Download pdf - New Japan RadioFinancial Highlights Net sales ¥ 60,443 ¥ 60,726 $ 603,288 Net income 435 1,722 4,341 Per share Net income ¥ 11.12 ¥ 44.00 $ 0.11 Cash dividends 12.00 12.00 0.12

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A n n u a l R e p o r t 2 0 0 8For the F iscal Year 2007 Ended March 31, 2008

NewJapanRadio

The fusion of & opens new technologies and new markets.

Various electronic devices that promote multimedia and

ubiquitous computing societies are evolving rapidly.

To respond as quickly as possible to the rapidly changing

times, New Japan Radio Co., Ltd. is promoting R&D based

on the concepts of "The fusion of & opens new

technologies and new markets."

New Japan Radio offers products and services meeting

the needs of the "multimedia and ubiquitous computing era"

by combining its "microwave technology" to carry information

and "semiconductor technology" to process information. Our

company is developing as a manufacturer of electronic devices

supporting development of products for a highly information-

based society.

Microwave & Microelectronics

2 Financial Highlights

3 Consolidated Business Overview

4 Dear Shareholders

8 Semiconductor Devices

11 Microwave Application Products

12 Microwave Tubes and Radar Components

16 Management's Discussion and Analysis

20 Financial Statements

46 Independent Auditors' Report

47 Company Information

13 Research and Development

15 Environmental Activities

48 NJRC Group

Contents

A N N U A L R E P O R T 2 0 0 8 1

P r o f i l e

Semiconductor DevicesThese devices consist of bipolar ICs, MOS ICs and microwave & optoelectronic devices. The bipolar ICs are mainly analog ICs (such as operational amplifiers and comparators). The MOS ICs are mainly LCD driver ICs, audio processors and quartz crystal oscillator ICs. The microwave & optoelectronic devices consist of GaAs MMICs and optoelectronic devices.

Microwave Application ProductsThese products consist of components for satellite broadcasting, satellite communications and terrestrial communications. The main products are transmitters, receivers, and low-noise amplifiers.

Microwave Tubes and Radar ComponentsThe main products are radar parts, including magnetron and radar components for governmental-use.

New Japan Radio Co., Ltd. started business as Saitama Japan Radio Co., Ltd. in 1959 through 100% investments from its parent company, Japan Radio Co., Ltd., and adopted its present name in 1961.

New Japan Radio Co., Ltd. took over the manufacturing divisions of microwave tubes and semiconductors from Japan Radio Co., Ltd. in 1961 and 1962 respectively.

With the establishment of Saga Electronics Co., Ltd. in 1965, New Japan Radio Co., Ltd. set up five subsidiaries in Japan. We also have Kawagoe works, one branch office, and two sales offices. Following the overseas establishment of NJR CORPORATION (U.S.A.) in 1979, we set up THAI NJR CO., LTD. (Thailand) in 1989 and NJR (SINGAPORE) PTE LTD (Singapore) in 1992, NJR SHANGHAI CO.,LTD.(China) in 2008.

New Japan Radio Co., Ltd. went public (over-the-counter issues). It listed its stock on the second section of Tokyo Stock Exchange in 2000 and on its first section in 2002.

New Japan Radio Co., Ltd. consists of "Semiconductor Devices," "Microwave Application Products" and "Microwave Tubes and Radar Components."

� Foundation

� Production

� Group Organization

� Stock

� Business Formation

� Defense/meteorology field� Marine radar field

MicrowaveMicrowaveTubes and Radar ComponentsTubes and Radar Components

New Japan Radio Co., Ltd.� Terrestrial communications� Satellite communications� Satellite broadcasting

Microwave Application ProductsMicrowave Application Products

� Bipolar ICs� MOS ICs� Microwave & Optoelectronic Devices

Semiconductor

A N N U A L R E P O R T 2 0 0 82 A N N U A L R E P O R T 2 0 0 8 3

F i n a n c i a l H i g h l i g h t s

Net sales ¥ 60,443 ¥ 60,726 $ 603,288Net income 435 1,722 4,341

Per share Net income ¥ 11.12 ¥ 44.00 $ 0.11Cash dividends 12.00 12.00 0.12

Shareholders' equity ¥ 25,523 ¥ 25,985 $ 254,743Total assets 58,077 60,361 579,664Capital expenditure 4,173 3,477 41,652Depreciation and amortization 4,737 3,897 47,275

2008 2007 2008

Millions of YenThousands ofU.S. Dollars

Yen U.S. Dollars


Note: U.S. Dollar amounts are translated from Japanese Yen, for convenience only, at the rate of ¥100.19 = U.S.$1.

Sales proportion by division in fiscal 2007

Semiconductor Devices

[Consolidated net sales: ¥51,132 million; sales mix ratio: 84.6%]

In semiconductor products, sales of optical semiconductor devices grew well due to new use in

optical drives. Microwave devices (GaAs ICs) for mobile phones also grew well.

In bipolar ICs, sales of power supply ICs grew slightly; sales of operational amplifiers, comparators,

and audio ICs dropped due to intensifying competition in the TV and digital still camera markets.

In MOS ICs, sales of power supply ICs for digital still cameras and game machines grew. Sales of

DSPs (digital signal processors) for flat-panel TVs and LCD driver ICs finding new applications in

automotive displays also grew.

Sales trends by division (3 years)

2005 2006 2007 20082005 2006 2007 20082005 2006 2007 2008

23,017

24,334

25,985 25,523

Shareholder's equity(Millions of Yen)

2,569

1,118

1,721

435

Ordinary Profit/Net income(Millions of Yen)

65,053

60,332 60,725 60,443

Net sales(Millions of Yen)


C o n s o l i d a t e d B u s i n e s s O v e r v i e w

Note: U.S. Dollar amounts are translated from Japanese Yen, for convenience only, at the rate of ¥100.19 = U.S.$1.

Sales proportion by division in fiscal 2007


[Consolidated net sales: ¥51,132 million; sales mix ratio: 84.6%]

In semiconductor products, sales of optical semiconductor devices grew well due to new use in

optical drives. Microwave devices (GaAs ICs) for mobile phones also grew well.

In bipolar ICs, sales of power supply ICs grew slightly; sales of operational amplifiers, comparators,

and audio ICs dropped due to intensifying competition in the TV and digital still camera markets.

In MOS ICs, sales of power supply ICs for digital still cameras and game machines grew. Sales of

DSPs (digital signal processors) for flat-panel TVs and LCD driver ICs finding new applications in

automotive displays also grew.


Microwave Application Products

Microwave Tubes and Radar Components

84.6%

7.8%

7.6%

Sales trends by division (3 years)


[Consolidated net sales: ¥4,732 million, sales mix ratio: 7.8%]

Sales of main component products for satellite communications decreased because sales to the VSAT

(Very Small Aperture Terminal) market stabilized after a good previous year as expected.

Component products for terrestrial communications increased their sales for terrestrial digital

broadcasting equipment in Japan.


[Consolidated net sales: ¥4,579 million, sales mix ratio: 7.6%]

Microwave tubes and Radar Components increased their sales in major clients for government and

public offices, and mainly in ship radars for private sector.

Note: Operating profit and loss by division means operating profit and loss before deduction of non-apportionable operating expenses.

50.8

FY2005 FY2006 FY2007

50.3 51.0

Billions of Yen

Billions of Yen

5.0

FY2005 FY2006 FY2007

6.2

4.7

Billions of Yen

4.6

FY2005 FY2006 FY2007

4.24.6

D e a r S h a r e h o l d e r s


Enhancing Vitality for Growth and

Product Manufacturing

Kazuo HirataPresident

Sales in fiscal 2007 were down by about ¥283 million compared to the previous fiscal year. These results are not too bad considering the financial instability caused by the US subprime loan crisis and sluggish market conditions. Sales of microwave & optoelectronic devices, and microwave tubes and radar components increased, but sales of microwave application products, audio ICs, and crystal oscillator ICs were sluggish. In the Semiconductor Devices division, which enjoyed brisk sales, sales of products such as microwave devices (GaAs ICs), optical semiconductor devices, DSPs (digital signal processors) and power supply ICs grew well.

New product releases and development of high-value-added products created this growth.Factors hampering sales included flagging markets (especially overseas) and increased competition.Sales in fiscal 2007 were ¥60,443 million (decrease of 0.5% compared to previous fiscal year). Operating income was ¥1,542 million (decrease of 16.2% compared to previous fiscal year), and current net income was ¥435 million (decrease of 74.7% compared to previous fiscal year).The actual achievements by department are as follows:

� Semiconductor Devices [Consolidated net sales: ¥51,132 million; sales mix ratio: 84.6%]In semiconductor products, sales of optical semiconductor devices grew well due to new use in optical drives. Microwave devices (GaAs ICs) for mobile phones also grew well.In bipolar ICs, sales of power supply ICs grew slightly; sales of operational amplifiers, comparators, and audio ICs dropped due to intensifying competition in the TV and digital still camera markets.In MOS ICs, sales of power supply ICs for digital still cameras and game machines grew. Sales of DSPs (digital signal processors) for flat-panel TVs and LCD driver ICs finding new applications in automotive displays also grew.

� Microwave Application Products [Consolidated net sales: ¥4,732 million, sales mix ratio: 7.8%]Sales of main component products for satellite communications decreased because sales to the VSAT (Very Small Aperture Terminal) market stabilized after a good previous year as expected. Component products for terrestrial communications increased their sales for terrestrial digital broadcasting equipment in Japan.

� Microwave Tubes and Radar Components [Consolidated net sales: ¥4,579 million, sales mix ratio: 7.6%]Microwave tubes and Radar Components increased their sales in major clients for government and public offices, and mainly in ship radars for private sector.

[Corporate Mission]The mission of our corporate group is to "aid in the healthy development of society by accomplishing our focal role in matching the expectations of society with those of our customers to realize our corporate mission by providing the best products possible based on our unique "microelectronics and microwave" technology."

[Management Indexes]Our group focuses on four management indexes:(1) Sales amount : ¥100 billion or more (2) Total asset turnover : 1.2 times or more(3) Recurring margin : 10% or more (4) Return on equity : 20% or moreOur group business is in semiconductors and various electronic parts and we attach priority to profitability

supporting the capital investment and R&D needed for continued growth with emphasis on efficiency.

[Medium-/Long-term Management Strategies](1) Our strategy in the main semiconductor business is to enhance business strength, expand the system, and develop new competitive products.To implement these strategies, we will meet customer needs by growing sales in north and east China by Shanghai subsidiary company, NJR Shanghai Co., Ltd. established in January 2008, by reinforcing customer-based business using the Design Centers in Osaka and Singapore, and by committing resources to new markets, such as communications, industrial instruments, and automotive equipment.

4 A N N U A L R E P O R T 2 0 0 8 5

Sales in fiscal 2007 were down by about ¥283 million compared to the previous fiscal year. These results are not too bad considering the financial instability caused by the US subprime loan crisis and sluggish market conditions. Sales of microwave & optoelectronic devices, and microwave tubes and radar components increased, but sales of microwave application products, audio ICs, and crystal oscillator ICs were sluggish. In the Semiconductor Devices division, which enjoyed brisk sales, sales of products such as microwave devices (GaAs ICs), optical semiconductor devices, DSPs (digital signal processors) and power supply ICs grew well.

New product releases and development of high-value-added products created this growth.Factors hampering sales included flagging markets (especially overseas) and increased competition.Sales in fiscal 2007 were ¥60,443 million (decrease of 0.5% compared to previous fiscal year). Operating income was ¥1,542 million (decrease of 16.2% compared to previous fiscal year), and current net income was ¥435 million (decrease of 74.7% compared to previous fiscal year).The actual achievements by department are as follows:

� Semiconductor Devices [Consolidated net sales: ¥51,132 million; sales mix ratio: 84.6%]In semiconductor products, sales of optical semiconductor devices grew well due to new use in optical drives. Microwave devices (GaAs ICs) for mobile phones also grew well.In bipolar ICs, sales of power supply ICs grew slightly; sales of operational amplifiers, comparators, and audio ICs dropped due to intensifying competition in the TV and digital still camera markets.In MOS ICs, sales of power supply ICs for digital still cameras and game machines grew. Sales of DSPs (digital signal processors) for flat-panel TVs and LCD driver ICs finding new applications in automotive displays also grew.

� Microwave Application Products [Consolidated net sales: ¥4,732 million, sales mix ratio: 7.8%]Sales of main component products for satellite communications decreased because sales to the VSAT (Very Small Aperture Terminal) market stabilized after a good previous year as expected. Component products for terrestrial communications increased their sales for terrestrial digital broadcasting equipment in Japan.

� Microwave Tubes and Radar Components [Consolidated net sales: ¥4,579 million, sales mix ratio: 7.6%]Microwave tubes and Radar Components increased their sales in major clients for government and public offices, and mainly in ship radars for private sector.

[Corporate Mission]The mission of our corporate group is to "aid in the healthy development of society by accomplishing our focal role in matching the expectations of society with those of our customers to realize our corporate mission by providing the best products possible based on our unique "microelectronics and microwave" technology."

[Management Indexes]Our group focuses on four management indexes:(1) Sales amount : ¥100 billion or more (2) Total asset turnover : 1.2 times or more(3) Recurring margin : 10% or more (4) Return on equity : 20% or moreOur group business is in semiconductors and various electronic parts and we attach priority to profitability

supporting the capital investment and R&D needed for continued growth with emphasis on efficiency.

[Medium-/Long-term Management Strategies](1) Our strategy in the main semiconductor business is to enhance business strength, expand the system, and develop new competitive products.To implement these strategies, we will meet customer needs by growing sales in north and east China by Shanghai subsidiary company, NJR Shanghai Co., Ltd. established in January 2008, by reinforcing customer-based business using the Design Centers in Osaka and Singapore, and by committing resources to new markets, such as communications, industrial instruments, and automotive equipment.

D e a r S h a r e h o l d e r s

August 2008

Kazuo HirataPresident

A N N U A L R E P O R T 2 0 0 86

been integrated. The main Semiconductor Devices division was reorganized to promote efficient product development over a wide range from analog to digital ICs.We will improve basic technologies, such as packaging to implement high-density mounting, as well as R&D into new devices using SiC and GaN.We will develop more new, higher added-value products, especially in the growing automotive market.We are actively addressing global environmental themes with focus on products using less power, complying with RoHS (Restriction of Hazardous Substances) and other standards.Our goal is to become a “one-stop solution” for all customers' requests and needs and we look forward to your continued support in these endeavors.

In manufacturing we will establish a more efficiequality production system. We will also reinforce the capacity of Thai NJR Co., Ltd. to increase competitiveness.Moreover, we will reinforce the business promotion system of NJR Fukuoka Co., Ltd. and Saga Electronics Co., Ltd. to expand semiconductor production by our group as a whole.(2) Our group is promoting quality and environmental management.In addition to ISO9001 and ISO14001, ISO/TS16949 approval has supported growing sales, especially in the automotive field.We are introducing an internal control and risk management system to meet our corporate social responsibilities.

[Immediate Tasks]The competition in R&D and prices in our main field of semiconductors is becoming more intense with the rapid spread of digitalization to realize a ubiquitous network society. In order to catch market trends and make full use of unique technologies to meet market needs, we will pursue group growth by increasing sales, promoting development of new products, and pursuing quality.We will also improve and operate systems to ensure reliable financial reporting on the basis of "policies for maintenance of internal control systems."

[Summary]In fiscal 2007, growing unexpected global worries including the subprime issue affected sales. We will improve our systems and products to increase profits despite negative external factors.

We received the award for high-quality products from Hirose Plant of Toyota Motor Corporation we've been supplying with semiconductor products.


We received the award for high-quality products from Hirose Plant of Toyota Motor Corporation we've been supplying with semiconductor products.





