AidA EnginEEring, Ltd.

Annual Report 2007

Forming technology bringing products to life

At a GlanceA i d A

Press-manufactured products can be found in a wide range of everyday products, from automobile parts and electronic components such as computers and mobile phones to bodies for air conditioners, refrigerators and compressors, stainless steel kitchen appliances and wristwatch casings. They are an indispensable part of our daily lives.

Forming technology bringing products to life

Automobile parts

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Prof ileThe widespread use of manufactured products would not

be possible without advanced press technologies. Many of

the parts for automobiles and household appliances, from

the chassis to the various components, are the product of

pressing. Cans for food and drinks are also manufactured

by pressing.

Pressing technology allows for a large volume of identical

products to be produced in a short period of time, making

possible the cost reductions realized by mass production.

It would not be unfair to say that the consumer lifestyles of

today would not be possible without pressing. Press technol-

ogy is also drawing attention as an environmentally friendly

process, due to its resource and energy saving nature.

AIDA ENGINEERING is involved in all aspects of press

manufacturing, from development of pressing techniques

to the manufacture and maintenance of the press machines

themselves. We play a role as the “forming systems builder”

in all aspects of our customers’ manufacturing. Under our

corporate philosophy of “Advance globally as a forming sys-

tems builder, and continue to be a company that contributes

to people and society,” we celebrated 90 years in business in

2007. We will continue to contribute to people and society.

ContentsFinancial Highlights 02

To Our Shareholders 03

Business Overview 07

Corporate Governance 10

Board of Directors and Corporate Auditors 12

Consolidated Six-Year Financial Summary 13

Management’s Discussion and Analysis of Business Results and Financial Position 14

Consolidated Balance Sheets 16

Consolidated Statements of Income 18

Consolidated Statements of Changes in Net Assets 19

Consolidated Statements of Cash Flows 20

Notes to Consolidated Financial Statements 21

Report of Independent Auditors 32

Corporate Data 33

Stock Information 33

Cautionary Statements with Respect to Forward-Looking StatementsStatements made in this annual report with respect to plans and future performance that are not historical fact are forward-looking statements. These statements are based on management’s assumptions and beliefs in light of the information currently avail-able to it. AIDA ENGINEERING cautions that a number of factors could cause actual results to differ materially from those discussed in the forward-looking statements. Such factors include but are not limited to foreign exchange rates, market trends and economic conditions.

Appliance bodies, compressors and other parts

Electronic components such as IC-related parts

and HDDs

bringing

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02 Millions of yen

Thousands of U.S. dollars

2007 2006 2005 2004 2003 2007

For the Year:Net sales ................................................... ¥62,120 ¥54,303 ¥43,679 ¥39,017 ¥35,646 $526,046Operating income (loss) .......................... 5,164 3,412 2,027 657 (469) 43,729Income (loss) before income taxes ......... 4,809 3,168 2,566 565 (1,825) 40,725Net income (loss) ..................................... 3,053 1,792 1,281 289 (1,745) 25,860Capital expenditure ................................. 3,087 1,800 2,240 4,620 4,055 26,146Depreciation and amortization ............... 1,894 1,814 1,883 1,990 1,823 16,040

At the Year End:Total assets ............................................... 90,076 83,510 75,687 65,418 68,118 762,781Total current assets ................................. 52,323 45,994 41,290 29,934 32,037 443,084Total property, plant and equipment ...... 21,100 19,875 19,409 19,028 17,802 178,682Total current liabilities ............................. 24,407 21,464 15,881 8,876 10,230 206,684Total long-term liabilities ......................... 1,531 1,265 392 355 321 12,967Total net assets ........................................ 64,138 60,780 59,413 56,186 57,566 543,128

Yen U.S. cents

Per Share:Net income (loss)—Basic ........................ ¥42.67 ¥23.79 ¥17.40 ¥4.06 (¥22.90) ¢36.13 —Diluted ..................... 42.23 23.52 17.30 4.06 — 35.76Cash dividends ......................................... 13.00 10.00 10.00 8.00 8.00 11.00

Note: U.S. dollar amounts have been translated at the rate of ¥118.09 to $1, the rate prevailing on March 31, 2007.

HighlightsFinancial

AIDA ENGINEERING, LTD. and Consolidated Subsidiaries Years ended March 31

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ShareholdersTo Our

Ninety Years as a Forming Systems BuilderAIDA ENGINEERING was founded in Tokyo by Youkei Aida as Aida

Steelworks. Over the next nine decades we have concentrated on

the development, manufacture and sale of press machines, and

have grown into a global company with production and develop-

ment facilities in Japan, Asia, the Americas and Europe. “AIDA” is

a global brand in the press machine industry, and our equipment

is widely used by many customers. Pressing is a production tech-

nology indispensable to the spread of various industrial products,

while at the same time it is an environmentally friendly process.

The AIDA ENGINEERING Group is a “forming systems builder” sup-

porting the general development of press processing, and intends

to continue to contribute to the business of its customers and the

welfare of society.

Review of Fiscal 2006The decade following the collapse of Japan’s economic bubble

was an extremely difficult period for the press machine industry.

Orders and sales prices continued to fall from their respective

peaks in 1989 and 1991, with AIDA ENGINEERING suffering a con-

solidated net loss in the fiscal year to March 2003, its first since

the Company’s listing. The medium-term management plan in

effect at that time (covering the five years from April 2002 through

March 2007) called for a restructuring of the former functional-

ized organization, replacing it with a product-oriented business

division system. The new organization aimed to strengthen our

earnings capacity by allowing us to respond quickly and accurately

to customer needs, and we feel that it made a certain contribution

to our earnings recovery.

AIDA ENGINEERING, LTD. commemorated the 90th anniversary of its founding in 2007, an event made possible by the support we have received from so many stakeholders.

To further build on that history, we are devoting our full effort to achieving our new medium-term business plan.

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04 We achieved significant increases in both sales and earnings

during fiscal 2006 (ended March 31, 2007). Consolidated net

sales rose 14.4% from the previous fiscal year to ¥62,120 million,

with operating income up 51.3% to ¥5,164 million. Ordinary profit

rose 40.2% to ¥5,186 million, while net income was up 70.4% to

¥3,053 million. The results are befitting of the final year of our

medium-term business plan. Underpinning this success was robust

demand. Capital expenditures in the automotive-related indus-

try—our main customers—over the past two to three years have

exceeded our plan. Orders received in fiscal 2006 reached ¥67,434

million, with an order backlog of ¥43,578 million. Both of these

figures represent new records for the third consecutive year.

In addition to the rising demand for press machines in gen-

eral, another factor behind our positive performance is the new

products we have developed since 2000, which have found wide-

spread acceptance in the market. The Direct Servo Former Series

launched in 2002 utilizes low-RPM, high-torque servo motors de-

veloped by AIDA ENGINEERING together with a direct-drive mecha-

nism to effectively form materials otherwise difficult to process.

The Ultimate Precision Forming Press UL Series launched in 2003

utilizes an innovative, high-rigidity “9-point suspension” that al-

lows for high-precision forming from different dimensions than

were previously available. Both product series have played a vital

role in our earnings recovery over the last few years, and we have

high expectations they will contribute to earnings growth in the

future.

The New Medium-Term Management Plan: Strengthen-ing Strategic ProductsWe have launched a new medium-term management plan with fis-

cal 2007 as the initial year. With this plan, we aim to continue to

build on the successes generated over the past five years. The key

points of the new medium-term management plan are (1) revenue

growth from concentrating business resources in strategic prod-

ucts, (2) enhancement of the global structure, and (3) reinforcing

human resources development.

Specifically, for the strengthening of strategic products, we

plan to focus on the Direct Servo Former Series and UL Series

described previously. These series have innovative features not

found in existing press machines, and we intend to expand our

manufacturing and sales structure for this new type of product

line. We plan to expand the lineup of these “new feature product”

series, and promote their systemization and adoption as standard

equipment to maintain stable quality and profitability. We expect

these series to gradually replace existing products as we develop

a more high-value-added business.

The New Medium-Term Management Plan: Enhancing the Global StructureEnhancing our global structure is essential for AIDA ENGINEERING

to serve its main customers in the automotive-related industry. The

AIDA ENGINEERING Group’s full-scale global development began

about 10 years ago, and the five years of the former medium-term

management plan were in a sense the stage for laying the founda-

tion. The AIDA ENGINEERING Group currently has production and

development facilities in Japan, China, Malaysia, the United States

and Italy, as well as directly managed sales and service locations

in 34 cities in 16 countries, including Japan.

Breaking down the ¥62,120 million in fiscal 2006 sales by re-

gion, Japan accounted for 56.2%, Asia 15.5%, the Americas 12.6%,

and Europe 15.7%. Customers of overseas branches include many

local companies in addition to the local branches of Japanese man-

ufacturers. By type of customer in each region, more than 90% of

customers in the Americas were Japanese companies, with roughly

half Japanese and half local companies in Asia, and around 70%

of customers in Europe local companies. Each location has devel-

oped its own characteristics and customer base.

One of the goals of the new medium-term management plan is

to organically integrate the production facilities in each country to

build a robust global network. Demand for press machines fluctu-

ates greatly, so there are often significant differences in capacity

utilization among the various plants. For example, the U.S. facility

has incurred an operating loss for the past two years as its factory

utilization rate has fallen in the face of significant curbs on capital

expenditures by the “Big Three” automakers. In Japan, on the other

hand, factories have been operating at full capacity to fill a large

order backlog. To allow us to respond flexibly to such fluctuations

in capacity utilization, we are pursuing a range of measures aimed

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05at stabilizing the utilization rate and raising production efficiency,

such as concentrating manufacture of functional components at

certain factories and shipping them to each production facility, or

manufacturing key components at factories near the final delivery

destination.

The New Medium-Term Management Plan: Reinforcing Human Resource DevelopmentThe AIDA ENGINEERING Group had 1,539 employees as of March

31, 2007. In Japan, approximately 130 employees, mostly from the

baby boomer generation, will reach retirement age (60) within the

next five years. Properly passing on to the next generation the

skills and abilities necessary to manufacture and develop press

machines possessed by these older employees is absolutely es-

sential to the future growth of the Company. As part of our specific

measures to reinforce human resource development, we plan to

expand our system to rehire employees who have reached retire-

ment age, as well as implement systems and structures to foster

the development of next-generation engineers. We also believe it

Aida Engineering’s Global Network (Directly managed service locations)

Sales and service location

Manufacturing plant

(As of March 31, 2007)

Aida has directly managed service outlets in 34 cities in 16 countries (including Japan) to provide a closely connected marketing service to its major clients.

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06 necessary to focus our efforts on cultivating personnel more eas-

ily adaptable to the global structure.

Along with these priority measures for the new medium-term

management plan, we have set medium-term targets to steadily

achieve, namely, net sales of ¥70,000 million or higher, an operat-

ing margin of 10% or higher and ROE of 7% or higher, with a payout

ratio of 30%. The AIDA ENGINEERING Group will devote its full

efforts to meeting these targets.

Our First New Factory in Japan in 33 YearsAlthough AIDA ENGINEERING has established new press machine

factories at overseas locations over the years, our last factory

built in Japan was the Tsukui Factory in 1974. During fiscal 2007,

we will build our first new domestic factory in 33 years. We are

also expanding the Tsukui Factory, with operations expected to

start during fiscal 2008. The primary purpose of the new facilities

is to meet customer needs by filling the order backlog that has

grown so significantly. They will also help to strengthen the global

production structure discussed in the preceding section.

Our two existing factories (Sagami and Tsukui) have layouts

that reflect a previous era, and besides being somewhat inef-

ficient, make the introduction of new equipment no easy matter.

The new and expanded facilities will provide ample space with a

revised layout that will allow for the introduction of highly sophis-

ticated machine tools, and will further enhance productivity. An

additional benefit will be a stronger structure in which the produc-

tion of the key functional components of press machines, which

are prone to quality fluctuations, will be concentrated in Japan and

supplied to various manufacturing plants overseas. We also hope

to increase customer satisfaction by equalizing capacity utiliza-

tion at a high level on a global basis, building a structure able to

provide “made by AIDA” quality anywhere in the world.

Message to ShareholdersAIDA ENGINEERING Group’s corporate philosophy is “Advance

globally as a forming systems builder, and continue to be a com-

pany that contributes to people and society.” The automotive-

related industry accounts for two-thirds of our sales, and the con-

sumer electronics and electronics components industry a fourth.

