0 Merger between Koyo Seiko Co., Ltd. and Toyoda Machine Works, Ltd. Merger in 1 st of January 2006

1 Background to Merger 1. Establish worldwide network of sales, development and manufacturing bases able to respond speedily and accurately to customers’ needs. We concluded that merging the two companies to form a leading worldwide systems supplier is the best means of meeting customers’ expectations and gaining their trust in the increasingly competitive auto industry. 2. Secure the technology development capability and resources required to shorten technical innovation lead time and develop complex, large-scale systems. Regarding steering business, the two companies established FAVESS Co., Ltd. in Nov to integrate electric power steering sales and development resources, and this company has steadily achieved results.

2 Purpose of Merger ToyodaMachine Works Creation of new business opportunities through synergy in four business areas Bearing business Machine tool business Drive line business Steering business World-level systems supplier Koyo Seiko Expand the benefits of integration at FAVESS to all steering business to meet customers’ needs Achieve the same synergistic benefit for bearings, machine tools and drive line products through integration Total integration Further development of bearing and machine tool business

3 Overall Corporate Goal Auto parts businesses (steering, bearings, drive line products) Machine tool business (foundation of manufacturing) Strong growth Synergistic effect To become a company that is known throughout the world and that has the trust, respect, and high expectations of society

4 Outline of Merger ◆ Company name ： JTEKT Corporation ◆ Date of merger ： January 1, 2006 ◆ Continuing company ： Koyo Seiko ◆ Executives ： Chairman: Takaya Yamada (current TMW chairman) President: Kohshi Yoshida (current Koyo Seiko president) Vice President: Motohiko Yokoyama (current TWM president) Other executives will be announced when decided ◆ Location of head office ： Osaka, Japan ◆ Merger ratio ： 0.76 common shares of Koyo Seiko will be allocated for each common share of Toyoda Machine Works The two companies will merge as companies on equal footing

5 Steering Business Basic Strategy Company E Company D Company C Company B Company A New company Strengthen technology development capability and enhance product lineup through realignment of resources and integration of know-how 2.Strengthen cost competitiveness by utilizing benefits of integration 3.Expand global supply capability and reinforce sales network Target global share for 2008 Secure leading position within the steering industry Industry position (sales) (¥1 billion) New company 30 ％

6 Steering Product Development 2. Construct global network of development bases ◆ Network of development bases with advanced development capability has already been established covering Japan, America, and Europe. Systemization Hydraulic power steering Electric power steering Being mass produced Now under development for mass production R&D now under way 1. Become full system supplier with complete lineup of products 3. Reinforce advanced development Vehicle motion active control system Automatic operation control system Function

7 Bearing Business Basic Strategy Top share of global automotive bearing market (17% share) ＊ Automotive bearings 1. Tapered roller bearings: Reinforce position as world’s no.1company in terms of product strength by providing products clearly differentiated from those of competitors and achieving dramatic cost reductions through the development of innovative technology 2. Hub unit bearings:Enhance advanced development (high functionality) and strengthen global supply network 3. Needle roller bearings: Specialize in automotive types (automatic transmission thrust bearings, rocker arm bearings) 4. Development of unit products combining bearing and drive line products ◆ Further strengthen automotive and industrial bearing business and achieve synergy through such means as combining bearings with other products to form unit products. New company １７％ Company A 16% Koyo 13% Company B 14% Company C 13% Others 44％ Others Worldwide position (sales) KOYO 13% ＊ Industrial bearings 1. Steel industry bearings and drive shafts: Utilize strength as holder of no.1 domestic share to expand overseas business 2. Windmill power generator bearings: Utilize experience and high share in Europe to aim for no.1 position 3. Machine tool bearings and EXSEV bearings: Through utilizing synergy and development of high-precision, high-function products, expand machine tool bearing business and obtain overwhelming global share of special- environment bearings. Aim for no.1 global position in each field

'03'04'05'06'07'08 Drive Line Business Basic Strategy Become a world-class supplier of drive line products through strategic global expansion of business Sales Fiscal year 1.Regarding intelligent torque controlled couplings (ITCC) and Torsens, which are strong products, expand business globally for the expanding 4WD market. 2.Improve the product strength, particularly the cost competitiveness, of drive shafts through machine tool technology innovation and bearing technology synergy (Japan, ASEAN, China) (¥1 billion) Double Bearing technology Drive shaft Propeller shaft ITCC Torsen Hub unit

9 Machine Tool Business Basic Strategy Contribute to the manufacturing operations and business development of customers as a systems supplier with top technology through combining the unique technology of both companies. ・ Utilization of superior bearing and heat-treatment technology ・ Expansion of grinding technology types ・ Integration of control technology Cutting Heat-treatment Grinding Control Bearing, heat-treatment technology Company A Company D Company E New Company Company C Company B \1 billion yen Industry position (2003 sales)

10