20-F

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

o 

REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2005

OR

o 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-5238

Nihon Densan Kabushiki Kaisha

(Exact name of registrant as specified in its charter)

NIDEC CORPORATION

(Translation of Registrant’s name into English)

Japan	338 Kuzetonoshiro-cho, Minami-ku, Kyoto 601-8205 Japan
(Jurisdiction of incorporation or organization)	(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Common Stock*	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of March 31,  2005, 71,236,861 shares of common stock were outstanding, including 1,650,600 shares represented by 6,602,400 American Depositary Shares .

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o

Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17  o   Item 18x

*

Not for trading, but only in connection with the listing of the American Depositary Shares, each representing one-fourth of one share of Common Stock.

	TABLE OF CONTENTS
		Page
PART I
Item  1.	Identity of Directors, Senior Management and Advisors.	3
Item  2.	Offer Statistics and Expected Timetable.	3
Item  3.	Key Information.	4
Item  4.	Information on the Company.	17
Item  5.	Operating and Financial Review and Prospects.	45
Item  6.	Directors, Senior Management and Employees.	80
Item  7.	Major Shareholders and Related Party Transactions	85
Item  8.	Financial Information	86
Item  9.	The Offer and Listing.	87
Item 10.	Additional Information.	89
Item 11.	Quantitative and Qualitative Disclosures About Market Risk.	102
Item 12.	Description of Securities Other Than Equity Securities.	107
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies.	107
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds.	107
Item 15.	Controls and Procedures.	107
Item 16A.	Audit Committee Financial Expert.	109
Item 16B.	Code of Ethics.	109
Item 16C.	Principal Accountant Fees and Services.	109
Item 16D.	Exemptions from the Listing Standards for Audit Committees.	110
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchases	111
PART III
Item 17.	Financial Statements	112
Item 18.	Financial Statements	112
Item 19.	Exhibits.	113
Index to Consolidated Financial Statements and Information.

As used in this annual report, unless otherwise specified, references to “Nidec” are to Nidec Corporation, and references to “we,” “our” and “us” are to Nidec Corporation and, except as the context otherwise requires, its consolidated subsidiaries.

As used in this annual report, “U.S. dollar” or “$” means the lawful currency of the United States of America, and “yen” or “¥” means the lawful currency of Japan.

As used in this annual report, “U.S. GAAP” means accounting principles generally accepted in the United States, and “Japanese GAAP” means accounting principles generally accepted in Japan.

As used in this annual report, “ADS” means an American Depositary Share, and “ADR” means an American Depositary Receipt.

In tables appearing in this annual report, figures may not add up to totals due to rounding.

2

PART I

Item 1. Identity of Directors, Senior Management and Advisors.

Not applicable.

Item 2. Offer Statistics and Expected Timetable.

Not applicable.

3

Item 3. Key Information.

A. Selected Financial Data.

The following table include selected historical financial data as at and for the years ended March 31, 2001 through 2005 derived from our consolidated financial statements prepared in accordance with the U.S. GAAP. You should read the selected financial data below in conjunction with Item 5 of this annual report and our audited consolidated financial statements which are included in this annual report.

Selected Financial Data

		Year ended March 31,
	2001	2002	2003	2004	2005	2005
	(Yen in millions and U.S. dollars in thousands, except number of shares outstanding and per share amounts)
Income statement data:
Net sales	¥172,710	¥193,332	¥231,836	¥277,497	¥485,861	$4,524,267
Cost of products sold	144,594	159,442	187,306	218,189	370,938	3,454,120
Selling, general and administrative expenses	12,810	17,691	21,302	28,542	35,340	329,081
Operating income	10,063	10,472	16,404	22,015	53,665	499,721
Income before provision for income taxes	15,138	11,477	10,911	19,639	57,290	533,476
Net income	10,711	6,580	10,680	16,089	33,455	311,528
Balance sheet data (period end):
Total assets	¥216,999	¥257,911	¥257,932	¥443,886	¥484,173	$4,508,548
Short-term borrowings	43,937	58,395	64,597	86,636	28,478	265,183
Current portion of long-term debt	3,839	15,365	8,951	2,653	8,493	79,086
Long-term debt	30,888	21,360	16,388	45,025	37,833	352,295
Total shareholders’ equity	78,575	85,475	88,557	110,046	207,040	1,927,926
Common stock	26,455	26,469	26,485	28,995	61,180	569,699
Number of shares outstanding	63,549,008	63,563,653	63,574,729	65,017,898	71,252,463	71,252,463
Per share data:
Net income per share-basic (1)	¥168.72	¥103.53	¥168.01	¥251.14	¥479.74	$4.47
Net income per share-diluted (1)	159.92	98.85	159.82	241.53	456.58	4.25
Cash dividends paid per share	15.00	27.50	20.00	30.00	35.00	0.33

Notes:

(1) Calculated using the average number of shares outstanding for the period (excluding shares held by Nidec). More detailed information regarding diluted shares outstanding is included in Note 20 in our consolidated financial statements included in this annual report.

4

We increased our interests in Nidec Copal Corporation and Nidec Copal Electronics Corporation, to over fifty percent each in January and February 2004, and they became our consolidated subsidiaries. Their results of operations are reflected in our financial statements for the year ended March 31, 2005 from the time of their consolidation.

We acquired an approximately 40% share in Sankyo Seiki Mfg. Co., Ltd. in October 2003 and increased our share to over 50% in February 2004. As a result, the results of operations of this subsidiary are included in our consolidated results of operations from February 2004.

Fluctuations in exchange rates between the Japanese yen and U.S. dollar and other currencies will affect the U.S. dollar and other currency equivalents of the yen price of our shares and ADSs and the U.S. dollar amounts received on conversion of cash dividends. We have translated some Japanese yen amounts presented in this annual report into U.S. dollars solely for your convenience. Unless otherwise noted, the rate used for the translations was ¥107.39 per $1.00, which was the approximate exchange rate in Japan on March 31, 2005.

	High	Low	Average	Period-end
Year ended March 31,
2001	125.54	104.40	111.65	125.54
2002	134.77	115.89	125.05	132.70
2003	133.41	115.71	121.95	118.07
2004	120.55	104.18	113.07	104.18
2005	114.30	102.26	107.49	107.22
Calendar period
January 2005	104.93	102.26	103.34	103.55
February 2005	105.84	103.70	104.94	104.25
March 2005	107.49	103.87	105.25	107.22
April 2005	108.67	104.64	107.19	104.64
May 2005	108.17	104.41	106.60	107.97
June 2005	110.91	106.64	108.75	110.91
July 2005	113.42	110.47	111.95	112.25

The above table presents the noon buying rates for Japanese yen per $1.00 in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York for and as of the end of each period indicated. These translations do not imply that the yen amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars at these rates or at all.

As of August 11, 2005, the noon buying rate was ¥109.92 per $1.00.

B. Capitalization and Indebtedness.

Not applicable.

C. Reasons for the Offer and Use of Proceeds.

Not applicable.

5

D. Risk Factors.

If any of the risks described below actually occurs, our business, financial condition or results of operations could be adversely affected.

Our customer base is highly concentrated, and our sales would suffer if one or more of our significant customers substantially reduce or cancel orders for our products

We are dependent on a limited number of large customers for a substantial portion of our net sales. Sales to our largest customer, Seagate, were approximately 16%, 14% and 8% of total net sales for the year ended March 31, 2003, 2004 and 2005, respectively. Sales to our six largest customers represented approximately 41%, 41% and 29% of our net sales for the years ended March 31, 2003, 2004 and 2005, respectively.

On January 6, 2003, the storage technology businesses of Hitachi Ltd. and IBM were combined to form Hitachi Global Storage Technologies. The new company was the third largest manufacturer of hard disk drives in the world. As a result of this development, our customer base has become more highly concentrated.

Our customer base is also highly concentrated in our other product markets such as brushless DC motors, fans, machinery, electronic and optical components and other products. Our accounts receivable are likewise concentrated. Six customers represented ¥19.7 billion, or 39%, ¥23.6 billion, or 24% and ¥33.6 billion, or 30% of our gross accounts receivable at March 31, 2003, 2004 and 2005, respectively. As a result of customer concentration, our net sales could be significantly impacted in the event of:

•

a significant reduction, delay or cancellation of orders from one or more of our significant customers;

•

a decision by one or more significant customers to select products manufactured by a competitor, or its own internally developed components, for inclusion in future product generations; or

•

financial difficulties affecting one or more significant customers.

We expect that, for the foreseeable future, sales to a limited number of customers will continue to account for a high percentage of our net sales. If current customers do not continue to place orders, we may not be able to replace these orders with orders from new customers, and this would significantly impact our business, operating results and financial condition.

6

We depend on the computer industry for sales of our products, and our business may be adversely affected by a decline in the computer market

Our precision motor and fan products are components used primarily in computer systems. A substantial portion of our net sales in turn depends on sales of computers and computer peripherals that incorporate our products. Revenues from hard disk drive spindle motors accounted for 42.2%, 38.5% and 24.5% of our net sales for the years ended March 31, 2003, 2004 and 2005, respectively. Although we have been diversifying our products and entering into new markets, such as motors for use in household appliances, automobiles and home entertainment equipment, we expect to continue to derive a significant portion of our revenues from the sale of products for use in computers and computer peripherals. The markets for computers and computer peripherals are cyclical and have been characterized by:

•

rapid technological change;

•

frequent new product introductions and short product life cycles;

•

significant price competition and price erosion;

•

fluctuating inventory levels;

•

alternating periods of over-capacity and capacity constraints due, in part, to cyclical and seasonal market patterns;

•

variations in manufacturing costs and yields; and

•

significant expenditures for manufacturing equipment and product development.

The computer market grew substantially in the late 1990s and then experienced a significant downturn from which it is only now beginning to recover. The downturn was characterized by lower product demand and accelerated reductions of product prices. These conditions prompted restructuring of operations by hardware manufacturers, including makers of hard disk drives, including our customers. Such restructurings involving our customers may result in our customers seeking to reduce costs and inventories, which could in turn reduce our margins or sales volumes. These customers may also switch to suppliers other than us. Such restructuring or similar moves by hard disk drive manufacturers in the future could have a material negative impact on our results of operations if we are unable to increase sales to other hard disk drive manufacturers or increase sales of spindle motors for non-desktop use.

The rate of decline in average selling price accelerates when, as is currently the case in the hard disk drive industry, competitors lower prices to absorb excess capacity, liquidate excess inventories, restructure or attempt to gain market share. During an industry downturn, manufacturers may abruptly stop purchasing additional inventory from suppliers such as us. And because many of our customers have adopted just-in-time inventory management processes, we often maintain up to one month’s inventory at or near the customer’s production facility, a practice which may force us to absorb excess inventories when growth slows. Our inventory was ¥17.0 billion at March 31, 2003, ¥45.2 billion at March 31, 2004 and ¥49.0 billion at March 31, 2005. Our inventory at March 31, 2004 compared to March 31, 2003 substantially increased due primarily to the consolidationof new subsidiaries such as Nidec Copal Corporatio n, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. Maintaining inventory increases our capital requirements and costs, complicates our inventory management strategies and makes it more difficult to match manufacturing plans with customer demand, thereby increasing the risk of inventory obsolescence and price erosion during periods of reduced demand, which could in turn have a material adverse effect on our business, financial condition and results of operations.

7

We are facing downward pricing pressure in our main product markets, and price declines could reduce our revenues and gross margins

We expect downward pricing pressure in our main product markets to continue. The hard disk drive industry, in particular, is characterized by rapidly declining average selling prices over the life of a product even for those products which are competitive and timely to-market. Our average selling price for hard disk drive spindle motors fell by approximately 8%, 9% and 9% during the years ended March 31, 2003, 2004 and 2005, respectively. In general, the average selling price for a given product in the hard disk drive market decreases over time as increases in the supply of competitive products and cost reductions occur and as technological advancements are achieved. There is also intense price competition among hard disk drive manufacturers and, as a result, our principal customers pressure us to lower the prices of our spindle motors. Falling prices reduce our margins, cause operating results to suffer and may make it difficult for us to maintain profitability. If we are not able to achieve such cost reductions, develop new customized products or increase our unit sales volume, our business, financial condition and results of operations could be materially and adversely impacted.

If our third party suppliers experience capacity constraints or production failures, our production could be significantly harmed

We rely on third party suppliers for some of the materials and equipment used in our manufacturing processes, including connectors, electric circuit unit assemblies and ball bearings. Even though we are decreasing our reliance on ball bearing suppliers as a result of the shift to fluid dynamic bearing spindle motors, our production capacity would nevertheless be limited if one or more of these materials were to become unavailable or available in reduced quantities or if we were unable to find alternative suppliers. If our source of materials and supplies were unavailable for a significant period of time, our operating results would be adversely affected.

We face aggressive competition both in the spindle motor market and in the markets into which we are attempting to expand our business, which could have a material adverse effect on our business and results of operations

Our major competitors in the area of hard disk drive spindle motors have increased their production capacity in recent periods, which has resulted in intensified competition and a reduction in prices. This trend of severe competition is likely to intensify as our competitors offer very competitive prices in order to grab larger market shares. It is also possible that ball bearing or other subcomponent manufacturers will try to enter the spindle motor market. In the area of mid-size motors for automobiles and household appliances, some of our competitors have substantially greater financial, engineering, manufacturing, marketing, service and support resources than we do and may have substantially greater name recognition, manufacturing expertise and capability and longer standing customer relationships than we do.

To remain competitive in our core business area of spindle motors and to increase our competitiveness in other motor markets in which we are attempting to expand our business, we believe that we must maintain a substantial investment in research and development and expand our manufacturing capability, marketing, sales efforts and customer service and support. We must also develop new products and enhance our existing products in a timely manner. We may not compete successfully in all or some of our markets in the future, and we may not have sufficient resources to continue to make such investments. We may not make the technological advances necessary to maintain our competitive position so that our products will receive industry acceptance. We anticipate that we may have to adjust prices on many of our products to stay competitive, and our profit margins may fall. In addition, technological changes, manufacturing efficiencies or development efforts by our competitors may render our products or technologies obsolete or uncompetitive. Our failure to maintain our competitive position could have a material adverse effect on our business and results of operations.

8

We may be unable to commercialize customized products that satisfy customers’ needs in a timely manner and in sufficient quantities, which could damage our reputation and reduce sales

Many of our customers work directly with component suppliers such as us to design and build customized products for specific needs. A significant portion of our contracts with these customers require us to provide customized products within a set delivery timetable. If we are unable to commercialize new product lines including design, manufacture and delivery of customized products, we may not be able to meet our customers’ product needs or timetables. Although we have not had such problems in the past, any future failure to meet significant customer requirements could damage our reputation and impede our ability to expand our business in markets for these products.

We could experience losses or damage to our reputation if any of the end-products in which our motors or other products are incorporated malfunction, causing damage to persons, property or data

Our small precision motors and other products are a key component in many consumer electronics devices, particularly data storage devices such as hard disk drives. Widespread malfunction of such devices could lead to consumer dissatisfaction, recalls and, potentially, lawsuits. If such problems are caused by or attributed or alleged to be attributed to defects in our motors or their design, we might be drawn into disputes with our customers, our reputation could be damaged and our results of operations might be adversely affected by lost sales or costs associated with recalls or defending ourselves against legal claims. We may suffer such losses or damage regardless of whether our products were defective.

Our operating results may fluctuate significantly because of a number of factors, many of which are beyond our control

We have experienced, and expect to continue to experience, fluctuations in sales and operating results from one quarter to the next. As a result, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful, and that such comparisons cannot be relied upon as indicators of future performance. Our operating results may be subject to significant quarterly fluctuations as a result of the following principal factors:

•

fluctuations in product demand as a result of the cyclical and seasonal nature of the industries in which our motor and drive technology products are sold and used, including the computer industry;

•

translation effect of exchange rate fluctuations on the results of our overseas subsidiaries;

•

the availability and extent of utilization of our manufacturing capacity;

•

changes in our product or customer mix;

•

entry of new competitors;

•

cancellation or rescheduling of significant orders, which can occur on short notice;

•

deferrals of customer orders in anticipation of new products or enhancements;

•

component and raw material costs and availability, particularly with respect to components obtained from sole or limited sources; and

•

natural and man-made disasters, including earthquakes, warfare and acts of terrorism, in Japan or elsewhere.

9

Moreover, a large portion of our operating expenses, including equipment depreciation, rent, salaries, capital leases and interest payments, are relatively fixed and difficult to reduce or adjust. Reductions in our unit sales will not typically correspond with reductions in these relatively fixed costs. Therefore, such reductions in our unit sales will generally result in reduced or negative margins for our products. Any or all of the above factors could have a material adverse effect on our business, financial condition and results of operations.

Our recent growth has been based in part on acquisitions, and our future growth could be adversely affected if we make acquisitions that turn out to be incompatible with our existing business or unsuccessful, or if we are unable to find suitable acquisition targets

We have achieved much of our growth by acquiring other companies that have provided us with complementary technologies and product lines. To the extent that we are unable to make successful acquisitions, we may not be able to continue to expand our product range and our growth rates could be adversely affected. Critical to the success of our acquisitions is the ordered, efficient integration of acquired businesses into our organization, which has in the past required, and may continue to require, significant resources. There can be no assurance that our investments will generate the operational and financial returns we expect. The success of future acquisitions will depend upon factors such as:

•

our ability to manufacture and sell the products of the businesses acquired;

•

continued demand for these acquired products by our customers;

•

our ability to integrate the acquired businesses’ operations, products and personnel;

•

our ability to retain key personnel of the acquired businesses; and

•

our ability to extend our financial and management controls and reporting systems and procedures to acquired businesses.

Failure to succeed in acquisitions, or an inability to find suitable acquisition targets, could have a material adverse effect on our business results of operations and financial condition.

Our growth places strains on our managerial, operational and financial resources

Our future success depends on our ability to expand our organization in line with the growth of our business, including the integration of recently added subsidiaries within the Nidec group. However, our growth has placed, and is expected to continue to place, a significant strain on our managerial, operational and financial resources. Our recent acquisitions and any further growth by us or our subsidiaries or affiliates, or an increase in the number of our strategic relationships, will increase this strain on our managerial, operational and financial resources. This strain may inhibit our ability to achieve the rapid execution necessary to successfully implement our business plan.

10

We could be harmed by litigation involving patents and other intellectual property rights

We have patent protection on certain aspects of our technology and also rely on trade secret, copyright and trademark laws, as well as contractual provisions, to protect our proprietary rights. We face the following risks:

•

we could incur substantial costs in defending against claims of infringement of the intellectual property of others and such claims could result in damage awards against us, in orders to pay for the use of previously unrecognized third-party intellectual property or in injunctions preventing us from continuing aspects of our business, which could in turn have a material adverse effect on our business, financial condition and results of operations.

•

our protective measures may not be adequate to protect our proprietary rights;

•

other parties, including competitors with substantially greater resources, may independently develop or otherwise acquire equivalent or superior technology, and we may be required to pay royalties to license intellectual property of those parties;

•

patents may not be issued pursuant to our current or future patent applications, and patents issued pursuant to such applications, or any patents we own or have licenses to use, may be invalidated, circumvented or challenged;

•

the rights granted under any such patents may not provide competitive advantages to us or adequately safeguard and maintain our technology;

•

we could incur substantial costs in seeking enforcement of our patents against infringement or the unauthorized use of our trade secrets, proprietary know how or other intellectual property by others; and

•

the laws of foreign countries in which our products are manufactured and sold may not protect our products and intellectual property rights to the same extent as the laws of Japan and the United States, and such laws may not be enforced in an effective manner.

For specific information relating to two intellectual property disputes that could have an adverse effect on our results of operations, see Item 4.B. “Business Overview—Legal Proceedings.”

Because our sales to overseas customers are denominated predominantly in U.S. dollars, we are exposed to exchange rate risks that could harm our results of operations

Sales to customers outside Japan accounted for 64.4%, 61.0% and 63.6% of our consolidated net sales during the years ended March 31, 2003, 2004 and 2005, respectively. A significant portion of our overseas sales is denominated in currencies other than the Japanese yen, primarily the U.S. dollar. As a result, appreciation of the Japanese yen against the U.S. dollar will generally have a negative effect on our operating income and net income. We experience volatility in our results of operations as a result of foreign currency exchange rate fluctuations when or result of operations of subsidiaries operating in currencies other than the yen are consolidated into our financial statements, which are reported in yen. We also experience foreign exchange risk to the extent that our sales and expenses or those of our subsidiaries are denominated in different currencies. In order to mitigate against this risk, in recent years we have attempted to offset a portion of our foreign currency revenue by matching the currency of revenue with the currency of expense. For example, if revenue for a particular product is in U.S. dollars, we attempt to purchase the supplies and resources used to produce that product in U.S. dollars. We also enter into forward exchange contracts to hedge portions of our transactional exposure to fluctuations in the value of foreign currencies as compared to the Japanese yen. Nevertheless, we remain exposed to the effects of foreign exchange fluctuations.

11

We rely on monthly financial data from operating segments that are not prepared on a U.S. GAAP basis and are not comparable between segments, which potentially reduces the usefulness of this data to us in making management decisions.

We assess our performance and make operating decisions based on financial information received from the fourteen operating segments that we report in our consolidated financial statements: Nidec Corporation, Nidec Electronics (Thailand) Co., Ltd., Nidec (Dalian) Limited, Nidec Taiwan Corporation, Nidec Singapore Pte. Ltd., Nidec Philippines Corporation, Sankyo Seiki Mfg. Co., Ltd., Nidec Copal Corporation, Nidec Tosok Corporation, Nidec Copal Electronics Corporation, Nidec Shibaura Corporation, Nidec-Shimpo Corporation, Nidec Power Motor Corporation and Nisshin Kohki Co., Ltd. This segmental information is prepared in accordance with the accounting principles in each segment’s respective country of domicile. For example, Nidec Corporation’s operating profit or loss is determined using Japanese GAAP while Nidec Singapore Pte. Ltd. applies Singaporean accounting principles. Therefore, our segmental data has not been prepa red under U.S. GAAP on a basis that is consistent with the consolidated financial statements or on any other single basis that is consistent between segments. In addition, year-end closing adjustments and other items are not included in segment totals. These aspects of our segment data could make it more difficult for us to evaluate the relative performance of individual segments and our overall operations in a timely manner, as compared with segment data compiled on a uniform U.S. GAAP basis.

We rely on production in developing countries which may become politically or economically unstable and face risks affecting international operations

We produce and sell a large percentage of our products at locations in the following developing countries: China, Thailand, Malaysia, Indonesia, the Philippines and Vietnam. In particular, we are growing increasingly reliant on our production bases in China, where we continue to move manufacturing operations in order to take advantage of more competitive production and supply costs. These countries are still in the process of developing their economic, social and other infrastructures and are susceptible to various uncertainties. The political, social and economic situations of these countries may not continue to provide an environment in which we would be able to continue to manufacture our products cost-efficiently or at all. The governmental authorities of those areas may impose regulations or restrictions that would make it difficult, impractical or impossible, whether economically, legally or otherwise, for us to conduct our business there. Dependence on overseas production, especially in developing countries, and managing international operations expose us to a number of additional risks associated with foreign commerce, including the following:

•

economic slowdown or downturn in the relevant industries in foreign markets;

•

international currency fluctuations;

•

general strikes or other disruptions in working conditions;

•

political instability (recently for example, terrorist activities);

•

trade restrictions or changes in tariffs;

•

outbreaks, such as Severe Acute Respiratory Syndrome (SARS) or avian flu, that inhibit international or regional commerce

•

the difficulties associated with staffing and managing international operations;

•

generally longer receivables collection periods;

•

unexpected changes in or imposition of new legislative or regulatory requirements;

12

•

relatively limited protection for intellectual property rights in some countries;

•

potentially adverse taxes; and

•

any or all of these risks could adversely affect our business, financial condition and results of operations.

We may become subject to more stringent environmental regulations in the future

Our operations and manufacturing processes are subject to a wide range of environmental laws and regulations in Thailand, the Philippines, Singapore, Japan, the United States and other countries in which we have production facilities. These regulations may become more stringent over time. In such a case, the amount of capital expenditures and other expenses which might be required to complete remedial actions and to continue to comply with applicable environmental laws could increase and be significant, which would materially and adversely affect our business, financial condition and results of operations.

We rely on our founder, President and CEO, Mr. Shigenobu Nagamori, the loss of whom could have a material adverse effect on our business

Our continued success will depend to a significant extent on the efforts and abilities of our founder and current President and CEO, Mr. Shigenobu Nagamori. Mr. Nagamori is actively engaged in our management and determines our strategic direction, especially with regard to acquisition activity. While we are in the process of establishing a management structure designed to reduce our dependence on Mr. Nagamori, his sudden departure or reduced attention to us could have a material adverse effect on our operations, financial condition and operating results.

For our business to continue effectively, we will need to attract and retain qualified personnel

Our business depends on the continued employment of our senior management, engineering and other technical personnel, many of whom would be extremely difficult to replace. To maintain our current market position and support future growth, we will need to hire, train, integrate and retain significant numbers of additional highly skilled managerial, engineering, manufacturing, sales, marketing, support and administrative personnel. Competition worldwide for such personnel is extremely intense, and there can be no assurance that we and our affiliates will be able to attract and retain such additional personnel.

A substantial number of our shares of common stock are eligible for future sale, and the sale of these shares may cause our stock price to decline, even if our business is doing well

As of March 31, 2005, there were 71,236,861 shares of our common stock issued and outstanding, including 11,706,942 shares beneficially owned by our President and CEO, Mr. Shigenobu Nagamori, representing 16.4% of the outstanding shares. These shares and, generally, the shares owned by other shareholders, can be disposed of on the Osaka Securities Exchange Co., Ltd., the Tokyo Stock Exchange, Inc. and otherwise in Japan. Additional sales of a substantial amount of our common stock in the public market, or the perception that sales may occur, could cause the market price of our common stock to decline. This could also impair our ability to raise additional capital through the sale of our securities. Also, in the future, we may issue securities to raise cash for additional capital expenditures, working capital, research and development or acquisitions. For example, we issued 5,600,000 shares to raise cash during the fiscal yea r ended March 31, 2005. We may also pay for interests in additional subsidiary or affiliated companies by using cash, common stock or both. We may also issue securities convertible into our common stock. Any of these events may dilute your ownership interest in us and have an adverse impact on the price of our common stock.

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Japan’s unit share system imposes restrictions in holdings of our common stock that do not constitute whole units

Pursuant to the Commercial Code of Japan relating to joint stock corporations and certain related legislation, our Articles of Incorporation provide that 100 shares of our stock constitute one “unit.” The Commercial Code imposes significant restrictions and limitations on holdings of shares that constitute less than a whole unit. In general, holders of shares constituting less than a unit do not have the right to vote, institute derivative actions or examine our accounting books and records. The transferability of our shares constituting less than one unit is significantly limited. Under the unit share system, holders of shares constituting less than a unit have the right to require us to purchase their shares. However, holders of ADSs that represent other than multiples of whole units cannot withdraw the underlying shares representing less than one unit and, therefore, they will be unable to exercise the right to requi re us to purchase the underlying shares. As a result, holders of ADSs representing shares in lots of less than one unit may not have access to the Japanese markets to sell their shares through the withdrawal mechanism.

Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions

Our Articles of Incorporation, Regulations of the Board of Directors and the Japanese Commercial Code govern our corporate affairs. Legal principles relating to such matters as the validity of corporate procedures, directors’ and officers’ fiduciary duties and shareholders’ rights may be different from those that would apply if we were a non-Japanese company. Shareholders’ rights under Japanese law may not be as extensive as shareholders’ rights under the laws of other countries or jurisdictions within the United States. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in another jurisdiction. In addition, Japanese courts may not be willing to enforce liabilities against us in actions brought in Japan which are based upon the securities laws of the United States or any U.S. state.

A holder of our ADSs will have fewer rights than a shareholder has and will have to act through the depositary to exercise those rights

The rights of the shareholders under Japanese law to take actions including voting their shares, receiving dividends and distributions, bringing derivative actions, examining the company’s accounting books and records and exercising appraisal rights are available only to holders of record. Because the depositary, through its custodian agent, is the record holder of the shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying ADSs as instructed by the ADS holder and will pay to ADS holders the dividends and distributions collected from us. However as an ADS holder you will not be able to bring a derivative action, examine our accounting books and records or exercise appraisal rights in your capacity as ADS holder.

Because of daily price range limitations under Japanese stock exchange rules, you may not be able to sell your shares of our common stock at a particular price on any particular trading day, or at all

Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each stock, based on the previous day’s closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular trading day, or at all.

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Foreign exchange fluctuations may affect the dollar value of our ADSs and dividends payable to holders of our ADSs

Market prices for our ADSs may fall if the value of the yen declines against the U.S. dollar. In addition, the U.S. dollar amount of cash dividends and other cash payments made to holders of our ADSs would be reduced if the value of the yen declines against the U.S. dollar.

It may not be possible for investors to effect service of process within the United States upon us or our Directors or Corporate Auditors or to enforce against us or these persons judgments obtained in United States courts predicated upon the civil liability provisions of the federal securities laws of the United States

We are a limited liability, joint-stock corporation incorporated under the laws of Japan. Most of our Directors and Corporate Auditors reside in Japan. All or substantially all of our assets and the assets of these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for investors to effect service of process within the United States upon us or these persons or to enforce against us or these persons judgment obtained in United States courts predicated upon the civil liability provisions of the federal securities laws of the United States. Our Japanese counsel, Tokyo Aoyama Aoki Law Office, has advised us that there is doubt as to the enforceability in Japan, in original actions for enforcement of judgments of United States courts, of liabilities predicated solely upon the federal securities laws of the United States.

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Special Note Regarding Forward-looking Statements

This annual report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our business, our industry and capital markets around the world. These forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “plan” or similar words. These statements discuss future expectations, identify strategies, contain projections of results of operations or of our financial condition, or state other forward-looking information. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from those contained in any forward-looking statement. We cannot promise that our expectations expressed in t hese forward-looking statements will turn out to be correct. Our actual results could be materially different from and worse than our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are set forth in “Risk Factors” and elsewhere in this annual report and include, but are not limited to:

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our ability to design, develop, mass produce and win acceptance of our products, particularly those that use the new fluid dynamic bearing motor technology, which are offered in highly competitive markets characterized by continual new product introductions and rapid technological development;

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general economic conditions in the computer, information technology and related product markets, particularly levels of consumer spending;

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exchange rate fluctuations, particularly between the Japanese yen and the U.S. dollar and other currencies in which we make significant sales or in which our assets and liabilities are denominated;

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our ability to acquire and successfully integrate companies with complementary technologies and product lines;

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adverse changes in laws, regulations or economic policies in any of the countries where we have manufacturing operations, especially China; and

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any negative impacts on our businesses from outbreaks of diseases in the countries where we have production plants, such as SARS and avian flu.

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Item 4. Information on the Company.

A. History and Development of the Company.

Nidec is a joint stock corporation that was incorporated and registered under the Commercial Code of Japan on July 23, 1973 under the name of Nihon Densan Kabushiki Kaisha. Our corporate headquarter is at 338 Kuzetonoshiro-cho, Minami-ku, Kyoto 601-8205, Japan. Our telephone number is 81-75-935-6140.  We currently operate through 89 subsidiaries located in 13 countries, and four affiliated companies located in 4 countries. As of March 31, 2005, we had 70,169 employees worldwide, 89.7% of which were employed outside Japan.

A major part of our growth strategy has involved the acquisition of and investment in other companies. During the fiscal year ended March 31, 2004, we added three companies: Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd., to our scope of consolidation under the U.S. GAAP by acquiring control through acquisition of over 50% of their outstanding shares. Our share of Nidec Copal Corporation and Nidec Copal Electronics Corporation increased to approximately 51% in February 2004 and January 2004, respectively, from approximately 45% each as of March 31, 2003. Also in February 2004, our share in Sankyo Seiki Mfg. Co., Ltd. increased to approximately 51% from approximately 40% as of October 1, 2003.

The following list presents a selected history of our major acquisition activities related the expansion of our small precision motors, machinery, power supplies and other products businesses:

Small Precision Motors, Machinery and Other Products

Year	Event
1989	We acquired Shinano Tokki Co., Ltd, a leading manufacturer of spindle motors for hard disk drives, from Teac Corporation, a then leading manufacturer of audio equipment and magnetic recording devices for PCs. As a result, we gained the largest market share of spindle motors in the world.
1995	We acquired 38.5% of Kyoritsu Machinery Co., Ltd. and changed its name to Nidec Machinery Corporation. We subsequently increased our ownership to 60.0%. This company manufactures factory automation equipment for small precision motor assemblies and automated measuring instruments.
1995/ 2003	We acquired newly issued shares of Shimpo Industries Co., Ltd., currently Nidec-Shimpo Corporation, constituting 36.7% of its then outstanding shares. We subsequently increased our ownership to 51% and have consolidated its results since February 2002. Nidec-Shimpo became a wholly-owned subsidiary of Nidec by way of share exchange, effective as of October 1, 2003. Nidec-Shimpo is a leading manufacturer of stepless automatic transmission mechanisms for automobiles.

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Year	Event
1997/ 2002	Our subsidiary, Nidec-Shimpo Corporation, acquired 90.0% of the outstanding shares of Read Corporation, currently Nidec-Read Corporation, from Nippon Steel Chemical Co., Ltd. Nidec-Read manufactures engineering inspection equipment for electronics components, including printed circuit boards, ceramics, semiconductors and automotive parts. Nidec-Read Corporation became our majority-owned subsidiary in February 2002 as a result of our acquisition of additional shares of Nidec-Shimpo Corporation.
1998/ 2004	We acquired 17.7% of the outstanding shares of Copal Co., Ltd., currently Nidec Copal Corporation, from Fujitsu Limited. We subsequently increased our ownership of Nidec Copal to 42.8% also in 1998. We increased our ownership of Nidec Copal Electronics to 51.3% in January 2004. In connection with our acquisition of Copal’s shares, we acquired from Copal 32.3% of the outstanding shares of Copal Electronics Corporation, currently Nidec Copal Electronics Corporation. Nidec Copal Electronics Corporation is a manufacturer of small electronic precision instruments, including semi-fixed gas registers, trimmer capacitators, small precision motors and gas and liquid pressure sensors. We subsequently increased our ownership of Nidec Copal Electronics to 40.0%, also in 1998. We increased our ownership of Nidec Copal to 51.0% in February 2004. Copal is a leading manufacturer of camera shutters and other optical and electronics instruments. Copal also manufactures information terminals, laboratory system instruments and automated manufacturing systems.
1998	We acquired the assets relating to the motor division of Shibaura Engineering Works Co., Ltd. and established a joint venture, Nidec Shibaura Corporation, with Toshiba Corporation and Shibaura Engineering. We owned 40.0% of the joint venture. We subsequently dissolved the joint venture and purchased the other 60.0% from our former joint venture partners, and Nidec Shibaura became our wholly-owned subsidiary from September 2000. Nidec Shibaura develops and manufactures precision motors for electric appliances and automobiles. Through Nidec Shibaura, we aim to accelerate the pace of development of new, highly competitive products in the worldwide market of motors for household appliances and automobiles.
1999	In October 1999, we acquired 71.0% of the outstanding shares of Nemicon Corporation, currently Nidec Nemicon Corporation. Later that year we acquired an additional 2.1%. Nemicon Corporation produces optical rotary encoders, proximity sensors and other electronic equipment.
2000	We acquired 67.0% of the outstanding shares of Y-E Drive Corporation, currently Nidec Power Motor, from Yasukawa Electric Corporation. Nidec Power Motor designs, develops, manufactures and services mid-size motors for industrial equipment and home electrical appliances. This acquisition is in line with our strategic plan to expand our business into the field of mid-size motors.
2004	In October 2003, we acquired approximately 40% of the outstanding shares of Sankyo Seiki Mfg. Co., Ltd. We subsequently increased our ownership of Sankyo Seiki to approximately 51%.

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For the years ended March 31, 2003, 2004 and 2005, our capital expenditures, as shown in our consolidated statements of cash flows for those years, were ¥21,275 million, ¥22,631 million and ¥37,257 million, respectively. Major capital expenditures for the last three fiscal years included the acquisition of plants and equipments for hard disk spindle motors that have fluid dynamic bearings in Thailand and the Philippines. We have had no recent significant divestiture and no significant divestitures are currently being planned.

B. Business Overview.

Overview

We are the world’s leading manufacturer of spindle motors for computer hard disk drives and also produce a variety of other small precision brushless DC motors. We ship our spindle motors to hard disk drive manufacturers throughout the world. For the year ended March 31, 2005, our net sales of hard disk drive spindle motors amounted to ¥119,233 million, representing 24.5% of total net sales of ¥485,861 million. For the year ended March 31, 2004, our net sales of hard disk drive spindle motors amounted to ¥106,919 million, representing 38.5% of total net sales of ¥277,497 million. For the year ended March 31, 2003, net sales of hard disk drive spindle motors totaled ¥97,717 million, or 42.1% of our total net sales of ¥231,836 million. We are one of the first spindle motor manufacturers to commence mass production of next-generation hard disk drive spindle motors that have fluid dynamic bearings, as opposed to conventional ball bearings.

In addition to spindle motors, we focus on the production of:

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other small precision brushless DC motors used in high-speed, continuous-duty applications, such as CD-ROM drives, CD-read/write, or R/W, DVD drives, high-capacity floppy disk drives, as well as in office equipment, such as facsimile machines, laser printers and photocopy machines;

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brushless DC fans, which are incorporated in computers, game consoles and other electronic equipment to disperse heat and lower the temperature of critical components;

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mid-size brushless DC motors used in household appliances, automobiles and industrial equipment;

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machinery;

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electric and optical components; and

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other products.

In order to better respond to pricing pressure and customer demands, we have established various overseas operations for research and development, production and sales. We currently have research and development facilities, production facilities and sales offices located in Japan, Asia, North America and Europe. Most of our research and development facilities are concentrated in Japan, where we focus on the development of next-generation motor and drive technology products. Most of our production facilities outside Japan are located in Asian countries such as China, Thailand, the Philippines, Singapore and Vietnam. This allows us to take advantage of lower labor costs while also gaining more direct access to our customers’ production facilities in these regions.

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In recent years, we have sought to grow and expand the range of our products by investing in or acquiring companies with technologies in motor, drive and other related products. These investments and acquisitions have provided us with ready access to markets for new products and personnel who can work with us in developing products that incorporate their technologies and ours. The products and operating results of recently acquired consolidated subsidiaries are covered within the description of our business.

Basic Characteristics of Electric Motors

The following description of basic characteristics of electric motors is meant to provide some background information that will help you understand recent trends relating to electric motors, our primary products.

In the first half of the twentieth century, electric motors had a limited number of uses such as driving industrial machinery and pumps. However, with the proliferation of household appliances after World War II, electric motors came to be used in a wider variety of applications and products such as air conditioners, washing machines, refrigerators and other household appliances. Today, sophisticated motors are required by many of the electronic products including computers, information technology equipment and home electronics. Electronic products are becoming increasingly sophisticated, offering greater features through the use of microprocessors, micro disk drives and other components. This increasing complexity requires more precise power quality and greater power reliability. In addition, the increasing costs of electricity, coupled with government regulations and environmental concerns, have contributed to increased demand for more energy-efficient motors. All these trends are contributing to increased demand for more advanced electric motors and rotational equipment technology.

Small precision motors can be classified into three broad categories based on the underlying technology: AC motors, general-purpose brush DC motors and special purpose brushless DC motors. Hard disk drive spindle motors, which are our main product, are a type of special purpose brushless DC motor.

DC Motors and AC Motors

At the most basic level, electric motors are devices that convert electric power into rotating mechanical energy. An electric motor can be powered by alternating current, commonly known as AC, or direct current, commonly known as DC. AC power is supplied to homes, offices and industrial sites directly by power companies, whereas DC power is supplied either through the use of batteries or by converting AC power to DC power.

Both AC motors and DC motors can be used to power most applications. The determination as to which motor is most appropriate depends on considerations of factors such as power source availability, speed variability requirements, torque needs, noise constraints and cost. Torque is a measure of the amount an object will rotate when a given force is applied.

Because of their simple design, AC motors offer reliable, low maintenance-cost operation for heavy applications. This is why AC motors are preferred for fixed speed applications in the industrial context and for commercial and domestic applications where AC line power can be easily provided. Many machines that require heavy power inputs such as air conditioners, washers, dryers, industrial machinery, fans, blowers, vacuum cleaners, elevators and escalators use AC motors. However, AC motors are not ideal for products that require delicate or precise control because the electronics required to control an AC motor are considerably more expensive than those required to control a DC motor. In addition, due to heat considerations, AC motors usually cannot be operated at low speeds.

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DC motors are ideal for products that are more dependent on the precision of speed than power. Controlling the speed of a DC motor is simple. The higher the current becomes, the faster the rotation becomes. Most DC motors will operate over a wider range of speeds and provide better performance than comparable AC motors. The superior performance is partly due to the simplicity of control, but it is also due in part to the fact that most DC motors are designed with variable speed operation in mind, and have added heat dissipation features that allow lower operating speeds. It is also easy to control the motor’s torque because it is proportional to current. By limiting the current, the torque is also limited. This makes DC motors ideal for delicate applications. DC motors have become the motor of choice in the majority of variable speed and torque control applications such as hard disk drives, CD-ROM drives, DVD drives and flop py disk drives. In the area of household appliances, such as cordless vacuum cleaners and other products that have traditionally used AC motors, manufacturers are beginning to switch from AC motors to DC motors due to the need for more energy-efficient and precisely controlled motors that support more sophisticated product features.

Brush DC Motors and Brushless DC Motors

There are two kinds of DC motors: brush and brushless. Brushless DC motors differ from conventional, brush DC motors in that the current which produces mechanical energy is applied to stationary coils via electronic switches without physical contact with the rotor, rather than by stationary rods brushing against the rotating coil. Conventional brush DC motors have several limitations: brush life, brush residue, maximum speed, and electrical noise. By avoiding friction, sparks and the wearing and fragmenting of the brush rods, brushless DC motors provide cleaner, faster, more efficient and quieter operation and longer maintenance-free life than conventional brush DC motors. These characteristics make brushless DC motors suitable for applications such as hard disk drives, for which clean operation is critical, and audio-visual equipment, for which low-noise operation is an important factor.

Although brushless DC motors have many advantages over brush DC motors, the use of brushless DC motors is still primarily confined to precision applications in disk drives and industrial motion equipment that require high efficiency, smooth operation and precise speed control. The higher price of brushless DC motors has been the primary factor slowing their broader adoption. DC motors require not only motor parts, but also drive electronics that currently can cost more than motor parts. Nevertheless, we believe that over time brushless DC motors will be more widely adopted among manufacturers of household appliances, audio-visual equipment and even larger heating, ventilation and air conditioning systems. As consumers come to demand more sophisticated and energy-efficient appliances, and as the production of brushless DC motors for such products reaches higher volumes, prices may fall to levels competitive enough to encourage mor e users to switch from brush DC motors to the more efficient and longer-lasting brushless DC motors.

Ball Bearing and Fluid Dynamic Bearing Technology in Hard Disk Drive Spindle Motors

Although products vary, all hard disk drives incorporate the same basic technology. One or more rigid disks are attached to a spindle motor assembly that rotates the disks at a high constant speed around a hub. The disks are the components on which data is stored and from which it is retrieved. Read/write heads, mounted on an arm assembly similar in shape to that of a record player, fly extremely close to each disk surface and record data on and retrieve it from concentric tracks in the magnetic layers of the rotating disks. In a hard disk drive, with a gap of less than 0.1 microns between the disk and the read/write head, even the smallest error can result in disastrous data damage or loss.

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The most significant technological challenges facing hard disk drive manufacturers today are associated with market demand for increased storage capacity, speed, precision and durability. Storage capacity is measured by areal density, which represents the number of bits of information on a linear inch of the recording track, multiplied by the number of recording tracks on a radial inch of the disk. As the size of computer software and data files has increased and the use of graphic and video files has proliferated, the need has grown for higher capacity, higher performance, smaller size and lighter weight hard disk drives. To achieve these goals, spindle motors capable of higher speeds and greater rotational precision need to be continually developed. Accordingly, the disk drive spindle motor has become an increasingly critical component of disk drive technology.

Ball bearing technology, which is used in conventional disk drive motors, has limitations. Ball bearings are not perfectly round and both ball bearings and their races can deform slightly under load. Any imperfections in roundness or in raceways will cause what are known as non-repeatable run-out errors that prevent tracks written to the disk from being regular. From the point of view of design, future increases in storage capacity may need to come largely from increasing the number of recording tracks on a radial inch of the disk. The challenge that faces us and other ball bearing spindle motor manufacturers is that ball bearing spindle motors may soon reach the limit of their ability to work at the track densities that will be required.

Motors using fluid dynamic bearing technology have been developed in response to this challenge. In fluid dynamic bearings, the bearing function is taken over by a layer of lubricant less than one-tenth the thickness of a human hair. The rotating spindle supported by the lubricant essentially floats in the bearing unit. The non-existence of metal-to-metal friction in fluid dynamic bearings substantially reduces non-repeatable run-out errors caused by surface imperfections of ball bearings. That makes it possible to increase rotational speed, reduce track spacing and increase the number of tracks per inch on the disk. Fluid dynamic bearing hard disk drive spindle motors offer other advantages over conventional ball bearing hard disk drive spindle motors, including better shock absorbance and vibration dampening, less noise and an extended fatigue life. Our fluid dynamic bearing hard disk drive spindle motors can rotate at over 20, 000 revolutions per minute compared with the 12,000 to 15,000 revolutions per minute for conventional motors with ball bearings. Fluid dynamic bearings reduce operation noise by three to ten decibels compared with ball bearings.

Most of our customers have evaluated the reliability of fluid dynamic bearing technology and made a decision to switch to this technology from conventional ball bearing technology. Over 90% of our net sales of hard disk drive spindle motor for the year ended March 31, 2005 consisted of spindle motors mounted with fluid dynamic bearings.

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Markets for DC Motors

Markets for Small Precision DC Motors

Small precision motors have many applications across a broad spectrum of industries. Though often not readily visible to consumers, since they are incorporated into other equipment as components, they serve a vital function. Small precision DC motors currently have uses as components in five major types of equipment:

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computers and office equipment;

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audio-visual equipment, home appliances and other consumer products;

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motor vehicles;

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heating and cooling machinery; and

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various industrial machines.

The demand for small precision motors fluctuates chiefly in response to trends in the key end-user industries whose products incorporate these motors. Consumer spending and capital investments are two important drivers of demand for the end-user industries. The 1990s saw expansion of the major markets for small precision motors, with computers and office equipment the major category of expansion, followed by audio-visual equipment, home appliances, other consumer products and heating and cooling machinery. The industrial machinery sector also grew primarily as result of an increase in capital investment. From late 2000 until recently, there was a significant deterioration of economic conditions, particularly with respect to capital investment and consumer spending in the computer, information technology and related product markets, which had a negative impact on sales. However, more recently there have been indications that econo mic conditions may have stabilized. There has also been an increase in the range of applications for our small precision DC motors, such for as mobile phones and digital cameras, and an increase in demand for fluid dynamic bearing spindle motors. As a result, demand for our small precision DC motors has shown improvement.

Hard Disk Drive Spindle Motors for Computer-Based Information Storage and Retrieval Devices. Most computer applications require access to a greater volume of information than can be stored economically in the random access memory, or RAM, of the computer’s central processing unit. This information can be stored on a variety of storage devices, including hard disk drives, both fixed and removable, floppy disk drives, magnetic tape drives, optical disk drives and semiconductor memory, including RAM and flash memory. Semi-conductor memory does not require rotating parts and accordingly has lower power requirements. However, among all of these storage devices, hard disk drives provide a balance between high volume and fast access speeds that makes them an attractive choice for many computer products. Hard disks are also available at substantially lower prices than high-speed semiconductor memory and are now being produced in comparable sizes (with much higher capacity). Semi-conductor memory is becoming more widespread, particularly in applications such as digital cameras and mobile phones. However, we believe that, due to the advantages of cost, capacity and speed, hard disk drives will continue to be used as the primary device for storing electronic data for computers.

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Currently, hard disk drives, which incorporate our motors and other components such as pivot assemblies, comprise the largest sector of the information storage industry based on Techno Systems Research Co., Ltd. The amount of data stored and accessed electronically has been growing due to the increased amount of data created as a result of the growth of the Internet. The increased volume of shared information was made possible by the growth of high speed broadband communications and the development of sophisticated software applications to generate and manage increasing volumes of data.

Traditionally, hard disk drive motors have been integrated into computer products in three primary categories:

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Enterprise. This category consists of high performance workstations, servers, mini-computers, mainframes and backup drive subsystems. Applications that run on enterprise systems are usually data-intensive. Servers mainly use 3.5-inch hard disk drives.

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Desktop. This category consists of desktop PCs. These PCs are used in a number of environments, ranging from homes to small and large businesses. Typically, these PCs use 3.5-inch hard disk drives.

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Portable. This category consists of portable notebook PCs and hand-held computers, which typically use 1.0-inch, 1.8-inch or 2.5-inch hard disk drives.

Hard Disk Drive Spindle Motors for New Consumer Electronics and Home Entertainment Applications. In addition to the growth in demand for PCs, and Internet- and network-related servers and storage, the widespread use and transmission of graphic images and high-fidelity audio and video in digital format is creating a need for greater storage capacity in consumer electronic devices. As a result, new generations of consumer electronics are expected by us to incorporate hard disk drives for data storage and retrieval functions.

MP3 players with incorporating small hard disk drives, already have gained an amount of popularity. We believe that small hard disk drives will be used in more electric products, such as personal digital assistants, or PDAs, digital video recorders, digital cameras and cellular telephones.

Hard disk drives are increasingly being used in other non-computer devices, such as home video game consoles, advanced television set-top boxes that retrieve audio and video data and store the data locally on these devices for playback and car navigation systems. These trends are expanding the market for hard disk drives from enterprise, desktop and portable computers to new consumer and home entertainment devices.

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Other Small Precision Brushless DC Motors. Other small precision brushless DC motors are designed for quiet performance in high-speed, continuous-duty applications such as CD-ROM, CD-R/W and DVD players and recorders, as well as in office equipment such as facsimile machines, laser printers and photocopy machines.

There has been a growing consumer demand for multimedia products such as CD-ROM, CD-R/W, DVD-ROM and DVD-R/W drives that incorporate brushless DC motors. CD-ROM technology combines audio, video, text, and graphics in one medium with the capability to store, search, and retrieve large quantities of information. One CD-ROM can contain up to 650 megabytes of data. During the 1990s, CD-ROM became the dominant medium for software distribution. DVDs are a type of optical disk that can hold up to 17 gigabytes of information. DVD video has already gained acceptance as a new medium for home video distribution. We believe the DVD video format is replacing the VHS format over time, because DVDs experience no image or sound degradation from normal usage and offer greater storage capacity, indexing, random access and lower manufacturing costs. DVD data storage devices have also been steadily replacing CD-ROMs in the computer industry. In part icular, the market for DVD-R/W is rapidly growing for use in household appliances and PCs.

Markets for Brushless DC Fans

As more electronics components, at higher densities, are incorporated into household appliances, computers, telecommunications and consumer electronics devices, medical and audio-visual equipment and home video game consoles, the benefits of brushless DC fans are creating greater interest and demand for their use in traditional AC fan applications. Beyond providing superior airflow, brushless DC fans can be controlled more easily. Operating a fan or blower at full speed continuously or cycling it on and off is not ideal for most cooling and ventilating applications. Variable speed DC fans offer several benefits. First, reducing fan speed provides energy savings from lower electrical power consumption. Second, noise can be reduced with variable-speed fans by automatically adjusting airflow as needed. Noise is an important factor in the perceived quality of a product. Third, DC fans significantly extend product life and, in turn, e xtend the operating life of the fan.

We expect that the advantages of DC fans over AC fans will lead to their inclusion in even more applications and that this trend will continue to contribute to an increase in our future sales. Three of the major fan applications where we expect future growth are discussed below.

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Cooling Fans for Computers. Virtually every computer in operation requires a fan to cool itself as it heats up during operation. Heat represents one of the biggest obstacles to building more powerful PCs than today’s PCs. The demand for increased cooling in smaller spaces with less noise has continued to grow as manufacturers seek to incorporate more components, particularly faster central processing units, into smaller, more powerful systems.

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High-Performance Fans for Use in Game Machines. Currently, we supply fans used in home video game consoles produced by the three major manufacturers.

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Fans for Audio-Visual Equipment. This market has entered a growth phase, driven by factors that include the introduction of digital technology, the addition of communications functions, and the linkage of audiovisual products with PCs.

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Markets for Mid-size Brushless DC Motors for Use in Household Appliances and Automobiles

Electric motors are basic components of most appliances. Control of these motors has become a critically important issue as new applications arise, higher performance is demanded, environmental concerns mount, and power becomes more expensive. Electric motors typically consume most of the power needed by appliances. One means of economizing energy usage by appliances is improving motor design. The on-off, single-speed operation of the motors in common appliances such as refrigerators, washers, dryers and vacuum cleaners leads to inefficient energy usage.

