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					        Value-added company




08.09
              Value-added company

                                                                                                                                                                                                                                                           Cover photo: ÒUS-2Ó STOL Search and
                                                                                                                                                                                                                                                           Rescue Amphibian

                                                                                                                                                                                                                                                           The            ÒUS-2Ó         STOL                Search               and        Rescue

                                                                                                                                                                                                                                                           Amphibian                   which             we         produce,                  is            an

                                                                                                                                                                                                                                                           amphibious aircraft able to take off and land on

                                                                                                                                                                                                                                                           waves up to three meters high in the open sea,

                                                                                                                                                                                                                                                           and       displays          its   capabilities                    as    used       by            the

                                                                                                                                                                                                                                                           Japan Maritime Self-Defense Force in airlifting

                                                                                                                                                                                                                                                           emergency patients from outlying islands and

                                                                                                                                                                                                                                                           rescuing people in distress at sea.




                                                                                                                                                                                                                                                                                   March 31,
                                                                                                                                                                                                                                    2008                                                                                2007
                                                                                                                                                                                                      Million yen                                   Thousand                                 Million yen                                Thousand
                                                                                                                         Years ended March 31, 2008 and 2007                                                                                        US dollars                                                                          US dollars
                                                                                                                         Net Sales                                                                         138,959                       1,389,590                                            144,451      1,444,510
                             To grow as a “sigma-niche best company”                                                     Net Income                                                                          2,450                          24,500                                              3,840         38,400
                                                                                                                         Earnings Per Share                                                                  24.53                            0.25                                              38.43           0.38
                             The origin of ShinMaywa Industries, Ltd. dates back to 1918, when its forerunner was
                                                                                                                         Cash Dividends Paid                                                                   999                           9,990                                                999          9,990
                             founded as Japan’s first aircraft manufacturer. The spirit of the company was then passed
                                                                                                                         Total Assets                                                                      144,206                       1,442,060                                            141,192      1,411,920
                             on to Kawanishi Aircraft Company Ltd., established in 1928, which developed and
                                                                                                                         Number of Employees                                                                                        3,954                                                            3,761
                             manufactured many renowned aircraft, including Japan's first long-distance aircraft.
                                 In 1949, Shin Meiwa Industry Company Ltd. (now ShinMaywa Industries, Ltd.) was          Note: U.S. dollar amounts have been translated at a rate of ´100 = U.S.$1.00, the rate as of March 31, 2008.

                             established, taking over the technologies of Kawanishi Aircraft Company Ltd. Since then,
                             ShinMaywa has expanded its scope of manufacturing on the basis of the experience and                Net Sales                                                                  Net Income                                                                              Earnings Per Share
                                                                                                                                 (Unit: million yen)                                                        (Unit: million yen)                                                                     (Unit: million yen)
                             expertise accumulated through aircraft building, which requires solid reliability.
                                                                                                                                              144,451 138,959                                                                                         3,840                                                                                   38.43
                                                                                                                                                                                                                                      3,643                                                                                       35.36
                                Today, the ShinMaywa Group upholds its corporate philosophy, contributing to society     130,608 127,992 129,681
                             through excellent technologies as well as superior products and services. The ShinMaywa                                                                                                  3,051
                                                                                                                                                                                                       2,696                                                                                                   28.12
                             Group’s basic policy is to enhance its corporate value by maintaining harmony with                                                                                                                                                      2,450                                                                                    24.53
                                                                                                                                                                                                                                                                                               21.53
Contents                     society through diligent daily corporate activities and by implementing management that

 1 Profile                   is always attentive to stakeholders, including shareholders, customers and employees.
 2 Financial Highlights      In line with this policy, we strive always to create products that embody customer ideas
 3 Top Message               and needs, using our unique technologies in the fields of Fluid Transfer Technology,
 7 At a Glance
                             Refuse Processing and Recycling Technology, Transportation Equipment and Vehicles                       .3             .3             .3             .3             .3             .3             .3              .3              .3             .3                        .3              .3              .3             .3              .3
 9 Segment of Operations                                                                                                   20
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13 Special Topics            Technology, Aircraft Technology, Cryogenic Technology and Automation and

15 Topics                    Systemization Technology, Precision Thin Film Coating Technology and Precision Processing   Forward-Looking Statements
16 Approach on Environment   Technology. We will continue to offer numerous products and services that are in constant   Statements made in this annual report - other than past and present facts - are future results projected in accordance with our
17 Corporate Governance      demand in these technological fields, and that are recognized as the best in terms of
                                                                                                                         present plans, strategies and outlooks, based on our management judgment in light of information currently available. These

19 Consolidated Financial                                                                                                forward-looking statements involve potential risks and uncertainties, and ShinMaywa cannot guarantee their accuracy and

   Statements                safety, quality, delivery time and price. In so doing, we are engaged in management that    reliability. It should be noted that the Company’s actual results may differ materially from those discussed in the forward-
                                                                                                                         looking statements herein, due to various factors. These factors include future economic conditions, competition in the
47 Company Overview          seeks our growth as a Ò sigma-niche best companyÓ that responds to market needs.            industry, market demand, exchange rate, other social and economic circumstances and the results of contingency.
Establishing the “Value Up 200!”
corporate goal                                                                                                   increased overseas sales ratio and the launch of           various situations, and construction of an
                                                                                                                 “SHIP”, our production reform operations.                  operational structure which transcends the
                                                                                                                 However, actual results again diverged largely             predisposition to rely on external conditions.
                                                                                                                 from our targets, and due to external factors
                                                                                                                 such as currency fluctuations that exceeded                    In congruence with our recently established
                                                                                                                 forecasts, sharp rises in materials costs, as well         “Value Up 200!” target, we are concentrating
                                                                                                                 as a substantial delay of the BOEING 787                   managerial resources into three core business
                                                                                                                 production program (which plays a key role in              segments: Aircraft, special purpose trucks and
                                                                                                                 expansion), we were unable to recover from the             industrial machinery, and through our
                                                                                                                 effects of these factors.                                  concentrated efforts, further increasing the sales
                                                                                                                     However, in seeking intrinsic corporate                ratio in new markets, including foreign markets.
                                                                                                                 value, the fluctuation in our performance caused           Furthermore, we are focused on improving
                                                                                                                 by changes in the external environment is an               efficiency in our distinctive “Low-volume
                                                                                                                 unacceptable excuse. We recognize that the                 diversified production”, and are committed to
                                                                                                                 most important and current issues concerning               building a system that limits the impact of
                                                                                                                 the Group are: achievement of Group targets                fluctuating materials and other costs as much as
                                                                                                                 under any circumstance, flexibility in handling            possible.


                                                                                                                           Outline of “Value Up 200!”

                                                                                                                             Action theme:
                                                                                                                                  Breaking away from dependence on the outside
                                                                                                                                  – Aiming to enhance intrinsic corporate value –

                                                                                                                             Duration:
                                                                                                                                 FY 2006 to FY2011
                                                                                                                                 (In practice, the plan runs for four years from FY 2008, as FY 2006 and FY
                                                                                                                                 2007 overlap with "T-up 130!")

                                                                                                                             Management agenda:
                                                                                                                                    Proactive expansion to overseas markets
                                                                                                                                    Dissolving vulnerability of production-to-order
                                                                                                                                    Increasing the ratio of sales for new markets/products
                                                                                                                                    Concentrating management resources on core businesses
                    Tadashi Kaneki
                    President and Chief Executive Officer                                                                           Appraisal of value of each business
                                                                                                                                    Drafting/implementing multilateral management plans

                                                                                                                         Management targets: FY2011
Establishment and review of the operational period of our                                                                   Item                          Targets                          FY 2007 (actual results)
“Value Up 200!” corporate goal                                                                                              Operating Income              ¥10 billion                      ¥5 billion
                                                                                                                            Net Sales                     ¥155 billion                     ¥138.9 billion
In accordance with our mid-term management                  year long-term management plan which began                      Operating Income Ratio        6.0% or over                     3.6%
plan, “T-up 130!”, the operating income target              in April 2006, and set up management targets to
                                                                                                                            ROE                           5.5% or over                     3.0%
established in 2006 was to reach over ¥8 billion            be achieved in the final fiscal year.
for the final fiscal year, 2008; however, currently                                                                         Overseas Sales Ratio          25% or over                      17%
the actual figure has diverged greatly from our                For the past two years we have worked on                                                   Maintaining current level
original goal. Due to these circumstances, the              “T-up 130!”, and have achieved steady results                   Payout Ratio                  (approx. 30%*)                   40.8%
ShinMaywa Group was forced to review the                    such as the acquisition of Iwafuji Industrial Co.,                                            *Based on consolidated
                                                                                                                                                           current net income
operational period for the “Value Up 200!” five             Ltd., through mergers and acquisitions,
Value-added company




       Aircraft Segment                                                                                         Inadequate completion examination of compact dump trucks
       A project of most urgency is the establishment       Another project related to component
                                                                                                                We are compelled to apologize for a matter          to heart, and sincerely aim to become a
       of a mass production system for the BOEING           manufacturing, is the creation of superior,
                                                                                                                concerning completion examinations.                 trustworthy corporate body, we will steadily
       787 production program, which we are currently       specialized technology. We are making progress
                                                                                                                    The Company, in cooperation with                perform and follow policies regarding our newly
       participating in the planning of. We can expect      in the development of a basic technology that
                                                                                                                automobile manufacturers, receives model            established target, “Value Up 200!”, and strive
       that the creation of a highly efficient production   will stand out in such a way that causes the
                                                                                                                designation for compact dump trucks, at the         to be a corporate body worthy of the
       system will effect component production in           global industry to say, “For parts like these, it
                                                                                                                Samukawa Plant (name changed from the               appreciation of our stakeholders. We would like
       other areas as well.                                 has to be ShinMaywa.”
                                                                                                                “Shonan Plant” on April 1st of this year) and is    to give sincerest thanks for your continued
                                                                                                                obliged by law to conduct a completion              support.
                                                                                                                examination when vehicles are produced.
       Special Purpose Truck Segment                                                                            However, during an inspection by the Ministry
                                                                                                                of Land, Infrastructure, Transport and Tourism in
       We are currently focused on reformation of the       Furthermore, as we cannot expect growth in          December 2007, it was revealed that tests for
       production system. Due to the variation in           domestic markets, our primary concern is            braking power and speedometer (two categories
       individual orders for our special purpose trucks,    expansion in foreign markets. As production,        in the completion examination) were omitted for
       handling production in the most efficient way        sales and maintenance systems are being             a certain period of time. On February 1st and
       becomes an important consideration, as does          developed in the promising areas of Africa, the     April 1st of this year, we submitted reports on
       the implementation of conceptual and                 Middle East and Asia, we also aim to provide        facts, causes and operational improvements to
       mechanical policies.                                 stability in goods and services to our customers    the Ministry.
                                                            in these regions.                                       We sincerely apologize for any
                                                                                                                inconvenience or unnecessary concern this
                                                                                                                incident may have caused our stakeholders.
       Industrial Machinery Segment                                                                             Regarding vehicles produced during the above
                                                                                                                mentioned period of omission, the Company is
       Although individual operations in this segment       In addition, the release of new products will
                                                                                                                voluntarily carrying out the inspection of
       are modest in scope, our strong point is             actively promote expansion into foreign
                                                                                                                vehicles that have not complied with
       flexibility in the way we respond to various         markets. The development of products
                                                                                                                compulsory renewal vehicle inspections.
       situations. In order to make effective use of this   (including current products we offer, such as
                                                                                                                    We are treating this matter with all
       strength in our existing pump and mechatronics       aircraft passenger boarding bridge and
                                                                                                                seriousness, and to ensure that this type of
       related business, we consistently make               environmental systems) which meet the needs
                                                                                                                incident does not occur again, we have set up
       improvements to our products, and build              of our customers will also increase our share in
                                                                                                                the “CSR and Quality Assurance Division”,
       systems that enable us to continually offer new,     global markets.
                                                                                                                implemented thorough preventative measures,
       leading edge products.
                                                                                                                and have carried out appropriate action with
                                                                                                                relevant personnel, including managerial staff.
                                                                                                                    In order to regain our stakeholders trust in
                                                                                                                ShinMaywa, all personnel and executives are
       Moreover, we are making efforts to develop new       possibilities for use with the Group's existing     united by a strong determination to prevent
       products and new technology by utilizing the         products, thereby potentially increasing the        further incidents from happening.
       combined technology of each segment. For             value of these products dramatically. The
       example, the “Grab and transport” technology         synergy produced by these combined                     The core of corporate social responsibility is
       of new group member, Iwafuji Industrial Co.,         technologies will enhance the creation of           stakeholders' recognition and acceptance of the                                   Tadashi Kaneki
       Ltd., is not only applicable in forestry, but has    products and business in all segments.              value of the corporation. As we take this matter                      President and Chief Executive Officer
                                                                                                                                                                                            Contribution to net sales   Net Sales (Unit: million yen)
                                                                                                                                                                                                                          2004.3                                            28,852
                                                                                                                                                                                                                          2005.3                                  20,849
Development and production       Major products                                                                                                                                                                           2006.3                                  20,688
of STOL Amphibian and                                                                                                                                                                                                     2007.3                                       24,616
various types of aircraft                                                                                                                                                                                                 2008.3                                            28,572
components and related
                                                                                                                                                                                                                        Operating Income (Unit: million yen)
products for commercial
                                                                                                                                                                                                                          2004.3                                               1,647
aircraft manufactures in
                                                                                                                                                                                                                          2005.3                           981

