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FINANCIAL SECTION Five-Year Summary (Consolidated) TSUKISHIMA KIKAI CO., LTD. and its consolidated subsidiaries Years ended March 31 (Note 1) 2005 2004 2003 2002 2001 2005 For the year: Net sales... 73,100 69,193 73,119 81,475 76,638 $680,697 Operating income... 2,472 4,258 2,887 3,543 5,807 23,019 Income before income taxes... 3,721 4,034 1,737 2,582 4,701 34,649 Net income... 2,653 2,442 873 1,397 2,155 24,704 At year-end: Total assets... 97,245 91,022 85,291 99,284 101,622 905,531 Shareholders equity... 48,318 45,421 39,831 40,452 39,326 449,930 Yen Per Share: Net income... 56.96 52.07 17.63 30.61 47.24 $0.53 Cash dividends... 1 20.00 15.00 15.00 15.00 15.00 0.19 Number of shares outstanding (in thousands)... 45,626 45,626 45,626 45,626 45,626 Note: U.S. dollar amounts are translated from yen at the rate of 107.39 to US$1, solely for the convenience of the reader. 1 The fiscal year ended March 31, 2005 dividend includes a commemorative dividend of 5.00 per share. Net Income per Share Return on Equity Equity per Share 60 50 40 47.24 (Yen) 8 (%) 56.96 52.07 6 5.6 5.7 5.7 1,100 1,000 995.02 1,059.54 (Yen) 900 886.68 30 30.61 4 3.5 800 861.91 872.15 20 17.63 2 2.2 10 700 0 0 600 01 02 03 04 05 01 02 03 04 05 01 02 03 04 05 7

Consolidated Balance Sheets TSUKISHIMA KIKAI CO., LTD. and its consolidated subsidiaries Years ended March 31, 2005 and 2004 ASSETS (Note 1) Current assets: Cash and time deposits... 21,524 22,573 $200,428 Marketable securities (Notes 2, 6)... 1,605 400 14,946 Notes and accounts receivable... 33,177 26,600 308,939 Allowance for doubtful accounts (Note 2)... (59) (69) (549) Inventories (Notes 2, 5)... 3,901 6,910 36,326 Deferred income taxes (Note 10)... 1,507 1,317 14,033 Other current assets... 787 533 7,328 Total current assets... 62,442 58,264 581,451 Property, plant and equipment (Notes 2, 7): Land... 6,855 6,329 63,833 Buildings and structures... 8,757 8,721 81,544 Machinery and equipment... 15,358 15,260 143,011 Construction in progress... 971 671 9,041 31,941 30,981 297,429 Less: accumulated depreciation... (16,365) (15,880) (152,388) Net property, plant and equipment... 15,576 15,101 145,041 Investments and other assets: Investments in securities (Notes 2, 6, 7)... 16,822 15,895 156,644 Long-term loans (Note 7)... 538 579 5,010 Deferred income taxes (Note 10)... 961 8,949 Other assets... 1,042 1,318 9,702 Less: allowance for doubtful accounts (Note 2)... (136) (135) (1,266) Total investments and other assets... 19,227 17,657 179,039 Total assets... 97,245 91,022 $905,531 See Notes to Consolidated Financial Statements. 8

LIABILITIES AND SHAREHOLDERS EQUITY (Note 1) Current liabilities: Notes and accounts payable Trade... 25,970 19,538 $241,829 Other... 2,376 2,635 22,125 Short-term bank loans (Note 7)... 750 1,745 6,984 Current portion of long-term bank loans (Note 7)... 453 359 4,218 Accrued income taxes (Note 10)... 506 1,605 4,712 Accrued expenses... 1,937 1,643 18,037 Accrued warranty (Note 2)... 804 737 7,487 Advances received... 2,604 5,551 24,248 Other current liabilities... 1,206 1,542 11,230 Total current liabilities... 36,606 35,355 340,870 Long-term liabilities: Long-term bank loans (Note 7)... 3,362 2,816 31,306 Deferred income taxes (Note 10)... 2,636 1,170 24,546 Provision for post-employment benefits (Notes 2, 8)... 5,962 5,797 55,517 Reserve for retirement payments to officers (Note 2)... 293 240 2,728 Other... 7 89 66 Total long-term liabilities 12,260 10,112 114,163 Minority interests... 61 134 568 Contingent liability (Note 11) Shareholders equity: Common stock, Authorized: 60 million shares Issued: 45,625,800 shares 2005 & 2004... 6,647 6,647 61,896 Additional paid-in capital... 5,486 5,486 51,085 Retained earnings... 31,567 29,666 293,947 Net unrealized gains on available-for-sale securities... 4,671 3,650 43,496 Treasury stock... (53) (28) (494) Total shareholders equity 48,318 45,421 449,930 Total liabilities and shareholders equity... 97,245 91,022 $905,531 See Notes to Consolidated Financial Statements. 9

Consolidated Statements of Income TSUKISHIMA KIKAI CO., LTD. and its consolidated subsidiaries Years ended March 31, 2005 and 2004 (Note 1) Net sales (Notes 3, 16)... 73,100 69,193 $680,697 Cost of sales (Note 3)... 59,292 53,590 552,119 Gross profit... 13,808 15,603 128,578 Selling, general and administrative expenses... 11,336 11,345 105,559 Operating income (Note 3) 2,472 4,258 23,019 Other income (expenses): Interest and dividend income... 446 114 4,153 Interest expenses... (93) (116) (866) Gain on sales of property, plant and equipment... 183 Gain on sale of business (Note 13)... 834 7,766 Gain on liquidation of consolidated subsidiary... 66 615 Loss on disposal of property, plant and equipment... (44) (57) (410) Loss on disposal of inventories... (63) (587) Loss on sales of investments in securities... (19) Retirement benefits for employees transferred to subsidiaries... (118) Loss on liquidation of non-consolidated subsidiary... (145) Other, net (Note 12)... 103 (66) 959 1,249 (224) 11,630 Income before income taxes (Note 3) 3,721 4,034 34,649 Income taxes (Notes 2, 10): Current... 1,243 1,674 11,575 Deferred... (234) (94) (2,179) Total income taxes 1,009 1,580 9,396 Minority interests... (59) (12) (549) Net income... 2,653 2,442 $ 24,704 Yen Per share Net income... 56.96 52.07 $0.53 Cash dividends... 20.00 15.00 0.19 See Notes to Consolidated Financial Statements. 10

