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Aida Engineering, Ltd. May 16, 2006

Flash Report (Consolidated Basis)Results for fiscal year 2006(April 1, 2005 through March 31, 2006)

Company name: Aida Engineering, Ltd.Stock listing: Tokyo Stock Exchange Code number: 6118 URL http://www.aida.co.jpRepresentative: Kimikazu Aida, President and representative directorInquiries: Eiji Takei, Operating officer, division manager of corporate planning and administration departmentTelephone: +81-42-772-5231Date of the meeting of the Board of Directors to settle the year-end consolidated accounts: May 16, 2006.U.S. accounting standard: not applied

1. Performance(1) Financial results

Year ended March 31 (Figures less than ¥1 million have been omitted)

Net Sales Operating Income Recurring Profit

Millions of yen % Millions of yen % Millions of yen %

2006 54,303 24.3 3,412 68.3 3,698 55.9

2005 43,679 11.9 2,027 208.6 2,373 166.8

Net IncomeNet Incomeper Share(Primary)

Net Incomeper Share(Diluted)dilution

Return onEquity

RecurringProfit-to-TotalCapital Ratio

RecurringProfit-to-NetSales Ratio

Millions of yen % Yen Yen % % %

2006 1,792 39.9 23.79 23.52 3.0 4.6 6.8

2005 1,281 342.5 17.40 17.30 2.2 3.4 5.4

1. Gain (Loss) on investment by equity method during the fiscal year ended March 31, 2006: ¥— million, 2005: ¥— million2. Average number of shares outstanding during the fiscal year ended March 31, 2006: 72,805,677 shares, 2005: 70,184,134 shares3. Change in accounting method: none4. Percentages indicate year-on-year increase/(decrease) in net sales, operating income, recurring profit, and net income.

(2) Financial position

March 31 (Figures less than ¥1 million have been omitted)

Total Assets Shareholders' Equity Shareholders'Equity ratio

Shareholders' Eequityper Share

Millions of yen Millions of yen % Yen

2006 83,510 60,780 72.8 849.94

2005 75,687 59,413 78.5 801.36

Number of shares outstanding at March 31, 2006: 71,511,572 shares, 2005: 74,140,207 shares

(3) Cash flows

Year ended March 31 (Figures less than ¥1 million have been omitted)

Cash Flows fromOperating Activities

Cash Flows fromInvesting Activities

Cash Flows fromFinancing Activities

Ending Cash andCash Equivalents

Millions of yen Millions of yen Millions of yen Millions of yen

2006 407 (1,300) (2,078) 9,983

2005 3,297 424 1,502 12,420

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(4) Number of subsidiaries and affiliatesConsolidated subsidiaries: 17Non-consolidated subsidiaries: None (accounted for by the equity method)Affiliates: None (accounted for by the equity method)

(5) Additions to and deletions from consolidated subsidiaries and affiliatesAdditions: Consolidated subsidiaries: 3, Affiliates: NoneDeletions: Consolidated subsidiaries: None, Affiliates: None

2. Forecast for fiscal year ending March 31, 2007

Net Sales Recurring Profit Net Income

Millions of yen Millions of yen Millions of yen

Interim Period 28,000 2,300 1,200

Fiscal Year 57,000 4,700 2,400

(Reference) Consolidated net income per share for the fiscal year ending March 31, 2007 is forecast to ¥33.56.

The above forecasts and those presented in appended material are based on the information presently available.Actual results may differ from these forecasts due to changes in various factors.

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ORGANIZATION OF AIDA ENGINEERING GROUP

The AIDA ENGINEERING Group’s main businesses are in the manufacturing and sale of forge rollingmachines, a type of metal processing machinery; various peripheral automation devices designed toautomate press processing; industrial robots; dies; and other related products. The Group comprises AidaEngineering, Ltd. and 17 subsidiaries (two domestic manufacturing subsidiary, one domestic tradingcompany, and 14 overseas manufacturing, sales, and service companies).

(Notes)

1. AIDA do BRASIL and PT AIDA STAMPING TECHNOLOGY (INDONESIA) were newly established and included in thescope of consolidation during fiscal year ended March 31, 2006.

2. Copres GmbH changed its corporate name to AIDA PRESSEN GmbH on November 21, 2005.

3. AIDA ENGINEERING UK, LTD. (no longer in business since March 2004) and VERDEX, INC. (dissolved February2006, presently in liquidation) are also consolidated subsidiary in addition to the above.

4. There are transactions conducted among consolidated subsidiaries separate from the ones listed above.

Manufacture in Japan

ACCEESS, LTD. Consolidatedsubsidiary

Insurance agency and security operationsin Japan

AIDA BUSINESS CORP. Consolidatedsubsidiary

Company reporting consolidated financial statementsAIDA ENGINEERING, LTD.

Manufacture, sale, service, and export operation in Japan

Manufacture in overseas

AIDA MANUFACTURING

(SHANGHAI) LTD.

AIDA MANUFACTURING

(MALAYSIA) SDN. BHD.

AIDA AMERICA CORP.

AIDA S.r.l.

Consolidatedsubsidiaries

Sale and service in overseas

AIDA HONG KONG LTD.

AIDA STAMPING

TECHNOLOGY PTE.

LTD.

AIDA STAMPING

TECHNOLOGY

(MALAYSIA) SDN. BHD.

AIDA STAMPING

TECHNOLOGY

(THAILAND) CO., LTD.

PT AIDA STAMPING

TECHNOLOGY

(INDONESIA)

AIDA CANADA, INC.

AIDA SAS

AIDA PRESSEN GmbH

AIDA do BRASIL

Consolidatedsubsidiaries

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MANAGEMENT POLICIES

(1) Fundamental Management Policies

AIDA ENGINEERING Group’s corporate philosophy is to “advance globally as a forming systems builder,and continue to be a company that contributes to people and society.” This encapsulates our ambition to become a leader in technological innovation in the broader field of forming and become a company that cancontribute to people in local communities worldwide while being a winner in the era of mega-competition.As an extension of our corporate mission, our slogan is “Harmony between People and Technology,” under which we will continue to provide products that meet customers’ needs by taking up the challenges offered by undeveloped technologies and process innovation.

(2) Fundamental Policies Concerning the Distribution of Company Profits

AIDA ENGINEERING considers generating shareholder returns to be a top management priority. And tothis end, the Company is working to enhance its corporate value by strengthening its operationalinfrastructure, improving its corporate quality, and conducting business on a global basis.

Our basic policy regarding dividends is to maintain a stable payout while making decisions on dividendsafter comprehensively considering business performance in a given fiscal period and future capitalrequirements.

We intend to allocate internal reserves toward investment in R&D aimed at further enhancing corporatevalue, toward capital investment designed to rationalize manufacturing and improving quality, strengtheningglobal operations, and boosting capital efficiency.

(3) Basic Stance and Policies on the Minimum Trading Unit for the Stock

Decisions to lower the minimum trading unit for the stock are based primarily on considerations of thestock price and the liquidity of the shares. At present, we view share liquidity to be adequate and, given thecurrent stock price and the costs involved in lowering the minimum trading unit for the stock and other factors,we do not intend to reduce the minimum trading unit at this time. Going forward, we will continue to considerthis issue while focusing on stock market trends and on shareholders returns as well as developments inregulations regarding stock certificates.

