Interim flash Report for Fiscal Year 2006 (Consolidated)

November 14, 2006 issued
Listed company name: Nihon Inter Electronics Corporation Listed stock exchange: Tokyo
TSE code No: 6974

Head office location:
Kanagawa
pref. （ＵＲＬ
http://www. niec.co.jp ）
Representative President (CEO) Name: Takeshi Yasuda
Officer in charge of inquiry

Name: Fumio Inoue, General Manager, Accounting Dept.
TEL: (0463) 84－8015
Date of Board of Directors meeting for closing account: November 14, 2006 Name of parent company: Kyosan Electric Mfg. Co.,Ltd.(Code No: 6742) Voting rights held by parent company: 20.7% Adoption of American accounting principles: None

1. Consolidated financial performance for the first half ( from April 1, 2006 to September 30, 2006 )
(1) Consolidated business performance results
(Note) figures are rounded off to nearest million yen
Sales Operating
income Ordinary
income

Millions of yen ％
Millions of yen ％
Millions of yen ％
1
st
half of FY 2006
1
st
half of FY 2005
18,721
20.1
15,586

(12.6)
1,263

31.3
962 (45.8)
978

29.6
755

(51.0)
FY 2005
33,183 1.0
2,295 (20.5)
1,935 (18.2)
Net income
Net income per share
Diluted net income per share

Millions of yen ％
Yen
Yen
1
st
half of FY 2006
1
st
half of FY 2005
631

49.8
421 (53.4)
20.98
13.49
20.91
13.39
FY 2005
1,130 (12.5)
35.08
34.88

(Note) ①Equity method investment gain (loss): for 1
st
half of FY 2006: - million yen，
for 1
st
half of FY 2005: - million yen, for FY 2005 : - million yen
②Average number of shares outstanding (consolidated):
for 1
st
half of FY 2006: 30,085,618 shares,
for 1
st
half of FY 2005: 31,239,363 shares, for full FY 2005 : 31,270,702 shares
③Change in accounting methods: None
④Percentages(%) appending to sales, operating income, ordinary income and net income are the rates of increase (decrease) compared with the same period of the previous year.( ) of % shows minus %

(2) Consolidated financial position

Total assets
Net equity
Net equity ratio
Net equity per share

Millions of yen
Millions of yen
％
Yen

As of Sept. 30, 2006
As of Sept. 30, 2005
36,203
31,564
11,583
11,144
32.0
35.3
379.59
356.05
As of March 31,2006
32,030
11,883
37.1 378.89
(Note) Number of shares outstanding (consolidated) on 9/30/2006: 30,515,401 shares,
9/30/2005: 31,301,842 shares, 3/31/2006: 31,277,086 shares
(3) Consolidated results of cash flow

Cash flows from
operating activities
Cash flows from
investing activities
Cash flows from
financing activities
Ending balance of cash and
cash equivalents

Millions of yen
Millions of yen
Millions of yen
Millions of yen
1
st
half of FY 2006
1
st
half of FY 2005
(152)
(274)
(787)
(917)
1,318
16
3,407
1,595
FY 2005
2,978
(1,577)
(1,100)

3,089
(4) Items pertaining to scope of consolidation and equity method application
Number of consolidated subsidiaries: 6
Number of non-consolidated subsidiaries applicable to equity method: None
Number of subsidiaries applicable to equity method: None
(5) Changes to scope of consolidation and equity method application: None
Newly consolidated: None and disconsolidated: None Newly added equity method subsidiaries: None, and removed from equity method subsidiaries: None

2. Consolidated forecast for FY 2006 ( from April 1, 2006 to March 31, 2007 )

Sales
Ordinary income
Net income
Millions
of
yen
Millions of yen
Millions of yen
Full FY
38,000
2,300
1,400
(Note) Forecast of net income per share for full FY 2006: 45.88 yen

Note: Please bear in mind the forecasted figures shown above are based on the information that is available at the
moment when the report is written and made on the assumptions that are considered rational but include a
number of risks and uncertainties that could materially affect the business performance. Actually realized performance etc. might be materially differed from the forecasted figures contained in this report, depending on
business and market environment changes and so on.