Products from both of these industries are available at prices af-

fordable by the ordinary consumer because of the cost reductions

made possible by mass production. Press processing is vital to the

mass production of such consumer goods. It also generates almost

no scrap waste and consumes little electricity, so is fundamentally

a low-resource, low-energy, environmentally friendly process.

Amid the current growing focus on corporate social responsibility,

the Company’s business itself helps to contribute to society.

To maximize earnings for all stakeholders—including share-

holders, investors, customers, business partners, as well as the

employees and families of the AIDA ENGINEERING Group—we will

continue to develop our foundation as a “forming systems builder,”

and achieve earnings growth over the medium to long term. Thank

you for your continued support of AIDA ENGINEERING.

September 2007

Kimikazu Aida

President & CEO

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07The Role of Press ManufacturingMany manufactured products are expensive when first brought to

market, but as the penetration rate rises mass production brings

down prices, and they become within the reach of more and more

consumers. Press manufacturing is what permits mass produc-

tion. At the prototype and limited production stage components

are cut to their required form using machine tools, but during the

mass production stage are press manufactured. Particularly in

the automotive-related industry, the biggest source of demand

for presses, it is no exaggeration to say that all manner of compo-

nents are produced using press manufacturing.

Another recent development in automobiles is the use of hard

materials such as high-tensile steel plates. As automobile bod-

ies are lightened as a means of improving fuel efficiency, harder

materials are essential to ensuring safety. This increases the dif-

ficulty of press manufacturing, and is driving the need for presses

of greater functionality, precision, and quality.

Source of Demand for Press MachinesPress machines and ancillary devices account for 83.3% of AIDA

ENGINEERING’s sales, and maintenance, repair and other services

16.4% (fiscal 2006). Two-thirds of product sales are to the auto-

motive-related industry and one-quarter is to the consumer elec-

tronics and electronic components industry, with the remainder

to other industries. In the automotive industry presses are used

to produce automobile bodies, chassis, engine parts, drive trains

and other components, and in the electronic component industry

for such parts as lead frames and motors. Press manufacturing is

used in a wide range of other industries as well, to produce such

items as drink cans, eyeglass frames, and syringe needles.

OverviewBusiness

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08 would be unable to provide the proper level of follow-up service to

ensure customer satisfaction. There is practically no difference in

AIDA ENGINEERING’s domestic and overseas sales service struc-

tures, with the largest number of overseas Japanese staff working

as service engineers, followed by sales engineers.

AIDA ENGINEERING has production facilities in five countries,

each of which plays a different role. Facilities in Japan manufacture

specialized, general-purpose and automated presses (electroni-

cally controlled, automated transport, and other models), those in

China and Malaysia general-purpose presses, and in the U.S. and

Italy specialized presses. Going forward, we plan to newly build

and expand production facilities in Japan, and undertake pro-

duction in optimal locations near all major markets, and further

enhance our global purchasing structure.

New Features in the Product LineupNew press technologies and products are not rolled out on an an-

nual basis; the development of innovative technologies generally

happens on a cycle spanning a decade or even two. AIDA ENGINEER-

ING, however, between 2002 and 2003 brought to market such

groundbreaking products as the Direct Servo Former Series, and

the UL Series of ultimate precision forming machines. The Direct

Servo Former Series, as a direct drive system utilizing low-speed,

Sales Service and Production StructureAIDA ENGINEERING’s press machine lineup is broadly divided

into large and mid-sized specialized presses, and small and mid-

sized general-purpose presses. Specialized presses, mainly for

the automotive-related industry, are tailor-made to offer varying

levels of function and precision. General-purpose presses provide

systematic production to a certain degree, and are sold mainly to

the consumer electronics and electronic components industry,

and to small and mid-sized companies. Unlike general machine

tools, presses must be aligned to fit the die used by the client.

Even if sold through a trading or lease company, therefore, AIDA

ENGINEERING’s engineers meet and discuss with the end user to

provide final assembly. The lack of any distributor inventory is one

of the features of the mechanical press market.

The AIDA ENGINEERING Group has service locations in 34 cities

in 16 countries, including Japan, all of which are directly managed.

Because the specifications of each and every machine—both the

general-purpose presses as well as the specialized ones—are dif-

ferent, they all have unique diagrams. Contracting with external

engineers would allow these diagrams, which are AIDA ENGINEER-

ING’s intellectual property, to be viewed by a third party. Further,

since engineers must be able to cope with minute differences in

the specifications, those without the extensive experience and

ample skills of engineers from the AIDA ENGINEERING Group

The AIDA UL Series with a Unique 9-Point Support Mechanism

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working life of dies. Press machines can be used for extended pe-

riods of up to two or three decades, though the amount invested

in dies and molds during that period is estimated to be between

50 and 100 times the cost of the machine. A press machine that

helps extend the life of dies and reduced the investment in dies by

several percentage points, therefore, offers an added incentive for

its adoption.

R&D at AIDA ENGINEERINGPress processing requires a pressing machine and dies. While

AIDA ENGINEERING is mainly a manufacturer of pressing ma-

chines, its research and development division also fabricates dies.

At customer request it develops new crafting techniques, as well

as designs and fabricates dies in order to provide them along with

the presses or automated machinery. In these cases AIDA ENGI-

NEERING is able to exhibit its full potential as a “forming systems

builder.” AIDA ENGINEERING is the only press machine manufac-

turer in Japan able to fabricate dies as well as machines. As a lead-

ing company in the industry, AIDA ENGINEERING will continue to

pursue the potential of press forming.

high-torque servo motors developed by AIDA ENGINEERING, al-

lows the speed and strength of the press to be freely adjusted.

This makes it able to press such difficult-to-process materials as

high-tensile material, stainless steel, and magnesium alloy with a

high degree of efficiency and precision. The UL Series employs an

innovative, highly rigid 9-point suspension structure that allows

precision pressing to within 1/100th of a millimeter without slant-

ing the surface of the pressed material. There is currently no other

such press utilizing a similar concept or precision press structure

anywhere in the world.

The trend in the automobile industry to create cars that are

lightweight and strong—within the confines of environmental con-

cerns and safety—remains unchanged. This means an increase in

the proportion of difficult-to-process material, and greater chal-

lenges for pressing. The current demand for press machines is

not limited to replacement of old equipment, but shows signs of

a trend toward the introduction of new press machines following

the adoption of new materials. The Direct Servo Former Series is

attracting significant attention as part of this trend.

The revolutionary precision of the UL Series has led to its in-

troduction in production plants for those automotive components

that require a particular degree of precision. The UL Series has

even brought inquiries from customers other than those with

whom AIDA ENGINEERING has a long-standing relationship. The

Forming Technology CenterThe AIDA Direct Servo Former with a Direct-Drive Servo Motor

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10 Basic Stance on Corporate GovernanceAIDA ENGINEERING considers strengthening and enhancing its

corporate governance systems to be one of the key priorities of

management. We are working to improve the fairness and sound-

ness of our management functions while bolstering our manage-

ment supervisory functions to accelerate decision-making and

ensure transparency in our operations.

Implementation Status of Corporate Governance MeasuresDirectors, the Board of Directors, Operating Officers, and the Executive

Committee E AIDA ENGINEERING introduced an executive officer

system in April 2001 to subdivide its management supervisory and

business execution functions, and to accelerate decision-making

and clarify lines of authority and responsibility. Our current man-

agement structure consists of five directors (including one exter-

nal director and one representative director) and 13 executive offi-

cers. Four of the five directors also serve as executive officers. As a

general rule, the Board of Directors meets regularly once a month,

and as needed on an ad hoc basis, and fulfills the function of a

decision-making body for key issues mandated by law and as a

supervisory body for business execution. As a general rule, the Ex-

ecutive Committee, which consists of the executive officers, meets

twice a month to discuss management policies and issues, with

the goals of unifying the will and intent of executive management

and accelerating business execution. In addition, in order to main-

tain an accurate and continual understanding of company-wide

business execution, a reporting meeting of the major business

units is convened once a month and it is attended by business

unit general managers as well as company directors, auditors, and

executive officers.

Auditors and the Board of Auditors E AIDA ENGINEERING has adopted

an auditor system. All four auditors are from outside the Company

and two are statutory auditors. We do not have dedicated staff as-

signed to the auditors or the Board of Auditors, but support tasks

required by the auditors are performed as needed by the staff in

the General Affairs Department and other functional departments.

The auditing activities of the auditors consist of attending meet-

ings of the Board of Directors, the Executive Committee, reporting

meetings of the business units, and other meetings as set forth in

the audit implementation plan. In addition, the auditors receive re-

ports from the accounting auditors, listen to business reports, and

review important documentation. They also visit corporate head-

quarters, major operating bases, and consolidated subsidiaries to

examine the status of business execution and the finances of each

division. Through these activities, they seek to accurately ascertain

and audit management execution and to audit the status of legal

compliance and appropriateness of the directors’ execution of their

responsibilities.

Remuneration for Directors and Auditors E For fiscal 2006, remunera-

tion for directors and auditors of AIDA ENGINEERING was as follows:

Number Total amount (unit: million yen)

Directors 6 178(included external director) (1) (6)Auditors (external) 4 30

Accounting Audits E PricewaterhouseCoopers Aarata has replaced

Chuo-Aoyama PricewaterhouseCoopers (Misuzu Audit Corpora-

tion as of September 1, 2006) who lost their auditor’s qualification

for AIDA ENGINEERING. The new firm has been contracted to con-

duct accounting audits in accordance with the requirements of the

Japan Commercial Code and the Securities and Exchange Law. The

audit firm receives compensation in return for conducting such ac-

tivities. There are no conflicts of interest between the auditing firm

and AIDA ENGINEERING nor between the certified public accoun-

tants of that firm who perform the audits and AIDA ENGINEERING.

Furthermore, there are self-imposed safeguards in place to ensure

that the auditing firm and the auditing accountants of that firm are

only involved in the accounting auditing of AIDA ENGINEERING for

set periods of time.

Internal Audits E We have established an independent Internal

Control Auditing Office under the Board of Auditors. The office is

staffed by two associates tasked with verifying the effectiveness

of the internal controls regarding the legal compliance and finan-

cial reporting systems. Additionally, we have established an Audit

Office for Consolidated Subsidiaries aimed at auditing the appro-

priateness and efficiency of the operation processes and manage-

ment and administrative structures at our consolidated subsidiar-

ies. One dedicated employee has been assigned to this office to

perform internal audits by paying visits to the consolidated sub-

sidiaries both in Japan and overseas when deemed necessary.

Risk Management Structure E In our risk management structure,

risks related to the execution of management strategies are

analyzed and appropriate countermeasures are implemented by

GovernanceCorporate

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the relevant business units with exposure to that risk. These mat-

ters are then discussed as needed by the Board of Directors and the

Executive Committee. Risks inherent in daily operations are usually

handled by the respective business units, but depending on the

nature of the risk we have also established a dynamic risk man-

agement structure whose response is dependent upon the poten-

tial impact on operations. This includes committees for health and

safety, product liability, export administration, and other cross-

functional committees, as well as project teams assembled to

address specific risks.

Internal Control SystemIn October 2003 we established the “AIDA Group Action Guide-

lines” in order to promote legal compliance and to conduct busi-

ness activities according to high ethical standards. We also es-

tablished a Compliance Committee designed to strengthen our

internal control system. We subsequently established the Internal

Control Auditing Office to enforce observance of the Action Guide-

lines even more rigorously.

Currently, we are preparing for the implementation of a struc-

ture to “ensure the credibility of financial reports” on the basis of

the Financial Instruments and Exchange Law by conducting sur-

veys to ascertain the actual status of the control environment as

a whole and the control activities within the Company and at its

subsidiaries.

Implementation during Fiscal 2006 (April 2006–March 2007)A series of 12 training sessions addressed to all administrators

and stakeholders in the AIDA group, including its subsidiaries,

were organized in fiscal 2006. These training sessions aimed to

raise awareness of the importance of legal compliance and inter-

nal controls among all the relevant personnel. In addition, in order

to identify potential issues in the bolstering of corporate gover-

nance, an employee survey was conducted that polled employee

consciousness about internal controls and corporate risks.

In an effort to further strengthen the system to “ensure the

credibility of financial reports,” the Internal Control Auditing Office

and the Audit Office for Consolidated Subsidiaries collaborated to

conduct field research on the comprehensive control environment

and internal control status of the consolidated subsidiaries.

