Informe Denso

Profile
DENSO Corporation, headquartered in Kariya, Aichi Prefecture, Japan, is a

leading global supplier of advanced automotive technologies, systems
and components. Since its foundation in 1949, the Company has spurred
industry growth through pioneering research and development and
superior quality products. As one of the world’s top suppliers of automo-
tive components, DENSO works hand-in-hand with all major automakers
worldwide in the fields of climate control, engine management, body
electronics, driving control and safety, hybrid vehicle components, and
information and communications.
DENSO also utilizes its proprietary technologies and expertise in industrial
systems, non-automotive thermal systems and other fields. The Company
currently employs approximately 112,000 people in 32 countries and regions
including Japan.
Significant Financial Results for the Year Ended March 31, 2007 (fiscal 2007)
• Operating income surpasses ¥300 billion for the first time; net sales and net income
are also record figures
• Every operating region reports higher sales and earnings in the same fiscal year for the
first time
• Annual dividend raised by ¥7.00 to ¥45.00 per share
Forward-looking Statements
This annual report contains forward-looking statements about DENSO’s future plans, strategies, benefits and perfor-
mance that are not historical facts. They are based on current expectations, estimates, forecasts and projections about
the industries in which it operates and benefits and assumptions made by management. As the expectations, esti-
mates, forecasts, and projections are subject to a number of risks, uncertainties and assumptions, they may cause
actual results to differ materially from those projected. DENSO, therefore, wishes to caution readers not to place undue
reliance on forward-looking statements. Furthermore, the company undertakes no obligation to update any forward-
looking statements as a result of new information, future events or other developments, risks, uncertainties and
assumptions mentioned.
Contents
❚ Highlights One: Financial 02
❚ Highlights Two: Global 03
❚ A Message From the President 04
❚ Initiatives for Realizing

the Long-term Plan for 2010 09
❚ Review of Operations by Segment 16
❚ Corporate Social Responsibility 27
❚ Corporate Governance,
Compliance and Risk Management 30
❚ Executive Management 34
❚ Financial Section 35
❚ Corporate Data 71
❚ Investor Information 76
DENSO Corporation Annual Report 2007 1

Highlights One: Financial
DENSO CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2007, 2006 and 2005
Thousands of
Millions of yen Percent change U.S. dollars
2007 2006 2005 2007/2006 2007
Net Sales: ¥3,609,700 ¥3,188,330 ¥2,799,949 13.2% $30,590,678
Sales in Japan 1,859,046 1,690,215 1,554,795 10.0% 15,754,627
Sales outside Japan 1,750,654 1,498,115 1,245,154 16.9% 14,836,051
Net Income 205,170 169,648 132,620 20.9% 1,738,729
Total Assets 3,765,135 3,411,975 2,780,982 10.4% 31,907,924
Equity *1 2,286,956 2,066,303 – 10.7% 19,380,983
Shareholders’ Equity – 1,970,388 1,643,182 – –
Capital Expenditures 312,457 288,714 235,258 8.2% 2,647,941
Depreciation 219,873 185,143 160,993 18.8% 1,863,330
R&D Expenses 279,890 256,339 238,241 9.2% 2,371,949
Yen Percent change U.S. dollars
Per Share:
Basic net income ¥ 249.88 ¥ 204.80 ¥ 159.02 22.0% $ 2.12
Cash dividends 45.00 38.00 32.00 18.4% 0.38
Equity *1 2,668.82 2,384.05 1,990.48 11.9% 22.62
Number of Employees 112,262 105,723 104,183 6.2%

Notes:1. U.S. dollar amounts have been translated, for convenience only, at the rate of ¥118=US$1, the approximate exchange rate prevailing on March 30,
2007, the last trading day of the fiscal year.
*1 Section under “Equity” is newly provided to conform to Japanese new accounting standard. The fiscal 2006 figures have also been reclassified to
reflect this change. See Note 2 (L) to the consolidated financial statements for details.
Net Sales Net Income Return on Equity

(Billions of yen) (Billions of yen) (%)
4,000 250 10
200 8
3,000
150 6
2,000
100 4
1,000
50 2
0 0 0
03 04 05 06 07 03 04 05 06 07 03 04 05 06 07
* The broken line excludes non-
recurring extraordinary items.
2 DENSO Corporation Annual Report 2007

Highlights Two: Global
Years ended March 31, 2007, 2006, 2005, 2004 and 2003
Net Sales (Millions of yen) Operating Income (Loss) (Millions of yen) Percentage of Net Sales (%)
Japan 2,000,000 250,000
200,000
1,500,000
150,000
1,000,000 52.8%
100,000
500,000
50,000
0 0
03 04 05 06 07 03 04 05 06 07
The Americas 800,000 30,000
600,000
20,000
400,000 21.0%
10,000
200,000
0 0
03 04 05 06 07 03 04 05 06 07
Europe 600,000 15,000
500,000
10,000
400,000
5,000
300,000
14.1%
0
200,000
–5,000
100,000
0 –10,000
03 04 05 06 07 03 04 05 06 07
Asia & Oceania 500,000 50,000
400,000 40,000
300,000 30,000
12.2%
200,000 20,000
100,000 10,000
0 0
03 04 05 06 07 03 04 05 06 07

A Message From the President
Koichi Fukaya
President and CEO
Fiscal 2007 Results

In fiscal 2007, the year ended March 31, 2007, consolidated net sales increased 13.2%
year on year to ¥3,609.7 billion. Operating income rose 13.7% to ¥303.1 billion, and net
income climbed 20.9% to ¥205.2 billion. All were record figures for the Company. This
strong performance reflected steady growth in sales to Japanese automakers, for
whom domestic and overseas production remained firm. Sales to automakers in
Europe and the United States also rose. Operating income, meanwhile, was supported
by higher output, as well as cost reductions, improved productivity, and other benefits
from efforts to rationalize operations and enhance management efficiency across
DENSO. These factors successfully offset the impact of escalating prices for raw mate-
rials during the year under review.
Operating Overview
In our push to realize DENSO VISION 2015, the DENSO Group took actions during the
year guided by a policy with two key goals—contribute to the creation of an advanced
automotive society, and evolve into a truly global corporation. For the first goal, we
worked to strengthen quality assurance systems to ensure customer trust and satisfac-
tion. To this end, we went back to basics, inspecting and reviewing every aspect of
DENSO operations, from development and design through to volume production and
shipments, to establish a rock-solid base for quality.
In product development, we created a host of new technologies and products, includ-
ing several world firsts, across the areas of the environment, safety, comfort and conve-
nience. These innovations were all incorporated in the Lexus LS460 unveiled in
September 2006.

With respect to the environment, DENSO developed the world’s first electric variable
cam timing control system. Linked to the running of the motor, this system helps to
reduce both fuel consumption and the emission of hazardous substances in exhaust
gases. In the area of safety, we developed four different products, among them a stereo
image-processing electronic control unit (ECU) and driving assistance ECU, both of
which were incorporated into a new pre-crash safety (PCS) system. In terms of innova-
tions that enhance comfort, DENSO developed a new air-conditioning system with the
world’s first matrix infrared sensor, which detects surface temperature distribution at the
rear of the vehicle cabin. This allows the new air-conditioning system to provide more
ideally conditioned air for individual vehicle occupants. In the area of convenience, we
developed another world first, this time a remote security system equipped with a remote
immobilizer function. In addition to product development in these four key areas, DENSO
also launched a new power supply management ECU in response to the growing number
of vehicle information displays that now require electrical power. The Lexus LS460 has
also been equipped with this ECU.
On a different note, the Ejector Cycle®, another world first developed by the DENSO
Remote security ECU
Group in 2003, was awarded the U.S. Environmental Protection Agency’s 2006 Climate
Protection Award. The award recognized the contribution made to combating global cli-
mate change by its innovative heat exchange cycle, which enables revolutionary
improvements in energy efficiency. This is achieved thanks to the use of a compact
refrigerant injector already used in refrigeration units found in refrigerated trucks, as well
as in home-use hot-water supply systems.
As growth in China, India, and other newly emerging markets continues, we took
steps to enhance DENSO’s capacity to develop products tailored to local needs with the
decision to establish a new technical center in Thailand. A similar center has already
been set up in China.
To evolve into a truly global corporation, we worked to build a powerful manufactur-
ing framework and raise awareness of workplace safety with the promotion and
entrenchment of the DENSO way of manufacturing worldwide. Specifically, this entailed
manufacturing training seminars at the Daian Plant in Japan for Group employees from
overseas as a means of ensuring that our unique approach to manufacturing is properly
conveyed to all parts of the Group. We also worked to bring a sense of shared values to
Manufacturing training seminar
the Group on a global scale by conducting activities to enhance understanding and
awareness of the “DENSO Spirit,” aiming to take full advantage of the knowledge and
teamwork of Group employees. This step was coupled with measures to boost motivation
and the level of collaboration through a more structured approach to workforce training.
With respect to DENSO global manufacturing framework, operations came onstream
at the integrated circuit (IC) wafer facilities that we recently added to the Kota Plant in
Japan. These new facilities will help DENSO meet growing demand for ECUs due to an
Kota Plant
increase in the number of air bag and other safety systems and energy-saving systems
such as electric power steering fitted to vehicles.

Amid growing awareness of environmental issues, we have also decided to boost
production capacity at DENSO Manufacturing Hungary Ltd. to meet increased demand
for diesel common rail systems in Europe. In Japan, we started producing essential com-
ponents for injectors, one of the key products for diesel common rail systems, at DENSO
Manufacturing Kitakyushu Co., Ltd. This is in support of full-scale operations already
under way at the Zenmyo Plant in Japan and Siam DENSO Manufacturing Co., Ltd. in
DENSO SISTEMAS TERMICOS
ESPANA S.A. Thailand to strengthen the DENSO supply system for diesel common rail systems
anchored by three bases worldwide.
In Europe, where DENSO is working to expand the car air conditioner business, we
complemented the launch of operations at DENSO SISTEMAS TERMICOS ESPANA S.A.
with the start of construction on new facilities at DENSO OTOMOTIV PARCALARI
SANAYI ANONIM SIRKET in Turkey.
In rapidly growing China, where local production by Japanese automakers has
DENSO OTOMOTIV PARCALARI

increased sharply, full-scale operations are now under way at 20 production companies
SANAYI ANONIM SIRKET established in the north and south of the country. This development has given DENSO a
wide-ranging manufacturing framework for supplying products to these automakers.
Capital Expenditures and Investment in R&D

Capital expenditures rose 8.2% during fiscal 2007 to ¥312.5 billion. We are planning to
increase capital expenditures to ¥353 billion in fiscal 2008 to respond to automakers’
aggressive plans to increase output and to support their global business operations. In
particular, we intend to increase output of heat exchangers, diesel common rail systems,
and automotive electronics.
Investment in R&D totaled ¥279.9 billion, or roughly 8.0% of consolidated net sales.
To pursue broad technology development activities in the four areas of the environment,
safety, comfort, and convenience, we are budgeting the same ratio to net sales of 8.0%,
or ¥305 billion, for investment in fiscal 2008. Going forward, we plan to maintain invest-
ment at 8.0% of net sales. This is a level that we believe will ensure DENSO can continue
to deliver sustained growth as an automotive components supplier capable of consis-
tently proposing new value to automakers.
Outlook for Fiscal 2008

Although Japanese automakers are likely to continue to raise output, we anticipate a
major drop-off in growth in sales to automakers in the U.S. and Europe. Accordingly, we
are forecasting consolidated net sales of ¥3,800 billion, an increase of 5.3% year on year,
for fiscal 2008, ending March 31, 2008. We are projecting slightly higher earnings, with
operating income up 1.6% to ¥308 billion, and net income up 0.9% to ¥207 billion. We
are only forecasting a marginal increase in operating income as we expect prices for raw
materials to remain high and an increase in depreciation accompanying amendments to
Japan’s tax system.

Initiatives for Sustainable Growth
The DENSO Group is working toward the completion of a long-term plan for 2010, first
formulated in fiscal 2006. To realize this vision, the Executive Vice Presidents and Senior
Managing Directors have taken the initiative in setting key promotion goals and identify-
ing the medium- to long-term issues facing the Group. These efforts notwithstanding,
DENSO today faces a far more severe business environment than initially anticipated,
one characterized by intensifying cost competition, high prices for raw materials, and
growth in the low-budget vehicle market, among other factors. In an environment of this
kind, accelerating the pace of measures for realizing the long-term plan will be critical to
preserving stable business growth.
For example, aggressive product development in the environmental area will be
important for attaining future growth. As fuel efficiency and emissions standards grow
more restrictive worldwide, automakers are responding by developing vehicles powered
by diesel, hybrid systems, biofuel and a variety of other power sources. Here, DENSO will
work hand in hand with automakers to develop technologies compatible with an array of
power sources.
At the same time, we are pressing ahead with activities to reduce costs. Among other
actions, we are encouraging the sharing of raw materials and components, as well as
common standards in these areas; pushing to implement successful examples of cost-
cutting across the Group; paring back fixed costs particularly at Group companies over-
seas; and improving capital expenditure efficiency not only at processing and assembly
facilities, but also at supply and transportation facilities.
In sum, these are the ways in which we are powerfully promoting product develop-
ment that will be the source of future growth and broad cost reductions. By leveraging
the stronger earnings base forged in the process, we will ensure that DENSO meets the
fiscal 2011 goals of consolidated net sales of at least ¥4 trillion and ROE of 10%.

Returning Profits to Shareholders
At DENSO, we consider the proactive return of profits to shareholders to be one of the
Company’s most important management concerns. Specific strategies in this regard are
a combination of dividends and share buybacks.
We view dividends as a means of paying stable returns to shareholders over the long
term. The fundamental policy with respect to dividends is to consistently increase the
cash dividend per share over the long term, giving due consideration to a comprehensive
range of factors that include consolidated business performance and the dividend payout
ratio. For fiscal 2007, the dividend applicable to the year was ¥45 per share, or ¥7 more
than the previous fiscal year.
We view share buybacks as a means of flexibly using retained earnings to return prof-
its to shareholders, with the amount of funds used for share buybacks based on our
business plans and cash flows. During the year under review we repurchased 7.5 million
shares, with a total value of ¥33.0 billion.
For fiscal 2007, the consolidated payout ratio was 18.0%. While slightly lower than
the previous year’s ratio of 18.6%, the total return ratio, which takes into account divi-
dend payments and share buybacks, was 34%, or roughly 4 percentage points higher
than a year earlier.
Improved business performance and ensuring steady earnings growth are both criti-
cal to raising shareholder value. For this reason, we effectively utilize retained earnings
for investment in R&D to develop new products, and for capital expenditures designed to
boost productivity and respond to growing output by DENSO customers.
As we look to the future, the continued support and understanding of our sharehold-
ers and other investors will be vital to DENSO’s success.
Koichi Fukaya
President and CEO

Feature
Initiatives for Realizing

the Long-term Plan for 2010
In accordance with our long-term plan first announced in 2006, we are eye-
ing consolidated net sales in excess of ¥4 trillion and an ROE of 10% by
fiscal 2011. In striving to meet this ROE benchmark, we are seeking to
improve the operating income margin as well.
Profits, however, are expected to plateau momentarily in fiscal 2008 due
to the increasingly large burden of upfront investments related to capital
expenditures, recruitment, and other spending required for future growth.
DENSO is nevertheless determined to meet its goals for fiscal 2011. To
cope with anticipated conditions, the Company will accelerate the pace of
initiatives outlined in the long-term plan in order to overcome the tempo-
rary lull in profit growth.
In this year’s feature, we introduce several programs and activities that
DENSO is pursuing in an effort to make the long-term plan a reality.

Feature 1
Achieving Future Growth

DENSO is striving to link future business growth to the development of sys-
tems and components that anticipate societal needs in the four areas of the
environment, safety, comfort, and convenience. The following is an intro-
duction to just some of the initiatives under way in two of those areas, the
environment and safety.
Environmental Initiatives
Across the globe, fuel efficiency standards to curb CO2 emissions and standards to re-
strict pollutants in exhaust gas are becoming tighter worldwide. Competition surrounding
the development of environmental technologies, meanwhile, is intensifying. The use of
ethanol and other environmentally friendly biofuels is also on the rise worldwide. By add-
ing biofuels to its long-standing and comprehensive development of products for gaso-
line, diesel and hybrid powertrains, DENSO will meet the needs of automakers at every
possible turn.
Gasoline direct injection engines have proven effectiveness in boosting fuel efficiency.
At DENSO, we are aiming to make this technology a more standard feature in gasoline-
engine vehicles through advances in components for fuel injection systems. Specifically,
we are working to develop technologies that can continuously improve performance of
the fuel pumps and injectors, while at the same time lowering costs.
Where diesel vehicles are concerned, in the very near future DENSO is planning to
launch a third-generation, 2,000-bar diesel common rail system that features lower emis-
sions, better power output and improved fuel efficiency.
For hybrids, although combining engines with electric motors has substantially en-
hanced fuel efficiency and power performance, such vehicles also require more compo-
nents than conventional vehicles. This has led to calls for better performance and more
compact size in every type of component, two areas that DENSO is currently addressing.
Meanwhile, in response to the growing use of biofuels, DENSO is collaborating with
automakers to gather information on fuels worldwide, while building a product develop-
ment framework with an eye to launching products for these fuel markets.
Diesel common rail system High output power control unit for
hybrid vehicles

Safety Initiatives
Safe driving demands that drivers pay close attention to surrounding conditions, making
accurate decisions accordingly. DENSO is contributing to traffic safety worldwide by de-
veloping systems that link people, vehicles and society. In this way, DENSO is aiming to
give greater consideration to drivers while bringing a renewed sense of fulfillment to the
driving experience. Two systems for achieving this goal are currently under development.
First, we are helping to better link drivers to vehicles with driver assistance systems
that monitor the state of the driver. These are technologies, in other words, for recogniz-
ing the driver’s face, as well as measuring eye blinking and heart rate. Monitoring the
state of the driver’s eyes, for example, can give a sense of how drowsy they might be.
Knowing beforehand the driver’s level of inattention could assist in avoiding potential
dangers that might be ahead. DENSO eventually hopes to apply this technology to a vari-
ety of different safety systems.
Second, we are developing cooperative systems from the perspective of better linking
drivers to society. DENSO is collaborating with automakers that are participating in na-
tional projects in Japan, the US and Europe. The objective is to create innovative road
safety systems consisting of wireless communication between different vehicles on the
road, roadside transmitters, and traffic control centers, as well as other types of infra-
structure. These systems will play a major role in reducing traffic accidents such as pre-
venting collisions at intersections and rear-end collisions at the end of traffic jams by
informing drivers of crucial information in a timely manner. In addition to enhancing
safety, these systems may also contribute to better environmental performance by re-
ducing CO2 emissions through more sophisticated control of traffic flow and other ben-
efits. Although the completion date for these systems is likely to be after 2010, DENSO is
nonetheless taking an active role, recognizing that development activities in these safety
Wireless safety unit system projects will enable it to leap ahead of other firms by being the first to develop
and provide prototype dedicated short range communication (DSRC) devices which are
wireless safety units (WSU) for the systems.
Cooperative System
Global Positioning Communication

Network
Satellite (GPS) Hot Spot
Vehicle to Hot Spot

Communication
Traffic Management Center
Vehicle to Vehicle Vehicle to Infrastructure

Communication Communication
Vehicle Roadside Infrastructure

Feature 2
Improving Cost
Competitiveness
Until recently, Business Groups at DENSO were largely responsible for spearheading
cost-reduction programs, with a focus mainly on their respective products. As part of
long-term plan initiatives, however, each product-centric approach has been joined by an
emphasis on cross-function approaches. In other words, we are aiming to further
enhance cost competitiveness by promoting cost reductions on a company-wide scale
with respect to raw materials, components, and fixed costs.
Raw Materials
As a means of coping with higher costs for raw materials, DENSO is promoting its All
Material Cost Kaizen Activity. For example, we are working to reduce unit costs for raw
materials by improving the way that central purchasing, local procurement promotion and
other buying activities are carried out by procurement divisions. Engineering divisions,
meanwhile, are taking steps to control the unit cost of products and components, as well
as the volume of raw materials required, by reviewing basic specifications. Actions here
include incorporating into designs ways of yielding more usable materials and replacing
specialty materials with commonplace or multipurpose alternatives. Manufacturing divi-
sions, for their part, are paring back the volume of raw materials used in manufacturing
processes by lowering the defect ratio of components and reducing the amount of scrap.
Measures have even been expanded to include the extensive collection, recycling and
sale of any scrap that is produced.
Components
For purchased components, DENSO previously set price targets for every procurement
region in an effort to reduce costs. Today, we have strengthened our capability to com-
pare prices internationally and conduct cost analysis, with the goal of purchasing at the
most competitive level possible on a global basis. Most notably, we are now reducing
costs by promoting greater standardization and commonization of components and limit-
ing the types of products bought in order to optimize procurement, as well as by cooper-
ating with suppliers to improve production methods.

Product
Main Growth-driver Low-cost
Air conditioners, Hybrid vehicle Air conditioners,
Engine ECUs components, Starters
Instrument clusters, Common rail Alternators
Injectors systems
Material All Material Cost Kaizen Activity
Maximize impact
• Respond to calls for lower prices
Cross- from customers
function Components Cost comparison/analysis • Preserve superior cost competitiveness
approaches versus rival manufactures
• Develop a full line up of products for
low-priced vehicles
Fixed costs Focus on high-ratio Group companies
Fixed Costs
Specifically targeting Group companies, DENSO is reviewing the work performed by indi-
rect administrative and manufacturing divisions, while vigorously encouraging the use of
shared regional services and greater integration of functions at regional headquarters. In
doing so, we are looking to trim fixed costs by streamlining operations.
Powerfully promoting an approach to cost reductions that is both product-centric and
cross-functional will enable DENSO to consistently respond to calls for lower prices from
its customers. In parallel, while preserving its superior cost competitiveness versus rival
manufacturers, this approach will allow DENSO to develop a full lineup of products for
low-priced vehicles.

Feature 3
Promoting Efficiency
Through Capital Investment
Promoting Efficiency Through Capital Investment
DENSO’s earlier pursuit of efficiency through capital investment focused on realizing
high productivity levels, primarily by increasing the automation of production lines and
boosting line speed. However, there were inefficiencies in the previous production sys-
tem for two main reasons: the large size of the equipment itself and inefficient machine
movement, and the division of manufacturing plants and areas based on production
processes, such as parts processing and assembly, resulting in waste in both invento-
ries and transportation inside facilities. This situation prompted us to roll out programs
to innovate our production lines. The aim here was to build and promote fully inte-
grated production lines where the concept of CS3 (Compact, Simple, Slim, Speed) is
thoroughly entrenched.
• Compact: A compact production system that still preserves the Simple, Slim and
Speed aspects of the CS3 concept.
• Simple: System construction that is simple, yet realizes high quality.
• Slim: Net processing ratio that produces high added value and no waste.
• Speed: Swift preparation and production using only the required amounts for
each product.
In previous innovation efforts, we achieved substantial reductions in costs in our pro-

cessing and assembly equipment by using innovative approaches to integrate compo-
nent parts, and through the construction of compact assembly lines. In contrast,
innovation measures were delayed in supply and transport equipment, despite such
equipment accounting for 30% of total production line costs.

