |                         
|Long-term liabilities                           | 747             |  |                         
|Shareholders equity                            | 7,305           |  |                         
|Total liabilities and shareholders equity      | ¥ 12,434        |  |                         
|NIDECs share of shareholders equity           | ¥ 2,377         |  |                         
|NIDECs investment in equity-method affiliates  | ¥ 2,696         |  |                         
|Loan receivable from affiliated companies       | ¥ 172           |  |                         
|Number of affiliated companies at end of period | 5               |  |                         



| |                                    | Yen in millions             |   | U.S. dollarsin thousands  
| | ---------------------------------- | --------------------------- | - | --------------------------
| |                                    | For the year ended March 31 |   | For the yearendedMarch 31,
| |                                    |                             |  
| |                                    | 2005                        |   | 2006                      
| | Net revenues                       | ¥ 10,319                    |   |                           
| | Gross profit                       | ¥ 1,088                     |   |                           
| | Net income                         | ¥ 45                        |   |                           
| | NIDECs share of net (loss) income | ¥ (17                       | ) |                           
| | Adjustments                        | (17                         | ) |                           
| | Equity loss                        | ¥ (34                       | ) |                           

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

As of March 31, 2006, entities comprising a significant portion of NIDECs investment in affiliated companies include NTN-Nidec (Zhejiang) Corporation (NNSC) (40.00%), NTN-Nidec (Thailand) Co., Ltd. (NNTC) (40.00%), Nidec Development Philippines Corporation (NDF) (39.99%), Copal Yamada Corporation (CYC) (28.59%) and Seijin-Sankyo Control Devices Co., Ltd. (SCD) (22.28%).

As of March 31, 2007, entities comprising a significant portion of NIDECs investment in affiliated companies include NNSC (40.00%), NNTC (40.00%), NDF (39.99%) and, CYC (28.59%).

An affiliated company, SCD, accounted for using the equity method with carrying amounts of ¥338 million (1 company, SCD) as of March 31, 2006 were quoted on various established stock markets at an aggregate market capitalization of ¥1,243 million. NIDECs interest in SCD was sold during the year ended March 31, 2007.

Account balances and transactions with affiliated companies are presented below:

|                                    | Yen in millions |  | U.S. dollarsin thousands
|----------------------------------- | --------------- |  | ------------------------
|                                    | March 31        |  | March 31,               
|                                    | 2006            |  | 2007                    
|Trade notes and accounts receivable | ¥ 727           |  |                         
|Trade notes and accounts payable    | ¥ 1,111         |  |                         

| |                    | Yen in millions             |         | U.S. dollarsin thousands  
| | ------------------ | --------------------------- | ------- | --------------------------
| |                    | For the year ended March 31 |         | For the yearendedMarch 31,
| |                    | 2005                        |         | 2006                      
| | Sales of products  |                             | ¥ 270   |                           
| | Purchases of goods |                             | ¥ 2,870 |                           

For the year ended March 31, 2006, sales of products according to transactions with affiliated companies increased mainly due to an increase of sales to NNSC.

On the other hand, purchases of goods according to transactions with affiliated companies for the year ended March31, 2006 increased compared to the year ended March 31, 2005, mainly due to an increase in the transaction with NNSC.

For the year ended March 31, 2007, sales of products according to transactions with affiliated companies increased mainly due to the increase of sales to NNTC.

On the other hand, purchases of goods according to transactions with affiliated companies for the year ended March31, 2007 increased compared to the year ended March 31, 2006, mainly due to an increase in the transaction with NNSC and NNTC.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Dividends from affiliated companies accounted for by the equity method for the years ended March 31, 2005, 2006 and 2007 were ¥33 million, ¥35 million and ¥40 million ($339 thousand), respectively.

12. Other non-current assets:

Other non-current assets as of March 31, 2006 and 2007 consist of the following:

|                     | Yen in millions |  | U.S. dollars
      in thousands
|-------------------- | --------------- |  | -------------------------------
|                     | March 31        |  | March 31,                      
|                     | 2006            |  | 2007                           
|Intangible assets *1 | ¥ 1,605         |  |                                
|Deferred tax assets  | 5,404           |  |                                
|Other *2             | 2,724           |  |                                
|                     |                 |  |                                
|                     | ¥ 9,733         |  |                                
|                     |                 |  |                                

Notes:

*1. Intangible assets information is described at note No. 5 Goodwill and other intangible assets

*2. Other primarily consists of other investments and other assets.

13. Short-term borrowings and long-term debt:

Short-term borrowings at March 31, 2006 and 2007 consist of the following:

|                                                                                                                                            | Yen in millions |  | U.S. dollars
      in thousands
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------- |  | -------------------------------
|                                                                                                                                            | March 31        |  | March 31,                      
|                                                                                                                                            | 2006            |  | 2007                           
|Loans, principally from banks with average interest at March 31, 2006 of
      3.46% and at March 31, 2007 of 3.13% per annum, respectively | ¥ 43,621        |  |                                
|                                                                                                                                            |                 |  |                                

At March 31, 2007, NIDEC had unused lines of credit amounting to ¥62,180 million ($526,726 thousand) with banks. Under these programs, NIDEC is authorized to obtain short-term financing at prevailing interest rates.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Long-term debt at March 31, 2006 and 2007 comprises the following:

|                                                                                                                                                                                                                                                                             |  | Yen in millions |   | U.S. dollars
      in thousands
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | - | -------------------------------
|                                                                                                                                                                                                                                                                             |  | March 31        |   | March 31,                      
|                                                                                                                                                                                                                                                                             |  | 2006            |   | 2007                           
|Secured loans, representing obligations principally to banks
      Due 2008 in 2006 with interest ranging 1.89% per annum in 2006
      Due 2008 in 2007 with interest ranging 2.07% per annum in 2007                                                                       |  | ¥ 74            |   |                                
|Unsecured loans, representing principally to banks
      Due 2006 to 2026 in 2006 with interest ranging from 0.00% to 4.70% per
      annum in 2006
      Due 2007 to 2026 in 2007 with interest ranging from 0.00% to 6.40% per
      annum in 2007                         |  | 3,448           |   |                                
|Zero coupon 0.0% convertible bonds, due 2008
      2006: Convertible currently at ¥6,914 ($59) for one common share, redeemable
      before due date (note)
      2007: Convertible currently at ¥6,914 ($59) for one common share, redeemable
      before due date (note) |  | 27,413          |   |                                
|Long-term capital lease obligations
      Due 2006 to 2015 in 2006, with interest from 1.00% to 6.04% per annum in 2006
      Due 2007 to 2015 in 2007, with interest from 1.25% to 5.85% per annum in
      2007                                                            |  | 5,846           |   |                                
|                                                                                                                                                                                                                                                                             |  |                 |   |                                
|                                                                                                                                                                                                                                                                             |  | 36,781          |   |                                
|Less - Current portion due within one year                                                                                                                                                                                                                                   |  | (4,647          | ) |                                
|                                                                                                                                                                                                                                                                             |  |                 |   |                                
|                                                                                                                                                                                                                                                                             |  | ¥ 32,134        |   |                                
|                                                                                                                                                                                                                                                                             |  |                 |   |                                

Note:

1. Detail of Zero coupon 0.0% convertible bonds, due 2008 is as follow;

|                     | Yen in millions |  | U.S. dollars
      in thousands
|-------------------- | --------------- |  | -------------------------------
|                     | March 31        |  | March 31,                      
|                     | 2006            |  | 2007                           
|Principal amount     | ¥ 27,000        |  |                                
|Unamortized discount | 413             |  |                                
|                     |                 |  |                                
|Total                | ¥ 27,413        |  |                                
|                     |                 |  |                                

2. The yen denominated zero coupon convertible bonds with stock acquisition rights due 2008, which are listed at London Stock Exchange, were issued on October 17, 2003, and are redeemable at 100% of face value on October 17, 2008 (maturity date). The face value of the bonds was ¥30,000 million ($254,130 thousand) and the issue price was 103.00% of the face value.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The aggregate amounts of annual maturity of long-term debt during the next five years are as follows:

|Year ending March 31 |  | Yen in millions |  | U.S. dollarsin thousands
|-------------------- |  | --------------- |  | ------------------------
|2008                 |  | ¥ 3,216         |  |                         
|2009                 |  | 28,924          |  |                         
|2010                 |  | 1,628           |  |                         
|2011                 |  | 606             |  |                         
|2012                 |  | 226             |  |                         
|2013 and thereafter  |  | ¥ 176           |  |                         
|                     |  |                 |  |                         

At March 31, 2007, lands and buildings with carrying value of ¥330 million ($2,795 thousand), and ¥277 million ($2,346 thousand), respectively, were pledged as collateral for bankc borrowings.

Standard agreements with certain banks in Japan include provisions that collateral (including sums on deposit with such banks) or guarantors will be furnished upon the banks request and that any collateral furnished, pursuant to such agreements or otherwise, will be applicable to all present or future indebtedness to such banks.

14. Other current liabilities:

Other current liabilities as of March 31, 2006 and 2007 consist of the following:

|                                          | Yen in millions |  | U.S. dollars
      in thousands
|----------------------------------------- | --------------- |  | -------------------------------
|                                          | March 31        |  | March 31,                      
|                                          | 2006            |  | 2007                           
|Accrued expenses                          | ¥ 14,690        |  |                                
|Income taxes payable                      | 6,838           |  |                                
|Payable for property, plant and equipment | 3,764           |  |                                
|Other                                     | 3,517           |  |                                
|                                          |                 |  |                                
|                                          | ¥ 28,809        |  |                                
|                                          |                 |  |                                

Other primarily consists of deposit received and other.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

15. Pension and severance plans:

The Company and certain subsidiaries sponsor pension and retirement plans, which entitle employees, under most circumstances, to lump-sum indemnities or pension payments based on current rates of pay and length of service. Under normal circumstances, the minimum payment prior to retirement age is an amount based on voluntary retirement. Employees receive additional benefits upon involuntary retirement, including retirement at the mandatory retirement age.

The Company and certain subsidiaries and affiliates have maintained the employees pension fund (EPF) pursuant to the Japanese Welfare Pension Insurance Law (JWPIL). The EPF consisted of two tiers, Substitutional Portion, in which the EPF, in lieu of the governments social insurance program, collected contributions, funded them and paid benefits to the employees with respect to the pay-related portion of the old-age pension benefits prescribed by JWPIL, and Corporate Portion which was established at the discretion of each employer.

In June 2001, the Corporate Defined Benefit Pension Plan Law was enacted and allows any EPF to terminate its operation relating to Substitutional Portion that in the past an EPF had operated and managed in lieu of the government, subject to approval from the Japanese Minister of Health, Labor and Welfare. In December 2004, The Company obtained the approval from the Minister for the exemption from benefit payments related to employee services of Substitutional Portion. In March 2005, The Company completed the transfer of the plan assets equivalent to Substitutional Portion to the government.