S e m i c o n d u c t o r D e v i c e s

Our semiconductor products are mostly analog semiconductors classified into three broad groups: Bipolar ICs, MOS ICs, and Microwave & Optoelectronic Devices

Microwave & Optoelectronic Devices

Bipolar ICs

MOS ICs

NJL6401R-2The NJL6401R-2 is a high-speed PIN photodiode that can detect blue-violet and IR laser diode. It can be used, for example, for laser power monitor of optical pickup for blu-ray and brightness adjustment of RGB back light

NJG1133MD7The NJG1133MD7 is a W-CDMA Triple Band LNA (Low Noise Amplifier).

NJM2729EThe NJM2729E is a high performance operational amplifier featuring very low offset voltage and drift.

Main ProductsMicrowave & Optoelectronic Devices: Optical semiconductor devices, microwave devices (GaAs ICs)Small package-type photoreflectors are the main products in optical semiconductor devices. ICs for mobile phones are the main products in microwave devices. The lineup of microwave devices has been strengthened by diversifying manufacturing. Sales of products based on various packaging and filtering technologies have increased.

Bipolar ICs: Operational amplifiers and comparators, power supply ICs, audio/video ICs, commissioned production and salesWe have focused on producing higher-value-added operational amplifiers and comparators. There has been more demand for power supply ICs mainly for digital AV equipment. Demand for audio/video ICs for TVs and audio equipment and mobile phones continues to grow, as do motor ICs mainly for PC fans.

MOS ICs: Power supply ICs, audio ICs, DSPs (digital signal processors), crystal oscillator ICsWe have focused on producing LCD driver ICs for OA equipment and mobile phones, audio ICs and crystal oscillator ICs. The functions of DSPs have become much more sophisticated.

[Performance in Fiscal 2007]Consolidated sales by the Semiconductor Devices division amounted to ¥51,132 million (increase of 1.7% compared to previous year).

•Microwave & Optoelectronic Devices: [¥5,892 million, increase of 57.5% compared to previous year]The results of R&D for the past 3 years yielded an increase in sales. In optical semiconductor devices, use of devices for optical pick-ups of small packages (COBP) in next-generation game machines and players helped grow sales. Demand for microminiature photoreflectors for mobile phone camera modules grew. We actively pursued sales for new uses in optical drives. In microwave devices (GaAs ICs), sales of W-CDMA antenna switches and low-noise GPS amplifiers grew. Low-noise amplifiers for GPS, CDMA, and one-segment TV mobiles, as well as antenna switches for W-CDMA/GSM and UMTS/CDMA/GSM and general-purpose switches were introduced. The upgraded development system supported better design accuracy and reduced development times.In market trends, business with mobile phone, module and chip-set manufacturers was widespread, facilitating market research in China, Taiwan and Europe. In customer support, the Sales division (and Product Planning division) supported by the Design division provided one-stop shop solutions for customers.

•Bipolar ICs: [¥34,880 million, decrease of 3.8% compared to previous year]Sales of power supply ICs increased, but commissioned sales of operational amplifiers, comparators, and audio ICs decreased. Roll-out delays to market reduced sales.

•MOS ICs: [¥10,360 million, increase of 0.7% compared to previous year]Sales of power supply ICs for digital still cameras and game machines grew substantially as did DSPs (digital signal processors) for flat-panel TVs and LCD driver ICs for automotive displays. On the other hand, sales of crystal oscillator ICs for digital still cameras and audio processors for TVs dropped.

[Product Development by Division and Fiscal 2008 Targets]In fiscal 2008, we will focus on automotive products by developing general-purpose ICs for automotive systems and special-purpose ICs. Specifically, we will challenge a core supplier to domestic car manufacturers while researching and developing power supply ICs for automotive systems and analog master slices.

� Microwave & Optoelectronic Devices

•Optical Semiconductor DevicesThe demand for miniature photoreflectors for mobile camera modules using small COBP packages has increased. We will release a product with the smallest package in its class.In optical pick-up devices, we have developed blue-laser products for the growing recorder market. In sensor-related products, we have developed RGB sensors for color correcting LED backlights in LCD panels.

•Microwave Devices (GaAs ICs)We will start selling GSM/TD-SCDMA antenna switches mainly for the Chinese market. We have also developed 2-bit DPDT switches, GSM/W-CDMA antenna switches, 1-bit cross SPDT switches, GPS low-noise amplifiers, one-segment TV high-gain low-noise amplifiers, W-CDMA 3-band low-noise amplifiers and CDMA-band low-noise amplifiers, then we will sequentially introduce them. This will help promote higher-performance low-noise amplifiers for GSM along with commercialization of internal positive and negative power switches. We will also focus on developing 8- and 10-GHz operating switches and amplifiers for next-generation PHS. We will introduce products for mobile phones, PHS, game machines, PND, and WiMAX. We shall continue joint R&D with universities while pursuing customers' suggestions.

� Bipolar ICs

•Operational Amplifiers and ComparatorsWe will continue developing and marketing high-added-value products with high accuracy and speed to secure the leading market share in Japan as well as an increased overseas market share. We shall separate "low-priced, existing-performance products" and "high-priced, high-performance products." Of the two design centers (Singapore and Osaka) established in fiscal 2006, the Singapore Design Center will deal mainly with AV-related products and electronic volumes while the Design Center of Saga Electronics Co., Ltd. will continue to develop and design high-performance automotive products and industrial products in Japan. We will also focus on developing ISO/TS16949-compliant automotive products as well as on input/output full-swing, low-power (for digital and industrial equipment) and high-speed, high-accuracy (for industrial equipment) operational amplifiers, which have been sold since fiscal 2007. High-performance operational amplifiers for high-quality audio systems will be mass-produced. In fiscal 2008, we will focus on developing high-accuracy, high-speed operational amplifiers for industrial equipment, such as metering equipment and sensors.

•Power Supply ICsWe will strengthen the lineup of products for digital AV equipment and PCs sales of which increased in fiscal 2007 and focus our efforts on even higher sales. We will actively develop the large-current, high-voltage power supply ICs facilitated its commercialization in fiscal 2007. Moreover, we will expand sales of DC-DC converters using CMOS technology, as high-value-added products for the system power supply market. We will develop power supply ICs for high-accuracy systems with MCP (Multi-chip Package). We expect increased sales to markets using charge-control ICs and products for battery chargers for mobile phones.


NJL6401R-2The NJL6401R-2 is a high-speed PIN photodiode that can detect blue-violet and IR laser diode. It can be used, for example, for laser power monitor of optical pickup for blu-ray and brightness adjustment of RGB back light

NJG1133MD7The NJG1133MD7 is a W-CDMA Triple Band LNA (Low Noise Amplifier).

NJM2729EThe NJM2729E is a high performance operational amplifier featuring very low offset voltage and drift.

Main ProductsMicrowave & Optoelectronic Devices: Optical semiconductor devices, microwave devices (GaAs ICs)Small package-type photoreflectors are the main products in optical semiconductor devices. ICs for mobile phones are the main products in microwave devices. The lineup of microwave devices has been strengthened by diversifying manufacturing. Sales of products based on various packaging and filtering technologies have increased.

Bipolar ICs: Operational amplifiers and comparators, power supply ICs, audio/video ICs, commissioned production and salesWe have focused on producing higher-value-added operational amplifiers and comparators. There has been more demand for power supply ICs mainly for digital AV equipment. Demand for audio/video ICs for TVs and audio equipment and mobile phones continues to grow, as do motor ICs mainly for PC fans.

MOS ICs: Power supply ICs, audio ICs, DSPs (digital signal processors), crystal oscillator ICsWe have focused on producing LCD driver ICs for OA equipment and mobile phones, audio ICs and crystal oscillator ICs. The functions of DSPs have become much more sophisticated.

[Performance in Fiscal 2007]Consolidated sales by the Semiconductor Devices division amounted to ¥51,132 million (increase of 1.7% compared to previous year).

•Microwave & Optoelectronic Devices: [¥5,892 million, increase of 57.5% compared to previous year]The results of R&D for the past 3 years yielded an increase in sales. In optical semiconductor devices, use of devices for optical pick-ups of small packages (COBP) in next-generation game machines and players helped grow sales. Demand for microminiature photoreflectors for mobile phone camera modules grew. We actively pursued sales for new uses in optical drives. In microwave devices (GaAs ICs), sales of W-CDMA antenna switches and low-noise GPS amplifiers grew. Low-noise amplifiers for GPS, CDMA, and one-segment TV mobiles, as well as antenna switches for W-CDMA/GSM and UMTS/CDMA/GSM and general-purpose switches were introduced. The upgraded development system supported better design accuracy and reduced development times.In market trends, business with mobile phone, module and chip-set manufacturers was widespread, facilitating market research in China, Taiwan and Europe. In customer support, the Sales division (and Product Planning division) supported by the Design division provided one-stop shop solutions for customers.

•Bipolar ICs: [¥34,880 million, decrease of 3.8% compared to previous year]Sales of power supply ICs increased, but commissioned sales of operational amplifiers, comparators, and audio ICs decreased. Roll-out delays to market reduced sales.

•MOS ICs: [¥10,360 million, increase of 0.7% compared to previous year]Sales of power supply ICs for digital still cameras and game machines grew substantially as did DSPs (digital signal processors) for flat-panel TVs and LCD driver ICs for automotive displays. On the other hand, sales of crystal oscillator ICs for digital still cameras and audio processors for TVs dropped.

[Product Development by Division and Fiscal 2008 Targets]In fiscal 2008, we will focus on automotive products by developing general-purpose ICs for automotive systems and special-purpose ICs. Specifically, we will challenge a core supplier to domestic car manufacturers while researching and developing power supply ICs for automotive systems and analog master slices.

� Microwave & Optoelectronic Devices

•Optical Semiconductor DevicesThe demand for miniature photoreflectors for mobile camera modules using small COBP packages has increased. We will release a product with the smallest package in its class.In optical pick-up devices, we have developed blue-laser products for the growing recorder market. In sensor-related products, we have developed RGB sensors for color correcting LED backlights in LCD panels.

•Microwave Devices (GaAs ICs)We will start selling GSM/TD-SCDMA antenna switches mainly for the Chinese market. We have also developed 2-bit DPDT switches, GSM/W-CDMA antenna switches, 1-bit cross SPDT switches, GPS low-noise amplifiers, one-segment TV high-gain low-noise amplifiers, W-CDMA 3-band low-noise amplifiers and CDMA-band low-noise amplifiers, then we will sequentially introduce them. This will help promote higher-performance low-noise amplifiers for GSM along with commercialization of internal positive and negative power switches. We will also focus on developing 8- and 10-GHz operating switches and amplifiers for next-generation PHS. We will introduce products for mobile phones, PHS, game machines, PND, and WiMAX. We shall continue joint R&D with universities while pursuing customers' suggestions.

� Bipolar ICs

•Operational Amplifiers and ComparatorsWe will continue developing and marketing high-added-value products with high accuracy and speed to secure the leading market share in Japan as well as an increased overseas market share. We shall separate "low-priced, existing-performance products" and "high-priced, high-performance products." Of the two design centers (Singapore and Osaka) established in fiscal 2006, the Singapore Design Center will deal mainly with AV-related products and electronic volumes while the Design Center of Saga Electronics Co., Ltd. will continue to develop and design high-performance automotive products and industrial products in Japan. We will also focus on developing ISO/TS16949-compliant automotive products as well as on input/output full-swing, low-power (for digital and industrial equipment) and high-speed, high-accuracy (for industrial equipment) operational amplifiers, which have been sold since fiscal 2007. High-performance operational amplifiers for high-quality audio systems will be mass-produced. In fiscal 2008, we will focus on developing high-accuracy, high-speed operational amplifiers for industrial equipment, such as metering equipment and sensors.

•Power Supply ICsWe will strengthen the lineup of products for digital AV equipment and PCs sales of which increased in fiscal 2007 and focus our efforts on even higher sales. We will actively develop the large-current, high-voltage power supply ICs facilitated its commercialization in fiscal 2007. Moreover, we will expand sales of DC-DC converters using CMOS technology, as high-value-added products for the system power supply market. We will develop power supply ICs for high-accuracy systems with MCP (Multi-chip Package). We expect increased sales to markets using charge-control ICs and products for battery chargers for mobile phones.


S e m i c o n d u c t o r D e v i c e s

NJW1199FThe NJW1199F is a 8-channel electronic volume with Input Selector.

NJU26040VThe NJU26040V is a DSP built-in OTP (One Time Programmable) ROM.

NJR4222PLNJR4222PL is a 24 GHz “FMCW Radar” module which calculates the distance from the radar to object or human.

NJT5118NJT5118 is a brand-new model, 14 GHz 8 W output power transmitter for VSAT (Very Small Aperture Terminal) system of satellite communication, developed as generic product.

•Audio/Video ICsWe have a good track record in selling audio ICs to most audio equipment manufacturers. By targeting the digital still camera market, we will continue to strengthen sales of electronic volumes (for flat-panel TVs, car audio systems, and AV amplifiers) and of low-voltage video amplifiers sold for automotive cameras, car navigation systems, and audio processors since fiscal 2007. Our development policy will continue to promote "unification of audio and video products."

•Motor ICsIn recent years, we have positioned PC fan motors as main products and have focused on selling two-phase motor ICs. We have also strengthened the lineup of three-phase DC motor ICs and stepping-motor ICs and have reinforced the sales system. Our share for cooling fan motor driver ICs (5-V fan motor driver ICs) is about 10% of the global market because CMOS technology reduces rotation noise and current consumption that competing products cannot match.

We will sell higher-output, higher-voltage products (for fan and stepping motors) and further strengthen sales in game machines.

� MOS ICs

•Power Supply ICsWe will continue to focus on expanding sales of power supply ICs for digital still cameras and game machines.

•Display ICsWe will continue to focus on expanding sales of LCD driver ICs for automotive displays.

•Audio ICsWe will focus on especially selling class-D amplifiers for TVs and game machines, and also selling audio processors for TVs. We will also grow sales of high-output ICs for automotive audio systems as well as sales to flagship digital audio products.

•Crystal Oscillator ICsWe will focus on promoting crystal oscillator ICs for digital still cameras and also strengthen sales for mobile phones and flat-panel TVs. We will also focus on selling low-voltage, high-frequency products. We will strengthen sales of low-voltage, low-current, high-frequency ICs for optical communications and digital equipment.

•DSP (Digital Signal Processors)We will continue to strengthen sales of DSPs for flat-panel TVs, which grew well in fiscal 2007. We will focus on combining sales of DSP core technologies with various IP macros with full peripheral functions in future. We will also provide high-performance DSPs with stronger functions using 0.18 and 0.13µm process technologies. We will develop OTP-version DSP products without microcontrollers.

Main ProductsComponent products for Satellite and Terrestrial Communications, and SensorsOur main products are microwave-band BUCs (Block Up Converters), LNBs (low-noise down converters) and transceivers. For satellite communications, Ku-band (14 GHz) BUCs are main products. In addition, the wide range of choice is available from the C-band (5 to 6 GHz) to Ka-band (30 GHz). For terrestrial communications, fixed wireless access transceivers are main products. In sensors, both X-band (10 GHz) and K-band (24 GHz) doppler sensor modules are main products.

[Performance in Fiscal 2007 and Fiscal 2008 Targets]Sales were ¥4,732 million (decrease of 23.8% compared to the previous year) due to the cooling satellite communications (VSAT) market. This decrease was partly offset by growing sales of products for digital terrestrial broadcasting equipment.

•Component Products for Satellite Communications and BroadcastingOur main component products for satellite communications were affected by the 2007 market slowdown after the boom in fiscal 2006. However, sales of K-band (20 GHz) LNBs for VSAT made a good start. We are focusing on developing higher-output-power BUCs, particularly Ku-band 8-W BUCs will be released in fiscal 2008, featuring the compactness in size and high-efficiency in power consumption. We will continue to strengthen the lineup of BUCs, in parallel with investigation of commercialization of integrated transmission and reception.

NJW4770SGDThe NJW4470SGD is a power IC that combines the chips for liquid crystal module drive, gradient voltage, and image processing circuits, using MCP (Multi-Chip Package) technology. It makes the liquid crystal module even thiner.


