CONFIDENTIAL

Important messages to an uncertain market

October 23, 2008

2

CONFIDENTIAL

Roadmap

Investors face unprecedented uncertainty

USS Co., Ltd. has a strong opportunity

Important messages to give investors conviction

How does Taiyo Pacific Partners support management?

3

CONFIDENTIAL

Investor psychology in market cycles…

We are here

Market Phase BottomEarly Stage Recovery

Mid-Stage Bull Market

Peak of Bull Market

Bear Market

Asset PriceMovement

FundamentalsImproving but

ignoredSolid underlying

performanceSweet summer of

growth

Optimistic, Overconfidence,

Long-duration projections

Overawareness of deteriorating conditions

ValuationAttractive, but few

takersAbundant bargains

Willingness to pay up

Revised models justify streching

Shocked recognition of

outlandish prices paid

PsychologyExhausion,

disbelief, and demoralization

Doubt, reflection, and conversion

Faith, hope and charity

Euphoria, greed, and extrapolation

Fear, panic, and loathing

Source: David Darst, Global Wealth Management, Morgan Stanley

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CONFIDENTIAL

Market sentiment is extremely low right now

University of Michigan market sentiment index worst in three decades

Chicago Board Options Exchange Volatility Index, measuring implied volatility of index options for S&P 500 over the next 30 days.

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CONFIDENTIAL

Equity investors are panicked

“Market declines are accelerating!Where can I invest???”

“Market declines are accelerating!Where can I invest???”

“In two months, no more Fannie, Freddie, Lehman Brothers, Merrill Lynch,

Northern Rock, Washington Mutual, or

Wachovia. Record bailout of AIG. Who’s

next?”

“In two months, no more Fannie, Freddie, Lehman Brothers, Merrill Lynch,

Northern Rock, Washington Mutual, or

Wachovia. Record bailout of AIG. Who’s

next?”

“How long will a

recession last?

“How long will a

recession last?

“USD 700bn bailout is four times bigger than the Japanese bad loan

problem. Only the beginning?”

“USD 700bn bailout is four times bigger than the Japanese bad loan

problem. Only the beginning?”

“Almost US 45bn dollars were pulled from US

mutual funds two weeks ago. Should I be holding

stocks?”

“Almost US 45bn dollars were pulled from US

mutual funds two weeks ago. Should I be holding

stocks?”

“World stocks lostJPY 2,000 trillion in one year—a value equal to 40% of world GDP!”

“World stocks lostJPY 2,000 trillion in one year—a value equal to 40% of world GDP!”

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CONFIDENTIAL

Investors’ immediate priorities

Minimize losses!

Find earnings performance!

Reduce volatility!

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CONFIDENTIAL

Be the company that satisfies these new priorities

We believe that USS can

attract new investment in the current market

and

retain that investment after the market improves.

Let’s see why…

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CONFIDENTIAL

Roadmap

Investors face unprecedented uncertainty

USS Co., Ltd. has a strong opportunity

Important messages to give investors conviction

How does Taiyo Pacific Partners support management?

9

CONFIDENTIAL

A sensitive market favors defensive stocks…

Sector Return vs TOPIX relative (last 3 months)

(25.0%) (20.0%) (15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0%

Global Service

Steal & Machinary

Electronic Machinary & PrecisionInstruments

Materials

Auto

Construction & Real Estate

Fiance

Communication

Domestic Service

Defensive

Source: Bloomberg

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CONFIDENTIAL

USS has many characteristics of a defensive stock

High earnings visibility!

Low share price volatility! Beta of

0.74!

Attractive risk-return profile! Minimal exposure

to yen appreciation!

Let’s look at these…

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CONFIDENTIAL

USS has outperformed, earnings visibility is very good

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

0

20

40

60

80

100

120

140

160

Gulliver International Co. Ltd. (7599-JP) 39.0 USS Co. Ltd. (4732-JP) 153.8

Relative Strength vs. TOPIX 1st Section17-Oct-2007 to 17-Oct-2008 (Daily)17-Oct-2007=100; Local

Data Source: Exshare ©FactSet Research Systems 2008

10/15/08 downward revision

3/17/08 Downward

revision

9/16/08 downward

revision

1/29/08 upward

revision in dividend

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

0

20

40

60

80

100

120

140

160

Gulliver International Co. Ltd. (7599-JP) 39.0 USS Co. Ltd. (4732-JP) 153.8

Relative Strength vs. TOPIX 1st Section17-Oct-2007 to 17-Oct-2008 (Daily)17-Oct-2007=100; Local