(4) Management Indicators the Company is Targeting

AIDA ENGINEERING Group will continue to focus on the promotion of globalization of business and theenhancement of profitability. In the medium-term, we will make further efforts for the improvement ofcorporate value with the goal of realizing ¥60 billion or more in sales and 10% or more in operating profit onsales.

(5) Medium- to Long-Term Management Strategies

The core of our management strategy is the become the No. 1 company in the forming system field overthe medium- to long-term by focusing on the global market and promoting globalization by buildingmanufacturing and sales bases in Japan, the Americas, Europe, and Asia. In our 2nd Five-YearManagement Plan, we are aiming to be No 1. in our industry in terms of quality, cost-competitiveness, andtechnology and thus improve our corporate quality, globalize operations, and diversify our product portfolio.

(6) Tasks Ahead for the Company

The mechanical press industry progresses with a favorable amount of orders, while the demand for capitalinvestment is recovering in Japan and overseas. However, the industry faces a difficult business environment

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featuring skyrocketing material prices, intensifying price competition and the fierce pressure for shorterdelivery time.

In 2002, AIDA ENGINEERING Group implemented the "2nd Five-Year Management Plan" to survive insuch a difficult management environment and to build a strong foundation. In the fifth year of the foregoingManagement Plan, the Company will tackle the following five priority objectives under the theme "stepping upefforts toward powerful persons, powerful products, and a powerful organization for the establishment of atrue global business" as our goal.

Improve customer satisfaction“to achieve No. 1 in quality” Pursue of globally competitive low-cost products“to realize No. 1 in low cost” Manufacture innovative products passable throughout the world“to achieve No. 1 in technology” Extend the use of consolidated earning power by“reinforcing the Company’s global system” Create an enterprise that can offer dreams and hope to its employees through its “personnel strategy

and development of human resources”

(7) Matters related to the parent company

Not applicable.

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BUSINESS PERFORMANCE AND FINANCIAL POSITION

(1) Business Developments and Results in the fiscal year ended March 31, 2006

The economic environment surrounding AIDA ENGINEERING Group during the consolidated fiscal yearended March 31, 2006, has reflected the steady performance of the U.S. economy, continued high growth inAsia, and the gradual recovery of the economy in Europe amid concerns that the economy of each countrymay be affected by the surge in crude oil prices. The corporate earnings indicated a pronounced tendencytoward improvement in Japan in line with the continued tendency for the relatively stable Japanese yen.

The mechanical press industry in Japan continued to boom as a whole owing to the worldwide expansionin capital investments in the consumer-electronics industry due to the expansion of the flat panel TV setsmarket with continuing global capital investments in the automotive industry, the key source of demand. Theorder statistics by the Japan Forming Machinery Association were pushed up to ¥227.47 billion, an increaseof 21.4% from the previous fiscal year.

Under these circumstances, AIDA ENGINEERING Group published as a slogan “the establishment of the global management system” as the fourth year of “the Five-Year Plan to achieve no. 1 in quality, no. 1 in lowcost, and no. 1 in technology” and worked together for the increase in consolidated revenue.

As a result, sales for the current consolidated fiscal year ended March 31, 2006, rose to a record ¥54,303million (an increase of 24.3% from the previous year) owing to the growth in sales in the automotive industryand the increase in flat panel TV manufacturing facilities as well as the expansion of market share in Europewhere the full production of our manufacturing subsidiary has started. Despite the expenditures involved inthe launching of the business in Europe, operating income was ¥3,412 million (up 68.3%) and ordinaryincome was ¥3,698 million (up 55.9%) reflecting the revenue-increase effect and cost reductions. AIDAENGINEERING Group recorded net income of ¥1,792 million (up 39.9%) after recording ¥183 million inextraordinary loss, which was caused by the withdrawal from business as a result of liquidation ofprofit-deteriorating subsidiaries for the purpose of selection and concentration of business and optimalplacement of management resources.

(2) Business performance by geographic segment in the fiscal year ended March 31, 2006

Japan: Owing to expanding demand for capital investment and increased sales in service businesses, netsales amounted to ¥42,630 million (an increase of 23.4% from the previous year) and operating income was¥3,407 million (up 96.1%) due to revenue increase effect and cost reductions.Asia: Demand for capital investment was on an uptrend in the automotive industry and production at ourmanufacturing subsidiaries in Malaysia and China rose. Net sales was ¥9,938 million (an increase of 42.2%from the previous year) and operating income was ¥1,013 million (up 26.7%).North America: Due to increase in demand for capital investment by Japanese automotive industries, netsales was ¥9,084 million (an increase of 26.6% from the previous year), however, production at ourmanufacturing subsidiary declined due to downturn in demand from U.S. automotive industries and operatingloss was ¥163 million (operating income of ¥85 million in previous year).Europe: Production at our manufacturing subsidiary started in full scale and sales to new customers areincreased. Net sales was ¥6,128 million (an increase of 200.2% from previous year), however, operating losswas ¥736 million (an increase of 5.5% from previous year)due to its start up cost.

(3) Financial position in the fiscal year ended March 31, 2006

Cash and cash equivalents at the end of the fiscal year decreased by ¥2,437 million year on year, to¥9,983 million.

( Cash flows from operating activities )

Net cash provided by operating activities amounted to ¥407 million (versus ¥3,297 million in fiscal 2005),

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owing to an increase in income before income taxes and other adjustments, which offset a decrease bygrowing inventories on the back of business expansion.

( Cash flows from investing activities )

Net cash used in investing activities amounted to ¥1,300 million (versus inflows of ¥424 million in fiscal2005), as outflows from the acquisition of tangible fixed assets aiming expansion of production capacity.

( Cash flows from financing activities )

Net cash used in financing activities amounted to ¥2,078 million, owing to acquisition of treasury stock anddividend payment (net inflows amounted to ¥1,502 million in fiscal 2005).

(4) Outlook for the Fiscal Year Ending March 31, 2007

Although demand for capital investment in automotive industry and consumer electronics industry areexpected to remain firm, economic uncertainty due to high prices of steel and other raw materials, soaring oilprices and concern over trend of foreign currency exchange rate make future of economic condition unclear.Amid this environment, AIDA ENGINEERING Group will strive to expand its consolidated earnings, byexpanding operating basis of our group companies in Japan, Asia, Europe and America.

For the fiscal year ending March 31, 2007, we forecast consolidated net sales of ¥57,000 million, recurringprofit of ¥4,700 million, and net income of 2,400 million. We plan the annual dividend of ¥11 per share,consisting of the regular dividend of ¥10 per share and additional ¥1 per share of the commemorativedividend for our 90th anniversary of the foundation of our company.