Demand is also growing for advanced electric motors in automobiles. Electronic motor-powered power steering systems, engine cooling, active suspensions and brake systems have become increasingly commonplace in small and mid-size cars. Automotive manufacturers are also focusing on developing energy-efficient electrical power steering systems. Conventional power steering systems use a hydraulic pump driven by the vehicle’s engine to provide the required assistance for the driver. The biggest disadvantage of this system is that the pump has to work continuously, wasting power. Fuel consumption can be improved by as much as 2% by switching the power source from the engine to a high-efficiency, mid-size motor, which activates only when needed just for enough power. Brushless DC motors also provide quieter operation and a longer life. For mid-size brushless DC motors in power steering systems, we expect steady market growth in Eur ope, followed by the United States and Asia. Eventually, we hope to see demand grow for mid-size brushless DC motors for automobile air conditioners, because brushless DC motors are more durable and require less frequent maintenance and repair.

Markets for Machinery

Products in this market include die bonders, circuit board testers, high-speed pressing machines, chip mounters, measuring machines, power transmission equipment, card readers, industrial robots and other factory automation equipment.

After having experienced a protracted domestic economic recession, we are seeing a gradual increase in capital investment primarily in the fields of information technology in and outside of Japan. Demand increased during the second-half of the fiscal year ended March 31, 2004, contributing to an increase in our annual sales of precision press machines, testing equipment and semiconductor production equipment.

While fundamental economic conditions for this market segment remain volatile, we expect the current upward to continue to the extent that trends continue for increased capital investments by major Japanese companies and the revitalization of the world's information technology market.

Markets for Electronic and optical components

The Electronic and optical components segment consists of optical devices, camera shutters, optical pickup units, plastic lens, trimmer potentiometers, encoders, switches, polygon scanners, and a variety of precision plastic-mold products.

Sales growth of our shutters for digital cameras and other optics-related components has slowed from the fourth quarter of the year ended March 31, 2005, when these was an increase in the dissemination rate of digital cameras in the Japanese market. Digital camera manufacturers are now concurrently carrying out inventory adjustments.

For our Optical pickup units, the market for Optical disk drives for PCs has continued to expand.

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Markets for Others

The Others segment consists of precision products used in multiple application fields, including from auto parts, industrial equipment, pivot assemblies and communications equipment. Products in this segment include

Overall, markets for these products have been steadily growing as indicated by our segmental sales increase for the year ended March 31, 2005.

Our Business Strategy

Our goal is to achieve and maintain sustainable high growth, high profitability and higher stock price by being a leading provider of motor and other drive technology products. We intend to accomplish these goals by pursuing the following strategies.

•

Focus on our core products and maintain our dominant position in the hard disk drive spindle motor market. Our technological expertise and research and development efforts enable us to focus on the high performance spindle motor market, which we expect will continue to grow not only because of expansion of the computer market but also because of the growing demand for hard disk drive motors in non-computer products such as digital cameras, home video game consoles, digital video recorders, MP3 players, car navigation systems and advanced television set-top boxes.  We seek ongoing refinement of our drive technologies for spindle motors and other motors to further improve the speed and quality of our products. We have developed fluid dynamic bearing motors in response to the growing needs of hard disk drive manufacturers for spindle motors that can work at higher speeds with disks with gr eater track densities for greater data storage. Because of the technological limitation of the conventional ball bearing technology used for hard disk spindle motors, the market for hard disk drive spindle motors has been undergoing a fundamental shift in favor of this new technology. We have been expanding our hard disk drive spindle motor production facilities for high volume production of fluid dynamic bearing spindle motors, as well as making efforts to convince our customers to use fluid dynamic bearing spindle motors in their hard disk drives. We seek to continue to improve the quality of our motors to respond to the fast pace of storage capacity increases for hard disk drives. We have developed a new type of fluid dynamic bearing unit with a Japanese bearing manufacturer, using a sintered-alloy metal. The new fluid dynamic bearing units using oil impregnated sintered-alloy metal enables us to produce them by molding and pressing procedures, resulting in a substantial reduction in processing costs. The se are designed to be embedded into our fluid dynamic bearing spindle motors for hard disk drives targeting the fast-growing consumer electronics market. We believe this new technology provides an opportunity to expand our share of the spindle motor market even further and will serve to further improve the profitability of our spindle motors for hard disk drives.

•

Continue to expand our market share of small precision brushless DC motors for non-hard-disk-drive applications. We believe that significant growth in the use of the Internet, broadband communications and sophisticated software applications has increased data storage needs and created growth opportunities. We seek to continue to diversify our markets and the customers we serve and the products we produce based on growth potential and our ability to capitalize on our technological and manufacturing capabilities. We believe this will reduce our current dependence on a few large customers. While we seek to consolidate our leading position as a provider of hard disk drive spindle motors, we also seek to expand our market share with respect to other types of small precision brushless DC motors used in non-hard disk drive applications such as:

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office equipment, including copy machines, printers and fax machines;

-

CD-ROM drives;

-

CD-R/W drives;

-

DVD-ROM drives; and

-

DVD-R/W including Blu-ray Disc and HD DVD drives.

•

Diversify into new growth markets including mid-size brushless DC motors. We have been diversifying our product offerings into mid-size brushless DC motors, which are used in household appliances, automobile power steering systems and industrial equipment. We also aim to increase our sales of mid-size brushless DC motors to automotive manufactures for their next-generation suspension systems and brake systems, where electric motors have traditionally never been used.

•

Pursue mergers and acquisitions for growth and expand our existing product portfolio into related areas of business. We seek to achieve growth by expanding and developing our product offerings, technologies, sales channels and market presence. A major goal of our acquisitions strategy is the rapid acquisition of product development capabilities and component technologies in new markets, as well as skilled personnel. In selecting target companies, we look for companies involved in similar manufacturing operations with advanced products and technologies that are underperforming due to their financial difficulties or lack of marketing and/or management strength.  In addition, as we are now in a position of increasing financial and operational strength, we are able to target companies that are not experiencing difficulties but nevertheless may be compatible to our business that we would not previously have had the resources to acquire. Following an acquisition, we seek to improve the target’s performance by introducing our management philosophy and corporate policies. We also share our product technology and manufacturing expertise. We have completed a number of acquisitions since 1995 that targeted companies with products and technologies relevant to motor and drive technology products. We plan to strengthen co-ordination among our affiliates and subsidiaries and will continue to evaluate opportunities that complement our existing product portfolio and enhance our strengths in our core market of brushless DC motors.

•

Lower manufacturing costs and increased price competitiveness and profitability. We seek to become less vulnerable to decreasing market prices by lowering manufacturing costs through research and development, cost-conscious design and other efficiency measures. Such measures include shifting production to relatively lower-cost locations overseas, or to locations closer to our customers, expanding the percentage of components produced in-house and improving our cost efficiency through achieving economies of scale by increasing production. We believe that the shift in production to fluid dynamic bearing spindle motors as well as the introduction of the new fluid dynamic bearing units using oil-impregnated sintered-alloy metal, will ultimately help us lower costs since we will not need to purchase ball bearings from outside suppliers and can eliminate the process of machining bearings. In addit ion, we believe that the ability to lower prices for our products will help increase our sales and market share.

•

Develop a strong presence in key regional markets to anticipate and respond to customer needs. We seek to develop a competitive advantage by building a presence in each of the world’s three major markets for our products: Asia, North America and Europe. In Asia, this means having manufacturing, design, sales and servicing capabilities in each region close to our customers in order to ensure that we can anticipate and meet our customers’ business requirements in local markets and participate in establishing technological and design requirements for new products. Close technical collaboration with our customers and their suppliers during the design phase of new disk drives facilitates integration of our products into new drives, improves our ability to reach cost-effective, high volume manufacturing rapidly and enhances the likelihood that we will become a customer’s primary sup plier of motors. In Europe and North America, our sales offices are used to monitor market trends in our customers’ products.

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Our Principal Products, Customers and Competition

The following table presents net sales in each of our major categories of products for each of the three years ended March 31, 2003, 2004 and 2005:

		Yen in millions			U.S. dollars in thousands
		For the year ended March 31			For the year ended March 31, 2005
		2003	2004	2005
Net sales:
	Small precision motors:
	Hard disk drive spindle motors	¥ 97,717	¥ 106,919	¥ 119,233	$ 1,110,280
	Other small precision brushless DC motors	25,583	34,138	61,066	568,638
	Small precision brush DC motors	3,280	5,372	7,980	74,309
	Brushless DC fans	27,395	26,047	34,435	320,654
	Sub-total	153,975	172,476	222,714	2,073,881
	Mid-size motors	37,479	32,574	35,564	331,167
	Machinery and power supplies	22,555	31,240	76,957	716,612
	Electronic and optical components *	1,903	23,188	128,417	1,195,800
	Others	15,924	18,019	22,209	206,807
	Consolidated total	¥ 231,836	¥ 277,497	¥ 485,861	$ 4,524,267

* Electronic and optical components net sales are disclosed separately beginning this fiscal year because the materiality this group increased as a result of the consolidation of Sankyo Seiki Mfg. Co., Ltd., Nidec Copal Corporation and Nidec Copal Electronics Corporation. Segment information for the years ended March 31, 2003 and 2004 has been restated to conform to this presentation.

Hard Disk Drive Spindle Motors

Our ball bearing hard disk drive spindle motors include those for 3.5-inch, 2.5-inch, 1.8-inch and 1.0-inch hard disk drives. We have been providing fluid dynamic bearing hard disk drive spindle motors, offering such motors for 3.5-inch, 2.5-inch, 1.8-inch, 1.0-inch and 0.85-inch hard disk drives. As shown in the table above, our net sales of hard disk drive spindle motors were ¥97,717 million for the year ended March 31, 2003 and ¥106,919 million for the year ended March 31, 2004. For the year ended March 31, 2005, our net sales of hard disk drive spindle motors, including fluid dynamic bearing motors, amounted to ¥119,233 million, representing 24.5% of total net sales.

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We currently have seven customers for our hard disk drive spindle motors. All of these customers are major hard disk drive manufacturers. Our seven customers are Seagate, Maxtor, Western Digital, Hitachi GST, a joint venture between Hitachi and IBM, Fujitsu, Toshiba and Samsung. For the year ended March 31, 2003, sales of hard disk drive spindle motors to our top five customers constituted over 36%of our net sales. For the year ended March 31, 2004, sales of hard disk drive spindle motors to our top five customers constituted over 36% of our net sales. For the year ended March 31, 2005, sales of hard disk drive spindle motors to our top five customers constituted over 24% of our net sales. For the year ended March 31, 2005, Seagate, the world’s largest disk drive manufacturer, represented 8.3% of our net sales, with ¥40,491 million, and Hitachi GST represented 6.7% of our net sales, with ¥32,634 mill ion. We currently supply Seagate, our largest customer, with a majority of its high-end, ball bearing hard disk drive spindle motors and most of its fluid dynamic bearing hard disk drive spindle motors. We also supply our second-largest customer, Hitachi GST, with a most of its hard disk drive motor requirements. We currently supply substantially all of other leading hard disk drive manufacturers with most of their hard disk drive spindle motors. In the near future, we do not expect to see any new major manufacturers enter the market for 1.0-inch, 2.5-inch or 3.5-inch hard disk drives, due to extreme competition in the hard disk drive industry. However, we expect to see new hard disk drive manufacturers, and thus potential new customers, to emerge for 1.8-inch, 1.0-inch and 0.85-inch hard disk drives, as new applications for those hard disk drives are developed.

Currently, there are four major producers of spindle motors for hard disk drives in the world, including us, who together account for almost all of the worldwide market. While we face competition from the other three producers, Minebea, Victor Company of Japan, or JVC, and Panasonic, particularly in the 1.8-inch, 2.5-inch and 3.5-inch hard disk drive motor segments, we currently have a market share of more than majority of the hard disk drive spindle motor market by shipment volume. As discussed above, the hard disk drive industry is now shifting from motors based on ball bearing technology to those based on fluid dynamic bearing technology, where we believe we have a technological advantage and will gain additional reputation benefits from being one of the first market entrants. At present, we are the largest manufacturer of 2.5-inch fluid dynamic bearing hard disk drive spindle motors. All 2.5-inch hard disk drive producers hav e adopted fluid dynamic bearing spindle motors. Most 2.5-inch hard disk drives are used in notebook computers. Seagate was the first manufacturer to use fluid dynamic bearing motors in 3.5-inch hard disk drives used in desktop computers and high-end hard disk drives. Moreover, we believe that we are the dominant supplier of fluid dynamic bearing motors for their high-end hard disk drives. The fluid dynamic bearing motors that we supply to Seagate are based on the designs developed by Seagate. We also believe that we enjoy a very strong position in the 1.0-inch hard disk drive motor segment, as we are not aware of any other producers of this product at present.

In addition to us, we believe that three competitors – JVC, Panasonic and Minebea – are active in the development and marketing of fluid dynamic bearing hard disk drive spindle motors. We seek to compete by working closely with our customers to design and develop motors that meet their specifications. We have already developed a strong background in manufacturing both 2.5-inch models for notebook applications and 3.5-inch models for desktop applications as well as 3.5-inch models for high-end applications. Aside from producing Seagate models, we have been developing a wide range of our own fluid dynamic bearing spindle motors in all categories from 0.85- to 3.5-inch models. Seagate was formerly a competitor. However, we no longer expect them to be engaged in mass production of fluid dynamic bearing motors, because they sold their fluid dynamic bearing production facilities in Rangsit, Thailand to us in November 2000.

We believe that our development activities, which enable us to provide high speed, precision rotation motors, including fluid dynamic bearing motors, and our move to lower-cost, overseas production will maintain and potentially strengthen our competitive position in the market for hard disk drive spindle motors. We have established a new plant in Shenzhen, China as part of our strategy to produce hard disk drive spindle motors on a larger scale, at lower cost and to have closer contact to our customers, who are increasing relocating their production facilities to China. Although information storage technologies exist that do not utilize hard disk drives, we are not aware of any products that will replace the hard disk drive in the foreseeable future. We believe that demand for hard disk drives will continue to increase in the medium and long term.

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Other Small Precision Brushless DC Motors

In addition to our hard disk drive spindle motors and small precision brushless DC fans, our small precision brushless DC motors are used in both computer related devices (including CD-ROM drives, CD-R/W drives and DVD recorders and players) and office equipment (including computer peripherals, copiers, printers and fax machines). Color copiers in particular require a sensitive and smooth dram spin to achieve high-grade printing. Our power transmission drives and brushless motors work together to provide a high-accuracy spin. We are in fierce competition with Matsushita Electric Industrial, Shinano Kenshi and Sanyo Seimitsu in this market, though we hope to increase our market share through the introduction of new products. Our net sales of other small precision brushless DC motors were ¥25,583 million for the year ended March 31, 2003, ¥34,138 million for the year ended March 31, 2004 and ¥61,066 million for the year ended March 31, 2005. The market trend for slim optical disk drive units, incorporated mainly into laptop computers, is steadily shifting to value-added, CD-R/W-DVD hybrids. We are the main supplier of CD-R/W-DVD hybrid units to three major Taiwan makers, – Lite-on, BTC and Acer – and believe that we have a significant share of this market. Another focus of our attention is DVD disk drives incorporated into slim optical disk drive units. We believe that we are in a good position to increase our share in this slim optical disk drive market because spindle motors for these products are required to demonstrate a high degree of rotation accuracy and none of the local Taiwanese manufacturers comply with such requirements. We have been expanding our market share both in terms of slim and thick types, by targeting products on the higher end of the quality spectrum. Our prime target is the home video game console market, which we are gradually penetrating.

Manufacturers in Korea and Taiwan currently lead the manufacturing market for CD-ROM drives, CD-R/W and DVD devices.  We supply a large portion of brushless DC motors to manufacturers in these countries.  In order to expand our market share, we are making efforts to further reduce our production costs by standardizing our products and by generating scale efficiencies.

We have been increasing our monthly production of brushless DC motors for use in office equipment such as laser printers, fax machines and multimedia equipment, including CD-ROM and CD-R/W drives and DVD drives, to up to twelve million motors per month during the year ended March 31, 2005. Because we are intentionally expanding our market shares both in slim and thick types, our sales have been steadily increasing since the second half of the year ended March 31, 2001 despite of the severe competition with low-cost manufacturers in Korea and Taiwan. In order to respond to this competition, we have attempted to lower our costs by shifting our production bases to overseas, especially to China where we have established our subsidiary, Nidec (Dongguan) located nearby Shenzhen.

Brushless DC Fans

Our brushless DC fans are used in many types of products, including computers and video game consoles, for the purpose of lowering the temperature of central processing units in these products. In addition, they are used in household appliances, including bidet-toilets, rice cookers, microwave ovens and plasma displays. Our net sales of brushless DC fans accounted for ¥27,395 million for the year ended March 31, 2003, ¥26,047 million for the year ended March 31, 2004 and ¥34,435 million for the year ended March 31, 2005.

Customers for our brushless DC fans include manufacturers of central processing units, computers, computer cases and computer peripherals, laser printers, photocopy machines, projectors, audio/visual equipment, household appliances, game consoles, telecommunications equipment, automobile seats and automobile air conditioners. Overseas, a substantial portion of our sales is to manufacturers of central processing units, computers and computer peripherals. We also have a leading position in the fan market for color printers, projectors and mini-component stereo sets. We are also expanding sales of our fans into new markets such as automobile seats and telecommunications equipment. We began the sales of fans for video game consoles in March 2000, and we believe that we are currently the largest supplier to each of the three major game console manufacturers. In Japan, our primary competitors for brushless DC fans are Matsushita Electr ic, Sanyo Denki and Minebea. We also face competition from Papst in Germany and Taiwanese companies such as Sunon, Delta and Chenhome, which are generally providing lower quality but less expensive fans. We are also selling our fans and motors to the manufacturers of digital laser projectors. Texas Instruments, with which we maintain a long-standing business relationship, is a leading designer and manufacturer of digital laser projectors, and we expect that from our existing business with Texas Instruments, we will be able to capture a large share of the market for fans and motors in digital laser projectors.

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We do not sell large quantities of brushless DC fans to overseas customers in the household appliance industry. Overseas markets in this industry still favor AC fans, which are less expensive than DC fans. On the other hand, there is greater demand in Japan for our small precision brushless DC fans within the Japanese appliance industry, because Japanese households tend to demand better quality and more fully featured household appliances that require precisely regulated power control. We believe that we have the largest share of the domestic fan motor market with respect to household appliance products.

Mid-size Motors

Through Nidec Shibaura Corporation, which was originally a joint venture among Nidec, Shibaura Mechatronics and Toshiba and which became our wholly owned subsidiary in September 2000, we produce mid-size brushless DC motors for household appliances such as washing machines and air conditioners. We are combining the technology and expertise of Nidec Shibaura in household appliance motors with other technologies we have developed through our experience in the spindle motor field. In the area of household appliance DC motors, our principal competitors are Matsushita Electric, Hitachi and several Chinese manufacturers. We also design, develop, manufacture and service mid-size motors for industrial equipment such as pumps and elevators as well as home electrical appliances through Nidec Power Motor.

One area into which we have diversified is mid-size motors for power steering. We are currently selling such motors to two European car manufacturers through one major power steering manufacturer. We are actively exploring possibilities for collaboration with other suppliers to the automotive industry and plan to enter the U.S. market. We face competition from companies that supply auto parts to the major car manufacturers such as Emerson in the United States and Bosch in Europe.

Machinery and Power Supplies and Other Related Products

Machinery we design and manufacture includes semiconductor production equipment, such as die bonders and board testers, high-speed press machines, machine tool equipment for the manufacture of motors, measuring equipment, power transmission equipment, factory automation systems, laboratory systems equipment, robots and card readers.

On July 16, 2002 we sold our power supply business to a third party via Nidec America Corporation.

The majority of our die bonders and board testers are shipped directly to information technology and semiconductor industry plants.

The market for these products was strong in the first half of the year ended March 31, 2005, but in the second half, the upward trend began slowing down. However we believe that this slow-down is due to a temporary adjustment in inventories. Semiconductor manufacturers are now actively investing in production and development of high added value products, where we expect new capital investment.

“Other products” have progressed favorably due to strong sales of new products from our major customers in North America, Europe and Japan, to which automotive component parts manufactured by Nidec Tosok Corporation are supplied.

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However, net sales only increased slightly as compared to the previous fiscal year, as a result of overlapping negative factors such as the impact from a production decrease and a request for larger discounts from our major customers, in connection with steel product shortages in the second half of the year ended March 31, 2005.

In addition, sales of shutters produced by Nidec Copal Corporation have increased as a result of strong demand for digital cameras. Optical pickups of Sankyo Seiki Mfg. Co., Ltd. are on the rise, due to favorable demand for the recording type and thin model type for PCs. Electronic parts of Nidec Copal Electronics Corporation have progressed favorably primarily due to increased demand resulting from capital investment related to telecommunications equipment, broadcasting equipment and semiconductor manufacturing equipment.

In January and February 2004, Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd., which have previously been our affiliated companies, became consolidated subsidiaries of the NIDEC group. Nidec Copal Corporation produces laboratory systems equipment and digital camera shutters, Nidec Copal Electronics Corporation manufactures electronics parts and Sankyo Seiki Mfg. Co., Ltd. manufactures card readers, robots and optical pickups.

Sales

We regard a timely response to consumer demands as the most important aspect of service. By establishing a sales base in many regions, both inside and outside Japan, we have established a global sales network which covers the world’s key motor markets. As of March 31, 2005, we had 90 sales and marketing offices in Japan, 13 in the United States, 2 in Europe and 31 in the rest of Asia.

In Japan, products are mainly sold to customers directly through Sales Departments, which employed 962 staff members as of March 31, 2005. Some products are also sold through sales representatives. We have sales bases and sales branches in various regions in Japan, such as Tokyo, Osaka, Aichi (Nagoya), Fukuoka, Kanagawa, and Hiroshima. Since most of our customers have a technical development department in Japan, we work to expand new demand by meeting the diversified needs of our customers through these sales departments and seek to quickly respond to changes in the market.

Overseas, generally, products are sold to customers through subsidiaries and affiliates. In the United States and Canada, a portion of our products is sold through sales representatives.  In Europe, products are mainly sold directly to customers through sales subsidiaries. In Asia, such as Singapore, China, Hong Kong, Taiwan, and South Korea, sales subsidiaries are responsible for directly selling products to customers in their area. As for manufacturing subsidiaries in Asia, such as Singapore, Thailand, Taiwan, the Philippines, and China, products are generally sold through parent companies, although, some products are sold through sales subsidiaries in these areas or directly to customers. Our manufacturing subsidiary in Dongguan sells nearly all of its products to customers through sales subsidiaries in Hong Kong.

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The following table presents a breakdown of total revenues by geographic market for the three years ended March 31,2003, 2004 and 2005:

	Yen in millions			U.S. dollars in thousands
	For the year ended March 31			For the year ended March 31, 2005
	2003	2004	2005
Sales and operating revenue:
Japan	¥126,904	¥149,392	¥292,822	$2,726,716
U.S.A.	7,006	5,378	8,200	76,357
Singapore	46,706	39,056	59,989	558,609
Thailand	23,333	36,610	42,653	397,179
The Philippines	3,607	2,230	5,557	51,746
China	1,337	13,439	23,771	221,352
Other	22,943	31,392	52,869	492,308
Consolidated total	¥231,836	¥277,497	¥485,861	$4,524,267

Because our hard disk drive spindle motors are components used in information technology equipment, the market for which is subject to rapid technological change, it is critical to provide in-depth support, including by locating production, sales and service operations as close as possible to customers. Success in our business depends on the ability to quickly understand and respond to market needs, including product trends, features and specifications, as well as production capacity and pricing. Our Sales Department is constantly evaluating the market in search of new opportunities. Feedback on identified needs is quickly passed on to our Development and Production Departments, and the entire team works together to further the commercialization effort of new products. The rapid acquisition of information and action by our Sales Department enables our Development and Production Departments to respond quickly, so that products mee ting customer requirements can be launched in a timely manner.

Production

We specialize in the field of “Everything that Spins and Moves” centering on drive technology products, namely motors, and have acquired large market share for many of our products by reinforcing motor-related technology and application engineering through mergers and acquisitions. As a result, we have been successful in expanding sales and profits by taking advantage of new market opportunities and demand trends. We divide operations into the five business segments discussed blow. While development and design engineering are mostly conducted in Japan, production of small precision motors is conducted in various Asian countries, including Thailand, the Philippines, Singapore and China, based on our basic policy of producing products close to the production sites of our customers. While some mid-size motors are being produced in Japan, production of mid-size motors in Thailand and China, which has been increasing recentl y, shows a production cost advantage. Machinery is still being produced mostly in Japan.

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Small Precision Motors

We produce most of our small precision motors, such as spindle motors for HDDs, brushless DC motors and fan motors in our overseas manufacturing subsidiaries in Thailand, the Philippines, Singapore, Vietnam and China. In addition, we established a joint venture with NTN Corporation in China in August 2002. The joint venture is producing fluid dynamic bearing units using oil impregnated sintered-alloy metal for our spindle motors for HDDs. These production operations in Asia have resulted in cost reductions in relation to such factors as capital expenditure, labor costs and taxes. Some of our subsidiaries manufacturing some of component parts in Thailand and the Philippines. Supply component parts to some of our other facilities, helping reduce the production cost. We have established research and development centers in Japan, which develop new designs and more efficient processing/production technology in order to create advanced new products. In particular, our technical development centers in Kyoto, Shiga, Nagano and Tottori have been engaged in design and prototype production for new-product development, and are promoting the full transfer of technology to overseas plants, including formation of mass production lines. After the completion of this technology transfer, we anticipate that these technical development centers will to collaborate closely with overseas plants and provide technical support.

Mid-Size Motors

The design and development of the following products is conducted in our Technical Development Center in Shiga and manufacturing subsidiaries in Fukui and Fukuoka: mid-size brushless DC motors for vehicles that respond to market demands for lower fuel consumption and lower vehicle emissions, mid-size brushless DC motors for consumer electronics and housing facilities which feature energy savings, low noise and longer life, and mid-size motors for industrial use that respond to the demand for energy saving machinery. Production of those products is conducted in Japan as well as in our manufacturing subsidiaries in Thailand and in China. Production centers in Japan provide technical support to manufacturing subsidiaries in Thailand and in China. Products manufactured in our manufacturing subsidiaries in Thailand and China are sold to our customers in Japan and overseas through our sales departments in each production center in Japa n, and some of them are directly sold to customers in Thailand and China.

Electric and optical components

We produce encoders, optical components such as camera shutters, lens units and optical pick-up units, electronics parts including pressure sensors, electronics circuit parts and actuators, as a result of Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. becoming our consolidated subsidiaries in January and February 2004. Shutters and lens units for various cameras are developed and designed by a manufacturing subsidiary in Tokyo and produced in manufacturing subsidiaries in Fukushima and in China. A manufacturing subsidiary in Nagano develops, designs and manufactures electronics components such as actuators and optical pick-up units, which are also produced in Singapore and China. Electronic component parts such as pressure sensors and electronics circuit parts are developed, designed and manufactured by our manufacturing subsidiaries in Saitama, Tochigi and Miyagi.

Machinery and Others

Various semiconductor manufacturing equipment, such as fully automatic die bonders and fully automatic wire bonders, measuring equipment, such as automatic measuring equipment and image processing equipment, and machinery, such as high-speed press equipment and inspection equipment of printed circuit boards, have mainly been designed, developed and manufactured by our manufacturing subsidiaries in Japan. Some of our measuring equipment, such as high-speed press machines is manufactured in China. The products in this business segment, such as the mini-laboratory system of Nidec Copal Corporation and industrial robots and card readers of Sankyo Seiki Mfg. Co., Ltd., are new products we acquired as a result of the consolidation of these subsidiaries. These are developed, designed and manufactured primarily by our manufacturing subsidiaries in Tokyo and Nagano, and some of them are manufactured in our manufacturing subsidiary in Chin a.

“Others”, consists of pivot assemblies and automotive parts. Our manufacturing subsidiary in Singapore conducts the development, design and manufacture of pivot assemblies. Automotive parts are developed, designed and manufactured by a manufacturing subsidiary in Japan and are also produced by our manufacturing subsidiary in Vietnam.

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Suppliers

Our purchasing policy is to purchase parts, components, raw materials, equipment and other supplies from the various suppliers chosen by us based on factors such as price, quality and delivery of the supplies and related services. We believe that this policy encourages suppliers to develop technological improvements, cost competitiveness and other competitive features. Most supplies, except some components for printed circuits, are purchased locally and we have not experienced any difficulty in obtaining supplies under our purchasing policy. We believe that the materials and components necessary for our manufacturing operations are presently available both in quantity and quality. Moreover, as we have switched from ball bearing to fluid dynamic bearing technology, we are less reliant on outside suppliers of ball bearings.

Key supplies for manufacturing motors are ball bearings, presses and stamping parts for the production of hubs, stator cores and die casts for the production of brackets on which motors are mounted. Other principal supplies include components for printed circuits, such as integrated circuits and electromagnetic steel sheets, as well as other electronic parts. In the past, we purchased base plates for motors from suppliers, but now we produce such base plates. In recent years, we had some difficulties in obtaining integrated circuits and other electronic components for printed circuits, due to an increasing demand. If similar difficulties occur in the future, we may be required to keep stock of such components in our inventory, although at present we do not believe we need to do so.

In January and February 2004, Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. became our consolidated subsidiaries. Since then these companies and their subsidiaries have tried to shift their production bases from Japan to overseas in order to reduce production costs and to increase competitive strength. We seek to improve their purchasing quality control measures.

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Government Regulation and Environmental Standards

In Japan, we are subject to environmental regulation under the Air Pollution Control Law, the Water Pollution Control Law, the Wastes Disposal and Public Cleaning Law, the Resource Recycling Law, the Basic Law for Establishing a Recycling-based Society and other laws. We are also subject to local regulations which in some cases impose requirements more stringent than the national requirements. However, we do not use large volumes of hazardous or toxic chemicals in our manufacturing operations in Japan. Moreover, our operations do not require the disposal of large amounts of waste into the environment. Our emissions are sufficiently low so that we are not required to report their amount under the Pollutant Release and Transfer Register.

Our overseas operations are also subject to environmental regulation. Our operations in the United States, for example, are subject to extensive environmental regulation under a number of laws, including the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental, Response, Compensation and Liability Act and the Toxic Substances Control Act. We are also subject to substantial state legislation that parallels, and in some cases imposes more stringent obligations than, federal requirements.

We believe that leadership in environmental protection is an important competitive factor in the markets for our products. We have given and will continue to give high management priority to environmental matters. We believe that our operations are in substantial compliance with regulatory requirements affecting our facilities and products in each of the markets in which we operate. We monitor these requirements and adjust affected operations and products to ensure that we remain in substantial compliance with these requirements. With one exception, all our plants in Japan and all our overseas production bases have either received, or are scheduled to receive within the next several years, certifications under the ISO 14001 standards on environmental management systems of the International Organization for Standardization. The one exception is Nidec America Corporation, whose clients have not requested ISO 14001 certification. Al so, in response to a number of recent requests from customers, we have established a committee to investigate ways that we might eliminate the use of lead in our manufacturing processes. As a result, almost all of our current products use lead-free solder, with a few exceptions because of specific customer requirements.

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Our Employees

The following table shows the number of our employees as of the dates indicated:

	As of March 31,
	2003	2004	2005
Japan	3,569	7,486	7,222
North America	247	330	284
Asia (other than Japan)	29,507	51,315	62,647
Europe	8	9	16
Total	33,331	59,140	70,169

Japan

In Japan, as of March 31, 2005, we had 7,222 employees. 3,168 of these employees were engaged in manufacturing operations, 1,531 in research and development and 962 in retail business activities.

Most of our employees receive compensation on the basis of fixed annual salaries and twice-a-year bonuses. In addition, we have a separate bonus system to reward employees who make significant technological contributions to our operations as reflected primarily by patent registrations. We emphasize and reward individual skills and performance. We have started to incorporate performance-linked elements into our domestic compensation and promotion systems to make us more competitive in Japan in recruiting and retaining highly-skilled individuals. Under our retirement allowance system, eligible employees are entitled to a lump-sum allowance and a retirement annuity upon their retirement.

In Japan, although Nidec has no labor union, labor unions have been organized in some of our subsidiaries. No substantial strikes and/or labor disputes have occurred so far. We consider that the relationship between the company and employees is favorable.

Overseas

As of March 31, 2005, we had 62,947 employees overseas. 57,751 of these employees were engaged in manufacturing operations, 294 in research and development and 394 in retail business activities.

No material strikes and/or labor disputes have occurred overseas and we believe that the relationship between us and our employees is favorable.

Intellectual Property

As of March 31, 2005, we owned approximately 1,662 issued patents, 212 utility model registrations and 293 trademarks in Japan as well as 539 issued patents and 16 trademarks in the United States. Every year, we file additional patent applications in Japan, some of which we also file in the United States. We also seek patent protection in various other foreign jurisdictions where we manufacture or sell our products. As of March 31, 2005, we had a total of 4,717 patent and utility model applications pending in Japan and in foreign jurisdictions. While we believe that our patents are important, in general, no single or group of related patents is essential to us or any of our principal business segments.

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We have two strategies for enhancing the protection of our intellectual property rights. First, we distribute descriptions of our patented technology, with schematics, to our development and sales personnel who have more frequent contact with our competitors and their products. By keeping our development and sales personnel informed about the current status and content of our patent and utility model applications and registrations, they are better able to evaluate whether any of our competitors’ products might be infringing our technology. Second, we are putting more effort into obtaining samples of our competitors’ products so that our technical and legal teams can conduct detailed analysis regarding possible patent infringement. Information gained from this process also helps us to obtain more favorable terms during the negotiation of license agreements.

Legal Proceedings

On December 9, 2004, NEC Corporation (NEC) filed a lawsuit against us in the Tokyo District Court claiming that NEC had a loss of &165;174 million ($1,620 thousand) resulting from unamortized equipment for its products and other costs caused by a stoppage of purchases of its products by us, and claiming that we were liable to compensate NEC for the loss on the grounds that we did not meet our guaranteed purchase volume obligation. We have argued that we have not guaranteed purchase volumes and that there is therefore no reason to compensate the unamortized equipment cost. We have also argued that the reason for the stoppage of products purchases by us derives from NEC failing to achieve scheduled cost reduction, and that there is no reason for us to compensate NEC. Because this litigation has only recently initiated, we cannot project the outcome. The details of the transaction are as follows. From July 2000, we purchased from NEC electric control units (ECUs), assembled ECUs with motors, and then supplied ECU-motor assemblies to our customers for incorporation into electric power steering systems. However, on October 2002, we were notified of a stoppage of purchases of ECU-motor assemblies by the customer on the grounds of a failure to achieve scheduled cost reductions on the ECU. Therefore, we stopped the purchase of the ECUs from NEC. Due to the fact that we continue to supply the motor separately to the customer even after their stoppage of the purchase of ECU-motor assemblies, we believe that the stoppage of purchase of ECU-motor assemblies by the customer was not caused by any problem of the motor.

On February 15, 2005, we filed a patent infringement lawsuit in the United States District Court for the Northern District of California against Victor Company of Japan, Limited and its subsidiary, JVC Components (Thailand) Co., Ltd., and their sales agents, Kabushiki Kaisha Agilis and Agilis Technology Inc. (collectively “JVC”), charging them with infringing its U.S. Patent Nos. 5,667,309, 6,554,476, 6,343,877 and 6,793,394. The four patents cover our fluid dynamic bearing technology used in spindle motors found in computer hard disc drives. JVC has supplied and continues to supply spindle motors to hard disc drive manufacturers without a license under these patents. We brought this action to prevent JVC from selling, distributing or importing infringing spindle motors in the United States, and from selling or distributing such motors for incorporation into hard disc drives sold, distributed or imported in the United States. In addition, we seek compensatory damages for JVC’s infringement, as well as treble damages for willful infringement and recovery of our attorneys fees, as permitted under United States Patent law.

In April 2005, a group of 62 U.S. Music Copyright holders including BURNE CO., (collectively “Plaintiffs”) filed a lawsuit in the Southern District Court of New York, alleging that five companies and one individual, including Sankyo Seiki Mfg. Co., Ltd. and two of its other consolidated subsidiaries of Company (collectively “Defendants”) had been concerned in sales of allegedly infringing music-box movements which were imported into U.S. by several U.S. importers. Defendants are now in the process of investigating the importer's payment status of copyright royalty for the music-box movements, and the estimation of the result of the lawsuit is difficult at this time. However, the result of the lawsuit may have an adverse effect on our consolidated business results.

We are also involved in a number of other actions and proceedings in Japan and overseas in the ordinary course of our business. Based upon the information currently available to us and our domestic and overseas legal counsel, we believe that the ultimate resolution of such actions and proceedings will not, in the aggregate, have a material adverse effect on our financial condition or results of operations.

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C. Organizational Structure.

The following table and the discussion that follows present summary information on our major consolidated subsidiaries as of March 31, 2005:

Name	Country	Principal business	Net sales for the year ended March 31, 2005	Issued share capital as of March 31, 2005	Percentage owned by us as of March 31, 2005
					(%)
Consolidated subsidiaries
Nidec Electronics (Thailand) Co., Ltd.	Thailand	Manufacture and sales of spindle motors for hard disk drives	TB25,220 million	TB1,950 million	99.9%
Nidec (Dalian) Limited	China	Manufacture of small brushless DC motors and fan motors	US$366,637 thousand	US$32,500 thousand	100.0%
Nidec Singapore Pte. Ltd.	Singapore	Manufacture and sales of pivot assemblies	US$435,191 thousand	S$8,000 thousand	100.0%
Nidec Philippines Corporation	Philippines	Manufacture of spindle motors for hard disk drives	PP10,844 million	PP1,400 million	99.9%
Nidec Shibaura Corporation	Japan	Manufacture and sales of small AC motors	¥30,892 million	¥1,000 million	100.0%
Nidec Power Motor Corporation	Japan	Manufacture and sales of mid-size motors and small AC motors	¥10,159 million	¥1,000 million	83.5%
Nidec Nemicon Corporation	Japan	Manufacture and sales of rotary encoders, proximity sensors and other electronic equipment	¥2,694 million	¥230 million	95.2%
Nidec-Kyori Corporation	Japan	Manufacture and sales of high speed automatic presses, feed devices and other industrial machinery	¥8,153 million	¥450 million	100.0%
Nidec Machinery Corporation	Japan	Manufacture and sales of automatic assembly line machinery and testers	¥7,466 million	¥100 million	60.0%
Nidec America Corporation	U.S.A	Manufacture and sales of fans and precision motors	US$29,394 thousand	US$82 thousand	100.0%
Nidec Taiwan Corporation	Taiwan	Sales of fans	NT$3,789,028 thousand	NT$5,000 thousand	100.0%
Nidec Electronics GmbH	Germany	Sales of spindle motors for hard disk drives and fans	EUR28,346 thousand	EUR153 thousand	100.0%
Nidec (H.K.) Co., Ltd.	Hong Kong	Sales of parts for our products and sales of spindle motors	HK$1,385,322 thousand	HK$800 thousand	99.9%
Nidec Tosok Corporation (1) *	Japan	Manufacture and sales of precision automotive parts, automatic measuring equipment, semiconductor manufacturing machinery, air/electronic gauges, precision ball screws, and other precision measuring devices and manufacture of fan motors	¥28,678 million	¥3,287 million	58.5%
Nidec-Shimpo Corporation	Japan	Manufacture and sales of power transmission drives, control devices, measuring and factory automation equipment, ceramic and wood art equipment, and others	¥18,043 million	¥2,592 million	100.0%

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Name	Country	Principal business	Net sales for the year ended March 31, 2005	Issued share capital as of March 31, 2005	Percentage owned by us as of March 31, 2005
					(%)
Nidec-Read Corporation *	Japan	Manufacture and sales of printed circuit boards, liquid crystal display and plasma display panels testing systems and automatic measurement/control systems	¥4,897 million	¥938 million	65.5%
Nidec Total Service Corporation	Japan	Insurance agency, real estate business, merchandising, building maintenance and others	¥2,054 million	¥86 million	100.0%
Nidec (Zhejiang) Corporation	China	Manufacture of spindle motors for hard disk drives	US$131,002 thousand	US$20,000 thousand	100.0%
Nidec (Dongguan) Limited	China	Manufacture of small brushless DC motors	US$103,060 thousand	US$5,000 thousand	100.0%
Nidec (New Territories) Co., Ltd.	Hong Kong	Manufacture and sales of small brushless DC motors	HK$0 thousand	HK$1 thousand	99.8%
Nidec System Engineering (Zhejiang) Corporation	China	Manufacture of factory automation equipment	CNY132,333 thousand	CNY41,384 thousand	100.0%
Nidec (Shanghai) International Trading Co., Ltd. (1)	China	Sales of small brushless DC motors	CNY124,311 thousand	CNY1,655 thousand	100.0%
Nidec Copal Corporation (2)*	Japan	Manufacture and sales of optical, electronic and information equipment, photo laboratory system and factory automation equipment	¥69,042 million	¥11,080 million	54.1%
Nidec Copal Electronics Corporation (2) *	Japan	Manufacture and sales of electronic circuit components, pressure sensors, actuators and potentiometers	¥23,865 million	¥2,362 million	51.1%
Sankyo Seiki Mfg., Co., Ltd. (2) *	Japan	Manufacture and sales of motors, optical pickup units, automated teller machines, home appliance components, factory automation equipment	¥122,311 million	¥35,270 million	55.3%

Notes:

(1) On July 29, 2005, we increased our holding to 65.03%.

(2) Nidec (Shanghai) International Trading Co., Ltd. was established in April 2003 by Nidec as its Chinese sales and marketing subsidiary.

(3) These companies became majority-owned subsidiaries in January and February 2004.

(* - Listed on one or more stock exchanges in Japan)

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Joint Venture with NTN Corporation

On August 28, 2002, Nidec and NTN Corporation established a joint venture, NTN-Nidec (Zhejiang) Corporation, in Pinghu City located near Shanghai, China.

Nidec holds 40% and NTN holds 60% of the equity of the new joint venture. The breakdown of initial paid-in capital of $6.5 million was $2.6 million from Nidec and $3.9 million from NTN. The purpose of the new joint venture company is to manufacture and sell fluid dynamic bearing units made of sintered alloy metal for hard disk drive motors. Production started in April 2003.

A sintered-alloy-based fluid dynamic bearing unit by the new joint venture will be used in our fluid dynamic bearing motor for hard disk drives. NTN-Nidec (Zhejiang) Corporation is also seeking to sell fluid dynamic bearing motors in the computer peripheral equipment market and the audio-visual market, which has increasingly been using hard disk drives.

In January 2004, NTN-Nidec (Zhejiang) Corporation increased its paid-in capital to $21 million US dollars from $13 million US dollars in lieu of an exchange of ownership of shares between Nidec and NTN Corporation. This capital investment was used for capital improvements to achieve increased production capability to 8 million pieces per month from the original 3 million. At the end of 2005, NTN-Nidec (Zhejiang) Corporation had capacity of approximately 5 million pieces per month.

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D. Property, Plants and Equipment.

Our principal executive offices are located in Kyoto, Japan and occupy approximately 36,119 square meters of office space. At March 31, 2005, we operated manufacturing and sales facilities through 23 Japanese subsidiaries and 66 foreign subsidiaries. These facilities are located in Japan, China, Taiwan, Singapore, Thailand, Malaysia, South Korea, Indonesia, the Philippines, Vietnam, Canada, the United States and Europe.

The following table sets forth information, as of March 31, 2005, with respect to our principal manufacturing facilities and other facilities:

Facility name	Location	Floor space (square meters)	Principal products and function
In Japan
Corporate Headquarters and Central Technical Laboratories (1)	Japan	36,119	Basic research and development and fluid dynamic bearing technology development
Nidec-Shimpo Corporation	Japan	29,322	Manufacturing of power transmission equipments and measuring equipment
Nidec Copal Corporation Koriyama Technical Center	Japan	23,072	Development design and material procurement
Nidec Tosok Corporation Headoffice and Technical Center (1)	Japan	20,949	Manufacturing of measuring equipments and semiconductor equipment
Shiga Technical Development Center (1)	Japan	20,596	Research and development and manufacturing of spindle motors for hard disk drives, DC motors for PC peripheral devices, mid-size motors for automobiles and pumps and precision motors
Sankyo Seiki Mfg. Co., Ltd. Head Office and Shimosuwa Facility	Japan	20,212	Financial industry terminals and manufacturing of card readers
Sankyo Seiki Komagane Facility	Japan	19,187	Manufacturing of motor-driven actuator units and DC motors for PC peripheral devices
Nidec Copal Corporation Shiojiri Factory	Japan	18,903	Manufacturing of mini-laboratory system
Nidec Shibaura Corporation Head Office	Japan	18,517	Manufacturing and sales of mid-size motors
Nidec Tosok Corporation Yamanashi Factory	Japan	15,044	Manufacturing of components for automobiles
Nidec Copal Precision Parts Corporation Koriyama Factory	Japan	13,596	Manufacturing of precision dies, press stamping components, injection molding components and surface treatment processing components
Nidec Copal Electronics Corporation Sano Factory (1)	Japan	11,393	Manufacturing and sales of precision automotive parts
Mineyama Precision Machining Center (1)	Japan	11,070	Research and development and manufacturing of spindle motors for hard disk drives (both ball bearing and fluid dynamic bearing)

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Facility name	Location	Floor space (square meters)	Principal products and function
Outside Japan
Nidec Philippines Corporation (3)	Philippines	131,455	Manufacturing of spindle motors for hard disk drives
Nidec Tosok (Vietnam) Co., Ltd.	Vietnam	47,412	Manufacturing of fans and components for automobiles
Nidec (Dalian) Limited (2)	China	46,338	Manufacturing of spindle motors for hard disk drives, DC motors for PC peripheral devices, fans and components for precision motors
Nidec Subic Philippines Corporation	Philippines	35,786	Manufacturing of spindle motors for hard disk drives
Nidec Copal (Zhejiang) Co.,Ltd .	China	29,335	Manufacturing of components and lens cones for digital still cameras and mini-laboratory systems
Nidec Shibaura (Zhejiang) Co., Ltd.	China	22,700	Manufacturing of mid-size motors
Nidec (Dong Guan) Corporation (2)	China	22,700	Manufacturing of small brushless DC motors for PC peripheral devices and office automation equipment
Sankyo Seiki (Fuzhou) Co.,Ltd.	China	20,540	Manufacturing of optical pickup units
Nidec (Zhejiang) Corporation (2)	China	20,000	Manufacturing of spindle motors for hard disk drives and assembling motors and accessories
Nidec Precision (Thailand) Co., Ltd. (4)	Thailand	19,560	Manufacturing of components for hard disk drive spindle motors
Nidec Copal (Thailand) Corporation	Thailand	16,450	Manufacturing of camera components and micro motors
Tokyo Pigeon (Hong Kong) Co., Ltd.	Hong Kong	14,254	Manufacturing and sales of Mechanism for audio
HK Nissin Kohki Co., Ltd.	Hong Kong	13,780	Forming of plastic and plastic lens
Nidec Shibaura Electronics (Thailand) Co., Ltd.	Thailand	13,410	Manufacturing of mid-size motors
Sankyo Seiki (Singapore) Pte., Ltd.	Singapore	13,380	Manufacturing of stepping motors and motor-driven actuator units
Nidec System Engineering (Zhejiang) Corporation (2)	China	12,400	Manufacturing of factory automation equipment
Nidec Copal Electronics (Zhejiang) Co., Ltd. (1)	China	12,400	Manufacturing of electric components
Sankyo Electronics (Shaoguan) Co., Ltd.	China	12,300	Manufacturing of motor-driven actuator units
Nidec High-Tech Motor (Thailand) Co., Ltd. (4)	Thailand	11,000	Manufacturing of fluid dynamic bearing spindle motors

__________
Notes:

(1) We own both the property and the facilities.

(2) We lease the property and own the facilities.

(3) Nidec Philippines Corporation leases the property from Nidec Development Philippines Corporation, a joint venture company with Prudential BK established for the purpose of purchasing land in the Philippines. We own the facilities.

(4) We lease both the property and the facilities.

In addition to the above facilities, we have a number of other smaller factories located worldwide. We also have sales and service offices which are located primarily in Tokyo, Machida, Osaka, Nagoya, Fukuoka, Zama and Hiroshima.

As of March 31, 2005, the aggregate book value of the land and buildings we owned was ¥111.5 billion, and the aggregate book value of machinery and equipment we owned was ¥178.6 billion. We lease other equipment that we use in our operations.

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Item 5. Operating and Financial Review and Prospects.

A. Operating Results.

You should read the following discussion of our financial condition and results of operations together with our consolidated financial statements and information included in this annual report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under Item 3.D and elsewhere in this annual report.

Overview

Market Environment for Hard Disk Drive Spindle Motors

We sell hard disk drive spindle motors, our main products that constituted 24.5% of our total sales for the year ended March 31, 2005, to major hard disk drive manufacturers.

According to Techno Systems Research Co., Ltd., a Japanese research institute specializing in technological industries, 87.7% of hard disk drives were used for PCs and the rest were used for non-PC products such as game consoles, DVD recorders and portable audio units for the calendar year ended December 31, 2004.

During the year ended March 31, 2005, fluid dynamic bearing technology for hard disk drive spindle motors made rapid progress in the market. Almost 90.3% of our production of hard disk drive spindle motors was fluid dynamic bearing motors for the year ended March 31, 2005, compared to 77.0% for the year ended March 31, 2004. We believe that almost all, with a few exceptions, hard disk drive manufacturers in the world will be shifting from conventional ball bearing motors to fluid dynamic bearing motors in the years ahead.

During the latter half of the year ended March 31, 2001, the U.S. economy began to slow, and this led to a reduced demand for PCs. The reduced demand for PCs continued into the year ended March 31, 2002. PC markets have since begun to recover. According to International Data Corporation, worldwide PC shipments, including PC servers increased by 14.7% for calendar year 2004 from calendar year 2003. Nevertheless, average sales prices have declined. Our average sales price of hard disk drive spindle motors fell by approximately 8% during the year ended March 31, 2003 and fell by approximately 9% during the year ended March 31, 2004. Our average sales price of hard disk drive spindle motors fell again by approximately 9% during the year ended March 31, 2005, despite the increase in the shipments of our hard disk drive spindle motors by 20%. This, we believe, reflects intensified competition in the market for 2.5-inch h ard disk drives due to major market entries, as represented by Seagate, Maxtor and Samsung Electronics.

The increase in the shipments of our hard disk drive spindle motors was attributable to the strong demand for our hard disk drive motors, especially from manufacturers of new consumer electronics and home entertainment applications. We have seen an increasing number of our customers establish their hard disk drive production centers in China and other countries, as they have been attracted by these countries’ low production cost environment. We believe that the migration of our customers’ production facilities to those countries, especially China, will continue for the next several years.

We have been responding to the trends described above by taking the following steps:

•

We are expanding manufacturing and assembly operations in China and other low-cost production locations, such as Thailand and the Philippines.

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•

We are expanding the manufacture of a new type of fluid dynamic bearing spindle motor using oil-impregnated, sintered-alloy metal. The use of sintered-alloy metal, for its fitness for molding and press work, significantly lessens dependence on the comparatively lengthy machining process during production of other spindle motors and therefore substantially reduces processing cost per unit.

•

We are expanding the percentage of components we produce in-house.

We believe that, by taking these steps, we are achieving cost savings that outweigh the decrease in average unit prices. In addition, we have been increasing total revenue from fluid dynamic bearing spindle motors in new non-computer markets, a trend we believe will continue. This, we believe, reflects the strong demand for our hard disk drive motors, especially from manufacturers of new consumer electronics and home entertainment applications.

Market Environment for Other Small Precision Brushless DC Motors

Most of our revenues from sales of other small precision brushless DC motors, which accounted for 12.6% of our total net sales for the year ended March 31, 2005, are derived from sales to manufacturers of CD-ROM, COMBO (CD-R/W drive combined with DVD-ROM drive) drives and writable DVD drives.

We believe that the market for CD-ROM drives is reaching maturity. At the same time, the markets for COMBO drives and writable DVD drives are growing, in part as replacements for CD-ROM drives. Also, a recent slow-down in demand for computers has been putting downward pressure on the pricing for those drives that are used in them. Accordingly, some of our small precision brushless DC motors, particularly those for use in CD-ROM drives, have been experiencing downward pricing pressure, while the demand for other uses, particularly in COMBO drives and writable DVD drives in non-computer products, has been growing. We expect to become more competitive in these markets, as our production costs decline as a result of standardizing our product lines.

Market Environment for brushless DC Fans

We sell our brushless DC fans, which accounted for 7.1% of our total net sales for the year ended March 31, 2005, to various manufacturers of computers, computer peripheral, game consoles, photocopy machines, projectors and household appliances such as refrigerators. We also sell brushless DC fans, which are used to cool automobile seats.

Sales of brushless DC fans are primarily affected by the general market demand for the products which incorporate them. For several years prior to calendar year 2003, the demand for brushless DC fans used for game consoles increased substantially. However, during the fiscal years ended March 31, 2004 and 2005, such demand dropped substantially, which had a negative effect on the market for brushless DC fans. Despite significant decreases in sales of brushless DC fans for game machine consoles for the years ended March 31, 2004 and 2005, mainly due to a peak in the global demand for game machines, we have seen strong demand for fans directed to the high-end segments of the PC, server, and MPU cooler markets. Demand for our brushless DC fans is also increasing in the market for household electric appliances, as represented by microwave ovens, rice cookers, warm water toilet seats and refrigerators.