Consolidated Statements of Shareholders Equity TSUKISHIMA KIKAI CO., LTD. and its consolidated subsidiaries Years ended March 31, 2005 and 2004 Thousands Number of Additional Net unrealized gains shares of common Common paid-in Retained on available-for-sale Treasury stock issued stock capital earnings securities stock Balance as of March 31, 2003... 45,626 6,647 5,486 27,977 (258) (21) Cash dividends... (684) Bonuses to officers... (69) Net income for the year ended March 31, 2004... 2,442 Change of unrealized gains on available-for-sale securities... 3,908 Treasury stock... (7) Balance as of March 31, 2004... 45,626 6,647 5,486 29,666 3,650 (28) Cash dividends... (684) Bonuses to officers... (68) Net income for the year ended March 31, 2005... 2,653 Change of unrealized gains on available-for-sale securities... 1,021 Treasury stock... (25) Balance as of March 31, 2005... 45,626 6,647 5,486 31,567 4,671 (53) Thousands (Note 1) Number of Additional Net unrealized gains shares of common Common paid-in Retained on available-for-sale Treasury stock issued stock capital earnings securities stock Balance as of March 31, 2004... 45,626 $ 61,896 $ 51,085 $ 276,245 $ 33,988 $(261) Cash dividends... (6,369) Bonuses to officers... (633) Net income for the year ended March 31, 2005... 24,704 Change of unrealized gains on available-for-sale securities... 9,508 Treasury stock... (233) Balance as of March 31, 2005... 45,626 $61,896 $51,085 $293,947 $43,496 $(494) See Notes to Consolidated Financial Statements. 11

Consolidated Statements of Cash Flows TSUKISHIMA KIKAI CO., LTD. and its consolidated subsidiaries Years ended March 31, 2005 and 2004 (Note 1) Cash flows from operating activities: Income before income taxes and minority interests... Adjustments for: Depreciation and amortization... Amortization of goodwill arising from consolidation... Increase in provision for post-employment benefits... Increase(decrease) in accrued bonus... Increase(decrease) in reserve for retirement payments to officers... Interest and dividend income... Interest expenses... Gain on sales of property, plant and equipment... Loss on disposal of property, plant and equipment... Gain on sales of investments in securities... Loss on sales of investments in securities... Gain on liquidation of consolidated subsidiary... Loss on liquidation of non-consolidated subsidiary... Gain on sale of business (Note 13)... Increase in notes and accounts receivable... Decrease in advances received... Decrease in inventories... Increase in notes and accounts payable, trade... Bonuses to officers... Other... Subtotal... 3,721 1,433 (40) 188 82 106 (446) 93 44 (2) (66) (834) (4,811) (3,487) 2,907 4,551 (69) (56) 3,314 4,034 1,364 (8) 85 (227) (80) (114) 116 (183) 57 19 145 (1,798) (882) 918 120 (70) 481 3,977 $ 34,649 13,344 (372) 1,751 764 987 (4,153) 866 410 (19) (615) (7,766) (44,799) (32,470) 27,070 42,378 (643) (523) 30,859 Interest and dividend income received... Interest expenses paid... Income taxes paid... Net cash provided by operating activities... Cash flows from investing activities: Purchase of marketable securities... Proceeds from sales of marketable securities... Purchase of property, plant and equipment... Proceeds from sales of property, plant and equipment... Purchase of investments in securities... Proceeds from sales of investments in securities... Payments for loans receivable... Collection of loans receivable... Payments for liquidation of consolidated subsidiary... Proceeds from sale of business... Proceeds from acquisition of subsidiary stock resulting in changes in the scope of consolidation... Other... Net cash provided by (used in) investing activities... Cash flows from financinging activities: Decrease in short-term bank loans... Proceeds from long-term bank loans... Repayments of long-term bank loans... Additions of treasury stock Dividends paid... Net cash used in financing activities... Net decrease in cash and cash equivalents... Cash and cash equivalents at beginning of period (Note 2,4)... Cash and cash equivalents at end of period (Note2,4)... 447 (93) (2,772) 896 (800) 400 (1,773) 21 (251) 206 (3) 43 (79) 1,835 526 51 176 (1,095) 200 (406) (25) (685) (2,011) (939) 22,418 21,479 123 (113) (495) 3,492 1,305 (1,768) 374 (577) 35 (383) 25 (311) (1,300) (1,155) (409) (7) (685) (2,256) (64) 22,482 22,418 4,162 (866) (25,812) 8,343 (7,449) 3,725 (16,510) 196 (2,337) 1,918 (28) 400 (736) 17,087 4,898 475 1,639 (10,196) 1,862 (3,780) (233) (6,379) (18,726) (8,744) 208,753 $200,009 See Notes to Consolidated Financial Statements. 12

Notes to Consolidated Financial Statements 1. Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements have been prepared from the financial statements filed with the Financial Services Agency as required by the Japanese Securities and Exchange Law in accordance with accounting principles and practices generally accepted in Japan, which are different from the accounting and disclosure requirements of International Accounting Standards. Certain reclassifications have been made to present the accompanying consolidated financial statements in a format which is familiar to readers outside Japan. For the convenience of the reader, the accompanying consolidated financial statements have been presented in by translating all Japanese yen amounts at the exchange rate of 107.39 to $1, the approximate rate of exchange at March 31, 2005. These translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollar amounts at the above rate or at any other rate. 2. Summary of Significant Accounting Policies (a) The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. The investments in unconsolidated subsidiaries and an affiliate are stated at cost and the equity method is not applied for the valuation of such investments since they are considered immaterial in the aggregate. The four major subsidiaries that have been consolidated with the Company are listed below: Tsukishima Technology Maintenance Service Co., Ltd. Tsukishima Techno Machinery Co., Ltd. Sun Eco Thermal Co., Ltd. Tsukishima Nittetsu Chemical Engineering, Ltd. Effective from this year, Asano Laboratories Co., Ltd. is excluded from the scope of consolidation, following the conclusion of liquidation procedures in February 2005 in line with the sale of business. Effective from this year, Tsukishima Nittetsu Chemical Engineering, Ltd. is newly included in the scope of consolidation by acquisition of stock in March 2005. (b) Marketable Securities and Investments in Securities. All of the Group s securities are classified as follows: i) Held-to-maturity debt securities, which management has the positive intent and ability to hold to maturity, are reported at amortized cost. ii) Available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of shareholders 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 movingaverage method. (c) Inventories (1) Raw materials are stated at cost which is determined by the periodic average method. (2) Supplies are stated at cost which is determined by the moving average method. (3) Work in process is stated at cost which is determined by the specific cost method. (d) Property, Plant and Equipment Property, plant and equipment are carried at cost. Depreciation is computed by the declining balance method over the estimated useful lives of the assets, except for buildings placed in service after April 1, 1998, for which depreciation is computed on the straight-line method. The range of useful lives is from 3 to 60 years for buildings and structures and from 2 to 13 years for machinery and equipment. (e) Allowance for Doubtful Accounts The allowance for doubtful accounts is provided for in an amount sufficient to cover possible losses on collection. It consists of the estimated uncollectible amount with respect to identified doubtful receivables and an amount calculated on the historical loss experience with respect to remaining receivables. (f) Accrued Warranty The accrued warranty is provided for based on the amounts to be determined as a certain percentage (which is distinguished between domestic and overseas construction) of the amount of completed construct contracts for the year, which is computed as a ratio of the actual repair 13