Data Source: Exshare ©FactSet Research Systems 2008

10/15/08 downward revision

3/17/08 Downward

revision

9/16/08 downward

revision

1/29/08 upward

revision in dividend

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CONFIDENTIAL

USS risk-return profile is very attractive

Source: FactSet. Relative return: TSE 33 sector index annualized return relative to TOPIX 1st section over the last one year (October 2007 to October 2008). Risk: measured by standard deviation during the same period

Relative Returns / Risk to TOPIX

Air Transportation

Pulp & Paper

Rubber Products

Construction

Other Financing Business

Other Products

Wholesale Trade

Oil & Coal Products

Iron & Steel

USS

Electric Power & Gas

Land TransportationAgriculture

Foods

Pharmaceutical

Retail Trade

Warehousing

Information & Communication

Banks

Services

Metal ProductsChemicals

Transportation Equipment

Precision

Electric Appliances

Mining

Machinery

Glass & Ceramics Products

Nonferrous Metals

(20.0%)

(15.0%)

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Risk (%)

Ret

urn

(%

)

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CONFIDENTIAL

USS is immune to yen appreciation

USS is domestic-oriented and free from currency fluctuation

TSE 33 Sectors Sales by Region

49%

59%

69%

71%

73%

74%

74%

84%

88%

95%

90%

27%

11%

11%

5%

0%

7%

9%

9%

5%

3%

11%

10%

8%

7%

9%

2%

7%

1%

0%

2%

7%

15%

8%

13%

3%

12%

3%

3%

3%

0%

6%

5%

4%

4%

15%

5%

7%

3%

4%

0%

10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Auto

Elec.Machinery & Pres.Instruments

Steel & Machinery

Materials

Fiance

Global Services

Defensives

Domestic Services

Construction & Real Estate

Communication

USS

Japan US EU Asia Other

(*)

(*): USS 10K 10Q states that oversase sales is less than 10%. Source: Tokyo Stock Exchange

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CONFIDENTIAL

Not just defensive: USS creates shareholder value!

• Investors require a cost of equity value over 9.0% to beat the opportunity cost of owning a stock

• The aggregate ROE value for TOPIX is lower than the cost of equity, which means that most companies on TOPIX destroy shareholder value

•USS’ ROE exceeds the cost of equity, which means USS creates shareholder value

Shareholder value creation

8.90%

12.80%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

USS TOPIX 1st

ROE (%)

Cost of capital 9.0%

Source: Bloomberg

Note: Based on risk free rate of 2% and equity risk premium 5%

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CONFIDENTIAL

Roadmap

Investors face unprecedented uncertainty

USS Co., Ltd. has a strong opportunity

Important messages to give investors conviction

How does Taiyo Pacific Partners support management?

16

CONFIDENTIAL

This interim report is a critical part of USS’ opportunity

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CONFIDENTIAL

Affirm USS’ credibility

• In the current volatility, investors are looking at the management of a company to decide whether the business is reliable.

“Investors will shift away from models, quantitative or otherwise, and back to human beings, where their level of understanding is greater.”

– Quote from “Pinning Down Shape of New-look Financial World,” Financial Times, by Michael Gordon of Fidelity International

• As a result, how you present your results will give investors an important message about the message you are giving.

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CONFIDENTIAL

Affirm USS’ credibility

• Presentation tips to show USS is reliable:

– Be factual• Emphasize that investors have the data needed to evaluate

the company—this helps investors return to USS’ strong fundamentals.

– Give the bad along with the good• Of course, clear disclosure of potentially negative news

helps investors feel that there are no surprises.• USS’ “negatives” are not that bad—contract completions

may have fallen but earnings are much more stable than alternatives.

• If needed, articulate a plan of action to make a negative item better at the time it is disclosed—help investors see management is in control of the situation.

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CONFIDENTIAL

Affirm USS’ credibility

• Presentation tips to show USS is reliable:

– Polish up your Q&A answers

• The current market situation could mean you get unusual questions from investors, analysts or the press.

• Have positive answers to questions related to any impacts on the company from credit crunch or the coming recession.