In the year ended March 31, 2005, NIDEC adopted EITF Issue No. 03-02, Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities for the settlement process of the substitutional portion of EPF. EITF Issue No. 03-02 requires employers to account for the entire separation process of a substitutional portion from an entire plan (including a corporate portion) upon completion of the transfer to the government of a substitutional portion of EPF and related plan assets as the culmination of a series of steps in a single settlement transaction. Under this approach, the difference between the accumulated benefit obligation and the assets required to be transferred to the government was accounted for and separately disclosed as a subsidy. And a proportionate amount of net unrecognized gain or loss related to the entire EPF and difference between projected benefit obligations and accumulated benefit obligations for a substitutional portion of EPF were recognized as a settlement gain or loss.

In addition, during the year ended March 31, 2005, certain subsidiaries in Japan transferred or terminated their defined benefit pension plans.

Nidec Nissin Corporation and Nidec Sankyo Corporation transferred their defined benefit plans to defined contribution plans in June 2004 and December 2004, respectively.

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|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Nidec Copal Corporation determined to terminate its EPF on January 28, 2005 and received approval of the termination on February 25, 2005. Upon this approval, Nidec Copal Corporation completed the termination process on March 2005 and the gain on the termination was recognized in the year ended March 31, 2005.

The accounting for these transitions and termination were in accordance with SFAS No. 88 Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits.

While NIDEC has no legal obligation, NIDEC provided lump-sum severance benefits for retirement of directors and corporate auditors. The allowance for the payment had been accrued, based on the estimated cost of the severance plan, which had not been funded. NIDEC decided to terminate its severance plan in the year ended March 31, 2005 and completed the termination April 1, 2006.

For the year ended March 31, 2007, NIDEC made some business acquisitions and as the results, assumed pension liabilities of ¥4,587 million ($38,856 thousand), mainly composed of foreign companies liabilities. Under these pension plans, pension payments mainly based on current rates of pay and length of service and many plans has not been funded.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158 (SFAS 158), Employers Accounting for Defined Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and 132(R). NIDEC adopted SFAS 158 effective March 31, 2007. The impact of the adoption of SFAS 158 has been reflected within NIDECs consolidated financial statements as of March 31, 2007. The incremental effect of applying SFAS 158 is as follows:

|                                               | Yen in millions               
|---------------------------------------------- | ------------------------------
|                                               | Before Application of SFAS 158
|Other non-current assets                       | ¥ 25,236                      
|Total assets                                   | ¥ 662,919                     
|                                               |                               
|Total current liabilities                      | ¥ 235,369                     
|Accrued pension and severance costs            | 13,735                        
|Total long-term liabilities                    | 56,507                        
|Minority interest in consolidated subsidiaries | 66,430                        
|Accumulated other comprehensive loss:          |                               
|Minimum pension liability adjustment           | (140                          
|Pension liability adjustments                  | -                             
|                                               |                               
|Total shareholders equity                     | 304,613                       
|                                               |                               
|Total liabilities and shareholders equity     | ¥ 662,919                     
|                                               |                               

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Information regarding NIDECs employees defined benefit plans is as follows:

Japanese plans:

NIDEC uses mainly a December 31 measurement date for Japanese plans.

|                                               | Yen in millions |   | U.S. dollarsin thousands
|---------------------------------------------- | --------------- | - | ------------------------
|                                               | March 31        |   | March 31,               
|                                               | 2006            |   | 2007                    
|Change in benefit obligation:                  |                 |   |                         
|Benefit obligation at beginning of year        | ¥ 14,853        |   |                         
|Service cost                                   | 609             |   |                         
|Interest cost                                  | 295             |   |                         
|Actuarial (gain) loss                          | (52             | ) |                         
|Acquisition and other                          | -               |   |                         
|Curtailment/Settlement                         | (63             | ) |                         
|Benefits paid                                  | (1,263          | ) |                         
|                                               |                 |   |                         
|                                               | 14,379          |   |                         
|                                               |                 |   |                         
|Change in plan assets:                         |                 |   |                         
|Fair value of plan assets at beginning of year | 5,047           |   |                         
|Actual return on plan assets                   | 762             |   |                         
|Employer contribution                          | 777             |   |                         
|Acquisition and other                          | -               |   |                         
|Curtailment/Settlement                         | (33             | ) |                         
|Benefits paid                                  | (591            | ) |                         
|                                               |                 |   |                         
|Fair value of plan assets at end of year       | 5,962           |   |                         
|                                               |                 |   |                         
|Funded status                                  | 8,417           |   |                         
|Unrecognized actuarial loss                    | 117             |   |                         
|Unrecognized prior service cost                | 566             |   |                         
|                                               |                 |   |                         
|                                               | ¥ 9,100         |   |                         
|                                               |                 |   |                         

Amounts included in the consolidated balance sheet are comprised of:

|                                       | Yen in millions |   | U.S. dollarsin thousands
|-------------------------------------- | --------------- | - | ------------------------
|                                       | March 31        |   | March 31,               
|                                       | 2006            |   | 2007                    
|                                       |                 |   |                         
|Accrued pension and severance costs    | ¥ 9,381         |   |                         
|Accumulated other comprehensive income | (281            | ) |                         
|                                       |                 |   |                         
|Net amounts recognized                 | ¥ 9,100         |   |                         
|                                       |                 |   |                         

F-39



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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Amounts included in accumulated other comprehensive income (loss) as pension liability adjustments are comprised of:

|                                       | Yen in millions |  | U.S. dollarsin thousands
|-------------------------------------- | --------------- |  | ------------------------
|                                       | March 31        |  | March 31,               
|                                       | 2006            |  | 2007                    
|Actuarial loss                         | ¥ -             |  |                         
|Prior service cost                     | -               |  |                         
|Pension liability adjustments, pre-tax | ¥ -             |  |                         

The accumulated benefit obligation for all defined benefit pension plans were ¥13,458 and ¥14,324 million ($121,338 thousand) for the year ended March 31, 2006 and 2007, respectively.

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for which the accumulated benefit obligations exceed plan assets are as follows:

|                                | Yen in millions |  | U.S. dollarsin thousands
|------------------------------- | --------------- |  | ------------------------
|                                | March 31        |  | March 31,               
|                                | 2006            |  | 2007                    
|Projected benefit obligations   | ¥ 14,345        |  |                         
|Accumulated benefit obligations | 13,424          |  |                         
|Fair value of plan assets       | 5,928           |  |                         

Weighted-average assumptions used to determine benefit obligations as of March 31, 2006 and 2007 are as follows:

|                              | March 31
|----------------------------- | --------
|                              | 2006    
|Discount rate                 | 1.5-3.1%
|Rate of compensation increase | 0.0-3.5%

Weighted-average assumptions used to determine net pension and severance costs for the years ended March 31, 2005, 2006 and 2007 are as follows:

|                               | For the year ended
|------------------------------ | ------------------
|                               | March 31          
|                               | 2005              
|Discount rate                  | 1.0-2.3%          
|Expected return on plan assets | 0.8-3.5%          
|Rate of compensation increase  | 0.0-6.2%          

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

| |                                                                          | Yen in millions             |   | U.S. dollars
      in thousands         
| | ------------------------------------------------------------------------ | --------------------------- | - | ----------------------------------------
| |                                                                          | For the year ended March 31 |   | For the year
      ended
      March 31,
| |                                                                          | 2005                        |   | 2006                                    
| | Components of net periodic (benefit) cost:                               |                             |   |                                         
| | Service cost                                                             | ¥ 1,048                     |   |                                         
| | Interest cost                                                            | 871                         |   |                                         
| | Expected return on plan assets                                           | (382                        | ) |                                         
| | Amortization of net actuarial loss (gain)                                | 28                          |   |                                         
| | Amortization of prior service credit                                     | (62                         | ) |                                         
| | Settlement loss resulted from the transfer of the substitutional portion | 39                          |   |                                         
| | Gains from curtailments                                                  | (1,842                      | ) |                                         
| | Gains from  settlements                                                  | (6,735                      | ) |                                         
| |                                                                          |                             |   |                                         
| | Net periodic pension cost                                                | ¥ (7,035                    | ) |                                         
| |                                                                          |                             |   |                                         

Unrecognized prior service cost and unrecognized actuarial gain and loss are amortized using the straight-line method over the average remaining service period of active employees. The estimated prior service credit and net actuarial gain for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into benefits cost for the year ending March 31, 2008 are ¥62 million ($525 thousand) and ¥5 million ($42 thousand), respectively.

In the year ended March 31, 2005, the accounting for the settlement for a substitutional portion of EPF at the Company in accordance with EITF Issue No. 03-02 are as follows:

|                                                                                         | March 31,
|---------------------------------------------------------------------------------------- | ---------
|                                                                                         | 2005     
|Accumulated benefit obligations for a substitutional portion of EPF                      | ¥ 3,130  
|Related government-specified portion of plan assets of EPF transferred to the government | 1,740    
|Subsidy                                                                                  | 1,390    
|Proportionate amount of net unrecognized loss related to the entire EPF                  | (39      
|Periodic pension costs related to the settlement for a substitutional portion of EPF     | (39      
|Net settlement gain for a substitutional portion of EPF                                  | ¥ 1,351  

F-41



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|Table of Contents                                          
|-----------------------------------------------------------
|Index to Consolidated Financial Statements and Information.

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Foreign plans:

NIDEC uses mainly a March 31 measurement date for foreign plans.

|                                               | Yen in millions |   | U.S. dollarsin thousands
|---------------------------------------------- | --------------- | - | ------------------------
|                                               | March 31        |   | March 31,               
|                                               | 2006            |   | 2007                    
|Change in benefit obligation:                  |                 |   |                         
|Benefit obligation at beginning of year        | ¥ 251           |   |                         
|Service cost                                   | 115             |   |                         
|Interest cost                                  | 26              |   |                         
|Actuarial loss (gain)                          | (5              | ) |                         
|Acquisition and other                          | -               |   |                         
|Foreign currency exchange rate changes         | 42              |   |                         
|Benefits paid                                  | (52             | ) |                         
|                                               |                 |   |                         
|                                               | 377             |   |                         
|                                               |                 |   |                         
|Change in plan assets:                         |                 |   |                         
|Fair value of plan assets at beginning of year | 72              |   |                         
|Actual return on plan assets                   | 1               |   |                         
|Employer contribution                          | 6               |   |                         
|Foreign currency exchange rate changes         | 9               |   |                         
|Benefits paid                                  | (31             | ) |                         
|                                               |                 |   |                         
|Fair value of plan assets at end of year       | 57              |   |                         
|                                               |                 |   |                         
|Funded status                                  | 320             |   |                         
|Unrecognized actuarial loss                    | 3               |   |                         
|                                               |                 |   |                         
|                                               | ¥ 323           |   |                         
|                                               |                 |   |                         

Amounts included in the consolidated balance sheet are comprised of:

|                                    | Yen in millions |  | U.S. dollarsin thousands
|----------------------------------- | --------------- |  | ------------------------
|                                    | March 31        |  | March 31,               
|                                    | 2006            |  | 2007                    
|                                    |                 |  |                         
|Accrued pension and severance costs | ¥ 323           |  |                         
|                                    |                 |  |                         
|Net amounts recognized              | ¥ 323           |  |                         
|                                    |                 |  |                         

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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Amounts included in accumulated other comprehensive income (loss) as pension liability adjustments are comprised of:

|                                       | Yen in millions |  | U.S. dollarsin thousands
|-------------------------------------- | --------------- |  | ------------------------
|                                       | March 31        |  | March 31,               
|                                       | 2006            |  | 2007                    
|Actuarial loss                         | ¥ -             |  |                         
|Pension liability adjustments, pre-tax | ¥ -             |  |                         



The accumulated benefit obligation for all defined benefit pension plans were ¥377 and ¥4,529 million ($38,365 thousand) for the year ended March 31, 2006 and 2007, respectively.