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CONSOLIDATED FINANCIAL STATEMENTS

(1) Consolidated Balance Sheet (Figures less than ¥1 million have been omitted)

March 31

2006 2005Change

Millions of yen % Millions of yen % Millions of yen

ASSETS

Current assets:

Cash and deposits 9,983 11,788 (1,805)

Notes and accounts receivable-trade 13,427 10,570 2,856

Marketable securities — 1,495 (1,495)

Inventories 19,963 15,695 4,267

Deferred tax assets 1,100 898 201

Others 1,660 960 700

Allowance for doubtful accounts (139) (118) (20)

Total current assets 45,994 55.1 41,290 54.6 4,704

Fixed assets:

Tangible fixed assets:

Buildings and structures 9,107 9,129 (21)Machinery, equipment andtransportation equipment 4,288 4,037 251

Land 5,462 5,721 (259)

Construction in progress 520 125 395

Others 496 395 100

Total tangible fixed assets 19,875 23.8 19,409 25.6 466

Intangible fixed assets 695 0.8 740 1.0 (45)

Investments and other assets:

Investment securities 14,704 12,074 2,629

Deferred tax assets 16 3 12

Others 2,293 2,256 37

Allowance for doubtful accounts (68) (85) 16

Total investments and otherassets

16,945 20.3 14,248 18.8 2,696

Total fixed assets 37,515 44.9 34,397 45.4 3,118

Total assets 83,510 100.0 75,687 100.0 7,822

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(Figures less than ¥1 million have been omitted)

March 31

2006 2005Change

Millions of yen % Millions of yen % Millions of yen

LIABILITIES

Current liabilities:

Notes and accounts payable-trade 5,870 4,675 1,195

Short-term loans payable 1,000 — 1,000

Accounts payable-other 2,982 3,182 (200)

Accrued income taxes 1,464 932 531

Advance received 6,286 3,750 2,536

Reserve for warranty claims 1,570 1,464 106

Accrued bonuses 572 486 86

Others 1,717 1,390 327

Total current liabilities 21,464 25.7 15,881 21.0 5,582

Long-term liabilities:

Allowance for employees’retirementbenefits

90 31 59

Allowance for directors’retirementbenefits

293 263 30

Deferred tax liabilities 876 91 784

Consolidation adjustments account — 1 (1)

Others 5 5 0

Total long-term liabilities 1,265 1.5 392 0.5 873

Total liabilities 22,730 27.2 16,274 21.5 6,455

SHAREHOLDERS’EQUITY

Common stock 7,831 9.4 7,831 10.3 —

Capital reserve 13,031 15.6 13,048 17.2 (17)

Retained earnings 40,800 48.9 39,809 52.6 990

Unrealized holding gain on securities 1,917 2.3 659 0.9 1,257

Foreign exchange translationadjustment

878 1.1 (309) (0.4) 1,188

Treasury stock (3,677) (4.4) (1,625) (2.1) (2,052)

Total shareholders’equity 60,780 72.8 59,413 78.5 1,367

Total liabilities and shareholders’equity

83,510 100.0 75,687 100.0 7,822

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(2) Consolidated Statement of Income (Figures less than ¥1 million have been omitted)

Year ended March 31

2006 2005Change

Millions of yen % Millions of yen % Millions of yen

Net sales 54,303 100.0 43,679 100.0 10,623

Cost of sales 42,208 77.7 34,175 78.2 8,032

Gross profit 12,094 22.3 9,504 21.8 2,590

Selling, general and administrativeexpenses

8,682 16.0 7,476 17.1 1,206

Operating income 3,412 6.3 2,027 4.6 1,384

Non-operating income:

Interests received 269 161 107

Dividends received 97 50 47

Foreign exchange gain — 27 (27)

Others 113 163 (50)

479 0.9 402 0.9 76

Non-operating expenses:

Foreign exchange loss 92 — 92

Foreign taxes and public charges — 28 (28)

Others 101 29 71

193 0.4 57 0.1 135

Recurring profit 3,698 6.8 2,373 5.4 1,325

Extraordinary gain:

Gain on sale of fixed assets 34 40 (6)

Gain on sale of investment securities 4 170 (165)

Gain on reversals of allowance fordoubtful accounts

34 10 23

Gain on cancellations of insurancecontracts

— 134 (134)

Others 4 22 (17)

78 0.1 379 0.9 (301)

Extraordinary loss:

Loss on sale of fixed assets 113 2 110

Loss on disposal of fixed assets 32 65 (33)

Loss on impairment of fixed assets 82 — 82

Loss on sale of investment securities 57 — 57

Loss on withdrawal from business 183 — 183

Loss from European businessrestructuring

138 — 138

Loss due to revision of pensionsystem

— 87 (87)

Others — 29 (29)

608 1.1 185 0.4 422

Income before income taxes 3,168 5.8 2,566 5.9 601

Income taxes and enterprise taxes 1,708 3.1 1,064 2.4 643

Adjustment for income taxes (332) (0.6) 220 0.5 (552)

Net income 1,792 3.3 1,281 2.9 510

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(3)Appropriation of Consolidated Retained Earnings (Figures less than ¥1 million have been omitted)

Year ended March 31

2006 2005

Millions of yen Millions of yen

CAPITAL RESERVE

Capital reserve at the beginning of the year 13,048 12,415

Increase in capital reserve

Gain on issuance of new stock through the exercise ofwarrants

— — 633 633

Decrease in capital reserve

Loss on issuance of new stock through the exercise ofwarrants

17 17 — —

Capital reserve at the end of the year 13,031 13,048

RETAINED EARNINGS

Retained earnings at the beginning of the year 39,809 39,085

Increase in retained earnings

Net income 1,792 1,792 1,281 1,281

Decrease in retained earnings

Cash dividends 741 557

Directors bonus 60 801 — 557

Retained earnings at the end of the year 40,800 39,809

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(4) Consolidated Statement of Cash Flows (Figures less than ¥1 million have been omitted)

Year ended March 31

2006 2005

Millions of yen Millions of yen

Cash flows from operating activities:

Income before income tax 3,168 2,566

Depreciation 1,814 1,883

Loss on impairment of fixed assets 82 —

(Gain) loss on sale of marketable securities 58 (169)

Increase (decrease) in allowance for doubtful accounts (4) 31

Increase (decrease) in allowance for bonuses 84 135

Increase (decrease) in allowance for product liabilities 81 (41)

Increase (decrease) in retirement benefits 56 15

Interests and dividends received (366) (211)

Interests expense 5 —

Loss on disposal of fixed assets 32 65

(Gain) loss on sale of fixed assets 78 (38)

Decrease (increase) in notes and accounts receivable (79) (15)

Decrease (increase) in inventories (3,763) (3,711)

Increase (decrease) in notes and accounts payable 485 2,603

Decrease (increase) in other assets (689) (164)

Increase (decrease) in other liabilities 237 436

Payment of directors bonus (60) —

Others 49 (41)

Subtotal 1,269 3,344

Proceeds from interests and dividends income 346 232

Payment of interests (5) —

Payment and refund of income tax (1,203) (279)

Net cash provided by operating activities 407 3,297

Cash flows from investing activities:

Proceeds from sale of marketable securities 505 553

Payments on purchase of tangible fixed assets (1,796) (1,031)

Proceeds from sale of tangible fixed assets 138 94

Payments on purchase of investment securities (7,697) (2,601)

Proceeds from sale of investment securities 7,207 4,944

Payments for deposits in time deposits (4) (171)

Proceeds from withdrawal of time deposits 372 12

Outflows from acquisition of operation — (1,362)