– Emphasize the company’s strong track record re hitting guidance.

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CONFIDENTIAL

Emphasize USS’ strengths

• Highlight the strength of USS’ balance sheet and lack of debt

• Point out company’s high profitability – OPM >37%; EBITDA margin >47%

• Without naming names, show how the company’s market position and fee model will be a strong advantage even in a weaker economy

• Point out strong dividend policy, record of buybacks returning value to investors

And, of course, you should…

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CONFIDENTIAL

Emphasize USS’ strengths

• Point out the defensive characteristics of your stock…

– Outperformance in a down market, high earnings visibility

– Attractive risk-return profile

– Minimal exposure to yen appreciation

… and reasons to stay invested after a defensive position is no longer necessary.

– Shareholder value creation!

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CONFIDENTIAL

Be proactive

• Media and analysts are a microphone. Take control of the story to make sure that it amplifies what you want investors to hear

– Market confidence can be made or broken by analysts. Stay in touch with analysts to explain any data as needed

– Positive news is a way to recruit additional analysts

• At the same time, do not rely on analysts to get out the message

– Continue to make information available online in Japanese and English

– If needed, get in touch with your largest investors if anything needs explaining

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CONFIDENTIAL

Be proactive

• If needed, refute rumors quickly!

• As some TOPIX companies this month faced one-day drops in share price of over 20%, silence is death in the presence of negative or inaccurate news.

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CONFIDENTIAL

Long-term vision

• Help investors to remember that there is a bright future amid the current turmoil—talk about long-term goals and your mid-term planning to achieve them

• Show the company’s strong, stable performance record. Help investors to feel comfortable with staying put, and with building or adding to a position

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CONFIDENTIAL

Long-term vision

“Good company, but limited growth prospects suggest shares are expensive.”

– Which broker analyst said this? Noboru Terashima at ABN-AMRO—in September 1999, just after your IPO

– This growth question has lingered virtually throughout your history as a publicly traded company

• Although this is less pressing than immediate questions about earnings stability, point out how the company has defied skepticism and that USS is actively looking at ways to further expand revenue

– This shows USS is not merely a defensive stock, but one which has growth prospects also!

• Is there any way this crisis gives USS a strategic benefit? Explain!

26

CONFIDENTIAL

Roadmap

Investors face unprecedented uncertainty

USS Co., Ltd. has a strong opportunity

Important messages to give investors conviction

How does Taiyo Pacific Partners support management?

27

CONFIDENTIAL

Taiyo Pacific Partners

• Taiyo Pacific Partners has USD 2 billion assets under management and an operating history exceeding five years.

• We focus only on public and private equity in Japan.

• Our staff features 25 multi-lingual investmentprofessionals with diversebackgrounds in sell-side equity research, portfolio management,banking, consulting, accounting and law.

• More than half of our professionals are Japanese nationals.

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CONFIDENTIAL

How Taiyo thinks about maximizing corporate value

1. Business Value• Sales growth• Margin improvement• Good investments

2. Reputation Value • Proactive IR• Shareholder friendly• Good disclosure

3. Financial Value• Leverage effect• Optimal structure• Capital Mgmt

Three sources of value to maximize

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CONFIDENTIAL

We help companies enhance success in all three areas

Business

- Strategic analysis

- Market intelligence on competitors

- Corporate governance successes

- M&A and growth

Investor Relations

- Telling the story.

- Building excitement.

- Attracting sell-side analysts.

- Effective materials.

- Effective communications.

- Roadshows.

Financial

- How to optimize capital structure to maintain flexibility for business decisions.

- Cost of capital. - Which financial

metrics make sense for internal management purposes.

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CONFIDENTIAL

We are very interested in USS’ business

• Two of our three partners have experience as expert consultants to the auto industry

• We have been doing our own research to see if we can provide data that USS can use

• We welcome a chance to present our findings to you in the near future

CONFIDENTIAL

We look forward to working with you!

CONFIDENTIAL

DisclaimerTaiyo Pacific Partners LP (“TPP”) does not make any warranty, express or implied a) as to the accuracy or completeness of the contents of this report, or b) as to the results of relying on any information contained herein.

In no case shall TPP have any liability to any person in respect of any loss, claim, damages, costs or liability arising from reliance on any information contained in this report or use of this report.

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