The framework of the investor relation activities includes the

following meetings, which are held throughout the year: presen-

tation of first half and fiscal results, three meetings with security

analysts, and individual meetings with investors. These proactive

efforts were made to enable the timely disclosure and transpar-

ency of corporate information.

Status of Corporate GovernanceAt a board meeting held on May 28, 2007, the Board of Directors at

AIDA ENGINEERING, LTD. established rules for the large-scale pur-

chase of the Company’s shares in an effort to prevent undue con-

trol over the Company’s assets and business decisions by those

who were judged inappropriate on the basis of the Company’s fun-

damental policy on the control of the Company. AIDA has decided

to frame a policy entailing countermeasures to be taken when a

large-scale buyer does not comply with the rules. This decision

was approved at the general shareholders meeting, held on June

28, 2007.

General Shareholders Meeting

Board of DirectorsFive directors including one

external director

Board of AuditorsFour Auditors

(All are external)

Accounting Auditor

President/CEOChairperson of Executive Committee

Executive CommitteeReview and discussion on business issues(Comprising executive officers including

four directors)

Executive director(Business execution)

Departments and Groups

Compliance Committee

Internal Control Auditing Office

Audit Office of Consoli-dated Subsidiaries

Appointment/ Dismissal Supervision Discussion on important

issues and reporting

Audit

Audit Instruction

ReportingReporting

Agreement to Appoint-ment/Re-appointmentJudgment of reasonability of accounting audits

Appointment/Dismissal Appointment/DismissalAppointment/Dismissal

Accounting Audit

Reporting

Reporting

Reporting

Reporting

Instruction

InstructionDiscussion on business issues and reporting

Internal Audit Internal Audit

Instruction and promotion

(Exe

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Instruction

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President & CEO

Kimikazu Aida

Directors

Masaharu Sakaki

Naoyoshi Nakanishi

Nobuyoshi Maeda

Takao Mikoshiba

Photo (above)From left:

Directors Takao Mikoshiba

Masaharu Sakaki

President & CEO Kimikazu Aida

Directors Naoyoshi Nakanishi

Nobuyoshi Maeda

Standing Statutory Auditors

Takeru Yamazaki

Toshiharu Sawada

Statutory Auditors

Koichi Sato

Yoshihiro Masuoka

Board of Directorsand Corporate Auditors

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Millions of yen

2007 2006 2005 2004 2003 2002

For the Year:Orders ..................................................................................... ¥67,434 ¥62,838 ¥53,341 ¥37,910 ¥38,612 ¥36,774Net sales ................................................................................. 62,120 54,303 43,679 39,017 35,646 37,715Cost of sales ........................................................................... 47,180 42,208 34,175 31,894 29,408 31,226Selling, general and administrative expenses .................... 9,776 8,682 7,476 6,466 6,707 6,183Operating income (loss) ........................................................ 5,164 3,412 2,027 657 (469) 305Ordinary profit (loss) ............................................................. 5,186 3,698 2,373 889 (235) 680Income (loss) before income taxes ....................................... 4,809 3,168 2,566 565 (1,825) 783Net income (loss) ................................................................... 3,053 1,792 1,281 289 (1,745) 193Capital expenditure ............................................................... 3,087 1,800 2,240 4,620 4,055 2,708Depreciation and amortization ............................................. 1,894 1,814 1,883 1,990 1,823 1,779Research and development expenses ................................. 1,433 1,448 1,450 1,727 1,953 1,985Net cash provided by (used in) operating activities ............ 4,054 407 3,297 2,501 1,054 (797)Net cash provided by (used in) investing activities ............. (1,275) (1,300) 424 (98) 820 1,797Free cash flow ........................................................................ 2,779 (893) 3,721 2,403 1,874 1,000Net cash provided by (used in) financing activities ............. (1,609) (2,078) 1,502 (1,545) (3,181) (1,614)

At the Year-End:Total assets ............................................................................ 90,076 83,510 75,687 65,418 68,118 74,275Total current assets ............................................................... 52,323 45,994 41,290 29,934 32,037 33,711Total property, plant and equipment .................................... 21,100 19,875 19,409 19,028 17,802 17,923Total current liabilities ........................................................... 24,407 21,464 15,881 8,876 10,230 11,254Total long-term liabilities ...................................................... 1,531 1,265 392 355 321 388Total net assets ...................................................................... 64,138 60,780 59,413 56,186 57,566 62,631Total interest-bearing debt .................................................... — 1,000 — — 82 301Return on equity (%) .............................................................. 4.9 3.0 2.2 0.5 (2.9) 0.3Return on assets (%) ............................................................. 3.5 2.3 1.8 0.4 (2.5) 0.3Shareholders’ equity ratio (%) .............................................. 71.2 72.8 78.5 85.9 84.5 84.3

Yen

Per Share:Net income (loss)—Basic ...................................................... ¥ 42.67 ¥23.79 ¥17.40 ¥4.06 (¥22.90) ¥2.44 —Diluted ................................................... 42.23 23.52 17.30 4.06 — —Cash dividends ....................................................................... 13.00 10.00 10.00 8.00 8.00 10.00Shareholders’ equity ............................................................. 893.19 849.94 801.36 805.88 801.11 804.55

Number of employees ........................................................... 1,539 1,472 1,375 1,050 1,094 1,198

CONSOLIDATED SIx-YEAr FINANCIAL SummArYAIDA ENGINEERING, LTD. and Consolidated Subsidiaries As of March 31, 2007, 2006, 2005, 2004, 2003 and 2002

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mANAGEmENT’S DISCuSSION AND ANALYSIS OF BuSINESS rESuLTS AND FINANCIAL POSITION

Orders and Sales

During fiscal 2006 (ended March 31, 2007) the press machine manufacturing industry benefited from an increase in capital in-vestments globally in the automotive-related industry—its main source of demand—and in the consumer electronics industry an expanding market worldwide for flat-screen televisions, along with capital investments to produce larger units. Order statistics from the Japan Forming Machinery Association (JFMA) show a record-high ¥244,795 million, a 7.6% increase from the previous fiscal year. Under such circumstances, the AIDA ENGINEERING Group achieved a 7.3% increase in orders to ¥67,434 million, and 14.4% increase in consolidated net sales to ¥62,120 million, both of which are record highs.

results by Business Division and Geographic region

Business Division

L PressMachinesOrders for the subject fiscal year totaled ¥57,084 million (up 5.8% year on year), with net sales of ¥51,771 million (up 14.0%), both re-cord highs. This was due mainly to increases in capital investments globally in both the automotive-related and consumer electronics industries, along with an expansion of press machine production at a European subsidiary.

L ServicesThe service division also marked record highs in orders and net sales, amounting to ¥10,212 million (up 17.7% year on year). This was due mainly to increases in capital investments in the automotive-related industry.

L OtherOrders and net sales totaled ¥136 million (down 35.3% year on year).

Geographic region

L JapanSales rose to ¥45,311 million (up 6.3% from the previous year), with operating income of ¥4,114 million (up 20.7%). This was due mainly to expanded demand for capital investment in the automotive-related industry, and the increase in sales by the service division.

L AsiaSales increased to ¥11,181 million (up 12.5% from the previous year), with operating income of ¥1,323 million (up 30.6%). This was due mainly to an increase in demand for capital investment in the automotive-related industry, and expanded production by subsidiaries in Malaysia and China.

L TheAmericasSales were ¥8,464 million (down 6.8% from the previous year), with an operating loss of ¥190 million recorded for the subject fis-cal year (compared to an operating loss of ¥163 million the previous fiscal year). This was due mainly to the settling down of equipment purchases among Japanese companies, along with continued re-straints on capital investments at U.S. companies.

L EuropeSales rose to ¥10,218 million (up 66.7% from the previous year), with operating income of ¥58 million (compared to an operating loss of ¥736 million the previous fiscal year). This was due mainly to brisk factory construction in the European region by Japanese companies, and improvement in capacity utilization at the subsid-iary in Italy.

Earnings

Gross profit rose 23.5% from the previous fiscal year to ¥14,940 million, with the gross profit margin up 1.8 percentage points to

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24.1%. This was due mainly to the benefit from the rise in net sales, which outpaced the increase in the cost of sales. Selling, general and administrative (SG&A) expenses rose 12.6% to ¥9,776 million, with the ratio of SG&A expenses to net sales falling 0.3 percentage point to 15.7%. Miscellaneous expenses including bonuses and sales commissions also increased, but were absorbed by the rise in income. As a result, operating income rose 51.3% from the previous fis-cal year to ¥5,164 million, with the operating margin up 2.0 per-centage points to 8.3%. In non-operating income and expenses, the Company recorded net non-operating income of ¥22 million, due mainly to interest and dividend income that covered a foreign exchange loss. As a result, ordinary profit rose 40.2% to ¥5,186 million, with the ordinary margin up 1.5 percentage points to 8.3%. In extraordinary gains and losses, the Company recorded a net extraordinary loss of ¥377 million, due mainly to losses on impairment of fixed assets and on sale of investment securities. As a result, income before income taxes rose 51.8% from the pre-vious fiscal year to ¥4,809 million, with the pretax margin up 1.9 percentage points to 7.7%. Net income rose 70.4% from the previous fiscal year to ¥3,053 million, with the net profit margin rising 1.6 percentage points to 4.9%. Dividends per share for the subject fiscal year were set at ¥13.00 per share, ¥3.00 higher than the previous fiscal year, in-cluding ¥1.00 per share as a commemorative dividend for the Com-pany’s 90th anniversary. The payout ratio was 30.5%.

Financial Position

Total assets for the subject fiscal year rose 7.9% from March 31, 2006, to ¥90,076 million. Current assets rose 13.8% to ¥52,323 million, mainly due to increases in notes and accounts receiv-able and inventories in response to strong orders and business

expansion. Fixed assets rose 0.6% to ¥37,752 million, mainly due to an increase in machinery and vehicles, though this was offset by a decrease in investments in securities. Current liabilities rose 13.7% from March 31, 2006, to ¥24,407 million, mainly due to increases in non-trade payable and advanc-es from customers on contracts that followed the business expan-sion. Long-term liabilities rose 21.0% to ¥1,531 million, mainly due to an increase in deferred income tax. Total net assets rose 5.5% from March 31, 2006, to ¥64,138 million, mainly due to an increase in retained earnings in line with the recording of net income. Shareholders’ equity ratio de-clined 1.6 percentage points from March 31, 2006, to 71.2%, with the ratio of net income to net assets up 1.9 percentage points to 4.9%.

Cash Flows

Cash and cash equivalents at March 31, 2007, amounted to ¥11,475 million, an increase of ¥1,492 million from March 31, 2006. Net cash provided by operating activities amounted to ¥4,054 million. This was due mainly to inflows from income before income taxes and the non-cash item depreciation and amortization, which exceeded an increase in inventories and increase in other assets. Net cash used in investing activities amounted to ¥1,275 million. This was due mainly to expenditures for payments for purchase of property, plant and equipment, which exceeded proceeds from sale of investments in securities. Net cash used in financing activities amounted to ¥1,609 mil-lion. This was due mainly to expenditures for repayment of short-term bank loan and cash dividends paid, which exceeded proceeds from disposition of treasury stock.

