Financial ReportFirst Quarter of Fiscal 2008

Jun-ichi Hoki, President and CEO

Yukio Ishii, General Manager, Administration Div.

（April 1 – June 30, 2008）

July 15, 2008July 15, 2008

22

This presentation contains statements about the CompanyThis presentation contains statements about the Company’’s plans, forecasts, s plans, forecasts, strategies, and beliefs related to its future performance. Such strategies, and beliefs related to its future performance. Such forwardforward--looking statements were prepared based on judgments of the Compalooking statements were prepared based on judgments of the Companyny’’s s management according to information available when this presentamanagement according to information available when this presentation was tion was prepared. Readers are asked not to rely completely on performancprepared. Readers are asked not to rely completely on performance e forecasts contained herein, and understand that actual results mforecasts contained herein, and understand that actual results may differ ay differ from such forecasts. from such forecasts.

Financial results reported herein have not been audited.Financial results reported herein have not been audited.

Notice Regarding ForwardNotice Regarding Forward--Looking StatementsLooking Statements

33

Performance Overview

14.2%

23.6%

23.3%

% of % of TotalTotal

100.0%

101.3%

101.6%

107.5%

%%

15.3%

25.1%

24.7%

% of % of TotalTotal

71.05 yen71.01 yenEPSEPS

01,0681,067Net incomeNet income

1,778

1,754

7,522

AmountAmount

Fiscal 2008Fiscal 2008First Quarter ResultsFirst Quarter Results

221,755Ordinary incomeOrdinary income

281,726Operating incomeOperating income

5246,998Net salesNet sales

AmountAmountAmountAmount

YearYear--onon--Year Year ComparisonComparison

Fiscal 2007Fiscal 2007First Quarter ResultsFirst Quarter Results(Unit: million yen, (Unit: million yen,

rounded down)rounded down)

Fiscal 2008 First Quarter Income Statements 44

Fiscal 2008 First QuarterSales Growth by Major Products

55

-50

0

50

100

150

200

250

300

350

400

351

41-26 -2

13

146

Kit 1Q of Fiscal 2008 sales Growth524 million yen

Regular kit

130

220

Operamaster

Non-woven fabrics

Mekkin bag

Other non-woven fabrics

Other products

External sales of P.T. Hogy(formerly P.T. Nitto Matex)

（Unit: million yen, rounded down）

Fiscal 2008 Sales Growth by Quarter 66

（Unit: million yen, rounded down）

Kit

External sales of P.T. Hogy(formerly P.T. Nitto Matex)

Non-wovenfabrics

Mekkin bag

Other non-wovenfabrics

Growth amount

Otherproducts

41

-39

347

70

325

103

142

322

40

121

351

146

338

306

309 288

-32-33

-62

-63

-20-69-55

-31-30-30

323

39

- 200

- 100

0

100

200

300

400

500

600

FY2006, 1Q FY2006, 2Q FY2006, 3Q FY2006, 4Q FY2007, 1Q FY2007, 2Q FY2007, 3Q FY2007, 4Q FY2008, 1Q

Contracts for Operamaster77

(Contracts)96

Contracts

0

10

20

30

4050

60

70

80

90

100

44期1Q 45期1Q 46期1Q 47期1Q 48期1Q

Contracts

46

10

17

1Q 1Q 1Q 1Q 1Q(FY2004) (FY2005) (FY2006) (FY2007) (FY2008)

34

20

26 28

41

53

60

66

72

80

87

90

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

FY2008: Contracts

Sales of Operamaster

（Unit: billion yen, rounded down）

88

0.5

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

（FY2004） (FY2005) (FY2006) (FY2007) (FY2008)

2.4

3.4

1.7

3.7

2.1

1.4

1.6

3.6

0.8

3.3

2.3

2.9

1.4

3.6

2.5

3.6

2.1

3.7

2.5

2.1

3.8

2.3

2.3

3.5

1.7

1.2

3.4

1.5

3.4

1.3

3.4

0.6

2.81.8 1.91.2

2.1

3.1

2.8

3.2

2.1

3.3

3.6

3.3

Contracts: 6(Cumulative contracts: 96)