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Market Environment for Mid-size Motors

We sell mid-size motors, which accounted for approximately 7.3% of our total net sales for the year ended March 31, 2005, to home electric appliance, industrial machine and automobile power steering system manufacturers.

Recently, the demand for power steering systems that incorporate mid-size brushless DC motors, which help conserve energy, has been increasing. An increasing number of power steering system manufacturers have shifted to producing this type of power steering systems, away from the conventional engine-driven type that uses belts. We believe, however, that it will still take some time before the acceptance of power steering systems that use mid-size brushless DC motors reaches a sufficiently high level to enable us to start mass production of these motors, because, in this market, the evaluation of samples that must take place prior to the introduction of a new product takes a comparatively long period of time. Also, in recent years there has been increased demand for household appliance products including air conditioners and dish washers that use mid-size brushless DC motors.

However, during the fiscal year ended March 31, 2005, mid-size brushless DC motors for use in home electric appliances and industrial machines suffered decreases in sales price and increases in steel price, particularly in the second half of the year. In this segment, mainly due to a steep rise in the price of steel, operating income decreased by approximately ¥1,661 million as compared to the previous period, to ¥256 million.

Market Environment for Electronic and Optical Components

We sell electronic and optical components, which accounted for approximately 26.4% of our total net sales for the year ended March 31, 2005, to digital camera and optical disk drive manufacturers.

Sales of our optical pickup units have been sluggish partly due to a substantial price decline in the audio visual equipment market as a result of overproduction in China. On the other hand, the market for optical disk drives for PCs continues to expand. In particular, sales of “recording types” and “thin-types for notebook PCs” have progressed favorably.

Sales of our shutters for digital cameras have until now progressed favorably, supported by the recent growth in the digital camera market. In the Japanese market, however, due to factors such as the over-50% dissemination rate of digital cameras, the growth rate of sales slowed from the 4th quarter of the year ended March 31, 2005. Digital camera manufacturers are concurrently carrying out inventory adjustments. As we have made active investments in production bases in Thailand and China, we believe there may be a risk of an increase in depreciation charges if the sluggish digital camera market is protracted.

Effects of Our Recent Acquisitions Activities on Our Financial Statements

As discussed under Item 4.A of this annual report, we have sought growth by investing in or acquiring companies with motors, drives and other related products and technologies. Depending on the circumstances, we acquire a majority interest or a substantial minority interest in the target companies we seek to acquire. Our approach has been to identify underperforming companies with advanced products and technologies. In recent years, we have acquired substantial interests in a number of major companies, several of which were public companies in Japan.

In connection with our acquisition of subsidiaries, we had an aggregate amount of goodwill of ¥3,611 million as of March 31, 2002. This goodwill was originally scheduled to be amortized over a period of five years. In accordance with Statement of Financial Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), amortization of goodwill ceased beginning on April 1, 2002. Goodwill is now to be tested for impairment at least annually.

In February 2002, we made an additional acquisition of approximately 1.1% of the common stock of Nidec-Shimpo Corporation and made it our majority-owned subsidiary. As a result of this acquisition, Nidec Read Corporation, Nidec Tosok Corporation and some other affiliated companies also became our majority-owned subsidiaries. Assuming that this acquisition transaction had occurred as of April 1, 2000, on an unaudited pro forma basis our net sales would have been ¥213,670 million for the year ended March 31, 2001 and ¥227,860 million for the year ended March 31, 2002, and our net income would have been ¥11,203 million for the year ended March 31, 2001 and ¥6,878 million for the year ended March 31, 2002.

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We acquired additional shares of common stock of Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd., which had previously been accounted for by the equity method, in January and February, 2004. Our ownership interests in these companies increased to over 50% and our consolidated financial statements now include the accounts of these majority-owned subsidiaries from the acquisition dates. As a result, our carrying amount of investment in equity-method affiliates as of March 31, 2004 decreased by ¥25,366 million compared to the previous fiscal year.

During the years ended March 31, 2004 and 2005, our equity-method affiliates recorded contributed ¥156,818 million and ¥10,319 million to net sales, ¥22,291 million and ¥1,088 million to gross profit (net sales minus and cost of products sold), and ¥5,069 million and ¥45 million to net income, respectively. Earnings (loss) from equity-method investment in affiliated companies amounted to ¥2,522 million and ¥(34) million for the year ended March 31, 2004 and 2005, respectively. The decrease in net sales, gross profit, net income and earnings from equity-method investments in affiliated companies for the year ended March 31, 2005 compared with the year before was primarily due to Nidec Copal Corporation and Nidec Copal Electronics Corporation, which became our consolidated subsidiaries in January and February 2004, respectively.

Effects of Foreign Currency Fluctuations

A significant portion of our business is conducted in currencies other than the yen, most significantly, the U.S. dollar. Our business is thus sensitive to fluctuations in foreign currency exchange rates, especially the yen-U.S. dollar exchange rate. Our consolidated financial statements are subject to both translation risk and transaction risk. Translation risk is the risk that our consolidated financial statements for a particular period or for a particular date are affected by changes in the prevailing exchange rates of the currencies in those countries in which we conduct business against the Japanese yen. The translation effect, even if it is substantial, is a reporting consideration and does not reflect our underlying results of operations.

Transaction risk arises when the currency structure of our costs and liabilities deviates from the currency structure of our sales proceeds and assets. A substantial portion of our overseas sales are made in U.S. dollars. While sales denominated in U.S. dollars are, to a significant extent, offset by U.S. dollar denominated costs, we generally have had a significant net long U.S. dollar position. With respect to costs not denominated in U.S. dollars, we believe that we have been able to reduce the level of transaction risk to the extent that our overseas subsidiaries incur costs in currencies that generally follow the U.S. dollar. Transaction risk remains for products sold in U.S. dollars to the extent that we must purchase parts for our products from Japan, the costs for which are denominated in yen.

Changes in the fair values of our foreign exchange forward contracts and changes in option prices under our foreign currency option agreements are recognized as gains or losses on derivative instruments in our consolidated statement of income. For a more detailed discussion of these instruments, you should read Note 21 to our consolidated financial statements included in this annual report.

Trends for the Year Ending March 31, 2006

We believe that we face multiple elements of uncertainty surrounding our businesses for the fiscal year ending March 31, 2006. Although, a large number of Japanese corporations reported record high operating profits for the fiscal year ended March 31, 2005, mainly due to the strong demand from Asian countries, especially from China, it remains unclear how the Chinese economy will respond to exchange fluctuations and whether such strong demand will last.

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Further, it is a concern that political instability, including recent anti-Japanese movements and demonstrations in China, may give rise to adverse effects on corporate activities. Whether inventory adjustment in the field of digital information devices, which has progressed rather favorably, will end or be prolonged, or whether a reverse divergence between product prices and raw material prices will be corrected or expand will also significantly affect our business.

Under such changing circumstances, while it is very difficult to forecast demand correctly, our group will continue to pursue challenges not only in the motor business but also new growth by expanding the scope of related technologies. We expect that the machinery segment and electronics and optical components segment of the group companies will continue to grow in accordance with overall economic recoveries in their markets.

Target

Nidec’s primary target is to reach group sales of ¥1 trillion by 2010. Efforts undertaken to achieve this target include measures such as aggressive M&A strategies that underpin the rapid growth of Nidec. Nidec has the firm belief that growth must generate high profitability. To accomplish such objective on a consolidated basis, Nidec realizes that its core business must attain a higher profitability. An expansion into new business and the development of new products are other key factors to the future growth.

The foregoing statements regarding the year ending March 31, 2006 are forward-looking statements based on our assumptions and beliefs as to economic and market conditions, our performance under those conditions and other factors are subject to the qualifications set forth in the “Special Note Regarding Forward-looking Statements” under Item 3.D of this annual report. Our actual results of operations could vary significantly from those described above, as a result of factors such as:

•

a decline in the demand for computer hard disk drives and related information technology products that incorporate our motors, or a longer than expected delay in the recovery of such demand;

•

a downward movement in the pricing of our motors due to efforts by competing manufacturers to reduce excess inventory or to gain market share;

•

a general decline in the global economy, particularly levels of consumer spending and capital investment;

•

our ability to mass produce and win market acceptance of our products, particularly those that use new fluid dynamic bearing motor technology;

•

the appreciation of the Japanese yen against the U.S. dollar and other currencies in which we make significant sales or in which our assets and liabilities are denominated; and

•

other factors discussed under Item 3.D of this annual report.

In addition to the above, unanticipated events and circumstances could affect our results of operations.

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Results of Operations

The following table sets forth selected information relating to our income and expense items for each of the three years in the period ended March 31, 2005.

	Year ended March 31,
	2003		2004		2005		2005
	(Yen in millions and U.S. dollars in thousands)
Net sales	¥ 231,836		¥ 277,497		¥ 485,861		$ 4,524,267
Cost and expenses:
Cost of products sold	187,306		218,189		370,938		3,454,120
Selling, general and administrative expenses	21,302		28,542		35,340		329,081
Research and development expenses	6,824		8,751		25,918		241,345
	215,432		255,482		432,196		4,024,546
Operating income	16,404		22,015		53,665		499,721
Other income (expenses):
Interest and dividend income	364		362		929		8,651
Interest expense	(890	)	(862	)	(871	)	(8,111	)
Foreign exchange gain (loss) gain, net	(3,511	)	(3,149	)	2,377		22,134
Gain (loss) from derivative instruments, net	23		(5	)	(175	)	(1,630	)
(Loss) gain on marketable securities, net	(1,583	)	816		1,586		14,769
Gain from issuance of securities by affiliated companies	39		-		-		-
(Loss)gain on sales of investments in affiliated companies	(4	)	45		(3	)	(28	)
Other, net	69		417		(218	)	(2,030	)
	(5,493	)	(2,376	)	3,625		33,755
Income before provision for income taxes	10,911		19,639		57,290		533,476
Provision for income taxes	(1,053	)	(5,424	)	(12,847	)	(119,629	)
Income before minority interest and equity in earnings of affiliated companies	9,858		14,215		44,443		413,847
Minority interest in income (loss) of consolidated subsidiaries	644		648		10,954		102,002
Equity in net (income) / losses of affiliated companies	(1,466	)	(2,522	)	34		317
Net income	¥ 10,680		¥ 16,089		¥ 33,455		$ 311,528

Results of Operations – Year Ended March 31, 2005 Compared to Year Ended March 31, 2004

Net Sales

Our net sales increased ¥208,364 million, or 75.1%, from ¥277,497 million for the year ended March 31, 2004 to ¥485,861 million for the year ended March 31, 2005. This increase was mainly due to the addition of newly consolidated subsidiaries. In particular, net sales of Nidec Copal Corporation, Nidec Copal Electronics Corporation, Sankyo Seiki Mfg. Co., Ltd. and certain other affiliated companies were newly consolidated in January and February 2004 as a result of an increase in our ownership interest therein, and were included in our net sales for only February and March 2004. The net sales of these newly consolidated subsidiaries were ¥29,723 million for February and March 2004 and ¥207,767 million for the year ended March 31, 2005. Excluding the contribution from these newly consolidated subsidiaries, net sales increased ¥30,320 million, or 12.2%, from ¥247,774 million for the year en ded March 31, 2004 to ¥278,094 million for the year ended March 31, 2005, due primarily to an increase in sales of hard disk drive spindle motors, other small precision brushless DC motors and machinery.

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Details will be described by segment below.

Net sales of our hard disk drive spindle motors increased ¥12,314 million, or 11.5%, from ¥106,919 million for the year ended March 31, 2004 to ¥119,233 million for the year ended March 31, 2005. Unit shipments of our hard disk drive spindle motors increased by 20.4%. However, the average sales price on a yen basis dropped by slightly less than 9% as compared to the previous period. The primary factor for the small decrease in the average sales price was the increase in sales volume of high-priced goods of 1.8 inches or smaller hard disk drive spindle motors.

Net sales from hard disk drive spindle motors accounted for 38.5% of total net sales for the year ended March 31, 2004 and 24.5% of total net sales for the year ended March 31, 2005. Net sales of fluid dynamic bearing motors accounted for 77.0% of total net sales of hard disk drive spindle motors for the year ended March 31, 2004 and 90.3% of total net sales for the year ended March 31, 2005.

Net sales of other small precision brushless DC motors increased ¥26,928 million, or 78.9%, from ¥34,138 million for the year ended March 31, 2004 to ¥61,066 million for the year ended March 31, 2005.

Excluding the contribution from newly consolidated subsidiaries, net sales increased ¥2,466 million, or 7.9%, from ¥31,028 million for the year ended March 31, 2004 to ¥33,494 million for the year ended March 31, 2005. Unit shipments increased approximately 25% as compared to the previous period, which together with the impact of a stronger yen and changes in the mix of products contributed to a decrease in the average sales price of approximately 14% at an annualized rate.

Net sales of other small precision brushless DC motors accounted for 12.3% of total net sales for the year ended March 31, 2004 and 12.6% of total net sales for the year ended March 31, 2005.

Net sales of our brushless DC fans increased ¥8,388 million, or 32.2%, from ¥26,047 million for the year ended March 31, 2004 to ¥34,435 million for the year ended March 31, 2005. Excluding the contribution from newly consolidated subsidiaries, net sales increased ¥7,898 million, or 30.4%, from ¥25,986 million for the year ended March 31, 2004 to ¥33,884 million for the year ended March 31, 2005. Unit shipments only increased by approximately 11%. The primary factor for the increase was the increase in sales of high-priced goods, including those for high-end PCs and servers and for high-end MPU coolers.

Net sales of brushless DC fans accounted for 9.4% of total net sales for the year ended March 31, 2004 and 7.1% of total net sales for the year ended March 31, 2005.

Net sales of mid-size motors increased ¥2,990 million, or 9.2%, from ¥32,574 million for the year ended March 31, 2004 to ¥35,564 million for the year ended March 31, 2005. The increase in net sales was due to a sales increase in motors for home appliances, including air conditioners, and industrial use. Net sales of motors for power steering remained almost unchanged as a result of a change to sales of motors without electronic control devices during the previous period.

Net sales of mid-size motors accounted for 11.7% of our total net sales for the year ended March 31, 2004 and 7.3% of total net sales for the year ended March 31, 2005.

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Net sales of machinery increased ¥45,717 million, or 146.3%, from ¥31,240 million for the year ended March 31, 2004 to ¥76,957 million for the year ended March 31, 2005. ¥39,426 million, out of total increase, was from the addition of Nidec Copal Corporation and Sankyo Seiki Mfg. Co., Ltd. as a result of an expansion in our consolidation of these companies. Excluding the contribution of these newly consolidated subsidiaries, net sales increased ¥6,291 million, or 23.2%, from ¥27,171 million for the year ended March 31, 2004 to ¥33,462 million for the year ended March 31, 2005. The increase was primarily due to increased sales of digital information devices and liquid crystal related devices as a result of the expansion of consolidation and products related to capital investment, including the precision press of Nidec-Kyori Corporation, inspection equipment of Nidec-Read Corporatio n and various semiconductor manufacturing equipment of Nidec Tosok Corporation. However, in the fourth quarter of the current period, sales significantly declined.

Net sales of machinery accounted for 11.3% of our total net sales for the year ended March 31, 2004 and 15.8% of total net sales for the year ended March 31, 2005.

“Electronic and Optical components” is a new product category established from the current period as a result of expansion in the scope of consolidation. This product category includes optical pickup units, shutters for digital cameras and trimmer potentiometers produced by Sankyo Seiki Mfg. Co., Ltd., Nidec Copal Corporation, Nidec Copal Electronics Corporation and Nidec Nemicon Corporation. (Note: Products of these companies had been included in the “Others” product category in the previous fiscal year ended March 31, 2004). Net sales from this business for the year ended March 31, 2005 totaled ¥128,417 million and accounted for 26.4% of our total net sales year ended March 31, 2005.

Net sales of other products increased ¥4,190 million, or 23.3%, from ¥18,019 million for the year ended March 31, 2004 to ¥22,209 million for the year ended March 31, 2005. This increase mainly resulted from increased sales of products by Sankyo Seiki Mfg. Co., Ltd. and automobile parts by Nidec Tosok Corporation.

Net sales of other products accounted for 6.5% of total net sales for the year ended March 31, 2004 and 4.6% of total net sales for the year ended March 31, 2005.

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Cost of Products Sold

Our cost of products sold increased ¥152,749 million, or 70.0%, from ¥218,189 million for the year ended March 31, 2004 to ¥370,938 million for the year ended March 31, 2005. Much of the increase was attributable to Sankyo Seiki Mfg. Co., Ltd., Nidec Copal Corporation, Nidec Copal Electronics Corporation and others, in which we increased our ownership interest and which became consolidated subsidiaries in January and February 2004. As a percentage of net sales, cost of sales decreased from 78.6% to 76.3%. This was due primarily to the efficiencies of scale realized by mass production of small precision motors. Excluding the contribution from the newly consolidated subsidiaries, cost of products sold increased ¥22,459 million, or 11.5%, from ¥194,726 million for the year ended March 31, 2004 to ¥217,185 million for the year ended March 31, 2005 due primarily to increased sales.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased ¥6,798 million, or 23.8%, from ¥28,542 million for the year ended March 31, 2004 to ¥35,340 million for the year ended March 31, 2005. This increase was due primarily to the additional expenses of our newly consolidated subsidiaries as described above. As a percentage of net sales, selling, general and administrative expenses decreased from 10.3% for the year ended March 31, 2004 to 7.3% for the year ended March 31, 2005. Excluding the additional expenses from the newly consolidated subsidiaries, selling, general and administrative expenses decreased ¥662 million, or 3.1%, from ¥21,451 million for the year ended March 31, 2004 to ¥20,789 million for the year ended March 31, 2005. This was due primarily to a decrease in the disposal loss of property, plant and equipment by ¥614 million.

Research and Development Expenses

Our research and development expenses increased ¥17,167 million, or 196.2%, from ¥8,751 million for the year ended March 31, 2004 to ¥25,918 million for the year ended March 31, 2005. This increase was due in part to the additional expenses of our newly consolidated subsidiaries. As a percentage of net sales, research and development expenses increased from 3.2% for the year ended March 31, 2004 to 5.3% for the year ended March 31, 2005. Excluding the additional expenses of the newly consolidated subsidiaries, research and development expenses increased ¥9,581 million, or 124.9%, from ¥7,668 million for the year ended March 31, 2004 to ¥17,249 million for the year ended March 31, 2005. This was primarily due to an increase in expenses for our research and development with respect to sub-1.8 inch hard disk drives spindle motors, mainly used for portable music players and mid-size mot ors mainly used for automobile steering systems. An increase in expenses related to research and development resources, including labor costs for technical personnel, was another contributing factor.

Operating Income

As a result of the foregoing factors, our operating income increased ¥31,650 million, or 143.8%, from ¥22,015 million for the year ended March 31, 2004 to ¥53,665 million for the year ended March 31, 2005. As a percentage of net sales, operating income increased from 7.9% to 11.0%.

Other Income (Expenses)

We had other income in the amount of ¥3,625 million for the year ended March 31, 2005, while we incurred other expenses in the amount of ¥2,376 million for the year ended March 31, 2004.

Interest and dividend income increased ¥567 million, or 156.6%, from ¥362 million for the year ended March 31, 2004 to ¥929 million for the year ended March 31, 2005. This was primarily due to the addition of our newly consolidated subsidiaries. Excluding the effect of the addition of these newly consolidated subsidiaries, interest and dividend income increased ¥170 million, or 53.6%, from ¥317 million for the year ended March 31, 2004 to ¥487 million for the year ended March 31, 2005. This was primarily due to interest income attributable to the increased average balance of our foreign currency deposits.

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Gain on marketable securities, net increased ¥770 million, or 94.4%, from ¥816 million for the year ended March 31, 2004 to ¥1,586 million for the year ended March 31, 2005. This increase is attributable to the fact that a stable domestic stock market facilitated sales of marketable securities providing for net realized gains.

We had foreign exchange gains in the amount of ¥2,377 million for the year ended March 31, 2005, an increase of ¥5,526 million from foreign exchange losses in the amount of ¥3,149 million for the year ended March 31, 2004. This increase was primarily due in some part to the addition of our newly consolidated subsidiaries. Excluding the effect of these newly consolidated subsidiaries, we had foreign exchange gains in the amount of ¥1,686 million for the year ended March 31, 2005, an increase of ¥4,867 million from foreign exchange losses in the amount of ¥3,181 million for the year ended March 31, 2004. This was principally due to an increase in the balance of our foreign currency denominated assets during the fiscal year ended March 31, 2005 and a further depreciation in the value of the yen against relevant foreign currencies, as compared to the fiscal year ended March 31, 2004. The exchange rate of t he yen against the U.S. dollar as of March 31, 2004 and March 31, 2005 was 105.69 yen and 107.39 yen, respectively.   

Income before Provision for Income Taxes

As a result of the foregoing, our income before income taxes increased ¥37,651 million, or 191.7%, from ¥19,639 million for the year ended March 31, 2004 to ¥57,290 million for the year ended March 31, 2005.

Provision for Income Taxes

Our provision for income taxes increased ¥7,423 million, or 136.9%, from ¥5,424 million for the year ended March 31, 2004 to ¥12,847 million for the year ended March 31, 2005.

Our provision for income taxes did not increase in proportion to the income before provision for income taxes because the estimated effective income tax rate for the year ended March 31, 2005 was lower than the estimated effective income tax rate for the year ended March 31, 2004. This was mainly because the valuation allowance corresponding to the estimated taxable income for the year ending March 31, 2005 decreased primarily due to a decrease in  carryforwards losses for tax purposes as a result of the recovery in the profitability of Sankyo Seiki Mfg. Co., Ltd. The impact of tax benefits associated with foreign subsidiaries decreased due to a drop in the ratio of income from overseas subsidiaries with lower tax rates to total income resulting from the addition of Sankyo Seiki Mfg. Co., Ltd., Nidec Copal Corporation and Nidec Copal Electronics Corporation as consolidated subsidiaries which operate primarily in Japan.

Minority Interest in Income (Loss) of Consolidated Subsidiaries

Minority interest in income of our consolidated subsidiaries increased ¥10,306 million, or almost 16 times, from ¥648 million for the year ended March 31, 2004 to ¥10,954 million for the year ended March 31, 2005. This was due primarily to our increased interest in, Nidec Copal Corporation, Nidec Copal Electronics Corporation, Sankyo Seiki Mfg. Co., Ltd. and certain other affiliated companies, which became consolidated subsidiaries in January and February 2004.

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Equity in Net (Income)/Losses of Affiliated Companies

We had equity in net losses of affiliated companies in the amount of ¥34 million for the year ended March 31, 2005, as compared to and equity in net income in our affiliated companies in the amount of ¥2,522 million for the year ended March 31, 2004. This was primarily due to a decrease in the number of affiliates accounted for by the equity method as we acquired additional ownership interests in Nidec Copal Electronics Corporation, Nidec Copal Corporation, Sankyo Seiki Mfg. Co., Ltd. and certain other affiliated companies, which resulted in their consolidation in January and February 2004, respectively.

Net Income

As a result of the foregoing, our net income increased ¥17,366 million, or 107.9%, from ¥16,089 million for the year ended March 31, 2004 to ¥33,455 million for the year ended March 31, 2005.

Results of Operations – Year Ended March 31, 2004 Compared to Year Ended March 31, 2003

Net Sales

Our net sales increased ¥45,661 million, or 19.7%, from ¥231,836 million for the year ended March 31, 2003 to ¥277,497 million for the year ended March 31, 2004. This increase was mainly due to the addition of newly consolidated subsidiaries. Net sales of Nidec Copal Corporation, Nidec Copal Electronics Corporation, Sankyo Seiki Mfg. Co., Ltd. and certain other affiliated companies newly consolidated in January and February 2004 due to the increase in our ownership interest, were included in our net sales for only February and March 2004. The net sales of these newly consolidated subsidiaries for February and March 2004 were ¥29,723 million.  Excluding the contribution from these newly consolidated subsidiaries, net sales increased ¥15,938 million, or 6.9%, from ¥231,836 million for the year ended March 31, 2003 to ¥247,774 million for the year ended March 31, 2004 due pri marily to an increase in sales of hard disk drives spindle motors, other small precision brushless DC motors and machinery. Gross profit (net sales minus cost of products sold) was ¥44,530 million for the year ended March 31, 2003 and ¥59,308 million for the year ended March 31, 2004. The gross profit ratio increased from 19.2% for the year ended March 31, 2003 to 21.4% for the year ended March 31, 2004.

Net sales of our hard disk drives spindle motors increased ¥9,202 million, or 9.4%, from ¥97,717 million for the year ended March 31, 2003 to ¥106,919 million for the year ended March 31, 2004. The increase was primarily due to a 20.8% increase in unit shipments which was partially offset by a modest decline in unit prices and the yen’s appreciation. During the year ended March 31, 2004, there was an over 70% increase in unit shipments of spindle motors for 2.5-inch, 1.8-inch and other smaller hard disk drives. Net sales from hard disk drives spindle motors accounted for 42.1% of total net sales for the year ended March 31, 2003 and 38.5% of total net sales for the year ended March 31, 2004. Net sales of fluid dynamic bearing motors accounted for 56.3% of total net sales of hard disk drives spindle motors for the year ended March 31, 2003 and 77.0% of total net sales for the year ended Marc h 31, 2004. This was due primarily to a sharp increase in demand for fluid dynamic bearing motors which have been rapidly replacing demand for conventional ball bearing motors. As conventional ball bearing motors have come up against technological limitations in fulfilling market needs, this increase in net sales of fluid dynamic bearing motors was mainly due to a successful shift to mass production at our overseas factories.

Net sales of other small precision brushless DC motors increased ¥8,555 million, or 33.4%, from ¥25,583 million for the year ended March 31, 2003 to ¥34,138 million for the year ended March 31, 2004. This increase resulted from the growth of brushless DC motors mainly used for DVD drives, CD-R drives and CD-R/W drives. In particular, sales volume of these motors increased by approximately 46.0% compared to the year ended March 31, 2003. Net sales of other small precision brushless DC motors accounted for 11.0% of total net sales for the year ended March 31, 2003 and 12.3% of total net sales for the year ended March 31, 2004.

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Net sales of small precision brush DC motors increased ¥2,092 million, or 63.8%, from ¥3,280 million for the year ended March 31, 2003 to ¥5,372 million for the year ended March 31, 2004. This increase of ¥2,032 million was due primarily to the addition of net sales from two newly consolidated companies, Nidec Copal Corporation and Sankyo Seiki Mfg. Co., Ltd. Excluding the contribution from these new companies, net sales increased ¥60 million, or 1.8%, to ¥3,340 million. Net sales of small precision brush DC motors accounted for 1.4% of total net sales for the year ended March 31, 2003 and 1.9% of total net sales for the year ended March 31, 2004.

Net sales of our brushless DC fans decreased ¥1,348 million, or 4.9%, from ¥27,395 million for the year ended March 31, 2003 to ¥26,047 million for the year ended March 31, 2004. This was primarily due to a decrease in the unit sales price and declining sales volume due to a slowdown in demand that lingered over from the latter half of the previous fiscal year. The combination of sluggish demand and increasingly fierce market competition brought down the unit sales price. Net sales of brushless DC fans accounted for 11.8% of total net sales for the year ended March 31, 2003 and 9.4% of total net sales for the year ended March 31, 2004.

Net sales of mid-size motors decreased ¥4,905 million, or 13.1%, from ¥37,479 million for the year ended March 31, 2003 to ¥32,574 million for the year ended March 31, 2004. During this period, we discontinued our prior practice of selling some mid-size motors together with electronic control units purchased from a third party supplier for use in hydraulic power steering systems and began selling these mid-size motors separately. As a consequence, both our sales and cost of sales declined in respect to the amounts related to the electronic control units. Net sales of mid-size motors accounted for 16.2% of our total net sales for the year ended March 31, 2003 and 11.7% of total net sales for the year ended March 31, 2004.

Net sales of machinery increased ¥8,685 million, or 38.5%, from ¥22,555 million for the year ended March 31, 2003 to ¥31,240 million for the year ended March 31, 2004. This increase of ¥4,069 million was due primarily to the addition of net sales from two newly consolidated companies, Nidec Copal Corporation and Sankyo Seiki Mfg. Co., Ltd. Excluding the contribution from these newly consolidated subsidiaries, net sales increased ¥4,616 million, or 20.5%, from ¥22,555 million for the year ended March 31, 2003 to ¥27,171 million for the year ended March 31, 2004. This increase was primarily due to increases in unit shipments of precision presses manufactured by Nidec-Kyori Corporation, gear reducers manufactured by Nidec-Shimpo Corporation and die bonders and factory automation components manufactured by Nidec Tosok Corporation. Net sales of machinery accounted for 9.7% of our total net sales for the year ended March 31, 2003 and 11.3% of total net sales for the year endede March 31, 2004.

Net sales of other products increased ¥23,380 million, or 131.1%, from ¥17,827 million for the year ended March 31, 2003 to ¥41,207 million for the year ended March 31, 2004. This increase of ¥20,450 million was due primarily to the addition of net sales from three newly consolidated companies, Nidec Copal Electronics Corporation, Nidec Copal Corporation and Sankyo Seiki Mfg. Co., Ltd. Excluding the contribution from these newly consolidated subsidiaries, net sales increased ¥2,930 million, or 16.4%, to ¥20,757 million for the year ended March 31, 2004. During this period, sales of automobile components manufactured by Nidec Tosok Corporation and encoders manufactured by Nidec Nemicon Corporation increased. Net sales of other products accounted for 7.7% of total net sales for the year ended March 31, 2003 and 14.8% of total net sales for the year ended March 31, 2004.

Cost of Products Sold

Our cost of products sold increased ¥30,883 million, or 16.5%, from ¥187,306 million for the year ended March 31, 2003 to ¥218,189 million for the year ended March 31, 2004. Much of the increase in absolute terms was attributable to 49 newly consolidated subsidiaries, including Sankyo Seiki Mfg. Co., Ltd., Nidec-Copal Corporation, Nidec-Copal Electronics Corporation and others, in which we increased our ownership interest and which became consolidated subsidiaries in January and February 2004. Excluding the contribution from these newly consolidated subsidiaries, cost of products sold increased ¥7,420 million, or 4.0%, from ¥187,306 million for the year ended March 31, 2003 to ¥194,726 million for the year ended March 31, 2004, due primarily to the increase in sales.

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As a percentage of net sales, cost of sales decreased from 80.8% to 78.6%. This decrease was primarily due to increased efficiencies of scale through an expansion in the production of fluid dynamic bearing motors mainly undertaken by factories in Southeast Asia.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased ¥7,240 million, or 34.0%, from ¥21,302 million for the year ended March 31, 2003 to ¥28,542 million for the year ended March 31, 2004. This increase was mainly due to additional expenses of our newly consolidated subsidiaries, particularly for restructuring of factories at Sankyo Seiki Mfg. Co., Ltd. in March. As a percentage of net sales, selling, general and administrative expenses increased from 9.2% for the year ended March 31, 2003 to 10.3% for the year ended March 31, 2004.

Excluding the additional expenses from these newly consolidated subsidiaries, selling, general and administrative expenses increased ¥149 million, or 0.7%, to ¥21,451 million. This increase was due primarily to an increase in personnel expenses by ¥410 million at Nidec from ¥4,577 million for the year ended March 31, 2003 to ¥4,987 million for the year ended March 31, 2004, reflecting an expansion of its workforce and an increase in depreciation costs of tangible fixed assets by ¥243 million at Nidec from ¥276 million for the year ended March 31, 2003 to ¥519 million for the year ended March 31, 2004, reflecting the establishment of a new headquarters building. The increase was partly offset by a U.S. $8 million payment to Rotron under a settlement agreement recorded as Selling, General and Administrative expense in the previous year. On March 28, 2003, Nidec and Nidec America Corporation entered into a settlement agreement with Rotron terminating the pending litigation and exchanging reciprocal intellectual property rights and privileges whereby each side covenanted not to sue the other under existing patents as applied to existing products. Under the settlement agreement, we paid Rotron U.S. $8 million.

Research and Development Expenses

Our research and development expenses increased ¥1,927 million, or 28.2%, from ¥6,824 million for the year ended March 31, 2003 to ¥8,751 million for the year ended March 31, 2004. This increase was mainly due to the additional expenses of our newly consolidated subsidiaries. Excluding the additional expenses of these newly consolidated subsidiaries, research and development expenses increased ¥844 million, or 12.4%, from ¥6,824 million for the year ended March 31, 2003 to ¥7,668 million for the year ended March 31, 2004. This increase was mainly due to an increase in our research and development efforts with respect to fluid dynamic bearing motors and mid-size motors for automobile steering systems. As a percentage of net sales, research and development expenses increased from 2.9% to 3.2%. Excluding the impact from these newly consolidated subsidiaries, as a percentage of net sale s, research and development expenses increased from 2.9% to 3.1%.

Operating Income

As a result of the foregoing factors, our operating income increased ¥5,611 million, or 34.2%, from ¥16,404 million for the year ended March 31, 2003 to ¥22,015 million for the year ended March 31, 2004. As a percentage of net sales, operating income increased from 7.1% to 7.9%.

Other Income (Expenses)

We had other expenses in the amount of ¥2,376 million for the year ended March 31, 2004 while we incurred other expenses in the amount of ¥5,493 million for the year ended March 31, 2003.

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Foreign exchange losses decreased ¥362 million from ¥3,511 million for the year ended March 31, 2003 to ¥3,149 million for the year ended March 31, 2004.

A strategic approach taken to reduce the risks arising from exchange-rate fluctuations mitigated the impact of a simultaneous increase in the average balance of our foreign currency denominated assets and the value of the yen against relevant foreign currencies.

The exchange rate of the yen against the U.S dollar as of March 31, 2003 and March 31, 2004 was 120.20 yen and 105.69 yen, respectively.

For the year ended March 31, 2003, we had losses on sales of marketable securities in the amount of ¥22 million and other-than-temporary losses on marketable securities in the amount of ¥1,561 million. The other-than temporary losses arose mainly from our holdings of equity securities in the Japanese banking sector and were calculated based on market prices at year-end. Losses are recognized as other-than-temporary, when declines in the fair value of an individual security have been more than 20% below the carrying amount for six months. For the year ended March 31, 2004, we had gains on sales of marketable securities in the amount of ¥818 million and other-than-temporary losses on marketable securities in the amount of ¥2 million. The increases in the value of marketable securities derived mainly from a sharp recovery in the domestic stock market as compared to the previous fiscal year.

Our other income, net for the year ended March 31, 2004 was ¥417 million, while our other income, net for the year ended March 31, 2003 was ¥69 million. This was mainly because Nidec Tosok Corporation abolished the tax qualified pension plan on March 31, 2003 and adopted the defined contribution pension plan from April 1, 2003 instead. As a result, Nidec Tosok Corporation gained ¥459 million for the year ended March 31, 2004.

Income before Provision for Income Taxes

As a result of the foregoing, our income before income taxes increased ¥8,728 million, or 80.0%, from ¥10,911 million for the year ended March 31, 2003 to ¥19,639 million for the year ended March 31, 2004.

Provision for Income Taxes

Our provision for income taxes totaled approximately 5 times from ¥1,053 million for the year ended March 31, 2003 to ¥5,424 million for the year ended March 31, 2004. This was because our effective tax rate increased from 9.7% for the year ended March 31, 2003 to 27.6% for the year ended March 31, 2004.

(*) See Note 19 to the consolidated financial statements included in this annual report.

Minority Interest in Income (Loss) of Consolidated Subsidiaries

For the year ended March 31, 2004, minority interest in income of consolidated subsidiaries was ¥648 million as compared to ¥644 million for the year ended March 31, 2003.

Equity in Net (Income)/Losses of Affiliated Companies

We had equity in net income of affiliated companies in the amount of ¥2,522 million for the year ended March 31, 2004 and equity in net income in our affiliated companies in the amount of ¥1,466 million for the year ended March 31, 2003. This increase was mainly due to an increase in net income of Nidec Copal Corporation and Nidec Copal Electronics Corporation, which were affiliated companies until they became consolidated in January and February 2004.

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Net Income

As a result of the foregoing, our net income increased ¥5,409 million, or 50.6%, from ¥10,680 million for the year ended March 31, 2003 to ¥16,089 million for the year ended March 31, 2004.

Segment Information

Based on the applicable criteria set forth in the Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS No. 131”), we have fourteen reportable operating segments on which we report in our consolidated financial statements. These reportable operating segments are legal entities. One of them is Nidec Corporation, while the others are Nidec’s thirteen consolidated subsidiaries: Nidec Electronics (Thailand) Co., Ltd., Nidec (Dalian) Limited, Nidec Taiwan Corporation, Nidec Singapore Pte. Ltd., Nidec Philippines Corporation, Sankyo Seiki Mfg. Co., Ltd., Nidec Copal Corporation, Nidec Tosok Corporation, Nidec Copal Electronics Corporation, Nidec Shibaura Corporation, Nidec-Shimpo Corporation, Nidec Power Motor Corporation and Nissin Kohki Co., Ltd. For the information required by SFAS No. 131, see Note 25 to our consolidated financ ial statements included in this annual report.

Nidec-Shimpo Corporation and Nissin Kohki Co., Ltd. were identified as reportable segments for the year ended March 31, 2005. Nidec America Corporation has been excluded as an operating segment based on its reduced significance in the current period. Segment information for the year ended March 31, 2004 has been restated to conform to the current presentation.

We evaluate our financial performance based on segmental profit and loss, which consists of sales and operating revenues less operating expenses. Segmental profit or loss is determined using the accounting principles in the segment’s country of domicile. Nidec Corporation, Sankyo Seiki Mfg. Co., Ltd., Nidec Copal Corporation, Nidec Tosok Corporation, Nidec Copal Electronics Corporation, Nidec Shibaura Corporation, Nidec-Shimpo Corporation, Nidec Power Motor Corporation and Nissin Kohki Co., Ltd. apply Japanese GAAP, Nidec Electronics (Thailand) Co., Ltd. applies Thai accounting principles, Nidec (Dalian) Limited applies Chinese accounting principles, Nidec Taiwan Corporation applies Taiwanese accounting principles, Nidec Singapore Pte. Ltd. applies Singaporean accounting principles and Nidec Philippines Corporation applies Philippine accounting principles. Therefore our segmental data has not been prepared under U.S. GAAP on a basis that is consistent with our consolidated financial statements or on any other single basis that is consistent between segments. While there are several differences between U.S. GAAP and the underlying accounting principles used by the operating segments, the principal differences that affect segmental operating profit or loss are accounting for pension and severance costs, directors’ bonuses and leases. We believe that the monthly segmental information is available on a timely basis and that it is sufficiently accurate at the segment profit and loss level for us to manage our business.

The first of the following two tables shows revenues from external customers and other operating segments by reportable operating segment for the years ended March 31, 2003, 2004 and 2005. The second table shows operating profit or loss by reportable operating segment for the years ended March 31, 2003, 2004 and 2005:

	Year ended March 31,
	2003	2004	2005	2005
	(Yen in millions and U.S. dollars in thousands)
Nidec
External revenues	¥ 65,248	¥ 60,316	¥ 56,602	$ 527,070
Intersegment revenues	63,916	58,320	73,749	686,740
Sub total	129,164	118,636	130,351	1,213,810
Nidec Electronics (Thailand)
External revenues	20,484	33,003	36,891	343,524
Intersegment revenues	21,256	17,794	21,240	197,784
Sub total	41,740	50,797	58,131	541,308
Nidec (Dalian)
External revenues	48	112	754	7,021
Intersegment revenues	27,523	31,270	38,678	360,164
Sub total	¥ 27,571	¥ 31,382	¥ 39,432	$ 367,185

59

	Year ended March 31,
	2003	2004	2005	2005
	(Yen in millions and U.S. dollars in thousands)
Nidec Taiwan
External revenues	¥ 8,921	¥ 12,492	¥ 11,418	$ 106,323
Intersegment revenues	1,625	1,113	934	8,697
Sub total	10,546	13,605	12,352	115,020
Nidec Singapore
External revenues	46,708	36,668	45,442	423,149
Intersegment revenues	3,851	3,081	1,363	12,692
Sub total	50,559	39,749	46,805	435,841
Nidec Philippines
External revenues	3,602	1,511	1,094	10,187
Intersegment revenues	18,838	22,117	21,131	196,769
Sub total	22,440	23,628	22,225	206,956
Sankyo Seiki
External revenues	-	7,779	68,880	641,401
Intersegment revenues	-	3,641	19,313	179,840
Sub total	-	11,420	88,193	821,241
Nidec Copal
External revenues	-	9,146	54,067	503,464
Intersegment revenues	-	1,384	9,351	87,075
Sub total	-	10,530	63,418	590,539
Nidec Tosok
External revenues	18,933	21,211	23,992	223,410
Intersegment revenues	565	666	657	6,118
Sub total	19,498	21,877	24,649	229,528
Nidec Copal Electronics
External revenues	-	2,854	20,653	192,318
Intersegment revenues	-	372	2,355	21,929
Sub total	-	3,226	23,008	214,247
Nidec Shibaura
External revenues	15,138	15,767	14,449	134,547
Intersegment revenues	2,966	4,429	9,348	87,047
Sub total	18,104	20,196	23,797	221,594
Nidec-Shimpo
External revenues	8,020	8,476	10,317	96,070
Intersegment revenues	1,093	1,583	2,326	21,659
Sub total	9,113	10,059	12,643	117,729
Nidec Power Motor
External revenues	9,116	7,986	9,635	89,720
Intersegment revenues	93	147	340	3,166
Sub total	9,209	8,133	9,975	92,886
Nissin Kohki
External revenues	-	1,974	12,641	117,711
Intersegment revenues	-	303	1,041	9,694
Sub total	-	¥ 2,277	¥ 13,682	$ 127,405

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	Year ended March 31,
	2003		2004		2005		2005
	(Yen in millions and U.S. dollars in thousands)
All Others
External revenues	¥ 35,212		¥ 60,235		¥ 118,798		$ 1,106,229
Intersegment revenues	55,151		65,677		168,131		1,565,612
Sub total	90,363		125,912		286,929		2,671,841
Total
External revenues	231,430		279,530		485,633		4,522,144
Intersegment revenues	196,877		211,897		369,957		3,444,986
Adjustments(*)	406		(2,033	)	228		2123
Intersegment elimination	(196,877	)	(211,897	)	(369,957	)	(3,444,986	)
Consolidated total (net sales)	¥ 231,836		¥ 277,497		¥ 485,861		$ 4,524,267

(*) See Note 25 to the consolidated financial statements included in this annual report.

		Year ended March 31,
		2003		2004		2005		2005
		(Yen in millions and U.S. dollars in thousands)
Segment profit or loss:
	Nidec	¥ 3,521		¥ 1,483		¥ 2,351		$ 21,892
	Nidec Electronics (Thailand)	3,179		8,590		8,649		80,538
	Nidec (Dalian)	3,001		2,486		2,436		22,684
	Nidec Taiwan	343		362		130		1,211
	Nidec Singapore	2,020		2,489		1,935		18,018
	Nidec Philippines	1,212		1,422		(379	)	(3,529	)
	Sankyo Seiki	-		(2,581	)	7,624		70,994
	Nidec Copal	-		586		3,195		29,751
	Nidec Tosok	689		1,450		1,053		9,805
	Nidec Copal Electronics	-		307		3,583		33,364
	Nidec Shibaura	(134	)	801		1,356		12,627
	Nidec-Shimpo	501		826		1,397		13,009
	Nidec Power Motor	488		251		(392	)	(3,650	)
	Nissin Kohki	-		229		946		8,809
	All Others	3,771		6,568		13,983		130,208
	Total	18,591		25,269		47,867		445,731
	Adjustments (*)	(2,187	)	(3,254	)	5,798		53,990
	Consolidated total	¥ 16,404		¥ 22,015		¥ 53,665		$ 499,721

(*) See Note 25 to the consolidated financial statements included in this annual report.

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Net sales of Nidec increased ¥11,715 million, or 9.9%, from ¥118,636 million for the year ended March 31, 2004 to ¥130,351 million for the year ended March 31, 2005. External revenues of Nidec decreased ¥3,714 million, or 6.2%, from ¥60,316 million for the year ended March 31, 2004 to ¥56,602 million for the year ended March 31, 2005. This decrease resulted primarily from a decrease in sales of hard disk drives spindle motors due to a change in sales methods for some overseas customers. Sales to some overseas customers that were previously made through Nidec are now made through direct transactions between our overseas subsidiaries and customers. However, intersegment revenues of Nidec increased ¥15,429 million, or 26.5%, from ¥58,320 million for the year ended March 31, 2004 to ¥73,749 million for the year ended March 31, 2005. This increase resulted prim arily from an increase in sales of hard disk drives spindle motors to a main customer through Nidec Singapore Pte. Ltd. Operating profit of Nidec increased ¥868 million, or 58.5%, from ¥1,483 million for the year ended March 31, 2004 to ¥2,351 million for the year ended March 31, 2005. This increase was due primarily to an increase in commission fees from subsidiary companies.

Net sales of Nidec decreased 8.2% from ¥129,164 million for the year ended March 31, 2003 to ¥118,636 million for the year ended March 31, 2004. This decrease resulted primarily from a decrease in sales of hard disk drives spindle motors due to a change in sales methods for some overseas customers. Sales to some overseas customers that were previously made through Nidec are now made through direct transactions between our overseas subsidiaries and customers. Operating profit of Nidec decreased 57.9% from ¥3,521 million for the year ended March 31, 2003 to ¥1,483 million for the year ended March 31, 2004 reflecting the decrease in sales of hard disk drives spindle motors and an increase in research and development expenses.

Net sales of Nidec Electronics (Thailand) Co., Ltd. increased ¥7,334 million, or 14.4%, from ¥50,797 million for the year ended March 31, 2004 to ¥58,131 million for the year ended March 31, 2005 due primarily to an increase in sales of fluid dynamic bearing motors to main customers. Operating profit increased only ¥59 million, or 0.7%, from ¥8,590 million for the year ended March 31, 2004 to ¥8,649 million for the year ended March 31, 2005 due primarily to an increase in royalty expenses and commission fees to Nidec.

Net sales of Nidec Electronics (Thailand) Co., Ltd. increased 21.7% from ¥41,740 million for the year ended March 31, 2003 to ¥50,797 million for the year ended March 31, 2004 due to an increase in sales of fluid dynamic bearing motors to main customers. Operating profit increased 170.2% from ¥3,179 million for the year ended March 31, 2003 to ¥8,590 million for the year ended March 31, 2004 due primarily to the increase in sales and improvements in cost efficiency in mass production.

Net sales of Nidec (Dalian) Limited increased ¥8,050 million, or 25.7%, from ¥31,382 million for the year ended March 31, 2004 to ¥39,432 million for the year ended March 31, 2005. This increase was due primarily to an increase in customer demand for brushless DC fans for notebook-type personal computers. However, operating profit decreased 2.0% from ¥2,486 million for the year ended March 31, 2004 to ¥2,436 million for the year ended March 31, 2005 due primarily to an increase in royalty expenses to Nidec and freight and packing expenses.

Net sales of Nidec (Dalian) Limited increased 13.8% from ¥27,571 million for the year ended March 31, 2003 to ¥31,382 million for the year ended March 31, 2004 due to an increase in customer demand for DC motors for notebook-type PCs. However, operating profit decreased 17.2% from ¥3,001 million for the year ended March 31, 2003 to ¥2,486 million for the year ended March 31, 2004. The major reason for this decrease in operating profit came from a delay in cost improvements and a drop in sales prices.

Net sales of Nidec Taiwan Corporation decreased ¥1,253 million, or 9.2%, from ¥13,605 million for the year ended March 31, 2004 to ¥12,352 million for the year ended March 31, 2005 due primarily to a decrease in customer demand for brushless DC fans and DC motors. Operating profit decreased ¥232 million, or 64.1%, from ¥362 million for the year ended March 31, 2004 to ¥130 million for the year ended March 31, 2005.This decrease was due primarily to a decrease in sales and a drop in unit price of DC fans.

62

Net sales of Nidec Taiwan Corporation increased 29.0% from ¥10,546 million for the year ended March 31, 2003 to ¥13,605 million for the year ended March 31, 2004 due to an increase in customer demand for DC fans and DC motors. However, operating profit increased only 5.5% from ¥343 million for the year ended March 31, 2003 to ¥362 million for the year ended March 31, 2004 due to a drop in unit price of DC fans.

Net sales of Nidec Singapore Pte. Ltd. increased ¥7,056 million, or 17.8%, from ¥39,749 million for the year ended March 31, 2004 to ¥46,805 million for the year ended March 31, 2005 due primarily to an increase in sales of hard disk drives spindle motors to main customers. However the operating profit of Nidec Singapore Pte. Ltd. decreased ¥554 million, or 22.3%, from ¥2,489 million for the year ended March 31, 2004 to ¥1,935 million for the year ended March 31, 2005 due primarily to decreased sales of higher margin products.

Net sales of Nidec Singapore Pte. Ltd. decreased 21.4% from ¥50,559 million for the year ended March 31, 2003 to ¥39,749 million for the year ended March 31, 2004 due to a delay of our response to a change in product specification of fluid dynamic bearing motors by a main customer. However, operating profit of Nidec Singapore Pte. Ltd. increased 23.2% from ¥2,020 million for the year ended March 31, 2003 to ¥2,489 million for the year ended March 31, 2004 due primarily to an increase in sales from the profitable manufacturing division by 13.5%.

Net sales of Nidec Philippines Corporation decreased ¥1,403 million, or 5.9%, from ¥23,628 million for the year ended March 31, 2004 to ¥22,225 million for the year ended March 31, 2005. This decrease in sales was due primarily to a decrease in sales of conventional ball bearing motors to a few main customers. Also, a main customer in Thailand purchased fluid dynamic bearing motors from Nidec Electronics (Thailand) Co., Ltd. instead of Nidec Philippines Corporation. Nidec Philippines Corporation had operating profit of ¥1,422 million for the year ended March 31, 2004 where as it had an operating loss of ¥379 million for the year ended March 31, 2005. This was due primarily to the decrease in sales and an increase in depreciation of tangible fixed assets related to the expansion of our fluid dynamic bearing motors production capacity. The adverse impact from decentralization of producti on in the Philippines to two factories as a result of absorbing the FDB department of Sankyo Seiki Mfg. Co., Ltd. and an increase in fixed costs not fully absorbed also contributed to the operating loss for the year ended March 31, 2005.

Net sales of Nidec Philippines Corporation increased 5.3% from ¥22,440 million for the year ended March 31, 2003 to ¥23,628 million for the year ended March 31, 2004 due to a successful shift to fluid dynamic bearing motors from ball bearing motors. Operating profit of Nidec Philippines Corporation increased 17.3% from ¥1,212 million for the year ended March 31, 2003 to ¥1,422 million for the year ended March 31, 2004 due to the increase in sales and an improvement in production efficiency of parts for fluid dynamic bearing motors.

Net sales of Sankyo Seiki Mfg. Co., Ltd. were ¥11,420 million for the year ended March 31, 2004 and ¥88,193 million for the year ended March 31, 2005. Sankyo Seiki had an operating loss of ¥2,581 million for the year ended March 31, 2004 where it had operating profit of ¥7,624 million for the year ended March 31, 2005. Sankyo Seiki has been consolidated since February 2004, and thus only its net sales and operating loss for February and March 2004 are reflected in our consolidated net sales and operating profit for the year ended March 31, 2004. It recorded a significant amount of loss due to the expenses for reconstruction of factories in March 2004

Net sales of Nidec Copal Corporation were ¥10,530 million for the year ended March 31, 2004 and ¥63,418 million for the year ended March 31, 2005. Operating profit was ¥586 million for the year ended March 31, 2004 and ¥3,195 million for the year ended March 31, 2005. Nidec Copal Corporation has been consolidated since February 2004, and thus only its net sales and operating profit for February and March 2004 are reflected in our consolidated net sales and operating profit for the year ended March 31, 2004.

63

Net sales of Nidec Tosok Corporation increased ¥2,772 million, or 12.7%, from ¥21,877 million for the year ended March 31, 2004 to ¥24,649 million for the year ended March 31, 2005 due primarily to an increase in sales of automobile parts and semiconductor fabrication equipment. However, operating profit decreased ¥397 million, or 27.4%, from ¥1,450 million for the year ended March 31, 2004 to ¥1,053 million for the year ended March 31, 2005. This decrease was due primarily to an increase in research and development expenses related to automobile parts and in depreciation of tangible fixed assets related to the head office.

Net sales of Nidec Tosok Corporation increased 12.2% from ¥19,498 million for the year ended March 31, 2003 to ¥21,877 million for the year ended March 31, 2004 due to an increase in sales of automobile parts and instruments for testing. Operating profit increased 110.4% from ¥689 million for the year ended March 31, 2003 to ¥1,450 million for the year ended March 31, 2004 due primarily to an increase in sales and production shift to overseas countries.

Net sales of Nidec Copal Electronics Corporation were ¥3,226 million for the year ended March 31, 2004 and ¥23,008 million for the year ended March 31, 2005. Operating profit was ¥307 million for the year ended March 31, 2004 and Nidec Copal Electronics Corporation has been consolidated since January 2004, and thus only its net sales and operating profit for January through March 2004 contributed to our net sales and operating profit for the year ended March 31, 2004.

