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, 2004

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,  2004, 65,003,538 shares of common stock were outstanding, including 1,158,400 shares represented by 4,633,600 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.	18
Item  5.	Operating and Financial Review and Prospects.	46
Item  6.	Directors, Senior Management and Employees.	79
Item  7.	Major Shareholders and Related Party Transactions	84
Item  8.	Financial Information	85
Item  9.	The Offer and Listing.	86
Item 10.	Additional Information.	88
Item 11.	Quantitative and Qualitative Disclosures about Market Risk.	100
Item 12.	Description of Securities Other Than Equity Securities.	105
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies.	105
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds.	105
Item 15.	Controls and Procedures.	105
Item 16A.	Audit Committee Financial Expert.	106
Item 16B.	Code of Ethics.	106
Item 16C.	Principal Accountant Fees and Services.	106
Item 16D.	Exemptions from the Listing Standards for Audit Committees.	107
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchases	107
PART III
Item 17.	Financial Statements	108
Item 18.	Financial Statements	108
Item 19.	Exhibits.	108
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 tables include selected historical financial data as at and for the years ended March 31, 2000 through 2004. The data for the years ended March 31, 2000 through 2004 in the first table is derived from our audited consolidated financial statements prepared in accordance with the U.S. GAAP. The data for the years ended March 31, 2000 through 2004 in the second table is derived from our audited consolidated financial statement prepared in accordance with Japanese GAAP. You should read the selected financial data below in conjunction with Item 5 of this annual report and our audited consolidated financial statements and information prepared in accordance with U.S. GAAP which are included in this annual report.

U.S. GAAP Selected Financial Data

	Year ended March 31,
	2000	2001	2002	2003	2004	2004
	(Yen in millions and U.S. dollars in thousands, except number of shares outstanding and per share amounts)
Income statement data:
Net sales	¥ 137,643	¥ 172,710	¥ 193,332	¥ 231,836	¥ 277,497	$ 2,625,575
Cost of products sold	109,936	144,594	159,442	187,306	218,189	2,064,424
Selling, general and administrative expenses	9,675	12,810	17,691	21,302	28,542	270,054
Operating income	13,590	10,063	10,472	16,404	22,015	208,298
Income before provision for income taxes (1)	7,058	15,138	11,477	10,911	19,639	185,817
Net income	3,707	10,711	6,580	10,680	16,089	152,228
Balance sheet data (period end):
Total assets	¥ 158,045	¥ 216,999	¥ 257,911	¥ 257,932	¥ 443,886	$ 4,199,886
Short-term borrowings	14,179	43,937	58,395	64,597	86,636	819,718
Current portion of long-term debt	2,846	3,839	15,365	8,951	2,653	25,102
Long-term debt	29,518	30,888	21,360	16,388	45,025	883,887
Total shareholders’ equity	66,389	78,575	85,475	88,557	110,046	1,041,215
Common stock	26,358	26,455	26,469	26,485	28,995	274,340
Number of shares outstanding	31,721,969	63,549,008	63,563,653	63,574,729	65,017,898	65,017,898
Per share data:
Net income per share-basic (2)	¥ 58.59	¥ 168.72	¥ 103.53	¥ 168.01	¥ 251.14	$ 2.38
Net income per share-diluted (2)	55.57	159.92	98.85	159.82	241.53	2.29
Cash dividends declared per share	15.00	15.00	27.50	20.00	30.00	0.28

Notes:

(1) Under U.S. GAAP, income before provision for income taxes does not include equity in net income/losses of affiliated companies.

(2) Calculated using the average number of shares outstanding for the period (excluding shares held by Nidec). All per share amounts have been restated to reflect the retroactive effect of the 2 for 1 stock split that took effect on May 19, 2000. More detailed information regarding diluted shares outstanding is included in Note 19 in our consolidated financial statements included in this annual report.

4

Japanese GAAP Selected Financial Data

	Year ended March 31,
	2000	2001	2002	2003	2004	2004
	(Yen in millions and U.S. dollars in thousands, except number of shares outstanding and per share amounts)
Income statement data:
Net sales	¥ 138,505	¥ 249,238	¥ 281,069	¥ 298,641	¥ 329,003	$ 3,112,906
Cost of sales	110,849	204,410	229,433	238,851	256,879	2,430,495
Selling, general and administrative expenses	13,230	28,795	35,428	36,928	41,044	388,343
Operating income	14,425	16,033	16,206	22,861	31,078	294,049
Income before income taxes (1)	8,404	17,152	11,717	12,712	22,809	215,810
Net income	6,079	9,956	6,461	6,485	11,448	108,317
Balance sheet data (period end):
Total assets	¥ 161,309	¥ 305,677	¥ 299,013	¥ 305,318	¥ 433,706	$ 4,103,567
Short-term borrowings	13,650	57,341	59,428	65,496	86,944	822,632
Current portion of long-term debt	2,463	4,182	13,695	8,376	1,650	15,612
Long-term debt	28,724	30,061	19,326	14,466	42,282	400,057
Total shareholders’ equity	77,483	82,175	89,551	90,142	104,681	990,453
Common stock	26,358	26,454	26,468	26,485	28,994	274,331
Number of shares outstanding	31,721,969	63,549,008	63,563,653	63,574,729	65,017,898	65,017,898
Per share data:
Net income per share-basic (2)	¥ 192.18	¥ 163.65	¥ 101.67	¥ 100.08	¥ 176.20	$ 1.67
Net income per share-diluted (2)	180.37	154.86	97.09	95.66	169.74	1.61
Cash dividends declared per share	30	20	25	25	30	0.28

__________

Notes:

(1) Under Japanese GAAP, income before income taxes includes equity in net income/losses of affiliated companies.

(2) Calculated using the average number of shares outstanding for the period (excluding shares held by Nidec).

There are differences between Japanese GAAP and U.S. GAAP. They primarily relate to the statement of cash flows, disclosure of segment information, the scope of consolidation, accounting for derivatives, deferred income taxes, accounting for investments in certain equity securities, accounting for lease transactions, accrued compensated absences, accounting for employee retirement and severance benefits, accounting for the impairment of long-lived assets, earnings per share and comprehensive income. Also, under Japanese GAAP, a restatement of prior years’ financial statements reflecting the effect of a change in accounting policies is not required.

We had eighteen and one more consolidated companies under the Japanese GAAP than under the U.S. GAAP as of March 31, 2003 and 2004, respectively.

Over the years, such difference in the scope of consolidation has caused numeric and descriptive discrepancies between the information in our separate financial statements conforming to respective GAAPs. The most notable example was the financial results for Nidec Copal Corporation, Nidec Copal Electronics Corporation and their subsidiaries unreported in the U.S GAAP-based statements, despite their supposedly substantial impacts on Nidec's consolidated fiscal revenues.

In view of more comprehensible and accountable financial reporting, we decided to unify our accounting basis and chose the U.S GAAP as our single standards to comply with. In this context, we increased our stake in Nidec Copal Corporation, Nidec Copal Electronics Corporation and their subsidiaries to over fifty percent each in January and February 2004, making their financial results reportable under the U.S. GAAP.

Reflecting the timing of their consolidation, the descriptions of these companies' fiscal results in this annual report are limited to those for mainly February and March 2004. From the year ending March 31, 2005 onward, our consolidated financial reporting is reflecting the full-year results for these newly consolidated companies.

5

We acquired approximately 40% share in Sankyo Seiki Mfg. Co., Ltd. in October 2003and increased our share to over 50% in February 2004. As a result, February and March results included in this annual report.

Fluctuations in exchange rates between the Japanese yen and U.S. dollar and other currencies will affect the U.S. dollar and other currency equivalent 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 ¥105.69 per $1.00 which was the approximate exchange rate in Japan on March 31, 2004.

	High	Low	Average	Period-end
Year ended March 31,
2000	¥124.45	¥101.53	¥110.02	¥102.73
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
Calendar period
January 2004	107.17	105.52	106.27	105.84
February 2004	109.59	105.36	106.71	109.26
March 2004	112.12	104.18	108.52	104.18
April 2004	110.37	103.70	107.66	110.37
May 2004	114.30	108.50	112.20	110.18
June 2004	111.27	107.10	109.58	109.43

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.

As of July 21, 2004, the noon buying rate was ¥110.10 per $1.00.

B. Capitalization and Indebtedness.

Not applicable.

C. Reasons for the Offer and Use of Proceeds.

Not applicable.

6

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. For the year ended March 31, 2002, sales to our largest customer, Seagate, were approximately 16% of total net sales and for the year ended March 31, 2003, sales to our largest customer, Seagate, were approximately 16% of total net sales. For the year ended March 31, 2004, sales to our largest customer, Seagate, were approximately 14% of total net sales. Sales to our six largest customers represented approximately 49%, 41% and 41% of our net sales for the years ended March 31, 2002, 2003 and 2004, respectively. The number of hard disk drive manufacturers is limited and, historically, orders from a limited number of these manufacturers accounted for a substantial portion of our revenues. For example, over 10% of our net sales of our hard disk drive spindle motors account for one custo mer, one customer and two customers during the years ended March 31, 2002, 2003 and 2004, respectively.

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

Our customer base is also highly concentrated in our other product markets such as brushless DC motors, fans, machinery and other products. Our accounts receivable are likewise concentrated. At March 31, 2002 six customers represented ¥18.5 billion, or 40%, of the gross accounts receivable. At March 31, 2003, six customers represented ¥19.7 billion, or 39%, of our gross accounts receivable. At March 31, 2004, six customers represented ¥23.6 billion, or 24%, of our gross accounts receivable. 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. Such fluctuations could materially harm our business, financial condition and operating results.

7

We depend on the computer industry, 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 depends on sales of computers and computer peripherals. Revenue from hard disk drive spindle motors accounted for 48.5%, 42.2% and 38.5% of our net sales for the years ended March 31, 2002, 2003 and 2004, 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 capital equipment and product development.

The computer market grew substantially in the late 1990s and then experienced a significant downturn from which it is beginning to recover. The downturn was characterized by lower product demand and accelerated reduction of product prices. These conditions prompted restructuring of operations by hardware manufacturers, including makers of hard disk drives. For example, during 2001, Fujitsu stopped manufacturing hard disk drives for desktop computers to concentrate on the manufacturing of hard disk drives for servers and laptop computers. Our sales to Fujitsu, which represented 5.6%, 3.7% and 3.2% of our total net sales for the years ended March 31, 2002, 2003 and 2004, respectively, were comprised of various products including spindle motors for desktop computers, as well as spindle motors for use in non-desktop computers such as servers or notebook computers. The Fujitsu restructuring or similar moves by other manufacturers in the future could have a material negative impact on our results of operations if we are unable to increase spindle motor sales to other hard disk drive manufacturers or increase sales to Fujitsu 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 ¥19.6 billion at March 31, 2002, ¥17.0 billion at March 31, 2003 and ¥45.2 billion at March 31, 2004. The inventory at March 31, 2004 substantially increased due to an increase of consolidated subsidiaries such as Nidec Copal Corporation, 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 have a material adverse effect on our business, financial condition and results of operations.

8

We are facing downward pricing pressure in our main product markets and this decline could reduce our revenues and gross margins

We expect downward pricing pressure in our main product markets to continue in the future. 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 rose by approximately 14% during the years ended March 31, 2002, but fell by approximately 8% and 9% during the years ended March 31, 2003 and 2004, 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 spi ndle 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, or 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.

9

We may be unable to commercialize new product lines or deliver our customized products to satisfy specific customers’ needs in a timely manner and in sufficient quantities, which could damage our reputation and future 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, 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 into these new products and markets.

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 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.

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; and

•

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

Since 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 against any decrease in revenue as a result of fluctuations in product demand or otherwise might not be offset by a reduction in expenses and could have a material adverse effect on our business, financial condition and results of operations.

10

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 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 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 business’ 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.

On October 1, 2003, we acquired approximately 40% share of Sankyo Seiki Mfg. Co., Ltd. in the form of capital alliance and subsequently increased our share through the additional purchase of their new shares and the purchase of their shares in the market. As of March 31, 2004, our ownership in Sankyo Seiki Mfg. Co., Ltd. accounted for 51.02% of their total outstanding shares issued.

Sankyo Seiki Mfg. Co., Ltd. is in the course of business reconstruction. Failure or delay in the recovery of the company could have an adverse effect on our business, financial condition and results of operations.

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 continue to 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.

11

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 us against claims of infringement of the intellectual property of others and such claims could, if they were to result in damage awards against us and 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, 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 and proprietary know how 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 68.8%, 64.4% and 61.0% of our consolidated net sales during the years ended March 31, 2002, 2003 and 2004, 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. 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 fluctuatio ns in the value of foreign currencies as compared to the Japanese yen. Nevertheless, we remain exposed to the effects of foreign exchange fluctuations.

12

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 thirteen operating segments that we report in our consolidated financial statements: Nidec Corporation, Nidec Singapore Pte. Ltd., Nidec Electronics (Thailand) Co., Ltd., Nidec Philippines Corporation, Nidec America Corporation, Nidec Power Motor Corporation, Nidec (Dalian) Limited, Nidec Shibaura Corporation, Nidec Tosok Corporation, Nidec Taiwan Corporation, Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. 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 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. In addition, year-end closing adjustments and other items are not included in segmental 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 in the future and face risks including any negative impacts of Severe Acute Respiratory Syndromes, or SARS, from 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 othe rwise, for us to conduct our business there. Dependence on overseas production, even in under-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;

•

trade restrictions or changes in tariffs;

•

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;

•

relatively limited protection for intellectual property rights in some countries;

•

potentially adverse taxes; and

•

negative impact of SARS.

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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 be significant, which would increase our cost of production and 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 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, 2004, there were 65,003,538 shares of our common stock issued and outstanding, including 11,706,942 shares beneficially owned by our President and CEO, Mr. Shigenobu Nagamori, representing 18.0% 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, and we may also pay for interests in additiona l 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 t o exercise the right to require 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 ou r expectations expressed in these 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 diseases spread widely in the countries where we have production plants such as SARS.

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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 88 subsidiaries located in 13 countries, and 7 affiliated companies located in 5 countries. As of March 31, 2004, we had 59,140 employees worldwide, 87.3% 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 included three companies: Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd., in our scope of consolidation under the U.S. GAAP by acquiring over 50% of their outstanding shares. Our share in 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 business:

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 the 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	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 is a leading manufacturer of stepless automatic transmission mechanisms for automobiles.

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Year	Event
1997	Shimpo Industries Co., Ltd., currently Nidec-Shimpo Corporation, acquired 90.0% of the outstanding shares of Read Corporation, currently Nidec-Read Corporation, from Nippon Steel Chemical Co., Ltd. We currently own 18.9%, directly and our affiliate, Nidec-Shimpo, owns 40.0% of Nidec-Read. 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	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%. 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 increased our ownership of Nidec Copal Electronics to 40.0%. 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. 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, 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.
2003	Nidec-Shimpo became a wholly-owned subsidiary of Nidec by way of share exchange, effective as of October 1, 2003.
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%.We increased our ownership of Nidec Copal Electronics to 51.3% in January 2004 and increased our ownership of Nidec Copal to 51.0% in February 2004.

For the years ended March 31, 2004, 2003 and 2002, our capital expenditures, as shown in our consolidated statements of cash flows for those years, were ¥22,631 million, ¥21,715 million and ¥19,270 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 nor any significant divestitures currently being made.

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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, 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. For the year ended March 31, 2002, net sales of hard disk drive spindle motors amounted to ¥93,748 million, or 48.5% of total net sales of ¥193,332 million. We have become one of the first spindle motor manufacturers to commence mass production of next-generation hard disk drive spindle moto rs 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; 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 in subsidiary form 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.

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.

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Basic Characteristics of Electric Motor

The following basic characteristics of electric motor 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 that have fueled the communications and information technology revolution. In fact, electric motors literally drive these products. Electronic products in all markets are becoming increasingly sophisticated, offering greater “intelligence” 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 o f electricity, coupled with government regulations and environmental concerns, have caused an increased demand for more energy-efficient motors. All these trends are contributing to the 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 refers to the amount of force that must be applied to cause a rotating object to turn at a given speed.

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 and 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 voltage 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 that the motor can achieve 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 floppy disk drives. Also 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 as new generations of these products offer more sophisticated 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 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 compet itive enough to encourage more 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 0.01 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 design’s point of view, 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 motor can rotate at 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.

Customers have evaluated the reliability of fluid dynamic bearing technology and made a decision to switch to this technology from conventional ball bearing technology. Currently, over 77% of our hard disk drive spindle motors production is mounted with fluid dynamic bearings.

Markets for DC Motors

Markets for Small Precision DC Motors

Small precision motors have many specific applications across a broad spectrum of industries. Though invisible for the most part, since they are incorporated into other equipment, they serve a vital function. Small precision DC motors currently have five major end uses:

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computers and office equipment;

•

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

•

motor vehicles;

•

heating and cooling machinery; and

•

various industrial machines.

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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 leading the way, followed by audio-visual equipments, home appliances, other consumer products and heating and cooling applications. The industrial machinery sector also did well, responding to an increase in capital investment. From late 2000 until recently, there was a significant deterioration of economic conditions, particularly 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 economic conditions have stabilized and there has also been an increase in the range of applications, such as mobile phones and digital cameras, for our small precision DC motors 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 that 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 access to large volumes of information faster than other types of drives. Hard disks are also at substantially lower cost 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.

Currently, hard disk drives, which incorporate our motors and other components such as pivot assemblies, comprise the largest sector of the information storage industry. 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 operations. 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.

•

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.

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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. As a result, new generations of consumer electronics, such as personal digital assistants, digital video recorders, digital cameras, MP3 players and cellular telephones are expected to incorporate hard disk drives for data storage and retrieval functions. Hard disk drives are getting to be used in other non-computer devices, such as home video game consoles, and advanced television set-top boxes that retrieve audio and video data and store the data locally on these devices for playback. These trends are expanding the market scope for hard di sk drives from enterprise, desktop and portable computers to new consumer and home entertainment devices.

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 9.4 gigabytes of information, or over fourteen times the amount of current CD-ROMs. DVD video has already accepted as a new medium for home video distribution. We believe the DVD video format is replacing the VHS format over time as 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 particular, the market for DVD-R/W is rapidly growing for the 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, extend the operating life of the fan.

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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 believe that we are the largest supplier of the fans used in home video game consoles produced by 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.

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 longer life. For mid-size brushless DC motors in power steering systems, we expect steady market growth in Europe, 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, we believe that they are well suited for use in commercial buses and vehicles where air conditioners are used heavily. Demand may also grow in the luxury car market because air conditioning systems using brushless DC motors can cool an automobile more quickly and efficiently.

Market Environment for Machinery

Products in this realm 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 return of drive for capital investment primarily in the fields of information technology in and outside of Japan. Increased demand set in 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.

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While fundamental conditions for this market segment remain fluid, we expect the current upward trend will basically continue in view of increased capital investments by major Japanese companies and revitalization of the world's information technology market.

Market Environment for Others

The Others segment consists of precision products used in multiple application fields, ranging from optical devices, auto parts, industrial equipment, medical equipment to communications equipment. Products in this segment include camera shutters, optical pickup units, plastic lens, pivot assemblies, trimmer potentiometers, encoders, switches, polygon scanners, and a variety of precision plastic-mold products. Overall, markets for these products have been steadily growing as indicated by our segmental sales increase for the year ended March 31,2004. We expect demand for our camera shutters and other optics-related components will remain vibrant, with the buoyant digital components market in the background. We also anticipate a continued increase in demand for various electronic circuit components, in view of the slow but steady recovery in domestic capital investment and global semiconductor productio n during the term.

Our Business Strategy

Our goal is to achieve and maintain high growth, profitability, and our 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.

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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 expect ongoing refinement of our drive technologies for spindle motors and other motors to improve further 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 greater track densities for greater data storage.  We believe that conventional ball bearing technology has reached its limited in terms of speed, and thus the market for hard disk drive spindle motors is now undergoing a fundamental shift in favor of the new technology.  We believe this new technology provides an opportunity to expand our share of the spindle motor market even further.  Accordingly, 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. While having elevated the quality of our motors to new heights in step with today's drastic 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 be aring 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.  These are designed to be embedded into our fluid dynamic bearing spindle motors for hard disk drives purposely 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.

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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 ever-sophisticated software applications has increased data storage needs and creates growth opportunities We will continue to diversify markets and the customers we serve and the products we produce based on growth potential and ability to capitalize on our technological and manufacturing capabilities. We believe this will reduce our dependence on any single customer or group of 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;

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CD-ROM drives;

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CD-R/W drives;

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DVD-ROM drives; and

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DVD-R/W drives.

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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.

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Pursue mergers and acquisitions that will fuel future 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 burden or lack of marketing and/or management strength.  In addition, as we are now in a position of increasing strength, we are able to target companies that do not suffer from these difficulties. Following an acquisition, we see k to improve its 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 and cost-conscious design and other efficiency measures such as shifting production to relatively lower-cost locations overseas, or to locations closer to customers, expanding the percentage of components produced in-house and improving our cost efficiency through achieving the economy of scale by increasing the production and sales of hard disk drive spindle motors to other consumer appliance and other consumer products manufacturers outside the PC industry. We believe that the shift in production to fluid dynamic bearing spindle motors will ultimately help us lower costs further since we will not need to purchase ball bearings from outside suppliers. In addition, we believe that the ability to lower prices for our products will help increase our market share in low-end product markets and increase sales to electronics makers in Asia, particularly Taiwan.

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Develop a strong presence in key regional markets to anticipate and respond to customer needs. We have consistently sought 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 other 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 likeli hood that we will become a customer’s primary supplier of motors. In Europe and North America, our sales offices are also used to monitor market trends in our customers’ devices.

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Our Principal Products, Our 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, 2002, 2003 and 2004:

		Yen in millions			U.S. dollars in thousands
		For the year ended March 31			For the year ended March 31, 2004
		2002	2003	2004
Net sales:
	Small precision motors:
	Hard disk drive spindle motors	¥ 93,748	¥ 97,717	¥ 106,919	$ 1,011,628
	Other small precision brushless DC motors	21,657	25,583	34,138	323,001
	Small precision brush DC motors	2,539	3,280	5,372	50,828
	Brushless DC fans	24,523	27,395	26,047	246,447
	Sub-total	142,467	153,975	172,476	1,631,904
	Mid-size motors	36,252	37,479	32,574	308,203
	Machinery and power supplies	7,693	22,555	31,240	295,582
	Others	6,920	17,827	41,207	389,886
	Consolidated total	¥ 193,332	¥ 231,836	¥ 277,497	$ 2,625,575

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 well. As shown in the table above, our net sales of hard disk drive spindle motors were ¥93,748 million for the year ended March 31, 2002 and ¥97,717 million for the year ended March 31, 2003. For the year ended March 31, 2004, our net sales of hard disk drive spindle motors, including fluid dynamic bearing motors, amounted to ¥106,919 million, representing 38.5% of total net sales.

We currently have nine customers for our hard disk drive spindle motors. Almost all of these customers are major hard disk drive manufacturers. They are Seagate, Maxtor, Western Digital, Hitachi GST, a joint venture between Hitachi and IBM, Fujitsu, Toshiba, Samsung, GS Magic and Cornice. For the year ended March 31, 2002, sales of hard disk drive spindle motors to the top five customers constituted over 42% of our net sales. For the year ended March 31, 2003, sales of hard disk drive spindle motors to the 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 the top five customers constituted over 36% of our net sales. For the year ended March 31, 2004, Seagate, the world’s largest disk drive manufacturer, represented 14.0% of our net sales with ¥38,909 million. For the year ended March  ;31, 2004, each of Seagate and Hitachi GST, with ¥30,664 million, represented over 10% of our net sales. We currently supply Seagate, our largest customer, with most 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.

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Currently, there are four major producers in the world of spindle motors for hard disk drives, who together account for almost all of the worldwide market. While we face competition from Minebea, JVC and Matsushita Kotobuki, particularly in the 2.5-inch and 3.5-inch hard disk drive motor segments, we currently have a share more than majority of the hard disk drive spindle motor market. 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 have adopted fluid dynamic bearing spindle motors. Most 2.5-inch hard dis k 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 currently dominate 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 – Victor Company of Japan, Matsushita Kotobuki 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 but we no longer expect them to be engaged in mass production of fluid dynamic bearing motors because they sold their fluid dynamic bearing production facili ties 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 even 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. 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.

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 and ¥34,138 million for the year ended March 3 1, 2004. The market trend for slim optical disk drive units, usually loaded 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 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.

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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 such 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 up to eleven million motors per month during the year ended March 31, 2004. 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 new 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 and ¥26,047 million for the year ended March 31, 2004.

Customers for our brushless DC fans include manufacturers of central processing units, computers and computer peripherals, laser printers, photocopy machines, projectors, audio/visual equipment, household appliances, game consoles, telecommunications equipment, automobile seats and automobile air conditioners. In 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 major three game console manufacturers. In Japan, our primary competitors for brushless DC fans are Ma tsushita Electric, Sanyo Denki and Minebea. We also face competition from Rapst 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.

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.

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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 and 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

Our machinery 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.

These markets experienced sluggishness up until recently, but are now experiencing a resurgence in activity.

Among “Other” products, in particular automotive parts manufactured by Nidec Tosok Corporation have increased in sales due to the recently active automobile market. 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 the favorable environments of the recording type and thin model type for PCs. Electronic parts of Nidec Copal Electronics Corporation have progressed favorably against the backdrop of increased demand for capital investment related to telecommunications equipment, broadcasting equipment and semiconductor manufacturing equipment.

In January and February 2004, Nidec Copal Corporation, Nidec Copal Electronics Corporation, 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. We expect these segments will account for considerable portion from next year.

Sales

We regard speedy response as the most important aspect of service, and 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, 2004, we had 83 sales and marketing offices in Japan, 15 in the United States, 2 in Europe and 25 in the rest of Asia.

In Japan, products are mainly sold to customers directly through Sales Departments which employed 966 staff as of March 31, 2004, and some products are sold through certain 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 quickly respond to changes in the market.