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for which the accumulated benefit obligations exceed plan assets are as follows:

|                                | Yen in millions |  | U.S. dollarsin thousands
|------------------------------- | --------------- |  | ------------------------
|                                | March 31        |  | March 31,               
|                                | 2006            |  | 2007                    
|Projected benefit obligations   | ¥ 377           |  |                         
|Accumulated benefit obligations | 377             |  |                         
|Fair value of plan assets       | 57              |  |                         

Discount rate and rate of compensation used to determine benefit obligations as of March 31, 2007 are 4.3% and 2.5%, respectively.

Dicount rate and rate of compensation used to determine net pension and severance costs for the years ended March 31, 2007 are 4.3% and 2.5%, respectively.

The assumptions used before March 31, 2006 and expected return on plan assets have not material impact for NIDECs consolidated financial statement.

| |                                            | Yen in millions             |   | U.S. dollars
      in thousands         
| | ------------------------------------------ | --------------------------- | - | ----------------------------------------
| |                                            | For the year ended March 31 |   | For the year
      ended
      March 31,
| |                                            | 2005                        |   | 2006                                    
| | Components of net periodic (benefit) cost: |                             |   |                                         
| | Service cost                               | ¥ 58                        |   |                                         
| | Interest cost                              | 5                           |   |                                         
| | Expected return on plan assets             | (5                          | ) |                                         
| |                                            |                             |   |                                         
| | Net periodic pension cost                  | ¥ 58                        |   |                                         
| |                                            |                             |   |                                         

There are no estimated prior service credit and net actuarial gain for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into benefits cost for the year ending March 31, 2008.

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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Japanese plans and foreign plans:

The weighted-average asset allocations of NIDEC’s pension plans are as follows:

|Assets Category                         |  | Asset allocation of pension plans
|--------------------------------------- |  | ---------------------------------
|Actual (%)                              |  | Target (%)                       
|March 31,
      2006                    |  | March 31,
      2007             
|Equity securities                       |  | 42                               
|Debt securities                         |  | 18                               
|Life insurance company general accounts |  | 32                               
|Others                                  |  | 8                                
|                                        |  |                                  
|Total                                   |  | 100                              
|                                        |  |                                  

NIDECs policy and objective for plan asset management is to generate a stable return on the investment over the long term, which enable NIDECs pension funds to meet future benefit payment requirements under risks which NIDEC considers permissible. NIDEC formulates basic portfolio that suits the above-mentioned policy, and ensure that plan assets are allocated under this basic portfolio. NIDEC evaluates its actual return and revise the basic portfolio, if necessary.

NIDEC expects to contribute approximately ¥742 million ($6,285 thousand) to its defined benefit plans for the year ending March 31, 2008.

The future benefit payments for defined benefit plans are expected as follows:

|                | Yen in millions      |  | U.S. dollars
      in thousands
|--------------- | -------------------- |  | -------------------------------
|                | Japanese
      plans |  | Foreign
      plans            
|2008            | ¥ 1,363              |  |                                
|2009            | 1,038                |  |                                
|2010            | 1,163                |  |                                
|2011            | 1,320                |  |                                
|2012            | 1,027                |  |                                
|Years 2013-2016 | ¥ 4,235              |  |                                

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|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Certain subsidiaries have a number of defined multiemployer plans. Total amounts of cost recognized for certain subsidiaries contribution to the plans were ¥188, ¥216 and ¥218 million ($1,847 thousand) for the year ended March 31, 2005, 2006 and 2007, respectively and NIDEC expects to contribute approximately ¥221 million ($1,872 thousand) for the year ending March 31, 2008.

Certain subsidiaries have a number of defined contribution plans. Total amounts of cost recognized for certain subsidiaries contribution to the plans were ¥244, ¥403 and ¥379 million ($3,211 thousand) for the year ended March 31, 2005, 2006 and 2007, respectively and NIDEC expects to contribute approximately ¥1,259 million ($10,665 thousand) for the year ending March 31, 2008.

16. Other long-term liabilities:

Other long-term liabilities as of March 31, 2006 and 2007 consist of the following:



| |                               |  | Yen in millions |  | U.S. dollarsin thousands
| | ----------------------------- |  | --------------- |  | ------------------------
| |                               |  | March 31        |  | March 31,               
| |                               |  | 2006            |  | 2007                    
| | Deferred tax liabilities      |  | ¥ 2,371         |  |                         
| | Long-term accrued liabilities |  | 5,747           |  |                         
| | Other                         |  | 3,247           |  |                         
| |                               |  |                 |  |                         
| |                               |  | ¥ 11,365        |  |                         
| |                               |  |                 |  |                         



“Other” primarily consists of revenue received in advance, and other.

F-45



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

17. Shareholders equity:

In June 2004, the Company issued 5,620,000 shares of common stock in a public offering in Japan, and received proceeds in the amount of ¥59,954 million ($507,870 thousand).

On November 18, 2005, the Company completed a two-for-one stock split. The number of shares issued was 71,542,257 shares. There was no increase in the common stock account in accordance with the related Japanese law. All per share amounts have been restated to reflect the retroactive effect of the stock split.

Conversions of convertible debt into common stock are accounted for in accordance with the provisions of the related Japanese law by crediting approximately one-half of the conversion proceeds to the common stock account and the remainder to the additional paid-in capital account.



The Japanese Company Law provides that an amount equal to 10% of cash dividends
from retained earnings by the Company and its Japanese subsidiaries must
be appropriated as a legal reserve. No further appropriations are required
when the sum of the legal reserves reached 25% of stated capital. These
reserves are currently exceeds 25% of stated capital and are available
for dividends under the Japanese Corporate Law subject to approval at the
shareholders meeting. Certain foreign subsidiaries are also required
to appropriate their earnings to legal reserves under the laws of the respective
countries.

The amount of statutory retained earnings of the Company available for dividend payments to shareholders was ¥62,217 million and ¥70,798 million ($599,729 thousand) for the year ended March 31, 2006 and 2007, respectively. In accordance with customary practice in Japan, the appropriations are not accrued in the financial statements for the period to which they relate, but are recorded in the subsequent accounting period. Retained earnings for the year ended March 31, 2007 includes amounts representing final cash dividends of ¥3,618 million ($30,648 thousand), ¥25 ($0.21) per share.

Retained earnings relating to equity in undistributed earnings reflect ¥433 million,  ¥415 million and ¥402 million ($3,405 thousand) of accumulated deficit of the companies accounted for by the equity method for the years ended March 31, 2005, 2006 and 2007.

F-46



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Detailed components of accumulated other comprehensive income at March 31, 2005, 2006 and 2007 and the related changes, net of taxes, for the years ended March 31, 2005, 2006 and 2007 consist of the following:



|                                  | Yen in millions                             
|--------------------------------- | --------------------------------------------
|                                  | Foreign
      currencytranslationadjustments
|Balance at March 31, 2004         | ¥ (11,475                                   
|Other comprehensive income (loss) | 2,009                                       
|                                  |                                             
|Balance at March 31, 2005         | (9,466                                      
|Other comprehensive income (loss) | 9,391                                       
|                                  |                                             
|Balance at March 31, 2006         | (75                                         
|Other comprehensive income (loss) | 6,949                                       
|Adoption of SFAS No. 158          | -                                           
|                                  |                                             
|Balance at March 31, 2007         | ¥ 6,874                                     
|                                  |                                             
|                                  |                                             
|                                  |                                             
|                                  | U.S. dollars in thousands                   
|                                  | Foreigncurrencytranslationadjustments       
|Balance at March 31, 2006         | $ (636                                      
|Other comprehensive income (loss) | 58,865                                      
|Adoption of SFAS No. 158          | -                                           
|                                  |                                             
|Balance at March 31, 2007         | $ 58,229                                    
|                                  |                                             

The minimum pension liability adjustment shown in the above table relates to two consolidated subsidiaries.

F-47



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Tax effects allocated to each component of other comprehensive income for the years ended March 31, 2005, 2006 and 2007 are as follows:



|                                                                                                         | Yen in millions
|-------------------------------------------------------------------------------------------------------- | ---------------
|                                                                                                         | Pre-taxamount  
|For the year ended March 31, 2005:                                                                       |                
|Foreign currency translation adjustments                                                                 | ¥ 1,971        
|Unrealized gains (losses) from securities:                                                               |                
|Unrealized holding gains (losses) arising during period                                                  | 1,326          
|Less: reclassification adjustment primarily for other than temporary losses included in net income       | (1,586         
|Minimum pension liability adjustment                                                                     | (55            
|Other comprehensive income                                                                               | ¥ 1,656        
|                                                                                                         |                
|For the year ended March 31, 2006:                                                                       |                
|Foreign currency translation adjustments                                                                 | ¥ 9,345        
|Unrealized gains (losses) from securities:                                                               |                
|Unrealized holding gains (losses) arising during period                                                  | 5,721          
|Less: reclassification adjustment primarily
      for other than temporary losses included in net income | (3,869         
|Minimum pension liability adjustment                                                                     | (100           
|Other comprehensive income (loss)                                                                        | ¥ 11,097       
|                                                                                                         |                
|For the year ended March 31, 2007:                                                                       |                
|Foreign currency translation adjustments                                                                 | ¥ 7,001        
|Unrealized gains (losses) from securities:                                                               |                
|Unrealized holding gains (losses) arising during period                                                  | 2              
|Less: reclassification adjustment primarily
      for other than temporary losses included in net income | (943           
|Minimum pension liability adjustment                                                                     | (44            
|Other comprehensive income                                                                               | ¥ 6,016        

|                                                                                                         | U.S. dollars in thousands
|-------------------------------------------------------------------------------------------------------- | -------------------------
|                                                                                                         | Pre-taxamount            
|For the year ended March 31, 2007:                                                                       |                          
|Foreign currency translation adjustments                                                                 | $ 59,305                 
|Unrealized gains (losses) from securities:                                                               |                          
|Unrealized holding gains (losses) arising during period                                                  | 17                       
|Less: reclassification adjustment primarily
      for other than temporary losses included in net income | (7,988                   
|Minimum pension liability adjustment                                                                     | (373                     
|Other comprehensive income                                                                               | $ 50,961                 

F-48



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

18. Stock-based compensation:

On May 14, 2003, the Company’s shareholders approved a stock option plan. Under the plan, executives and certain employees receive options. The number of shares to be issued upon exercise of the options is limited to 296,700 shares of the Companys common stock. Each option entitles the holder to purchase 100 shares of the Companys common stock. The options vested at June 30, 2004 and became exercisable for the period from July 1, 2004 to June 30, 2007. The exercise price was determined as ¥7,350 ($62.26) per share of common stock. Options were granted with an exercise price equal to the closing price of the Companys shares traded on the Osaka Securities Exchange on the grant date.