                                                                                                                                                                                                  20.6%
Japan and overseas
                                                                                                                                                                                                                          2006.3                    628
                                                                                                                                                                                                                          2007.3                            1,003
                                 ÒUS-2Ó STOL Search and Rescue Amphibian Wing-To-Body Fairing for BOEING 777 WTB Fairing Kit etc. for G550   Main Wing Spar for BOEING 787                                                2008.3                          893

                                                                                                                                                                                            Contribution to net sales   Net Sales (Unit: million yen)
                                                                                                                                                                                                                          2004.3                                    46,110
                                                                                                                                                                                                                          2005.3                                 41,212
Development and production       Major products                                                                                                                                                                           2006.3                                     48,205
of special purpose trucks                                                                                                                                                                                                 2007.3                                        52,446
featuring diverse functions                                                                                                                                                                                               2008.3                                      50,110
tailored to each type of cargo
                                                                                                                                                                                                                        Operating Income (Unit: million yen)
and related handling work
                                                                                                                                                                                                                          2004.3                                               4,246
                                                                                                                                                                                                                          2005.3                                 2,979

                                                                                                                                                                                                  36.0%
                                                                                                                                                                                                                          2006.3                                       3,588
                                                                                                                                                                                                                          2007.3                                      3,481
                                 Rear Dump Body and Tipping Gear      Refuse Collectors                      Tail Gate Lifters                Detachable Container Systems                                                2008.3                                  3,069

                                                                                                                                                                                            Contribution to net sales   Net Sales (Unit: million yen)
                                                                                                                                                                                                                          2004.3                                    45,145
                                                                                                                                                                                                                          2005.3                                        51,114
Development and production       Major products                                                                                                                                                                           2006.3                                      49,206
of automatic equipment and                                                                                                                                                                                                2007.3                                          54,791
systems that play important                                                                                                                                                                                               2008.3                                       50,529
roles on manufacturing floors
                                                                                                                                                                                                                        Operating Income (Unit: million yen)
and in urban infrastructure
                                                                                                                                                                                                                          2004.3                             3,138
                                                                                                                                                                                                                          2005.3                                           4,454

                                                                                                                                                                                                  36.4%
                                                                                                                                                                                                                          2006.3                          2,695
                                                                                                                                                                                                                          2007.3                               3,295
                                 Automatic Wire Terminating Machines Parking equipment                       Lightweight Submersible Pump     Refuse Transfer Station System (in Fukuoka)                                 2008.3                             3,097

                                                                                                                                                                                            Contribution to net sales   Net Sales (Unit: million yen)
                                                                                                                                                                                                                          2004.3                               10,500
                                                                                                                                                                                                                          2005.3                                        14,816
Building construction, civil     Major products                                                                                                                                                                           2006.3                                 11,580
engineering works, plumbing                                                                                                                                                                                               2007.3                                   12,595
works, design and installation                                                                                                                                                                                            2008.3                             9,747
of air conditioning systems,
                                                                                                                                                                                                                        Operating Income (Unit: million yen)
as well as real-estate
                                                                                                                                                                                                                          2004.3              96
brokerage and development
                                                                                                                                                                                                                          2005.3                                     375

                                                                                                                                                                                                   7.0%
of computer systems
                                                                                                                                                                                                                          2006.3                                                   489
                                                                                                                                                                                                                          2007.3         66
                                 Development of Computer Systems                          Construction example                                                                                                            2008.3                                       395
Review of Fiscal 2007                                          Future Prospects                                           Review of Fiscal 2007                                            Future Prospects
Sales were higher than the previous                            Regarding fiscal 2008 aircraft segment                     Sales and profits were both lower than                           In fiscal 2008, despite a prediction of continued
year, while profits were down.                                 performance, although delivery of components               the previous year's results.                                     harsh conditions in domestic markets, due to
Along with our 2nd mass-production order for the               for the BOEING 787 are expected to increase, a             In regards to production and sales of truck bodies               year-round contributions from the net sales of
STOL Search and Rescue Amphibian for the                       decline in commercial sales is forecast due to an          and related products, we achieved an increase in                 Iwafuji Industrial Co., Ltd. – which became our
Ministry of Defense, fuselage fabrication and                  appreciating yen, and a decrease in fabrication of         both orders and sales of our new line of refuse                  consolidated subsidiary last November – and the
regular maintenance operations are progressing                 the “US-2” STOL Search and Rescue Amphibian                collectors, however as the replacement demand                    resulting enhanced production efficiency, we
according to plan, resulting in increases in orders            for the Ministry of Defense.                               for products that meet domestic emission control                 anticipate net sales of ¥50,000 million and
and sales.                                                        As a result, we anticipate net sales of ¥25,600         standards has run its course, along with a                       operating income of ¥3,660 million in the Special
   In commercial production, despite a decrease                million and operating income of ¥1,050 million.            reduction in exports, both orders and sales of                   Purpose Truck segment.
in orders of fuselage components for Boeing's                                                                             dump trucks, detachable container trucks,
mass-production program of the next-generation,                                                                           tailgate-lifters (laborsaving cargo loading device),
mid-sized commercial aircraft, the BOEING 787,                                                                            etc. have declined.
delivery of components for the BOEING 777                                                                                     In maintenance and repair operations, parts
increased, therefore the number of orders                                                                                 sales and service remained unchanged from the
remained unchanged from the previous year, and                                                                            previous fiscal year, while sales of used special-
sales increased.                                                                                                          purpose trucks increased.


Net Sales (Unit: million yen)                               Operating Income (Unit: million yen)                          Net Sales (Unit: million yen)                                 Operating Income (Unit: million yen)
   2008.3                                          28,572      2008.3                               893                      2008.3                                            50,110      2008.3                              3,069
   2009.3
(Estimate)
                                                25,600         2009.3
                                                            (Estimate)
                                                                                                           1,050             2009.3
                                                                                                                          (Estimate)
                                                                                                                                                                               50,000      2009.3
                                                                                                                                                                                        (Estimate)
                                                                                                                                                                                                                                       3,660

Operating Income Ratio (Unit: million yen)                                                                                Operating Income Ratio (Unit: million yen)
   2008.3                                    3.1%                                                                            2008.3                                     6.1%
   2009.3
(Estimate)
                                                    4.1%                                                                     2009.3
                                                                                                                          (Estimate)
                                                                                                                                                                               7.3%




 BOEING 777



                                                                                                   Wing-To-Body Fairing                    Compacting Type Refuse Collector
                                                                                                                                           “G-RX ROUTE PACKER”
                                                                          relatively unchanged from the previous year,
Review of Fiscal 2007                                                     sales and orders of mechanical parking                  Review of Fiscal 2007
Sales and profits were both lower than                                    equipment increased.                                    Sales and profits were both lower than
the previous year's results.                                                 In regards to environmental related projects,        the previous year's results.
As falling trends in public investment continue,                          although refuse transfer station installation           Although orders for installation work increased,
despite modification of prices, and a concentrated                        progressed according to plan, due to a decline in       orders and sales for construction work decreased
effort to fill replacement orders, sales and orders                       the amount of new business, orders and sales            due to delays in commencement influenced by
of pumps and related products were both down.                             both decreased.                                         revisions in the Building Standards Law.
   Although orders for Thin Film Coating Systems                                                                                     Orders and sales increased for both staffing
were down, due to delivery of equipment with                                                                                      services and contracting business, as well as for
heavy conveyor systems, sales increased. As the                           Future Prospects                                        contracting related to computer system
positive transition towards capital investment in                         In fiscal 2008, as demand for Mechatronic               development and design.
the automotive industry came full circle, orders                          products such as the Aircraft Passenger Boarding
and sales for Automatic Wire Terminating                                  Bridge increases, its relative market environment
Machines decreased. New and large-scale orders                            is expected to be positively influenced by other
of “PAXWAY”, the Aircraft Passenger Boarding                              products as well. This is expected to contribute to     Net Sales (Unit: million yen)                                 Operating Income (Unit: million yen)
Bridge, contributed to an increase in business,                           net sales of ¥51,300 million and an operating              2008.3                                    9,747               2008.3                                    395
however sales decreased.                                                  income of ¥3,460 million in the Industrial                 2009.3
                                                                                                                                  (Estimate)
                                                                                                                                                                                       12,100      2009.3
                                                                                                                                                                                                (Estimate)
                                                                                                                                                                                                                                       250
   As sales and orders for new construction                               Machinery Segment.
increased, and maintenance operations remained
                                                                                                                                  Operating Income Ratio (Unit: million yen)
                                                                                                                                     2008.3                                            4.1%
Net Sales (Unit: million yen)                                         Operating Income (Unit: million yen)                           2009.3                       2.1%
   2008.3                                            50,529              2008.3                                       3,097       (Estimate)
   2009.3
(Estimate)
                                                     51,300              2009.3
                                                                      (Estimate)
                                                                                                                          3,460

Operating Income Ratio (Unit: million yen)
   2008.3                                          6.1%
   2009.3
(Estimate)
                                                      6.7%




A380 Type “PAXWAY” Aircraft Passenger Boarding Bridge (Narita International Airport)                         NONCLOG SCREW
                                                                                                             SUBMERSIBLE PUMP
Automatic Wire Terminating Machines
– Indispensable in automobile and home appliance production
Were you aware that ShinMaywa manufacturing technology is used in the car you drive, in your cell                                        Global Expansion
phone and even in your home appliances?                                                                                               Over 70% of ShinMaywa's Automatic Wire Terminating Machines are delivered to
  Here we will introduce one of ShinMaywa's Mechatronics line of products which you may find                                          locations outside of Japan, including China, Southeast Asia, and Mexico, and occupy a
surprisingly familiar in your life.                                                                                                   30% share of the automobile related market in Asia.
                                                                                                                                        Also, product maintenance centers have been established in Shanghai, China;
   Automatic Wire Terminating Machines                                                                                                Bangkok, Thailand; and El Paso, USA. As this is a mass-production apparatus, we have
In order for automobiles and home appliances to operate smoothly they                                                                 established a system capable of rapid maintenance support.
require a wire-harness of compactly bundled electrical wiring and data-
transfer circuits. The process of creating this wire-harness involves the
cutting of electrical wires at a specific length, stripping, then crimping the
terminations, which is done by Automatic Wire Terminating Machines                                                                       The assembly of Automatic Wire Terminating Machines in China begins
developed and manufactured by ShinMaywa.
   In 1956, ShinMaywa developed an Automatic Wire Stripping Machine                                                                      Test assembly began at the maintenance
which only cuts through the plastic coating of the wire, since then we have                                                              center in China, ShinMaywa (Shanghai)
made many improvements and currently wire crimping is performed by                              Automatic
                                                                                                                                         Trading Co., Ltd. in June of 2008. In recent
automated robots.                                                                               Wire Stripping Machine
                                                                                                                                         years, the amount of production of home
   The machines which we currently have on the market, are designed to                                                                   appliances in China has steadily increased,
meet the needs of wire-harness makers, with a lineup of strengths such                                                                   as has the demand for high quality, low
as: high-speed processing, cost efficiency, reduction of defect rate, high                                                               cost wire-harnesses. As such, it was
performance and ease of operational setup.                                                                                               necessary to secure a production system
The point which attracts the most attention is “Speed”, and we offer models                                                              close to the market.
which can crimp 4,500 wire terminations in one hour (12.5% increase over                                                                 Regular assembly operations commenced
previous models) making this a very popular model.                                                                                       in August, and we began accepting orders
                                                                                                                                         in September having acquired approval of
                                                                                                Example     of   wire   fabrication
                                                                                                                                         the expansion of our scope of service.



                                                                                                                                                                                                 ShinMaywa   ( S h a n g h a i ) Tr a d i n g ' s   o ff i c e s




                                                                                                                                         Future Expansion
                                                                                                                                      An increase in new factory construction by wire-harness makers over the past few
                                                                                                                                      years has created a healthy trend for this sector of business.
                                                                                                                                         As we strive to expand further into global markets, we will continue to work
                                                                                                                                      diligently towards promoting business activities which expand our customer base.
                                                                                                                                      We will also endeavor to create machines which decrease reliance on human
                                                                                                                                      resources, reduce running costs, are more environmentally friendly and meet the
                                                                                                                                      needs of the customer through faster and more accurate production methods.
   TRD301                                                TR201
                                                                                                                                      Furthermore, we continue to examine and develop new and invaluable features for
   (for   use   in   automobiles)                        (for   use   in   home   appliances)

                                                                                                                                      our customers, increase the speed of maintenance by improving service systems, and
                                                                                                                                      further improve production shares.

