Business Results

Overview

In FDK Group’s operating environment during the nine month period that ended December 31, 2008, difficulties increased due to the slowdown of the world economy. From the middle of that period, decline in demand affected many products, including LCD televisions, mobile phones and automobiles.

Under these conditions, FDK Group proceeded to concentrate on its core competencies in the power and high frequency areas in accordance with the Group’s New Policies and Strategies for Growth, which was announced in January, 2008. These two product areas are the ones we are most competitive in and the ones that are backed by our original material technologies.

FDK Group’s net sales for the nine months ending December 31, 2008 were JPY63,700 million, a substantial decrease of JPY25,092 million from the same period last year, as sales of LCD related products, which used to provide the majority of FDK’s net sales, were less than half those of the same period last year. This was due to the aftermath of the slowdown in consumption stemming from the downturn in the world economy. As a result, operating loss was JPY661 million, and as foreign exchange loss was increased by the rise in the yen’s value from October, loss before income taxes was JPY4,150 million.

Electronic Device Business

Sales of multilayer power inductors, coil devices, switching power supplies, and optical devices, which are our main product focus, remained the same as the same period last year. However, sales of signal processing modules for LCDs decreased from the same period last year due to the termination of contract manufacturing in Taiwan and the market slowdown. Sales of backlight inverter modules for LCDs decreased significantly from the same period last year due to a decline in prices for products in the LCD television market and the effect of pullbacks in consumer spending.

As a result, sales of the electronic device business were JPY43,696 million, a 35.9 % decrease from the same period last year.

Battery Business

Sales of alkaline batteries, which are core products in the battery business, remained the same as the same period last year due to some promotional activities for the Fujitsu Alkaline Batteries “G.D.R. series” in Japan and extended sales activities in the global market. Sales of lithium batteries decreased from the same period last year due to the affects of the decrease in demand for home construction in North America.

As a result, sales of the battery business were JPY20,004 million, a 3.2% decrease from the same period last year.

Cash Flow Condition

Cash flow from operating activities increased JPY287 million from the beginning of this fiscal year due to an increase in cash from the posting of depreciation and amortization and the decrease in notes and accounts receivable-trade. There were decreases in cash and cash equivalents caused by the posting of loss before income and the decrease in notes and accounts payable trade.

Cash flow from investment activities decreased JPY1,497 million from the beginning of the fiscal year due to the purchase of property, plants, equipment, etc. Cash flow from financing activities increased JPY401 million from the beginning of the fiscal year due to an increase in loans.

As a result, the balance of cash and cash equivalent at the end of December 31, 2008 was JPY8,068 million, an increase of JPY851 million from the beginning of the fiscal year.

Forecast for the Fiscal Year Ending March 31, 2009

FDK group is now examining new measures to deal with the current situation and is reviewing the drastically changed market in the third quarter and more severe market conditions expected in the fourth quarter. We will announce the financial forecast for the fiscal year ending March 31, 2009 after we complete our review of the effects of the measures we are taking on profits, as well as considering the impact of exchange rates and other pertinent factors.