On November 18, 2005, the Company completed a two-for-one stock split. As a result, the exercise price changed to ¥3,675 ($31.13) per share of common stock. The exercise price is presented by the changed price retroactive to the previous fiscal year in the table below.



|                           |  | Number of options |  | Exercise price
      (per share)
|-------------------------- |  | ----------------- |  | --------------------------------
|Balance at March 31, 2003: |  |                   |  |                                 
|Granted                    |  | 2,967             |  |                                 
|Exercised                  |  | 0                 |  |                                 
|Canceled                   |  | 105               |  |                                 
|                           |  |                   |  |                                 
|Balance at March 31, 2004: |  | 2,862             |  |                                 
|Exercised                  |  | 439               |  |                                 
|Canceled                   |  | 61                |  |                                 
|                           |  |                   |  |                                 
|Balance at March 31, 2005: |  | 2,362             |  |                                 
|Exercised                  |  | 606               |  |                                 
|Canceled                   |  | 0                 |  |                                 
|                           |  |                   |  |                                 
|Balance at March 31, 2006: |  | 1,756             |  |                                 
|Exercised                  |  | 596               |  |                                 
|Canceled                   |  | 0                 |  |                                 
|                           |  |                   |  |                                 
|Balance at March 31, 2007: |  | 1,160             |  |                                 
|                           |  |                   |  |                                 

F-49



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The fair value of option was ¥3,499 ($29.64) per share. The fair value as of the date of grant was estimated using a Black-Scholes option-pricing model with the following assumptions:

| |                         | As of May 14, 2003
| | ----------------------- | ------------------
| | Risk-free interest rate |                   
| | Expected volatility     |                   
| | Expected dividend yield |                   
| | Expected lives          |                   
| |                         |                   

In December 2004, the FASB issued SFAS No. 123R (SFAS 123R), revised 2004, Share-Based Payment. SFAS 123R requires measurement of compensation cost for all share-based payments (including employee stock options) at fair value for interim or annual periods beginning after June 15, 2005. The Company adopted FAS No. 123R using the modified-prospective transition method beginning April 1, 2006. The adoption of FAS 123R did not have any impact on NIDEC’s consolidated financial position, consolidated results of operations, or liquidity.

F-50



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

19. Income taxes:

The components of income before income taxes comprise the following:

| |                                       | Yen in millions            |  | U.S. dollars
      in thousands
| | ------------------------------------- | -------------------------- |  | -------------------------------
| |                                       | For the year endedMarch 31 |  | For the yearendedMarch 31,     
| |                                       | 2005                       |  | 2006                           
| | Income before income taxes:           |                            |  |                                
| | The Company and domestic subsidiaries | ¥ 34,725                   |  |                                
| | Foreign subsidiaries                  | 22,565                     |  |                                
| |                                       |                            |  |                                
| |                                       | ¥ 57,290                   |  |                                
| |                                       |                            |  |                                

The provision for income taxes consists of the following:

| |                                        | Yen in millions            |  | U.S. dollarsin thousands  
| | -------------------------------------- | -------------------------- |  | --------------------------
| |                                        | For the year endedMarch 31 |  | For the yearendedMarch 31,
| |                                        | 2005                       |  | 2006                      
| | Current income tax expense:            |                            |  |                           
| | The Company and domestic subsidiaries  | ¥ 8,471                    |  |                           
| | Foreign subsidiaries                   | 1,839                      |  |                           
| |                                        |                            |  |                           
| | Total current                          | 10,310                     |  |                           
| |                                        |                            |  |                           
| | Deferred income tax expense (benefit): |                            |  |                           
| | The Company and domestic subsidiaries  | 2,292                      |  |                           
| | Foreign subsidiaries                   | 245                        |  |                           
| |                                        |                            |  |                           
| | Total deferred                         | 2,537                      |  |                           
| |                                        |                            |  |                           
| | Total provision                        | ¥ 12,847                   |  |                           
| |                                        |                            |  |                           



With regard to the effective tax rates of the Company and domestic subsidiaries for the year ended March 31, 2007, it approached to the statutory tax rate. This was mainly due to the result of net decrease in valuation allowance and increase in additional tax expenses based on transfer pricing taxation.

F-51



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The low effective tax rates of the Company and domestic subsidiaries for the year ended March 31, 2006 were mainly due to a net decrease in valuation allowance.

The low effective tax rates of the Company and domestic subsidiaries for the year ended March 31, 2005 were mainly due to a net decrease in valuation allowance.

NIDEC is subject to a number of different income taxes, which, in the aggregate, indicate a statutory rate in Japan of approximately 41.0% in 2005, 2006 and 2007. Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows:

|                                              | For the year endedMarch 31
|--------------------------------------------- | --------------------------
|                                              | 2005                      
|Statutory tax rate                            | 41.0                      
|Increase (reduction) in taxes resulting from: |                           
|Tax benefit in foreign subsidiaries           | (12.7                     
|Tax on undistributed earnings                 | 2.6                       
|Valuation allowance                           | (10.2                     
|Transfer pricing taxation                     | -                         
|Other                                         | 1.7                       
|                                              |                           
|Effective income tax rate                     | 22.4                      
|                                              |                           

The effective income tax rate for the year ended March 31, 2007 was higher compared to the effective income tax rate for the year ended March 31, 2006. This was mainly due to additional tax expenses based on transfer pricing taxation.

Tax benefit in foreign subsidiaries primarily relates to income sourced from foreign subsidiaries mainly in Thailand, Singapore and the Philippines. In Thailand, NIDEC received privileges under the promotional certificates issued in April 1995, August 1997, May 1999, July 1999, October 1999 and August 2000. Under these privileges, NIDEC received an exemption from corporate income tax for a period of three to seven years from the date of commencement of certain revenue-generating activities identified by the promotional certificate. In Singapore, NIDEC has been granted pioneer status for a period of ten years, commencing in April 1996. In April 2004 NIDEC received another pioneer status of a new project for 10 years. The pioneer status exempts NIDEC from income tax. In the Philippines, NIDEC received certain tax incentives in March 1997, which included an income tax holiday for six years. In March 2003 the income tax holiday was extended for one year. In March 2004 NIDEC received another income tax holiday of a new project for four years.

F-52



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The aggregate dollar and per share effects of the tax holidays are as follows:

| |                                   | Yen in millions             |         | U.S. dollars
      in thousands
| | --------------------------------- | --------------------------- | ------- | -------------------------------
| |                                   | For the year ended March 31 |         | For the year ended March 31,   
| |                                   | 2005                        |         | 2006                           
| | Aggregate amounts of tax holidays | ¥ 3,647                     |         |                                
| |                                   |                             |         |                                
| |                                   | Yen                         |         | U.S. dollars                   
| | Per share                         | - basic                     | ¥ 26.15 |                                
| |                                   | - diluted                   | ¥ 24.86 |                                
| |                                   |                             |         |                                

F-53



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The significant components of deferred tax assets and liabilities are as follows:

|                                                  | Yen in millions |   | U.S. dollarsin thousands
|------------------------------------------------- | --------------- | - | ------------------------
|                                                  | March 31        |   | March 31,               
|                                                  | 2006            |   | 2007                    
|Deferred tax assets:                              |                 |   |                         
|Inventories                                       | ¥ 2,750         |   |                         
|Property, plant and equipment                     | 4,713           |   |                         
|Accrued bonus                                     | 2,115           |   |                         
|Accrued enterprise tax                            | 785             |   |                         
|Pension and severance plans                       | 7,873           |   |                         
|Operating loss carryforwards for tax purposes     | 5,393           |   |                         
|Foreign tax credit                                | 1,367           |   |                         
|Other                                             | (3,539          | ) |                         
|                                                  |                 |   |                         
|Gross deferred tax assets                         | 21,457          |   |                         
|Less - Valuation allowance                        | (11,602         | ) |                         
|                                                  |                 |   |                         
|Net deferred tax assets                           | 9,855           |   |                         
|                                                  |                 |   |                         
|Deferred tax liabilities:                         |                 |   |                         
|Basis difference of acquired assets               | (2,955          | ) |                         
|Undistributed earnings not permanently reinvested | (1,921          | ) |                         
|Maketable securities                              | (4,835          | ) |                         
|Intangible assets                                 | -               |   |                         
|Other                                             | 7,241           |   |                         
|                                                  |                 |   |                         
|Gross deferred tax liabilities                    | (2,470          | ) |                         
|                                                  |                 |   |                         
|Net deferred tax assets                           | ¥ 7,385         |   |                         
|                                                  |                 |   |                         

Operating loss carryforwards for tax purposes of consolidated subsidiaries on March 31, 2007 amounted to approximately ¥11,181 million ($94,714 thousand) and are available as an offset against future taxable income of such subsidiaries.

With the exception of ¥2,461 million ($20,847 thousand) with no expiration period, total available operating loss carryforwards expire at various dates primarily up to 7 years.

The valuation allowance mainly relates to deferred tax assets of consolidated subsidiaries with operating loss carryforwards for tax purposes that are not expected to be realized. The net changes in the total valuation allowance for deferred tax assets for the years ended March 31, 2005, 2006 and 2007 consist of the following:

F-54



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

| |                                          | Yen in millions |   | U.S. dollarsin thousands
| | ---------------------------------------- | --------------- | - | ------------------------
| |                                          | March 31        |   | March 31,               
| |                                          | 2005            |   | 2006                    
| | Valuation allowance at beginning of year | ¥ (20,765       | ) |                         
| | Deductions                               | 5,172           |   |                         
| | Impact of acquisition of companies       | -               |   |                         
| |                                          |                 |   |                         
| | Valuation allowance at end of year       | ¥ (15,593       | ) |                         
| |                                          |                 |   |                         

Net deferred tax assets are included in the consolidated balance sheets as follows:

|                            | Yen in millions |   | U.S. dollarsin thousands
|--------------------------- | --------------- | - | ------------------------
|                            | March 31        |   | March 31,               
|                            | 2006            |   | 2007                    
|Deferred tax assets:        |                 |   |                         
|Other current assets        | ¥ 4,451         |   |                         
|Other non-current assets    | 5,404           |   |                         
|Deferred tax liabilities:   |                 |   |                         
|Other current liabilities   | (99             | ) |                         
|Other long-term liabilities | (2,371          | ) |                         
|                            |                 |   |                         
|Net deferred tax assets     | ¥ 7,385         |   |                         
|                            |                 |   |                         

Management of NIDEC intends to reinvest certain undistributed earnings of their foreign subsidiaries for an indefinite period of time. As a result, no deferred tax liability has been recorded on undistributed earnings of these subsidiaries, which are not expected to be remitted in the foreseeable future, aggregating ¥75,587million ($640,296 thousand) as of March 31, 2007. NIDEC estimates an additional deferred tax liability of ¥12,618million ($106,887thousand) would be required at such time if the full amount of these accumulated earnings were expected to be remitted.

For the year ended March 31, 2007, Nidec recognized some valuation allowance for the acquired entities deferred tax assets for deductible temporary differences and tax credit carryforwards. Tax benefits recognized for subsequent years were first applied to reduce goodwill to zero. Amount of reduction in goodwill related to the release of valuation allowance established at the acquisition date was ¥5,233 million ($44,329 thousand).