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Millions of yen

Thousands of U.S. dollars

(Note 3)

ASSETS 2007 2006 2007

Current assets:

Cash on hand and at banks (Notes 2.(3) and 4) .......................................................... ¥ 9,809 ¥9,983 $ 83,066

Notes and accounts receivable, trade (Note 2.(2)(a)) ................................................. 14,326 13,427 121,319

Short-term investments (Notes 2.(3), 2.(6)(a), 4 and 5) ............................................. 1,705 — 14,440

Inventories (Note 2.(5)) ................................................................................................ 22,949 19,963 194,340

Deferred income taxes (Notes 2.(15) and 10) .............................................................. 1,525 1,100 12,917

Other current assets ..................................................................................................... 2,128 1,660 18,025

Allowance for doubtful accounts (Note 2.(4)) ............................................................. (121) (139) (1,025)

Total current assets .............................................................................................. 52,323 45,994 443,084

Fixed assets:

Property, plant and equipment (Notes 2.(7) and (8)):

Buildings and structures .............................................................................................. 21,838 20,748 184,931

Less: Accumulated depreciation .......................................................................... (12,396) (11,640) (104,977)

9,441 9,107 79,953

Machinery and vehicles ................................................................................................ 18,029 16,622 152,678

Less: Accumulated depreciation .......................................................................... (12,904) (12,333) (109,275)

5,125 4,288 43,402

Land ............................................................................................................................... 5,369 5,462 45,471

Construction in progress .............................................................................................. 574 520 4,865

Other equipment ........................................................................................................... 2,511 2,284 21,269

Less: Accumulated depreciation .......................................................................... (1,922) (1,788) (16,279)

589 496 4,989

Total property, plant and equipment ................................................................... 21,100 19,875 178,682

Intangible assets (Note 2.(9)) .......................................................................................... 835 695 7,073

Investments and other assets:

Investments in securities (Notes 2.(6)(a) and 5) ......................................................... 13,309 14,704 112,710

Directors’ insurance reserve fund ................................................................................ 1,057 751 8,955

Deferred income tax (Notes 2.(15) and 10) .................................................................. 16 16 137

Other assets .................................................................................................................. 1,486 1,542 12,588

Allowance for doubtful accounts (Note 2.(4)) ............................................................. (53) (68) (450)

Total investments and other assets .................................................................... 15,817 16,945 133,940

Total fixed assets .................................................................................................. 37,752 37,515 319,696

Total assets ....................................................................................................... ¥90,076 ¥83,510 $762,781

See accompanying notes.

CONSOLIDATED BALANCE SHEETSAIDA ENGINEERING, LTD. and Consolidated Subsidiaries As of March 31, 2007 and 2006

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Thousands of U.S. dollars

(Note 3)

LIABILITIES AND NET ASSETS 2007 2006 2007

Current liabilities: Notes and accounts payable, trade (Note 2.(2)(a)) ................................................. ¥ 5,454 ¥5,870 $ 46,186 Short-term bank loan (Note 7) ................................................................................. — 1,000 — Non-trade payable .................................................................................................... 4,182 2,982 35,416 Income taxes payable ............................................................................................... 1,354 1,464 11,469 Advances from customers on contracts .................................................................. 8,480 6,286 71,815 Accrued warranty costs (Note 2.(10)) ....................................................................... 2,266 1,570 19,189 Accrued bonuses for employees (Note 2.(11)) ......................................................... 699 572 5,924 Accrued bonuses for directors (Note 2.(11)) ........................................................... 94 — 796 Other current liabilities ............................................................................................. 1,876 1,717 15,886 Total current liabilities ...................................................................................... 24,407 21,464 206,684

Long-term liabilities: Deferred income tax (Notes 2.(15) and 10) .............................................................. 1,015 876 8,602 Accrued pension and severance costs for employees (Notes 2.(12) and 8) .......... 198 90 1,682 Accrued directors’ and corporate auditors’ retirement benefits (Note 2.(13)) ...... 298 293 2,524 Other long-term liabilities ........................................................................................ 18 5 158 Total long-term liabilities ................................................................................. 1,531 1,265 12,967 Total liabilities ................................................................................................... 25,938 22,730 219,652

Net assets: Shareholders’ equity (Note 2.(19)): Common stock Authorized: 188,149,000 shares in 2006 188,149,000 shares in 2007 Issued: 79,147,321 shares in 2006 79,147,321 shares in 2007 ............................................................... 7,831 7,831 66,313 Additional paid-in capital ......................................................................................... 13,009 13,031 110,162 Retained earnings ..................................................................................................... 43,078 40,800 364,796 Treasury stock (7,635,749 shares, in 2006) (7,339,611 shares, in 2007) ..................................................................................... (3,548) (3,677) (30,045) Total shareholders’ equity ............................................................................... 60,370 57,984 511,226

revaluation and translation adjustments: Net unrealized gains on “other securities” (Note 2.(6)(a)) ..................................... 2,046 1,917 17,329 Deferred hedge losses (Note 2.(6)(c)) ...................................................................... (25) — (213) Foreign currency translation adjustments (Note 2.(2)(b)) ..................................... 1,745 878 14,785 Total revaluation and translation adjustments .............................................. 3,767 2,796 31,901 Total net assets ................................................................................................. 64,138 60,780 543,128 Commitments and contingent liabilities (Note 14) ........................................................ — — — Total liabilities and net assets ......................................................................... ¥90,076 ¥83,510 $762,781

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CONSOLIDATED STATEmENTS OF INCOmEAIDA ENGINEERING, LTD. and Consolidated Subsidiaries For the years ended March 31, 2007, 2006 and 2005

Millions of yen

Thousands of U.S. dollars

(Note 3)

2007 2006 2005 2007

Net sales ¥62,120 ¥54,303 ¥43,679 $526,046 Cost of sales (Note 11) ........................................................................ 47,180 42,208 34,175 399,528 Gross profit ......................................................................................... 14,940 12,094 9,504 126,517 Selling, general and administrative expenses (Note 11) ................. 9,776 8,682 7,476 82,788 Operating income ............................................................................... 5,164 3,412 2,027 43,729 Interest income .......................................................................... 281 269 161 2,386 Dividend income ........................................................................ 97 97 50 821 Other non-operating income ..................................................... 110 113 191 935 Total non-operating income .............................................................. 489 479 402 4,143 Interest expenses ...................................................................... 8 5 — 75 Loss on sale of short-term investments ................................... — 5 — — Foreign exchange loss ............................................................... 356 92 — 3,020 Other non-operating expenses ................................................. 101 90 57 855 Total non-operating expenses .......................................................... 466 193 57 3,952 Ordinary profit .................................................................................... 5,186 3,698 2,373 43,920 Gain on sale of fixed assets ....................................................... 27 34 40 236 Gain on sale of investments in securities (Note 5) .................. — 4 170 — Gain on reversals of allowance for doubtful accounts ............ 5 34 10 44 Gain on reversals of reserve for directors’

retirement benefits .................................................................... 7 — — 64 Surrender value of insurance .................................................... — — 134 — Other extraordinary gain ........................................................... 5 4 22 45 Total extraordinary gain .................................................................... 46 78 379 390 Loss on sale of fixed assets ....................................................... 1 113 2 11 Loss on disposal of fixed assets ............................................... 67 32 65 567 Impairment loss on fixed assets (Notes 2.(8) and 12) ............. 101 82 — 857 Loss on sale of investment securities (Note 5) ........................ 148 57 — 1,256 Loss on change of pension plan ................................................ — — 87 — Loss on business liquidation ..................................................... — 183 — — Loss on restructuring and reorganization

of our operations in Europe ....................................................... 101 138 — 863 Other extraordinary loss ........................................................... 3 — 29 28 Total extraordinary loss ..................................................................... 423 608 185 3,585 Income before income taxes ............................................. 4,809 3,168 2,566 40,725 Current ........................................................................................ 2,110 1,708 1,064 17,874 Deferred ...................................................................................... (355) (332) 220 (3,010)Income taxes (Notes 2.(15) and 10) ................................................... 1,755 1,375 1,285 14,864 Net income ......................................................................... ¥ 3,053 ¥1,792 ¥1,281 $ 25,860

Yen U.S. cents

2007 2006 2005 2007

Per share: Net income—Basic (Notes 2.(18) and 9) ........................................... ¥42.67 ¥23.79 ¥17.40 ¢36.13 —Diluted (Notes 2.(18) and 9) ........................................ 42.23 23.52 17.30 35.76 Cash dividends (Notes 2.(17) and (18) ............................................... 13.00 10.00 10.00 11.00

See accompanying notes.

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CONSOLIDATED STATEmENTS OF CHANGES IN NET ASSETSAIDA ENGINEERING, LTD. and Consolidated Subsidiaries For the years ended March 31, 2007, 2006 and 2005

Millions of yenNumber of shares of

Common stock Issued

(Thousands)

Common stock

Additional paid-in capital

Retained earnings

Treasury stock

Total shareholders’

equity

Net unrealized

gains on “other

securities”

Deferred

hedge losses

Foreign

currency translation

adjustments

Total revaluation

and translation

adjustments

Total net assets

Balance at March 31, 2004 ............................... 79,147 ¥7,831 ¥12,415 ¥39,085 (¥3,054) ¥56,277 ¥573 — (¥664) (¥91) ¥56,186 Net income .................. — — — 1,281 — 1,281 — — — — 1,281 Net unrealized gains

on “other securities” (Notes 2.(6)(a) and 5) .. — — — — — — 86 — — 86 86

Foreign currency translation adjust-ments (Note 2.(2)(b)) .. — — — — — — — — 355 355 355

Cash dividends ............ — — — (557) — (557) — — — — (557) Treasury stock

transactions, net (–4,419,523 shares) .... — — 633 — 1,428 2,061 — — — — 2,061

Balance at March 31, 2005 ............................... 79,147 7,831 13,048 39,809 (1,625) 59,063 659 — (309) 350 59,413 Net income .................. — — — 1,792 — 1,792 — — — — 1,792 Net unrealized gains

on “other securities” (Notes 2.(6)(a) and 5) .. — — — — — — 1,257 — — 1,257 1,257

Foreign currency translation adjust-ments (Note 2.(2)(b)) .. — — — — — — — — 1,188 1,188 1,188

Cash dividends ............ — — — (741) — (741) — — — — (741) Treasury stock

transactions, net (2,628,635 shares) ...... — — (17) — (2,052) (2,069) — — — — (2,069)

Payment of directors’ bonus and others ........ — — — (60) — (60) — — — — (60)

Balance at March 31, 2006 ............................... 79,147 7,831 13,031 40,800 (3,677) 57,984 1,917 — 878 2,796 60,780 Net income .................. — — — 3,053 — 3,053 — — — — 3,053 Net unrealized gains

on “other securities” (Notes 2.(6)(a) and 5) .. — — — — — — 129 — — 129 129

Foreign currency translation adjust-ments (Note 2.(2)(b)) .. — — — — — — — — 867 867 867

Cash dividends ............ — — — (715) — (715) — — — — (715) Treasury stock trans-

actions, net (–296,138 shares) ......................... — — (21) — 129 107 — — — — 107

Payment of directors’ bonus and others ........ — — — (60) — (60) — (25) — (25) (85)

Balance at March 31, 2007 ............................... 79,147 ¥7,831 ¥13,009 ¥43,078 (¥3,548) ¥60,370 ¥2,046 (¥25) ¥1,745 ¥3,767 ¥64,138

Thousands of U.S. dollars (Note 3)Number of shares of

Common stock Issued

(Thousands)

Common stock

Additional paid-in capital

Retained earnings

Treasury stock

Total shareholders’

equity

Net unrealized

gains on “other

securities”

Deferred

hedge losses

Foreign

currency translation

adjustments

Total revaluation

and translation

adjustments

Total net assets

Balance at March 31, 2006 ............................... 79,147 $66,313 $110,348 $345,499 ($31,144) $491,016 $16,236 — $7,442 $23,678 $514,695 Net income .................. — — — 25,860 — 25,860 — — — — 25,860 Net unrealized gains

on “other securities” (Notes 2.(6)(a) and 5) .. — — — — — — 1,093 — — 1,093 1,093

Foreign currency translation adjust-ments (Note 2.(2)(b)) .. — — — — — — — — 7,342 7,342 7,342

Cash dividends ............ — — — (6,055) — (6,055) — — — — (6,055) Treasury stock trans-

actions, net (–296,138 shares) ......................... — — (185) — 1,099 913 — — — — 913

Payment of directors’ bonus and others ........ — — — (508) — (508) — (213) — (213) (721)

Balance at March 31, 2007 ............................... 79,147 $66,313 $110,162 $364,796 ($30,045) $511,226 $17,329 ($213) $14,785 $31,901 $543,128

See accompanying notes.

