ANNUAL REPORT

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Asahi Tec Corporation • Headquarters: Japan • Industry: Automotive Components – Cast Auto Parts Segment • Tokyo Stock Exchange ticker: 5606.T • Total Shares Outstanding: 476,717,658 • RHJI ownership as of March 31, 2009: 60.1% (286,314,061 shares) • Contribution price per share (March 23, 2005): JPY 250 • Closing share price on March 31, 2008: JPY 88 • Closing share price on March 31, 2009: JPY 35 Geographic distribution of revenue Overview of Activities Asahi Tec (www.asahitec.co.jp) primarily designs, manufactures and sells ductile iron cast auto parts for truck and construction machinery OEMs, aluminum casting parts for truck and passenger car OEMs and aluminum wheels for automobile OEMs. Asahi Tec also designs, manufactures and sells environmental systems, equipment and development technologies used by municipalities and electrical hardware and equipment used by electricity generators. Revenue by operating segment U.S. 36% Chassis 30% Japan 35% Powertrain 31% Europe 18% Asia (excl. Japan) 6% Americas (excl. U.S.) 5% Devices & Equipment 5% General Casting & Forging Parts 34% Key figures Condensed consolidated income statement for the fiscal year ended March 31 (1) (In millions) JPY EUR 2009 2008 2009 2008 Revenue 218,815 315,768 1,668.2 2,407.3 Gross profit 18,848 29,528 143.7 225.1 Gross margin 8.6 % 9.4 % 8.6 % 9.4 % EBITDA 13,655 24,744 104.1 188.6 EBITDA margin 6.2 % 7.8 % 6.2 % 7.8 % Operating loss (52,294) (25,074) (368.7) (191.2) Loss for the year (23,958) (41,059) (182.6) (313.0) (1) Excluding the effect of the purchase price allocation carried out in connection with the contribution of the ownership interests to the Company at March 31, 2005. Consolidated cash and financial debt for the fiscal year ended March 31 (In millions) JPY EUR 2009 2008 2009 2008 Cash 5,350 6,530 40.8 49.8 Financial debt 79,366 117,457 605.1 895.5 12
LETTER TO SHAREHOLDERS AND BUSINESS REVIEW Despite a significant deleveraging of its balance sheet, unprecedented volume declines forced Asahi Tec’s US subsidiary Metaldyne into Chapter 11. Asahi Tec also suffered from collapsing demand and is likely to breach financial covenants during the fiscal year ending March 31, 2010 Asahi Tec’s consolidated revenue fell by 30.7% from JPY 315,768 million during the fiscal year ended March 31, 2008 to JPY 218,815 million during the fiscal year ended March 31, 2009. The global economic recession had a severe impact on Japan’s export driven economy. Asahi Tec’s Asian activities experienced significant volume declines, particularly driven by decreased export of motorcycles to emerging markets and continuously falling domestic demand for cars and trucks. Despite increased sales of parts for construction machines and electric power transmission equipment, Asian consolidated sales fell by 39% compared to the previous year. In the US, the effect of the downturn was even more devastating. U.S. sales at Asahi Tec’s US based subsidiary Metaldyne fell by 41.4%. Sagging customer confidence and the lack of credit availability resulted in continuously falling demand. Metaldyne’s main customers shut down production for several weeks in an attempt to respond to the contraction of the US auto market that ultimately resulted in Chrysler’s and General Motor’s filing for Chapter 11 bankruptcy protection. During the 2nd and 3rd quarter of the fiscal year ended March 31, 2009, Metaldyne responded to the decreasing sales by continuous adjustment of its cost structure, and was able to significantly deleverage its balance sheet following the successful tender for most of its outstanding senior and senior subordinated bonds with an aggregate principal amount of USD 361.3 million (JPY 35,621 million). Metaldyne reduced its outstanding debt from approximately USD 830.2 million (JPY 82,529 million) at March 31, 2008, to USD 536.3 million (JPY 52,878 million), including the cancellation, effective September 26, 2008, of approximately USD 31.0 million (JPY 3,134 million) of secured subordinated notes pursuant to a debt cancellation agreement entered into between Chrysler Corporation ("Chrysler") and Metaldyne. In addition, upon completion of the tender offer, Chrysler agreed to cancel the 97,098 Class C Preferred shares it held in Asahi Tec with a face value of JPY 6,082 million. The bond tender was financed by a USD 50 million investment from Asahi Tec, funded by the Company’s subscription to newly issued shares of Asahi Tec for JPY 4,917 million, increasing its ownership in Asahi Tec from 45.3% to 60.18%. In addition, certain of Metaldyne’s leading customers provided Metaldyne with USD 60 million funding for the bond tender offer, in the form of