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REGIONAL PERSPECTIVE

I JAPAN I THE AMERICAS I EUROPE I ASIA AND OSEANIA I

Our unit volume increased solidly in every principal market--Japan, the Americas, Europe, East and Asia and Oceania--in the past fiscal year. Sales and operating income also rose strongly in terms of local currencies in each principal market. The sharp appreciation of the yen, however, diminished the yen-denominated value of sales and earnings growth outside Japan. From an average rate of 131 yen=$1 in the previous fiscal year, the yen strengthened to an average rate of 114 yen=$1.
Good geographical balance characterizes our business portfolio. And the percentage contribution of sales outside Japan continued to rise in the past fiscal year despite the appreciation of the yen. Business with customers outside Japan accounted for 38.4% of net sales in the past fiscal year, up from 37.2% in the previous year and 31.9% in fiscal 1998. Underlying our growing global presence is a commitment to supplying customers everywhere with world-class products at internationally competitive prices. "World-class" includes equipping products with the latest technologies for safeguarding the environment. It also includes doing everything possible to minimize the environmental impact of our operations. In the past year, we achieved our goal of earning ISO 14001 certifications at all our principal plants in the world. ISO 14001 guidelines, established by the International Organization for Standardization, are the most widely recognized global benchmark for sound environmental management.

Continuing gains in productivity reinforce the international competitiveness of our Japanese operations.
The virtual driving experience at the DENSO pavilion was a highlight of the 1999 Tokyo Motor Show.

JAPAN

More Flexible Than Ever

Operating income at our Japanese operations rose 9.1%, to 84.8 billion yen ($800 million), before eliminations for consolidation, on a 0.4% increase in sales, to 1,192.8 billion yen ($11.3 billion). Those figures are business results calculated by company location. They include business in exporting products and semifinished products to nonconsolidated companies outside Japan, as well as business in Japan. By customer location, our sales in Japan rose 0.5% in the past fiscal year, to 1,161.0 billion yen ($11.0 billion).
The business gains at our Japanese operations occurred despite continuing weakness in Japanese vehicle production. Unit production of vehicles in Japan shrank slightly for the second year in row as large declines in trucks and busses offset a small increase in passenger cars. We outperformed the market overall on the strength of growing business with our two largest customers in Japan, Toyota and Honda, and expanding business in exports. We made the most of unit sales growth by concentrating on high-value-added items in each product category. New products and technologies for making automobiles cleaner and more fuel efficient figured especially prominently in our business performance. Our challenge in Japan is to make a smooth transition to serving a newly mature market. Japan's economic and market fundamentals are excellent, and we expect recovery to take hold and to gain momentum in 2000 and 2001. But the almost continuous growth that characterized Japanese demand through the 1980s has given way to a pattern of cyclical ups and downs. We therefore have invested aggressively in new production formats to make us more flexible in responding to fluctuations in demand.
The growth that we posted in operating income in Japan in the past fiscal year evidences our progress: Our Japanese operations now can support a reliable stream of earnings even in the absence of annual market expansion. And we will become more flexible still through continuing advances in production technology.
We also are becoming more efficient outside our factories. Productivity has surged in the administrative operations that we transferred to a newly established subsidiary in April 1999. Similar moves are raising efficiency in other sectors.

DENSO president Hiromu Okabe visits a day-care center for children of employees at DENSO Mexico. The plant also has an after-hours high school for employees.
Employees at Michigan Automotive Compressor help build a playscape at an elementary school in their company's neighborhood.