Net sales of Nidec Shibaura Corporation increased ¥3,601 million, or 17.8%, from ¥20,196 million for the year ended March 31, 2004 to ¥23,797 million for the year ended March 31, 2005 due primarily to an increase in sales of mid-size motors and machines from the trading division. Operating profit increased ¥555 million, or 69.3%, from ¥801 million for the year ended March 31, 2004 to ¥1,356 million for the year ended March 31, 2005. The major reason for this increase in operating profit came from the increase in sales of machines from Nidec Shibaura Corporation’s trading division.

Net sales of Nidec Shibaura Corporation increased 11.6% from ¥18,104 million for the year ended March 31, 2003 to ¥20,196 million for the year ended March 31, 2004 due to an increase in sales of machines. Although Nidec Shibaura Corporation recorded an operating loss of ¥134 million for the year ended March 31, 2003, it had operating profit of ¥801 million for the year ended March 31, 2004 mainly due to a decrease in the write-off of obsolete inventory.

Net sales of Nidec-Shimpo Corporation increased ¥2,584 million, or 25.7%, from ¥10,059 million for the year ended March 31, 2004 to ¥12,643 million for the year ended March 31, 2005 due primarily to an increase in sales of power transmission equipment and factory automation equipment for the Chinese market. Operating profit of Nidec-Shimpo Corporation increased ¥571 million, or 69.1%, from ¥826 million for the year ended March 31, 2004 to ¥1,397 million for the year ended March 31, 2005. The increase in operating profit resulted primarily from an increase in sales and a cost reduction due to a shift of production to China.

Net sales of Nidec-Shimpo Corporation increased ¥946 million, or 10.4%, from ¥9,113 million for the year ended March 31, 2003 to ¥10,059 million for the year ended March 31, 2004 due primarily to an increase in sales of power transmission equipment and factory automation equipment. Operating profit of Nidec-Shimpo Corporation increased ¥325 million, or 64.9%, from ¥501 million for the year ended March 31, 2003 to ¥826 million for the year ended March 31, 2004. The increase in operating profit resulted primarily from an increase in sales and a cost reduction due to a successful shift of production to China.

64

Net sales of Nidec Power Motor Corporation increased ¥1,842 million, or 22.6%, from ¥8,133 million for the year ended March 31, 2004 to ¥9,975 million for the year ended March 31, 2005. This was due primarily to increased demand for AC motors across industries. Nidec Power Motor Corporation had operation profit of  ¥251 million for the year ended March 31, 2004 where as it had an operating loss of ¥392 million for the year ended March 31, 2005. This was due primarily to an increase in personnel expenses and freight and packing expenses and a drop in the gross profit margin due to rise in the price of steel materials.

Net sales of Nidec Power Motor Corporation decreased 11.7% from ¥9,209 million for the year ended March 31, 2003 to ¥8,133 million for the year ended March 31, 2004 due to sluggish demand for AC motors across industries and a price war as a result of severe competition. Operating profit of Nidec Power Motor Corporation decreased 48.6% from ¥488 million for the year ended March 31, 2003 to ¥251 million for the year ended March 31, 2004 due to the decrease in sales and an increase in personnel expenses.

Net sales of Nissin Kohki Co., Ltd. were ¥2,277 million for the year ended March 31, 2004 and ¥13,682 million for the year ended March 31, 2005. It had operating profit of ¥229 million for the year ended March 31, 2004 and ¥946 million for the year ended March 31, 2005. Nissin Kohki has been consolidated since February 2004 and thus only its net sales and operating profit for February and March 2004 contributed to our consolidated net sales and operating profit for the year ended March 31, 2004.

Within the All Others segment, net sales increased ¥161,017 million, or 127.9% from ¥125,912 million for the year ended March 31, 2004 to ¥286,929 million for the year ended March 31, 2005. Operating profit also increased ¥7,415 million, or 112.9% from ¥6,568 million for the year ended March 31, 2004 to ¥13,983 million for the year ended March 31, 2005. The net sales and operating profits of our newly consolidated subsidiaries other than Nidec Copal Corporation, Nidec Copal Electronics Corporation, Sankyo Seiki Mfg. Co., Ltd., and Nissin Kohki Co., Ltd. were ¥148,171 million and ¥5,810 million for the year ended March 31, 2005, respectively, and were included in the All Others segment. Excluding the contribution from these newly consolidated subsidiaries, net sales and operating profit increased ¥35,009 million and ¥1,858 million, respectively, mainly due to the expansion and improvement of profitability in Nidec (Dongguan) Corporation, Nidec (Zhejiang) Corporation.

Within the All Others segment, net sales increased 39.3% from ¥90,363 million for the year ended March 31, 2003 to ¥125,912 million for the year ended March 31, 2004. Operating profit also increased 67.5% from ¥3,771 million for the year ended March 31, 2003 to ¥6,568 million for the year ended March 31, 2004. The net sales and operating profits of our newly consolidated subsidiaries other than Nidec Copal Corporation, Nidec Copal Electronics Corporation, Sankyo Seiki Mfg. Co., Ltd. and Nissin Kohki Co., Ltd. were ¥22,163 million and ¥253 million for the year ended March 31, 2004, respectively, and were included in the All Others segment. Excluding the contribution from these newly consolidated subsidiaries, net sales and operating profit increased ¥13,386 million and ¥2,544 million, respectively, mainly due to the expansion and improvement of profitability in Nidec (Dongguan) Corporation and Nidec Shibaura (Zhejiang) Co., Ltd.

65

Recent Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards No. 151 (“SFAS 151”), “Inventory Costs an amendment of ARB No. 43, Chapter 4.” SFAS 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expenses, freight, handling costs and wasted material (spoilage).  Among other provisions, the new rule requires that such items be recognized as current-period charges, regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43.  SFAS 151 is effective for fiscal years beginning after June 15, 2005. We do not expect that adoption of SFAS 151 will have a material effect on our consolidated financial position, consolidated results of operations, or liquidity.

In December 2004, the FASB issued SFAS No. 123R (“SFAS 123R”), revised 2004, “Share-Based Payment.”  SFAS 123R requires employee stock options and rights to purchase shares under stock participation plans to be accounted for under the fair value method, and eliminates the ability to account for these instruments under the intrinsic value method prescribed by APB Opinion No. 25 and allowed under the original provisions of SFAS 123.  SFAS 123R requires the use of an option pricing model for estimating fair value, which is amortized to expense over the service periods.  Based on existing employee stock options and rights to purchase shares under stock participation plans, we do not expect SFAS 123R to have material effect on our consolidated financial position, consolidated results of operations, or liquidity.

66

Application of Critical Accounting Policies

The Company and its subsidiaries in Japan maintain their records and prepare their financial statements in accordance with accounting principles generally accepted in Japan, and its foreign subsidiaries in conformity with those of their countries of domicile. Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results may differ from these estimates, judgments and assumptions.

An accounting estimate in our financial statements is a critical accounting estimate if it requires us to make assumptions about matters that are highly uncertain at the time the accounting estimate is made, and either different estimates that we reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. We have identified the following critical accounting policies with respect to our financial presentation.

Inventories

Our inventories, which consist primarily of finished products such as hard disk drive spindle motors, are stated at the lower of cost or market value. Cost is determined principally using the weighted average cost method and the market value is mainly based on net realizable value less direct sales costs. These products are exposed to frequent innovation, the introduction of new products to the market and short product life cycles due to rapid technological advances and model changes. We periodically assess the market value of our inventory, based on sales trends and forecasts and technological changes and write off inventories with no movement for one year or when it is apparent that there is no possibility of future sales or usage. We did not record significant inventory write-offs during the years ended March 31, 2004 or 2005. We may have to recognize large amounts of inventory write-off as a result of an unexpected decli ne in market conditions, changes in demand or changes in our product line.

Other-than-temporary Losses on Marketable Securities

We review the market value of our marketable securities at the end of each fiscal quarter. Our marketable securities consist of available-for-sale securities and investments in listed subsidiaries. Other-than-temporary losses on individual marketable securities are charged to income in the period as incurred. Losses on available-for-sale securities are classified as other-than-temporary based on the length of time and the extent to which the fair value has been less than the carrying amount. When the carrying amount of the equity-method investment exceeds the quoted market value at the end of each period, we write down such investment to the market value if the decline in fair value below the carrying amount is considered other-than-temporary. In determining if a decline in the fair value of equity-method investment is other-than-temporary, we take into consideration the length of time and the extent to which the fair value has b een less than the carrying amount, the financial condition and estimated future profitability of the company. The fair value of marketable securities is based on quoted market prices. Our management employs a systematic methodology to assess the recoverability of such investments by reviewing the financial position of underlying companies and prevailing market conditions in which these companies operate to determine if our investment in each of these companies is impaired and whether the impairment is other-than-temporary.

We believe that the accounting estimate related to investment impairment is a critical accounting policy because:

•

it is highly susceptible to change from period to period because it requires our management to make assumptions about future financial condition and cash flows of investees; and

•

the impact that recognizing an impairment would have on the total assets reported on our balance sheet as well as our operating income would be material.

As of March 31, 2004 and 2005, the estimated fair value of our marketable securities was ¥17,839 million and ¥16,559 million, respectively. We recorded gain on marketable securities in the amount of ¥816 million and ¥1,586 million for the years ended March 31, 2004 and 2005, respectively.

67

Allowance for Doubtful Accounts

We maintain a general allowance for doubtful accounts based on the historical rate of credit losses experienced. We additionally provide allowances for specific customer accounts deemed uncollectible. Management assesses the need for specific allowances based on changes in the customers’ financial condition and length of time the account has remained overdue. As our customer base is highly concentrated, the nonfulfillment or delay in payment caused by even one of our major customers may require us to record a significant additional allowance. For the year ended March 31, 2005, sales to our six largest customers represented approximately 29% of our net sales. Our accounts receivable are likewise concentrated. At March 31, 2005, six customers represented ¥33.6 billion, or 30%, of our gross accounts receivable. In addition, during economic downturns, certain number of our customers may have difficulty with their cash flows.

Although we believe that we can make reliable estimates for doubtful accounts, customer concentrations as well as overall economic conditions may affect our ability to accurately estimate the allowance for doubtful accounts. Our allowance for doubtful accounts amounted to ¥623 million as of March 31, 2004 and ¥484 million as of March 31, 2005. Our trade notes and accounts receivable balance was ¥129,919 million, net of allowance for doubtful accounts, as of March 31, 2005.

Deferred Tax Assets

As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process requires us to estimate our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as deferred revenue, for tax and accounting purposes. These differences resulted in deferred tax assets and liabilities, which were included within our consolidated balance sheet. As of March 31, 2005 we had deferred tax assets in the amount of ¥10,346 million. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the t ax provision in our income statement.

Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We have recorded a valuation allowance of ¥15,585 million as of March 31, 2005, due to uncertainties related to our ability to utilize some of our deferred tax assets, primarily consisting of certain net operating losses carried forward for tax purposes incurred by our subsidiaries. Our determination to record valuation allowances is based on a history of unprofitable periods by the subsidiaries and their estimated future profitability. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to establish an additional valuation allowance which could have an adverse effect on our financial position and results of operations.

Impairment of Long-lived Assets

Long-lived assets, consisting primarily of property, plant and equipment, comprised approximately 31% of our total assets as of March 31, 2005. We carefully monitor the appropriateness of the estimated useful lives of these assets. Whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable, we review the respective assets for impairment. An impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows. We review idle assets for possible impairment based on their condition or based on the probability of future use. Changes in technology, market demand, our planned product mix, or in our intended use of these assets, may cause the estimated period of use or the value of these assets to change. In addition, changes in general industry conditions such as increased competition could cause the value of a certain amo unt of these assets to change. Estimates and assumptions used in both estimating the useful life and evaluating potential impairment issues require a significant amount of judgment. As such, our judgment as to the recoverability of capitalized amounts and the amount of any impairment will be significantly impacted by such factors.

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Acquisitions

In recent years, we have made a number of significant business acquisitions, which have been accounted for using the purchase method of accounting. The purchase method requires that the net assets, tangible and identifiable intangible assets less liabilities of the acquired company be recorded at fair value, with the difference between the cost of an acquired company and the fair value of the acquired net assets recorded as goodwill. Application of the purchase method requires our management to make complex judgments about the allocation of the purchase price to that of the fair value of the net assets we acquire and estimation of the related useful lives. The determinations of fair value of assets and liabilities are primarily based on factors such as independent appraisers’ cash flow analysis and quoted market prices, if available.

Valuation of Goodwill

We assess the impairment of acquired goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:

•

significant underperformance relative to expected historical or projected future operating results;

•

significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

•

significant negative industry or economic trends;

•

significant decline in the stock price of the acquired entity for a sustained period; and

•

market capitalization of the acquired entity relative to its net book value.

When we determine that the carrying value of goodwill and other intangibles may not be recoverable, based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a projected discounted cash flow determined by our management to be commensurate with the risk inherent in our current business model. Changes in the projected discounted cash flow could negatively affect the valuations. Goodwill amounted to ¥40,664 million as of March 31, 2005.

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Pension Plans

We account for our defined benefit pension plans in accordance with Statement of Financial Accounting Standards No. 87, “Employer’s Accounting for Pensions.” For periodic pension calculation, we are required to assume some components, which include expected return on plan assets, discount rate, rate of increase in compensation levels and average remaining years of service. We use long-term historical actual return information and estimated future long-term investment returns by reference to external sources to develop our expected rate of return on plan assets. The discount rate is assumed based on the rates available on high-quality fixed-income debt instruments with the same period to maturity as the estimated period to maturity of the pension benefit. We assume a rate of increase in compensation levels and average remaining years of service based on our historical data. Changes in these assumptions will have an impact on our net periodic pension cost. For example, a significant assumption used in determining our accrued pension and severance costs is the expected weighted-average rate of return on plan assets.

The following table shows the sensitivity to a change in the expected return on plan assets, holding all other assumptions constant, for pension plans of Japan-based employees as of March 31, 2005.

	Yen in millions
Change in assumption	Pre-tax pension expense	Equity (Net of tax)
50 basis point increase/decrease in expected return on plan assets	-/+ 49	+/- 29

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B. Liquidity and Capital Resources

Our principal needs for cash are:

•

payments for the purchase of parts and raw materials;

•

payments for the purchase of equipment for our production facilities;

•

selling, general and administrative expenses such as research and development expenses;

•

payments for the purchase of shares of companies targeted under our acquisitions strategy;

•

employees’ salaries, wages and other payroll costs;

•

repayment of short-term debt;

•

payments of dividends to our shareholders; and

•

taxes.

We fund our growth primarily with funds generated from operations, proceeds from issuances of  new shares, unsecured bonds, including convertible bonds, and borrowings from banks. We believe that these funding sources, as well as future sources of external funding, will be sufficient to meet our capital requirements for the current fiscal year. The uses of funds raised are capital expenditures, investment in and financing of affiliated companies and repayment of borrowings from banks. We intend to implement additional funding programs as the need arises to further strengthen our capital base, and thus enhance the balance between borrowings and equity capital. Part of the funds raised going forward will be reserved and utilized for potential mergers and acquisitions.

During the year ended March31, 2005, we issued 5,620,000 shares of common stock in a public offering in Japan and received proceeds in the amount of ¥59,954 million. We used the proceeds mainly for capital expenditures and the remainder for repayments of borrowings. We intend to obtain significant amounts of cash through offerings of securities as necessary in the future.

We actively seek to implement group financing strategies within Nidec Group in order to improve our cash efficiencies on a consolidated basis and reduce capital costs. For example, our subsidiaries actively repay loans with higher interest rates from banks and we extend loans with lower interest rates to these subsidiaries. We work to reduce finance costs on a consolidated basis by thoroughly reviewing and managing the group’s financing costs and allocating surplus cash effectively within the group through balancing cash flows and investment activities including mergers and acquisitions.

Total assets increased ¥40,287 million from ¥443,886 million to ¥484,173 million for the year ended March 31, 2005. Trade accounts receivable increased ¥16,059 million due to an increase in sales. Property, plant and equipment increased ¥16,794 million due primarily to construction of a new head office building by Nidec Tosok Corporation and additional machinery and equipment purchases to increase production in overseas companies. Goodwill also increased ¥12,586 million due to additional investments in subsidiaries.

Total liabilities decreased ¥63,083 million from ¥284,709 million to ¥221,626 million for the year ended March 31, 2005. This was mainly due to repayments of short-term borrowings of ¥58,158 million using cash flows from operations and the issuance of new shares.

Working capital, defined as current assets less current liabilities, increased ¥60,995 million from ¥39,621 million to ¥100,616 million as of March 31, 2005 as compared to March 31, 2004. This was due primarily to the decrease in short-term borrowings.

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Our receivable turnover ratio is calculated by dividing net sales for the year ended March 31 by the year-end trade notes and accounts receivable balance. Our receivable turnover ratio was 3.7 for the year ended March 31, 2005, compared to 4.0 for the year ended March 31, 2004. The inventory turnover ratio is calculated by dividing cost of products sold for the year ended March 31 by the year-end inventory balance. Our inventory turnover ratio was 7.6 for the year ended March 31, 2005, compared to 9.1 for the year ended March 31, 2004. Our receivable turnover ratio and inventory turnover ratio for the year ended March 31, 2004 were calculated excluding newly consolidated companies in January and February 2004 as we did last fiscal year. We have been trying to reduce production levels to enable us to reduce our excess inventory levels and avoid write-offs, but did not reach satisfactory results during this fiscal year.

Total shareholder’s equity increased ¥96,994 million, or 88.1%, from ¥110,046 million for the year ended March 31, 2004 to ¥207,040 million for the year ended March 31, 2005. This increase was mainly due to the issuance of new shares of ¥59,954 million and an increase in retained earnings of ¥31,067 million, offset by dividends paid of ¥2,388 million. As a result, the ratio of stockholders’ equity to total assets increased from 24.8% as of March 31, 2004 to 42.8% as of March 31, 2005.

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Cash Flows

Net cash provided by operating activities increased ¥12,923 million from ¥31,410 million for the year ended March 31, 2004 to ¥44,333 million for the year ended March 31, 2005. This was mainly due to an increase in net income of ¥17,366 million. In addition, non-cash income statement items such as depreciation, minority interest in income of consolidated subsidiaries and equity in net income of affiliated companies increased ¥20,117 million. This was offset by decreases in notes and accounts receivable and notes and accounts payable as compared to the prior year of ¥16,304 million and decrease in accrual for pension and severance costs, net payment of ¥8,410 million due to the transfer to Japanese Government of Substitutional Portion of Employee Pension Fund Liabilities. Excluding the effect of newly consolidated subsidiaries, net cash provided by operating activities increased ¥3 ,042 million from ¥25,011 million to ¥28,053 million.

Net cash provided by operating activities increased ¥7,122 million from ¥24,288 million for the year ended March 31, 2003 to ¥31,410 million for the year ended March 31, 2004 mainly due to increases in net income of ¥5,409 million and depreciation of ¥1,411 million. Depreciation increased mainly due to investments in machinery and equipment for production of fluid dynamic bearing motors. Other non-cash income statement items or increase/decrease of current assets and liabilities did not significantly affect the total.

Net cash used in investing activities increased ¥24,755 million from ¥21,133 million for the year ended March 31, 2004 to ¥45,888 million for the year ended March 31, 2005. This was mainly due to increases in additions to property, plant and equipment of ¥14,626 million and investments in consolidated subsidiaries of ¥11,046 million, as well as decreases in investments in and advances to affiliated companies and in acquisitions of consolidated subsidiaries, net of cash acquired. Excluding the effect of newly consolidated subsidiaries, net cash used in investing activities increased ¥7,389 million from ¥21,124 million to ¥28,513 million.

Net cash used in investing activities decreased ¥2,046 million from ¥23,179 million for the year ended March 31, 2003 to ¥21,133 million for the year ended March 31, 2004. This decrease was mainly due to increases in acquisition of consolidated subsidiaries, net of cash acquired, of ¥16,435 million and investments in and advances to affiliated companies of ¥14,114 million by acquiring stakes in newly consolidated subsidiaries after adding investments to affiliated companies. We focused on investments in facilities equipment mainly for our production of fluid dynamic bearing motors. The additions to property, plant and equipment for the years ended March 31, 2003 and 2004 were ¥21,715 million and ¥22,631 million, respectively.

Net cash used in financing activities was ¥2,494 million for the year ended March 31, 2005, while net cash provided by financing activities was ¥32,494 million for the year ended March 31, 2004. This was mainly due to an increase in the repayment of short-term borrowings of ¥69,028 million and a decrease in proceeds from issuance of corporate bonds of ¥30,873 million, which were partly offset by an increase in proceeds from the issuance of shares of ¥60,133 million. Excluding the effect of newly consolidated subsidiaries, net cash provided by financing activities decreased ¥34,811 million from ¥37,601 million to ¥2,790 million.

Net cash provided by financing activities was ¥32,494 million for the year ended March 31, 2004, while net cash used in financing activities was ¥4,163 million for the year ended March 31, 2003. This increase in net cash provided by financing activities of ¥36,657 million primarily came from proceeds from issuance of yen denominated zero coupon convertible bonds with stock acquisition rights of ¥30,873 million and a decrease in repayments of long-term debts of ¥8,498 million. The face value of such zero coupon convertible bonds was ¥30,000 million and the issue price was 103.00% of the face value. With respect to the stock acquisition rights under the convertible bonds, the conversion price per share is ¥13,905 and the number of shares issuable upon conversion of bonds at the initial conversion price is 2,222,222.

As a result of the foregoing factors and the effect of exchange rate changes, our total outstanding balance of cash and cash equivalents decreased ¥3,281 million from ¥73,392 million as of March 31, 2004 to ¥70,111 million as of March 31, 2005. Excluding the effect of newly consolidated subsidiaries, our total outstanding balance of cash and cash equivalents increased ¥2,796 million from ¥31,502 million as of March 31, 2004 to ¥34,298 million as of March 31, 2005.

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C. Research and Development, Patents and Licenses, etc.

An important requirement for success in the highly competitive markets we serve is the ability to supply products that incorporate leading edge technology and quality. Given that competition has been intensifying, one of the major aims of our research and development activities in recent years has been to reduce the cost of design without affecting the quality of our products. We employed approximately 1,825 people engaged in research and development mainly in Japan as well as in the United States, Singapore, China, Malaysia and Taiwan, as of March 31, 2005.

Our position as the leading supplier of hard disk drive spindle motors to the major hard disk drive manufacturers provides us with access to information regarding the industry, which we seek to incorporate into our research and development activities. We seek to quickly develop products that match the precise needs of each customer.

Based on precision engineering expertise gained from our history of making motors, we have concentrated our research and development activities on drive motor technologies. However, we are conducting research in many areas, including the basic technologies of spindle motors for various types of information equipment, as well as technologies for new types of motors such as fluid dynamic bearing technology, which we have been developing for the past several years.

We are diversifying our research and development activities, which have been heavily concentrated on small motor technology in the field of spindle motors, to motor and drive technologies in new fields. For example, through Nidec Shibaura Corporation and Nidec Tosok Corporation, we focus on the research and development of motors for home electric appliances and motors for automobile parts. Also, through Nidec-Shimpo Corporation, our subsidiary specializing in power transmission drives and variable speed drives, we have been focusing on the research and development of geared motors for color copiers. By doing so, we have been able to develop and market new products through our integrated sales design and production system.

In January and February 2004, Nidec Copal, Nidec Copal Electronics and Sankyo Seiki became our consolidated subsidiaries. Nidec Copal has a substantial majority of market share in shutters for digital cameras and has been developing shutters and lens units. It has developed vibration motors for mobile phones and laboratory systems equipment, among other industrial equipment related products. Nidec Copal Electronics has developed ultra-precision fixed resistors for its circuit parts business and coreless type polygon laser scanners for its actuator business. It has also promoted the development of sensors for its pressure sensor business, mainly for the semiconductor equipment industry. Sankyo Seiki has developed intelligent mechanism products, which have merged fine mechatronics and software, coupled with the development of ultra-precision processing technology. These activities include research and development of multimedia equi pment, information accessory equipment such as computers, industrial equipment, home electronics and housing equipment.

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Recently, our principal research and development activities have been as follows:

•

the development of fluid dynamic bearing spindle motors, including the technology for installing fluid dynamic bearing spindle motors in hard disk drives smaller than 1.8-inches and fluid dynamic bearing spindle motors using sintered-alloy metal;

•

the development and improvement of basic motor characteristics. For example, in order to achieve a higher transfer rate of memory written on hard disks, higher rotation speeds are required of spindle motors. As a result, spindle motors which were formerly required to generate 5,400 rotations per minute are now required to generate 7,200 to 15,000 rotations per minute. These higher speeds can, however, produce more vibration. Such vibration, as well as the higher density of disks, can disrupt the read-write function of hard disk drives. Accordingly, precise rotation has become more important, and we are therefore conducting research and development with a view to improving the precision of rotation;

•

the improvement of analysis and material technologies, including (1) improving technologies for investigating the impact of spindle motors on hard disks, (2) improving the cleanliness of materials and of manufacturing technology and (3) research into the development of uses of new materials for spindle motors;

•

the development of spindle motors smaller than a 1.0-inch disc, used for digital still cameras, selected mobile phones, car navigation systems and digital video cameras;

•

the development and improvement of spindle motors for DVDs;

•

the development and improvement of DC fan motors with a high airflow capacity that helps disperse heat inside end products including computers, game machines and audio-visual equipments;

•

the development of new lines of small brushless DC motors, including those used for home electric appliances and automobile parts;

•

the development of new lines of spin finishing machines, high performance electric micrometers and two-channel digital air micrometers;

•

the development of gear reducers, including additional lines of gear reducers tailored for the American and Asian markets;

•

Series production of shutters, IC card printers and patch units of related products by Nidec Copal;

•

Development of ultra precision fixed resistors, coreless polygon laser scanners and sensors mainly for the semiconductor equipment industry by Nidec Copal Electronics; and

•

Development of stepping motors for downsizing digital camera, development of products and accessory equipment, card reader technology, liquid crystal substrate robots and energy saving models of core actuators corresponding to the needs of customers by Sankyo Seiki.

The core of our research and development activities is our Central Laboratory, located at our headquarters in Kyoto. In addition to basic and applied research, the Central Laboratory supports the development of products that incorporate the latest technology. Market requirements are becoming more demanding. To respond to them reliably and promptly, we have established research and development bases in various countries and regions. We operate technical centers most notably in Kyoto, and also in Shiga, Nagano and Tottori Prefectures in Japan. These operations carry out research and development relating not only to new product development, but also to the improvement of quality and production technology for existing products.

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Utilizing state-of-the-art testing, inspection and measurement equipment, we are increasing our understanding and use of various basic technologies, not only precision motor machining technology, but also in fields such as mechanical and materials engineering and applied chemistry. Accurate and prompt inspection, analysis and measurement performed using state-of-the-art equipment are an integral element of our product and process development. The manufacture of precision motors requires high precision, measurement and analysis at the level of hundredths of a micron. Each material must be analyzed at the molecular level in order to prevent contamination, dust and gases, which are generated by adhesives and other materials and which can infiltrate the minute gap between the disk surface and the head. Using the latest equipment, our Research and Development Department conducts rigorous inspection, measurement and analysis, and utili zes the results to improve product design and process capabilities.

Similarly, we respond to challenges such as noise reduction, using advanced equipment and our own methods. Today, noise reduction is a significant issue in the computer and consumer electronics fields. In order to address this issue, we have constructed acoustic test rooms, consisting of reverberation and sound anechoic chambers which conform to international standards, where we conduct tests, measurement and analysis.

In addition to its motor business, Nidec Copal operates technology development centers in Itabashi, Tokyo and Koriyama, Fukushima Prefecture. Nidec Copal Electronics has technology development centers in Irima, Saitama Prefecture, Tajiri, Miyagi Prefecture and Sano, Tochigi Prefecture. Sankyo Seiki operates its technology development centers in Shimosuwa, Komagane and Chino in Nagano Prefecture and Itabashi, Tokyo.

We incurred research and development expenses of ¥6,824 million for the year ended March 31, 2003, ¥8,751 million for the year ended March 31, 2004 and ¥25,918 million for the year ended March 31, 2005.

Much of our research and development is conducted by our domestic subsidiaries, which we then reimburse for costs incurred. We also cooperate with our affiliates to conduct significant research and development. We anticipate spending approximately ¥28,500 million on research and development in the year ending March 31, 2006. We believe that our research and development expenses are sufficient for sustaining our competitiveness in the motor industry and other industries.

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D. Trend Information.

The information required by this item is set forth in Item 5.A of this annual report.

E. Off-Balance Sheet Arrangements.

Contingent liabilities for guarantees given in the ordinary course of business amounted to approximately ¥682 million ($6,351 thousand) at March 31, 2005. On April 2002, our consolidated subsidiary, Nidec Tosok Corporation, agreed to a guarantee for Okaya Seiken Corporation, subcontractor of Nidec Tosok Corporation, totaling ¥298 million ($2,775 thousand) in order to provide funds for Okaya’s manufacturing facilities in Vietnam.

In addition, we have guaranteed approximately ¥384 million ($3,576 thousand) of bank loans of employees for their housing costs. If an employee defaults on his/her loan payments, we are required to perform under the guarantee. The undiscounted maximum amount of our obligation to make future payments in the event of defaults is approximately ¥682 million ($6,351 thousand). The current carrying amount of the liabilities for our obligations under the guarantee is zero.

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F. Tabular Disclosure of Contractual Obligations.

The following tables represent our contractual obligations and other commercial commitments as of March 31, 2005.

	(Yen in millions)
Contractual Obligations	Payments Due by Period
	Total	Less than 1 year	1-3 years	4-5 years	After 5 years
Long-term Debt	¥ 40,680	¥ 6,439	¥ 3,504	¥ 30,668	¥ 69
Capital Lease Obligations	5,646	2,054	2,580	954	58
Operating Leases	870	174	200	50	446
Purchase Commitments for Fixed Aseets	4,925	4,925	-	-	-
Total Contractual Cash Obligations	¥ 52,121	¥ 13,592	¥ 6,284	¥ 31,672	¥ 573
Other Commercial Commitments	Total Amounts Committed	Amount of Commitment Expiration Per Period
		Less than 1 year	1-3 years	4-5 years	Over 5 years
Guarantees	¥ 682	¥ 59	¥ 103	¥ 100	¥ 420
Total Commercial Commitments	¥ 682	¥ 59	¥ 103	¥ 100	¥ 420
	(U.S.dollars in thousands)
Contractual Obligations	Payments Due by Period
	Total	Less than 1 year	1-3 years	4-5 years	After 5 years
Long-term Debt	$ 378,806	$ 59,959	$ 32,629	$ 285,576	$ 642
Capital Lease Obligations	52,575	19,126	24,025	8,884	540
Operating Leases	8,101	1,620	1,862	466	4,153
Purchase Commitments for Fixed Aseets	45,861	45,861	-	-	-
Total Contractual Cash Obligations	$ 485,343	$ 126,566	$ 58,516	$ 294,926	$ 5,335
Other Commercial Commitments	Total Amounts Committed	Amount of Commitment Expiration Per Period
		Less than 1 year	1-3 years	4-5 years	Over 5 years
Guarantees	$ 6,351	$ 549	$ 959	$ 932	$ 3,911
Total Commercial Commitments	$ 6,351	$ 549	$ 959	$ 932	$ 3,911

Our capital commitments as of March 31, 2005 principally consisted of commitments to purchase property, plant and equipment. Commitments outstanding for the purchase of property, plant and equipment and other assets decreased from approximately ¥5,948 million on March 31, 2004 to approximately ¥4,925 million on March 31, 2005, and from approximately ¥6,159 million on March 31, 2003 to approximately ¥5,948 million on March 31, 2004, respectively. Each decrease is due mainly to a reduction in investments in facilities equipment compared to the previous year. See Note 24 to our consolidated financial statements included in this annual report. We expect to make capital expenditures in addition to those for which we have outstanding commitments.

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Annual maturities on long-term debt and lease obligations during the next five years are as follows:

Year ending March 31		Yen in millions	U.S. dollars in thousands
	2006	¥ 8,493	$ 79,086
	2007	4,216	39,259
	2008	1,868	17,394
	2009	31,274	291,219
	2010	348	3,240
	2011 and thereafter	¥ 127	$ 1,183

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Item 6. Directors, Senior Management and Employees.

A. Directors and Senior Management.

Directors, Executive Officers and Corporate Auditors

The following table provides information about our Directors, Executive Officers and Corporate Auditors as of the date of this annual report:

Name		Position	Date of Birth		Month in which current term expires	Number of Nidec shares owned as of March 31, 2005	Percentage of common stock outstanding as of March 31, 2005
						(in thousands)
	Shigenobu Nagamori	President, Chief Executive Officer and Representative Director		August 28, 1944	June 2006	11,707	16.4%
	Hiroshi Kobe	Executive Vice President, Chief Operating Officer and Director		March 28, 1949	June 2006	118	*
	Yasunobu Toriyama	Executive Vice President, Chief Financial and Accounting Officer and Director		September 18, 1938	June 2006	7	*
	Kenji Sawamura	Senior Managing Director		February 15, 1942	June 2006	2	*
	Yasuo Hamaguchi	Senior Managing Director		September 27, 1949	June 2006	133	*
	Seizaburo Kawaguchi	Managing Director		October 27, 1953	June 2006	10	*
	Tadaaki Hamada	Director		August 14, 1948	June 2006	1	*
	Seiichi Hattori	Director		December 30, 1953	June 2006	10	*
	Tetsuo Inoue	Director		June 22, 1948	June 2006	3	*
	Satoru Kaji	Director		October 4, 1947	June 2006	3	*
	Takashi Iwata	Director		April 9, 1947	June 2006	1	*
	Kiyoyoshi Takegami	Director		December 28, 1954	June 2006	25	*
	Akira Kagata	Director		March 7, 1943	June 2006	-	*
	Hideo Asahina	Corporate Auditor		March 28, 1938	June 2007	0	*
	Yohichi Ichikawa	Corporate Auditor		April 4, 1935	June 2008	102	*
	Tadayoshi Sano	Corporate Auditor		April 13, 1944	June 2007	1	*
	Tsutomu Katsuyama	Corporate Auditor		June 5, 1932	June 2007	-	*

__________

Note: The asterisk represents beneficial ownership of less than 1%.

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Shigenobu Nagamori has served as our President, Chief Executive Officer and Representative Director since our establishment in July 1973. In June 1995 he became Chairman and Director of Simpo Industries Co., Ltd., currently Nidec-Shimpo Corporation, and from October 2003 became Chairman and Representative Director of Nidec-Shimpo Corporation. He became Chairman and Director of Nidec Tosok Corporation in June 1997 and Nidec-Read Corporation in April 1997. He joined Nidec-Kyori Corporation as Chairman and Representative Director in June 1997. He became Chairman and Director of Nidec Copal Corporation in June 1998. He became Chairman and Representative Director of Nidec Machinery Corporation and Nidec Shibaura Corporation in January 1998 and October 1998, respectively. In June 1999, he also became Chairman and Representative Director of Nidec Shibaura (Zhejiang) Co. , Ltd. In October 1999, he became Chairman and Representative Director of Nidec Nemicon Corporation. He became Chairman and Representative Director of Nidec Power Motor Corporation in March 2000. In March 2002, he became Chairman and Representative Director of Nidec System Engineering (Zhejiang) Corporation and in September 2002, Nidec Copal Electronics Corporation. In March 2004, he became Chairman and Representative Director of Sankyo Seiki Mfg. Co., Ltd., Sankyo Shoji Co., Ltd., Sankyo Total Service Co., Ltd., Sankyo Ryutsu Kogyo Co., Ltd. (currently Nidec Logistics Corporation), Tokyo Pigeon Co., Ltd. and Nissin Kohki Co., Ltd. He became Chairman and Director of Nidec Copal Electronics Corporation in September 2004.

Hiroshi Kobe has served as Executive Vice President, Chief Operating Officer and Director of Nidec Corporation since 2000. He joined Nidec in 1973 and served as Managing Director, Director of Sales, Domestic Business and Senior Managing Director in charge of overall business operations. He is also Chairman and Representative Director of Nidec Taiwan Corporation, Nidec (H.K.) Co., Ltd., Nidec Korea Corporation. And he became Chairman and Representative Director of Nidec Electronics GmbH and Nidec (Shanghai) International Trading Co., Ltd. in April 2003. In 2004, he became Chairman and Representative Director of Nidec Philippines Corporation and Nidec Precision Philippines Corporation. He was also appointed to take charge of Sales, Compliance Office, Risk Management, and Motor Engineering Research Laboratory.

Yasunobu Toriyama has served as our Executive Vice President, Chief Financial and Accounting Officer and Director since April 2002. He became our Managing Director in 1996 and has served as General Manager of Administrative Department since then. He became our Senior Managing Director in 1997. Since 1998 he has been General Manager of various departments, in June 2004 he was appointed to be General Manager of Investor Relations, Public Relations & Advertising, Accounting, Finance and Systems Department.

Kenji Sawamura joined Nidec Corporation in October 1998 as Executive Director (Riji). He became Vice President and Director of Nidec (Dalian) Limited and President and Director of Nidec Precision (Dalian) Limited in July 1999. He became President of Nidec (Dalian) Limited in June 2001. He served as our Senior Managing Director and Chairman and Representative Director of Nidec (Dalian) Limited since April 2002. He became Chairman, Chief Executive Officer and Director of Nidec America Corporation in July 2004. He was also appointed to take charge of DC / FAN motor business, Shiga Technical Center, Tottori Technical Center, Purchasing Department, Corporate Quality Control and Molds Preparation.

Yasuo Hamaguchi became our Managing Director in June 1998, and he was responsible for the spindle motor business since April 2000. He has served as our Senior Managing Director since April 2002. In November 1998, he became Chairman and Representative Director of Nidec Shibaura Electronics (Thailand) Co., Ltd. In April 2003, he became Chairman and Representative Director of Nidec Electronics (Thailand) Co.,Ltd. and Nidec (Zhejiang) Corporation. He became President and Representative Director of Nidec Philippines Corporation in July 2004.

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Seizaburo Kawaguchi has served as our Director since June 2000. From March 1989 to March 2003, he served as President and Representative Director of Nidec Singapore Pte. Ltd.  He became President and Representative Director of Nidec Electronics (Thailand) Co., Ltd. in April 2003. He has served as our Managing Director since April 2004.

Tadaaki Hamada had a previous job in Bank of Tokyo-Mitsubishi, and he joined Nidec in February 2000 as Executive Director (Riji) and has served as General Manager of Corporate Planning since March 2000. From August 2001 to March 2003, he was appointed to be Executive Vice President of Nidec America Corporation. He became General Manager of International Projects Administration in April 2003. He has served as our Director since June 2004, and since April 2005, he has served as our Managing Director in charge of Secretarial Office, Corporate Planning, Intellectual Property, Legal, General Affairs, Personnel, International Projects Administration Department.

Seiichi Hattori has served as our Director since June 1999. He was Director of the Sales Department from October 1996 to March 1998. From April 1998 to March 1999, he served as Executive Director of our Sales Department. He was appointed to be in charge of domestic sales in April 2002. He became President and Director of Nidec (H.K.) Co., Ltd. and Nidec (Shanghai) International Trading Co., Ltd. in April 2003. He was also appointed to take charge of Sales Department in April 2005.

Tetsuo Inoue has served as our Director since June 2002. He joined Nidec Corporation in December 1999 and has served as General Manager of our Management of Affiliated Companies Department since then.

Satoru Kaji has served as our Director since June 2003. He became Executive Vice President of Nidec America Corporation in January 1994 and Executive Director (Riji) in April 2001. He became General Manager of No. 1 International Sales and Marketing in July 2001 and has been in charge of International Sales and Marketing as General Manager of International Sales Administration since April 2002. In April 2003, he became President and Representative Director of  Nidec Singapore Pte.Ltd. He became Vice Chairman and President of Nidec (Zhejiang) Corporation, and became in charge of Nidec Pinghu City Industrial Park in May 2005.

Takashi Iwata had a previous job in Matsushita Electric Industrial Co., Ltd., and he joined Nidec in December 2003 as Executive Director (Riji) and has served as a General Manager of Accounting Department. He became General Manager of Internal Audit & Management Advisory in April 2004. He has served as our Director since June 2004.

Kiyoyoshi Takegami joined Nidec in April 1978, and has held important job on various sections for engineering. He became General Manager of Development of Shiga Factory in April 1991, and from April 1994 to March 2003, he was appointed to be Vice President of Nidec Electronics (Thailand) Co., Ltd. He became General Manager of Nagano Technical Center in April 2003. He has served as our Director since June 2004. In April 2005, he has doubled as Director of Development Engineering and Director of Quality Assurance of Nagano Technical Center.

Akira Kagata had a previous job in Matsushita Electric Industrial Co., Ltd. He joined Nidec in March 2002, and he became Executive Director (Riji) in April 2003. He became General Manager of Central Technical Laboratory in April 2004. He has served as our Director since June 2005 and he was appointed to be responsible for the research and development of spindle motors.

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Hideo Asahina has served as our full-time Corporate Auditor since June 2003. He became Director of Kobe Customs, Ministry of Finance in June 1985 and Finance Minister’s Secretariat Councilor in charge of International Finance Bureau in June 1986.  He became Director of Finance Corporation of Local Public Enterprise in October 1988 and President of Osaka Securities Finance Co., Ltd. in June 1991. He has been Director General of Commemorative Association for the Japan World Exposition 1970 since July 1996.

Yoichi Ichikawa has served as our full-time Corporate Auditor since June 1998. From January 1995 to March 1998, he served as our General Manager of International Sales Administration Department and during the same period he also served as Chairman and Representative Director of Nidec Electronics (Thailand) Co., Ltd.

Tadayoshi Sano has served as our full-time Corporate Auditor since June 2003. He joined Nidec in November 1995 and has served as General Manager of Accounting since April 1996 and Executive Director (Riji) since April 1998.

Tsutomu Katsuyama was enrolled in the Kyoto Bar Association and established Tsutomu Katsuyama Law Firm in April 1972. He has been a practicing attorney since then. He served as our Corporate Auditor since June 2003.

Our Board of Directors has the ultimate responsibility for the administration of our affairs. Our Articles of Incorporation provide for not more than twenty Directors. Directors are elected at a general meeting of shareholders, and the normal term of office of Directors is one year, although they may serve any number of consecutive terms. The Board of Directors elects one or more Representative Directors, who have the authority individually to represent us. The Board of Directors may also elect one Chairman of  the Board of Directors, one President, one or more Executive Vice Presidents, Senior Managing Directors and Managing Directors. Shigenobu Nagamori is the President and Chief Executive Officer, Hiroshi Kobe is the Executive Vice President and Chief Operating Officer and Yasunobu Toriyama is the Executive Vice President and Chief Financial and Accounting Officer. Our Executive Officers serve at t he discretion of the Board of Directors.

Corporate Auditors

Our Articles of Incorporation provide for not more than five Corporate Auditors. Currently, we have four Corporate Auditors: Hideo Asahina, Yoichi Ichikawa, Tadayoshi Sano and Tsutomu Katsuyama. Corporate Auditors, of whom at least one must be from outside our company, are elected at a general meeting of shareholders, and the normal term of office of a Corporate Auditor is four years, although they may serve any number of consecutive terms. Three of our Corporate Auditors, Hideo Asahina, Yoichi Ichikawa, and Tadayoshi Sano, are full-time Corporate Auditors. Two of our Corporate Auditors, Hideo Asahina and Tsutomu Katsuyama, are from outside the Nidec group. Our four Corporate Auditors form our Board of Corporate Auditors. Corporate Auditors are under a statutory duty to review the administration of our affairs by the Directors, to examine our financial statements and business reports to be submitted by the Board of Directors to the general meetings of shareholders and to report their opinions thereon to the shareholders. They are required to attend meetings of the Board of Directors and are entitled to express their opinions, but they are not entitled to vote. Corporate Auditors also have a statutory duty to provide their report to the Board of Corporate Auditors, which must submit its auditing report to the Representative Directors. The Board of Corporate Auditors also determines matters relating to the duties of the Corporate Auditors, such as auditors’ policy and methods of investigation of our affairs.

In addition to Corporate Auditors, we must appoint independent certified public accountants, who have the statutory duties of examining the financial statements to be submitted by the Board of Directors to the annual general meetings of shareholders, reporting thereon to the Board of Corporate Auditors and the Representative Directors, and examining the financial statements to be filed with the Minister of Finance of Japan.

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B. Compensation.

The aggregate compensation, including bonuses, paid by us to our Directors and Corporate Auditors as a group during the year ended March 31, 2005 was ¥1,854 million. In accordance with customary Japanese business practices, a retiring Director or Corporate Auditor receives a lump-sum retirement payment, which is subject to the approval of the general meeting of shareholders. In the year ended March 31, 2005, retirement payments in the aggregate amount of ¥167 million were made.

We are currently authorized to issue rights to subscribe for or purchase up to 296,700 shares of our common stock to our directors, corporate auditors and employees for no consideration for the purposes of increasing their incentive and motivation to enhance our business performance and to promote shareholder-oriented management.

C. Board Practices.

The information required by this item is set forth in Item 6.A and 6.B of this annual report.

D. Employees.

The information required by this item is set forth in Item 4.B of this annual report.

E. Share Ownership.

The information required by this item is set forth in Item 6.A of this annual report. On May 14, 2003, we issued rights to purchase 296,700 shares of our common stock to directors, corporate auditors and certain employees for no consideration. These rights are exercisable under certain conditions for the period between July 1, 2004 and June 30, 2007, and the exercise price is set at ¥7,350 per share of common stock, subject to certain adjustments. We are currently authorized under this plan to issue rights to purchase 219,300 shares.

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Item 7. Major Shareholders and Related Party Transactions.

A. Major Shareholders.

To our knowledge, as of March 31, 2005, the following persons beneficially owned more than 5% of our outstanding common stock:

Shareholders	Number of shares of common stock owned (thousands)	Percentage of common stock outstanding
Shigenobu Nagamori	11,707	16.4	%
Capital Research and Management Company and its affiliates (1)	3,585	5.0

__________

(1) As of January 31, 2005, and based on the report filed on that date by Capital Research and Management Company with the Financial Services Agency in Japan, which disclosed its and its affiliates’ beneficial ownership of our common stock.

The voting rights of the shareholders described above are identical to those of our other shareholders.

As of March 31, 2005, there were 71,252,463 shares of our common stock outstanding held by 11,373 shareholders of record, including 112 shareholders of record with addresses in the United States who held 9,606,985 shares, representing approximately 13.5% of our outstanding common stock as of that date.

To our knowledge, we are not, directly or indirectly, owned or controlled by any other corporation or by any government or by any other natural or legal persons, severally or jointly. We know of no arrangements the operation of which may at a later time result in a change of control of Nidec.

B. Related Party Transactions.

Since April 1, 2003, except as described below, we have not entered into any material transactions with our directors, officers, corporate auditors or their respective family members or enterprises over which they can exert significant influence.

As of March 31, 2005, President Nagamori held of record 8.4％ and S. N Kohsan, a business entity indirectly owned by him, held of record 6.2％ of our outstanding shares. President Nagamori’s immediate family held an additional 1.8％ of our outstanding shares as of the same date.

We have entered into various arms-length manufacturing, sales and purchase arrangements with our affiliates, most of which involve the production of components or products that we sell.

C. Interests of Experts and Counsel.

Not applicable.

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Item 8. Financial Information.

A. Consolidated Statements and Other Financial Information.

Financial Statements

The information required by this item is set forth in our consolidated financial statements included in this annual report.

Legal or Arbitration Proceedings

The information on legal or arbitration proceedings required by this item is set forth in Item 4.B. of this annual report.

Dividend Policy

We normally pay cash dividends twice per year. Our Board of Directors recommends the dividend to be paid following the end of each fiscal year. This recommended dividend must then be approved by shareholders at the general meeting of shareholders required to be held in June of each year. Immediately following approval of the dividend at the shareholders’ meeting, we pay the dividend to holders of record as of the immediately preceding March 31. In addition to these year-end dividends, we normally pay interim dividends in the form of cash distributions from our retained earnings to our shareholders of record as of September 30 in each year by resolution of our Board of Directors and without shareholder approval. We normally pay the interim dividend in December.

The following table sets forth the year-end and interim dividends paid to holders of record of our common stock for each of the record dates shown. Yen per share dividend amounts are translated solely for your convenience into U.S. dollars at the noon buying rate for Japanese yen announced by the Federal Reserve Bank of New York on the dividend payment date.

Record date	Dividends per share
	Yen		U.S. dollar
September 30, 2001	¥	15.0	$	0.126
March 31, 2002		10.0		0.075
September 30, 2002		10.0		0.081
March 31, 2003		15.0		0.126
September 30, 2003		15.0		0.138
March 31, 2004		15.0		0.140
September 30, 2004		20.0		0.190
March 31, 2005	¥	25.0	$	0.230

It is the present intention of the Board of Directors to continue to pay cash dividends on a semiannual basis and to provide a stable level of dividends to our shareholders The declaration and payment of dividends are, however, subject to our future earnings, financial condition and other factors, including statutory and other restrictions with respect to the payment of dividends.

Dividends paid to shareholders outside Japan on shares of common stock or ADSs are generally subject to a Japanese withholding tax at the maximum rate of 20%. Reduced rates for withholding apply to shareholders in some countries which have income tax treaties with Japan. U.S. holders are generally subject to a maximum withholding rate of 10%.

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B. Significant Changes.

We are not aware of any significant change in our financial position since March 31, 2005, the date of our last audited financial statements.

Item 9. The Offer and Listing.

A. Offer and Listing Details.

In Japan, our common stock is listed on the First Section of the Osaka Securities Exchange, Co., Ltd. and the First Section of the Tokyo Stock Exchange, Inc. both of which are reserved for larger, established companies.

The following table sets forth, for the periods indicated, the closing high and low sales prices, as adjusted to reflect the 1.1-for-1 stock split that took effect on May 20, 1997 as well as the 2-for-1 stock split that took effect on May 19, 2000 but excepting the 4-for-1 ratio change that took effect on January 1, 2004, and the average daily trading volume of our common stock on the Osaka Securities Exchange, and the closing highs and lows of the Nikkei Stock Average:

	Price Per Share		Average Daily Trading Volume	Nikkei Stock Average
	High	Low		High	Low
			(in thousands of shares)
Year ended March 31,
2000	¥ 14,895	¥ 7,500	157	¥ 20,706.65	¥ 15,972.68
2001	10,200	4,890	112	20,833.21	11,819.70
2002	9,290	3,650	162	14,529.41	10,409.68
2003	9,840	5,500	216	11,979.85	7,862.43
2004
First Quarter	8,300	5,600	186	9,137.14	7,607.88
Second Quarter	9,790	8,090	173	11,033.32	9,265.56
Third Quarter	11,400	9,180	167	11,161.71	9,614.60
Fourth Quarter	11,400	9,950	197	11,770.65	10,365.40
2005
First Quarter	12,390	10,780	237	12,163.89	10,505.05
Second Quarter	11,350	9,590	218	11,896.01	10,687.81
Third Quarter	12,740	10,810	260	11,488.76	10,659.15
Fourth Quarter	13,350	11,620	189	11,966.69	11,238.37
2006
First Quarter	13,440	11,470	258	11,874.75	10,825.39
Calendar period
January 2005	12,630	11,620	168	11,539.99	11,238.37
February 2005	12,730	11,830	206	11,740.60	11,360.40
March 2005	13,350	12,720	192	11,966.69	11,565.88
April 2005	13,440	12,130	267	11,874.75	10,938.44
May 2005	12,800	11,470	259	11,276.59	10,825.39
June 2005	12,210	11,600	250	11,584.01	11,160.88
July 2005	¥ 12,520	¥ 11,620	243	¥ 11,899.60	¥ 11,565.99

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Our ADSs have been listed on the New York Stock Exchange since September 27, 2001. The following table sets forth, for the periods indicated, the closing high and low sales price in U.S. dollars and the average trading volume of our ADSs on the New York Stock Exchange:

	Price Per ADS		Average Daily Trading Volume	Dow Jones Industrial Average
	High	Low		High	Low
			(in ADSs)
Year ended March 31,
2002
Third Quarter	$ 14.75	$ 8.48	4,994	$ 10,137.00	$ 8,836.80
Fourth Quarter	18.25	13.06	11,482	10,635.30	9,618.20
2003	19.56	10.94	669	10,381.70	7,286.27
First Quarter	19.56	15.55	1,130	10,381.70	9,120.10
Second Quarter	18.75	12.50	366	9,379.50	7,591.93
Third Quarter	16.31	10.94	717	8,931.68	7,286.27
Fourth Quarter	15.85	13.25	452	8,842.62	7,524.06
2004	25.91	5.73	3,097
First Quarter	17.50	11.75	1,080	9,323.02	8,069.86
Second Quarter	20.88	16.81	2,076	9,659.13	9,036.04
Third Quarter	25.91	20.64	860	10,453.92	9,469.20
Fourth Quarter	26.61	23.00	8,376	10,737.70	10,048.23
2005
First Quarter	28.20	24.65	7,532	10,570.81	9,906.91
Second Quarter	25.87	22.09	7,100	10,342.79	9,814.59
Third Quarter	30.73	24.93	3,914	10,854.54	9,749.99
Fourth Quarter	32.40	28.27	5,705	10,940.55	10,368.61
2006
First Quarter	31.26	26.49	8,792	10,623.07	10,012.36
Calendar period
January 2005	30.50	28.27	4,925	10,729.43	10,368.61
February 2005	30.65	29.00	6,042	10,841.60	10,551.94
March 2005	32.40	30.15	6,123	10,940.55	10,405.70
April 2005	31.26	28.66	6,605	10,546.32	10,012.36
May 2005	30.40	27.35	9,581	10,542.55	10,140.12
June 2005	28.48	26.49	10,127	10,623.07	10,274.97
July 2005	$ 28.25	$ 26.02	12,755	$ 10,705.55	$ 10,270.68

* The Ratio of ADS to shares was changed from each ADS representing on share to each ADS representing one-fourth of one share, effective January 1, 2004. Accordingly price per ADS information has been restated for all prior periods presented to reflect this ratio change.