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Overseas, generally, products are sold to customers through subsidiaries and affiliates. In the United States and Canada, a portion of our products are sold through sales representatives.  In Europe, mainly, products are directly sold to customers through sales subsidiaries. In Southeast Asia, such as Singapore, China, Hong Kong, Taiwan, and South Korea, sales subsidiaries responsible for the area directly sell products to customers. As for manufacturing subsidiaries in Southeast Asia, such as Singapore, Thailand, Taiwan, the Philippines, and China, products are generally sold through parent companies, however, 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.

The following table presents a breakdown of total revenues by geographic market for the three years ended March 31, 2002, 2003 and 2004:

	Yen in millions			U.S. dollars in thousands
	For the year ended March 31			For the year ended March 31, 2004
	2002	2003	2004
Sales and operating revenue:
Japan	¥97,602	¥126,904	¥149,392	$1,413,492
U.S.A.	7,487	7,006	5,378	50,885
Singapore	48,114	46,706	39,056	369,534
Thailand	17,112	23,333	36,610	346,390
The Philippines	5,220	3,607	2,230	21,099
Other	17,797	24,280	44,831	424,175
Consolidated total	¥193,332	¥231,836	¥277,497	$2,625,575

Because our hard disk drive spindle motors are components used in information technology equipment and the market for these products is subject to rapid technological change, it is critical to provide in-depth support, including location of 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. The rapid acquisition of information and action by our Sales Department enables our Development and Production Departments to respond quic kly, so that products meeting customer requirements can be swiftly launched.

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 each of our products by reinforcing motor related technology and application engineering through an M&A strategy. As a result, we have been successful in expanding sales and profits by developing new markets and demand. Our operations have been divided into the following four segments and we will pursue ever-larger scale group management by exerting a wide-ranging synergy effect through technical exchanges across each field. While development and design of each operation 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 general policy of producing products close to the production centers of our customer s. While some mid-size motors are produced in Japan, production in Thailand and China has recently increased in terms of cost superiority, while machinery is still being produced mostly in Japan. The details are as follows.

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Small Precision Motors

We are producing most of the small precision motors, such as spindle motors for HDDs, brushless DC motors, fan motors in our overseas manufacturing subsidiaries in Thailand, the Philippines, Singapore, Vietnam and China. In addition, we have established a joint venture with NTN Corporation in China in August 2002. The joint venture has been increasing its production capacity to approximately 3 million pieces per month as of March 31, 2004 and plans to further increase it to 6 million per month by December 2004. These production operations in Asia have brought us particularly significant benefits in terms of cost reductions in relation to such factors as capital expenditure, labor costs and taxes. This has an advantage in that while we can provide sales and engineering services where our customers design their products, we can locate production operations close to our customer production centers. Overs eas operations also allow us to reduce the cost of production, sales and purchase, and provide global access to the latest industry information. There are subsidiaries manufacturing component parts among our manufacturing subsidiaries in Thailand and the Philippines, which supply component parts to other production bases, helping reduce the costs of the entire group. We have established research and development centers in Japan, which provide prototype and mass production functions in order to create products with high added values. In particular, our technical development centers in Kyoto, Shiga, Nagano and Tottori have been continuously 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 will maintain close collaboration with overseas plants and provide production support.

Mid-Size Motors

In addition to the pursuit of safety and comfort, design and development of the following products have been conducted in our Technical Development Center in Shiga and manufacturing subsidiaries in Fukui and Fukuoka: mid-size brushless DC motors for vehicles, which are in line with market demands for lower fuel consumption and lower vehicle emissions, mid-size brushless DC motors for consumer electronics and housing facilities, which have the features of energy savings, low noise and longer life, and mid-size motors for industrial use, which have increased demand for energy savings. Production of products belonging to this group is conducted at the three plants in Japan and also in our manufacturing subsidiaries in Thailand and China. Each production center in Japan is also providing production support to the manufacturing plants in China. Products manufactured in our manufacturing subsidiaries in Tha iland and China are sold to our customers in Japan and overseas through our sales departments in each center in Japan, and some of them are directly sold to customers in Thailand and China.

Machinery and Others

Various semiconductor manufacturing equipment, including fully automatic die bonders, fully automatic wire bonders, etc., measuring equipment, including 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 in our manufacturing subsidiaries in Tokyo, Kanagawa, Kyoto and Shiga. Some of our measuring equipment and some products such as the high-speed press are also manufactured in China. To this product group, system machinery such as the mini-laboratory system of Nidec Copal Corporation, and industrial robots and card readers of Sankyo Seiki Mfg. Co., Ltd., both of which became our consolidated subsidiaries in February 2004, have been added. These are developed, designed and manufactured in our manufacturing subsidiaries in Tokyo and Nagano, a nd some of them are manufactured in our manufacturing subsidiary in China.

For other fields, consisting of pivot assemblies, automotive parts, encoders, etc., optical equipment such as camera shutters, lens units, electronics parts, including pressure sensors and electronics circuit parts, actuators, optical pick-up units, etc., have been added, 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. Our manufacturing subsidiary in Singapore conducts development, design and manufacture of pivot assemblies. Car components are developed, designed and manufactured in a manufacturing subsidiary in Kanagawa and are also produced in our manufacturing subsidiary in Vietnam. Shutters and lens units for various cameras are developed and designed in a manufacturing subsidiary in Tokyo and produced in manufacturing subsidiaries in Fukushima and China. A manufacturing subsidiary in Nagano develops, designs and manufactures such electronics components as actuators and optical pick-up units, while overseas, these are also produced in Singapore and China. Electronic component parts such as pressure sensors and electronics circuit parts are developed, designed and manufactured in our manufacturing subsidiaries in Saitama, Tochigi and Miyagi.

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Suppliers

We purchase parts, components, raw materials, equipment and other supplies from various suppliers chosen based on factors such as price and quality of the goods supplied, timeliness of delivery and quality of service. We believe that this policy encourages technological innovation, cost reduction and other competitive measures. As a matter of policy, as relates to the motor business, we generally use a large number of suppliers to purchase parts, components, raw materials and equipment. Most supplies are sourced locally and, with the exception of components for printed circuits, we have not experienced, and do not anticipate, any difficulty in obtaining supplies at reasonable prices. We believe that materials and components necessary for our manufacturing operations are presently available in quantities we require. Moreover, as we continue to switch from ball bearing to fluid dynamic bearing technolog y, we will be less reliant on outside suppliers of ball bearings.

Principal supplies include ball bearings, presses and stamping parts for the production of hubs, stator cores and other key components of motors, and die casts for the production of the bracket 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 bases for motors from third party suppliers, but in recent years we have commenced our own production of certain of such bases. In the past, due to an increasing demand for integrated circuit related products we sometimes had difficulty obtaining integrated circuits and other electronic components for printed circuits. If similar circumstances occur in the future, we may be required to maintain a stock of such components in inventory, although at present we do not need to do so.

In January and February 2004, Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. became consolidated subsidiaries. In these companies and their subsidiaries, production ratios in Japan are high, however, it is considered that overseas production ratios will be increased in the future to further cost reductions or due to reasons of competitive strength. In addition, these companies manufacture various kinds of products and have key components. However, so far, they have not experienced difficulties in procuring key components, and it is considered that this will not be a problem in the foreseeable future.

We work with our component suppliers on an ongoing basis to help them maintain and improve their quality control measures. Some of our Japanese suppliers have moved their manufacturing facilities to Asia in recent years based on our encouragement and support so that they may take advantage of lower labor costs to lower the prices they charge us.

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.

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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 are continuously engaged in monitoring these requirements and adjusting affected operations and products to ensure that we remain in substantial compliance with all of these requirements. With two exceptions, 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 two exceptions are: Nagano Techni cal Development Center, which does not manufacture a significant volume of products to merit certification; and Nidec America Corporation, whose clients have not requested ISO 14001 certification. Also, 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 one example, we are currently testing the use of lead-free solder in a few of our products.

Our Employees

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

	As of March 31,
	2002	2003	2004
Japan	3,606	3,569	7,486
North America	317	247	330
Asia (other than Japan)	21,400	29,507	51,315
Europe	7	8	9
Total	25,330	33,331	59,140

Japan

In Japan, as of March 31, 2004, we had 7,486 employees. 3,789 of these employees were engaged in manufacturing operations, 1,566 in research and development and 966 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 in 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.

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Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. which became a subsidiary in January and February 2004, have 4108 employees in Japan, with 2200 employees engaged in manufacturing operations, 915 in development and 393 in sales.

In Japan, although Nidec has no labor union, labor unions have been organized in some of our subsidiaries, respectively. 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, 2004, we had 51,654 employees overseas. 49,413 of these employees were engaged in manufacturing operations, 89 in research and development and 307 in retail business activities.

Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. which became a subsidiary in January and February 2004 have 17,150 employees overseas, with 16,018 employees engaged in manufacturing operations, 49 in development and 124 in sales.

No strikes and/or labor disputes have occurred overseas so far, and we consider that the relationship between the company and employees is favorable.

Intellectual Property

As of March 31, 2004, we owned approximately 1,630 issued patents, 385 utility model registrations and 263 trademarks in Japan as well as 533 issued patents and 27 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, 2004, we had a total of 4,406 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.

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

Nidec and its U.S. subsidiary, Nidec America Corporation, were sued in 1991 in the U.S. District Court in Connecticut by Rotron, an action in which Rotron claimed that fans manufactured or distributed by Nidec and Nidec America Corporation infringed upon two of Rotron’s patents. 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 covenants not to sue the other under existing patents as applied to existing products. Under the settlement agreement, Nidec America Corporation paid Rotron $8 million, which was recorded as “Other Current Liabilities” in our consolidated balance sheet as of March 31, 2003 and as “Selling, General and Administrative Expenses” in our consolidated statements of income for the y ear ended March 31, 2003. Our decision to enter in the settlement agreement was based on our business judgement that it was the best choice for us to avoid jury’s verdict that one category of our products infringed Rotron’s patent and to obtain prospective protection against future claims by Rotron by executing the settlement agreement.

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We have received a notice from Matsushita Electric Industrial Co., Ltd. claiming that small precision brushless DC motors manufactured by us and Nidec Copal Corporation infringe one of their patents relating to neodymium magnets and have not been able to resolve this matter through negotiation. Accordingly, we filed a motion with the Japanese Patent office on November 16, 2001 seeking a declaratory judgment that Matsushita Electric’s patent is invalid on several grounds, the primary one being that the invention is obvious in view of prior art. It is likely that Matsushita Electric will counter by filing a patent infringement action against us. If the Japanese Patent office were to conclude that Matsushita Electric’s patent is valid and we were to lose on appeal in subsequent judicial proceedings, it is possible that our small precision brushless DC motors will be found to infringe Matsushita Electric’s patent. On June 25, 2003, the Japanese Patent Office judged that the patent was invalid, and on August 16, 2003, Matsushita filed a suit with the Tokyo High Court against the Company contesting the Japanese Patent Office’s judgement. On December 22, 2003, the Tokyo High Court handed down a judgement in favor of Nidec and affirmed the Japanese Patent Office’s judgement that the patent was invalid. On January 9, 2004, Matsushita Electric did not make an appeal against the judgement of the court. Therefore the judgement of the court and the invalidity of the patent of Matsushita Electric were settled.

On July 16, 2004, Minebea Co., Ltd. informed us that it had filed a lawsuit against us in Washington, D.C. The lawsuit relates to our negotiations with Minebea to have Minebea take a license under certain of our patents directed to the fluid dynamic bearing technology used in the spindle motors found in many computer hard disc drives. As of the date of the filing of this annual report, we have been served with Minebea’s complaint. We will respond appropriately once we thoroughly examine the complaint.

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.

C. Organizational Structure.

The following table and the discussion that follows present summary information on our major consolidated subsidiaries as of March 31, 2004:

Name	Country	Principal business	Net sales for the year ended March 31, 2004	Issued share capital as of March 31, 2004	Percentage directly owned by Nidec as of March 31, 2004
					(%)
Consolidated subsidiaries
Nidec Electronics (Thailand) Co., Ltd.	Thailand	Manufacture and sales of spindle motors for hard disk drives	TB21,236 million	TB1,950 million	99.9
Nidec (Dalian) Limited	China	Manufacture of small brushless DC motors and fan motors	U.S.$277,545 thousand	U.S.$32,500 thousand	100.0
Nidec Singapore Pte. Ltd.	Singapore	Manufacture and sales of pivot assemblies	U.S.$351,544 thousand	S$8,000 thousand	100.0
Nidec Philippines Corporation	Philippines	Manufacture of spindle motors for hard disk drives	PP10,714 million	PP1,400 million	99.9
Nidec Precision (Thailand) Co., Ltd.	Thailand	Manufacture various components for our products	TB2,770 million	TB450 million	99.9
Nidec Shibaura Corporation	Japan	Manufacture and sales of small AC motors	¥28,613 million	¥1,000 million	100.0

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Name	Country	Principal business	Net sales for the year ended March 31, 2004	Issued share capital as of March 31, 2004	Percentage directly owned by Nidec as of March 31, 2004
					(%)
Nidec Power Motor Corporation	Japan	Manufacture and sales of mid-size motors and small AC motors	¥8,136 million	¥1,000 million	83.5
Nidec Nemicon Corporation	Japan	Manufacture and sales of rotary encoders, proximity sensors and other electronic equipment	¥2,427 million	¥230 million	93.8
Nidec-Kyori Corporation	Japan	Manufacture and sales of high speed automatic presses, feed devices and other industrial machinery	¥6,243 million	¥450 million	95.2
Nidec Machinery Corporation	Japan	Manufacture and sales of automatic assembly line machinery and tester	¥5,034 million	¥100 million	60.0
Nidec America Corporation	U.S.A	Manufacture and sales of fans and precision motors	U.S.$37,295 thousand	U.S.$82 thousand	100.0
Nidec Taiwan Corporation	Taiwan	Sales of fans	NT$4,110,214 thousand	NT$5,000 thousand	100.0
Nidec Electronics GmbH	Germany	Sales of spindle motors for hard disk drives and fans	EUR20,730 thousand	EUR 153 thousand	100.0
Nidec (H.K.) Co., Ltd.	Hong Kong	Sales of parts for our products and sales of spindle motors	HK$956,927 thousand	HK$800 thousand	99.9
P.T. Nidec Indonesia	Indonesia	Manufacture of components for pivot assemblies and precision motors	U.S.$27,050 thousand	U.S.$700 thousand	99.0
Nidec Tosok Corporation *	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	¥26,860 million	¥3,287 million	57.5
Nidec-Shimpo Corporation *	Japan	Manufacture and sales of power transmission drives, control device, measuring and factory automation equipment, ceramic and wood art equipment, and others	¥10,058 million	¥2,592 million	100.0
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	¥3,819 million	¥938 million	65.4

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Name	Country	Principal business	Net sales for the year ended March 31, 2004	Issued share capital as of March 31, 2004	Percentage directly owned by Nidec as of March 31, 2004
					(%)
Nidec Total Service Corporation	Japan	Insurance agency, real estate business, merchandising, building maintenance and others	¥1,161 million	¥86 million	100.0
Nidec (Zhejiang) Corporation	China	Manufacture of spindle motors for hard disk drives	U.S.$84,307 thousand	U.S.$12,000 thousand	100.0
Nidec (Dongguan) Limited	China	Manufacture of small brushless DC motors	U.S.$59,598 thousand	U.S.$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	CNY51,704 thousand	CNY41,384 thousand	100.0
Nidec (Shanghai) International Trading Co., Ltd. (1)	China	Sales of small brushless DC motors	CNY48,178 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	¥65,547 million	¥11,080 million	51.0
Nidec Copal Electronics Corporation (2) *	Japan	Manufacture and sales of electronic circuit components, pressure sensors, actuators and potentiometers	¥19,434 million	¥2,362 million	51.3
Sankyo Seiki Mfg., Co., Ltd. (2) *	Japan	Manufacture and sales of motors, optical pickup units, automated teller machines, home appliance components, factory automation	¥106,809 million	¥35,270 million	51.0

Notes:

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

(2) These companies become majority-owned subsidiaries in January and February 2004.

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

Recently Acquired Subsidiaries

In January and February 2004, our interest exceeded 50% in Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. respectively, and these companies became our consolidated subsidiaries.

Nidec Copal was founded in May 1949 as Japan’s only specialty manufacturer of camera shutters. For over 50 years, Nidec Copal has been supplying shutters and other products to the world’s leading camera makers. At the same time, Nidec Copal has also diversified its business. They have developed various high-technology products for major manufacturers on an OEM basis as well as their own original brands. They now have a solid footing as an optomechatronics manufacturer integrating optics, mechanics, and electronics. Since acquiring a minority interest in Nidec Copal in February 1998, we have been working with them to build a stronger management base and expand their business lines. We have been taking advantage of synergies to strengthen their manufacturing techniques and systems.

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Nidec Copal Electronics Corporation was established in April 1967 as a specialty manufacturer of electronics components. Its corporate policy is to supply high-quality products at low prices. Nidec Copal Electronics began by developing a wirewound trimmer which was enthusiastically received by many sectors in the electronics industry. This initial success laid the groundwork for future development at the start of the electronics revolution. Later, robust sales of cermet trimmers led to Nidec Copal Electronic’s expansion. Further development efforts led to the release of a succession of new product lines. These included ranges of motors, encoders, switches and pressure sensors.

Sankyo Seiki Mfg. Co., Ltd. was incorporated in June 1946 as a music box manufacturer. Initially, craftsmen had made music boxes by hand, but in 1950, four years after incorporation, Sankyo Seiki established the world’s first mass production system of music boxes by mechanization. It has produced a variety of music boxes, from high end products to products for popular use, and soon climbed to become the largest music box manufacturer in the world. In the latter half of the 1950’s, when Japan entered the age of high economic growth, the Company started production of industrial equipment on the basis of precision technology, developed as a result of its music box production. In 1957, it started production of 8mm movie cameras and projectors and, in 1959, it started production of driving parts, including micro motors and time switches, which were embedded in home electric appliances. As a resul t, the Company accomplished a great transformation to a precision equipment manufacturer from a music box manufacturer. Thereafter, along with the advancement of electronics technologies, it has expanded its product line-up to home electric appliances and housing equipment, information device peripherals and industrial equipment. In response to rapidly advancing digital technologies, it has also developed new equipment materials and products as core elements of optical and magnetic basic technology, which is the basic element of digital technologies.

Nidec Copal Corporation recorded sales of ¥65,547 million in the year ended March 31, 2004 according to Japanese GAAP. The company became one of our consolidated subsidiaries in February 2004, whose sales of ¥10,369 million are included according to U.S. GAAP.

Nidec Copal Electronics Corporation recorded sales of ¥19,434 million in the year ended March 31, 2004 according to Japanese GAAP. It became our consolidated subsidiary in January 2004 and sales of ¥3,111 million are included according to U.S. GAAP.

Sankyo Seiki Mfg. Co., Ltd. recorded sales of ¥106,809 million in the year ended March 31, 2004 according to Japanese GAAP. The company became our consolidated subsidiary in February 2004, whose sales of ¥16,243 million are included according to U.S. GAAP.

Joint Venture with Johnson Electric

Since establishment of the Joint Venture, Nidec Johnson Electric (Hong Kong) Limited and Nidec Johnson Electric Corporation have implemented various countermeasures for expanding sales and gaining market share in the targeted AV market. As a result of its continuous efforts, Nidec Johnson has achieved positive results to a certain extent. During the four fiscal years since Nidec Johnson was established, total sales and the number of customers have increased steadily even though Nidec Johnson experienced an operating loss for the year ended March 31, 2003.

For the year ended March 31, 2004 the business environment surrounding us and Johnson Electric has significantly changed and both owners of this Joint Venture have been obliged to reconsider their respective strategic directions in this business. We took majority ownership of Sankyo Seiki Mfg. Co., Ltd on October 1, 2003. Sankyo Seiki Mfg. Co., Ltd had similar product lines with those of Nidec Johnson. On the other hand Johnson Electric had already anticipated ownership of Nippon Mini Motor Co., LTD that had also competing products with those of the Joint Venture.

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Under these circumstances we and Johnson Electric have mutually agreed to develop and advance their own businesses separately in this market area and to terminate the Joint Venture agreement between Nidec and Johnson Electric.

On March 24, 2004 dissolution of the Joint Venture agreement became effective and we sold its own shares of the Joint Venture to Johnson Electric.

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 Nidec’s $2.6 million and NTN’s $3.9 million. 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.

We originally planned to establish this new joint venture in the Philippines in December 2001 and start operation from April 2002. However, in March 2002, Nidec and NTN decided to postpone this plan temporarily due to the accelerated schedule of a customer’s model adoption, which compelled us to go with our originally developed fluid dynamic bearing units.

Subsequently, both Nidec and NTN actively promoted pre-production samples and evaluation and torture tests for large customers. Considering the rapid development of our customers’ business activities in China, we decided to establish our production base for fluid dynamic bearing units in the Pinghu Economic Development Zone in China. A new factory in Pinghu was completed in March 2003 and started production from April 2003.

A sintered-alloy-based fluid dynamic bearing (Brand name:  Hydrodynamic BEARPHITE) unit by the new joint venture will be used in our fluid dynamic bearing motor for hard disk drives with superior quality in rotation accuracy, quietness and durability. NTN-Nidec (Zhejiang) Corporation introduces such new fluid dynamic bearing motors not only in the current computer peripheral equipment market but also in the audio-visual market that has been adopting hard disk drives rapidly, thereby satisfying our customer’s various demands.

NTN-Nidec (Zhejiang) Corporation has been increasing its production capacity and the level of capacity as of March 31, 2004 was approximately 3 million pieces per month.  Additionally, NTN-Nidec (Zhejiang) Corporation plans to increase this to 6 million per month by the end of 2004. For preparation in this investment, NTN-Nidec (Zhejiang) Corporation has increased its paid-in capital to $21 million US dollars as of January 12, 2004 instead of changing ownership shares between Nidec and NTN Corporation.

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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, 2004, we operated manufacturing and sales facilities through 26 Japanese subsidiaries and 62 foreign subsidiaries. The 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, 2004, with respect to our principal manufacturing facilities and other facilities:

Facility name	Location	Floor space (square meters)	Principal products and function
In Japan
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)
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
Nagano Technical Development Center (1)	Japan	7,862	Research and development and manufacturing of spindle motors for hard disk drives and pivot assemblies
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 equipments
Nidec Tosok Corporation 2nd Factory	Japan	4,387	Manufacturing of components for automobiles
Nidec Tosok Corporation 3rd Factory	Japan	10,517	Manufacturing of measuring equipments and semiconductor equipments
Nidec Tosok Corporation Yamanashi Factory	Japan	14,919	Manufacturing of components for automobiles
Nidec Logistics Co., Ltd.	Japan	8,274	Logistics
Nidec Copal Corporation Head Office and Tokyo Technical Center	Japan	8,346	Sales, development design, purchase and others
Nidec Copal Corporation Koriyama Technical Center	Japan	24,240	Development design and material procurement
Nidec Copal Corporation Shiojiri Factory	Japan	18,903	Manufacturing of minilab system
Nidec Copal Corporation Ichinoseki Factory	Japan	5,185	Manufacturing of electronic components
Nidec Copal Precision Parts Corporation Koriyama Factory	Japan	12,333	Manufacturing of precision dies and press stamping components and injection molding componentsand surface treatment processing components
Nidec Copal Precision Parts Corporation Muikamachi Factory	Japan	6,091	Manufacturing of machining components
Nidec Copal Electronics Corporation Tajiri Factory	Japan	22,338	Manufacturing and sales of precision automotive parts
Nidec Copal Electronics Corporation Sano Factory	Japan	67,011	Manufacturing and sales of precision automotive parts
Sankyo Seiki Komagane Facility	Japan	19,187	Manufacturing of motor-driven actuator units and DC motors for PC peripheral devices
Sankyo Seiki Mfg. Co., Ltd. Head Office and Shimosuwa Facility	Japan	20,212	Financial industry terminals and manufacturing of card readers
Sankyo Seiki Ina Facility	Japan	6,752	Manufacturing of industrial robots
Nissin Kohki Co., Ltd. Head Office and Chino Factory	Japan	7,052	Forming of plastic and plastic lens and dies
Tohhoku Nissin Kohki Co., Ltd.	Japan	7,532	Forming of plastic

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Facility name	Location	Floor space (square meters)	Principal products and function
Outside Japan
Nidec Electronic (Thailand) Co., Ltd.-Rojana Factory (1)	Thailand	38,600	Manufacturing of spindle motors for hard disk drives
Nidec Electronic (Thailand) Co., Ltd.-Ayutthaya Factory (5)	Thailand	5,200	Manufacturing of spindle motors for hard disk drives
Nidec Electronic (Thailand) Co., Ltd.-Bangkadi Factory (1)	Thailand	9,500	Manufacturing of spindle motors for hard disk drives
Nidec Precision (Thailand) Co., Ltd. (5)	Thailand	19,560	Manufacturing of components for hard disk drive spindle motors
Nidec High-Tech Motor (Thailand) Co., Ltd. (5)	Thailand	11,000	Manufacturing of fluid dynamic bearing spindle motors
P.T. Nidec Indonesia (5)	Indonesia	4,300	Manufacturing of components for pivot assemblies and precision motors
Nidec (Dalian) Limited (3)	China	26,706	Manufacturing of spindle motors for hard disk drives, DC motors for PC peripheral devices, fans and components for precision motors
Nidec Shibaura (Zhejiang) Co., Ltd.	China	28,600	Manufacturing of mid-size motors
Nidec America Corporation (2)	U.S.A.	8,710	Research and development and manufacturing of power supplies, fans and small high-precision motors
Nidec Philippines Corporation (4)	Philippines	131,455	Manufacturing of spindle motors for hard disk drives
Nidec Subic Philippines Corporation	Philippines	35,786	Manufacturing of spindle motors for hard disk drives
Nidec Singapore Pte. Ltd. (3)	Singapore	8,000	Research and development and manufacturing of spindle motors and pivot assemblies for hard disk drives
Nidec Tosok (Vietnam) Co., Ltd.	Vietnam	47,412	Manufacturing of fans and components for automobiles
Nidec Shibaura Electronics (Thailand) Co., Ltd.	Thailand	13,410	Manufacturing of mid-size motors
Nidec (Zhejiang) Corporation (3)	China	20,000	Manufacturing of spindle motors for hard disk drives and assembling motors and accessories
Nidec (Dong Guan) Corporation (3)	China	22,700	Manufacturing of small brushless DC motors for PC peripheral devices and office automation equipment
Nidec System Engineering (Zhejiang) Corporation (3)	China	12,400	Manufacturing of factory automation equipment
Nidec Copal (Thailand) Corporation	Thailand	12,240	Manufacturing of camera components and micro motor
Nidec Copal (Malaysia) Sdn. Bhd	Malaysia	6,562	Manufacturing and sales of small high-precision motors and press stamping components and injection molding components
Nidec Copal Philippines Corporation	Philippines	7,520	Manufacturing and sales of small high-precision motors and press stamping components and injection molding components and surface treatment processing components
Nidec Copal (Vietnam) Co.,Ltd.	Vietnam	7,000	Manufacturing and sales of small high-precision motors
Nidec Copal (Zhejiang) Co.,Ltd .	China	19,308	Manufacturing of components and lens cones for digital still cameras and minilab systems
Sankyo Seiki (Fuzhou) Co.,Ltd.	China	11,000	Manufacturing of optical pickup units
Sankyo Seiki (America) Inc.	U.S.A	4,726	Manufacturing of motor-driven actuator units
Sankyo Seiki (Singapore) Pte., Ltd. (5)	Singapore	13,380	Manufacturing of stepping motors and motor-driven actuator unites
Nidec Sankyo Taiwan Corporation (3)	Taiwan	15,261	Manufacturing of DC motors and card readers
Sankyo precision (Malaysia) Sdn. Bhd. (5)	Malaysia	103,592	Manufacturing of DC motors
Sankyo Electronics (Shaoguan) Co., Ltd. (3)	China	12,300	Manufacturing of motor-driven actuator units
Tokyo Pigeon (Hong Kong) Co., Ltd. (5)	Hong Kong	14,254	Manufacturing and sales of Mechanism for audio
HK Nissin Kohki Co., Ltd. (5)	Hong Kong	13,780	Forming of plastic and plastic lens
P. T. Indonesia Nissin Kohki (5)	Indonesia	5,595	Forming of plastic
Dalian Nissin Kohki Co., Ltd. (5)	China	5,789	Forming of plastic

__________

Notes:

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

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

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

(4) 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.