F-55



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

20. Reconciliation of the differences between basic and diluted earnings per share:

In a meeting of the Board of Directors held on July 28, 2005, the Company decided to implement a two-for-one stock split (the Stock Split). The shares of shareholders listed or recorded on the final shareholders register and the official shareholders register for September 30, 2005 were split two for one. The number of issued shares of record on September 30, 2005 was the number of shares to be split.

Basic and diluted earnings per share as well as the number of shares in the following table retroactively reflect the effect of the two-for-one stock split that became effective on November 18, 2005.

The table below sets forth a reconciliation of the differences between basic and diluted income per share for the year ended March 31, 2005, 2006 and 2007.

|                                            | Yen in millions                    |          | Thousands of shares           |         | Yen                        |  | U.S. dollars              
|------------------------------------------- | ---------------------------------- | -------- | ----------------------------- | ------- | -------------------------- |  | --------------------------
|                                            | Net income                         |          | Weighted-
      averageshares |         | Net income
      per share |  | Net income
      per share
|For the year ended March 31, 2005:          |                                    |          |                               |         |                            |  |                           
|Basic net income per share                  |                                    |          |                               |         |                            |  |                           
|Net income available to common shareholders | ¥ 33,455                           |          |                               | 139,470 |                            |  | ¥ 239.87                  
|Effect of dilutive securities               |                                    |          |                               |         |                            |  |                           
|                                            | Unsecured 0.8% convertible bonds   | 42       |                               |         | 2,589                      |  |                           
|                                            | Zero coupon 0.0% convertible bonds | -        |                               |         | 4,463                      |  |                           
|                                            | Securities of a subsidiary         | (2       | )                             |         | -                          |  |                           
|                                            | Stock option                       | -        |                               |         | 197                        |  |                           
|Diluted net income per share                |                                    |          |                               |         |                            |  |                           
|                                            | Net income for computation         | ¥ 33,495 |                               |         | 146,719                    |  |                           

F-56



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                                            | Yen in millions                    |          | Thousands of shares           |         | Yen                        |  | U.S. dollars              
|------------------------------------------- | ---------------------------------- | -------- | ----------------------------- | ------- | -------------------------- |  | --------------------------
|                                            | Net income                         |          | Weighted-
      averageshares |         | Net income
      per share |  | Net income
      per share
|For the year ended March 31, 2006:          |                                    |          |                               |         |                            |  |                           
|Basic net income per share                  |                                    |          |                               |         |                            |  |                           
|Net income available to common shareholders | ¥ 40,949                           |          |                               | 143,445 |                            |  | ¥ 285.47                  
|Effect of dilutive securities               |                                    |          |                               |         |                            |  |                           
|                                            | Unsecured 0.8% convertible bonds   | 11       |                               |         | 872                        |  |                           
|                                            | Zero coupon 0.0% convertible bonds | -        |                               |         | 4,386                      |  |                           
|                                            | Securities of a subsidiary         | 0        |                               |         | -                          |  |                           
|                                            | Stock option                       | -        |                               |         | 212                        |  |                           
|Diluted net income per share                |                                    |          |                               |         |                            |  |                           
|                                            | Net income for computation         | ¥ 40,960 |                               |         | 148,915                    |  |                           
|For the year ended March 31, 2007:          |                                    |          |                               |         |                            |  |                           
|Basic net income per share                  |                                    |          |                               |         |                            |  |                           
|Net income available to common shareholders | ¥ 39,932                           |          |                               | 144,665 |                            |  | ¥ 276.03                  
|Effect of dilutive securities               |                                    |          |                               |         |                            |  |                           
|                                            | Zero coupon 0.0% convertible bonds | -        |                               |         | 4,022                      |  |                           
|                                            | Stock option                       | -        |                               |         | 174                        |  |                           
|Diluted net income per share                |                                    |          |                               |         |                            |  |                           
|                                            | Net income for computation         | ¥ 39,932 |                               |         | 148,861                    |  |                           

F-57



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

21. Financial instruments:

NIDEC manages the exposure of its financial assets and liabilities to interest rate and foreign exchange rate movements through the use of derivative financial instruments which include foreign exchange forward contracts, interest rate swaps, interest rate currency swap agreements, and interest rate cap agreements. These financial instruments are executed with creditworthy financial institutions, and substantially all foreign currency contracts are denominated in U.S. dollars. Financial instruments involve, to varying degrees, market risk as instruments are subject to price fluctuations and elements of credit risk in the event that the counterparty should default. In the unlikely event the counterparties fail to meet the contractual terms of a foreign currency or an interest rate instrument, NIDECs risk is limited to the fair value of the instrument. Although NIDEC may be exposed to losses in the event of non-performance by counterparties on financial instruments, it does not anticipate significant losses due to the nature of its counterparties. Counterparties to NIDECs financial instruments represent, in general, international financial institutions. Additionally, NIDEC does not have a significant exposure to any individual counterparty. Based on the creditworthiness of these financial institutions, NIDEC believes that the overall credit risk related to its financial instruments is insignificant.

The estimated fair values of NIDECs financial instruments are summarized as follows:

|                                                                                          | Yen in millions
|----------------------------------------------------------------------------------------- | ---------------
|                                                                                          | March 31, 2006 
|                                                                                          | Carryingamount 
|Asset (Liability)                                                                         |                
|Cash and cash equivalents                                                                 | ¥ 92,079       
|Short-term investments                                                                    | 2,909          
|Short-term loan receivable                                                                | 56             
|Marketable securities                                                                     | 19,676         
|Long-term loan receivable                                                                 | 361            
|Short-term borrowings                                                                     | (43,621        
|Long-term debt including the current portion and excluding
      capital lease obligation | (30,940        
|Foreign exchange forward contracts                                                        | (1             
|Interest rate swap agreements                                                             | (12            
|Interest rate cap agreements                                                              | (8             



F-58



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                                                                                    | Yen in millions |   | U.S. dollarsin thousands
|----------------------------------------------------------------------------------- | --------------- | - | ------------------------
|                                                                                    | March 31, 2007  |   | March 31, 2007          
|                                                                                    | Carryingamount  |   | Estimatedfair value     
|Asset (Liability)                                                                   |                 |   |                         
|Cash and cash equivalents                                                           | ¥ 88,784        |   |                         
|Short-term investments                                                              | 3,541           |   |                         
|Short-term loan receivable                                                          | 8               |   |                         
|Marketable securities                                                               | 20,118          |   |                         
|Long-term loan receivable                                                           | 379             |   |                         
|Short-term borrowings                                                               | (78,848         | ) |                         
|Long-term debt including the current portion and excluding capital lease obligation | (28,924         | ) |                         
|Foreign exchange forward contracts                                                  | 3               |   |                         
|Interest rate swap agreements                                                       | (12             | ) |                         
|Interest rate currency swap agreements                                              | (27             | ) |                         
|Interest rate cap agreements                                                        | -               |   |                         

The following are explanatory notes relating to the financial instruments.

Cash and cash equivalents, short-term investments, short-term loans receivable and short-term borrowings: In the normal course of business, substantially all cash and cash equivalents, time deposits short-tem loans receivable and short-term borrowing are highly liquid and are carried at amounts that approximate fair value.

Marketable securities: The fair value of marketable securities was based on quoted market prices.

Long-term loan receivable: The fair value of long-term loans was estimated by discounting expected future cash flows.

Long-term debt: The fair value of bonds issued by NIDEC was estimated based on their market price which was influenced by, and corresponded to stock price. The fair value of long-term bank loans (including the current portion and excluding capital lease obligation) was estimated based on the discounted amounts of future cash flows using NIDEC’s current incremental borrowing rates for similar liabilities.

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Derivative financial instruments

Changes in the estimated fair value of foreign exchange forward contracts, determined by reference to the discounted present value of net cash flows, are recognized as Gain (loss) from derivative instruments, net in the consolidated statement of income.

Losses on foreign exchange forward contracts was ¥192 million for the year ended March 31, 2005, and gains from foreign exchange forward contracts were ¥25 million and ¥4 million ($34 thousand) for the year ended March 31, 2006 and 2007. The contracted amounts outstanding on March 31, 2006 and 2007 were ¥1,463 million and ¥391 million ($3,312 thousand), respectively.

Interest rate swaps, and interest rate currency swap agreements, which mature from 2009 to 2011, were designed to reduce NIDECs exposure to losses resulting from adverse fluctuations in cash flows due to changes in interest rates and currency exchange rates on underlying debt instruments. Interest rate cap agreement, which was designed to the same purpose, was matured in 2006.

Changes in the fair value of interest rate swaps, and interest rate currency swap agreements, which are estimated based on the discounted amounts of net future cash flows, are recognized as Gain (loss) from derivative instruments, net in the income statement. Gains from interest rate swaps for the year ended March 31, 2005 and 2006 were ¥8 million and ¥34 million, respectively. Loss on interest rate swaps, and interest rate currency swap agreements was ¥23 million ($195 thousand) for the year ended March 31, 2007. The contracted amounts outstanding on March 31, 2006 and 2007 were ¥1,200 million and ¥1,320 million ($11,182 thousand), respectively.

Interest rate cap agreements require the writer to pay the purchaser at specified future dates the amounts, if any, by which a specified market interest rate exceeds the fixed cap rate, applied to a notional amount. The premiums paid for interest rate cap agreements purchased are included in Prepaid expenses and other current assets and Other non-current assets in the accompanying consolidated balance sheets. Differences between the premium paid and fair value of these contracts and subsequent changes in fair values of option prices, which are calculated based on Black-Scholes option-pricing model, are recognized as Gain (loss) from derivative instruments, net in the income statement. Gains from interest rate cap agreements for the year ended March 31, 2005, 2006, and 2007 were ¥10 million, ¥16 million, and ¥8 million ($68 thousand), respectively. The notional amount of interest rate cap agreements on March 31, 2006 was ¥2,500 million and there is no outstanding contract on March 31, 2007.

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

22. Related party transactions:

As of March 31, 2007, the president of the Company and a business entity indirectly owned by the president of the Company held 8.2% and 6.1% of the outstanding shares of the Company, respectively. There were no significant related party transactions other than those described in Note 11.

23. Lease commitments:

NIDEC leases certain assets under capital lease and operating lease arrangements. An analysis of leased assets under capital leases is as follows:

| |                                 | Yen in millions |   | U.S. dollarsin thousands
| | ------------------------------- | --------------- | - | ------------------------
| |                                 | March 31        |   | March 31,               
| | Class of property               | 2006            |   | 2007                    
| | Machinery and equipment         | ¥ 9,516         |   |                         
| | Other leased assets             | 829             |   |                         
| | Less - Accumulated amortization | (5,735          | ) |                         
| |                                 |                 |   |                         
| |                                 | ¥ 4,610         |   |                         
| |                                 |                 |   |                         

Amortization expenses under capital leases for the years ended March 31, 2005, 2006 and 2007 were ¥1,923 million, ¥1,947 million and ¥1,874 million ($15,875 thousand), respectively.

