Listed company name: YASKAWA Electric Corporation
http://www.yaskawa.co.jp/en/
President: Koji Toshima
Stock exchange listings: Tokyo, Fukuoka
Stock ticker number: 6506

1. Summary of Results for the First Half of Fiscal Year 2006
    (March 21, 2006 to September 20, 2006)
    (Note: This document was translated from the financial statement submitted to the Tokyo Stock
     Exchange for the period stated above. The figures under one million are rounded off.)

(4) Scope of consolidation and application of equity method accounting
	Total consolidated subsidiaries: 65 companies Non-consolidated subsidiaries to which equity method accounting is applied: 3 companies Affiliated companies to which equity method accounting is applied: 12 companies

(5) Changes in scope of consolidation and application under equity method accounting
	Consolidated (new): 8 (eliminated): 4 Affiliated companies (new): 0 (eliminated): 7

2. Projected Consolidated Results for the Fiscal Year Ending March 20, 2007

		(Millions of yen)
		Year ending March 20, 2007
	Net sales	364,000
	Ordinary income	33,000
	Net income	18,000

3. Management Policies

Fundamental Management Policies
　YASKAWA Electric Corporation, along with its subsidiaries and affiliated companies, has long held to its policy of committing ourselves to the development of society and the well-being of all people through business achievements. To accomplish these goals, YASKAWA Group follows three principles below.

• giving priority to product quality and developing cutting-edge technology in which we can take price throughout the world
• improving management efficiency and ensuring enough profit to stay competitive
• responding to the market needs and committing ourselves to serving the customers the best we can
  

　Taking into consideration the increasing interest in the creation of corporate value, YASKAWA Group's priority is to improve capital efficiency for greater financial returns to our shareholders. In order to do so, we will continue to provide products and services of great value to our customers in view of enhancing customer satisfaction. We will also continue our efforts to improve employee satisfaction so that our employees feel more loyal and proud to work at YASKAWA. We believe that these activities will result in increased corporate value, greater profitability, and a larger financial return on your investment.

Policy on Profit Distribution
　Regarding profit distribution, our goal is to secure stable and continuous cash dividends to our shareholders as well as some in reserve to enrich our business base and to enable future business expansion. We base our decision of profit distribution on the integrated consideration of our business performance, the business environment, and the financial conditions.The dividend for the year ended in March 2006 was ¥6 per share, including ¥5 as regular payment and ¥1 as commemorative payment related to YASKAWA Electric Corporation’s 90th anniversary. The amendment of the articles of incorporation related to the introduction of interim dividends was resolved at the 90th shareholders’ meeting on June 16, 2006. On October 31, 2006, the board of directors decided to pay an interim dividend of ¥3 per share.

Policy on Reduction of Share Trading Unit Size
　Based on the share prices and liquidity, we decide on our policy on share trading unit size. Our belief is that YASKAWA Electric Corporation currently has sufficient liquidity. In consideration also of our current share price and the additional costs incurred in reducing the share trading unit size, we do not feel that reducing the unit size would create any additional value for the Company or for our shareholders. We will continue to monitor stock market trends and make any decisions in consideration of the benefit of our shareholders and the timing of change in stock regulations.

Management Goals
　Our business performance is evaluated mainly by the following indicators: ordinary income ratio, shareholders' equity ratio, and return on equity (ROE). YASKAWA Group seeks to maximize earnings on invested shareholders' equity, which benefits all stakeholders including our employees and not to mention our shareholders. We also aim to structure the Company in such a way that it will remain profitable even in the volatile business environments. We achieve this management structure by improving profitability and strengthening our credit rating to facilitate fund-raising.

Mid- to Long-term Business Strategies
　From the fiscal year 2006, YASKAWA Group started implementing a new three-year business plan "DASH 100".
We aim to achieve our visions for the Company's 100th anniversary in 2015 of becoming "a corporate group with firm global No.1 businesses", "a company that contribute to the evolution of society, the well-being of all people and the global environment", and "a company where employees demonstrate their maximum creativity and take pride in their work". The next 10 years until 2015 will be divided into three terms with different mid-term business plans to be drawn and implemented. For the first stage of the next 10 years, we drew out the new mid-term business plan "DASH 100".

DASH 100: Basic Objectives
　Building on the "post-mechatronics shift" management base established by the previous mid-term business plan "Win21 Plus", the following two basic objectives will be worked for in order to maximize YASKAWA's corporate value and brand.

• Realization of firm global No.1 position in market share, size, and profitability for the core mechatronics businesses by strengthening them further
• Establishment of a new pillar of business to ensure growth and stability of the company

DASH 100: Position
　Taking advantage of positive market conditions, YASKAWA Group will switch to growth-oriented management by accelerating business expansion and growth.