Cumulative Sales: 1.29 billion yen

FY2007: Contracts

FY2006: Contracts

FY2005: Contracts

FY2004: Contracts

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

44期 45期 46期 47期 48期1Q0%

20%

40%

60%

80%

100%90% 82% 77%

70% 56%

未対応手術件数

対応済手術件数

浸透率

Contracts for Operamaster andNumber of Operations

(Operations)

＊As of June 30, 2008

Non-conforming surgical operations

Conforming surgical operations

FY2004 FY2005 FY2006 FY2007 FY2008, 1Q

Diffusion rate

Fiscal 2008 First Quarter Highlights

Changing customer environment

Materials costs up due to surging oil prices

Raw materials prices generally on upward trend

Operamaster up and running

Change in standard and method for valuing inventories

1111

Next Plans

Fiscal 2008 Projected Statement of Income

15.0%

26.1%

26.0%

% of Total

14.0%

25.1%

24.9%

% of Total

309.99 yen

269.73 yen

EPS

114.9%6054,6604,054Net income

854

867

2,139

Amount

Year-on-YearComparison

111.7%

112.0%

107.4%

%

8,1407,285Ordinary income

8,1007,232Operating income

31,15029,010Net sales

AmountAmount

Fiscal 2008Plans

Fiscal 2007Results(Unit: million yen,

rounded down)

1212

Fiscal 2008 Strategies1313

Nurture human resources; train employeesOperamasterOperamaster

Quickly sign contracts with hospitals where internal agreements reachedIncrease diffusion rate at existing contracted hospitals

Non-woven fabricsIncrease sales of Tigalyer-brand products under Surrem product strategy

Surging crude oil pricesSurging crude oil pricesRaw materials prices generally on upward trend

Further improve efficiency at factoriesDevelop competitive productsAdopt rigorous cost controls

1414

Overview and Analysis

Fiscal 2008 First Quarter Income Statements

14.2%

23.6%

23.3%

27.6%

50.9%

49.1%

% of Total

100.0%

101.3%

101.6%

108.6%

105.3%

109.9%

107.5%

%

15.3%

25.1%

24.7%

27.3%

52.0%

48.0%

% of Total

71.05 yen71.01 yenEPS

01,0681,067Net income

3

1,778

23

1,754

2,074

3,829

3,693

7,522

Amount

Fiscal 2008First Quarter Results

-1114Extraordinary income/loss

221,755Ordinary income

-529Non-operating income/loss

281,726Operating income

1641,910SG & A expenses

1923,636Gross profit

3323,361Cost of sales

5246,998Net sales

AmountAmount

Year-on-YearComparison

Fiscal 2007First Quarter Results(Unit: million yen,

rounded down)

1515

Fiscal 2008 Key Points of First Quarter1616

Net Sales

Year-on-year comparison: Up ¥524 million (+7.5%）

Kit products： Up ¥351 million year-on-year （+12.7%）

Operamaster: Increase in customers making initial purchases of kit products prior to signing Operamaster contracts

Regular kit products: Apply Surrem concept also to ophthalmology (up 13.6%) and radiology (up 5.6%) fields; benefits will gradually appear

Non-woven fabric products： Up ¥41 million year-on-year （+1.5%）

Use Surrem strategy to boost sales, centering on gown products (up 6.9%)

Fiscal 2008 First Quarter Cost Analysis1717

Cost of sales ratio： Up 1.1 points year-on-year comparison48.0% (FY2007; 1Q) 49.1% (FY2008; 1Q)

Improved cost of sales ration for both Hogy Medical (parent company) and PT Hogy Indonesia

Hogy Medical (parent company): 49.8% 49.4% (48.9% excluding devaluation of inventories)