1
Group Overview
The Nihon Inter Electronics Group (“The Company”) consists of the Nihon Inter Electronics Corporation (“Nihon Inter” or “NIEC”), six consolidated subsidiaries (one domestic subsidiary, five overseas subsidiaries), two affiliates and conducts its business activities with a primary focus on the manufacturing and sale of power semiconductors. Products and merchandise handled by Nihon Inter, its subsidiaries and affiliates as well as their respective functions are as follows:
Segment
Principal products and
merchandise
Company
Schottky barrier diodes (SBD), and
fast recovery epitaxial diodes
(FRED), rectifying diodes for small power applications
Nihon Inter (mfg., sales)
IEC (mfg., sales)
PIEC (mfg.) IES (sales)
HIEC (sales)
NISH (mfg., sales)
Semiconductor
discrete devices
Rectifying diodes for medium to large power applications,
thyristors, others
Nihon Inter (mfg., sales)
Products
Semiconductor-app
lied products
Power modules, stacks
Nihon Inter (mfg., sales),
Inter Unit Corp. (mfg.,
sales), NISH (mfg., sales)
Merchandise Semiconductors,
electronic
components, LCD devices, power sources, others
Nihon Inter (sales)
Kyosan Electric (supply)
The following is a flow chart of the Company’s operations.
A ffilia te* K y o s a n
O t h e r n o n -G r o u p C o m p a n y
C o n s o lid a te ds u b s id ia r y* IU C
P ro d u c t
M e r c h a n d is e
O v e rs e a s tr a n sa c tio n p a r tn e r s
D o m e s tic tra n sa c tio n p a r tn e rs
C o n so lid a te d
s u b sid ia rie s
* IE S
* H IE C
C o n so lid a te d
su b sid ia rie s
* IE C
* P IE C
N IE C
C o n so lid a te d
su b sid ia ry
* N IS H
M e r c h a n d is e
P r o d u c t
P r o d u c t
P r o d u c t
P r o d u c t
M e r c h a n d is e
P r o d u c t
M e r c h a n d is
P r o d u c t, m e r c h a n d is e
P r o d u c t
P r o d u c t
C o m p o n e n t
W o r k -in -P r o c e s s p r o d u c t
M e rc h a n d is e
P r o d u c t
C o m p o n e n t
C o m p o n e n t
C o m p o n e n t
C o m p o n e n t
C o m p o n e n t
P r o d u c t
*IEC: International Electronics Corp., Ltd.

*IES: Inter Electronics Singapore Pte. Ltd.
*PIEC: Philippine Inter Electronics Corporation
*HIEC: Hong Kong Inter Electronics Co.
*NISH: Nihon Inter Electronics (Shanghai) Co., Ltd. *IUC: Inter units Corporation
*Kyosan: Kyosan Electric Mfg. Co., Ltd.

2
Management Policies

1. Basic Management Policy
Nihon Inter Electronics Corporation (NIEC)’s basic guiding principle is to fulfill the
expectations of its shareholders and all other stakeholders. With a focus on markets and
applications with high growth potential, Nihon Inter is one of the leaders in its industry on
development, manufacture, and sales of power semiconductors and devices that enable
high-efficiency power conversion and power management.
Nihon Inter’s mission is to contribute to society in terms of energy conservation and
environmental protection by efficient use of electricity through power management solutions.
Therefore, the Company’s basic management policy is to develop industry-leading
high-value-added products while continually augmenting its cost competitiveness, improving
financial performance, and taking the leadership role in its industry.

2. Basic Policy Regarding Profit Sharing
One of our basic policies is to maintain stable distribution of our dividends to our
shareholders. With a view of strengthening our competitive position in the power management
market, we plan to effectively utilize our retained earnings towards reinforcement of our
business infrastructure through research and development and capital expenditures. At the
same time, we shall endeavor further to meet the expectations of our shareholders by
distributing appropriate dividends, commensurate with our business results.