THE AMERICAS

Further Expansion

Continuing growth in North American demand powered our operating profit in the Americas further upward in the past fiscal year. Operating income at our operations in the region climbed 32.4%, to 26.7 billion yen ($252 million), before eliminations for consolidation, despite the appreciation of the yen. Sales were essentially unchanged, at 432.1 billion yen ($4.1 billion), as the strengthening yen offset growth in dollar-denominated sales.
We continue to expand our production capacity throughout the Americas. DENSO Manufacturing Tennessee, Inc., is building a production line at its Athens Plant to make ignition coils. DENSO Mexico S.A. de C.V. added sensors for antilock braking systems to its production portfolio in the past year. And we integrated a Brazilian plant acquired from Magnetti Marelli in February 1999 into our Latin American production network. In nonautomotive products, we are doubling production capacity for wireless telephones at DENSO Wireless Systems America, Inc., in 2000. Our companies in the Americas continue to garner prestigious supplier awards from leading automakers. Recognition from U.S. customers in the past year included awards from General Motors, Cummins Engine, and others. In Latin America, DENSO Industrial da Amazonia Ltda. earned its second consecutive superior supplier award from a Brazilian company that produces Honda motorcycles. The U.S. magazine Industry Week named us one of the "World's 100 Best-Managed Companies" in August 1999. Previously, Industry Week recognized DENSO Manufacturing Michigan, Inc., as one of the "10 Best Manufacturing Firms" in the United States.

Executives of Volvo Car present DENSO managers with a supplier award at a May 1999 ceremony.
Production of fuel injection pumps for diesel engines is under way at DENSO Manufacturing Hungary Ltd.

EUROPE

New Possibilities

Vehicle production in Europe remained strong despite slowing economic growth. Sales at our European operations climbed 21.3%, to 167.9 billion yen ($1.6 billion). Operating income declined 11.4%, however, to 2.3 billion yen ($22 million). That decline was principally on account of the amortization of goodwill assumed in connection with the acquisition of Magnetti Marelli's Rotating Machines Division and the appreciation of the yen.
Expanding our presence in the European marketplace is a top priority in our global strategy. We therefore moved quickly to assimilate the European manufacturing operations that we acquired from Magnetti Marelli in March 1999. Those operations comprise plants that produce starters, alternators, and small motors in Italy, starters and alternators in the United Kingdom, and small motors in Poland. Together with our other plants in the United Kingdom, Spain, Germany, and Hungary, they support exciting new possibilities in serving European demand. DENSO Barcelona S.A. is expanding its plant to begin manufacturing oxygen sensors, airflow meters, and ignition coils. Our joint venture with Toyoda Automatic Loom Works Ltd., TD Deutsche Klimakompressor GmbH, began operation in the German state of Saxony in April 2000. It produces variable-displacement compressors for car air conditioners. And we began producing fuel injection pumps for diesel engines in 2000 at DENSO Manufacturing Hungary.
DENSO Manufacturing UK Ltd. was one of only five companies to receive a supplier quality award in 1999 from Toyota's U.K. production subsidiary. We also received special recognition in the past year from Volvo Car and other European automakers.

A ceremony in accordance with local customs inaugurated manufacturing operations at our new plant in Bangalore, India, in November 1999.
We established a center in Thailand in 1999 to manufacture and distribute wheelchairs in Southeast Asia and to furnish educational and other assistance for physically disabled people in the region.

ASIA AND OCEANIA

Growth And Recovery

Demand for automobiles has recovered impressively in Southeast Asia since the currency crisis of 1997. Demand also was generally strong in Australia and New Zealand in the past fiscal year. And our operations continue to grow steadily in China and India. Operating income at our operations in Asian nations besides Japan and in Oceania surged 4.5-fold, to 3.3 billion yen ($31 million), on a 2.1-fold increase in sales, to 90.6 billion yen ($855 million).
Our manufacturing and marketing network in Southeast Asia comprises several plants in Thailand, Indonesia, the Philippines, Malaysia, and Taiwan. We have raised our efficiency greatly in the region by coordinating those operations through DENSO International Singapore Pte. Ltd. since 1999. Elsewhere in Asia, we have manufactured automotive components in India since the mid-1980s and now operate there through five manufacturing subsidiaries and affiliates and a sales subsidiary. The two newest members of our Indian manufacturing network began operation in the past year. DENSO Kirloskar Industries Pvt. Ltd. began making radiators and car air conditioners in November 1999 in Bangalore. DENSO Haryana Pvt. Ltd. began making components for electronic fuel injection systems in Haryana in March 2000.
Six DENSO subsidiaries and affiliates produce an extensive range of automotive components and systems in China. And their business with local automakers expanded solidly in the past fiscal year.
Automakers in Asia and Oceania continued to single out our operations and products for special recognition. For example, our subsidiary Australian Automotive Air Pty. Ltd. earned a 1999 supplier of the year award from Toyota's Australian manufacturing company.

