Financial Information: Annual Report 2005

	Notes to Consolidated Financial Statements
	NSK Ltd. and Subsidiaries For the year ended March 31, 2005

14. Leases

(a) Finance Leases
The following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of the leased property as of March 31, 2005 and 2004, which would have been reflected in the consolidated balance sheets if finance lease accounting had been applied to the finance leases currently accounted for as operating leases:

		Millions of yen		Thousands of U.S. dollars
As of March 31,		2005	2004	2005
Acquisition costs:
	Machinery and equipment	¥3,871	¥4,423	$36,178
	Other assets	1,657	1,938	15,486
		¥5,528	¥6,361	$51,664
Accumulated depreciation:
	Machinery and equipment	¥2,032	¥2,347	$18,991
	Other assets	1,082	1,028	10,112
		¥3,115	¥3,376	$29,112
Net book value:
	Machinery and equipment	¥1,838	¥2,075	$17,178
	Other assets	574	909	5,364
		¥2,413	¥2,984	$22,551

  Lease payments relating to finance leases accounted for as operating leases amounted to ¥1,171 million ($10,944 thousand) and ¥1,380 million, which were equal to the depreciation expense of the leased assets computed by the straight-line method over the lease terms, for the years ended March 31, 2005 and 2004, respectively.

Year ending March 31,	Millions of yen	Thousands of U.S. dollars
2006	¥ 908	$ 8,486
2007 and thereafter	1,504	14,056
Total	¥2,413	$22,551

(b) Operating Leases
Future minimum lease payments subsequent to March 31, 2005 for noncancelable operating leases are summarized as follows:

Year ending March 31,	Millions of yen	Thousands of U.S. dollars
2006	¥1,116	$10,430
2007 and thereafter	3,471	32,439
Total	¥4,588	$42,879

15. Derivative Transactions

The Company and certain subsidiaries have entered into derivative transactions in order to manage certain risks arising from adverse fluctuations in foreign currency exchange rates and interest rates.
  The Company is exposed to credit risk in the event of nonperformance of the counterparties to its derivatives positions, but any such loss would not be material because the Company enters into such transactions only with financial institutions with high credit ratings.

Summarized below are the notional amounts and the estimated fair value of the derivative transactions outstanding at March 31, 2005 and 2004:

Millions of yen						Thousands of U.S. dollars
As of March 31, 2005			Notional amount	Fair value	Unrealized gain (loss)	Notional amount	Fair value	Unrealized gain (loss)
Forward foreign exchange contracts
	Buy:
		US$	¥189	¥182	¥(7)	$1,766	$1,701	$(65)
		STG£	50	50	0	467	467	0
		EURO	421	426	4	3,935	3,981	37
		YEN	907	901	(5)	8,477	8,421	(47)
Total			¥1,569	¥1,561	¥(8)	$14,664	$14,589	$(75)

Millions of yen
As of March 31, 2005			Notional amount	Fair value	Unrealized gain (loss)
Forward foreign exchange contracts
	Buy:
		US$	¥ 192	¥ 178	¥(14)
		STG£	58	55	(2)
		EURO	-	-	-
		YEN	1,455	1,437	(17)
Total			¥1,705	¥1,671	¥(34)

The notional amounts of the forward foreign exchange contracts presented above exclude those entered into to hedge receivables and payables denominated in foreign currencies, which have been translated and are reflected at their corresponding contracted rates in the accompanying consolidated balance sheets.

Interest-related transactions
At March 31, 2005 and 2004, the disclosure of fair value information for interest-related derivatives positions has been omitted since all derivatives have been accounted for as hedges.

16. Amounts Per Share

Yen				U.S. dollars
Year ended March 31,		2005	2004	2005
Net income :
	Basic	¥41.35	¥26.12	$0.386
	Diluted	40.78	25.83	0.381
Net assets		349.07	349.83	3.262
Cash dividends applicable to the year		11.00	6.50	0.103

Basic net income per share is computed based on the net income available for distribution to shareholders of common stock and the weighted average number of shares of common stock outstanding during each year. Diluted net income per share is computed based on the net income available for distribution to the shareholders and the weighted average number of shares of common stock outstanding during each year after giving effect to the dilutive potential of shares of common stock to be issued upon the conversion of convertible bonds and the exercise of stock options.
  Amounts per share of net assets are computed based on net assets available for distribution to the shareholders and the number of shares of common stock outstanding at the year end.
  Cash dividends per share for the year ended March 31, 2005 represented the cash dividends resolved by the Board of Directors as applicable to that year, together with the interim cash dividends paid. Cash dividends per share for the year ended March 31, 2004 represented the cash dividends proposed by the Board of Directors as applicable to that year, together with the interim cash dividends paid.

17. Supplementary Cash Flow Information

(a) Summary of assets and liabilities excluded from consolidation because of sales of subsidiaries’ stock
The following is a summary of the transferred assets and liabilities, relevant selling prices and net cash outflows resulting from the sales of subsidiaries’ stock for the years ended March 31, 2005 and 2004:

Millions of yen			Thousands of U.S. dollars
Year ended March 31,	2005	2004	2005
Current assets	¥ 2,055	¥ 11,413	$ 19,206
Non-current assets	1,392	3,302	13,009
Current liabilities	(205)	(11,829)	(1,916)
Non-current liabilities	(181)	(671)	(1,692)
Minority interest	(1,224)	(686)	(11,439)
Translation adjustments	112	90	1,047
Carrying value on an equity basis	(1,224)	(729)	(11,439)
(Loss) gain on sales of subsidiaries’ stock	(105)	460	(981)
Proceeds from sales of stock	618	1,351	5,776
Cash and cash equivalents held by subsidiaries	(1,514)	(1,706)	(14,150)
Net cash outflows	¥ (895)	¥ (335)	$ (8,364)

(b) Summary of assets and liabilities of subsidiaries included in consolidation upon acquisition of their stock
The following is a summary of the assets and liabilities of subsidiaries which were included in consolidation upon acquisition of their stock and a reconciliation of the related acquisition cost and net cash outflows for the year ended March 31, 2004:

Year ended March 31, 2004	Millions of yen
Current assets	¥19,352
Non-current assets	15,455
Excess of cost over net assets acquired	5,700
Current liabilities	(7,703)
Non-current liabilities	(2,823)
Minority interests	(471)
Carrying value on an equity basis	(12,212)
Acquisition cost	17,298
Cash and cash equivalents held by subsidiaries	(7,958)
Net cash outflows	¥ 9,339

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