3. Targeted Management Benchmarks
Having identified, as our targeted management benchmarks, sales increase rate, gross
margin rate, ratio of net income to total assets (Return on Assets), we set respective targets for
these benchmarks and are striving to achieve such targets every business year.

4. Mid- and Long-term Management Strategy
The efficient use of electricity is a global issue. Environmental and social issues are
preventing developed economies from creating the additional supply required to meet the
growing demand and infrastructure development costs are prohibitive in the developing
economies. In addition, today’s electronics need to use electricity more efficiently to improve
features and functionality. The need to use electricity more efficiently is a trend that will
become more critical with the passage of time.

3
Over the last several years, power management companies have spearheaded the effort to
use electricity more efficiently. Power management is a group of technologies that work
together to refine electricity into a format that can be consumed more efficiently. Nihon Inter is
a power management company and holds the #1 market share in SBD, a key building block
technology in power management.

Entering into the last term of our current 3-year plan, we continue to emphasize the “Focus
on the Market” principle. The “Focus on the Market” principle entails identifying the markets
that have the most potential for Nihon Inter and our customers and then focusing our
resources on that market to become a leader in key power management applications.

We have identified 3 long-term power management market trends to focus our 3-year plan on
. Progress in IT convergence and digitalization for consumer use appliances,
. The electronification of the automobile,
. Development of industry use machineries and white goods home appliances functioned with
inverters for more saving enegyrequirement.
We have organized our company to support these trends and focus our sales, manufacture and
R&D activities to continuously and profitably improve our position in these markets.

In order to support the “Focus on the Market” principle, we have established a matrix
organization. The matrix includes the traditional functional reporting relationship but then
organizes teams of managers from each functional organization such as production, sales and
R&D divisions to focus on our selected markets. These teams work together to quickly react to
individual market conditions and then ensure that we are maximizing our position in that
market. The teams’ incentive programs are based upon achieving agreed-to targets in the
market segment.

5. Company’s goals and issues to be addressed
The Company has been focusing on upgrading its position in the industry within IT and
digital home appliances, automotive and related products, industrial machinery and clean
energy markets. Under each of those broad market categories, we then further select specific
applications with expectable growth potentials to target and carry out our extracted strategies.

4
Our company’ important goals include:
To increase our share of SBD/FRED and other discrete devices in selected applications
To increase our share of power management modules in selected applications
To improve manufactured product gross margin rate
To improve cash flow of our merchandise business
To improve ROA

For consumer-use products, we set the expansion of market share that stems from full
fledged mass production of 8-inch wafer fab. and continuous cost reduction as the highest
priority. By reinforcing stable product provision system to satisfy the customers’ demand and
deliver request and increasing the productivity of current manufacturing lines at the same time,
we target top of worldwide market share in SBD product.
For industry-use products, we could direct sales increase to Japanese companies which have
entered into Chinese market by inception of manufacturing and selling in Nihon Inter
Electronics (Shanghai) Co., Ltd. Moreover, regarding hybrid car market that is expected to
rapidly grow from now on, we concentrate our resources and exert ourselves to develop new
products by organizing 2 in 1 project team with our clients.
For merchandise business, we aim at enlarging cash flows by contracting collection period in
our targeted audio, video, amusement, automobile, medical and security markets and
compressing inventory. As to our own developed merchandise business with high added value,
since the expansion of our focus market has been recognized, we strengthen the development
of new products based on needs and sales system.
In addition, being as a part of our BPI (business process innovation ) activity, we have been
reviewing overall supply chain management system inside all Nihon Inter Group. By sharing
the information through one integrated network with domestic and overseas group companies,
precisely catching global market trends, we will be working on the construction of more
efficiently structured supply chain system to match the market requirements.

6. Major shareholder(s) etc. information
As of Sept. 30, 2006

Name of companies
Attribute
Shares of holding
voting rights
Listed at stock
exchange etc.
Kyosan Electric
Mfg.Co., Ltd
Major
shareholder
20.7% Tokyo Stock Exchange
Osaka Stock Exchange