DASH 100: Basic Goals

• Establish businesses that are truly global No.1 (No.1 in market share, size, and profitability)
• Develop and start up new businesses
• Realize ordinary income ratio of 10% as soon as possible

*Shareholders' equity ratio =	Total shareholders’ equity + Total evaluation and translation adjustments
	Total assets

Management Initiatives and Challenges
　In order to realize the targets set in the mid-term business plan “DASH100” as soon as possible, YASKAWA Group will execute necessary measures in line with the basic objectives and the action plans, while we keep up on the market transitions and pay attention to the risk of economic fluctuation.
　Firstly, we will expand sales in the automobile and semiconductor/LCD markets, and also in Asia, Europe and the U.S., and accelerate the development and the launch of new products. Also, we will strengthen sales and service operations of our competitive semiconductor wafer transfer robots with the newly established joint venture, YASKAWA Brooks Automation, Inc., which began operation in September.
　Meanwhile, we will continue the corporate-wide thorough pursuit of further improvement of the quality of our products and of our work, which determine our brand value. In order to develop and start up new businesses, we will start market creation and development by means of alliance and collaboration with our partners in the field of service robots for non-manufacturing purposes with growth potential.
　Also, a flexible marketing strategy that suits each region in the world is implemented, thus maximizing our strength as a corporate group to enable growth of our business.
　Our continuous reform of the profit structure includes enhancement of added value by focusing on the competitive products, regions and markets, as well as cost reductions in products and control of expenditures.
　 Furthermore, internal control system is enhanced by ensuring compliance and risk management, while we work on standardization of our business, and build highly objective and transparent business processes.

4. Business Performance During the First Half of Fiscal Year 2006
　During the first half of fiscal year 2006, even though there was some concern over the rising prices of crude oil and raw materials, the economic conditions of our main markets in Europe, North America, and Asia were generally positive. The Japanese economy also continued to recover by increased corporate capital expenditures, and improvements in employment conditions.
　In the midst of this economic environment, YASKAWA Group began implementation of the mid-term business plan “DASH100” this fiscal year, aimed at conducting growth-oriented management. The three basic goals of “DASH100” are to establish businesses that are truly global No.1 in market share, size, and profitability, to develop and start up new businesses, and to realize ordinary income ratio of 10% as soon as possible. In the first half-year of “DASH100”, we worked on penetrating further and developing the markets that we have focused on, namely, automobile, semiconductor and LCD markets. We also expanded sales in the growing markets in Asia, especially China, and in Europe and North America. All these efforts had the aim of reinforcing existing businesses and expanding the business domain. In order to further strengthen the business of semiconductor wafer-handling robots, a joint company, YASKAWA Brooks Automation, Inc. was established in partnership with Brooks Automation, Inc. Synetics Solutions Inc., our former subsidiary in North America, was transferred to Brooks.
　As a result, sales in the first six months of fiscal year 2006 rose by 23.0% to ¥179,732 million compared to the corresponding period last year, operating income was up by 85.0% at ¥15,101 million, and ordinary income was also up by 85.2% at ¥15,166 million. Net income of the same period was ¥8,722 million, which was 3.2 times higher than the corresponding period last year. All of these results showed significant growth and marked record highs.
　The non-consolidated half-year results of YASKAWA Electric also marked record highs, with sales increasing by 17.9% to ¥103,729 million compared to the corresponding period last year, operating income increasing 2.8-fold to ¥4,716 million, ordinary income doubling to ¥8,316 million, and net income increasing by ¥5,663 million to ¥6,203 million.
　In consideration of the above, the interim dividend was set at ¥3 per share.

Results by Business Segment

Motion Control
　The Motion Control segment experienced positive conditions in the semiconductor and electronic component markets for its AC servomotors and controllers, while the overseas air conditioning market remained positive for the AC Drives. We worked on further developing these markets by strengthening sales operations, expanded sales of new products, and improved the product lineup. We also focused on increasing added value, and made cost reductions in order to raise profitability.
　The overall results for the Motion Control segment, when compared to the corresponding period last year, show sales increasing by 28.0% to ¥78,733 million and operating income increasing 2.2 times to ¥10,179 million. Both marked record highs as half-year results.

Robotics
　The demand in the Japanese automobile market is gradually recovering from the slowdown caused by capital expenditure adjustments started in the second half of last fiscal year. On the other hand, we worked on sales expansion in the European and North American markets while there was a sign of restrained capital expenditures in those markets. Meanwhile, the demand in the LCD and semiconductor markets recovered. For these existing markets in general, we worked on market expansion by providing products optimized for each purpose and market. For the automobile market, we worked on market creation by dual arm robots and seven-axis robots that were developed to meet the need for new robot application to support and coexist with humans on production lines.
　As a result, sales in the Robotics segment rose by 16.1% to ¥63,088 million compared to the corresponding period last year, however operating income was down by 8.5% at ¥4,034 million, as sales of high-value added products for the automobile market decreased and competition intensified in the European and North American markets.
(Note: The name of the segment was changed from the former “Robotics Automation” to “Robotics” this fiscal year.)