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CONSOLIDATED STATEmENTS OF CASH FLOWSAIDA ENGINEERING, LTD. and Consolidated Subsidiaries For the years ended March 31, 2007, 2006 and 2005

Millions of yen

Thousands of U.S. dollars

(Note 3)

2007 2006 2005 2007

Cash flows from operating activities:

Income before income taxes ............................................................. ¥ 4,809 ¥3,168 ¥2,566 $40,725 Adjustments for: Depreciation and amortization ..................................................... 1,894 1,814 1,883 16,040 Impairment loss on fixed assets (Notes 2.(8) and 12) ................. 101 82 — 857 Loss (gain) on sale of short-term investments

and investments in securities ....................................................... 148 58 (169) 1,256 Increase (decrease) in allowance for doubtful accounts ............. (42) (4) 31 (357) Accrued bonuses for employees, net ........................................... 124 84 135 1,055 Accrued warranty costs, net .......................................................... 624 81 (41) 5,292 Accrued pension and severance costs for employees, net ......... 95 56 15 812 Interest and dividend income ........................................................ (378) (366) (211) (3,207) Interest expense ............................................................................ 8 5 — 75 Loss on disposal of property, plant and equipment .................... 67 32 65 567 Loss (gain) on sale of property, plant and equipment ................ (26) 78 (38) (224) Decrease (increase) in notes and accounts

receivable, trade ............................................................................ 1,322 (79) (15) 11,199 (Increase) in inventories ................................................................ (2,459) (3,763) (3,711) (20,831) Increase in notes and accounts payable, trade ........................... 934 485 2,603 7,915 (Increase) in other assets .............................................................. (1,143) (689) (164) (9,686) (Decrease) increase in other assets ............................................. (213) 237 436 (1,808) Payment of directors’ bonus ......................................................... (60) (60) — (508) Other, net ........................................................................................ 108 49 (41) 920 Sub-total ..................................................................................... 5,915 1,269 3,344 50,094 Interest and dividends received .................................................... 381 346 232 3,232 Interest paid ................................................................................... (8) (5) — (75) Income taxes paid .......................................................................... (2,233) (1,203) (279) (18,913)

Net cash provided by operating activities ..................................... 4,054 407 3,297 34,337

Cash flow from investing activities:

Proceeds from sale of short-term investments ........................... — 505 553 — Payments for purchase of property, plant and equipment ......... (2,784) (1,796) (1,031) (23,583) Proceeds from sale of property, plant and equipment ................ 110 138 94 938 Payments for purchase of investments in securities .................. (697) (7,697) (2,601) (5,905) Proceeds from sale of investments in securities ......................... 2,162 7,207 4,944 18,313 Payments for deposits of funds into time deposits ..................... (37) (4) (171) (319) Proceeds from withdrawal of time deposits ................................ — 372 12 — Payments for transfer of business ................................................ — — (1,362) — Payments on purchase of investing securities

due to changes in scope of consolidation (Note 4) ...................... — (42) — — Other, net ........................................................................................ (28) 16 (13) (241)Net cash provided by (used in) investing activities ........................ (1,275) (1,300) 424 (10,798)

Cash flow from financing activities:

Proceeds from short-term bank loan ............................................ — 1,106 — — Repayment of short-term bank loan ............................................. (1,000) (235) — (8,468) Proceeds from long-term bank loan ............................................. — 50 — — Repayment of long-term bank loan .............................................. — (202) — — Proceeds from bond ...................................................................... — — 2,000 — Proceeds from shares to minority shareholders ......................... — 12 — — Retirement of treasury stock ......................................................... (33) (2,318) (21) (285) Proceeds from disposition of treasury stock ............................... 141 248 83 1,199 Cash dividends paid ....................................................................... (717) (739) (559) (6,073)Net cash provided by (used in) financing activities ........................ (1,609) (2,078) 1,502 (13,628)

Effect of exchange rate changes on cash and cash equivalents ......................................................................... 321 533 215 2,723

Net increase (decrease) in cash and cash equivalents ................... 1,492 (2,437) 5,440 12,634 Cash and cash equivalents at the beginning of the year ................. 9,983 12,420 6,980 84,537 Cash and cash equivalents at the end of the year (Notes 2.(3), 4 and 5) ......................................................................... ¥11,475 ¥9,983 ¥12,420 $97,172

See accompanying notes.

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NOTES TO CONSOLIDATED FINANCIAL STATEmENTSAIDA ENGINEERING, LTD. and Consolidated Subsidiaries

Basis of Presenting Consolidated Financial Statements:

The accompanying consolidated financial statements of AIDA ENGINEERING, LTD. (“AIDA”) and its consolidated subsidiaries (collectively, the “Companies”) have been prepared based on the financial statements of AIDA and its consolidated subsidiar-ies and the consolidated financial statements filed with the Director of Kanto Finance Bureau in Japan in accordance with the Securities and Exchange Law. The accounting records of AIDA and its domestic consolidated subsidiaries are maintained in accordance with the provisions set forth in the Japanese Company Law and Securities and Exchange Law, and in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards. The accounting records of overseas- consolidated subsidiaries are maintained in accordance with generally accepted accounting principles prevailing in the respective regions in which they were incorporated. Certain items presented in the consolidated financial statements filed with the Director of the Kanto Finance Bureau in Japan have been reclassified and / or recapitulated and certain notes are added for the convenience of readers outside Japan. The amounts presented in millions of yen are truncated after million and thousands of U.S. dollars after thousands.

Summary of Significant Accounting Policies:

(1) Principles of consolidation Under the Japanese accounting standards, a subsidiary and an affiliate are defined as follows: O a subsidiary: a company in which the reporting entity directly or indirectly holds more than 50% of the voting rights

thereof or which is deemed to be controlled directly or indirectly by the reporting entity; and O an affiliate: a company in which the reporting entity directly or indirectly holds 20% or more of the voting rights thereof or

in which the reporting entity is deemed to exercise significant influence directly or indirectly on its decision making.

In principle all subsidiaries have been consolidated (16 subsidiaries in 2007, 17 subsidiaries in 2006 and 14 subsidiaries in 2005). One subsidiary (ARBIOTEC, LTD.) was excluded from consolidation and the investment in such subsidiary was carried at cost due to immateriality of that company from the view point of consolidated financial position and results of operation.

Consolidated subsidiaries as of March 31, 2007 and for the year then ended are as follows: O Domestic subsidiaries: ACCESS LTD. AIDA BUSINESS CORP. O Overseas subsidiaries: AIDA AMERICA CORP. AIDA ENGINEERING UK LTD. AIDA MANUFACTURING (MALAYSIA) SDN. BHD. AIDA MANUFACTURING (SHANGHAI) LTD. AIDA STAMPING TECHNOLOGY PTE. LTD. AIDA STAMPING TECHNOLOGY (MALAYSIA) SDN. BHD. AIDA STAMPING TECHNOLOGY (THAILAND) CO., LTD. PT AIDA STAMPING TECHNOLOGY INDONESIA AIDA HONG KONG LTD. AIDA CANADA, INC. AIDA SAS AIDA-Pressen GmbH Aida S.r.l. AIDA do BRASIL

(Remarks)One consolidated subsidiary, VERDEX INC. was excluded due to the termination of the liquidation procedure.

All consolidated subsidiaries are wholly owned by AIDA.All significant inter-company transactions, balances and unrealized inter-company profits are eliminated on consolidation.The year-end date of AIDA MANUFACTURING (SHANGHAI) LTD. is December 31, and the year-end dates of all other consoli-dated subsidiaries are consistent with the consolidated balance sheet date. Adjustments have been properly recorded to the accompanying consolidated financial statements for significant transactions during the period between the fiscal year-end of the above mentioned subsidiary and the balance sheet date.

(2) Foreign currency

(a) Translation of foreign currency transactions Foreign currency transactions are generally translated using foreign exchange rates prevailing at the transaction dates. Receivables and payables denominated in foreign currencies are translated at the current exchange rates at the balance sheet date.

(b) Translation of foreign currency financial statements of overseas subsidiaries All assets and liabilities of foreign subsidiaries are translated at the current rates at the respective balance sheet dates whereas the net assets is translated at historical rates. All the income and expense accounts are translated at the average exchange rates for the period.

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Account balances and profit and loss items incurred in relation to the transactions with the parent company are trans-lated at the rates applied by the parent company and the differences on the balance sheet items form a part of the transla-tion adjustments whereas such difference on profit and loss items is charged to the consolidated statements of income as foreign exchange gain or loss.

Foreign currency financial statements translation differences are recorded in the consolidated balance sheets as a separate component of net assets.

(3) Cash and cash equivalents Cash and cash equivalents in the consolidated statements of cash flows are composed of cash on hand, bank deposits able to be withdrawn on demand and short-term highly liquid investments with an original maturity of three months or less and which represent a minor risk of fluctuations in value.

(4) Allowance for doubtful accountsThe allowance for doubtful accounts is provided based on the estimated uncollectible amounts for doubtful receivables in addition to the general provision for normal receivables computed by applying the rate computed based on past credit loss experience.

(5) Inventories Inventories are stated principally at cost. The cost of finished products and work in process is mainly determined by the specific identification method and the cost of raw materials is determined mainly by the first-in first-out (FIFO) method.

(6) Financial instruments The Japanese accounting standard for financial instruments, which cover accounting treatments for short-term investments, investments in securities, derivative financial instruments and hedge accounting, has been applied.

(a) Investments in securities The standard requires all securities, except for those representing equity in subsidiaries and affiliates, to be classified and accounted for as follows:

Trading securities, which are held for the purpose of earning capital gains for a short period, are reported at fair value, and the related unrealized gains and losses are included in earnings for the period. The Companies had no trading securities for the periods reported in the accompanying consolidated financial statements.

Held-to-maturity securities, which are expected to be held to maturity with the positive intent and ability to hold to maturity, are reported at amortized cost. The Companies had no held-to-maturity securities for the periods reported in the accompanying consolidated financial statements.

Securities other than trading securities and held-to-maturity securities are classified as other securities. Other securities with fair market value are recognized at such fair market value at the balance sheet date, and the

related unrealized gain or losses, net of applicable tax effects thereon, are reported in a separate component of net assets. Other than temporary declines in the value of other securities are reflected in current income. Other securities without fair market value are stated at cost; cost being determined using the moving-average method.

(b) Derivative financial instruments In accordance with the accounting standards, all derivatives are recognized as either assets or liabilities at fair value, with changes in fair value charged to current income for the period in which they arise, except for derivatives that are designed as “hedging instruments” (see (c) Hedge accounting below).

(c) Hedge accounting In accordance with the accounting standards, gains or losses arising from changes in fair value of the derivatives desig-nated as “hedging instruments” are deferred as a deferred hedge gains and losses in net asset and are to be charged to income in the same period during which the gains and losses on the hedged items or transactions are recognized.

The derivatives designated as hedging instruments by the Companies are forward foreign exchange contracts and currency options.

(7) Property, plant and equipment Property, plant and equipment, including significant renewals and improvements, are carried at cost. Maintenance and repairs including minor renewals and betterments are charged to income as incurred. Depreciation for property, plant and equipment in AIDA and its domestic subsidiaries are mainly calculated by applying the declining-balance method, whereas those held by the overseas consolidated subsidiaries and the new head office building of AIDA are depreciated by the straight-line method, over the estimated useful lives of the respective assets. When retired or disposed of, the difference between the net book value and sales proceeds is charged or credited to income. Estimated useful lives range from 2 to 50 years for build-ings and structures and from 2 to 10 years for machinery and vehicles.

(8) Impairment lossOn August 9, 2002, the Business Accounting Council of Japan issued new accounting standards entitled “Statement of Opinion on the Establishment of Accounting Standards for Impairment of Fixed Assets”. Further, on October 31, 2003, the Accounting Standards Board of Japan issued Financial Accounting Standards Implementation Guideline No.6 – “Application Guidance on Accounting Standards for Impairment of Fixed Assets”. Effective as of March 31, 2006, the Companies adopted these new ac-counting standards for impairment of fixed assets.

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As a result of adopting this standard and guidance, income before income taxes for the year ended March 31, 2006 decreased by ¥162 million.

(9) Intangible assets Intangible assets including capitalized software costs are carried at cost less accumulated amortization. Capitalized software costs are amortized under the straight-line method over the estimated useful life of 5 years.

(10) Accrued warranty costs Accrued warranty costs are provided in the amount of estimated future warranty cost to be incurred in the period covered by warranty contract.

(11) Accrued bonuses for directors and employees Accrued bonuses for directors and employees are provided based on the estimated amounts expected to be paid to employees after the year end. On November 29, 2005, the Accounting Standards Board of Japan issued new accounting standards entitled “ASBJ Statement No.4 Accounting Standard for Directors’ bonus”. Effective as of March 31, 2007, the Companies adopted this new accounting standard for directors’ bonus. As a result of adopting this standard, operating income, ordinary income and income before income taxes for the year ended March 31, 2007 decreased by ¥94 million (U.S.$796 thousand).