costs incurred under the warranty against the amounts of completed construction contracts during the past years. In addition, the estimated repair costs for identified individual construction are provided. (g) Provision for Post-employment Benefits Employees who terminate their services with the Company and its consolidated subsidiaries are generally entitled to lump-sum severance payments based on their current basic rates of pay and length of service. In addition, the Company has the tax-qualified pension plans with insurance companies and trust banks. The provision for post-employment benefits recorded in the balance sheets less the pension plan assets was sufficient to satisfy the projected benefit obligation for employee s services up to the balance sheet date. (h) Reserve for Retirement Payments to Officers The Company and major consolidated subsidiaries have provided for reserve for retirement payments to officers under the retirement benefits plan which are calculated by the estimated amount to be paid if all officers retired at the balance sheet date. With respect to officers resignations, the retirement payments calculated under the retirement benefits plan are normally paid subject to approval of the shareholders. The retirement payments to officers should be provided for when such costs can be reasonably estimated. (i) Income Taxes The Company and its consolidated subsidiaries have adopted the asset-liability method of tax effect accounting to recognize the effect of all temporary differences in the recognition of the tax basis assets and liabilities and their financial reporting amounts. (j) Translation of Foreign Currencies Foreign currency receivables and payables are translated at the appropriate year-end current rate. Revenue and expense accounts are translated at the rates closely approximate to those prevailing on the transaction dates. Exchange gains and losses arising from the above foreign currency translations and transactions are included in other income or expenses. (k) Research and Development Costs Research and development costs are charged to income as incurred. (l) Recognition of Contract Revenue Sales of construction regarding contracts both with an amount of over 0.3 billion and a period of over one year are recognized by the percentage of completion method. Other sales are recognized by the completed contract method. (m) Cash Equivalents For the purpose of the consolidated statements of cash flows, cash and cash equivalents include highly liquid investments which can be withdrawn without any restriction and with minimum market risk. (n) Derivative Financial Instruments Derivative financial instruments utilized by the Company are comprised principally of foreign exchange contracts used to hedge currency risk. The carrying amount of derivative financial instruments, consisting principally of foreign exchange contracts, all of which are used for hedge purposes, are estimated by obtaining quotes from brokers. 3. Change in Accounting Policy Previously, the Company and its consolidated subsidiaries applied the percentage of completion method to sales of major units with a value of 1.5 billion and installation of which requires more than one year. However, effective from this year, the Company and its consolidated subsidiaries have applied the percentage of completion method to sales of major units with a value of 0.3 billion and installation of which requires more than one year. This change in method of recognizing revenues has been made in view of International Accounting Standards, matching revenue and expense in the period of benefit. As a result of this change, net sales were 5,196 million ($48,384 thousand) higher, and both operating income and income before income taxes were 876 million ($8,157 thousand) higher than under the previous method of accounting. 14

4. Cash flow statements (a) Cash and cash equivalents as of March 31, 2005 and 2004 consisted of the following: Cash and time deposits... Less: time deposits that mature or become due over three months after the date of acquisition... Cash and cash equivalents... 21,524 22,573 $200,428 (45) 21,479 (155) 22,418 (419) $200,009 (b) Significant components of assets and liabilities that increased by acquisition of stock are as follows: 2005 2005 Current assets... 4,265 $39,715 Fixed assets... 393 3,660 Total assets... 4,658 $43,375 Current liabilieies... 3,610 $33,616 Long-term liabilities... 987 9,191 Total liabilities... 4,597 $42,807 (c) Significant components of assets and liabilities that decreased by sale of business are as follows: 2005 2005 Current assets... 2,355 $21,929 Fixed assets... 306 2,850 Total assets... 2,661 $24,779 Current liabilieies... 1,052 $ 9,796 Long-term liabilities... 264 2,458 Total liabilities... 1,316 $12,254 5. Inventories Inventories as of March 31, 2005 and 2004 consisted of the following: Work in process... Raw materials and supplies... 3,749 6,693 $34,910 152 217 1,416 3,901 6,910 $36,326 15

6. Marketable Securities and Investments in Securities (a) Marketable securities and investments in securities as of March 31, 2005 and 2004 consisted of the following: Current: Government and corporate bonds... Non-current: Equity securities... Government and corporate bonds... Investment trusts... 1,605 1,605 14,211 2,603 8 16,822 400 400 12,471 3,417 7 15,895 $ 14,946 $ 14,946 $132,331 24,239 74 $156,644 (b) The carrying amounts and aggregate fair values of marketable and investment securities at March 31, 2005 and 2004 were as follows: 2005 Unrealized Unrealized Cost gains losses Fair value Securities classified as: Available-for-sale: Equity securities... 6,148 7,943 (69) 14,022 Others... 10 (3) 7 6,158 7,943 (72) 14,029 Held-to-maturity securities... 4,209 17 (0) 4,226 2004 Unrealized Unrealized Cost gains losses Fair value Securities classified as: Available-for-sale: Equity securities... 6,148 6,184 (32) 12,300 Others... 10 (2) 8 6,158 6,184 (34) 12,308 Held-to-maturity securities... 3,812 20 (3) 3,829 2005 Unrealized Unrealized Cost gains losses Fair value Securities classified as: Available-for-sale: Equity securities... $57,249 $73,964 $(642) $130,571 Others... 93 (28) 65 $57,342 $73,964 $(670) $130,636 Held-to-maturity securities... $39,194 $ 158 $ (0) $ 39,352 16