           Environmental Considerations
                                                                                                                                                              Net Sales    (Unit: billion yen)




                Eco-wiring friendly               Energy efficient, noise reduction and lightweight                                                                     2005.3                                     1.9




   Eco-wiring, which does not make          We have developed models which are over 30% more                                                                            2006.3                                                       2.5


   use of coating that is harmful to the    effective in reduction of noise and power consumption,
                                                                                                                                                                        2007.3                                                                              3.3

   environment can also be used.            and 30% lighter (compared to our previous models),
                                            which contributes to ease in factory layout alteration.                                                                     2008.3                                                        2.6




                                                                                                                                                             (Estimated) 2009.3                                                             2.8
                                                                                                           Environment is a keyword for ShinMaywa, which aims to grow as an “Environment-

Acquirement of Iwafuji Industrial Co., Ltd.
                                                                                                           creating company for daily life”.
                                                                                                              We carry out all business activities while keeping environmental protection in mind
                                                                                                           throughout the manufacturing process, as well as creating environmentally conscious
By acquiring all shares of Iwafuji Industrial Co.,                                                         products, or so-called, “Eco-products”.
Ltd. (a forestry machinery sales/manufacturer) in                                                             In 1993, ShinMaywa instituted action guidelines for environmental conservation
November 2007, our group entered the high-                                                                 which promote a policy of harmony with the environment. In keeping with these
performance forestry machine (including special                                                            guidelines, we are committed to environmental conservation throughout the
purpose forestry trucks) manufacturing and sale                                                            manufacturing process.
business.                                                                                                     Along with the guidelines mentioned above, we have also established an
By combining the skills of Iwafuji Industrial                                                              Environmental Action Plan under which individual targets to be achieved by 2010
specialists that have been cultivated over years of                                                        were placed in the following four categories: 1) Environmental management,
experience with our own skills and products, we                                                            2) Products and services, 3) Plants and offices, and 4) Partnership with stakeholders.
will facilitate the creation of special purpose trucks                                                     To accomplish these targets, specific measures are under way.
and equipment with increased-value, thereby                                                                   In 1998, our environmental management system was established to provide the
increasing sales and expanding into new markets
related to special purpose trucks.
                                                           Grapple Processor                               framework which supports our environmental management activities. While each
                                                                                                           business site works to manage and achieve its own goals, relevant information is
                                                                                                           shared throughout the ShinMaywa Group.

                                                                                                                Zero Emissions Achieved
Withdrawal from the beauty and medical equipment sector                                                    As of March 2008, we have achieved zero waste emissions at all of our production
                                                                                                           centers. In accordance with the group's Environmental Action Plan, our 2007 goal was
In February 2008 it was decided that our                 lack of cohesion with the Group’s other various   for zero emissions at 6 plants, and since that time we have worked to promote waste
subsidiary SML, Ltd. would withdraw from all             businesses, the decision was made to terminate    reduction and recycling. Two plants within the Industrial Machinery Division achieved
beauty and medical equipment related business.           this area of our business. Furthermore, the       this goal by March 2005, and as the Aircraft and Special Purpose Truck Divisions met
Since its foundation in 1970, SML, Ltd. has              liquidation of this company has been scheduled    zero emission standards, all plants became “Zero emission”.
focused on the manufacture and sales of beauty           for Fiscal 2008, although the Group will take     Note: Company standard for zero emissions: Final disposal quantity of less than 5 tons, and final disposal rate of less than 1%.
equipment, however due to reductive tendencies           responsibility of maintenance, etc. of products
in the primary beauty equipment markets and a            which have already been sold.

                                                                                                                    Eco-products
ÒUS-2Ó STOL Search and Rescue Amphibian at the ÒLIMA '07 AirshowÓ                                              ShinMaywa introduced the Assessment for DfE (Design
                                                                                                               for the Environment) in order to reduce environmental
and PR regarding its multiple applications                                                                     burden during a product's life cycle (from materials
                                                                                                               procurement to production, distribution, use, collection
                                                                                                               and disassembly, to proper disposal). Assessment
As a public relations opportunity, the “US-2” STOL
                                                                                                               categories for each product are evaluated, and only
Search and Rescue Amphibian was registered in
                                                                                                               products which meet the standards of each category are
the “LIMA '07 Airshow” in Langkawi Island,

                                                                                                                                                                  *
                                                                                                               defined as, “Eco-products”.
Malaysia in December 2007. The “US-2” has a
                                                                                                                  The sales ratio of Eco-products in fiscal 2007 was
wide-range of capabilities, among these are the
                                                                                                               60.5% (excluding group companies), and we aim to raise
ability to fly at very low speeds, make short
                                                                                                               this to 80% by fiscal 2010.
                                                                                                               * Sales ratio of Eco-products = Eco-product sales/total sales of all products
takeoffs and landings, and takeoff and land on
waves up to three meters high in the open sea. It
is also invaluable for use in firefighting and air-sea
                                                                                                               Medium-speed Submersible Mixer “SMM Series”
                                                                                                                1
rescue, and in the emergency deployment of
disaster relief personnel and equipment.                                                                            Energy efficient mixer – Reduces stirring power to 1/2
By using a large model of the plane at the air-                                                                     to 1/3 (compared to other products made by
                                                                                                                    ShinMaywa) and, reduces power consumption by
show, we were able to demonstrate the usefulness           Exhibition booth                                         more than 50%.
                                                                                                                2
and versatility of this aircraft.
                                                                                                                    Maintenance efficient – Double the maintenance cycle
                                                                                                                    length and operating life compared to other models of                                 Submersible Mixer
                                                                                                                    submersible mixers made by ShinMaywa.                                                    “SMM Series”
Basic philosophy regarding corporate governance                                                                          Currently ShinMaywa has six Directors (two from outside the Company) who
                                                                                                                      attend the monthly Board of Director’s meetings to decide on important management
In regard to corporate governance, the ShinMaywa Group places top priority on                                         subjects. The Board also monitors the performance of its Directors as deemed
conducting corporate activities in compliance with relevant laws and regulations,                                     appropriate. ShinMaywa has concluded in its articles of association that the number
social norms and common sense, while ensuring management transparency and                                             of Directors shall be eight or less.
rationality, in order to improve our corporate value.                                                                    ShinMaywa has eleven Executive Officers, including four managers from
                                                                                                                      respective divisions, who focus on the implementation of specific projects. These
   ShinMaywa's approach to corporate governance                                                                       Executive Officers are members of the Management Committee, an advisory body to
Taking into account the business style and scale of ShinMaywa, the company has                                        the President that, in principle, meets twice a month to discuss important matters
adopted a corporate auditing system, and introduced an Executive Officer system.                                      related to the management of ShinMaywa.
The latter is intended to strengthen management functions by transferring individual                                     There are five Corporate Auditors, three of whom are Outside Auditors who, in
business management authority to Executive Officers, in order to speed up decision                                    addition to attending the Board of Directors’ meetings and other important in-house
making and clarify management responsibilities. The executive officer system also                                     meetings, perform their duties by listening to business reports from Directors and
aims to enhance governance by ensuring that directors (the Board of Directors)                                        employees, and inspecting final-approval documents.
concentrate on assessing individual business operations from company-wide                                                Ernst & Young ShinNihon have been appointed as the Company's Accounting
perspectives, as well as decision making and the supervision of management resource                                   Auditors, and have furnished accurate management information so as to establish an
allocation.                                                                                                           environment that enables the auditor to conduct accounting audits from a fair
   Furthermore, ShinMaywa has set the terms of office for Directors and Executive                                     standpoint.
Officers at one year, in order to facilitate management assessment and clarification of                                  As part of our compliance efforts, we have stipulated a standard of ethics in order
management responsibilities. At the same time the Management Personnel                                                to provide guidelines which ensure all employees conform with laws and regulations,
Committee was established, as an advisory body to the President, to further improve                                   social norms and common sense. ShinMaywa also works to promote awareness of
the transparency and appropriateness of personnel affairs and compensation.                                           compliance and establish various related programs, such as the “ShinMaywa Ethics
The majority of these committee members are experts from outside the Company                                          Day” and “Corporate Ethics Month”. Furthermore, in order to clarify the responsibility
(lawyers and university professors) and Outside Directors.                                                            for centralized control of compliance and CSR implementation, as well as quality
                                                                                                                      assurance of products and services the “CSR and Quality Assurance Division” was
                                                                                                                      established, which in turn is evaluated and inspected by the “Corporate Ethics Expert
                                                                                                                      Committee” that was formed primarily with members from outside the company. This
                                           General meeting of shareholders                                            committee also put together a system for providing counseling and advice.
                                                                                                                         A corporate ethics consultation section (corporate ethics helpline) was also created
                                                                                                                      in order to eliminate compliance risk through early problem detection and self-
                                               Board of Corporate Auditors                     Independent Auditors


                                        (Corporate Auditors and Outside Auditors)               (audit corporation)
                                                                                                                      governance.




                                   Board of Directors (Directors and Outside Directors)




       Corporate Ethics Expert Committee                                      Management Personnel Committee


         (Outside Directors and Experts)                                        (Outside Directors and Experts)
                                                     Representative


                                                         Director

                                                                                     Management Committee
                                                     (President and

          CSR and Quality Assurance                                            (Directors and Executive Officers)
                                                          CEO)

                    Division




                       Respective division heads                                    Internal Audit Division


                  (Executive Officers and Employees)                                (Internal Audit Office)




      Corporate Ethics Helpline                 Internal Reporting Section


     (internal reporting system)                 (Office of the President)




                                                External Reporting Office


                                                        (law firm)




                                                                    An overview of the Company's management system
                          Value-added company




Ye a r s e n d e d M a r c h 3 1 , 2 0 0 8 a n d 2 0 0 7 w i t h R e p o r t o f I n d e p e n d e n t A u d i t o r s
                                                                           March 31,                                                                                                                              March 31,

                                                       (Millions of yen)          (Thousands of U.S. dollars)                                                                                                            (Thousands of U.S. dollars)
                                                                                                                                                                                              (Millions of yen)
                                                                                          (Note 3)                                                                                                                               (Note 3)
                                                      2008         2007                2008           2007                                                                                  2008          2007                2008         2007


Assets                                                                                                            Liabilities and Net assets
                                                                                                                  Current liabilities:
Current assets:
                                                                                                                    Trade notes and accounts payable                                      ´ 25,186     ´ 23,660           $ 251,860      $ 236,600
  Cash and time deposits(Note 4)                   ´ 11,337     ´ 10,099         $ 113,370         $ 100,990        Accrued expenses                                                         6,963        7,372              69,630         73,720
                                                                                                                    Accrued income taxes (Note 9)                                            1,010        1,771              10,100         17,710
  Trade notes and accounts receivable                51,577       56,751               515,770        567,510       Accrued bonuses for directors (Note 2)                                     152          163               1,520          1,630
  Allowance for doubtful receivables                   (126)         (204)               (1,260)        (2,040)     Provision for product warranty                                             109           88               1,090            880
                                                                                                                    Provision for losses on construction contracts                             896            Ð               8,960              Ð
  Inventories (Note 5)                               41,411       32,837               414,110        328,370       Other current liabilities                                                4,723        5,037              47,230         50,370
  Deferred income taxes (Note 9)                      2,651         2,595               26,510         25,950     Total current liabilities                                                 39,042       38,093             390,420        380,930

  Prepaid expenses and other current assets           1,232         1,325               12,320         13,250     Long-term liabilities:
Total current assets                                108,083      103,404           1,080,830        1,034,040       Long-term debt (Note 7)                                                 6,000         6,000                60,000       60,000
                                                                                                                    Accrued retirement benefits for employees (Note 8)                      8,848         9,074                88,480       90,740
                                                                                                                    Accrued retirement benefits for directors and corporate auditors          823           742                 8,230        7,420
Property, plant and equipment (Note 14):                                                                            Deferred income taxes (Notes 9)                                           317             Ð                 3,170            Ð
                                                                                                                    Deferred income taxes on land revaluation account (Notes 9 and 11)         62           150                   620        1,500
  Land(Note 11)                                       5,782         5,375               57,820         53,750       Goodwill                                                                  678             Ð                 6,780            Ð
                                                                                                                    Other long-term liabilities                                             5,509         4,182                55,090       41,820
  Buildings and structures                           36,021        36,111              360,210        361,110
                                                                                                                  Total long-term liabilities                                              22,238        20,151               222,380      201,510
  Machinery, equipment and vehicles                  34,463       34,814               344,630        348,140     Total liabilities                                                        61,281        58,245               612,810      582,450
  Construction in progress                              496            84                 4,960           840
                                                                                                                  Contingent liabilities (Note 10)
                                                     76,763       76,386               767,630        763,860
  Less accumulated depreciation and                                                                               Net assets:
    impairment loss                                 (50,729)      (49,509)             (507,290)     (495,090)
                                                                                                                  ShareholdersÕ equity (Note 12):
Property, plant and equipment, net                   26,034       26,877               260,340        268,770       Common stock
                                                                                                                       Authorized Ð 300,000,000 shares
                                                                                                                       Issued Ð 119,727,565 shares at March 31, 2008 and 2007              15,981        15,981               159,810      159,810
Investments and long-term loans receivable:                                                                         Capital surplus                                                        15,739        15,739               157,390      157,390
  Investments in an unconsolidated subsidiary                                                                       Retained earnings                                                      57,524        55,990               575,240      559,900
    and affiliates                                      202           125                 2,020         1,250       Less treasury common stock, at cost;
                                                                                                                       19,862,697 shares at March 31, 2008 and
  Investment securities (Note 6)                      3,331         4,622               33,310         46,220
                                                                                                                       19,815,023 shares at March 31, 2007                                  (8,175)       (8,152)             (81,750)     (81,520)
  Long-term loans receivable                             13            15                  130            150     Total shareholdersÕ equity                                               81,070        79,559               810,700      795,590
Total investments and long-term loans receivable      3,546         4,763               35,460         47,630
                                                                                                                  Valuation and translation adjustments:
Deferred income taxes (Note 9)                        2,834         2,654               28,340         26,540       Unrealized gain on securities                                              673        1,401               6,730      14,010
Other assets                                          3,707         3,493               37,070         34,930       Land revaluation account (Note 11)                                        (389)        (306)             (3,890)     (3,060)
                                                                                                                    Translation adjustments                                                     (8)          90                 (80)        900
                                                                                                                  Total valuation and translation adjustments:                                 275        1,185               2,750      11,850
                                                                                                                    Minority interests                                                       1,579        2,202              15,790      22,020
                                                                                                                  Total net assets                                                          82,925       82,947             829,250     829,470
Total assets                                       ´ 144,206   ´ 141,192         $ 1,442,060       $ 1,411,920    Total liabilities and net assets                                       ´ 144,206    ´ 141,192         $ 1,442,060 $ 1,411,920