B. Plan of Distribution.

Not applicable.

C. Markets.

See Item 9.A. of this annual report for information on the markets on which our common stock is listed or quoted.

D. Selling Shareholders.

Not applicable.

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E. Dilution.

Not applicable.

F. Expenses of the Issue.

Not applicable.

Item 10. Additional Information.

A. Share Capital.

Not applicable.

B. Memorandum and Articles of Association.

Objects and Purposes in Our Articles of Incorporation

Article 2 of our Articles of Incorporation, which are attached as an exhibit to this annual report, states our objects and purposes.

Provisions Regarding Our Directors

Our Articles of Incorporation do not permit a Director to vote on a proposal in which a Director is materially interested and, under the Commercial Code of Japan, a Director is required to refrain from voting on such matters at meetings of the Board of Directors.

The Commercial Code provides that compensation for directors is determined at a general meeting of shareholders of a company. Within the upper limit approved by the shareholders’ meeting, the board of directors will determine the amount of compensation for each director. The Board of Directors may, by its resolution, leave such decision to the discretion of the company’s president.

The Commercial Code provides that the incurrence by a company of a significant loan from a third party should be approved by the company’s Board of Directors.

The Commercial Code requires directors to “perform their duties faithfully on behalf of the company,” thus subjecting directors to a duty of loyalty (chujitsu gimu). This duty is supplemented by other duties such as to avoid self-dealing and competition with the corporation as well as to abide by all laws and regulations, the articles of incorporation and resolutions of general meetings of shareholders.

Directors can be held liable for damages caused by any of the following actions:

•

declaring an unlawful dividend or distribution of money;

•

offering some benefit to a shareholder in exchange for the exercise of that shareholder’s rights as shareholder;

•

approving loans to other directors;

•

engaging in a transaction that conflicts with interests of the company; or

•

performing any other actions that violate a law, including the general duties of directors described in the preceding paragraph, an ordinance or the articles of incorporation.

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There is no mandatory retirement age for our Directors under the Commercial Code or our Articles of Incorporation.

There is no requirement concerning the number of shares one individual must hold in order to qualify him or her as a Director either under the Commercial Code or our Articles of Incorporation.

Holding of Our Shares by Foreign Investors

There are no limitations on the rights of non-residents or foreign shareholders to hold or exercise voting rights on our shares imposed by the laws of Japan or our Articles of Incorporation or our other constituent documents.

Rights of Our Shareholders

Set forth below is information relating to our common stock, including brief summaries of the relevant provisions of our Articles of Incorporation and Share Handling Regulations, as currently in effect, and of the Japanese Commercial Code and related legislation.

General

Our authorized share capital is 240,000,000 shares, of which 71,252,463 shares were issued and outstanding as of March 31, 2005. Under the Commercial Code, shares must be registered and are transferable by delivery of share certificates. In order to assert shareholders’ rights against us, a shareholder must have its name and address registered on our register of shareholders in accordance with our Share Handling Regulations. The registered beneficial holder of deposited shares underlying the ADSs is the depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert shareholders’ rights such as the right to bring a derivative action, examine our accounting books and records or exercise appraisal rights.

A holder of shares may choose, at its discretion, to participate in the central clearing system for share certificates under the Law Concerning Central Clearing of Share Certificates and Other Securities of Japan. Participating shareholders must deposit certificates representing all of the shares to be included in this clearing system with the Japan Securities Depository Center. If a holder is not a participating institution in the Securities Center, it must participate through a participating institution, such as a securities company or bank having a clearing account with the Securities Center. All shares deposited with the Securities Center will be registered in the name of the Securities Center on our register of shareholders. Each participating shareholder will in turn be registered on our register of beneficial shareholders and be treated in the same way as shareholders registered on our register of shareholders. For the purpo se of transferring deposited shares, delivery of share certificates is not required. Entry of the share transfer in the books maintained by the Securities Center for participating institutions, or in the book maintained by a participating institution for its customers, has the same effect as delivery of share certificates. The registered beneficial owners may exercise the rights attached to the shares, such as voting rights, and will receive dividends (if any) and notices to shareholders directly from us. The shares held by a person as a registered shareholder and those held by the same person as a registered beneficial owner are aggregated for these purposes. Beneficial owners may at any time withdraw their shares from deposit and receive share certificates, subject to the limitations caused by the Japanese unit share system described below.

A new law to establish a new central clearing system for shares of listed companies and to eliminate the issuance and use of certificates for such shares was promulgated in June 2004 and the relevant law will come into effect within five years of the date of promulgation.  On the effective date, a new central clearing system will be established and the shares of all Japanese companies listed on any Japanese stock exchange, including our shares, will be subject to the new central clearing system.  On the same day, all existing share certificates for share of all Japanese companies listed on any Japanese stock exchange, including our shares, will become null and void and the transfer of such shares will be effected through entry in the books maintained under the new central clearing system.

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Shareholders’ Rights to Bring Actions Against Directors

The provisions of Articles 267 through 268-3 of the Japanese Commercial Code constitute the Japanese shareholder derivative action mechanism. The provisions allow any shareholder who has held a share for the previous six months to demand that the corporation take action to protect the company and enforce a director’s duties. Specifically, Article 267 provides that derivative actions may be brought to “enforce the liability of directors” which refers to situations including, but not limited to, that where directors loan money to other directors, engage in self-interested transactions, or violate any law, ordinance or the articles of incorporation. If the board has not instituted an action within sixty days, the plaintiff-shareholder may initiate a lawsuit as a derivative action. The Commercial Code provides an exception to the sixty day waiting period, however, for cases in which waiting sixty days might cause the com pany “irreparable damage.” In such cases, the shareholder may institute the action immediately, but after having brought the action must notify the company “without delay.” So, for example, if a company might suffer irreparable damage from an illegal act of a director, a shareholder who has owned a share continuously for the previous six months may seek a provisional injunction prohibiting the director from performing the illegal act.

Dividends

Under our Articles of Incorporation, our financial accounts will be closed on March 31 of each year and annual dividends, if any, will be paid to shareholders of record as of that date. The Japanese Commercial Code permits a joint stock corporation to distribute profits by way of interim dividends if the articles of incorporation of a company so provide. Our Articles of Incorporation permit us to make interim dividends and such interim dividends, if any, will be paid to shareholders of record as of September 30 of each year. For information as to Japanese taxes on dividends, see “Tax Considerations ― Japanese Taxation.”

Under our Articles of Incorporation, we are not obligated to pay any dividends which are left unclaimed for a period of three years after the date on which they first became payable.

Transfer of Additional Paid-In Capital and Legal Reserve to Stated Capital and Stock Splits

When we issue new shares, the entire amount of the issue price of those new shares is required to be accounted for as stated capital, although we may account for an amount not exceeding one-half of the issue price as additional paid-in capital. The Commercial Code permits us, by resolution of our Board of Directors, to transfer the whole or any part of additional paid-in capital and legal reserve to stated capital and to grant shareholders additional shares free of charge by way of a stock split, with reference to the whole or any part of the amount of additional paid-in capital and legal reserve transferred to stated capital. Under the Commercial Code, by resolution of our Board of Directors, we may increase the authorized shares up to the number reflecting the rate of stock splits and amend our Articles of Incorporation by resolution of our Board of Directors to this effect without the approval of a shareholders’ meeting. Fo r example, if each share become three shares by way of a stock split, we may increase the authorized shares from the current 240,000,000 shares to 720,000,000 shares.

Japanese Unit Share System

Our Articles of Incorporation provide that 100 shares of common stock constitute one “unit.” The Commercial Code of Japan permits us, by resolution of our Board of Directors, to reduce the number of shares that constitutes one unit or abolish the unit share system, and amend our Articles of Incorporation to this effect without the approval of a shareholders’ meeting.

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Transferability of Shares Representing Less Than One Unit. We may not issue share certificates for a number of shares not constituting an integral number of units, except in limited circumstances. Because the transfer of shares normally requires delivery of the share certificates for the shares being transferred, shares constituting a fraction of a unit and for which no share certificates are issued may not be transferable. Because transfer of ADRs does not require a change in the ownership of the underlying shares, holders of ADRs evidencing ADSs that constitute less than one unit of shares are not affected by these restrictions in their ability to transfer the ADRs. However, because transfers of less than one unit of the underlying shares are normally prohibited under the unit share system, the deposit agreement provides that the right of ADR holders to surrender their ADRs and withdraw the underlying shares for sal e in Japan may only be exercised as to whole units.

Right of a Holder of Shares Representing Less Than One Unit to Require Us to Purchase Its Shares. A holder of shares representing less than one unit may at any time require us to purchase our shares. These shares will be purchased at:

•

the closing price of the shares reported by the Osaka Securities Exchange Co., Ltd. (the “Osaka Securities Exchange”) on the day when the request to purchase is made; or

•

if no sale takes place on such stock exchange on that day, the closing price of the shares reported by the Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”) on such day; or

•

if no sale takes place on either of such stock exchanges on such day, the price at which the shares are first traded on the Osaka Securities Exchange on the next day; or

•

if no sale takes place on such stock exchange on such day, the price at which the shares are first traded on the Tokyo Stock Exchange on such day; or

•

if no sale takes place on either of such stock exchanges on such day, the price at which the shares are first traded on either of such stock exchanges, provided that, if the shares are traded on both such exchanges on the same day, the relevant price shall be the price at which the shares are first traded on the Osaka Securities Exchanges.

In such case, we will request payment of an amount equal to the brokerage commission applicable to the shares purchased. However, because holders of ADSs representing less than one unit are not able to withdraw the underlying shares from deposit, these holders will not be able to exercise this right as a practical matter

Transferability of Shares Representing Less Than One Unit. We have made ADS Ratio Change from the ratio of one share of the common stock to the ratio of the one-fourth of one share of the common stock. As a result, the minimum trading unit of the ADS was the ratio of the one-fourth of one share of the common stock. We may not issue share certificates for a number of shares not constituting an integral number of units, except in limited circumstances. Because the transfer of shares normally requires delivery of the share certificates for the shares being transferred, shares constituting a fraction of a unit and for which no share certificates are issued may not be transferable. Because transfer of ADRs does not require a change in the ownership of the underlying shares, holders of ADRs evidencing ADSs that constitute less than one unit of shares are not affected by these restrictions in their ability to transfer the ADRs. However, beca use transfers of less than one minimum unit of the underlying shares are normally prohibited under the unit share system, the deposit agreement provides that the right of ADR holders to surrender their ADRs and withdraw the underlying shares for sale in Japan may only be exercised as to whole units.

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Voting Right of a Holder of Shares Representing Less Than One Unit. A holders of shares representing less than one unit cannot exercise any voting rights pertaining to those shares. In calculating the quorum for various voting purposes, the aggregate number of shares representing less than one unit will be excluded from the number of outstanding shares. A holder of shares representing one or more whole units will have one vote for share, except as stated in “— Voting Rights” below.

A shareholder who owns shares representing less than one unit will not be able to exercise any rights relating to voting rights, such as the right to participate in a demand for the resignation of a director, the right to participate in a demand for the convocation of a general meeting of shareholders and the right to join with other shareholders to propose an agenda item to be addressed at a general meeting of shareholders. In addition, a holder of shares constituting less than one unit does not have the right to require us to issue share certificates for those shares.

Other Rights of a Holder of Shares Representing Less Than One Unit. A holder of shares representing less than one unit has the following rights:

•

to receive distribution of dividends of profit or interest;

•

to receive shares and/or cash by way of retirement, consolidation, division, conversion, exchange or transfer of shares, company split or merger;

•

to be allotted rights to subscribe for new shares and other securities when such rights are granted to shareholders;

•

to participate in any distribution of surplus assets upon liquidation;

•

to institute a derivative action; and

•

to demand that a director suspend illegal and certain other acts.

Annual General Meeting of Shareholders

We normally hold our annual general meeting of shareholders in June of each year in Kyoto City, or in a neighboring area. In addition, we may hold an extraordinary general meeting of shareholders whenever necessary by giving at least two weeks’ advance notice. Under the Japanese Commercial Code, notice of any shareholders’ meeting must be given to each shareholder having voting rights or, in the case of a non-resident shareholder, to his resident proxy or mailing address in Japan in accordance with our Share Handling Regulations, at least two weeks prior to the date of the meeting.

Voting Rights

A shareholder is generally entitled to one vote per one unit of shares, as described under “— Japanese Unit Share System” above. In general, under the Japanese Commercial Code, a resolution can be adopted at a general meeting of shareholders by a majority of the voting rights represented at the meeting. The Japanese Commercial Code and our Articles of Incorporation require a quorum for the election of directors and corporate auditors of not less than one-third of outstanding shares with voting rights. Our shareholders are not entitled to cumulative voting in the election of directors. A corporate shareholder whose outstanding voting rights are in turn more than one-quarter directly or indirectly owned by us does not have voting rights. Shareholders may exercise their voting rights through proxies, provided that those proxies are also shareholders who have voting rights.

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The Japanese Commercial Code and our Articles of Incorporation provide that a quorum of not less than one-third of outstanding shares with voting rights must be present at a shareholders’ meeting to approve any material corporate actions such as:

•

a reduction of the stated capital;

•

amendment of the articles of incorporation (except amendments which the board of directors are authorized to make under the Commercial Code as described under “Transfer of Additional Paid-In Capital and Legal Reserve to Stated Capital and Stock Splits” and “— Japanese Unit Share System” above);

•

the removal of a director or corporate auditor;

•

establishment of a 100% parent-subsidiary relationship by way of share exchange or share transfer;

•

a dissolution, merger or consolidation;

•

a company split;

•

the transfer of the whole or an important part of our business;

•

the taking over of the whole of the business of any other corporation; and

•

any issuance of shares at a “specially favorable” price, any issuance of bonds or debentures with warrants to subscribe for shares with “specially favorable” conditions, or any issuance of warrants to subscribe for shares with “specially favorable” conditions, to persons other than shareholders.

At least two-thirds of the voting rights represented at the meeting must approve these actions.

The voting rights of holders of ADSs are exercised by the depositary based on instructions from those holders. With respect to voting by holders of ADRs, please see Item 10 of our registration statement on Form 20-F filed on September 18, 2001.

Subscription Rights

Holders of shares have no pre-emptive rights. Authorized but unissued shares may be issued at such times and upon such terms as our Board of Directors determines, subject to the limitations as to the issue of new shares at a “specially favorable” price mentioned in “- Voting Rights” above. The Board of Directors may, however, determine that shareholders be given subscription rights to new shares, in which case they must be given on uniform terms to all shareholders as of a record date of which not less than two weeks’ prior public notice of the date on which such subscription rights must be given. Each of the shareholders to whom such rights are given must also be given at least two weeks’ prior notice of the date on which such rights will expire.

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Stock Acquisition Rights

We may issue stock acquisition rights (shinkabu yoyakuken) or bonds with stock acquisition rights (shinkabu yoyakuken-tsuki shasai) (in relation to which the stock acquisition rights are undetachable). Except where the issue would be on “specially favorable” conditions, the issue of stock acquisition rights or bonds with stock acquisition rights may be authorized by a resolution of the Board of Directors. Subject to the terms and conditions thereof, holders of stock acquisition rights may acquire a prescribed number of shares by exercising their stock acquisition rights and paying the exercise price at any time during the exercise period thereof. Upon exercise of stock acquisition rights, we will be obliged to either issue the relevant number of new shares or transfer the necessary number of existing shares held by us as treasury stock to the holder. The entitlements accorded to stock acquisition rights atta ched to bonds are substantially similar to those accorded to stock acquisition rights issued without being attached to bonds, provided that, if so determined by the Board of Directors at the time of its resolution authorizing the issue of the relevant bonds with stock acquisition rights, then, upon exercise of the stock acquisition rights, their exercise price will be deemed to have been paid by the holder thereof to us in lieu of redeeming the relevant bonds by us.

Pursuant to the special resolution of our annual general meeting of shareholders held on June 26, 2002 and the resolutions of the Board of Directors held on May 14, 2003, 2,967 stock acquisition rights, which represent rights to acquire 296,700 shares of common stock were issued on May 14, 2003 to our and our subsidiaries’ directors, corporate auditors and employees without consideration for stock acquisition rights.

Pursuant to the resolution of the Board of Directors held on September 30, 2003, 15,000 stock acquisition rights, which represent rights to acquire 2,284,151 shares of common stock were issued on October 17, 2003 with the conversion price of ¥13,828 per share (as adjusted), in connection with the public offering of ¥30 billion zero coupon convertible bonds due 2008 with an issue price of 103% of the principal amount of the bonds.

Liquidation Rights

In the event of liquidation, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among the shareholders in proportion to the number of shares they own.

Liability to Further Calls or Assessments

All of our currently outstanding shares, including shares represented by the ADSs, are fully paid and nonassessable.

Transfer Agent

The Sumitomo Trust and Banking Company, Limited is the transfer agent for the shares. Sumitomo Trust’s office is located at 5-33, Kitahama 4-chome, Chuo-ku, Osaka, 540-0041, Japan. Sumitomo Trust maintains our register of shareholders and records transfers of record ownership upon presentation of share certificates.

Record Date

The close of business on March 31 is the record date for our year-end dividends, if paid, and the close of business on September 30 is the same for our interim dividends, if paid. A holder of shares constituting one or more “units” who is registered as a holder on our register of shareholders at the close of business as of March 31 is also entitled to exercise shareholders’ voting rights at the annual general meeting of shareholders with respect to the fiscal year ending on March 31. In addition, we may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’ public notice.

The shares generally trade ex-dividend or ex-rights in the Japanese stock exchanges on the third business day before a record date (or if the record date is not a business day, the fourth business day prior thereto), for the purpose of dividends or rights offerings.

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Repurchase by Nidec of Shares

Under the amended Commercial Code which became effective on April 1, 2004, we may acquire our shares for any purposes either by obtaining the authorization of shareholders at an annual   general shareholders’ meeting or, if our Articles of Incorporation so provide, by resolution of our Board of Directors. In accordance with the amended Commercial Code, we amended our Articles of Incorporation at the ordinary general meeting held on June 23, 2004 to authorize us to acquire our shares for any purposes by resolution of our Board of Directors. This acquisition is subject to the condition that the aggregate amount of the purchase price must not exceed the amount of the retained earnings available for annual dividend payments at the last closing of our accounts less the sum of any amount paid or to be paid by way of appropriation of retained earnings and any transfer of retained earnings to stated capital.  Our Board of Directors has not yet taken any such resolution.

In the case of shares listed on a Japanese stock exchange, acquisition shall be made through the market or by way of tender offer by the close of the following annual general shareholders’ meeting, unless acquisition of the shares from a specified person is authorized by the approval of two-thirds of the voting rights present at the shareholders’ meeting at which a quorum of not less than one-third of outstanding shares with voting rights must be present.

In addition, we may acquire our shares by means of repurchase of any number of shares constituting less than one “unit” upon the request of the holder of those shares, as described under “― Japanese Unit Share System” above.

American Depositary Receipts

For information regarding American Depositary Receipts and our depositary, please see Item 10 of our registration statement on Form 20-F filed on September 18, 2001.

Reporting of Substantial Shareholdings

The Securities and Exchange Law of Japan and its related regulations require any person who has become, solely or jointly, a holder of more than 5% of the total issued shares with voting rights of a company that is listed on any Japanese stock exchange to file a report with the Director of the competent Local Finance Bureau of the Ministry of Finance within five business days. With certain exceptions, a similar report must also be filed in respect of any subsequent change of 1% or more in the holding of shares with voting rights or of any specified changes set out in any previously-filed reports. For this purpose, shares issuable to such person upon exercise of share subscription warrants, or stock acquisition rights are taken into account in determining both the number of shares with voting rights held by the holder and the issuer’s total issued shares with voting rights. Copies of each report must also be furnished to the is suer of the shares and to all Japanese stock exchanges on which the shares are listed.

Daily Price Fluctuation Limits under Japanese Stock Exchange Rules

Share prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each share, based on the previous day’s closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell shares at such price on a particular trading day, or at all.

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On August 11, 2005, the closing price of our shares on the Osaka Securities Exchange was ¥12,830 per share. The following table shows the daily price limit for a stock on the Osaka Securities Exchange with a closing price of between ¥5,000 and ¥10,000 per share, as well as the daily price limit if our per share price were to rise to between ¥10,000 and ¥20,000, or fall to between ¥3,000 and ¥5,000. Other daily price limits would apply if our per share price moved to other ranges.

Selected Daily Price Limits
Previous Day’s Closing Price or Special Quote				Maximum Daily Price Movement
Over	¥ 3,000	Less than	¥ 5,000	¥ 500
Over	5,000	Less than	10,000	1,000
Over	10,000	Less than	20,000	2,000

For a history of the trading price of our shares on the Osaka Securities Exchange, see Item 9.A of this annual report.

C. Material Contracts.

We have not entered into any material contracts, other than in the ordinary course of business, within the two years immediately preceding the date of this document or any contract, other than in the ordinary course of business, which contains any provision under which we have any obligation or entitlement which is material to us as at the date of this document.

D. Exchange Controls.

Acquisition or Disposition of Shares or ADS

Under the Foreign Exchange and Foreign Trade Law, all aspects of regulations on foreign exchange and foreign trade transactions are, with minor exceptions relating to inward direct investments which are not generally applicable to our shares, only subject to post transaction reporting requirements. Nonresidents of Japan, including foreign corporations not resident in Japan, who acquire or dispose of shares of common stock or ADSs, are generally not required to submit such post transaction reports. However, the Minister of Finance has the power to impose a licensing requirement for transactions in limited circumstances.

Dividends and Proceeds of Sale

Under the Foreign Exchange and Foreign Trade Law, dividends paid on, and the proceeds of sales in Japan of shares held by non-residents of Japan may in general be converted into any foreign currency and repatriated abroad. Under the terms of the deposit agreement pursuant to which our ADSs are issued, the depositary is required, to the extent that in its judgment it can convert yen on a reasonable basis into dollars and transfer the resulting dollars to the United States, to convert all cash dividends that it receives in respect of deposited shares into dollars and to distribute the amount received (after deduction of applicable withholding taxes) to the holder of ADSs. For additional information regarding our ADSs, please see Item 10 of our registration statement on Form 20-F filed on September 18, 2001.

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E. Taxation.

This section describes the material United States federal income and Japanese tax consequences of owning shares or ADSs. It applies to you only if you hold your shares or ADSs as capital assets for tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:

•

a dealer in securities;

•

a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;

•

a tax-exempt organization;

•

a life insurance company

•

a person liable for alternative minimum tax;

•

a person that actually or constructively owns 10% or more of the voting stock of Nidec;

•

a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction; or

•

a person whose functional currency is not the U.S. dollar.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions and the laws of Japan all as currently in effect, as well as on the income tax treaty between the United States of America and Japan (the “Treaty”). These laws are subject to change, possibly on a retroactive basis. In addition, this section is based in part upon the representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

You are a U.S. holder if you are a beneficial owner of shares or ADSs and you are:

•

a citizen or resident of the United States;

•

a domestic corporation;

•

an estate whose income is subject to United States federal income tax regardless of its source; or

•

a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.

You should consult your own tax advisor regarding the United States federal state and local and the Japanese and other tax consequences of owning and disposing of shares and ADSs in your particular circumstances.

In general, and taking into account the earlier assumptions, for United States federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to United States federal income tax.

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United States Federal Income Taxation

Taxation of Dividends

Under the United States federal income tax laws, and subject to the passive foreign investment company, or PFIC, rules as discussed below, if you are a U.S. holder, the gross amount of any dividend paid by Nidec out of its current or accumulated earnings and profits (as determined for United States federal income tax purposes) will be subject to U.S. federal taxation. If you are a noncorporate U.S. holder, dividends paid to you in taxable years beginning before January 1, 2009 that constitute qualified dividend income will be taxable to you at a maximum tax rate of 15% provided that you hold the shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meet other holding period requirements. Dividends we pay with respect to the shares or ADSs will be qualified dividend income. You must include any Japanese tax withheld from the dividend payment in this gross amount even though you do not in fact receive it. The dividend will be taxable to you when you, in the case of shares, or the depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the yen payments made, determined at the spot yen/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for United States federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the shares or ADSs and thereafter as capital gain.

Subject to generally applicable limitations on the ability to claim a credit on the foreign taxes paid, the Japanese tax withheld in accordance with the Treaty and paid over to Japan will be creditable against your United States federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 15% tax rate. To the extent a refund of the tax withheld is available to you under Japanese law or under the Treaty, the amount of tax withheld that is refundable will not be eligible for credit against your United States federal income tax liability.

Dividends will be income from sources outside the United States. Dividends paid in taxable years beginning before January 1, 2007 generally will be “passive” or “financial services” income, and dividends paid in taxable years beginning after December 31, 2006 will, depending on your circumstances, be “passive” or “general” income which, in either case, is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you.

Taxation of Capital Gains

Subject to the PFIC rules as discussed below, if you are a U.S. holder and you sell or otherwise dispose of your shares or ADSs, you will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your shares or ADSs. Capital gain of a noncorporate U.S. holder that is recognized before January 1, 2009 is generally taxed at a maximum rate of 15% where the holder has a holding period greater than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

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PFIC Rules

Nidec believes that shares and ADSs should not be treated as stock of a PFIC for United States federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change.  If Nidec were to be treated as a PFIC, unless a U.S. holder elects to be taxed annually on a mark-to-market basis with respect to the shares or ADSs, gain realized on the sale or other disposition of your shares or ADSs would in general not be treated as capital gain.  Instead, if you are a U.S. holder, you would be treated as if you had realized such gain and certain “excess distributions” ratably over your holding period for the shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. With certain exceptions, your shares or ADSs w ill be treated as stock in a PFIC if Nidec were a PFIC at any time during your holding period in your shares or ADSs. Dividends that you receive from Nidec will not be eligible for the special tax rates applicable to qualified dividend income if Nidec is treated as a PFIC with respect to you either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.

Japanese Taxation

The following is a summary of the principal Japanese tax consequences to owners of our shares who are non-resident individuals or non-Japanese corporations without a permanent establishment in Japan to which the relevant income is attributable. The changes are subject to changes in the applicable Japanese laws or double taxation conventions occurring after that date. This summary is not exhaustive of all possible tax considerations which may apply to a particular investor. Potential investors should satisfy themselves as to:

•

the overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including specifically the tax consequences under Japanese law;

•

the laws of the jurisdiction of which they are resident; and

•

any tax treaty between Japan and their country of residence, by consulting their own tax advisers.

Generally, a non-resident shareholder is subject to Japanese withholding tax on dividends on the shares paid by us. A stock split is not subject to Japanese income or corporation tax, as it is characterized merely as an increase of number of shares (as oppose to an increase of value of shares) from Japanese tax perspectives. Due to the 2001 Japanese tax legislation effective from April 1, 2001, a conversion of retained earnings or legal reserve (but other than additional paid-in capital, in general) into stated capital on a non-consolidated basis is not characterized as a deemed dividend for Japanese tax purposes, and therefore such a conversion does not trigger Japanese withholding taxation (Article 2 (17) (n) of the Japanese Corporation Tax Law).

Under the 2001 tax legislation, deemed dividend taxation system has been drastically changed. Under the new rule, if we purchase our listed shares by way of a tender offer for the purpose of cancellation with retained earnings, the selling shareholders (both individuals and corporations) are in general required to recognize (i) deemed dividend corresponding to a price into share capital portion (including additional paid-in capital) and retained earnings portion on a non-consolidated basis under Article 24(1)(v) of the Japanese Corporation Tax Law, and (ii) capital gain or loss computed as a difference between the basis of the shares subject to the tender offer at the shareholders level and the amount of the consideration for the tender offer (deducting the amount corresponding to the deemed dividend computed as (i) above) under Article 61-2(1) of the same law. On the other hand, in the case of individual shareholders, no deemed di vidend is required to be recognized until March 31, 2005 due to the operation of a temporary measurement (Article 9-6 of the Japanese Special Tax Measurement Law under which two years extension of the treatment is promulgated under the 2005 tax legislation) and therefore they are only required to recognize capital gain or loss of the shares subject to the tender offer. In the meantime, when shares are acquired by us (whether by way of a tender offer or otherwise) for the purpose of cancellation with retained earnings, the shareholders (both individuals and corporations) whose shares were not canceled were previously deemed to have received a dividend corresponding to the increase of share value by the share cancellation, under the old tax law before the 2001 tax legislation. However, under the 2001 tax legislation, no deemed dividend taxation occurs for the remaining shareholders (both individuals and corporations) whose shares are not canceled.

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Unless an applicable tax treaty, convention or agreement reduces the maximum rate of withholding tax, the rate of Japanese withholding tax applicable to dividends on the listed shares such as those paid by us to non-resident shareholders is currently 7% which is applicable for the period from January 1, 2004 to March 31, 2008 (15% rate will apply thereafter) except for dividends paid to any individual shareholder who holds 5% or more of the issued shares for which the applicable rate is 20%. Japan has income tax treaties, conventions or agreements whereby the above mentioned withholding tax rate is reduced, generally to 15% for portfolio investors with, among others, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and the United Kingdom. Under the new tax treaty between the United States and Japan of which withhold ing tax treatments is applicable effective from July 1, 2004 on an accelerative basis, the withholding tax rate on dividends (those declared on or after July 1, 2004) is 10% for portfolio investors, if they do not have a permanent establishment in Japan and the shares with respect to which such dividends are paid are not related in-fact to such permanent establishment, and if they are qualified US residents eligible to enjoy treaty benefits. It shall be noted that, under the new tax treaty between the US and Japan, withholding tax on dividends declared after July 1, 2004 is exempt from Japanese taxation by way of withholding or otherwise for pension funds which are qualified US residents eligible to enjoy treaty benefits unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension funds. Non-resident shareholders who are entitled to a reduced rate of Japanese withholding tax on payment by us of dividends on the shares are required to submit an Application Form for Income Tax Convention regarding Relief from Japanese Income Tax on Dividends in advance through us to the relevant tax authority before payment of dividends. A standing proxy for non-resident shareholders may provide such application service. See Item 10.B. of this annual report. Non-resident shareholders who do not submit an application in advance will be entitled to claim the refund of withholding taxes withheld in excess of the rate of an applicable tax treaty from the relevant Japanese tax authority. For Japanese tax purposes, the treaty rate normally applies superseding the tax rate under the domestic law. However, due to the so-called preservation doctrine, if the tax rate under the domestic tax law is lower than that promulgated under the applicable income tax treaty, then the domestic tax rate is still applicable. If the domestic tax rate still applies, no treaty application is required to be filed, consequently.

Gains derived from the sale of shares outside Japan, or from the sale of shares within Japan by a nonresident shareholder as a portfolio investor, are generally not subject to Japanese income or corporation taxes.

Japanese inheritance and gift taxes may be assessed against an individual who has acquired shares as a legatee, heir or donee, even if the individual is not a Japanese resident.

F. Dividends and Paying Agents.

Not applicable.

G. Statement by Experts.

Not applicable.

H. Documents on Display.

We file periodic reports and other information with the Securities and Exchange Commission. You may read and copy any document that we file with the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference room. The Securities and Exchange Commission also maintains a web site at www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the Securities and Exchange Commission.  You may also inspect our SEC reports and other information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. Some of this information may also be found on our website at www.nidec.co.jp/english/ir/index.html. Information on our website does not form part of this annual report.

As a foreign private issuer, we are exempt from the rules under the Securities Exchange Act of 1934 prescribing the furnishing and content of proxy statements to shareholders.

I. Subsidiary Information.

Not applicable.

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Item 11. Quantitative and Qualitative Disclosure About Market Risk.

We hold financial instruments in the normal course of business and are exposed to market risk, including changes in foreign exchange rates, interest rates and equity prices. We employ a variety of measures to manage market risk related to our financial instruments, including cash and cash equivalents, financial receivables, securities investments, long-term debt and short-term borrowings.

We do not have a policy of hedging all or a defined portion of specific risks. Accordingly, our decisions with regard to the use of derivative instruments are made on a case-by-case basis, and the nature and quantity of open derivative contracts can vary significantly over time. However, from time to time, we enter into derivative financial instruments which include foreign exchange forward contracts, foreign currency option agreements, interest rate swap agreements and interest rate cap agreements. Interest rate swap and cap agreements are designed to reduce our exposure to losses resulting from adverse fluctuations in interest rates on the underlying financial instruments. Foreign currency option agreements are designed to reduce our exposure to losses resulting from adverse fluctuations in foreign exchange rates on underlying accounts payable and anticipated purchase transactions in foreign currency. Foreign exchange forward con tracts are designed to reduce our exposure to losses resulting from adverse fluctuations in foreign exchange rates on our foreign currency accounts receivables, other receivables and accounts payable.

Foreign currency exchange rate risk

Transaction risk

A significant portion of our business is conducted in currencies other than yen, most significantly the U.S. dollar. For the year ended March 31, 2005, our U.S. dollar denominated sales comprised more than 55.5% of total sales. While sales denominated in U.S. dollars are, to a significant extent, offset by U.S. dollar denominated costs, which currently represent in excess of 54.0% of our total costs, we generally have had a significant net long U.S. dollar position. Our principal exposure arises at the level of Nidec which had an excess of U.S. dollar denominated trade receivables over trade payables of $189 million as of March 31, 2005. To the extent that there are any open foreign currency, i.e., U.S. dollar denominated positions, we are exposed to the risk of foreign currency fluctuations. Any gains and losses that result are recorded in our results of operations for the period. The foreign exchange gain (loss), net represents t he differences between the value of monetary assets and liabilities when they are originated at exchange rates current when a purchase or sale occurs and their value at the prevailing exchange rate when they are settled or translated at year-end. Foreign currency denominated monetary assets may include bank deposits, trade receivables and other receivables and monetary liabilities may include trade and notes payable, borrowings and debt.

Translation risk

Our reporting currency is the Japanese yen. We have assets and liabilities outside Japan that are subject to fluctuations in foreign currency exchange rates. Our assets and liabilities that are outside Japan are primarily located in Singapore, Thailand, the Philippines and China. We prepare financial statements of our foreign operations in their functional currencies prior to consolidation in our financial statements. Translation gains and losses arising from changes in the value of the reporting currency relative to the functional currencies of the underlying operations are recorded outside of our statement of operations in other comprehensive income until we dispose of or liquidate (which has not occurred in the past, nor do we expect it to occur frequently in the future) the relevant foreign operation.

Foreign currency derivatives

As our investments in foreign subsidiaries with a functional currency other than the Japanese yen are generally considered long-term, we do not hedge these net investments.

From time to time we utilize foreign currency forward contracts and foreign currency options derivative instruments to manage exposure to exchange rate volatility for accounts payable, accounts receivable and anticipated transactions denominated in foreign currencies. However, we do not use instruments with leverage, nor exotic options, to mitigate market risk. Changes in the fair values of our foreign exchange forward contracts and options are recognized as gains and losses on derivative instruments within our results of operations. The table below sets forth the aggregate contract amounts and weighted-average contracted forward rates for annual maturities of the foreign exchange forward contracts for the next five years.

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Foreign currency derivatives at March 31, 2004
	Maturity date							Fair Value
	2005	2006	2007	2008	2009	Thereafter	Total
Foreign Exchange Forward Contracts
Sell U.S. dollars
Contract amounts (in millions)	¥ 1,849	-	-	-	-	-	¥ 1,849	¥ 50
Weighted-average contracted forward Rate (yen per U.S.$1)	108.08	-	-	-	-	-	108.08
Sell THB
Contract amounts (in millions)	¥ 120	-	-	-	-	-	¥ 120	¥ 4
Weighted-average contracted forward Rate (yen per THB1)	2.73	-	-	-	-	-	2.73
Sell HKD
Contract amounts (in millions)	¥ 3,650	-	-	-	-	-	¥ 3,650	¥ 43
Weighted-average contracted forward Rate (yen per HKD1)	13.67	-	-	-	-	-	13.67
Buy U.S. dollars
Contract amounts (in millions)	¥ 699	-	-	-	-	-	¥ 699	¥ (13	)
Weighted-average contracted forward Rate (yen per U.S.$1)	107.46	-	-	-	-	-	107.46

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Foreign currency derivatives at March 31, 2005
	Maturity date							Fair Value
	2006	2007	2008	2009	2010	Thereafter	Total
Foreign Exchange Forward Contracts
Sell U.S. dollars
Contract amounts (in millions)	¥ 1,444	-	-	-	-	-	¥ 1,444	¥ (31	)
Weighted-average contracted forward Rate (yen per U.S.$1)	104.54	-	-	-	-	-	104.54
Sell THB
Contract amounts (in millions)	¥ 110	-	-	-	-	-	¥ 110	¥ (1	)
Weighted-average contracted forward Rate (yen per THB1)	¥ 2.70	-	-	-	-	-	¥ 2.70
Buy U.S. dollars
Contract amounts (in millions)	¥ 207	-	-	-	-	-	¥ 207	¥ 7
Weighted-average contracted forward Rate (yen per U.S.$1)	103.71	-	-	-	-	-	103.71

Interest rate risk

We enter into interest rate swaps and other contracts to reduce our market risk exposure from changes in interest rates. We have long-term receivables and debt, with fixed and variable rates, and we enter into interest rate swaps and other contracts in order to stabilize the fair values and cash flows of those receivables and debts.

The table below sets forth information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates. For our debts and receivables, it indicates whether the interest component is fixed or variable, the amount of the cash flows and the expected weighted-average interest rate for the next five years and thereafter and the items’ fair value. For our interest rate caps, the table presents payment type, notional principal amounts and weighted-average interest strike rates by expected (contracted) maturity dates and the items fair value. Notional amounts are used to calculate the contractual payments to be exchanged under the contracts.

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Interest rate risk at March 31, 2004
	Maturity date														Fair Value
	2005		2006		2007		2008		2009		Thereafter		Total
Long-term Loan Receivable	(Yen in millions)
Fixed Rate
Principal cash flows	2		5		7		6		5		101		126		138
Weighted-average interest rate	3.50	%	4.15	%	3.07	%	3.56	%	4.14	%	4.02	%	3.95	%
Floating Rate
Principal cash flows	83		75		61		45		30		43		337		337
Weighted-average interest rate	3.29	%	3.01	%	3.17	%	3.25	%	3.43	%	3.21	%	3.20	%
Long-term Debt
Fixed Rate (long-term loan)
Principal cash flows	1,656		1,300		713		652		16		74		4,411		4,440
Weighted-average interest rate	1.27	%	1.29	%	0.61	%	0.66	%	2.18	%	3.66	%	1.12	%
Fixed Rate (convertible bonds)
Principal cash flows	-		9,274		-		-		30,818		-		40,092		48,575
Weighted-average interest rate	-		0.80	%	-		-		0.00	%	-		0.19	%
Floating Rate (long-term loan)
Principal cash flows	7		2		2		2		2		13		28		28
Weighted-average interest rate	1.80	%	2.01	%	2.27	%	2.62	%	2.97	%	3.52	%	2.76	%
Interest Rate Derivatives
Interest Rate Swaps
Fixed rate payments
Notional amounts	1,000		-		-		-		1,200		-		2,200		-
Weighted-average interest rate	1.66	%	-		-		-		1.42	%	-		1.53	%	-
Floating rate receives
Notional amounts	1,000		-		-		-		1,200		-		2,200		(54	)
Weighted-average interest rate	0.06	%	-		-		-		0.47	%	-		0.29	%
Interest Rate Caps
Purchased Caps
Notional amounts	-		-		2,500		-		-		-		2,500		(34	)
Weighted-average interest rate	-		-		1.00	%	-		-		-		1.00	%

105

Interest rate risk at March 31, 2005
	Maturity date														Fair Value
	2006		2007		2008		2009		2010		Thereafter		Total
Long-term Loan Receivable	(Yen in millions)
Fixed Rate
Principal cash flows	18		25		54		24		4		78		203		184
Weighted-average interest rate	2.61	%	2.13	%	1.81	%	2.10	%	4.29	%	4.01	%	2.85	%
Floating Rate
Principal cash flows	83		73		57		37		12		16		278		278
Weighted-average interest rate	2.79	%	2.99	%	3.27	%	3.47	%	4.44	%	4.31	%	3.19	%
Long-term Debt
Fixed Rate (long-term loan)
Principal cash flows	1,037		845		652		16		5		68		2,623		2,591
Weighted-average interest rate	1.02	%	1.06	%	0.75	%	2.97	%	3.86	%	3.62	%	1.05	%
Fixed Rate (convertible bonds)
Principal cash flows	5,394		-		-		30,638		-		-		36,032		36,032
Weighted-average interest rate	0.80	%	-		-		0.00	%	-		-		0.12	%
Floating Rate (long-term loan)
Principal cash flows	2		2,001		2		2		2		16		2,025		2,025
Weighted-average interest rate	1.80	%	2.53	%	2.46	%	2.77	%	3.09	%	3.57	%	0.039	%
Interest Rate Derivatives
Interest Rate Swaps
Fixed rate payments
Notional amounts	-		-		-		1,200		-		-		1,200		(46	)
Weighted-average interest rate	-		-		-		1.42	%	-		-		1.42	%	-
Floating rate receives
Notional amounts	-		-		-		1,200		-		-		1,200		-
Weighted-average interest rate	-		-		-		0.30	%	-		-		0.30	%
Interest Rate Caps
Purchased Caps
Notional amounts	-		2,500		-		-		-		-		2,500		(24	)
Weighted-average interest rate	-		1.00	%	-		-		-		-		1.00	%

106

Equity security price risk

We have marketable equity securities classified as available-for-sale securities. At March 31, 2004, the fair value of these securities was ¥17,761 million and at March 31, 2005 it was ¥16,554 million. If the fair value of these securities were to change by 10%, the impact on the carrying amount of those securities as of March 31, 2004 would be ¥1,776 million and as of March 31, 2005 would be ¥1,655 million, respectively. We had no open equity derivative positions during the year ended March 31, 2004 or 2005.

Commodity price risk

We had no open commodity derivative positions for the year ended March 31, 2004 or 2005.

Item12. Description of Securities Other Than Equity Securities.

Not applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies.

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.

None.

Item 15. Controls and Procedures.

Nidec maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Nidec have been detected.  There inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

107

Management carried out an evaluation, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2004 pursuant to Rule 13a-15(b) under the Exchange Act.  Based upon the evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2005 because of the reportable conditions described below which would have constituted material weaknesses in internal control over financial reporting.

As a foreign private issuer, Nidec is not yet subject to the requirement of Rule 13a-15(c) under the Exchange Act that an issuer’s management, with the participation of its principal executive and financial officers, evaluate the effectiveness of its internal control over financial reporting as of the end of each fiscal year.  However, in connection with the audit of our consolidated financial statements for the year ended March 31, 2005, our principal accountant reported to Nidec’s Board of Corporate Auditors the following reportable conditions pursuant to AU Section 325, Communication of Internal Control Related Matters Noted in an Audit, of the American Institute of Certified Public Accountants’ Professional Standards:

1.     During the course of its audit of one of Nidec’s subsidiaries, the principal accountant noted unusual transactions including sales to an agent, sales to a foreign subsidiary with unusually high margins and no eliminating adjustments for profits on certain inter-company transactions at the subsidiary, which Nidec’s internal control procedures did not identify as irregular transactions.

2.     Nidec’s management evaluates subsidiary business performance on a monthly basis based on non-consolidated financial data which does not include consolidation adjustments, such as the elimination of inter-company transactions.  Also, for management evaluation purposes, Nidec only consolidates its accounts at the parent company level, with no sub-consolidations at subsidiaries.  In light of these and other circumstances, the principal accountant identified a significant risk that, even with the quarterly closing and preparation of consolidated financial statements that Nidec currently conducts, the types of irregular transactions described above would not be identified in a timely manner.

3.     The principal accountant pointed out that appropriate controls and procedures would need to be implemented to address risks in the area of improper recording of inter-company and/or consolidation adjustments, including the strengthening of the existing anti-fraud program, amendments to procedures for closing of consolidated financial statements and the dedication of additional resources to ensure newly implemented controls can be effectively applied.

Management held a meeting among itself, Nidec’s Board of Corporate Auditors and the principal accountant to discuss the reportable conditions communicated by the principal accountant.  In light of that discussion and other discussions held with the Board of Corporate Auditors and the principal accountant, management concluded that the reportable conditions as communicated by the principal accountant would have constituted material weaknesses in Nidec’s internal control over financial reporting.

In light of the material weaknesses, Nidec performed additional analysis and other procedures in connection with the preparation of its consolidated financial statements.  Accordingly, Nidec believes that the financial statements included in this Annual Report on Form 20-F fairly present, in all material respects, its financial position, results of operations and cash flows for the periods presented in accordance with generally accepted accounting principles.

Management also carried out an evaluation, with the participation of the Chief Executive Officer and the Chief Financial Officer, of changes in our internal control over financial reporting that occurred during the year ended March 31, 2005.  Based upon that evaluation, there was no change during the fiscal year ended March 31, 2005 that has materially affected, or is reasonably likely to materially affect, Nidec’s internal control over financial reporting.

108

To remediate the reportable conditions described above, Nidec is in the process of implementing certain measures such as increasing the level of internal audit review at the subsidiary at which the principal accountant identified irregular transactions and requiring all of its subsidiaries to prepare their financial statements in a manner consistent with generally accepted accounting principles in the United States, including those relating to consolidation.  Management will periodically report to the Board of Corporate Auditors on the progress on the implementation of these measures.

Item 16A. Audit Committee Financial Expert.

The Board of Corporate Auditors of Nidec has determined that Nidec does not have an “audit committee financial expert” as defined in Item 16A of Form 20-F serving on the Board of Corporate Auditors. Nidec believes that the combined knowledge, skills and experience of the Board of Corporate Auditors enables them, as a group, to act effectively in the fulfillment of their tasks and responsibilities, including those under the Sarbanes-Oxley Act of 2002. In addition, the Corporate Auditors have the power and authority to engage outside experts as they deem appropriate to provide them with advice on matters related to their responsibilities.

Item 16B. Code of Ethics.

Nidec has adopted a written code of ethics for its chief executive officer, chief financial officer, chief accounting officer and other senior officers which has been effective as of April 1, 2004. Nidec’s code of ethics is attached to this annual report on Form 20-F as exhibit 11.1.

Item 16C. Principal Accountant Fees and Services

Principal Accountant Audit Fees and Services Fees

The following table presents the fees paid or accrued by us for the audit and non-audit services rendered by our principal accountants, ChuoAoyama PricewaterhouseCoopers, during the fiscal years ended March 31, 2004 and 2005.

	Yen in millions		U.S. dollars in thousands
	For the year ended March 31		For the year ended
Type of Fee	2004	2005	March 31, 2005
Audit Fees (1)	¥ 278	¥ 352	$ 3,278
Audit Related Fees (2)	11	35	326
Tax Fees (3)	17	15	140
All Other Fees (4)	0	2	18
Total	¥ 306	¥ 404	$ 3,762

(1) Audit fees consist of the fees for professional services provided in connection with the audit of our annual financial statements and review of our quarterly financial statements and audit services provided in connection with other statutory or regulatory filing.

(2) Audit related fees are fees for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements and were not otherwise included in Audit Fees. This includes fees for employment benefit plan audits, due diligence to related mergers and acquisitions, attestations by ChuoAoyama PricewaterhouseCoopers that are not required by statute or regulation, and consulting on financial accounting/reporting standards.

109

(3) Tax fees represent fees for professional services rendered by ChuoAoyama PricewaterhouseCoopers for tax compliance, tax advise and tax planning.

(4) All other fees include fees for products and services provided by ChuoAoyama PricewaterhouseCoopers other than the services reported above.

The Board of Corporate Auditors has concluded the provision of the non-audit services listed above is compatible with maintaining the independence of ChuoAoyama PricewaterhouseCoopers.

Pursuant to Rule 2-01(c)(7) of Regulation S-X, the Board of Corporate Auditors pre-approves the engagement of our principal accountants and their affiliates to render audit and non-audit services to us. As a general rule, the Board of Corporate Auditors specifically pre-approves the engagement of such services after examining the details of the proposal engagement submitted by our management. With respect to certain specified audit and non-audit services, once every year, the Board of Corporate Auditors generally pre-approves the engagement of our principal accountants and their affiliates to render such services pursuant to the Board’s pre-approval policies and procedures. Under the pre-approval policies and procedures, services that are the subject of general pre-approval are specifically identified, together with the maximum aggregate fee amount that may be paid for each such service. The Board of Corporate Auditors reviews this list of specific services and related matters on an annual basis. All services to be rendered by our principal accountants or their affiliates that are not specifically identified must be specifically pre-approved by the Board of Corporate Auditors. Even for those services that are specifically identified, the rendering of such services for fees in excess of the maximum aggregate fee amount under the pre-approval policies and procedures must be specifically pre-approved by the Board of Corporate Auditors.

None of the services described above under this Item 16C were waived from the pre-approval requirement pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

Item 16D. Exemptions from the Listing Standards for Audit Committees.

Not applicable

110

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchases.

The following table sets forth information concerning purchases made by us during the fiscal year ended March 31, 2005.

		Shares	Yen	Shares	Shares
		Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of publicly announced plans or programs	Maximum numbers of shares that may yet be purchased under the plans or programs
2004
	April 1 - 30	385	¥ 11,189	-	-
	May 1 - 31	233	12,019	-	-
	June 1 - 30	339	11,054	-	-
	July 1 - 31	89	10,360	-	-
	August 1 - 31	192	10,522	-	-
	September 1- 30	183	11,062	-	-
	October 1 - 31	384	11,156	-	-
	November 1 - 30	458	12,421	-	-
	December 1- 31	642	12,117	-	-
2005
	January 1 - 31	383	12,461	-	-
	February 1 - 28	867	12,330	-	-
	March 1 - 31	470	13,056	-	-
Total		4,625	¥ 11,929	-	-

All of the purchase shown above represent with the purchase of fractional shares from fractional share owners under the Japanese Commercial Code. For an explanation of the right of such shareholders, see “Japanese Unit Share System— Right of a Holder of Shares Representing Less Than One Unit to Require Us to Purchase Its Shares.” under Item 10.B of this Annual Report.

Currently, we don’t have any publicly announced repurchase plans or programs.

111

PART III

Item 17. Financial Statements.

In lieu of responding to this item, we have responded to Item 18 of this annual report.

Item 18. Financial Statements.

The information required by this item is set forth in our consolidated financial statements included in this annual report.

112

Item 19. Exhibits.

Exhibit Number	Description
1.1	Articles of Incorporation of Nidec Corporation (English translation)
1.2	Share Handling Regulations of Nidec Corporation (English translation)*
1.3	Regulations of the Board of Directors of Nidec Corporation (English translation)
1.4	Regulations of the Board of Corporate Auditors of Nidec Corporation (English translation)
2.1	Specimen common stock certificates of Nidec Corporation (English translation)**
2.2	Form of Deposit Agreement among Nidec Corporation, Morgan Guaranty Trust Company of New York as Depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt***
8.1	Subsidiaries of Nidec Corporation
11.1	Code of Ethics
12.1	Certification of the Chief Executive Officer required by Rule 13a-14(a)
12.2	Certification of the Chief Financial Officer required by Rule 13a-14(a)
13.1	Certification of the Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code
13.2	Certification of the Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code

We have not included as exhibits certain instruments with respect to our long-term debt, the amount of debt authorized under each of which does not exceed 10% of our total assets, and we agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

____________

*     Incorporated by reference to Nidec’s annual report on Form 20-F for the year ended March 31, 2003 filed on July 7, 2003.

**   Incorporated by reference to Nidec’s annual report on Form 20-F for the year ended March 31, 2002 filed on July 5, 2002.

*** Incorporated by reference to the Registration Statement on Form F-6 (file no. 333-13894) filed on September 7, 2001.

113

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	NIDEC CORPORATION
	By:    /s/ Shigenobu Nagamori
	Name:	Shigenobu Nagamori
	Title:	President, Chief Executive Officer and  Representative Director
Date:  August 12, 2005

INDEX OF EXHIBITS

Exhibit Number	Description
1.1	Articles of Incorporation of Nidec Corporation (English translation)
1.2	Share Handling Regulations of Nidec Corporation (English translation)*
1.3	Regulations of the Board of Directors of Nidec Corporation (English translation)
1.4	Regulations of the Board of Corporate Auditors of Nidec Corporation (English translation)
2.1	Specimen common stock certificates of Nidec Corporation (English translation)**
2.2	Form of Deposit Agreement among Nidec Corporation, Morgan Guaranty Trust Company of New York as Depositary and all owners and holders from time to time of American Depositary Receipts, including the form of American Depositary Receipt***
8.1	Subsidiaries of Nidec Corporation
11.1	Code of Ethics
12.1	Certification of the Chief Executive Officer required by Rule 13a-14(a)
12.2	Certification of the Chief Financial Officer required by Rule 13a-14(a)
13.1	Certification of the Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code
13.2	Certification of the Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code

We have not included as exhibits certain instruments with respect to our long-term debt, the amount of debt authorized under each of which does not exceed 10% of our total assets, and we agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

____________

*     Incorporated by reference to Nidec’s annual report on Form 20-F for the year ended March 31, 2003 filed on July 7, 2003.