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

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

As of March 31, 2004, the aggregate book value of the land and buildings we owned was ¥104.4 billion, and the aggregate book value of machinery and equipment we owned was ¥163.4 billion. We lease other equipment that we use in our operations.

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

We sell hard disk drive spindle motors, our main products that constituted 38.5% of our total sales for the year ended March 31, 2004, to major hard disk drive manufacturers.

Market Environment for Hard Disk Drive Spindle Motors

According to Techno Systems Research Co., Ltd., a Japanese research institute specializing in technological industries, 93.1% of hard disk drive were used for PC and the rest were used for non-PC products such as game console, DVD recorders and portable audio for the year ended December 31, 2003.

During the year ended March 31, 2004 the fluid dynamic bearing technology for hard disk drive spindle motors had prevailed swiftly in the market. Almost 77.0% of our production of hard disk drive spindle motors were fluid dynamic bearing motors as of  the year ended March 31, 2004, compared to 56.3% as of the year ended March 31, 2003. We believe that almost all, with a few exceptions, hard disk drive manufacturers in the world would be shifting from conventional ball bearings motors to fluid dynamic bearings motors.

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. According to International Data Corporation’s estimate, worldwide PC shipments, including PC servers increased by 11.7% for the calendar year 2003 from the calendar year 2002 and is estimated to have increased by 13.5% for the calendar year 2004. Our average sales price of hard disk drive spindle motors rose by approximately 14% during the year ended March 31, 2002 and fell by approximately 8% during the year ended March 31, 2003. Our average sales price of hard disk drive spindle motors fell again by approximately 9% during the year ended March 31, 2004, despite the increase in the shipments of our hard disk drive spindle motors by 21%. This, we believe, reflects the strong demand for our hard disk drive motors, especially from manufacturers of new consumer electronics and home entertainment applications.

Also, recently 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.

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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.

•

We are seeking to increase mass production of fluid dynamic bearing hard disk drive spindle motors for 3.5-inch hard disk drives.

•

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 lower average unit prices. Also we have been increasing total revenue as has been increasing for fluid dynamic bearing spindle motors in new non-computer markets , which 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. We were able to increase our market share of hard disk drive motors for use in non-PC products including DVD recorders and car navigation systems to 6.9% for calendar year 2003 from 5.8% in the previous year.

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 12.3% of our total net sales for the year ended March 31, 2004, are derived from sales to manufacturers of CD-ROM, CD-R/W and DVD drives. We believe that the market for CD-ROM drives is reaching maturity. At the same time, the markets for CD-R/W drives and DVD drives are growing, in part by replacing 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 under downward pricing pressure, while the demand for others, particularly those for use in CD-R/W drives and 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 r esult of standardizing our product lines.

Market Environment for brushless DC Fans

We sell our brushless DC fans,which accounted for 9.4% of our total net sales for the year ended March 31, 2004, to various manufacturers of computers, computer peripherals, game consoles, photocopy machines, projectors and household appliances such as rice cookers. We are also selling 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 first three months of the calendar year 2003, such demand dropped substantially, which had a negative effect on the market for brushless DC fans. Despite a significant decreases in sales of brushless DC Fans for game machine consoles for the year ended March 31, 2004 mainly due to a peak-out in the global demand for game machines, we also have seen strong demand for fans for household electric appliances, in line with strong demand of such products as microwave ovens, rice cookers, warm water toilet seats and refrigerators.

Market Environment for Mid-size Motors

We sell mid-size motors,  which accounted for approximately 11.7% of our total net sales for the year ended March 31, 2004, to home electric appliances, industrial machines 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, and an increasing number of power steering system manufacturers have shifted to producing this type of power steering systems, away from the conventional type that uses belts for engine driven. We believe, however, that it will still take some time before the acceptance of power steering systems that use mid-size brushless motors reaches a sufficiently high level to enable us to start mass production of these motors because, in this market, evaluation of samples that must take place prior to the introduction of a new product takes a comparative ly 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 motors.

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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 motor, drive and other related products and technologies. Depending on circumstances, we acquire a majority interest or a substantial minority interest in the target company. 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 already public companies in Japan.

In connection with our acquisition of majority ownership of consolidated 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”), which is discussed in “Recent Accounting Pronouncements” below, 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, which 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. Also 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.

We acquired additional  shares of common stock of Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. which had 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 decreased by ¥25,366 million.

During the year ended March 31, 2003 and 2004, our  equity method affiliates  ¥86,258 million and ¥156,818 million to net sales, ¥15,785 million and ¥22,291 million to gross profit (net sales minus and cost of products sold), and ¥3,225 million and ¥5,069 million to net income, respectively. Earnings from equity method investment in affiliated companies amounted to ¥1,466 million and ¥2,522 million for the year ended March 31, 2003 and 2004, respectively. The increase in net sales, gross profit, net income and earnings from equity method investment in affiliated companies for the year ended March 31, 2004 compared with the year before was primarily due to Sankyo Seiki Mfg. Co., Ltd., which became our equity method affiliate in October 2003 as a result of our purchase of 40% of its common stock and whic h became our consolidated subsidiary in February 2004, as well as to an increase in net income of Nidec Copal Electronics Corporation and Nidec Copal Corporation, which were equity method affiliates until they became 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 yen ― most significantly, U.S. dollars. 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.

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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, which currently represent in excess of 60% of our total 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 20 to our consolidated financial statements included in this annual report.

Trends for the Year Ending March 31, 2005

The year ending March 31, 2005 bears many uncertainties. The industrial world is paying close attention to the results of the U.S. presidential election and subsequent changes in the nation’s currently upbeat economy, as well as to China’s handling of exchange fluctuations and raw-material supply deficiency. It can hardly be predictable exactly how these issues could affect today’s world’s economy.

We believe that we face many uncertainties during the year ending March 31, 2005.  For example, in the United States, the government’s economic policy may change depending on the outcome of the presidential election, and it remains to be seen whether the U.S. economy will slow down during the second half of calendar year 2004 and thereafter.  In China, it remains to be seen whether the government will be able to effectively handle problems related to exchange rate fluctuations and deficiency in raw material supplies.

The Japanese economy, in the meantime, is showing signs of emerging from a long period of economic standstill and moving toward a sound and sustainable recovery. From the viewpoint of technology the recent wave of digitalization and advance in nano technology have created a wide array of technological applications and related market needs, which we believe signal an expansion  of global demand for products utilizing such technologies.

Against the background of today’s rapidly changing business environment, we have set out to find opportunities for new growth through broadening the range of our motor business and improving associated drive technologies by the acquisition of Sankyo Seiki Mfg. Co., Ltd.

We believe that our core motor business will remain on a stable growth track, driven by, the anticipated expansion in business opportunities related to products utilizing digital technology. We also believe that the components and machinery businesses conducted by our group companies will also achieve stable growth.

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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, and is now working to achieve a 15% return on equity. 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 another key factors to the future growth.

The foregoing statements regarding the year ending March 31, 2005 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, 2004.

	Year ended March 31,
	2002		2003		2004		2004
	(Yen in millions and U.S. dollars in thousands)
Net sales	¥ 193,332		¥ 231,836		¥ 277,497		$ 2,625,575
Cost and expenses:
Cost of products sold	159,442		187,306		218,189		2,064,424
Selling, general and administrative expenses	17,691		21,302		28,542		270,054
Research and development expenses	5,727		6,824		8,751		82,799
	182,860		215,432		255,482		2,417,277
Operating income	10,472		16,404		22,015		208,298
Other income (expenses):
Interest and dividend income	572		364		362		3,425
Interest expense	(1,167	)	(890	)	(862	)	(8,156	)
Foreign exchange gain (loss), net	2,107		(3,511	)	(3,149	)	(29,795	)
Gain (loss) from derivative instruments, net	8		23		(5	)	(47	)
(Loss) gain on marketable securities, net	(1,400	)	(1,583	)	816		7,720
Gain from issuance of securities by affiliated companies	-		39		-		-
Gain (loss) from sales of investments in affiliated companies	11		(4	)	45		426
Other, net	874		69		417		3,946
	1,005		(5,493	)	(2,376	)	(22,481	)
Income before provision for income taxes	11,477		10,911		19,639		185,817
Provision for income taxes	(2,162	)	(1,053	)	(5,424	)	(51,320	)
Income before minority interest and equity in earnings of affiliated companies	9,315		9,858		14,215		134,497
Minority interest in income (loss) of consolidated subsidiaries	318		644		648		6,131
Equity in net (income) / losses of affiliated companies	2,417		(1,466	)	(2,522	)	(23,862	)
Net income	¥ 6,580		¥ 10,680		¥ 16,089		$ 152,228

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 en ded March 31, 2004 due primarily to an increase in sales of hard disc 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.

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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 tota l net sales for the year ended March 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.

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 has lingered since the latter half of the previous fiscal year. The combination of sluggish demand and increasingly fierce market competition has brought down 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.

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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 two 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, factory automation components, manufactured by Nidec Tosok Corporation. Net sales of machinery accoun ted 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 Marc h 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 our newly consolidated forty-nine subsidiaries. They are 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 line with the sales increase.

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, in particular, expenses 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 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 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 Nid ec America Corporation entered into the settlement agreement with Rotron terminating the pending litigation and exchanging reciprocal intellectual property rights and privileges whereby each side covenants not to sue the other under existing patents as applied to existing products. Under the settlement agreement, we paid to Rotron U.S. $8 million.

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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 subsidiari es, as a percentage of net sales, 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.

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 Yen's value against relevant foreign currencies.

Yen's exchange rates against the U.S dollar as of March 31, 2003 and March 31, 2004 were 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.

For our other income, net for the year ended March 31, 2004 was ¥417 million, while for 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.

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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 18 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.

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.

55

Results of Operations – Year Ended March 31, 2003 Compared to Year Ended March 31, 2002

Net Sales

Our net sales increased ¥38,504 million, or 19.9%, from ¥193,332 million for the year ended March 31, 2002 to ¥231,836 million for the year ended March 31, 2003. This increase was mainly due to the addition of newly consolidated subsidiaries. Net sales of Nidec Tosok Corporation, Nidec-Shimpo Corporation and certain other affiliated companies newly consolidated in February 2002 by increasing our ownership interest, were included in our net sales for only one month for the year ended March 31, 2002 but net sales of these subsidiaries for the entire year ended March 31, 2003 were included in our net sales. The net sales of these newly consolidated subsidiaries for the year ended March 31, 2003 were ¥42,301 million, which consisted of ¥29,179 million to external customers and ¥13,122 million to group companies. Therefore, excluding the contribution from these newly cons olidated subsidiaries, net sales increased ¥9,325 million, or 4.9%, from ¥190,715 million for the year ended March 31, 2002 to ¥200,040 million for the year ended March 31, 2003 due primarily to an increase in sales of other small precision brushless DC motors and brushless DC fans. Gross profit was ¥33,890 million for the year ended March 31, 2002 and ¥44,530 million for the year ended March 31, 2003. The gross profit ratio increased from 17.5% for the year ended March 31, 2002 to 19.2% for the year ended March 31, 2003 mainly due to the higher gross profit ratio of our newly consolidated subsidiaries.

Net sales of our hard disk drive spindle motors increased ¥3,969 million, or 4.2%, from ¥93,748 million for the year ended March 31, 2002 to ¥97,717 million for the year ended March 31, 2003 mainly due to an increased demand for hard disk spindle motors in non-PC areas, such as DVD recorders and car navigation systems, despite the drop in unit prices. Net sales from hard disk drive spindle motors accounted for 48.5% of total net sales for the year ended March 31, 2002 and 42.1% of total net sales for the year ended March 31, 2003.

Net sales of other small precision brushless DC motors increased ¥3,926 million, or 18.1%, from ¥21,657 million for the year ended March 31, 2002 to ¥25,583 million for the year ended March 31, 2003. This increase resulted from the growth of brushless DC motors mainly used for DVD drives, CD-R drives and CD-R/W drives. Net sales from other small precision brushless DC motors accounted for 11.2% of total net sales for the year ended March 31, 2002 and 11.0% of total net sales for the year ended March 31, 2003.

Net sales of small precision brush DC motors increased ¥741 million, or 29.2%, from ¥2,539 million for the year ended March 31, 2002 to ¥3,280 million for the year ended March 31, 2003. This was primarily due to an increase in sales of vibration motors used in mobile phones.

Net sales of our brushless DC fans increased ¥2,872 million, or 11.7%, from ¥24,523 million for the year ended March 31, 2002 to ¥27,395 million for the year ended March 31, 2003. This was primarily due to increased demand for fan motors used in microprocessor cooling units and home video game consoles during the first half of the year. Net sales from brushless DC fans accounted for 12.7% of total net sales for the year ended March 31, 2002 and 11.8% of total net sales for the year ended March 31, 2003.

Net sales of mid-size motors increased ¥1,227 million, or 3.4%, from ¥36,252 million for the year ended March 31, 2002 to ¥37,479 million for the year ended March 31, 2003. This increase was primarily due to an increase in sales of motors for automobile power steering systems, while sales of motors for home electric appliances and industrial machines decreased mainly due to a sluggish market. Net sales from mid-size motors accounted for 18.8% of our total net sales for the year ended March 31, 2002 and 16.2% of total net sales for the year ended March 31, 2003.

Net sales of machinery and power supplies increased ¥14,862 million, or 193.2%, from ¥7,693 million for the year ended March 31, 2002 to ¥22,555 million for the year ended March 31, 2003. For the year ended March 31, 2003, ¥16,238 million of additional net sales were contributed by two newly consolidated subsidiaries, Nidec Tosok Corporation and Nidec-Shimpo Corporation. Excluding the contribution from these newly consolidated subsidiaries, net sales decreased ¥1,376 million, or 22.0%, from ¥6,252 million for the year ended March 31, 2002 to ¥4,876 million for the year ended March 31, 2003. The primary reason for this decline was our withdrawal from the power supplies business both in Japan and in the United States.

56

Net sales of other products increased ¥10,907 million, or 157.6%, from ¥6,920 million for the year ended March 31, 2002 to ¥17,827 million for the year ended March 31, 2003. This increase was due to the addition of ¥12,230 million of net sales of automobile parts by Nidec Tosok Corporation. Excluding the contribution from Nidec Tosok Corporation, net sales decreased ¥1,323 million, or 22.9%, from ¥5,774 million for the year ended March 31, 2002 to ¥4,451 million for the year ended March 31, 2003. This was mainly due to the decline of ¥2,286 million in sales of pivot assemblies produced at Nidec Singapore Pte. Ltd.

Cost of Products Sold

Our cost of products sold increased 17.5% from ¥159,442 million for the year ended March 31, 2002 to ¥187,306 million for the year ended March 31, 2003. Much of the increase in absolute terms was attributable to our newly consolidated subsidiaries, Nidec Tosok Corporation, Nidec-Shimpo Corporation and nine other newly consolidated subsidiaries, and increased depreciation of tangible fixed assets related to the expansion of our fluid dynamic bearing production capacity for the year ended March 31, 2003. Excluding the contribution from these newly consolidated subsidiaries, cost of products sold increased ¥2,696 million, or 1.7%, from ¥159,422 million for the year ended March 31, 2002 to ¥160,301 million for the year ended March 31, 2003. As a percentage of net sales, cost of sales decreased from 82.5% to 80.8%. This decrease was primarily due to increased ef ficiencies of scale realized by increased mass production of fluid dynamic bearing motors and lower cost of products relative to net sales of these newly consolidated subsidiaries.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased 20.4% from ¥17,691 million for the year ended March 31, 2002 to ¥21,302 million for the year ended March 31, 2003. In addition to the increase in line with the sales increase, this increase was mainly due to the additional expenses of the newly consolidated subsidiaries. Excluding the additional expenses from these newly consolidated subsidiaries, selling, general and administrative expenses increased ¥180 million, or 1.1%, to ¥17,322 million.

Nidec and its U.S. subsidiary, Nidec America Corporation, were sued in 1991 in the U.S. District Court in Connecticut by Rotron, an action in which Rotron claimed that fans manufactured or distributed by Nidec and Nidec America Corporation infringed upon two of Rotron’s patents. On March 28, 2003, Nidec and Nidec America Corporation entered into a settlement agreement with Rotron terminating the pending litigation between the companies and exchanging reciprocal intellectual property rights and privileges whereby each side covenants not to sue the other under existing patents as applied to existing products. Under the settlement agreement, Nidec America Corporation paid Rotron $8 million, which has been recorded in “Other Current Liabilities” in our consolidated balance sheet and in “Selling, General and Administrative Expenses” in our consolidated statements of income. Our dec ision to enter in the settlement agreement was based on our business judgement that it was the best choice for us to avoid jury’s verdict that one category of our products infringed Rotron’s patent and to obtain prospective protection against future claims by Rotron by executing the settlement agreement.

Excluding the impact from these newly consolidated subsidiaries, salaries increased by ¥409 million at Nidec from ¥1,979 million for the year ended March 31, 2002 to ¥2,388 million for the year ended March 31, 2003. Moreover, officers’ salaries increased by ¥106 million at Nidec from ¥302 million for the year ended March 31, 2002 to ¥408 million for the year ended March 31, 2003.

We changed the manner in which we account for goodwill in light of the adoption of new accounting standards, SFAS No. 142, which became effective for us on April 1, 2002. Under SFAS No. 142, goodwill and intangible assets deemed to have indefinite lives are no longer amortized, as previous standards required, but are tested for impairment annually. As a result, we ceased to amortize ¥3,658 million of goodwill on a straight-line basis over its estimated useful life and did not recognize ¥968 million of goodwill amortization expense for the year ended March 31, 2003 that would have been recognized if the previous standards had been in effect. As a result of our impairment test, we did not recognize impairments for the year ended March 31, 2003.

As a percentage of net sales, selling, general and administrative expenses were the same 9.2% both for the year ended March 31, 2002 and for the year ended March 31, 2003.

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Research and Development Expenses

Our research and development expenses increased 19.1% from ¥5,727 million for the year ended March 31, 2002 to ¥6,824 million for the year ended March 31, 2003. 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 decreased ¥103 million, or 1.8%, from ¥5,729 million for the year ended March 31, 2002 to ¥5,624 million for the year ended March 31, 2003. This was mainly due to a decrease of expenditures for fluid dynamic bearing motors. As a percentage of net sales, research and development expenses decreased from 3.0% to 2.9%.

Operating Income

As a result of the foregoing factors, our operating income increased 56.6% from ¥10,472 million for the year ended March 31, 2002 to ¥16,404 million for the year ended March 31, 2003. As a percentage of net sales, operating income increased from 5.4% to 7.1%.

Other Income (Expenses)

We had other income in the amount of ¥1,005 million for the year ended March 31, 2002 while we incurred other expenses in the amount of ¥5,493 million for the year ended March 31, 2003.

Interest and dividend income decreased from ¥572 million for the year ended March 31, 2002 to ¥364 million for the year ended March 31, 2003. This decrease was mainly due to the decreased average balance of foreign currency deposits and lower interest rates. Interest expense decreased from ¥1,167 million for the year ended March 31, 2002 to ¥890 million for the year ended March 31, 2003. This decrease was mainly due to the decreased average balance of our long-term debt during the period.

For the year ended March 31, 2003, we recorded a net foreign exchange loss in the amount of ¥3,511 million, of which ¥2,118 million was recorded at Nidec and ¥622 million at Nidec Philippines Corporation. The loss at Nidec was principally due to the appreciation of the yen against the U.S. dollar, which eroded the yen value of its net foreign currency denominated assets. The loss at Nidec Philippines Corporation was principally due to the appreciation of the yen against the Philippine peso, which eroded Nidec Philippines Corporation’s net yen-denominated borrowings.

For the year ended March 31, 2002, we recorded a net foreign exchange gain in the amount of ¥2,107 million, of which ¥1,146 million was recorded at Nidec and ¥365 million at Nidec Electronics (Thailand) Co., Ltd.

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 the market prices at the 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 its carrying amount for six months. At March 31, 2003, gross unrealized losses of ¥487 million were recognized as temporary losses in equity. This was partially offset by unrealized gains of ¥113 million. It is uncertain whether these losses will become other-than-temporary or whether any further deterioration in fair value will occur since it depends largely on the performance of the Japanese stock market.

Our other, net for the year ended March 31, 2003 was ¥69 million, while our other, net for the year ended March 31, 2002 was ¥874 million due primarily to the settlement gain from Princeton Global Management Inc. for the year ended March 31, 2002.

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Income before Provision for Income Taxes

As a result of the foregoing, our income before income taxes decreased 4.9% from ¥11,477 million for the year ended March 31, 2002 to ¥10,911 million for the year ended March 31, 2003.

Provision for Income Taxes

The provision for income taxes declined 51.3% from ¥2,162 million for the year ended March 31, 2002 to ¥1,053 million for the year ended March 31, 2003. This was because our effective tax rate decreased from 18.8% for the year ended March 31, 2002 to 9.7% in the year ended March 31, 2003 as an adjustment for prior year’s tax accruals related to the reversal of deferred tax liabilities on loss on write-downs of investment securities.

Minority Interest in Income (Loss) of Consolidated Subsidiaries

For the year ended March 31, 2003, minority interest in income of consolidated subsidiaries was ¥644 million as compared with ¥318 million for the year ended March 31, 2002. This increase was mainly due to the addition of our newly consolidated subsidiaries.

Equity in Net (Income)/Losses of Affiliated Companies

We had equity in net income of affiliated companies in the amount of ¥1,466 million for the year ended March 31, 2003 and equity in net loss in our affiliated companies in the amount of ¥2,417 million for the year ended March 31, 2002. The reason for this change was that we changed the manner in which we account for goodwill in light of the adoption of SFAS No. 142, which became effective on April 1, 2002.

We ceased to amortize ¥9,228 million of the portion of the difference between the cost of our investment and the amount of underlying equity in net assets of our affiliated companies that is recognized as goodwill. For the year ended March 31, 2003, we did not recognize ¥2,591 million of amortization on the goodwill associated with our affiliated companies. We continue to review equity method investments for impairment in accordance with the guidance in Accounting Principles Boards Opinion No. 18. For the year ended March 31, 2003, there were no impairments recorded for our affiliated companies.

Summarized financial information for our affiliated companies is included in Note 11 to our consolidated financial statements included in this annual report.

Net Income

As a result of the foregoing, our net income increased 62.3% from ¥6,580 million for the year ended March 31, 2002 to ¥10,680 million for the year ended March 31, 2003.