loans to Metaldyne. From the total proceeds of USD 110 million, Metaldyne used USD 60.1 million to pay for the tendered bonds. Previously, on July 15, 2008, the Company, via a capital subscription of JPY 1,800 million in Asahi Tec, also funded a cure of Metaldyne’s breach of financial covenants at June 30, 2008. On October 14, 2008, a capital injection of JPY 1,051 million by the Company into Asahi Tec further supported Metaldyne’s liquidity. Throughout the fiscal year ended March 31, 2009, Asahi Tec and Metaldyne increased their efforts to maintain profitability through cost reductions, plant closures, successfully negotiated price revisions and other measures designed to contain the effects of continuously falling order volumes, but the combination of the unprecedented sales decline and increased material prices resulted in a gross profit of JPY 18,848 million for the fiscal year ended March 31, 2009, compared to JPY 29,528 million a year earlier. The operating loss for the fiscal year ended March 31, 2009, of JPY 52,294 million, was negatively impacted by an impairment charge of JPY 49,309 million on certain property, plant and equipment and intangible assets, including goodwill, of Metaldyne in view of its deteriorated financial performance and the uncertainty around its ability to operate as a going concern that existed at March 31, 2009 (1) . Excluding impairment losses for both years, the operating loss for the fiscal year ended March 31, 2009, amounted to JPY 2,985 million, compared to an operating profit of JPY 4,175 million for the previous fiscal year. The impairment losses were partly offset by the gain of JPY 39,768 million on the redemption of bonds following the successful bond tender and the cancellation of debt by Chrysler, resulting in a net loss for the fiscal year ended March 31, 2009 of JPY 23,958 million, compared to JPY 41,059 million last year. Despite Asahi Tec’s continued support and the resulting reduction of Metaldyne’s indebtedness, Metaldyne’s financial performance was heavily affected by car production in the US that continued to fall beyond expectations. Faced with its own challenges, Asahi Tec was no longer in a position to further support Metaldyne, which on May 27, 2009, filed a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code, shortly after Chrysler, one of its main customers, also filed for protection under Chapter 11. Given that its assets and capital structure are completely ringfenced from Metaldyne, Asahi Tec will now focus on its own needs and opportunities. Without Metaldyne, which will be deconsolidated, Asahi Tec projects net sales of JPY 60,200 million and an operating loss of JPY 300 million, based on its management forecast prepared under J-GAAP for the fiscal year ending March 31, 2010. Asahi Tec is likely to breach certain financial covenants under its credit agreements in the course of the fiscal year ending March 31, 2010. Asahi Tec is currently seeking a waiver of covenants from its lenders. In the event that Asahi Tec were not successful in obtaining such a waiver, it would be in default of its obligations under its credit agreements, which would cast significant doubt on Asahi Tec’s ability to operate as a going concern. (1) The total impairment charge recorded in the consolidated financial statements for the fiscal year ended March 31, 2009, amounted to JPY 52,786 million as a result of an additional impairment loss of JPY 3,477 million recorded by the Company on goodwill resulting from the purchase price allocation. 13
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FINANCIAL STATEMENTS FOR THE FISCAL
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PART III CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE The Belgian Co
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CORPORATE GOVERNANCE The following
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CORPORATE GOVERNANCE (1997 to 2000)
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CORPORATE GOVERNANCE INVESTMENT AND
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CORPORATE GOVERNANCE Mr. Fischer ha
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CORPORATE GOVERNANCE OTHER TERMS RH
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CORPORATE GOVERNANCE STATUTORY AUDI
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PART IV SHAREHOLDERS’ INFORMATION
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SHAREHOLDERS’ INFORMATION SHARE P
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NOTES 127
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Co-ordination and Production : IPAC
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ANNUAL REPORT

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