Payments on purchase of investing securities due to changes in scope ofconsolidation

(42) —

Others 16 (13)

Net cash provided by (used in) investing activities (1,300) 424

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Year ended March 31

2006 2005

Millions of yen Millions of yen

Cash flows from financing activities:

Proceeds from short-term borrowings 1,106 —

Repayment of short-term borrowings (235) —

Proceeds from long-term borrowings 50 —

Repayment of long-term borrowings (202) —

Proceeds from issuance of bonds — 2,000

Proceeds from minority shareholders for issuance of stock 12 —

Payments on purchase of treasury stock (2,318) (21)

Proceeds from sale of treasury stock 248 83

Dividends paid by the Company (739) (559)

Net cash provided by (used in) financing activities (2,078) 1,502

Effect of exchange rate changes on cash and cash equivalents 533 215

Net increase (decrease) in cash and cash equivalents (2,437) 5,440

Cash and cash equivalents at the beginning of the year 12,420 6,980

Cash and cash equivalents at the end of the year 9,983 12,420

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SIGNIFICANT ITEMS FOR PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

1. Scope of consolidationNumber of consolidated subsidiaries: 17

ACCESS, LTD., AIDA BUSINESS CORP., VERDEX, INC., AIDA AMERICA CORP.,AIDA CANADA, INC., AIDA do BRASIL, AIDA SAS, AIDA S.r.l., AIDA ENGINEERING UK LTD.,AIDA PRESSEN GmbH, AIDA STAMPING TECHNOLOGY PTE.LTD.,AIDA STAMPING TECHNOLOGY (MALAYSIA) SDN.BHD.,AIDA STAMPING TECHNOLOGY (THAILAND) CO.LTD.,AIDA MANUFACTURING (MALAYSIA) SDN.BHD.,PT AIDA STAMPING TECHNOLOGY (INDONESIA), AIDA HONG KONG LTD.,AIDA MANUFACTURING (SHANGHAI) LTD.

Stock acquisition of VERDEX, INC. and establishment of AIDA do BRASIL and PT AIDA STAMPINGTECHNOLOGY (INDONESIA) during the fiscal year increased the number of consolidatedsubsidiaries by three. AIDA PRESSEN GmbH is renamed from COPRES GmbH November 21,2005.

Names of non-consolidated subsidiaries: ARBIOTEC, LTD.Reasons for excluding from consolidation:

The total assets, net sales, net income, and retained earnings of the non-consolidated subsidiaryare all minor and would not have a material effect on consolidated financial statements. Thesubsidiary, therefore, was excluded from the scope of consolidation.

2. Application of the equity methodNon-consolidated subsidiaries to which the equity method was not applied: ARBIOTEC, LTD.Reasons for not applying the equity method to non-consolidated subsidiaries

The net income and retained earnings of the non-consolidated subsidiary are both minor andwould not have a material effect on consolidated financial statements. The non-consolidatedsubsidiary, therefore, was excluded from the scope of application for the equity method.

3. Accounting period of consolidated subsidiariesAmong the consolidated subsidiaries, one, AIDA MANUFACTURING (SHANGHAI) LTD., has a fiscalyear ending on December 31. In preparing consolidated financial statements, financial statementsprepared as of that date are used and necessary consolidation adjustments are made for any significanttransactions that took place between December 31 and March 31.

4. Accounting policies(1) Valuation standards and methods for significant assets

1. SecuritiesOther securities

Securities with market valuesMarket value method based on market or other prices as of the consolidated balance sheetdate (Valuation differences are all accounted for as direct entries to capital. Cost at the time ofsale is determined using the moving average method.)

Securities without market valuesMoving average cost method

2. Net receivables (and liabilities) arising from derivatives transactionsMarket value method

3. InventoriesFinished goods and work in process Mainly Specific cost methodRaw materials Mainly First-in-first-out cost method

(2) Depreciation method of significant fixed assets1. Tangible fixed assets

The Company and its domestic consolidated subsidiaries mainly use declining balance method fordepreciation. Overseas consolidated subsidiaries mainly use straight-line method. The company’s certain buildings and other assets are depreciated by straight-line method. The company’sbuildings and structures, and machinery and equipment are depreciated over the useful livesdesignated by the Company.

Buildings and structures Two to 50 yearsMachinery and equipment Two to 10 years

2. Intangible fixed assetsStraight-line methodSoftware for internal use is depreciated using the straight-line method over 5 years

(3) Accounting for significant reserves1. Allowance for doubtful accounts

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To provide for losses due to bad debts, allowances for normal receivables are provided using a ratedetermined by past bad debt experience, and allowances for specific doubtful accounts areprovided for the estimated uncollectible portions of those accounts after an examination ofindividual accounts.

2. Reserve for warranty claimsTo provide for expenses that emerge after products have been transferred to customers,anticipated expenses for maintenance during warranty periods are recorded as reserve forwarranty claims.

3. Accrued bonusesTo provide for payment of bonuses to employees, the amount expected to be paid for theconsolidated fiscal year is recorded as accrued bonuses.

4. Reserve for retirement allowance for employeesTo provide for costs of retirement benefits to employees, the amount estimated to have beenincurred at the end of March 31, 2006 is recognized based on the estimated amount of liabilities forretirement benefits and the estimated fair value of the pension plan assets at the end of the fiscalyear. Actuarial differences are amortized from the following fiscal year of the recognition, on astraight-line basis over a set number of years (10 years. 5 years for some employees of domesticconsolidated subsidiaries.) within the average remaining service years of employees.

5.Reserve for directors’ retirement benefitsTo provide for the payment of directors’ and corporate auditors’ retirement benefits, the amount necessary at the end of the consolidated fiscal year is recorded based on rules covering directors’ retirement benefits.

(4)Standards for converting the assets and liabilities, and income and expenses, of overseasconsolidate subsidiaries into Japanese yen

The assets and liabilities of overseas consolidated subsidiaries are converted to yen as of theconsolidated balance sheet date and using the spot exchange rate. Income and expenses areconverted to yen using the average exchange rate for the fiscal year. Exchange differences areincluded in foreign currency translation adjustments under shareholders’ equity.

(5)Accounting for significant lease transactionsThe company and its consolidated domestic subsidiaries account for finance leases other than thosein which ownership will transfer to the lessee as ordinary rental transactions. Overseas consolidatedsubsidiaries account for finance leases as purchases.

(6) Hedge accountingThe Company uses deferral hedge accounting methods.

(7) Consumption taxesThe Company and its consolidated domestic subsidiaries record transactions exclusive ofconsumption tax.

5. Valuation of consolidated subsidiaries’ assets and liabilitiesThe market value method is used for all assets and liabilities.

6. Amortization of the consolidation adjustment accountAmortization is performed evenly over 5 years.

7. Matters Related to the Handling of Distribution of ProfitsThe Consolidated Statements of Retained Earnings are compiled based on the distribution ofconsolidated profits decided upon during the consolidated fiscal year.

8. Scope of Funds Included in the Consolidated Statements of Cash FlowsFunds (cash and cash equivalents) included in the Consolidated Statements of Cash Flows comprisecash on hand; demand deposits; and short-term investments that have maturities of under three months,are readily convertible into cash, and have minimal risk of price fluctuations.