                                                                                                                  The accompanying notes are an integral part of these statements.
                                                                          Year ended March 31,                                                                                                (Millions of yen)
                                                                                       (Thousands of U.S. dollars)                                                Number of                         Shareholders' Equity
                                                            (Millions of yen)
                                                                                               (Note 3)                                                            shares of                                                     Treasury
                                                                                                                                                                   common       Common             Capital        Retained     common stock,
                                                         2008            2007            2008            2007                                                        stock       stock             surplus        earnings        at cost


Net sales                                            ´ 138,959       ´144,451        $ 1,389,590 $ 1,444,510         Balance at March 31, 2006                 119,727,565       ´15,981          ´15,739         ´53,191         ´(8,127)

Cost of sales                                          116,198        121,506          1,161,980       1,215,060       Gain on disposal of treasury stock               Ð               Ð                0                 Ð            0

Gross profit                                             22,760          22,944         227,600         229,440        Bonuses to directors                             Ð               Ð                Ð           (108)              Ð
                                                                                                                       Dividends paid                                   Ð               Ð                Ð           (999)              Ð

Selling, general and administrative expenses                                                                           Net income for the year                          Ð               Ð                Ð          3,840               Ð
   (Note 13and 15)                                        17,752         17,645          177,520         176,450
                                                                                                                       Net changes in items other
Operating income                                          5,008           5,298           50,080         52,980          than those in shareholdersÕ equity             Ð               Ð                Ð             65             (25)
                                                                                                                     Balance at March 31, 2007                 119,727,565        15,981           15,739          55,990          (8,152)
Other income (expenses):                                                                                               Gain on disposal of treasury stock               Ð               Ð                0                 Ð            3
  Interest and dividend income                                73             65              730            650        Dividends paid                                   Ð               Ð                Ð           (999)              Ð
  Interest expense                                           (80)           (55)            (800)           (550)      Net income for the year                          Ð               Ð                Ð          2,450               Ð
  Amortization of goodwill                                    52                Ð            520                Ð    Net changes in items other
                                                                                                                          than those in shareholdersÕ equity            Ð               Ð                Ð             82             (27)
  Equity in (losses) earnings of an unconsolidated
    subsidiary and affiliates                                (37)               0           (370)               0    Balance at March 31, 2008                 119,727,565       ´15,981          ´15,739         ´57,524         ´(8,175)
  Gain on sales of property, plant and equipment            101            902             1,010          9,020
                                                                                                                                                                                              (Millions of yen)
  Restructuring losses (Note 8)                            (333)                Ð         (3,330)               Ð
                                                                                                                                                                   Valuation and translation adjustments
  Other, net                                               (549)           (128)          (5,490)         (1,280)                                                 Unrealized       Land
                                                                                                                                                                   gain on      revaluation      Translation      Minority      Total net
                                                           (774)            784           (7,740)         7,840                                                   securities      account        adjustments      Interests      assets

Income before income taxes and minority interests         4,233           6,083           42,330         60,830
                                                                                                                     Balance at March 31, 2006                     ´1,925           ´(240)            ´(51)        ´2,210        ´80,629
                                                                                                                       Gain on disposal of treasury stock               Ð                Ð                 Ð               Ð            1
Income taxes (Note 9):
                                                                                                                       Bonuses to directors                             Ð                Ð                 Ð               Ð        (108)
  Current                                                  1,523          2,376            15,230         23,760
                                                                                                                       Dividends paid                                   Ð                Ð                 Ð               Ð        (999)
  Deferred                                                   201           (173)            2,010         (1,730)
                                                                                                                       Net income for the year                          Ð                Ð                 Ð               Ð       3,840
Minority interests                                             57               38               570         380
                                                                                                                       Net changes in items other
Net income (Note 16)                                     ´ 2,450     ´    3,840          $ 24,500       $ 38,400         than those in shareholdersÕ equity          (524)            (65)             141             (7)          (415)
The accompanying notes are an integral part of these statements.                                                     Balance at March 31, 2007                       1,401           (306)              90          2,202         82,947
                                                                                                                       Gain on disposal of treasury stock               Ð                Ð                 Ð               Ð            3
                                                                                                                       Dividends paid                                   Ð                Ð                 Ð               Ð        (999)
                                                                                                                       Net income for the year                          Ð                Ð                 Ð               Ð       2,450
                                                                                                                       Net changes in items other
                                                                                                                         than those in shareholdersÕ equity          (728)            (82)             (98)          (623)         (1,477)
                                                                                                                     Balance at March 31, 2008                      ´ 673           ´(389)           ´ (8)        ´ 1,579        ´82,925
                                                       (Thousands of U.S. dollars) (Note 3)                                                                                                       Year ended March 31,

                                                              Shareholders' Equity                                                                                                                             (Thousands of U.S. dollars)
                                                                                                                                                                                    (Millions of yen)
                                                                                           Treasury                                                                                                                    (Note 3)
                                           Common            Capital        Retained     common stock,
                                            stock            surplus        earnings        at cost                                                                               2008           2007             2008           2007

Balance at March 31, 2006                 $159,810          $157,390       $531,910        $(81,270)                  Operating activities
  Gain on disposal of treasury stock               Ð                0                Ð               0                Income before income taxes and minority interests          ´ 4,233         ´ 6,083         $ 42,330       $ 60,830
  Bonuses to directors                             Ð                Ð         (1,080)                Ð                Depreciation and amortization                                3,733           3,414           37,330         34,140
                                                                                                                      Equity in losses (earnings) of an unconsolidated
  Dividends paid                                   Ð                Ð         (9,990)                Ð                  subsidiary and affiliates                                        37             (0)              370            (0)
  Net income for the year                          Ð                Ð        38,400                  Ð                Decrease in accrued retirement benefits for
                                                                                                                        employees and directors                                      (393)         (931)           (3,930)        (9,310)
  Reversal of land revaluation account             Ð                Ð            650                 Ð                Interest and dividend income                                    (73)          (65)             (730)          (650)
  Net changes in items other                                                                                          Interest expense                                                 80            55               800            550
    than those in shareholdersÕ equity             Ð                Ð                Ð            (250)               Gain on sales of property, plant and equipment                 (101)         (902)           (1,010)        (9,020)
  Balance at March 31, 2007                 159,810          157,390        559,900           (81,520)                Decrease (increase) in trade notes and accounts
                                                                                                                        receivable                                                 6,610          (4,131)          66,100        (41,310)
  Gain on disposal of treasury stock               Ð                0                Ð              30                Increase in inventories                                     (7,618)         (6,771)         (76,180)       (67,710)
  Dividends paid                                   Ð                Ð         (9,990)                Ð                Increase in trade notes and accounts payable                   464             975            4,640          9,750
                                                                                                                      Other, net                                                   1,805           2,470           18,050         24,700
  Net income for the year                          Ð                Ð        24,500                  Ð
                                                                                                                                                                                   8,779             198           87,790          1,980
  Net changes in items other                                                                                          Interest and dividends received                                 72              65              720            650
    than those in shareholdersÕ equity             Ð                Ð            820              (230)
                                                                                                                      Interest paid                                                  (80)            (55)            (800)          (550)
Balance at March 31, 2008                 $159,810          $157,390       $575,240        $(81,750)                  Income taxes paid                                           (2,272)         (2,139)         (22,720)       (21,390)
                                                                                                                      Net cash provided by (used in) operating activities          6,498          (1,930)          64,980        (19,300)
                                                       (Thousands of U.S. dollars) (Note 3)
                                            Valuation and translation adjustments                                     Investing activities
                                           Unrealized         Land         Translation        Minority    Total net   Purchases of property, plant and equipment                  (2,306)         (4,043)         (23,060)       (40,430)
                                            gain on        revaluation
                                           securities        account       adjustments        Interests    assets     Proceeds from sales of property, plant and equipment           248           1,128            2,480         11,280
                                                                                                                      Purchases of intangible assets                                (507)           (466)          (5,070)        (4,660)
Balance at March 31, 2006                   $19,250          $(2,400)         $ (510)         $22,100     $806,290    Purchases of consolidated subsidiary stock accompanied
                                                                                                                        by changes in scope of consolidation(Note 4)              (1,095)                Ð        (10,950)               Ð
  Gain on disposal of treasury stock               Ð                Ð                Ð               Ð          10    Purchases of consolidated subsidiary stocks from
  Bonuses to directors                             Ð                Ð                Ð               Ð      (1,080)
                                                                                                                      minority shareholders                                         (331)              Ð           (3,310)             Ð
                                                                                                                      Other, net                                                    (191)             29           (1,910)           290
  Dividends paid                                   Ð                Ð                Ð               Ð      (9,990)   Net cash used in investing activities                       (4,183)         (3,352)         (41,830)       (33,520)
  Net income for the year                          Ð                Ð                Ð               Ð      38,400
  Reversal of land revaluation account             Ð             (650)               Ð               Ð            Ð   Financing activities
                                                                                                                      Proceeds from long-term debt                                     Ð          4,000                 Ð         40,000
  Net changes in items other
                                                                                                                      Acquisition of treasury stock, net                             (23)           (25)             (230)          (250)
  than those in shareholdersÕ equity           5,240                Ð          1,410               (70)     (4,150)
                                                                                                                      Dividends paid                                                (999)          (999)           (9,990)        (9,990)
  Balance at March 31, 2007                  14,010            (3,060)           900           22,020      829,470    Dividends paid to minority shareholders                        (32)           (32)             (320)          (320)
  Gain on disposal of treasury stock               Ð                Ð                Ð               Ð          30    Net cash (used in) provided by financing activities         (1,054)         2,943           (10,540)        29,430
                                                                                                                      Effect of exchange rate changes on cash and cash
  Dividends paid                                   Ð                Ð                Ð               Ð      (9,990)     equivalents                                                      (26)           67           (260)           670
  Net income for the year                          Ð                Ð                Ð               Ð      24,500    Net increase (decrease) in cash and cash
                                                                                                                        equivalents                                                1,233          (2,272)          12,330        (22,720)
  Net changes in items other
    than those in shareholdersÕ equity        (7,280)            (820)          (980)          (6,230)     (14,770)
                                                                                                                      Cash and cash equivalents at beginning of the year          10,099          12,371          100,990        123,710
                                                                                                                      Cash and cash equivalents at end of the year (Note 4)     ´ 11,333        ´ 10,099        $ 113,330      $ 100,990
Balance at March 31, 2008                    $6,730          $(3,890)          $ (80)         $15,790     $829,250

                                                                                                                      The accompanying notes are an integral part of these statements.
The accompanying notes are an integral part of these statements.
1.   Summary of Significant Accounting Policies                                                  (d) Foreign currency translation


(a) Basis of presentation                                                                           All monetary assets and liabilities, regardless of whether they are short-term or

                                                                                                    long-term, denominated in foreign currencies are translated into yen at the exchange
     ShinMaywa Industries, Ltd. (the ÒCompanyÓ) and its domestic consolidated                       rates prevailing as of the fiscal year end, and the resulting gain and loss are included
     subsidiaries maintain their books of account in conformity with the financial                  in income.
     accounting standards of Japan, and its overseas consolidated subsidiaries maintain

     their books of account in conformity with those of their countries of domicile.                Balance sheet accounts and revenue and expense accounts of the overseas

                                                                                                    consolidated subsidiaries are translated into yen at the exchange rates prevailing as
     The accompanying consolidated financial statements have been compiled from the                 of the fiscal year end, except for the components of net assets excluding minority
     consolidated financial statements prepared by the Company as required under the                interests which are translated at their historical exchange rates. Translation
     Financial Instruments and Exchange Act of Japan and, therefore, have been prepared             adjustments are presented as a component of valuation and translation adjustments
     in accordance with accounting principles generally accepted in Japan, which are                and minority interests.
     different in certain respects as to the application and disclosure requirements of

     International Financial Reporting Standards.