Future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of March 31, 2007 are as follows:

|Year ending March 31:                       | Yen inmillions |   | U.S. dollarsin thousands
|------------------------------------------- | -------------- | - | ------------------------
|2008                                        | ¥ 2,343        |   |                         
|2009                                        | 1,638          |   |                         
|2010                                        | 1,407          |   |                         
|2011                                        | 534            |   |                         
|2012                                        | 210            |   |                         
|2013 and thereafter                         | 34             |   |                         
|                                            |                |   |                         
|Total minimum lease payments                | 6,166          |   |                         
|Less - Amount representing interest         | (313           | ) |                         
|                                            |                |   |                         
|Present value of net minimum lease payments | 5,853          |   |                         
|Less - Current obligations                  | (2,203         | ) |                         
|                                            |                |   |                         
|Long-term capital lease obligations         | ¥ 3,650        |   |                         
|                                            |                |   |                         



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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)





Rental expenses under operating leases for the years ended March 31, 2005, 2006 and 2007 were ¥368 million, ¥560 million and ¥478 million ($4,049 thousand), respectively.



The minimum rental payments required under operating leases relating primarily to land, buildings and equipment having initial or remaining non-cancelable lease terms in excess of one year at March 31, 2007 are as follows:



|Year ending March 31: | Yen inmillions               |         | U.S. dollarsin thousands
|--------------------- | ---------------------------- | ------- | ------------------------
|                      | 2008                         | ¥ 814   |                         
|                      | 2009                         | 705     |                         
|                      | 2010                         | 640     |                         
|                      | 2011                         | 642     |                         
|                      | 2012                         | 629     |                         
|                      | 2013 and thereafter          | 1,027   |                         
|                      |                              |         |                         
|                      | Total minimum future rentals | ¥ 4,457 |                         
|                      |                              |         |                         



NIDEC is a lessor in operating leases for which a portion of the land, office and manufacturing facilities is leased over various terms. Rental revenues under operating leases for the years ended March 31, 2005, 2006 and 2007 were ¥46 million, ¥45 million and ¥66 million ($559 thousand), respectively.

The future minimum lease payments to be received under operating leases that have remaining non-cancelable term at March 31, 2007 are as follows:

|Year ending March 31: | Yen inmillions               |       | U.S. dollarsin thousands
|--------------------- | ---------------------------- | ----- | ------------------------
|                      | 2008                         | ¥ 168 |                         
|                      | 2009                         | 117   |                         
|                      | 2010                         | 77    |                         
|                      | 2011                         | 75    |                         
|                      | 2012                         | 25    |                         
|                      | 2013 and thereafter          | -     |                         
|                      |                              |       |                         
|                      | Total minimum future rentals | ¥ 462 |                         
|                      |                              |       |                         

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)



24. Other commitments and contingencies, concentrations and factors that may affect future operations:



Commitments -

Commitments outstanding at March 31, 2007 for the purchase of property, plant and equipment and other assets approximated ¥3,317 million ($28,098 thousand).

Contingencies -

Contingent liabilities for guarantees given in the ordinary course of business amounted to approximately ¥296 million ($2,507 thousand) at March 31, 2007. NIDEC has guaranteed approximately ¥296 million ($2,507 thousand) of bank loan of employees for their housing costs. If an employee defaults on his/her loan payments, NIDEC is required to perform under the guarantee. The undiscounted maximum amount of NIDECs obligation to make future payments in the event of defaults is approximately ¥296 million ($2,507 thousand). The current carrying amount of the liabilities for NIDECs obligations under the guarantee is zero.

Concentration of risk -

NIDEC is dependent on a number of large customers for a substantial portion of NIDECs net sales. Sales to NIDECs six largest customers represented approximately 29%, 34%, and 37% of consolidated net sales for the years ended March 31, 2005, 2006, and 2007, respectively. Sales to NIDECs largest customer were approximately 8%, 11%, and 11% of consolidated net sales for the years ended March 31, 2005, 2006, and 2007, respectively. Accounts receivable are financial instruments that expose NIDEC to a concentration of credit risk. At March 31, 2006, the six largest customers with the outstanding accounts receivable balances totaled ¥36,960 million, or 29% of the gross accounts receivable, compared to ¥49,097 million ($415,900 thousand), or 33% of the gross accounts receivable, at March 31, 2007. If any one or group of these customers receivable balances should be deemed uncollectable, it would have a materially adverse effect on NIDECs results of operations and financial condition.

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

25. Segment information:



(1) Enterprise-wide information:

Product information –

The following table provides product information for the years ended March 31, 2005, 2006 and 2007:

|           |                                                 | Yen in millions             |  | U.S. dollars
      in thousands
|---------- | ----------------------------------------------- | --------------------------- |  | -------------------------------
|           |                                                 | For the year ended March 31 |  | For the year ended March 31,   
|           |                                                 | 2005                        |  | 2006                           
|Net sales: |                                                 |                             |  |                                
|           | Small precision motors:                         |                             |  |                                
|           | Hard disk drives spindle motors                 | ¥ 119,233                   |  |                                
|           | Other small precision brushless
      DC motors | 61,066                      |  |                                
|           | Small precision brush DC motors                 | 7,980                       |  |                                
|           | Brushless DC fans                               | 34,435                      |  |                                
|           |                                                 |                             |  |                                
|           | Sub-total                                       | 222,714                     |  |                                
|           | Mid-size motors                                 | 35,564                      |  |                                
|           | Machinery                                       | 76,957                      |  |                                
|           | Electronic and optical components               | 128,417                     |  |                                
|           | Others                                          | 22,209                      |  |                                
|           |                                                 |                             |  |                                
|           | Consolidated total                              | ¥ 485,861                   |  |                                
|           |                                                 |                             |  |                                

The Hard disk drives spindle motors group of products consists of ball bearing hard disk drives spindle motors, including those for 3.5-inch, 2.5-inch, and 1.8-inch hard disk drives. It also includes fluid dynamic bearing hard disk drives spindle motors for 3.5-inch, 2.5-inch, 1.8-inch, 1.0-inch and 0.85-inch hard disk drives for the years ended March 31, 2005, 2006 and 2007.

The Other small precision brushless DC motors group of products consists of brushless motors for many types of products, including optical disk drives, copiers, printers and fax machines.

The Small precision brush DC motors group of products consists of brush DC motors for many types of products, including DVD players, CD players, home video game consoles and mobile phones.

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The “Brushless DC fans” group of products consists of brushless fans, which are used in many types of products, including computers and game machines for the purpose of lowering the temperature of central processing units in these products.

The Mid-size motors group of products consists of motors are used in automobiles, various electric household appliances and industrial equipment.

The Machinery group of products consists of power transmission equipment, semi-conductor manufacturing supplies, test systems, measuring equipment, card readers, industrial robots and factory automation systems.

The Electronic and optical components group of products consists of camera shutters, camera lends units, encoders, switches, trimmer potentiometers, motor driven actuator units, optical pickup units, processing and precision plastic mold products.

Others consists of automobile parts, pivot assemblies, other components and other services.



Geographic information 



Revenue from external customers, which are attributed to countries based on the location of the parent company or the subsidiaries that transacted with the external customer for the years ended March 31, 2005, 2006 and 2007, and long-lived assets for the years ended March 31, 2006 and 2007 are as follows:

|                             |                          | Yen in millions             |  | U.S. dollars
      in thousands
|---------------------------- | ------------------------ | --------------------------- |  | -------------------------------
|                             |                          | For the year ended March 31 |  | For the year ended March 31,   
|                             |                          | 2005                        |  | 2006                           
|Sales and operating revenue: |                          |                             |  |                                
|                             | Japan                    | ¥ 292,822                   |  |                                
|                             | U.S.A.                   | 8,200                       |  |                                
|                             | Singapore                | 59,989                      |  |                                
|                             | Thailand                 | 42,653                      |  |                                
|                             | The Philippines          | 5,557                       |  |                                
|                             | China                    | 23,771                      |  |                                
|                             | Other                    | 52,869                      |  |                                
|                             |                          |                             |  |                                
|                             | Consolidated
      total | ¥ 485,861                   |  |                                
|                             |                          |                             |  |                                

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                   |                    | Yen in millions             |  | U.S. dollars
      in thousands
|------------------ | ------------------ | --------------------------- |  | -------------------------------
|                   |                    | For the year ended March 31 |  | For the year ended March 31,   
|                   |                    | 2006                        |  | 2007                           
|Long-lived assets: |                    |                             |  |                                
|                   | Japan              | ¥ 80,180                    |  |                                
|                   | U.S.A.             | 841                         |  |                                
|                   | Singapore          | 1,206                       |  |                                
|                   | Thailand           | 22,987                      |  |                                
|                   | The Philippines    | 20,026                      |  |                                
|                   | China              | 36,979                      |  |                                
|                   | Other              | 14,009                      |  |                                
|                   |                    |                             |  |                                
|                   | Consolidated total | ¥ 176,228                   |  |                                
|                   |                    |                             |  |                                





(2) Operating segment information:

The operating segments reported below are defined as components of an enterprise for which separate financial information is available and regularly reviewed by NIDECs chief operating decision maker. NIDECs chief operating decision maker utilizes various measurements to assess segment performance and allocate resources to segments.

The NCJ segment comprises NIDEC Corporation in Japan, which primarily produces and sells hard disk drive motors, DC motors, fans, and Mid-size motors.

The NET segment comprises Nidec Electronics (Thailand) Co., Ltd. and Nidec Precision (Thailand) Co., Ltd., subsidiaries in Thailand, which primarily produce and sell hard disk drive motors.

The NCC segment comprises Nidec (Zhejiang) Corporation, a subsidiary in China, which primarily produces and sells hard disk drive motors. NCC has been a reportable segment since 2006.



The NCD segment comprises Nidec (Dalian) Limited, a subsidiary in China, which primarily produces and sells DC motors and fans.

The NCS segment comprises Nidec Singapore Pte. Ltd., a subsidiary in Singapore, which primarily produces and sells hard disk drive motors and pivot assemblies, and sells DC motors and fans.

The NCH segment comprises Nidec (H.K.) Co., Ltd., a subsidiary in Hong Kong, which primarily sells hard disk drive motors, DC motors and fans. NCH has been a reportable segment since 2006.

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The NCF segment comprises Nidec Philippines Corporation and Nidec Precision Philippines Corporation, subsidiaries in The Philippines, which primarily produce and sell hard disk drive motors.

The NSNK segment comprises Nidec Sankyo Corporation, a subsidiary in Japan, which primarily produces and sells DC motors, machinery, and optical and electronic parts.

The NCPL segment comprises Nidec Copal Corporation, a subsidiary in Japan, which primarily produces and sells optical and electronic parts and machinery.

The NTSC segment comprises Nidec Tosok Corporation, a subsidiary in Japan, which primarily produces and sells automobile parts and machinery.

The NCEL segment comprises Nidec Copal Electronics Corporation, a subsidiary in Japan, which primarily produces and sells electronic parts.

The NSBC segment comprises Nidec Shibaura Corporation, a subsidiary in Japan, which primarily produces and sells mid-size motors.



The NSCJ segment comprises Nidec-Shimpo Corporation, a subsidiary in Japan, which primarily produces and sells power transmission drives, measuring machines and electric potters wheels.



The NNSN segment comprises Nidec Nissin Corporation, a subsidiary in Japan, which primarily produces and sells optical components.

The All Others segment comprises subsidiaries that are operating segments but not designated as reportable segments due to materiality.