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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 thirteen 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 12 consolidated subsidiaries: Nidec Singapore Pte. Ltd., Nidec Electronics (Thailand) Co., Ltd., Nidec Philippines Corporation, Nidec America Corporation, Nidec Power Motor Corporation, Nidec (Dalian) Limited, Nidec Shibaura Corporation, Nidec Tosok Corporation, Nidec Taiwan Corporation, Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. 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 Taiwan Corporation, Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. are newly reportable segments for the year ended March 31, 2004. Segment information for the years ended March 31, 2002 and 2003 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, Nidec Power Motor Corporation, Nidec Shibaura Corporation, Nidec Tosok Corporation, Nidec Copal Corporation, Nidec Copal Electronics Corporation and Sankyo Seiki Mfg. Co., Ltd. apply Japanese GAAP, Nidec Singapore Pte. Ltd. applies Singaporean accounting principles, Nidec Electronics (Thailand) Co., Ltd. applies Thai accounting principles, Nidec Philippines Corporation applies Philippine accounting principles, Nidec America Corporation applies U.S. GAAP, Nidec (Dalian) Limited applies Chinese accounting principles and Nidec Taiwan Corporation applies Taiwanese 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 other than Nidec America Corporation, 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, 2002, 2003 and 2004. The second table shows operating profit or loss by reportable operating segment for the years ended March 31, 2002, 2003 and 2004:

	Year ended March 31,
	2002	2003	2004	2004
	(Yen in millions and U.S. dollars in thousands)
Nidec
External revenues	¥ 63,205	¥ 65,248	¥ 60,316	$ 570,688
Intrasegments revenues	61,679	63,916	58,320	551,802
Sub total	124,884	129,164	118,636	1,122,490
Nidec Singapore
External revenues	48,115	46,708	36,668	346,939
Intrasegments revenues	3,254	3,851	3,081	29,151
Sub total	51,369	50,559	39,749	376,090
Nidec Electronics (Thailand)
External revenues	14,787	20,484	33,003	312,262
Intrasegments revenues	23,109	21,256	17,794	168,361
Sub total	37,896	41,740	50,797	480,623
Nidec Philippines
External revenues	5,220	3,602	1,511	14,297
Intrasegments revenues	19,816	18,838	22,117	209,263
Sub total	25,036	22,440	23,628	223,560

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	Year ended March 31,
	2002		2003		2004		2004
	(Yen in millions and U.S. dollars in thousands)
Nidec America
External revenues	7,487		6,075		3,564		33,721
Intrasegments revenues	539		1,398		1,430		13,530
Sub total	8,026		7,473		4,994		47,251
Nidec Power Motor
External revenues	9,345		9,116		7,986		75,561
Intrasegments revenues	31		93		147		1,391
Sub total	9,376		9,209		8,133		76,952
Nidec (Dalian)
External revenues	17		48		112		1,060
Intrasegments revenues	24,070		27,523		31,270		295,865
Sub total	24,087		27,571		31,382		296,925
Nidec Shibaura
External revenues	16,192		15,138		15,767		149,181
Intrasegments revenues	2,479		2,966		4,429		41,906
Sub total	18,671		18,104		20,196		191,087
Nidec Tosok
External revenues	1,615		18,933		21,211		200,691
Intrasegments revenues	139		565		666		6,301
Sub total	1,754		19,498		21,877		206,992
Nidec Taiwan
External revenues	3,661		8,921		12,492		118,195
Intrasegments revenues	1,470		1,625		1,113		10,531
Sub total	5,131		10,546		13,605		128,726
Nidec Copal
External revenues	-		-		9,146		86,536
Intrasegments revenues	-		-		1,384		13,095
Sub total	-		-		10,530		99,631
Nidec Copal Electronics
External revenues	-		-		2,854		27,003
Intrasegments revenues	-		-		372		3,520
Sub total	-		-		3,226		30,523
Sankyo Seiki
External revenues	-		-		7,779		73,602
Intrasegments revenues	-		-		3,641		34,450
Sub total	-		-		11,420		108,052
All Others
External revenues	22,672		37,157		67,121		635,074
Intrasegments revenues	39,760		54,846		66,133		625,726
Sub total	62,432		92,003		133,254		1,260,800
Total
External revenues	192,316		231,430		279,530		2,644,810
Intrasegments revenues	176,346		196,877		211,897		2,004,892
Adjustments(*)	1,016		406		(2,033	)	(19,235	)
Intrasegments elimination	(176,346	)	(196,877	)	(211,897	)	(2,004,892	)
Consolidated total (net sales)	¥ 193,332		¥ 231,836		¥ 277,497		$ 2,625,575

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

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		Year ended March 31,
		2002		2003		2004		2004
		(Yen in millions and U.S. dollars in thousands)
Segment profit or loss:
	Nidec	¥ 4,101		¥ 3,521		¥ 1,483		$ 14,032
	Nidec Singapore	1,963		2,020		2,489		23,550
	Nidec Electronics (Thailand)	1,578		3,179		8,590		81,275
	Nidec Philippines	2,485		1,212		1,422		13,454
	Nidec America	(680	)	165		279		2,640
	Nidec Power Motor	187		488		251		2,375
	Nidec (Dalian)	1,778		3,001		2,486		23,522
	Nidec Shibaura	279		(134	)	801		7,579
	Nidec Tosok	90		689		1,450		13,719
	Nidec Taiwan	219		343		362		3,425
	Nidec Copal	-		-		586		5,544
	Nidec Copal Electronics	-		-		307		2,905
	Sankyo Seiki	-		-		(2,581	)	(24,420	)
	All Others	2,979		4,107		7,344		69,486
	Total	14,979		18,591		25,269		239,086
	Adjustments (*)	(4,507	)	(2,187	)	(3,254	)	(30,788	)
	Consolidated total	¥ 10,472		¥ 16,404		¥ 22,015		$ 208,298

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

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 increased 3.4% from ¥124,884 million for the year ended March 31, 2002 to ¥129,164 million for the year ended March 31, 2003. This increase resulted from increased sales of small precision brushless DC motors used for DVD, CD-R and CD-R/W drives and mid-size motors for automobile power steering systems. Operating profit of Nidec decreased 14.1% from ¥4,101 million for the year ended March 31, 2002 to ¥3,521 million for the year ended March 31, 2003 due to increased selling, general and administrative expenses such as personnel, freight and packing expenses despite increased gross profit.

.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%.

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Net sales of Nidec Singapore Pte. Ltd. decreased 1.6% from ¥51,369 million for the year ended March 31, 2002 to ¥50,559 million for the year ended March 31, 2003 due primarily to the appreciation of the yen by approximately 2.5%, offset by an increase in sales denominated in U.S. dollars by 1.0%. Operating profit of Nidec Singapore Pte. Ltd. increased 2.9% from ¥1,963 million for the year ended March 31, 2002 to ¥2,020 million for the year ended March 31, 2003 mainly due to improvement in production efficiency in small precision ball bearing motors.

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 Electronics (Thailand) Co., Ltd. increased 10.1% from ¥37,896 million for the year ended March 31, 2002 to ¥41,740 million for the year ended March 31, 2003 due to an increase in sales of fluid dynamic bearing motors to main customers. Operating profit increased 101.5% from ¥1,578 million for the year ended March 31, 2002 to ¥3,179 million for the year ended March 31, 2003 due primarily to a successful shift to mass production of fluid dynamic bearing motors from conventional ball bearing motors.

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 Nidec Philippines Corporation decreased 10.4% from ¥25,036 million for the year ended March 31, 2002 to ¥22,440 million for the year ended March 31, 2003 due to the decreased sales of ball bearing motors despite a rapid shift of production from ball bearing motors to fluid dynamic bearing motors. Operating profit of Nidec Philippines Corporation fell 51.2% from ¥2,485 million for the year ended March 31, 2002 to ¥1,212 million for the year ended March 31, 2003 due to decreased sales of ball bearing motors and increased depreciation of capital investment for the production of fluid dynamic bearing motors.

Net sales of Nidec America Corporation decreased 33.2% from ¥7,473 million for the year ended March 31, 2003 to ¥4,994 million for the year ended March 31, 2004 mainly due to a decrease in sales of fan motors used in microprocessor cooling units by a change in sales routes. Sales to a main customer that were previously made through Nidec America Corporation are now made directly from Japan. However, operating profit of Nidec America Corporation increased 69.1% from ¥165 million for the year ended March 31, 2003 to ¥279 million for the year ended March 31, 2004. This was mainly due to a decrease in selling, general and administrative expenses by the withdrawal from the unprofitable power supplies business.

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Net sales of Nidec America Corporation decreased 6.9% from ¥8,026 million for the year ended March 31, 2002 to ¥7,473 million for the year ended March 31, 2003 due to decreased sales of fan motors and the withdrawal from the power supplies business. Although Nidec America Corporation recorded an operating loss of ¥680 million for the year ended March 31, 2002, it had operating profit of ¥165 million for the year ended March 31, 2003. This was mainly due to increased domestic manufacturing of high-margin fan products despite decreased sales of low-margin imported fan motors and the withdrawal from the unprofitable power supplies business.

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 Nidec Power Motor Corporation decreased 1.8% from ¥9,376 million for the year ended March 31, 2002 to ¥9,209 million for the year ended March 31, 2003 due to sluggish demand for AC motors across industries. However, operating profit of Nidec Power Motor Corporation increased 161.0% from ¥187 million for the year ended March 31, 2002 to ¥488 million for the year ended March 31, 2003 due to the shift of production to China and domestic cost reduction activities.

Net sales of Nidec (Dailian) 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 (Dailian) Limited increased 14.5% from ¥24,087 million for the year ended March 31, 2002 to ¥27,571 million for the year ended March 31, 2003 due to an increase in customer demand for DC motors. Operating profit increased 68.8% from ¥1,778 million for the year ended March 31, 2002 to ¥3,001 million for the year ended March 31, 2003. The major reason for this increase in operating profit came from the improvement in cost efficiency by increasing production of profitable DC motors for notebook-type PCs.

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 Shibaura Corporation decreased 3.0% from ¥18,671 million for the year ended March 31, 2002 to ¥18,104 million for the year ended March 31, 2003 due to the curtailment of the electric tools business. After recording operating profit of ¥279 million for the year ended March 31, 2002, Nidec Shibaura Corporation had a loss of ¥134 million for the year ended March 31, 2003. This decline in profits was mainly due to the write-off of obsolete inventory.

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 and operating profit of Nidec Tosok Corporation were ¥1,754 million and ¥90 million for the year ended March 31, 2002 and ¥19,498 million and ¥689 million for the year ended March 31, 2003, respectively. Nidec Tosok Corporation has been consolidated since February 2002.

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.

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Net sales and operating profit of Nidec Copal Corporation were ¥10,530 million and ¥586 million for the year ended March 31, 2004. Nidec Copal Corporation has been consolidated since February 2004.

Net sales and operating profit of Nidec Copal Electronics Corporation were ¥3,226 million and ¥307 million for the year ended March 31, 2004. Nidec Copal Electronics Corporation has been consolidated since January 2004.

Net sales and an operating loss of Sankyo Seiki Mfg. Co., Ltd. were ¥11,420 million and ¥2,581 million for the year ended March 31, 2004. Sankyo Seiki Mfg. Co., Ltd. has been consolidated since February 2004. It recorded significant loss due to the expenses for restructuring of factories in March 2004.

Within the All Others segment, net sales increased 44.8% from ¥92,003 million for the year ended March 31, 2003 to ¥133,254 million for the year ended March 31, 2004. Operating profit also increased 78.8% from ¥4,107 million for the year ended March 31, 2003 to ¥7,344 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 and Sankyo Seiki Mfg. Co., Ltd. were ¥24,781 million and ¥413 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 ¥16,470 million and ¥2,824 million, respectively, mainly due to the expansion and improvement of profitability in Nidec (Dongguan) Corporation and Nidec Shibaura (Zhejiang) Co., Ltd.

Within the All Others segment, net sales increased 47.4% from ¥62,432 million for the year ended March 31, 2002 to ¥92,003 million for the year ended March 31, 2003. Operating profit also increased 37.9% from ¥2,979 million for the year ended March 31, 2002 to ¥4,107 million for the year ended March 31, 2003. In February 2002, Nidec acquired over 50% ownership in Nidec-Shimpo Corporation, Nidec-Read Corporation, Nidec Tosok Corporation and certain other affiliated companies, and these companies were consolidated from their respective acquisition dates. The net sales and operating profit of these companies other than Nidec Tosok Corporation were ¥1,132 million and ¥162 million for the year ended March 31, 2002 and ¥24,977 million and ¥2,242 million for the year ended March 31, 2003, respectively, and were included in the All Others s egment. Excluding the contribution from these newly consolidated subsidiaries, net sales increased ¥5,726 million mainly due to increased sales in Nidec Hi-Tech Motor (Thailand), and operating profit decreased ¥1,076 million mainly due to decreased profit in Nidec Machinery Corporation and a loss at Nidec (Zheijiang) Corporation.

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Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 143, “Accounting for Asset Retirement Obligations”. This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement shall be effective for fiscal years beginning after June 15, 2002. The adoption of FAS No. 143 did not have a material impact on our results of operations and financial position.

In November 2002, the FASB issued EITF Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables”. EITF Issue No. 00-21 provides guidance on when and how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF Issue No.00-21 applied to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. Adoption of this standard did not have a material impact on its results of operations and financial position.

In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 are effective for us on July 1, 2003. We have completed its evaluation of the impact of FIN 46 and has not identified any variable interest entities which would requir e consolidation as a result of implementing the new standard.

In December 2003, the FASB issued revised FIN No. 46 (“FIN No. 46R”), which replaces FIN No. 46. FIN No. 46R retains many of the basic concepts introduced in FIN No. 46; however, it also introduces a new scope exception for certain types of entities that qualify as a “business” as defined in FIN No. 46R, revises the method of calculating expected losses and residual returns for determination of a primary beneficiary, and includes new guidance for assessing variable interests. The adoption of FIN No. 46R did not have an impact on our results of operations and financial position or impact the way we had previously accounted for VIEs.

In April 2003, the FASB issued SFAS No.149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. This statement amends and clarifies financial accounting and reporting for derivative instruments, including derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. We are currently evaluating the impact of adopting this new pronouncement. The adoption of SFAS No.149 did not have an impact on our results of operations and financial position.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 establishes standards for how certain financial instruments with characteristics of both liabilities and equity shall be classified and measured. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No.150 did not have a significant impact on our results of operations and financial position.

In November 2003, the Emerging Issues Task Force reached consensus on paragraph 18 of Issue No.03-01 (“EITF 03-01”), “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” EITF 03-01 requires that certain quantitative and qualitative disclosures should be required for debt and marketable equity securities classified as available-for-sale or held-to-maturity under SFAS No.115. “Accounting for Certain Investments in Debt and Equity Securities” and SFAS No.124,”Accounting for Certain Investments Held by Not-for-Profit Organizations” that are impaired at the balance sheet date but for which an other-than-temporary impairment has not been recognized. We adopted EITF 03-01 in March 2004. However, it did not have a material impact on our results of operations and financial position.

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In December 2003, the FASB issued SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits”. The standard requires that companies provide additional disclosures about the types of plan assets, investment strategy, plan obligations, cash flows and components of periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. In accordance with the transition provisions of the new FAS No. 132, Note 15, pension and severance plans has been expanded to include the new disclosures requirements as of and for the year ended March 31, 2004.

Application of Critical Accounting Policies

Our consolidated financial statements are prepared in conformity 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, 2003 or 2004. We may have to recognize large amounts of inventory write-downs as a result of an unexpected decline 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 their 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 exten t to which the fair value has been 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.

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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, 2003 and 2004, the estimated fair value of our marketable securities was ¥4,569 million and ¥17,839 million, respectively. We recorded loss on marketable securities in the amount of ¥1,583 million and gain in the amount of ¥816 million for the years ended March 31, 2003 and 2004, respectively.

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, 2004, sales to our six largest customers represented approximately 40% of our net sales. Our accounts receivable are likewise concentrated. At March 31, 2004, six customers represented ¥23.6 billion, or 24%, of our gross accounts receivable. In addition, during economic downturns, certain number of our customers ma y 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 ¥465 million as of March 31, 2003 and ¥623 million as of March 31, 2004. Our trade notes and accounts receivable balance was ¥113,940 million, net of allowance for doubtful accounts, as of March 31, 2004.

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, 2004 we had deferred tax assets in the amount of ¥14,061 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 inc lude an expense within the tax 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 ¥20,765 million as of March 31, 2004, 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.

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Impairment of Long-lived Assets

Long-lived assets, consisting primarily of property, plant and equipment, comprised approximately 30% of our total assets as of March 31, 2004. 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 amount 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.

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 determination 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 ¥28,078 million as of March 31, 2004.

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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 th ese 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 are 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, provided that holding all other assumptions constant, for Japanese pension plans as of March 31, 2004.

	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	-/+ 41	+/- 24

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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 cost; 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 expenditure, investment in and financing of affiliated companies and repayments of borrowing from banks. We will 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 fund raised going forward will be reserved and utilized for future M&A operations.

During fiscal 2003, we issued Euro convertible bonds of ¥30 billion. We used the proceeds for the issuance of our shares to shareholders of Sankyo Seiki, the purchase of Sankyo Seiki’s shares and the issuance of our shares to shareholders of Nidec Copal Corporation. Also, in June 2004, we issued 5,750,000 shares of common stock in a public offering in Japan, and received proceeds in the amount of ¥63,799 million.  Of such proceeds, we plan to use approximately ¥38,351 million for additional investments in our equity method affiliates, ¥2,649 million for investments in factories and equipment in Japan and overseas, including Thailand, China and the Philippines, and the remainder for repayment of certain of our indebtedness. We intend to obtain significant amount of cash through offerings of securities  as necessary in the future.

We actively seek to implement group financing schemes 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 extends 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 finance costs and allocating surplus cash effectively within the group through balancing cash flows and investment activities including mergers and acquisitions.

Total assets increased by ¥185,954 million from ¥257,932 million for the year ended March 31, 2003 to ¥443,886 million for the year ended March 31, 2004. Total assets of newly consolidated subsidiaries such as Nidec Copal Corporation, Nidec Copal Electronics Corporation, Sankyo Seiki Mfg. Co., Ltd. and certain other companies were ¥199,131 million. Excluding the contribution from these newly consolidated subsidiaries, total assets decreased by ¥13,177 million to ¥244,755 million for the year ended March 31, 2004. This is due to a reduction of investments in and advances to affiliates because these three companies became more than 50% owned subsidiaries despite the increase in property, plant and equipment

Total liabilities increased by ¥124,442 million to ¥284,709 million as of March 31, 2004. Total liabilities of newly consolidated subsidiaries described above were ¥87,652 million. Excluding the liabilities of these newly consolidated subsidiaries, total liabilities increased by ¥36,790 million from ¥160,267 million for the year ended March 31, 2003 to ¥197,057 million for the year ended March 31, 2004. The main reason was due to proceeds from issuance of yen denominated zero coupon convertible bonds. In addition, short-term borrowings and long-term debt increased.

Working capital, defined as current assets less current liabilities, increased by ¥51,483 million to ¥39,621 million as of March 31, 2004 as compared to March 31, 2003. Working capital of newly consolidated subsidiaries described above was ¥61,137 million. Excluding the contribution from these newly consolidated subsidiaries, working capital decreased from negative ¥11,862 million to negative ¥21,516 million. This was due primarily to the increase in short-term borrowings because we funded a great portion of our operations through short-term borrowings from banks that offer relatively lower interest rates than long-term debt.

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The 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. Excluding the contribution from these newly consolidated subsidiaries, our receivable turnover ratio was 4.0 for the year ended March 31, 2004, compared to 3.9 for the year ended March 31, 2003. The inventory turnover ratio is calculated by dividing cost of products sold for the year ended March 31 by the year-end inventory balance. Excluding the contribution from these newly consolidated subsidiaries, our inventory turnover ratio was 9.1 for the year ended March 31, 2004, compared to 11.0 for the year ended March 31, 2003. We had been trying to reduce production levels to enable us to move excess inventory and avoid write-offs but did not reach satisfactory results during this term.

Total shareholder’s equity increased by ¥21,489 million, or 24.3%, from ¥88,557million for the year ended March 31, 2003 to ¥110,046 million for the year ended March 31, 2004. This increase was mainly due to increases in retained earnings of ¥14,179 million and 582,990 new shares issued upon shares exchange with Nidec-Shimpo Corporation of ¥3,495 million. The ratio of stockholders’ equity to total assets decreased from 34.3% as of March 31, 2003 to 24.8% as of March 31, 2004 mainly due to increases in yen denominated zero coupon convertible bonds, short-term borrowings and minority interest in consolidated subsidiaries.

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Cash Flows

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 continuous investments in machinery and equipment for production of fluid dynamic bearing motors. Other non-cash P/L items or increase/decrease of current assets and liabilities did not significantly affect the total.

Net cash provided by operating activities was ¥24,288 million for the year ended March 31, 2003, compared with ¥21,263 million for the year ended March 31, 2002. Besides higher net income, the increase was principally due to an increase in depreciation and notes and accounts payable despite an increase in equity in net income of affiliated companies and accrued income taxes. Depreciation increased mainly due to investments in machinery and equipment for production of fluid dynamic bearing motors. An increase in notes and accounts receivables of ¥1,004 million in the year ended March 31, 2003 and ¥2,050 million in the year ended March 31, 2002 negatively affected cash flow from operating activities in both periods.  

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 stake in newly consolidated subsidiaries after adding investments to affiliated companies. We focused consistently 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 investing activities was ¥23,179 million for the year ended March 31, 2003, compared with ¥15,669 million for the year ended March 31, 2002. This increase was mainly due to an increase in our total expenditures for property, plant and equipment. For the years ended March 31, 2002 and 2003, we focused consistently on investments in facilities equipment mainly for our production of fluid dynamic bearing motors. Besides payments for additional investments in subsidiaries, net of cash acquired was ¥672 million for the year ended March 31, 2003 compared with proceeds for additional investments in subsidiaries in the amount of ¥2,962 million for the year ended March 31, 2002.

As a result of these factors, our net cash flow (the difference between cash provided by operating activities and cash used in investing activities) increased ¥9,168 million from ¥1,109 million for the year ended March 31, 2003 to ¥10,277 million for the year ended March 31, 2004.

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 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. Concerning stock acquisition rights, 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.

Net cash used in financing activities was ¥4,163 million for the year ended March 31, 2003, while net cash provided by financing activities was ¥1,536 million for the year ended March 31, 2002. This was mainly due to the net repayment of long-term debt in the amount of ¥10,745 million for the year ended March 31, 2003, compared with an increase of ¥114 million for the year ended March 31, 2002. On the contrary, an increase in short-term borrowings was ¥8,844 million for the year ended March 31, 2003 and ¥ 4,105 million for the year ended March 31, 2002.

As a result of the foregoing factors and the effect of exchange rate changes, our total outstanding balance of cash and cash equivalents increased ¥40,353 million from ¥33,039 million as of March 31, 2003 to ¥73,392 million as of March 31, 2004.

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Our capital commitments as of March 31, 2004 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 ¥6,159 million on March 31, 2003 to approximately ¥5,948 million on March 31, 2004, and from approximately ¥9,007 million on March 31, 2002 to approximately ¥6,159 million on March 31, 2003, respectively. Each decrease is due mainly to a reduction in investments in facilities equipment compared to the previous year. See Note 20 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.

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)
2005	¥2,653	$25,102
2006	11,233	106,282
2007	1,142	10,805
2008	1,249	11,818
2009	31,236	295,544
2010 and thereafter	165	1,561

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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 consistently embody leading edge technology and quality. Given that the 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. Nidec employs approximately 1,655 people, who are engaged in research and development mainly in Japan as well as in the United States and Singapore as of March 31, 2004. Our position as the leading supplier of hard disk drive spindle motors to the major hard disk drive manufacturers provides us with access to the most current information in the industry which we immediately incorporate into our research and development activities. As a result, we can quickly develop products that match the precise needs of each cust omer.

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 all 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 technology 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 subsidiaries. Nidec Copal holds overwhelming market share in shutters for digital cameras and has been carrying out development of shutters and lens units. It has developed vibration motors for mobile phones and laboratory systems equipment among industrial equipment related products of the Company. 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 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 development of ultra-precision processing technology. These include research and development of each of the following fields of multimedia equipment, information accessory equipment such as computers, industrial equipment, home electronics and housing equipment.

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 drive 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 the 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 10,000 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 becomes more important and we are therefore conducting research and development with a view to improving the precision of rotation;

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•

the improvement of analysis and material technologies, including by (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 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 effectively help 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 type polygon laser scanners and sensors mainly for the semiconductor equipment industry by Nidec Copal Electronics; and

•

Development of stepping motors for downsizing of the digital camera market, development products and accessory equipment, applying card reader technology, liquid crystal substrate robots, 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 focused on long-term perspectives, 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.

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 absolute precision, measurement and analysis at the level of mere 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 promptly and accura tely conducts rigorous inspection, measurement and analysis, and utilizes the results to improve product design and process capabilities.

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Similarly, we respond promptly to challenges such as noise reduction, using cutting-edge 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, conforming 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 ¥5,727 million for the year ended March 31, 2002, ¥6,824 million for the year ended March 31, 2003 and ¥8,751 million for the year ended March 31, 2004. Much of our research and development is conducted by our domestic subsidiaries, which are then reimbursed for costs incurred. We also cooperate with our affiliates to conduct significant research and development. We anticipate spending approximately ¥15,000 million on research and development in the year ending March 31, 2005 due to an increase of consolidated subsidiaries such as Nidec Copal Corporation, Nidec Copal Electronics Corporation, Sankyo Seiki Mfg. Co., Ltd.. We believe that our research and development expenses are sufficient for sustaining our competitiveness in the motor industry and other industries.

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 ¥750 million ($7,096 thousand) at March 31, 2004. These contingent liabilities primarily relate to ’ our guarantee of affiliated companies’ borrowings from banks. On April 2002,  our consolidated subsidiary, Nidec Tosok Corporation, agreed to guarantee for Okaya Seiken Corporation, its subconstractor of , totaling ¥309 million ($2,924 thousand) in order to provide funds for Okaya Seiken’s manufacturing facilities in Vietnam.

 Also, we have guaranteed approximately ¥441 million ($4,173thousand) of bank loan 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  our obligation to make future payments in the event of default is approximately ¥441 million ($4,173thousand).

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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, 2004.

	(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	¥ 47,678	¥ 2,653	¥ 12,377	¥ 32,485	¥ 163
Capital Lease Obligations	3,147	1,003	1,087	1,000	57
Operating Leases	734	127	104	52	451
Purchase Commitments for Fixed Aseets	5,948	5,948	-	-	-
Total Contractual Cash Obligations	¥ 57,507	¥ 9,731	¥ 13,568	¥ 33,537	¥ 671
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	¥ 750	¥ 18	¥ 100	¥ 99	¥ 533
Total Commercial Commitments	¥ 750	¥ 18	¥ 100	¥ 99	¥ 533
	(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	$ 451,111	$ 25,102	$ 117,106	$ 307,361	$ 1,542
Capital Lease Obligations	29,776	9,490	10,285	9,462	539
Operating Leases	6,945	1,202	984	492	4,267
Purchase Commitments for Fixed Aseets	56,278	56,278	-	-	-
Total Contractual Cash Obligations	$ 544,110	$ 92,072	$ 128,375	$ 317,315	$ 6,348
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	$ 7,096	$ 170	$ 946	$ 937	$5,043
Total Commercial Commitments	$ 7,096	$ 170	$ 946	$ 937	$5,043

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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 31,2004	Percentage of common stock outstanding as of March 31, 2004
				(in thousands)
Shigenobu Nagamori	President, Chief Executive Officer and Representative Director	August 28, 1944	June 2005	11,707	18.0%
Hiroshi Kobe	Executive Vice President, Chief Operating Officer and Director	March 28, 1949	June 2005	118	*
Yasunobu Toriyama	Executive Vice President, Chief Financial and Accounting Officer and Director	September 18, 1938	June 2005	8	*
Kenji Sawamura	Senior Managing Director	February 15, 1942	June 2005	2	*
Yasuo Hamaguchi	Senior Managing Director	September 27, 1949	June 2005	133	*
Yoshiharu Kinugawa	Managing Director	March 5, 1947	June 2005	60	*
Seizaburo Kawaguchi	Managing Director	October 27, 1953	June 2005	11	*
Toshihiro Kimura	Director	July 2, 1953	June 2005	13	*
Seiichi Hattori	Director	December 30, 1953	June 2005	10	*
Tetsuo Inoue	Director	June 22, 1948	June 2005	3	*
Satoru Kaji	Director	October 4, 1947	June 2005	3	*
Tadaaki Hamada	Director	August 14, 1948	June 2005	-
Takashi Iwata	Director	April 9, 1947	June 2005	0
Kiyoyoshi Takegami	Director	December 28, 1954	June 2005	25
Hideo Asahina	Corporate Auditor	March 28, 1938	June 2007	0	*
Yoichi 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 Logistics Corporation (the company name was changed from “Sankyo Ryutsu Co., Ltd.” in April 2004), Tokyo Pigeon Co., Ltd. and Nissin Kohki Co., Ltd.