Budget • Budget management Level of
Control • Review evaluation method innovation
Plan
Model production line
• Simplification and standardization of products
Increase • Optimization of facilities
Efficiency Technology • Processing, assembly: Introduction of CS3 Enhance Technology Innovation in
of Capital Innovation • Supply, transport: Simplification of goods flow Processing innovation conjunction
Investment Do • Local procurement Processing with processing
Assembly and assembly
• Strengthen startup flow Supply Catch up

Resources
• Increase operating and space efficiency Transport
Management
• Optimize regional production and supply capacity
Check
2000 2006 2008 2010 (year)
As part of the long-term plan, we will focus foremost on continuous efforts to bolster
and promote technology development for processing and assembly equipment and apply
this technology to production lines. Supply and transport equipment will also be targeted
with stronger measures, with attention given to reducing equipment costs by simplifying
the flow of goods and components right from the process design stage. Specific initia-
tives will be:
(1) Clarify which points to emphasize regarding the method of flow, and thoroughly elimi-
nate hidden inefficiencies related to the packaging of component parts supplied to pro-
duction lines, transport methods and transport trajectory within the production line.
(2) Bring a variety of approaches to bear in creating production lines that either minimize
or avoid the need for transport and supply work altogether. One approach will be to
eliminate work-piece direction change and dramatically condense the length of work-
piece travel within the production line by investigating which product shape provides the
best line flow. Another approach will be to reduce the amount of transport equipment
used and develop simple component parts supply devices, transport robots and other
low-cost transport and supply equipment.

Review of Operations by Segment
Automotive
Thermal Systems Powertrain Control Systems Information and Safety Systems Electric Systems
Net Sales Net Sales Net Sales Net Sales

(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)
1,200,000 1,000,000 800,000 400,000
1,000,000
750,000 600,000 300,000
800,000
600,000 500,000 400,000 200,000
400,000
250,000 200,000 100,000
200,000
0 0 0 0
03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07
Percentage of Net Sales Percentage of Net Sales Percentage of Net Sales Percentage of Net Sales
(%) (%) (%) (%)
31.5% 23.0% 16.2% 9.2%
Main Products Main Products Main Products Main Products

[Air-conditioning Products] [Engine Control Components] [Body Electronics Components] [Engine Electrical Systems]
Air conditioning systems for cars, Ignition coils, Magnetos, Spark Instrument clusters, Integrated Starters, Alternators
buses, and construction plugs, Glow plugs, Exhaust gas climate control panels, Smart
equipment, Truck refrigeration sensors, Ceramic substrates, keys, Remote keyless entry [EHV Components]
units, Air purifiers Diesel Particulate Filters (DPFs), controllers, Rear and corner Inverters, DC-DC converters,
Engine ECUs for motorcycles sonars, Car security systems, Battery monitoring units
[Cooling Systems and Body ECUs
Components] [System Control Components] [Electric Control Components]
Radiators, Cooling fans, Inter Valves (Exhaust gas recirculation [ITS Products] ECUs and sensors for electric
coolers, Oil coolers, Front-end (EGR) valves, Automatic transmission Car navigation systems, power steering systems
modules, Engine cooling modules, (AT) control valves, AT solenoid Electronic Toll Collection (ETC)
Reserve tanks valves, and others), Canisters, on-board equipment, Advanced
Knock sensors, Accelerator Vehicle Operation Systems
sensors, Variable cam timing (VCT) (AVOS), Data communication
components, Throttle bodies, Air modules
flow meters, Oil filters, Air cleaners,
Integrated air fuel modules, Shift- [Driving Assist and Safety
by-wire actuators, Horns Products]
Airbag sensors and ECUs, ABS
[Fuel Injection Products] actuators and ECUs, Laser radars
Diesel engine-related components and ECUs for adaptive cruise
(Common rail systems, In-line fuel control systems, Millimeter-wave
injection pumps, Rotary fuel injection radars and ECUs for pre-crash
pumps, Nozzles, and others), safety systems, HID ballast, ECUs
Gasoline engine-related components for adaptive front lighting systems
(Fuel pumps, Fuel pump modules,
Fuel filters, Fuel injectors, and others)
➔ P.18 ➔ P.19 ➔ P.20 ➔ P.22

Notes: 1. DENSO reorganized its business groups in fiscal 2006. Accordingly, net sales until fiscal 2005 reflect former segment
classifications, while figures for fiscal 2006 and 2007 are shown in accordance with the new classifications.
2. In addition to the above, the Other business segment recorded net sales of ¥87,433 million, ¥87,989 million, ¥92,908 million,
¥91,986 million, and ¥102,623 million in fiscal 2003, 2004, 2005, 2006, and 2007, respectively.

Non-automotive
Electronic Systems Small Motors Industrial Systems Consumer Products
Net Sales Net Sales Net Sales

(Millions of yen) (Millions of yen) (Millions of yen)
500,000 250,000 80,000
400,000 200,000
60,000
300,000 150,000
40,000
200,000 100,000
20,000
100,000 50,000
0 0 0
03 04 05 06 07 03 04 05 06 07 03 04 05 06 07
Percentage of Net Sales Percentage of Net Sales Percentage of Net Sales

(%) (%) (%)
8.6% 6.9% 1.8%
Main Products Main Products Main Products Main Products

[Electronics Products] Windshield wiper systems, [Automatic ID Data Capture CO2 refrigerant heat-pump water
Engine ECUs, AT control Windshield washer systems, Devices] heaters, Automatic faucets,
Transmission ECUs Power window motors, Power seat Bar code handy scanners and Electrically powered kitchen
motors, Power steering motors, handy terminals, QR code systems
[Electronics Devices] and other automotive motors scanners and handy terminals,
Semiconductor sensors, ICs, Smart card readers/writers, Radio
Power modules, EL displays Frequency-Identification (RF-ID)
systems
[Relays]
[Factory Automation (FA)
Products]
Industrial robots, Programmable
controllers
[Refrigeration and Air-

Conditioning Systems]
Cooling units for electronic
devices (Mobile phone base
stations, Computers, and others),
Kerosene heat pumps, Spot
coolers and heaters
➔ P.23 ➔ P.24 ➔ P.25 ➔ P.25

Automotive
Thermal Systems
Overview
During the year under review, this segment took a number of steps to enhance its supply
framework. In April 2006, the Kitakyushu Plant, which manufactures car air conditioners
in Japan, was spun off and established as a new company, DENSO Manufacturing
Kitakyushu Co., Ltd. In the same month, car air conditioner manufacturing got under way
at DENSO SISTEMAS TERMICOS ESPANA S.A. In October 2006, Chinese subsidiary
DENSO (Tianjin) Thermal Products Co., Ltd. began producing heat exchangers, and in
Matrix IR sensor Turkey, a new plant was constructed to boost output of car air conditioners at DENSO
OTOMOTIV PARCALARI SANAYI ANONIM SIRKET.
Efforts to expand sales were supported by the start of deliveries of heating, ventilat-
ing, and air-conditioning (HVAC) units to PSA Peugeot Citroën, and HVAC units and
engine cooling modules (ECM) to Adam Opel.
In terms of new products, DENSO launched a new car air-conditioning system. This
system incorporates a number of newly developed components: the world’s first matrix
infrared ray (IR) sensor, which detects surface temperature distribution inside the cabin; a
compact front HVAC unit with advanced control capabilities; a quieter rear air conditioner
cooling unit; and an oxygen concentration conditioner, which ensures oxygen concentra-
Compact front HVAC unit
tion in the cabin remains at ideal levels. With these components, the new system pro-
vides more ideally conditioned air for individual occupants while boosting efficiency.
These and other actions, as well as higher vehicle production in Japan due to an
increase in exports, and success in boosting sales to customers in Europe, resulted in
segment sales of ¥1,138.0 billion, an increase of 10.3% from the previous fiscal year.
Perspective
Air-conditioning Products
In this field, there are growing environmental demands on vehicles due to more stringent
fuel efficiency regulations and EU restrictions on refrigerants that ban the use of coolants
Rear air conditioner cooling unit
with high global warming potential (GWP). Consequently, needs are rising for air condi-
tioners that not only realize comfortable cabin environments, but are also kinder on the
environment. In this context, DENSO is striving to achieve high efficiency for all compo-
nents in order to raise total system efficiency. Efforts are also under way to create air
conditioners that use new types of refrigerants as part of product development that
seeks to balance comfort with concerns for the global environment.
Cooling Systems and Components

Further innovation in cooling systems and components is required in the industry due to
a range of trends. The challenge will be to meet demands from automakers for improved
engine efficiency and output, as well as respond to rising production of diesel vehicles
and direct-injection and turbocharged gasoline vehicles. Demands for improved fuel
efficiency due to surging gasoline prices and stricter fuel consumption regulations,
greater legal protection for pedestrians and other trends and regulations are also having
an impact. Against this backdrop, DENSO is developing high-performance, compact
cooling systems, and optimizing cooling systems by linking them with ECMs, intercoolers

and exhaust gas recirculation (EGR) coolers used in diesel vehicles and direct-injection
and turbocharged gasoline vehicles. At the same time, DENSO is developing products
created from its own cooling and climate control technologies that contribute to im-
proved fuel efficiency, faster warm-up speed and enhanced power output, and working
on the development and commercialization of thermal management system products
based on applied waste heat recovery, heat exchange and other technologies.
Powertrain Control Systems

Overview
In July 2006, production of oil filters began at Toyota Boshoku Foshan Co., Ltd., a joint
venture with Toyota Boshoku Corporation in Foshan, China. DENSO Manufacturing
Kitakyushu Co., Ltd., which was established as a new company following its spin off from
DENSO in April 2006, started producing fuel injector components for diesel common rail
systems in December 2006.
The Company also took steps to raise production capacity. In North America, output
of fuel pump modules and their constituent components was increased at Kyosan
DENSO Manufacturing Kentucky, LLC., while in Japan, capacity for ceramic substrates
and diesel particulate filters (DPFs) was added at the Daian Plant.
New products launched during the year included a motor-driven electric variable cam
timing control system. This new system uses a motor to directly adjust the opening/clos-
ing timing of intake valves, which is usually done hydraulically. This means intake valve
timing can be controlled more precisely and comprehensively, enabling higher engine
output, less fuel consumption, and reduced amounts of hydrocarbons in emissions.
As a result of the foregoing, sales of diesel injection components increased, reflecting
higher sales of common rail systems mainly in Europe, as did sales of system control
Motor-driven electric variable cam components such as evaporative leak check modules (ELCMs), resulting in segment
timing control system
sales of ¥830.1 billion, an increase of 13.2% year on year.
Perspective
Gasoline engine-related systems and components
Exhaust emissions from port fuel injection (PFI) engines are already purified to levels
common in the atmosphere. One outstanding issue going forward remains the extent to
which improved fuel efficiency can help to lower CO2 emissions. To this end, DENSO is
promoting the development of products compatible with direct injection engines, which
contribute to improved fuel efficiency.
Diesel engine-related systems and components

Diesel vehicles make up roughly 50% of the market in Europe. Due to this high per-
centage, stronger voluntary regulatory actions to restrict CO2 emissions and tighter
emissions than the Euro5 standards are anticipated going forward. In North America,
while stricter Corporate Average Fuel Economy (CAFE) standards may herald a shift to
diesel engines, particularly for SUVs, one issue on the horizon is compliance with Tier 2
Bin 5 emissions regulations. In Japan, regulations that may set diesel engine particulate

matter (PM) emission standards at the same level as those for gasoline engines are
expected to be adopted in either 2009 or 2010. Consequently, this prospect is generat-
ing a greater need for DPFs and other PM countermeasures. DENSO is responding by
developing high-pressure fuel injection (2,000-bar) technology, precision fuel injection
technology and sensors for compensation control. The dual aim here is to reduce
exhaust gas emissions and create systems that contain total costs by simplifying after-
treatment processes. DENSO is developing various after-treatment systems for exhaust
gas, including cordierite-based DPFs, lean NOx traps (LNTs), and urea selective cata-
lytic reduction (SCR) systems.
Information and Safety Systems

Overview
In Japan, DENSO boosted production capacity of sensors for safety systems at the
Daian Plant. In October 2006, China-based subsidiary Tianjin Poon Sung Electronics Co.,
Ltd. became operational, beginning the supply of instrument clusters. During the year,
DENSO also expanded sales of car navigation systems to the Premier Automotive Group
(PAG), Ford Europe and Mazda.
DENSO launched a number of new products in this segment during the year under
Driving assistance ECU
review. These included four components for a new pre-crash safety (PCS) system for
Toyota: a stereo image-processing ECU and driving assistance ECU, both world-first
products, and a front millimeter-wave radar and pre-crash seatbelt ECU. The stereo im-
age-processing ECU rapidly processes image signals received from a stereo camera that
photographs obstacles appearing in front of the vehicle, and then transmits these signals
to the driving assistance ECU. This ECU uses the information, as well as data sent from
the vehicle’s front and rear millimeter-wave radar, to control the PCS system.
Another new product was the world’s thinnest card key, developed for DENSO’s
smart entry and push start system. This was achieved by insert-molding the circuit board
Stereo image-processing ECU
with resin, resulting in a thinness of only 3.35 millimeters. Thanks to the resin, the card
key also features the world’s highest-level bending strength, and the world’s first totally
waterproof circuit area.
DENSO also launched an instrument cluster with a TFT display, which allows the
driver to read displayed information more easily. For the TFT display, DENSO developed
a new backlight unit using a high-luminance, light-emitting diode (LED), the world’s first
backlight unit to be developed specifically for an instrument cluster’s TFT display.
In addition to these initiatives, sales surged 16.8% year on year to ¥583.9 billion on
the back of growth in sales of ITS products, due to higher demand for car navigation
systems in North America, and increased sales of body electronics components, reflect-
ing sales growth in smart entry and push start systems in Japan and higher sales volume
New card key
for advanced instrument clusters.

Perspective
Body electronics
As automakers worldwide seek to distinguish themselves in the marketplace and raise
customer satisfaction, greater steps are being taken to enhance functions that improve
convenience, comfort and security. Recognizing this trend, DENSO is developing smart
entry and push start systems and other functions that realize outstanding levels of con-
venience. DENSO is also pushing forward with the development and launch of remote
Instrument cluster with TFT display
security systems, clearance sonars and a wide range of other devices in the body elec-
tronics field that enable safe and secure driving.
Instrument clusters
In this field, needs are rising for products that contribute to driver safety and peace of
mind by monitoring the vehicle’s surrounding environment and offering driver assistance.
DENSO is answering needs for all-round visibility by developing multimedia displays that
incorporate compact TFT screens. To improve driver field of vision, DENSO is also creat-
ing head-up displays, which display information on the windshield, that link to surround-
ing infrastructure to provide peripheral monitoring and obstacle detection.
Car navigation systems

In addition to Japan, demand for car navigation systems has started to take off in the
North American and European markets. Demand is now polarized between low-priced
systems integrated with audio equipment for convenience and comfort, and systems that
are integrated with vehicle control equipment to provide enhanced safety and security.
DENSO develops custom LSIs with scalability features that allow them to be used in
products ranging from basic car navigation systems to high-end multimedia systems.
The Company is also developing systems that will enhance the attractiveness of vehicles
by working in linkage with other vehicle equipment, such as instrument clusters and
cruise control systems.
Driving assist and safety

While rising awareness about safety is expected to lead to growth in this market, one key
issue going forward will be to reduce prices so that these systems become standard on
more vehicles. For its part, DENSO is focusing on the system and component aspects of
radar cruise control, pre-crash safety and similar systems to realize cost levels that will
promote the widespread adoption of these systems, alongside initiatives to further boost
system performance.

Electric Systems
Overview
During the year under review, output of segment conductor (SC) alternators was
increased in Japan at the Anjo Plant. Sales, meanwhile, were also boosted with the start
of deliveries of inverters for a hybrid truck manufactured by Hino Motors and a new deal
to supply starters to Honda in North America.
New product launches during the year included a power supply management ECU.
This ECU calculates the battery charge rate using battery voltage and current. When the
battery charge rate is low, the ECU increases the flow of electricity to the battery for
recharging. The ECU also determines which systems receive preferential supplies of
electricity when the charge rate is low.
Sales in this business segment climbed 24.0% year on year to ¥330.0 billion. This
improvement reflected higher sales of alternators and other engine electrical products, and
electric power steering ECUs, as well as the growing number of HEV models on the market.
Power supply management ECU
Perspective
Starters
As calls for lower fuel consumption grow, demand is rising for vehicles with engines that
automatically switch off when idling. DENSO is addressing this market need by develop-
ing starters compatible with these eco-drive vehicles (starters for these cars have to be
more durable to handle frequent starting and stopping during urban driving).
Alternators
Automakers have long needed alternators with improved power generation capacity to
support increased electricity consumption in vehicles. Another requirement has been to
reduce magnetic noise to enhance cabin comfort. Other needs are for lighter products
that improve fuel efficiency and reduce CO2 emissions, and smaller alternators that are
easier to install in vehicles. A newly emerging need is for alternators that offer optimal
power generation and charging control. To meet these needs, DENSO is boosting the
output of its SC alternators, which are compact, lightweight, low-noise and highly effi-
cient. Steps are also being taken to augment the development of related components.
Hybrid vehicle components

Toyota Motor Corporation has announced its vision to sell 1 million hybrid vehicles annu-
ally in the early 2010’s. Other domestic and overseas automakers are poised to follow
Toyota’s lead, accelerating growth in the hybrid vehicle market. Against this backdrop,
DENSO is taking part in development across the entire Toyota hybrid system, supplying
battery monitoring units, DC-DC converters, inverters, and other components used in its
hybrid vehicles. DENSO is now moving forward with the development of technologies for
achieving smaller, more efficient and lower cost components, to contribute to improved
hybrid vehicle performance and market growth.

Electric power steering systems (EPS)
Driven by automaker needs for greater fuel efficiency and easier installation, the EPS
market is expected to undergo rapid expansion during the years up to 2010. Further-
more, automakers are looking for compact, low-cost, high-power systems that are com-
patible with various vehicle models—from large- and standard-sized models to compact
cars. In this market, DENSO is responding to rapid adoption of EPS by offering a wider
choice of new sensors and brushless motor EPS launched in the previous fiscal year. The
Company is also examining the best supply framework to put in place, including over-
seas sites, to meet rising demand.
Electronic Systems
Overview
In June 2006, an additional facility built at the Kota Plant in Japan to increase output of
IC wafers became operational. Other steps to boost production capacity included
increasing output of automotive electronics and instrument clusters at Tianjin DENSO
Electronics Co., Ltd. in China, and adding capacity for automotive electronics in North
America at DENSO Manufacturing Tennessee, Inc.
In terms of new products, the Company launched an inertia sensor with an inclina-
tion-detecting function. With this component, a world first, DENSO has combined an
inertia sensor for vehicle stability control (VSC), which detects acceleration and angular
velocity to determine vehicle posture when the car is running, with an inclination sensor
that can detect when the car has been stolen based on the vehicle’s rate of inclination
Inertia sensor with inclination- when the ignition keys have not been used. DENSO has also reduced the component’s
detecting function size by around 25% compared to conventional inertia sensors that do not incorporate the
inclination function.
Sales in this business segment rose 15.1% year on year to ¥310.7 billion. In addition
to the above initiatives, this increase was supported primarily by rising demand for differ-
ent types of ECUs and sensors, reflecting higher vehicle production in Japan on the back
of increased exports, and the growing use of electronic components in vehicles.
Perspective
Engine ECUs
These components are needed to enhance the precision and control of diesel common
rail systems and gasoline direct injection systems, thereby helping to reduce emissions
and boost fuel efficiency. Customers are looking for ECUs that are smaller, more durable
and offer better heat resistance. Meanwhile, there is an increasing need to develop ECUs
optimized for the BRIC countries, where low-priced vehicles account for a large part of
the market. In this context, DENSO is developing integrated control systems that com-
bine the numerous ECUs currently installed in cars, with a view to increasing driving
comfort, convenience and fuel efficiency. DENSO is also developing the software plat-
forms critical to realizing these integrated systems. By bolstering the development of new
mounting and elemental technologies, the Company is working to offer new proposals
and develop new products for customers in a more timely manner. Efforts in this vein will
continue going forward.

Semiconductor sensors
In response to tighter regulations and laws governing exhaust emissions, control systems
are becoming more sophisticated. The range of areas where sensors now play a critical
role is also expanding. Accordingly, sensors are expected to be durable enough to with-
stand engine exhaust gases, 100% pure gasoline fumes and other harsh environments,
to deliver high levels of accuracy and wide detection ranges. DENSO is determined to
meet these needs by leveraging its strengths as a total systems supplier, aiming to real-
ize volume production of pressure, acceleration, rotary position and light sensors for a
variety of systems ahead of competitors. To create these key devices, DENSO conducts
product planning that anticipates system needs, and draws on highly trusted
technology—the kind only possible with fully integrated production technology encom-
passing everything from wafer processing through to system packaging. Going forward,
DENSO will seek to offer high-performance, hybrid sensors developed from its propri-
etary elemental, material, and production technologies to meet demand for systems with
more sophisticated and diverse specifications.
Small Motors
Overview
In May 2006, DENSO began production of windshield wiper systems, windshield washer
systems, and power rear sunshades at ASMO (Guangzhou) Small Motor Co., Ltd. in China.
A new sub-plant was also constructed in North America by ASMO Manufacturing, Inc. to
raise output of windshield washer systems. Sales, meanwhile, were boosted by the start of
deliveries to Nissan of tilting and telescopic mechanism motors.
In terms of new products, fiscal 2007 saw the launch of a rear wiper motor with the
world’s first wiper motor to incorporate a clutch, which cuts excessive external load.
Internal motor components were also made more compact, leading to a reduction in
overall motor size and weight of 20% and 23%, respectively. Another new product was
DENSO’s compact smart rear wiper motor. By adopting a custom IC for the component’s
New rear wiper motor controller, which ensures the motor works in unison with the rear washer system, DENSO
reduced the size of the controller and integrated it with the motor itself. Compared to the
combined dimensions of the previous separate motor and controller components, this
led to an overall reduction in size and weight of 25%, respectively.
These and other actions lifted segment sales 10.7% year on year to ¥248.8 billion, pri-
marily reflecting growth in sales of windshield wiper systems and power window motors.
Perspective
Windshield wiper systems
Tracking expansion in vehicle cabin space and greater fuel efficiency, there is significant
demand for smaller, lightweight wiper components. In addition to improvements in basic
wiper performance, there is also a need for qualitative enhancements in the appearance
of exterior parts. To meet these market needs, DENSO supplies windshield wiper sys-
tems that offer a level of compactness, lightness, and wiping performance that is among
the best in the world. Development is also under way on the next generation of products
that will raise the performance bar even higher, including systems that look better and
offer improved control functions.

Windshield washer systems
Demands from automakers for lighter products that improve fuel efficiency, as well as
systems that maintain more efficient wiper performance by using only the optimal
amount of fluid required for cleaning, are steadily gaining momentum. Another customer
demand is for qualitative enhancements to improve the appearance of external parts. In
answering these market needs, DENSO has launched systems equipped with some of
the world’s most compact and lightweight high-efficiency pumps in a push to reduce
total system weight. A windshield washer system that reduces the amount of fluid used is
also currently under development.
Power window motors

Vehicle doors are becoming slimmer to provide more cabin space. This trend has caused
a substantial increase in demand for smaller and lighter power window motors. And as
new cars are increasingly fitted with remote control, automatic operation and other value-
added power window functions, more cars require jam-protection systems. This means
there is a growing need for smart motors with built-in control circuits. DENSO already
offers some of the world’s lightest, most compact power window motors, which it cur-
rently markets worldwide. In response to needs for smart motors, the Company has
already completed development of smart power window motors and is preparing to add
these motors to its product lineup.
Non-automotive
Industrial Systems and Consumer Products

Overview
DENSO launched a number of new products in this segment during the year under
review. A new addition to the lineup of CO2 refrigerant heat-pump hot water supply sys-
tem, marketed as Eco Cute in Japan, was the ‘design eco cute’ model in the slim-type
with two water storage tanks. This new model has been given a new look to blend in with
urban environments. DENSO also launched a new high-efficiency kerosene heat pump
‘design eco cute’ ‘KHP’ D1 Series that can be powered by gas as well as kerosene. By employing a new
refrigerant (R410A), high-performance variable capacity compressor, highly efficient air-
source heat exchanger and an energy-saving DC motor, DENSO has been able to reduce
emissions of NOx and particulate matter (PM) by around 15% and 50%, respectively,
compared to previous models. Electricity consumption has also been cut by roughly
40%. As a result, this kerosene heat pump achieves a world-class level of energy effi-
ciency, operating at COP 1.53.
In fiscal 2007, sales in Industrial Systems and Consumer Products dropped 6.6%
year on year to ¥65.6 billion, mainly reflecting a decline in sales of CO2 refrigerant heat-
pump water heaters.