(c) Available-for-sale securities and held-to-maturity securities whose fair values were not readily determinable as of March 31, 2005 and 2004 were as follows: Carrying Amount Available-for-sale: Equity securities... 65 64 $605 65 64 $605 Held-to-maturity securities... 5 $ 7. Short-term Bank Loans and Long-term Bank Loans Short-term bank loans are represented by 12-month notes, and the weighted average interest rate applicable to such loans as of March 31, 2005 and 2004 were approximately 1.1 percent and 0.9 percent respectively. Long-term bank loans as of March 31, 2005 and 2004 consisted of the following: Loans, from banks, due 2011... Less: portion due within one year... 3,815 (453) 3,362 3,175 (359) 2,816 $35,524 (4,218) $31,306 The following assets were pledged as collateral for the above long-term bank loans and short-term bank loans: Property, plant and equipment (Net book value) Land... Buildings and structures... Investments in securities... Long-term loans... 228 362 27 83 700 99 486 25 75 685 $2,123 3,371 251 773 $6,518 Interest rates of long-term bank loans as of March 31, 2005 and 2004 were between 0.56 percent and 3.15 percent and between 0.65 percent and 3.15 percent respectively. The aggregate annual maturities of long-term bank loans outstanding as of March 31, 2005 were as follows: The aggregate annual maturities of long-term bank loans payable Years ending March 31 2006... 453 $ 4,218 2007... 2,248 20,933 2008 and thereafter... 1,114 10,373 17

8. Provision for Post-employment Benefits Employees who terminate their service with the Company and its consolidated subsidiaries are generally entitled to lump-sum severance payments. In addition, the Company has tax-qualified pension plans. Provision for post-employment benefit obligations as of March 31, 2005 and 2004 consisted of the following: a. Post-employment benefit obligations... b. Pension assets... c. Net-total (a+b)... d. Unrecognized actuarial differences... e. Provisions for post-employment benefits (c+d)... (8,749) 1,597 (7,152) 1,190 (5,962) (8,503) 1,631 (6,872) 1,075 (5,797) $(81,469) 14,871 (66,598) 11,081 $(55,517) Post-employment benefit expenses for the year ended March 31, 2005 and 2004 consisted of the following: a. Service costs... b. Interest costs... c. Expected return... d. Amortization of unrecognized actuarial differences... e. Post-employment benefit expenses total... 497 202 (24) 210 885 573 220 (32) 222 983 $4,628 1,881 (223) 1,955 $8,241 Basic measurement of post-employment benefit obligations and other items 2005 2004 a. Allocation method for projected post-employment benefits... Straight-line method Straight-line method b. Discount rate... 2.5% 2.5% c. Expected rate of return... 1.5% 1.5% d. Year over which the actuarial differences obligations are allocated... 7 years 7 years 9. Research and Development Costs Research and development costs charged to income for the years ended March 31, 2005 and 2004 amounted to 1,519 million ($14,145 thousand) and 1,523 million respectively. 18

10. Income Taxes Income taxes applicable to the Company and its consolidated subsidiaries consist of corporate income tax, enterprise taxes and corporate inhabitants taxes. The effective income tax rates of the Company and its consolidated subsidiaries differ from the statutory tax rate for the following reasons: 2005 2004 Statutory tax rate... Expenses not deductible for tax purposes... Non-taxable dividend income... Effects from the income tax rate change... Per capita levy of inhabitant taxes... Use of net operating loss carry forwards... Othernet... Effective tax rate... 40.7% 7.0 (25.6) 0.9 (0.8) 4.9 27.1% 42.0% 4.1 (1.1) 1.0 0.7 (8.2) 0.7 39.2% Deferred tax assets and liabilities at March 31, 2005 and 2004 were composed of the following: Deferred tax assets: Accrued cost of sales... Accrued enterprise taxes... Accrued warranty... Provision for post-employment benefits... Intangible fixed assets... Unrealized profit... Accrued bonus to employees... Net operating loss carry forwards... Others... Subtotal... Lessvaluation allowance... Total deferred tax assets... 211 76 327 2,314 170 133 605 2 608 4,446 4,446 207 134 306 2,145 155 137 565 69 425 4,143 (69) 4,074 $ 1,965 708 3,045 21,548 1,583 1,238 5,634 19 5,661 41,401 41,401 Deferred tax liabilities: Reserve for deferred gains on sales of fixed assets for tax purposes... Net unrealized gains on available-for-sale securities... Total deferred tax liabilities... Net deferred tax assets (liabilities)... (1,415) (3,200) (4,615) (169) (1,427) (2,500) (3,927) 147 (13,177) (29,798) (42,975) $ (1,574) 11. Contingent Liability The Company was contingently liable for the following items: Guarantees for indebtedness of non-consolidated subsidiaries and others... 837 860 $7,794 19

12. Other Income/ (Expenses)Other, Net Other income/(expenses)other, net consisted of the following items: As of March 31 Gain on insurance... Depreciation of intangible fixed assets... Other, net... 64 (25) 64 101 (54) (113) $ 596 (233) 596 103 (66) $ 959 13. Gain on sale of business Gain on sale of business of 834 million($7,766 thousand) resulted from sale of business of Asano Laboratories Co., Ltd. 14. Subsequent Events The following appropriations of unappropriated retained earnings were approved at the meeting of shareholders of the Company held on June 29, 2005. Cash dividends... 592 $5,513 13.0 per share (applicable to the six-month period ended March 31, 2005) Bonuses to directors and statutory auditors... 45 419 15. Finance Leases Finance leases, except those leases for which the ownership of the leased assets is considered to be transferred to the lessee, are accounted for as operating leases. The Company and its consolidated subsidiaries lease certain buildings and structures, tools, furniture, fixtures, and other assets. The pro forma information of leased assets under finance leases that do not transfer ownership of the leased assets to the lessee on an as if capitalized basis for the years ended March 31, 2005 and 2004 is as follows: Buildings and structures... Tools, furniture and fixtures... Other assets... Less: accumulated depreciation... 565 321 15 (412) 489 671 151 (786) 36 $ 5,261 2,989 140 (3,837) $ 4,553 Obligations under finance leases as of March 31, 2005 and 2004 were as follows: Due within one year... Due after one year... 97 392 489 17 19 36 $ 903 3,650 $4,553 20