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, and Risk Management.

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, C.E.O 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, Corporate Quality Control, Purchasing Department 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 Director of Mineyama Precision Machining Center in May 2003. He became President and Representative Director of Nidec Philippines Corporation in July 2004.

Yoshiharu Kinugawa has served as our Managing Director since June 1993. From Aplil 1997 to March 2000, he served as Director of Corporate Purchasing and Vice Chairman and Representative Director of Koyo Nidec (Dalian) Precision Bearings Co., Ltd. He was responsible for corporate research & development, large DC motor business and fluid dynamic bearing business and served as Manager of our Central Laboratory and Vice Chairman and Director of Nidec Electronics Corporation from 2000 to 2002. In April 2002, he was appointed to be responsible for the research and development of spindle motors and became General Manager of the Central Laboratory, Processing Technology Department and the Mineyama Plant.  He became in charge of Nagano Technical Center in April 2003 and Central Technical Laboratory in May 2003.

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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.

Toshihiro Kimura has served as our Director since June 1997. From July 1995 to March 2000, he served as President and Director of Nidec (Dalian) Limited. He became the Senior Executive Director of the Shiga Technical Center and General Manager of Project Support Department No.1 and has been responsible for our DC motor business since April 2000. In April 2000 he also became Vice Chairman and Representative Director of Nidec (Dalian) Limited. He became General Manager of Central Technology Laboratory in May 2003. He became Vice Chairman and President of Nidec (Zhejiang) Corporation, and became in charge of Nidec Pinghu City Industrial Park in April 2004.

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.

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.

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.

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 section 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 Director of Nagano Technical Center in April 2003.

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.

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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 President and Chief Executive Officer and one or more Executive Vice Presidents, Senior Managing Directors and Managing Directors. Our Executive Officers serve at the 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: Yoichi Ichikawa, Hideo Asahina, 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, Yoichi Ichikawa, Hideo Asahina 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 t he 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.

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, 2004 was ¥960 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, 2004, retirement payments in the aggregate amount of ¥175 million were made.

We are currently authorized to issue rights to subscribe for or purchase up to 298,500 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.

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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.  In addition, we are currently authorized to issue the rights to purchase 298,500 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.

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Item 7. Major Shareholders and Related Party Transactions.

A. Major Shareholders.

To our knowledge, as of March 31, 2004 or a later date as indicated, 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	18.0%
Mitsubishi Tokyo Financial Group, Inc. and its affiliates (1)	3,269	5.1

__________

(1) As of January 31, 2003, and based on the report filed on that date by Mitsubishi Tokyo Financial Group, Inc. 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, 2004, there were 65,017,898 shares of our common stock outstanding held by 10,420 shareholders of record, including 85 shareholders of record with addresses in the United States who held 3,327,527 shares, representing approximately 5.1% 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 or which they can exert significant influence.

As of March 31, 2004, President Nagamori held of record 9.2% and S. N Kohsan, a business entity indirectly owned by him, held of record 6.8% of our outstanding shares. President Nagamori’s immediate family held an additional 2.0% 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
September 30, 2000	¥	7.5	$	0.068
March 31, 2001		12.5		0.100
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

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, with a goal of increasing our payout ratio to 30% on a non-consolidated, Japanese GAAP basis. 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 15%.

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B. Significant Changes.

We are not aware of any significant change in our financial position since March 31, 2004, 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
Year ended March 31,			(in thousands of shares)
1999	¥ 7,450	¥ 3,105	126	¥ 16,731.92	¥ 12,879.97
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
First Quarter	9,840	7,930	221	11,979.85	10,074.56
Second Quarter	8,990	6,080	236	10,960.25	9,075.09
Third Quarter	8,200	5,500	248	9,215.56	8,303.39
Fourth Quarter	7,490	6,240	160	8,790.92	7,862.43
2004
First Quarter	8,300	5,600	186	9,137.14	7,607.88
Second Quarter	9,790	7,850	172	11,033.32	9,265.56
Third Quarter	11,600	9,110	166	11,161.71	9,614.60
Fourth Quarter	11,450	9,760	197	11,770.65	10,365.40
2005
First Quarter	12,480	10,660	967	12,163.89	10,505.05
Calendar period
January 2004	11,450	10,160	217	11,103.10	10,665.15
February 2004	10,800	9,760	180	11,041.92	10,365.40
March 2004	11,280	10,000	195	11,770.65	11,162.75
April 2004	12,480	10,660	243	12,163.89	11,683.42
May 2004	12,100	11,190	219	11,571.34	10,505.05
June 2004	¥ 11,800	¥ 10,810	243	11,884.06	11,027.05

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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
Year ended March 31,			(in ADSs)
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	20.89	16.81	2,076	9,686.08	8,871.20
Third Quarter	25.91	20.59	860	10,462.44	9,276.80
Fourth Quarter	26.75	22.90	8,375	10,753.63	10,007.49
2005
First Quarter	28.60	24.10	7,472	10,570.81	9,852.19
Calendar period
January 2004	26.75	23.83	3,050	10,705.18	10,367.41
February 2004	24.74	23.25	7,453	10,753.63	10,434.67
March 2004	26.29	22.90	13,770	10,695.55	10,007.49
April 2004	28.60	25.02	13,033	10,570.81	10,219.18
May 2004	27.50	24.10	3,780	10,386.32	9,852.19
June 2004	$ 27.50	$ 24.82	5,604	$ 10,487.54	$ 10,134.86

* 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.

E. Dilution.

Not applicable.

F. Expenses of the Issue.

Not applicable.

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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.

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.

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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  65,017,898 shares were issued and outstanding as of March 31, 2004. 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 o f shareholders. For the purpose 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.

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 s ixty days might cause the company “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.

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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 s hareholders’ meeting. For 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.

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 sale 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 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 on such day; or

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•

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 nderlying shares, holders of ADRs evid encing 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 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.

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;

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•

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 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. 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 righ ts 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.

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;

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•

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 preemptive rights under our Articles of Incorporation when we issue new shares. Under the Commercial Code, our Board of Directors, may, however, determine that shareholders be given subscription rights in connection with a particular issue of new shares. In this case, such rights must be given on uniform terms to all shareholders as of a specified record date by at least two weeks’ prior public notice to shareholders of the record date. Public or individual notice must be given to each of these shareholders at least two weeks prior to the date of expiration of the subscription rights.

We may issue warrants to subscribe for new shares (hereinafter referred to as “subscription warrants”) as warrants on their own or attached to bonds or debentures to any persons. Holders of shares have no preemptive rights under our Articles of Incorporation when we issue subscription warrants. Under the Commercial Code, our Board of Directors, may, however, determine that shareholders be given subscription rights in connection with a particular issue of subscription warrants. In the case of an issue of subscription warrants, public or individual notice must be given to each of the shareholders at least two weeks prior to the date for payment (or issuance of the subscription rights if such subscription warrants are issued without consideration).

Rights to subscribe for new shares, subscription warrants or rights to subscribe for subscription warrants may be transferable or nontransferable by the Board of Directors and may be made at or substantially below the market price of shares. Accordingly, rights offerings can result in substantial dilution or can result in rights holders not being able to realize the economic value of those rights.

Pursuant to the special resolution of our annual general meeting of shareholders held on June 26, 2002, 2,967 subscription warrants, which represent rights to subscribe for 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 subscription warrants.

Pursuant to the special resolution of the Board of Directors held on September 30, 2004, 15,000 subscription warrants, which represent rights to subscribe for 2,222,222 shares of common stock were issued on October 17, 2003 with the conversion price of ¥13,905 per share, in connection with the public offering of ¥30 billion zero coupon convertible bonds due 2008.

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.

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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.

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 ordinary 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 capita l.

The resolution of our annual general meeting of shareholders held on June 25, 2003 authorizes us to acquire up to 1,000,000 shares (representing approximately 1.57% of shares issued and outstanding) within ¥10 billion by the closing of our annual general meeting of shareholders to be held in 2004. As to June 30, 2003, we have acquired 8,882 shares of our common stock in total.

In the case of shares listed on a Japanese stock exchange or traded in the over-the counter market, 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.

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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, or whose shares are traded on an over-the-counter market in Japan, 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 issuer of the shares and to all Japanese stock exchanges on which the shares are listed or, in the case of shares traded over-the-counter, to the Japan Securities Dealers Association.

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.

On July 21, 2004, the closing price of our shares on the Osaka Securities Exchange was ¥10,030 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.

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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.

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.

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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.

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 after December 31, 2002 and 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 120-day period beginning 60 days before the ex-dividend date and meet other holding period requirements. The IRS has announced that it will permit taxpayers to apply a proposed legislative change to the holding period requirement descirebed in the preceding s entence as if such change were already effective. This legislative “technical correction” would change the minimum required holding period, retroactive to January 1, 2003, to more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. 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.

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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, but generally will be “passive income” or “financial services income” which 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 on or after May 6, 2003 before January 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.

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 rat 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.  In addition, dividen ds that you receive from Nidec will not be eligible for the special tax rates applicable to qualified dividend income if Nidec is a PFIC 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).

98

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, 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). On the other hand, in the case of individual shareholders, no deemed dividend is required to recognize until March 31, 2005 due to the operation of a temporary measurement (Article 9-4 of the Japanese Special Tax Measurement Law) 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.

Unless an applicable tax treaty, convention or agreement reduce 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 applies 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 United States a nd Japan of which withholding 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 are qualified US residents eligible to enjoy treaty benefits. 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 purpose, the treaty r ate normally applies superseding the tax rate under the domestic law. However, due to the so-colled 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.

99

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 450 Fifth Street, N.W., 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/finance.

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.

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 contracts 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.

100

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, 2004, our U.S. dollar denominated sales comprised more than 61% 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 61.7% 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 $105 million as of March 31, 2004. After adjusting for U.S. dollar denominated bank deposits, borrowings, debt and other monetary items, as of March 31, 2004 Nidec had net U.S. dollar denominated monetary assets of approximately $161.5 million. 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 the 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.

101

Foreign currency derivatives at March 31, 2003

	Maturity date							Fair Value
	2004	2005	2006	2007	2008	Thereafter	Total
Foreign Exchange Forward Contracts
Sell U.S. dollars
Contract amounts (in millions)	¥ 1,509	-	-	-	-	-	¥ 1,509	¥ 8
Weighted-average contracted forward rate (yen per U.S.$1)	120.30	-	-	-	-	-	120.30
Buy U.S. dollars
Contract amounts (in millions)	¥ 792	-	-	-	-	-	¥ 792	¥ 5
Weighted-average contracted forward rate (yen per U.S.$1)	118.67	-	-	-	-	-	118.67
Buy EUR
Contract amounts (in millions)	¥ 43	-	-	-	-	-	¥ 43	¥ 1
Weighted-average contracted forward rate (yen per EUR1)	126.77	-	-	-	-	-	126.77

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 dollars
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

102

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.

Interest rate risk at March 31, 2003

	Maturity date														Fair Value
	2004		2005		2006		2007		2008		Thereafter		Total
Long-term Loan Receivable	(Yen in millions)
Fixed Rate
Principal cash flows	0		1		1		2		2		17		23		27
Weighted-average interest rate	0.00	%	4.17	%	4.14	%	4.14	%	4.14	%	3.97	%	3.97	%
Floating Rate
Principal cash flows	43		37		44		33		26		65		248		248
Weighted-average interest rate	3.39	%	3.43	%	2.83	%	2.74	%	2.66	%	2.59	%	2.92	%
Long-term Debt
Fixed Rate (long-term loan)
Principal cash flows	1,780		1,454		1,165		606		602		17		5,624		5,683
Weighted-average interest rate	1.61	%	1.32	%	1.13	%	0.60	%	0.58	%	3.92	%	1.23	%
Fixed Rate (convertible bonds)
Principal cash flows	5,027		-		9,279		-		-		-		14,306		16,966
Weighted-average interest rate	0.53	%	-		0.80	%	-		-		-		0.71	%
Floating Rate (long-term loan)
Principal cash flows	1,486		1,228		95		2		2		15		2,828		2,828
Weighted-average interest rate	2.07	%	2.19	%	2.35	%	2.66	%	2.84	%	3.19	%	3.06	%

103

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	%

104

Equity security price risk

We have marketable equity securities classified as available-for-sale securities. At March 31, 2003, the fair value of these securities was ¥4,534 million and at March 31, 2004 it was ¥17,761 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, 2003 would be ¥453 million and as of March 31, 2004 would be ¥1,776 million, respectively. We had no open equity derivative positions during the year ended March 31, 2003 or 2004.

Commodity price risk

We had no open commodity derivative positions for the year ended March 31, 2003 or 2004.

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.

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 Exchange Act rules. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2004.

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 during the year ended March 31, 2004.  Based upon that evaluation, there was no change that occurred during the fiscal year ended March 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

105

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 to 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 From 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 2003.

	Yen in millions		U.S. dollars in thousands
	For the year ended March 31,		For the year ended
Type of Fee	2003	2004	March 31, 2004
Audit Fees (1)	¥257	¥278	$2630
Audit Related Fees (2)	1	11	104
Tax Fees (3)	20	17	161
All Other Fees (4)	0	0	0
Total	¥278	¥306	$2895

(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.

(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 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 PricewaterhouseCoopers.

106

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

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

Not applicable

107

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.

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***
4.1	Share Exchange Agreement between Nidec Corporation and Nidec-Shimpo Corporation, dated April 25, 2003
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 From 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.

108

NIDEC CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated balance sheets at March 31, 2003 and 2004		F-3
Consolidated statements of income for the years ended March 31, 2002, 2003 and 2004		F-5
Consolidated statements of shareholders’ equity and comprehensive income (loss) for the years ended March 31, 2002, 2003, 2004		F-6
Consolidated statements of cash flows for the years ended March 31, 2002, 2003, 2004		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-21
See Note 18, Income taxes		F-41

F-1

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 cash flows present fairly, in all material respects, the financial position of NIDEC Corporation and its consolidated subsidiaries at March 31, 2003 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2004, 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 reason able 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 28, 2004

F-2

NIDEC CORPORATION

CONSOLIDATED BALANCE SHEETS

ASSETS

		Yen in millions				U.S. dollars in thousands
		March 31				March 31,
		2003		2004		2004
Current assets:
	Cash and cash equivalents	¥ 33,039		¥ 73,392		$ 694,408
	Trade notes and accounts receivable, net of allowance for doubtful accounts of   ¥465 million in 2003 and ¥623 million ($5,895 thousand) in 2004:
	Notes	8,708		17,431		164,926
	Accounts	50,780		96,509		913,133
	Inventories	17,036		45,245		428,092
	Prepaid expenses and other current assets	11,750		13,838		130,929
	Total current assets	121,313		246,415		2,331,488
	Marketable securities and other securities investments	5,324		19,892		188,211
	Investments in and advances to affiliates	29,051		2,259		21,374
		34,375		22,151		209,585
	Property, plant and equipment:
	Land	18,490		30,532		288,883
	Buildings	47,220		73,860		698,836
	Machinery and equipment	83,624		163,401		1,546,040
	Construction in progress	2,425		7,411		70,120
		151,759		275,204		2,603,879
	Less - Accumulated depreciation	(61,050	)	(142,792	)	(1,351,046	)
		90,709		132,412		1,252,833
	Goodwill	3,658		28,078		265,664
	Other non-current assets	7,877		14,830		140,316
	Total assets	¥ 257,932		¥ 443,886		$ 4,199,886

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,
		2003		2004		2004
Current liabilities:
	Short-term borrowings	¥ 64,597		¥ 86,636		$ 819,718
	Current portion of long-term debt	8,951		2,653		25,102
	Trade notes and accounts payable	49,276		93,418		883,887
	Other current liabilities	10,351		24,087		227,902
	Total current liabilities	133,175		206,794		1,956,609
Long-term liabilities:
	Long-term debt	16,388		45,025		426,010
	Accrued pension and severance costs	10,357		29,836		282,297
	Other long-term liabilities	347		3,054		28,896
	Total long-term liabilities	27,092		77,915		737,203
Minority interest in consolidated subsidiaries		9,108		49,131		464,859
Commitments and contingencies (Note 24)
Shareholders’ equity:
	Common stock authorized: 240,000,000 shares in 2003 and 2004; issued and outstanding:63,574,729 shares in 2003 and 65,017,898 shares in 2004	26,485		28,995		274,340
	Additional paid-in capital	25,817		31,822		301,088
	Retained earnings	43,708		57,887		547,706
	Accumulated other comprehensive loss	(7,387	)	(8,535	)	(80,755	)
	Foreign currency translation adjustments	(5,690	)	(11,475	)	(108,572	)
	Unrealized gains on securities	225		2,972		28,120
	Minimum pension liability adjustment	(1,922	)	(32	)	(303	)
	Treasury stock, at cost: 8,648 shares in 2003 and 14,360 shares in 2004	(66	)	(123	)	(1,164	)
	Total shareholders’ equity	88,557		110,046		1,041,215
	Total liabilities and shareholders’ equity	¥ 257,932		¥ 443,886		$ 4,199,886

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,
		2002		2003		2004		2004
Net sales		¥ 193,332		¥ 231,836		¥ 277,497		$ 2,625,575
Operating expenses:
Cost of products sold		159,442		187,306		218,189		2,064,424
Selling, general and administrative expenses		17,691		21,302		28,542		270,054
Research and development expenses		5,727		6,824		8,751		82,799
		182,860		215,432		255,482		2,417,277
Operating income		10,472		16,404		22,015		208,298
Other income (expense):
Interest and dividend income		572		364		362		3,425
Interest expense		(1,167	)	(890	)	(862	)	(8,156	)
Foreign exchange gain (loss), net		2,107		(3,511	)	(3,149	)	(29,795	)
Gain (loss) from derivative instruments, net		8		23		(5	)	(47	)
(Loss) gain on marketable securities, net		(1,400	)	(1,583	)	816		7,720
Gain from issuance of securities by affiliated companies		-		39		-		-
Gain (loss) from sales of investments in affiliated companies		11		(4	)	45		426
Other, net		874		69		417		3,946
		1,005		(5,493	)	(2,376	)	(22,481	)
Income before provision for income taxes		11,477		10,911		19,639		185,817
Provision for income taxes		(2,162	)	(1,053	)	(5,424	)	(51,320	)
Income before minority interest and equity in earnings of affiliated companies		9,315		9,858		14,215		134,497
Minority interest in income (loss) of consolidated subsidiaries		318		644		648		6,131
Equity in net (income) / losses of affiliated companies		2,417		(1,466	)	(2,522	)	(23,862	)
Net income		¥ 6,580		¥ 10,680		¥ 16,089		$ 152,228
Per share data:		Yen						U.S. dollars
Net income	－ basic	¥ 103.53		¥ 168.01		¥ 251.14		$ 2.38
	－ diluted	¥ 98.85		¥ 159.82		¥ 241.53		$ 2.29
Cash dividends		¥ 27.50		¥ 20.00		¥ 30.00		$ 0.28

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

F-5

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME (LOSS)

	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, 2001	63,549,008	¥ 26,455	¥ 25,787	¥ 29,467		¥ (3,134	)	¥ (0	)	¥ 78,575
Comprehensive income:
Net income				6,580						6,580
Other comprehensive income (loss):
Foreign currency translation adjustments						2,456				2,456
Unrealized gains (losses) on securities, net of reclassification adjustment						(428	)			(428	)
Minimum pension liability adjustment						21				21
Total comprehensive income										8,629
Dividends paid				(1,748	)					(1,748	)
Conversion of convertible debt	14,645	14	14							28
Purchase of treasury stock								(14	)	(14	)
Reissuance of treasury stock								5		5
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

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

F-6

NIDEC CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME (LOSS)

	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, 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

	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, 2003	$ 250,591	$ 244,271	$ 413,550		$ (69,892	)	$ (625	)	$ 837,895
Comprehensive income:
Net income			152,228						152,228
Other comprehensive income (loss):
Foreign currency translation adjustments					(54,736	)			(54,736	)
Unrealized gains (losses) on securities, net of reclassification adjustment					25,991				25,991
Minimum pension liability adjustment					17,882				17,882
Total comprehensive income									141,365
Dividends paid			(18,072	)					(18,072	)
Conversion of convertible debt	23,749	23,749							47,498
New shares issued upon shares exchange		33,068							33,068
Purchase of treasury stock							(539	)	(539	)
Reissuance of treasury stock									-
Balance at March 31, 2004	$ 274,340	$ 301,088	$ 547,706		$ (80,755	)	$ (1,164	)	$ 1,041,215

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,
		2002		2003		2004		2004
Cash flows from operating activities:
	Net income	¥ 6,580		¥ 10,680		¥ 16,089		$152,228
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation	9,088		12,862		14,273		135,046
	Amortization	1,589		353		217		2,053
	Loss (gain) on sales of marketable securities	7		22		(816	)	(7,720	)
	Loss on devaluation of marketable securities	1,393		1,561		-		-
	Loss on sales and disposal of property, plant and equipment	2,422		896		819		7,749
	Deferred income taxes	(2,957	)	(1,351	)	460		4,352
	Minority interest in income (loss) of consolidated subsidiaries	318		644		648		6,131
	Equity in net losses (income) of affiliated companies	2,417		(1,466	)	(2,522	)	(23,862	)
	(Gain) loss from derivative instruments, net	(8	)	(23	)	5		47
	Gain from issuance of securities by affiliated companies	-		(39	)	-		-
	(Gain) loss from sale of investments in affiliated companies	(11	)	4		(45	)	(426	)
	Foreign currency adjustments	(148	)	2,200		3,566		33,740
	Changes in operating assets and liabilities:
	Increase in notes and accounts receivable	(2,050	)	(1,004	)	(3,559	)	(33,674	)
	Decrease (increase) in inventories	3,917		1,714		(5,959	)	(56,382	)
	(Decrease) increase in notes and accounts payable	(2,566	)	3,677		5,699		53,922
	Increase (decrease) in accrued income taxes	1,351		(3,436	)	876		8,288
	Other	(79	)	(3,006	)	1,659		15,696
	Net cash provided by operating activities	¥ 21,263		¥ 24,288		¥ 31,410		$ 297,188

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,
		2002		2003		2004		2004
Cash flows from investing activities:
	Additions to property, plant and equipment	¥ (19,270	)	¥ (21,715	)	¥ (22,631	)	$ (214,126	)
	Proceeds from sales of property, plant and equipment	2,124		501		893		8,449
	Purchases of marketable securities	(219	)	(55	)	(2,176	)	(20,589	)
	Proceeds from sales of marketable securities	237		97		1,780		16,842
	Investments in and advances to affiliates	(1,819	)	(693	)	(14,807	)	(140,098	)
	Proceeds from sales of investments in affiliated companies	192		-		955		9,036
	Acquisitions of consolidated subsidiaries, net of cash acquired	2,962		-		16,435		155,502
	Payments for additional investments in subsidiaries	-		(672	)	(1,057	)	(10,001	)
	Other	124		(642	)	(525	)	(4,967	)
	Net cash used in investing activities	(15,669	)	(23,179	)	(21,133	)	(199,952	)
Cash flows from financing activities:
	Increase in short-term borrowings	4,105		8,844		11,204		106,008
	Proceeds from issuance of long-term debt	3,393		5,527		0		0
	Repayments of long-term debt	(3,279	)	(16,272	)	(7,774	)	(73,555	)
	Proceeds from issuance of corporate bonds	-		-		30,873		292,109
	Dividends paid	(1,748	)	(1,271	)	(1,910	)	(18,072	)
	Other	(935	)	(991	)	101		956
	Net cash provided by (used in) financing activities	1,536		(4,163	)	32,494		307,446
	Effect of exchange rate changes on cash and cash equivalents	1,161		(2,402	)	(2,418	)	(22,877	)
	Net increase (decrease) in cash and cash equivalents	8,291		(5,456	)	40,353		381,805
	Cash and cash equivalents at beginning of year	30,204		38,495		33,039		312,603
	Cash and cash equivalents at end of year	¥ 38,495		¥ 33,039		¥ 73,392		$ 694,408

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 supplies, power transmission equipment, board testers, semi-conductor manufacturing supplies, substrate inspection equipment, measuring equipment; automated teller machines, factory automation systems, precision parts and dies; and iv) other products, which include auto parts, pivot assemblies, encoders, optical pick-up units, shutters, optical units, lenses, sensors, backlights for liquid crystal displays, trimmer potentiometers, switches, pressure sensors, rotary encoders, polygon laser scanners and other services. Manufacturing operations are located primarily in Asia (China, Taiwan, 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 accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.

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.

A subsidiary or an affiliated company may issue shares to third parties in a public offering or upon the conversion of convertible debt to common shares at amounts per share that are in excess of or less than NIDEC’s average per share carrying value. With respect to such transactions, 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.

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, generally 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.

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.