**   Incorporated by reference to Nidec’s annual report on Form 20-F for the year ended March 31, 2002 filed on July 5, 2002.

*** Incorporated by reference to the Registration Statement on Form F-6 (file no. 333-13894) filed on September 7, 2001.

NIDEC CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated balance sheets at March 31, 2004 and 2005		F-3
Consolidated statements of income for the years ended March 31, 2003, 2004 and 2005		F-5
Consolidated statements of shareholders’ equity and comprehensive income (loss) for the years ended March 31, 2003, 2004, 2005		F-6
Consolidated statements of cash flows for the years ended March 31, 2003, 2004, 2005		F-8
Notes to consolidated financial statements		F-10
Financial statements schedules
Schedule Ⅱ－Valuation and qualifying accounts
See Note 7, Allowance for doubtful accounts		F-23
See Note 19, Income taxes		F-44

F-1

NIDEC CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Shareholders and

Board of Directors of

Nihon Densan Kabushiki Kaisha

(“NIDEC Corporation”)

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows present fairly, in all material respects, the financial position of NIDEC Corporation and its consolidated subsidiaries at March 31, 2004 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2005, in conformity with accounting principles generally accepted in the United States of America.   These financial statements are the responsibility of the Company’s management.   Our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).  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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

As discussed in notes 2 to the consolidated financial statements, the Company changed its method of accounting for goodwill and other intangible assets in the year ended March 31, 2003.

/s/ ChuoAoyama PricewaterhouseCoopers

Kyoto, Japan

June 23, 2005

F-2

NIDEC CORPORATION

CONSOLIDATED BALANCE SHEETS

ASSETS

		Yen in millions				U.S. dollars in thousands
		March 31				March 31,
		2004		2005		2005
Current assets:
	Cash and cash equivalents	¥ 73,392		¥ 70,111		$ 652,863
	Trade notes and accounts receivable, net of allowance for doubtful accounts of   ¥623 million in 2004 and ¥484 million ($4,507 thousand) in 2005:
	Notes	17,431		17,351		161,570
	Accounts	96,509		112,568		1,048,217
	Inventories	45,245		48,962		455,927
	Other current assets	13,838		11,951		111,286
	Total current assets	246,415		260,943		2,429,863
	Marketable securities and other securities investments	19,892		18,495		172,223
	Investments in and advances to affiliated companies	2,259		1,865		17,367
		22,151		20,360		189,590
	Property, plant and equipment:
	Land	30,532		31,774		295,875
	Buildings	73,860		79,765		742,760
	Machinery and equipment	163,401		178,594		1,663,041
	Construction in progress	7,411		6,687		62,268
		275,204		296,820		2,763,944
	Less - Accumulated depreciation	(142,792	)	(147,614	)	(1,374,560	)
		132,412		149,206		1,389,384
	Goodwill	28,078		40,664		378,657
	Other non-current assets	14,830		13,000		121,054
	Total assets	¥ 443,886		¥ 484,173		$ 4,508,548

The accompanying notes are an integral part of these financial statements.

F-3

NIDEC CORPORATION

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY

		Yen in millions				U.S. dollars in thousands
		March 31				March 31,
		2004		2005		2005
Current liabilities:
	Short-term borrowings	¥ 86,636		¥ 28,478		$ 265,183
	Current portion of long-term debt	2,653		8,493		79,086
	Trade notes and accounts payable	93,418		95,076		885,334
	Other current liabilities	24,087		28,280		263,339
	Total current liabilities	206,794		160,327		1,492,942
Long-term liabilities:
	Long-term debt	45,025		37,833		352,295
	Accrued pension and severance costs	29,836		11,128		103,622
	Other long-term liabilities	3,054		12,338		114,890
	Total long-term liabilities	77,915		61,299		570,807
Minority interest in consolidated subsidiaries		49,131		55,507		516,873
Commitments and contingencies (Note 24)
Shareholders’ equity:
	Common stock authorized 2004 and 2005: 240,000,000 shares ; issued and outstanding: 2004 - 65,017,898 shares/ 2005 - 71,252,463 shares	28,995		61,180		569,699
	Additional paid-in capital	31,822		63,799		594,087
	Retained earnings	57,887		88,954		828,326
	Accumulated other comprehensive loss	(8,535	)	(6,745	)	(62,808	)
	Foreign currency translation adjustments	(11,475	)	(9,466	)	(88,146	)
	Unrealized gains on securities	2,972		2,777		25,859
	Minimum pension liability adjustment	(32	)	(56	)	(521	)
	Treasury stock, at cost: 2004 - 14,360 shares / 2005 - 15,602 shares	(123	)	(148	)	(1,378	)
	Total shareholders’ equity	110,046		207,040		1,927,926
	Total liabilities and shareholders’ equity	¥ 443,886		¥ 484,173		$ 4,508,548

The accompanying notes are an integral part of these financial statements.

F-4

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2003		2004		2005		2005
Net sales		¥ 231,836		¥ 277,497		¥ 485,861		$ 4,524,267
Operating expenses:
Cost of products sold		187,306		218,189		370,938		3,454,120
Selling, general and administrative expenses		21,302		28,542		35,340		329,081
Research and development expenses		6,824		8,751		25,918		241,345
		215,432		255,482		432,196		4,024,546
Operating income		16,404		22,015		53,665		499,721
Other income (expense):
Interest and dividend income		364		362		929		8,651
Interest expense		(890	)	(862	)	(871	)	(8,111	)
Foreign exchange (loss) gain, net		(3,511	)	(3,149	)	2,377		22,134
Gain (loss) from derivative instruments, net		23		(5	)	(175	)	(1,630	)
(Loss) gain on marketable securities, net		(1,583	)	816		1,586		14,769
Gain from issuance of securities by affiliated companies		39		-		-		-
(Loss) gain on sales of investments in affiliated companies		(4	)	45		(3	)	(28	)
Other, net		69		417		(218	)	(2,030	)
		(5,493	)	(2,376	)	3,625		33,755
Income before provision for income taxes		10,911		19,639		57,290		533,476
Provision for income taxes		(1,053	)	(5,424	)	(12,847	)	(119,629	)
Income before minority interest and equity in earnings of affiliated companies		9,858		14,215		44,443		413,847
Minority interest in income of consolidated subsidiaries		644		648		10,954		102,002
Equity in net (income) / losses of affiliated companies		(1,466	)	(2,522	)	34		317
Net income		¥ 10,680		¥ 16,089		¥ 33,455		$ 311,528
		Yen						U.S. dollars
Per share data:
Net income	－ basic	¥ 168.01		¥ 251.14		¥ 479.74		$ 4.47
	－ diluted	¥ 159.82		¥ 241.53		¥ 456.58		$ 4.25
Cash dividends		¥ 20.00		¥ 30.00		¥ 35.00		$ 0.33

The accompanying notes are an integral part of these financial statements.

F-5

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME

	Yen in millions
	Common stock		Additional paid-in capital	Retained earnings		Accumulated other comprehensive income (loss)		Treasury stock, at cost		Total
	Shares	Amount
Balance at March 31, 2002	63,563,653	¥ 26,469	¥ 25,801	¥ 34,299		¥ (1,085	)	¥ (9	)	¥ 85,475
Comprehensive income:
Net income				10,680						10,680
Other comprehensive income (loss):
Foreign currency translation adjustments						(4,289	)			(4,289	)
Unrealized gains (losses) on securities, net of reclassification adjustment						(101	)			(101	)
Minimum pension liability adjustment						(1,912	)			(1,912	)
Total comprehensive income										4,378
Dividends paid				(1,271	)					(1,271	)
Conversion of convertible debt	11,076	16	16							32
Purchase of treasury stock								(57	)	(57	)
Reissuance of treasury stock										-
Balance at March 31, 2003	63,574,729	¥ 26,485	¥ 25,817	¥ 43,708		¥ (7,387	)	¥ (66	)	¥ 88,557
Comprehensive income:
Net income				16,089						16,089
Other comprehensive income (loss):
Foreign currency translation adjustments						(5,785	)			(5,785	)
Unrealized gains (losses) on securities, net of reclassification adjustment						2,747				2,747
Minimum pension liability adjustment						1,890				1,890
Total comprehensive income										14,941
Dividends paid				(1,910	)					(1,910	)
Conversion of convertible debt	860,179	2,510	2,510							5,020
New shares issued upon shares exchange	582,990		3,495							3,495
Purchase of treasury stock								(57	)	(57	)
Reissuance of treasury stock										-
Balance at March 31, 2004	65,017,898	¥ 28,995	¥ 31,822	¥ 57,887		¥ (8,535	)	¥ (123	)	¥ 110,046

The accompanying notes are an integral part of these financial statements.

F-6

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME

	Yen in millions
	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)		Treasury stock, at cost		Total
	Shares	Amount
Balance at March 31, 2004	65,017,898	¥ 28,995	¥ 31,822		¥ 57,887		¥ (8,535	)	¥ (123	)	¥ 110,046
Comprehensive income:
Net income					33,455						33,455
Other comprehensive income (loss):
Foreign currency translation adjustments							2,009				2,009
Unrealized gains from securities, net of reclassification adjustment							(195	)			(195	)
Minimum pension liability adjustment							(24	)			(24	)
Total comprehensive income											35,245
Dividends paid					(2,388	)					(2,388	)
Conversion of convertible debt	570,665	1,940	1,940								3,880
Issuance of new shares	5,620,000	30,084	30,077								60,161
Issuance cost of new stock			(207	)							(207	)
Exercise of stock option	43,900	161	161								322
Treasury stock issued upon stock exchange			6						31		37
Purchase of treasury stock									(56	)	(56	)
Balance at March 31, 2005	71,252,463	¥ 61,180	¥ 63,799		¥ 88,954		¥ (6,745	)	¥ (148	)	¥ 207,040

	U.S. dollars in thousands
	Common Stock	Additional paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)		Treasury stock, at cost		Total
Balance at March 31, 2004	$269,997	$ 296,322		$ 539,035		$ (79,477	)	$ (1,145	)	$ 1,024,732
Comprehensive income:
Net income				311,528						311,528
Other comprehensive income (loss):
Foreign currency translation adjustments						18,708				18,708
Unrealized gains from securities, net of reclassification adjustment						(1,816	)			(1,816	)
Minimum pension liability adjustment						(223	)			(223	)
Total comprehensive income										328,197
Dividends paid				(22,237	)					(22,237	)
Conversion of convertible debt	18,065	18,065								36,130
Issuance of new shares	280,138	280,073								560,211
Issuance cost of new stock		(1,928	)							(1,928	)
Exercise of stock option	1,499	1,499								2,998
Treasury stock issued upon stock exchange		56						289		345
Purchase of treasury stock								(522	)	(522	)
Balance at March 31, 2005	$ 569,699	$ 594,087		$ 828,326		$ (62,808	)	$ (1,378	)	$ 1,927,926

The accompanying notes are an integral part of these financial statements.

F-7

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2003		2004		2005		2005
Cash flows from operating activities:
	Net income	¥ 10,680		¥ 16,089		¥ 33,455		$311,528
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation	12,862		14,273		21,528		200,466
	Amortization	353		217		577		5,373
	Loss (gain) on sales of marketable securities	22		(816	)	(1,618	)	(15,067	)
	Loss on devaluation of marketable securities	1,561		-		32		298
	Loss on sales and disposal of property, plant and equipment	896		819		1,479		13,772
	Deferred income taxes	(1,351	)	460		2,537		23,624
	Minority interest in income of consolidated subsidiaries	644		648		10,954		102,002
	Equity in net (income) losses of affiliated companies	(1,466	)	(2,522	)	34		317
	(Gain) loss from derivative instruments, net	(23	)	5		175		1,630
	Gain from issuance of securities by affiliated companies	(39	)	-		-		-
	Loss (gain) on sale of investments in affiliated companies	4		(45	)	3		28
	Foreign currency adjustments	2,200		3,566		(752	)	(7,003	)
	Accrual for pension and severance costs, net payments	857		(942	)	(9,352	)	(87,084	)
	Changes in operating assets and liabilities:
	Increase in notes and accounts receivable	(1,004	)	(3,559	)	(15,132	)	(140,907	)
	Decrease (increase) in inventories	1,714		(5,959	)	(3,254	)	(30,301	)
	Increase in notes and accounts payable	3,677		5,699		968		9,014
	(Decrease) increase in accrued income taxes	(3,436	)	876		2,303		21,445
	Other	(3,863	)	2,601		396		3,687
	Net cash provided by operating activities	¥ 24,288		¥ 31,410		¥ 44,333		$ 412,822

The accompanying notes are an integral part of these financial statements.

F-8

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2003		2004		2005		2005
Cash flows from investing activities:
	Additions to property, plant and equipment	¥ (21,715	)	¥ (22,631	)	¥ (37,257	)	$ (346,932	)
	Proceeds from sales of property, plant and equipment	501		893		2,510		23,373
	Purchases of marketable securities	(55	)	(2,176	)	(3	)	(28	)
	Proceeds from sales of marketable securities	97		1,780		2,739		25,505
	Investments in and advances to affiliated companies	(693	)	(14,807	)	-		-
	Proceeds from sales of investments in affiliated companies	-		955		344		3,203
	Acquisitions of consolidated subsidiaries, net of cash acquired	-		16,435		23		214
	Payments for additional investments in subsidiaries	(672	)	(1,057	)	(12,103	)	(112,701	)
	Other	(642	)	(525	)	(2,141	)	(19,937	)
	Net cash used in investing activities	(23,179	)	(21,133	)	(45,888	)	(427,303	)
Cash flows from financing activities:
	Increase (decrease) in short-term borrowings	8,844		11,204		(57,824	)	(538,449	)
	Proceeds from issuance of long-term debt	5,527		0		2,868		26,706
	Repayments of long-term debt	(16,272	)	(7,774	)	(4,442	)	(41,363	)
	Proceeds from issuance of corporate bonds	-		30,873		-		-
	Proceeds from issuance of new shares	-		-		60,133		559,950
	Dividends paid	(1,271	)	(1,910	)	(2,388	)	(22,237	)
	Other	(991	)	101		(841	)	(7,831	)
	Net cash (used in) provided by financing activities	(4,163	)	32,494		(2,494	)	(23,224	)
	Effect of exchange rate changes on cash and cash equivalents	(2,402	)	(2,418	)	768		7,152
	Net (decrease) increase in cash and cash equivalents	(5,456	)	40,353		(3,281	)	(30,553	)
	Cash and cash equivalents at beginning of year	38,495		33,039		73,392		683,416
	Cash and cash equivalents at end of year	¥ 33,039		¥ 73,392		¥ 70,111		$ 652,863

The accompanying notes are an integral part of these financial statements.

F-9

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of operations:

NIDEC Corporation (the “Company”) and its subsidiaries (collectively “NIDEC”) are primarily engaged in the design, development, manufacturing and marketing of i) small precision motors, which include spindle motors for computer hard disk drives, motors for CD-ROM and DVD drives, small precision fans and vibration motors for mobile phones; ii) mid-size motors, which are used in various electric household appliances, automobiles and industrial equipment; iii) machinery, which includes, power transmission equipment, board testers, semi-conductor manufacturing supplies, substrate inspection equipment, measuring equipment, card readers and factory automation systems. iv) electronic and optical components, which include camera shutters, camera lends units, encoders, switches, trimmer potentiometers, motor driven actuator units, optical pickup units, processing and precision plastic mold products. v) other products, w hich include auto parts, pivot assemblies and other services. Manufacturing operations are located primarily in Asia (China, Singapore, Thailand, Malaysia and the Philippines), and the Company has sales subsidiaries in Asia, North America and Europe.

The main customers for spindle motors are manufacturers of hard disk drives. NIDEC also sells its products to the manufacturers of various automation equipment, electric household appliances, home video game consoles, and telecommunication and audio-visual equipment.

2. Summary of significant accounting policies:

The Company and its subsidiaries in Japan maintain their records and prepare their financial statements in accordance with accounting principles generally accepted in Japan, and its foreign subsidiaries in conformity with those of their countries of domicile. Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conformity with accounting principles generally accepted in the United States of America. Significant accounting policies after reflecting adjustments for the above are as follows:

Estimates -

The preparation of NIDEC’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates include allowance for doubtful accounts, depreciation and amortization of long-lived assets, valuation allowance for deferred tax asset and pension liabilities. Actual results could differ from those estimates.

F-10

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Basis of consolidation and accounting for investments in affiliated companies -

The consolidated financial statements include the accounts of the Company and those of its majority-owned subsidiary companies. All significant intercompany transactions and accounts have been eliminated. Companies over which NIDEC exercises significant influence, but which it does not control, are classified as affiliated companies and accounted for using the equity method. Consolidated net income includes NIDEC’s equity in current earnings (losses) of such companies, after elimination of unrealized intercompany profits.

On occasion, a consolidated subsidiary or affiliated company accounted for by the equity method may issue its shares to third parties as either public or private offering or upon conversion of convertible debt to common stock at amounts per share in excess of or less than NIDEC’s average per share carrying value. With respect to such transactions, where the sale of such shares is not part of a broader corporate reorganization and the reacquisition of such shares is not contemplated at the time of issuance, the resulting gains or losses arising from the change in interest are recorded in income for the year when the change in interest transaction occurs. If reacquisition of such shares is contemplated at the time of issuance or realization of such gain is not reasonably assured (i.e., the entity is newly formed, non-operating, a research and development or start-up/development stage entity, or where the entity’s ability t o continue in existence is in question), the transaction is accounted for as a capital transaction.

NIDEC does not hold any interests in variable interest entities, therefore does not provide the disclosure required by FIN No.46R.

Translation of foreign currencies -

All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at the year-end exchange rates and all income and expense accounts are translated at exchange rates that approximate those prevailing at the time of the transactions. The resulting translation adjustments are included as a component of accumulated other comprehensive income in shareholders’ equity.

Assets and liabilities denominated in foreign currencies are translated at the year-end exchange rates and the resulting transaction gains or losses are taken into income.

Cash and cash equivalents -

Cash and cash equivalents include all highly liquid investments, with original maturities of three months or less that are readily convertible to known amounts of cash and are so near maturity that they present insignificant risk of changes in value because of changes in interest rates.

F-11

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Inventories -

Inventories are stated at the lower of cost or market. Cost is determined principally on the average cost basis. Cost includes the cost of materials, labor and applied factory overhead. Projects in progress, which mainly relate to production of factory automation equipment based on contracts with customers, are stated at the lower of cost or estimated realizable value, cost being determined as the accumulated production cost.

Marketable securities -

Marketable securities consist of equity securities that are listed on recognized stock exchanges. Equity securities designated as available-for-sale are carried at fair value with changes in unrealized gains or losses included as a component of accumulated other comprehensive income in shareholders’ equity, net of applicable taxes. Realized gains and losses are determined on the average cost method and are reflected in the statement of income. Other than temporary declines in market value of individual securities classified as available-for-sale are charged to income in the period the loss occurs.

Derivative financial instruments -

NIDEC employs derivative financial instruments, including foreign currency options, interest rate swap, interest rate cap agreements and foreign exchange forward contracts to manage its exposure to fluctuations in foreign currency exchange rates and interest rates. Derivative contracts are marked to market and changes in value, both increases and decreases, are recognized directly in the consolidated statement of income. No derivatives are designated as hedges or accounted for as hedges.

Property, plant and equipment -

Property, plant and equipment are stated at cost. Major renewals and improvements are capitalized; minor replacements, maintenance and repairs are charged to current operations. Depreciation of property, plant and equipment is mainly computed on the declining-balance method to reflect the manner in which the machinery is used due to short product cycles and rapid technology changes by the Company, its Japanese subsidiaries and its Thai manufacturing subsidiary, which mainly produce high-end spindle motors for hard disk drives and are usually the first to commence production of new products, and on the straight-line method for foreign subsidiary companies (except for the Thai subsidiary manufacturing as described above ) at rates based on the estimated useful lives of the assets. Estimated useful lives range from 10 to 20 years for most spindle motor factories, from 7 to 60 years for factories to produce other products, 50 years for the head office and sales offices, from 2 to 22 years for leasehold improvement, and from 2 to 18 years for machinery and equipment.

Depreciation expense amounted to ¥12,862 million, ¥14,273 million, and ¥21,528 million ($200,466 thousand) for the years ended March 31, 2003, 2004, and 2005, respectively.

F-12

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Lease-

NIDEC adopted SFAS No.13 “Accounting for Leases” (“SFAS No. 13”). Under SFAS No. 13, NIDEC recorded in a property, plant and equipment and a lease obligation as a capital lease.

Goodwill -

Goodwill represents the excess of purchase price and related costs over the fair value of net assets of acquired businesses. Under Statement of Financial Accounting Standards (“SFAS”) 142 “Goodwill and Other Intangible Assets”, goodwill acquired in business combinations is not amortized but tested annually for impairment. If, between annual tests, an event, which would reduce the fair value below its carrying amount, occurs, we would recognize impairment.

Long-lived assets -

NIDEC reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated as the excess of the assets carrying value over its fair value. Long-lived assets that are to be disposed of other than by sale are considered to be held and used until the disposal. Long-lived assets that are to be disposed of by sale are reported at the lower of their carrying value or fair value less costs to sell. Reductions in carrying value are recognized in the period in which long-lived assets are classified as held for sale.

Revenue recognition -

NIDEC recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assumed. For motors, these criteria are generally met at the time product is delivered to the customers’ site. Revenue for machinery and equipment sales is recognized upon receipt of final customer acceptance. At the time the related revenue is recognized, NIDEC makes provisions for estimated product returns.

Research and development expenses-

Research and development expenses are charged to operations as incurred.

Advertising costs -

Advertising and sales promotion costs are expensed as incurred. Advertising costs were ¥139 million, ¥149 million, and ¥304 million ($2,831 thousand) for the years ended March 31, 2003, 2004 and 2005, respectively.

F-13

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Income taxes -

The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

Earnings per share -

Basic net income per common share is calculated by dividing net income by the weighted-average number of shares outstanding during the reported period. The calculation of diluted net income per common share is similar to the calculation of basic net income per share, except that the weighted-average number of shares outstanding includes the additional dilution from potential common stock equivalents such as convertible bonds and warrants. All per share amounts have been restated to reflect the retroactive effect of stock splits.

Other comprehensive income -

Other comprehensive income refers to revenues, expenses, gains and losses that are included in comprehensive income, but are excluded from net income as these amounts are recorded directly as an adjustment to shareholders’ equity. NIDEC’s other comprehensive income is primarily comprised of unrealized gains and losses on marketable securities designated as available-for-sale, foreign currency translation adjustments and adjustments to recognize additional minimum liabilities associated with NIDEC’s defined benefit pension plans.

Stock-based compensation-

NIDEC followed the disclosure-only provisions of SFAS No. 148 - “Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123 (Revised 2004)” and elected to apply Accounting Principle Board Opinion (“APB”) No. 25 in accounting for its stock-based compensation plans approved on May 14, 2003. Under APB No.25, no compensation expense was recognized on the grant date, since at that date, the option price equals the market price of the underlying common stock.

The following table illustrates the effect of the stock options granted on May 14, 2003 on net income and net income per share over their vesting period for the years ended March 31, 2004 and 2005, if the fair value based method had been applied to.

F-14

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

	Yen in millions (except for pershare data)				U.S. dollars in thousands (except for per share data)
	For the year ended March 31				For the year ended March 31,
	2004		2005		2005
Net income, as reported	¥ 16,089		¥ 33,455		$ 311,528
Deduct:
Stock-based employee compensation cost	(680	)	(194	)	(1,806	)
Pro forma net income	¥ 15,409		¥ 33,261		$ 309,722
Net income per share:
Basic-as reported	¥ 251.14		¥ 479.74		$ 4.47
Basic-pro forma	¥ 240.52		¥ 476.95		$ 4.44
Diluted-as reported	¥ 241.53		¥ 456.58		$ 4.25
Diluted-pro forma	¥ 231.35		¥ 453.93		$ 4.23

Reclassification

Certain reclassifications of previously reported amounts have been made to the consolidated statements of cash flows for the years ended March 31, 2003 and 2004 to conform to the current year presentation. Such reclassifications have no effect on cash flows.

Recent accounting pronouncements

In November 2004, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards No. 151 (“SFAS 151”), “Inventory Costs an amendment of ARB No. 43, Chapter 4.” SFAS 151 amends the guidance in ARB No. 43 Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage).  Among other provisions, the new rule requires that such items be recognized as current-period charges, regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43. SFAS 151 is effective for fiscal years beginning after June 15, 2005. NIDEC does not expect that adoption of SFAS 151 will have a material effect on its consolidated financial position, consolidated results of operations, or liquidity.

F-15

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

In December 2004, the FASB issued SFAS No. 123R (“SFAS 123R”), revised 2004, “Share-Based Payment.” SFAS 123R requires employee stock options and rights to purchase shares under stock participation plans to be accounted for under the fair value method, and eliminates the ability to account for these instruments under the intrinsic value method prescribed by APB Opinion No. 25, and allowed under the original provisions of SFAS 123. SFAS 123R requires the use of an option pricing model for estimating fair value, which is amortized to expense over the service periods. NIDEC has not yet fully evaluated the effect of SFAS 123R on its consolidated financial position, consolidated results of operations, or liquidity.

3. U.S. dollar amounts:

U.S. dollar amounts presented in the consolidated financial statements and the related notes are included solely for the convenience of the reader and are unaudited. These translations should not be construed as representations that the yen amounts actually represent, or have been or could be converted into, U.S. dollars. For this purpose, the rate of ¥107.39 = U.S. $1, the approximate current exchange rate at March 31, 2005, was used for the presentation of the U.S. dollar amounts in the accompanying consolidated financial statements of NIDEC as of and for the year ended March 31, 2005.

F-16

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

4. Acquisitions and dispositions:

NIDEC made no significant business acquisitions or disposal for the year ended March 31, 2003.

On October 1, 2003, NIDEC issued 582,990 shares of its common stock in exchange for common stock of Nidec-Shimpo Corporation (“NSCJ”), making NSCJ a wholly owned subsidiary of NIDEC. The shares were issued to NSCJ’s shareholders of record as of September 30, 2003, in an amount equal to 0.060 shares per share of NSCJ’s common stock. However, no shares were allotted to the shares of NSCJ’s common stock already held by NIDEC. The number of shares of NSCJ’s common stock transferred to NIDEC through the share exchange amounted to 9,716,516 shares. The number was reached by subtracting 10,284,000 shares of NSCJ’s common stock held by NIDEC from 20,000,516 total outstanding shares of NSCJ’s common stock.

In January 2004, NIDEC acquired additional ownership of 7.36 % in Nidec Copal Electronics Corporation (“NCEL”), which manufactures and markets trimmer potentiometers, switches, pressure sensors, rotary encoders, motors, polygon laser scanners and fans that incorporate new mechatronics technologies and NCEL became NIDEC’s 51.3 % owned subsidiary.

In February 2004, NIDEC also increased its ownership of 4.23 % in Nidec Copal Corporation (“NCPL”), which manufactures and markets optical and electronic products, such as shutters, optical units and lenses, small precision motors, sensors, backlights for liquid crystal displays, and precision parts and dies and NCPL also became NIDEC’s 51.0% owned subsidiary.

Furthermore, in February 2004, NIDEC acquired 51.0 % of the stock of Sankyo Seiki Mfg. Co., Ltd. (“SNKC”). SNKC develops, manufactures and sells products relating to micro motors, optical pick-up units, automated teller machines, home appliances, factory automation systems and others. As a member of the NIDEC Group, SNKC will pursue synergies with the Company and its subsidiaries in various areas. SNKC became NIDEC’s 51.0 % owned subsidiary.

NIDEC previously accounted for those investments using the equity method of accounting and these step-up acquisitions are accounted for in accordance with SFAS 141. As a result of these acquisitions, NIDEC increased its ownerships in certain other affiliated companies accounted for by the equity-method. The results of operations of the acquired businesses are included in the accompanying financial statements from their respective dates of acquisition. In addition, NIDEC made other step-up acquisitions in NCEL, NCPL, SNKC and other affiliated companies other than those discussed above. Those step-up acquisitions during the year amounted to ¥32,132 million in aggregate.

F-17

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Total cash consideration was ¥32,132 million allocated ¥6,161 million for NCPL, ¥694 million for NCEL and ¥25,277 million for SNKC, respectively. NIDEC acquired an additional 3,673,100 shares in NCPL, 364,000 shares in NCEL and 40,171,995 shares in SNKC, respectively.

NIDEC did not recognize contingent payments, options, or commitments specified in the acquired to each major asset and liability caption of the acquired entity at the acquisition date.

NIDEC made no significant business acquisitions or disposal for the year ended March 31, 2005.

The following represents the unaudited pro forma results of operations of NIDEC for the year ended March 31, 2003 and 2004, as if the acquisition in these companies had occurred on April 1, 2002. The unaudited pro forma results of operations are presented for comparative purposes only and are not necessarily indicative of the results of operations that may occur in the future or that would have occurred had the acquisitions been in effect on the dates indicated.

		Yen in millions
		For the year ended March 31 (Unaudited)
		2003	2004
Pro forma net sales		¥ 402,131	¥ 494,196
Pro forma net income		5,828	1,406
		Yen
Pro forma net income per common share
	－basic	¥ 91.68	¥ 21.95
	－diluted	87.64	21.79

F-18

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

NIDEC described the allocation to separately disclose individually. The assets acquired and liabilities assumed on consolidation are as follows:

	Yen in millions
	March 31, 2004
	NCEL		NCPL		SNKC		TOTAL
Cash and cash equivalents	¥ 6,413		¥ 10,141		¥ 32,013		¥ 48,567
Accounts receivable	6,099		18,899		28,190		53,188
Inventories	2,621		6,603		14,759		23,983
Other current assets	698		1,953		2,653		5,304
Property, plant and equipment	5,367		14,382		20,792		40,541
Goodwill	865		13,440		9,007		23,312
Other non-current assets	1,218		13,476		4,755		19,449
Total assets acquired	23,281		78,894		112,169		214,344
Short-term borrowings and current portion of long-term debt	(901	)	(26	)	(11,725	)	(12,652	)
Accounts payable	(2,593	)	(13,558	)	(22,017	)	(38,168	)
Other current liabilities	(2,752	)	(4,851	)	(8,180	)	(15,783	)
Long-term debt	(6	)	(44	)	(3,104	)	(3,154	)
Other non-current liabilities	(1,594	)	(16,761	)	(6,786	)	(25,141	)
Total liabilities assumed	(7,846	)	(35,240	)	(51,812	)	(94,898	)
Minority interest	(6,897	)	(14,078	)	(21,880	)	(42,855	)
Investments in affiliated companies, net of accumulated losses of an affiliated company in excess of investment	(7,844	)	(23,415	)	(13,200	)	(44,459	)
Net assets acquired	¥ 694		¥ 6,161		¥ 25,277		¥ 32,132

The ¥23,312 million of goodwill was assigned to each operating segments described as below.

	Yen in Millions
	March 31, 2004
NCJ	¥ 22,465
NCPL	312
NTSC	156
NSBC	156
NCEL	78
NSCJ	78
SNKC	67
	¥ 23,312

F-19

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

NIDEC finalized our purchase price allocation for the acquisition completed in the fourth quarter of 2004 related to intangible assets and plant & equipment. In this regard, we had engaged an external appraisal firm and updated our purchase price allocation as appropriate.

NIDEC recognized the order or production backlogs in the robotic business assets as a valuable intangible assets, estimated approximately ¥61 million based on the analysis sing DCF method. And the trademark for music and royalty for the music software companies license were recognized as a valuable intangible assets, estimated approximately ¥1 million. SNKC had approximately 500 patents and 80 new utility models as of September 30, 2003. However, only three patents were contributing to earn revenues. NIDEC recognized these patents that were automatic ice making, IC card reader and automatic open/close system of toilet seat and cover as valuable intangible assets, estimated approximately ¥44 million on the analysis using RFR method. NIDEC transferred the total amounts of ¥106 million from goodwill account to other non-current assets account involving these valuable intangible assets.

F-20

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

5. Goodwill and other intangible assets

Intangible assets subject to amortization are summarized as follows:

	Yen in millions				U.S dollars in thousands
	March 31				March 31,
	2004		2005		2005
	Gross Carrying Amounts	Accumulated Amortization	Gross Carrying Amounts	Accumulated Amortization	Gross Carrying Amounts	Accumulated Amortization
Patent rights	¥ 56	¥ 22	¥ 70	¥ 22	$ 652	$ 205
Soft ware	1,087	672	1,688	768	15,718	7,152
Other	371	120	451	209	4,200	1,946
Total	¥ 1,514	¥ 814	¥ 2,209	¥ 999	$ 20,570	$ 9,303

Intangible assets acquired during the year ended March 31, 2005 totaled ¥758 million ($7,058 thousand) and primarily consist of patent right of ¥48 million ($447 thousand) and software of ¥646 million ($6,015 thousand).

The weighted average amortization period for patent rights and software are 8 years and 5 years, respectively.

Total amortization of intangible assets for the year ended March 31, 2005 amounted to ¥225 million ($2,095 thousand). Total non-depreciated intangible assets amounted to 19 million ($177 thousand).

The estimated aggregate amortization expense for intangible assets for the next five years is as follows:

Years ending March 31,	Yen in Millions	U.S. dollars in thousands
2006	¥ 289	$ 2,691
2007	248	2,309
2008	193	1,797
2009	142	1,322
2010	83	773

Goodwill represents the excess of purchase price and related costs over the fair value of net assets of acquired businesses. On April 1, 2002, NIDEC adopted SFAS No. 142 “Goodwill and Other Intangible Assets”. Under SFAS No. 142, goodwill acquired in business combinations is not amortized but tested annually for impairment. If, between annual tests, an event, which would reduce the fair value below its carrying amount, occurs, NIDEC would recognize an impairment.

F-21

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

NIDEC have completed the annual impairment test for existing goodwill as required by SFAS No. 142. NIDEC have determined that the fair value of each reporting unit which includes goodwill is in excess of its carrying amount. Accordingly, no impairment loss was recorded for goodwill.

The carrying amounts of goodwill by operating segment as of March 31, 2005 are as follows. Operating segment information is described at note No.25 (2).

	Yen in Millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
NCJ	¥ 27,136	¥ 39,970	$ 372,195
NCPL	312	312	2,905
NSCJ	81	81	754
NTSC	156	156	1,453
NCEL	78	78	726
SNKC	67	67	624
NSBC	248	-	-
	¥ 28,078	¥ 40,664	$ 378,657

There were changes in the allocation of goodwill by operating segment due to a share transfer within group companies as of March 31, 2004 and an addition of operating segment as of March 31, 2005.

The changes in the carrying amount of goodwill for the year ended March 31, 2005 are as follows:

	Yen in Millions	U.S. dollars in thousands
Balance as of April 1, 2004	¥ 28,078	$ 261,458
Acquired during the year	10,249	95,437
Termination of SNKC’s pension plan	2,337	21,762
Balance as of March 31, 2005	¥ 40,664	$ 378,657

The carrying amount of goodwill by operating segment as of March 31, 2004 was ¥27,136 million for the NCJ segment. The amount of goodwill acquired during the year ended March 31, 2005 was ¥12,834 million ($119,508 thousand). As a result of additional investments, it was ¥39,970 million ($372,195 thousand) for the NCJ segment.

F-22

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

6. Supplemental cash flow information:

Cash payments for income taxes were ¥5,840 million, ¥4,088 million and ¥8,007 million ($74,560 thousand) for the years ended March 31, 2003, 2004 and 2005, respectively. Interest payments during the years ended March 31, 2003, 2004 and 2005 were ¥1,112 million, ¥856 million and ¥853 million ($7,943 thousand), respectively.

Capital lease obligations of ¥1,202 million, ¥550 million and ¥2,440 million ($22,721 thousand) were incurred for the years ended March 31, 2003, 2004 and 2005, respectively.

Conversions of convertible debt into common stock were ¥32 million, ¥5,020 million and ¥3,880 million ($36,130 thousand) for the years ended March 31, 2003, 2004 and 2005, respectively.

7. Allowance for doubtful accounts:

An analysis of activity within the allowance for doubtful accounts relating to trade notes and accounts receivable and notes receivable for the years ended March 31, 2003, 2004 and 2005 is as follows:

	Yen in millions						U.S. dollars in thousands
	March 31						March 31,
	2003		2004		2005		2005
Allowance for doubtful accounts at beginning of year	¥ 378		¥ 465		¥ 623		$ 5,801
Provision for doubtful accounts	381		226		281		2,617
Collection	(1	)	(40	)	(2	)	(19	)
Write-offs	(5	)	(27	)	(329	)	(3,063	)
Write-backs	(265	)	(255	)	(100	)	(931	)
Acquisition and other	-		294		3		28
Translation adjustment and other	(23	)	(40	)	8		74
Allowance for doubtful accounts at end of year	¥ 465		¥ 623		¥ 484		$ 4,507

F-23

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

8. Inventories:

Inventories consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
Finished goods	¥ 15,850	¥ 18,853	$ 175,556
Raw materials	10,267	12,688	118,149
Work in process	15,016	13,009	121,138
Project in progress	886	964	8,977
Supplies and other	3,226	3,448	32,107
	¥ 45,245	¥ 48,962	$ 455,927

9. Other current assets:

Other current assets as of March 31, 2004 and 2005 consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
Other receivable	¥ 6,199	¥ 3,399	$ 31,651
Deferred tax assets	2,973	3,855	35,897
Other	4,666	4,697	43,738
	¥ 13,838	¥ 11,951	$ 111,286

“Other” primarily consists of time deposit, prepaid expenses and other.

F-24

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

10. Marketable securities and other securities investments:

Marketable securities and other securities investments include debt and equity securities of which the aggregate fair value, gross unrealized gains and losses and cost are as follows:

	Yen in millions
	March 31, 2004
	Cost	Gross unrealized gains	Gross unrealized losses	Fair value
Available-for-sale
Debt securities	¥ 83	¥ 0	¥ 5	¥ 78
Equity securities	8,450	9,473	162	17,761
Total	¥ 8,533	¥ 9,473	¥ 167	¥ 17,839
Securities not practicable to fair value
Equity securities	¥ 2,053

	Yen in millions
	March 31, 2005
	Cost	Gross unrealized gains	Gross unrealized losses	Fair value
Available-for-sale
Debt securities	¥ 5	¥ 0	-	¥ 5
Equity securities	7,586	9,066	¥ 98	16,554
Total	¥ 7,591	¥ 9,066	¥ 98	¥ 16,559
Securities not practicable to fair value
Equity securities	¥ 1,936

	U.S. dollars in thousands
	March 31, 2005
	Cost	Gross unrealized gains	Gross unrealized losses	Fair value
Available-for-sale
Debt securities	$ 46	$ 0	-	$ 46
Equity securities	70,640	84,421	$ 912	154,149
Total	$ 70,686	$ 84,421	$ 912	$ 154,195
Securities not practicable to fair value
Equity securities	$ 18,028

F-25

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

At March 31, 2005, the contractual maturities of available-for-sale debt securities are summarized as follows:

	Yen in millions		U.S. dollars in thousands
	March 31, 2005		March 31, 2005
	Cost	Fair value	Cost	Fair value
Due within 1 year	-	-	-	-
Due after 1 year to 5 years	¥ 5	¥ 5	$ 46	$ 46
Due after 5 years	-	-	-	-
	¥ 5	¥ 5	$ 46	$ 46

During the year ended March 31, 2003, 2004 and 2005, the net unrealized gain on available-for-sale securities included as a component of accumulated other comprehensive income, net of applicable taxes, decreased by ¥101 million, increased by ¥2,747 million and decreased by ¥195 million ($1,816 thousand), respectively.

Proceeds from sales of available-for-sale securities were ¥97 million, ¥1,780 million and ¥2,739 million ($25,505 thousand) for the years ended March 31, 2003, 2004 and 2005, respectively. On those sales, gross realized gains were ¥0 million, ¥778 million and ¥1,618 million ($15,067 thousand) and gross realized losses were ¥23 million, ¥2 million and ¥ - million, respectively.

F-26

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

NIDEC holds long-term investment securities that are classified as “marketable securities and other securities investments.” These securities were issued by various non-public companies. These securities are recorded at cost, as their fair values are not readily determinable. NIDEC’s management employs a systematic methodology to assess the recoverability of such investments by reviewing the financial position of the underlying companies and the prevailing market conditions in which these companies operate to determine if NIDEC’s investment in each individual company is impaired and whether the impairment is other-than-temporary. If any impairment is determined to be other-than-temporary, the cost of the investment is written-down by the impaired amount and the amount is recognized currently as a realized loss.

The following table presents the gross unrealized losses on, and fair value of, our investment securities, aggregated by investment category and length of time that individual investment securities have been in a continuous unrealized loss position, at March 31, 2005.

	Yen in millions			Yen in millions
	Less than 12 months			12 months or more
	Fair value	Unrealized loss		Fair value	Unrealized loss
Debt securities	-	-		-	-
Equity securities	¥ 184	¥ (11	)	¥ 451	¥ (87	)
Total	¥ 184	¥ (11	)	¥ 441	¥ (87	)

	U.S. dollars in thousands			U.S. dollars in thousands
	Less than 12 months			12 months or more
	Fair value	Unrealized loss		Fair value	Unrealized loss
Debt securities	-	-		-	-
Equity securities	$ 1,713	$ (102	)	$ 4,200	$ (810	)
Total	$ 1,713	$ (102	)	$ 4,200	$ (810	)

NIDEC presumes a decline in value of investment securities is other-than-temporary if the fair value is 20% or more below the original cost for an extended period of time. The presumption of an other-than-temporary impairment may be overcome if there is evidence to support that the decline is temporary in nature due to the existence of other factors which overcome the duration or magnitude of the decline. On the other hand, there may be cases where impairment losses are recognized when specific factors indicate the decline in the fair value is other-than-temporary.

As of March 31, 2005, NIDEC determined that the decline in value for investment securities with unrealized losses shown in the above table is temporary in nature.

F-27

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

11. Investments in and transactions with affiliated companies:

Summarized financial information for affiliated companies accounted for using the equity method, which is presented based on accounting principles generally accepted in the United States of America, is shown below:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
Current assets	¥ 5,375	¥ 4,285	$ 39,901
Non-current assets	6,502	5,199	48,413
Total assets	¥ 11,877	¥ 9,484	$ 88,314
Current liabilities	¥ 5,114	¥ 3,671	$ 34,184
Long-term liabilities	1,637	1,036	9,647
Shareholders’ equity	5,126	4,777	44,483
Total liabilities, minority interest and shareholders’ equity	¥ 11,877	¥ 9,484	$ 88,314
NIDEC’s share of shareholders’ equity	¥ 1,301	¥ 1,431	$ 13,325
NIDEC’s investment in equity-method affiliates	¥ 2,116	¥ 1,717	$ 15,988
Loan receivable from affiliated companies	¥ 143	¥ 148	$ 1,379
Number of affiliated companies at end of period	7	4

For the year ended March 31, 2004, NIDEC acquired additional ownership in Nidec Copal Corporation (“NCPL”), Nidec Copal Electronics Corporation (“NCEL”) and certain other affiliated companies accounted for by the equity method. NIDEC’s ownership interests in these companies increased to over 50% and NIDEC’s consolidated financial statements include the accounts of these majority-owned subsidiaries from the acquisition dates.

	Yen in millions					U.S. dollars in thousands
	For the year ended March 31					For the year ended March 31,
	2003		2004	2005		2005
Net revenues	¥ 86,258		¥ 156,818	¥ 10,319		$ 96,089
Gross profit	¥ 15,785		¥ 22,291	¥ 1,088		$ 10,131
Net income	¥ 3,225		¥ 5,069	¥ 45		$ 419
NIDEC’s share of net income	¥ 1,472		¥ 2,308	¥ (17	)	$ (158	)
Amortization/ adjustments	(6	)	214	(17	)	(159	)
Equity income (loss)	¥1,466		¥ 2,522	¥ (34	)	$ (317	)

F-28

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

As of March 31, 2003, entities comprising a significant portion of NIDEC’s investment in affiliated companies include NCPL (46.77%) and NCEL (43.94%).

As of March 31, 2004, entities comprising a significant portion of NIDEC’s investment in affiliated companies include NTN-Nidec (Zhejiang) Corporation (“NNSC”) (40.00%) and Nidec Development Philippines Corporation (“NDF”) (39.99%). The significant decrease in carrying amount of the investment in equity method affiliates is due to NCPL and NCEL becoming consolidated subsidiaries.

As of March 31, 2005, entities comprising a significant portion of NIDEC’s investment in affiliated companies include NNSC (40.00%) and NDF (39.99%).

Certain affiliated companies accounted for using the equity method with carrying amounts of ¥226 million (1 company; Seijin-Sankyo Control Devices Co., Ltd.) as of March 31, 2004 and ¥261 million ($2,430 thousand) (1 company, Seijin-Sankyo Control Devices Co., Ltd.) as of March 31, 2005 were quoted on various established stock markets at an aggregate market capitalization of ¥374 million and ¥432 million ($4,023 thousand), respectively. Seijin-Sankyo Control Devices Co., Ltd. has become an affiliated company accounted for using the equity method. This was because Sankyo Seiki Mfg. Co., Ltd. (“SNKC”) has become consolidated subsidiary on February 2004.

For the year ended March 31, 2004, net revenue, gross profit, net income and other incomes, described above table, increased mainly due to these incomes of Sankyo Seiki Mfg. Co., Ltd. and its subsidiaries until February 2004 when these companies became NIDEC’s consolidated subsidiaries.

For the year ended March 31, 2005, net revenue, gross profit, net income and other incomes, described above table, largely decreased. This was mainly due that these income of NCPL, NCEL, SNKC and their subsidiaries until January and February 2004, when this companies became NIDEC’s consolidated subsidiaries, was included in the amounts for the year ended March 31, 2004 described above table.

F-29

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Account balances and transactions with affiliated companies are presented below:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
Trade notes and accounts receivable	¥ 167	¥ 201	$ 1,872
Trade notes and accounts payable	522	831	7,738

	Yen in millions			U.S. dollars in thousands
	For the year ended March 31			For the year ended March 31,
	2003	2004	2005	2005
Sales of products	¥ 714	¥ 1,166	¥ 270	$ 2,514
Purchases of goods	1,975	2,088	2,870	26,725

For the year ended March 31, 2004, sales of products according to transactions with affiliated companies increased mainly due to sales of Nidec Logistics Corporation, called “Sankyo Ryutsu Kogyo Co., Ltd.” until March 31, 2004, which was NIDEC’s consolidated subsidiaries, transacted with Sankyo Seiki Mfg. Co., Ltd. and its subsidiaries, which were NIDEC’s affiliated companies accounted for using the equity method until February 2004.

At the same time, purchases of goods according to transactions with affiliated companies slightly increased. Purchases of goods decreased because Nidec Corporation shifted the supplier from Nidec Copal Philippines Corporation, which was NIDEC’s affiliated company until February 2004, to Nidec (Dongguan) Corporation, which was NIDEC’s consolidated subsidiary for the year ended March 31, 2004. On the other hand, the purchases increased because of an increase in the transaction with NNSC. NNSC manufactured a sintered-alloy-based fluid dynamic bearing unit, used in NIDEC’s fluid dynamic bearing motor for hard disk drives.

For the year ended March 31, 2005, sales of products according to transactions with affiliated companies largely decreased mainly due to the exclusion in the sales to NCPL, NCEL, SNKC and their subsidiaries which became NIDEC’s consolidated subsidiaries on January and February 2004.

At the same time, purchases of goods according to transactions with affiliated companies increased compared to the last fiscal year ended March 31, 2004, mainly due to an increase in the transaction with NNSC.

F-30

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Dividends from affiliated companies accounted for by the equity method for the years ended March 31, 2003, 2004 and 2005 were ¥499 million, ¥515 million and ¥33 million ($307 thousand), respectively.

In August 1999, NCPL issued unsecured 1.56% bonds, to the Company with detachable warrants. As of March 31, 2003, the Company holds the ex-warrant bonds at cost in the amount of ¥499 million, included in “Investments in and advances to affiliated companies” in the consolidated balance sheets. The bonds reached maturity date on August 2003.

Loan receivables from affiliated companies accounted for by the equity method were ¥143 million and ¥148 million （$1,379 thousand) as of March 31, 2004 and 2005, respectively.

12. Other non-current assets:

Other non-current assets as of March 31, 2004 and 2005 consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
Deferred tax assets	¥ 11,088	¥ 7,374	$ 68,666
Other	3,742	5,626	52,388
	¥ 14,830	¥ 13,000	$ 121,054

“Other” primarily consists of other investments and other assets.

13. Short-term borrowings and long-term debt:

Short-term borrowings at March 31, 2004 and 2005consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
Loans, principally from banks with average interest at March 31, 2004 of 0.671% and at March 31, 2005 of 0.887% per annum, respectively	¥ 86,636	¥ 28,478	$ 265,183

At March 31, 2005, NIDEC had unused lines of credit amounting to ¥123,553 million ($1,150,507 thousand) with banks. Under these programs, NIDEC is authorized to obtain short-term financing at prevailing interest rates.

F-31

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Long-term debt at March 31, 2004 and 2005 comprises the following:

	Yen in millions				U.S. dollars in thousands
	March 31				March 31,
	2004		2005		2005
Secured loans, representing obligations principally to banks Due 2005 to 2006 in 2004 with interest ranging from 2.125% to 3.25% per annum in 2004	¥ 544		¥ -		$ -
Unsecured loans, representing principally to banks Due 2004 to 2026 in 2004 with interest ranging from 0.00% to 6.80% per annum in 2004 Due 2005 to 2026 in 2005 with interest ranging from 0.00% to 6.80% per annum in 2005	3,895		4,648		43,281
Unsecured 0.8% convertible bonds ,due 2006 2004: Convertible currently at ¥6,842 ($65) for one common share, redeemable before due date 2005: Convertible currently at ¥6,798 ($63) for one common share, redeemable before due date	9,274		5,394		50,228
Zero coupon 0.0% convertible bonds, due 2008 2004: Convertible currently at ¥13,905 ($132) for one common share, redeemable before due date 2005: Convertible currently at ¥13,828 ($129) for one common share, redeemable before due date *1	30,818		30,638		285,297
Long-term capital lease obligations Due 2005 to 2016 in 2004, with interest from 0.7% to 6.0% per annum in 2004 Due 2005 to 2016 in 2005, with interest from 1.0% to 6.0% per annum in 2005	3,147		5,646		52,575
	47,678		46,326		431,381
Less - Current portion due within one year	(2,653	)	(8,493	)	(79,086	)
	¥ 45,025		¥ 37,833		$ 352,295

*1: The yen denominated zero coupon convertible bonds with stock acquisition rights due 2008, which are listed at London Stock Exchange, were issued on October 17, 2003, and are redeemable at 100% of face value on October 17, 2008 (maturity date). The face value of the bonds was ¥30,000 million ($279,356 thousand) and the issue price was 100.00% of the face value.

F-32

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The aggregate amounts of annual maturity of long-term debt during the next five years are as follows:

Year ending March 31	Yen in millions	U.S. dollars in thousands
2006	¥ 8,493	$ 79,086
2007	4,216	39,259
2008	1,868	17,394
2009	31,274	291,219
2010	348	3,240
2011 and thereafter	¥ 127	$ 1,183

At March 31, 2005, lands with book value of ¥330 million ($3,073 thousand), and buildings with book value of ¥196 million ($1,825thousand), respectively, were mortgaged as collateral for borrowings from banks.

Standard agreements with certain banks in Japan include provisions that collateral (including sums on deposit with such banks) or guarantors will be furnished upon the banks’ request and that any collateral furnished, pursuant to such agreements or otherwise, will be applicable to all present or future indebtedness to such banks.

14. Other current liabilities:

Other current liabilities as of March 31, 2004 and 2005 consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
Accrued expenses	¥ 12,096	¥ 12,945	$ 120,542
Income taxes payable	3,790	6,129	57,072
Other	8,201	9,206	85,725
	¥ 24,087	¥ 28,280	$ 263,339

“Other” primarily consists of payable for property, plant and equipment, and other.

F-33

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

15. Pension and severance plans:

The Company and certain subsidiaries sponsor pension and retirement plans, which entitle employees, under most circumstances, to lump-sum indemnities or pension payments based on current rates of pay and length of service. Under normal circumstances, the minimum payment prior to retirement age is an amount based on voluntary retirement. Employees receive additional benefits upon involuntary retirement, including retirement at the mandatory retirement age. With respect to directors’ resignations, lump-sum severance indemnities are calculated by using a similar formula and are subject to approval of the shareholders.

Employees in Japan are members of contributory funded defined benefit pension plans, which are pursuant to the Japanese Welfare Pension Insurance Law (JWPIL). The contributory pension plans cover a portion of the governmental welfare pension program, under which the contributions are made by the companies and their employees, and an additional portion representing the noncontributory pension plans. The pension benefits are determined based on years of service and the compensation amounts as stipulated in the aforementioned regulations, and are payable, at the option of the retiring employee, as a monthly pension payment or as a lump-sum payment. The contributions to the plans are funded with several financial institutions in accordance with applicable laws and regulations.