Positive factors

Negative factors

Improved productivity, depreciation,

etc

Unrealized gains

Devaluation of inventories

Fiscal 2008 First Quarter SG & A Expenses Analysis

1818

SG & A expenses： Up ¥164 million year-on-year comparison¥1,910 million (FY2007; 1Q)

¥2,074 million (FY2008; 1Q)

Positive factors

Negative factors

Depreciation costs

Personnel expenses

Prototype costs

Miscellaneous expenses

Transportation costs

Fiscal 2008 First QuarterNon-Operating and Extraordinary Income/Loss

1919

Non-operating income/loss：-¥5 million year-on-year comparison

Dividend income: ¥12 million (FY2007; 1Q)

¥32 million (FY2008; 1Q)

Exchange gain/loss: ¥18 million (FY2007; 1Q)

-¥10 million (FY2008; 1Q)

Extraordinary income/loss：-¥11 million year-on-year comparison (results)

Transfer from loan allowance: ¥21 million (FY2007; 1Q)

Fiscal 2008 First QuarterSummary of Income Statements

Personnel expenses: ¥152 million; Miscellaneous expenses: ¥23 million; Travel expenses: ¥20 million; Transportation costs: ¥13 million; Depreciation: - ¥20 million; Prototype costs: - ¥19 million

8.6%16427.6%2,07427.3%1,910SG & A expenses

1.6%2823.3%1,75424.7%1,726Operating income

50.9%

49.1%

100%

% of Total

192

332

524

Increase/Decrease (millions of yen)

5.3%

9.9%

7.5%

%

52.0%

48.0%

100%

% of Total

3,829

3,693

7,522

Fiscal 20081Q

Results

Main reasons for changes

Fiscal 20071Q

Results

Depreciation: - ¥42 million; Unrealized gains: ¥37 million (- ¥74 million in FY2007); Valuation of inventories: ¥35 million

3,361Cost of sales

3,636Gross profit

Kit products（12.7% up; includes Operamaster:20.5% up, regular kit products: 7.7% up); Non-woven fabrics (1.5% up); Mekkin bag (3.3% down)

6,998Net sales

2020

Fiscal 2008 First QuarterSummary of Income Statements

- 315・Interest income

1010-・Exchange loss

203212・Dividend income

- 18-18・Exchange gain

31310・Others

- 506・Loss on disposal of fixed assets

- 506Extraordinary expenses

- 17321Extraordinary income

62518Non-operating expenses

1.3%2223.6%1,77825.1%1,755Ordinary income

% of Total

- 18

0

- 3

1

Increase/Decrease (millions of yen)

%% of Total

2

1

13

48

Fiscal20081Q

Results

Main reasons for changesFiscal20071Q

Results

Incurred due to borrowings17・Interest expenses

1・Others

Transfer from loan allowance (FY2007)21・Others

47Non-operating income

2121

00.0%00.0%0・Minority interests

0.0%014.2%1,06815.3%1,067Net income

9.5%

23.7%

% of Total

10

11

Increase/Decrease (millions of yen)

0.6%

%

10.0%

25.3%

% of Total

713

1,781

Fiscal20081Q

Results

Main reasons for changes

Fiscal20071Q

Results

702・Income taxes

1,770Income before income taxes and minority interests

2222Fiscal 2008 First QuarterSummary of Income Statements

Fiscal 2008 First QuarterSummary of Balance Sheets

5.8%621,0881,025Construction in progress

- 3.6%- 1,02828,51828,51829,54729,547Tangibles

Due to depreciation- 2.4%- 30812,90513,213Buildings and structures

Due to depreciation- 4.9%- 3406,8917,231Machinery and vehicles

“Land” changed to “Leasehold” (due to standardization

of accounting treatment for overseas subsidiaries)- 5.8%- 4417,6348,075Other assets