                                                                                                 (e) Cash equivalents
     Certain amounts in the prior year Õs financial statements have been reclassified to

     conform to the current year Õs presentation.   In addition, the notes to the consolidated      All highly liquid investments with a maturity of three months or less when
     financial statements include information which is not required under accounting                purchased are considered cash equivalents.
     principles generally accepted in Japan but is presented herein as additional

     information.

                                                                                                 (f) Securities
     As permitted by the Financial Instruments and Exchange Act, amounts of less than

     one million yen have been omitted. As a result, the totals shown in the                        Securities are generally classified into three categories: trading, held-to-maturity or
     accompanying consolidated financial statements (both in yen and in U.S. dollars) do            other securities.   Securities held by the Company and its consolidated subsidiaries
     not necessarily agree with the sums of the individual amounts.                                 are all classified as other securities.   Marketable securities classified as other

                                                                                                    securities are carried at fair value with any changes in unrealized gain or loss, net of

                                                                                                    the applicable income taxes, included directly in net assets.     Non-marketable
(b) Scope of Consolidation                                                                          securities classified as other securities are carried at cost.   Cost of securities sold is

                                                                                                    determined by the moving average method.
     The consolidated financial statements for the years ended March 31, 2008 and 2007

     included the accounts of the Company and its 20 and 19 subsidiaries, respectively.

     Investments in one subsidiary and 2 affiliates are accounted for by the equity              (g) Inventories
     method for the years ended March 31, 2008 and 2007.

                                                                                                    Inventories are stated principally at the lower of cost or market, cost being

                                                                                                    determined by the moving average method.
(c) Principles of consolidation and accounting for investments in
     unconsolidated subsidiaries and affiliates
                                                                                                 (h) Property, plant and equipment
     The accompanying consolidated financial statements include the accounts of the

     Company and significant companies controlled directly or indirectly by the                     Property, plant and equipment is recorded at cost except that, as permitted by the
     Company.   Companies over which the Company exercises significant influence in                 Corporation Tax Law.
     terms of their operating and financial policies have been included in the

     consolidated financial statements on an equity basis. All significant intercompany             Depreciation of property, plant and equipment is computed by the declining-balance
     balances and transactions have been eliminated in consolidation.                               method over the estimated useful lives of the respective assets as prescribed by the

                                                                                                    Corporation Tax Law, and certain foreign subsidiaries apply the straight-line
     The balance sheet date of certain consolidated subsidiaries is December 31. Any                method.   Significant renewals and additions are capitalized at cost.     Maintenance
     significant differences in intercompany accounts and transactions arising from                 and repairs are charged to income as incurred.
     intervening intercompany transaction during the period from January 1 through

     March 31 have been adjusted, if necessary.
   Property, plant and equipment and intangible fixed assets are reviewed for              (l) Provision for product warranty
   impairment whenever events or changes in circumstances indicate that the carrying
   amount of an asset may not be recoverable. An impairment loss is recognized if             For payments of the after-sales service expense of the product and the repair cost of the
   certain indicators of asset impairment exist and the book value of an asset exceeds        completed work, provision for product warranty is provided based on past experience.
   the undiscounted sum of future cash flows of the asset and is measured as the excess
   of the book value over the higher of (1) the fair market value of the asset, net of
   disposition costs, and (2) the present value of future cash flows arising from          (m) Provision for losses on construction contracts
   ongoing utilization of the asset and from disposal of the asset after use.
                                                                                              With regard to construction contracts that have not yet been delivered and are with
   Business assets of the Company and its consolidated subsidiaries are grouped at its        high probability of generating losses at the end of the fiscal year, and where it is
   management accounting units for impairment testing. However, the Company and               possible to reasonably estimate the amount of such losses, the estimated amount of
   its consolidated subsidiaries determine whether an asset is impaired on an individual      losses to be incurred is provided as provision for losses on construction contracts.
   asset basis for leased assets and when the business asset is deemed idle or it is
   scheduled to be disposed of.
                                                                                           (n) Retirement benefits
   (Change in accounting policy of the Company and its consolidated subsidiaries)
   Effective the year ended March 31, 2008, depreciation of tangible fixed assets             Accrued retirement benefits for employees are provided principally at an amount
   acquired since April 1, 2007 has been calculated in accordance with the revised            calculated based on the retirement benefit obligation and the fair value of the
   Corporation Tax Law. The application of the provisions of the revised Corporation          pension plan assets at the balance sheet dates, as adjusted for unrecognized actuarial
   Tax Law had an insignificant impact on net income for the year ended March 31,             gain or loss and unrecognized prior service cost. The retirement benefit obligation
   2008 from the corresponding amount which would have been recorded under the                is attributed to each period by the straight-line method over the estimated remaining
   previous method.                                                                           years of service of the eligible employees.

   (Additional Information)                                                                   Actuarial gain and loss are amortized in the year following the year in which the gain or
   Effective the year ended March 31, 2008, depreciation of tangible fixed assets             loss is recognized primarily by the straight-line method over a period of 13 years which
   acquired before March 31, 2007, and depreciated to their respective allowable              falls within the average remaining years of service of the eligible employees.
   limits, has been calculated by a method which depreciates residual value equally for
   five years. As the result of this change, operating income and income before income        Prior service cost is amortized as incurred by the straight-line method over a period of
   taxes and minority interests decreased by ´153 million ($1,530 thousand) for the           13 years which falls within the average remaining years of service of the employees.
   year ended March 31, 2008 from the corresponding amount which would have been
   recorded under the previous method.                                                        Certain domestic consolidated subsidiaries have adopted a simplified method for
                                                                                              calculating their retirement benefit obligation which is permitted under the
                                                                                              accounting standard for retirement benefits.
(i) Leases
                                                                                              In addition, subject to the shareholdersÕ approval, directors and corporate auditors of
   Noncancelable leases are accounted for as operating leases (whether such leases are        the Company and its consolidated subsidiaries are customarily entitled to lump-sum
   classified as operating or finance leases) except that lease agreements which              payments of retirement benefits. Provision for retirement benefits for those officers
   stipulate the transfer of ownership of the leased assets to the lessee are accounted       has been made at estimated amounts under the internal rules of the Company and its
   for as finance leases.                                                                     consolidated subsidiaries.


(j) Allowance for doubtful receivables                                                     (o) Income taxes


   An allowance for doubtful receivables is provided at an amount calculated based on         Deferred tax assets and liabilities are determined based on the differences between
   historical experience, while specific allowances for doubtful receivables are              financial reporting and the tax bases of the assets and liabilities, and are measured
   provided for the estimated amounts considered to be uncollectible after reviewing          using the enacted tax rates and laws which will be in effect when the differences are
   individual collectibility.                                                                 expected to reverse.


(k) Accrued bonuses for directors                                                          (p) Research and development expenses


   Accrued bonuses for directors are provided for payments of bonuses to director             Research and development expenses are charged to income as incurred and are
   based on an estimated amount.                                                              included in cost of sales and selling, general and administrative expenses.
(q) Amounts per share                                                                    3.   U.S. Dollar Amounts

   Net income per share is computed based on the net income available for distribution        The translations of yen amounts into U.S. dollar amounts are included solely for the
   to shareholders of common stock and the weighted-average number of shares of               convenience of readers outside Japan and have been made for both 2008 and 2007, as a
   common stock outstanding during the year. Amounts per share of net assets are              matter of arithmetic computation only, at the rate of ´100 = U.S.$1.00, the approximate rate
   computed based on net assets available for distribution to the shareholders and the        of exchange in effect on March 31, 2008. The translations should not be construed as a
   number of shares of common stock outstanding at the year end.                              representation that yen have been, could have been, or could in the future be, converted into
                                                                                              U.S. dollars at the above or any other rate.
(r) Derivative financial instruments


   The Company utilizes various derivative financial instruments in order to manage      4. Supplementary Cash Flow Information
   certain risk arising from adverse fluctuation in foreign currency exchange rates.
   Derivatives are carried at fair value with any changes in unrealized gain or loss          Information with cash and cash equivalents as of March 31, 2008 and 2007 are as follows:
   charged or credited to income.
                                                                                                                                                   (Millions of yen)            (Thousands of U.S. dollars)

(s) Revenue recognition
                                                                                                                                                 2008            2007              2008               2007

   Revenues from production of STOL Search and Rescue Amphibians are recognized by       Cash and time deposits                                 ´11,337         ´10,099           $113,370           $100,990
   the percentage-of-completion method. Revenues from production of waste treatment      Time deposits with deposit terms of more
                                                                                         than three months                                              (4)             Ð                (40)                Ð
   facilities with contracted amounts exceeding ´400 million ($4,000 thousand) and
   production periods exceeding one year are also recognized by the percentage-of-       Cash and cash equivalents at end of the year           ´11,333         ´10,099           $113,330           $100,990
   completion method. Sales recognized by the percentage-of-completion method
   amounted to ´7,445 million ($74,450 thousand) and ´5,361 million ($53,610                  The following shows a breakdown of assets and liabilities at the initial consolidation of the initially
   thousand) for the years ended March 31, 2008 and 2007, respectively.                       consolidated subsidiary through stock acquisition and the relationship between net expenditure and
                                                                                              cost for the acquisition of the subsidiary:
(t) Consumption taxes


   All amounts in the accompanying financial statements are stated exclusive of                                                                    (Millions of yen)            (Thousands of U.S. dollars)
   consumption tax. Non-deductible consumption taxes paid by a domestic consolidated
   subsidiary which can not be reduced from consumption taxes received in accordance                                                                     2008                                 2008
   with Consumption Tax Law of Japan are charged to income as incurred.
                                                                                         Current assets                                                  ´ 2,841                          $ 28,410
(u) Goodwill and negative goodwill
                                                                                         Fixed assets                                                        832                             8,320
                                                                                         Current liabilities                                              (1,269)                          (12,690)
   Goodwill or negative goodwill, the differences between the cost and the underlying
                                                                                         Long-term liabilities                                              (607)                           (6,070)
   equity in net assets at the respective dates of acquisition of the consolidated
                                                                                         Negative goodwill                                                  (422)                           (4,220)
   subsidiaries, is amortized over the period of 5 years except for the immaterial
                                                                                         Acquisition cost of shares                                        1,374                            13,740
   differences which are charged or credited to income as incurred.
                                                                                         Cash and cash equivalents of the acquired company                  (279)                           (2,790)
                                                                                         Net expenditure of consolidated subsidiary stock                ´ 1,095                          $ 10,950




                                                                                         5. Inventories
2. Accounting Changes
                                                                                              Inventories at March 31, 2008 and 2007 consisted of the following:
   Bonuses to directors

                                                                                                                                                   (Millions of yen)            (Thousands of U.S. dollars)
   Effective the year ended March 31, 2007, the Company adopted a new accounting
   standard for directors' bonuses. As a result of the adoption of this accounting                                                               2008            2007              2008               2007
   standard, operating income and income before income taxes and minority interests
   decreased by ´163 million ($1,630 thousand) for the year ended March 31, 2007         Finished goods                                        ´ 2,519          ´ 1,608          $ 25,190            $ 16,080
   from the corresponding amount which would have been recorded under the previous       Work in process                                         28,439           22,014           284,390             220,140
   method. The effect of this change on segment information is described in Note 19.     Raw materials and supplies                              10,453            9,214           104,530              92,140
                                                                                                                                               ´ 41,411         ´ 32,837         $ 414,110           $ 328,370
6. Securities                                                                                                            (c) Information regarding sales of securities classified as other securities for the years
                                                                                                                            ended March 31, 2008 and 2007 are as follows:
(a) Information with respect to marketable securities classified as other securities as of
    March 31, 2008 and 2007 are as follows:                                                                                                                                 (Millions of yen)             (Thousands of U.S. dollars)

                                                                         March 31, 2008                                                                                   2008              2007            2008            2007
                                                 (Millions of yen)                    (Thousands of U.S. dollars)        Proceeds from sales                                 ´Ð               ´89               $Ð              $890
                                                                                                                         Gain on sales                                        Ð                72                Ð               720
                                      Acquisition   Carrying    Unrealized      Acquisition     Carrying    Unrealized   Loss on sales
                                         cost       amount      gain(loss)         cost         amount      gain(loss)                                                        Ð                 Ð                Ð                 Ð