I DENSO HOME I TOP I BACK I NEXT I------------ DENSO CORPORATION

Continuing gains in productivity reinforce the international competitiveness of our Japanese operations.		The virtual driving experience at the DENSO pavilion was a highlight of the 1999 Tokyo Motor Show.

JAPAN
More Flexible Than Ever
Operating income at our Japanese operations rose 9.1%, to 84.8 billion yen ($800 million), before eliminations for consolidation, on a 0.4% increase in sales, to 1,192.8 billion yen ($11.3 billion). Those figures are business results calculated by company location. They include business in exporting products and semifinished products to nonconsolidated companies outside Japan, as well as business in Japan. By customer location, our sales in Japan rose 0.5% in the past fiscal year, to 1,161.0 billion yen ($11.0 billion). The business gains at our Japanese operations occurred despite continuing weakness in Japanese vehicle production. Unit production of vehicles in Japan shrank slightly for the second year in row as large declines in trucks and busses offset a small increase in passenger cars. We outperformed the market overall on the strength of growing business with our two largest customers in Japan, Toyota and Honda, and expanding business in exports. We made the most of unit sales growth by concentrating on high-value-added items in each product category. New products and technologies for making automobiles cleaner and more fuel efficient figured especially prominently in our business performance.		Our challenge in Japan is to make a smooth transition to serving a newly mature market. Japan's economic and market fundamentals are excellent, and we expect recovery to take hold and to gain momentum in 2000 and 2001. But the almost continuous growth that characterized Japanese demand through the 1980s has given way to a pattern of cyclical ups and downs. We therefore have invested aggressively in new production formats to make us more flexible in responding to fluctuations in demand. The growth that we posted in operating income in Japan in the past fiscal year evidences our progress: Our Japanese operations now can support a reliable stream of earnings even in the absence of annual market expansion. And we will become more flexible still through continuing advances in production technology. We also are becoming more efficient outside our factories. Productivity has surged in the administrative operations that we transferred to a newly established subsidiary in April 1999. Similar moves are raising efficiency in other sectors.

DENSO president Hiromu Okabe visits a day-care center for children of employees at DENSO Mexico. The plant also has an after-hours high school for employees.		Employees at Michigan Automotive Compressor help build a playscape at an elementary school in their company's neighborhood.

THE AMERICAS
Further Expansion
Continuing growth in North American demand powered our operating profit in the Americas further upward in the past fiscal year. Operating income at our operations in the region climbed 32.4%, to 26.7 billion yen ($252 million), before eliminations for consolidation, despite the appreciation of the yen. Sales were essentially unchanged, at 432.1 billion yen ($4.1 billion), as the strengthening yen offset growth in dollar-denominated sales. We continue to expand our production capacity throughout the Americas. DENSO Manufacturing Tennessee, Inc., is building a production line at its Athens Plant to make ignition coils. DENSO Mexico S.A. de C.V. added sensors for antilock braking systems to its production portfolio in the past year. And we integrated a Brazilian plant acquired from Magnetti Marelli in February 1999 into our Latin American production network. In nonautomotive products, we are doubling production capacity for wireless telephones at DENSO Wireless Systems America, Inc., in 2000.		Our companies in the Americas continue to garner prestigious supplier awards from leading automakers. Recognition from U.S. customers in the past year included awards from General Motors, Cummins Engine, and others. In Latin America, DENSO Industrial da Amazonia Ltda. earned its second consecutive superior supplier award from a Brazilian company that produces Honda motorcycles. The U.S. magazine Industry Week named us one of the "World's 100 Best-Managed Companies" in August 1999. Previously, Industry Week recognized DENSO Manufacturing Michigan, Inc., as one of the "10 Best Manufacturing Firms" in the United States.