(12) Accrued pension and severance costs for employees Accrued pension cost and severance costs for employees are represented the estimated present value of projected benefit obligations in excess of the fair value of the plan assets, except for the unrecognized actuarial differences. Unrecognized actuarial differences are amortized on a straight-line method mainly over a period of 5 or 10 years from the next fiscal year in which they arise.

(13) Accrued directors’ and corporate auditors’ retirement benefits With respect to AIDA’s directors and corporate auditors, a provision is made for retirement benefits based on internal rules.

(14) Research and development costs Research and development costs are expensed as incurred.

(15) Income taxes The asset and liability method is applied for accounting for income taxes. This method recognizes deferred tax assets and liabilities based on the difference between the financial statement and tax bases of assets and liabilities.

(16) Leases Finance leases other than those that are deemed to transfer the ownership of the leased assets to lessees are accounted for by a method similar to that used for ordinary operating leases. However, all finance leases relating to the overseas consolidated subsidiaries are recognized as purchase of assets on installments payments.

(17) Appropriation of retained earningsUnder the Japanese Company Law and the Articles of Incorporation of the Company, the appropriation of retained earnings proposed by the Board of Directors is subject to approval by the shareholders at a meeting. The appropriations of retained earnings reflected in the accompanying consolidated financial statements include the results of such appropriations appli-cable to the immediately preceding financial year as approved at the shareholders’ meeting, and effected, during the relevant year. Dividends are paid to shareholders on the shareholders’ register as at the end of each financial year. Appropriations of retained earnings reflected in the accompanying consolidated financial statements have been recorded after approval by the shareholders as required under the Japanese Company Law.

(18) Net income per share and cash dividends per shareNet income per share is computed based on the weighted-average number of shares of common stock outstanding during each year. Cash dividends per share, represent dividends declared as applicable to the respective fiscal year.

(19) Presentation of net assets in balance sheetOn December 9, 2005, the Accounting Standards Board of Japan issued new accounting standards entitled “Accounting Stan-dards for Presentation of Net Assets in the Balance Sheet and its Implementation Guidance”. Effective as of March 31, 2007, the Companies adopted these new accounting standards for Presentation of net assets in the balance sheet. The equivalent amount of “Total shareholders’ equity” which has been used in the previous fiscal years is ¥64,163 million (U.S.$543,341 thousand) at March 31, 2007.

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u.S. Dollar Amounts:

The U.S. dollar amounts stated in the consolidated financial statements are included solely for convenience of readers outside Japan. The rate of ¥118.09 = US$1, the approximate rate of exchange as at March 31, 2007, has been used for the purpose of such translation. Those translations should not be construed as representations that the Japanese yen amounts actually represent, or have been or could be converted into U.S. dollars at that rate.

Cash and Cash Equivalents:

Balance and components of cash and cash equivalents at March 31, 2007 and 2006 coincided with the balance of cash on hand and at banks shown in the accompanying consolidated balance sheets ”Cash on hand and at banks” on the consolidated balance sheets and “Cash and cash equivalents at the end of the year” at March 31, 2007 on the consolidated statements of cash flows are reconciled as follows:

Millions of yen

Thousands of U.S. dollars

2007 2006 2007

Cash on hand and at bank ............................................................................................. ¥ 9,809 ¥9,983 $83,066 Add: Securities matured within 1 year ..................................................................... 1,705 — 14,440 Less: Time deposits due over three months ............................................................ (39) — (334)

Cash and cash equivalents ........................................................................................... ¥11,475 ¥9,983 $97,172

Assets and liabilities of company newly consolidated through acquisition are as follows:Millions of yen

VERDEX INC. 2006

Current assets ............... ¥76Fixed assets .................. 133Total assets ................... 209Current liabilities .......... 158Long-term liabilities ...... 152Total liabilities ............... ¥310

Short-term Securities and Investments in Securities:

March 31, 2007

(1) The aggregate cost and market value (carrying value) of other securities with market values at March 31, 2007, were as follows;

Millions of yen

Types of securities Acquisition costMarket value

(carrying value)Unrealized gains

(losses)

Those where market value exceeds acquisition cost: a Stocks ............................................................................................................ ¥1,113 ¥4,804 ¥3,690 b Bonds Other ............................................................................................................ 1,000 1,002 2 c Other .............................................................................................................. 1,005 1,005 0 Sub-total .................................................................................................... 3,118 6,811 3,692Those where market value does not exceed acquisition cost: a Stocks ............................................................................................................ 412 402 (10) b Bonds Other ............................................................................................................ 2,500 2,417 (82) c Other .............................................................................................................. 4,476 4,311 (164) Sub-total .................................................................................................... 7,388 7,131 (257) Total ....................................................................................................... ¥10,507 ¥13,942 ¥3,435

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Thousands of U.S. dollars

Types of securities Acquisition costMarket value

(carrying value)Unrealized gains

(losses)

Those where market value exceeds acquisition cost: a Stocks ............................................................................................................ $9,431 $40,683 $31,252 b Bonds Other ............................................................................................................ 8,468 8,486 18 c Other .............................................................................................................. 8,511 8,512 1 Sub-total .................................................................................................... 26,410 57,683 31,272Those where market value does not exceed acquisition cost: a Stocks ............................................................................................................ 3,490 3,405 (85) b Bonds Other ............................................................................................................ 21,170 20,469 (700) c Other .............................................................................................................. 37,907 36,511 (1,395) Sub-total .................................................................................................... 62,568 60,386 (2,181) Total ....................................................................................................... $88,978 $118,070 $29,091

(2) Other securities sold during the year ended March 31, 2007:Millions of yen

Proceeds Realized gains Realized losses¥2,162 — ¥148

Thousands of U.S. dollarsProceeds Realized gains Realized losses$18,313 — $1,256

(3) Major components of securities whose fair market value is not readily determinable as of March 31, 2007 were as follows:

Carrying value Types of securities

Millions of yen

Thousands of U.S. dollars

Preferred stocks .................................................................................................... ¥1,000 $8,468Unlisted stocks ..................................................................................................... 62 528Equity in an unconsolidated subsidiary .............................................................. 10 84 Total ....................................................................................................... ¥1,072 $9,080

(4) The redemption schedule of securities as of March 31, 2007 was as follows:Millions of yen

Types of securities

Within 1 year

Over 1 year but within 5 years

Over 5 years but within 10 years

Over 10 years

Bonds Other .................................................................................... ¥— ¥1,682 ¥— ¥2,500Other ........................................................................................ — 2,196 — 800 Total ......................................................................... ¥— ¥3,878 ¥— ¥3,300

Thousands of U.S. dollars Types of securities

Within 1 year

Over 1 year but within 5 years

Over 5 years but within 10 years

Over 10 years

Bonds Other .................................................................................... $— $14,243 $— $21,170Other ........................................................................................ — 18,597 — 6,774 Total ......................................................................... $— $32,841 $— $27,944

March 31, 2006

(1) The aggregate cost and market value (carrying value) of other securities with market values at March 31, 2006, were as follows;

Millions of yen

Types of securities Acquisition costMarket value

(carrying value)Unrealized gains

(losses)

Those where market value exceeds acquisition cost: a Stocks ............................................................................................................ ¥1,116 ¥4,732 ¥3,616 Sub-total .................................................................................................... 1,116 4,732 3,616Those where market value dose not exceeds acquisition cost: a Stocks ............................................................................................................ 5 2 (2) b Bonds Other ............................................................................................................ 4,000 3,740 (259) c Other .............................................................................................................. 5,287 5,155 (132) Sub-total .................................................................................................... 9,293 8,899 (394) Total ....................................................................................................... ¥10,409 ¥13,631 ¥3,222

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(2) Other securities sold during the year ended March 31, 2006:Millions of yen

Proceeds Realized gains Realized losses¥7,112 ¥4 ¥57

(3) Major components of securities whose fair market value is not readily determinable as of March 31, 2006 were as follows:

Carrying valueTypes of securities Millions of yen

Preferred stocks ............................................................... ¥1,000Unlisted stocks ................................................................ 62Equity in an unconsolidated subsidiary ......................... 10 Total .................................................................. ¥1,072

(4) The redemption schedule of securities as of March 31, 2006 was as follows:Millions of yen

Types of securities Within 1 yearOver 1 year but within 5 years

Over 5 years but within 10 years Over 10 years

Bonds ................................................................................ Other ............................................................................. ¥— ¥1,969 ¥— ¥3,000Other ................................................................................. — 2,730 — 1,000 Total .................................................................. ¥— ¥4,700 ¥— ¥4,000

Derivative Financial Instruments:

The Companies enter into forward foreign exchange contracts and currency options. The Companies use derivative instruments only for hedging purposes and not for purposes of trading or speculation. Forward exchange contract and currency options, which the Companies use, are exposed to the risk of changes in exchange rates. Forward foreign exchange contracts and currency options are utilized to hedge market risks relating to possible future changes in foreign exchange rates foreign-currency denominated trading accounts. The Companies’ management believes that credit risk relating to derivative instruments, which the Companies use, are relatively low since all of its counter-parties to the derivative instruments are creditworthy financial institutions. These contracts reduce the Companies’ overall exposure to exchange fluctuations by effectively fixing the transaction cost to the Companies. The Companies have internal rules and policies related to derivative transactions, The Corporate Planning and Adminis-tration Department conducts derivative arrangements based on these internal rules and policies, as well as monitoring the effectiveness of the respective hedge arrangements. Market value information on the derivatives outstanding as of March 31, 2007 and 2006 are summarized in the following tables. Derivative transactions to which hedge accounting have been applied are excluded from the table shown below.

Currency related transactions Millions of yen

2007Contract value Market value Unrealized gain

(loss)Contract value total Over 1 year

Forward exchange transactions: Sold- US$ ........................................................................... ¥2,778 ¥ — ¥2,733 ¥45 Euro ........................................................................... 145 — 148 (3) Purchased- US$ ........................................................................... 64 — 65 0 Euro ........................................................................... 126 — 128 2Currency options: Sold- US$ Call .................................................................... ¥5,027 ¥991 ¥ — ¥— Option premiums ..................................................... 106 24 196 (90) Purchased- US$ Put ..................................................................... 5,027 991 — — Option premiums ..................................................... (106) (24) (35) 45

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Thousands of U.S. dollars

2007Contract value Market value Unrealized gain

(loss)Contract value total Over 1 year

Forward exchange transactions: Sold- US$ ........................................................................... $23,526 $ — $23,144 $381 Euro ........................................................................... 1,232 — 1,261 (29) Purchased- US$ ........................................................................... 548 — 556 7 Euro ........................................................................... 1,069 — 1,091 21Currency options: Sold- US$ Call .................................................................... $42,576 $8,396 $ — $ — Option premiums ..................................................... 900 209 1,667 (766) Purchased- US$ Put ..................................................................... 42,576 8,396 — — Option premiums ..................................................... (900) (209) (303) 387

Millions of yen

2006Contract value Market value Unrealized gain

(loss)Contract value total Over 1 year

Forward exchange transactions: Sold- US$ ........................................................................... ¥2 ¥— ¥2 (¥0)Currency options: Sold- US$ Call .................................................................... ¥2,115 ¥— ¥— ¥— Option premiums ..................................................... 31 — 78 (47) Purchased- US$ Put ..................................................................... ¥2,115 — — — Option premiums ..................................................... 31 — 20 10

Short-term Bank Loan:

Short-term bank loan at March 31, 2006 consisted of the following.Millions of yen

Amount Average interest rate Last dueShort-term bank loan ........................................................................................... ¥1,000 0.4% —

There was no short-term bank loan at March 31, 2007. As at March 31, 2006, AIDA had commitment line of credit agreement of syndicated detail. Lead managing underwriter of the syndicate is Mizuho Corporate Bank.