Perspective
Refrigeration and air conditioning systems
Backed by a national project to reduce emissions of CO2, the uptake of energy-saving
CO2 refrigerant heat-pump water heaters is projected to reach a total of 5.2 million units
by 2010. Together, these units will cut CO2 emissions by an equivalent of 4.8 million tons
each year. In this context, DENSO will use its thermal systems technology acquired as
one of the industry’s top car air conditioner manufacturers to drive forward the develop-
ment of CO2 refrigerant heat-pump water heaters. Specifically, the Company will focus on
‘KHP’ D1 Series developing basic technologies such as ejector cycle refrigeration and low-pressure shell-
type compressors, and create and commercialize new systems and products that are
compact and integrated, employ a hybrid power approach, and can be used as heaters
in colder regions where air-source heat is low. In this way, DENSO will work to open up
new markets and support government efforts for the greater uptake of CO2-refrigerant
heat-pump equipment.
Automatic data capture

Needs for automatic identification are rising in retail, logistics, factory automation and a
wide range of other areas. Through its involvement in automotive electronics, DENSO
has global class-leading electronic technology resources and quality control systems.
Backed by this expertise, the Company, as a pioneer in barcode and 2D code readers,
reliably serves this field at all phases from product development, sales and service sup-
port through to systems integration. Meanwhile, as public and corporate IT systems
become more advanced and complex due to the fast pace of IT innovation, protecting
trade secrets, private information and other important data is becoming even more
important. Against this backdrop, DENSO is applying the electronic technologies culti-
vated in its automotive business in the wider IT domain. The Company currently provides
an extensive range of advanced systems based on contactless IC cards, which are used
as the main media for ensuring system security, and works to develop new products.
Factory automation
At the manufacturing frontline, the overarching demand is for flexible production frame-
works that can respond to diversifying market needs. After intensive development within
the Group, DENSO now sells factory automation (FA) system products to external cus-
tomers in response to these needs. DENSO also offers FA solutions for a variety of
manufacturing plants the world over. These solutions are centered on industrial robots,
born out of the Group’s production technology capabilities cultivated over the years, and
programmable controllers that provide sequence control for production lines, machine
tools and logistics transport equipment at factories.

Corporate Social Responsibility
Overview CSR Framework

DENSO defines its corporate social responsibility (CSR) DENSO has created a shared CSR framework, shown in
as contributing to the sustained development of society to the diagram below, for the entire Group to systemize an
support the continued growth of the Group. Accordingly, emphasis on CSR across all its activities.
in conjunction with our economic contribution to society
through our business results, we are also working to The DENSO Group Declaration of Corporate
enhance our contribution in the environmental and social Behavior
spheres. With this in mind, we have established a dedi- Formulated in April 2006, this declaration sits at the heart
cated CSR Promotion Center to strengthen Group-wide of our CSR activities. It clarifies the kind of corporate
CSR activities. activities we need to implement to contribute to the sus-
Our CSR activities have earned high marks outside the tained development of society in the context of our rela-
Group. For example, DENSO has regularly been included tionships with stakeholders.
in such socially responsible investment indices as the
Dow Jones Sustainability Indexes (DJSI) and the Ethibel
Sustainability Index (ESI).
CSR Framework
DENSO Group Declaration of Corporate Behavior

Policy
Strategic Areas:
• Environmental protection • Corporate citizenship • Respecting associates*
Content of
Activities Fundamental Areas:
Economic Environmental • Compliance • Customer relations
Aspects and Social • Free, fair and transparent transactions • Information disclosure, IR
(business results) Aspects • Occupational safety • Mental health
Promotion Structure CSR Promotion Committee CSR Promotion Center CSR Leaders
*Including respect for human rights

CSR Promotion System ii) Ascertaining then reducing the volume of CO2
In June 2006, DENSO established a CSR Promotion Com- emitted by all our corporate activities
mittee, chaired by the president and comprising all the Aiming to help prevent global warming, DENSO is work-
Company’s directors, to make decisions related to CSR ing to reduce emissions of CO2 in every area of its
activities. CSR Leaders have also been appointed at each operations. These activities go beyond product and
Group company to play a central role in implementing technology development to encompass manufacturing,
CSR initiatives. logistics and administration divisions, as well as the
actions of individual employees.
CSR Activities In manufacturing divisions, efforts to identify and stan-
The DENSO Group is leveraging its unique strengths in dardize the groundbreaking energy-saving technologies
three strategic key areas of its CSR activities: environ- and expertise we have deployed in Japan and transfer
mental protection, corporate citizenship and respecting them to other DENSO companies is realizing benefits
associates. Below, we explain our activities in these areas across the entire Group. As a result, in fiscal 2007, we
in more detail. reduced CO2 emissions per unit of production by 23%
(volume of emissions in manufacturing divisions per unit
Environmental Protection of net sales: unit of production) compared with the fiscal
Aiming for growth balanced with consideration for the en- 2001 benchmark, exceeding our EcoVision 2015 target of
vironment, DENSO is working to help solve a wide range a 20% reduction by fiscal 2011. The technologies and
of environmental issues. Specifically, in line with our basic expertise that are enabling us to achieve this improve-
environmental policy and action plan in DENSO EcoVision ment have also won praise from outside the Group, illus-
2015, formulated in fiscal 2006, that guide our approach trated by Clean Development Mechanism certification for
to issues such as global warming, recycling, and sub- energy-saving technologies used at a plant in Malaysia.
stances with environmental impact, we are focusing on In logistics divisions, we are adopting more environ-
four key areas: enhancing the development of environmentally sound transportation methods. For example, on
mentally friendly products; ascertaining then reducing the our longest domestic logistics route from Aichi Prefecture
volume of CO2 emitted by all our corporate activities; to North Kyushu, we are shifting some container transport
steadily reducing our global environmental impact; and from road to rail.
reinforcing Group-wide environmental management. To further increase the effectiveness of these initiatives,
Below, we explain the first two areas in more detail. we are also strengthening the DENSO Group’s supply
chain. Specific steps included tightening our Green Pro-
i) Enhancing the development of environmentally curement Guidelines for suppliers and working with them in
friendly products manufacturing and logistics to reduce CO2 emissions.
As a supplier of automotive components and systems, the
DENSO Group believes that developing technologies and
products that reduce the environmental impact of auto-
mobiles is vital. One example of these efforts in fiscal
2007 was the development of a motor-driven electric vari-
able cam timing control system for the Lexus LS460, a
world first. This and many other components are part of
DENSO’s efforts to protect the global environment
through technologies that improve fuel efficiency, reduce
A container train used for transport between
the volume of harmful substances in exhaust emissions DENSO sites in Aichi Prefecture and North Kyushu
and realize other advances.

Corporate Citizenship One example of our efforts to create a corporate cul-
DENSO is aiming to win even greater trust from interna- ture that encourages more employees to participate in
tional society through efforts to coexist with local commu- corporate citizenship activities is the DENSO Group Com-
nities worldwide. To realize this objective, in fiscal 2007, munity Service Day, where DENSO Group employees vol-
we formulated the DENSO Group Basic Policy for Corpo- unteer to work together in teams on activities in individual
rate Citizenship Activities. This policy defines two key communities. In fiscal 2007, around 16,800 DENSO
areas where DENSO can use its unique strengths to best employees in Japan and overseas participated in these
effect —develop people (create programs for fostering activities, building shared bonds and winning greater trust
youth and supporting socially disadvantaged people), and from local communities.
promote harmony with the environment. The policy also
promotes Group-wide efforts to create a corporate culture Respecting Associates
that encourages the participation of all employees in cor- We provide in-depth human resources development from
porate citizenship activities. a medium- to long-term perspective so that each associ-
In the first area, develop people, our efforts in Japan ate can maximize their capabilities.
are focused on DENSO Taiyo Co., Ltd., a subsidiary DENSO considers the basis of development to be
established in 1984 to help people with physical disabili- continuous on-the-job training. In addition, DENSO is pro-
ties become more independent by providing employment moting its off-the-job training designed to enhance the
opportunities. Overseas, in 1999, we established the knowledge and skills of associates in a systematic man-
Wheelchairs and Friendship Center of Asia (WAFCA), a ner. These and other approaches are part of support
non-profit organization that manufactures and distributes given to associates to help them demonstrate their abili-
wheelchairs in Thailand, among other activities. WAFCA is ties and attain even higher goals.
extending its reach into other parts of Asia. For example, In particular, we are focusing on the development of a
in fiscal 2008, WAFCA began activities to support the Global & Common Training system designed to foster
manufacture and wider use of wheelchairs in China as common work practices and values in all DENSO Group
part of efforts to help people with physical disabilities associates. To achieve this, we introduced the “DENSO
across Asia gain more independence. Approach to Working” and “Manufacturing DNA Training”
In the second key area of our corporate citizenship in fiscal 2007. We plan to continue actively providing sup-
activities, promote harmony with the environment, we port to associates to help them grow and achieve per-
introduced a unique scheme called DENSO EcoPoint sonal fulfillment.
designed to encourage our employees to take part in vol-
untary eco-activities that help protect the environments of
local communities. Employees are awarded points for
participating in local clean-up activities or using more
eco-friendly commuting methods. Saved points can then
be exchanged for eco-products or contributions to tree-
planting and other schemes that benefit the environment.
By providing this kind of support, we are aiming to make
environmental protection more fun, illustrated by the
3,200 people who had signed up for the scheme by the
end of fiscal 2007. DENSO Taiyo

Corporate Governance, Compliance and Risk Management
Basic Policy on Corporate Governance and day-to-day operations. The managing officers (27)
DENSO is working to strengthen its corporate gover- focus exclusively on business execution in each business
nance. The Company sees this as vital not only to raising division. In addition, the term of office for directors has
Group competitiveness but also to maintaining and been reduced to one year to create a management struc-
improving long-term business performance in today’s rap- ture capable of adapting flexibly to changes in the busi-
idly changing global markets. ness environment and to further clarify management
responsibility for each business term.
Corporate Governance System
DENSO has adopted the corporate auditor system. In 2. Decision-making bodies related to business
addition to statutory bodies such as the General Meeting execution
of Shareholders, the Board of Directors and the Board of The Board of Directors, which meets monthly, is the
Corporate Auditors, as well as the Accounting Auditor, Company’s decision-making body with responsibility for
DENSO has put in place a number of internal control statutory and other important management matters.
mechanisms. Through the ongoing provision of manage- DENSO also has a Top Management Meeting and other
ment information to shareholders and other investors, the organizations that discuss issues from a Company-wide
Company practices sound, highly efficient and transpar- perspective prior to them being submitted to the Board
ent management. of Directors.
Board of Directors and Board of Corporate Auditors 3. Management oversight functions

1. Managing officer system The Company’s two standing corporate auditors and
DENSO has adopted the managing officer system. Using three external corporate auditors are responsible for
this system, DENSO is speeding up decision-making and monitoring the execution of duties by directors and audit-
operational execution by reducing the number of directors ing the operations and financial condition of DENSO Cor-
and appointing managing officers. The system comprises poration and its domestic and overseas subsidiaries. An
directors (13) who supervise activities in all business academic, an attorney and an executive from another
divisions and play a bridging role between management company make up the three external corporate auditors,

who attend meetings of the Board of Directors and the Details of Fees Paid to the Accounting Auditor
Board of Corporate Auditors. These individuals provide Fees paid for audits performed by accounting auditor
advice to directors from a broad perspective and Deloitte Touche Tomatsu were as follows:
exchange opinions with the other corporate auditors.
In addition to the statutory appointment of corporate Compensation for services rendered pursuant to Article 2-1
auditors, the Company’s audit system also comprises of Japan’s Certified Public Accountants Law ¥44 million
dedicated internal audit departments at key domestic and Other fees ¥13 million
overseas subsidiaries. There are 40 staff in total assigned
to this role. In terms of audit methods, DENSO’s business Strengthening the Internal Control System
divisions and domestic and overseas subsidiaries volun- The enactment of Japan’s Corporate Law in May 2006
tarily carry out internal inspections using their own internal bolstered measures for enhancing internal control sys-
control systems, while continuous audits are also con- tems at Japanese corporations. Moreover, pursuant to
ducted to ensure compliance with laws and the appropri- Japan’s Securities and Exchange Law, corporations are
ateness of the Company’s own management and also required to report on their internal control systems to
business procedures. DENSO’s corporate auditors meet ensure the reliability of their financial reporting in fiscal
monthly with internal audit departments to discuss audit 2008. In accordance with these trends, DENSO is upgrad-
results and reports and exchange opinions, working to ing and enhancing its internal control system by reviewing
raise the efficiency and quality of audits. and revalidating administrative systems with respect to
operational processes and documentation.
Remuneration to Directors and Corporate Auditors
Details Regarding Remuneration Compliance
Remuneration paid to directors and corporate auditors in Basic Policy
fiscal 2007 was as follows: The Code of Conduct for DENSO Group Associates
clearly stipulates legal compliance and respect for cus-
Directors (13) ¥703 million toms and cultural norms in every country and region
Corporate auditors (5) ¥87 million where the Group operates. Individual employees of the
(including ¥25 million paid to external corporate auditors (3)) DENSO Group are also expected to conduct themselves
DENSO’s Corporate Governance System

General Meeting of Shareholders
Appoint, Supervise
Top Management Meeting

Board of Directors Board of Corporate
Audit Auditors
CSR Promotion Committee
Chairman (Majority of External
President, Executive Vice Presidents Risk Management Meeting Corporate Auditors)
Business Ethics and Compliance Committee
Export Controls Committee
Customer Satisfaction Improvement Committee
Senior Managing Directors Environmental Committee
(Business Division Leaders) Internal Information Committee
Central Security Committee
Social Contribution Activities Committee Accounting
Others Audits
Accounting Auditor
Managing Officers Audit

Internal Audit Department
(Frontline Operational Execution)

in line with the highest ethical standards. This code is Additionally, each year DENSO sponsors a Global Legal
shared by all Group companies in Japan, with Group Conference attended by head office personnel from Japan,
companies overseas also adhering to the spirit and prin- North America, Europe and China to encourage greater
ciples of the code. sharing of compliance information and related issues.
Alongside the creation of these systems and tools,
Promotion System the Company conducts activities, such as the publica-
DENSO has established a Business Ethics and Compli- tion of compliance-related educational information and
ance Committee, with the Legal Department as its secre- news, as part of its dedication to ensuring compliance-
tariat, as one element of its internal control system. This oriented management.
committee is responsible for monitoring the legality and
ethical standards of all the Company’s corporate activi- Education and Awareness
ties. A Business Ethics Hotline, which provides access to DENSO has instituted compliance education specific to
outside legal counsel and the Company’s Legal Depart- each employee work grade since fiscal 2002 to help dis-
ment, has also been established to handle questions from seminate and entrench compliance awareness throughout
employees about compliance and provide related advice. the Group. In May 2006, Compliance Leaders, who also
In May 2006, the number of key suppliers adopting the serve concurrently as CSR Leaders, were assigned at
hotline, which is managed in accordance with Japan’s DENSO and Group companies in Japan to carry out com-
Whistleblower Protection Law, had grown to 300 firms. pliance education and awareness activities at the work-
place level.
Compliance by Region
North America Inspection of Compliance Activities
Compliance activities are centered on the North America October is Business Ethics and Compliance Month at
Compliance Committee established in 1999, and con- DENSO, during which time all Group workplaces undergo
ducted based on extensive guidance issued by compli- a voluntary compliance inspection. This inspection is
ance officers. The committee also manages a compliance supplemented with a survey on business ethics to deter-
helpline. Compliance audits were newly launched in 2006. mine the degree of compliance policy awareness and to
ascertain potential risks. The results of the survey are
Europe then reported to the Business Ethics and Compliance
An EU version of the DENSO Group Employee Code of Committee. In fiscal 2006, the survey was distributed to
Conduct was formulated in fiscal 2006. Going forward, roughly 4,000 employees, including temporary staff for
the code will be successively promoted throughout the the first time, with findings reflected in activities con-
EU region, with adjustments made to reflect the laws and ducted during fiscal 2007.
cultural norms of respective EU countries. DENSO is also
considering the adoption of a helpline based on guide- Risk Management
lines unique to Europe. Basic Approach and Promotion System
As another element of its internal control system, DENSO
China gives due attention to preventing risk before it material-
DENSO has begun examining the possible introduction izes, and ensuring a timely and accurate initial response
of a compliance program for operations in the country in order to minimize damage when unforeseen crises
for fiscal 2008. arise. This approach enables the Company to minimize
the diverse risks associated with its global business
operations. To this end, DENSO has established the Risk
Management Meeting. This all-encompassing body is
designed to unite the entire Group in a common effort to
enhance its ability to respond to risk in Japan and overseas.

Risk Management System of its information assets. Since 2005, DENSO has applied
Board of Directors the DENSO Group Information Security Standards to 56
domestic Group companies and 75 Group bases over-
Risk Management Responsible Dept. Business Groups
Meeting Regional seas. Formulated with reference to Information Security
head-quarters Domestic DENSO Group
Management System criteria, these standards contain
companies
Overseas DENSO Group
142 specific points pertaining to the management of
Principal Risks
information assets. An Information Security Leader and
Information Security Center have been established as
Internal accidents and mistakes
Environmental pollution, man-made disasters, growing problems specialized departments under the Information Strategy
stemming from user complaints, human resource- and labor-related
issues, human rights issues, leakage of trade secrets, recalls, bad debts, Committee. DENSO has also built an information man-
traffic accidents, production stoppages, information system
interruptions, breach of contract, others agement system based on ISO/IEC 27001 and other
internationally recognized information management sys-
Legal violations
Anti-trust law violations, Foreign Exchange Control Law violations, tax tem standards. In addition to the control of trade secrets,
evasion, infringement of other companies’ patents, crimes and scandals
involving employees and officers, others audits and Company-wide voluntary inspections, DENSO
Accidents and incidents due to external factors conducts monitoring surveys to ascertain actual condi-
Attempts to buy out DENSO stock, lawsuits brought by shareholders,
product liability lawsuits, unforeseen accidents, transportation and tions at each Group company to continuously raise the
capacity issues, cyberterrorism, others level of information security through the Group.
Natural disasters and random events
Dramatic fluctuations in foreign exchange and interest rates, natural
disasters, random occurrences, damage incurred at suppliers, others
Information Security Control System
Information Strategy Committee
Specific Activities
Proposal/Report Direct/Supervise
All DENSO officers, managers and personnel responsible
Information Security Leader
for managing specific risk areas are issued a Crisis Com-
Auditing
munication Manual. All other employees are required to Report Direct/Supervise
carry a copy of the Risk Management Handbook at all

Information Security Center Audit
times. These steps are designed to promote accurate Department
General Administration Department
responses whenever crises arise. As a measure to bolster
IT Planning Center
risk management, DENSO enacts a risk management
Engineering Administration Department
seminar extended to all personnel responsible for risk
Legal Department
management in the domestic DENSO Group. The seminar
Intellectual Property Department
was attended by 75% of eligible personnel in fiscal 2006.
Human Resources Department
Moreover, DENSO is formulating a Business Recovery Corporate Communications Department
Plan that seeks to ensure the safety of Group employees
Cooperation
and their families in the event of a major disaster, and to
enable the Company to meet its supply obligations to General Managers (Executives)
customers by swiftly responding to the crisis. Report Direct/Supervise
Supervisors (Executives)
Information Security
Report Direct/Supervise
Basic Approach and Promotion System
DENSO views technology and information, as well as cus- Each Section
tomer and employee data, as invaluable assets. This rec- Information Security Control Supervisors
ognition prompted the Company to draft the DENSO Information Security Control Promotion Officers
Group’s Basic Principles of Information Security in 2003,

and to take steps to better protect and strengthen control

Executive Management
(As of June 26, 2007)
From left
Shinro Iwatsuki
Akihiko Saito
Koichi Fukaya
Oyuki Ogawa
Board of Directors Corporate Auditors Managing Officers

Chairman Standing Corporate Mitsuo Matsushita
Akihiko Saito Auditors Hikaru Sugi
President and CEO Nobuaki Horiuchi Shinji Shirasaki
Koichi Fukaya Toshio Watanabe Shigehiro Nishimura
Yasushi Nei
Corporate Auditors Mitsunori Takao
Executive Vice Presidents
Fujio Cho * Mitsuhiko Masegi
Shinro Iwatsuki
Tamiki Kishida * Masahiko Miyaki
Oyuki Ogawa
Tsutomu Saito * Akio Shikamura
*External Corporate Auditors Haruya Maruyama
Senior Managing Directors Manfredo Nicolelli
Masatoshi Ano Yoshikazu Makino
Mitsuharu Kato Mikio Kumano
Hiromi Tokuda Akio Tajima
Nobuaki Katoh Yasushi Yamanaka
Kenji Ohya Sakae Kitazawa
Koji Kobayashi Yoshitaka Asano
Kazuo Hironaka Michio Adachi
Sojiro Tsuchiya Tetsuo Kondo
Kenichiro Kamai
Director Hiroyuki Wakabayashi
Shoichiro Toyoda Satoshi Iwata
Akihiro Yukawa
Masahiko Itoh
Yoshihiro Saka
Toshiyuki Kato
Sadahiro Usui

Financial Section
Contents
Financial Review 36
Management’s Discussion and Analysis 38
Consolidated Balance Sheets 48
Consolidated Statements of Income 50
Consolidated Statements of
Shareholders’ Equity 51
Consolidated Statements of Cash Flows 52
Notes to Consolidated
Financial Statements 53
Independent Auditors’ Report 70

Financial Review
Financial Summary
Years ended March 31
2007 2006 2005 2004

Net Sales: ¥3,609,700 ¥3,188,330 ¥2,799,949 ¥2,562,411
Sales in Japan 1,859,046 1,690,215 1,554,795 1,442,645
Sales outside Japan 1,750,654 1,498,115 1,245,154 1,119,766
Operating Income 303,068 266,559 213,895 188,659
Net Income 205,170 169,648 132,620 110,027
Total Assets 3,765,135 3,411,975 2,780,982 2,526,502
Equity *2 2,286,956 2,066,303 – –
Shareholders’ Equity – 1,970,388 1,643,182 1,509,489
Capital Expenditures 312,457 288,714 235,258 196,461
Depreciation 219,873 185,143 160,993 151,169
R&D Expenses 279,890 256,339 238,241 214,917
Net Cash Provided by Operating Activities 406,543 368,575 273,296 231,814
Per Share:
Basic net income ¥ 249.88 ¥ 204.80 ¥ 159.02 ¥ 130.02
Diluted net income 249.56 204.62 158.96 130.01
Cash dividends 45.00 38.00 32.00 24.00
Equity *2 2,668.82 2,384.05 1,990.48 1,809.55
Ratios:
Return on Sales (%) 5.7 5.3 4.7 4.3
Current Ratio (%) 151.0 160.6 161.4 163.0
Fixed Ratio (%) 104.1 102.1 98.2 97.2
Return on Equity (%) 9.9 9.4 8.4 7.6
Average Number of Shares (in thousands) 821,060 825,725 830,869 842,005
Number of Employees 112,262 105,723 104,183 95,461
Notes: 1. As of March 31, 2007, DENSO CORPORATION had 188 consolidated subsidiaries and applied the equity method of accounting with respect to 32 affiliates.
2. The figures for the year ended March 31, 2002 include the effect of an irregular 15-month reporting period, due to certain major overseas consolidated
subsidiaries and overseas affiliates (45 companies) deciding to change their year-end to March 31 from December 31.
3. U.S. dollar amounts have been translated, for convenience only, at the rate of ¥118=US$1, the approximate exchange rate prevailing on March 30, 2007,
the last trading day of the fiscal year.
Sales by Business Segment