System Engineering
　The System Engineering segment progressed with a reform in the profit structure by specializing in its strong businesses and by cost reductions. Also, efforts were made to take in the increasing demand for electrical systems for steel plants. Sales of control systems for loading and unloading cranes for the Chinese market increased.
　As a result, sales in System Engineering increased by 46.4% to ¥21,097 million compared to the corresponding period last year. An operating loss of ¥757 million occurred, however it improved by ¥1,103 million from the corresponding period last year.

Information Technologies
　As for the Information Technologies segment, positive market conditions continued for YE DATA INC. since the second half of the previous fiscal year for its multimedia equipments, especially card readers. Also, the demand was robust for businesses of YASKAWA INFORMATION SYSTEMS Corporation including its system integration for telecommunication businesses, and control software for semiconductor/LCD equipment manufacturers.
　As a result, sales in Information Technologies increased by 18.8% to ¥13,101 million, compared to the corresponding period last year, and operating income increased 3.3 times to ¥644 million.

Other
　Sales in the Other segment decreased by 22.7% to ¥3,711 million, however operating income increased by 20.9% to ¥994 million compared to the corresponding period last year.

5. Balance Sheet Highlights

Assets
　At the end of the first half of this fiscal year, current assets increased by ¥12,743 million to ¥178,460 million compared to the corresponding date of last year, as trade notes and accounts receivable increased by ¥10,826 million.
　As for fixed assets, intangible fixed assets decreased by ¥1,038 million, while tangible fixed assets, and investments and other assets increased by ¥1,115 million and ¥2,245 million respectively. Total fixed assets increased by ¥2,322 million to ¥83,455 million.
　Total assets therefore increased by ¥15,066 million at ¥261,916 million compared to the corresponding date of last year.
Liabilities
　Current liabilities decreased by ¥2,856 million to ¥125,106 million, while trade notes and accounts payable increased by ¥6,906 million, and short-term bank loans decreased by ¥10,972 million.
　Regarding long-term liabilities, long-term debt decreased by ¥1,934 million and accrued retirement benefits increased by ¥1,428 million. As a result, total long-term liabilities at the end of the first half of this fiscal year decreased by ¥2,392 million to ¥70,386 million.
　Total liabilities at the end of the first half of this fiscal year therefore decreased by ¥5,248 million to ¥195,492 million compared to the corresponding date last year.
Net Assets
　Total net assets amounted to ¥66,423, as retained earnings increased by ¥16,148 million.

6. Cash Flow

　Even though there was an increase in trade payables and income tax, income before income taxes and minority interests contributed to cash flows from operating activities ending at a positive ¥5,701 million.
　Cash flows from investing activities ended at a negative ¥1,329 million because purchases of tangible fixed assets amounted to ¥4,146 million even though there were proceeds from sales of property, plant and equipment, and securities of affiliates.
　Free cash flow, which is a sum of cash flows from operating and investing activities, was at a positive ¥4,372 million.
　Cash flows from financing activities ended at a negative ¥4,282 million as repayments were made for interest-incurring debt and dividends were paid.
　As a result of these activities, the balance of cash and cash equivalents at the end of the first half of this fiscal year was ¥13,272 million, up by ¥1,170 million compared to the corresponding date of last year.

Cash Flow Indicator Trends

Cash Flow Indicator Trends for the YASKAWA Group are shown below.
	Fiscal Year 2004		Fiscal Year 2005		Fiscal Year 2006
	End of first half	End of full year	End of first half	End of full year	End of first half
Shareholders' equity ratio (%)	14.2	15.1	17.1	20.7	23.4
Shareholders' equity ratio   based on market value (%)	48.6	56.5	81.0	118.2	105.2
Repayment of debt (years)	-	13.4	9.2	3.3	10.3
Interest coverage ratio (times)	-	4.9	12.8	12.8	9.2

7. Outlook for Fiscal Year 2006

Forecasted business results for the fiscal year 2006 are shown below.
Fiscal Year 2006 Consolidated		(millions of yen)
	Fiscal Year 2006 (forecast)	Year-on-year Change
Net Sales	364,000	41,084
Operating Income	33,000	8,514
Ordinary Income	33,000	8,669
Net Income	18,000	7,843

Fiscal Year 2006 Non-consolidated		(millions of yen)
	Fiscal Year 2006 (forecast)	Year-on-year Change
Net Sales	214,000	24,482
Operating Income	13,000	4,854
Ordinary Income	18,000	4,953
Net Income	11,000	7,197

Warning
　The information within this document is made as of the date of writing. Any forward-looking statements are made according to the assumptions of management and are subject to change as a result of risks and uncertainties. YASKAWA Electric undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

[Appendix]

1.Interim Consolidated Balance Sheet (summary)
2.Interim Consolidated Statements of Income (summary)
3.Interim Consolidated Statements of Cash Flows (summary)
4.Segment Information