M i c r o w a v e A p p l i c a t i o n P r o d u c t s

NJW1199FThe NJW1199F is a 8-channel electronic volume with Input Selector.

NJU26040VThe NJU26040V is a DSP built-in OTP (One Time Programmable) ROM.

NJR4222PLNJR4222PL is a 24 GHz “FMCW Radar” module which calculates the distance from the radar to object or human.

NJT5118NJT5118 is a brand-new model, 14 GHz 8 W output power transmitter for VSAT (Very Small Aperture Terminal) system of satellite communication, developed as generic product.

•Audio/Video ICsWe have a good track record in selling audio ICs to most audio equipment manufacturers. By targeting the digital still camera market, we will continue to strengthen sales of electronic volumes (for flat-panel TVs, car audio systems, and AV amplifiers) and of low-voltage video amplifiers sold for automotive cameras, car navigation systems, and audio processors since fiscal 2007. Our development policy will continue to promote "unification of audio and video products."

•Motor ICsIn recent years, we have positioned PC fan motors as main products and have focused on selling two-phase motor ICs. We have also strengthened the lineup of three-phase DC motor ICs and stepping-motor ICs and have reinforced the sales system. Our share for cooling fan motor driver ICs (5-V fan motor driver ICs) is about 10% of the global market because CMOS technology reduces rotation noise and current consumption that competing products cannot match.

We will sell higher-output, higher-voltage products (for fan and stepping motors) and further strengthen sales in game machines.

� MOS ICs

•Power Supply ICsWe will continue to focus on expanding sales of power supply ICs for digital still cameras and game machines.

•Display ICsWe will continue to focus on expanding sales of LCD driver ICs for automotive displays.

•Audio ICsWe will focus on especially selling class-D amplifiers for TVs and game machines, and also selling audio processors for TVs. We will also grow sales of high-output ICs for automotive audio systems as well as sales to flagship digital audio products.

•Crystal Oscillator ICsWe will focus on promoting crystal oscillator ICs for digital still cameras and also strengthen sales for mobile phones and flat-panel TVs. We will also focus on selling low-voltage, high-frequency products. We will strengthen sales of low-voltage, low-current, high-frequency ICs for optical communications and digital equipment.

•DSP (Digital Signal Processors)We will continue to strengthen sales of DSPs for flat-panel TVs, which grew well in fiscal 2007. We will focus on combining sales of DSP core technologies with various IP macros with full peripheral functions in future. We will also provide high-performance DSPs with stronger functions using 0.18 and 0.13µm process technologies. We will develop OTP-version DSP products without microcontrollers.

Main ProductsComponent products for Satellite and Terrestrial Communications, and SensorsOur main products are microwave-band BUCs (Block Up Converters), LNBs (low-noise down converters) and transceivers. For satellite communications, Ku-band (14 GHz) BUCs are main products. In addition, the wide range of choice is available from the C-band (5 to 6 GHz) to Ka-band (30 GHz). For terrestrial communications, fixed wireless access transceivers are main products. In sensors, both X-band (10 GHz) and K-band (24 GHz) doppler sensor modules are main products.

[Performance in Fiscal 2007 and Fiscal 2008 Targets]Sales were ¥4,732 million (decrease of 23.8% compared to the previous year) due to the cooling satellite communications (VSAT) market. This decrease was partly offset by growing sales of products for digital terrestrial broadcasting equipment.

•Component Products for Satellite Communications and BroadcastingOur main component products for satellite communications were affected by the 2007 market slowdown after the boom in fiscal 2006. However, sales of K-band (20 GHz) LNBs for VSAT made a good start. We are focusing on developing higher-output-power BUCs, particularly Ku-band 8-W BUCs will be released in fiscal 2008, featuring the compactness in size and high-efficiency in power consumption. We will continue to strengthen the lineup of BUCs, in parallel with investigation of commercialization of integrated transmission and reception.

NJW4770SGDThe NJW4470SGD is a power IC that combines the chips for liquid crystal module drive, gradient voltage, and image processing circuits, using MCP (Multi-Chip Package) technology. It makes the liquid crystal module even thiner.

•Component Products for Terrestrial CommunicationsThe WIPAS (Wireless IP Access System) sales areas have been expanded from Japan to overseas. Compliance with RoHS and ETSI (European standard) is complete. In fiscal 2008, we will serialize RF units for digital terrestrial broadcasting relays.

•SensorsWe commercialized K-band (24 GHz) FMCW radar modules as well as conventional Doppler sensors based on time-proven core technologies. We are looking forward to offering products in full compliance with the Japanese Radio Law.Conventional Doppler modules can detect moving people and objects and are used in home and car security systems, automatic doors, speed guns and toys. In contrast, FMCW radar modules can measure distances to stationary people and objects, so use is expected in many products including industrial applications. In fiscal 2008, we will focus on developing various kinds of sensor for both automotive and industrial markets.


M i c r o w a v e T u b e s a n d R a d a r C o m p o n e n t s

ar system.the peak

output power is 25 kW.

M118M118 is a mechanicaly tunable frequency palsed type X-band magnetron; designed to operate in the frequency range of 8.5 GHz to 9.6 GHz with a peak output power of 40 kW.

NJC9952NJC9952 is a wave-guide type tri-function filter, designed for X-band Marine Radar.

Main ProductsElectron Tubes for Radars and Peripheral Equipment Products in this division are classified roughly into "electron tubes for defense and weather-related radars and peripheral equipment" for government and public use and "electron tubes for marine, avionics and ground-related radars” and peripheral equipment, and cathode products."

[Performance in Fiscal 2007]Sales of the "electron tubes for radars and peripheral equipment" amounted to ¥2,420 million (increase of 8.0% compared to previous year). Because the shipbuilding market was active, sales of electron tubes for marine radars and peripheral equipment did well, as did sales of electron tubes for ground radars, and sales of cathode products for lamps. Sales amounted to ¥2,159 million (increase of 9.0% compared to previous year). As a result, total sales for the Microwave division amounted to ¥4,579 million (increase of 8.4%).

•Electron Tubes for Defense and Weather-related Radars and Peripheral EquipmentJapan's defense plan is transitioning rapidly from aircraft to missiles so sales of main products for aircraft spares will decrease. However, electron tubes that cannot be replaced by semiconductors continue to be in demand.We have cultivated a new market for radar component products since fiscal 2006 against the backdrop of a high market share in Japan. We have manufactured and sold a prototype and undergone customer evaluation. We will focus on expanding the product lineup and sales.

•Electron Tubes for Marine, Avionics and Ground-related Radars and Peripheral EquipmentDue to expanding bulk transport mainly to China and globalization, world shipbuilding is booming, creating demand for large marine radars. In this market environment, while

R&D DivisionR&D expenses in fiscal 2007 amounted to ¥6,098 million, shared nearly equally between research and development. R&D is performed by product (in every division) with 350 themes using 410 staff. The institute plays a central role in developing core technologies and promotes: 1) development of leading-edge devices, 2) management of intellectual property, and 3) support and management of joint technology developments with universities and external research organizations. We actively publish our research results in papers and at exhibitions (Japan, China, Singapore, USA, Europe). The Saga Design Center conducts fundamental research and high-level design into packages for automotives, especially surface-mount, SoC and SiP packages expected to be in future demand. It also pursues research into quality inspection for these packaging technologies. The Osaka and Singapore Design Centers handle development of new products for the automotive AV digital market, as well as improving process and manufacturing technologies supporting the high reliability required by the automotive market. We are actively pursuing development of eco-friendly microminiature packages (ESON®, EQFN®, WPCSP®) to save energy and resources for digital consumer equipment (mobile phones, PCs, digital still cameras).

The activities by product department are as follows:

•R&D by Semiconductor Devices DivisionIn our main operational amplifier products, we are developing the super-high-speed current-return type following high-accuracy and CMOS low-noise types. In power supply ICs, we are pursuing high-efficiency synchronous rectification types and LDO (low drop out regulator) high-current output types. We are also pursuing high-performance ICs for charge control of lithium ion batteries. In audio ICs, we have strengthened the lineup of high-accuracy, high-sound-quality electronic volumes for AV equipment, and have developed products with integrated low-tone enhancements using our original surround technology. In video ICs, we developed broadband video amplifiers and switches for HDTV and pursued commercialization of isolation amplifiers for automotive AV equipment. In motor ICs, we have developed high-voltage motor drivers. For communications ICs, we are pursuing development of keyless one-chip front ends. We are actively developing products meeting automotive specifications and have released operational amplifiers and power supply ICs. We continue to develop DSPs (digital signal processors) for the flat-panel TV and automotive audio markets, as well as DSPs with built-in OTP to meet the fast delivery and development requirements of the flat-panel TV market. We are pursuing miniaturization technology and have positioned class-D amplifiers for downstream of DSPs to develop high-output products.

promoting design of marine radar devices, we will focus on selling products meeting the new spurious signal regulations. We will also maintain the world's top share by expanding our share of the large marine radar market. We will continue active sales to the worldwide avionics market where more small aircraft are expected to be built and to the ground radar market where there are fewer electron tube manufacturers.

[Targets for Fiscal 2008]

•Electron Tubes for Marine, Avionics, Ground-related Radars and Peripheral EquipmentTo make more efficient use of the electro-magnetic spectrum, regulations governing spurious signals may become even stricter. We will use our track record in compliance to supply radar microwave devices as a transmitter and receiver set. Specifically by promoting design-in development, we will supply radar electron tubes and peripheral equipment for next-generation radars.

•Sales of Electron Tubes and Guns for Industrial/Medical LinacsMedical linacs using X-rays and electron beams are used widely in cancer treatment because of reducing patients' burden. Overseas, there is increasing demand for X-ray linacs for border security inspections and industrial X-ray linacs for inspecting ship and truck containers. We will provide electron tubes and guns for industrial and medical linacs worldwide.

•Developing Solid State Radar Modules using Semiconductor Elements (SiC)We are developing new semiconductor elements (SiC) for consumer solid-state radar modules. We are pursuing sales in all markets (marine, avionics, ground) based on these small, lightweight, eco-friendly, high-performance devices.


R e s e a r c h a n d D e v e l o p m e n t

output power is 25 kW.

M118M118 is a mechanicaly tunable frequency palsed type X-band magnetron; designed to operate in the frequency range of 8.5 GHz to 9.6 GHz with a peak output power of 40 kW.

NJC9952NJC9952 is a wave-guide type tri-function filter, designed for X-band Marine Radar.

Main ProductsElectron Tubes for Radars and Peripheral Equipment Products in this division are classified roughly into "electron tubes for defense and weather-related radars and peripheral equipment" for government and public use and "electron tubes for marine, avionics and ground-related radars” and peripheral equipment, and cathode products."

[Performance in Fiscal 2007]Sales of the "electron tubes for radars and peripheral equipment" amounted to ¥2,420 million (increase of 8.0% compared to previous year). Because the shipbuilding market was active, sales of electron tubes for marine radars and peripheral equipment did well, as did sales of electron tubes for ground radars, and sales of cathode products for lamps. Sales amounted to ¥2,159 million (increase of 9.0% compared to previous year). As a result, total sales for the Microwave division amounted to ¥4,579 million (increase of 8.4%).

•Electron Tubes for Defense and Weather-related Radars and Peripheral EquipmentJapan's defense plan is transitioning rapidly from aircraft to missiles so sales of main products for aircraft spares will decrease. However, electron tubes that cannot be replaced by semiconductors continue to be in demand.We have cultivated a new market for radar component products since fiscal 2006 against the backdrop of a high market share in Japan. We have manufactured and sold a prototype and undergone customer evaluation. We will focus on expanding the product lineup and sales.

•Electron Tubes for Marine, Avionics and Ground-related Radars and Peripheral EquipmentDue to expanding bulk transport mainly to China and globalization, world shipbuilding is booming, creating demand for large marine radars. In this market environment, while

R&D DivisionR&D expenses in fiscal 2007 amounted to ¥6,098 million, shared nearly equally between research and development. R&D is performed by product (in every division) with 350 themes using 410 staff. The institute plays a central role in developing core technologies and promotes: 1) development of leading-edge devices, 2) management of intellectual property, and 3) support and management of joint technology developments with universities and external research organizations. We actively publish our research results in papers and at exhibitions (Japan, China, Singapore, USA, Europe). The Saga Design Center conducts fundamental research and high-level design into packages for automotives, especially surface-mount, SoC and SiP packages expected to be in future demand. It also pursues research into quality inspection for these packaging technologies. The Osaka and Singapore Design Centers handle development of new products for the automotive AV digital market, as well as improving process and manufacturing technologies supporting the high reliability required by the automotive market. We are actively pursuing development of eco-friendly microminiature packages (ESON®, EQFN®, WPCSP®) to save energy and resources for digital consumer equipment (mobile phones, PCs, digital still cameras).

The activities by product department are as follows:

•R&D by Semiconductor Devices DivisionIn our main operational amplifier products, we are developing the super-high-speed current-return type following high-accuracy and CMOS low-noise types. In power supply ICs, we are pursuing high-efficiency synchronous rectification types and LDO (low drop out regulator) high-current output types. We are also pursuing high-performance ICs for charge control of lithium ion batteries. In audio ICs, we have strengthened the lineup of high-accuracy, high-sound-quality electronic volumes for AV equipment, and have developed products with integrated low-tone enhancements using our original surround technology. In video ICs, we developed broadband video amplifiers and switches for HDTV and pursued commercialization of isolation amplifiers for automotive AV equipment. In motor ICs, we have developed high-voltage motor drivers. For communications ICs, we are pursuing development of keyless one-chip front ends. We are actively developing products meeting automotive specifications and have released operational amplifiers and power supply ICs. We continue to develop DSPs (digital signal processors) for the flat-panel TV and automotive audio markets, as well as DSPs with built-in OTP to meet the fast delivery and development requirements of the flat-panel TV market. We are pursuing miniaturization technology and have positioned class-D amplifiers for downstream of DSPs to develop high-output products.


R e s e a r c h a n d D e v e l o p m e n t

In crystal oscillator ICs, in addition to small, thin products, we are developing lower-current products with less frequency deviations due to power swings. In GaAs ICs, we have completed development of LNA for triple-band W-CDMA and antenna switches and introduced new products to the market. The low-distortion, low-noise, high-gain, high-performance, high-voltage ESD (electrostatic breakdown voltage), and small LNA were achieved using a HJFET (heterojunction FET) circuit. The low-distortion, high-voltage ESD, small antenna switch was achieved using enhancement/depression and this W-CDMA technology has spread to the GSM field. We have developed and mass-produced a microminiature SPDT switch for wireless LAN and Bluetooth (2.4 GHz wireless transmission systems). We have also developed a multiband antenna switch for GSM, microminiature, low-current LNA for GPS, and a power amplifier for wireless LAN. We are pursuing research in gallium nitride and silicon germanium for high-frequency products. We have commercialized Blu-Ray photodiodes for optical pick-ups and developed an IC process for blue lasers. We are researching reflectors, light receiving elements infrared ray while developing lens-positioning sensors for longer reception distances. We have commercialized intensity sensors for small COBP portable devices and have strengthened product lineups for LCD TVs and intensity appliances. Small COBP reflectors have been commercialized and will be further miniaturized. Millimeter-wave elements for automobile radars, CCD correlators for optical fiber communications, high-frequency ICs for wireless LAN, and products for next-generation WiMAX are all in development.

•R&D by Microwave Application Products DivisionWe are pursuing development of market-priced models for PLL LNB (phase-locked loop low-noise block converter) products for satellite communications, as well as strengthening the lineup of market-priced models for ODU (outdoor unit) products for satellite communications, and development of low- to high-power output modules for general products. In terrestrial communications, we have strengthened the lineup of oversea version for 26 GHz-band FWA (fixed wireless access) products for home use and developed module products for the microwave relay terminal for domestic digital terrestrial TV broadcasting.In sensors, we are continuing development of 24-GHz FMCW radar modules.

•R&D by Microwave Tubes and Radar Components DivisionWe have developed electron tubes for various radars and peripheral equipment, microwave-band modules centered on low-noise signal transmitters, SiC devices, and solid-state radar modules using SiC devices.