F-11

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

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 accelerated basis on which machinery is replaced earlier 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 manufacturing subsidiary) at rates based on the estimated useful lives of the assets. Estimated useful lives are 7 years for prefabricated warehouses, and range from 10 to 20 years for m ost spindle motor factories, from 7 to 60 years for factories to produce other products, 50 years for the head office and sales offices, from 3 to 22 years for leasehold improvement, and from 2 to 13 years for machinery and equipment.

Depreciation expense amounted to ¥9,088 million, ¥12,862 million, and ¥14,273 million ($135,046 thousand) for the years ended March 31, 2002, 2003, and 2004, respectively.

F-12

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

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 an 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 probable. Motors 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.

Advertising costs -

Advertising and sales promotion costs are expensed as incurred. Advertising costs were ¥70 million, ¥139 million, and ¥149million ($1,410 thousand) for the years ended March 31, 2002, 2003 and 2004, respectively.

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. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

F-13

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Net income 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 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.

NIDEC follows the disclosure-only provisions of SFAS No. 148 - “Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123” and has elected to apply APB No. 25 in accounting for its stock-based compensation plans. No compensation expense is recognized on the grant date, since at that date, the option price equals the market price of the underlying common stock. See Note 17 for a summary of the pro forma effects on reported net income and net income per share for the year ended March 31, 2004 based on the fair value of options and shares granted as prescribed by SFAS No. 148.

Reclassification

Certain reclassifications of previously reported amounts have been made to the consolidated balance sheets as of March 31, 2003 and the consolidated statements of cash flows for the years ended March 31, 2002 and 2003 to conform to the current year presentation. Such reclassifications have no effect on cash flows.

F-14

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Newly adopted accounting standards

In June 2001, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 143, “Accounting for Asset Retirement Obligations”. This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement shall be effective for fiscal years beginning after June 15, 2002. The adoption of FAS No. 143 did not have a material impact on NIDEC’s results of operations and financial position.

In November 2002, the FASB issued EITF Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables”. EITF Issue No. 00-21 provides guidance on when and how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF Issue No.00-21 applied to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. Adoption of this standard did not have a material impact on its results of operations and financial position.

In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 are effective for NIDEC on July 1, 2003. NIDEC has completed its evaluation of the impact of FIN 46 and has not identified any variable interest entities which would re quire consolidation as a result of implementing the new standard.

In December 2003, the FASB issued revised FIN No. 46 (“FIN No. 46R”), which replaces FIN No. 46. Fin No. 46R retains many of the basic concepts introduced in FIN No. 46; however, it also introduces a new scope exception for certain types of entities that qualify as a “business” as defined in FIN No. 46R, revises the method of calculating expected losses and residual returns for determination of a primary beneficiary, and includes new guidance for assessing variable interests. The adoption of FIN No. 46R did not have an impact on NIDEC’s results of operations and financial position or impact the way NIDEC had previously accounted for variable interest entities.

In April 2003, the FASB issued SFAS No.149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. This statement amends and clarifies financial accounting and reporting for derivative instruments, including derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. NIDEC is currently evaluating the impact of adopting this new pronouncement. The adoption of SFAS No.149 did not have an impact on NIDEC’s results of operations and financial position.

F-15

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 establishes standards for how certain financial instruments with characteristics of both liabilities and equity shall be classified and measured. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15,2003. The adoption of SFAS No.150 did not have a significant impact on NIDEC’s results of operations and financial position.

In December 2003, the FASB issued SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits”. The standards requires that companies provide additional disclosures about the types of plan assets, investment strategy, plan obligations, cash flows and components of periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. In accordance with the transition provisions of the new FAS No. 132, Note 15, Pension and severance plans, has been expanded to include the new disclosures requirements as of and for the year ended March 31, 2004.

In November 2003, the Emerging Issues Task Force reached consensus on paragraph 18 of Issue No.03-01 (“EITF 03-01”), “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” EITF 03-01 requires that certain quantitative and qualitative disclosures should be required for debt and marketable equity securities classified as available-for-sale or held-to-maturity under SFAS No.115. “Accounting for Certain Investments in Debt and Equity Securities” and SFAS No.124,”Accounting for Certain Investments Held by Not-for-Profit Organizations” that are impaired at the balance sheet date but for which an other-than-temporary impairment has not been recognized. NIDEC adopted the disclosure provision of EITF 03-01 in March 2004. However, it did not have a material impact on the disclosures in NIDEC’s Condensed Consolidated Financial Stat ements.

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 ¥105.69 = U.S. $1, the approximate current exchange rate at March 31, 2004, 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, 2004.

F-16

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

4. Acquisitions and dispositions:

In February 2002, NIDEC acquired additional ownership of 1.05% in Nidec-Shimpo Corporation (“NSCJ”), which manufactures and markets power transmission equipment, factory automation systems, measuring equipment and ceramic art equipment and NSCJ became NIDEC’s 50.7% owned subsidiary. As a result of this acquisition, NIDEC increased its ownership of Nidec-Read Corporation (“NRCJ”), a subsidiary of NSCJ, which manufactures and markets various board testers and NRCJ also became NIDEC’s 60.4% owned subsidiary. NIDEC also increased its ownership of Nidec Tosok Corporation (“NTSC”), which manufactures and markets automotive parts, semiconductor equipment, high precision motors, measuring equipment and other products and NTSC also 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 NSCJ and other affiliated companies other than discussed above. Those step-up acquisitions during the year amounted to \630 million in the aggregate.

NIDEC made no significant business acquisitions or disposals 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 share 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.

F-17

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

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 ($ 304,021 thousand) in aggregate.

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, 2003. 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.

F-18

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		Yen in millions		U.S. dollars in thousands
		For the year ended March 31 (Unaudited)		For the year ended March 31,
		2003	2004	2004
				(Unaudited)
Pro forma net sales		¥ 402,131	¥ 494,196	$ 4,675,901
Pro forma net income		5,828	1,406	13,303
		Yen		U.S. dollars
Pro forma net income per common share
	－basic	¥ 91.68	¥ 21.95	$ 0.21
	－diluted	87.64	21.79	0.21

	Yen in millions		Yen in millions	Yen in millions		U.S. dollars in thousands
	March 31		March 31	March 31		March 31,
	2002		2003	2004		2004
Cash and cash equivalents	¥ 3,592		-	¥ 48,567		$ 459,523
Accounts receivable	8,825		-	53,188		503,245
Inventories	4,675		-	23,983		226,918
Other current assets	1,789		-	5,304		50,185
Property, plant and equipment	18,987		-	40,541		383,584
Other non-current assets	2,910		-	19,449		184,020
Fair value of assets acquired	40,778		-	191,032		1,807,475
Short-term borrowings and current portion of long-term debt	(10,930	)	-	(12,652	)	(119,708	)
Accounts payable	(4,795	)	-	(38,168	)	(361,132	)
Other current liabilities	(2,265	)	-	(15,783	)	(149,333	)
Long-term debt	(296	)	-	(3,154	)	(29,842	)
Other non-current liabilities	(4,019	)	-	(25,141	)	(237,875	)
Fair value of liabilities assumed	(22,305	)	-	(94,898	)	(897,890	)
Minority interest	(8,038	)	-	(42,855	)	(405,478	)
Goodwill	1,635		-	23,312		220,569
Investments in affiliated companies, net of accumulated losses of an affiliated company in excess of investment	(11,440	)	-	(44,459	)	(420,655	)
Purchase price	630		-	32,132		304,021
Cash acquired	(3,592	)	-	(48,567	)	(459,523	)
Net cash paid (acquired)	¥ (2,962	)	-	¥ (16,435	)	$ (155,502	)

F-19

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

5. Goodwill and other intangible assets

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.

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, 2004 are as follows. Operating segment information is described at note No.24 (2).

	Yen in Millions	U.S. dollars in thousands
NCJ	¥ 25,560	$ 241,839
NCF	1,576	14,912
NCPL	312	2,952
NSBC	248	2,346
NTSC	156	1,476
NCEL	78	738
SNKC	67	634
Other	81	767
	¥ 28,078	$ 265,664

The changes in the carrying amount of goodwill for the year ended March 31, 2004 are as follows:

	Yen in Millions	U.S. dollars in thousands
Balance as of April 1, 2003	¥ 3,658	$ 34,611
Acquired during the year	24,420	231,053
Balance as of March 31, 2004	¥ 28,078	$ 265,664

The carrying amount of goodwill by operating segment as of March 31, 2003 was ¥3,567 million for the NCJ segment. The amount of goodwill acquired during the year ended March 31, 2004 was ¥21,993 million ($208,090 thousand). As a result of the sales, it was ¥25,560 million ($241,839 thousand) for the NCJ segment.

F-20

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

6. Supplemental cash flow information:

Cash payments for income taxes were ¥3,732 million, ¥5,840 million and ¥4,088 million ($38,679 thousand) for the years ended March 2002, 2003 and 2004, respectively. Interest payments during the years ended March 2002, 2003 and 2004 were ¥1,118 million, ¥1,112 million and ¥856 million ($8,099 thousand), respectively.

Capital lease obligations of ¥949 million, ¥1,202 million and ¥550 million ($5,203 thousand) were incurred for the years ended March 31, 2002, 2003 and 2004, respectively.

Conversions of convertible debt into common stock were ¥28 million, ¥32 million and ¥5,020 million ($47,498 thousand) for the years ended March 31, 2002, 2003 and 2004, 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, 2002, 2003 and 2004 is as follows:

	Yen in millions						U.S. dollars in thousands
	March 31						March 31,
	2002		2003		2004		2004
Allowance for doubtful accounts at beginning of year	¥ 397		¥ 378		¥ 465		$ 4,400
Provision for doubtful accounts	67		381		226		2,138
Collection	(2	)	(1	)	(40	)	(378	)
Write-offs	(53	)	(5	)	(27	)	(255	)
Write-backs	(69	)	(265	)	(255	)	(2,413	)
Acquisition and other	24		-		294		2,782
Translation adjustment and other	14		(23	)	(40	)	(379	)
Allowance for doubtful accounts at end of year	¥ 378		¥ 465		¥ 623		$ 5,895

F-21

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,
	2003	2004	2004
Finished goods	¥ 7,077	¥ 15,850	$ 149,967
Raw materials	4,528	10,267	97,143
Work in process	4,336	15,016	142,076
Project in progress	699	886	8,383
Supplies and other	396	3,226	30,523
	¥ 17,036	¥ 45,245	$ 428,092

9. Prepaid expenses and other current assets:

Prepaid expenses and other current assets as of March 31, 2003 and 2004 consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2003	2004	2004
Other receivable	¥ 6,353	¥ 6,199	$ 58,652
Deferred tax assets	3,133	2,973	28,129
Other	2,264	4,666	44,148
	¥ 11,750	¥ 13,838	$ 130,929

“Other” primarily consists of prepaid expenses, short-term loans receivable and other.

F-22

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, 2003
	Cost	Gross unrealized gains	Gross unrealized losses	Fair value
Available-for-sale
Debt securities	¥ 36	¥ 0	¥ 1	¥ 35
Equity securities	4,907	113	486	4,534
Total	¥ 4,943	¥ 113	¥ 487	¥ 4,569
Securities not practicable to fair value
Equity securities	¥ 755

	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

	U.S. dollars in thousands
	March 31, 2004
	Cost	Gross unrealized gains	Gross unrealized losses	Fair value
Available-for-sale
Debt securities	$ 785	$ 0	$ 47	$ 738
Equity securities	79,951	89,630	1,533	168,048
Total	$ 80,736	$ 89,630	$ 1,580	$ 168,786
Securities not practicable to fair value
Equity securities	$ 19,425

F-23

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

At March 31, 2004, the contractual maturities of available-for-sale debt securities are summarized as follows:

	Yen in millions		U.S. dollars in thousands
	March 31, 2004		March 31, 2004
	Cost	Fair value	Cost	Fair value
Due within 1 year	¥ 78	¥ 73	$ 738	$ 691
Due after 1 year to 5 years	5	5	47	47
Due after 5 years	-	-	-	-
	¥ 83	¥ 78	$ 785	$ 738

During the year ended March 31, 2002, 2003 and 2004, the net unrealized gain on available-for-sale securities included as a component of accumulated other comprehensive income, net of applicable taxes, decreased by ¥428 million, decreased by ¥101 million and increased by ¥2,747 million ($25,991 thousand), respectively.

Proceeds from sales of available-for-sale securities were ¥237 million, ¥97 million and ¥1,780 million ($16,842 thousand) for the years ended March 31, 2002, 2003 and 2004, respectively. On those sales, gross realized gains were ¥8 million, ¥0 million and ¥778 million ($7,361 thousand) and gross realized losses were ¥14 million, ¥23 million and ¥2 million ($19 thousand), respectively.

On April 2, 1999, NIDEC purchased for ¥2,000 million a note issued by Princeton Global Management Inc. The face amount of the note was ¥2,000 million and it was due to mature on September 29, 1999. On September 30, 1999, the Princeton Global Management Inc. defaulted on its obligation with respect to the note. NIDEC recognized a devaluation loss of ¥2,000 million as a realized loss on marketable securities in the income statement for the year ended March 31, 2000.

On January 18, 2002, NIDEC received approximately ¥1,689 million from the settlement of a dispute with HSBC USA Inc. and Republic Securities, which is an affiliate of HSBC USA Inc. and previously served as custodian for the Princeton Global Management Inc. This dispute arose out of the fact that, on September 30, 1999, Princeton Global Management Inc. defaulted on the note. The settlement gain of ¥1,689 million is included in “Other, net” in the income statement for the year ended March 31, 2002. In addition, the Company expects to receive approximately $1.5 million from the receiver of Princeton Global Management Inc., currently in liquidation, as the Company's share of its net residual assets. The amount to be paid by the receiver, however, is subject to change depending on the final size of the net residual assets of Princeton Global Management Inc.

F-24

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, 2004.

	Yen in millions			Yen in millions
	Less than 12 months			12 months or more
	Fair value	Unrealized loss		Fair value	Unrealized loss
Debt securities	-	-		¥ 50	¥ (5	)
Equity securities	¥ 658	¥ (35	)	495	(127	)
Total	¥ 658	¥ (35	)	¥ 545	¥ (132	)

	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	-	-		$ 473	$ (47	)
Equity securities	$ 6,226	$ (331	)	4,684	(1,202	)
Total	$ 6,226	$ (331	)	$ 5,157	$ (1,249	)

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, 2004, NIDEC determined that the decline in value for investment securities with unrealized losses shown in the above table is other-than-temporary in nature.

F-25

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,
	2003	2004	2004
Current assets	¥ 52,801	¥ 5,375	$ 50,856
Non-current assets	32,767	6,502	61,520
Total assets	¥ 85,568	¥ 11,877	$ 112,376
Current liabilities	¥ 26,159	¥ 5,114	$ 48,387
Long-term liabilities	19,550	1,637	15,489
Minority interest	1,545	-	-
Shareholders’ equity	38,314	5,126	48,500
Total liabilities, minority interest and shareholders’ equity	¥ 85,568	¥ 11,877	$ 112,376
NIDEC’s share of shareholders’ equity	¥ 17,155	¥ 1,301	$ 12,310
NIDEC’s investment in equity-method affiliates	¥ 27,482	¥ 2,116	$ 20,021
Number of affiliated companies at end of period	10	7

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. As a result, NIDEC’s carrying amount of investment in equity method affiliates decreased by ¥25,366 million ($240,004 thousand).

	Yen in millions					U.S. dollars in thousands
	For the year ended March 31					For the year ended March 31,
	2002		2003		2004	2004
Net revenues	¥ 130,643		¥ 86,258		¥ 156,818	$ 1,483,754
Gross profit	¥ 21,855		¥ 15,785		¥ 22,291	$ 210,909
Net income	¥ 3,319		¥ 3,225		¥ 5,069	$ 47,961
NIDEC’s share of net income	¥ 1,331		¥ 1,472		¥ 2,308	$ 21,837
Amortization/ adjustments	(3,748	)	(6	)	214	2,025
Equity income (loss)	¥ (2,417	)	¥1,466		¥ 2,522	$ 23,862

F-26

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

As of March 31, 2002, entities comprising a significant portion of NIDEC’s investment in affiliated companies include NCPL (46.65%) and NCEL (40.81%). Amortization/adjustments increased due to the increase in amortization of goodwill of additional investments in equity method affiliates acquired for the year ended March 31, 2001.

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%). Amortization/adjustments decreased because new accounting standards SFAS 142 was adopted and impairment was not recognized in the current period.

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

Certain affiliated companies accounted for using the equity method with carrying amounts of ¥25,381 million (2 companies; NCPL and NCEL) as of March 31, 2003 and ¥226 million ($2,138 thousand) (1 company; Seijin-Sankyo Control Devices Co., Ltd.) as of March 31, 2004, were quoted on various established stock markets at an aggregate market capitalization of ¥56,442 million and ¥374million ($3,539 thousand), respectively.

NCPL and NCEL have become consolidated subsidiaries since NIDEC acquired additional ownership in NCEL and NCPL on January 2004 and February 2004, 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 has become consolidated subsidiary on February 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.

Account balances and transactions with affiliated companies are presented below:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2003	2004	2004
Trade notes and accounts receivable	¥ 1,247	¥ 167	$ 1,580
Trade notes and accounts payable	325	-	-

Account balances decreased rapidly. This was mainly due to exclusion of the account balances of NCPL, NCEL and their subsidiaries, which became NIDEC’s consolidated subsidiaries on January 2004 and February 2004, respectively.

F-27

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,
	2002	2003	2004	2004
Sales of products	¥ 2,745	¥ 714	¥ 1,166	$ 11,032
Purchases of goods	8,262	1,975	661	6,254

Sales of products according to transactions with affiliated companies increased mainly due to sales of Sankyo Ryutsu Kogyo Co., Ltd., 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 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.

Dividends from affiliated companies accounted for by the equity method for the years ended March 31, 2002, 2003 and 2004 were ¥583 million, ¥499 million and ¥515 million ($4,873 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.

Loans receivable from affiliated companies accounted for by the equity method was ¥1,070 million and ¥143 million （$1,353 thousand) as of March 31, 2003 and 2004, respectively.

F-28

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

12. Other non-current assets:

Other non-current assets as of March 31, 2003 and 2004 consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2003	2004	2004
Deferred tax assets	¥ 6,099	¥ 11,088	$ 104,911
Other	1,778	3,742	35,405
	¥ 7,877	¥ 14,830	$ 140,316

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

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

Short-term borrowings as of March 31, 2003 and 2004 consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2003	2004	2004
Loans, principally from banks with average interest at March 31, 2003 of 0.914% per annum and at March 31, 2004 of 0.671% per annum, respectively	¥ 64,597	¥ 86,636	$ 819,718

At March 31, 2004, NIDEC had unused lines of credit amounting to¥73,841 million ($698,656 thousand) with banks. Under these programs, NIDEC is authorized to obtain short-term financing at prevailing interest rates.

F-29

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Long-term debt at March 31, 2003 and 2004 comprises the following:

	Yen in millions				U.S. dollars in thousands
	March 31				March 31,
	2003		2004		2004
Secured loans, representing obligations principally to banks, due 2004 to 2005 in 2003 and 2005 to 2006 in 2004 with interest ranging from 3.25% to 3.65% per annum in 2003 and from 2.125% to 3.25% per annum in 2004	¥ 950		¥ 544		$ 5,147
Unsecured loans, representing principally to banks, due 2004 to 2021 in 2003 and 2004 to 2026 in 2004 with interest ranging from 0.00% to 4.70% per annum in 2003 and from 0.00% to 6.80% per annum in 2004	7,502		3,895		36,853
Unsecured 1.0% convertible bonds, due 2003, was convertible at ¥1,862.10 ($18) for one common share, redeemable before due date	329		-		-
Unsecured 0.8% convertible bonds, due 2006, convertible currently at ¥6,842 ($65) for one common share, redeemable before due date	9,279		9,274		87,747
Unsecured 0.5% convertible bonds, due 2004, was convertible at ¥6,842 ($65) for one common share, redeemable before due date	4,698		-		-
Zero coupon 0.0% convertible bonds, due 2008, convertible currently at ¥13,905 ($132) for one common share, redeemable before due date *1	-		30,818		291,589
Long-term capital lease obligations, due 2004 to 2014 in 2003 and due 2005 to 2016 in 2004, with interest ranging from 0.7% to 6.0% per annum in 2003 and from 0.7% to 6.0% per annum in 2004	2,581		3,147		29,776
	25,329		47,678		451,112
Less - Current portion due within one year	(8,951	)	(2,653	)	(25,102	)
	¥ 16,388		¥ 45,025		$ 426,010

*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 ($283,849 thousand)and the issue price was 103.00% of the face value. Concerning stock acquisition rights, the conversion price per share is ¥13,905 ($132) and the number of convertible shares is 2,222,222.

F-30

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
2005	¥ 2,653	$ 25,102
2006	11,233	106,282
2007	1,142	10,805
2008	1,249	11,818
2009	31,236	295,544
2010 and thereafter	165	1,561

At March 31, 2004, securities with book value of ¥2,736 million ($25,887 thousand), 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, 2003 and 2004 consist of the following:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2003	2004	2004
Accrued expenses	¥ 7,001	¥ 12,096	$ 114,448
Income taxes payable	869	3,790	35,859
Other	2,481	8,201	77,595
	¥ 10,351	¥ 24,087	$ 227,902

“Other” primarily consists of payable for property, plant and equipment, and other.

F-31

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

15. Pension and severance plans:

The Company and subsidiaries in Japan 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. 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 Nidec Copal Corporation obtained approval to transfer the obligation for benefits related to future employee service to Japanese Government on January 26, 2004 and on April 15, 2003, respectively. The obligation related to a portion of the governmental welfare pension program established under the Japanese Welfare Pension Insurance Law. The Company and Nidec Copal Corporation are also in process of transferring the obligation for past services, but have not received approval. When approval is received and the plan assets are transferred in amount sufficient to settle the transferred obligations, the plans will be accounted for as settled with gain or loss recognition under EITF Issue No. 03-2, “Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities”. EITF Issue No. 03-2 provides guidance on when and how to acco unt for arrangements that involve the separation and transfer of the substitutional portion to the government.

NIDEC adopted SFAS No. 87, “Employer’s Accounting for Pensions”, on April 1, 1999, due to the initial preparation of financial information in accordance with accounting principles generally accepted in the United States and the unavailability of actuarial data for previous periods. Upon adoption, the resulting transition obligation of ¥1,374 million is being amortized from April 1, 1989 over a period of 15 years. The amortization of the transition obligation for the period from April 1, 1989 to March 31, 1999 of ¥918 million has been recorded as an adjustment to beginning shareholders’ equity at April 1, 1999.

F-32

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,
	2003		2004		2004
Change in benefit obligation:
Benefit obligation at beginning of year	¥ 13,024		¥ 14,331		$ 135,595
Service cost	649		676		6,396
Interest cost	307		211		1,997
Plan participants’ contributions	93		102		965
Actuarial loss	1,360		(801	)	(7,579	)
Past service cost	-		-		-
Acquisition and other	-		31,473		297,786
Curtailment/Settlement	-		(1,960	)	(18,545	)
Foreign currency exchange rate changes	(10	)	(15	)	(142	)
Benefits paid	(1,092	)	(1,046	)	(9,897	)
	14,331		42,971		406,576
Change in plan assets:
Fair value of plan assets at beginning of year	4,323		4,137		39,143
Actual return on plan assets	(290	)	236		2,233
Employer contribution	627		419		3,964
Acquisition and other	-		10,149		96,026
Curtailment/Settlement	-		(135	)	(1,277	)
Plan participants’ contributions	93		102		965
Foreign currency exchange rate changes	(4	)	-		-
Benefits paid	(612	)	(434	)	(4,106	)
Fair value of plan assets at end of year	4,137		14,474		136,948
Funded status	10,194		28,497		269,628
Unrecognized actuarial loss	(2,523	)	(1,351	)	(12,783	)
Unrecognized net transition obligation	(78	)	-		-
Unrecognized prior service cost	752		690		6,529
	¥ 8,345		¥ 27,836		$ 263,374
Amounts included in the consolidated balance sheets are comprised of:
Accrued pension and severance costs	¥ 9,426		¥ 27,914		$ 264,112
Accumulated other comprehensive income	(1,081	)	(78	)	(738	)
Net amounts recognized	¥ 8,345		¥ 27,836		$ 263,374

F-33

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Accumulated benefit obligations and corresponding plan assets at the end of the year are as follows:

	Yen in millions		U.S. dollars in thousands
	March 31		March 31,
	2003	2004	2004
Accumulated benefit obligations	¥ 12,242	¥ 39,435	$ 373,120
Fair value of plan assets	3,927	14,239	134,724

Weighted-average assumptions used to determine benefit obligations as of March 31, 2002, 2003 and 2004 are as follows:

	March 31
	2002	2003	2004
Discount rate	2.0-2.7%	1.0-2.0%	1.0-2.3%
Rate of compensation increase	1.5-3.9%	1.5-3.9%	0.0-6.2%

Weighted-average assumptions used to determine net pension and severance costs for the years ended March 31, 2002, 2003 and 2004 are as follows:

	For the year ended
	March 31
	2002	2003	2004
Discount rate	3.0%	2.0-2.7%	1.0-2.0%
Expected return on plan assets	3.5-4.5%	1.0-3.0%	1.0-2.0%
Rate of compensation increase	2.8%	1.5-3.9%	1.5-3.9%

	Yen in millions						U.S. dollars in thousands
	For the year ended March 31						For the year ended March 31,
	2002		2003		2004		2004
Components of net periodic (benefit) cost:
Service cost	¥ 550		¥ 649		¥ 850		$ 8,043
Interest cost	244		307		323		3,056
Expected return on plan assets	(145	)	(109	)	(132	)	(1,249	)
Amortization of unrecognized net actuarial loss	-		8		182		1,722
Amortization of net transition obligation	91		91		208		1,968
Amortization of unrecognized prior service cost	(22	)	(62	)	(93	)	(880	)
(Gains) losses on curtailments and settlements	-		-		(459	)	(4,343	)
Net periodic pension cost	¥ 718		¥ 884		¥ 879		$ 8,317

F-34

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			Expected return on plan assets (weighted average) (%)
	Actual (%)		Target (%)
	March 31 2003	March 31 2004	March 31 2005
Equity securities	30	21	20	9.3
Debt securities	17	5	5	1.0
Property, plant and equipment	-	-	-	-
Others	53	74	75	0.8
Total	100	100	100	2.5

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 to 75% of total assets rather than high-risk securities.

