Itsuo Kozuka, Company President

I would like to extend a special appreciation to all of our stockholders for being supportive.

In the domestic economy in this consolidated fiscal year, it has the matters to concern to the future such as a remarkable rise of crude oil price and future rise in price prospect of an interest rare. However, export and investment in plant and equipment becomes a firm tone, improvement of corporate earnings advances, and it is supported by the employment improvement so that it started shows a sign of recovery in individual consumption.

In overseas, the favorable condition of Asian group such as China and India stood out, but it changed to the firm tone. On the other hand, in the United States a decline in individual consumption by the increase of home loan burden is apprehensive, and the uneasiness of economic slowdown has been increasing.

As for the domestic sale of the automotive industry which is a main customer of our group, the depress of the compact car took a large part, and also the number of sales of the standard car, the track, and the bus decreased after an interval of three years though the sales of mini-car maintained the good condition.

On the other hand, the number of export exceeded the domestic sales for the first time, and the domestic production has increased compared with the previous year.

Auto sales decreases in the United States, increases in Europe somewhat. Nevertheless, sales of Japanese companies of car manufacturing which provides the superior fuel cost performance and quality shows a growth continuously. In addition the number of oversea local production has increased.

It hastened the production move to China with the copier that relates to our group in the information environment equipment industry. Therefore the domestic production has decreased considerably.

In such situation, our group has been supported by the domestic and foreign productions of each customer. In addition, we have measured the expansion of business affairs by the development of a positive business activity and the enlargement of production bases, and strengthened the earnings structure through a pursuit to high value added and making a certain target cost by reinforcing the production line and the system of production

• May, 2006   Guangzhou Futaba Auto Part Co., Ltd (The 4th base in China)
• July, 2006   Dongguan Futaba Metal Products Co., Ltd. (The 5th base in China)
• October, 2006   Futaba Industrial Texas Corp. (The 4th base in the North America)
• December, 2006   Futaba Imari Co.,Ltd the Nohgata Plant (The 3rd base in Kyushu)

In addition, we merged Futaba Industrial Chiryuu Co., Ltd. in April, 2006 and reorganized it as the Chiryuu plant.

Achievements in This Consolidated Fiscal Year

The amount of sales reached an all-time high of 394.8 billion yen, a gain of 21.4% over the previous year. The breakdown is as follows; Automobile Part 369.3 billion yen (up 23.5% over the previous year), Information Environment Equipment Part 18.9 billion yen (up 0.1%), and others 6.6 billion yen (down 7.5%)

Although we have been under severe pressure from our customers to reduce our prices, as the result of reducing cost, lowering the expenses, and improving efficiency our operating profit reached 22.2 billion yen (up 26.2% over the previous year), the ordinary profit reached 23.4 billion yen (up 20.7%) with foreign exchange gain, and a net profit reached 12.7billions yen (up 11.1%). Moreover each profit has reached new highs.

The business environment in the next fiscal year seems severe because the followings are expected; reaching the ceiling of expert due to the stagnation of U.S. economy, a remarkable rising of material cost, gaining strength in yen, and strong approaching of each company on the reduction in cost. By strengthening the business power, improving the manufacturing efficiency, and maintaining the production base and the system, we expects the sales 410 billion yen, a gain of 3.8% over the previous financial year, the operating profit 24 billion yen (up 7.9%), the ordinary profit 25 billion yen (up 6.6%), and the net profit 13.5 billion yen (up 5.7%).

A Future Prospect

An application of internal management by the financial products trading law (SOX law) will start in 2008 fiscal year. It is important and urgent problem to meet the requirement by which it follows this law even though we have been performing the internal management as before. We will work on the system maintenance along a schedule.

Automobile Parts

1. The expansion of the production bases and the organization construction that suits a local strategy are necessary while the globalization of each customer is progressing.
   We assume the diversification of the production system as the world start-up of the world strategy car and the local strategy exist simultaneously. Therefore, we have worked on constructing the global organization corresponding to this issue.
2. Along with advances in globalization, a share fight, the technological development competitions, and the cost competitions would get a fierce. In order to overcome these competitions, we will work on obtaining new customers as well as cultivating the relation with existing customers, promoting efficiency of production, and constructing the co-operation system further more.
3. We think that in the super compact car plan, a great reduction in cost will be demanded. Therefore, we will think of the strategy which can cope with this issue about a drastic reduction in costs plan.
4. Dealing with the CO2 reduction becomes urgent by the environmental regulations so that we will develop an original technology and work on captures at new business market.

Information Environment Equipment parts

1. As for the information equipment, the production shift to China of customers is advanced. However, we will ensures the commercial rights security in China and obtain new customers, and also make an effort for the domestic commercial rights security.
2. In environmental equipment field, we have started in parts of the equipment related to energy. However, early practical use is expected due to the global warming obstruction so that we will cooperate with the joint development companies and move forward to the expansion of use.

We would like to thank this opportunity to thank all stockholders again for their continued support.

June, 2007