The Company and certain subsidiaries and affiliates have maintained the employees’ pension fund (EPF) pursuant to JWPIL. The EPF consisted of two tiers, “Substitutional Portion”, in which the EPF, in lieu of the government’s social insurance program, collected contributions, funded them and paid benefits to the employees with respect to the pay-related portion of the old-age pension benefits prescribed by JWPIL, and “Corporate Portion” which was established at the discretion of each employer.

In June 2001, the Corporate Defined Benefit Pension Plan Law was enacted and allows any EPF to terminate its operation relating to “Substitutional Portion” that in the past an EPF had operated and managed in lieu of the government, subject to approval from the Japanese Minister of Health, Labor and Welfare. In December 2004, The Company obtained the approval from the Minister for the exemption from benefit payments related to employee services of “Substitutional Portion”. In March 2005, The Company completed the transfer of the plan assets equivalent to “Substitutional Portion” to the government.

NIDEC adopted EITF Issue No. 03-02, “Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities” for the settlement process of the substitutional portion of EPF. EITF Issue No. 03-02 requires employers to account for the entire separation process of a substitutional portion from an entire plan (including a corporate portion) upon completion of the transfer to the government of a substitutional portion of EPF and related plan assets as the culmination of a series of steps in a single settlement transaction. Under this approach, the difference between the accumulated benefit obligation and the assets required to be transferred to the government was accounted for and separately disclosed as a subsidy.

F-34

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

And a proportionate amount of net unrecognized gain or loss related to the entire EPF and difference between projected benefit obligations and accumulated benefit obligations for a substitutional portion of EPF were recognized as a settlement gain or loss.

In addition, during the year ended March 31, 2005, certain subsidiaries in Japan transferred or terminated their defined benefit pension plans.

Nissin Kohki Co., Ltd. and Sankyo Seiki Mfg. Co., Ltd. transferred their defined benefit plans to defined contribution plans in June 2004 and December 2004, respectively.

Nidec Copal Corporation determined to terminate its EPF on January 28, 2005 and received approval of the termination on February 25, 2005. Upon this approval, Nidec Copal Corporation completed the termination process on March 2005 and the gain on the termination was recognized in the current fiscal period.

The accounting for these transitions and termination were in accordance with SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits.”

While NIDEC has no legal obligation, the Company and certain subsidiaries provided lump-sum severance benefits for retirement of directors and corporate auditors. The allowance for the payment had been accrued, based on the estimated cost of the severance plan, which had not been funded.

However, NIDEC decided to terminate its severance plan during this year. After the payment of the allowance as of March 31, 2005 for the benefit corresponding to their term of office up to the terminal date subject to approval of the shareholders, NIDEC will provide directors and corporate auditors with remuneration that better reflects the annual performance and results of the companies, rather than length of service of individuals.

F-35

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

NIDEC uses a December 31 measurement date for its pension plans. Information regarding NIDEC’s employees’ defined benefit plans is as follows:

	Yen in millions				U.S. dollars in thousands
	March 31				March 31,
	2004		2005		2005
Change in benefit obligation:
Benefit obligation at beginning of year	¥ 14,331		¥ 42,971		$ 400,140
Service cost	676		1,106		10,299
Interest cost	211		876		8,157
Plan participants’ contributions	102		-		-
Actuarial loss (gain)	(801	)	960		8,939
Acquisition and other	31,473		15		139
Projected benefit obligation settled due to the separation of substitutional portion	-		(3,130	)	(29,146	)
Curtailment	(101	)	(1,842	)	(17,152	)
Settlement	(1,859	)	(24,254	)	(225,850	)
Foreign currency exchange rate changes	(15	)	9		84
Benefits paid	(1,046	)	(1,607	)	(14,964	)
	42,971		15,104		140,646
Change in plan assets:
Fair value of plan assets at beginning of year	4,137		14,474		134,780
Actual return on plan assets	236		444		4,134
Employer contribution	419		984		9,163
Acquisition and other	10,149		35		326
Assets transferred to the government due to the separation of substitutional portion	-		(1,740	)	(16,203	)
Curtailment/Settlement	(135	)	(8,154	)	(75,929	)
Plan participants’ contributions	102		-		-
Foreign currency exchange rate changes	-		2		19
Benefits paid	(434	)	(926	)	(8,623	)
Fair value of plan assets at end of year	14,474		5,119		47,667
Funded status	28,497		9,985		92,979
Unrecognized actuarial loss	(1,351	)	(524	)	(4,880	)
Unrecognized prior service cost	690		628		5,848
	¥ 27,836		¥ 10,089		$ 93,947
Amounts included in the consolidated balance sheets are comprised of:
Accrued pension and severance costs	¥ 27,914		¥ 10,224		$ 95,204
Accumulated other comprehensive income	(78	)	(135	)	(1,257	)
Net amounts recognized	¥ 27,836		¥ 10,089		$ 93,947

The accumulated benefit obligation for all defined benefit pension plans were ¥40,832 and ¥14,211 million ($132,331 thousand) for the year ended March 31, 2004 and 2005, respectively.

F-36

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for which the accumulated benefit obligations exceed plan assets are as follows:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
Projected benefit obligations	¥ 41,574	¥ 15,067	$140,302
Accumulated benefit obligations	39,435	14,174	131,986
Fair value of plan assets	14,239	5,082	47,323

Weighted-average assumptions used to determine benefit obligations as of March 31, 2004 and 2005 are as follows:

	March 31
	2004	2005
Discount rate	1.0-2.3%	1.0-2.5%
Rate of compensation increase	0.0-6.2%	0.0-3.5%

Weighted-average assumptions used to determine net pension and severance costs for the years ended March 31, 2003, 2004 and 2005 are as follows:

	For the year ended
	March 31
	2003	2004	2005
Discount rate	2.0-2.7%	1.0-2.0%	1.0-2.3%
Expected return on plan assets	1.0-3.0%	1.0-2.0%	0.8-3.5%
Rate of compensation increase	1.5-3.9%	1.5-3.9%	0.0-6.2%

	Yen in millions						U.S. dollars in thousands
	For the year ended March 31						For the year ended March 31,
	2003		2004		2005		2005
Components of net periodic (benefit) cost:
Service cost	¥ 649		¥ 850		¥ 1,106		$ 10,299
Interest cost	307		323		876		8,157
Expected return on plan assets	(109	)	(132	)	(387	)	(3,604	)
Amortization of unrecognized net actuarial loss	8		182		28		261
Amortization of net transition obligation	91		208		-		-
Amortization of unrecognized prior service cost	(62	)	(93	)	(62	)	(577	)
Settlement loss resulted from the transfer of the substitutional portion	-		-		39		363
Gains from curtailments	-		(101	)	(1,842	)	(17,152	)
Gains from settlements	-		(358	)	(6,735	)	(62,716	)
Net periodic pension cost	¥ 884		¥ 879		¥ (6,977	)	$ (64,969	)

F-37

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Unrecognized prior service cost and unrecognized actuarial gain and loss are amortized using the straight-line method over the average remaining service period of active employees.

The weighted-average asset allocations of our pension plans are as follows:

Assets Category	Asset allocation of pension plans
	Actual (%)		Target (%)
	March 31, 2004	March 31, 2005	March 31, 2006
Equity securities	21	25	25
Debt securities	5	23	23
Property, plant and equipment	-	-	-
Others	74	52	52
Total	100	100	100

Our benefit plan committee establishes investment policies and strategies and regularly monitors the performance of the plan’s funds. Our current investment policy with respect to pension assets is to keep them at a stable condition by increasing low-risk portfolio rather than high-risk securities.

NIDEC expects to contribute approximately ¥739 million ($6,881 thousand) to its defined benefit plans for the year ending March 31, 2006.

The future benefit payments for defined benefit plans are expected as follows:

Years ending March 31,	Yen in Millions	U.S. dollars in thousands
2006	¥ 944	$ 8,790
2007	1,045	9,731
2008	1,034	9,628
2009	931	8,669
2010	1,034	9,628
Years 2011-2015	4,285	39,901

Certain subsidiaries have a number of defined multiemployer plans. Total amounts of cost recognized for certain subsidiaries’ contribution to the plans were ¥24, ¥24 and ¥188 million ($1,751 thousand) for the year ended March 31, 2003, 2004 and 2005, respectively and NIDEC expects to contribute approximately ¥194 million ($1,806 thousand) for the year ending March 31, 2006.

Certain subsidiaries have a number of defined contribution plans. Total amounts of cost recognized for certain subsidiaries’ contribution to the plans were ¥0, ¥92 and ¥244 million ($2,272 thousand) for the year ended March 31, 2003, 2004 and 2005, respectively and NIDEC expects to contribute approximately ¥958 million ($8,921 thousand) for the year ending March 31, 2006.

F-38

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The accounting for the settlement for a substitutional portion of EPF at The Company in accordance with EITF Issue No. 03-02 are as follows:

	March 31, 2005
	Yen in Millions		U.S. dollars in thousands
Accumulated benefit obligations for a substitutional portion of EPF	¥ 3,130		$ 29,146
Related government-specified portion of plan assets of EPF transferred to the government	1,740		16,203
Subsidy	1,390		12,943
Proportionate amount of net unrecognized loss related to the entire EPF	(39	)	(363	)
Difference between projected benefit obligations and accumulated benefit obligations for a substitutional portion of EPF	-		-
Periodic pension costs related to the settlement for a substitutional portion of EPF	(39	)	(363	)
Net settlement gain for a substitutional portion of EPF	1,351		12,580

Subsidy was all included as a reduction of selling, general, and administrative expenses (“SG&A expenses”), and periodic pension costs related to the settlement for a substitutional portion of EPF was allocated ¥17 million ($158 thousand) into cost of sales and ¥22 million ($205 thousand) into SG&A expenses in the Consolidated Statements of Income.

16. Other long-term liabilities:

Other long-term liabilities as of March 31, 2004 and 2005 consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2004	2005	2005
Deferred tax liabilities	¥ 1,223	¥ 817	$ 7,608
Long-term accrued liabilities	-	7,554	70,342
Other	1,831	3,967	36,940
	¥ 3,054	¥ 12,338	$ 114,890

“Other” primarily consists of revenue received in advance, and other.

F-39

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

17. Shareholders’ equity:

On May 19, 2000, the Company completed a two-for-one stock split. The number of shares issued was 31,721,969 shares. There was no increase in the common stock account because the new shares were distributed from the portion of previously issued shares accounted for as excess of par value in the common stock account in accordance with the Japanese Commercial Code. All per share amounts have been restated to reflect the retroactive effect of the stock split.

In June 2004, the Company issued 5,620,000 shares of common stock in a public offering in Japan, and received proceeds in the amount of ¥59,954 million ($558,283 thousand).

Conversions of convertible debt into common stock are accounted for in accordance with the provisions of the Japanese Commercial Code by crediting approximately one-half of the conversion proceeds to the common stock account and the remainder to the additional paid-in capital account.

The Japanese Commercial Code provides that an amount equal to at least 10% of annual cash dividends and other distributions from retained earnings (including bonuses to Directors and Corporate Auditors) and an amount equal to 10% of interim dividends paid by the Company and its Japanese subsidiaries must be appropriated as a legal reserve. Before amendments to the Japanese Commercial Code that took effect on October 1, 2001, no further appropriation was required when the legal reserve reached 25% of stated capital. This reserve was not available for dividends under the Japanese Commercial Code but could be used to reduce a deficit or could be transferred to stated capital. Certain foreign subsidiaries were also required to appropriate their earnings to legal reserves under the laws of the respective countries. Legal reserve included in retained earnings as of March 31, 2001 was ¥1,060 million.

Due to the amendments to the Japanese Commercial Code that took effect on October 1, 2001, the appropriation of the legal reserve is now required until the sum of the legal reserve and the additional paid-in capital equals 25% of stated capital. As was the case prior to the amendments, the portion of the legal reserve and the additional paid-in capital is not available for dividends but may be used to reduce a deficit or may be transferred to stated capital. However, the portion of the legal reserve and the additional paid-in capital exceeding 25% of stated capital is available for dividends subject to approval at the shareholders’ ordinary general meeting. The additional paid-in capital currently exceeds 25% of stated capital and the legal reserve is available for dividends except with respect to certain foreign subsidiaries that are required to appropriate their earnings to legal reserves and are unavailable for dividends u nder the laws of the respective countries.

F-40

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The amount of statutory retained earnings of the Company available for dividend payments to shareholders was ¥34,482 million and ¥43,401 million ($404,144 thousand) for the year ended March 31, 2004 and 2005, respectively. In accordance with customary practice in Japan, the appropriations are not accrued in the financial statements for the period to which they relate, but are recorded in the subsequent accounting period after shareholders’ approval has been obtained. Retained earnings for the year ended March 31, 2005 includes amounts representing final cash dividends of ¥1,781 million ($16,584 thousand), ¥25 ($0.23) per share, which were approved at the shareholders’ meeting held on June 23, 2005.

Retained earnings include ¥2,332 million relating to equity in undistributed earnings as of March 31, 2003 but as of March 31, 2004 and 2005, reflect ¥431 million and ¥433 million ($4,032 thousand) of accumulated deficit of the companies accounted for by the equity method.

Detailed components of accumulated other comprehensive income at March 31, 2003, 2004 and 2005 and the related changes, net of taxes, for the years ended March 31, 2003, 2004 and 2005 consist of the following:

	Yen in millions
	Foreign currency translation adjustments		Unrealized gains (losses) on securities		Minimum pension liability adjustment		Accumulated other comprehensive income (loss)
Balance at March 31, 2002	¥ (1,401	)	¥ 326		¥ (10	)	¥ (1,085	)
Other comprehensive income (loss)	(4,289	)	(101	)	(1,912	)	(6,302	)
Balance at March 31, 2003	(5,690	)	225		(1,922	)	(7,387	)
Other comprehensive income (loss)	(5,785	)	2,747		1,890		(1,148	)
Balance at March 31, 2004	(11,475	)	2,972		(32	)	(8,535	)
Other comprehensive income (loss)	2,009		(195	)	(24	)	1,790
Balance at March 31, 2005	¥ (9,466	)	¥ 2,777		¥ (56	)	¥ (6,745	)
	U.S. dollars in thousands
	Foreign currency translation adjustments		Unrealized gains (losses) on securities		Minimum pension liability adjustment		Accumulated other comprehensive income (loss)
Balance at March 31, 2004	$ (106,854	)	$ 27,675		$ (298	)	$ (79,477	)
Other comprehensive income (loss)	18,708		(1,816	)	(223	)	16,669
Balance at March 31, 2005	$ (88,146	)	$ 25,859		$ (521	)	$ (62,808	)

The minimum pension liability adjustment shown in the above table relates to two consolidated subsidiaries.

F-41

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Tax effects allocated to each component of other comprehensive income for the years ended March 31, 2003, 2004 and 2005 are as follows:

	Yen in millions
	Pre-tax amount		Tax expense		Net-of-tax amount
For the year ended March 31, 2003:
Foreign currency translation adjustments	¥ (4,175	)	¥ (114	)	¥ (4,289	)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period	(1,762	)	740		(1,022	)
Less: reclassification adjustment primarily for other than temporary losses included in net income	1,583		(662	)	921
Minimum pension liability adjustment	(3,528	)	1,616		(1,912	)
Other comprehensive income (loss)	¥ (7,882	)	¥ 1,580		¥ (6,302	)
For the year ended March 31, 2004:
Foreign currency translation adjustments	¥ (5,769	)	¥ (16	)	¥ (5,785	)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period	5,410		(2,218	)	3,192
Less: reclassification adjustment primarily for other than temporary losses included in net income	(765	)	320		(445	)
Minimum pension liability adjustment	3,202		(1,312	)	1,890
Other comprehensive income (loss)	¥ 2,078		¥ (3,226	)	¥ (1,148	)
For the year ended March 31, 2005:
Foreign currency translation adjustments	¥ 1,971		¥ 38		¥ 2,009
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period	1,326		(544	)	782
Less: reclassification adjustment primarily for other than temporary losses included in net income	(1,586	)	609		(977	)
Minimum pension liability adjustment	(55	)	31		(24	)
Other comprehensive income (loss)	¥ 1,656		¥ 134		¥ 1,790

	U.S. dollars in thousands
	Pre-tax amount		Tax expense		Net-of-tax amount
For the year ended March 31, 2005:
Foreign currency translation adjustments	$ 18,354		$ 354		$ 18,708
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period	12,348		(5,066	)	7,282
Less: reclassification adjustment primarily for other than temporary losses included in net income	(14,769	)	5,671		(9,098	)
Minimum pension liability adjustment	(512	)	289		(223	)
Other comprehensive income (loss)	$ 15,421		$ 1,248		$ 16,669

F-42

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

18. Stock-based compensation:

On May 14, 2003, the Company’s shareholders approved a stock option plan. Under the plan, executives and certain employees receive options. The number of shares to be issued upon exercise of the options is limited to 296,700 shares of the Company’s common stock. Each option entitles the holder to purchase 100 shares of the Company’s common stock. The options vest and become exercisable for the period from July 1, 2004 to June 30, 2007. The exercise price was determined as ¥7,350 ($68.44) per share of common stock. Options were granted with an exercise price equal to the closing price of the Company’s shares traded on the Osaka Securities Exchange on the grant date.

	Number of options	Exercise price (per shares)
Balance at March 31, 2003:
Granted	2,967	¥ 7,350	$ 68.44
Exercised	0	7,350	68.44
Canceled	105	7,350	68.44
Balance at March 31, 2004:	2,862	7,350	68.44
Exercised	439	7,350	68.44
Canceled	61	7,350	68.44
Balance at March 31, 2005:	2,362	7,350	68.44

The Company uses the intrinsic value based method of accounting prescribed by APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations, for the accounting of its stock-based compensation plans. No stock-based compensation cost was recognized on the date of grant, as the current market price of the underlying stock was equal to the exercise price.

The fair value of option was ¥3,499 ($32.58) per share. The fair value as of the date of grant was estimated using a Black-Scholes option-pricing model with the following assumptions:

	For the year ended March 31, 2004
Risk-free interest rate	0.14	%
Expected volatility	64.00	%
Expected dividend yield	0.34	%
Expected lives	4.13	years

F-43

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

19. Income taxes:

The components of income before income taxes comprise the following:

	Yen in millions			U.S. dollars in thousands
	For the year ended March 31			For the year ended March 31,
	2003	2004	2005	2005
Income before income taxes:
The Company and domestic subsidiaries	¥ 2,069	¥ 2,069	¥ 34,725	$ 323,354
Foreign subsidiaries	8,842	17,570	22,565	210,122
	¥ 10,911	¥ 19,639	¥ 57,290	$ 533,476

The provision for income taxes consists of the following:

	Yen in millions				U.S. dollars in thousands
	For the year ended March 31				For the year ended March 31,
	2003		2004	2005	2005
Current income tax expense:
The Company and domestic subsidiaries	¥ 1,629		¥ 3,490	¥ 8,471	$ 78,881
Foreign subsidiaries	775		1,474	1,839	17,124
Total current	2,404		4,964	10,310	96,005
Deferred income tax expense (benefit):
The Company and domestic subsidiaries	(1,082	)	321	2,292	21,343
Foreign subsidiaries	(269	)	139	245	2,281
Total deferred	(1,351	)	460	2,537	23,624
Total provision	¥ 1,053		¥ 5,424	¥ 12,847	$ 119,629

The low effective tax rates of the Company and domestic subsidiaries for the year ended March 31, 2005 are mainly due to a net decrease in valuation allowance.

F-44

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

NIDEC is subject to a number of different income taxes, which, in the aggregate, indicate a statutory rate in Japan of approximately 42.0% in 2003 and 2004, and 41.0% in 2005. Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows:

	For the year ended March 31
	2003		2004		2005
Statutory tax rate	42.0	%	42.0	%	41.0	%
Increase (reduction) in taxes resulting from:
Tax benefit in foreign subsidiaries	(32.2	)	(28.2	)	(12.7	)
Tax on undistributed earnings	4.5		5.0		2.6
Valuation allowance	(6.5	)	8.8		(10.2	)
Other	1.9		0.0		1.7
Effective income tax rate	9.7	%	27.6	%	22.4	%

The effective income tax rate for the year ended March 31, 2005 was lower compared to the effective income tax rate for the year ended March 31, 2004. This was mainly because the valuation allowance for the year ended March 31, 2005 decreased primarily due to a decrease in the loss carryforwards for tax purposes as a result of the recovery in profitability of Sankyo Seiki Mfg. Co. Ltd. after the date of acquisition. The impact on the rates of tax benefit in foreign subsidiaries decreased due to a drop in the ratio of income as a result of the addition of Sankyo Seiki Mfg. Co. Ltd., Nidec Copal Corporation and Nidec Copal Electronics Corporation as consolidated subsidiaries which operate primarily in Japan.

Tax benefit in foreign subsidiaries primarily relates to income sourced from foreign subsidiaries mainly in Thailand, Singapore and the Philippines. In Thailand, NIDEC received privileges under the promotional certificates issued in April 1995, August 1997, May 1999, July 1999, October 1999 and August 2000. Under these privileges, NIDEC received an exemption from corporate income tax for a period of three to seven years from the date of commencement of certain revenue-generating activities identified by the promotional certificate. In Singapore, NIDEC has been granted pioneer status for a period of ten years, commencing in April 1996. The pioneer status exempts NIDEC from income tax. In the Philippines, NIDEC received certain tax incentives in March 1997, which included an income tax holiday for six years. In March 2003 the income tax holiday was extended for one year. In March 2004 NIDEC received another income tax holiday of a n ew project for four years.

F-45

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The aggregate dollar and per share effects of the tax holidays are as follows:

		Yen in millions			U.S. dollars in thousands
		For the year ended March 31			For the year ended March 31,
		2003	2004	2005	2005
Aggregate amounts of tax holidays		¥ 1,269	¥ 2,896	¥ 3,647	$ 33,960
		Yen			U.S. dollars
Per share	－ basic	¥ 19.96	¥ 45.21	¥ 52.30	$ 0.49
	－ diluted	¥ 18.88	¥ 43.34	¥ 49.71	$ 0.46

On March 31, 2003, the Japanese National Diet approved various changes to the calculation of the statutory local enterprise tax for companies, effective April 2004. As a result, the normal statutory corporate income tax rate in Japan was decreased from 42% to approximately 41% from April 2004. Our tax rates used for the current and non-current deferred assets and liabilities on March 31, 2003 were 42% and 40%, respectively. On March 31, 2004, we changed both of the rates to 41%. The amounts affected by the rate change were a decrease of ¥43 million ($407 thousand) at the net current deferred tax assets and an increase of ¥115 million ($1,088 thousand) at the net non-current deferred tax assets last year.

F-46

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The significant components of deferred tax assets and liabilities are as follows:

	Yen in millions				U.S. dollars in thousands
	March 31				March 31,
	2004		2005		2005
Deferred tax assets:
Inventories	¥ 2,882		¥ 2,812		$ 26,185
Marketable securities	-		-		-
Property, plant and equipment	4,458		3,995		37,201
Accrued bonus	1,905		1,990		18,530
Accrued enterprise tax	352		882		8,213
Pension and severance plans	12,816		8,865		82,549
Operating loss carryforwards for tax purposes	13,951		7,716		71,850
Foreign tax credit	2,806		2,032		18,922
Other	(4,344	)	(1,470	)	(13,687	)
Gross deferred tax assets	34,826		26,822		249,763
Less - Valuation allowance	(20,765	)	(15,593	)	(145,200	)
Net deferred tax assets	14,061		11,229		104,563
Deferred tax liabilities:
Basis difference of acquired assets	(2,929	)	(3,230	)	(30,078	)
Undistributed earnings not permanently reinvested	(2,185	)	(1,934	)	(18,009	)
Maketable securities	(2,453	)	(2,559	)	(23,829	)
Other	6,258		6,840		63,693
Gross deferred tax liabilities	(1,309	)	(883	)	(8,223	)
Net deferred tax assets	¥ 12,752		¥ 10,346		$ 96,340

Operating loss carryforwards for tax purposes of consolidated subsidiaries on March 31, 2005 amounted to approximately ¥21,510 million ($200,298 thousand) and are available as an offset against future taxable income of such subsidiaries.

F-47

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The valuation allowance mainly relates to deferred tax assets of consolidated subsidiaries with operating loss carryforwards for tax purposes that are not expected to be realized. The net changes in the total valuation allowance for deferred tax assets for the years ended March 31, 2003, 2004 and 2005 consist of the following:

	Yen in millions						U.S. dollars in thousands
	March 31						March 31,
	2003		2004		2005		2005
Valuation allowance at beginning of year	¥ (4,319	)	¥ (3,607	)	¥ (20,765	)	$ (193,361	)
Additions	-		(1,726	)	-		-
Deductions	712		-		5,172		48,161
Impact of acquisition of companies	-		(15,432	)	-		-
Valuation allowance at end of year	¥ (3,607	)	¥ (20,765	)	¥ (15,593	)	$ (145,200	)

Net deferred tax assets are included in the consolidated balance sheets as follows:

	Yen in millions				U.S. dollars in thousands
	March 31				March 31,
	2004		2005		2005
Deferred tax assets:
Other current assets	¥ 2,973		¥ 3,855		$ 35,897
Other non-current assets	11,088		7,374		68,666
Deferred tax liabilities:
Other current liabilities	(86	)	(66	)	(615	)
Other long-term liabilities	(1,223	)	(817	)	(7,608	)
Net deferred tax assets	¥ 12,752		¥ 10,346		$ 96,340

Management of NIDEC intends to reinvest certain undistributed earnings of their foreign subsidiaries for an indefinite period of time. As a result, no deferred tax liability has been recorded on undistributed earnings of these subsidiaries, which are not expected to be remitted in the foreseeable future, aggregating ¥41,482 million ($386,274 thousand) as of March 31, 2005. NIDEC estimates an additional deferred tax liability of ¥6,826 million ($63,563 thousand) would be required at such time if the full amount of these accumulated earnings were expected to be remitted.

F-48

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

20. Reconciliation of the differences between basic and diluted earnings per share:

Basic and diluted earnings per share as well as the number of shares in the following table retroactively reflect the effect of the two-for-one stock split that became effective on May 19, 2000.

Reconciliation of the differences between basic and diluted earnings per share for the years ended March 31, 2003, 2004, and 2005 is as follows:

		Yen in millions		Thousands of shares	Yen	U.S. dollars
		Net income		Weighted- average shares	Net income per share	Net income per share
For the year ended March 31, 2003:
Basic net income per share
Net income available to common shareholders		¥ 10,680		63,565	¥ 168.01
Effect of dilutive securities
	Convertible bonds	64		3,658
Diluted net income per share
	Net income for computation	¥ 10,744		67,223	¥ 159.82
For the year ended March 31, 2004:
Basic net income per share
Net income available to common shareholders		¥ 16,089		64,063	¥ 251.14
Effect of dilutive securities
	Convertible bonds	50		2,755
Diluted net income per share
	Net income for computation	¥ 16,139		66,818	¥ 241.53
For the year ended March 31, 2005:
Basic net income per share
Net income available to common shareholders		¥ 33,455		69,735	¥ 479.74	$ 4.47
Effect of dilutive securities
	Unsecured 0.8% convertible bonds	42		1,294
	Zero coupon 0.0% convertible bonds	-		2,232
	Securities of a subsidiary	(2	)	-
	Stock option	-		99
Diluted net income per share
	Net income for computation	¥ 33,495		73,360	¥ 456.58	$ 4.25

F-49

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

In a meeting of the Board of Directors held on July 28, 2005, the Company decided to implement a two-for-one stock split (the “Stock Split”). Pro forma effect of the stock split is as follows:

UNAUDITED
		Yen in millions		Thousands of shares	Yen	U.S. dollars
		Net income		Weighted- average shares	Net income per share	Net income per share
For the year ended March 31, 2005:
Basic net income per share
Net income available to common shareholders		¥ 33,455		139,470	¥ 239.87	$ 2.23
Effect of dilutive securities
	Unsecured 0.8% convertible bonds	42		2,589
	Zero coupon 0.0% convertible bonds	-		4,463
	Securities of a subsidiary	(2	)	-
	Stock option	-		197
Diluted net income per share
	Net income for computation	¥ 33,495		146,719	¥ 228.29	$ 2.13

F-50

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

21. Financial instruments:

NIDEC manages the exposure of its financial assets and liabilities to interest rate and foreign exchange rate movements through the use of derivative financial instruments which include foreign exchange forward contracts, foreign currency option agreements, interest rate swap agreements and interest rate cap agreements. These financial instruments are executed with creditworthy financial institutions, and substantially all foreign currency contracts are denominated in U.S. dollars. Financial instruments involve, to varying degrees, market risk as instruments are subject to price fluctuations and elements of credit risk in the event that the counterparty should default. In the unlikely event the counterparties fail to meet the contractual terms of a foreign currency or an interest rate instrument, NIDEC’s risk is limited to the fair value of the instrument. Although NIDEC may be exposed to losses in the event of non-performanc e by counterparties on financial instruments, it does not anticipate significant losses due to the nature of its counterparties. Counterparties to NIDEC’s financial instruments represent, in general, international financial institutions. Additionally, NIDEC does not have a significant exposure to any individual counterparty. Based on the creditworthiness of these financial institutions, NIDEC believes that the overall credit risk related to its financial instruments is insignificant.

The estimated fair values of NIDEC’s financial instruments are summarized as follows:

	Yen in millions
	March 31, 2004
	Carrying amount		Estimated fair value
Asset (Liability)
Cash and cash equivalents	¥ 73,392		¥ 73,392
Short-term investments	959		959
Short-term loan receivable	185		185
Marketable securities	17,839		17,839
Long-term loan receivable	463		475
Short-term borrowings	(86,636	)	(86,636	)
Long-term debt including the current portion and excluding capital lease obligation	(44,531	)	(53,043	)
Foreign exchange forward contracts	84		84
Interest rate swap agreements	(54	)	(54	)
Interest rate cap agreements	(34	)	(34	)

F-51

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

	Yen in millions				U.S. dollars in thousands
	March 31, 2005				March 31, 2005
	Carrying amount		Estimated fair value		Carrying amount		Estimated fair value
Asset (Liability)
Cash and cash equivalents	¥ 70,111		¥ 70,111		$ 652,863		$ 652,863
Short-term investments	852		852		7,934		7,934
Short-term loan receivable	374		374		3,483		3,483
Marketable securities	16,559		16,559		154,195		154,195
Long-term loan receivable	499		504		4,647		4,693
Short-term borrowings	(28,478	)	(28,478	)	(265,183	)	(265,183	)
Long-term debt including the current portion and excluding capital lease obligation	(40,680	)	(49,462	)	(378,806	)	(460,583	)
Foreign exchange forward contracts	(26	)	(26	)	(242	)	(242	)
Interest rate swap agreements	(46	)	(46	)	(428	)	(428	)
Interest rate cap agreements	(24	)	(24	)	(223	)	(223	)

The following are explanatory notes relating to the financial instruments.

Cash and cash equivalents, short-term investments and short-term loans receivable: In the normal course of business, substantially all cash and cash equivalents, time deposits and short-term loans receivable are highly liquid and are carried at amounts that approximate fair value.

Marketable securities: The fair value of marketable securities was based on quoted market prices.

Long-term loan: The fair value of long-term loans was estimated by discounting expected future cash flows.

Short-term borrowings: The fair value of short-term borrowings was estimated based on the discounted present value of future cash flows using NIDEC’s current incremental borrowing rates for similar liabilities as the discount rate. The fair value of short-term borrowings is therefore approximately the same as the carrying amount.

Long-term debt: The fair value of bonds issued by NIDEC was estimated based on their market price which was influenced by, and corresponded to stock price. The fair value of long-term bank loans (including the current portion and excluding capital lease obligation) was estimated based on the discounted amounts of future cash flows using NIDEC’s current incremental borrowing rates for similar liabilities.

F-52

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Derivative financial instruments

Changes in the estimated fair value of foreign exchange forward contracts, determined by reference to the discounted present value of net cash flows, are recognized as “Gain (loss) on derivative instruments, net” in the consolidated statement of income. Gains from foreign exchange forward contracts were ¥23 million for the year ended March 31, 2003, losses from foreign exchange forward contracts were ¥5 million for the year ended March 31, 2004, and losses from foreign exchange forward contracts were ¥192 million ($1,788 thousand) for the year ended March 31, 2005. The contracted amounts outstanding on March 31, 2004 and 2005 were ¥6,318 million and ¥1,761 million ($16,398 thousand), respectively.

Interest rate swap and cap agreements, which mature from 2006 to 2009, were designed to reduce NIDEC’s exposure to losses resulting from adverse fluctuations in cash flows due to changes in interest rates on underlying debt instruments.

Changes in the fair value of interest rate swap agreements, which are estimated based on the discounted amounts of net future cash flows, are recognized as “Gain (loss) on derivative instruments, net” in the income statement. Loses from interest rate swap agreements were ¥2 million for the year ended March 31, 2004, and gains from interest rate swap agreements were ¥8 million ($74 thousand) for the year ended March 31, 2005. The aggregate notional amounts of the interest rate swap agreements on March 31, 2004 and 2005 were ¥2,200 million and ¥1,200 million ($11,174 thousand) pay fixed. No such agreements existed on March 31, 2003.

Interest rate cap agreements require the writer to pay the purchaser at specified future dates the amounts, if any, by which a specified market interest rate exceeds the fixed cap rate, applied to a notional amount. The premiums paid for interest rate cap agreements purchased are included in “Prepaid expenses and other current assets” and “Other non-current assets” in the accompanying consolidated balance sheets. Differences between the premium paid and fair value of these contracts and subsequent changes in fair values of option prices, which are calculated based on Black-Scholes option-pricing model, are recognized as “Gain (loss) on derivative instruments, net” in the income statement. Gains from interest rate cap agreements were ¥1 million for the year ended March 31, 2004, and gains from interest rate cap agreements were ¥10 million ($93 thousand) for the year ended March 31, 2005. Both of the notional amounts of interest rate cap agreements on March 31, 2004 and 2005 were ¥2,500 million ($23,280 thousand). No such agreements existed on March 31, 2003.

F-53

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

22. Related party transactions:

As of March 31, 2005, the president of the Company and a business entity indirectly owned by the president of the Company held 8.4 % and 6.2 % of the outstanding shares of the Company, respectively. There were no significant related party transactions other than described in Note 11 for the year ended March 31, 2005.

23. Lease commitments:

NIDEC leases certain assets under capital lease and operating lease arrangements. An analysis of leased assets under capital leases is as follows:

	Yen in millions				U.S. dollars in thousands
	March 31				March 31,
Class of property	2004		2005		2005
Machinery and equipment	¥ 6,266		¥ 8,834		$ 82,261
Other leased assets	433		724		6,742
Less - Accumulated amortization	(4,746	)	(5,150	)	(47,956	)
	¥ 1,953		¥ 4,408		$ 41,047

Amortization expenses under capital leases for the years ended March 31, 2003, 2004 and 2005 were ¥694 million, ¥1,182 million and ¥1,923 million ($17,907 thousand), respectively.

Future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of March 31, 2005 are as follows:

Year ending March 31:	Yen in millions		U.S. dollars in thousands
2006	¥ 2,180		$ 20,300
2007	1,445		13,456
2008	1,262		11,751
2009	637		5,932
2010	344		3,203
2011 and thereafter	61		568
Total minimum lease payments	5,929		55,210
Less - Amount representing interest	(283	)	(2,635	)
Present value of net minimum lease payments	5,646		52,575
Less - Current obligations	(2,054	)	(19,127	)
Long-term capital lease obligations	¥ 3,592		$ 33,448

Rental expenses under operating leases for the years ended March 31, 2003, 2004 and 2005 were ¥272 million, ¥330 million and ¥368 million ($3,427 thousand), respectively.

F-54

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The minimum rental payments required under operating leases relating primarily to land, buildings and equipment having initial or remaining non-cancelable lease terms in excess of one year at March 31, 2005 are as follows:

Year ending March 31:		Yen in millions	U.S. dollars in thousands
	2006	¥ 174	$ 1,620
	2007	118	1,099
	2008	82	764
	2009	31	289
	2010	19	177
	2011 and thereafter	446	4,152
	Total minimum future rentals	¥ 870	$ 8,101

NIDEC is a lessor in operating leases for which a portion of the land, office and manufacturing facilities is leased over various terms. Rental revenues under operating leases for the years ended March 31, 2003, 2004 and 2005 were ¥30 million, ¥24 million and ¥46 million ($428 thousand), respectively.

The future minimum lease payments to be received under operating leases that have remaining non-cancelable term at March 31, 2005 are as follows:

Year ending March 31:		Yen in millions	U.S. dollars in thousands
	2006	¥ 40	$ 372
	2007	36	335
	2008	24	223
	2009	21	196
	2010	21	196
	2011 and thereafter	19	177
	Total minimum future rentals	¥ 161	$ 1,499

F-55

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

24. Other commitments and contingencies, concentrations and factors that may affect future operations:

Commitments -

Commitments outstanding at March 31, 2005 for the purchase of property, plant and equipment and other assets approximated ¥4,925 million ($45,861 thousand).

Contingencies -

Contingent liabilities for guarantees given in the ordinary course of business amounted to approximately ¥682 million ($6,351 thousand) at March 31, 2005. On April 2002, Nidec’s consolidated subsidiary, Nidec Tosok Corporation, agreed to guarantee for Okaya Seiken Corporation, subcontractor of Nidec Tosok Corporation, totaling ¥298 million ($2,775 thousand) in order to provide funds for Okaya’s manufacturing facilities in Vietnam.

Besides NIDEC has guaranteed approximately ¥384 million ($3,576 thousand) of bank loan of employees for their housing costs. If an employee defaults on his/her loan payments, NIDEC is required to perform under the guarantee. The undiscounted maximum amount of NIDEC’s obligation to make future payments in the event of defaults is approximately ¥682 million ($6,351 thousand). The current carrying amount of the liabilities for our obligations under the guarantee is zero.

On December 9, 2004, NEC Corporation (NEC) filed a lawsuit against the Company in Tokyo District Court claiming that NEC had a loss of ¥174 million ($1,620 thousand) accrued from unamortized equipment for its products and so on caused by stoppage of purchase of the products by the Company, and claiming that the Company has been liable to compensate NEC for the loss on the ground of the Company’s non-achievement of guaranteed purchase volume. The Company has argued against the claim that the Company has not guaranteed the purchase volume and there has been no reason to compensate the unamortized equipment cost. The Company also has argued that the reason of the stoppage of products purchase by the Company derives from non-achievement of scheduled cost reduction by NEC and therefore there is no reason for the Company to compensate the NEC’s claim. As this litigation started shortly before, The Company can’t prospect the result thereof. The details of the transaction are as follows; Since July 2000, the Company purchased from NEC the electric control units (ECU), assembled the ECU with the motors, and then supplied ECU-motor assembly to one customer for incorporation into its electric power steering (EPS). However, on October 2002, the Company were notified of stoppage of purchase of the ECU-motor assembly by the customer on the ground of non-achievement of scheduled cost reduction on the ECU. Therefore, the Company stopped the purchase of the ECU from NEC. From the fact that the Company continues to supply the motor to the customer even after the stoppage of the purchase of ECU-motor assembly by the customer, the Company is sure that the stoppage of purchase of ECU-motor assembly by the customer is not caused by the problem of the motor.

F-56

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Concentration of risk -

NIDEC is dependent on a number of large customers for a substantial portion of NIDEC’s net sales. Sales to NIDEC’s six largest customers represented approximately 41%, 40%, and 29% of consolidated net sales for the years ended March 31, 2003, 2004, and 2005, respectively. Sales to NIDEC’s largest customer were approximately 16%, 14%, and 8% of consolidated net sales for the years ended March 31, 2003, 2004 and 2005, respectively. Accounts receivable are financial instruments that expose NIDEC to a concentration of credit risk. At March 31, 2004, the six largest customers with the outstanding accounts receivable balances totaled ¥23,625 million, or 24% of the gross accounts receivable, compared to ¥33,627 million ($313,130 thousand), or 30% of the gross accounts receivable, at March 31, 2005. If any one or group of these customer’s receivable balances should be deemed uncollectable, it would have a materially adverse effect on NIDEC’s results of operations and financial condition.

F-57

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

25. Segment information:

(1) Enterprise-wide information:

Product information –

The following table provides product information for the years ended March 31, 2003, 2004 and 2005:

		Yen in millions			U.S. dollars in thousands
		For the year ended March 31			For the year ended March 31,
		2003	2004	2005	2005
Net sales:
	Small precision motors:
	Hard disk drives spindle motors	¥ 97,717	¥ 106,919	¥ 119,233	$ 1,110,280
	Other small precision brushless DC motors	25,583	34,138	61,066	568,638
	Small precision brush DC motors	3,280	5,372	7,980	74,309
	Brushless DC fans	27,395	26,047	34,435	320,654
	Sub-total	153,975	172,476	222,714	2,073,881
	Mid-size motors	37,479	32,574	35,564	331,167
	Machinery	22,555	31,240	76,957	716,612
	Electronic and optical components *1	1,903	23,188	128,417	1,195,800
	Others	15,924	18,019	22,209	206,807
	Consolidated total	¥ 231,836	¥ 277,497	¥ 485,861	$ 4,524,267

*1 Electronic and optical components net sales are disclosed separately beginning this fiscal year because the materiality of such product group increased as a result of the consolidation of Sankyo Seiki Mfg. Co., Ltd., Nidec Copal Corporation and Nidec Copal Electronics Corporation and segment information for the years ended March 31, 2003 and 2004 has been restated to conform to the current presentation.

The “Hard disk drives spindle motors” group of products consists of ball bearing hard disk drives spindle motors, including those for 3.5-inch, 2.5-inch, 1.8-inch and 1.0-inch hard disk drives. It also includes fluid dynamic bearing hard disk drives spindle motors for 3.5-inch, 2.5-inch, 1.8-inch and 1.0-inch or smaller hard disk drives for the years ended March 31, 2003, 2004 and 2005.

The “Other small precision brushless DC motors” group of products consists of brushless motors for many types of products, including CD-ROM and CD-read / write drives, DVD players, high-capacity floppy disk drives, copiers, printers and fax machines.

The “Small precision brush DC motors” group of products consists of brush DC motors for many types of products, including DVD players, CD-ROM and home video game consoles.

F-58

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The “Brushless DC fans” group of products consists of brushless fans, which are used in many types of products, including computers and game machines for the purpose of lowering the temperature of central processing units in these products.

The “Mid-size motors” group of products consists of motors for automobiles, motors for industrial use, motors for home appliances and servomotors for OA equipment.

The “Machinery” group of products consists of semiconductor production equipment (e.g., die bonders, board testers), high-speed press machines, measuring machines, power transmission equipment, and FA systems.

The “Electronic and optical components” group of products consists of electric components and optical components, which include optical pick up units, motor driven actuator units, camera shutters, trimmer potentiometers.

“Others” consists of automobile parts, pivot assemblies, other components and other services.

Geographic information –

Revenue from external customers, which are attributed to countries based on the location of the parent company or the subsidiaries that transacted with the external customer for the years ended March 31, 2003, 2004 and 2005, and long-lived assets for the years ended March 31, 2004 and 2005 are as follows:

China was identified as reportable location in the current period due to its materiality. Geographic information for the years ended March 31, 2003 and March 31, 2004 have been restated to conform to the current presentation.

		Yen in millions			U.S. dollars in thousands
		For the year ended March 31			For the year ended March 31,
		2003	2004	2005	2005
Sales and operating revenue:
	Japan	¥ 126,904	¥ 149,392	¥ 292,822	$ 2,726,716
	U.S.A.	7,006	5,378	8,200	76,357
	Singapore	46,706	39,056	59,989	558,609
	Thailand	23,333	36,610	42,653	397,179
	The Philippines	3,607	2,230	5,557	51,746
	China	1,337	13,439	23,771	221,352
	Other	22,943	31,392	52,869	492,308
	Consolidated total	¥ 231,836	¥ 277,497	¥ 485,861	$ 4,524,267

F-59

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		Yen in millions		U.S. dollars in thousands
		For the year ended March 31		For the year ended March 31,
		2004	2005	2005
Long-lived assets:
	Japan	¥ 70,519	¥ 74,133	$ 690,316
	U.S.A.	796	789	7,347
	Singapore	522	992	9,237
	Thailand	16,927	18,390	171,245
	The Philippines	15,079	15,923	148,273
	China	17,436	25,134	234,044
	Other	11,133	13,845	128,922
	Consolidated total	¥ 132,412	¥ 149,206	$ 1,389,384

 (2) Operating segment information:

The operating segments reported below are defined as components of an enterprise for which separate financial information is available and regularly reviewed by NIDEC’s chief operating decision maker. NIDEC’s chief operating decision maker utilizes various measurements to assess segment performance and allocate resources to segments.

NSCJ and NSKC were identified as reportable segments in the current period. Segment information for the years ended March 31, 2003 and 2004 have been restated to conform to the current presentation.

NIDEC has fourteen reportable segments, NCJ, NET, NCD, NCT, NCS, NCF, SNKC, NCPL, NTSC, NCEL, NSBC, NSCJ, NPMC and NSKC which have been identified based on differences in legal entities with responsible managers.

The NCJ segment comprises NIDEC Corporation in Japan, which primarily produces and sells hard disk drive motors, DC motors and fans.

The NET segment comprises Nidec Electronics (Thailand) Co., Ltd. and Nidec Precision (Thailand) Co., Ltd., subsidiaries in Thailand, which primarily produce and sell hard disk drive motors.

The NCD segment comprises Nidec (Dalian) Limited, a subsidiary in China, which primarily produces and sells DC motors and fans.

The NCT segment comprises Nidec Taiwan Corporation, a subsidiary in Taiwan, which primarily sells DC motors and fans.

F-60

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The NCS segment comprises Nidec Singapore Pte. Ltd., a subsidiary in Singapore, which primarily produces and sells hard disk drive motors and pivot assemblies.

The NCF segment comprises Nidec Philippines Corporation and Nidec Precision Philippines Corporation, subsidiaries in The Philippines, which primarily produce and sell hard disk drive motors.

The SNKC segment comprises Sankyo Seiki Mfg. Co., Ltd., a subsidiary in Japan, which primarily produces and sells micro motors and optical and electronic parts.

The NCPL segment comprises Nidec Copal Corporation, a subsidiary in Japan, which primarily produces and sells optical and electronic parts.

The NTSC segment comprises Nidec Tosok Corporation, a subsidiary in Japan, which primarily produces and sells automobile parts and machinery.

The NCEL segment comprises Nidec Copal Electronics Corporation, a subsidiary in Japan, which primarily produces and sells electronic parts.

The NSBC segment comprises Nidec Shibaura Corporation, a subsidiary in Japan, which primarily produces and sells mid-size motors.

The NSCJ segment comprises Nidec-Shimpo Corporation, a subsidiary in Japan, which primarily produces and sells power transmission drives, measuring machines and electric potter’s wheels. NSCJ has been a new reportable segment.

The NPMC segment comprises Nidec Power Motor Corporation, a subsidiary in Japan, which primarily produces and sells AC motors.

The NSKC segment comprises Nissin Kohki Co., Ltd., a subsidiary in Japan, which primarily produces and sells optical components. NSKC has been a new reportable segment.

The All Others segment comprises subsidiaries that are operating segments but not designated as reportable segments due to materiality.

F-61

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

NIDEC evaluates performance based on segmental profit and loss, which consists of sales and operating revenues less operating expenses. Segmental profit or loss is determined using the accounting principles in the segment’s country of domicile. NCJ, SNKC, NCPL, NTSC, NCEL, NSBC, NSCJ, NPMC, NSKC’s operating profit or loss is determined using Japanese GAAP, NET applies Thai accounting principles, NCD applies Chinese accounting principles, NCT applies Taiwanese accounting principles, NCS applies Singaporean accounting principles and NCF applies Philippine accounting principles. Therefore our segmental data has not been prepared under U.S. GAAP on a basis that is consistent with the consolidated financial statements or on any other single basis that is consistent between segments. While there are several differences between U.S. GAAP and the underlying accounting bases used by management, the principal differences that affect segmental operating profit or loss are accounting for pension and severance costs, directors’ bonuses and leases. Management believes that the monthly segmental information is available on a timely basis and that it is sufficiently accurate at the segment profit and loss level for management’s purposes.

F-62

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The following tables show revenues from external customers and other financial information by operating segment for the years ended March 31, 2003, 2004 and 2005:

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2003		2004		2005		2005
Revenue from external customers:
	NCJ	¥ 65,248		¥ 60,316		¥ 56,602		$ 527,070
	NET	20,484		33,003		36,891		343,524
	NCD	48		112		754		7,021
	NCT	8,921		12,492		11,418		106,323
	NCS	46,708		36,668		45,442		423,149
	NCF	3,602		1,511		1,094		10,187
	SNKC	-		7,779		68,880		641,401
	NCPL	-		9,146		54,067		503,464
	NTSC	18,933		21,211		23,992		223,410
	NCEL	-		2,854		20,653		192,318
	NSBC	15,138		15,767		14,449		134,547
	NSCJ	8,020		8,476		10,317		96,070
	NPMC	9,116		7,986		9,635		89,720
	NSKC	-		1,974		12,641		117,711
	All others	35,212		60,235		118,798		1,106,229
	Total	231,430		279,530		485,633		4,522,144
	U.S. GAAP adjustments *1	517		(2,485	)	(34	)	(317	)
	Consolidation adjustments related to elimination of intercompany transactions via third party	(158	)	(95	)	(331	)	(3,082	)
	Others	47		547		593		5,522
	Consolidated total	¥ 231,836		¥ 277,497		¥ 485,861		$ 4,524,267

*1 US GAAP adjustments mainly related to the differences of revenue recognition between shipment and delivery bases. And the sales to affiliates that are consolidated under Japanese GAAP but equity accounted under U.S. GAAP.

F-63

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

NIDEC had sales to one customer of ¥36,240 million and ¥38,909 million within the NCJ, NCS, NCA and “All Others” segments for the years ended March 31, 2003 and 2004, respectively, and to another customer of ¥30,664 million within the NCJ, NCS, NET, SNKC and “All Others” segments for the years ended March 31, 2004 that exceeded 10% of NIDEC’s net sales. There were no sales which exceeded 10% of the consolidated net sales for the year ended March 31, 2005.

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2003		2004		2005		2005
Revenue from other operating segments:
	NCJ	¥ 63,916		¥ 58,320		¥ 73,749		$ 686,740
	NET	21,256		17,794		21,240		197,784
	NCD	27,523		31,270		38,678		360,164
	NCT	1,625		1,113		934		8,697
	NCS	3,851		3,081		1,363		12,692
	NCF	18,838		22,117		21,131		196,769
	SNKC	-		3,641		19,313		179,840
	NCPL	-		1,384		9,351		87,075
	NTSC	565		666		657		6,118
	NCEL	-		372		2,355		21,929
	NSBC	2,966		4,429		9,348		87,047
	NSCJ	1,093		1,583		2,326		21,659
	NPMC	93		147		340		3,166
	NSKC	-		303		1,041		9,694
	All Others	55,151		65,677		168,131		1,565,612
	Total	196,877		211,897		369,957		3,444,986
	Intersegment elimination	(196,877	)	(211,897	)	(369,957	)	(3,444,986	)
	Consolidated total	-		-		-		-

F-64

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2003		2004		2005		2005
Segment profit or loss:
	NCJ	¥ 3,521		¥ 1,483		¥ 2,351		$ 21,892
	NET	3,179		8,590		8,649		80,538
	NCD	3,001		2,486		2,436		22,684
	NCT	343		362		130		1,211
	NCS	2,020		2,489		1,935		18,018
	NCF	1,212		1,422		(379	)	(3,529	)
	SNKC	-		(2,581	)	7,624		70,994
	NCPL	-		586		3,195		29,751
	NTSC	689		1,450		1,053		9,805
	NCEL	-		307		3,583		33,364
	NSBC	(134	)	801		1,356		12,627
	NSCJ	501		826		1,397		13,009
	NPMC	488		251		(392	)	(3,650	)
	NSKC	-		229		946		8,809
	All Others	3,771		6,568		13,983		130,208
	Total	18,591		25,269		47,867		445,731
Main components of U.S. GAAP adjustments:
	Pension and severance costs	253		341		547		5,094
	Lease	115		54		(86	)	(801	)
	Directors’ bonus	(112	)	(150	)	(403	)	(3,753	)
Consolidation adjustments mainly related to elimination of intersegment profits		(156	)	(754	)	(839	)	(7,813	)
Reclassification *1		(2,306	)	(3,039	)	7,048		65,630
Others *2		19		294		(469	)	(4,367	)
		¥ 16,404		¥ 22,015		¥ 53,665		$ 499,721

*1 Loss on disposal of fixed assets and some other items are reclassified from other expenses and included in operating expenses.

*2 Others include other U.S. GAAP adjustments such as the differences of revenue recognition between shipment and delivery bases, depreciation of fixed assets and provision for compensated absence.