Executives of Volvo Car present DENSO managers with a supplier award at a May 1999 ceremony.		Production of fuel injection pumps for diesel engines is under way at DENSO Manufacturing Hungary Ltd.

EUROPE
New Possibilities
Vehicle production in Europe remained strong despite slowing economic growth. Sales at our European operations climbed 21.3%, to 167.9 billion yen ($1.6 billion). Operating income declined 11.4%, however, to 2.3 billion yen ($22 million). That decline was principally on account of the amortization of goodwill assumed in connection with the acquisition of Magnetti Marelli's Rotating Machines Division and the appreciation of the yen. Expanding our presence in the European marketplace is a top priority in our global strategy. We therefore moved quickly to assimilate the European manufacturing operations that we acquired from Magnetti Marelli in March 1999. Those operations comprise plants that produce starters, alternators, and small motors in Italy, starters and alternators in the United Kingdom, and small motors in Poland. Together with our other plants in the United Kingdom, Spain, Germany, and Hungary, they support exciting new possibilities in serving European demand.		DENSO Barcelona S.A. is expanding its plant to begin manufacturing oxygen sensors, airflow meters, and ignition coils. Our joint venture with Toyoda Automatic Loom Works Ltd., TD Deutsche Klimakompressor GmbH, began operation in the German state of Saxony in April 2000. It produces variable-displacement compressors for car air conditioners. And we began producing fuel injection pumps for diesel engines in 2000 at DENSO Manufacturing Hungary. DENSO Manufacturing UK Ltd. was one of only five companies to receive a supplier quality award in 1999 from Toyota's U.K. production subsidiary. We also received special recognition in the past year from Volvo Car and other European automakers.

A ceremony in accordance with local customs inaugurated manufacturing operations at our new plant in Bangalore, India, in November 1999.		We established a center in Thailand in 1999 to manufacture and distribute wheelchairs in Southeast Asia and to furnish educational and other assistance for physically disabled people in the region.

ASIA AND OCEANIA
Growth And Recovery
Demand for automobiles has recovered impressively in Southeast Asia since the currency crisis of 1997. Demand also was generally strong in Australia and New Zealand in the past fiscal year. And our operations continue to grow steadily in China and India. Operating income at our operations in Asian nations besides Japan and in Oceania surged 4.5-fold, to 3.3 billion yen ($31 million), on a 2.1-fold increase in sales, to 90.6 billion yen ($855 million). Our manufacturing and marketing network in Southeast Asia comprises several plants in Thailand, Indonesia, the Philippines, Malaysia, and Taiwan. We have raised our efficiency greatly in the region by coordinating those operations through DENSO International Singapore Pte. Ltd. since 1999.		Elsewhere in Asia, we have manufactured automotive components in India since the mid-1980s and now operate there through five manufacturing subsidiaries and affiliates and a sales subsidiary. The two newest members of our Indian manufacturing network began operation in the past year. DENSO Kirloskar Industries Pvt. Ltd. began making radiators and car air conditioners in November 1999 in Bangalore. DENSO Haryana Pvt. Ltd. began making components for electronic fuel injection systems in Haryana in March 2000. Six DENSO subsidiaries and affiliates produce an extensive range of automotive components and systems in China. And their business with local automakers expanded solidly in the past fiscal year. Automakers in Asia and Oceania continued to single out our operations and products for special recognition. For example, our subsidiary Australian Automotive Air Pty. Ltd. earned a 1999 supplier of the year award from Toyota's Australian manufacturing company.