A N N U A L R E P O R T 2 0 0 814

E n v i r o n m e n t a l A c t i v i t i e s

Achieving Harmony with Nature

The G8 Hokkaido Toyako Summit was held this year amid growing concerns over environmental issues, such as climate change and resources. The environment was a main agenda item and the summit focused on countermeasures to global warming and discussion was held to establish future direction. Public and private corporate attitudes in Japan about global environmental protection are becoming clearer through strengthened efforts by both local and national government.

The New Japan Radio (NJRC) group obtained its first ISO14001 certification for the Kawagoe Works in 1997 and now all group companies have this certification. In the future, we will promote improvement of our environmental protection activities to match the accelerating pace of the domestic and international response to environmental issues.

In FY 2005, NJR started its "environmental management" action plan and we have clearly expressed our management intention in environmental activities. As a part of this action, the group is working on a management system setting "environmental targets" as a central core of activities. We are also promoting "increased environmental awareness by all employees" using hands-on activities. Specifically, we have an "environment month" to foster awareness by employees and also participate in the government's "Cool BIZ" campaign. In environmental protection, we focus on five achievement indicators: "reduction of CO2 emissions resulting from energy consumption", "reduction of PFC (Perfluoro-compound) emissions", "reduction of waste", "reduction of environmental burden caused by chemicals" and "reduction of water usage". In addition, we are strengthening risk assessment including compliance with environmental laws and regulations, and emergency response. We have started activities relating to management of chemical substances in products following international trends.

Our "Environmental Report 2008" summarizes the environmental activities of our NJR group and we continue promoting environmental protection based on the "NJR Group Environmental Vision". We welcome suggestions about how we can further improve.

A N N U A L R E P O R T 2 0 0 8 15


M a n a g e m e n t ' s D i s c u s s i o n a n d A n a l y s i s

I. Financial ConditionsTotal assets at the end of the current consolidated fiscal year stood at ¥58,077 million, a decrease of ¥2,284 million on account of a decrease in cash and bank deposits compared to the end of the previous fiscal year. Total liabilities came to ¥32,554 million, a decrease of ¥1,822 million owing to a decrease in trade accounts payable compared to the end of the previous fiscal year. As a result, total equity stood at ¥25,523 million, a decrease of ¥462 million compared to the end of the previous fiscal year, and equity ratio was 43.9% and showed an increase of 0.9 % compared to the end of the previous fiscal year. The main assets and liabilities are listed below.

(1) Cash and Cash EquivalentsCash and cash equivalents (hereafter "funds") at the end of the current consolidated fiscal year totaled ¥4,640 million, a decrease of ¥1,937 million compared to the end of the previous fiscal year (an increase of ¥1,949 million in previous fiscal year).Each cash flow status is as follows:• Cash flow by Operating Activities

The current net profit before tax adjustments amounted to ¥923 million (¥2,741 million in the previous fiscal year). Depreciation and amortization (¥4,737 million; ¥3,897 in the previous fiscal year), an increase in inventories (¥685 million; decrease of ¥213 million in the previous fiscal year), a decrease in notes and accounts payable (¥1,050 million; increase of ¥976 million in the previous fiscal year) and an income taxes paid (¥1,102 million; ¥660 million in the previous fiscal year) were adjusted. As a result, funds increased by ¥2,183 million (¥7,346 million in the previous fiscal year) from operating activities.

• Cash flow by Investing ActivitiesPurchases of property, plant and equipment amounted to ¥4,076 million (¥2,948 million in previous fiscal year). Funds decreased by ¥4,221 million (¥3,091 million in previous fiscal year) by investing activities.

• Cash flow by Financing ActivitiesAn increase in short-term bank loans amounted to ¥800 million (A decrease of ¥1,636 in previous fiscal year). And cash dividends paid amounted to ¥469 million (¥469 million in previous fiscal year). As a result, funds increased by ¥134 million (decreased ¥2,326 in previous fiscal year) from financing activities.

(2) Notes Receivable and Accounts ReceivableAccounts receivable decreased by ¥667 million compared to the end of the previous fiscal year, to ¥14,592 million (25.1% of combined assets) because a forward exchange contract was partly used during the current consolidated fiscal year to avoid risks from exchange-rate fluctuations involving US$-based accounts receivable from overseas sales. However, the appreciating yen caused a decrease in the said US$-based account receivables on the last day of the current consolidated fiscal year. In addition, the last day of the previous consolidated fiscal year fell on a bank holiday.

(3) InventoriesProduction surpassed sales because production was enhanced in anticipation of expanded sales due to further development of current products and more applications as well as an expanded new product lineup in the Semiconductor Devices division. Consequently, inventories increased by ¥509 million compared to the end of the previous year, to ¥15,326 million (26.4% of combined assets).

(4) Property, Plant and EquipmentMain capital investment has been in manufacturing and R&D of semiconductors, which are key devices in electronic hardware where constant innovation is required and the market is rapidly changing. Total capital investment during the current consolidated fiscal year increased by ¥696 million compared to the previous fiscal year, to ¥4,173 million. However, property, plant and equipment decreased by ¥774 million compared to the end of the previous fiscal year, to ¥14,841 million (25.6% of combined assets) due to increased depreciation by a change in the depreciation method.

(5) Interest-bearing DebtDespite working consistently to improve and strengthen our financial standing, interest-bearing debt at the end of the current consolidated fiscal year increased by ¥561 million compared to the end of the previous fiscal year, to ¥9,401 million (16.2% of total liabilities and equity) due to short-term borrowing of working capital.

II. Results of Operations(1) Sales and Operating Profit and Loss Sales and operating profit and loss by division as well as by geographic segment for the current consolidated fiscal year are shown in "[Overview of Performance] Performance."Although measures were implemented to curb total expenses, in order to address decreased orders for semiconductor devices, which are our main business, and the impact of yen appreciation on overseas sales and operating profits, this did not ameliorate declining profits including the increase in depreciation expenses, resulting in a decrease in operating profits of ¥297 million compared to the previous fiscal year, to ¥1,542 million.

(2) Ordinary Profit and LossThe declining profit margin expanded due to exchange losses of ¥631 million caused by rapid appreciation of the yen, which started during the 4th quarter, resulting in a decrease in ordinary profits of ¥764 million (42.3%) compared to the previous fiscal year to ¥1,042 million.

(3) Current Net IncomeReversal of liability for retirement benefits of ¥993 million were recorded as special profit in the previous consolidated fiscal year as well as the corporate taxes for the past fiscal year recorded as a tax expense for the current consolidated fiscal year further expanded the declining profit margin, resulting in a decrease in a current net income of ¥1,287 million (74.7%) compared to the previous fiscal year, to ¥435 million.

[Overview of Performance]

• PerformanceDuring the current consolidated fiscal year, the Japanese economy showed signs of slow recovery driven by improved company earnings until the end of the year when the global surge in the cost of raw materials, especially oil, and the financial crisis and sluggish share prices and growing concern over the slowing US economy triggered by the US subprime loan crisis increased business uncertainty. In the electronics industry, demand for digital home appliances including the flat-panel TVs, digital still cameras, and mobile phones increased steadily.Looking at our group, our main Semiconductor Devices, and Microwave Tubes and Radar Components divisions increased sales steadily, while sales for the Microwave Application Products division decreased as active demand for components for satellite communications stabilized after the good previous fiscal year.As a result, our performance slowed during the current consolidated fiscal year. In addition, current net profit decreased considerably compared to the previous fiscal year when the reduced debt of ¥993 million for retirement allowances involving the change in our retirement allowance and pension systems was allocated as Reversal of liability for retirement benefits to special profits.

Sales: ¥60,443 million (decrease of 0.5% compared to previous fiscal year) Operating Income: ¥1,542 million (decrease of 16.2% compared to previous fiscal year) Ordinary Income: ¥1,042 million (decrease of 42.3% compared to previous fiscal year) Current Net Income: ¥435 million (decrease of 74.7% compared to previous fiscal year)

The segment information by business operation is not shown here. Instead, the performance by business division is listed below.Note that the operating profit or loss figure for each business division is that before unallocated operating expenses have been deducted.



I. Financial ConditionsTotal assets at the end of the current consolidated fiscal year stood at ¥58,077 million, a decrease of ¥2,284 million on account of a decrease in cash and bank deposits compared to the end of the previous fiscal year. Total liabilities came to ¥32,554 million, a decrease of ¥1,822 million owing to a decrease in trade accounts payable compared to the end of the previous fiscal year. As a result, total equity stood at ¥25,523 million, a decrease of ¥462 million compared to the end of the previous fiscal year, and equity ratio was 43.9% and showed an increase of 0.9 % compared to the end of the previous fiscal year. The main assets and liabilities are listed below.

(1) Cash and Cash EquivalentsCash and cash equivalents (hereafter "funds") at the end of the current consolidated fiscal year totaled ¥4,640 million, a decrease of ¥1,937 million compared to the end of the previous fiscal year (an increase of ¥1,949 million in previous fiscal year).Each cash flow status is as follows:• Cash flow by Operating Activities

The current net profit before tax adjustments amounted to ¥923 million (¥2,741 million in the previous fiscal year). Depreciation and amortization (¥4,737 million; ¥3,897 in the previous fiscal year), an increase in inventories (¥685 million; decrease of ¥213 million in the previous fiscal year), a decrease in notes and accounts payable (¥1,050 million; increase of ¥976 million in the previous fiscal year) and an income taxes paid (¥1,102 million; ¥660 million in the previous fiscal year) were adjusted. As a result, funds increased by ¥2,183 million (¥7,346 million in the previous fiscal year) from operating activities.

• Cash flow by Investing ActivitiesPurchases of property, plant and equipment amounted to ¥4,076 million (¥2,948 million in previous fiscal year). Funds decreased by ¥4,221 million (¥3,091 million in previous fiscal year) by investing activities.

• Cash flow by Financing ActivitiesAn increase in short-term bank loans amounted to ¥800 million (A decrease of ¥1,636 in previous fiscal year). And cash dividends paid amounted to ¥469 million (¥469 million in previous fiscal year). As a result, funds increased by ¥134 million (decreased ¥2,326 in previous fiscal year) from financing activities.

(2) Notes Receivable and Accounts ReceivableAccounts receivable decreased by ¥667 million compared to the end of the previous fiscal year, to ¥14,592 million (25.1% of combined assets) because a forward exchange contract was partly used during the current consolidated fiscal year to avoid risks from exchange-rate fluctuations involving US$-based accounts receivable from overseas sales. However, the appreciating yen caused a decrease in the said US$-based account receivables on the last day of the current consolidated fiscal year. In addition, the last day of the previous consolidated fiscal year fell on a bank holiday.

(3) InventoriesProduction surpassed sales because production was enhanced in anticipation of expanded sales due to further development of current products and more applications as well as an expanded new product lineup in the Semiconductor Devices division. Consequently, inventories increased by ¥509 million compared to the end of the previous year, to ¥15,326 million (26.4% of combined assets).

(4) Property, Plant and EquipmentMain capital investment has been in manufacturing and R&D of semiconductors, which are key devices in electronic hardware where constant innovation is required and the market is rapidly changing. Total capital investment during the current consolidated fiscal year increased by ¥696 million compared to the previous fiscal year, to ¥4,173 million. However, property, plant and equipment decreased by ¥774 million compared to the end of the previous fiscal year, to ¥14,841 million (25.6% of combined assets) due to increased depreciation by a change in the depreciation method.

(5) Interest-bearing DebtDespite working consistently to improve and strengthen our financial standing, interest-bearing debt at the end of the current consolidated fiscal year increased by ¥561 million compared to the end of the previous fiscal year, to ¥9,401 million (16.2% of total liabilities and equity) due to short-term borrowing of working capital.

II. Results of Operations(1) Sales and Operating Profit and Loss Sales and operating profit and loss by division as well as by geographic segment for the current consolidated fiscal year are shown in "[Overview of Performance] Performance."Although measures were implemented to curb total expenses, in order to address decreased orders for semiconductor devices, which are our main business, and the impact of yen appreciation on overseas sales and operating profits, this did not ameliorate declining profits including the increase in depreciation expenses, resulting in a decrease in operating profits of ¥297 million compared to the previous fiscal year, to ¥1,542 million.

(2) Ordinary Profit and LossThe declining profit margin expanded due to exchange losses of ¥631 million caused by rapid appreciation of the yen, which started during the 4th quarter, resulting in a decrease in ordinary profits of ¥764 million (42.3%) compared to the previous fiscal year to ¥1,042 million.

(3) Current Net IncomeReversal of liability for retirement benefits of ¥993 million were recorded as special profit in the previous consolidated fiscal year as well as the corporate taxes for the past fiscal year recorded as a tax expense for the current consolidated fiscal year further expanded the declining profit margin, resulting in a decrease in a current net income of ¥1,287 million (74.7%) compared to the previous fiscal year, to ¥435 million.

[Overview of Performance]

• PerformanceDuring the current consolidated fiscal year, the Japanese economy showed signs of slow recovery driven by improved company earnings until the end of the year when the global surge in the cost of raw materials, especially oil, and the financial crisis and sluggish share prices and growing concern over the slowing US economy triggered by the US subprime loan crisis increased business uncertainty. In the electronics industry, demand for digital home appliances including the flat-panel TVs, digital still cameras, and mobile phones increased steadily.Looking at our group, our main Semiconductor Devices, and Microwave Tubes and Radar Components divisions increased sales steadily, while sales for the Microwave Application Products division decreased as active demand for components for satellite communications stabilized after the good previous fiscal year.As a result, our performance slowed during the current consolidated fiscal year. In addition, current net profit decreased considerably compared to the previous fiscal year when the reduced debt of ¥993 million for retirement allowances involving the change in our retirement allowance and pension systems was allocated as Reversal of liability for retirement benefits to special profits.

Sales: ¥60,443 million (decrease of 0.5% compared to previous fiscal year) Operating Income: ¥1,542 million (decrease of 16.2% compared to previous fiscal year) Ordinary Income: ¥1,042 million (decrease of 42.3% compared to previous fiscal year) Current Net Income: ¥435 million (decrease of 74.7% compared to previous fiscal year)

The segment information by business operation is not shown here. Instead, the performance by business division is listed below.Note that the operating profit or loss figure for each business division is that before unallocated operating expenses have been deducted.



<Semiconductor Devices Division>Increasing demand for power supply ICs for digital still cameras and game machines, new use of DSP (digital signal processor) in flat-panel TVs and LCD driver ICs in automotive displays contributed to increased sales. On the other hand, operational amplifiers and comparators remained flat; in audio ICs, sales of analog audio processors for TVs decreased, along with sales of video ICs and crystal oscillator ICs for digital still cameras.Sales of optical semiconductor devices increased due to new use in optical drives, as did sales of microwave devices (GaAs ICs) owing to growing demand for mobile phones. However, commissioned production and sales by our subsidiary NJR Fukuoka Co., Ltd. and sales of other companies' products by NJR Trading Co., Ltd. were sluggish.As a result, sales and operating profits showed only slight growth.

Sales: ¥51,132 million (increase of 1.7% compared to previous fiscal year) Operating Income: ¥6,053 million (increase of 1.5% compared to previous fiscal year)

<Microwave Application Products Division>Our main component products for satellite communications progressed sluggishly because the active demand for VSAT (Very Small Aperture Terminal) products during the previous year cooled down as we expected, while component products for terrestrial communications progressed favorably owing to increased sales for terrestrial digital broadcasting equipment in the Japanese market.As a result, overall sales and operating profits remained sluggish.

Sales: ¥4,732 million (decrease of 23.8% compared to previous fiscal year) Operating Income: ¥806 million (decrease of 39.9% compared to previous fiscal year)

<Microwave Tubes and Radar Components Division>Sales of microwave tubes and radar components for government and public offices as well as the private sector increased steadily, especially in large electronic tubes for the major clients, and ship radars for the private sector. The sales and operating profits were good.