F-65

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2003		2004		2005		2005
Interest revenue:
	NCJ	¥ 143		¥ 120		¥ 319		$ 2,970
	NET	2		16		44		410
	NCD	4		8		19		177
	NCT	4		4		5		47
	NCS	102		54		133		1,238
	NCF	32		23		25		233
	SNKC	-		8		172		1,602
	NCPL	-		1		14		130
	NTSC	4		1		1		9
	NCEL	-		0		14		130
	NSBC	0		9		37		345
	NSCJ	12		11		15		140
	NPMC	4		4		4		37
	NSKC	-		20		12		112
	All Others	31		71		139		1,294
	Total	338		350		953		8,874
	Intersegment elimination	(37	)	(81	)	(454	)	(4,227	)
	Consolidated total	¥ 301		¥ 269		¥ 499		$ 4,647

F-66

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2003		2004		2005		2005
Interest expense:
	NCJ	¥ 311		¥ 310		¥ 329		$ 3,064
	NET	114		25		1		9
	NCD	13		7		-		-
	NCT	0		0		-		-
	NCS	0		0		-		-
	NCF	120		103		137		1,276
	SNKC	-		45		32		298
	NCPL	-		0		3		28
	NTSC	17		13		18		168
	NCEL	-		1		9		84
	NSBC	58		94		120		1,117
	NSCJ	36		34		39		363
	NPMC	29		22		26		242
	NSKC	-		40		26		242
	All Others	209		179		466		4,339
	Total	907		873		1,206		11,230
	Intersegment elimination	(17	)	(11	)	(335	)	(3,119	)
	Consolidated total	¥ 890		¥ 862		¥ 871		$ 8,111

F-67

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2003		2004		2005		2005
Depreciation:
	NCJ	¥ 1,295		¥ 1,777		¥ 1,605		$ 14,946
	NET	2,803		2,622		2,565		23,885
	NCD	1,050		1,103		919		8,558
	NCT	17		12		11		102
	NCS	590		736		240		2,235
	NCF	1,734		1,876		2,109		19,639
	SNKC	-		96		1,244		11,584
	NCPL	-		308		1,350		12,571
	NTSC	677		526		655		6,099
	NCEL	-		151		825		7,682
	NSBC	117		89		71		661
	NSCJ	246		191		189		1,760
	NPMC	26		25		25		233
	NSKC	-		0		326		3,036
	All Others	3,866		4,425		8,688		80,901
	Total	12,421		13,937		20,822		193,892
	U.S. GAAP adjustments *1	694		923		1,445		13,456
	Reconciliation	(253	)	(587	)	(739	)	(6,882	)
	Consolidated total	¥ 12,862		¥ 14,273		¥ 21,528		$ 200,466

*1 Leased properties are not capitalized in the operating segment but are capitalized under U.S. GAAP.

F-68

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		Yen in millions					U.S. dollars in thousands
		For the year ended March 31					For the year ended March 31,
		2003		2004		2005	2005
Income tax expenses or benefit:
	NCJ	¥ 1,323		¥ 2,399		¥ 1,177	$ 10,960
	NET	(174	)	571		204	1,900
	NCD	226		151		213	1,983
	NCT	89		97		45	419
	NCS	85		45		49	456
	NCF	17		9		11	103
	SNKC	-		(17	)	100	931
	NCPL	-		274		2,083	19,397
	NTSC	38		556		290	2,701
	NCEL	-		123		1,334	12,422
	NSBC	198		121		119	1,108
	NSCJ	62		51		224	2,086
	NPMC	(224	)	17		193	1,797
	NSKC	-		175		475	4,423
	All Others	860		1,384		3,084	28,717
	Total	2,500		5,956		9,601	89,403
	Consolidation adjustments	(1,447	)	(532	)	3,246	30,226
	Consolidated total	¥ 1,053		¥ 5,424		¥ 12,847	$ 119,629

F-69

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		Yen in millions				U.S. dollars in thousands
		For the year ended March 31				For the year ended March 31,
		2004		2005		2005
Segment assets:
	NCJ	¥ 216,865		¥ 261,296		$ 2,433,150
	NET	26,458		32,463		302,291
	NCD	12,496		17,215		160,304
	NCT	4,535		4,105		38,225
	NCS	16,969		24,448		227,656
	NCF	15,371		15,483		144,175
	SNKC	77,256		80,771		752,128
	NCPL	52,286		53,123		494,674
	NTSC	22,040		27,109		252,435
	NCEL	21,758		24,724		230,226
	NSBC	20,078		20,750		193,221
	NSCJ	18,850		18,268		170,109
	NPMC	7,798		9,045		84,226
	NSKC	10,657		11,297		105,196
	All Others	137,829		164,095		1,528,028
	Total	661,246		764,192		7,116,044
U.S. GAAP adjustments:
	Lease	1,906		3,079		28,671
	Property, plant and equipment	(2,195	)	(2,221	)	(20,681	)
	Deferred tax assets	7,235		4,115		38,318
	Marketable securities	1,343		2,108		19,629
	Others	1,026		(2,818	)	(26,241	)
	Sub-total	9,315		4,263		39,696
	Elimination of intersegment assets, net of taxes	(263,345	)	(336,134	)	(3,130,031	)
	Valuation differences	6,750		6,798		63,302
	Goodwill	28,078		40,664		378,657
	To adjust affiliate from cost to equity method *1	(541	)	(521	)	(4,851	)
	Others	2,383		4,911		45,731
	Consolidated total	¥ 443,886		¥ 484,173		$ 4,508,548

*1 The costs of investments in equity method investees were included in the segments and the adjustments under the equity method were included in the reconciliation.

F-70

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		Yen in millions				U.S. dollars in thousands
		For the year ended March 31				For the year ended March 31,
		2004		2005		2005
Expenditure for segment assets:
	NCJ	¥ 5,593		¥ 2,066		$ 19,238
	NET	2,338		3,230		30,077
	NCD	1,268		1,115		10,383
	NCT	0		2		19
	NCS	46		516		4,805
	NCF	3,975		2,095		19,508
	SNKC	180		6,408		59,670
	NCPL	356		1,977		18,410
	NTSC	901		3,469		32,303
	NCEL	189		1,226		11,416
	NSBC	37		36		335
	NSCJ	342		1,182		11,007
	NPMC	56		687		6,397
	NSKC	0		502		4,675
	All Others	7,486		20,854		194,189
	Total	22,767		45,365		422,432
	Reconciliation *1	(136	)	(8,108	)	(75,500	)
	Consolidated total	¥ 22,631		¥ 37,257		$ 346,932

*1 The amounts of expenditure for segment assets were on an accrual basis while the amounts of consolidated total were on a cash basis.

NIDEC did not have significant non-cash items other than depreciation in reported profit. Equity in earnings of affiliates were not allocated to the segments in the financial information report available and are not regularly reviewed by NIDEC’s chief operating decision maker. Intersegment sales were made at prices that approximate current market value.

F-71

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

26. Subsequent events:

Dividends

Subsequent to March 31, 2005, the Company’s Board of Directors declared a cash dividend of ¥1,781 million ($16,584 thousand) payable on June 24, 2005 to stockholders of record on March 31, 2005. This decision is subject to approval by the shareholders at the annual general meeting of shareholders to be held on June 23, 2005.

Customer insolvency

Nidec Copal Corporation, a consolidated subsidiary of the Company announced that one of its customers, AgfaPhoto GmbH, had filed for insolvency with the Cologne District Court in Germany on May 26, 2005. Therefore NIDEC recognized that accounts receivable of Nidec Copal Corporation from AgfaPhoto GmbH, approximately total amounts of ¥1,176 million ($10,951 thousand), would not be collected or that collection would not be postponed. Should a need for correction to NIDEC’s forecast consolidated results for the year ended March 31, 2006, a further notice to that effect will be issued immediately.

Stock Split － Unaudited

In a meeting of the Board of Directors held on July 28, 2005, the Company decided to implement a two-for-one stock split (the “Stock Split”). The shares of shareholders listed or recorded on the final shareholders register and the official shareholders register for September 30, 2005 will be split two for one. The number of issued shares of record on September 30, 2005 will be the number of shares to be split. Effective date (Issue date of split shares) is November 18, 2005.

As a result of this Stock Split, the exercise prices for the Company’s 2nd Unsecured Convertible Bond, Stock Acquisition Rights, and Yen Denominated Convertible Bonds with Stock Acquisition Rights due October 17, 2008 will be adjusted as follows on and after October 1, 2005.

(Yen)
	Issue Date	Adjusted (Exercise Prices)	Previous (Exercise Prices)
The 2nd Unsecured Convertible Bond	January 28, 1999	3,399.50	6,798.90
Stock Acquisition Rights	May 14, 2003	3,675.00	7,350.00
Yen Denominated Convertible Bonds with Stock Acquisition Rights due October 17, 2008	October 17, 2005	6,914.40	13,828.70

F-72

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

27. Quarterly Financial Data for the year ended March 31, 2005: (Unaudited)

		Yen in millions
		First Quarter		Second Quarter		Third Quarter		Forth Quarter		Total
Net sales		¥ 112,287		¥ 124,118		¥ 128,224		¥ 121,232		¥ 485,861
Operating expenses:
Cost of products sold		86,762		94,631		98,434		91,111		370,938
Selling, general and administrative expenses		9,103		9,505		8,812		7,920		35,340
Research and development expenses		5,395		6,913		6,497		7,113		25,918
		101,260		111,049		113,743		106,144		432,196
Operating income		11,027		13,069		14,481		15,088		53,665
Other income (expense):
Interest and dividend income		163		181		274		311		929
Interest expense		(250	)	(263	)	(231	)	(127	)	(871	)
Foreign exchange gain (loss), net		1,848		1,364		(3,623	)	2,788		2,377
(Loss) gain on derivative instruments, net		(86	)	(66	)	201		(224	)	(175	)
Gain from marketable securities, net		562		193		707		124		1,586
Gain (loss) from sales of investments in affiliated companies		11		(10	)	(2	)	(2	)	(3	)
Other, net		310		(621	)	375		(282	)	(218	)
		2,558		778		(2,299	)	2,588		3,625
Income before provision for income taxes		13,585		13,847		12,182		17,676		57,290
Provision for income taxes		(2,541	)	(3,302	)	(2,515	)	(4,489	)	(12,847	)
Income before minority interest and equity in earnings of affiliated companies		11,044		10,545		9,667		13,187		44,443
Minority interest in income of consolidated subsidiaries		2,512		3,016		1,504		3,922		10,954
Equity in net losses/(income) of affiliated companies		24		(12	)	67		(45	)	34
Net income		¥ 8,508		¥ 7,541		¥ 8,096		¥ 9,310		¥ 33,455
Per share data:		Yen
Net income	－ basic	¥ 127.62		¥ 106.76		¥ 114.60		¥ 131.14		¥ 479.74
	－ diluted	¥ 121.20		¥ 101.72		¥ 109.15		¥ 125.17		¥ 456.58
Cash dividends		¥ 15.00		¥ 0.00		¥ 20.00		¥ 0.00		¥ 35.00

Earnings-per-share amounts for each quarter are computed independently. As a result, their sum may not equal the total year earnings-per-share amounts.

F-73

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		U.S. dollars in thousands
		First Quarter		Second Quarter		Third Quarter		Forth Quarter		Total
Net sales		$ 1,045,600		$1,155,769		$ 1,194,003		$ 1,128,895		$ 4,524,267
Operating expenses:
Cost of products sold		807,915		881,190		916,603		848,412		3454,120
Selling, general and administrative expenses		84,766		88,509		82,056		73,750		329,081
Research and development expenses		50,238		64,373		60,499		66,235		241,345
		942,919		1,034,072		1,059,158		988,397		4024,546
Operating income		102,681		121,697		134,845		140,498		499,721
Other income (expense):
Interest and dividend income		1,518		1,686		2,551		2,896		8,651
Interest expense		(2,328	)	(2,449	)	(2,151	)	(1,183	)	(8,111	)
Foreign exchange gain (loss), net		17,208		12,701		(33,737	)	25,962		22,134
(Loss) gain on derivative instruments, net		(801	)	(615	)	1,872		(2,086	)	(1,630	)
Gain from marketable securities, net		5,233		1,797		6,584		1,155		14,769
Gain (loss) from sales of investments in affiliated companies		103		(93	)	(19	)	(19	)	(28	)
Other, net		2,887		(5,783	)	3,492		(2,626	)	(2,030	)
		23,820		7,244		(21,408	)	24,099		33,755
Income before provision for income taxes		126,501		128,941		113,437		164,597		533,476
Provision for income taxes		(23,661	)	(30,748	)	(23,419	)	(41,801	)	(119,629	)
Income before minority interest and equity in earnings of affiliated companies		102,840		98,193		90,018		122,796		413,847
Minority interest in income of consolidated subsidiaries		23,391		28,085		14,005		36,521		102,002
Equity in net losses/(income) of affiliated companies		224		(112	)	624		(419	)	317
Net income		$ 79,225		$ 70,220		$ 75,389		$ 86,694		$ 311,528
Per share data:		U.S. dollars
Net income	－ basic	$ 1.19		$ 0.99		$ 1.07		$ 1.22		$ 4.47
	－ diluted	$ 1.13		$ 0.95		$ 1.02		$ 1.17		$ 4.25
Cash dividends		$ 0.14		$ 0.00		$ 0.19		$ 0.00		$ 0.33

Earnings-per-share amounts for each quarter are computed independently. As a result, their sum may not equal the total year earnings-per-share amounts.

F-74 EX-1 2 ex011.htm

Exhibit 1.1

ARTICLES OF INCORPORATION OF NIDEC CORPORATION

Chapter 1. General Provisions

(Trade Name)

Article 1. The Company shall be called NIPPON DENSAN KABUSHIKI KAISHA.

2. The Company shall be called NIDEC CORPORATION in English.

(Objects)

Article 2. The Objects of the Company shall be to engage in the following businesses:

(1) Manufacture and sale of electric machinery, equipment, and tools.

(2) Manufacture and sale of a variety of electronic machine parts and components.

(3) Manufacture and sale of factory automation systems such as industrial robotic machines.

(4) Manufacture and sale of speed controlling devices, technical art tools, and measurement tools

(5) Manufacture and sale of forging and stamping machine.

(6) Manufacture and sale of high-precision press processed products.

(7) Manufacture and sale of die mold for stamping.

(8) Manufacture and sale of other machinery, equipment and tools.

(9) Non-life insurance agency business and activities relating to life insurance solicitation.

(10) Sale, purchase, leasing, renting and management of real property and acting as intermediary therein.

(11) Sale of books, stationery, teaching equipment & material and telecommunication equipment.

(12) Agency of travel and advertising.

(13) Any and all businesses incidental or relating to any of the foregoing items.

(Location of head office)

Article 3. The Company shall have its head office in Kyoto.

(Method of giving public notice)

Article 4. Publication by the Company shall be made by electronic publication.  Provided, however, in case of an accident or other inevitable cause that prevents the electronic publication, the publication shall be made in Nihon Keizai Shimbun.

総務03 定款 Exhibit 01.1（2005).doc

Chapter 2. Shares

(Total number of shares to be issued by the Company)

Article 5. The total number of shares authorized to be issued by the Company shall be 240 million shares.

(Shares Repurchase)

Article 6. Pursuant to Article 211-3, Clause 1, No.2 of the Commercial Code, the company may, by resolution of the Board of Directors, purchase shares to be held as treasury shares..

(Non-issue of share-certificates indicating a number of shares less than one unit)

Article 7. The number of shares to constitute one unit of shares of the Company shall be 100.

2. The Company shall not issue share-certificates indicating a number of shares less than one unit.

(Transfer agent)

Article 8. The Company shall have a transfer agent with respect to shares.

2. The transfer agent and its business offices shall be selected by resolution of the Board of Directors and public notice shall be given of such matters.

3. The register of shareholders and the register of virtual shareholders of the Company (hereinafter called the register of shareholders, etc.,) and the register of lost shares are kept at the transfer agent office and the registration of a transfer of shares in the register of shareholders, purchase of shares constituting less than one unit, the registration of lost shares in the register of shares and other business relating to shares, shall be handled by the transfer agent and not by the Company.

(Share Handling Regulations)

Article 9. The denomination of share certificates, the registration of a transfer of shares in the register of shareholders, purchase of shares constituting less than one unit, the registration of lost shares in the register of shares and other handling relating shares, shall be governed by the Share Handling Regulations to be established by the Board of Directors.

(Date to determine entitled shareholders and pledgees)

Article.10 The shareholders entitled to exercise their rights at the ordinary general meeting of shareholders relating to the closing of accounts shall be the final shareholders appearing or being recorded in the register of shareholders, etc., as of march 31 in each year.

2. In addition to the preceding paragraph, if the Company needs, by the Board of Directors, it may, upon giving prior public notice, deem the final shareholders and registered pledgees appearing in the resister of shareholders, etc., as of a specified date, to be the shareholders or the registered pledgees who are entitled to exercise their rights.

Chapter 3. General Meeting of Shareholders

(Convening)

Article 11. The ordinary general meeting of shareholders of the Company shall be convened in June in each year and the extraordinary general meeting of shareholders shall be convened whenever the necessity arises.

(Person to convene meeting and chairman of meeting)

Article 12. Unless otherwise provided in laws, a general meeting of shareholders shall be convened by the President, who shall act as chairman of such meeting.

2. If the President is unable to act, another Director shall act in his place as provided by the Board of Directors.

(Method of adopting resolution)

Article 13. Unless otherwise provided in laws, ordinances, or these Articles of Incorporation, resolutions of a general meeting of shareholders shall be adopted by a majority of the votes of the shareholders present.

2. The resolution under Commercial Code Article 343, Clause 1 is made subject to attendance of shareholders having more than one third of voting rights of the all shareholders and is made by the majority of more than two third of the exercised voting rights.

(Exercise of voting rights by proxy)

Article 14. Shareholders may exercise their voting rights by delegating the power to other shareholders who are entitled to vote, provided that the shareholder or the proxy shall present, at each general meeting of shareholders, the Company the letter to entitle to vote.

Chapter 4.  Directors and Board of Directors

(Number of Directors)

Article 15. The Company shall have not more than 20 Directors.

(Election of Directors)

Article 16. Directors shall be elected at a general meeting of shareholders. For the election of Directors, the presence of the holders of shares representing one-third or more of the voting rights of all the shareholders shall be required and the majority thereof shall be needed.

2. For the election of Directors, no cumulative voting shall be used.

総務03 定款 Exhibit 01.1（2005).doc

(Term of office of Directors)

Article 17. The term of office of Directors shall expire at the close of the ordinary general meeting of shareholders relating to the closing of accounts last to occur within one years after their assumption of office.

2. The term of office of Directors elected to increase their number or to fill vacancies shall be the same with the unexpired balance of the term of office of the other Directors currently in office.

(Representative Directors and Directors with specific titles)

Article 18. Representative Directors shall be appointed by resolution of the Board of Directors.

2. By resolution of the Board of Directors, the Company may have one board Chairman, one President and one or more Executive Vice Presidents, Senior Managing Directors and Managing Directors.

(Person to convene the Board of Directors and chairman of meeting)

Article 19. Unless otherwise provided in laws, the Board of Directors shall be convened by the President who shall be chairman of the meeting.

2. If the President is unable to act, another Director shall act in his place as provided by the Board of Directors.

(Notice of meeting of the Board of Directors)

Article 20. Notice for convening a meeting of the Board of Directors shall be dispatched to each Director and each Corporate Auditor three days prior to the date of the meeting; provided, however, that such period of notice may be shortened in case of urgency.

(Resolution of the Board of Directors)

Article 21. For resolution of the Board of Directors, the presence of a majority of Directors shall be required. And the resolution thereof shall be adopted by a majority of Directors present.

(Remuneration for Directors)

Article 22. Remuneration for Directors shall be determined by the resolution of a general meeting of shareholders.

総務03 定款 Exhibit 01.1（2005).doc

Chapter 5. Corporate Auditors and Board of Corporate Auditors

(Number of Corporate Auditors)

Article 23. The Company shall have not more than five Corporate Auditors.

(Election of Corporate Auditors)

Article 24. Corporate Auditors shall be elected at a general meeting of shareholders. For the election of Corporate Auditors, the presence of holders of shares representing one-third or more of the voting rights of all the shareholders shall be required and the majority thereof shall be needed.  

(Term of office of Corporate Auditors)

Article 25. The term of office of Corporate Auditors shall expire at the close of the ordinary general meeting of shareholders relating to the closing of accounts last to occur within four years after their assumption of office.

2. The term of office of Corporate Auditors elected to fill vacancies shall be the same with the unexpired balance of the term of the retired Corporate Auditors.

(Full-time Corporate Auditors)

Article 26. The Corporate Auditors shall appoint a full time Corporate Auditor or Corporate Auditors from among their members.

(Notice of meeting of the Board of Corporate Auditors)

Article 27. Notice for convening a meeting of the Board of Corporate Auditors shall be dispatched to each Corporate Auditor three days prior to the date of the meeting; provided, however, that such period of notice may be shortened in case of urgency.

(Resolution of the Board of Corporate Auditors)

Article 28. Unless otherwise provided in laws, for resolutions of the Board of Corporate Auditors, a majority of Corporate Auditors shall be required.

(Remuneration for Corporate Auditors)

Article 29. Remuneration for Corporate Auditors shall be determined by the resolution of a general meeting of shareholders.

総務03 定款 Exhibit 01.1（2005).doc

Chapter 6. Accounts

(Business year and date of closing of accounts)

Article 30. The business year of the Company shall begin on April 1 in each year and end on March 31 in the following year, and the last day of each business year shall be the date of closing of accounts for such business year.

(Dividend of profit and interim dividend)

Article 31. Dividend of profit shall be paid to the final shareholders or registered pledgees appearing or being recorded in the register of shareholders, etc., as of March 31 in each year.

2. The Company may, by resolution of the Board of Directors, pay dividends in money (termed “interim dividend” hereafter) as provided by Commercial Code Article 293-5 to the final shareholders or registered pledgees appearing or being recorded in the register of shareholders, etc., as of September 30 in each year.

(Period of limitations)

Article 32. The Company shall be relieved of the obligation to pay any dividend of profit or interim dividend upon expiration of three years from the day on which such dividend became first due and payable. Further the Company shall not pay any interest on dividend of profit or interim dividend.

(Time of conversion of convertible bonds)

Article 33. For the purpose of calculation of the first dividend of profit or interim dividend on shares issued upon conversion of convertible bonds, the conversion shall be deemed to have taken place on April 1,if conversion request is made from April 1 to September 30 or October 1, if conversion request is made from October 1 to March 31 of the following year.

総務03 定款 Exhibit 01.1（2005).doc

EX-1

ＮＩＤＥＣ　ＣＯＲＰＯＲＡＴＩＯＮ

EX-1

Exhibit 1.3

(Translation)

NIDEC CORPORATION

REGULATIONS OF THE BOARD OF DIRECTORS

(As amended on July 1, 2004)

(Purpose)

Article 1. The purpose of these regulations is to provide for the functions and powers of the board of directors of the company and the procedures for conducting its meeting and thereby to attain reasonable conduct of its meetings.

2. The matters relating to the board of directors shall be governed by these regulations as well as by laws, ordinances or the articles of incorporation.

(Treatment of doubts)

Article 2. Any doubt that may arise in connection with the administration of these regulations shall be dealt with by resolution of the board of directors.

(Composition)

Article 3. The board of directors shall be composed of all of the directors.  Statutory auditors have to be present and give their opinions at any meeting of the board of directors if need were.

(Time of holding meetings)

Article 4. The meetings of the board of directors shall consist of ordinary meetings and extraordinary meetings.

2. Ordinary meetings of the board of directors shall be held once every month and extraordinary meetings of the board of directors shall be held whenever the necessity arises.

3. The ordinary meetings of the board of directors mentioned in the preceding paragraph may be postponed or called off depending on the circumstances; provided, however, that such meetings shall not be called off consecutively for three months.

(Person having convening power)

Article 5. Each meeting of the board of directors shall be convened by the president. If the president is unable to act, another director shall act in his place in the order previously determined by the board of directors.

2. Any directors may request the convening of a meeting of the board of directors by presenting to the person having convening power mentioned in the preceding paragraph a document setting forth the matters to be considered and the reasons therefor.

(Convening procedure)

Article 6. Notice for convening a meeting under the preceding article shall be dispatched not later than three days prior to the date of the meeting; provided, however, that such period of notice may be shortened in case of urgency.

2. If consented to by all the directors and the statutory auditors, a meeting of the board of directors may be held without following the convening procedure.

(Chairman)

Article 7. Chairmanship of each meeting of the board of directors shall be assumed by the president. If the president is unable to act, another director shall act in his place in the order previously determined by the board of directors.

(Attendance by counselors, etc)

Article 8. If the board of directors deems it necessary, it may require the counselors and other persons to attend its meeting and give their reports or opinions.

(Method of adopting resolutions)

Article 9. Resolutions of the board of directors shall be adopted at its meeting at which a majority of the directors shall be present, by a majority of the directors so present.

2. Directors interested in any of the resolutions mentioned in the preceding paragraph can not participate in such resolution. In that case, the number of such directors shall not be counted in the number of directors present.

(Matters to be submitted)

Article 10. The matters to be submitted to the board of directors for consideration shall be as follows;

1. Statutory matters:

(1) Establishment, removal or abolition of head office or branch offices.

(2) Decision on the convening of a general meeting of shareholders and the matters to be submitted thereto.

(3) Appointment and removal of representative directors and directors with specific titles.

(4) Approval of directors competitive transactions.

(5) Approval of transactions between directors and the company

(6) Decision on the matters relating to the issuance of shares, bonds, acquisition rights of shares and bonds with acquisition rights of shares.

(7) Decision on the matters relating to the capitalization of legal reserves and the issuance of shares for free distribution.

(8) Decision on the matters relating to an interim dividend.

(9) Decision on the matters relating to a subdivision of shares.

(10) Selection, removal and change of a transfer agent and its business office.

(11) Decision on the record date of the register of shareholders.

(12) Decision on the matters relating to purchase of own shares.

(13) Decision on the matters relating to dispose of own shares, purchase of own shares from subsidiaries and depreciation of own shares.

(14) Decision on the matters relating to decrease of number of shares (one unit) or to abolish the rule of number.

(15) Such other matter as the board of directors may deem important.

2. Important matters relating to business:

(1) Matters relating to the incorporation of affiliated companies.

(2) Matters relating to business cooperation or joint ventures with other companies.

(3) Decision on new projects (meaning those requiring amendment of the articles of incorporation and those requiring no such amendment but requiring investment of \100 million or more in each instance).

(4) Such other matters as the board of directors may deem necessary.

3. Matters relating to accounting:

(1) Approval of accounting documents and their accompanying detailed statements.

(2) Approval of proposed appropriation of profits or losses.

(3) Monthly financial report.

(4) Compilation and drafting of annual business plans.(statement income, balance sheet, manpower planning, cash flow planning, borrowed money planning)

(5) Establishment of borrowing limits and determination of borrowings over such limits.

(6) Establishment of limits to acquisition of securities, a acquisition, pledge, loans and disposition of securities above such limits.

(7) Acquisition, repair and disposition of fixed assets and important property worth \300 million in each instance.

(8) Making investment of \300 million or more in each instance.

(9) Lending of assets or making loans or giving guarantee or offering a mortgage of obligations worth \300 million or more in each instance.

(10) Borrowing or leasing of assets worth \300 million or more in each instance.

(11) Adjustment, release from obligations in respect of bad debts of \20 million or more in each instance.

(12) Such other matter as the board of directors may deem necessary.

4. Matters relating to personnel affairs:

(1) Employment of services of directors as employees and terms of such employment.

(2) Personal affairs of managers and other important employees.

(3) Such other matter as the board of directors may deem important.

5. Others:

(1) Institution and defense of legal actions of managerial importance, policies for settling such actions and selection of counsels.

(2) Making court settlement or withdrawal of suits of managerial importance, and settlement policies and settlement of disputes of managerial importance.

(3) Approval of establishment, amendment or repeal of important rules and regulations (e.g., the share handling regulations, the regulations of the board of directors, and the proposal processing regulations, company regulations concerning insider trading, compliance regulations, risk management regulations).

(4) Other matters provided for in laws, ordinances or the articles of incorporation and such other matter as the board of directors may deem important.

(Ratification)

Article 11. If there arises any matter which can not be submitted to the board of directors for consideration because it requires an urgent action or for any other unavoidable cause, representative directors may take such action as they may deem fit, notwithstanding the provisions of article 9. In that case, ratification of the board of directors must be sought at its next meeting.

(Reporting)

Article 12. The president shall report to the board of directors the state of execution of business of the company and other necessary matters at least once every three months;  provided, however, that depending on the case, the president may cause such report to be made by other directors in charge of the business in question.

2. A director who has made a competitive transaction or a transaction with the company shall report to the board of directors the important facts about such transaction without delay.

(Minutes)

Article 13. The proceedings in outline and the resultant actions taken at each meeting of the board of directors shall be recorded in minutes and the directors and statutory auditors present shall affix their names and seals thereto and such minutes shall be kept on file at the company permanently.

(Secretariat)

Article 14. The administrative affairs relating to the board of directors shall be under the charge of the manager of the general affairs department and the minutes shall be kept on file at the general affairs department.

(Amendment and repeal)

Article 15. Any amendment or repeal of these regulations shall be made by resolution of the board of directors.

EX-1

Exhibit 1.4

(Translation)

NIDEC CORPORATION

REGULATIONS OF THE BOARD OF STATUTORY AUDITORS

(As amended on August 1, 2004)

(Purpose)

Article 1. These regulations prescribe a matter about the board of statutory auditors based on laws and ordinances and the articles of incorporation.

(Organization)

Article 2. The board of statutory auditors shall be composed of all of the statutory auditors.

(Purpose of the board of statutory auditors)

Article 3. The board of statutory auditors shall receive the report as to material matter with respect to audit, and conference or make resolution: provided, however, that the board of statutory auditors shall not prevent statutory auditors exercising their rights.

(Time of holding meetings)

Article 4. The board of statutory auditors shall consist of ordinary meetings and extraordinary meetings,

2. Ordinary meeting of the board of statutory auditors shall be held once every month and extraordinary meetings of the board of statutory auditors shall be held whenever the necessity arises.

3. The ordinary meetings of the board of statutory auditors mentioned in the preceding paragraph may be postponed or called off depending on the circumstances: provided, however, that such meetings shall not be called off consecutively for three months.

(Chairman and Person having convening power)

Article 5. The board of statutory auditors prescribes the chairman of the board of statutory auditors by mutual election.

2. The chairmanship of each meeting of the board of statutory auditors convenes the board of statutory auditors and administers it. In addition, the chairmanship accomplishes the duties that took commission of the board of statutory auditors. But the chairmanship does not disturb the exercise of authority of each statutory auditor.

(A notes of convening)

Article 6. Notice for convening a meeting under the preceding article shall be dispatched not later than three days prior to the date of the meeting.

2. If consented to by all the statutory auditors, a meeting of the board of statutory auditors may be held without following the convening procedure.

(Method of adopting resolution)

Article 7. Resolution of the board of statutory auditors means decision of the matters which need consent of statutory auditors. In such case the resolution shall be adopted at its meeting at which a majority of all the statutory auditors except for the resolution for removal mentioned in the second paragraph of the article 13 and consent of the board of statutory auditors in the third paragraph of the article 13.

2. When the board of statutory auditors resolve, it needs a discussion according to the enough materials.

(Resolutions for the course of audit)

Article 8. The course, plan, method and business assignment shall be decided after discussion by the board of statutory auditors at the beginning of the audit.

2. In addition to the matters regulated in previous paragraph, the board of statutory auditors may resolute matters which statutory auditors regard as necessary for executing their business like election of the staff of audit and a budget of audit.

(A periodical meeting etc. with Representative Director)

Article 9. The board of statutory auditors has a meeting with Representative Director regularly and exchanges opinions about the problem that a company should deal with, the situation of environment maintenance of statutory auditors of audit and an important problem in audit. At the same time, the board of statutory auditors does the request that it judged to be necessary and makes an effort to deepen mutual recognition with representative director.

2. The board of statutory auditors explains audit policy and audit plan and the enforcement situation of audit and result appropriately for representative director and the board of directors.

3. The board of statutory auditors discusses the matter which directors should report as well as a matter to fix for a law in the board of statutory auditors with a director and is decided and received the report.

(Report to the board of statutory auditors)

Article 10. Statutory auditors shall report their situation in conducting executing their audit if necessary and at any time when requested by the board of statutory auditors.

2. Statutory auditors, when reported by accounting auditors, directors, employees such as internal auditing section and others, shall report it to the board of statutory auditors.

3. The board of statutory auditors demands a report for statutory auditors, directors, employees such as internal auditing section and other people if necessary.

(Treatment for report)

Article 11. The board of statutory auditors shall take appropriate measures according to the situation, it shall conduct a necessary investigation and advice for director, when reported the fact which cause material damage to the company is discovered and the discovery of the directors’ illegal action or the material fact that directors violate laws, ordinance or articles of incorporation in conducting their duties by accounting auditors.

2. The board of statutory auditors shall deal with it as the same mentioned in the previous paragraph , if necessary, when the board of statutory auditors is reported matters, which was established by a discussion with directors in advance, from directors or employees.

(Preparation of audit reports)

Article 12. The board of statutory auditors shall receive financial statement and audit reports from accounting auditors. The person who receives these documents may be the full-time statutory auditor.

2. The board of statutory auditors shall receive the report as to the contents of audit etc. by statutory auditors and prepare for audit reports after the discussion.

3. Different opinion of statutory auditor, if any, shall be append to audit reports.

4. Each statutory auditor shall affix his names and seals to the audit report. The Full-time statutory auditors shall append the note that they are full-time statutory auditors to the audit reports.

(Resolution for election, reelection and removal of accounting auditors)

Article 13. The board of statutory auditors shall resolute the following matters with regard to election, reelection and removal of accounting auditors.

(1) Consent on the agenda as to election, non-election and removal of accounting auditors to be submitted to the general meeting of shareholders.

(2) Request for making election, non-election and removal of accounting auditors the purpose of a general meeting of shareholders.

(3) Request for submitting the agenda as to election of accounting auditors.

(4) Electing the person who temporarily performs the duty of accounting auditors when the accounting auditors is short.

2. All statutory auditors’ consent shall be needed when the board of statutory auditors remove the accounting auditors on the ground of statutory reason for removal. In such case, the statutory auditors elected by the board of statutory auditors shall explain the removal of the accounting auditors and the reason of it at the first general meeting of shareholders after the removal.

(A right of consent about election of statutory auditors and request for propose.)

Article 14. The board of statutory auditors shall resolute the following matters with regard to election of statutory auditors.

(1) Consent on the agenda as to election of statutory auditors to be submitted to the general meeting of shareholders.

(2) Request for making election of statutory auditors the purpose of a general meeting of shareholders.

(3) Request for submitting the agenda as to election of statutory auditors.

(Consent of the statutory auditions as to exempt responsibility of directors.)

Article 15. The consent of the board of statutory auditors about the following agenda shall be needed by all statutory auditors’ consents.

(1) Consent for proposal about a responsibility exemption of the directors whom a board of directors is going to suggest to a general meeting of shareholders;  

(2) Consent for proposal to amend the articles of incorporation by the board of directors resolution that a board of directors is going to suggest to a general meeting of shareholders about a responsibility exemption of the directors;

(3) Consent for proposal about a responsibility exemption of the directors that directors are going to suggest to the board of directors that based on official regulations of the articles of incorporation;

(4) Consent for proposal to amend the articles of incorporation that can contract a responsibility exemption among outside directors whom the board of directors is going to suggest to a general meeting of shareholders;  

(5) Consent that shall participate in a lawsuit to assist directors by company in shareholders lawsuit;

(Discussion about statutory auditors executing their right)

Article 16. Statutory auditors may discuss at the board of statutory auditors when they exercise their right or perform their duties as to the followings;

(1) Explanation when statutory auditors are asked some question in writing by shareholders before the general meeting of shareholders.

(2) Report to the board of directors and request for convening of the board of directors etc.

(3) Opinion report as to the agenda or the documents to be submitted to the general meeting of shareholders.

(4) Request for suspending directors’ action.

(5) Stating the opinion as to the election, removal and remuneration of statutory auditors at the general meeting of shareholders.

(6) The matters as to the suit between the company and the directors.

(7) Others, the matters as to the institution of legal action etc.

(Discussion as to mutual election and remuneration of statutory auditor)

Article 17. The board of statutory auditors may discuss the matters as to the mutual election and remuneration of full-time statutory auditors if consented by all statutory auditors.

(Minutes)

Article 18. The proceedings in outline and the resultant actions taken at each meeting of the board of statutory auditors shall be recorded in minutes and statutory auditors present shall affix their names and seals thereto and such minutes shall be kept on file at the company permanently.

2. Minutes in the preceding paragraph shall be kept on file in the head office for ten years.

(Office of the board of statutory auditors)

Article 19. All matters concerning the board of statutory auditors shall be treated by the manager of the general affairs department.

(Audit standard of statutory auditors)

Article 20. A matter about the board of statutory auditors and audit of statutory auditors depends on laws and ordinances or articles of incorporation or a matter to prescribe in these regulations of the board of statutory auditors or audit standard of statutory auditors in the board of statutory auditors.

(Amendment and repeal of these regulations)

Article 21. Any amendment and repeal of these regulations shall be made by board of statutory auditors.

EX-1

Exhibit 8.1

Subsidiaries of the registrant

No.	Company name in English	Jurisdiction of Incorporation
1	Nidec America Corporation	U.S.A
2	Nidec Electronics GmbH	Germany
3	Nidec Electronics (Thailand) Co., Ltd.	Thailand
4	Nidec Precision (Thailand) Co., Ltd.	Thailand
5	Nidec Hi-Tech Motor (Thailand) Co., Ltd.	Thailand
6	Nidec (Dalian) Limited	China
7	Nidec Taiwan Corporation	Taiwan
8	Nidec Singapore Pte. Ltd.	Singapore
9	P.T. Nidec Indonesia	Indonesia
10	Nidec (H.K.) Co., Ltd.	Hong Kong
11	Nidec Philippines Corporation	Philippines
12	Nidec Precision Philippines Corporation	Philippines
13	Nidec Subic Philippines Corporation	Philippines
14	Nidec Korea Corporation	Korea
15	Nidec-Kyori Corporation	Japan
16	Nidec Machinery Corporation	Japan
17	Nidec Total Service Corporation	Japan
18	Nidec Total Service (Zhejiang) Corporation	China
19	Nidec Nemicon Corporation	Japan
20	Nidec Power Motor Corporation	Japan
21	Nidec Seiko Corporation	Japan
22	Nidec Power Motor (Shanghai) International Trading Co., Ltd.	China
23	Nidec Power Motor (Zhejiang) Co., Ltd.	China
24	Nidec-Shimpo Corporation	Japan
25	Nidec-Read Corporation	Japan
26	Nidec-Read Taiwan Corporation	Taiwan
27	Nidec-Shimpo America Corporation	U.S.A
28	Coneart Kilns Incorporated	Canada
29	Shimpo Drives Incorporation	U.S.A
30	Nidec-Shimpo Philippines Corporation	Philippines
31	Nidec -Shimpo (Shanghai) International Trading Co., Ltd.	China
32	Nidec-Shimpo (Zhejiang) Corporation	China
33	Nidec Tosok Corporation	Japan
34	Nidec Tosok (Vietnam) Co., Ltd.	Vietnam
35	Nidec Tosok (Shanghai) Co., Ltd.	China
36	Nidec Copal Corporation	Japan
37	Nidec Copal Philippines Corporation	Philippines
38	Nidec Copal (Vietnam) Co., Ltd.	Vietnam
39	Nidec Copal (Malaysia) Sdn. Bhd.	Malaysia
40	Nidec Copal Precision Parts Corporation	Japan
41	Nidec Copal (Thailand) Co., Ltd.	Thailand
42	Copal Optical and Electronic Machinery (Shanghai) Co., Ltd.	China
43	Nidec Copal (U.S.A) Corporation	U.S.A
44	Nidec Copal Hong Kong Co., Ltd.	Hong Kong
45	Nidec Copal (Zhejiang) Co., Ltd.	China
46	Nidec Copal Electronics Corporation	Japan
47	Nidec Copal Electronics, Inc.	U.S.A
48	Nidec Copal Electronics GmbH	Germany
49	Globa Service Inc.	Japan
50	Globa Sales Co., Ltd.	Japan
51	Kansai Globa Sales Co., Ltd.	Japan
52	Nidec Copal Electronics (Shanghai) Co., Ltd.	China
53	Nidec Copal Electronics (Korea) Co.,Ltd.	Korea
54	Nidec Copal Electronics (Zhejiang) Co., Ltd.	China
55	Nidec Shibaura Corporation	Japan
56	Nidec Shibaura (Zhejiang) Co., Ltd.	China
57	Nidec Shibaura Electronics (Thailand) Co., Ltd.	Thailand
58	Nidec Shibaura (H.K.) Limited	Hong Kong
59	Nidec Steel Products (Zhejiang) Co., Ltd.	China
60	Nidec System Engineering (Zhejiang) Corporation	China
61	Nidec (Zhejiang) Corporation	China
62	Nidec (Dongguan) Limited	China
63	Nidec (New Territories) Co., Ltd.	China
64	Nidec (Shanghai) International Trading Co., Ltd.	China
65	Sankyo Seiki Mfg. Co., Ltd.	Japan
66	Nidec Logistics Corporation	Japan
67	Nidec Logistics Consulting (Pinghu) Corporation	China
68	Sankyo Service Engineering Co., Ltd.	Japan
69	Sankyo Shoji Co., Ltd.	Japan
70	Sankyo Seiki (America) Inc.	U.S.A
71	Nidec Sankyo Taiwan Corporation	Taiwan
72	Sankyo Seiki (Singapore) Pte., Ltd.	Singapore
73	Sankyo precision (Malaysia) Sdn. Bhd.	Malaysia
74	Sankyo Seiki (Fuzhou) Co., Ltd.	China
75	Sankyo Seiki Fuzhou (H.K.) Co., Ltd.	China
76	Sankyo Seiki (Shanghai) Co., Ltd.	China
77	Sankyo Seiki (Hong Kong) Co., Ltd.	Hong Kong
78	Sankyo Electronics (Shaoguan) Co., Ltd.	China
79	Sankyo Seiki (Shenzhen) Co., Ltd.	China
80	Nissin Kohki Co., Ltd.	Japan
81	Tohhoku Nissin Kohki Co., Ltd.	Japan
82	Taiwan Nissin Koki Co., Ltd.	Taiwan
83	HK Nissin Kohki Co., Ltd.	Hong Kong
84	P. T. Indonesia Nissin Kohki	Indonesia
85	Dalian Nissin Kohki Co., Ltd.	China
86	Tokyo Pigeon Co., Ltd.	Japan
87	Tokyo Pigeon Mfg. Pte., Ltd.	Singapore
88	Tokyo Pigeon (Hong Kong) Co., Ltd.	Hong Kong
89	P. T. Tokyo Pigeon Indonesia	Indonesia

EX-1

Exhibit 11.1

Code of Ethics

Compliance Rules

Chapter I: General Provisions

Article 1 (Purpose)

These Compliance Rules (these “Rules”) set forth the basic principles, structure and operation of a compliance system that, through continuous review and improvement, is designed to promote the proper conduct of our business in accordance with applicable laws and regulations.

Article 2 (Scope of Application)

2.1. These Rules shall apply to Nidec Corporation (the “Company”) and any affiliated company that is substantially controlled by the Company.

2.2. The Risk Management Committee shall decide whether an affiliated company is substantially controlled by the Company in light of matters such as the relationship between each company’s personnel, capital investment and interparty transactions.

2.3. The Risk Management Committee shall notify the Administrative Division and the Overseas Business Administrative Division of any company that is determined to be an affiliated company.

Article 3 (Definition of Compliance)

As used herein, “Compliance” refers to a comprehensive management system that is designed to establish corporate integrity, earn the respect of the communities in which we do business and raise ethical awareness among our directors, officers and employees by promoting the observance of laws, regulations, company rules and ethical conduct.

Chapter II: Structure

Article 4 (The Board of Directors)

The Board of Directors shall decide basic matters relating to Compliance.

Article 5 (The Compliance Committee)

A Compliance Committee (the “Committee”) shall be established with a chairman elected by the Board of Directors from among its members. The Committee shall report to the Board of Directors and, to the extent it deems necessary, it shall establish a basic Compliance policy, create and update a compliance manual and attest to the progress of annual compliance plans.

Article 6 (The Compliance Office)

6.1. The Committee shall have a Compliance Office (the “Office”) that shall serve as secretariat.  The Office shall be responsible for vigorously enforcing Compliance by planning and proposing policies concerning Compliance, administering the policies set forth in the compliance manual and providing each business division with guidance and support.

6.2. The Office shall determine whether or not particular conduct violates laws or is inappropriate from the perspective of social and ethical standards. Directors, officers and employees may request the Committee to determine whether particular conduct is appropriate.

6.3. The Office shall promote understanding regarding Compliance by publicizing examples of inappropriate conduct.

Article 7 (Compliance Officer)

7.1. Each business unit general manager, division general manager or other person separately appointed by the Committee (each, a “Compliance Officer”) shall be accountable to the Committee concerning Compliance matters within his or her area of jurisdiction.

7.2. The Compliance Officer shall establish a system for promoting Compliance within his or her area of jurisdiction and report to the Office regarding such system.

7.3. The Compliance Officer shall take appropriate action with respect to Compliance matters in his or her area of jurisdiction and shall receive support from the Office as necessary.  Whenever a case arises that needs to be reported, the Compliance Officer shall take emergency measures to deal with the matter and report thereon to the Office as soon as possible. The Office shall report the matter to concerned departments as it deems necessary.

7.4. In addition to the preceding two paragraphs, any reports that must be made to the Office under these Rules shall be made by the Compliance Officer.  However, if there is any reason why the Compliance Officer cannot make the report, he or she may, with the Committee’s approval, appoint a representative to make any such reports. The representative shall have the same responsibilities as the Compliance Officer.

Article 8 (Special Rules Regarding Public Relations)

If the Office decides that a particular Compliance matter may affect public relations, it shall report the matter as soon as possible to the manager of the Public Relations & Advertisement Division and the manager of the Investor Relations Division.

Chapter III: Code of Ethics

Article 9 (Code of Ethics)

9.1. This code of ethics (this “Code of Ethics”) shall be applied to its Chief Executive Officer, Chief Financial Officer(CFO) and Chief Accounting Officer(CAO) as well as all other directors, officers and employees of the Company (“Covered Persons”).  Covered Persons must make effort to:

a) Promote honest and ethical conduct, including the ethical handling of conflicts of interest,

b) Promote full, fair, accurate, timely and understandable disclosure,

c) Promote compliance with applicable laws and governmental rules and regulations, and

d) Deter wrongdoing.

9.2. Each Covered Person owes a duty to the Company to act with integrity.  Integrity requires, among other things, being honest and candid.  Deceit and subordination of principle are inconsistent with integrity.

9.3. Each Covered Person must:

a) Act with integrity, including being honest and candid while still maintaining the confidentiality of information where required or consistent with the Company’s policies,

b) Observe both the form and spirit of laws and governmental rules and regulations, accounting standards and Company policies, and

c) Adhere to a high standard of business ethics.

Article 10 (Conflicts of Interest and Corporate Opportunities)

10.1. Covered Persons shall refrain from conduct that conflicts with the interests of the Company and subordinate their personal interests to those of the Company.  A “conflict of interest” can arise when a Covered Person takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively.  Before taking any action that might conflict with or compete against the interests of the Company, directors must obtain prior approval from the Board of Directors in accordance with Articles 264 and 265 of the Commercial Code of Japan.  

10.2. Some clear conflict of interest situations that should always be approved by the Board of Directors, if material, include the following:

a) Any significant ownership interest in any supplier or customer;

b) Any consulting or employment relationship with any customer, supplier or competitor;

c) Any outside business activity that detracts from an individual’s ability to devote appropriate time and attention to his or her responsibilities with the Company;

d) The receipt of non-nominal gifts or excessive entertainment from any company with which the Company has current or prospective business dealings;

e) Being in the position of supervising, reviewing or having any influence on the job evaluation, pay or benefit of any immediate family member; and

f) Selling anything to the Company or buying anything from the Company, except on the same terms and conditions as comparable officers or directors are permitted to so purchase or sell.

Anything that would present a conflict for a Covered Person would likely also present a conflict if related to a member of his or her family.

10.3. When Covered Persons are uncertain as to whether their or others conduct might conflict with the Company’s interests, they shall consult with and/or report to the Office.

Article 11 (Disclosure Controls and Procedures)

11.1.Each Covered Person is required to be familiar with and comply with the Company's Disclosure Controls and Procedures applicable to him or to her, so that the Company's subject reports and documents filed with the Securities and Exchange Commission (the “SEC”) comply in all material respects with the applicable federal securities laws and SEC rules.  

11.2.Each Covered Person having direct or supervisory authority regarding these SEC filings or the Company's other public communications concerning its general business, results, financial condition and prospects should, to the extent appropriate within his or her area of responsibility, consult with other Company officers and employees and take other appropriate steps regarding these disclosures with the goal of making full, fair, accurate, timely and understandable disclosure.

11.3.Each Covered Person must:

a) Familiarize himself or herself with the disclosure requirements applicable to the Company as well as the business and financial operations of the Company,

b) Not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company’s independent auditors, governmental regulators and self-regulatory organizations.

c) Properly review and critically analyze proposed disclosure for accuracy and completeness (or, where appropriate, delegate this task to others).

Article 12 (Confidentiality)

Covered Persons shall maintain the confidentiality of undisclosed material information concerning to the Company, affiliated companies, customers, joint venture partners and other such parties that, if disclosed, would harm the Company or such other entities.

Article 13 (Prohibition of Unfair Transactions)

13.1. The Company does not seek competitive advantage through unlawful or unethical business practices.

13.2. Covered Persons shall endeavor to deal fairly with customers, competitors and other parties with whom they deal during the course of business, and shall refrain from engaging in unfair transactions or acts, such as price or market manipulation, concealing facts, taking advantage of information that they become aware of based on their position, miscommunication of material information and similar such acts.

Article 14 (Protection and Proper Use of the Company’s Assets)

Covered Persons should protect the Company’s assets and ensure their efficient use.  All Company’s assets should be used only for legitimate business purposes.

Article 15 (Compliance with Laws)

15.1. Covered Persons must observe all laws and regulations applicable to the Company’s business.

15.2. Covered Persons must exercise sufficient care with respect to investments in securities so that they do not violate insider-trading laws and so that they comply with applicable securities laws and regulations and Company rules.  Covered Persons must consult with and/or report to the Office if they do not understand applicable laws or regulations or if they have any doubts regarding their application.

Article 16 (Responsibility to Report Noncompliance)

If Covered Persons violate any Compliance rules, are compelled to violate any Compliance rules or become aware of a violation of Compliance rules by a third party, they must report such violation to the Office. In such case, the Company shall do everything possible to maintain the confidentiality of the report, the name of the person making the report and related matters.  Also, the Company shall not retaliate against or cause disadvantage to a reporting person.

Article 17 (Waivers of this Code of Ethics)

17.1.From time to time, the Company may waive some provisions of this Code of Ethics. Covered Persons who believe that a waiver may be called for should contact the Office.

17.2.Any changes to or waiver of this Code of Ethics for directors of the Company will, to the extent required, be promptly disclosed as provided by SEC rules.

Chapter IV: Policy and Planning

Article 18 (Compliance Enforcement)

The Committee shall at the start of the fiscal year prepare and submit a basic plan concerning Compliance to the Board of Directors for their approval.  Each Compliance Officer shall prepare an annual plan for Compliance within his or her area of jurisdiction based on the Committee’s basic policy and submit such plan to the Office.

Article 19 (Compliance Training)

The Personnel Division shall consider ways to improve Compliance awareness when it designs training programs for Covered Persons.

Chapter V: Follow up

Article 20 (Compliance Audit)

The Internal Audit & Management Advisory Division shall review the implementation of each Compliance Officer’s annual compliance plan and shall provide appropriate instruction and supervision as it deems necessary.

Article 21 (Revision)

Any revision of these Rules shall be made by resolution of the Board of Directors.

EX-1

Exhibit 12.1

CERTIFICATION

I, Shigenobu Nagamori, certify that:

1.  I have reviewed this annual report on Form 20-F of Nidec Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this annual report;

4.  The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)  omitted in accordance with the guidance of SEC Release No. 33-8238;

c)  evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

5.  The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of company’s board of directors (or persons performing the equivalent function):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date:  August 12, 2005

  /s/   Shigenobu Nagamori

Shigenobu Nagamori

President, Chief Executive Officer and Representative Director

EX-1

Exhibit 12.2

CERTIFICATION

I, Yasunobu Toriyama, certify that:

1.  I have reviewed this annual report on Form 20-F of Nidec Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this annual report;

4.  The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)  omitted in accordance with the guidance of SEC Release No. 33-8238;

c)  evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

5.  The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of company’s board of directors (or persons performing the equivalent function):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date:  August 12, 2005

  /s/   Yasunobu Toriyama

Yasunobu Toriyama

Executive Vice President, Chief Financial and Accounting Officer and Director

EX-1

Exhibit 13.1

CERTIFICATION

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Nidec Corporation (the “Company”) hereby certifies, to such officer’s knowledge, that the Company’s annual report on Form 20-F for the year ended March 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  August 12, 2005

  /s/   Shibenobu Nagamori

Shigenobu Nagamori

President, Chief Executive Officer and Representative Director

EX-1

Exhibit 13.2

CERTIFICATION

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Nidec Corporation (the “Company”) hereby certifies, to such officer’s knowledge, that the Company’s annual report on Form 20-F for the year ended March 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  August 12, 2005

  /s/  Yasunobu Toriyama

Yasunobu Toriyama

Executive Vice President, Chief Financial and Accounting Officer and Director