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Notes

(Consolidated Balance Sheets)

March 31, 2006 March 31, 2005

Accumulated depreciation on tangible fixed assets ¥25,761 million ¥24,209 million

(Consolidated Statements of Cash Flows)1. Reconciliation of cash and deposits and marketable securities in the consolidated financial statements

and cash equivalents in the consolidated statements of cash flows

March 31, 2006 March 31, 2005

Cash and deposits ¥9,983 million ¥11,788 millionMarketable Securities ¥— million ¥1,495 millionTotal ¥9,983 million ¥13,283 millionTime deposits withmaturities over 3 months ¥— million ¥(368) million

Marketable securities otherthan CP, financial bills

¥— million ¥(495) million

Cash and cash equivalents ¥9,983 million ¥12,420 million

2. Assets and liabilities of the company newly included in the scope of consolidation through stockacquisition

March 31, 2006VERDEX, INC.

Current assets ¥76 millionFixed assets ¥133 millionTotal assets ¥209 millionCurrent liabilities ¥158 millionLong-term liabilities ¥152 millionTotal liabilities ¥310 million

3. Assets and liabilities increased by acquisition of operation

March 31, 2005AIDA S.r.l

Current assets ¥803 millionFixed assets ¥1,655 millionTotal assets ¥2,458 millionCurrent liabilities ¥1,096 millionTotal liabilities ¥1,096 million

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Relating to Tax Effect Accounting

1. Breakdown by major reasons of arising deferred tax assets and liabilities

(Figures less than ¥1 million have been omitted)

March 31

2006 2005

Millions of yen Millions of yen

Deferred tax assets:

Current assets

Loss on write-down of inventories 329247

247

Reserve for warranty claims 417 214

Accrued bonuses 209 210

Unrealized profit relating to inventories 128 115

Business tax payable 132 117

Others 117 149

Total current assets 1,335 1,055

Fixed assets

Depreciation and amortization 1,257 1,059

Valuation loss on investment securities 294 —Valuation loss on golf club memberships 111 127

Reserve for directors’retirement benefit 119 106

Unrealized holding loss on other securities — 117

Net loss carried forward 1,465 1,165

Others 330 27

Total fixed assets 3,579 2,603

Subtotal of deferred tax assets 4,915 3,658

Valuation allowance (2,173) (1,292)

Total deferred tax assets 2,741 2,365

Deferred tax liabilities:

Current liabilities

Undistributed earnings from overseas subsidiaries — (65)

Others 0 (63)

Total current liabilities 0 (129)

Long-term liabilities

Reserve for contraction of replacement assets (854) (877)

Reserve for retirement benefits for employees (94) (24)

Unrealized holding loss on securities (1,304) (570)

Others (246) —Total long-term liabilities (2,501) (1,473)

Total deferred tax liabilities (2,501) (1,602)

Net deferred tax assets 239 763

18

2. Major reasons derived from significant differences between statutory and effective tax rate

March 31

2006 2005

% %

Statutory tax rate 40.6 40.6

(Adjustment)

Permanent differences 0.3 2.6Dividend received (2.5) —Difference of tax rate for subsidiaries (9.8) (4.2)

Increase / decrease of valuation allowance 21.9 14.8

Undistributed earnings from overseas subsidiaries (2.1) 1.1

Per capita corporate resident tax 2.9 1.8

Special temporary corporate tax — 1.8

Tax deduction (4.7) (4.3)

Others (3.2) (4.1)

Effective tax rate 43.4 50.1

19

Relating to Retirement Benefit

1. Outline of Adopted Retirement Benefit PlanAIDA ENGINEERING and its domestic consolidated subsidiaries have adopted employees’ pension funds

and qualified pension funds as their defined-benefit pension plans. In accordance with theDefined-Contribution Pension Law, from April 1, 2004, a portion of severance payments has been transferredfrom a defined-benefit, qualified pension plan to a defined-contribution pension plan.

We note that certain overseas subsidiaries have adopted defined-benefit pension plans or defined-contribution pension plans.

2. Matters Relating to Retirement Benefit Liabilities(Figures less than ¥1 million have been omitted)

March 31, 2006 March 31, 2005

1. Projected benefit obligation (4,705) (4,531)

2. Plan assets 4,588 3,980

3. Unfunded pension obligation (116) (551)

4. Unrecognized net actuarial gains and losses 490 1,065

5. Net of employees’pension and retirement benefit obligation 373 514

6. Prepaid pension cost 463 545

7. Reserve for retirement benefits (90) (31)

(Note) Certain overseas subsidiaries have adopted facile method in measuring retirement benefit liabilities.

3. Matters Relating to Retirement Benefit Expenses(Figures less than ¥1 million have been omitted)

March 31, 2006 March 31, 2005

1. Service cost 278 163

2. Interest cost 90 87

3. Expected return on plan assets (79) (81)

4. Amortization of net actuarial gains and losses 140 118

5. Premiums paid to defined-contribution pension plans 95 85

6. Retirement benefit expenses 524 374

In addition to the figures shown above, contributions to employees’ pension funds amounted to ¥184 million in year

ended March 31, 2006 and ¥148 million in 2005.

(Note) Retirement benefit expenses incurred by overseas subsidiaries adopting facile method is included 1. Service

cost

4. Matters Relating to Basis of Calculating Retirement Benefit Liabilities

March 31, 2006 March 31, 2005

1. Discount rate 2.0% 2.0%

2. Expected rate of return on plan assets 2.0% 2.0%

3. Periodic allocation method for projected benefit Straight-line standard Straight-line standard

4. Amortization of unrecognized net actuarial gains and losses 5 years and 10 years 5 years and 10 years

5. Amortization of unrecognized prior service cost 1 year 1 year

20

SEGMENT INFORMATION

(1) Information by Business SegmentAida Engineering and its consolidated subsidiaries manufacture and sell press machines and auxiliary

equipment. This business accounted for over 90% of total sales, operating income and total assets in allsegments in the current and previous fiscal year. Therefore, segment breakdowns by business line havebeen omitted.

(2) Information by Geographical SegmentYear ended March 31, 2006 (Figures less than ¥1 million have been omitted)

Millions of yen

Japan Asia Americas Europe TotalEliminations

orCompanywide

Consolidated

Net sales and income:

1. Sales to outsidecustomers

32,404 8,828 8,352 4,717 54,303 — 54,303

2. Inter-segment sales 10,226 1,110 731 1,410 13,479 (13,479) —

Total sales 42,630 9,938 9,084 6,128 67,782 (13,479) 54,303

Operating expenses 39,223 8,925 9,247 6,864 64,261 (13,370) 50,891Operating income(loss) 3,407 1,013 (163) (736) 3,520 (108) 3,412

Total Assets 75,960 9,765 9,389 9,875 104,991 (21,480) 83,510

(Notes) 1. Segmentation of countries and regions is based on geographical proximity.

2. Major countries and regions in segments outside Japan

North America is replaced by Americas in year ended March 31, 2006 reflecting addition of AIDA do Brasil as

consolidated subsidiary.