NIDEC expects to contribute approximately ¥778 million ($7,361 thousand) to its defined benefit plans for the year ending March 31, 2005.

Certain subsidiaries have a number of defined contribution plans. Total amounts of cost recognized for certain subsidiaries’ contribution to the plans were ¥0, ¥0 and ¥92 million ($870 thousand) for the year ended March 31, 2002, 2003 and 2004, respectively.

NIDEC contributed ¥237 million ($2,242 thousand) to its defined contribution plans for the year ended March 31, 2004 and expects to contribute approximately ¥583 million ($5,516 thousand) for the year ending March 31, 2005.

F-35

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

16. 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.

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 ar e unavailable for dividends under the laws of the respective countries. Legal reserves included in retained earnings for such foreign subsidiaries as of March 31, 2003 and 2004 were ¥679 million and ¥774 million ($7,323 thousand), respectively.

The amounts of unrestricted consolidated retained earnings pursuant to accounting principles generally accepted in Japan were ¥38,631 million, ¥43,603 million and ¥52,865 million ($500,189 thousand) as of March 31, 2002, 2003 and 2004, respectively.

F-36

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

In accordance with customary practice in Japan, the appropriations are not accrued in 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 at March 31, 2004 includes amounts representing final cash dividends of ¥975 million ($9,225 thousand), ¥15.0 ($0.1) per share, which will be approved at the shareholders’ meeting held on June 23, 2004.

Retained earnings include ¥1,385 million and ¥2,332 million relating to equity in undistributed earnings as of March 31, 2002 and 2003 respectively but as of March 31, 2004, reflect ¥431 million ($4,078 thousand) of accumulated deficit of the companies accounted for by the equity method.

Detailed components of accumulated other comprehensive income at March 31, 2002, 2003 and 2004 and the related changes, net of taxes, for the years ended March 31, 2002, 2003 and 2004 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, 2001	¥ (3,857	)	¥ 754		¥ (31	)	¥ (3,134	)
Other comprehensive income (loss)	2,456		(428	)	21		2,049
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	)
	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, 2003	$ (53,836	)	$ 2,129		$ (18,185	)	$ (69,892	)
Other comprehensive income (loss)	(54,736	)	25,991		17,882		(10,863	)
Balance at March 31, 2004	$ (108,572	)	$ 28,120		$ (303	)	$ (80,755	)

The minimum pension liability adjustment shown in the above table relates to four consolidated subsidiaries.

F-37

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Tax effects allocated to each component of other comprehensive income for the years ended March 31, 2002, 2003 and 2004 are as follows:

	Yen in millions
	Pre-tax amount		Tax expense		Net-of-tax amount
For the year ended March 31, 2002:
Foreign currency translation adjustments	¥ 2,494		¥ (38	)	¥ 2,456
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period	(1,959	)	823		(1,136	)
Less: reclassification adjustment primarily for other than temporary losses included in net income	1,400		(692	)	708
Minimum pension liability adjustment	37		(16	)	21
Other comprehensive income (loss)	¥ 1,972		¥ 77		¥ 2,049
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	)

	U.S. dollars in thousands
	Pre-tax amount		Tax expense		Net-of-tax amount
Foe the year ended March 31, 2004:
Foreign currency translation adjustments	$ (54,584	)	$ (152	)	$ (54,736	)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period	51,187		(20,986	)	30,201
Less: reclassification adjustment primarily for other than temporary losses included in net income	(7,238	)	3,028		(4,210	)
Minimum pension liability adjustment	30,296		(12,414	)	17,882
Other comprehensive income (loss)	$ 19,661		$ (30,524	)	$ (10,863	)

F-38

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

17. 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 ($69.54) 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)
Granted	2,967	¥ 7,350	$ 69.54
Exercised	0	7,350	69.54
Canceled	105	7,350	69.54
For the twelve-month period ended March 31, 2004	2,862	7,350	69.54
Contractual life 4 years	2,862	¥ 7,350	$ 69.54
Exercisable options: For the twelve-month period ended March 31, 2004	2,862	¥ 7,350	$ 69.54

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 ($33.11) 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 twelve-month period 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-39

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

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 twelve-month period ended March 31, 2004, if the fair value based method had been applied to.

	Yen in millions (except for per share data)		U.S. dollars in thousands (except for per share data)
	For the twelve-month period ended March 31,		For the twelve-month period ended March 31,
	2004		2004
Net income, as reported	¥ 16,089		$ 152,228
Deduct:
Stock-based employee compensation cost	(680	)	(6,434	)
Pro forma net income	¥ 15,409		$ 145,794
Net income per share:
Basic-as reported	¥ 251.14		$ 2.38
Basic-pro forma	¥ 240.52		$ 2.28
Diluted-as reported	¥ 241.53		$ 2.29
Diluted-pro forma	¥ 231.35		$ 2.19

F-40

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

18. 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,
	2002	2003	2004	2004
Income before income taxes:
The Company and domestic subsidiaries	¥ 2,920	¥ 2,069	¥ 2,069	$ 19,576
Foreign subsidiaries	8,557	8,842	17,570	166,241
	¥ 11,477	¥ 10,911	¥ 19,639	$ 185,817

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,
	2002		2003		2004	2004
Current income tax expense:
The Company and domestic subsidiaries	¥ 4,975		¥ 1,629		¥ 3,490	$ 33,021
Foreign subsidiaries	144		775		1,474	13,947
Total current	5,119		2,404		4,964	46,968
Deferred income tax expense (benefit):
The Company and domestic subsidiaries	(2,840	)	(1,082	)	321	3,037
Foreign subsidiaries	(117	)	(269	)	139	1,315
Total deferred	(2,957	)	(1,351	)	460	4,352
Total provision	¥ 2,162		¥ 1,053		¥ 5,424	$ 51,320

The high effective tax rates of the Company and domestic subsidiaries are mainly due to a net increase in valuation allowance.

F-41

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 2002, 2003 and 2004. Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows:

	For the year ended March 31
	2002		2003		2004
Statutory tax rate	42.0	%	42.0	%	42.0	%
Increase (reduction) in taxes resulting from:
Tax benefit in foreign subsidiaries	(32.8	)	(32.2	)	(28.2	)
Tax on undistributed earnings	5.0		4.5		5.0
Valuation allowance	1.5		(6.5	)	8.8
Other	3.1		1.9		0.0
Effective income tax rate	18.8	%	9.7	%	27.6	%

Tax benefit in foreign subsidiaries primarily relates to income sourced from foreign subsidiaries 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.

“Valuation allowance” for the year ended March 31, 2004 was higher compared to “Valuation allowance” for the year ended March 31, 2003. This was mainly due to an increase in the operating loss carryforwards for tax purposes in Sankyo after the date of acquisition.

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 will be decreased from 42% to approximately 41% from April 2004. Our tax rates used for the current and non-current deferred assets and liabilities at the previous year were 42% and 40%, respectively. This year 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.

F-42

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,
	2003		2004		2004
Deferred tax assets:
Inventories	¥ 566		¥ 2,882		$ 27,269
Marketable securities	635		-		-
Property, plant and equipment	3,545		4,458		42,180
Accrued bonus	653		1,905		18,024
Accrued enterprise tax	(6	)	352		3,331
Pension and severance plans	3,778		12,361		116,955
Operating loss carryforwards for tax purposes	345		13,951		131,999
Foreign tax credit	1,953		2,806		26,549
Other	3,090		(4,344	)	(41,101	)
Gross deferred tax assets	14,559		34,371		325,206
Less - Valuation allowance	(3,607	)	(20,765	)	(196,471	)
Net deferred tax assets	10,952		13,606		128,735
Deferred tax liabilities:
Basis difference of acquired assets	(1,500	)	(2,929	)	(27,713	)
Undistributed earnings not permanently reinvested	(1,476	)	(2,185	)	(20,674	)
Maketable securities	-		(2,453	)	(23,209	)
Other	1,087		6,258		59,211
Gross deferred tax liabilities	(1,889	)	(1,309	)	(12,385	)
Net deferred tax assets	¥ 9,063		¥ 12,297		$ 116,350

Operating loss carryforwards for tax purposes of consolidated subsidiaries on March 31, 2004 amounted to approximately ¥40,410 million ($382,345 thousand) and are available as an offset against future taxable income of such subsidiaries.

F-43

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, 2002, 2003 and 2004 consist of the following:

	Yen in millions						U.S. dollars in thousands
	March 31						March 31,
	2002		2003		2004		2004
Valuation allowance at beginning of year	¥ (3,929	)	¥ (4,319	)	¥ (3,607	)	$ (34,128	)
Additions	(307	)	-		(1,726	)	(16,331	)
Deductions	134		712		-		-
Impact of acquisition of companies	(217	)	-		(15,432	)	(146,012	)
Valuation allowance at end of year	¥ (4,319	)	¥ (3,607	)	¥ (20,765	)	$ (196,471	)

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,
	2003		2004		2004
Deferred tax assets:
Prepaid expenses and other current assets	¥ 3,133		¥ 2,973		$ 28,130
Other non-current assets	6,099		11,088		104,911
Deferred tax liabilities:
Other current liabilities	(2	)	(86	)	(814	)
Other long-term liabilities	(167	)	(1,223	)	(11,572	)
Net deferred tax assets	¥ 9,063		¥ 12,752		$ 120,655

Management of NIDEC intends to reinvest certain undistributed earnings of their foreign subsidiaries for an indefinite period of time. As a result, no provision for income taxes has been made on undistributed earnings of these subsidiaries, which are not expected to be remitted in the foreseeable future, aggregating ¥32,513 million ($307,626 thousand) as of March 31, 2004. NIDEC estimates an additional tax provision of ¥7,335 million ($69,401 thousand) would be required at such time if the full amount of these accumulated earnings became subject to Japanese taxes.

F-44

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

19. Reconciliation of the differences between basic and diluted net income 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 income per share for the years ended March 31, 2002, 2003, and 2004 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, 2002:
Basic net income per share
Net income available to common shareholders		¥ 6,580	63,555	¥ 103.53
Effect of dilutive securities
	Convertible bonds	65	3,673
Diluted net income per share
	Net income for computation	¥ 6,645	67,228	¥ 98.85
For the year ended March 31, 2003:
Basic net income per share
Net income available to common shareholders		¥ 10,680	63,565	¥ 168.01
	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	$ 2.38
Effect of dilutive securities
	Convertible bonds	50	2,755
Diluted net income per share
	Net income for computation	¥ 16,139	66,818	¥ 241.53	$ 2.29

F-45

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

20. 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-performance 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, 2003
	Carrying amount		Estimated fair value
Asset (Liability)
Cash and cash equivalents	¥ 33,039		¥ 33,039
Short-term investments	74		74
Short-term loan receivable	1,075		1,075
Marketable securities	4,569		4,569
Long-term loan receivable	271		275
Short-term borrowings	(64,597	)	(64,597	)
Long-term debt including the current portion and excluding capital lease obligation	(22,758	)	(25,477	)
Foreign exchange forward contracts	14		14

F-46

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

	Yen in millions				U.S. dollars in thousands
	March 31, 2004				March 31, 2004
	Carrying amount		Estimated fair value		Carrying amount		Estimated fair value
Asset (Liability)
Cash and cash equivalents	¥ 73,392		¥ 73,392		$ 694,408		$ 694,408
Short-term investments	959		959		9,073		9,073
Short-term loan receivable	185		185		1,750		1,750
Marketable securities	17,839		17,839		168,786		168,786
Long-term loan receivable	463		475		4,381		4,494
Short-term borrowings	(86,636	)	(86,636	)	(819,718	)	(819,718	)
Long-term debt including the current portion and excluding capital lease obligation	(44,531	)	(53,043	)	(421,336	)	(501,874	)
Foreign exchange forward contracts	84		84		795		795
Interest rate swap agreements	(54	)	(54	)	(511	)	(511	)
Interest rate cap agreements	(34	)	(34	)	(322	)	(322	)

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-47

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. Losses from foreign exchange forward contracts were ¥8 million for the year ended March 31, 2002, Gains from foreign exchange forward contracts were ¥23 million for the year ended March 31, 2003, and losses from foreign exchange forward contracts were ¥5 million ($47 thousand) for the year ended March 31, 2004. The contracted amounts outstanding on March 31, 2003 and 2004 were ¥2,344 million and ¥6,318 million ($59,779 thousand), respectively.

Interest rate swap and cap agreements, which mature from 2002 to 2004, 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. Gains from interest rate swap agreements were ¥16 million for the year ended March 31, 2002, and losses from interest rate swap agreements were ¥2 million ($19 thousand) for the year ended March 31, 2004. On March 31, 2004, the aggregate notional amounts of the interest rate swap agreements were ¥2,200 million ($20,816 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 model, are recognized as “Gain (loss) on derivative instruments, net” in the income statement. Losses from interest rate cap agreements were ¥0 million for the year ended March 31, 2002, and gains from interest rate cap agreements were ¥1 million ($9 thousand) for the year ended March 3 1, 2004. On March 31, 2004, the notional amounts of interest rate cap agreement were ¥2,500 million ($23,654 thousand). No such agreements existed on March 31, 2003.

F-48

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

21. Related party transactions:

As of March 31, 2004, the president of the Company and a business entity indirectly owned by the president of the Company held 9.2% and 6.8% 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, 2004.

22. 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	2003		2004		2004
Machinery and equipment	¥ 3,824		¥ 6,266		$ 59,287
Other leased assets	323		433		4,097
Less - Accumulated amortization	(2,450	)	(4,746	)	(44,905	)
	¥ 1,697		¥ 1,953		$ 18,479

Amortization expenses under capital leases for the years ended March 31, 2002, 2003 and 2004 were ¥709 million, ¥694 million and ¥1,182 million ($11,184 thousand), respectively.

Future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of March 31, 2004 are as follows:

Year ending March 31:	Yen in millions		U.S. dollars in thousands
2005	¥ 1,092		$ 10,332
2006	723		6,841
2007	482		4,561
2008	635		6,008
2009	411		3,889
2010 and thereafter	63		596
Total minimum lease payments	3,406		32,227
Less - Amount representing interest	(259	)	(2,451	)
Present value of net minimum lease payments	3,147		29,776
Less - Current obligations	(1,003	)	(9,490	)
Long-term capital lease obligations	¥ 2,144		$ 20,286

Rental expenses under operating leases for the years ended March 31, 2002, 2003 and 2004 were ¥473 million, ¥272 million and ¥330 million ($3,122 thousand), respectively.

F-49

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, 2004 are as follows:

Year ending March 31:		Yen in millions	U.S. dollars in thousands
	2005	¥ 127	$ 1,202
	2006	57	539
	2007	47	445
	2008	34	322
	2009	18	170
	2010 and thereafter	451	4,267
	Total minimum future rentals	¥ 734	$ 6,945

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, 2002, 2003 and 2004 were ¥41 million, ¥30 million and ¥24 million ($227 thousand), respectively.

The future minimum lease payments to be received under operating leases that have remaining non-cancelable term at March 31, 2004 are as follows:

Year ending March 31:		Yen in millions	U.S. dollars in thousands
	2005	¥ 16	$ 152
	2006	17	161
	2007	17	161
	2008	5	47
	2009	3	28
	2010 and thereafter	3	28
	Total minimum future rentals	¥ 61	$ 577

In September1999, Nidec agreed to guarantee a debt facility for the East Pacific Funding Corporation, a special purpose entity, totaling ¥1,200 million. The East Pacific Funding Corporation purchased land and buildings from Nidec Tosok Corporation as part of a sale-leaseback arrangement. The transaction was accounted for by us as a financing arrangement, with the sale proceeds recorded as a liability and the land and buildings recorded as assets.

In September 2002, Nidec was released from the guarantee of the debt facility for the East Pacific Funding Corporation totaling ¥1,200 million since Nidec bought the beneficial right of land and buildings from the East Pacific Funding Corporation. Thereafter Nidec lends the land and buildings to Nidec Tosok Corporation and is depreciating the land and buildings over their useful lives.

F-50

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

23. Other commitments and contingencies, concentrations and factors that may affect future operations:

Commitments -

Commitments outstanding at March 31, 2004 for the purchase of property, plant and equipment and other assets approximated ¥5,948 million ($56,278 thousand).

Contingencies -

Contingent liabilities for guarantees given in the ordinary course of business amounted to approximately ¥750 million ($7,096 thousand) at March 31, 2004. These contingent liabilities primarily relate to the Companies’ guarantee of affiliated companies’ borrowings from banks. On April 2002, Nidec’s consolidated subsidiary, Nidec Tosok Corporation, agreed to guarantee for Okaya Seiken Corporation, subconstractor of Nidec Tosok Corporation, totaling ¥309 million ($2,924 thousand) in order to provide funds for Okaya’s manufacturing facilities in Vietnam.

Besides NIDEC has guaranteed approximately ¥441 million ($4,173thousand) 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 ¥441 million ($4,173thousand).

The Company received notice from Matsushita Electric Industrial Co., Ltd. (“Matsushita”) claiming that small precision brushless DC motors manufactured by the Company infringe one of Matsushita’s patents relating to neodymium magnets and this matter through negotiation. Accordingly, the Company filed a motion with the Japanese Patent Office on November 16, 2001 seeking a declaratory judgment that the patent is invalid on several grounds, the primary one being that the invention is obvious in view of prior art.

On June 25, 2003, the Japanese Patent Office judged that the patent was invalid, and on August 16, 2003, Matsushita filed a suit with the Tokyo High Court against the Company contesting the Japanese Patent Office’s judgement. On December 22, 2003, the Tokyo High Court handed down a judgement in favor of the Company and affirmed the Japanese Patent Office’s judgement that the patent was invalid. On January 9, 2004, Matsushita did not make an appeal against the judgement of the court. Therefore the judgement of the court and the invalidity of the patent of Matsushita were settled.

F-51

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

Concentration of risk -

Revenue from spindle motors sold to manufacturers of computer hard disk drives, account for 74%, 66%, and 62% of total revenue for the years ended March 31, 2002, 2003, and 2004, respectively. The volatility of the market for disk drives and for NIDEC’s product could affect NIDEC’s future operating results and cause actual results to vary materially from historical results. As is typical on the disk drive industry, NIDEC must utilize leading edge components for its new generation of products, which are supplied to a limited number of customers. Sales to NIDEC’s six largest customers represented approximately 49%, 41%, and 40% of consolidated net sales for the years ended March 31, 2002, 2003, and 2004, respectively. Sales to NIDEC’s largest customer were approximately 16%, 16%, and 14% of consolidated net sales for the years ended March 31, 2002, 2003 and 2004, respectively. Account s receivable are financial instruments that expose NIDEC to a concentration of credit risk. At March 31, 2003, the six largest customers with the outstanding accounts receivable balances totaled ¥19,718 million, or 39% of the gross accounts receivable, compared to ¥23,625 million ($223,531 thousand), or 24% of the gross accounts receivable, at March 31, 2004. 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-52

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

24. Segment information:

(1) Enterprise-wide information:

Product information –

The following table provides product information for the years ended March 31, 2002, 2003 and 2004:

		Yen in millions			U.S. dollars in thousands
		For the year ended March 31			For the year ended March 31,
		2002	2003	2004	2004
Net sales:
	Small precision motors:
	Hard disk drives spindle motors	¥ 93,748	¥ 97,717	¥ 106,919	$ 1,011,628
	Other small precision brushless DC motors	21,657	25,583	34,138	323,001
	Small precision brush DC motors	2,539	3,280	5,372	50,828
	Brushless DC fans	24,523	27,395	26,047	246,447
	Sub-total	142,467	153,975	172,476	1,631,904
	Mid-size motors	36,252	37,479	32,574	308,203
	Machinery	7,693	22,555	31,240	295,582
	Others	6,920	17,827	41,207	389,886
	Consolidated total	¥ 193,332	¥ 231,836	¥ 277,497	$ 2,625,575

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 and 1.8-inch hard disk drives for the years ended March 31, 2002, 2003 and 2004.

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.

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.

F-53

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

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.

“Others” consists of automobile parts, optical parts, electronic 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, 2002, 2003 and 2004, and long-lived assets for the years ended March 31, 2003 and 2004 are as follows:

		Yen in millions			U.S. dollars in thousands
		For the year ended March 31			For the year ended March 31,
		2002	2003	2004	2004
Sales and operating revenue:
	Japan	¥ 97,602	¥ 126,904	¥ 149,392	$ 1,413,492
	U.S.A.	7,487	7,006	5,378	50,885
	Singapore	48,114	46,706	39,056	369,534
	Thailand	17,112	23,333	36,610	346,390
	The Philippines	5,220	3,607	2,230	21,099
	Other	17,797	24,280	44,831	424,175
	Consolidated total	¥ 193,332	¥ 231,836	¥ 277,497	$ 2,625,575

		Yen in millions		U.S. dollars in thousands
		For the year ended March 31		For the year ended March 31,
		2003	2004	2004
Long-lived assets:
	Japan	¥ 42,033	¥ 70,519	$ 667,225
	U.S.A.	931	796	7,531
	Singapore	1,617	522	4,939
	Thailand	16,903	16,927	160,157
	The Philippines	11,313	15,079	142,672
	Other	17,912	28,569	270,310
	Consolidated total	¥ 90,709	¥ 132,412	$ 1,252,834

F-54

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

 (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.

NCT, NCPL, NCEL and SNKC were identified as reportable segments in the current period. Segment information for the years ended March 31, 2002 and 2003 have been restated to conform to the current presentation.

NIDEC has thirteen reportable segments, NCJ, NCS, NET, NCF, NCA, NPMC, NCD, NSBC, NTSC, NCT, NCPL, NCEL and SNKC 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 and DC motors.

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 NET segment comprises Nidec Electronics (Thailand) Co., Ltd., a subsidiary in Thailand, which primarily produces and sells hard disk drive motors.

The NCF segment comprises Nidec Philippines Corporation, a subsidiary in The Philippines, which primarily produces and sells hard disk drive motors.

The NCA segment comprises Nidec America Corporation, a subsidiary in U.S.A., which primarily produces and sells fans.

The NPMC segment comprises Nidec Power Motor Corporation, a subsidiary in Japan, which primarily produces and sells AC motors.

The NCD segment comprises Nidec (Dalian) Limited, a subsidiary in China, which primarily produces and sells DC motors and fans.

The NSBC segment comprises Nidec Shibaura Corporation, a subsidiary in Japan, which primarily produces and sells mid-size motors.

The NTSC segment comprises Nidec Tosok Corporation, a subsidiary in Japan, which primarily produces and sells automobile parts and machinery.

The NCT segment comprises Nidec Taiwan Corporation, a subsidiary in Taiwan, which primarily sells DC motors and fans.

F-55

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

The NCPL segment comprises Nidec Copal Corporation, a subsidiary in Japan, which primarily produces and sells optical and electronic parts. NCPL was acquired in February 2004 and has been a new reportable segment.

The NCEL segment comprises Nidec Copal Electronics Corporation, a subsidiary in Japan, which primarily produces and sells electronic parts. NCEL was acquired in January 2004 and has been a new reportable segment.

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. SNKC was acquired in February 2004 and 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.

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, NPMC, NSBC, NTSC, NCPL, NCEL, SNKC’s operating profit or loss is determined using Japanese GAAP, NCS applies Singaporean accounting principles, NET applies Thai accounting principles, NCF applies Philippine accounting principles, NCA applies U.S. GAAP, NCD applies Chinese accounting principles and NCT applies Taiwanese 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-56

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, 2002, 2003 and 2004:

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2002		2003		2004		2004
Revenues from external customers:
	NCJ	¥ 63,205		¥ 65,248		¥ 60,316		$ 570,688
	NCS	48,115		46,708		36,668		346,939
	NET	14,787		20,484		33,003		312,262
	NCF	5,220		3,602		1,511		14,296
	NCA	7,487		6,075		3,564		33,721
	NPMC	9,345		9,116		7,986		75,561
	NCD	17		48		112		1,060
	NSBC	16,192		15,138		15,767		149,182
	NTSC	1,615		18,933		21,211		200,691
	NCT	3,661		8,921		12,492		118,195
	NCPL	-		-		9,146		86,536
	NCEL	-		-		2,854		27,003
	SNKC	-		-		7,779		73,602
	All others	22,672		37,157		67,121		635,074
	Total	192,316		231,430		279,530		2,644,810
	U.S. GAAP adjustments *1	1,066		517		(2,485	)	(23,512	)
	Others	(50	)	(111	)	452		4,277
	Consolidated total	¥ 193,332		¥ 231,836		¥ 277,497		$ 2,625,575

*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-57

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

NIDEC had sales to one customer of ¥31,809 million, ¥36,240 million and ¥38,909 million ($368,142 thousand) within the NCJ, NCS, NCA and “All Others” segments for the years ended March 31, 2002, 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.