Total rental expenses for the above leases were 27 million ($251 thousand) and 130 million for the years ended March 31, 2005 and 2004, respectively. The pro forma depreciation expense computed by the straight-line method was 27 million ($251 thousand) and 130 million for the years ended March 31, 2005 and 2004, respectively. The pro forma information above does not exclude the imputed interest portion because the remaining financial lease obligations are not material, compared with the book values of property, plant and equipment. 16. Segment Information (a) Information by Industry Segment The Company and its consolidated subsidiaries are primarily engaged in the following two major industry segments: Plant: Plants for environmental protection, water purification and sewage treatment, food, chemicals. Equipment and other: Dryers, filter press, gas holders, maintenance controls, repairs, etc. Effective from this year, the Company and its consolidated subsidiaries have changed their accounting policy with respect to the scope of the percentage of completion method to sales of major unit. As a result of this change, net sales were 4,045 million ($37,666 thousand) and operating income were 599 million ($5,578 thousand) higher respectively in plant and net sales were 1,151 million ($10,718 thousand) and operating income were 277 million ($2,579 thousand) higher respectively in equipment and other. Year ended March 31, 2005 Equipment Plant and other Total Eliminations Consolidated Sales: Customers... 42,219 30,881 73,100 73,100 Inter-segment... Total... 42,219 30,881 73,100 73,100 Operating expenses... 40,363 30,265 70,628 70,628 Operating income... 1,856 616 2,472 2,472 Total assets... 27,652 29,614 57,266 39,979 97,245 Depreciation... 426 946 1,372 1,372 Capital expenditures... 827 975 1,802 1,802 Year ended March 31, 2004 Equipment Plant and other Total Eliminations Consolidated Sales: Customers... 37,847 31,346 69,193 69,193 Inter-segment... Total... 37,847 31,346 69,193 69,193 Operating expenses... 34,734 30,201 64,935 64,935 Operating income... 3,113 1,145 4,258 4,258 Total assets... 23,795 26,343 50,138 40,884 91,022 Depreciation... 433 878 1,311 1,311 Capital expenditures... 384 1,292 1,676 1,676 21

Year ended March 31, 2005 Equipment Plant and other Total Eliminations Consolidated Sales: Customers... $393,138 $287,559 $680,697 $ $680,697 Inter-segment... Total... 393,138 287,559 680,697 680,697 Operating expenses... 375,855 281,823 657,678 657,678 Operating income... 17,283 5,736 23,019 23,019 Total assets... 257,492 275,761 533,253 372,278 905,531 Depreciation... 3,967 8,809 12,776 12,776 Capital expenditures... 7,701 9,079 16,780 16,780 (b) Overseas Sales Overseas sales by area and percentage of overseas sales over consolidated net sales for the years ended March 31, 2005 and 2004 were as follows: Percentage 2005 2004 Area: Asia... 8,057 4,681 $75,026 11.0% 6.8% Other... 142 94 1,322 0.2% 0.1% 8,199 4,775 $76,348 11.2% 6.9% Major countries and areas included in each geographic area are as follows: Asia: China, India, Thailand Other: Spain 22

Report of the Independent Certified Public Accountant The Board of Directors Tsukishima Kikai Co., Ltd. We have audited the accompanying consolidated balance sheets of Tsukishima Kikai Co., Ltd. and its consolidated subsidiaries as of March 31, 2005 and 2004, and the related consolidated statements of income, shareholders equity and cash flows for the years then ended, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company s management. Our responsibility 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 financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, 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 financial consolidated position of Tsukishima Kikai Co., Ltd. and its consolidated subsidiaries as of March 31, 2005 and 2004, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in Japan. Without qualifying our opinion, we draw attention to the following. As discussed in Note 3 to the consolidated financial statements, effective April 1,2004, the Company and its consolidated subsidiaries changed their accounting policy for the scope of the percentage of completion method to sales of major units. The accompanying consolidated financial statements as of and for the year ended March 31,2005 have been translated into United States dollars solely for the convenience of the reader. We have recomputed the translation and, in our opinion, the consolidated financial statements expressed in yen have been translated into United States dollars on the basis set forth in Note 1 of the notes to the consolidated financial statements. Tokyo, Japan June 29, 2005 Inoue Auditing Co., Inc. 23

Non-Consolidated Balance Sheets TSUKISHIMA KIKAI CO., LTD. Years ended March 31, 2005 and 2004 ASSETS (Note 1) Current assets: Cash and time deposits... 17,215 18,921 $ 160,304 Marketable securities (Notes 2, 6)... 1,605 400 14,946 Notes and accounts receivable... 28,055 23,709 261,244 Allowance for doubtful accounts (Note 2)... (42) (50) (391) Inventories (Notes 2, 5)... 2,751 5,967 25,617 Deferred income taxes (Note 9)... 1,055 984 9,824 Other current assets... 724 587 6,741 Total current assets... 51,363 50,518 478,285 Property, plant and equipment (Notes 2, 7): Land... 6,483 6,078 60,369 Buildings and structures... 7,716 7,391 71,850 Machinery and equipment... 11,055 10,904 102,943 Construction in progress... 959 636 8,930 26,213 25,009 244,092 Less: accumulated depreciation... (13,323) (12,812) (124,062) Net property, plant and equipment... 12,890 12,197 120,030 Investments and other assets: Investments in securities (Notes 2, 6)... 16,694 15,780 155,452 Investments and long-term loans to subsidiaries (Note 7)... 813 2,388 7,571 Other assets... 1,049 1,323 9,767 Less: allowance for doubtful accounts (Note 2)... (136) (135) (1,266) Total investments and other assets... 18,420 19,356 171,524 Total assets... 82,673 82,071 $ 769,839 See Notes to Non-Consolidated Financial Statements. 24