Sales: ¥4,579 million (increase of 8.4% compared to previous fiscal year) Operating Income: ¥594 million (increase of 18.7% compared to previous fiscal year)

Performance by geographical segment is listed below.Note that these sales include internal sales between segments, and the operating profit and loss figure is that before unallocated operating expenses have been deducted.

<Japan>As main semiconductor products, increasing demand for power supply ICs for digital still cameras and game machines, and new use of DSP (digital signal processor) in flat-panel TVs contributed to increased sales.On the other hand, operational amplifiers and comparators remained flat; in audio ICs, sales of analog audio processors for TVs decreased, along with sales of crystal oscillator ICs for digital still cameras.Sales of optical semiconductor devices increased due to new use in optical drives, as did sales of microwave devices (GaAs ICs) owing to growing demand for mobile phones. In microwave application products, component products for satellite communications continued to slow.As a result, sales remained at the same level as the previous fiscal year while operating profits were down.

Sales: ¥59,567 million (decrease of 0.6% compared to previous fiscal year) Operating Income: ¥7,562 million (decrease of 5.8% compared to previous fiscal year)

<Asia>In main semiconductor products, despite strong sales of video ICs, sales of operational amplifiers and comparators for portable audio devices, and of power supply ICs for printers decreased, as did sales of audio ICs due to reduced production of flat-panel TVs. This led to a decrease in sales. In addition, our subsidiary THAI NJR Co., Ltd. showed an operating loss.As a result, sales increased but operating loss increased too.

Sales: ¥12,367 million (increase of 5.7% compared to previous fiscal year) Operating Loss: ¥191 million (operating loss of ¥128 million in previous fiscal year)

<North America>As main semiconductor products, power-supply ICs showed robust sales thanks to strong production of portable GPS and new use in flat-panel TVs. On the other hand, operational amplifiers and comparators remained flat, and sales of audio ICs decreased due to declining demand for flat-panel TVs. However, sales of other companies' products increased.As a result, sales and operating profits showed strong results.

Sales: ¥2,705 million (increase of 2.7% compared to previous fiscal year) Operating Income: ¥21 million (operating loss of ¥31 million in previous fiscal year)

• Segment Information

<Operating Income by Products> Unit: Millions of Yen

Net Sales 51,132 4,732 4,579 60,443Operating Expenses 45,079 3,926 3,985 52,990Segment Operating Income 6,053 806 594 7,453Unallocated Operating Expenses − − − 5,911Operating Income − − − 1,542

<Net Sales by Customer Location>

Japan 33,189 54.9 32,122 52.9Asia 20,569 34.0 19,873 32.7North America 3,365 5.6 4,877 8.0Europe 1,548 2.6 1,570 2.6Others 1,772 2.9 2,284 3.8Total 60,443 100.0 60,726 100.0



<Semiconductor Devices Division>Increasing demand for power supply ICs for digital still cameras and game machines, new use of DSP (digital signal processor) in flat-panel TVs and LCD driver ICs in automotive displays contributed to increased sales. On the other hand, operational amplifiers and comparators remained flat; in audio ICs, sales of analog audio processors for TVs decreased, along with sales of video ICs and crystal oscillator ICs for digital still cameras.Sales of optical semiconductor devices increased due to new use in optical drives, as did sales of microwave devices (GaAs ICs) owing to growing demand for mobile phones. However, commissioned production and sales by our subsidiary NJR Fukuoka Co., Ltd. and sales of other companies' products by NJR Trading Co., Ltd. were sluggish.As a result, sales and operating profits showed only slight growth.

Sales: ¥51,132 million (increase of 1.7% compared to previous fiscal year) Operating Income: ¥6,053 million (increase of 1.5% compared to previous fiscal year)

<Microwave Application Products Division>Our main component products for satellite communications progressed sluggishly because the active demand for VSAT (Very Small Aperture Terminal) products during the previous year cooled down as we expected, while component products for terrestrial communications progressed favorably owing to increased sales for terrestrial digital broadcasting equipment in the Japanese market.As a result, overall sales and operating profits remained sluggish.

Sales: ¥4,732 million (decrease of 23.8% compared to previous fiscal year) Operating Income: ¥806 million (decrease of 39.9% compared to previous fiscal year)

<Microwave Tubes and Radar Components Division>Sales of microwave tubes and radar components for government and public offices as well as the private sector increased steadily, especially in large electronic tubes for the major clients, and ship radars for the private sector. The sales and operating profits were good.

Sales: ¥4,579 million (increase of 8.4% compared to previous fiscal year) Operating Income: ¥594 million (increase of 18.7% compared to previous fiscal year)

Performance by geographical segment is listed below.Note that these sales include internal sales between segments, and the operating profit and loss figure is that before unallocated operating expenses have been deducted.

<Japan>As main semiconductor products, increasing demand for power supply ICs for digital still cameras and game machines, and new use of DSP (digital signal processor) in flat-panel TVs contributed to increased sales.On the other hand, operational amplifiers and comparators remained flat; in audio ICs, sales of analog audio processors for TVs decreased, along with sales of crystal oscillator ICs for digital still cameras.Sales of optical semiconductor devices increased due to new use in optical drives, as did sales of microwave devices (GaAs ICs) owing to growing demand for mobile phones. In microwave application products, component products for satellite communications continued to slow.As a result, sales remained at the same level as the previous fiscal year while operating profits were down.

Sales: ¥59,567 million (decrease of 0.6% compared to previous fiscal year) Operating Income: ¥7,562 million (decrease of 5.8% compared to previous fiscal year)

<Asia>In main semiconductor products, despite strong sales of video ICs, sales of operational amplifiers and comparators for portable audio devices, and of power supply ICs for printers decreased, as did sales of audio ICs due to reduced production of flat-panel TVs. This led to a decrease in sales. In addition, our subsidiary THAI NJR Co., Ltd. showed an operating loss.As a result, sales increased but operating loss increased too.

Sales: ¥12,367 million (increase of 5.7% compared to previous fiscal year) Operating Loss: ¥191 million (operating loss of ¥128 million in previous fiscal year)

<North America>As main semiconductor products, power-supply ICs showed robust sales thanks to strong production of portable GPS and new use in flat-panel TVs. On the other hand, operational amplifiers and comparators remained flat, and sales of audio ICs decreased due to declining demand for flat-panel TVs. However, sales of other companies' products increased.As a result, sales and operating profits showed strong results.

Sales: ¥2,705 million (increase of 2.7% compared to previous fiscal year) Operating Income: ¥21 million (operating loss of ¥31 million in previous fiscal year)

• Segment Information

<Operating Income by Products> Unit: Millions of Yen

Net Sales 51,132 4,732 4,579 60,443Operating Expenses 45,079 3,926 3,985 52,990Segment Operating Income 6,053 806 594 7,453Unallocated Operating Expenses − − − 5,911Operating Income − − − 1,542

<Net Sales by Customer Location>

Japan 33,189 54.9 32,122 52.9Asia 20,569 34.0 19,873 32.7North America 3,365 5.6 4,877 8.0Europe 1,548 2.6 1,570 2.6Others 1,772 2.9 2,284 3.8Total 60,443 100.0 60,726 100.0

Microwave Tubes and Radar

Components

MicrowaveApplication

ProductsSemiconductor

Devices Total

Net Sales(Millions of Yen)

Composition Ratio (%)

Net Sales(Millions of Yen)

Composition Ratio (%)

2008 2007


C o n s o l i d a t e d B a l a n c e S h e e t sNew Japan Radio Co., Ltd. and Subsidiaries March 31, 2008 and 2007

ASSETS LIABILITIES AND EQUITY

CURRENT ASSETS:Cash and cash equivalents ¥ 4,640 ¥ 6,577 $ 46,312 Notes and accounts receivable:

Trade notes 1,399 1,858 13,965 Trade accounts 13,193 13,401 131,674 Other 424 90 4,229 Allowance for doubtful accounts (90) (108) (899)

Inventories (Note 4) 15,326 14,817 152,967 Deferred tax assets (Note 7) 1,000 1,098 9,985 Other current assets 254 180 2,536

Total current assets 36,146 37,913 360,769

PROPERTY, PLANT AND EQUIPMENT (Note 5):Land 232 240 2,316 Buildings and structures 25,770 25,775 257,208 Machinery and equipment 61,740 61,048 616,234 Furniture and fixtures 11,348 11,228 113,262 Construction in progress 440 387 4,387

Total 99,530 98,678 993,407 Accumulated depreciation (84,689) (83,063) (845,281)

Net property, plant and equipment 14,841 15,615 148,126

INVESTMENTS AND OTHER ASSETS:Investment securities (Note 3) 2,708 2,819 27,029 Deferred tax assets (Note 7) 3,094 3,034 30,886 Other assets 1,317 1,008 13,142 Allowance for doubtful accounts (29) (28) (288)

Total investments and other assets 7,090 6,833 70,769

TOTAL ¥58,077 ¥60,361 $579,664

See notes to consolidated financial statements.

Thousands ofU.S. Dollars

(Note 1)Millions of Yen

20082008 2007




C o n s o l i d a t e d B a l a n c e S h e e t sNew Japan Radio Co., Ltd. and Subsidiaries March 31, 2008 and 2007

ASSETS LIABILITIES AND EQUITY

CURRENT ASSETS:Cash and cash equivalents ¥ 4,640 ¥ 6,577 $ 46,312 Notes and accounts receivable:

Trade notes 1,399 1,858 13,965 Trade accounts 13,193 13,401 131,674 Other 424 90 4,229 Allowance for doubtful accounts (90) (108) (899)

Inventories (Note 4) 15,326 14,817 152,967 Deferred tax assets (Note 7) 1,000 1,098 9,985 Other current assets 254 180 2,536

Total current assets 36,146 37,913 360,769

PROPERTY, PLANT AND EQUIPMENT (Note 5):Land 232 240 2,316 Buildings and structures 25,770 25,775 257,208 Machinery and equipment 61,740 61,048 616,234 Furniture and fixtures 11,348 11,228 113,262 Construction in progress 440 387 4,387

Total 99,530 98,678 993,407 Accumulated depreciation (84,689) (83,063) (845,281)

Net property, plant and equipment 14,841 15,615 148,126

INVESTMENTS AND OTHER ASSETS:Investment securities (Note 3) 2,708 2,819 27,029 Deferred tax assets (Note 7) 3,094 3,034 30,886 Other assets 1,317 1,008 13,142 Allowance for doubtful accounts (29) (28) (288)

Total investments and other assets 7,090 6,833 70,769

TOTAL ¥58,077 ¥60,361 $579,664




20082008 2007



20082008 2007

CURRENT LIABILITIES:Short-term bank loans (Note 5) ¥ 8,853 ¥ 8,077 $ 88,366 Current portion of long-term debt (Note 5) 171 186 1,704 Notes and accounts payable:

Trade accounts 8,166 9,435 81,509 Construction and other 2,135 1,837 21,313

Income taxes payable 38 614 382 Accrued expenses 3,551 4,109 35,440 Other current liabilities 333 430 3,318

Total current liabilities 23,247 24,688 232,032

LONG-TERM LIABILITIES:Long-term debt (Note 5) 91 275 909 Liability for retirement benefits (Note 6) 8,937 9,118 89,200 Other long-term liabilities 279 295 2,780

Total long-term liabilities 9,307 9,688 92,889

CONTINGENT LIABILITIES (Note 11)

EQUITY (Notes 8, 15 and 17):Common stock authorized, 138,000,000 shares; issued, 39,131,000 shares in 2008 and 2007 5,220 5,220 52,102 Additional paid-in capital 5,224 5,224 52,140 Retained earnings 14,822 14,856 147,935 Net unrealized gain on available-for-sale securities 822 885 8,201 Foreign currency translation adjustments (562) (198) (5,607)Treasury stock at cost, 4,076 shares and 2,476 shares in 2008 and 2007 (3) (2) (28)

Total equity 25,523 25,985 254,743

TOTAL ¥58,077 ¥60,361 $579,664


C o n s o l i d a t e d S t a t e m e n t s o f I n c o m eNew Japan Radio Co., Ltd. and Subsidiaries Years Ended March 31, 2008, 2007 and 2006

NET SALES ¥60,443 ¥60,726 ¥60,333 $603,288

COST OF SALES (Note 9) 47,534 47,296 47,243 474,438

Gross profit 12,909 13,430 13,090 128,850

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 9) 11,367 11,591 11,335 113,460

Operating income 1,542 1,839 1,755 15,390

OTHER INCOME (EXPENSES):Interest and dividend income 50 34 31 500 Interest expense (119) (90) (104) (1,189)Foreign exchange gains (losses) (631) (67) 74 (6,299)Reversal of liability for retirement benefits (Note 6) 993 Loss on sales and disposals of property, plant and equipment (132) (70) (90) (1,315)Gain on sales of waste 197 122 63 1,965 Other net (Note 10) 16 (20) 12 161

Other income (expenses) net (619) 902 (14) (6,177)

INCOME BEFORE INCOME TAXES 923 2,741 1,741 9,213

INCOME TAXES (Note 7):Current 238 947 754 2,374 Prior period 177 1,764 Deferred 73 72 (131) 734

Total income taxes 488 1,019 623 4,872

NET INCOME ¥ 435 ¥ 1,722 ¥ 1,118 $ 4,341

PER SHARE OF COMMON STOCK (Notes 2.r and 16):Basic net income ¥ 11.12 ¥ 44.00 ¥ 27.69 $ 0.11 Diluted net income 27.69 Cash dividends applicable to the year 12.00 12.00 12.00 0.12




20082008 2007 2006

U.S. DollarsYen


BALANCE, APRIL1, 2005 39,131 ¥5,220 ¥5,224 ¥13,030 ¥279 ¥(734) ¥(2)

Net income 1,118 Cash dividends, ¥12 per share (469)Bonuses to directors (40)Net increase in unrealized gain on available-for-sale securities 480 Net increase in foreign currency translation adjustments 228

BALANCE, MARCH 31, 2006 39,131 5,220 5,224 13,639 759 (506) (2)

Net income 1,722 Cash dividends, ¥12 per share (470)Bonuses to directors (35)Net increase in unrealized gain on available-for-sale securities 126 Net increase in foreign currency translation adjustments 308 Increase in treasury stock (250 shares)

BALANCE, MARCH 31, 2007 39,131 5,220 5,224 14,856 885 (198) (2)

Net income 435 Cash dividends, ¥12 per share (469)Net decrease in unrealized gain on available-for-sale securities (63)Net decrease in foreign currency translation adjustments (364)Increase in treasury stock (1,600 shares) (1)

BALANCE, MARCH 31, 2008 39,131 ¥5,220 ¥5,224 ¥14,822 ¥822 ¥(562) ¥(3)

BALANCE, MARCH 31, 2007 $52,102 $52,140 $148,280 $8,836 $(1,977) $(20)

Net income 4,341 Cash dividends, $0.12 per share (4,686)Net decrease in unrealized gain on available-for-sale securities (635)Net decrease in foreign currency translation adjustments (3,630)Increase in treasury stock (1,600 shares) (8)

BALANCE, MARCH 31, 2008 $52,102 $52,140 $147,935 $8,201 $(5,607) $(28)


Millions of YenThousandsIssued

Number ofShares of

Common Stock

TreasuryStock–At Cost

RetainedEarnings

AdditionalPaid-inCapital

CommonStock

ForeignCurrency

TranslationAdjustments

Net UnrealizedGain on

Available-for-saleSecurities

Thousands of U.S. Dollars (Note 1)

TreasuryStock–At Cost

RetainedEarnings

AdditionalPaid-inCapital

CommonStock

ForeignCurrency

TranslationAdjustments

Net UnrealizedGain on

Available-for-saleSecurities

C o n s o l i d a t e d S t a t e m e n t s o f C h a n g e s i n E q u i t yNew Japan Radio Co., Ltd. and Subsidiaries Years Ended March 31, 2008, 2007 and 2006


C o n s o l i d a t e d S t a t e m e n t s o f C a s h F l o w sNew Japan Radio Co., Ltd. and Subsidiaries Years Ended March 31, 2008, 2007 and 2006