NIDEC has fourteen reportable segments, NCJ, NET, NCC, NCD, NCS, NCH, NCF, NSNK, NCPL, NTSC, NCEL, NSBC, NSCJ, and NNSN which have been identified based on differences in legal entities with responsible managers.

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

NIDEC evaluates performance based on segmental profit and loss, which consists of sales and operating revenues less operating expenses. Segmental profit or loss is determined using the accounting principles in the segments country of domicile. NCJ, NSNK, NCPL, NTSC, NCEL, NSBC, NSCJ, NNSNs operating profit or loss is determined using Japanese GAAP, NET applies Thai accounting principles, NCC and NCD applies Chinese accounting principles, NCS applies Singaporean accounting principles, NCH applies Hong Kong accounting principles and NCF applies Philippine accounting principles. Therefore NIDECs segmental data has not been prepared under U.S. GAAP on a basis that is consistent with the consolidated financial statements or on any other single basis that is consistent between segments. While there are several differences between U.S. GAAP and the underlying accounting bases used by management, the principal differences that affect segmental operating profit or loss are accounting for pension and severance costs, directors bonuses and leases. Management believes that the monthly segmental information is available on a timely basis and that it is sufficiently accurate at the segment profit and loss level for management’s purposes.

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following tables show revenues from external customers and other financial information by operating segment for the years ended March 31, 2005, 2006 and 2007:



|                                  |                                                                                               | Yen in millions             |   | U.S. dollars
      in thousands
|--------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------- | - | -------------------------------
|                                  |                                                                                               | For the year ended March 31 |   | For the year ended March 31,   
|                                  |                                                                                               | 2005                        |   | 2006                           
|Revenues from external customers: |                                                                                               |                             |   |                                
|                                  | NCJ                                                                                           | ¥ 56,602                    |   |                                
|                                  | NET                                                                                           | 36,891                      |   |                                
|                                  | NCC                                                                                           | 13,037                      |   |                                
|                                  | NCD                                                                                           | 754                         |   |                                
|                                  | NCS                                                                                           | 45,442                      |   |                                
|                                  | NCH                                                                                           | 17,114                      |   |                                
|                                  | NCF                                                                                           | 1,094                       |   |                                
|                                  | NSNK                                                                                          | 68,880                      |   |                                
|                                  | NCPL                                                                                          | 54,067                      |   |                                
|                                  | NTSC                                                                                          | 23,992                      |   |                                
|                                  | NCEL                                                                                          | 20,653                      |   |                                
|                                  | NSBC                                                                                          | 14,449                      |   |                                
|                                  | NSCJ                                                                                          | 10,317                      |   |                                
|                                  | NNSN                                                                                          | 12,641                      |   |                                
|                                  | All others                                                                                    | 109,700                     |   |                                
|                                  |                                                                                               |                             |   |                                
|                                  | Total                                                                                         | 485,633                     |   |                                
|                                  | U.S. GAAP adjustments *1                                                                      | (34                         | ) |                                
|                                  | Consolidation adjustments related to elimination of intercompany transactions via third party | (331                        | ) |                                
|                                  | Others *2                                                                                     | 593                         |   |                                
|                                  |                                                                                               |                             |   |                                
|                                  | Consolidated total                                                                            | ¥ 485,861                   |   |                                
|                                  |                                                                                               |                             |   |                                

*1 US GAAP adjustments mainly related to the differences of revenue recognition between shipment and delivery bases.

*2 Revenues of subsidiaries not included in management reports due to their immateriality are main components of Others.

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

NIDEC had sales to one customer of ¥58,767 million and ¥72,037 million within the NCJ, NET, NCC, NCS and “All Others” segments for the years ended March 31, 2006 and 2007, respectively, that exceeded 10% of NIDEC’s net sales. There were no sales which exceeded 10% of the consolidated net sales for the year ended March 31, 2005.

|                                        |                          | Yen in millions             |   | U.S. dollars
      in thousands
|--------------------------------------- | ------------------------ | --------------------------- | - | -------------------------------
|                                        |                          | For the year ended March 31 |   | For the year ended March 31,   
|                                        |                          | 2005                        |   | 2006                           
|Revenues from other operating segments: |                          |                             |   |                                
|                                        | NCJ                      | ¥ 73,749                    |   |                                
|                                        | NET                      | 21,240                      |   |                                
|                                        | NCC                      | 1,052                       |   |                                
|                                        | NCD                      | 38,678                      |   |                                
|                                        | NCS                      | 1,363                       |   |                                
|                                        | NCH                      | 2,003                       |   |                                
|                                        | NCF                      | 21,131                      |   |                                
|                                        | NSNK                     | 19,313                      |   |                                
|                                        | NCPL                     | 9,351                       |   |                                
|                                        | NTSC                     | 657                         |   |                                
|                                        | NCEL                     | 2,355                       |   |                                
|                                        | NSBC                     | 9,348                       |   |                                
|                                        | NSCJ                     | 2,326                       |   |                                
|                                        | NNSN                     | 1,041                       |   |                                
|                                        | All Others               | 166,350                     |   |                                
|                                        |                          |                             |   |                                
|                                        | Total                    | 369,957                     |   |                                
|                                        | Intersegment elimination | (369,957                    | ) |                                
|                                        |                          |                             |   |                                
|                                        | Consolidated total       | -                           |   |                                
|                                        |                          |                             |   |                                

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|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                                                                                |                             | Yen in millions             |   | U.S. dollars
      in thousands
|------------------------------------------------------------------------------- | --------------------------- | --------------------------- | - | -------------------------------
|                                                                                |                             | For the year ended March 31 |   | For the year ended March 31,   
|                                                                                |                             | 2005                        |   | 2006                           
|Segment profit or loss:                                                         |                             |                             |   |                                
|                                                                                | NCJ                         | ¥ 2,351                     |   |                                
|                                                                                | NET                         | 8,649                       |   |                                
|                                                                                | NCC                         | 107                         |   |                                
|                                                                                | NCD                         | 2,436                       |   |                                
|                                                                                | NCS                         | 1,935                       |   |                                
|                                                                                | NCH                         | 362                         |   |                                
|                                                                                | NCF                         | (379                        | ) |                                
|                                                                                | NSNK                        | 7,624                       |   |                                
|                                                                                | NCPL                        | 3,195                       |   |                                
|                                                                                | NTSC                        | 1,053                       |   |                                
|                                                                                | NCEL                        | 3,583                       |   |                                
|                                                                                | NSBC                        | 1,356                       |   |                                
|                                                                                | NSCJ                        | 1,397                       |   |                                
|                                                                                | NNSN                        | 946                         |   |                                
|                                                                                | All Others                  | 13,252                      |   |                                
|                                                                                |                             |                             |   |                                
|                                                                                | Total                       | 47,867                      |   |                                
|                                                                                |                             |                             |   |                                
|Main components of U.S. GAAP adjustments:                                       |                             |                             |   |                                
|                                                                                | Pension and severance costs | 547                         |   |                                
|                                                                                | Lease                       | (86                         | ) |                                
|                                                                                | Directors bonus            | (403                        | ) |                                
|Consolidation adjustments mainly related to elimination of intersegment profits | (839                        | )                           |   | (174                           
|Reclassification *1                                                             | 7,048                       |                             |   | (425                           
|Others *2                                                                       | (469                        | )                           |   | (190                           
|                                                                                |                             |                             |   |                                
|                                                                                |                             | ¥ 53,665                    |   |                                
|                                                                                |                             |                             |   |                                



*1 Some items are reclassified from other expenses (income) and included in operating expenses (income). Reclassification mainly includes loss caused by allowance for doubtful account for the year ended March 31, 2006 and loss on disposals of fixed assets for the year ended March 31, 2007.

*2 Main components of Others are other U.S. GAAP adjustments such as depreciation of fixed assets for the year ended March 31, 2006 and profit or loss of subsidiaries not included in management reports due to their immateriality for the year ended March 31, 2007.

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                  |                          | Yen in millions             |   | U.S. dollarsin thousands    
|----------------- | ------------------------ | --------------------------- | - | ----------------------------
|                  |                          | For the year ended March 31 |   | For the year ended March 31,
|                  |                          | 2005                        |   | 2006                        
|Interest revenue: |                          |                             |   |                             
|                  | NCJ                      | ¥ 319                       |   |                             
|                  | NET                      | 44                          |   |                             
|                  | NCC                      | 5                           |   |                             
|                  | NCD                      | 19                          |   |                             
|                  | NCS                      | 133                         |   |                             
|                  | NCH                      | 6                           |   |                             
|                  | NCF                      | 25                          |   |                             
|                  | NSNK                     | 172                         |   |                             
|                  | NCPL                     | 14                          |   |                             
|                  | NTSC                     | 1                           |   |                             
|                  | NCEL                     | 14                          |   |                             
|                  | NSBC                     | 37                          |   |                             
|                  | NSCJ                     | 15                          |   |                             
|                  | NNSN                     | 12                          |   |                             
|                  | All Others               | 137                         |   |                             
|                  |                          |                             |   |                             
|                  | Total                    | 953                         |   |                             
|                  | Intersegment elimination | (454                        | ) |                             
|                  |                          |                             |   |                             
|                  | Consolidated total       | ¥ 499                       |   |                             
|                  |                          |                             |   |                             

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NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                  |                          | Yen in millions             |   | U.S. dollars
      in thousands
|----------------- | ------------------------ | --------------------------- | - | -------------------------------
|                  |                          | For the year ended March 31 |   | For the year ended March 31,   
|                  |                          | 2005                        |   | 2006                           
|Interest expense: |                          |                             |   |                                
|                  | NCJ                      | ¥ 329                       |   |                                
|                  | NET                      | 1                           |   |                                
|                  | NCC                      | 25                          |   |                                
|                  | NCD                      | 0                           |   |                                
|                  | NCS                      | 0                           |   |                                
|                  | NCH                      | 0                           |   |                                
|                  | NCF                      | 137                         |   |                                
|                  | NSNK                     | 32                          |   |                                
|                  | NCPL                     | 3                           |   |                                
|                  | NTSC                     | 18                          |   |                                
|                  | NCEL                     | 9                           |   |                                
|                  | NSBC                     | 120                         |   |                                
|                  | NSCJ                     | 39                          |   |                                
|                  | NNSN                     | 26                          |   |                                
|                  | All Others               | 467                         |   |                                
|                  |                          |                             |   |                                
|                  | Total                    | 1,206                       |   |                                
|                  | Intersegment elimination | (335                        | ) |                                
|                  |                          |                             |   |                                
|                  | Consolidated total       | ¥ 871                       |   |                                
|                  |                          |                             |   |                                

F-73



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|              |                          | Yen in millions             |   | U.S. dollars
      in thousands
|------------- | ------------------------ | --------------------------- | - | -------------------------------
|              |                          | For the year ended March 31 |   | For the year ended March 31,   
|              |                          | 2005                        |   | 2006                           
|Depreciation: |                          |                             |   |                                
|              | NCJ                      | ¥ 1,605                     |   |                                
|              | NET                      | 2,565                       |   |                                
|              | NCC                      | 168                         |   |                                
|              | NCD                      | 919                         |   |                                
|              | NCS                      | 240                         |   |                                
|              | NCH                      | 2                           |   |                                
|              | NCF                      | 2,109                       |   |                                
|              | NSNK                     | 1,244                       |   |                                
|              | NCPL                     | 1,350                       |   |                                
|              | NTSC                     | 655                         |   |                                
|              | NCEL                     | 825                         |   |                                
|              | NSBC                     | 71                          |   |                                
|              | NSCJ                     | 189                         |   |                                
|              | NNSN                     | 326                         |   |                                
|              | All Others               | 8,554                       |   |                                
|              |                          |                             |   |                                
|              | Total                    | 20,822                      |   |                                
|              | U.S. GAAP adjustments *1 | 1,445                       |   |                                
|              | Reconciliation           | (739                        | ) |                                
|              |                          |                             |   |                                
|              | Consolidated total       | ¥ 21,528                    |   |                                
|              |                          |                             |   |                                



*1 Leased properties are not capitalized in the operating segment but are capitalized under U.S. GAAP.