Securities whose fair value exceeds
 their acquisition cost:
  Equity securities                    ´   932       ´ 2,247         ´ 1,314     $ 9,320       $ 22,470     $ 13,140
                                                                                                                         7. Long-Term Debt
  Bonds and debentures                       Ð             Ð               Ð           Ð              Ð            Ð
  Other securities                           Ð             Ð               Ð           Ð              Ð            Ð         Long-term debt at March 31, 2008 and 2007 consisted of the following:
                                       ´   932       ´ 2,247         ´ 1,314     $ 9,320       $ 22,470     $ 13,140
Securities whose acquisition cost
 exceeds their fair value:                                                                                                                                                  (Millions of yen)             (Thousands of U.S. dollars)
  Equity securities                    ´ 625         ´   458         ´ (167)     $ 6,250       $ 4,580       $ (1,670)
                                                                                                                                                                          2008              2007            2008            2007
  Bonds and debentures                       Ð             Ð               Ð            Ð             Ð             Ð
  Other securities                           Ð             Ð               Ð            Ð             Ð             Ð    Unsecured borrowings due 2010 to 2012
                                       ´ 625         ´ 458           ´ (167)     $ 6,250       $ 4,580       $ (1,670)   with weighted average interest rates of        ´ 6,000        ´ 6,000             $ 60,000        $ 60,000
                                                                                                                         1.27% at March 31, 2008 and 1.08% at
                                       ´ 1,557       ´ 2,705         ´ 1,147     $ 15,570      $ 27,050      $ 11,470    March 31, 2007

                                                                         March 31, 2007
                                                 (Millions of yen)                    (Thousands of U.S. dollars)
                                                                                                                             The aggregate annual maturities of long-term debt after March 31, 2008 are as follows:
                                      Acquisition   Carrying    Unrealized      Acquisition     Carrying   Unrealized
                                         cost       amount      gain (loss)        cost         amount     gain (loss)                                                                       Year ending March 31,
Securities whose fair value exceeds                                                                                                                                         (Millions of yen)             (Thousands of U.S. dollars)
 their acquisition cost:
  Equity securities                    ´ 1,472       ´ 3,867         ´ 2,394     $ 14,720      $ 38,670     $ 23,940     2009                                                     ´     Ð                            $      Ð
  Bonds and debentures                       0             0               Ð            0             0            Ð     2010                                                       2,000                              20,000
  Other securities                           Ð             Ð               Ð            Ð             Ð            Ð     2011                                                       2,000                              20,000
                                       ´ 1,472       ´ 3,867         ´ 2,394     $ 14,720      $ 38,670     $ 23,940     2012                                                       2,000                              20,000
                                                                                                                         Total                                                    ´ 6,000                            $ 60,000
Securities whose acquisition cost
 exceeds their fair value:
  Equity securities                    ´   129       ´   128         ´    (0)    $ 1,290       $ 1,280      $     (0)
  Bonds and debentures                       Ð             Ð               Ð            Ð             Ð            Ð
  Other securities                           Ð             Ð               Ð            Ð             Ð            Ð
                                       ´ 129         ´ 128           ´    (0)    $ 1,290       $ 1,280      $     (0)
                                       ´ 1,602       ´ 3,996         ´ 2,393     $ 16,020      $ 39,960     $ 23,930


(b) The aggregate book value of securities with no available fair value as of March 31,
    2008 and 2007 are as follows:


                                                          (Millions of yen)               (Thousands of U.S. dollars)
                                                         2008            2007                 2008          2007
Unlisted stocks                                          ´626            ´626               $6,260         $6,260
8.   Retirement Benefit Plans for Employees                                                                                   9.   Income Taxes


     The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., corporate pension plans, tax-        Income taxes applicable to the Company and its domestic consolidated subsidiaries comprise
     qualified pension plans and lump-sum payment plans, covering substantially all their employees. Eligible employees,           corporation tax, inhabitantsÕ taxes and enterprise tax, which, in the aggregate, resulted in a statutory
     upon termination of employment, are entitled to lump-sum or annuity payments, the amounts of which are determined             tax rate of approximately 40.6% for both 2008 and 2007. Income taxes of the overseas consolidated
     by reference to their basic rates of pay, length of service, and the conditions under which termination occurs.               subsidiaries are based generally on the tax rates applicable in their countries of incorporation.

     The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the                  The tax effects of temporary differences which gave rise to significant portions of the deferred tax
     consolidated balance sheets at March 31, 2008 and 2007 for the CompanyÕs and the consolidated                                 assets and liabilities at March 31, 2008 and 2007 are summarized as follows:
     subsidiariesÕ defined benefit plans:

                                                                                                                                                                                           (Millions of yen)      (Thousands of U.S. dollars)
                                                             (Millions of yen)              (Thousands of U.S. dollars)
                                                                                                                                                                                         2008          2007         2008            2007
                                                          2008           2007                 2008             2007
                                                                                                                              Deferred tax assets:
Retirement benefit obligation                          ´ (24,519)     ´ (24,145)           $ (245,190)     $ (241,450)          Net operating loss carryforwards                          ´ 695          ´ 668      $ 6,950          $ 6,680
Plan assets at fair value                                 13,368         13,189               133,680         131,890           Accrued employeesÕ retirement benefits                    3,333          3,627       33,330           36,270
Unfunded retirement benefit obligation                   (11,150)       (10,955)             (111,500)       (109,550)          Accrued bonuses                                           1,094          1,112       10,940           11,120
Unrecognized actuarial loss                                2,863          2,123                28,630          21,230           Accrued retirement benefits for directors and
Unrecognized prior service cost                             (128)          (124)               (1,280)         (1,240)          corporate auditors                                          336            303         3,360           3,030
Net retirement benefit obligation                         (8,416)        (8,956)              (84,160)        (89,560)          Loss on impairment of fixed assets                          360            494        3,600           4,940
Prepaid pension cost                                         432            118                 4,320           1,180           Depreciation and amortization                               334            314        3,340           3,140
Accrued retirement benefits                            ´ (8,848)      ´ (9,074)             $ (88,480)      $ (90,740)          Provision for losses on construction contracts              371              Ð        3,710               Ð
                                                                                                                                Other                                                     2,248          2,374       22,480          23,740
     Certain domestic consolidated subsidiaries have adopted a simplified method for calculating their                                                                                    8,775          8,895       87,750          88,950
     retirement benefit obligation which is permitted under the accounting standard for retirement benefits.                    Valuation allowance                                      (1,811)        (1,653)     (18,110)        (16,530)
                                                                                                                                                                                          6,964          7,242       69,640          72,420
     The components of retirement benefit expenses for the years ended March 31, 2008 and 2007 are outlined as follows:       Deferred tax liabilities:
                                                                                                                                Deferred gain on sale of property, plant and equipment       973         1,018        9,730          10,180
                                                                                                                                Unrealized gain on securities                                466           973        4,660           9,730
                                                             (Millions of yen)              (Thousands of U.S. dollars)         Negative goodwill                                            351             Ð        3,510               Ð
                                                                                                                                Other                                                          3             5           30              50
                                                          2008           2007                 2008             2007                                                                        1,794         1,996       17,940          19,960
                                                                                                                              Net deferred tax assets                                    ´ 5,169       ´ 5,245     $ 51,690        $ 52,450
Service cost                                              ´1,304          ´1,058              $13,040          $10,580
Interest cost                                                463             460                4,630            4,600
Expected return on plan assets                              (284)           (228)              (2,840)          (2,280)
                                                                                                                                   The effective tax rate reflected in the consolidated statement of income for the year ended March 31,
Amortization of actuarial loss                               329             336                3,290            3,360
                                                                                                                                   2007 differs from the statutory tax rate for the following reasons:
Amortization of prior service cost                             3               3                   30               30
Total                                                     ´1,816          ´1,629              $18,160          $16,290
                                                                                                                                                                                                                    2007
                                                                                                                              Statutory tax rate                                                                   40.6%
     Retirement benefit expenses of certain domestic consolidated subsidiaries, which have been                                 Expenses not deductible for tax purposes                                              3.5
     calculated by a simplified method, are included in service cost in the above table.                                        Revenues not taxable for tax purposes                                                (0.2)
                                                                                                                                Per capital portion of inhabitantsÕ taxes                                             2.4
     In addition to the above, a consolidated subsidiary has recorded premium severance payments of ´104                        Changes in valuation allowance                                                       (6.0)
     million ($1,040 thousand) as a component of restructuring losses for the year ended March 31, 2008.                        Tax credit                                                                           (1.6)
                                                                                                                                Other                                                                                (2.5)
     The assumptions used in the accounting for the above plans were as follows:                                              Effective tax rate                                                                   36.2%

                                                                  2008                                 2007
Discount rate                                                                                                                      As the difference between the statutory tax rate and the effective tax rate was less than 5% of the
                                                                  2.0%                                  2.0%
Expected rates of return on plan assets                                                                                            statutory tax rate, the disclosure of the tax rate reconciliation has been omitted for the year ended
                                                                  2.2%                                  2.0%
                                                                                                                                   March 31, 2008.
10.    Contingent Liabilities                                                                                             Dividends paid in the years ended March 31, 2008 and 2007 are as follows:

      At March 31, 2008, the Company and its consolidated subsidiaries were contingently liable as follows:                                                                                   Resolution
                                                                                                                                                                        2008                                             2007
                                                                 (Millions of yen)      (Thousands of U.S. dollars)
                                                                                                                                                      Annual general           Board of directors     Annual general        Board of directors
As endorsers of trade notes receivable endorsed to vendors             ´100                        $1,000                                               meeting of              meeting held on         meeting of           meeting held on
                                                                                                                                                    shareholders held          October 26, 2007      shareholders held      October 26, 2006
As guarantors of indebtedness, principally of customers                   1                            10                                            on June 27, 2007                                on June 23, 2006

                                                                                                                      Class of shares               Common stock               Common stock          Common stock               Common stock
                                                                                                                      Total cash dividends
                                                                                                                      (Millions of yen)                     ´ 499                       ´ 499                ´ 499                     ´ 499
11.    Land Revaluation
                                                                                                                      (Thousands of U.S. dollars)           $ 4,990                     $ 4,990              $ 4,990                   $ 4,990
      Pursuant to the ÒLaw Concerning the Revaluation of Land,Ó land used for a consolidated subsidiaryÕs             Cash dividends per share
      business operations was revalued on March 31, 2000. The income tax effect of the difference                     (Yen)                                ´     5            ´     5                       ´     5                  ´     5
      between the book value and the revalued amounts have been presented under liabilities as ÒDeferred
                                                                                                                      (U.S. dollars)                       $ 0.05             $ 0.05                        $ 0.05                   $ 0.05
      income taxes on land revaluation accountÓ and the remaining balances have been presented under
      valuation and translation adjustments as ÒLand revaluation accountÓ in the accompanying                         Basis date                    March 31, 2007 September 30, 2007                March 31, 2006       September 30, 2006
      consolidated balance sheets.                                                                                    Effective date                 June 28, 2007 December 3, 2007                   June 26, 2006        December 1, 2006

      Revaluation of the land was determined based on the property tax assessment values in accordance
      with Paragraph 3, Article 2 of the ÒEnforcement Ordinance Concerning Land Revaluation.Ó
                                                                                                                          Dividends whose basis date belongs to the years ended March 31, 2008 and 2007, but effective date of
      The carrying value of the land after revaluation exceeded its fair value by ´220 million ($2,200                    dividends falls in the next years are as follows:
      thousand) and ´225 million ($2,250 thousand) at March 31, 2008 and 2007, respectively.

                                                                                                                                                                                              Resolution
                                                                                                                                                                        2008                                             2007
12.    ShareholdersÕ Equity                                                                                                                                 Annual general meeting                            Annual general meeting
                                                                                                                                                           of shareholders to be held                          of shareholders held
      The Corporation Law of Japan (the ÒLawÓ), which superseded most of the provisions of the                                                                  on June 26, 2008                                on June 27, 2007
      Commercial Code of Japan, went into effect on May 1, 2006. The Law provides that an amount equal
      to 10% of the amount to be distributed as distributions of capital surplus (other than the capital              Class of shares                          Common stock                                      Common stock
      reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and
                                                                                                                      Total cash dividends
      the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25%
      of the common stock account. Such distributions can be made at any time by resolution of the                    (Millions of yen)                                  ´ 499                                             ´ 499
      shareholders, or by the Board of Directors if certain conditions are met, but neither the capital               (Thousands of U.S. dollars)                        $ 4,990                                           $ 4,990
      reserve nor the legal reserve is available for distributions.                                                   Cash dividends per share
                                                                                                                      (Yen)                                           ´     5                                          ´     5
      Movements in treasury stock during the years ended March 31, 2008 and 2007 are summarized as follows:
                                                                                                                      (U.S. dollars)                                  $ 0.05                                           $ 0.05
                                                                                                                      Basis date                               March 31, 2008                                   March 31, 2007
                                                                                 2008                                 Effective date                            June 27, 2008                                    June 28, 2007
                                                                          Number of shares
                                                   March 31, 2007     Increase          Decrease     March 31, 2008
Treasury stock                                      19,815,023         56,945            9,271        19,862,697

                                                                                 2007
                                                                          Number of shares
                                                   March 31, 2006     Increase          Decrease     March 31, 2007
Treasury stock                                      19,773,335         43,844            2,156        19,815,023
13.    Selling, General and Administrative Expenses                                                                                  Breakdown of the impairment loss by asset type for the years ended March 31, 2008 and 2007 are as follows:

      Selling, general and administrative expenses consist primarily of the following for the year ended March 31,
      2008 and 2007:                                                                                                                                                                    (Millions of yen)             (Thousands of U.S. dollars)