Millions of yen Thousands of
(percentage of net sales) U.S. dollars
2007 2006 2005 2004 2003 2007
Thermal Systems ¥1,137,975 ¥1,031,836 ¥ 931,568 ¥ 893,548 ¥ 830,018 $ 9,643,856
(31.5%) (32.4%) (33.3%) (34.9%) (35.6%)
Powertrain Control Systems 830,111 733,520 646,166 580,826 514,604 7,034,839
(23.0) (23.0) (23.0) (22.7) (22.1)
Information and Safety Systems 583,873 499,843 – – – 4,948,076
(16.2) (15.7) – – –
Electric Systems 329,981 266,139 331,426 293,372 269,567 2,796,449
(9.2) (8.3) (11.9) (11.4) (11.5)
Electronic Systems 310,737 270,040 424,377 378,835 345,543 2,633,365
(8.6) (8.5) (15.2) (14.8) (14.8)
Small Motors 248,772 224,709 193,646 181,634 171,914 2,108,237
(6.9) (7.0) (6.9) (7.1) (7.4)
ITS – – 120,938 92,521 60,328 –
– – (4.3) (3.6) (2.6)
Other Automotive 47,513 40,730 42,677 35,444 30,816 402,653
(1.3) (1.3) (1.5) (1.4) (1.3)
Automotive sub-total 3,488,962 3,066,817 2,690,798 2,456,180 2,222,790 29,567,475
(96.7) (96.2) (96.1) (95.9) (95.3)
Industrial Systems and
Consumer Products 65,628 70,258 58,920 53,686 53,353 556,169
(1.8) (2.2) (2.1) (2.1) (2.3)
Others 55,110 51,255 50,231 52,545 56,617 467,034
(1.5) (1.6) (1.8) (2.0) (2.4)
New businesses sub-total 120,738 121,513 109,151 106,231 109,970 1,023,203
(3.3) (3.8) (3.9) (4.1) (4.7)
Total ¥3,609,700 ¥3,188,330 ¥2,799,949 ¥2,562,411 ¥2,332,760 $30,590,678
(100.0) (100.0) (100.0) (100.0) (100.0)
Notes: 1. U.S. dollar amounts have been translated, for convenience only, at the rate of ¥118=US$1, the approximate exchange rate prevailing on March 30, 2007,
the last trading day of the fiscal year.
2. Sales by Business Segment for the year ended March 31, 2007 and 2006 are disclosed under new segments restructured in January 2006.
Thousands of
Millions of yen U.S. dollars
2002*1
2003 2002 unaudited 2001 2000 1999 1998 2007
¥2,332,760 ¥2,401,098 ¥2,183,062 ¥2,014,978 ¥1,883,407 ¥1,758,842 ¥1,667,311 $30,590,678
1,325,637 1,277,865 1,277,865 1,245,830 1,161,016 1,104,579 1,135,834 15,754,627
1,007,123 1,123,233 905,197 769,148 722,391 654,263 531,477 14,836,051
159,893 133,340 129,888 123,526 116,682 101,663 112,786 2,568,373
111,018 72,313 70,800 60,799 61,913 58,969 71,158 1,738,729
2,354,657 2,361,048 – 2,343,328 2,154,251 1,917,192 1,745,329 31,907,924
– – – – – – – 19,380,983
1,397,888 1,421,212 – 1,451,211 1,304,400 1,121,171 1,057,173 –
171,108 193,599 183,977 140,447 169,953 212,745 177,757 2,647,941
146,651 147,277 139,991 134,416 134,706 124,289 103,068 1,863,330
182,886 185,627 181,044 176,959 160,055 154,207 157,615 2,371,949
267,344 206,663 – 202,127 196,020 155,540 148,735 3,445,280
Yen U.S. dollars
¥ 128.37 ¥ 80.22 ¥ 78.54 ¥ 66.51 ¥ 68.15 ¥ 65.46 ¥ 79.93 $ 2.12

126.65 78.93 77.29 65.51 66.73 63.51 76.31 2.11
20.00 18.00 – 17.00 17.00 15.00 15.00 0.38
1,656.93 1,641.72 – 1,587.77 1,426.70 1,238.33 1,178.53 22.62
4.8 3.0 3.2 3.0 3.3 3.4 4.3

161.2 174.0 – 199.0 227.1 223.2 209.2
97.3 95.2 – 91.4 77.1 77.4 73.8
7.9 5.0 4.9 4.4 4.9 5.4 7.0
860,828 901,489 – 914,121 908,519 900,836 890,226
89,380 86,639 – 85,371 80,795 72,359 57,084
*1 The italicized figures for the year ended March 31, 2002 represent unaudited amounts calculated by management to reflect comparative income statement
information including the results of these overseas companies for the 12-month period ended December 31, 2001.
*2 Section under “Equity” is newly provided to conform to Japanese new accounting standard. The fiscal 2006 figures have also been reclassified to reflect this
change. See Note 2 (L) to the consolidated financial statements for details.
Sales by Company Location

Thousands of
2007 2006 2005 2004 2003 2007
Japan Customers ¥1,905,193 ¥1,727,675 ¥1,590,666 ¥1,469,552 ¥1,355,925 $16,145,703
Intersegment 636,068 561,284 469,891 416,245 374,770 5,390,407
Total 2,541,261 2,288,959 2,060,557 1,885,797 1,730,695 21,536,110
The Americas Customers 756,250 681,367 571,053 549,208 531,303 6,408,899
Intersegment 12,831 9,076 9,189 8,532 9,267 108,737
Total 769,081 690,443 580,242 557,740 540,570 6,517,636
Europe Customers 507,503 414,243 367,082 333,486 269,499 4,300,873
Intersegment 11,796 8,804 6,968 4,809 4,489 99,966
Total 519,299 423,047 374,050 338,295 273,988 4,400,839
Asia & Oceania Customers 440,754 365,045 271,148 210,165 176,033 3,735,203
Intersegment 39,447 30,064 19,757 13,438 9,837 334,297
Total 480,201 395,109 290,905 223,603 185,870 4,069,500
Eliminations (700,142) (609,228) (505,805) (443,024) (398,363) (5,933,407)
Consolidated ¥3,609,700 ¥3,188,330 ¥2,799,949 ¥2,562,411 ¥2,332,760 $30,590,678
Note:U.S. dollar amounts have been translated, for convenience only, at the rate of ¥118=US$1, the approximate exchange rate prevailing on March 30, 2007, the
last trading day of the fiscal year.

Management’s Discussion and Analysis
Business Overview
In fiscal 2007, ended March 31, 2007, the global economy was generally strong despite sharply
higher prices for crude oil and other raw materials. In the U.S., personal consumption showed
underlying strength despite lower housing investment, while Asian economies sustained high
growth rates, led by China and India. Japan also maintained its moderate recovery, supported
by higher capital investment on the back of improved corporate profits, and by strong exports.
In the automotive industry, vehicle sales in the key U.S. market declined due to sluggish
demand from the Big Three. However, Japanese vehicle sales remained strong thanks to their
better fuel economy. In Asia, although sales dropped in ASEAN nations and Taiwan, sales in
China and India were substantially above levels in the previous year, and this powered strong
sales overall in the region. In Japan, sales fell as the number of new car registrations decreased.
However, production was supported by strong exports of finished vehicles that exceeded the
level in the previous year.
During the year, the yen weakened 2.7% against the U.S. dollar and 8.8% against the euro.
Average yen exchange rates against these currencies were ¥116 and ¥149, respectively.
Management Strategy: DENSO VISION 2015

Under these conditions, the Group marshaled its combined strengths to realize DENSO VISION
2015, with a focus on two major policies—“Contribute to the creation of an advanced automo-
tive society” and “Evolve into a truly global corporation”.
To achieve the first policy, the Group reviewed and revised its development, design, volume
production, and shipment operations as part of its commitment to quality. More specifically, for
the Lexus LS460 launched in September 2006, we developed several new technologies and
products, some of which were world-firsts, in four critical areas—the environment, safety, com-
fort, and convenience.
As a part of our efforts to evolve into a truly global corporation, we further increased our
attention on workplace safety, while instilling the DENSO way of manufacturing in our workforce
worldwide and pursuing the establishment of an even stronger manufacturing framework. Spe-
cifically, to ensure our workforce fully understands the DENSO way of manufacturing, we con-
ducted a production training program for Group employees at the Daian plant. We also carried
out ongoing DENSO Spirit awareness and promotion campaigns aimed at tapping the full capa-
bilities and collective knowledge of our entire workforce. Our aim with DENSO Spirit is to create
a shared set of values globally, while at the same time creating employee training mechanisms
and fostering higher levels of employee motivation and teamwork.
Additionally, in April 2006, we established the DENSO Group Declaration of Corporate
Behavior to contribute to the sustainable development of society. This Declaration clearly states
Return on Sales action guides with respect to individual stakeholder groups (customers, shareholders, vendors,
(%)
employees, global society, and local communities). Going forward, the Group aims to conduct
corporate social responsibility (CSR) activities through all Group members, and in all nations
6.0 5.7 and regions in which it does business, to maintain the high level of trust placed in it by society.
5.3
5.0 4.8 4.7
4.3 Net Sales
4.0 Consolidated net sales increased significantly year on year, rising 13.2%, or ¥421.4 billion,
to ¥3,609.7 billion. This reflected firm production and sales of Japanese models in both the
3.0
domestic and overseas markets. The marked weakening of the yen also supported the
2.0 increase in sales.
1.0
0
03 04 05 06 07

Sales by Geographic Segment
In Japan, sales grew 11.0%, or ¥252.3 billion, to ¥2,541.3 billion. This reflected increased
domestic vehicle production and higher exports of components for manufacturing overseas.
In the Americas, sales rose 11.4%, or ¥78.6 billion, to ¥769.1 billion, with sales expansion
covering flat production of Japanese vehicles.
In Europe, sales increased 22.8%, or ¥96.3 billion, to ¥519.3 billion, reflecting higher sales of
components for Japanese and European vehicles.
In Asia & Oceania, sales increased 21.5%, or ¥85.1 billion, to ¥480.2 billion, due to firm output
of Japanese vehicles in Thailand and China, and strong production of South Korean automobiles.
Sales by Product Category

In the year under review, the Group recorded an increase in the automotive field of 13.8% or
¥422.1 billion, to ¥3,489.0 billion. This figure represented 96.7% of consolidated net sales, com-
pared with 96.2% a year earlier. Sales in new business fields were down 0.6%, or ¥0.8 billion,
to ¥120.7 billion, accounting for 3.3% of consolidated net sales, compared with 3.8% last year.
Sales in the six main product categories in the automotive field were as follows:
Thermal Systems: sales increased 10.3%, or ¥106.1 billion, to ¥1,138.0 billion, on higher
exports and stronger sales to European customers. Sales of thermal systems accounted for
31.5% of consolidated net sales, down slightly from 32.4% last year.
Powertrain Control Systems: sales grew 13.2%, or ¥96.6 billion, to ¥830.1 billion, due to
higher sales of diesel common-rail injection systems in Europe and brisk sales of hybrid vehicle-
related products. Sales of powertrain control systems accounted for 23.0% of consolidated net
sales, unchanged from the previous year.
Information and Safety Systems: sales rose 16.8%, or ¥84 billion, to ¥583.9 billion, driven by
higher sales of car navigation systems in North America and brisk demand for such products as
instrument clusters and remote keys due to the growing use of electronic components in
vehicles. Sales in this product category accounted for 16.2% of consolidated net sales, up from
15.7% a year earlier.
Electric Systems: sales increased 24.0%, or ¥63.8 billion, to ¥330 billion, primarily on higher
sales of alternators and other electrical components, as well as on increased sales of hybrid
vehicle-related products and safety-related equipment, including power steering electronic
control units (ECUs). Sales of electric systems accounted for 9.2% of consolidated net sales, up
from 8.3% last year.
Electronic Systems: sales increased 15.1%, or ¥40.7 billion, to ¥310.7 billion, reflecting higher
domestic vehicle production and increased demand for various ECUs and sensors due to the
growing use of electronic components in vehicles. Sales of electronic systems accounted for
8.6% of consolidated net sales, compared with 8.5% last year.
Small Motors: sales increased 10.7%, or ¥24.1 billion, to ¥248.8 billion, on higher sales of
motors for use in wiper systems, power seats, and power sliding doors. Sales of small motors
accounted for 6.9% of consolidated net sales, down slightly from 7.0% in the previous year.

Operating Income Operating Income
(¥ Billion)
Operating income substantially increased 13.7%, or ¥36.5 billion, to ¥303.1 billion. The main
negative factors impacting on operating income were higher material costs (up ¥40 billion year on
400 year), increased depreciation in line with higher capital expenditures (up ¥34.7 billion), and
increased personnel expenses (up ¥30.4 billion) due to such factors as a greater number of
300 303 employees and higher salaries overseas, as well as increased recruitment of fixed-term employees
267
in Japan in response to higher production. Factors having a positive impact on operating income
214 included capacity utilization gains from higher sales (up ¥114.5 billion) and rationalization benefits
200 189
160
(up ¥45 billion) from moves to streamline and increase efficiency throughout the Group as a
whole. Exchange gains (up ¥29.8 billion) also had a positive impact on operating income.
100
Operating Income by Geographic Segment

0 Operating income in Japan rose 3.7%, or ¥7.7 billion, to ¥215.3 billion. Factors negatively
03 04 05 06 07 impacting operating income included increased personnel expenses, deterioration in the prod-
uct mix associated with higher sales of such products as hybrid vehicle equipment and com-
mon-rail systems, higher depreciation in line with increased capital expenditures, and higher
material costs due to rising prices for copper, aluminum, and other materials. The positive sides
were gains in capacity utilization due to higher vehicle production in Japan, rationalization ben-
efits, and benefits from the weaker yen.
In the Americas, operating income rose 33.4%, or ¥7.3 billion, to ¥29.2 billion. Despite
higher personnel costs associated with increased production, higher depreciation, and
increased material costs, operating income was boosted by gains in capacity utilization and
rationalization efforts.
In Europe, operating income jumped 682.6%, or ¥10.6 billion, to ¥12.2 billion, on higher sales
in the Czech Republic and Hungary, and substantial improvement in margins achieved through
rationalization.
In Asia & Oceania, operating income rose 25.1%, or ¥9.2 billion, to ¥45.9 billion, on gains from
greater capacity utilization supported by increased sales, as well as on rationalization benefits.
Other Income (Expenses)

Other income-net totaled ¥16.6 billion, an increase of ¥11.3 billion, compared with the previous
year. This mainly reflected higher interest and dividend income, which rose 40.0%, or ¥5.2
billion, to ¥18.2 billion, mainly due to higher dividends from investees.
Net Income per Share Net Income

Dividends per Share The Group recorded income before income taxes and minority interests of ¥319.7 billion for
(¥) fiscal 2007, up 17.6%, or ¥47.9 billion, from the previous fiscal year. Income taxes increased
300 120 10.1%, or ¥9.2 billion, to ¥100 billion. Minority interests totaled ¥14.6 billion, up 27.5%, or ¥3.1
billion. As a result, the Group recorded net income of ¥205.2 billion, an increase of 20.9%, or
250 249.88 100
¥35.5 billion, from the previous fiscal year.
200
204.80
80 ROE increased from 9.4% to 9.9%, and net income per share of common stock rose from
¥204.80 to ¥249.88. Diluted net income per share of common stock was ¥249.56, compared
159.02
150 60 with ¥204.62 a year earlier.
128.37 130.02
100 45 40
32
38 Policy on Allocation of Earnings
50 24 20 Dividends
20
The Company is committed to paying consistent increases in the dividend, while taking into
0 0
03 04 05 06 07 consideration operating results and the dividend payout ratio. In line with this policy, the Com-
■ Net Income per Share pany increased the dividend applicable to the fiscal year by ¥7.00 to ¥45.00, representing a
Dividends per Share
payout ratio of 26.8% and 18.0% on a non-consolidated and consolidated basis, respectively.

The Company uses retained earnings for capital expenditures and research and development to
sustain long-term business growth, and to support its share buyback program as a means of
returning profits to shareholders.
Treasury Stock Repurchases

The company repurchases treasury stock as part of its strategy to increase ROE, return profits
to shareholders and ensure a flexible capital policy in response to changes in the operating
environment. As of March 31, 2007, the Company had repurchased a total of 144.2 million
shares at an aggregate cost of ¥317.2 billion since the beginning of its share buyback program
in the year ended March 31, 1997. This represents 16% of all the Company’s outstanding
shares as of March 31, 1997. In fiscal 2007, the Company repurchased 7.5 million shares in the
market at a cost of ¥33.0 billion. Additionally, at the Annual General Meeting of Shareholders
held in June 2007, a resolution was approved that allows the Company to repurchase up to 6.5
million shares (or a maximum of ¥32.5 billion) by the time of the next Annual General Meeting of
Shareholders to be held in June 2008. In the future, while giving consideration to cash flows,
the Company will maintain this policy as an important tool in improving ROE and increasing
shareholder value.
Source of Funds and Liquidity Risk Management

The Group’s fundamental financial policy is designed to: ensure efficient funding of the opera-
tional activities of the entire Group; secure an optimum level of funds and liquidity; and maintain
a sound financial position.
Global Cash Management System

In July 2000, DENSO Finance & Accounting Co., Ltd., a subsidiary that conducts the account-
ing operations of the Group, was established in Japan, together with regional headquarter sub-
sidiaries in North America, Europe, and Asia. By integrating financing functions at these
locations, the Group has created a structure that enables the optimum management of Group-
wide funds. Based on this structure, in which each subsidiary is responsible for managing funds
within its respective region, the Group can procure capital resources and manage excess or
deficient funds in a more centralized manner.
The Group has also created a cash pooling system for yen and U.S. dollars in order to
increase the efficiency of global financing and eliminate uneven distribution of funds between
regions. This system allows the Group to transfer excess funds to underfunded operations,
thereby reducing commissions and interest normally paid to financial institutions.
Financial Position
Total assets as of March 31, 2007, stood at ¥3,765.1 billion, 10.4%, or ¥353.2 billion, more
than the previous fiscal year.
Current assets increased 7.3%, or ¥102.3 billion, to ¥1,502.8 billion, primarily reflecting
increases in cash and deposits, notes and accounts receivable, and inventories, outweighing a
decline in marketable securities.
Property, plant and equipment increased 11.4%, or ¥111.0 billion, to ¥1,086.0 billion, due to
aggressive capital investment.
Investments and other assets rose 13.5%, or ¥139.9 billion, to ¥1,176.3 billion, mainly on the
acquisition of investment securities.
The total of current and long-term liabilities rose 9.8%, or ¥132.5 billion, to ¥1,478.2 billion.
Interest-bearing debt increased 7.8%, or ¥20.7 billion, to ¥286.8 billion.
Equity rose 10.7%, or ¥220.6 billion, to ¥2,287.0 billion.

Net Cash Provided Cash Flows
by Operating Activities
In terms of cash flows for the fiscal year ended March 31, 2007, net cash provided by operating
(¥ Billion)
activities was ¥406.5 billion, net cash used in investing activities was ¥312.9 billion, and net
500 cash used in financing activities was ¥79.9 billion. This, combined with a ¥0.5 billion increase
407
associated with newly consolidated subsidiaries, resulted in a term-end balance of cash and
400
369 cash equivalents of ¥337.0 billion, up ¥23.4 billion from the end of the previous fiscal year.
Net cash provided by operating activities for the fiscal year ended March 31, 2007, totaled
300
267 273 ¥406.5 billion, ¥38.0 billion more than in the previous fiscal year. This increase was chiefly
232
attributable to a ¥36.5 billion rise in operating income thanks to capacity utilization gains on the
200
back of higher sales and rationalization activities, including cost-reduction measures.
100
Investing activities used net cash of ¥312.9 billion, ¥6.0 billion less than the previous fiscal
year. This primarily reflected a ¥33.9 billion increase in cash used for the acquisition of property,
0 plant and equipment, against a ¥26.7 billion increase in proceeds from the sale of other market-
03 04 05 06 07 able securities.
Net cash used in financing activities was ¥79.9 billion (versus ¥25.5 billion provided in the
previous fiscal year). This was mainly attributable to a ¥19.8 billion net decline in funds procured
through short-term borrowing (versus a net increase of ¥30.1 billion in the previous year) and a
¥53.1 billion increase in cash used for the repurchase of treasury stock.
Capital Expenditures Capital Expenditures/Depreciation

Depreciation The Group applies a number of benchmarks to ensure appropriate decisions are made with
(¥ Billion)
regard to capital expenditures. These benchmarks include projected cash flow, ROA, number of
400 years to recover investments, and forecasts of profitability. As part of a drive to reduce medium-
term fixed costs, the Group is minimizing the scale of its production lines, standardizing compo-
313
300 289
nents, using global procurement, and reducing facilities costs.
Capital expenditures during the year under review totaled ¥312.5 billion, an increase of 8.2%,
235
220 or ¥23.8 billion, from the previous year. Depreciation increased 18.8%, or ¥34.7 billion, to
200 196
185
171
161
¥219.9 billion.
147 151
100 Capital Expenditures/Depreciation by Geographic Segment

In Japan, capital expenditures increased 4.3%, or ¥8.7 billion, to ¥210.7 billion. This investment
0 was mainly used to upgrade facilities that produce future strategic products. In June 2006, the
03 04 05 06 07 Company expanded a semiconductor wafer facility at the Kota Plant to increase IC production
■ Capital Expenditures capacity due to the growing use of electronic components in vehicles. Also, in December 2006,
■ Depreciation
DENSO Manufacturing Kitakyushu Co., Ltd. started producing common-rail system (CRS) injec-
tor components. The decision to add CRS injectors to the plant’s production lineup reflects the
growing shift to clean diesel products, especially in Europe. Marked growth in demand for these
injectors, which are an integral component of the CRS package, is anticipated in the region.
DENSO Manufacturing Kitakyushu, along with the Nishio and Zenmyo plants, is now a part of
the Group’s global supply framework for CRS injectors.
In the Americas, capital expenditures increased 27.8%, or ¥8.8 billion, to ¥40.4 billion. These
expenditures primarily reflected spending to increase engine ECU production at DENSO Manu-
facturing Tennessee, Inc., and to boost air conditioner and radiator production at DENSO
Manufacturing Michigan, Inc.
In Europe, investment was used to increase output of gasoline injectors at DENSO Manufac-
turing Hungary Ltd. and air conditioner products in Italy. Also, in response to rising sales of
automobile air conditioners, DENSO Sistemas Termicos Espana SA started operations in April
2006. In July 2006, we began construction of a new plant at DENSO Otomotiv Parcalari Sanayi
Anonim Sirket (Turkey), with the goal of starting operations in August 2007. As a result, capital
expenditures in Europe increased 5.1%, or ¥1.2 billion, to ¥24.8 billion.