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2002		2003		2004		2004
Revenues from other operating segments:
	NCJ	¥ 61,679		¥ 63,916		¥ 58,320		$ 551,802
	NCS	3,254		3,851		3,081		29,151
	NET	23,109		21,256		17,794		168,360
	NCF	19,816		18,838		22,117		209,263
	NCA	539		1,398		1,430		13,530
	NPMC	31		93		147		1,391
	NCD	24,070		27,523		31,270		295,865
	NSBC	2,479		2,966		4,429		41,906
	NTSC	139		565		666		6,302
	NCT	1,470		1,625		1,113		10,531
	NCPL	-		-		1,384		13,095
	NCEL	-		-		372		3,520
	SNKC	-		-		3,641		34,450
	All Others	39,760		54,846		66,133		625,726
	Total	176,346		196,877		211,897		2,004,892
	Intersegment elimination	(176,346	)	(196,877	)	(211,897	)	(2,004,892	)
	Consolidated total	¥ 0		¥ 0		¥ 0		$ 0

F-58

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,
		2002		2003		2004		2004
Segment profit or loss:
	NCJ	¥ 4,101		¥ 3,521		¥ 1,483		$ 14,032
	NCS	1,963		2,020		2,489		23,550
	NET	1,578		3,179		8,590		81,275
	NCF	2,485		1,212		1,422		13,454
	NCA	(680	)	165		279		2,640
	NPMC	187		488		251		2,375
	NCD	1,778		3,001		2,486		23,522
	NSBC	279		(134	)	801		7,579
	NTSC	90		689		1,450		13,719
	NCT	219		343		362		3,425
	NCPL	-		-		586		5,544
	NCEL	-		-		307		2,905
	SNKC	-		-		(2,581	)	(24,420	)
	All Others	2,979		4,107		7,344		69,486
	Total	14,979		18,591		25,269		239,086
Main components of U.S. GAAP adjustments:
	Pension and severance costs	(46	)	253		341		3,226
	Lease	50		115		54		511
	Directors’ bonus	(70	)	(112	)	(150	)	(1,419	)
Consolidation adjustments mainly related to elimination of intersegment profits		(1,725	)	(156	)	(754	)	(7,134	)
Reclassification *1		(3,190	)	(2,306	)	(3,039	)	(28,754	)
Others *2		474		19		294		2,782
		¥ 10,472		¥ 16,404		¥ 22,015		$ 208,298

*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-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,
		2002		2003		2004		2004
Interest revenue:
	NCJ	¥ 279		¥ 143		¥ 120		$ 1,135
	NCS	132		102		54		511
	NET	6		2		16		151
	NCF	48		32		23		218
	NCA	1		0		0		0
	NPMC	21		4		4		38
	NCD	0		4		8		76
	NSBC	5		0		9		85
	NTSC	0		4		1		9
	NCT	4		4		4		38
	NCPL	-		-		1		9
	NCEL	-		-		0		0
	SNKC	-		-		8		76
	All Others	47		43		102		966
	Total	543		338		350		3,312
	Intersegment elimination	(18	)	(37	)	(81	)	(767	)
	Consolidated total	¥ 525		¥ 301		¥ 269		$ 2,545

		Yen in millions						U.S. dollars in thousands
		For the year ended March 31						For the year ended March 31,
		2002		2003		2004		2004
Interest expense:
	NCJ	¥ 617		¥ 311		¥ 310		$ 2,933
	NCS	-		0		0		0
	NET	65		114		25		237
	NCF	125		120		103		975
	NCA	27		8		19		180
	NPMC	56		29		22		208
	NCD	56		13		7		66
	NSBC	63		58		94		889
	NTSC	2		17		13		123
	NCT	0		0		0		0
	NCPL	-		-		0		0
	NCEL	-		-		1		9
	SNKC	-		-		45		426
	All Others	201		237		234		2,214
	Total	1,212		907		873		8,260
	Intersegment elimination	(45	)	(17	)	(11	)	(104	)
	Consolidated total	¥ 1,167		¥ 890		¥ 862		$ 8,156

F-60

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,
		2002		2003		2004		2004
Depreciation:
	NCJ	¥ 1,669		¥ 1,295		¥ 1,777		$ 16,813
	NCS	627		590		736		6,964
	NET	1,790		2,803		2,622		24,808
	NCF	1,349		1,734		1,876		17,750
	NCA	193		138		83		785
	NPMC	63		26		25		237
	NCD	599		1,050		1,103		10,436
	NSBC	175		117		89		842
	NTSC	26		677		526		4,977
	NCT	13		17		12		114
	NCPL	-		-		308		2,914
	NCEL	-		-		151		1,429
	SNKC	-		-		96		908
	All Others	2,274		3,974		4,533		42,890
	Total	8,778		12,421		13,937		131,867
	U.S. GAAP adjustments *1	708		694		923		8,733
	Reconciliation	(398	)	(253	)	(587	)	(5,554	)
	Consolidated total	¥ 9,088		¥ 12,862		¥ 14,273		$ 135,046

*1 Leased properties are not capitalized in the operating segment but are capitalized under U.S. GAAP.

F-61

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,
		2002		2003		2004		2004
Income tax expenses and benefit:
	NCJ	¥ 1,816		¥ 1,323		¥ 2,399		$ 22,698
	NCS	28		85		45		426
	NET	(82	)	(174	)	571		5,402
	NCF	12		17		9		85
	NCA	(294	)	(283	)	129		1,220
	NPMC	(88	)	(224	)	17		161
	NCD	0		226		151		1,429
	NSBC	22		198		121		1,145
	NTSC	(52	)	38		556		5,261
	NCT	59		89		97		918
	NCPL	-		-		274		2,592
	NCEL	-		-		123		1,164
	SNKC	-		-		(17	)	(161	)
	All Others	923		1,205		1,481		14,013
	Total	2,344		2,500		5,956		56,353
	Consolidation adjustments	(182	)	(1,447	)	(532	)	(5,033	)
	Consolidated total	¥ 2,162		¥ 1,053		¥ 5,424		$ 51,320

F-62

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		2004
Segment assets:
	NCJ	¥ 168,872		¥ 216,865		$ 2,051,897
	NCS	19,016		16,969		160,554
	NET	21,875		26,458		250,336
	NCF	15,345		15,371		145,435
	NCA	3,125		2,270		21,478
	NPMC	7,001		7,798		73,782
	NCD	11,980		12,496		118,233
	NSBC	15,970		20,078		189,971
	NTSC	17,847		22,040		208,534
	NCT	4,225		4,535		42,908
	NCPL	-		52,286		494,711
	NCEL	-		21,758		205,866
	SNKC	-		77,256		730,968
	All Others	76,817		165,066		1,561,794
	Total	¥ 362,073		¥ 661,246		$ 6,256,467
U.S. GAAP adjustments:
	Lease	1,696		1,906		18,034
	Property, plant and equipment	(2,114	)	(2,195	)	(20,768	)
	Deferred tax assets	2,508		7,235		68,455
	Marketable securities	617		1,343		12,707
	Others	56		1,026		9,707
	Sub-total	2,763		9,315		88,135
	Elimination of intersegment assets, net of taxes	(107,642	)	(263,345	)	(2,491,674	)
	Valuation differences	3,639		6,750		63,866
	Goodwill	3,658		28,078		265,664
	To adjust affiliate from cost to equity method *1	(6,121	)	(541	)	(5,119	)
	Others	(438	)	2,383		22,547
	Consolidated total	¥ 257,932		¥ 443,886		$ 4,199,886

*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-63

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		2004
Expenditure for segment assets:
	NCJ	¥ 100	¥ 5,593		$ 52,919
	NCS	1,527	46		435
	NET	4,399	2,338		22,121
	NCF	1,981	3,975		37,610
	NCA	50	28		265
	NPMC	0	56		530
	NCD	638	1,268		11,998
	NSBC	419	37		350
	NTSC	908	901		8,525
	NCT	28	0		0
	NCPL	-	356		3,368
	NCEL	-	189		1,788
	SNKC	-	180		1,703
	All Others	6,449	7,800		73,801
	Total	16,499	22,767		215,413
	Reconciliation *1	5,216	(136	)	(1,287	)
	Consolidated total	¥ 21,715	¥ 22,631		$ 214,126

*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-64

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

25. Subsequent events:

Subsequent to March 31, 2004, the Company’s Board of Directors declared a cash dividend of ¥975 million ($9,225 thousand) payable on June 24, 2004 to stockholders of record on March 31, 2004. This decision is subject to approval by the shareholders at the annual general meeting of shareholders to be held on June 23, 2004.

The Company has determined issuance of new shares and secondary offering of existing shares, which were approved at a meeting of board of the directors held on May 28, 2004. The issuance consist of offering of newly issued shares, secondary offering of the shares (over-allotments) and issuance of new shares by allocation to a third party. The approximate net amount of funds to be raised by this public offering of new shares and third party capital increase is expected to be a maximum of ¥61,222 million and the Company expects to use ¥2,649 million for capital expenditure, ¥38,351 million for investment in and financing of affiliated companies, and the remainder to repay borrowings. Further, our related companies expect to use these funds for capital expenditure. These shares are not offered or sold in the United States.

On May 1, 2004, NIDEC’s consolidated subsidiary, Nissin Kohki Co., Ltd. adopted defined benefit pension plans pursuant to the Japanese Welfare Pension Insurance Law.

F-65

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

26. Quarterly Financial Data for the year ended March 31, 2004: (Unaudited)

		Yen in millions
		First Quarter		Second Quarter		Third Quarter		Forth Quarter		Total
Net sales		¥ 55,930		¥ 63,110		¥ 64,281		¥ 94,176		¥ 277,497
Operating expenses:
Cost of products sold		43,529		49,754		50,812		74,094		218,189
Selling, general and administrative expenses		4,907		5,898		4,700		13,037		28,542
Research and development expenses		2,333		1,294		2,123		3,001		8,751
		50,769		56,946		57,635		90,132		255,482
Operating income		5,161		6,164		6,646		4,044		22,015
Other income (expense):
Interest and dividend income		68		56		52		186		362
Interest expense		(203	)	(210	)	(173	)	(276	)	(862	)
Foreign exchange gain (loss), net		51		(1,728	)	(1,135	)	(337	)	(3,149	)
Gain (loss) from derivative instruments, net		-		(54	)	54		(5	)	(5	)
Gain on marketable securities, net		-		6		-		810		816
Gain from sales of investments in affiliated companies		-		-		-		45		45
Other, net		318		(60	)	214		(55	)	417
		234		(1,990	)	(988	)	368		(2,376	)
Income before provision for income taxes		5,395		4,174		5,658		4,412		19,639
Provision for income taxes		(1,090	)	(757	)	(1,792	)	(1,785	)	(5,424	)
Income before minority interest and equity in earnings of affiliated companies		4,305		3,417		3,866		2,627		14,215
Minority interest in income (losses) of consolidated subsidiaries		304		269		408		(333	)	648
Equity in net (income)/losses of affiliated companies		(580	)	(674	)	416		(1,684	)	(2,522	)
Net income		¥ 4,581		¥ 3,822		¥ 3,042		¥ 4,644		¥ 16,089
Per share data:		Yen
Net income	－ basic	¥ 72.05		¥ 60.03		¥ 47.29		¥ 71.80		¥ 251.14
	－ diluted	¥ 69.86		¥ 58.24		¥ 44.80		¥ 67.69		¥ 241.53
Cash dividends		¥ 15.00		¥ 0.00		¥ 15.00		¥ 0.00		¥ 30.00

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-66

NIDEC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS－(Continued)

		U.S. dollars in thousands
		First Quarter		Second Quarter		Third Quarter		Forth Quarter		Total
Net sales		$ 529,189		$ 597,124		$ 608,203		$ 891,059		$ 2,625,575
Operating expenses:
Cost of products sold		411,856		470,754		480,764		701,050		2,064,424
Selling, general and administrative expenses		46,428		55,805		44,470		123,351		270,054
Research and development expenses		22,074		12,243		20,087		28,395		82,799
		480,358		538,802		545,321		852,796		2,417,277
Operating income		48,831		58,322		62,882		38,263		208,298
Other income (expense):
Interest and dividend income		643		530		492		1,760		3,425
Interest expense		(1,921	)	(1,987	)	(1,637	)	(2,611	)	(8,156	)
Foreign exchange gain (loss), net		483		(16,350	)	(10,739	)	(3,189	)	(29,795	)
Gain (loss) from derivative instruments, net		-		(511	)	511		(47	)	(47	)
Gain on marketable securities, net		-		57		-		7,663		7,720
Gain from sales of investments in affiliated companies		-		-		-		426		426
Other, net		3,009		(568	)	2,025		(520	)	3,946
		2,214		(18,829	)	(9,348	)	3,482		(22,481	)
Income before provision for income taxes		51,045		39,493		53,534		41,745		185,817
Provision for income (losses) taxes		(10,313	)	(7,163	)	(16,955	)	(16,889	)	(51,320	)
Income before minority interest and equity in earnings of affiliated companies		40,732		32,330		36,579		24,856		134,497
Minority interest in income of consolidated subsidiaries		2,876		2,545		3,861		(3,151	)	6,131
Equity in net (income)/ losses of affiliated companies		(5,488	)	(6,377	)	3,936		(15,933	)	(23,862	)
Net income		$ 43,344		$ 36,162		$ 28,782		$ 43,940		$ 152,228
Per share data:		U.S. dollars
Net income	－ basic	$ 0.68		$ 0.57		$ 0.45		$ 0.68		$ 2.38
	－ diluted	$ 0.66		$ 0.55		$ 0.42		$ 0.64		$ 2.29
Cash dividends		$ 0.14		$ 0.00		$ 0.14		$ 0.00		$ 0.28

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-67

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:  July 26 , 2004

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***
4.1	Share Exchange Agreement between Nidec Corporation and Nidec-Shimpo Corporation, dated April 25, 2003
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 From 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.

EX-1 2 exhibit011.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) Non-life insurance agency business and activities relating to life insurance solicitation.

(5) Manufacture and sale of speed controlling devices, technical art tools, and measurement tools.

(6) Sale, purchase, leasing, renting and management of real property and acting as intermediary therein.

(7) Sale of books, stationery, teaching equipment & material and telecommunication equipment.

(8) Agency of travel and advertising.

(9) 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. Public notices of the Company shall be published in the Nihon Keizai Shinbun.

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.

(Acquisition of its own shares)

Article 6. The Company may, under the condition of Commercial Code Article 211-3, Clause 1, No.2, acquire its own shares by resolution of the Board of Directors.

(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.

(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 a 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 and retiring allowances for Directors shall be determined by the resolution of a general meeting of shareholders.

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 and retiring allowances for Corporate Auditors shall be determined by the resolution of a general meeting of shareholders.

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.

EX-1

Exhibit 1.1

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 April 6, 2003)

(Purpose)

Article 1. The purpose of these regulations is to provide for necessary matters with respect to the board of statutory auditors and attain reasonable conduct of its meetings in compliance with the provisions of laws, ordinances or the articles of incorporation

(Composition)

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.

(Person having convening power and chairman)

Article 5. The board of statutory auditors may designate the person having convening power: provided, however, that the board of statutory auditors shall not prevent other auditors convening the meeting.

2. Chairmanship of each meeting of the board of statutory auditors shall be assumed by the person having convening power under the preceding paragraph.

(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.

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, business assignment and budget of audit etc. shall be decided after discussion by the board of statutory auditors at the beginning of the audit.

2. The board of statutory auditors may resolute matters which statutory auditors regard as necessary for executing their business in addition to the matters regulated in previous paragraph.

(Report to the board of statutory auditors by statutory auditors)

Article 9. 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 and others, shall report it to the board of statutory auditors.

(Receiving reports from accounting auditors and directors)

Article 10. Statutory auditors, if necessary, shall receive reports from accounting auditors and directors at the board of statutory auditors.

(Treatment for special report)

Article 11. The board of statutory auditors shall discuss whether investigation is necessary or not when the fact which cause material damage to the company is discovered.

2. The board of statutory auditors shall deal with it as the same mentioned in the previous paragraph when reported 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.

(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 13-2. 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 13-3. The resolutions of the board of statutory auditors about the following agenda shall be needed by all statutory auditors’ consents.

(1) Director’s exemption from responsibility to be submitted to the general meeting of shareholders.

(2) The board of directors shall resolute to change the articles of incorporation to exempt their responsibility.

(3) Director’s exemption from responsibility to be submitted to the board of directors according to the articles of incorporation.

(4) Changing the articles of incorporation to make a contract which are restricted responsibility with outside directors.

(5) Participant of a lawsuit to assist directors by company.

(Discussion about statutory auditors executing their right)

Article 14. 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 15. 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 16. 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.

(Office of the board of statutory auditors)

Article 17. All matters concerning the board of statutory auditors shall be treated by the manager of the general affairs department.

(Amendment and repeal of these regulations)

Article 18. Any amendment and repeal of these regulations shall be made by board of statutory auditors.

EX-1

Exhibit 4.1

Share Exchange Agreement between Nidec Corporation and Nidec-Shimpo Corporation, dated April 25, 2003

Share Exchange Agreement

Nidec Corporation (hereinafter called A) and Nidec-Shimpo Corporation (hereinafter called B) conclude an agreement for exchange of shares (hereinafter called Agreement) as follows.

(Method)

Article 1. A, becoming a wholly owning parent, and B, becoming a wholly owned subsidiary, exchange shares in the method of exchange expressly provided in Article 352 and 363 of the Commercial Code.

(Amendment of Articles of Incorporation)

Article 2. Following the exchange of shares, A amends Article 2 (Object) of Articles of Incorporation on the exchange as follows. (amended parts are underlined)

( Object )

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) Non-life insurance agency business and activities relating to life insurance solicitation.

(6) Sale, purchase, leasing, renting and management of real property and acting as intermediary therein.

(7) Sale of books, stationery, teaching equipment & material and telecommunication equipment.

(8) Agency of travel and advertising.

(9) Any and all businesses incidental or relating to any of the foregoing items.

1

(Shares issued at the time of the exchange of shares and allotment)

Article 3.

1. At the time of the exchange of shares, A issues 582,990 common shares and allots these shares to the final shareholders (including the actual shareholders, hereinafter the same is true) listed on the register of shareholders (including the actual register of the shareholders, hereinafter the same is true) on the previous day of the exchange of shares at the ratio of 1 B’s common share to 0.060 A’s common shares.  However, no shares are allotted to 10,284,000 shares A holds.

2. In case of an increase in the number of common shares held by B as a result of exercising common share acquisition rights during the time from April 1, 2003 to August 29, 2003, A issues the necessary common shares in addition to the number of shares in the foregoing clause and allots these shares to the increased shareholders at the ratio of 1 B’s common share to 0.060 A’s common shares.

(Initial date in reckoning dividends)

Article 4. Initial date in reckoning dividends of profit on shares issued in the foregoing clause is October 1, 2003.

(Increased mount of capital stock and legal reserve)

Article 5. The increased amount of A’s capital stock and legal reserve is as follows.

(1) capital stock

No increase in the amount of capital stock in A

(2) legal reserve

Amount of A’s legal reserve increase is the multiplied amount of the existing shareholders’ equity on the day of the exchange of shares by the ratio of the number of B’s shares transferred to A to the total number of B’s outstanding shares.

(General meeting of shareholders to approve the exchange of shares)

Article 6. A, on June 25, 2003, and B, on June 24, 2003, as the date of general meeting of shareholders respectively convene a general meeting of shareholders (hereinafter called the general meeting to approve the exchange of shares) and ask for the approval of this Agreement and resolutions for matters necessary for the exchange of shares. In case of necessity or due to other reasons during the process of exchange of shares, A and B can consult and change the foregoing dates of convening.

(Date of exchange of shares)

Article 7. The date of exchange of shares is October 1, 2003.  In case of necessity or due to other reasons during the process of exchange of shares, A and B can consult and change this date.

(Administration of corporate assets)

Article 8. A and B, after the conclusion of this Agreement on to the previous day of the exchange of shares, execute its own business activities and administrate and manage the corporate assets with bona fide cares. Any act affecting seriously the assets or claims and obligations, A and B consult in advance and perform such an act.

(Dividend of profit)

Article 9. A and B pay dividends of profit in amounts limited to the following to the final shareholders and the registered pledgees of shares listed on the register of shareholders as of March 31, 2003.

(1) In A, ¥15 per share, amounting to ¥953,491,215 in total.

(2) In B, ¥1 per share, amounting to ¥19,997,317 in total.

2

(Interim dividends)

Article 10. A and B pay interim dividends in an amount limited to the following to the final shareholders and the registered pledgees of shares listed on the register of shareholders as of September 30,2003.

(1) In A, ¥17.5 per share, amounting to ¥1,112,406,417 in total.  In case of an increase in the number of shares due to conversion from convertible bonds during the time from April 1, 2003 to September 30, 2003, the amount of ¥17.5 multiplied by the increased number of shares is added.

(2) In B, ¥1.5 per share, amounting to ¥29,995,976 in total.  In case of an increase in the number of shares due to the exercise of acquisition rights of new shares during the time from April 1, 2003 to August 29, 2003, the amount of ¥1.5 multiplied by the increased number of shares is added.

(Term of office of the auditor assuming office prior to the exchange of shares)

Article 11. The term of the auditor of A assuming office prior to the date of exchange of shares is treated in the same way as in cases without the exchange of shares.

(Alteration of conditions for exchange of shares and cancellation of the Agreement)

Article 12. In case of any serious change in the state of assets or the business condition of A or B after the date of conclusion of the Agreement, A and B shall consult and can alter conditions for the exchange of shares or cancel the Agreement.

(Validity of Agreement)

Article 13. In case of failure of the general meeting of A or B to approve the exchange of shares, the Agreement loses validity.

(Matters to be discussed)

Article 14. In addition to matters prescribed in the Agreement, necessary matters for the exchange of shares are discussed and decided by A and B in compliance with the aim of the Agreement.

As evidence of conclusion of the Agreement, A and B shall prepare two copies of the Contract and sign them and hold a copy each.

Apr. 25, 2003

A:	Shigenobu Nagamori (Seal)	B:	Kazuhiko Kashihara(Seal)
	Chairman, President & CEO		President & CEO
	Nidec Corporation		Nidec Shimpo Corporation
	10 Tsutsumisoto-cho, Nishikyogoku, Ukyo-ku,		1 Terada, Kohtari, Nagaokakyo-city,
	Kyoto 615-0854 Japan.		Kyoto 617-0833 Japan

3

EX-1

Exhibit 8.1

Subsidiaries of the registrant

	Company name in English	Jurisdiction of Incorporation
01	Nidec America Corporation	U.S.A
02	Nidec Singapore Pte. Ltd.	Singapore
03	P.T. Nidec Indonesia	Indonesia
04	Nidec Electronics (Thailand) Co., Ltd.	Thailand
05	Nidec Precision (Thailand) Co., Ltd.	Thailand
06	Nidec Hi-Tech Motor (Thailand) Co., Ltd.	Thailand
07	Nidec Taiwan Corporation	Taiwan
08	Nidec (H.K.) Co., Ltd.	Hong Kong
09	Nidec (Dalian) Limited	China
10	Nidec Electronics GmbH	Germany
11	Nidec Philippines Corporation	Philippines
12	Nidec Precision Philippines Corporation	Philippines
13	Nidec-Kyori Corporation	Japan
14	Nidec Machinery Corporation	Japan
15	Nidec Total Service Corporation	Japan
16	Nidec Total Service (Zhejiang) Corporation	China
17	Nidec Nemicon Corporation	Japan
18	Nemicon Noise Corporation	Japan
19	Nidec Korea Corporation	Korea
20	Nidec-Shimpo Corporation	Japan
21	Nidec-Read Corporation	Japan
22	Nidec-Read Taiwan Corporation	Taiwan
23	Nidec-Shimpo America Corporation	U.S.A
24	Coneart Kilns Incorporated	Canada
25	Shimpo Drives Incorporation	U.S.A
26	Nidec-Shimpo Philippines Corporation	Philippines
27	Nidec -Shimpo (Shanghai) International Trading Co., Ltd.	China
28	Nidec-Shimpo (Zhejiang) Corporation	China
29	Nidec Tosok Corporation	Japan
30	Nidec Tosok (Vietnam) Co., Ltd.	Vietnam
31	Nidec Tosok (Shanghai) Co., Ltd.	China
32	Nidec Copal Corporation	Japan
33	Nidec Copal Philippines Corporation	Philippines
34	Nidec Copal (Vietnam) Co., Ltd.	Vietnam
35	Nidec Copal Precision Parts Corporation	Japan
36	Nidec Copal (Thailand) Co., Ltd.	Thailand
37	Nidec Copal (Malaysia) Sdn. Bhd.	Malaysia
38	Copal Optical and Electronic Machinery (Shanghai) Co., Ltd.	China
39	Nidec Copal (U.S.A) Corporation	U.S.A
40	Nidec Copal Hong Kong Co., Ltd.	Hong Kong
41	Nidec Copal (Zhejiang) Co., Ltd.	China
42	Nidec Copal Electronics Corporation	Japan
43	Nidec Copal Electronics, Inc.	U.S.A
44	Nidec Copal Electronics GmbH	Germany
45	Nidec Copal Electronics (Shanghai) Co., Ltd.	China
46	Nidec Copal Electronics (Korea) Co.,Ltd.	Korea
47	Nidec Copal Electronics (Zhejiang) Co., Ltd.	China
48	Globa Service Inc.	Japan
49	Globa Sales Co., Ltd.	Japan
50	Kansai Globa Sales Co., Ltd.	Japan
51	Nidec Shibaura Corporation	Japan
52	Nidec Shibaura (Zhejiang) Co., Ltd.	China
53	Nidec Shibaura Electronics (Thailand) Co., Ltd.	Thailand
54	Nidec Shibaura (H.K.) Limited	Hong Kong
55	Nidec Steel Products (Zhejiang) Co., Ltd.	China
56	Nidec Power Motor Corporation	Japan
57	Nidec Seiko Corporation	Japan
58	Nidec Power Motor (Shanghai) International Trading Co., Ltd.	China
59	Nidec (New Territories) Co., Ltd.	China
60	Nidec System Engineering (Zhejiang) Corporation	China
61	Nidec (Zhejiang) Corporation	China
62	Nidec (Dongguan) Limited	China
63	Nidec (Shanghai) International Trading Co., Ltd.	China
64	Sankyo Ryutsu Kogyo Co., Ltd.	Japan
65	Sankyo Seiki Mfg. Co., Ltd.	Japan
66	Sankyo Quoris Co., Ltd.	Japan
67	Sankyo Service Engineering Co., Ltd.	Japan
68	Sankyo Kaihatsu 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 (Shanghai) Co., Ltd.	China
76	Nidec Subic Philippines Corporation	Philippines
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	HK Nissin Kohki Co., Ltd.	Hong Kong
83	P. T. Indonesia Nissin Kohki	Indonesia
84	Dalian Nissin Kohki Co., Ltd.	China
85	Tokyo Pigeon Co., Ltd.	Japan
86	Tokyo Pigeon Mfg. Pte., Ltd.	Singapore
87	Tokyo Pigeon (Hong Kong) Co., Ltd.	Hong Kong
88	P. T. Tokyo Pigeon Indonesia	Indonesia

EX-1

Exhibit 11.1

Code of Ethics

Compliance Rules

2003.05.01

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:  July 26, 2004

/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:  July 26, 2004

/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, 2004 (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:  July 26, 2004

/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, 2004 (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:  July 26, 2004

/s/  Yasunobu Toriyama

Yasunobu Toriyama

Executive Vi ce President, Chief Financial and Accounting Officer and Director