                                                                                                                                                                                     2008              2007             2008            2007
                                                         (Millions of yen)            (Thousands of U.S. dollars)
                                                                                                                                 Buildings and structures                                ´10              ´ Ð              $100              $  Ð
                                                        2008         2007                  2008                2007              Machinery, equipment and vehicle                          3                2                30                20
                                                                                                                                 Other assets                                             16                7               160                70
Sales commission                                        ´ 112         ´ 178                $ 1,120             $ 1,780
                                                                                                                                 Total                                                   ´30              ´12              $300              $120
Provision of allowance for doubtful receivable              38            19                   380                 190
Employees salaries and allowances                        6,298         6,380                62,980              63,800
Retirement benefit expenses                                462           458                 4,620               4,580
Accrued bonuses for directors                              152           161                 1,520               1,610
Provision for directorsÕ and corporate auditorsÕ                                                                                 15.     Research and Development Expenses
  retirement benefits                                      212           229                  2,120               2,290
                                                                                                                                       Research and development expenses included in manufacturing cost and selling, general and
Welfare expenses                                         1,237         1,290                12,370              12,900                 administrative expenses for the years ended March 31, 2008 and 2007 amounted to ´2,007 million
Depreciation                                               708           687                 7,080               6,870                 ($20,070 thousand) and ´1,944 million ($19,440 thousand), respectively.
Travel expenses                                          1,153         1,097                11,530              10,970
Experiment and research expenses                         1,444         1,393                14,440              13,930

                                                                                                                                 16.     Amounts per Share


14.    Impairment Loss on Fixed Assets
                                                                                                                                     Amounts per share are summarized as follows:
                                                                                                                                                                                                         Year ended March 31,
      Impairment loss on fixed assets recognized in the consolidated financial statements for the years
      ended March 31, 2008 and 2007 are as follows:
                                                                                                                                                                                               (yen)                        (U.S. dollars)

                                                                                                        2008                                                                         2008              2007             2008            2007
          Location                      Usage                      Category
                                                                                      )   Millions of
                                                                                             yen)       ))   Thousands of
                                                                                                              U.S. dollars   )   Net income                                         ´ 24.53            ´ 38.43             $0.25             $0.38
Yawata-shi, Kyoto                  Management of           Buildings and                    ´ 30               $ 300             Net assets                                          814.56             808.16              8.15              8.08
and other                          parking facilities      structures, machinery,
                                                           equipment and
                                                           vehicles, and
                                                           other assets
                                                                                                        2007
          Location                      Usage                      Category
                                                                                      )   Millions of
                                                                                              yen       ) ) Thousands of )
                                                                                                             U.S. dollars

Meguro-ku, Tokyo                   Management of           Buildings and                    ´ 12               $ 120
and other                          parking facilities      structures, machinery,
                                                           equipment and
                                                           vehicle, and
                                                           other assets

      A consolidated subsidiary recognized impairment losses for parking facilities because operating loss
      had occurred continuously due to low utilization of these facilities. The carrying amount of those
      assets was written down to the nil recoverable amounts and impairment losses were recorded.
17. Leases                                                                                                                 Reserve for loss on impairment of finance leases accounted for as operating leases which is included
                                                                                                                           in other long-term liabilities, amounted to ´11 million ($110 thousand) and ´12 million ($120
(a) LesseesÕ Accounting
                                                                                                                           thousand) at March 31, 2008 and 2007, respectively.

    The following pro forma amounts represent the acquisition costs, accumulated depreciation, impairment of               Future minimum lease payments subsequent to March 31, 2008 for operating leases are summarized as follows:
    assets and net book value of the leased assets as of March 31, 2008 and 2007, which would have been reflected
                                                                                                                                                                                              Year ending March 31,
    in the consolidated balance sheets if finance lease accounting had been applied to the finance leases currently
    accounted for as operating leases:                                                                                                                                          (Millions of yen)                (Thousands of U.S. dollars)

                                                                                                                       2009                                                            ´ 35                                  $ 350
                                                          March 31, 2008                                               2010 and thereafter                                               28                                    280
                                (Millions of yen)                             (Thousands of U.S. dollars)              Total                                                           ´ 64                                  $ 640

                 Acquisition Accumulated Accumulated    Net book   Acquisition Accumulated Accumulated      Net book
                    costs    depreciation impairment     value       costs     depreciation impairment       value
                                             loss                                              loss
                                                                                                                       (b) LessorsÕ Accounting
Machinery,
 equipment and
 vehicles             ´2,794   ´1,453          ´37      ´1,304      $27,940      $14,530        $370        $13,040        The following amounts represent the acquisition costs, accumulated depreciation and net book value of the
                                                                                                                           leased assets relating to finance leases accounted for as operating leases at March 31, 2008 and 2007:
Other assets             65         36              Ð        28         650          360            Ð           280
Total                 ´2,860   ´1,490          ´37      ´1,333      $28,600      $14,900        $370        $13,330                                                                 March 31, 2008
                                                                                                                                                            (Millions of yen)                              (Thousands of U.S. dollars)
                                                          March 31, 2007
                                                                                                                                              Acquisition     Accumulated       Net book      Acquisition        Accumulated         Net book
                                (Millions of yen)                             (Thousands of U.S. dollars)                                       costs         depreciation       value          costs            depreciation         value
                 Acquisition Accumulated Accumulated    Net book   Acquisition Accumulated Accumulated      Net book   Machinery, equipment
                    costs    depreciation impairment     value       costs     depreciation impairment       value                               ´28              ´20             ´7            $280                  $200               $70
                                             loss                                              loss                    and vehicles
Machinery,
 equipment and
 vehicles             ´3,004   ´1,380          ´30      ´1,593      $30,040      $13,800        $300        $15,930                                                                 March 31, 2007

Other assets             69         51              Ð        17         690          510            Ð           170                                         (Millions of yen)                              (Thousands of U.S. dollars)

Total                 ´3,073   ´1,432          ´30      ´1,593      $30,730      $14,320        $300        $16,110                           Acquisition     Accumulated       Net book      Acquisition        Accumulated         Net book
                                                                                                                                                costs         depreciation       value          costs            depreciation         value

                                                                                                                       Machinery, equipment
                                                                                                                                                 ´67               ´60            ´7                $670              $600               $70
    Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated       and vehicles
    financial statements amounted to ´629 million ($6,290 thousand) and ´673 million ($6,730 thousand) for the
    years ended March 31, 2008 and 2007, respectively. Depreciation of the leased assets computed by the
    straight-line method over the respective lease terms and the interest portion included in the lease payments           Lease receipt relating to finance leases accounted for as operating leases in the accompanying
    amounted to ´600 million ($6,000 thousand) and ´30 million ($300thousand), respectively, for the year ended            consolidated financial statements amounted to ´10 million ($100 thousand) and ´31 million ($310
    March 31, 2008, and ´644 million ($6,440 thousand) and ´32million ($320 thousand), respectively, for the year          thousand) for the years ended March 31, 2008 and 2007, respectively. Depreciation of the assets leased
    ended March 31, 2007. Loss on impairment of leased assets amounted to ´9 million ($90 thousand) and ´5                 under finance leases accounted for as operating leases amounted to ´5 million ($50 thousand) and ´9
    million ($50 thousand) for the years ended March 31, 2008 and 2007, respectively. Release of reserve for loss          million ($90 thousand) for the years ended March 31, 2008 and 2007, respectively.
    on impairment of finance leases amounted to ´10 million ($100 thousand) and ´6 million ($60 thousand) for
    the years ended March 31, 2008 and 2007, respectively.                                                                 Future minimum lease receipt subsequent to March 31, 2008 from finance leases accounted for as
                                                                                                                           operating leases are summarized as follows:
    Future minimum lease payments subsequent to March 31, 2008 for finance lease transactions accounted for as
    operating leases are summarized as follows:
                                                                                                                                                                                              Year ending March 31,
                                                                                                                                                                                (Millions of yen)                (Thousands of U.S. dollars)
                                                                       Year ending March 31,
                                                        (Millions of yen)             (Thousands of U.S. dollars)      2009                                                             ´ 4                                     $ 40
                                                                                                                       2010 and thereafter                                                9                                       90
2009                                                        ´   519                            $ 5,190                 Total                                                            ´14                                     $140
2010 and thereafter                                             878                               8,780
Total                                                       ´ 1,397                            $ 13,970                    Future minimum lease receipt includes interest income.
18.    Derivatives                                                                                                               19.      Segment Information


      The Company is exposed to market risk from fluctuation in foreign currency exchange rates and enters into                        The Company and consolidated subsidiaries are primarily engaged in the manufacture and sales of
      derivative instruments in order to reduce such risk. The Company do not hold or issue derivative financial                       transportation equipment and machinery, and also conduct operations in the construction and services sectors.
      instruments for the purpose of speculative trading.
                                                                                                                                       The business segment information of the Company and consolidated subsidiaries for the years ended March 31,
      The forward foreign exchange contracts have aimed to decrease fluctuation of earnings and cash flow by the                       2008 and 2007 are summarized as follows:
      change in the exchange rates in usual operating transaction, the export of the product, the purchase of materials
      etc. Therefore, the forward foreign exchange contracts have been made reasonably in accordance with internal
      policies within the range of existing assets and liabilities in foreign currencies, the payments scheduled in the                                                         Year ended March 31, 2008
      future, and the forecasted income.                                                                                                                                               (Millions of yen)
                                                                                                                                                                                       Business segment
      Derivatives are subject to market risk and credit risk. Market risk is the exposure created by potential fluctuations in
      market conditions, including in changes in foreign exchange rates. Credit risk is the possibility that a loss may result                                              Special       Industrial                                Eliminations
      from a counterpartyÕs failure to perform according to the terms and conditions of contract.                                                            Aircraft       purpose       machinery    Construction     Other           and      Consolidated
                                                                                                                                                                             trucks                                                   corporate

      Because the counterparties to those derivative contracts are limited to major domestic financial institutions              I. Net sales, operating expenses, operating income
      with high credit ratings, the Company do not anticipate any losses arising credit risk.
                                                                                                                                 Net sales:
      Derivative transactions have been made in accordance with internal policies which regulate the authorization               Customers                   ´28,572       ´50,110        ´50,529           ´9,039      ´ 707       ´      Ð      ´138,959
      and credit limit amounts, and the accounting section has managed it collectively.                                          Inter-segment                     Ð           299             34              574       1,753        (2,661)            Ð
                                                                                                                                                              28,572        50,409         50,563            9,613       2,461        (2,661)      138,959
      The contract or notional amounts of the derivative financial instruments held at March 31, 2008 and 2007 are
                                                                                                                                 Operating expenses           27,679        47,340         47,465            9,455       2,223          (213)      133,951
      summarized as follows:
                                                                                                                                 Operating income            ´ 893         ´ 3,069        ´ 3,097           ´ 158       ´ 237        ´(2,448)     ´ 5,008
                                                                              March 31, 2008
                                                             Contracts due                                                       II. Assets, depreciation, impairment loss of fixed assets, capital expenditures

                                                      Within             After                 Fair
                                                                                                                 Gains
                                                                                                                                 Assets                      ´44,204       ´36,255        ´39,867          ´10,591      ´2,574       ´10,713      ´144,206
                                                      one year          one year              value                              Depreciation                  1,344           937          1,026               69         153           296         3,827
                                                                               (Millions of yen)                                 Impairment loss of
                                                                                                                                                                     Ð             Ð            30                 Ð            Ð           Ð            30
                                                                                                                                  fixed assets
Forward foreign exchange contracts:
To sell foreign currencies U.S. dollars               ´ 1,976             ´     Ð            ´ 1,794              ´ 181          Capital expenditures             373           636            607                 6       123           205          1,952