OPERATING ACTIVITIES:Income before income taxes ¥ 923 ¥2,741 ¥1,741 $ 9,213 Adjustments for:

Income taxes paid (1,102) (660) (1,048) (11,003)Depreciation and amortization 4,737 3,897 4,300 47,275 Loss on sales and disposals of property, plant and equipment 132 70 90 1,315 Bonuses to directors (35) (40)Changes in assets and liabilities:

Increase (decrease) in allowance for doubtful accounts (1) 16 (11) (11)Increase (decrease) in liability for retirement benefits (181) (353) 361 (1,803)Increase (decrease) in interest payable 5 1 (2) 49 Decrease in notes and accounts receivable 390 387 993 3,897 Decrease (increase) in inventories (685) 213 100 (6,835)Increase (decrease) in notes and accounts payable (1,050) 976 901 (10,476)

Other net (985) 93 (337) (9,829)Total adjustments 1,260 4,605 5,307 12,579

Net cash provided by operating activities 2,183 7,346 7,048 21,792

INVESTING ACTIVITIES:Purchases of property, plant and equipment (4,076) (2,948) (3,674) (40,678)Proceeds from sales of property, plant and equipment 14 14 4 136 Purchases of investment securities (2) (2) (2) (20)Collection of loans receivable 16 16 163 156 Other net (173) (171) 64 (1,725)

Net cash used in investing activities (4,221) (3,091) (3,445) (42,131)

FINANCING ACTIVITIES:Net change in short-term bank loans 800 (1,636) (1,736) 7,985 Proceeds from long-term debt 306 Repayments of long-term debt (184) (214) (743) (1,841)Repurchase of treasury stock (1) (8)Cash dividends paid (469) (469) (469) (4,682)Other net (12) (7) (119)

Net cash provided by (used in) financing activities 134 (2,326) (2,642) 1,335

FORWARD ¥(1,904) ¥1,929 ¥ 961 $(19,004)



20082008 2007 2006


C o n s o l i d a t e d S t a t e m e n t s o f C a s h F l o w s

FORWARD ¥(1,904) ¥1,929 ¥ 961 $(19,004)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS (33) 20 8 (332)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,937) 1,949 969 (19,336)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 6,577 4,628 3,659 65,648

CASH AND CASH EQUIVALENTS, END OF YEAR ¥ 4,640 ¥6,577 ¥4,628 $ 46,312




20082008 2007 2006

27

N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t sNew Japan Radio Co., Ltd. and Subsidiaries

26 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T 2 0 0 8

1. BASIS OF PRESENTING FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law (formerly, the Japanese Securities and Exchange Law) and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.

In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2007 and 2006 consolidated financial statements to conform to the classifications used in 2008.

The consolidated financial statements are stated in Japanese yen, the currency of the country in which New Japan Radio Co., Ltd. (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥100.19 to U.S.$1, the approximate rate of exchange at March 31, 2008. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Consolidation The consolidated financial statements as of March 31, 2008 include the accounts of the Company and all subsidiaries (together the "Companies").

Since the year ended March 31, 2008, NJR SHANGHAI CO., LTD. is newly consolidated.

Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Company has ability to exercise significant influence are accounted for by the equity method.

All significant intercompany balances and transactions have been eliminated in consolidation.All material unrealized profit included in assets resulting from transactions within the Companies is eliminated.

b. Cash and Cash Equivalents Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits which mature within three months of the date of acquisition.

c. Foreign Currency Transactions All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the income statement to the extent that they are not hedged by forward exchange contracts.

2726 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T 2 0 0 8

1. BASIS OF PRESENTING FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law (formerly, the Japanese Securities and Exchange Law) and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.

In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2007 and 2006 consolidated financial statements to conform to the classifications used in 2008.

The consolidated financial statements are stated in Japanese yen, the currency of the country in which New Japan Radio Co., Ltd. (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥100.19 to U.S.$1, the approximate rate of exchange at March 31, 2008. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Consolidation The consolidated financial statements as of March 31, 2008 include the accounts of the Company and all subsidiaries (together the "Companies").

Since the year ended March 31, 2008, NJR SHANGHAI CO., LTD. is newly consolidated.

Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Company has ability to exercise significant influence are accounted for by the equity method.

All significant intercompany balances and transactions have been eliminated in consolidation.All material unrealized profit included in assets resulting from transactions within the Companies is eliminated.

b. Cash and Cash Equivalents Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits which mature within three months of the date of acquisition.

c. Foreign Currency Transactions All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the income statement to the extent that they are not hedged by forward exchange contracts.

d. Foreign Currency Financial Statements Financial statements of foreign subsidiaries are translated into Japanese yen at the current exchange rates as of the balance sheet date for all balance sheet accounts except for equity, which are translated at the historical exchange rate.

Differences arising from such translation are shown as "Foreign currency translation adjustments" in a separate component of equity.

Revenue and expense accounts of consolidated foreign subsidiaries are translated into yen at the average exchange rate.

e. Marketable and Investment Securities All marketable securities the Companies own are classified as available-for-sale securities and are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity. The cost of securities sold is determined based on the moving-average method.

Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.

For other than temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.

f. Inventories Merchandise and finished goods are stated at cost determined by the moving-average method. Raw materials are stated at cost determined by the average method. Work in process is stated at cost, determined by the average method, or using the specific identification method. Inventories of foreign consolidated subsidiaries are stated at the lower of cost or market determined by the average method.

g. Property, Plant and Equipment Property, plant and equipment are stated at cost.

Depreciation of property, plant and equipment of the Companies is computed by the declining-balance method at rates based upon the usage of the assets over the estimated useful lives of the assets, while the straight-line method is applied to buildings acquired after April 1, 1998, of the Company and its domestic subsidiaries.

Estimated useful lives are as follows:

Buildings and structures 2 to 60 yearsMachinery and equipment 2 to 17 yearsFurniture and fixtures 1 to 20 years

Property, plant and equipment acquired on and after April 1, 2007 are depreciated in accordance with the revised corporate tax law, which is effective for fiscal years beginning on and after April 1, 2007.

The effect of this treatment was to decrease income before income taxes for the year ended March 31, 2008 by ¥232 million ($2,321 thousand).

Property, plant and equipment had been depreciated up to 95% of acquisition cost with 5% of residual value carried until previous fiscal years. However, such 5% portion of property, plant and equipment is systematically amortized over 5 years starting in the following year in which the carrying value of property, plant and equipment reaches 5% of the acquisition cost in accordance with the revised corporate tax law.

The effect of this treatment was to decrease income before income taxes for the year ended March 31, 2008 by ¥399 million ($3,982 thousand).



h. Long-lived Assets The Companies review its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.

i. Other Assets Intangible assets are carried at cost less accumulated amortization, which is calculated by the straight-line method principally over 3 to 10 years for intangible assets.

j. Retirement Benefits Since April 1, 2007, the Company has a cash balance pension plan covering employees with 20 years or more of service, or employees retiring over the age of 55 with 15 years or more of service.

The Companies accounted for the liability for retirement benefits based on projected benefit obligations and plan assets at the balance sheet date.

The Company has provided an allowance for directors' and corporate auditors' retirement benefits calculated in accordance with the Company's rules and has included this amount in the liability for retirement benefits.

k. Allowance for Doubtful Accounts The allowance for doubtful accounts is stated in amounts considered to be appropriate based on the Companies' past credit loss experience and an evaluation of potential losses in the receivables outstanding.

l. Bonuses to Directors and Corporate Auditors Bonuses to directors and corporate auditors are accrued at the year end to which such bonuses are attributable.

m. Presentation of Equity On December 9, 2005, the Accounting Standards Board of Japan (the "ASBJ") published a new accounting standard for presentation of equity. Under this accounting standard, certain items which were previously presented as liabilities are now presented as components of equity. Such items include stock acquisition rights, and any deferred gain or loss on derivatives accounted for under hedge accounting. This standard is effective for fiscal years ending on or after May 1, 2006. The consolidated balance sheets as of March 31, 2008 and 2007 are presented in line with this new accounting standard.

n. Research and Development Costs Research and development costs are charged to income as incurred.

o. Income Taxes The provision for income taxes is computed based upon pretax income included in the consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to temporary differences.

The Companies file a tax return under the consolidated corporate-tax system, which allows companies to base tax payments on the combined profits or losses of the parent company and its wholly owned domestic subsidiaries.

p. Leases Under Japanese accounting standards for leases, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, while other finance leases are permitted to be accounted for as operating lease transactions if certain "as if capitalized" information is disclosed in the notes to the lessee's consolidated financial statements.


q. Derivative Financial Instruments The Companies use derivative financial instruments to manage their exposures to fluctuations in foreign exchange rates. Foreign exchange forward contracts are utilized by the Companies to reduce foreign currency exchange rate risk. Derivative transactions entered into by the Companies have been made in accordance with internal policies which regulate the authorization and credit limit amount. The Companies do not enter into derivatives for trading or speculative purposes.

Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: (a) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the income statement and (b) for derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.

r. Per Share Information Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period, retroactively adjusted for stock splits. The average number of common shares used in the computation was 39,127,908 shares, 39,128,768 shares and 39,128,774 shares for 2008, 2007 and 2006, respectively.

Diluted net income per share reflects the potential dilution that could occur if securities were exercised into common stock. Diluted net income per share of common stock assumes full exercise of outstanding warrants.

Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year.

s. New Accounting Pronouncements

Measurement of Inventories Under Japanese GAAP, inventories are currently measured either by the cost method, or at the lower of cost or market. On July 5, 2006, the ASBJ issued ASBJ Statement No. 9, "Accounting Standard for Measurement of Inventories," which is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted. This standard requires that inventories held for sale in the ordinary course of business be measured at the lower of cost or net selling value, which is defined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses. The replacement cost may be used in place of the net selling value, if appropriate. The standard also requires that inventories held for trading purposes be measured at the market price.

Lease Accounting On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease Transactions," which revised the existing accounting standard for lease transactions issued on June 17, 1993. The revised accounting standard for lease transactions is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted for fiscal years beginning on or after April 1, 2007.

Under the existing accounting standard, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, however, other finance leases are permitted to be accounted for as operating lease transactions if certain "as if capitalized" information is disclosed in the note to the lessee's financial statements. The revised accounting standard requires that all finance lease transactions shall be capitalized recognizing lease assets and lease obligations in the balance sheet.



Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements Under Japanese GAAP, a company currently can use the financial statements of its foreign subsidiaries which have been prepared in accordance with generally accepted accounting principles in their respective jurisdictions for its consolidation process unless they are clearly unreasonable. On May 17, 2006, the ASBJ issued ASBJ Practical Issues Task Force (PITF) No. 18, "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements." The new standard prescribes: (1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated financial statements, (2) financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States tentatively may be used for the consolidation process, (3) however, the following items should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP unless they are not material;

(1) Amortization of goodwill(2) Actuarial gains and losses of defined benefit plans recognized outside profit or loss(3) Capitalization of intangible assets arising from development phases(4) Fair value measurement of investment properties, and the revaluation model for property, plant and equipment, and

intangible assets(5) Retrospective application when accounting policies are changed(6) Accounting for net income attributable to a minority interest

The new task force is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted.

Asset Retirement Obligations On March 31, 2008, the ASBJ published a new accounting standard for asset retirement obligations. Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from the acquisition, construction, development and the normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of the related asset retirement cost. This standard is effective for fiscal years beginning on or after April 1, 2010 with early adoption permitted for fiscal years beginning on or before March 31, 2010.


3. MARKETABLE AND INVESTMENT SECURITIES

Marketable and investment securities at March 31, 2008 and 2007, consisted of the following:

Non-current:Marketable equity securities ¥2,701 ¥2,812 $26,959 Trust fund investments and other 7 7 70

Total ¥2,708 ¥2,819 $27,029

The carrying amounts and aggregate fair values of marketable and investment securities at March 31, 2008 and 2007, were as follows:

Securities classified as available-for-sale Equity securities ¥1,322 ¥1,386 ¥7 ¥2,701

Total ¥1,322 ¥1,386 ¥7 ¥2,701

Securities classified as available-for-sale Equity securities ¥1,326 ¥1,487 ¥1 ¥2,812

Total ¥1,326 ¥1,487 ¥1 ¥2,812

Securities classified as available-for-sale Equity securities $13,195 $13,834 $70 $26,959

Total $13,195 $13,834 $70 $26,959

2008Millions of Yen

CostUnrealized

GainsUnrealized

LossesFair

Value

2008Thousands of U.S. Dollars

CostUnrealized

GainsUnrealized

LossesFair

Value

2007Millions of Yen

CostUnrealized

GainsUnrealized

LossesFair

Value

2008 2007 2008

Thousands ofU.S. DollarsMillions of Yen


New Japan Radio Co., Ltd. and Subsidiaries

N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s

Available-for-sale securities whose fair value is not readily determinable as of March 31, 2008 and 2007, were as follows:

Available-for-sale Equity securities ¥7 ¥7 $70

Total ¥7 ¥7 $70

Sales of marketable and investment securities at March 31, 2008, consisted of the following:

The amount of sale ¥9 $88 The amount of a gain on sale 4 43

4. INVENTORIES

Inventories at March 31, 2008 and 2007, consisted of the following:

Merchandise ¥ 56 ¥ 49 $ 561 Finished goods 5,142 5,119 51,324 Work in process 7,950 7,502 79,351 Raw materials 1,083 1,099 10,807 Supplies 1,095 1,048 10,924

Total ¥15,326 ¥14,817 $152,967

5. SHORT-TERM BANK LOANS AND LONG-TERM DEBT

Short-term bank loans at March 31, 2008 and 2007, consisted of notes to banks. The annual weighted average interest rates for short-term bank loans for the years ended March 31, 2008 and 2007, were 1.36 percent and 1.08 percent, respectively.

Millions of YenThousands of U.S. Dollars


Year EndingMarch 31

2008 2007 2008


2008 2007 2008


Carrying Amount


20082008 2007


Long-term debt at March 31, 2008 and 2007, consisted of the following:

Loans from banks and other financial institutions, due serially to 2011 with interest rates ranging from 1.05 to 1.60 percent (2008) and from 1.05 to 1.40 percent (2007): Collateralized ¥ 88 ¥ 184 $ 878 Unsecured 174 277 1,735

Total 262 461 2,613 Less current portion (171) (186) (1,704)Long-term debt, less current portion ¥ 91 ¥ 275 $ 909

Annual maturities of long-term debt outstanding at March 31, 2008, were as follows:

2009 ¥171 $1,704 2010 61 606 2011 30 303

Total ¥262 $2,613

The carrying amount of assets pledged as the above collateralized long-term debt at March 31, 2008, was as follows:

Property, plant and equipment net of accumulated depreciation ¥4,726 $47,167

6. RETIREMENT BENEFITS

The Company and its domestic subsidiaries maintain pension plans for their employees. The plans provide for lump-sum payments to terminated employees who have two years or more of continuous service.

Since April 1, 2007, the Company has a cash balance pension plan covering employees with 20 years or more of service, or employees retiring over the age of 55 with 15 years or more of service.

Certain foreign subsidiaries have a contributory funded pension plan covering only employees who have one year or more continuous service.

Retirement allowances for employees are determined on the basis of length of service and current basic salary at the time of termination. If the termination is involuntary, the employee is usually entitled to greater payment than in the case of voluntary termination.




Year EndingMarch 31

2008 2007 2008



Long-term debt at March 31, 2008 and 2007, consisted of the following:

Loans from banks and other financial institutions, due serially to 2011 with interest rates ranging from 1.05 to 1.60 percent (2008) and from 1.05 to 1.40 percent (2007): Collateralized ¥ 88 ¥ 184 $ 878 Unsecured 174 277 1,735

Total 262 461 2,613 Less current portion (171) (186) (1,704)Long-term debt, less current portion ¥ 91 ¥ 275 $ 909

Annual maturities of long-term debt outstanding at March 31, 2008, were as follows:

2009 ¥171 $1,704 2010 61 606 2011 30 303

Total ¥262 $2,613

The carrying amount of assets pledged as the above collateralized long-term debt at March 31, 2008, was as follows:

Property, plant and equipment net of accumulated depreciation ¥4,726 $47,167

6. RETIREMENT BENEFITS

The Company and its domestic subsidiaries maintain pension plans for their employees. The plans provide for lump-sum payments to terminated employees who have two years or more of continuous service.