In Asia & Oceania, capital expenditures increased 16.2%, or ¥5.1 billion, to ¥36.6 billion. This
investment was mainly used in Thailand to increase production of CRS and air conditioners. In
China, which is experiencing rapid market growth, investment was used mainly to start full-
scale operations at 20 previously established production companies, and to increase capacity
for various products, beginning with air conditioners and injectors.
Depreciation by region compared with the previous fiscal year was as follows: 19.2%, or
¥24.7 billion, higher in Japan to ¥153.3 billion; 9.9%, or ¥2.2 billion, higher in the Americas to
¥24.4 billion; 16.9%, or ¥3.1 billion, higher in Europe to ¥21.4 billion; and 28.6%, or ¥4.6 billion,
higher in Asia & Oceania to ¥20.7 billion.
R&D Activities Research and Development (R&D) Activities

(¥ Billion) To “Evolve into a truly global corporation”, the Group is working to construct a world-wide
development framework, while creating pioneering, attractive products in terms of the environ-
300 ment, safety, comfort, and convenience. We have achieved particular success in the environ-
279
256 mental field, winning the 2006 Climate Protection Award from the U.S. Environmental Protection
250 238
Agency in May 2006. This marks the third consecutive time we have won this award, following
215
200 on from awards in 2002 and 2004. The Group will continue to develop environmental technolo-
183
gies to contribute to the protection of the global environment.
150
As part of our drive to create a global development framework, in October 2006, we estab-
100 lished a branch office of DENSO Europe B.V. in Moscow, Russia. Additionally, we concluded an
agreement with Robert Bosch GmbH of Germany to establish a joint venture in Eastern Europe
50
to develop and produce diesel particulate filters. We also set up a technical center on the out-
0 skirts of Bangkok, Thailand to develop products that are optimized for that region.
03 04 05 06 07 In the year under review, R&D expenses increased 9.2%, or ¥23.6 billion, to ¥279.9 billion,
representing 7.8% of net sales, down from 8.0% in the previous period.
In this way, the Group is working to enhance the welfare of people everywhere by creating
products that offer greater innovation, advanced performance, and superior quality.
Risk Management
The Company has established a Risk Management Committee to minimize the diverse risk asso-
ciated with its global operations. This committee is responsible for mitigating risk that may impact
the Group, implementing countermeasures in the event of risk materializing and taking other steps
to enhance the Group’s overall capability to deal with risk both in Japan and overseas.
Economic Risk
Demand for auto parts, which account for the major part of the Group’s operating revenue around
the globe, is easily affected by the economic situation in the countries and regions where the
Group has sales bases. Accordingly, an economic downturn and resulting decrease in demand
for auto parts in the Group’s major markets, including Japan, the Americas, Europe, Asia and
Oceania, may have an adverse effect on the Group’s operating results and financial condition.
Further, Group operations can be indirectly affected by the economic situation in regions
where competitors have their manufacturing bases. For example, if a competitor is able to
employ local labor at lower cost and provide equivalent products at prices below those of the
Group, this may adversely affect sales. Further, if the local currency of regions where parts and
raw materials are sourced falls, there is a chance that the manufacturing cost not only for the
Group but also for other manufacturers will fall. As a result of these trends, export and price
wars may intensify, with the possibility that this will have an adverse effect on the Group’s oper-
ating results and financial condition.

Exchange Rate Risk
Operations within the Group include the sale and manufacture of products around the world. All
regional items in local currency including sales, costs and assets are converted to yen for the
purpose of creating consolidated financial statements. Based on the exchange rate used in
conversion, even though items have not changed as an amount of local currency, there is a
possibility that the amount expressed in yen after the conversion has been changed. In general,
a strong yen (in particular against the U.S. dollar and euro that constitute a major part of Group
sales) has an adverse effect on the Group’s operations, and a weak yen has a positive effect on
the Group’s operations.
For Group operations that manufacture in Japan and export, a strong yen against other curren-
cies decreases the worldwide comparative price competitiveness of their products and can have
an adverse effect on operating results. The Group performs currency hedging, and makes efforts
to minimize the adverse effect of short-term fluctuations in the exchange rates of major currencies
including the U.S. dollar, euro and yen. However, as a result of medium- and long-term move-
ments in exchange rates, there are cases where procurement, manufacturing, distribution and
sales cannot be performed exactly as planned and, as a result, exchange rate movements may
have an adverse effect on the Group’s operating results and financial condition.
Raw Materials and Component Supply Risk

The Group procures raw materials and components used to manufacture its products from
numerous external vendors. Although basic business contracts have been concluded with
these external vendors, and transactions are generally stable, there is no guarantee of short-
ages or sharply higher prices for raw materials and components due to fluctuations in market
conditions, unforeseen accidents at vendors or other such events. In such cases, the Group
could incur higher manufacturing costs or be forced to halt production, which may in turn have
an adverse effect on the Group’s operating results and financial condition.
New Product Development Risk

While the Group believes that it can continue to develop original and appealing new products,
the product development and sales process is, by its nature, complex and uncertain, and is
subject to the following risks:
• There is no guarantee of acquiring sufficient funds and resources for investment in new
products and new technologies.
• There is no guarantee that long-term investment and allocation of large amounts of
resources will lead to the development of successful new products and the creation of new
technologies.
• It is not certain that the Group will be able to correctly predict which new products and
new technologies will earn the support of the Group’s customers, and there is no guaran-
tee that the sales of these products will be successful.
• As a result of fast-paced technological advances and changes in market needs, there is a
possibility that the Group’s products will become outdated.
• As a result of delays in the commercialization of new technologies under development,
there is a possibility that market demands might not be met.
Beginning with the risks outlined above, if the Group is unable to fully anticipate industry and
market changes, and is unable to develop attractive new products, this may result in a drop in
future growth and profitability and may have an adverse effect on the Group’s operating results
and financial condition.

Pricing Risk
Price competition in the automotive industry is fierce. In particular, demands for price reductions
by automakers have increased in recent years. Further, it can be foreseen that the Group will
face intensified competition in the component fields and regional markets that it operates in.
Competitors include other component manufacturers, and some of these manufacturers are
providing products at a lower price than the Group. Also, in line with the evolution of the auto-
motive electronics business, there has been a rise in new competitors, such as consumer-
electronics manufacturers and tie-ups between existing competitors, and there is a chance that
they will quickly gain a large share in the market.
While we believe that the Group is the leading component manufacturer in the world and
continues to develop automotive parts that are technically advanced, of high quality and high
added-value, this is no guarantee that the Group will be able to compete effectively in the
future. There is always the possibility that pricing pressure and ineffective competitive practices
on the Group’s part will lead to a decrease in customers, which may have an adverse effect on
the Group’s operating results and financial condition.
Potential Risks of International Activities and Overseas Expansion

The proportion of manufacturing and sales activities carried out in the Americas and Europe, as
well as in developing and emerging markets in Asia and Oceania, has been increasing in recent
years. Expansion into these overseas markets has the following inherent risks, which if they mate-
rialize, may have an adverse effect on the Group’s operating results and financial condition.
• Unforeseen changes in laws or regulations.
• Unfavorable political or economic factors.
• Difficulties in employing and retaining personnel.
• Inadequate social infrastructure that may adversely affect the Group’s business activities.
• The potentially adverse impact of tax regulations
• Social or economic turmoil caused by terrorist incidents, military conflict, epidemics and
other events
Intellectual Property Risk

The Group has accumulated technology and expertise that allows it to differentiate its products
from those of its competitors. However, legal restrictions in certain regions and countries are
inadequate to fully protect these technologies and expertise as intellectual property. Conse-
quently, the Group may not be able to effectively prevent third parties from using its intellectual
property to manufacture similar products. Additionally, because the Group’s products employ a
broad range of technologies, there is a possibility that these products may be judged to have
infringed third-party intellectual property rights in the future.
OEM Customer Risk

The OEM business, which constitutes the majority of the Group’s business, serves automobile
manufacturers around the world and supplies a wide range of products, including air condition-
ing, engine, driving control and safety, and information and communication products. Sales to
OEM customers are liable to be affected by factors that the Group cannot control such as the
operating results of the OEM customer, while demands for reduced prices from the OEM cus-
tomer may reduce the Group’s profit margins. Further, there is a possibility that OEM customer
business downturns, unforeseen contract cancellations, changes in OEM customer procure-
ment policies, and price cuts to satisfy large customers may have an adverse effect on the
Group’s operating results and financial condition.
Sales to the Toyota Group account for roughly half of the Group’s sales. Such sales made to
a specific client group can be significantly impacted by the operating results of the customer.

Product Defect Risk
The Group manufactures a variety of products to meet internationally recognized quality con-
trol standards at factories around the world. However, there is no guarantee that all the
Group’s products are defect-free and that there will be no product recalls in the future. Also,
while the Group does have product liability insurance coverage, there is no guarantee that
this insurance will completely cover any compensation that the Group may be forced to pay.
Further, the Group may not be able to continue to subscribe to this insurance under condi-
tions acceptable to the Group. Product defects that lead to large-scale product recalls or
product liability compensation could have a huge cost and large impact on the Group’s repu-
tation, and this may lead to a decrease in sales and adversely affect the Group’s operating
results and financial condition.
Risks of Natural Disasters and Power Outages

In order to minimize the potential negative impact of manufacturing lines being shut down, the
Group carries out disaster-prevention inspections and equipment checks on a regular basis.
However, there is no guarantee that the Group can totally prevent or reduce the impact of
natural disasters, power outages or other stoppages of manufacturing lines. For example, many
of the Group’s places of business are in the Tokai region, and if a disastrous earthquake were
to hit this region, there is a possibility that the Group’s production and delivery activities would
be suspended.
Pension Liability Risk

Costs and liabilities for employees’ retirement benefits are calculated based on actuarial
assumptions such as the discount rate and the expected rate of return on the pension assets.
When actual results differ from the assumptions used for calculation, or when changes are
made to the assumptions, the effect is accumulated and brought forward into future calcula-
tions, generally resulting in an impact on reported future costs and liabilities.
Risk Management Meeting

With expansion of the Group’s overseas business, the rapid development of information tech-
nology and greater pressure on companies to fulfill their social responsibility with respect to the
environment, managing diversifying risks from a global perspective is becoming increasingly
important. In this context, the Company established a Risk Management Meeting to reinforce its
ability to respond to risk. Specifically, with respect to 58 areas of risk identified by the Company
as requiring management, the Group as a whole is taking steps to minimize their impact on
operations by mitigating potential risk and implementing thorough initial response measures in
the event that such risk does materialize.
Outlook
Growth in the global economy is expected to remain firm on the whole in fiscal 2008, ending
March 31, 2008. In the U.S., despite signs of an economic slowdown, personal consumption is
showing underlying strength. In Japan, the economy remains on a course of moderate expansion.
In the automotive industry, worldwide vehicle sales are forecast to remain firm, supported by
steady sales in the key American and European markets, and ongoing growth in China, India,
and other emerging markets.
Sales are also projected to rise in Japan on the back of new model launches and brisk sales
of compact vehicles. Together with sustained high levels of exports of finished vehicles, mainly
to North America, this is expected to support another year of vehicle production exceeding 10
million units.

The outlook for worldwide vehicle sales is dependent on a strong global economy. However,
trends going forward require some caution with respect to sharp increases in prices for raw
materials prices, beginning with crude oil, and foreign exchange rate volatility.
In this business climate, in fiscal 2008, the second year since the formulation of DENSO
VISION 2015, the Group will strengthen its commitment to safety and quality, the foundation of
its business, and accelerate the implementation of various initiatives enacted in fiscal 2006,
while continuing to be guided by the following two key policies:
1. Contribute to the creation of an advanced automotive society
2. Evolve into a truly global corporation
Specific initiatives in the first area will include: strengthening quality assurance systems to
ensure customer peace of mind and satisfaction, and creating components and systems that
are highly innovative and competitive. The Group will also work to achieve the business strate-
gies set for each product and to proactively make proposals to automakers.
In the second area, the Group will redouble its efforts in the area of safety awareness while
further enhancing its global production framework. Also, while maximizing Group capabilities,
which are underpinned by autonomy, the Group will work to create a workplace that enables all
of its employees around the world to fully demonstrate their full potential.
Based on these initiatives, and assuming U.S. dollar and euro exchange rates of ¥115 and
¥150, respectively, the Group is projecting consolidated net sales of ¥3,800 billion, an increase
of 5.3%, or ¥190.3 billion, and net income of ¥207.0 billion, an increase of 0.9%, or ¥1.8 billion,
for the fiscal year ending March 31, 2008. Other estimates are for capital expenditures of
¥353.0 billion, up 13.0%, or ¥40.5 billion, depreciation of ¥260.0 billion, up 18.2%, or ¥40.1
billion, and R&D expenses of ¥305.0 billion, up 9.0%, or ¥25.1 billion.
Forward-looking Statements
The above forecasts are based on information available as of the date of this report. Actual
results may differ materially from forecasts due to a variety of internal and external factors, such
as changes in business operations and exchange rates.

Consolidated Balance Sheets
March 31, 2007 and 2006
Thousands of
U.S. dollars
Millions of yen (Note 1)
Assets 2007 2006 2007
Current Assets:
Cash and cash equivalents ¥ 337,003 ¥ 313,611 $ 2,855,958
Short-term investments (Notes 3 and 8) 33,440 74,098 283,390
Notes and accounts receivable:
Trade 648,846 579,101 5,498,695
Non-consolidated subsidiaries and affiliates 12,033 13,593 101,975
660,879 592,694 5,600,670
Less: Allowance for doubtful accounts (2,736) (2,643) (23,187)
658,143 590,051 5,577,483
Inventories (Note 4) 313,679 287,571 2,658,297
Deferred tax assets (Note 6) 60,646 53,912 513,949
Other current assets 99,932 81,350 846,881
Total current assets 1,502,843 1,400,593 12,735,958
Property, Plant and Equipment (Notes 5 and 8):

Land 149,944 148,669 1,270,712
Buildings and structures 656,648 624,599 5,564,813
Machinery and equipment 2,337,584 2,104,812 19,810,034
Construction in progress 106,634 93,689 903,678
3,250,810 2,971,769 27,549,237
Less: Accumulated depreciation (2,164,831) (1,996,794) (18,346,025)
Net property, plant and equipment 1,085,979 974,975 9,203,212
Investments and Other Assets:

Investment securities (Note 3) 971,433 841,275 8,232,483
Investments in and advances to
non-consolidated subsidiaries and affiliates 47,395 47,096 401,653
Prepaid pension cost (Note 9) 100,169 94,266 848,890
Intangible assets 19,938 12,076 168,966
Other assets (Note 6) 37,378 41,694 316,762
Total investments and other assets 1,176,313 1,036,407 9,968,754
Total ¥ 3,765,135 ¥ 3,411,975 $ 31,907,924
See accompanying notes to consolidated financial statements.

Thousands of
U.S. dollars
Liabilities and Equity 2007 2006 2007
Current Liabilities:
Short-term borrowings (Note 7) ¥ 82,551 ¥ 92,107 $ 699,585
Current portion of long-term debt (Notes 7 and 8) 59,547 3,674 504,635
Notes and accounts payable:
Trade 462,644 418,099 3,920,712
Non-consolidated subsidiaries and affiliates 28,328 27,958 240,068
490,972 446,057 4,160,780
Income taxes payable 54,410 64,594 461,102
Accrued expenses 210,501 189,426 1,783,907
Other current liabilities (Note 6) 97,379 75,996 825,246
Total current liabilities 995,360 871,854 8,435,255
Long-Term Liabilities:
Long-term debt (Notes 7 and 8) 144,671 170,304 1,226,025
Liability for employees’ retirement benefits (Note 9) 172,602 166,998 1,462,729
Deferred tax liabilities (Note 6) 150,751 123,634 1,277,551
Other long-term liabilities 14,795 12,882 125,381
Total long-term liabilities 482,819 473,818 4,091,686
Minority Interests 95,915
Contingent Liabilities (Note 10)
Equity (Note 2 (L) and 11):

Common stock:
Authorized: 1,500,000,000 shares in 2007 and
1,426,942,000 shares in 2006
Issued: 884,068,713 shares in 2007 and 2006 187,457 187,457 1,588,619
Capital surplus 266,463 266,182 2,258,161
Stock acquisition rights 294 2,492
Retained earnings 1,500,807 1,329,974 12,718,703
Unrealized gain on available-for-sale securities 374,060 319,186 3,170,000
Deferred loss on derivatives under hedge accounting (905) (7,670)
Foreign currency translation adjustments 14,962 (14,562) 126,797
Treasury stock, at cost: 69,583,525 shares in 2007 and
57,805,824 shares in 2006 (169,130) (117,849) (1,433,305)
Total 2,174,008 1,970,388 18,423,797
Minority interests 112,948 957,186

Total equity 2,286,956 1,970,388 19,380,983
Total ¥3,765,135 ¥3,411,975 $31,907,924

Consolidated Statements of Income
Thousands of
U.S. dollars
2007 2006 2005 2007
Net Sales (Note 13) ¥3,609,700 ¥3,188,330 ¥2,799,949 $30,590,678
Cost of Sales (Note 14) 2,990,370 2,622,998 2,309,713 25,342,119
Gross profit 619,330 565,332 490,236 5,248,559
Selling, General and Administrative Expenses (Note 14) 316,262 298,773 276,341 2,680,186
Operating income 303,068 266,559 213,895 2,568,373
Other Income (Expenses):

Interest and dividend income 18,224 13,021 9,118 154,441
Foreign exchange gain 5,725 6,346 4,051 48,517
Equity in earnings of affiliates 1,469 1,549 2,340 12,449
Interest expense (5,709) (4,506) (3,541) (48,381)
Loss on sale or disposal of property, plant and equipment, net (2,996) (5,761) (5,422) (25,390)
Reversal of allowance for doubtful accounts 469 3,975
Impairment loss on long-lived assets (Note 5) (1,044) (159) (1,206) (8,848)
Restructuring charges (1,659) (14,059)
Impairment loss on investment securities (1,807) (177) (108) (15,314)
Gain on settlement of the substitutional portion of
governmental pension program due to return of
corresponding plan assets (Note 9) 1,016
Charge for full amount of transitional obligation for employees’
retirement benefits of subsidiaries in UK (Note 2 (I)) (10,929)
Factory removal expenses of a subsidiary (951)
Other, net 3,971 5,846 4,319 33,652
Total 16,643 5,295 9,551 141,042
Income before income taxes and minority interests 319,711 271,854 223,446 2,709,415
Income Taxes (Note 6):

Current 115,162 104,346 90,110 975,949
Deferred (15,194) (13,568) (6,824) (128,763)
Total 99,968 90,778 83,286 847,186
Minority Interests in Net Income 14,573 11,428 7,540 123,500
Net income ¥ 205,170 ¥ 169,648 ¥ 132,620 $ 1,738,729
U.S. dollars
Yen (Note 1)
Per Share of Common Stock (Notes 2 (T) and 18):

Basic net income ¥ 249.88 ¥ 204.80 ¥ 159.02 $ 2.12
Diluted net income 249.56 204.62 158.96 2.11
Cash dividends applicable to the year 45.00 38.00 32.00 0.38
Average Number of Shares (in thousands) 821,060 825,725 830,869


Consolidated Statements of Changes In Equity
Thousands Millions of Yen

Deferred
Outstanding Unrealized Loss
Number of Gain on on Foreign
Shares of Stock Available- Derivatives Currency
Common Common Capital Acquisition Retained for-sale under Hedge Translation Treasury Minority
Stock Stock Surplus Rights Earnings Securities Accounting Adjustments Stock Total Interests Total Equity
Balance, April 1, 2004 833,873 ¥187,457 ¥266,005 ¥1,080,996 ¥142,588 ¥(70,577) ¥(96,980) ¥1,509,489 ¥1,509,489
Net income 132,620 132,620 132,620
Cash dividends,
¥26 per share (21,686) (21,686) (21,686)
Bonuses to directors and
corporate auditors (560) (560) (560)
Purchase of treasury stock (9,129) (23,875) (23,875) (23,875)
Disposal of treasury stock 531 46 1,037 1,083 1,083
Net change in the year 31,142 14,969 46,111 46,111
Balance, March 31, 2005 825,275 ¥187,457 ¥266,051 ¥1,191,370 ¥173,730 ¥(55,608) ¥(119,818) ¥1,643,182 ¥1,643,182
Net income 169,648 169,648 169,648
Cash dividends,
¥37 per share (30,546) (30,546) (30,546)
Purchase of treasury stock (25) (83) (83) (83)
Disposal of treasury stock 1,006 131 2,051 2,182 2,182
Net change in the year 7 145,456 41,046 1 186,503 186,503
Balance, March 31, 2006 826,263 ¥187,457 ¥266,182 ¥1,329,974 ¥319,186 ¥(14,562) ¥ (117,849) ¥1,970,388 ¥1,970,388
Reclassified balance as of
March 31, 2006 (Note 2 (L)) ¥ 95,915 95,915
Adjustment of retained
earnings for newly
consolidated subsidiaries (9) (9) (9)
Net income 205,170 205,170 205,170
Cash dividends,
¥41 per share (33,779) (33,779) (33,779)
Purchase of treasury stock (12,622) (53,170) (53,170) (53,170)
Disposal of treasury stock 844 281 1,889 2,170 2,170
Net change in the year ¥294 54,874 ¥(905) 29,524 83,787 17,033 100,820
Balance, March 31, 2007 814,485 ¥187,457 ¥266,463 ¥294 ¥1,500,807 ¥374,060 ¥(905) ¥ 14,962 ¥(169,130) ¥2,174,008 ¥112,948 ¥2,286,956
Thousands of U.S. dollars

Deferred
Unrealized Loss
Gain on on Foreign
Stock Available- Derivatives Currency
Common Capital Acquisition Retained for-sale under Hedge Translation Treasury Minority
Stock Surplus Rights Earnings Securities Accounting Adjustments Stock Total Interests Total Equity
Balance, March 31, 2006 $1,588,619 $2,255,780 $11,270,966 $2,704,966 $(123,407) $ (998,720) $16,698,204 $16,698,204
Reclassified balance as of
March 31, 2006 (Note 2 (L)) $812,839 812,839
Adjustment of retained earnings for
newly consolidated subsidiaries (76) (76) (76)
Net income 1,738,729 1,738,729 1,738,729
Cash dividends, $0.35 per share (286,263) (286,263) (286,263)
corporate auditors (4,653) (4,653) (4,653)
Purchase of treasury stock (450,593) (450,593) (450,593)
Disposal of treasury stock 2,381 16,008 18,389 18,389
Net change in the year $2,492 465,034 $(7,670) 250,204 710,060 144,347 854,407
Balance, March 31, 2007 $1,588,619 $2,258,161 $2,492 $12,718,703 $3,170,000 $(7,670) $126,797 $(1,433,305) $18,423,797 $957,186 $19,380,983
See notes to consolidated financial statements.

