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With regard to the global economy in the fiscal year ended March 31, 2011, favorable growth continued in the Asian region, while the U.S. economy sustained its recovery. Overall, the European economy headed toward recovery, through there was significant national variation. Despite the effects of a strong yen, the Japanese economy sustained its recovery. The recovery benefited from improvements in the export environment brought about by overseas economic growth, as well as the economic stimulus policies adopted by the Government of Japan.

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The Nippon Thompson Group (the “Group”) took measures to bring about an early and assured recovery in sales, improve its earnings structure and build a resilient corporate structure.

From the sales perspective, the Group continued to actively develop its key “user-centered, proposal-based sales approach”. The Group endeavored to grow its business with existing customers and to cultivate new markets. In Japan, the Group absorbed its sales subsidiary, Nippon Thompson Sales Co., Ltd., by merger on July 1, 2010. Through this initiative, the Group accelerated its decision-making and endeavored to improve its capabilities for responding to the distributor market by enhancing its ability to offer solutions to customers. Overseas, in addition to strengthening relationship to sales agencies, the Group inaugurated new sales branches in Beijing, Guangzhou and Wuhan under its Chinese subsidiary, IKO-Thompson (Shanghai) Ltd. The Group thus strengthened its foundation to generate demand and expand sales in the Chinese market.

From the product development standpoint, the Group strengthened its “Maintenance-Free Series”, which is designed to reduce environmental impact, in its “Four Rows of Cylindrical Roller-type Linear Motion Guide” lineup. Due to its superior performance, demand for this lineup has been expanding. In addition, the Group developed “Precision Positioning Table Series” made of high-strength aluminum alloy that is both lightweight and compact, enhancing its “Precision Positioning Table Series” lineup.

From the production standpoint, in response to a rapid improvement in orders received for electronics-related industries and overseas markets, the Group made strenuous efforts to improve its supply capabilities. As part of efforts to enhance production systems, the Group absorbed Kasagami Mfg. Co., Ltd. and Mugegawa Mfg. Co., Ltd. by mergers on July 1, 2010. Through this initiative, the Group formed a more efficient production system.

Seen from market trends by region, due to the recovering export environment brought about by economic growth overseas, domestic market demand was particularly strong in electronics-related industries, such as semiconductor and electronic components mounting equipment, as well as machine tools. Demand in Asia remained robust due in part to ongoing investment in infrastructure and manufacturing facilities. Recovering demand in North America and Europe was primarily evident in electronics-related industries, precision machinery and medical equipment.

As a result, although negatively affected by the strong yen, the Group’s net sales increased 72.8% compared with the corresponding period of the previous fiscal year, to ¥43,849 million. On the earnings front, in addition to the effects of increased earnings stemming from increased production, operating income of ¥4,362 million (compared with an operating loss of ¥4,667 million in the corresponding period of the previous fiscal year) as a result of concerted efforts to reduce expenses and costs. Ordinary income of ¥4,112 million was recorded, reversing an ordinary loss of ¥4,739 million in the previous fiscal year, while net income of ¥3,054 million (turning around a net loss of ¥6,061 million for the same period of the previous fiscal year).

Although negatively affected by the strong yen, the Group’s net sales increased 72.8% compared with the corresponding period of the previous fiscal year, to ¥43,849 million. On the earnings front, in addition to the effects of increased earnings stemming from increased production, operating income of ¥4,362 million (compared with an operating loss of ¥4,667 million in the corresponding period of the previous fiscal year) as a result of concerted efforts to reduce expenses and costs. Ordinary income of ¥4,112 million was recorded, reversing an ordinary loss of ¥4,739 million in the previous fiscal year, while net income of ¥3,054 million (turning around a net loss of ¥6,061 million for the same period of the previous fiscal year).

Total assets as of March 31, 2011, totaled ¥86,252 million, an increase of ¥7,990 million compared with the end of the previous fiscal year. This mainly comprised a ¥5,714 million increase in cash and deposits. Notes and accounts receivable-trade rose ¥3,508 million, inventories increased ¥603 million, and investment and other assets decreased ¥1,460 million.

Total liabilities totaled ¥34,281 million, an increase of ¥6,420 million compared with the end of the previous fiscal year. This increase was mainly made up of rises in notes and accounts payable-trade of ¥4,495 million.

Total net assets amounted to ¥51,970 million, an increase of ¥1,569 million compared with the end of the previous fiscal year. The main components were an increase in retained earnings of ¥2,466 million, and a decrease in accumulated other comprehensive income of ¥891 million.

Cash and cash equivalents at the end of this fiscal year totaled ¥21,837 million, an increase of ¥5,758 million compared with the end of the previous year.

Net cash provided by operating activities was ¥6,773 million. The major reasons were income before income taxes of ¥4,006 million, depreciation and amortization of ¥2,457 million, an increase in notes and accounts payable-trade of ¥4,686 million, an increase in notes and accounts receivable-trade of ¥3,632 million, and an increase in inventories of ¥1,223 million.

Net cash used in investing activities totaled ¥137 million. The principal component being ¥1,405 million for the payments for purchase of property, plant and equipment, and ¥1,261 million in proceeds from cancellation of insurance funds.

Net cash provided by financing activities was ¥650 million. This was mainly due to proceeds from long-term bank loans of ¥1,000 million, payments of long-term bank loans of ¥1,282 million, and cash dividends paid of ¥551 million.