Accrued Pension and Severance Costs for Employees:

AIDA and its domestic subsidiaries maintain a contributory defined benefit welfare pension plan (as defined, the “welfare pension plan”) covering substantially all of their employees. The welfare pension plan is funded in conformity with the funding requirement of the Japanese Welfare Pension Insurance Law. The welfare pension plan covers a portion of the govern-mental welfare pension program and an additional portion under which contributions are made by these companies and their employees. AIDA and its domestic subsidiaries partially changed a pension plan from a defined benefits pension plan to a defined contribution pension plan effective April 1, 2004. Certain overseas consolidated subsidiaries adopt defined benefits pension plan or defined contribution pension plan. In addition to the welfare pension plan stated above, AIDA and its domestic subsidiaries maintain tax qualified pension plans which are defined benefit pension plans covering substantially all of their employees. These companies contribute amounts required to maintain sufficient plan assets to provide for accrued benefits, and such contribution is subject to limitation imposed by Japanese income tax laws for tax deduction. Matters relating to liabilities for retirement benefits as of March 31, 2007 and 2006:

Millions of yen

Thousands of U.S. dollars

2007 2006 2007a Projected benefit obligations ...................................................................... ¥(4,786) ¥(4,705) $(40,535)b Fund assets ................................................................................................... 4,618 4,588 39,112c Unfunded liabilities for retirement benefits a + b ................................. (167) (116) (1,422)d Unrecognized actuarial differences ............................................................ 327 490 2,771e Total c + d ................................................................................................. 159 373 1,348f Prepaid expenses for retirement benefits .................................................. 357 463 3,031g Accrued pension and severance costs for employees e – f ................. ¥ (198) ¥(90) $ (1,682)

Certain overseas consolidated subsidiaries use the simplified method to determine benefit obligations. Expenses for retirement benefits to employees for the years ended March 31, 2007, 2006 and 2005 are summarized as follows:

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Millions of yen

Thousands of U.S. dollars

2007 2006 2005 2007a Service expenses ...................................................... ¥287 ¥278 ¥163 $2,431b Interest costs ............................................................ 92 90 87 781c Expected return on fund assets .............................. (91) (79) (81) (777)d Amortization of actuarial differences ..................... 96 140 118 815e Contribution for pension plan ................................. 129 95 85 1,096f Expenses for retirement benefits ............................ ¥513 ¥524 ¥374 $4,347

Other than expenses for retirement benefits, as shown above contributions to the pension fund of ¥211 million (U.S.$1,794 thousand), ¥184 million and ¥148 million were charged to income for the year ended March 31, 2007, 2006 and 2005, respec-tively. Fund assets calculated based on proportion of contribution to the fund made by AIDA and its subsidiaries are ¥4,394 million (U.S.$37,209 thousand) as of March 31, 2007 and ¥4,199 million as of March 31, 2006, respectively. “Service expenses” of overseas consolidated subsidiaries using the simplified method were included in “Service expenses” above. Matters relat-ing to the calculation basis of liabilities for retirement benefits as of March 31, 2007, 2006 and 2005 are as follows:

2007 2006 2005a Discount rate: ................................................ 2.0% 2.0% 2.0%b Expected rate of return on plan assets: ...... 2.0% 2.0% 2.0%c Method of attributing projected benefits to

periods of services: ......................................Fixed amount

during the periodFixed amount

during the periodFixed amount

during the periodd Amortization of actuarial differences: ........ 5 or 10 years from the

following year of recognition5 or 10 years from the

following year of recognition5 or 10 years from the

following year of recognitione Amortization of prior service cost ............... — 1 year 1 year

Net Income per Share:

Calculation of net income per share for the years ended March 31, 2007, 2006 and 2005;Yen U.S. cents

2007 2006 2005 2007

Net income – Basic* ..................................................... ¥42.67 ¥23.79 ¥17.40 ¢36.13 – Diluted income* .................................... ¥42.23 ¥23.52 ¥17.30 ¢35.76

*The basic facts underlying the calculation of “Net income–Basic” and “Diluted income” are as follows;

Millions of yenThousands of U.S. dollars

2007 2006 2005 2007

Net income ................................................................... ¥ 3,053 ¥1,792 ¥1,281 $25,860Amount not attributable to common shareholders amount paid out as bonuses to directors .................. — ¥60 ¥60 —Net income related to common stock ......................... ¥ 3,053 ¥1,732 ¥1,221 $25,860Average number of shares outstanding during term (Thousands of shares) ................................................. 71,568 72,805 70,184 71,568Potential increase in common stock for the diluted income calculation (Thousands of shares) ................ 744 839 399 744

Income Taxes:

The Companies are subject to number of different income taxes. The applicable statutory tax rates in Japan were approximately 40.6% for the years ended March 31, 2007 and 2006.

(1) Reconciliation of the difference between the effective income tax rate and statutory income tax rate for the years ended March 31, 2007 and 2006 are shown below.

2007 2006

Statutory income tax rate ............................................ 40.6% 40.6%Increase (decrease) in tax rate: ..................................Non-deductible expenses for tax purposes .............. 4.1 0.3Dividend income .......................................................... (0.3) (2.5)Difference of tax rates for overseas subsidiaries ...... (4.6) (9.8)Changes in valuation allowance ................................. (4.0) 21.9Undistributed earnings of overseas subsidiaries ..... — (2.1)Base portion of inhabitant tax .................................... 2.6 2.9Tax credit ...................................................................... (4.8) (4.7)Others ........................................................................... 2.9 (3.2)Effective income tax rate ............................................. 36.5% 43.4%

(2) The major components of deferred income tax assets and liabilities at March 31, 2007 and 2006 are as follows:

Millions of yenThousands of U.S. dollars

2007 2006 2007

Deferred income tax assets: Loss on write-down of investments ........................................................... ¥ 412 ¥329 $ 3,490 Accrued warranty costs ............................................................................... 706 417 5,979 Accrued bonuses for employees ................................................................ 289 209 2,450 Unrealized intercompany profits ................................................................ 163 128 1,388

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Business tax payable .................................................................................. 119 132 1,010 Depreciation expense ................................................................................. 1,139 1,257 9,651 Unrealized loss of stocks ............................................................................ 199 294 1,692 Accrued directors’ and corporate auditors’ retirement benefits ............. 121 119 1,025 Tax losses carried-forward ......................................................................... 1,389 1,465 11,766 Others ........................................................................................................... 346 558 2,934 Subtotal deferred income tax assets ...................................................... 4,887 4,915 41,389 Less: Valuation allowance .......................................................................... (1,979) (2,173) (16,758) Total deferred income tax assets ........................................................... 2,908 2,741 24,630

Deferred income tax liabilities: Unrealized gains on other securities .......................................................... (1,391) (1,304) (11,782) Advanced depreciation for replacement assets ........................................ (833) (854) (7,061) Accrued pension and severance costs for employees .............................. (93) (94) (793) Others ........................................................................................................... (64) (246) (546) Total deferred income tax liabilities ....................................................... (2,384) (2,501) (20,183)

Net deferred income tax assets .......................................................... ¥ 524 ¥239 $ 4,441

research and Development Expenses:

Research and development expenses included in “Cost of sales” and “Selling, general and administrative expenses” for the years ended March 31, 2007, 2006 and 2005 are summarized as follows:

Millions of yenThousands of U.S. dollars

2007 2006 2005 2007

Cost of sales ................................................................... ¥ 982 ¥883 ¥987 $ 8,319Selling, general and administrative expenses ............ 451 564 462 3,822 Total ....................................................................... ¥1,433 ¥1,448 ¥1,450 $12,141

Impairment Loss on Fixed Assets:

The Companies’ business assets are generally grouped by business segment under the Companies’ management accounting system. Idle assets are separately evaluated for impairment on an individual asset level mentioned above. The Companies recorded Impairment Loss on Fixed Assets for the year ended March 31, 2007 is summarized as follows;

Type of assets Location Millions of yenThousands of U.S. dollars

Land ................................................................ Ishikawa Prefecture, Hakusan City ........................ ¥101 $857

The Companies have written off ¥101 million (shown by “Loss on impairment of property, plant and equipment”) for the land as of March 31, 2007. The recoverable value of land is estimated after consideration of the net sales price.

Leases:

The following is a summary of future minimum payments under operating leases and finance leases other than those which are deemed to transfer the ownership of the leased assets as of March 31, 2007, 2006 and 2005:

Millions of yenThousands of U.S. dollars

2007 2006 2005 2007

Operating leases:Due within one year ...................................................... ¥ 98 ¥90 ¥58 $ 836Thereafter ...................................................................... 76 100 74 646 Total ....................................................................... ¥175 ¥191 ¥133 $1,483

Finance leases:Due within one year ...................................................... ¥116 ¥111 ¥115 $ 986Thereafter ...................................................................... 81 149 188 687 Total ....................................................................... ¥197 ¥260 ¥303 $1,674

Lease expenses relating to finance leases which do not transfer ownership of the leased assets for the years ended March 31, 2007, 2006 and 2005 were ¥120 million (U.S.$1,019 thousand), ¥132 million and ¥128 million, respectively. The amounts of future minimum lease expenses under finance leases include the imputed interest lease portion. Pro forma data as of March 31, 2007 and 2006 as to acquisition cost, accumulated depreciation, net book value, deprecia-tion expense and interest expense of the assets leased under finance leases that do not transfer the ownership of leased assets to the lessee are summarized as follows:

Millions of yenThousands of U.S. dollars

2007 2006 2007

Pro forma acquisition cost ............................................................................... ¥508 ¥472 $4,305Pro forma accumulated depreciation .............................................................. (310) (211) (2,631)Pro forma net book value ................................................................................. ¥197 ¥260 $1,674

Pro forma depreciation expense ..................................................................... ¥120 ¥132 $1,019

In the above table, the amounts of acquisition costs and depreciation expenses include the imputed interest portion, and depreciation is based on the straight-line method over the lease term of the leased assets with no residual value.

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Commitment and Contingent Liabilities:

There were no material contingent liabilities at March 31, 2007.

related Party Transactions:

There are no material transactions between AIDA and its related companies and individuals, excluding transactions with consolidated subsidiaries which are eliminated in the consolidated financial statements and other than those disclosed elsewhere in these financial statements, for the years ended March 31, 2007 and 2006.

Segment Information:

(1) Information by business segment -The Companies are primarily engaged in manufacturing and merchandising products in the metal forming machinery and equipment segment. As net sales and operating income from this segment constituted more than 90% of the consolidated sales for the years ended March 31, 2007, 2006 and 2005, the disclosure of business segment information has been omitted.

(2) Information by geographic segment -Sales of the Companies classified by geographic area for the years ended March 31, 2007, 2006 and 2005 are summarized as follows:

Millions of yen

For the year ended March 31, 2007 Japan Asia (*1) Americas (*2) Europe (*3)

Elimination of inter segment sales and expenses Total

Sales to outside customers ....... ¥34,882 ¥9,649 ¥7,820 ¥9,767 ¥— ¥62,120Inter-segment sales ................... 10,428 1,532 643 450 (13,054) — Total sales .............................. 45,311 11,181 8,464 10,218 (13,054) 62,120Operating expenses ................. 41,197 9,857 8,654 10,160 (12,912) 56,956

Operating income (loss) ............ ¥4,114 ¥1,323 (¥190) ¥58 (¥141) ¥5,164

Total assets ........................ ¥79,391 ¥10,666 ¥10,107 ¥10,877 (¥20,966) ¥90,076

Thousands of U.S. dollars

For the year ended March 31, 2007 Japan Asia (*1) Americas (*2) Europe (*3)

Elimination of inter segment sales and

expenses Total

Sales to outside customers ....... $295,392 $81,709 $66,228 $82,716 $— $526,046

Inter-segment sales ................... 88,308 12,974 5,448 3,816 (110,547) — Total sales .............................. 383,700 94,683 71,677 86,532 (110,547) 526,046

Operating expenses .................. 348,861 83,476 73,286 86,038 (109,345) 482,316

Operating income (loss) ............ $34,839 $11,206 ($1,609) $494 ($1,202) $43,729

Total assets ........................ $672,294 $90,327 $85,592 $92,110 ($177,543) $762,781

Notes:(*1) Asia: China / Hong Kong, Singapore, Malaysia, Thailand, Indonesia, Korea.(*2) Americas: U.S.A., Canada, Brazil(*3) Europe: Italy, France, Germany, U.K.

Millions of yen

For the year ended March 31, 2006 Japan Asia (*4) Americas (*5) Europe (*6)

Elimination of inter segment sales and expenses Total

Sales to outside customers ....... ¥32,404 ¥8,828 ¥8,352 ¥4,717 ¥— ¥54,303Inter-segment sales ................... 10,226 1,110 731 1,410 (13,479) — Total sales .............................. 42,630 9,938 9,084 6,128 (13,479) 54,303

Operating expenses ................. 39,223 8,925 9,247 6,864 (13,370) 50,891

Operating income (loss) ............ ¥3,407 ¥1,013 (¥ 163) (¥736) (¥108) ¥3,412

Total assets ........................ ¥75,960 ¥9,765 ¥9,389 ¥9,875 (¥21,480) ¥83,510

Notes:North America is replaced by Americas in year ended March 31, 2006 reflecting addition of AIDA do BRASIL as consolidated subsidiary.(*4) Asia: China / Hong Kong, Singapore, Malaysia, Thailand, Indonesia, Korea.(*5) Americas: U.S.A., Canada, Brazil(*6) Europe: Italy, France, Germany, U.K.