Since April 1, 2007, the Company has a cash balance pension plan covering employees with 20 years or more of service, or employees retiring over the age of 55 with 15 years or more of service.

Certain foreign subsidiaries have a contributory funded pension plan covering only employees who have one year or more continuous service.

Retirement allowances for employees are determined on the basis of length of service and current basic salary at the time of termination. If the termination is involuntary, the employee is usually entitled to greater payment than in the case of voluntary termination.




The liability for employees' retirement benefits at March 31, 2008 and 2007, consisted of the following:

Projected benefit obligation ¥14,759 ¥14,410 $147,313 Fair value of plan assets (4,791) (4,764) (47,820)Unrecognized actuarial loss (1,314) (806) (13,115)

Net liability ¥ 8,654 ¥8,840 $ 86,378

The components of net periodic benefit costs are as follows:

Service cost ¥ 835 ¥873 ¥ 810 $ 8,332 Interest cost 360 363 345 3,594 Expected return on plan assets (119) (87) (133) (1,188)Amortization of prior service cost (993)Recognized actuarial loss 105 108 146 1,053

Net periodic benefit costs ¥1,181 ¥264 ¥1,168 $11,791

Assumptions used for the years ended March 31, 2008 and 2007, are set forth as follows:

Discount rate 2.5% 2.5% Expected rate of return on plan assets 2.5% 2.0% Recognition period of actuarial gain/loss 15 years 15 years Amortization period of prior service cost 1 year 1 year

The liability for retirement benefits to directors and corporate auditors included in the accompanying consolidated balance sheets amounted to ¥283 million ($2,822 thousand) and ¥278 million at March 31, 2008 and 2007, respectively. Amounts payable to directors and corporate auditors upon retirement are subject to the approval of the shareholders.

7. INCOME TAXES

The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 40.4 percent for the years ended March 31, 2008 and 2007.

The tax effects of significant temporary differences and loss carryforwards which result in deferred tax assets and liabilities at March 31, 2008 and 2007, were as follows:

Current

Deferred tax assets:Inventories ¥ 152 ¥ 161 $1,523 Accrued bonuses 793 818 7,911 Accrued enterprise tax 7 64 68 Others 159 164 1,586 Valuation allowance (4) (6) (34)

Total 1,107 1,201 11,054

Deferred tax liabilities: Inventories 95 103 949 Others 12 120

Total 107 103 1,069

Net deferred tax assets ¥1,000 ¥1,098 $9,985

Non-current

Deferred tax assets:Liability for retirement benefits ¥3,597 ¥3,650 $35,907 Tax loss carryforwards 208 137 2,074 Others 130 143 1,298 Valuation allowance (228) (182) (2,277)

Total 3,707 3,748 37,002 Offset with deferred tax liabilities (613) (714) (6,116)


Deferred tax liabilities: Special reserve for tax purposes ¥ 7 Undistributed earnings of subsidiaries ¥ 54 104 $ 537 Unrealized gain on available-for-sale securities 559 601 5,579 Others 1 2 9

Total 614 714 6,125 Offset with deferred tax assets (613) (714) (6,116)

Net deferred tax liabilities ¥ 1 $ 9

2008 2007 2008


2008 2007 2008



20082008 2007 2006

2008 2007




The liability for employees' retirement benefits at March 31, 2008 and 2007, consisted of the following:

Projected benefit obligation ¥14,759 ¥14,410 $147,313 Fair value of plan assets (4,791) (4,764) (47,820)Unrecognized actuarial loss (1,314) (806) (13,115)

Net liability ¥ 8,654 ¥8,840 $ 86,378

The components of net periodic benefit costs are as follows:

Service cost ¥ 835 ¥873 ¥ 810 $ 8,332 Interest cost 360 363 345 3,594 Expected return on plan assets (119) (87) (133) (1,188)Amortization of prior service cost (993)Recognized actuarial loss 105 108 146 1,053

Net periodic benefit costs ¥1,181 ¥264 ¥1,168 $11,791

Assumptions used for the years ended March 31, 2008 and 2007, are set forth as follows:

Discount rate 2.5% 2.5% Expected rate of return on plan assets 2.5% 2.0% Recognition period of actuarial gain/loss 15 years 15 years Amortization period of prior service cost 1 year 1 year

The liability for retirement benefits to directors and corporate auditors included in the accompanying consolidated balance sheets amounted to ¥283 million ($2,822 thousand) and ¥278 million at March 31, 2008 and 2007, respectively. Amounts payable to directors and corporate auditors upon retirement are subject to the approval of the shareholders.

7. INCOME TAXES

The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 40.4 percent for the years ended March 31, 2008 and 2007.

The tax effects of significant temporary differences and loss carryforwards which result in deferred tax assets and liabilities at March 31, 2008 and 2007, were as follows:

Current

Deferred tax assets:Inventories ¥ 152 ¥ 161 $1,523 Accrued bonuses 793 818 7,911 Accrued enterprise tax 7 64 68 Others 159 164 1,586 Valuation allowance (4) (6) (34)

Total 1,107 1,201 11,054

Deferred tax liabilities: Inventories 95 103 949 Others 12 120

Total 107 103 1,069


Non-current

Deferred tax assets:Liability for retirement benefits ¥3,597 ¥3,650 $35,907 Tax loss carryforwards 208 137 2,074 Others 130 143 1,298 Valuation allowance (228) (182) (2,277)

Total 3,707 3,748 37,002 Offset with deferred tax liabilities (613) (714) (6,116)


Deferred tax liabilities: Special reserve for tax purposes ¥ 7 Undistributed earnings of subsidiaries ¥ 54 104 $ 537 Unrealized gain on available-for-sale securities 559 601 5,579 Others 1 2 9

Total 614 714 6,125 Offset with deferred tax assets (613) (714) (6,116)

Net deferred tax liabilities ¥ 1 $ 9

2008 2007 2008





8. EQUITY

Since May 1, 2006, Japanese companies have been subject to the Corporate Law of Japan (the "Corporate Law"), which reformed and replaced the Commercial Code of Japan. The significant provisions in the Corporate Law that affect financial and accounting matters are summarized below:

a. Dividends

Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. However, the Company cannot do so because it does not meet all the above criteria.

The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to a certain limitation and additional requirements.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Corporate Law provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.

b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus

The Corporate Law requires that an amount equal to 10 percent of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25 percent of the common stock. Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Corporate Law also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.

c. Treasury Stock and Treasury Stock Acquisition Rights

The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by specific formula.

Under the Corporate Law, stock acquisition rights, which were previously presented as a liability, are now presented as a separate component of equity.

The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

The non-current net deferred tax liabilities are reflected in the consolidated balance sheets under "Other long-term liabilities."

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2008, 2007 and 2006, and the actual effective tax rate reflected in the accompanying consolidated statements of income is as follows:

Normal effective statutory tax rate 40.4% 40.4% 40.4% Taxation on per capita basis 1.6 0.6 0.9 Expenses not deductible for income tax purposes 6.3 (0.5) (0.3) Lower income tax rates applicable to income in certain foreign countries (3.5) 0.4 (0.2) Valuation allowance 8.7 1.3 4.0 Tax deduction of research and development (3.5) (5.6) (7.0) Others net 2.9 0.6 (2.0)

Actual effective tax rate 52.9% 37.2% 35.8%

At March 31, 2008, certain subsidiaries have tax loss carryforwards aggregating approximately ¥691 million ($6,901 thousand) which are available to be offset against taxable income of such subsidiaries in future years. These tax loss carryforwards, if not utilized, will expire as follows:

2009 ¥113 $1,134 2010 287 2,862 2011 86 856 2012 108 1,075 2013 and thereafter 97 974

Total ¥691 $6,901

2008 2007 2006


Year EndingMarch 31




8. EQUITY

Since May 1, 2006, Japanese companies have been subject to the Corporate Law of Japan (the "Corporate Law"), which reformed and replaced the Commercial Code of Japan. The significant provisions in the Corporate Law that affect financial and accounting matters are summarized below:

a. Dividends

Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. However, the Company cannot do so because it does not meet all the above criteria.

The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to a certain limitation and additional requirements.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Corporate Law provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.

b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus

The Corporate Law requires that an amount equal to 10 percent of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25 percent of the common stock. Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Corporate Law also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.

c. Treasury Stock and Treasury Stock Acquisition Rights

The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by specific formula.

Under the Corporate Law, stock acquisition rights, which were previously presented as a liability, are now presented as a separate component of equity.

The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

The non-current net deferred tax liabilities are reflected in the consolidated balance sheets under "Other long-term liabilities."

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2008, 2007 and 2006, and the actual effective tax rate reflected in the accompanying consolidated statements of income is as follows:

Normal effective statutory tax rate 40.4% 40.4% 40.4% Taxation on per capita basis 1.6 0.6 0.9 Expenses not deductible for income tax purposes 6.3 (0.5) (0.3) Lower income tax rates applicable to income in certain foreign countries (3.5) 0.4 (0.2) Valuation allowance 8.7 1.3 4.0 Tax deduction of research and development (3.5) (5.6) (7.0) Others net 2.9 0.6 (2.0)

Actual effective tax rate 52.9% 37.2% 35.8%

At March 31, 2008, certain subsidiaries have tax loss carryforwards aggregating approximately ¥691 million ($6,901 thousand) which are available to be offset against taxable income of such subsidiaries in future years. These tax loss carryforwards, if not utilized, will expire as follows:

2009 ¥113 $1,134 2010 287 2,862 2011 86 856 2012 108 1,075 2013 and thereafter 97 974

Total ¥691 $6,901




9. RESEARCH AND DEVELOPMENT COSTS

Research and development costs charged to income were ¥6,098 million ($60,867 thousand), ¥6,183 million and ¥6,305 million for the years ended March 31, 2008, 2007 and 2006, respectively.

10. OTHER INCOME (EXPENSES) OTHER NET

Other income (expenses) other net consisted of the following:

Loss on damages ¥(30) ¥(92) ¥(50) $(300)Gain on sales of property, plant and equipment 8 10 4 80 Gain on sales of investment securities 4 64 43 Loss on disposal of long-term prepaid expenses (60)Reversal of allowance for doubtful account 1 11 9 Other net 33 62 43 329

Total ¥ 16 ¥(20) ¥ 12 $ 161

11. LEASES

The Company and domestic subsidiaries have several lease agreements relating to office space, computer equipment and circuit equipment. Total lease payments under finance lease agreements that do not transfer ownership of the leased property to the Company and domestic subsidiaries were ¥158 million ($1,581 thousand), ¥185 million and ¥218 million for the years ended March 31, 2008, 2007 and 2006, respectively.

Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligations under finance leases, depreciation expense and interest expense of finance leases that do not transfer ownership of the leased property to the lessee on an "as if capitalized" basis for the years ended March 31, 2008 and 2007, was as follows:

Acquisition cost ¥39 ¥303 ¥280 ¥622 $385 $3,032 $2,793 $6,210 Accumulated depreciation 18 165 143 326 178 1,651 1,431 3,260

Net leased property ¥21 ¥138 ¥137 ¥296 $207 $1,381 $1,362 $2,950


20082008 2007 2006

Other

Furnitureand

Fixtures

Machineryand

EquipmentTotalOther

Furnitureand

Fixtures

Machineryand

Equipment Total

Thousands of U.S. Dollars

2008Millions of Yen

2008


Acquisition cost ¥41 ¥404 ¥352 ¥797Accumulated depreciation 15 234 150 399 Net leased property ¥26 ¥170 ¥202 ¥398

Obligations under finance leases as of March 31, 2008 and 2007, are as follows:

Due within one year ¥121 ¥147 $1,206 Due after one year 181 257 1,804

Total ¥302 ¥404 $3,010

The imputed interest expense portion which is computed using the interest method is excluded from the above obligations under finance leases.

Depreciation expense and interest expense under finance leases for the years ended March 31, 2008, 2007 and 2006, were as follows:

Depreciation expense ¥151 ¥177 ¥210 $1,509 Interest expense 8 9 7 73

Total ¥159 ¥186 ¥217 $1,582

Depreciation expense and interest expense, which are not reflected in the accompanying consolidated statements of income, are computed by the straight line-method and the interest method, respectively.

TotalOther

Furnitureand

Fixtures

Machineryand

Equipment

Millions of Yen

2007


20082008 2007


20082008 2007 2006




12. DERIVATIVES

The Company enters into foreign exchange forward contracts to hedge foreign exchange risk associated with certain assets and liabilities denominated in foreign currencies and forecasted transactions.

All derivative transactions are entered into to hedge foreign currency exposures incorporated with its financing activities. The Company does not hold or issue derivatives for trading purposes.

Because the counterparties to these derivatives are limited to major international financial institutions, the Company does not anticipate any losses arising from credit risk.

Derivative transactions entered into by the Company have been made in accordance with internal policies which regulate the authorization and credit limit amount.

The Company had no derivatives contracts outstanding at March 31, 2008 and 2007.

13. SEGMENT INFORMATION

Information about industry segments, geographical segments and sales to foreign customers of the Companies for the years ended March 31, 2008, 2007 and 2006, is as follows:

(1) Industry Segments

Industry segments information is not shown since substantially all consolidated net sales, operating income and identifiable assets for 2008, 2007 and 2006 resulted from the primary business of the Companies, which is to manufacture and sell electronics devices such as electron tubes and semiconductor devices.

(2) Geographical Segments

The segment information is grouped by geographic area based on the countries and areas where the Companies are located. The segments mainly consist of the following countries:

Asia: For 2008 Thailand, Singapore, ChinaFor 2007 and 2006 Thailand, Singapore

North America United States of America

The geographical segments of the Companies for the years ended March 31, 2008, 2007 and 2006, are summarized as follows:

Sales:To customers ¥53,065 ¥4,685 ¥2,693 ¥60,443 Interarea transfers 6,502 7,682 12 ¥(14,196)

Total 59,567 12,367 2,705 (14,196) 60,443

Operating expenses 52,005 12,558 2,684 (8,346) 58,901

Operating income (loss) ¥ 7,562 ¥ (191) ¥ 21 ¥ (5,850) ¥ 1,542

Total assets ¥48,824 ¥3,800 ¥ 457 ¥ 4,996 ¥58,077

Sales:To customers $529,652 $46,759 $26,877 $603,288 Interarea transfers 64,892 76,674 123 $(141,689)

Total 594,544 123,433 27,000 (141,689) 603,288


Operating income (loss) $ 75,472 $(1,903) $ 207 $ (58,386) $ 15,390

Total assets $487,317 $37,928 $ 4,557 $ 49,862 $ 579,664

Sales:To customers ¥53,413 ¥4,772 ¥2,541 ¥ 60,726 Interarea transfers 6,528 6,929 93 ¥ (13,550)

Total 59,941 11,701 2,634 (13,550) 60,726


Operating income (loss) ¥8,025 ¥(128) ¥ (31) ¥ (6,027) ¥ 1,839

Total assets ¥48,850 ¥4,492 ¥ 602 ¥ 6,417 ¥60,361




12. DERIVATIVES

The Company enters into foreign exchange forward contracts to hedge foreign exchange risk associated with certain assets and liabilities denominated in foreign currencies and forecasted transactions.

All derivative transactions are entered into to hedge foreign currency exposures incorporated with its financing activities. The Company does not hold or issue derivatives for trading purposes.

Because the counterparties to these derivatives are limited to major international financial institutions, the Company does not anticipate any losses arising from credit risk.

Derivative transactions entered into by the Company have been made in accordance with internal policies which regulate the authorization and credit limit amount.

The Company had no derivatives contracts outstanding at March 31, 2008 and 2007.