LIABILITIES AND SHAREHOLDERS EQUITY (Note 1) Current liabilities: Accounts payable Trade... 23,708 19,982 $220,766 Other... 2,028 2,135 18,884 Short-term bank loans (Note 7)... 50 945 466 Current portion of long-term bank loans (Note 7)... 64 16 596 Accrued income taxes (Note 9)... 113 1,155 1,052 Accrued expenses... 955 925 8,893 Accrued warranty (Note 2)... 707 722 6,583 Advances received... 1,786 5,343 16,631 Other current liabilities... 974 1,303 9,070 Total current liabilities... 30,385 32,526 282,941 Long-term liabilities: Long-term bank loans (Note 7)... 88 819 Deferred income taxes (Note 9)... 2,636 2,048 24,546 Provision for post-employment benefits (Note 2)... 3,850 3,790 35,851 Reserve for retirement payments to officers (Note 2)... 258 216 2,402 Other... 7 7 65 Total long-term liabilities... 6,839 6,061 63,683 Contingent liability (Note 10) Shareholders equity: Common stock, Authorized: 60 million shares Issued: 45,625,800 shares 2005 & 2004... 6,647 6,647 61,896 Additional paid-in capital... 5,486 5,486 51,085 Retained earnings... 28,698 27,729 267,232 Net unrealized gains on available-for-sale securities... 4,671 3,650 43,496 Treasury stock... (53) (28) (494) Total shareholders equity... 45,449 43,484 423,215 Total liabilities and shareholders equity... 82,673 82,071 $769,839 See Notes to Non-Consolidated Financial Statements. 25

Non-Consolidated Statements of Income TSUKISHIMA KIKAI CO., LTD. Years ended March 31, 2005 and 2004 (Note 1) Net sales (Note 3)... 60,482 56,514 $563,200 Cost of sales (Note 3)... 49,520 44,086 461,123 Gross profit... 10,962 12,428 102,077 Selling, general and administrative expenses... 9,698 9,623 90,307 Operating income (Note 3)... 1,264 2,805 11,770 Other income (expenses): Interest and dividend income... 570 174 5,308 Interest expenses... (5) (14) (47) Gain on sales of property, plant and equipment... 179 Gain on liquidation of consolidated subsidiary... 92 857 Loss on disposal of property, plant and equipment... (35) (55) (326) Loss on disposal of inventories... (63) (587) Loss on sales of investments in securities... (19) Retirement benefits for employees transferred to subsidiaries... (118) Loss on liquidation of subsidiary... (145) Other, net (Note 11)... 88 61 820 647 63 6,025 Income before income taxes (Note 3)... 1,911 2,868 17,795 Income taxes (Notes 2, 9): Current... 387 1,182 3,604 Deferred... (181) 63 (1,686) Total income taxes... 206 1,245 1,918 Net income... 1,705 1,623 $ 15,877 Yen Per share Net income... 36.43 34.45 $ 0.34 Cash dividends... 20.00 15.00 0.19 See Notes to Non-Consolidated Financial Statements. 26

Non-Consolidated Statements of Shareholders Equity TSUKISHIMA KIKAI CO., LTD. Years ended March 31, 2005 and 2004 Thousands Number of Additional Net unrealized gains shares of common Common paid-in Retained on available-for-sale Treasury stock issued stock capital earnings securities stock Balance as of March 31, 2003... 45,626 6,647 5,486 26,850 (258) (21) Cash dividends... (684) Bonuses to officers... (60) Net income for the year ended March 31, 2004... 1,623 Change of unrealized gains on available-for-sale securities... 3,908 Treasury stock... (7) Balance as of March 31, 2004... 45,626 6,647 5,486 27,729 3,650 (28) Cash dividends... (684) Bonuses to officers... (52) Net income for the year ended March 31, 2005... 1,705 Change of unrealized gains on available-for-sale securities... 1,021 Treasury stock... (25) Balance as of March 31, 2005... 45,626 6,647 5,486 28,698 4,671 (53) Thousands (Note 1) Number of Additional Net unrealized gains shares of common Common paid-in Retained on available-for-sale Treasury stock issued stock capital earnings securities stock Balance as of March 31, 2004... 45,626 $ 61,896 $ 51,085 $ 258,208 $ 33,988 $ (261) Cash dividends... (6,369) Bonuses to officers... (484) Net income for the year ended March 31, 2005... 15,877 Change of unrealized gains on available-for-sale securities... 9,508 Treasury stock... (233) Balance as of March 31, 2005... 45,626 $61,896 $51,085 $267,232 $43,496 $(494) See Notes to Non-Consolidated Financial Statements. 27

Non-Consolidated Statements of Cash Flows TSUKISHIMA KIKAI CO., LTD. Years ended March 31, 2005 and 2004 (Note 1) Cash flows from operating activities: Income before income taxes... Adjustments for: Depreciation and amortization... Increase(decrease) in provision for post-employment benefits... Increase(decrease) in accrued bonus... Increase(decrease) in reserve for retirement payments to officers... Interest and dividend income... Interest expenses... Gain on sales of property, plant and equipment... Loss on disposal of property, plant and equipment... Gain on sales of investments in securities... Loss on sales of investments in securities... Gain on liquidation of consolidated subsidiary... Loss on liquidation of subsidiary... Increase in notes and accounts receivable... Decrease in advances received... Decrease in inventories... Increase(decrease) in accounts payable, trade... Bonuses to officers... Other... Subtotal... Interest and dividend income received... Interest expenses paid... Income taxes paid... Net cash provided by operating activities... 1,911 1,066 60 30 42 (570) 5 35 (2) (92) (4,346) (3,557) 3,217 3,726 (52) (90) 1,383 571 (4) (1,829) 121 2,868 967 (33) (193) (47) (174) 14 (179) 55 19 145 (1,033) (1,055) 1,435 (704) (60) 391 2,416 183 (12) (148) 2,439 $ 17,795 9,926 559 279 391 (5,308) 47 326 (19) (857) (40,469) (33,122) 29,956 34,696 (484) (838) 12,878 5,317 (37) (17,031) 1,127 Cash flows from investing activities: Purchase of marketable securities... Proceeds from sales of marketable securities... Purchase of property, plant and equipment... Proceeds from sales of property, plant and equipment... Purchase of investments in securities... Proceeds from sales of investments in securities... Payments for loans receivable... Collection of loans receivable... Proceeds from liquidation of consolidated subsidiary... Other... Net cash used in investing activities... Cash flows from financinging activities: Decrease in short-term bank loans... Proceeds from long-term bank loans... Repayments of long-term bank loans... Additions of treasury stock... Dividends paid... Net cash used in financing activities... Net decrease in cash and cash equivalents... Cash and cash equivalents at beginning of period (Notes 2,4)... Cash and cash equivalents at end of period (Notes 2,4)... (800) 400 (1,641) 21 (282) 201 41 1,748 (47) (359) 1,305 (1,617) 369 (571) 35 (375) 23 (182) (1,013) (7,449) 3,725 (15,281) 196 (2,626) 1,872 382 16,277 (439) (3,343) (895) 200 (64) (25) (684) (1,468) (1,706) 18,876 17,170 (935) (67) (7) (684) (1,693) (267) 19,143 18,876 (8,334) 1,862 (596) (233) (6,369) (13,670) (15,886) 175,771 $159,885 See Notes to Non-Consolidated Financial Statements. 28