(1) Asia…………………China/Hong Kong, Singapore, Malaysia, Thailand, Indonesia, South Korea

(2) Americas……………Ｕnited States, Canada, Brasil

(3) Europe………………Italy, France, Germany, United Kingdom,

3. No unallocatable operating expenses is included in Eliminations or companywide.

4. No companywide assets are included in Eliminations or Companywide.

Year ended March 31, 2005 (Figures less than ¥1 million have been omitted)

Millions of yen

Japan AsiaNorth

AmericaEurope Total

Eliminationsor

CompanywideConsolidated

Net sales and income:

1. Sales to outsidecustomers

28,570 6,465 6,889 1,754 43,679 — 43,679

2. Inter-segment sales 5,989 523 288 287 7,088 (7,088) —

Total sales 34,560 6,989 7,177 2,041 50,768 (7,088) 43,679

Operating expenses 32,822 6,189 7,092 2,739 48,843 (7,191) 41,652Operating income(loss) 1,737 799 85 (697) 1,925 102 2,027

Total Assets 71,840 6,893 7,477 8,634 94,845 (19,157) 75,687

(Notes) 1. Segmentation of countries and regions is based on geographical proximity.

2. Major countries and regions in segments outside Japan

(1) Asia…………………China/Hong Kong, Singapore, Malaysia, Thailand, South Korea

(2) North America………United States, Canada

(3) Europe………………Italy, France, Germany, United Kingdom

3. No unallocatable operating expenses is included in Eliminations or companywide.

4. No companywide assets are included in Eliminations or Companywide.

21

(3) Overseas sales

Year ended March 31, 2006 (Figures less than ¥1 million have been omitted)

Asia Americas Europe Others Total

Overseas sales 10,599 8,992 5,317 47 24,956

Consolidated sales 54,303

Overseas sales to consolidatedsales ratio (%)

19.5% 16.6% 9.8% 0.1% 46.0%

(Notes) 1. Segmentation of countries and regions is based on geographical proximity.

2. Major countries and regions in segments outside Japan

Geographic segment is reclassified in the year ended March 31, 2006. Accordingly, sales made to North,

Central and South America is included in Americas. Sales made to Central and South America in the year

ended 2005, in the amount of 24 million yen is classified to Others.

(1) Asia………………China, Thailand, Malaysia, Indonesia, South Korea, Philippines

(2) Americas…………United States, Canada, Mexico, Brasil

(3) Europe……………Italy, United Kingdom, Germany, Czech Republic, Turkey, Russia

(4) Other ……………Australia

3. Overseas sales are sales by the Company and its consolidated subsidiaries in countries and regions

outside Japan.

Year ended March 31, 2005 (Figures less than ¥1 million have been omitted)

Asia NorthAmerica Europe Others Total

Overseas sales 7,348 6,864 4,088 59 18,361

Consolidated sales 43,679

Overseas sales to consolidatedsales ratio (%)

16.8% 15.7% 9.4% 0.1% 42.0%

(Notes) 1. Segmentation of countries and regions is based on geographical proximity.

2. Major countries and regions in segments outside Japan

(1) Asia………………China, Thailand, Malaysia, Indonesia, South Korea, India

(2) North America……United States, Canada

(3) Europe……………Italy, France, United Kingdom, Germany, Czech Republic, Poland

(4) Other ……………Mexico, Brazil

3. Overseas sales are sales by the Company and its consolidated subsidiaries in countries and regions

outside Japan.

22

STATUS OF PRODUCTION, ORDERS, AND SALES

(1) Production volumeYear ended March 31 (Figures less than ¥1 million have been omitted)

2006 2005

Millions of yen % Millions of yen %

Press machines 45,585 99.6 35,867 100.0

Services — — — —-

Others 187 0.4 — —

Total 45,773 100.0 35,867 100.0

(Notes) 1. The amounts shown above are evaluated in sales price.2. The amounts shown above are not inclusive of consumption tax.

(2) Orders receipt and backlogYear ended March 31 (Figures less than ¥1 million have been omitted)

2006 2005

Millions of yen % Millions of yen %

Orders Press machines 53,949 85.9 46,046 86.3

Services 8,677 13.8 7,279 13.6

Others 211 0.3 15 0.0

Total 62,838 100.0 53,341 100.0

Backlog Press machines 38,265 100.0 29,730 100.0

Services — — — —

Others — — — —

Total 38,265 100.0 29,730 100.0

(Note) The amounts shown above are not inclusive of consumption tax.

(3) SalesYear ended March 31 (Figures less than ¥1 million have been omitted)

2006 2005

Millions of yen % Millions of yen %

Press machines 45,414 83.6 36,385 83.3

Services 8,677 16.0 7,279 16.7

Others 211 0.4 15 0.0

Total 54,303 100.0 43,679 100.0

(Note) The amounts shown above are not inclusive of consumption tax.

23

SECURITIES

(1) Other securities with market value(Figures less than ¥1 million have been omitted)

March 31

2006 2005

Acquisitioncost

Balancesheet

amount

UnrealizedGain/(Loss)

Acquisitioncost

Balancesheet

amount

UnrealizedGain/(Loss)

Securities for which amountposted on consolidated balancesheets exceeds acquisition cost

1. Stocks 1,116 4,732 3,616 1,107 2,521 1,414

2. Bonds:

Others — — — 696 696 0

3. Others — — — 1,000 1,001 0

Subtotal 1,116 4,732 3,616 2,804 4,219 1,414

Securities for which amountposted on consolidated balancesheets does not exceedacquisition cost

1. Stocks 5 2 (2) 14 10 (3)

2. Bonds:

Financial bills — — — 999 999 (0)

Others 4,000 3,740 (259) 1,000 845 (154)

3. Others 5,287 5,155 (132) 6,563 6,419 (144)

Subtotal 9,293 8,899 (394) 8,578 8,274 (303)

Total 10,409 13,631 3,222 11,382 12,494 1,111

(2) Other securities sold during the year ended March 31, 2006(Figures less than ¥1 million have been omitted)

Amount of sale Total amount of gainon sale

Total amount of losson sale

7,112 4 57

(3) Securities without market value(Figures less than ¥1 million have been omitted)

March 31

2006 2005

Balance sheet amount Balance sheet amount

1. Other securities:

Stock (Preferred stock) 1,000 1,000

Unlisted stock (except forOTC stock) 62 65

2. Stock of subsidiaries oraffiliated companies 10 10

Total 1,072 1,075

24

(4) Expected redemption of other investment securities with maturities

March 31, 2006 (Figures less than ¥1 million have been omitted)

Within 1 year Over 1 year andwithin 5 years

Over 5 years andwithin 10 years Over 10 years

Bonds:

Others — 1,969 — 3,000

Others: — 2,730 — 1,000

Total — 4,700 — 4,000

March 31, 2005 (Figures less than ¥1 million have been omitted)

Within 1 year Over 1 year andwithin 5 years

Over 5 years andwithin 10 years Over 10 years

Bonds:

Financial bill 1,000 — — —

Others 495 3,476 1,697 1,000

Total 1,495 3,476 1,697 1,000

25

Aida Engineering, Ltd. May 16, 2006Flash Report (Non-Consolidated Basis)Results for fiscal year 2006(April 1, 2005 through March 31, 2006)