Millions of yen

For the year ended March 31, 2005 Japan Asia (*7) North America (*8) Europe (*9)

Elimination of inter segment sales and

expenses Total

Sales to outside customers ....... ¥28,570 ¥6,465 ¥6,889 ¥1,754 ¥— ¥43,679Inter-segment sales ................... 5,989 523 288 287 (7,088) — Total sales .............................. 34,560 6,989 7,177 2,041 (7,088) 43,679

Operating expenses ................. 32,822 6,189 7,092 2,739 (7,191) 41,652

Operating income (loss) ............ ¥1,737 ¥799 ¥85 (¥697) ¥102 ¥2,027

Total assets ........................ ¥71,840 ¥6,893 ¥7,477 ¥8,634 (¥19,157) ¥75,687

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Notes: (*7) Asia: China / Hong Kong, Singapore, Malaysia, Thailand, Korea(*8) North America: U.S.A., Canada(*9) Europe: Italy, France, Germany, U.K.

(3) Export sales and sales by overseas subsidiaries -Export sales information of the Company for the years ended March 31, 2007, 2006 and 2005 are as follows:

Millions of yenThousands of U.S. dollars

2007 2006 2005 2007

Export sales and sales by overseas subsidiaries: Asia (*1) ..................................................................... ¥12,064 ¥10,599 ¥7,348 $102,164 Americas (*2) ............................................................ 8,000 8,992 6,864 67,750 Europe (*3) ................................................................ 9,575 5,317 4,088 81,086 Others (*4) ................................................................. 467 47 59 3,962

¥30,108 ¥24,956 ¥18,361 $254,963

Percentage against consolidated net sales ................ 48.5% 46.0% 42.0% 48.5%

Notes:North America is replaced by Americas in year ended March 31, 2006 reflecting addition of AIDA do BRASIL as consolidated subsidiary.(*1) Asia: China, Thailand, Malaysia, Indonesia, Korea, etc.(*2) Americas: U.S.A., Canada, Mexico, Brazil, etc.(*3) Europe: Italy, U.K., Germany, Czech Republic, Turkey, Russia, etc.(*4) Others: Australia, etc.

Stock Options:

The following are the number of common shares to be granted for stock options.The date of ordinary

shareholders’ meetingNumber of common

shares granted (shares)Exercise price

per share (exact yen) Exercise periods

I. Stock options to purchase treasury stocks ........... June 29, 1999 740,000 437 From July 1, 2001 to March 31, 2009

June 29, 2000 320,000 519 From July 1, 2002 to March 31, 2010

June 28, 2001 500,000 374 From July 1, 2003 to March 31, 2011

II. Stock option to purchase newly issued shares .... June 27, 2002 410,000 304 From July 1, 2004 to March 31, 2012

June 27, 2003 330,000 388 From July 1, 2005 to March 31, 2013

June 29, 2004 589,000 563 From July 1, 2006 to March 31, 2014

June 29, 2005 924,000 725 From July 1, 2007 to March 31, 2015

3,813,000

The summary of the number of stock options is as follows.

The date of ordinary shareholders’ meetingJune 29,

1999June 29,

2000June 28,

2001June 27,

2002June 27,

2003June 29,

2004June 29,

2005 Total

Exercise price per share (exact yen) 437 519 374 304 388 563 725Number of stock options (1) 473,000 219,000 245,000 117,000 265,000 589,000 915,000 2,823,000Decrease on the exercise of stock options (2) (111,000) (21,000) (45,000) (35,000) (96,000) (30,000) (338,000)Decrease on the lapse of stock options (3) (1,000) (1,000)Number of stock options as of March 31, 2007 (4)=(1)+(2)+(3) 362,000 198,000 200,000 82,000 169,000 559,000 914,000 2,484,000

Subsequent Event:

March 31, 2007:

On June 28, 2007, at the general meeting of shareholders, the following appropriation of retained earnings was approved:Millions of yen Thousands of U.S. dollars

Cash dividends (¥13.00 (U.S.¢11.00) per share) ...... ¥933 $7,904

March 31, 2006:

On June 29, 2006, at the general meeting of shareholders, the following appropriation of retained earnings was approved:Millions of yen Thousands of U.S. dollars

Cash dividends (¥10.00 (U.S.¢8.51) per share) ........ ¥715 $6,087

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COrPOrAtE dAtA(As of March 31, 2007)

L Head Office: 2-10, Ohyama-cho, Sagamihara, Kanagawa 229-1181, Japan

L Phone .................................. (81) 42-772-5231

L Facsimile ............................ (81) 42-772-5263

L Founded .............................. March 1917

L Established ....................... March 25, 1937

L Paid-in Capital ................. ¥7,831 million

L number of Employees .... 1,539

L group Companies:P ACCESS LTD.P AIDA BUSINESS CORP.

L domestic:Yamagata, Oyama, Takasaki, Higashi-Kanto, Nagano, Kanagawa, Hamamatsu, Nagoya, Chubu, Hokuriku, Osaka, Chugoku-Shikoku, Fukuoka

L Overseas:north AmericaP AIDA AMERICA CORP. (U.S.A.)

7660 Center Point 70 Blvd., Dayton, Ohio 45424-6380, U.S.A.Phone: (1) 937-237-2382Facsimile: (1) 937-237-1995

P AIDA CANADA, INC. (CANADA)121 Bradwick Drive, Unit #2, Concord, Ontario, L4K 1K5, CanadaPhone: (1) 905-738-9692Facsimile: (1) 905-738-9695

South AmericaP AIDA do BRASIL (BRAZIL)

Rua Jesuino Arruda 769, 04532-082, Itaim-bibi Sao Paulo (SP), BrazilPhone: (55) 011-30798736Facsimile: (55) 011-30791085

EuropeP AIDA S.r.l. (HEAD OFFICE, LECCO FACILITY)

(ITALY)Corso Europa, 240 23801 Calolziocorte (LC), ItalyPhone: (39) 0341-634111Facsimile: (39) 0341-634151

P AIDA S.r.l. (BRESCIA FACILITY) (ITALY)Via Brescia, 26 25020 Pavone Mella (BS), ItalyPhone: (39) 030-9590111Facsimile: (39) 030-9959377

P AIDA S.r.l. FRANCE (FRANCE)22 Rue Guynemer 78600 Maisons-Laffitte, FrancePhone: (33) 1-3912-6001Facsimile: (33) 1-3912-0070

P AIDA S.r.l. UK (ENGLAND)City Road, Derby DE1 3RP, EnglandPhone: (44) 1332-648200Facsimile: (44) 1332-648221

P AIDA S.r.l. CZECH (CZECH REPUBLIC)Nad Vr-ovskou horou 88/4 101 00 Praha 10, Czech RepublicPhone: (420) 234-690-510Facsimile: (420) 234-690-410

P AIDA PRESSEN GmbH (GERMANY)Sdfeld, 9d 59174 Kamen, GermanyPhone: (49) 2307-43864-20Facsimile: (49) 2307-43864-40

East AsiaP SEOUL OFFICE (KOREA)

Seongji Heights Officetel Rm. 512 702-13, Yeoksam-Dong, Kangnam-Gu, Seoul, 135-080, KoreaPhone: (82) 2-565-7595Facsimile: (82) 2-565-7594

ChinaP AIDA MANUFACTURING (SHANGHAI) LTD.

(CHINA)Hua Jing Road 9, Waigaoqiao Free Trade Zone, Pudong New Area, Shanghai, 200131, ChinaPhone: (86) 21-5046-2066Facsimile: (86) 21-5046-3872

P AIDA HONG KONG, LTD. (CHINA)Unit 901-902, 9/F., 29 Austin Road, Tsimshatsui, Kowloon, Hong KongPhone: (852) 2736-0118Facsimile: (852) 2375-6581

P AIDA HONG KONG, LTD. BEIJING OFFICE (CHINA)Room 1408, Avic Building, No. 10B, Central Road, East 3rd Ring Road, Beijing, 100022, ChinaPhone: (86) 10-6568-2542Facsimile: (86) 10-6568-2543

StOCK inFOrMAtiOn (As of March 31, 2007)

Stock Code ......................................6118Stock Exchange Listing .................. Tokyo Stock Exchange

First SectionNumber of Shares Outstanding ....79,147,321 sharesTrading Unit ....................................1,000 sharesNumber of Shareholders ...............7,335Transfer Agent and Registrar ........ Mizuho Trust and Banking

Co., Ltd.Fiscal Year-End ...............................March 31Ordinary General Shareholders’ Meeting ................June

L Breakdown of issued Shares by type of Shareholder:

％％

％

％

％

P AIDA HONG KONG, LTD. HUA NAN OFFICE (CHINA)12/F, West Wing, Legend Research & Devel-opment Building, High-Tech Industrial Park, Nanshan, Shenzhen, Guangdong, ChinaPhone: (86) 755-2601-3818Facsimile: (86) 755-2601-3618

Southeast AsiaP AIDA MANUFACTURING (MALAYSIA) SDN. BHD.

(MALAYSIA)Plo 524, Jalan Keluli, 81700 Pasir Gudang, Johor, MalaysiaPhone: (60) 7-251-6688Facsimile: (60) 7-252-0688

P AIDA STAMPING TECHNOLOGY (MALAYSIA) SDN. BHD. (MALAYSIA)No. 5 Jalan Pengetua U1/32 Hicom-Glenmarie Industrial Park 40150 Shah Alam, Selangor, MalaysiaPhone: (60) 3-5569-2872Facsimile: (60) 3-5569-2879

P AIDA STAMPING TECHNOLOGY PTE. LTD. (SINGAPORE)22 Woodlands Industrial Park E1 Singapore 757740Phone: (65) 6363-9813Facsimile: (65) 6363-0713

P AIDA STAMPING TECHNOLOGY (THAILAND) CO., LTD. (THAILAND)41/23 Moo 6, Bangna-Trad KM. 16. 5, Tambol Bangchalong, Amphur Bangplee,Samutprakarn 1054010260, ThailandPhone: (66) 2337-0197Facsimile: (66) 2337-0198

P PT AIDA STAMPING TECHNOLOGY INDONESIA (INDONESIA)Ruko Mall Bekasi Fajar Blok B No. 22 Kawasan Industri MM 2100, Cikarang Barat Bekasi - 17520, IndonesiaPhone: (62) 21-8998-2432Facsimile: (62) 21-8998-2433

P AIDA HONG KONG, LTD. PHILIPPINES OFFICE (PHILIPPINES)Unit 1210 12th/F Alpap Bldg.Trade St. Cor. Investment Drive, Madrigal Business Park, Ayala Alabang, Muntinlupa City, PhilippinesPhone: (63) 2-771-1268Facsimile: (63) 2-771-1268

L Major Shareholders:

Number of Shares Held (thousands)

Percentage of Total Issued Shares (%)

The Dai-ichi Mutual Life Insurance Company 5,995 7.58

Nippon Life Insurance Company 3,725 4.71

Japan Trustee Services Bank, Ltd. (Trust Account 4) 3,311 4.18

Meiji Yasuda Life Insurance Company 2,516 3.18

The Master Trust Bank of Japan, Ltd. (Trust Account) 2,367 2.99

Mizuho Corporate Bank, Ltd. 2,179 2.75

The Bank of New York Treaty Jasdic Account (Stand-ing proxy: Mizuho Corporate Bank, Ltd.’s Kabutocho Custody & Proxy Department within the Settlement & Clearing Services Division)

2,005 2.53

Japan Trustee Services Bank, Ltd. (Trust Account) 1,960 2.48

Morgan Stanley & Co. International Limited (Standing proxy: Morgan Stanley Japan Securities Co., Ltd.) 1,859 2.35

Kimikazu Aida 1,288 1.63

AIDA ENGINEERING, LTD. (Japan)

2-10, Ohyama-cho, Sagamihara, Kanagawa 229-1181, Japan

Phone: (81) 42-772-5231 Facsimile: (81) 42-772-5263Printed in Japan

Utilizing 20% post-consumer recycled paper pulp

This annual report is printed on recycled paper.