13. SEGMENT INFORMATION

Information about industry segments, geographical segments and sales to foreign customers of the Companies for the years ended March 31, 2008, 2007 and 2006, is as follows:

(1) Industry Segments

Industry segments information is not shown since substantially all consolidated net sales, operating income and identifiable assets for 2008, 2007 and 2006 resulted from the primary business of the Companies, which is to manufacture and sell electronics devices such as electron tubes and semiconductor devices.

(2) Geographical Segments

The segment information is grouped by geographic area based on the countries and areas where the Companies are located. The segments mainly consist of the following countries:

Asia: For 2008 Thailand, Singapore, ChinaFor 2007 and 2006 Thailand, Singapore

North America United States of America

The geographical segments of the Companies for the years ended March 31, 2008, 2007 and 2006, are summarized as follows:


Total 59,567 12,367 2,705 (14,196) 60,443



Total assets ¥48,824 ¥3,800 ¥ 457 ¥ 4,996 ¥58,077

Sales:To customers $529,652 $46,759 $26,877 $603,288 Interarea transfers 64,892 76,674 123 $(141,689)

Total 594,544 123,433 27,000 (141,689) 603,288


Operating income (loss) $ 75,472 $(1,903) $ 207 $ (58,386) $ 15,390

Total assets $487,317 $37,928 $ 4,557 $ 49,862 $ 579,664

Sales:To customers ¥53,413 ¥4,772 ¥2,541 ¥ 60,726 Interarea transfers 6,528 6,929 93 ¥ (13,550)

Total 59,941 11,701 2,634 (13,550) 60,726


Operating income (loss) ¥8,025 ¥(128) ¥ (31) ¥ (6,027) ¥ 1,839

Total assets ¥48,850 ¥4,492 ¥ 602 ¥ 6,417 ¥60,361

Millions of Yen

Eliminationsor Corporate

NorthAmericaAsiaJapan Consolidated

2008




2008

Millions of Yen



2007





Total 59,203 10,827 2,941 (12,638) 60,333



Total assets ¥49,228 ¥4,231 ¥ 674 ¥ 4,779 ¥58,912

Notes: 1. The unallocated operating expenses for the years ended March 31, 2008, 2007 and 2006, amounting to ¥5,911 million ($58,995 thousand), ¥5,966 million and ¥5,759 million, respectively, are included in "Eliminations or Corporate" column, which mainly consisted of administration expenses of the Company.

2. The corporate assets at March 31, 2008, 2007 and 2006, amounting to ¥8,252 million ($82,363 thousand), ¥9,974 million and ¥8,330 million, respectively, are included in "Eliminations or Corporate" column, and consisted primarily of funds held by the Company for investing purposes (cash, time deposits, marketable securities and investment securities) and assets held for administration of the Company.

3. As mentioned in Note 2.g, property, plant and equipment acquired on and after April 1, 2007, were depreciated in accordance with the revised corporate tax law, which is effective for fiscal years beginning on and after April 1, 2007.

The effect of this change was to decrease operating income in Japan by ¥230 million ($2,297 thousand) and was to increase the unallocated operating expenses included "Eliminations or Corporate" column by ¥2 million ($24 thousand) for the year ended March 31, 2008.

4. As mentioned in Note 2.g, property, plant and equipment had been depreciated up to 95% of acquisition cost with 5% of property, plant and equipment is systematically amortized over 5 years starting in the following year in which the carrying value of property, plant and equipment reaches 5% of the acquisition cost in accordance with the revised corporate tax law.

The effect of this change was to decrease operating income of Japan by ¥398 million ($3,974 thousand) and was to increase the unallocated operating expenses included "Eliminations or Corporate" column by ¥1 million ($8 thousand) for the year ended March 31, 2008.

Millions of Yen



2006


(3) Sales to Foreign Customers

Sales to foreign customers for the years ended March 31, 2008, 2007 and 2006, amounted to 27,254 million ($272,027 thousand), ¥28,604 million and ¥28,704 million, respectively, and accounted for 45.1 percent, 47.1 percent and 47.6 percent, respectively, of the consolidated net sales.

The segment information is grouped by geographic area based on the countries and regions where the Companies' customers are located. The segments mainly consist of the following countries and regions:

Asia Hong Kong, Republic of Korea, Taiwan, Singapore, MalaysiaNorth America United States of AmericaEurope United Kingdom, Holland, Germany, ItalyOther Israel, Mexico

Sales ¥20,569 ¥3,365 ¥1,548 ¥1,772 ¥27,254

Sales $205,306 $33,583 $15,450 $17,688 $272,027

Sales ¥19,873 ¥4,877 ¥1,570 ¥2,284 ¥28,604

Sales ¥20,454 ¥4,477 ¥1,589 ¥2,184 ¥28,704

Millions of Yen

OtherEuropeNorth

AmericaAsia Total

2008


OtherEuropeNorth

AmericaAsia Total

2008

Millions of Yen

OtherEuropeNorth

AmericaAsia Total

2007

Millions of Yen

OtherEuropeNorth

AmericaAsia Total

2006




14. RELATED PARTY TRANSACTIONS

Transactions with and balances due from and to directors for the year ended March 31, 2008 are not disclosed because they are immaterial.

15. STOCK OPTIONS

The stock options outstanding as of March 31, 2008 and 2007 are as follows:

The stock option activity is as follows:

For the Year Ended March 31, 2007

Vested: March 31, 2006 outstanding 131,000 Cancelled 7,000 March 31, 2007 outstanding 124,000

For the Year Ended March 31, 2008

Vested: March 31, 2007 outstanding 124,000 Cancelled 124,000 March 31, 2008 outstanding

From January 7, 2004 to December 20, 2007

Exercise Period

¥995 ($9.93)

Exercise Price

17 directors 1 employee

Persons Granted

2003 Stock Option

Stock Option

June 27, 2003

Date of Grant

131,000 shares

Number of Options Granted

(Shares)

2003 Stock Option


16. NET INCOME PER SHARE

Reconciliation of the differences between basic and diluted net income per share ("EPS") for the years ended March 31, 2008, 2007 and 2006 is as follows:

Year Ended March 31, 2008

Basic EPS Net income available to common shareholders ¥ 435 39,128 ¥11.12 $0.11


Basic EPS Net income available to common shareholders ¥1,722 39,129 ¥44.00


Basic EPS-Net income available to common shareholders ¥1,083 39,129 ¥27.69 Effect of dilutive securities Warrants 3

Diluted EPS Net income for computation ¥1,083 39,132 ¥27.69

Diluted net income per share is not disclosed because it is anti-dilutive.

17. SUBSEQUENT EVENT

At the general shareholders meeting of the Company held on June 27, 2008, the appropriation of retained earnings was duly approved as follows:

Cash dividends, ¥6.0 ($0.06) per share ¥235 $2,343

EPS

U.S. DollarsYen

Weighted-average Shares

Thousands of Shares

Net Income

Millionsof Yen


A N N U A L R E P O R T 2 0 0 846

I n d e p e n d e n t A u d i t o r s ' R e p o r t C o m p a n y I n f o r m a t i o n

Semiconductor Device Plant

Head OfficeNB Nihonbashi Bldg., 3-10, Nihonbashi Yokoyama-cho,

Chuo-ku, Tokyo 103-8456, Japan

SubsidiariesSaga Electronics Co., Ltd. (Japan)

NJR Trading Co., Ltd. (Japan)

NJR CORPORATION (U.S.A.)

NJR Chichibu Co., Ltd. (Japan)

THAI NJR CO., LTD. (Thailand)

NJR(SINGAPORE)PTE LTD (Singapore)

NJR Service Co., Ltd. (Japan)

NJR FUKUOKA CO., LTD. (Japan)

NJR SHANGHAI CO., LTD. (China)

Independent auditor Deloitte Touche Tohmatsu

Transfer agent Mizuho Trust & Banking Co., Ltd.

Stock exchange listing First Section, Tokyo Stock Exchange

Number of shareholders 2,925 (as of March 31, 2008)

PresidentKazuo Hirata*

Managing DirectorsShigeo Ohki*

Ryo Ogura

Rinji Inaba

Yuichi Seto

DirectorsYoshikazu Sashida

Shinji Takeuchi

Bunji Hisamori

Takashi Aoki

Kazuo Ozoe

Kenichi Matsuda

Miyuki Takahashi

Akira Seshimoto

Corporate AuditorsAkira Yamamoto

Kunio Kuramochi

Yoshihiro Yoshikawa

Shinya Maruyama

* Representative Director

To the Board of Directors of New Japan Radio Co., Ltd.:

We have audited the accompanying consolidated balance sheets of New Japan Radio Co., Ltd. (the "Company") and subsidiaries as of March 31, 2008 and 2007, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended March 31, 2008, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of New Japan Radio Co., Ltd. and subsidiaries as of March 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 31, 2008, in conformity with accounting principles generally accepted in Japan.

Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

June 27, 2008

A N N U A L R E P O R T 2 0 0 8 47

I n d e p e n d e n t A u d i t o r s ' R e p o r t C o m p a n y I n f o r m a t i o n

Board of Directors

Corporate Data

Organization Chart

President

Corporate Planning Department

Information System Department

Corporate Internal Auditing Department

Quality & Environmental Planning Department

Export Control Department

General Affairs Headquarters

Personnel Headquarters

Microwave & Optoelectronic Device Division

Semiconductor Manufacturing Headquarters

Semiconductor Technology Headquarters

Semiconductor Sales & Marketing Division

IC Division

Semiconductor Production Headquarters

Research Laboratory

Kawagoe Works

Microwave Division

Microwave Component Division

IC Plant

Semiconductor Device Plant

Head OfficeNB Nihonbashi Bldg., 3-10, Nihonbashi Yokoyama-cho,

Chuo-ku, Tokyo 103-8456, Japan

SubsidiariesSaga Electronics Co., Ltd. (Japan)

NJR Trading Co., Ltd. (Japan)

NJR CORPORATION (U.S.A.)

NJR Chichibu Co., Ltd. (Japan)

THAI NJR CO., LTD. (Thailand)

NJR(SINGAPORE)PTE LTD (Singapore)

NJR Service Co., Ltd. (Japan)

NJR FUKUOKA CO., LTD. (Japan)

NJR SHANGHAI CO., LTD. (China)

Independent auditor Deloitte Touche Tohmatsu

Transfer agent Mizuho Trust & Banking Co., Ltd.

Stock exchange listing First Section, Tokyo Stock Exchange

Number of shareholders 2,925 (as of March 31, 2008)

PresidentKazuo Hirata*

Managing DirectorsShigeo Ohki*

Ryo Ogura

Rinji Inaba

Yuichi Seto

DirectorsYoshikazu Sashida

Shinji Takeuchi

Bunji Hisamori

Takashi Aoki

Kazuo Ozoe

Kenichi Matsuda

Miyuki Takahashi

Akira Seshimoto

Corporate AuditorsAkira Yamamoto

Kunio Kuramochi

Yoshihiro Yoshikawa

Shinya Maruyama

* Representative Director

To the Board of Directors of New Japan Radio Co., Ltd.:

We have audited the accompanying consolidated balance sheets of New Japan Radio Co., Ltd. (the "Company") and subsidiaries as of March 31, 2008 and 2007, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended March 31, 2008, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of New Japan Radio Co., Ltd. and subsidiaries as of March 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 31, 2008, in conformity with accounting principles generally accepted in Japan.

Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

June 27, 2008

A N N U A L R E P O R T 2 0 0 8 47

A N N U A L R E P O R T 2 0 0 848

N J R C G r o u p

Achieving Customer Satisfaction inside and outside Japan

New Japan Radio(NJRC) Group has established business locations, sales subsidiariesinside and outside

Japan, covering all semiconductor products, microwave tubes and radar components, and microwave

application products.

We have built a global network of providing services and market research. Our design centers, which

were established in Osaka and Singapore, have already started their operations.

We will improve business performance with an eye towards cultivating existing product markets and

extending sales of new products.

PUBLISHER: New Japan Radio Co., Ltd.ADDRESS: NB Nihonbashi Bldg., 3-10, Nihonbashi Yokoyama-cho, Chuo-ku,Tokyo 103-8456, Japan Tel. +81-3-5642-8222 Fax. +81-3-5642-8220URL: http//www.njr.co.jp/EDITOR: WIN CORPORATION

Head OfficeNew Japan Radio Co., Ltd. NJR Trading Co., Ltd.Telephone +81-3-5642-8222Facsimile +81-3-5642-8220Head Office of New Japan Radio Co., Ltd. includes General Administration Department and Sales Department for semiconductor products. Serves as a starting point for NJR Group’s business.

Kawagoe WorksNew Japan Radio Co., Ltd. Telephone +81-49-264-2111Facsimile +81-49-264-4241Kawagoe Works is a base for R&D and semiconductor wafer manufacturing. A consistent system for manufacturing and sales has been established here for microwave products. Kawagoe Works creates New Japan Radio’s innovative technologies.

NJR Chichibu Co., Ltd.Telephone +81-494-54-2666Facsimile +81-494-54-2660This company performs fabrication and testing of water chips for NJRC semiconductors, opto devices and satellite broadcast reception components.

N J R C G r o u p

Achieving Customer Satisfaction inside and outside Japan

New Japan Radio(NJRC) Group has established business locations, sales subsidiariesinside and outside

Japan, covering all semiconductor products, microwave tubes and radar components, and microwave

application products.

We have built a global network of providing services and market research. Our design centers, which

were established in Osaka and Singapore, have already started their operations.

We will improve business performance with an eye towards cultivating existing product markets and

extending sales of new products.

PUBLISHER: New Japan Radio Co., Ltd.ADDRESS: NB Nihonbashi Bldg., 3-10, Nihonbashi Yokoyama-cho, Chuo-ku,Tokyo 103-8456, Japan Tel. +81-3-5642-8222 Fax. +81-3-5642-8220URL: http//www.njr.co.jp/EDITOR: WIN CORPORATION

Head OfficeNew Japan Radio Co., Ltd. NJR Trading Co., Ltd.Telephone +81-3-5642-8222Facsimile +81-3-5642-8220Head Office of New Japan Radio Co., Ltd. includes General Administration Department and Sales Department for semiconductor products. Serves as a starting point for NJR Group’s business.

Kawagoe WorksNew Japan Radio Co., Ltd. Telephone +81-49-264-2111Facsimile +81-49-264-4241Kawagoe Works is a base for R&D and semiconductor wafer manufacturing. A consistent system for manufacturing and sales has been established here for microwave products. Kawagoe Works creates New Japan Radio’s innovative technologies.

NJR Chichibu Co., Ltd.Telephone +81-494-54-2666Facsimile +81-494-54-2660This company performs fabrication and testing of water chips for NJRC semiconductors, opto devices and satellite broadcast reception components.

Saga Electronics Co., Ltd.Telephone +81-952-52-3181Facsimile +81-952-52-3214This company handles assembly and testing of NJRC semiconductor products, and also performs sub-contracting work.

NJR CORPORATIONTelephone +1-408-995-6200Facsimile +1-408-938-5580This company acts as a sales representative for NJRC products in North America, while also playing an important role in following market and technology trends.

THAI NJR CO., LTD.Telephone +66-53-581-260Facsimile +66-53-581-266An NJRC overseas production (assembly and testing) facility; also assists procurement by overseas clients.

NJR FUKUOKA CO., LTD.Telephone +81-92-805-4660Facsimile +81-92-805-4669This company, one of our group companies, handles semiconductor wafer manufacturing, and also manufactures products for New Japan Radio and sells various commissioned products. It is the key to expansion of New Japan Radio Group’s semiconductor business.

NJR (SINGAPORE) PTE LTDTelephone +65-6744-4143Facsimile +65-6744-9439This company handles NJRC's sales in Southeast Asia, overseeing and supporting regional sales representatives.

NJR SHANGHAI CO., LTD.Telephone +86-21-5820-2567Facsimile +86-21-5831-0737This company handles NJRC's sales in northeastern and northern China, overseeing and supporting regional sales representatives.

NewJapanRadio