Company name: Aida Engineering, Ltd.Stock listing: Tokyo Stock Exchange Code number: 6118 URL http://www.aida.co.jpRepresentative: Kimikazu Aida, President and representative directorInquiries: Eiji Takei, Operating officer, division manager of corporate planning and administration departmentTelephone: +81-42-772-5231Date of the meeting of the Board of Directors to settle the year-end consolidated accounts: May 16, 2006.Date of the General Meeting of the Shareholders: June 29, 2006.Date of the payment for year-end dividends: June 30, 2006.Interim dividends: No Unit stock system: Yes (One unit: 1,000 shares)

1. Performance(1) Financial results

Year ended March 31 (Figures less than ¥1 million have been omitted)

Net Sales Operating Income Recurring Profit

Millions of yen % Millions of yen % Millions of yen %

2006 42,580 23.0 3,169 90.3 3,366 50.0

2005 34,626 7.9 1,665 387.5 2,244 209.4

Net IncomeNet Incomeper Share(Primary)

Net Incomeper Share(Diluted)

Returnon

Equity

RecurringProfit-to-TotalCapital ratio

RecurringProfit-to-NetSales Ratio

Millions of yen % Yen Yen % % %

2006 1,570 16.2 20.75 20.51 2.7 4.7 7.9

2005 1,351 532.9 18.41 18.30 2.4 3.4 6.5

1. Average number of shares outstanding during the fiscal year ended March 31, 2006: 72,805,677 shares, 2005: 70,184,134 shares2. Change in accounting method: none3. Percentages indicate year-on-year increase/(decrease) in net sales, operating income, recurring profit, and net income.

(2) Dividends

Year ended March 31

Annual Dividends per Share

Interim Year-End

Total Amount ofAnnual Dividends

PayoutRatio

Dividends-to-Shareholders’ Equity Ratio

Yen Yen Yen Millions of yen % %

2006 10.00 ― 10.00 715 48.2 1.2

2005 10.00 ― 10.00 741 54.3 1.3

(3) Financial position

March 31 (Figures less than ¥1 million have been omitted)

Total Assets Shareholders' Equity Shareholders'Equity Ratio

Shareholders' Equityper Share

Millions of yen Millions of yen % Yen

2006 72,641 58,487 80.5 817.88

2005 69,271 58,535 84.5 789.53

Number of shares outstanding at March 31, 2006: 71,511,572 shares, 2005: 74,140,207 sharesNumber of treasury stock at March 31, 2006: 7,635,749 shares, 2005: 5,007,114 shares

26

2. Forecast for fiscal year ending March 31, 2007

Annual Dividends per ShareNet Sales Recurring

Profit Net IncomeInterim Year-End

Millions of yen Millions of yen Millions of yen Yen Yen Yen

Interim period 21,000 1,800 850 ― ― ―

Fiscal year 42,000 3,600 1,700 ― 11.00 11.00

(Reference) Non-Consolidated net income per share for the fiscal year ending March 31, 2007 is forecast to ¥23.77.

The above forecasts and those presented in appended material are based on the information presently available.Actual results may differ from these forecasts due to changes in various factors.

27

NON-CONSOLIDATED FINANCIAL STATEMENTS

(1) Non-Consolidated Balance Sheet (Figures less than ¥1 million have been omitted)

March 31

2006 2005Change

Millions of yen % Millions of yen % Millions of yen

ASSETS

Current assets:

Cash and deposits 1,206 2,995 (1,789)

Notes receivable-trade 2,429 4,023 (1,593)

Accounts receivable-trade 9,669 6,013 3,655

Marketable securities ― 1,495 (1,495)

Finished goods 2,021 204 1,817

Raw materials 870 793 76

Work in process 9,174 9,359 (184)

Supplies 22 22 0

Advances 5 4 1

Prepaid expenses 69 67 1

Deferred tax assets 894 802 92

Accounts receivable-non trade 1,097 454 643

Others 966 750 215

Allowance for doubtful accounts (1) (3) 1

Total current assets 28,426 39.1 26,982 39.0 1,443

Fixed assets:

Tangible fixed assets:

Buildings 5,243 5,332 (89)

Structures 185 220 (34)

Machinery and equipment 2,313 2,160 153Vehicles and transportationequipment 44 53 (8)

Tools, furniture and fixtures 219 280 (60)

Land 5,181 5,530 (348)

Construction in progress 20 112 (92)

Total tangible fixed assets 13,207 18.2 13,688 19.8 (480)

Intangible fixed assets:

Patent rights 0 0 (0)

Land lease rights 29 29 —Software 32 48 (15)

Others 271 36 234

Total intangible fixed assets 334 0.5 114 0.2 219

Investments and other assets:

Investment securities 14,683 12,055 2,627

Investments in subsidiaries 13,855 14,347 (492)

Long-term loans for employees 3 2 0Bankrupt and reorganization claimsand other claims of similar status 183 13 170

Long-term prepaid expense 11 20 (9)Directors and officers' liabilityinsurance 751 745 6

Others 1,419 1,386 32

Allowance for doubtful accounts (233) (85) (148)

Total investments and otherassets

30,673 42.2 28,485 41.1 2,187

Total fixed assets 44,214 60.9 42,288 61.0 1,925

Total assets 72,641 100.0 69,271 100.0 3,369

28

(Figures less than ¥1 million have been omitted)

March 31

2006 2005Change

Millions of yen % Millions of yen % Millions of yen

LIABILITIES

Current liabilities:

Notes payable-trade 133 259 (126)

Accounts payable-trade 3,549 3,080 469

Short-term loans payable 1,000 — 1,000

Accounts payable-non trade 3,829 3,506 323

Accrued expenses 323 324 (0)

Accrued income taxes 1,158 716 442

Advance received 1,623 1,553 69

Deposits received 58 52 5

Reserve for warranty claims 759 461 298

Accrued bonuses 450 394 56

Others 151 32 118

Total current liabilities 13,037 17.9 10,381 15.0 2,655

Long-term liabilities:Allowance for directors’retirementbenefits 293 263 30

Deferred tax liabilities 810 85 724

Others 11 5 6

Total long-term liabilities 1,116 1.5 354 0.5 761

Total liabilities 14,153 19.5 10,735 15.5 3,417

SHAREHOLDERS’EQUITY

Common stock 7,831 10.8 7,831 11.3 —Capital reserve:

Additional paid-in capital 12,425 12,425 —Other capital reserve 615 633 (17)

Gain on disposal of treasurystock 615 633 (17)

Total capital reserve 13,041 18.0 13,058 18.9 (17)

Retained earnings:

Legal reserve 1,957 1,957 —Voluntary reserve:

Reserve for dividends 1,658 1,658 —Reserve for research anddevelopment 5,400 5,400 —Reserve for foreign exchangefluctuations 2,000 2,000 —Reserve for cancellation ofstock 5,500 4,892 607

Reserve for advanceddepreciation of replacedproperty

1,284 1,328 (43)

General reserve 19,961 19,761 200

Total voluntary reserve 35,804 35,040 763Unappropriated retained earningsat the end of year 1,622 1,617 5