Consolidated Statements of Cash Flows
Thousands of
U.S. dollars
2007 2006 2005 2007
Operating Activities:
Income before income taxes and minority interests ¥ 319,711 ¥ 271,854 ¥ 223,446 $ 2,709,415
Adjustments for:
Payment of income taxes (124,277) (84,671) (92,606) (1,053,195)
Depreciation 219,873 185,143 160,993 1,863,330
Impairment loss on long-lived assets 1,044 159 1,206 8,848
Amortization of goodwill (163) (145) 225 (1,381)
Increase in liability for retirement benefits 3,653 12,521 7,927 30,957
Equity in earnings of affiliates (1,469) (1,549) (2,340) (12,449)
Loss on sale or disposal of property, plant and equipment, net 2,996 5,761 5,422 25,390
Foreign exchange gain (2,179) (1,467) (2,758) (18,466)
Changes in assets and liabilities:
Increase in notes and accounts receivable (53,262) (54,878) (35,411) (451,373)
Increase in inventories (14,508) (22,503) (27,932) (122,949)
Increase in notes and accounts payable 33,596 44,033 29,132 284,712
Decrease in defined contribution pension payable (525) (6,145) (7,622) (4,449)
Increase in prepaid pension cost (5,903) (3,348) (6,668) (50,025)
Other, net 27,956 23,810 20,282 236,915
Total adjustments 86,832 96,721 49,850 735,865
Net cash provided by operating activities 406,543 368,575 273,296 3,445,280
Investing Activities:
Acquisition of property, plant and equipment (311,196) (277,329) (226,246) (2,637,254)
Proceeds from sale of property, plant and equipment 10,764 8,991 4,334 91,220
Purchase of available-for-sale securities (80,888) (89,139) (89,623) (685,492)
Proceeds from sale and redemption of available-for-sale securities 81,734 54,986 54,229 692,661
(Payment for) Proceeds from purchase of consolidated subsidiaries,
net of cash acquired (1,509) 85
Other, net (13,317) (14,934) (11,561) (112,855)
Net cash used in investing activities (312,903) (318,934) (268,782) (2,651,720)
Financing Activities:
Net (decrease) increase in short-term borrowings (19,838) 30,142 8,387 (168,119)
Proceeds from long-term borrowings 37,241 47,221 22,797 315,602
Repayments of long-term borrowings (9,670) (21,403) (5,539) (81,949)
Dividends paid (33,779) (30,546) (21,686) (286,263)
Purchase of treasury stock (53,170) (83) (23,875) (450,593)
Other, net (696) 129 (181) (5,898)
Net cash (used in) provided by financing activities (79,912) 25,460 (20,097) (677,220)
Foreign Currency Translation Adjustments on Cash and
Cash Equivalents 9,181 6,656 2,920 77,805
Net Increase (Decrease) in Cash and Cash Equivalents 22,909 81,757 (12,663) 194,145
Cash and Cash Equivalents at Beginning of Period 313,611 231,846 244,509 2,657,720
Cash and Cash Equivalents of Newly Consolidated Subsidiary 483 8 4,093
Cash and Cash Equivalents at End of Period ¥ 337,003 ¥ 313,611 ¥ 231,846 $ 2,855,958
Assets and liabilities increased due to purchase of

consolidated subsidiaries:
Fair value of assets acquired – ¥ 17,016 ¥ 1,934 –
Liabilities assumed – (8,926) (984) –
Cash paid for the acquisitions – 1,527 481 –

Notes to Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial Statements

The accompanying consolidated financial statements have been prepared from accounts and records maintained by DENSO
CORPORATION (the “Company”), and consolidated subsidiaries (together, referred to as the “Group”) in accordance with the provi-
sions set forth in the Securities and Exchange Law of Japan and its related accounting regulations, and in conformity with account-
ing principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of
International Financial Reporting Standards. The accounts and records of foreign consolidated subsidiaries are maintained in
conformity with accounting principles of the countries of their domicile.
On December 27, 2005, the Accounting Standards Board of Japan (the “ASBJ”) published a new accounting standard for the
statement of changes in equity, which is effective for fiscal years ending on or after May 1, 2006. The consolidated statement of
shareholders’ equity, which was previously voluntarily prepared in line with the international accounting practices, is now required
under generally accepted accounting principles in Japan and has been renamed “the consolidated statement of changes in equity”
in the current fiscal year.
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 2006 financial statements to conform to the classifications used in 2007.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company is incorpo-
rated 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 ¥118 to U.S. $1, the approximate rate of exchange at March 30, 2007,
the last trading day of the fiscal year. Such translations should not be construed as representations that the Japanese yen amounts
have been, could have been or could in the future be, converted into U.S. dollars at that or any other rate of exchange.
2. Summary of Significant Accounting Policies

(A) Principles of Consolidation and Accounting for Investments in Affiliates
The Company had 188 subsidiaries at March 31, 2007 (188 for 2006 and 171 for 2005).
The Company applied the “control” concept for its consolidation policy. Under the control concept, those companies in which
the Company, directly or indirectly, is able to exercise control over operations are fully consolidated. The consolidated financial
statements for the year ended March 31, 2007 include 188 subsidiaries (179 for 2006 and 171 for 2005). The Company applied
the “power to exercise significant influence” concept to determine affiliates to be accounted for by the equity method. Under the
influence concept, those companies over which the Company has the ability to exercise significant influence are accounted for by
the equity method. The Company applied the equity method to all 32 affiliates for the year ended March 31, 2007 (31 affiliates for
2006 and 29 affiliates for 2005).
The fiscal years of subsidiaries are not necessarily the same as that of the Company. Accounts of subsidiaries, which have differ-
ent fiscal years, have been adjusted for significant transactions to properly reflect their financial position at March 31 of each year
and the results of operations and cash flows for the years then ended. In the year ended March 31, 2005, 3 of the Company’s
foreign subsidiaries and affiliates, which are consolidated or accounted for by the equity method, decided to change their fiscal year-
end from December 31 to March 31. Additionally, in the year ended March 31, 2005, a foreign subsidiary changed its closing date
from December 31 to March 31. The Company’s consolidated financial statements thus include 15 months of operating results at
the 4 subsidiaries and affiliates that changed their fiscal year-end or closing date in the year ended March 31, 2005.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profits included
in assets resulting from transactions within the Group are eliminated.
The net excess of the acquisition cost of the Company’s investments in consolidated subsidiaries and affiliates accounted for
under the equity method over the fair value of the net assets of those companies (“Goodwill”) is amortized over the estimated avail-
able life or five years.
Investments in 9 non-consolidated subsidiaries are stated at cost for the year ended March 31, 2006. If the equity method of
accounting had been applied to the investments in those companies, the effect on the accompanying consolidated financial state-
ments would not be material.

(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, commercial paper and money management funds, all of which mature or
become due within three months of the date of acquisition.
(C) Inventories
Inventories other than raw materials are stated principally at cost. Raw materials are stated principally at the lower of cost or market.
In both cases, cost is determined by the annual average method.
(D) Securities
All securities are classified as available-for-sale securities and are stated 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 tempo-
rary declines in fair value, available-for-sale securities are reduced to net realizable value by a charge to income.
(E) Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost. Depreciation is computed, with minor exceptions, by the declining-balance method
at rates based on the estimated useful lives of the assets. The range of useful lives is principally from 10 to 45 years for buildings and
structures and mainly seven years for machinery. Additional depreciation is charged for machinery operated in excess of normal usage.
(F) Long-lived Assets

In August 2002, the Business Accounting Council (the “BAC”) issued a Statement of Opinion, “Accounting for Impairment of Fixed
Assets”, and in October 2003 the ASBJ Guidance NO.6, “Guidance for Accounting Standard for Impairment of Fixed Assets”. These
pronouncements are effective for fiscal years beginning on or after April 1, 2005 with early adoption permitted for fiscal years ending
on or after March 31, 2004. The Group adopted the accounting standard for impairment of fixed assets as of April 1, 2004.
The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount
of an asset of 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 disposi-
tion 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.
(G) Intangible Assets

Intangible assets consisted of in-house software, goodwill and others. The straight-line method is primarily used to amortize intangible
assets. The amortization of in-house software, which is available to reduce operating costs, is computed using the straight-line
method based on the estimated useful life of five years.
(H) Allowance for Doubtful Accounts

The allowance for doubtful accounts is stated in amounts considered to be appropriate based on the Group’s past credit loss expe-
rience and an evaluation of potential losses in the receivables outstanding.
( I ) Liability for Employees’ Retirement Benefits

The Group accounted for the liability for retirement benefits based on projected benefit obligations and plan assets at the balance
sheet date.
As of April 1, 2005, three consolidated subsidiaries located in the United Kingdom adopted the new local accounting standards
for the liability for employees’ retirement benefits. The new local accounting standards require to evaluate pension obligation and
plan assets at fair value, which resulted in a transitional loss for the year when the new standards are adopted.
The effect of this was to increase retirement benefit costs by ¥357 million and to reduce operating income by ¥347 million for the
year ended March 31, 2006. In addition, these consolidated subsidiaries recognized a loss of ¥10,929 million for full amount of tran-
sitional obligation for employees’ retirement benefits, which had the effect of reducing income before income taxes and minority
interests by ¥11,276 million.
(J) Research and Development Expenses

Research and development expenses are charged to income as incurred.

(K) Stock Options
On December 27, 2005, the ASBJ issued ASBJ Statement No.8, “Accounting Standard for Stock Options” and related guidance.
The new standard and guidance are applicable to stock options newly granted on and after May 1, 2006. This standard requires
companies to recognize compensation expense for employee stock options based on the fair value at the date of grant and over the
vesting period as consideration for receiving goods or services. The standard also requires companies to account for stock options
granted to non-employees based on the fair value of either the stock option or the goods or services received. In the balance sheet,
the stock option is presented as a stock acquisition right as a separate component of equity until exercised. The standard covers
equity-settled, share-based payment transactions, but does not cover cash-settled, share-based payment transactions. In addition,
the standard allows unlisted companies to measure options at their intrinsic value if they cannot reliably estimate fair value.
The Company applied the new accounting standard for stock options to those granted on and after May 1, 2006. The effect of
adoption of this accounting standard for the year ended March 31, 2007 was to decrease income before income taxes and minority
interests by ¥294 million ($2,492 thousand).
(L) Presentation of Equity

On December 9, 2005, 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, minority interests, 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 sheet as of March 31, 2007 is
presented in line with this new accounting standard.
(M) Leases
The leases are accounted for mainly as operating leases. Under Japanese accounting standards for leases, finance leases that are
deemed 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
financial statements.
(N) Income Taxes

The provision for current income taxes is computed based on the pretax income included in the consolidated statements of income.
The asset and liability approach is used to recognize deferred tax assets and liabilities, which are recorded to reflect the impact of
temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for
tax purposes. These deferred taxes are measured by applying currently enacted tax laws to the temporary differences.
Future tax benefits are recognized to the extent that such benefits are likely to be realized.
(O) Bonuses to Directors and Corporate Auditors

Prior to the fiscal year ended March 31, 2005, bonuses to directors and corporate auditors were accounted for as a reduction of
retained earnings in the fiscal year following approval at the general shareholders meeting. The ASBJ issued ASBJ Practical Issues
Task Force (PITF) No.13, “Accounting Treatment for Bonuses to Directors and Corporate Auditors”, which encouraged companies
to record bonuses to directors and corporate auditors on the accrual basis with a related charge to income, but still permitted the
direct reduction of such bonuses from retained earnings after approval of the appropriation of retained earnings.
The ASBJ replaced the above accounting pronouncement by issuing a new accounting standard for bonuses to directors and
corporate auditors on November 29, 2005. Under the new accounting standard, bonuses to directors and corporate auditors must
be expensed and are no longer allowed to be directly charged to retained earnings. This accounting standard is effective for fiscal
years ending on or after May 1, 2006. The companies must accrue bonuses to directors and corporate auditors at the year-end to
which such bonuses are attributable.
The Group adopted the new accounting standard for bonuses to directors and corporate auditors from the year ended March 31,
2007. The effect of adoption of this accounting standard was to decrease income before income taxes and minority interests for the
year ended March 31, 2007 by ¥587 million ($ 4,975 thousand).

(P) Appropriations of Retained Earnings
Appropriations of retained earnings at each year-end are reflected in the financial statements for the following year on
shareholders’ approval.
(Q) Translation of Foreign Currency Accounts

All short-term and long-term monetary receivable and payable accounts denominated in foreign currencies are translated into
Japanese yen at the current exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are
recognized in the consolidated statements of income to the extent that they are not hedged by forward exchange contracts.
(R) Translation of Financial Statements for Consolidated Foreign Subsidiaries

The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rates
at the balance sheet date, except for equity, which is translated at the historical rates. Differences arising from such translation were
shown as “Foreign currency translation adjustments” in a separate component of equity.
Revenue and expense accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the annual average rates.
(S) Derivative Financial Instruments

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 statements of income; 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.
The foreign exchange forward contracts, currency options and currency swap contracts employed to hedge foreign exchange
exposures to the consolidated subsidiaries are measured at fair value, and the unrealized gain/loss are recognized in income.
Interest rate swaps are utilized to hedge interest rate exposures of financial assets and long-term debt (bonds). These swaps,
which qualify for hedge accounting, are measured at market value at the balance sheet date and the unrealized gains and losses are
deferred until maturity as other liability or asset. When interest rate swap contracts meet specific matching criteria, the interest rate
swaps are not re-measured at market value but the differentials paid or received under the swap contracts are recognized and
included in interest expense or income.
(T) Net Income and Dividends per Share

Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of
common shares outstanding in each period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common
stock. Diluted net income per share of common stock assumes full conversion of the outstanding convertible bonds at the beginning
of the year (or at the time of issuance) with an applicable adjustment for related interest expense, net of tax, and full exercise of
outstanding stock option.
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.
(U) New Accounting Pronouncements

Measurement of Inventories
Under generally accepted accounting principles in Japan (“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.
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 capi-
talized” information is disclosed in the note to the lessee’s financial statements.
The revised accounting standard requires that all finance lease transactions should be capitalized. The revised accounting stan-
dard 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.
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 foreign subsidiaries which are prepared in accor-
dance 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 task force
prescribes: 1) the accounting policies and procedures applied to the 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.
3. Short-term Investments and Investment Securities

Short-term investments consisted of time deposits not classified as cash equivalents in the amount of ¥14,949 million ($126,687
thousand) and ¥14,134 million, at March 31, 2007 and 2006, respectively, and debt securities. Investment securities consisted of
equity securities and debt securities.
The carrying amounts and aggregate fair values of available-for-sale securities included in short-term investments and in invest-
ment securities at March 31, 2007 and 2006 were as follows:
Thousands of
Unrealized Unrealized Unrealized Unrealized
Cost Gain Loss Fair Value Cost Gain Loss Fair Value
2007 2007
Equity securities ¥167,197 ¥623,593 ¥(192) ¥790,598 $1,416,924 $5,284,686 $(1,627) $6,699,983
Debt securities 184,791 358 (683) 184,466 1,566,025 3,034 (5,788) 1,563,271
Total ¥351,988 ¥623,951 ¥(875) ¥975,064 $2,982,949 $5,287,720 $(7,415) $8,263,254
Millions of yen
Unrealized Unrealized
Cost Gain Loss Fair Value
2006
Equity securities ¥167,179 ¥531,946 ¥ (3) ¥699,122

Debt securities 182,830 519 (786) 182,563
Total ¥350,009 ¥532,465 ¥(789) ¥881,685

The carrying amounts of available-for-sale securities whose fair value was not readily determinable included in short-term invest-
ments and in investment securities at March 31, 2007 and 2006 were as follows:
Thousands of
2007 2006 2007
Equity securities ¥14,443 ¥16,993 $122,398

Debt securities 417 2,561 3,534
Total ¥14,860 ¥19,554 $125,932
The carrying amounts of debt securities by contractual maturities for available-for-sale securities at March 31, 2007 were as follows:
Thousands of
Due in one year or less ¥ 18,491 $ 156,703

Due after one year through five years 166,392 1,410,102
Total ¥184,883 $1,566,805
4. Inventories
Inventories at March 31, 2007 and 2006 were as follows:
Thousands of
2007 2006 2007
Finished products ¥125,927 ¥117,212 $1,067,178

Work in process 81,669 79,450 692,110
Raw materials and supplies 106,083 90,909 899,009
Total ¥313,679 ¥287,571 $2,658,297
5. Long-lived Assets
The Group reviewed its long-lived assets for impairment. As a result, relating to unused land in Japan, the Group recognized impair-
ment losses of ¥79 million ($670 thousand) and ¥159 million for the years ended March 31, 2007 and 2006, respectively.
In addition, the Group recognized an impairment loss of ¥965 million ($8,178 thousand) for certain buildings and structures and
machinery and equipment in the UK due to the change of business environment for electronic equipment products in the UK and the
carrying amount of the relevant long-lived assets were written down to the recoverable amount for the year ended March 31, 2007.
The recoverable amount of the asset group was measured at its value in use and the discount rate used for computation of present
value of future cash flows was 5.0%.

6. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in aggregate, resulted in
normal statutory tax rates of approximately 40% for the year ended March 31, 2007 (40% in 2006 and in 2005).
The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities at March 31, 2007 and 2006
as follows:
Thousands of
2007 2006 2007
Deferred tax assets:

Depreciation ¥ 67,570 ¥ 62,377 $ 572,627
Retirement benefits 61,603 59,175 522,059
Accrued bonuses to employees 21,643 20,356 183,415
Warranty reserve 6,164 5,358 52,237
Long-term prepaid expenses 1,773 18,009 15,026
Accrued contributions of transfer to defined contribution pension plans – 209 –
Other 91,052 60,622 771,627
Less: Valuation allowance (11,618) (9,370) (98,457)
Total deferred tax assets ¥238,187 ¥216,736 $2,018,534
Deferred tax liabilities:
Unrealized gain on available-for-sale securities ¥248,557 ¥212,099 $2,106,415
Prepaid pension cost 32,067 29,712 271,754
Other 28,250 24,735 239,407
Total deferred tax liabilities ¥308,874 ¥266,546 $2,617,576
Net deferred tax liabilities ¥ (70,687) ¥ (49,810) $ (599,042)
Net deferred tax assets presented in the consolidated balance sheets at March 31, 2007 and 2006 were as follows:
Thousands of
2007 2006 2007
Current assets–Deferred tax assets ¥ 60,646 ¥ 53,912 $ 513,949

Investments and other assets–Other assets 21,060 20,284 178,475
Current liabilities–Other current liabilities (1,642) (372) (13,915)
Long-term liabilities–Deferred tax liabilities (150,751) (123,634) (1,277,551)
Net deferred tax liabilities ¥ (70,687) ¥ (49,810) $ (599,042)
The reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying
consolidated statements of income for the years ended March 31, 2007, 2006 and 2005 were as follows:
2007 2006 2005
Normal effective statutory tax rate 39.89% 39.89% 39.89%

Tax credit of R&D expenses and other (4.17) (5.61) (5.10)
Tax benefits not recognized on operating (income) losses of subsidiaries (0.20) 1.22 2.39
Dividend received from foreign subsidiaries 1.56 1.58 1.24
Items permanently non-taxable such as dividend received (0.73) (0.62) (0.51)
Lower income tax rates applicable to income in certain foreign countries (3.31) (1.64) (0.26)
Foreign tax credit (1.25) (0.82) –
Other (0.52) (0.61) (0.38)
Actual effective tax rate 31.27% 33.39% 37.27%

7. Short-term Borrowings and Long-term Debt
Short-term borrowings at March 31, 2007 and 2006 consisted of notes to banks and bank overdrafts. The weighted average inter-
est rates applicable to short-term borrowings at March 31, 2007 and 2006 were 2.9% and 2.7%, respectively.
Long-term debt at March 31, 2007 and 2006 consisted of the following:
Thousands of
2007 2006 2007
Unsecured 0.34% yen bonds due 2007 ¥ 50,000 ¥ 50,000 $ 423,729

Unsecured 1.11% yen bonds due 2012 50,000 50,000 423,729
Secured 4.07% U.S. dollar bonds due serially to 2019 413 – 3,500
Other long-term debt
(weighted average interest rates of 1.6% in 2007 and 0.5% in 2006) 103,805 73,978 879,702
Total ¥204,218 ¥173,978 $1,730,660
Less: Current portion 59,547 3,674 504,635
Long-term debt, less current portion ¥144,671 ¥170,304 $1,226,025
The Company assigned the obligation to repay its 1.9% unsecured bonds issued on June 23, 1998 to a financial institution during
the year ended March 31, 2003. Accordingly, these bonds have been treated as redeemed and a loss on redemption of bonds, in the
amount of ¥4,964 million, was recognized. Contingent liabilities to bond holders with respect to this transaction are described in Note 10.
Thousands of
Year ending March 31, Millions of yen U.S. dollars
2008 ¥ 59,547 $ 504,635

2009 10,967 92,940
2010 11,191 94,839
2011 3,567 30,229
2012 154 1,305
2013 and thereafter 118,792 1,006,712
Total ¥204,218 $1,730,660
8. Pledged Assets
The following assets were pledged as collateral for secured 4.07% U.S. dollar bonds of ¥414 million ($3,508 thousand) and long-term
borrowing of ¥629 million ($5,331 thousand) at March 31, 2007.
Thousands of
Short-term investments (Bank Deposit) ¥ 879 $ 7,449

Buildings and structures, net of accumulated depreciation 582 4,932
Land 133 1,127
Total ¥1,594 $13,508
9. Liability for Employees’ Retirement Benefits

Employees are generally entitled to lump-sum severance indemnities determined by current basic rates of pay, length of service, and
the conditions under which the termination occurs. The Company and its domestic consolidated subsidiaries have unfunded retire-
ment benefit plans and funded non-contributory pension plans for employees. Under the unfunded retirement benefit plans, the
amount of severance indemnities to be paid by the Company and domestic subsidiaries is, in most cases, reduced by the benefits
payable under the funded pension plain. The foreign consolidated subsidiaries do not recognize such cost. However, certain foreign
subsidiaries adopted individual pension plans.

According to the enactment of the Defined Contribution Pension Plan Law in October 2001, the Company implemented a defined
contribution pension plain in October 2002 by which a portion of the severance lump-sum payment plan was terminated. Similary,
domestic subsidiaries, GAC CORPORATION and ASMO CO., LTD., implemented a defined contribution pension plan in April and
October 2003, respectively, by which a portion of the severance lump-sum payment plan was terminated.
SHIMIZU INDUSTRIES CO., LTD., which was consolidated as of April 1, 2005, obtained an approval of exemption from past
pension obligation related to the substitutional portion of the governmental program from the Ministry of Health, Labor and Welfare
on April 1, 2005 and actually transferred plan assets in the amount of ¥844 million by cash on September 30, 2005. Accordingly,
SHIMIZU INDUSTRIES CO., LTD. recognized a gain on settlement of the substitutional portion of governmental pension program
due to return of corresponding plan assets in the amount of ¥1,016 million for the year ended March 31, 2006.
The liability (asset) for employees’ retirement benefits at March 31, 2007 and 2006 consisted of the following:
Thousands of
2007 2006 2007
Projected benefit obligation ¥ 579,470 ¥ 552,833 $ 4,910,763

Fair value of plan assets (564,884) (509,734) (4,787,153)
Unrecognized actuarial loss (7,638) (44,355) (64,729)
Unrecognized prior service benefit 65,485 73,988 554,958
Net liability 72,433 72,732 613,839
Prepaid pension cost 100,169 94,266 848,890
Liability for employees’ retirement benefits ¥ 172,602 ¥ 166,998 $ 1,462,729
The components of net periodic retirement benefit costs for the years ended March 31, 2007, 2006 and 2005 were as follows:
Thousands of
2007 2006 2005 2007
Service cost ¥ 26,008 ¥24,822 ¥22,824 $ 220,407

Interest cost 11,940 11,309 8,920 101,186
Expected return on plan assets (12,081) (9,912) (7,360) (102,381)
Recognized actuarial loss 11,343 19,176 19,729 96,127
Amortization of prior service benefit (9,239) (9,112) (9,023) (78,297)
Net periodic retirement benefit costs ¥ 27,971 ¥36,283 ¥35,090 $ 237,042
Gain on settlement of the substitutional portion of governmental
pension program due to return of corresponding plan assets – (1,016) – –
Contribution to defined contribution pension plans fund 3,139 3,074 3,006 26,602
Total ¥ 31,110 ¥38,341 ¥38,096 $ 263,644
Assumptions used for the years ended March 31, 2007, 2006 and 2005 were set forth as follows:
2007 2006 2005
Discount rate mainly 2.0% mainly 2.0% mainly 2.0%

Expected rate of return on plan assets mainly 3.0% mainly 3.0% mainly 3.0%
Amortization period of prior service benefit 10 years 10 years 10 years
Recognition period of actuarial gain/loss 10 years 10 years 10 years
10. Contingent Liabilities

At March 31, 2007, the Group had the following contingent liabilities:
Thousands of
Guarantees of loans from financial institutions to the Group’s employees ¥ 16 $ 136

Trade notes sold with recourse 6 51
Redemption of 1.9% yen bonds transferred to a third party under a debt assumption agreement 60,000 508,474
Bank guarantees for customs duty 642 5,441
Total ¥60,664 $514,102

11. Equity
On and after May 1, 2006, Japanese companies are subject to a new corporate law of Japan (the “Corporate Law”), which reformed
and replaced the Commercial Code of Japan (the “Code”) with various revisions that are, for the most part, applicable to events or
transactions which occur on or after May 1, 2006 and for the fiscal years ending on or after May 1, 2006. The significant changes 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 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.
The Company meets all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorpo-
ration 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% 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% 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 earn-
ings 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.