Notes to Non-Consolidated Financial Statements 1. Basis of Presenting Non-Consolidated Financial Statements The accompanying non-consolidated financial statements have been prepared from the financial statements filed with the Financial Services Agency as required by the Japanese Securities and Exchange Law in accordance with accounting principles and practices generally accepted in Japan, which are different from the accounting and disclosure requirements of International Accounting Standards. Certain reclassifications have been made to present the accompanying non-consolidated financial statements in a format which is familiar to readers outside Japan. For the convenience of the reader, the accompanying non-consolidated financial statements have been presented in by translating all Japanese yen amounts at the exchange rate of 107.39 to $1, the approximate rate of exchange at March 31, 2005. These translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollar amounts at the above rate or at any other rate. 2. Summary of Significant Accounting Policies (a) Marketable Securities and Investments in Securities The Company s securities are classified as follows: i) Held-to-maturity debt securities, which management has the positive intent and ability to hold to maturity, are reported at amortized cost. ii) Equity securities, which were issued by subsidiaries, are stated at moving-average cost. iii) Available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of shareholders 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 movingaverage method. (b) Inventories (1) Raw materials are stated at cost which is determined by the periodic average method. (2) Supplies are stated at cost which is determined by the moving average method. (3) Work in process is stated at cost which is determined by the specific cost method. (c) Property, Plant and Equipment Property, plant and equipment are carried at cost. Depreciation is computed by the declining balance method over the estimated useful lives of the assets, except for buildings placed in service after April 1, 1998, for which depreciation is computed on the straight-line method. The range of useful lives is from 3 to 60 years for buildings and structures and from 2 to 13 years for machinery and equipment. (d) Allowance for Doubtful Accounts The allowance for doubtful accounts is provided for in an amount sufficient to cover possible losses on collection. It consists of the estimated uncollectible amount with respect to identified doubtful receivables and an amount calculated on the historical loss experience with respect to remaining receivables. (e) Accrued Warranty The accrued warranty is provided for based on the amounts to be determined as a certain percentage (which is distinguished between domestic and overseas construction) of the amount of completed construct contracts for the year, which is computed as a ratio of the actual repair costs incurred under the warranty against the amounts of completed construction contracts during the past years. In addition, the estimated repair costs for identified individual construction are provided. (f) Provision for Post-employment Benefits Employees who terminate their services with the Company are generally entitled to lump-sum severance payments based on their current basic rates of pay and length of service. In addition, the Company has the tax-qualified pension plans with insurance companies and trust banks. The provision for post-employment benefits recorded in the balance sheets less the pension plan assets was sufficient to satisfy the projected benefit obligation for employee s services up to the balance sheet date. 29

(g) Reserve for Retirement Payments to Officers The Company has provided for reserve for retirement payments to officers under the retirement benefits plan which are calculated by the estimated amount to be paid if all officers retired at the balance sheet date. With respect to officers resignations, the retirement payments calculated under the retirement benefits plan are normally paid subject to approval of the shareholders. The retirement payments to officers should be provided for when such costs can be reasonably estimated. (h) Income Taxes The Company has adopted the asset-liability method of tax effect accounting to recognize the effect of all temporary differences in the recognition of the tax basis assets and liabilities and their financial reporting amounts. (i) Translation of Foreign Currencies Foreign currency receivables and payables are translated at appropriate year-end current rate. Revenue and expense accounts are translated at the rates closely approximate to those prevailing on the transaction dates. Exchange gains and losses arising from above foreign currency translations and transactions are included in other income or expenses. (j) Research and Development Costs Research and development costs are charged to income as incurred. (k) Recognition of Contract Revenue Sales of construction regarding contracts both with an amount of over 0.3 billion and a period of over one year are recognized by the percentage of completion method. Other sales are recognized by the completed contract method. (l) Cash Equivalents For the purpose of the non-consolidated statements of cash flows, cash and cash equivalents include highly liquid investments which can be withdrawn without any restriction and with minimum market risk. (m) Derivative Financial Instruments Derivative financial instruments utilized by the Company are comprised principally of foreign exchange contracts used to hedge currency risk. The carrying amount of derivative financial instruments, consisting principally of foreign exchange contracts, all of which are used for hedge purposes, are estimated by obtaining quotes from brokers. 30

3. Change in Accounting Policy Previously the Company applied the percentage of completion method to sales of major units with a value of 1.5 billion and installation of which requires more than one year. However effective from this year, the Company has applied the percentage of completion method to sales of major units with a value of 0.3 billion and installation of which requires more than one year. This change in method of recognizing revenues has been made in view of International Accounting Standards, matching revenue and expense in the period of benefit. As a result of this change, net sales were 5,196 million ($48,384 thousand) higher, and both operating income and income before income taxes were 876 million ($8,157 thousand) higher than under the previous method of accounting. 4. Cash and Cash Equivalents Cash and cash equivalents as of March 31, 2005 and 2004 consisted of the following: Cash and time deposits... Less: time deposits that mature or become due over three months after the date of acquisition... Cash and cash equivalents... 17,215 18,921 $160,304 (45) 17,170 (45) 18,876 (419) $159,885 5. Inventories Inventories as of March 31, 2005 and 2004 consisted of the following: Work in process... Raw materials and supplies... 2,675 5,822 $24,909 76 145 708 2,751 5,967 $25,617 6. Marketable Securities and Investments in Securities (a) Marketable securities and investments in securities as of March 31, 2005 and 2004 consisted of the following: Current Government and corporate bonds... Non-current Equity securities... Government and corporate bonds... Investment trusts... 1,605 1,605 14,083 2,603 8 16,694 400 400 12,361 3,412 7 15,780 $ 14,946 $ 14,946 $131,139 24,239 74 $155,452 31