“Land” changed to “Leasehold” (due to standardization

of accounting treatment for overseas subsidiaries)38.3%287751463Intangibles

- 1.0%- 36235,18935,551Fixed assets

4.2%3688,8558,487Notes and accounts receivable

- 4.9%- 2625,4115,674Inventories

159

- 573

- 308

Increase/Decrease (millions of yen)

19.5%

- 5.4%

- 1.2%

%

822

10,564

25,654

Fiscal2008 1Q

Main reasons for changes

Fiscal 2007

(At March 31, 2008)

25,962Current assets

11,138Cash and bank deposits

662Other current assets

Assets

2323

0.8%162,0362,019Other assets

- 670

0

361

378

Increase/Decrease (millions of yen)

- 1.1%

0.0%

10.6%

6.4%

%

60,843

483

3,399

5,918

Fiscal2008 1Q

Main reasons for changes

Fiscal 2007

(At March 31, 2008)

Decline in loss on market valuation of shares: ¥706 million ¥345 million

3,038Investment securities

483Insurance reserve

61,514Total assets

5,540Investments and other assets

2424Fiscal 2008 First QuarterSummary of Balance Sheets

0.8%3387384Reserve for employees’ retirement benefits

0.0%0397397Long-term payables

P.T. Hogy (formerly P.T. Nitto Matex)- 5.9%- 6118125Negative goodwill

0.6%1312310Other long-term liabilities

- 13.0%- 1,37010,51311,883Total liabilities

- 11.7%- 4443,7964,240Long-term liabilities

Repaid loans- 17.0%- 4252,5002,925Long-term debt

Tax benefits due to loss on market valuation of investment securities

- 21.3%- 178097Deferred income taxes

17.4%2631,5201,256Other current liabilities

0.0%-1,0001,000Long-term debt due to within 1 year

Payment of income taxes, etc. (FY2007)- 130.6%- 9477261,674Accrued income tax

- 242

- 925

Increase/Decrease (millions of yen)

- 7.0%

- 13.8%

%

3,469

6,716

Fiscal2008 1Q

Main reasons for changes

Fiscal 2007

(At March 31, 2008)

7,642Current liabilities

3,711Notes and accounts payable

Liabilities

2525Fiscal 2008 First QuarterSummary of Balance Sheets

0.0%- 1- 7,105- 7,104Treasury stock

- 1.1%- 67060,84361,514Total liabilities and net assets

86.8%- 374- 431- 57Translation adjustments

0.0%01414Minority interest

1.4%69950,33049,631Total net assets

43.5%204469265Deferred hedging gains or losses

Quarterly net income and cash dividends revised due to change in accounting treatment

1.5%65242,13241,479Earned surplus

- 27.6%46- 170- 217Valuation/translation adjustments

217

-

652

Increase/Decrease (millions of yen)

-104.3%

0.0%

1.3%

%

- 208

15,459

50,486

Fiscal2008 1Q

Main reasons for changes

Fiscal 2007

(At March 31, 2008)

49,834Shareholders’ equity

15,459Common stock and Capital surplus

Share valuation loss: - ¥345 million- 425Net unrealized gains or losses on securities

Net Assets

2626Fiscal 2008 First QuarterSummary of Balance Sheets

Fiscal 2008 First QuarterSummary of Cash Flows

- 25- 27- 2Others

- 59- 257- 198ⅡNet cash used in investing activities

Land in Ushiku City: ¥52 million (FY2008; 1Q)- 23- 178- 155Purchase of tangible fixed assets

Increase in tax expenses (FY2007)- 453- 1,651- 1,197Income taxes paid

- 136204340Others

- 10- 52- 41Purchase of intangible fixed assets

- 144- 428- 284Notes and accounts receivable

8510621Inventories

- 592

- 63

11

- 1,293

Increase/Decrease (millions of yen)

- 177

608

1,781

443

Fiscal2008 1Q

Main reasons for changes

Fiscal 2007

(At March 31, 2008)

