Financial Information: Annual Report 2004

	NSK’s Comprehensive Growth Strategy —Maximizing Synergies

NSK’s Medium- to Long-Term Business Strategy

Clarifying the Profit Accountability of Each Business Unit
In February 2004, NSK transformed its business structure, previously organized by product—bearings, automotive components, and precision machinery and parts—into a customer-oriented structure. This change enables us to clarify the profit accountability of each business unit by allowing top management in each division to manage all stages, from research and development to production and sales. In addition, by unifying the line of communications, formally separated by product and function (i.e. production, marketing, and sales), we have created a new structure for more rapid and efficient business planning.
  In our industrial machinery bearings business, we are already among the top suppliers of standard ball bearings. In addition, we are working to expand our business in bearings for general industrial use, where latent demand is strong. In the automotive products and precision machinery and parts businesses, in addition to strengthening our profit structure, we will reinforce new product development, which is essential to growth.

Maximizing Our Comprehensive Strengths
In addition to improving profitability, growth, and stability of each business division, we aim to achieve greater synergies among all divisions. We also recognize that a powerful, centrifugal headquarter function for the entire NSK Group is vital to emerging a winner from among the competition and to achieving future growth in today’s rapidly changing and globalizing business environment. We will use the new organizational structure to maximize our comprehensiveness strengths, to increase the corporate value of the NSK Group both in the medium and long term.

Financial Results and Plan by Segment
(We have changed our segment categorization from fiscal 2004. For details, please refer to page 20.)

		Billions of Yen
For the years		FY2002	FY2003		FY2004
		Results	Initial Plan*1	Results	Inisial Plan*1
Bearings
	Net sales	321.9	325.6	332.8	347.4
	Operating income	22.1	22.0	23.6	29.4
	Operating income margin	6.9%	6.8%	7.1%	8.5%
Automotive components
	Net sales	150.7	121.6	129.3	131.1
	Operating income	4.3	4.0	4.3	5.8
	Operating income margin	2,8%	3.3%	3.3%	4.4%
Precision machinery and parts
	Net sales	34.9	34.4	47.1	37.2
	Operating income	-6.3	0.1	0.0	2.6
	Operating income margin	-18.0%	0.3%	-0.1%	7.0%
Others
	Net sales	15.3	10.4	13.0	10.3
	Operating income	1.1	0.5	1.1	0.8
	Operating income margin	7.4%	4.8%	9.1%	7.8%
Eliminations		-3.4	-3.6	-3.0	-3.6
Total
	Net sales	522.8	492.0	522.2	526.0
	Operating income	17.8	23.0	26.0	35.0
	Operating income margin	3.4%	4.7%	5.0%	6.7%
*1 Initial plan at the initiation of the mid-term business plan in February 2003

		Billions of Yen
		FY2003	FY2004
		Results*2	Revised Plan*3
Industrial machinery bearings
	Net sales	176.3	181.0
	Operating income	12.2	14.0
	Operating income margin	6.9%	7.7%
Automotive products
	Net sales	285.8	290.0
	Operating income	15.7	17.0
	Operating income margin	5.5%	5.7%
Precision machinery and parts
	Net sales	47.1	63.0
	Operating income	0.0	7.0
	Operating income margin	-0.1%	11.1%
Others
	Net sales	13.0	13.0
	Operating income	1.1	1.0
	Operating income margin	9.1%	7.7%
Eliminations		-3.0	-4.0
Total
	Net sales	522.2	555.0
	Operating income	26.0	35.0
	Operating income margin	5.0%	6.3%

	Billions of Yen
At year-end	FY2002	FY2003	FY2004
	Results	Results	Revised Plan*3
Inventories	83.5	75.9	69.5
Investment securities	36.8	54.9	54.9
Interest-bearing debts	267.8	246.5	216.5
Shareholders' equity	170.6	188.7	199.6
Total assets	593.1	621.9	607.0
D/E ratio (times)	1.57	1.31	1.08
ROE (%)	-1.41	7.96	7.98
Capital expenditures	23.0	25.5	30.0
Depreciation expenses	28.8	26.6	27.0