(b) The carrying amounts and aggregate fair values of marketable and investment securities at March 31, 2005 and 2004 were as follows: 2005 Unrealized Unrealized Cost gains losses Fair value Securities classified as: Available-for-sale: Equity securities... 6,148 7,942 (69) 14,021 Others... 10 (3) 7 6,158 7,942 (72) 14,028 Held-to-maturity securities... 4,209 17 (0) 4,226 2004 Unrealized Unrealized Cost gains losses Fair value Securities classified as: Available-for-sale: Equity securities... 6,146 6,184 (31) 12,299 Others... 10 (2) 8 6,156 6,184 (33) 12,307 Held-to-maturity securities... 3,812 20 (3) 3,829 2005 Unrealized Unrealized Cost gains losses Fair value Securities classified as: Available-for-sale: Equity securities... $57,249 $73,955 $(642) $130,562 Others... 93 (28) 65 $57,342 $73,955 $(670) $130,627 Held-to-maturity securities... $39,194 $ 158 $ (0) $ 39,352 (c) Available-for-sale securities whose fair values were not readily determinable as of March 31, 2005 and 2004 were as follows: Carrying Amount Available-for-sale: Equity securities... 63 63 63 63 $587 $587 32

7. Short-term Bank Loans and Long-term Bank Loans Short-term bank loans are represented by 12-month notes, and the weighted average interest rates applicable to such loans as of March 31, 2005 and 2004 were approximately 0.6 percent and 0.9 percent respectively. Long-term bank loans as of March 31, 2005 and 2004 consisted of the following: Loans, from banks, due 2007... Less: portion due within one year... 152 16 $1,415 (64) (16) (596) 88 $ 819 The following assets were pledged as collateral for the above short-term bank loans. Property, plant and equipment (Net book value) Land... Buildings and structures... Investments and long-term loans to subsidiaries... 96 297 100 493 96 320 100 516 $ 894 2,766 931 $4,591 Interest rates of long-term bank loans as of March 31, 2005 and 2004 were 0.56 percent and 0.65 percent respectirely. The aggregate annual maturities of long-term bank loans outstanding as of March 31, 2005 were as follows: The aggregate annual maturities of long-term bank loans payable Years ending March 31 2006... 64 $596 2007... 64 596 2008 and thereafter... 24 223 33

8. Research and Development Costs Research and development costs charged to income for the years ended March 31, 2005 and 2004 amounted to 1,517 million ($14,126 thousand) and 1,505 million respectively. 9. Income Taxes Income taxes applicable to the Company consist of corporate income tax, enterprise taxes and corporate inhabitants taxes. The effective income tax rates of the Company differ from the statutory tax rate for the following reasons (not shown for the year ended March 31, 2004 due to the difference being immaterial): Statutory tax rate... Expenses not deductible for tax purposes... Non-taxable dividend income... Othernet... Effective tax rate... 2005 2004 40.7% 12.3 (49.9) 7.7 10.8% Deferred tax assets and liabilities at March 31, 2005 and 2004 were composed of the following: Deferred tax assets: Accrued cost of sales... Accrued enterprise taxes... Accrued warranty... Provision for post-employment benefits... Intangible fixed assets... Accrued bonus to employees... Others... Total deferred tax assets... 203 38 287 1,497 158 307 542 3,032 203 106 300 1,406 155 294 399 2,863 $ 1,890 354 2,673 13,940 1,471 2,859 5,047 28,234 Deferred tax liabilities: Reserve for deferred gains on sales of fixed assets for tax purposes... Net unrealized gains on available-for-sale securities... Total deferred tax liabilities... Net deferred tax liabilities... (1,415) (3,199) (4,614) (1,582) (1,427) (2,500) (3,927) (1,064) (13,176) (29,789) (42,965) $(14,731) 34

10. Contingent Liability The Company was contingently liable for the following items: Guarantees for indebtedness of subsidiaries and others... 3,943 4,419 $36,717 11. Other Income/ (Expenses)Other, Net Other income/(expenses)other, net consisted of the following items: As of March 31 Gain on insurance... 64 98 $ 596 Depreciation of intangible fixed assets... Other, net... (14) 38 (42) 5 (130) 354 88 61 $ 820 12. Subsequent Events The following appropriations of unappropriated retained earnings were approved at the meeting of shareholders of the Company held on June 29, 2005. Cash dividends... 592 $5,513 13.0 per share (applicable to the six-month period ended March 31, 2005) Bonuses to directors and statutory auditors... 45 419 13. Finance Leases Finance leases, except those leases for which the ownership of the leased assets is considered to be transferred to the lessee, are accounted for as operating leases. The Company leases certain tools, furniture, fixtures, and other assets. The pro forma information of leased assets under finance leases that do not transfer ownership of the leased assets to the lessee on an as if capitalized basis for the years ended March 31, 2005 and 2004 is as follows: Tools, furniture and fixtures... Other assets... Less: accumulated depreciation... 227 11 (59) 179 617 148 (756) 9 $2,114 102 (549) $1,667 35

Obligations under finance leases as of March 31, 2005 and 2004 were as follows: Due within one year... Due after one year... 40 139 179 5 4 9 $ 372 1,295 $1,667 Total rental expenses for the above leases were 14 million ($130 thousand) and 119 million for the years ended March 31, 2005 and 2004, respectively. The pro forma depreciation expense computed by the straight-line method was 14 million ($130 thousand) and 119 million for the years ended March 31, 2005 and 2004, respectively. The pro forma information above does not exclude the imputed interest portion because the remaining financial lease obligations are not material, compared with the book values of property, plant and equipment. 36

Report of the Independent Certified Public Accountant The Board of Directors Tsukishima Kikai Co., Ltd. We have audited the accompanying non-consolidated balance sheets of Tsukishima Kikai Co., Ltd. as of March 31, 2005 and 2004, and the related non-consolidated statements of income, shareholders equity and cash flows for the years then ended, all expressed in Japanese yen. These non-consolidated financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these nonconsolidated 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 financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, 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 non-consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tsukishima Kikai Co., Ltd. as of March 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in Japan. Without qualifying our opinion, we draw attention to the following. As discussed in Note 3 to the non-consolidated financial statements, effective April 1,2004, the Company changed its accounting policy for the scope of the percentage of completion method to sales of major units. The accompanying non-consolidated financial statements as of and for the year ended March 31,2005 have been translated into United States dollars solely for the convenience of the reader. We have recomputed the translation and, in our opinion, the non-consolidated financial statements expressed in yen have been translated into United States dollars on the basis set forth in Note 1 of the notes to non-consolidated financial statements. Tokyo, Japan June 29, 2005 Inoue Auditing Co., Inc. 37

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