12. Stock Options
The stock option outstanding as of March 31, 2007 is as follows:
Number of Options
Stock Option Persons Granted Granted Date of Grant Exercise Price Exercise Period
2000 Directors 284,000 shares August 1, 2000 ¥ 2,717 From July 1, 2002
General Managers ($23.03) to June 30, 2006
General Managers ($20.31) to June 30, 2007
Key Employees ($16.97) to June 30, 2008
2003 Directors 1,114,000 shares August 1, 2003 ¥ 2,090 From July 1, 2005
Key Employees ($17.71) to June 30, 2009
Directors of subsidiaries
Managing Officers ($23.22) to June 30, 2010
Key Employees
Key Employees
Key Employees
The stock option activity is as follows:

Shares
For the year ended March 31, 2007 2006 2005 2004 2003 2002 2001 2000
Non-vested
March 31, 2006 — Outstanding – 1,266,000 1,096,000 – – – –
Granted 1,342,000 – – – – – –
Canceled – 79,000 12,000 – – – –
Vested – – 1,084,000 – – – –
March 31, 2007 — Outstanding 1,342,000 1,187,000 – – – – –
Vested
March 31, 2006 — Outstanding – – – 332,600 80,600 143,500 105,000
Vested – – 1,084,000 – – – –
Exercised – – 491,100 116,200 40,400 110,000 85,000
Canceled – – 2,700 2,000 – – 20,000
March 31, 2007 — Outstanding – – 590,200 214,400 40,200 33,500 –
Yen (U.S. dollars)

2006 2005 2004 2003 2002 2001 2000
Exercise price ¥3,950 ¥2,758 ¥2,740 ¥2,090 ¥2,003 ¥2,397 ¥2,717

($ 33.47) ($ 23.37) ($ 23.22) ($ 17.71) ($ 16.97) ($ 20.31) ($ 23.03)
Average stock price at exercise – – 4,298 3,401 2,893 3,881 4,033
(–) (–) (36.42) (28.82) (24.52) (32.89) (34.18)
Fair value price at grant date 730 – – – – – –
(6.19) (–) (–) (–) (–) (–) (–)

The assumptions used to measure fair value of 2006 Stock Option
Estimate method: Black-Scholes option pricing model
Volatility of stock price: 24.1%
Estimated remaining outstanding period: 4 years
Estimated dividend yield: 1.05%
Interest rate with risk free: 1.20%
13. Significant Shareholder

Toyota Motor Corporation (“Toyota”) directly owned 201,502 thousand, 203,127 thousand, and 203,127 thousand shares of common
stock of the Company at March 31, 2007, 2006 and 2005, respectively, which accounted for 22.79%, 22.98% and 22.98% of the total
shares of the Company issued at the respective dates.
Sales of the Group to Toyota for the years ended March 31, 2007, 2006 and 2005 were as follows:
Thousands of
2007 2006 2005 2007
Sales to Toyota (Japan headquarters only) ¥1,109,011 ¥990,333 ¥883,652 $9,398,398
14. Research and Development Expenses

Research and development expenses charged to income were ¥279,890 million ($2,371,949 thousand), ¥256,339 million, and
¥238,241 million for the years ended March 31, 2007, 2006 and 2005, respectively.
15. Leases
The Group leases certain machinery, computer equipment, and other assets. Total lease expense for finance leases for the years
ended March 31, 2007, 2006 and 2005 were ¥2,246 million ($19,034 thousand) ¥2,283 million and ¥2,383 million, respectively.
Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligation under finance leases, and
depreciation expenses of finance leases that do not transfer ownership of the leased property to the lessee on an “as if capitalized”
basis was as follows:
Millions of yen
Buildings and Machinery and
structures equipment Software Total
2007
Acquisition cost ¥300 ¥12,237 ¥81 ¥12,618

Accumulated depreciation 39 6,229 46 6,314
Net leased property ¥261 ¥ 6,008 ¥35 ¥ 6,304
Thousands of U.S. dollars

2007
Acquisition cost $2,542 $103,703 $687 $106,932

Net leased property $2,212 $ 50,915 $297 $ 53,424
Millions of yen
2006
Acquisition cost ¥330 ¥9,923 ¥471 ¥10,724

Net leased property ¥217 ¥4,419 ¥ 93 ¥ 4,729

Thousands of
2007 2006 2007
Obligations under finance leases

Due within one year ¥2,234 ¥2,044 $18,932
Due after one year 4,070 2,685 34,492
Total ¥6,304 ¥4,729 $53,424
Obligations under finance leases includes the imputed interest expense portion.
Depreciation expenses, which were not reflected in the accompanying consolidated statements of income for the years ended
March 31, 2007, 2006 and 2005, computed by the straight-line method, were ¥2,246 million ($19,034 thousand) ¥2,283 million and
¥2,383 million, respectively.
The rental commitments under non-cancelable operating leases at March 31, 2007 were as follows:
Thousands of
Due within one year ¥ 940 $ 7,966

Due after one year 3,302 27,983
Total ¥4,242 $35,949
16. Segment Information

(A) Business Segments
Business segment data for the years ended March 31, 2007, 2006 and 2005 is not presented as the automotive segment repre-
sented more than 90% of total sales and assets of all business segments and operating income in each fiscal year.
(B) Geographical Segments (by company location)

Thousands of
Years ended March 31 2007 2006 2005 2007
Sales Japan Customers ¥1,905,193 ¥1,727,675 ¥1,590,666 $16,145,703

Intersegment 636,068 561,284 469,891 5,390,407
Total 2,541,261 2,288,959 2,060,557 21,536,110
The Americas Customers 756,250 681,367 571,053 6,408,899
Intersegment 12,831 9,076 9,189 108,737
Total 769,081 690,443 580,242 6,517,636
Europe Customers 507,503 414,243 367,082 4,300,873
Intersegment 11,796 8,804 6,968 99,966
Total 519,299 423,047 374,050 4,400,839
Asia & Oceania Customers 440,754 365,045 271,148 3,735,203
Intersegment 39,447 30,064 19,757 334,297
Total 480,201 395,109 290,905 4,069,500
Eliminations (700,142) (609,228) (505,805) (5,933,407)
Consolidated ¥3,609,700 ¥3,188,330 ¥2,799,949 $30,590,678
Operating Income Japan ¥ 215,317 ¥ 207,650 ¥ 180,000 $ 1,824,720
(Loss) The Americas 29,188 21,875 23,638 247,356
Europe 12,161 1,554 (8,777) 103,059
Asia & Oceania 45,921 36,709 20,067 389,161
Eliminations 481 (1,229) (1,033) 4,077
Consolidated ¥ 303,068 ¥ 266,559 ¥ 213,895 $ 2,568,373
Assets Japan ¥2,426,778 ¥2,193,889 ¥1,783,896 $20,565,915
The Americas 390,031 354,150 287,455 3,305,347
Europe 339,721 283,163 251,753 2,878,992
Asia & Oceania 366,470 282,529 215,582 3,105,678
Corporate and Eliminations 242,135 298,244 242,296 2,051,992
Consolidated ¥3,765,135 ¥3,411,975 ¥2,780,982 $31,907,924

As explained in Note 2 (I), three consolidated subsidiaries located in the United Kingdom adopted the new local accounting stan-
dards for liability for employees’ retirement benefits. The effect of this was to increase retirement benefit costs by ¥357 million and
operating costs by ¥347 million, and to reduce operating income by the same amounts in the Europe geographical segment for the
ended March 31, 2006.
As explained in Note 2 (O), the Group adopted the new accounting standard for bonuses to directors and corporate auditors from
the year ended March 31, 2007. The effect of adoption of this accounting standard was to increase operating costs by ¥587 million
($4,975 thousand) and to reduce operating income by the same amounts in the Japan geographical segment for the year ended
March 31, 2007.
As explained in Note 2 (K), the Company applied the new accounting for stock options to those granted on and after May 1,
2006. The effect of adoption of this accounting standard was to increase operating costs by ¥294 million ($2,492 thousand) and to
reduce operating income by the same amounts in the Japan geographical segment for the year ended March 31, 2007.
(C) Sales by Customer Location

Thousands of
Years ended March 31 2007 2006 2005 2007
Japan ¥1,859,046 ¥1,690,215 ¥1,554,795 $15,754,627

51.5% 53.0% 55.5% 51.5%
The Americas 768,514 692,801 582,769 6,512,831
21.3% 21.7% 20.8% 21.3%
Europe 507,460 414,674 367,588 4,300,508
14.1% 13.0% 13.1% 14.1%
Asia & Oceania 463,478 380,541 287,627 3,927,780
12.8% 12.0% 10.3% 12.8%
Others 11,202 10,099 7,170 94,932
0.3% 0.3% 0.3% 0.3%
Net Sales ¥3,609,700 ¥3,188,330 ¥2,799,949 $30,590,678
The figures in table (B) Geographical Segments are determined based on the locations of the Group companies, and therefore, differ from the figures in table (C)
Sales by Customer Location.

17. Derivatives
The Group uses derivatives for the purpose of reducing their exposures to adverse fluctuations in interest rates and foreign exchange
rates. Derivatives used include forward exchange contracts, currency swap, currency options, and interest rate swaps. The amounts
of derivatives are limited by the Group’s regulations.
Derivatives are subject to risk, such as fluctuations in interest rates and foreign exchange rates. Because the counterparties to these
derivatives are limited to major international financial institutions, the Group does not anticipate any losses arising from credit risk.
The execution and control of derivatives at the Company, as approved by the Board of Directors at the beginning of each fiscal
period, are governed by internal regulations, which stipulate the purpose of derivatives, their scope of use, and the reporting system.
The fair values of the Group’s derivative contracts at March 31, 2007 and 2006 were as follows:
Thousands of
Contract or Net Contract or Net
Notional Unrealized Notional Unrealized
Amounts Fair Value Gain/(Loss) Amounts Fair Value Gain/(Loss)
2007 2007
Forward exchange contracts:

Buying contracts–
Euro ¥ 79 ¥ 77 ¥ (2) $ 670 $ 653 $ (17)
U.S. Dollar 12 12 0 102 102 0
Currency swaps:
Receipt U.S. Dollar
Payment Korean Won (*) ¥15,072 ¥14,563 ¥(509) $127,729 $123,415 $(4,314)
Millions of yen
Contract or Net
Notional Unrealized
Amounts Fair Value Gain/(Loss)
2006

Buying contracts–
U.S. Dollar ¥ 150 ¥ 146 ¥ (4)
Euro 8 8 0
Currency swaps:
Receipt British Pound
Payment U.S. Dollar (*) ¥ 327 ¥ 327 ¥ 0
Receipt U.S. Dollar
Payment Indonesian Rupiah (*) 3,235 3,046 (189)
Receipt U.S. Dollar
Payment Korean Won (*) 14,460 13,730 (730)

The fair value and net unrealized gain/loss on forward exchange contracts, currency swap contracts and interest rate swap
contracts employed to hedge exchange rate and other risks on payables and receivables to/from consolidated subsidiaries that
have been eliminated in consolidation, were as follows:
Millions of yen Thousands of U.S. dollars
Contract or Net Contract or Net
Notional Unrealized Notional Unrealized
Amounts Fair Value Gain/(Loss) Amounts Fair Value Gain/(Loss)
2007 2007

Selling contracts ¥25,385 ¥25,471 ¥ (86) $215,127 $215,856 $ (729)
Buying contracts 540 528 (12) 4,576 4,474 (102)
Currency swaps:
Receipt Yen (*) ¥ 607 ¥ 780 ¥ (173) $ 5,144 $ 6,610 $ (1,466)
Payment Czech Koruna
Receipt Singapore Dollar (*) 3,483 3,492 (9) 29,517 29,593 (76)
Payment U.S. Dollar
Receipt Euro (*) 3,958 3,906 52 33,542 33,101 441
Payment English Pound
Receipt Yen 863 607 (256) 7,314 5,144 (2,170)
Payment Thai Baht (*)
Receipt Swedish Krone
Payment Euro (*) 437 436 (1) 3,703 3,695 (8)
Receipt Yen
Payment Euro (*) 25,574 23,799 (1,775) 216,729 201,687 (15,042)
Receipt U.S. Dollar
Payment Indonesian Rupiah (*) 3,198 3,187 (11) 27,102 27,009 (93)
Interest rate swaps:
Floating rate receipt,
fixed rate payment ¥23,568 ¥23,937 ¥ 369 $199,729 $202,856 $ 3,127
Millions of yen
Contract or Net
Notional Unrealized
Amounts Fair Value Gain/(Loss)
2006

Selling contracts ¥24,142 ¥24,422 ¥(280)
Buying contracts 617 610 (7)
Currency swaps:
Receipt Yen (*) ¥ 815 ¥ 870 ¥ (55)
Payment U.S. Dollar
Receipt Yen (*) 607 699 (92)
Payment Czech Koruna
Receipt Yen (*) 225 218 7
Payment Euro
Receipt Singapore Dollar (*) 763 762 1
Payment U.S. Dollar
Receipt Yen
Payment Thai Baht (*) 2,460 2,150 (310)
Receipt Swedish Krone
Payment Euro (*) 614 616 2
Receipt U.S. Dollar
Payment Indonesian Rupiah (*) 357 356 (1)
Notes: 1. The fair values of foreign currencies are translated at the spot rate at the balance sheet date.
2. Derivatives for which hedge accounting is applied are excluded from this disclosure.
3. The contract or notional amounts of derivatives shown in the above tables do not measure the Group’s exposure to credit or market risks.
( )
4. * indicates hedged items.

18. Net Income per Share
The reconciliation of the differences between basic and diluted net income per share (EPS) for the years ended March 31, 2007 and
2006 were as follows:
Millions of yen Thousands of shares Yen U.S. dollars
Weighted Average
Net Income Shares EPS EPS
2007
Basic EPS
Net income available to common shareholders ¥205,170 821,060 ¥249.88 $2.12
Effect of dilutive securities
Stock option – 1,074
Diluted EPS
Net income for computation ¥205,170 822,134 ¥249.56 $2.11
Millions of yen Thousands of shares Yen

Weighted Average
Net Income Shares EPS
2006
Basic EPS
Net income available to common shareholders ¥169,110 825,725 ¥204.80
Stock option – 724
Diluted EPS
Net income for computation ¥169,110 826,449 ¥204.62
Millions of yen Thousands of shares Yen

Weighted Average
Net Income Shares EPS
2005
Basic EPS
Net income available to common shareholders ¥132,128 830,869 ¥159.02
Stock option – 339
Diluted EPS
Net income for computation ¥132,128 831,208 ¥158.96
19. Subsequent Events

On June 26, 2007, at a meeting of the shareholders of the Company, the following items were approved.
(A) Appropriation of Retained Earnings
Thousands of
Cash dividends ¥19,548 $165,661
(B) Stock Option Plan

The plan provides for issuing stock options mainly to directors, managing officers, key employees and directors of subsidiaries. The
options entitle the holders to purchase shares of the Company’s common stock up to 1,900 thousand shares. The options will be
generally granted at an exercise price of 105% of the average closing price of the per share value of the Company’s common stock,
according to the Tokyo Stock Exchange, for the month prior to the month in which the options are issued. The Company plans to
issue acquired treasury stock on exercise of the stock options. The exercisable period is August 1, 2009 to July 31, 2013.
(C) Purchase of Treasury Stock

The Company is authorized to repurchase up to 6,500 thousand shares of the Company’s common stock (aggregate amount of
¥32,500 million ($275,424 thousand)).

Independent Auditors’ Report
To the Board of Directors of

DENSO CORPORATION:
We have audited the accompanying consolidated balance sheets of DENSO CORPORATION (the “Company”) and consoli-
dated subsidiaries (together, the “Group”) as of March 31, 2007 and 2006, 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, 2007, all expressed in
Japanese yen. These consolidated financial statements are the responsibility of the Company’s management. Our responsibil-
ity 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 finan-
cial statements. An audit also includes assessing the accounting principles used and significant estimates made by man-
agement, 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 DENSO CORPORATION and consolidated subsidiaries as of March 31, 2007 and 2006, and the consoli-
dated results of their operations and their cash flows for each of the three years in the period ended March 31, 2007, in con-
formity with accounting principles generally accepted in Japan.
As discussed in Note 2(L) to the consolidated financial statements, effective May 1, 2006, the consolidated financial
statements have been prepared in accordance with the new accounting standard for presentation of equity.
As discussed in Note 2(I) to the consolidated financial statements, three consolidated subsidiaries located in the United
Kingdom adopted the new local accounting standards for the liability for employees’ retirement benefits as of April 1, 2005.
As discussed in Note 2(F) to the consolidated financial statements, the Group adopted the new accounting standard for
impairment of fixed assets as of April 1, 2004.
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 26, 2007

Corporate Data
Operations in Japan
Start of Location
Main Products/Research Fields Operations Employees (Prefecture)
Headquarters 1949* 10,452 Aichi
Ikeda Plant Manufacture of radiators, oil coolers, and inter coolers 1965 748 Aichi
Anjo Plant Manufacture of starters, alternators, and hybrid vehicle components 1967 2,444 Aichi
Nishio Plant Manufacture of air conditioners, radiators, fuel injection systems 1970 6,823 Aichi
for diesel, and electronic fuel injection components
Takatana Plant Manufacture of instrument clusters, displays, car navigation systems, 1974 2,453 Aichi
and various sensors
Daian Plant Manufacture of ignition devices, driving control and safety products, 1982 3,988 Mie
exhaust emission control components, various other actuators
and sensors
Kota Plant Manufacture of integrated circuits and electronic control components 1987 3,520 Aichi
Toyohashi Plant Manufacture of air conditioners and natural refrigerant (CO2) 1987 1,051 Aichi
heat-pump hot water supply systems
Agui Plant Manufacture of machinery and tools 1990 912 Aichi
Zenmyo Plant Manufacture of electronic diesel fuel injection systems 1998 907 Aichi
Hiroshima Plant Manufacture of radiators, electric fans, integrated air fuel modules, 1965 141 Hiroshima
and heater units
DENSO Research Research in semiconductors, information and communications 1991 382 Aichi
Laboratories systems, and human-machine interface technologies
Nukata Proving Test driving automotive components 1984 31 Aichi

Ground
* The start of operations at the headquarters is recorded as the date of DENSO’s independence from Toyota Motor Co. Ltd. (now Toyota Motor Corporation)
(As of March 31, 2007)

Group Companies in Japan
Consolidated Subsidiaries
% Owned % Owned
Company by DENSO* Employees Company by DENSO* Employees
ASMO CO., LTD. 73.4 4,759 DENSO FINANCE & 100.0 75
ANDEN CO., LTD. 100.0 1,257 ACCOUNTING CENTER CO., LTD.
HAMANAKODENSO CO., LTD. 76.5 1,175 DENSO SQUARE CORPORATION 100.0 3
DAISHINSEIKI CO., LTD. 99.2 598 DENSO SEIBI CO., LTD. 100.0 57
KYOSANDENKI CO., LTD. 62.3 1,300 DENSO TECHNO CO., LTD. 100.0 1,632
GAC CORPORATION 57.5 838 DENSO FACILITIES CORPORATION 100.0 496
ASAHI MANUFACTURING CO., LTD. 100.0 441 DENSO YUSEN TRAVEL CORPORATION 70.0 13
SANKYO RADIATOR CO., LTD. 74.2 289 DENSO UNITY SERVICE CORPORATION 100.0 676
SHIMIZU INDUSTRY CO., LTD. 51.0 481 DENSO LOGITEM CORPORATION 100.0 177
TECHMA CORPORATION 100.0 388 NIPPON SOKEN, INC. 75.0 383
DENSO AIRS CORPORATION 62.5 495 MOBILE MEDIANET INC. 58.0 28
DENSO ELECS CO., LTD. 100.0 242 OSAWA INC. 100.0 64
DENSO KATSUYAMA CO., LTD. 96.4 161 DENSO ACE CORPORATION 100.0 113
DENSO KIKO CO., LTD. 100.0 230 DENSO HOKKAIDO CORPORATION 100.0 140
DENSO MANUFACTURING 100.0 328 DENSO TOHOKU CORPORATION 100.0 90

KITAKYUSHU CO., LTD. DENSO TOKYO CORPORATION 100.0 446
DENSO TAIYO CO., LTD. 51.0 219 DENSO CHUBU CORPORATION 100.0 344
DENSOTRIM CO., LTD. 80.0 490 DENSO KANSAI CORPORATION 100.0 134
DENSO PREAS CO., LTD. 100.0 127 DENSO CHUGOKU CORPORATION 100.0 82
DENSO REMANI CORPORATION 100.0 16 DENSO SHIKOKU CORPORATION 100.0 102
NIPPON WIPER BLADE CO., LTD. 70.0 752 DENSO KYUSHU CORPORATION 100.0 109
IPICS CORPORATION 100.0 67 DENSO SERVICE OKINAWA CO., LTD. 100.0 36
DENSO EMC ENGINEERING 100.0 34 MIYAZAKI ASMO CO., LTD. 100.0 391
SERVICE CORPORATION APINES CO., LTD. 100.0 115
DENSO ISM CORPORATION 100.0 174 SUAB CO., LTD. 100.0 35
DENSO IT LABORATORY, INC. 100.0 15 HAMADEN P & S CO., LTD. 100.0 47
DENSO INFORMATION TECHNOLOGY 100.0 124 KYOSAN TECS CO., LTD. 100.0 45
CORPORATION
KYOSAN SERVICE CORPORATION 100.0 22
DENSO ABASHIRI TEST
CENTER CORPORATION 100.0 9 OTARI GAC CO., LTD. 100.0 47
DENSO WAVE INC. 75.0 589 GAC HUMAN CO., LTD. 100.0 209
DENSO WELL CORPORATION 100.0 65 GAC MECHATRONICS CO., LTD. 100.0 10
DENSO SI CORPORATION 100.0 67 YASAKA GAC CO., LTD. 100.0 56
DENSO MTEC CORPORATION 100.0 113 DENSO SERVICE NISHISAITAMA CO., LTD. 100.0 15
DENSO E & TS TRAINING 100.0 165 DS SHIZUOKA CO., LTD. 100.0 9

CENTER CORPORATION SYSTEX JAPAN INC. 50.1 38
DENSO KYUYO SERVICE CORPORATION 100.0 28 MAULTECH CORPORATION 58.3 44
DENSO CREATE INC. 100.0 180
* including DENSO Corporation and its subsidiaries
Affiliates Under the Equity Method

ADVANCED DRIVER INFORMATION TECHNOLOGY CORPORATION SHINSEI INDUSTRIAL CO., LTD. TOMEI BRAZING CO., LTD.
ADVICS CO., LTD. SOHWA CORPORATION TD MOBILE KANSAI CO., LTD.
ITOH SEIKO CO., LTD. TSUDA INDUSTRIES CO., LTD. TD MOBILE CHUGOKU CO., LTD.
G. S. ELECTECH INC. NIPPA CORPORATION TOUCHCARE CORPORATION
JECO CO., LTD. MARCON DENSO CO., LTD.