F-74



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                                |                           | Yen in millions             |  | U.S. dollarsin thousands    
|------------------------------- | ------------------------- | --------------------------- |  | ----------------------------
|                                |                           | For the year ended March 31 |  | For the year ended March 31,
|                                |                           | 2005                        |  | 2006                        
|Income tax expenses or benefit: |                           |                             |  |                             
|                                | NCJ                       | ¥ 1,177                     |  |                             
|                                | NET                       | 204                         |  |                             
|                                | NCC                       | 0                           |  |                             
|                                | NCD                       | 213                         |  |                             
|                                | NCS                       | 49                          |  |                             
|                                | NCH                       | 63                          |  |                             
|                                | NCF                       | 11                          |  |                             
|                                | NSNK                      | 100                         |  |                             
|                                | NCPL                      | 2,083                       |  |                             
|                                | NTSC                      | 290                         |  |                             
|                                | NCEL                      | 1,334                       |  |                             
|                                | NSBC                      | 119                         |  |                             
|                                | NSCJ                      | 224                         |  |                             
|                                | NNSN                      | 475                         |  |                             
|                                | All Others                | 3,259                       |  |                             
|                                |                           |                             |  |                             
|                                | Total                     | 9,601                       |  |                             
|                                | Consolidation adjustments | 3,246                       |  |                             
|                                |                           |                             |  |                             
|                                | Consolidated total        | ¥ 12,847                    |  |                             
|                                |                           |                             |  |                             

F-75



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                       |                                                  | Yen in millions             |   | U.S. dollarsin thousands    
|---------------------- | ------------------------------------------------ | --------------------------- | - | ----------------------------
|                       |                                                  | For the year ended March 31 |   | For the year ended March 31,
|                       |                                                  | 2006                        |   | 2007                        
|Segment assets:        |                                                  |                             |   |                             
|                       | NCJ                                              | ¥ 302,801                   |   |                             
|                       | NET                                              | 45,606                      |   |                             
|                       | NCC                                              | 9,923                       |   |                             
|                       | NCD                                              | 19,425                      |   |                             
|                       | NCS                                              | 28,778                      |   |                             
|                       | NCH                                              | 10,796                      |   |                             
|                       | NCF                                              | 20,348                      |   |                             
|                       | NSNK                                             | 97,447                      |   |                             
|                       | NCPL                                             | 60,859                      |   |                             
|                       | NTSC                                             | 25,544                      |   |                             
|                       | NCEL                                             | 25,036                      |   |                             
|                       | NSBC                                             | 18,846                      |   |                             
|                       | NSCJ                                             | 21,310                      |   |                             
|                       | NNSN                                             | 11,483                      |   |                             
|                       | All Others                                       | 194,526                     |   |                             
|                       |                                                  |                             |   |                             
|                       | Total                                            | 892,728                     |   |                             
|U.S. GAAP adjustments: |                                                  |                             |   |                             
|                       | Lease                                            | 3,235                       |   |                             
|                       | Property, plant and equipment                    | (2,221                      | ) |                             
|                       | Deferred tax assets                              | 4,844                       |   |                             
|                       | Marketable securities                            | 443                         |   |                             
|                       | Others                                           | (3,383                      | ) |                             
|                       |                                                  |                             |   |                             
|                       | Sub-total                                        | 2,918                       |   |                             
|                       | Elimination of intersegment assets, net of taxes | (393,173                    | ) |                             
|                       | Valuation differences                            | 6,641                       |   |                             
|                       | Goodwill                                         | 44,266                      |   |                             
|                       | To adjust affiliate from cost to equity method   | (412                        | ) |                             
|                       | Others *1                                        | 13,002                      |   |                             
|                       |                                                  |                             |   |                             
|                       | Consolidated total                               | ¥ 565,970                   |   |                             
|                       |                                                  |                             |   |                             



*1 Assets of subsidiaries not included in management reports due to their immateriality are main components of Others.

F-76



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                                |                    | Yen in millions             |  | U.S. dollarsin thousands    
|------------------------------- | ------------------ | --------------------------- |  | ----------------------------
|                                |                    | For the year ended March 31 |  | For the year ended March 31,
|                                |                    | 2006                        |  | 2007                        
|Expenditure for segment assets: |                    |                             |  |                             
|                                | NCJ                | ¥ 2,325                     |  |                             
|                                | NET                | 4,686                       |  |                             
|                                | NCC                | 2,641                       |  |                             
|                                | NCD                | 1,308                       |  |                             
|                                | NCS                | 550                         |  |                             
|                                | NCH                | 9                           |  |                             
|                                | NCF                | 2,620                       |  |                             
|                                | NSNK               | 2,137                       |  |                             
|                                | NCPL               | 4,125                       |  |                             
|                                | NTSC               | 535                         |  |                             
|                                | NCEL               | 1,126                       |  |                             
|                                | NSBC               | 138                         |  |                             
|                                | NSCJ               | 1,543                       |  |                             
|                                | NNSN               | 1,180                       |  |                             
|                                | All Others         | 16,611                      |  |                             
|                                |                    |                             |  |                             
|                                | Total              | 41,534                      |  |                             
|                                | Reconciliation *1  | 1,651                       |  |                             
|                                |                    |                             |  |                             
|                                | Consolidated total | ¥ 43,185                    |  |                             
|                                |                    |                             |  |                             

*1 The amounts of expenditure for segment assets were on an accrual basis while the amounts of consolidated total were on a cash basis.

NIDEC did not have significant non-cash items other than depreciation in reported profit. Equity in earnings of affiliates were not allocated to the segments in the financial information report available and are not regularly reviewed by NIDEC’s chief operating decision maker. Intersegment sales were made at prices that approximate current market value.

F-77



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

26. Subsequent events:



Dividends

Subsequent to March 31, 2007, the Companys Board of Directors declared a cash dividend of ¥3,618 million ($30,648 thousand) payable on June 8, 2007 to stockholders of record on March 31, 2007.

Tender Offer for Japan Servo

NIDEC completed its tender offer for Japan Servo Co., Ltd. (Japan Servo). The tender offer, which commenced on March 14, 2007, expired on April 23, 2007. NIDEC received valid acceptances of 18,203,000 shares (or 51.77%) of common stock in Japan Servo for ¥260 ($2) per share, total of ¥4,733 million ($40,093 thousand). As a result, Japan Servo became NIDEC’s consolidated subsidiary on April 27, 2007.

F-78



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

27. Quarterly Financial Data for the year ended March 31, 2007: (Unaudited)



|                                                                                     | Yen in millions    
|------------------------------------------------------------------------------------ | -------------------
|                                                                                     | First
      Quarter
|Net sales                                                                            | ¥ 145,819          
|Operating expenses:                                                                  |                    
|Cost of products sold                                                                | 111,956            
|Selling, general and administrative expenses                                         | 11,216             
|Research and development expenses                                                    | 7,613              
|                                                                                     |                    
|                                                                                     | 130,785            
|                                                                                     |                    
|Operating income                                                                     | 15,034             
|Other income (expense):                                                              |                    
|Interest and dividend income                                                         | 562                
|Interest expense                                                                     | (486               
|Foreign exchange (loss) gain, net                                                    | (944               
|Gain (loss) from derivative instruments, net                                         | 6                  
|Gain (loss) from marketable securities, net                                          | 208                
|Other, net                                                                           | (352               
|                                                                                     |                    
|                                                                                     | (1,006             
|                                                                                     |                    
|Income before provision for income taxes                                             | 14,028             
|Provision for income taxes                                                           | (3,128             
|                                                                                     |                    
|Income before minority interest and equity in earnings
      of affiliated companies | 10,900             
|Minority interest in income of consolidated subsidiaries                             | 2,053              
|Equity in net (income)/losses of affiliated companies                                | (2                 
|                                                                                     |                    
|Net income                                                                           | ¥ 8,849            
|                                                                                     |                    
|                                                                                     |                    
|Per share data:                                                                      | Yen                
|Net income                                                                           | - basic            
|                                                                                     | - diluted          
|Cash dividends                                                                       | ¥ 20.00            
|                                                                                     |                    



|Earnings-per-share amounts for each quarter are computed independently. As a result, their sum may not equal the total year earnings-per-share amounts.
|-------------------------------------------------------------------------------------------------------------------------------------------------------

F-79



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|Table of Contents                                         
|----------------------------------------------------------
|Index to Consolidated Financial Statements and Information

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

|                                                                                     | U.S. dollars in thousands
|------------------------------------------------------------------------------------ | -------------------------
|                                                                                     | FirstQuarter             
|Net sales                                                                            | $ 1,235,231              
|Operating expenses:                                                                  |                          
|Cost of products sold                                                                | 948,378                  
|Selling, general and administrative expenses                                         | 95,010                   
|Research and development expenses                                                    | 64,490                   
|                                                                                     |                          
|                                                                                     | 1,107,878                
|                                                                                     |                          
|Operating income                                                                     | 127,353                  
|Other income (expense):                                                              |                          
|Interest and dividend income                                                         | 4,761                    
|Interest expense                                                                     | (4,117                   
|Foreign exchange (loss) gain, net                                                    | (7,997                   
|Gain (loss) from derivative instruments, net                                         | 51                       
|Gain (loss) from marketable securities, net                                          | 1,762                    
|Other, net                                                                           | (2,982                   
|                                                                                     |                          
|                                                                                     | (8,522                   
|                                                                                     |                          
|Income before provision for income taxes                                             | 118,831                  
|Provision for income taxes                                                           | (26,497                  
|                                                                                     |                          
|Income before minority interest and equity in earnings
      of affiliated companies | 92,334                   
|Minority interest in income of consolidated subsidiaries                             | 17,391                   
|Equity in net (income)/losses of affiliated companies                                | (17                      
|                                                                                     |                          
|Net income                                                                           | $ 74,960                 
|                                                                                     |                          
|                                                                                     |                          
|Per share data:                                                                      | U.S. dollars             
|Net income                                                                           | - basic                  
|                                                                                     | - diluted                
|Cash dividends                                                                       | $ 0.17                   
|                                                                                     |                          



|Earnings-per-share amounts for each quarter are computed independently. As a result, their sum may not equal the total year earnings-per-share amounts.
|-------------------------------------------------------------------------------------------------------------------------------------------------------

F-80