                                                                         (Thousands of U.S. dollars)
                                                                                                                                                                                (Thousands of U.S. dollars)
Forward foreign exchange contracts:
                                                      $19,760             $     Ð            $17,940              $1,810         I. Net sales, operating expenses, operating income
To sell foreign currencies U.S. dollars
                                                                                                                                 Net sales:
                                                                                                                                 Customers                 $285,720       $501,100       $505,290          $90,390     $ 7,070 $       Ð $1,389,590
                                                                              March 31, 2007                                     Inter-segment                    Ð          2,990            340            5,740      17,530   (26,610)         Ð
                                                             Contracts due                                                                                  285,720        504,090        505,630           96,130      24,610   (26,610) 1,389,590
                                                       Within            After                 Fair
                                                                                                                 Gains
                                                                                                                                 Operating expenses         276,790        473,400        474,650           94,550      22,230    (2,130) 1,339,510
                                                      one year          one year              value                              Operating income          $ 8,930        $ 30,690       $ 30,970          $ 1,580     $ 2,370 $ (24,480) $ 50,080
                                                                               (Millions of yen)
                                                                                                                                 II. Assets, depreciation, impairment loss of fixed assets, capital expenditures
Forward foreign exchange contracts:
To sell foreign currencies U.S. dollars               ´ 3,673             ´     Ð            ´ 3,652               ´ 21          Assets                    $442,040       $362,550       $398,670      $105,910        $25,740      $107,130    $1,442,060
                                                                                                                                 Depreciation                13,440          9,370         10,260           690          1,530         2,960        38,270
                                                                         (Thousands of U.S. dollars)
                                                                                                                                 Impairment loss of
Forward foreign exchange contracts:                                                                                                                                  Ð             Ð           300                 Ð            Ð           Ð           300
                                                                                                                                  fixed assets
To sell foreign currencies U.S. dollars               $36,730             $     Ð            $36,520               $ 210
                                                                                                                                 Capital expenditures           3,730         6,360          6,070             60        1,230          2,050        19,520
                                               Year ended March 31, 2007                                                             The disclosure of geographic segment information for the years ended March 31, 2008 and 2007 has been
                                                      (Millions of yen)                                                              omitted because more than 90% of total consolidated sales were recorded in Japan and more than 90% of total
                                                                                                                                     assets were located in Japan.
                                                      Business segment
                                           Special       Industrial                                Eliminations                      Overseas sales, which include export sales of the Company and its domestic consolidated subsidiaries and sales
                            Aircraft       purpose       machinery    Construction     Other           and      Consolidated         (other than exports to Japan) of the foreign consolidated subsidiaries, for the years ended March 31, 2008 and
                                            trucks                                                   corporate
                                                                                                                                     2007 are summarized as follows:
                                                                                                                                                                                                    Year ended March 31, 2008
I. Net sales, operating expenses, operating income (loss)                                                 (Millions of yen)
                                                                                                                                                                                                        (Millions of yen)
Net sales:
Customers                   ´24,616       ´52,446        ´54,791          ´11,433      ´1,162       ´     Ð      ´144,451                                                          Asia            North           Other areas              Total
                                                                                                                                                                                                  America
Inter-segment                     Ð           145             24              680       1,506        (2,358)            Ð
                             24,616        52,592         54,816           12,114       2,668        (2,358)      144,451      Overseas sales                                    ´ 4,043         ´ 11,707            ´ 7,695            ´    23,446
Operating expenses           23,613        49,111         51,520           12,307       2,409           189       139,152      Consolidated net sales                                  Ð                Ð                  Ð                138,959
Operating income(loss)      ´ 1,003       ´ 3,481        ´ 3,295          ´ (193)      ´ 259        ´(2,547)     ´ 5,298
                                                                                                                                                                                                  (Thousands of U.S. dollars)
II. Assets, depreciation, impairment loss of fixed assets, capital expenditures
                                                                                                                                                                                   Asia            North           Other areas              Total
Assets                      ´41,148       ´32,762        ´44,742          ´10,291      ´2,751        ´9,497      ´141,192                                                                         America
Depreciation                  1,200           851            981               50         140           274         3,498
                                                                                                                               Overseas sales                                   $ 40,430        $ 117,070           $ 76,950            $ 234,460
Impairment loss of
                                    Ð             Ð            12                 Ð            Ð           Ð            12     Consolidated net sales                                  Ð                Ð                  Ð            1,389,590
 fixed assets
                                                                                                                               Overseas sales as a percentage of
Capital expenditures           2,975           806            736            742          124           216          5,602     consolidated sales                                   2.9%             8.4%               5.6%                 16.9%

                                               (Thousands of U.S. dollars)                                                                                                                        Year ended March 31, 2007
I. Net sales, operating expenses, operating income (loss)
                                                                                                                                                                                                        (Millions of yen)
Net sales:
                                                                                                                                                                                   Asia            North           Other areas              Total
Customers              $246,160          $524,460       $547,910      $114,330        $11,620      $      Ð $1,444,510                                                                            America
Inter-segment                 Ð             1,450            240          6,800        15,060       (23,580)         Ð
                        246,160           525,920        548,160       121,140         26,680       (23,580) 1,444,510         Overseas sales                                    ´ 4,306          ´ 9,424            ´ 8,368        ´ 22,099
Operating expenses      236,130           491,110        515,200       123,070         24,090         1,890 1,391,520          Consolidated net sales                                  Ð                Ð                  Ð        ´ 144,451
Operating income(loss) $ 10,030          $ 34,810       $ 32,950       $ (1,930)      $ 2,590      $(25,470) $ 52,980
                                                                                                                                                                                                  (Thousands of U.S. dollars)
II. Assets, depreciation, impairment loss of fixed assets, capital expenditures                                                                                                                    North
                                                                                                                                                                                   Asia                            Other areas              Total
                                                                                                                                                                                                  America
Assets                    $411,480       $327,620       $447,420      $102,910        $27,510       $94,970    $1,411,920
Depreciation                12,000          8,510          9,810           500          1,400         2,740        34,980      Overseas sales                                   $ 43,060         $ 94,240           $ 83,680            $ 220,990
Impairment loss of                                                                                                             Consolidated net sales                                  Ð                Ð                  Ð            1,444,510
                                    Ð             Ð           120                 Ð            Ð           Ð           120
 fixed assets                                                                                                                  Overseas sales as a percentage of
                                                                                                                               consolidated sales                                   3.0%             6.5%               5.8%                 15.3%
Capital expenditures         29,750          8,060          7,360           7,420       1,240         2,160         56,020


    As described in Note 2(a), effective the year ended March 31, 2007, the Company adopted a new accounting                   20.    Subsequent Event
    standard for directorsÕ bonuses. As a result of this change, operating expenses of ÒSpecial purpose trucksÓ,
    ÒIndustrial machineryÓ, ÒConstructionÓ, ÒOtherÓ and ÒEliminationsÓ for the year ended March 31, 2007                             The following appropriations of retained earnings of the Company, which have not been reflected in
    increased by ´14 million ($140 thousand), ´50 million ($500 thousand), ´20 million ($200 thousand), ´28                          the accompanying consolidated financial statements for the year ended March 31, 2008, are subject to
    million ($280 thousand) and ´49 million ($490 thousand), respectively, and the respective operating income                       approval be approved at a shareholdersÕ meeting to be held on June 26, 2008:
    decreased by the same amounts as compared with the corresponding amounts which would be recorded under                                                                                   (Millions of yen)       (Thousands of U.S. dollars)
    the previous method.
                                                                                                                               Cash dividends (´5.00 = U.S.$0.050per share)                        ´499                        $4,990
Board of Directors                                                                       Stocks Information (As of March 31, 2008)
    President and Chief Executive Officer   Tadashi Kaneki                                   Share overview
                                                                                             Total number of authorized shares ................ 300,000,000 shares
    Board Director and Senior Vice          Yoshihiro Onishi                                 Total number of shares issued ....................... 119,727,565 shares
    President and Executive Officer
                                                                                             Number of shares per unit ...................................... 1,000 shares
    Board Director and Senior Vice          Kazuo Oshita                                     Number of shareholders ................................................. 10,737
    President and Executive Officer

                                                                                             Breakdown of shareholders
    Board Director and Executive Officer    Keisuke Endo                                        Treasury Stocks ----- 16.59%                                                          Financial Institutions ----- 19.82%
                                                                                                (1)                                                                                   (45)
    Board Director                          Koichi Takatsuka *1                                 19,863,697 shares                                                                     23,727,840 shares
                                            Nobutane Yamamoto *1                                Japanese Individuals and Others
                                                                                                                                                                 Total
                                                                                                                                                                                      Financial Instruments Firms ----- 0.67%
                                                                                                ----- 24.59%
                                                                                                                                                               (10,737)
                                                                                                                                                                                      (53)
                                                                                                (10,385)
                                                                                                                                                             119,727,565
                                                                                                                                                                                      805,928 shares
    Vice President and Executive Officers   Masachika Matsuoka                                  29,441,205 shares
                                                                                                                                                                shares
                                            Yoshikazu Inoue                                                                                                      100%
                                                                                                                                                                                      Other Companies ----- 13.46%
                                            Takashi Sugano                                      Foreign Institutions and Individuals                                                  (116)
                                                                                                ----- 24.87%                                                                          16,118,316 shares
                                                                                                (137)
    Executive Officers                      Mikiaki Kato                                        29,770,579 shares                                                                            (number of shareholders)
                                            Masao Mizuta
                                            Masaharu Ishii
                                            Yasushi Ihara                                    Management index per share (consolidated)
                                            Taku Ikeda
                                                                                               Net asset per share                            Number of shares
    Corporate Auditor                       Norio Maki                                                                                                    38.43
                                            Yasushi Hoshiga                                      783.47 808.16 814.56                            35.36
                                            Takao Koyama *2
                                            Yuka Shimokobe *2                                                                                                     24.53
                                                                   *1 Outside Director
                                            Kyozo Hayashi *2       *2 Outside Auditor


                                                                                                      6.3 007.3 008.3                                6.3 007.3 008.3
                                                                                                200       2     2                              200       2     2

Network
                                                                                             Major shareholders              (As of March 31,2008)
                                                                                                 Order                      Name of shareholders                               Number of Shares Shareholding Ratio
                                                                                                                                                                                    Held              (%)
                                                                                                   1        SANSHIN CO., LTD.                                                    9,293,065            9.31
                                                                                                   2        Japan Trustee Services Bank, Ltd. (Trust Account)                    7,811,000            7.82
                                                                                                   3        The Master Trust Bank of Japan, Ltd. (Trust Account)                 6,067,000            6.08
                                                                                                   4        The Chase Manhattan Bank, N.A. London Secs Lending                   4,046,000            4.05
                                                                                                            Omnibus Account
                                                                                                   5        Hitachi, Ltd.                                                        4,000,337            4.01
                                                                                                   6        State Street Bank and Trust Company 505019                           3,491,000            3.50
                                                                                                   7        ShinMaywa Employees' Stock Ownership                                 2,886,262            2.89
                                                                                                   8        CBNYDFA International Cap Value Portfolio                            2,574,000            2.58
                                                                                                   9        Trust & Custody Services Bank, Ltd.                                  2,518,000            2.52
                                                                                                            (Securities Investment Trust Account)
                                                                                                 10         RBC Dexia Investor Services Bank A/C Lux Non                          1,344,000                 1.35
                                                                                                            Resident/Domestic Rate
Company Profile
    Company Name                          ShinMaywa Industries, Ltd.
    Head Office                           1-1 Shinmeiwa-cho, Takarazuka-shi, Hyogo 665-8550, Japan
    Paid-up Capital                       15,981,967,991 yen
    Founded                               November 5, 1949
    President                             Tadashi Kaneki
    Category of Business                  Transportation Equipment
    Number of Employees                   Consolidated 3,954 / Non-consolidated 2,056 (as of end of March, 2008)
    Number of Affiliate Companies         22



History
    1920      ¥ Kawanishi Machinery Company, forerunner of ShinMaywa Industries, Ltd., founded

    1928      ¥ Kawanishi Aircraft Company Limited established
              ¥ Kawanishi Machinery Company transferred Aircraft DivisionÕs entire business to Kawanishi Aircraft Company

    1949      ¥ Shin Meiwa Industry Company Limited (now ShinMaywa Industries, Ltd.) established
              ¥ first Rear Dump Body and Tipping Gear completed

    1950      ¥ Production of aircraft components commenced

    1954      ¥ First Self-priming Pump completed

    1956      ¥ First Automatic Wire Stripping Machine completed

    1964      ¥ First Rotary & Vertical Type Car Parking System developed

    1969      ¥ Production of Aircraft Passenger Boarding Bridge commenced

    1973      ¥ ÒTOWN PACKÓ Crushing and Compacting Type Refuse Collector developed

    1975      ¥ First ÒUS-1Ó STOL Search and Rescue Amphibian completed

    1978      ¥ First ÒDUST SCREWÓ Screw Type Refuse Storage and Discharger completed

    1979      ¥ First delivery of Refuse Transfer Station System completed

    1988      ¥ Joint corporation, THAI SHINMEIWA CO., Ltd. (now Thai ShinMaywa Co., Ltd.) established in
                Samut Sakhon, Thailand

    1989      ¥ SMIC (AMERICA) Ltd. (now ShinMaywa (America), Ltd.) established in Los Angeles (now located in El Paso)

    1990      ¥ SMIC (ASIA) PTE.LTD. (now ShinMaywa (Asia) Pte. Ltd.), established in Singapore

    1992      ¥ Production of Wing to Body Fairing for the Boeing 777 commenced

    1997      ¥ ShiMaywa (Malaysia) Sdn. Bhd. established in Kuala Lumpur, Malaysia
              ¥ ShinMaywa (California), Ltd. established in California, U.S

    2004      ¥ ShinMaywa (Shanghai) Trading Co., Ltd. established in Shanghai, China
              ¥ Hitachi, Ltd. transferred its shares of ShinMaywa Industries, making Company independent of Hitachi group

    2005      ¥ ShinMaywa(Bangkok) Co., Ltd. established in Bangkok, Thailand

    2007      ¥ Chongqing Endurance & ShinMaywa Environmental Machinery Co.,Ltd. (presently Chongqing Endurance &
                ShinMaywa Industries, Ltd.) was established as a joint venture company in Ch—ngq“ng, China.
              ¥ Iwafuji Industrial Co., Ltd. has become a group-affiliated company.

    2008      ¥ Representative office established in Dubai, United Arab Emirates

				
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