Total Retained earnings 39,384 54.2 38,615 55.7 769

Unrealized holding gains on securities 1,909 2.6 656 0.9 1,252

Treasury stock (3,677) (5.1) (1,625) (2.3) (2,052)

Total shareholders’equity 58,487 80.5 58,535 84.5 (48)

Total liabilities and shareholders’equity

72,641 100.0 69,271 100.0 3,369

29

(2) Non-Consolidated Statements of Income (Figures less than ¥1 million have been omitted)

Year ended March 312006 2005

Change

Millions of yen % Millions of yen % Millions of yen

Net sales 42,580 100.0 34,626 100.0 7,954

Cost of sales 34,803 81.7 28,313 81.8 6,490

Gross profit 7,777 18.3 6,313 18.2 1,464Selling, general and administrativeexpenses 4,608 10.8 4,648 13.4 (39)

Operating income 3,169 7.4 1,665 4.8 1,504

Non-operating income:

Interests received 7 11 (4)

Interests on marketable securities 140 103 37

Dividends received 182 350 (167)Rental income on real estate and other

assets 151 115 35

Foreign exchange gain — 79 (79)

Others 57 104 (47)

538 1.3 764 2.2 (225)

Non-operating expenses:

Expenses related to leased assets 210 127 83

Foreign exchange loss 63 — 63

Foreign taxes and public charges — 28 (28)

Others 66 29 37

341 0.8 184 0.5 156

Recurring profit 3,366 7.9 2,244 6.5 1,121

Extraordinary gain:

Gain on sale of fixed assets 32 2 30

Gain on sale of investment securities 4 170 (165)Gain on cancellations of insurance

contracts — 134 (134)

Special dividend received fromsubsidiaries

376 — 376

Others 18 13 5

432 1.0 321 0.9 111

Extraordinary loss:

Loss on sale of fixed assets 113 0 110

Loss on disposal of fixed assets 32 65 (33)

Loss on impairment of fixed assets 82 — 82

Loss on sale of investment securities 57 — 57

Loss from liquidation of subsidiaries 343 — 343Loss from valuation of investment

securities492 — 492

Loss due to revision of pension system — 122 (122)

Statutory welfare costs in previous years — 26 (26)

Others — 28 (28)

1,121 2.6 243 0.7 878

Income before income taxes 2,677 6.3 2,322 6.7 355

Income taxes and enterprise taxes 1,330 3.1 771 2.2 558

Adjustment for income taxes (223) (0.5) 199 0.6 (422)

Net income 1,570 3.7 1,351 3.9 218Retained earnings at the beginning ofyear 52 37 14

Increase in retained earnings due toabsorptions or separations — 227 (227)

Unappropriated retained earnings at theend of year 1,622 1,617 5

30

(3) Proposed Appropriation of Retained Earnings (Figures less than ¥1 million have been omitted)

Year ended March 31

2006 2005

Millions of yen Millions of yen

Unappropriated retained earnings at theend of year 1,622 1,617

Reversal of voluntary reserve

Reversal of reserve for advanceddepreciation of replaced property 33 33 43 43

Total 1,656 1,660

To be appropriated as follows:

Dividends 715 741

(¥10.00 per share in 2006 and 2005)

Directors’bonus 60 60

Voluntary reserve

Reserve for cancellation of stock — 607General reserve 800 1,575 200 1,608

Unappropriated retained earningscarried forward to next year 81 52

(Notes) 1. “Reversal of reserve for advanced depreciation of replaced property” is as per the provisions set forth in the Special Taxation Measures Law.

2.“Reserve for cancellation of stock” is for the acquisition and cancellation of treasury stock.

Dividends per Share

Year ended March 31

2006 2005

Annual Interim Year-end Annual Interim Year-end

Common stock 10.00 — 10.00 10.00 — 10.00

31

SIGNIFICANT ACCOUNTING POLICIES

1. Valuation standards and methods for securitiesInvestment securities for affiliates

Moving average cost methodOther securities

Securities with market valuesMarket value method based on market or other prices as of the consolidated balance sheet date(Valuation differences are all accounted for as direct entries to capital. Cost at the time of sale isdetermined using the moving average method.)

Securities without market valuesMoving average cost method

2. Net receivables (and liabilities) arising from derivatives transactionsMarket value method

3. Valuation standards and methods for inventoriesFinished goods and work in process Specific cost methodRaw materials First-in-first-out cost method

4. Depreciation method for fixed assets(1) Tangible fixed assets

1. Buildings (buildings proper excluding peripheral facilities)Declining-balance method based on the useful life determined by the Company (13 to 32 years).Certain buildings are depreciated by the straight-line method assuming a useful life of 31 to 50years.

2. Buildings (peripheral facilities excluding buildings proper) and structuresDeclining-balance method based on the useful life determined by the Company (two to 20 years)

3. Machinery and equipmentDeclining-balance method based on the useful life determined by the Company (10 years)

4.OthersDeclining-balance method (two to 20 years)

(2) Intangible fixed assetsStraight-line methodSoftware for internal use is depreciated over 5 years using the straight-line method.

5. Accounting for significant reserves(1) Allowance for doubtful accounts

To provide for losses due to bad debts, allowances for normal receivables are provided using a ratedetermined by past bad debt experience and allowances for specific doubtful accounts are providedestimating uncollectible portions of those accounts after an examination of individual accounts.

(2) Reserve for warranty claimsTo provide for expenses that emerge after products have been transferred to customers, anticipatedexpenses for maintenance during warranty periods are recorded as reserve for warranty claim.

(3) Accrued bonusesTo provide for payment of bonuses to employees, the amount expected to be paid for the fiscal year isrecorded as accrued bonuses.

(4) Reserve for retirement allowance for employeesTo provide for the payment of retirement benefits, reserve for retirement allowance for employees arerecorded based on projected retirement benefit obligations and pension assets at the end of the fiscalyear. Actuarial differences are amortized from the following fiscal year of the recognition, on astraight-line basis over a set number of years (10 years) within the average remaining service yearsof employees.

(5)Reserve for directors’ retirement benefitsTo provide for the payment of directors’ and corporate auditors’ retirement benefits, the amount necessary at the end of the fiscal year is recorded based on rules covering directors’ retirement benefits.

6. Accounting for lease transactionsFinance leases other than those in which ownership will transfer to the lessee are accounted for asordinary rental transactions.

7. Hedge accountingThe Company uses primarily deferral hedge accounting methods.

8. Consumption taxes

32

The Company record transactions exclusive of consumption tax.

Notes

(Balance Sheets)

March 31, 2006 March 31, 2005

Accumulated depreciation on tangible assets ¥23,283 million ¥22,431 million

33

CHANGES IN CORPORATE EXECUTIVES

(1) Changes in company representatives

Not applicable.

(2) Changes to other corporate executives

a) Candidates for new directors

Nobuyoshi Maeda : Operating officer, division manager of research and development division

b) Candidates for new auditors

Not applicable

c) Drectors scheduled to retire.

Masayoshi Sugawara

Takayasu Matsui

d) Auditors scheduled to retire

Not applicable

(Note) The aforementioned changes will be officially decided upon at the 71st General Meeting ofShareholders to be held on June 29, 2006.