1,770Income before income taxes and minority interest

672Depreciation

414Notes and accounts payable

1,736ⅠNet cash provided by operating activities

2727

0- 299- 299Cash dividend paid

3,01310,8387,825Ⅵ Cash and cash equivalents at beginning of year

1,59810,2538,655Ⅶ Cash and cash equivalents at end of year

- 62- 4517Ⅳ Effect of exchange rate changes on cash and cash equivalents

- 1,415- 584830Ⅴ Net change in cash and cash equivalents

0

0

Increase/Decrease (millions of yen)

- 425

- 725

Fiscal2008 1Q

Main reasons for changes

Fiscal 2007

(At March 31, 2008)

Repayment of borrowings- 425Repayments of long-term debt

- 725Ⅲ Net cash used in financing activities

2828Fiscal 2008 First QuarterSummary of Cash Flows

Change in Accounting for Overseas Subsidiaries2929

Effective the year to March 2009, the Company has applied “Accounting Treatment of Overseas Subsidiaries for Consolidated Financial Statements” (Practical Application Report No.18).

The following items have been revised for consolidated accounting purposes

・Rights to use landIndonesia: Amortization not required under local accounting standardsInternational accounting standards: Amortized over period of useful life

1. Amortized uniformly over useful life: ¥4 million effect on earnings

Prior-year amount procured retroactively from retained earnings ¥114 million decline in retained earnings

2. Previously stated as “Land”; now stated as “Leasehold” (included among intangible fixed assets)

Capital Expenditures and Depreciation Expenses3030

Fiscal 2008 - First QuarterCapital expenditures： ¥185 million （Land in Ushiku City: ¥52 million）

Depreciation expenses： ¥608 million

Fiscal 2007 – First QuarterCapital expenditures： ¥178 million （Land in Ushiku City: ¥62 million）

Depreciation expenses： ¥672 million

Fiscal 2008 PlanFiscal 2008 Plan

3131

Fiscal 2008 Projected Statement of Income3232

15.0%

26.1%

26.0%

26.3%

52.3%

47.7%

% of Total

14.0%

25.1%

24.9%

26.5%

51.4%

48.6%

% of Total

309.99 yen269.73 yenEPS

114.9%6054,6604,054Net income

160

854

-13

867

515

1,383

756

2,139

Amount

Year-on-Year Comparison

111.7%

112.0%

106.7%

109.3%

105.4%

107.4%

%

-300-460Extraordinary income/loss

8,1407,285Ordinary income

4053Non-operating income/loss

8,1007,232Operating income

8,2007,684SG & A expenses

16,30014,916Gross profit

14,85014,093Cost of sales

31,15029,010Net sales

AmountAmount

Fiscal 2008 PlansFiscal 2007 Results(Unit: million yen,

rounded down)

Fiscal 2008 Projected Net Sales Growthby Major Products

3333

Non-wovenfabrics

228 million yen

Sales Growth: 2,139 million yenSales Growth: 2,139 million yenSales Growth: 2,139 million yen

Operamaster

1,905 million yen

Total Kits1,935 million yen

Mekkin bag-4 million yen

External sales of P.T. Hogy (formerly P.T. Nitto Matex)

5 million yen

Other non- woven fabrics

5 million yen

Other products-30 million yen

Regular kit29 million yen

Net Sales Plan for Operamaster

(Unit: million yen, rounded down)

3434

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

FY2004 FY2005 FY2006 FY2007 FY2008 Plan

FY2008: Contracts forecast

FY2007: Contracts signed

FY2006: Contracts signed

FY2005: Contracts signed

FY2004: Contracts signed

720

7201,330

470

1,800

1,450

940

770

3,160

1,420

960

1,400

820

4,630

1,380

1,700

1,630

1,520

1,000

Contract plans: 45(Cumulative contracts: 135)

7,240 (Up 38.1% year-on-year))

Financial ReportFirst Quarter of Fiscal 2008

Jun-ichi Hoki, President and CEO

Yukio Ishii, General Manager, Administration Div.

（April 1 – June 30, 2008）

July 15, 2008July 15, 2008