Global Network
% Owned
Country Major Company Main Business by DENSO* Employees
U.S.A. ✩ DENSO INTERNATIONAL AMERICA, INC. • Holding company and regional headquarters for North America 100.0 630
• Sale of automotive components
• Engineering services, design, testing, and R&D
✩ DENSO SALES CALIFORNIA, INC. • Sale of automotive components, spot-coolers, and robots 100.0 244
✩ DENSO MANUFACTURING MICHIGAN, INC. • Manufacture of car air conditioners and radiators 100.0 2,225
✩ AMERICAN INDUSTRIAL MANUFACTURING • Remanufacture of automotive electrical components 100.0 110
SERVICES, INC.
✩ DENSO MANUFACTURING TENNESSEE, INC. • Manufacture of automotive electrical components, 100.0 2,500
instrument clusters, and automotive electronic products
✩ DENSO MANUFACTURING ATHENS TENNESSEE, INC. • Manufacture of injectors, oxygen sensors, and stick coils 100.0 892
★ MICHIGAN AUTOMOTIVE COMPRESSOR, INC. • Manufacture of compressors 40.0 820
★ TBDN TENNESSEE COMPANY • Manufacture of air cleaners and oil filters 49.0 517
★ ASSOCIATED FUEL PUMP SYSTEMS CORPORATION • Manufacture of fuel pumps 50.0 306
✩ DENSO WIRELESS SYSTEMS AMERICA, INC. • Manufacture of automotive electronic products 100.0 175
★ ACTIS MANUFACTURING, LTD. LLC. • Remanufacture of compressors for aftermarket 20.0 45
✩ DENSO MANUFACTURING ARKANSAS, INC. • Manufacture of car air conditioners and radiators 100.0 419
★ TD AUTOMOTIVE COMPRESSOR GEORGIA, LLC • Manufacture of compressors for car air conditioners 35.0 276
✩ DENSO REINSURANCE AMERICA, INC. • Undertaking insurances of DENSO group companies 100.0 –
as a captive insurance company
✩ ASMO NORTH AMERICA, LLC. • Headquarters for ASMO U.S. operations 100.0 11
✩ ASMO MANUFACTURING, INC. • Manufacture of windshield washer systems and servo motors 100.0 314
✩ ASMO NORTH CAROLINA, INC. • Manufacture of power window regulator motors, blower motors, 100.0 431
and electric fan motors
✩ ASMO DETROIT, INC. • Engineering services and North American sales planning 100.0 33
✩ AUTOMOTIVE MOTORS OF THOMASVILLE, INC. • Manufacture of power window regulator motors 100.0 134
✩ ASMO GREENVILLE OF NORTH CAROLINA, INC. • Manufacture of windshield wiper systems 100.0 534
and windshield washer systems
✩ ASMO APPALACHIAN CORPORATION • Manufacture of power window regulator motors 100.0 127
✩ NORTH CAROLINA ASAHI, INC. • Manufacture of wiper linkages 100.0 135
✩ NWB USA, INC. • Sale of wiper arms and wiper blades 91.0 11
✩ KYOSAN DENKI AMERICA, INC. • Headquarters for 100.0 –
KYOSAN DENSO MANUFACTURING KENTUCKY, LLC.
✩ KYOSAN DENSO MANUFACTURING KENTUCKY, LLC. • Manufacture of fuel pump modules 100.0 371
✩ SYSTEX PRODUCTS CORPORATION • Manufacture of plastic products for car air conditioners 55.6 185
✩ SYSTEX PRODUCTS ARKANSAS COMPANY • Manufacture of plastic products for car air conditioners 100.0 –
✩ PYPER PRODUCTS CORPORATION • Manufacture of plastic products for radiators 45.0 70
✩ TECHMA U.S.A., INC. • Manufacture of wire harnesses and electronic components 100.0 123
★ TD SCAN (U.S.A.), INC. • Sale of bar-code readers, two-dimensional code readers, 26.9 9
and automatic data capture devices
Canada ✩ DENSO MANUFACTURING CANADA, INC. • Manufacture of car air conditioners 100.0 323
✩ DENSO SALES CANADA, INC. • Sale of automotive components 100.0 –
Mexico ✩ DENSO MEXICO S.A. DE C.V. • Manufacture of instrument clusters, valves, and VCT 95.0 3,533
✩ GAC CORPORATION DE MEXICO S.A. DE C.V. • Manufacture and sale of spot-coolers and hoses for air conditioners 100.0 754
Brazil ✩ DENSO DO BRASIL LTDA. • Manufacture and sale of car air conditioners, compressors, and radiators 90.6 1,393
✩ DENSO INDUSTRIAL DA AMAZONIA LTDA. • Manufacture and sale of bus air conditioners 100.0 270
and ignition components for motorbikes
✩ DENSO MAQUINAS ROTANTES do BRASIL LTDA. • Manufacture and sale of alternators and motors 100.0 277
✩ DENSO SISTEMAS TERMICOS do BRASIL LTDA. • Manufacture and sale of car air conditioners and modules 100.0 444
✩ PECVAL INDUSTRIA LTDA. • Manufacture of plastic products for car air conditioners and radiators 92.7 197
Argentina ✩ DENSO MANUFACTURING ARGENTINA S.A. • Manufacture and sale of car air-conditioner-related products 98.3 165
Netherlands ✩ DENSO INTERNATIONAL EUROPE B.V. • Holding company for European operations 100.0 –
✩ DENSO EUROPE B.V. • Regional headquarters for Europe 100.0 242
• Remanufacture of automotive electrical components
✩ DENSO FINANCE HOLLAND B.V. • Financing 100.0 –
✩ Consolidated subsidiary ★ Affiliate under the equity method

% Owned
United ✩ DENSO INTERNATIONAL UK LTD. • Holding company for U.K. operations 100.0 –
Kingdom ✩ DENSO SALES UK LTD. • Sale of automotive components 100.0 207
• Design and R&D of air conditioners and EMS
✩ DENSO MARSTON LTD. • Manufacture and sale of radiators, oil coolers, and inter-coolers 100.0 785
✩ DENSO MANUFACTURING UK LTD. • Manufacture of car air conditioners and heaters 100.0 1,185
✩ DENSO MANUFACTURING MIDLANDS LTD. • Manufacture and sale of starters and alternators 100.0 227
✩ SHIMIZU INDUSTRY UK Ltd. • Manufacture plastic products for car air conditioners and radiators 100.0 302
Germany ✩ DENSO AUTOMOTIVE Deutschland GmbH • Sale of automotive components 100.0 270
• Technology research and R&D support
★ TD Deutsche Klimakompressor GmbH • Manufacture of compressors and pulleys 35.0 378
• Remanufacture of compressors
Spain ✩ DENSO BARCELONA S.A. • Manufacture of engine control components 100.0 661
and automotive electronic products
✩ DENSO SISTEMAS TERMICOS ESPANA S.A. • Manufacture and sale of HVAC units, 100.0 49
heaters, and integrated cooling modules
Italy ✩ DENSO SALES ITALIA S.R.L. • Sale of automotive components 100.0 15
✩ DENSO THERMAL SYSTEMS S.p.A. • Manufacture and sale of car air conditioners, heaters, and radiators 100.0 2,131
✩ DENSO MANUFACTURING ITALIA S.p.A. • Manufacture and sale of starters, alternators, and small motors 100.0 1,314
France ✩ DENSO SALES FRANCE S.A.R.L. • Sale of automotive components 100.0 35
Hungary ✩ DENSO MANUFACTURING HUNGARY LTD. • Manufacture of common rail systems, diesel injection pumps, and VCT 100.0 4,039
Sweden ✩ DENSO SALES SWEDEN AB • Sale of automotive components 100.0 42
• Engineering services
Poland ✩ DENSO THERMAL SYSTEMS POLSKA Sp.zo.o. • Manufacture and sale of heaters and cockpit modules 100.0 244
★ TBMECA Poland Sp.zo.o • Manufacture of automotive components and engine components 20.0 105
Belgium ✩ DENSO SALES BELGIUM N.V. • Sale of automotive components 100.0 37
Portugal ✩ JOAO DE DEUS & FILHOS S.A. • Manufacture and sale of radiators, inter-coolers, and heater cores 100.0 463
Czech ✩ DENSO MANUFACTURING CZECH s.r.o. • Manufacture of HVAC units, evaporators, condensers, and radiators 100.0 1,659
Republic ✩ ASMO CZECH s.r.o. • Manufacture of power windows, electronic throttles, and blower motors 100.0 186
✩ LIPLASTEC s.r.o. • Manufacture plastic products for car air conditioners and radiators 100.0 152
✩ AIRS MANUFACTURING CZECH s.r.o. • Manufacture of car air-conditioner-related components 100.0 314
Turkey ✩ DENSO OTOMOTIV PARCALARI • Manufacture of car air conditioners and heaters 100.0 128
SANAYI ANONIM SIRKET • Sale of starters and alternators
Saudi Arabia ★ DENSO ABDUL LATIF JAMEEL CO., LTD. • Manufacture and sale of car air conditioners 50.0 21
South Africa ★ Smiths Manufacturing (Pty) Limited • Manufacture and sale of car air conditioners 25.0 986
Australia ✩ DENSO INTERNATIONAL AUSTRALIA PTY. LTD. • Holding company and regional headquarters for Australia 100.0 48
✩ AUSTRALIAN AUTOMOTIVE AIR PTY. LTD. • Manufacture of air conditioners, radiators, and instrument clusters 100.0 602
Singapore ✩ DENSO INTERNATIONAL ASIA PTE. LTD. • Holding company for ASEAN and Taiwan 100.0 26
• Regional headquarters for Asia and Oceania
(logistics, finance and system development)
✩ DENSO INTERNATIONAL SINGAPORE PTE. LTD. • Sale of aftermarket products 100.0 36
Thailand ✩ DENSO INTERNATIONAL ASIA CO., LTD. • Regional headquarters for Asia and Oceania 100.0 –
(business planning, IS, human resources)
• Engineering services, design, testing and R&D
✩ DENSO INTERNATIONAL (THAILAND) CO., LTD. • Sale of automotive components 100.0 272
• Regional headquarters for Thailand
✩ DENSO (THAILAND) CO., LTD. • Manufacture of electrical automotive components, 51.3 2,847
car air conditioners, magnetos, and spark plugs
✩ DENSO TOOL & DIE (THAILAND) CO., LTD. • Manufacture and sale of dies and jigs for automotive equipment 100.0 137
✩ SIAM DENSO MANUFACTURING CO., LTD. • Manufacture of fuel injection system products (fuel pumps and injectors) 90.0 2,307
★ TOYOTA BOSHOKU FILTRATION SYSTEM • Manufacture of oil filters 40.0 858
(THAILAND) CO., LTD.
✩ ANDEN (THAILAND) CO., LTD. • Manufacture of relays and flashers 100.0 179
✩ SIAM KYOSAN DENSO CO., LTD. • Manufacture of fuel pump modules 100.0 499

% Owned
Indonesia ✩ PT. DENSO INDONESIA • Manufacture and sale of car air conditioners, 58.3 1,675
radiators, spark plugs, and filters
✩ PT. DENSO SALES INDONESIA • Sale of automotive components 100.0 96
✩ PT. ASMO INDONESIA • Manufacture of power window regulator motors 100.0 1,100
✩ PT. HAMADEN INDONESIA MANUFACTURING • Manufacture of horns 100.0 178
Republic ✩ DENSO PS ELECTRONICS CORPORATION • Manufacture and sale of instrument clusters 51.0 515
of Korea ✩ DENSO SALES KOREA CORP. • Sales support for automotive components 66.6 63
• Sale of non-automotive equipment and components
✩ DENSO PS CORPORATION • Manufacture and sale of small motors, fuel pumps, 72.9 1,560
and electrical automotive components
★ DOOWON CLIMATE CONTROL CO., LTD. • Manufacture and sale of car air conditioners 33.4 407
✩ KOREA WIPER BLADE CO., LTD. • Manufacture and sale of wiper arms, wiper blades, and wiper linkages 100.0 187
Malaysia ✩ DENSO (MALAYSIA) SDN. BHD. • Manufacture and sale of electrical automotive components, car air 72.7 1,259
conditioners, engine ECUs, and programmable logic controller units
✩ NIPPON WIPER BLADE (M) SDN. BHD. • Manufacture of wiper arms and wiper blades 93.3 1,047
India ✩ DENSO INDIA LTD. • Manufacture and sale of electrical automotive components, 52.9 903
electric fans, ventilators, magnetos, and windshield wiper motors
✩ DENSO HARYANA PVT. LTD. • Manufacture and sale of fuel pumps, injectors, engine ECUs, and ISCV 100.0 496
✩ DENSO KIRLOSKAR INDUSTRIES PVT. LTD. • Manufacture and sale of radiators and car air conditioners 89.0 277
✩ DENSO SALES INDIA PVT. LTD. • Sale of automotive components manufactured by companies in India 100.0 57
✩ DENSO FARIDABAD PVT. LTD. • Manufacture and sale of HVAC units and heaters 100.0 52
China ✩ DENSO (CHINA) INVESTMENT CO., LTD. • Holding company and regional headquarters for China 100.0 284
• Sale of automotive components manufactured by companies in China
★ YANTAI SHOUGANG DENSO CO., LTD. • Manufacture and sale of car air conditioners and compressors 31.0 410
✩ TIANJIN DENSO ENGINE • Manufacture and sale of alternators and starters 95.0 552
ELECTRICAL PRODUCTS CO., LTD.
✩ CHONGQING DENSO CO., LTD. • Manufacture and sale of magnetos, CDI amplifiers, and ignition coils 100.0 220
✩ TIANJIN DENSO ELECTRONICS CO., LTD. • Manufacture and sale of automotive electronic control components 93.0 801
✩ TIANJIN DENSO AIR-CONDITIONER CO., LTD. • Manufacture and sale of car air conditioners and radiators 95.0 253
✩ GUANGZHOU DENSO CO., LTD. • Manufacture and sale of car air conditioners, bus coolers, and radiators 60.0 729
★ SHANGHAI DENSO FUEL INJECTION CO., LTD. • Manufacture and sale of diesel injection pumps 34.0 717
✩ TIANJIN FAWER DENSO • Manufacture and sale of car air conditioners 60.0 223
AIR-CONDITIONER CO., LTD.
★ TIANJIN TOYOTA BOSHOKU • Manufacture and sale of air cleaners and oil filters 40.0 55
AUTOMOTIVE PARTS CO., LTD.
✩ DENSO (GUANGZHOU NANSHA) CO., LTD. • Manufacture and sale of fuel injection systems for gasoline vehicles 100.0 700
★ J-WORKS PARTS SALES (TIANJIN) CO., LTD. • Import and sale of aftermarket products for Japanese car makers 30.0 7
✩ DENSO (TIANJIN) THERMAL PRODUCTS CO., LTD. • Manufacture and sale of heat exchangers for 100.0 416
car air conditioners and radiators
✩ WUXI DENSO HANSHIN • Manufacture of ignition coils for automobiles 75.0 7
AUTOMOTIVE PRODUCTS CO., LTD.
✩ TOYOTA BOSHOKU FOSHAN CO., LTD. • Manufacture of oil filters 40.0 238
✩ DENSO TIANJIN ITS CO., LTD. • Manufacture and sale of car navigation systems 95.0 3
★ TD Automotive Compressor Kunshan, Co., Ltd. • Manufacture of compressors for car air conditioners 35.0 85
✩ TIANJIN POON SUNG ELECTRONICS CO., LTD. • Manufacture and sale of instrument clusters 100.0 32
✩ TIANJIN ASMO AUTOMOTIVE • Manufacture and sale of windshield wiper systems, windshield 60.5 549
SMALL MOTOR CO., LTD. washer systems, and electric fan motors
✩ ASMO (GUANGZHOU) SMALL MOTOR CO., LTD. • Manufacture of windshield wiper systems, windshield 100.0 104
washer systems, and powered rear sunshades
✩ TIANJIN GAC AIRCONDITION CORPORATION • Manufacture and sale of hoses and pipes for car air conditioners 100.0 278
✩ DENSO CREATE SHANGHAI INC. • Design and development of software 100.0 47
Taiwan ✩ DENSO TAIWAN CORP. • Manufacture and sale of automotive electrical components, 80.0 416
radiators, and car air conditioners
The ✩ PHILIPPINE AUTO COMPONENTS, INC. • Manufacture and sale of instrument clusters and car air conditioners 100.0 801
Philippines ✩ DENSO TECHNO PHILIPPINES, INC. • Design and development of software 100.0 44
Vietnam ✩ DENSO MANUFACTURING VIETNAM CO., LTD. • Manufacture and sale of air flow meters, VIC actuators, 95.0 1,050
and other engine-related products

Investor Information
Common Stock Independent Auditors

Authorized: 1,500,000,000 shares Deloitte Touche Tohmatsu (a Japanese member firm of
Issued: 884,068,713 shares Deloitte Touche Tohmatsu, a Swiss Verein)
Stock Exchange Listings Administrator of Shareholders’ Register

Tokyo Stock Exchange Mitsubishi UFJ Trust and Banking Corporation
Osaka Securities Exchange 1-4-5, Marunouchi, Chiyoda-ku,
Nagoya Stock Exchange Tokyo 100-8212, Japan
Number of Shareholders
68,755
Dividends Paid
(Yen)
50.00
40.00
30.00
20.00
10.00
2004 2005 2006 2007

Interim dividends per share (yen) 11.00 13.00 18.00 21.00
Year-end dividends per share (yen) 13.00 19.00 20.00 24.00
Total (yen) 24.00 32.00 38.00 45.00
Principal Shareholders (Leading Ten Principal Shareholders)

Number of shares held (thousands) Voting share ratio (%)
Toyota Motor Corporation 201,502 24.75
Toyota Industries Corporation 69,373 8.52
Robert Bosch Industries AG 47,434 5.82
The Master Trust Bank of Japan, Ltd. (Trust Account) 42,159 5.17
Japan Trustee Services Bank, Ltd. (Trust Account) 35,588 4.37
Nippon Life Insurance Company 23,050 2.83
Mitsui Sumitomo Insurance Company, Limited 15,148 1.86
DENSO Employees’ Shareholding Association 11,643 1.43
State Street Bank & Trust Company 9,905 1.21
Meiji Yasuda Life Insurance Company 9,373 1.15
Note: The above table excludes 69,551 thousand shares of treasury stock held by DENSO Corporation.

Breakdown of Shareholders (Voting Share Ratio, %)
Individuals
Financial Institutions Foreign Investors
Domestic Institutional Investors
Other Domestic Corporations
2006 8.1 12.4 16.7 35.5 27.3
2007 8.4 12.7 14.5 35.8 28.6
DENSO’s Common Stock Price Range and Trading Volume on Tokyo Stock Exchange
(Adjusted to Reflect Free Share Distributions and Stock Splits)
(Yen) (Yen)
Stock Prices (Left Scale)
5,000 30,000
4,000 24,000
3,000 18,000
2,000 12,000
1,000 High
6,000
Nikkei Stock Average (Right Scale) Low
0 0
(Thousands of Shares)
80,000
Trading Volume
60,000
40,000
20,000
0
January 2003 January 2004 January 2005 January 2006 March 2007
Headquarters Investor Relations

DENSO CORPORATION If you have any questions or would like a copy of our
1-1, Showa-cho, Kariya, publications, please contact:
Aichi 448-8661, Japan IR Group
Telephone: +81-566-25-5511 Finance & Accounting Department
DENSO CORPORATION
Date of Establishment 1-1, Showa-cho, Kariya,
December 16, 1949 Aichi 448-8661, Japan
Telephone: +81-566-25-5850
Publications Facsimile: +81-566-25-4860
Financial Statements
Fact Book ‘DENSO in Figures’
Corporate Brochure
CSR Report

DENSO on the Internet
DENSO offers a wealth of financial information,
including the latest reports and financial events schedule.
http://www.globaldenso.com/en/investors/

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Profile

DENSO Corporation, headquartered in Kariya, Aichi Prefecture, Japan, is a

❚ Highlights One: Financial 02

❚ Highlights Two: Global 03

❚ A Message From the President 04

❚ Initiatives for Realizing

❚ Review of Operations by Segment 16

❚ Corporate Social Responsibility 27

DENSO Corporation Annual Report 2007 1

Net Sales: ¥3,609,700 ¥3,188,330 ¥2,799,949 13.2% $30,590,678

Sales in Japan 1,859,046 1,690,215 1,554,795 10.0% 15,754,627

Sales outside Japan 1,750,654 1,498,115 1,245,154 16.9% 14,836,051

Net Income 205,170 169,648 132,620 20.9% 1,738,729

Total Assets 3,765,135 3,411,975 2,780,982 10.4% 31,907,924

Equity *1 2,286,956 2,066,303 – 10.7% 19,380,983

Shareholders’ Equity – 1,970,388 1,643,182 – –

Capital Expenditures 312,457 288,714 235,258 8.2% 2,647,941

Depreciation 219,873 185,143 160,993 18.8% 1,863,330

R&D Expenses 279,890 256,339 238,241 9.2% 2,371,949

Yen Percent change U.S. dollars

Basic net income ¥ 249.88 ¥ 204.80 ¥ 159.02 22.0% $ 2.12

Cash dividends 45.00 38.00 32.00 18.4% 0.38

Equity *1 2,668.82 2,384.05 1,990.48 11.9% 22.62

Number of Employees 112,262 105,723 104,183 6.2%

Net Sales Net Income Return on Equity

2 DENSO Corporation Annual Report 2007

Japan 2,000,000 250,000

The Americas 800,000 30,000

Europe 600,000 15,000

Asia & Oceania 500,000 50,000

DENSO Corporation Annual Report 2007 3

Fiscal 2007 Results

4 DENSO Corporation Annual Report 2007

DENSO Corporation Annual Report 2007 5

DENSO OTOMOTIV PARCALARI

Capital Expenditures and Investment in R&D

Outlook for Fiscal 2008

6 DENSO Corporation Annual Report 2007

DENSO Corporation Annual Report 2007 7

8 DENSO Corporation Annual Report 2007

Initiatives for Realizing

DENSO Corporation Annual Report 2007 9

Achieving Future Growth

10 DENSO Corporation Annual Report 2007

Global Positioning Communication

Vehicle to Hot Spot

Traffic Management Center

Vehicle to Vehicle Vehicle to Infrastructure

Vehicle Roadside Infrastructure

DENSO Corporation Annual Report 2007 11

12 DENSO Corporation Annual Report 2007

Material All Material Cost Kaizen Activity

Fixed costs Focus on high-ratio Group companies

DENSO Corporation Annual Report 2007 13

In previous innovation efforts, we achieved substantial reductions in costs in our pro-

14 DENSO Corporation Annual Report 2007

• Strengthen startup flow Supply Catch up

DENSO Corporation Annual Report 2007 15

Net Sales Net Sales Net Sales Net Sales

1,200,000 1,000,000 800,000 400,000

600,000 500,000 400,000 200,000

31.5% 23.0% 16.2% 9.2%

Main Products Main Products Main Products Main Products

➔ P.18 ➔ P.19 ➔ P.20 ➔ P.22