Income Analysis
During the year under review, despite a slight recovery in 
the second half of the fiscal period, the Japanese 
economy remained sluggish overall because of the 
exceedingly sharp strengthening of the yen in the first 
half of the fiscal year and the effects of a slowdown in the 
U.S.economy. 
  Under these conditions, the Group recorded growth in 
sales, thanks to higher revenues in the Aluminum and 
Copper Sector and the Electronics and Information Sector. 
During the fiscal year, consolidated net sales increased  
10.6%, to ¥1,477.0 billion. In addition, operating income 
jumped 49.9%, to ¥137.3 billon, raising the operating 
margin to 9.3% from 6.9% in the previous year.
  Sales in the Iron and Steel Sector amounted to ¥526.0 
billion, approximately the same as in the previous fiscal 
year. However, operating income jumped 69.1%, to  
¥55.3 billion, due to the effects of overall cost-cutting 
measures.
  In the Aluminum and Copper Sector sales rose  13.5%, 
to ¥317.5 billion, and operating income soared 69.1%, to  
¥23.2 billion. These increases reflected favorable sales of 
aluminum can stock, aluminum sheets for air conditioners,
 and aluminum substrates for magnetic disks.
  Sales in the Machinery  Sector edged up 2.4%, to 
¥463.9 billion, and operating income surged  44.6%, to 
¥36.6 billion. These gains are attributable to favorable 
results in our domestic plant-related business and to 
continued brisk sales of construction machinery.
  In the Electronics and Information Sector, sales were 
up 45.6%, to  ¥117.7 billion, and operating income 
increased 12.7%,to  ¥15.6 billion. These rises were 
supported by the continued strong performances of 
semiconductor related products.
  Sales from Other Businesses increased 21.4%, to 
¥100.2 billion, and operating income rose 28.3%, to ¥8.7 
billion. These gains were due to favorable results in our 
overall business activities, beginning with our 
transportation business.
  On the other hand, net other expenses amounted to     
¥34.6 billon, and  income before income taxes totaled 
¥102.7 billion. After adjustments for income taxes, 
minority interests, and investment gains and losses 
recorded by the equity method, net income amounted to 
¥90.3 billion.

Analysis of Cash Flow and Financial Position
The Group's operating, investing, and  financing 
activities during the year led to a 25.8% net decrease in 
cash and cash equivalents, to ¥77.1 billion.
  Net cash provided by operating activities amounted 
to ¥116.0 billion, up from ¥77.3 billion in the previous 
year.        
  During the fiscal year, the Group allocated ¥103.1 
billion for the purchase of plant and equipment, and 
¥59.9 billion  for the acquisition of  marketable 
securities, investments, and other assets. On the other 
hand, the Group registered  ¥71.1 billion in proceeds 
from the sale of plant and equipment and  proceeds of 
¥120.8 billion from the sale or collection of marketable 
securities, investments and other assets.  As a result, net 
cash provided by investing activities totaled ¥28.9 
billion.
  Net cash used in financing activities amounted to 
¥171.8 billion, compared with  ¥71.0 billion in the 
previous fiscal year. During the fiscal year, we procured  
¥106.4 billion through the issuance of  long-term debt 
and  corporate bonds. On the other hand, the Group 
repaid  ¥125.1 billion  in short-term borrowings while the 
repayment of long-term debt and the redemption of 
bonds was  ¥153.1 billion. 
  Total assets at the end of the year stood at ¥2,371.3 
billion, down 0.8% from the previous fiscal year-end. 
Total stockholders' equity at fiscal year-end was  
¥352.2 billion, up 33.0% from the end of the prior year.
  As a result, the Group's net worth ratio was 14.9%.