HKS Co., LTD has reported a net profit of $2.23 million in the 2008 fiscal year even amidst all the cutbacks and difficulties in the automotive and aftermarket industry. In the previous fiscal year, HKS posted a loss of $1.66 million. The healthy performance is attributed to increased sales, cost reduction in operations and expense reductions.

For the future, like many other manufactures in the industry, HKS says they plan to stop their participation in major industry shows, “including SEMA, PRI and Tokyo Auto Salon” but instead they will increase in operations and research and development to ensure products are delivered to the market more optimally.

It looks like even though HKS will be increasing R&D efforts, we won’t be seeing any cool new products and cars from HKS at the big shows for the near future. Maybe instead we can get them to remake some nostalgic 1980’s style HKS gauges?

PRESS RELEASE

HKS CO., LTD. & HKS USA, INC. ANNOUNCE STRONG EARNINGS

LOS ANGELES (November, 2008) – HKS Group, the premier manufacturer and supplier of automotive performance systems, components, and light-weight aircraft engines, has reported strong earnings for HKS Co., Ltd. and its subsidiary HKS USA, Inc. Anticipating the significant downturn in the global economy over the last year, HKS implemented a “lean operations plan” early in 2007 that was a major factor in increased earnings and financial strength, positioning the company to come through the on-going downturn in an even stronger position.

Below are the financial highlight statements release by HKS Japan, LTD. and HKS USA, Inc.

HKS Co., Ltd. Financial Highlights (FY 2008)

HKS Co., Ltd. FY 35 (2007-2008)

During HKS Co., Ltd’s Fiscal Year 35 (CY2007-2008), the Japanese Automobile market declined to its lowest level in the past 30 years due to global economic anxiety resulting from record price of crude oil and the U. S. sub-prime financial crisis. Japan’s top selling car segments were high MPG small cars and Mini cars while other segments declined significantly.

Recognizing the difficult global situation and domestic challenges, especially the saturated and stagnant Japanese Aftermarket Auto Parts Industry, HKS has executed a three prong corporate plan to grow and prosper in spite of the economic storm. These are; First, to reinforce and enhance our market position as a pioneer and the leader in the industry. Second, to aggressively expand our business in the overseas markets. Third, to cultivate new business opportunities by utilizing our technological expertise and experience.

Despite, the successful launch of a totally new electronic device, “CAMP2″ and aggressive expansion of the HKS GT Supercharger and Suspension product lines, the Japanese After-Market has declined due to less consumer consumption caused by the rise of consumer price index. At the same time, HKS Co., Ltd.’s business with Original Equipment Manufacturers (OEM) was growing. The newly introduced Supercharger for watercraft was a solid contributor to sales due to a major OEM contract. Because of these factors, the revenue from the Japanese market has increased from last fiscal year.

For the overseas markets, the weaker European economic trend was a concern, but businesses with OEM helped increase the revenue in that region. Additional distribution channels brought increased revenue in the Asian region. However, the U. S. economic downturn triggered by the sub-prime financial crisis and the conclusion of a contract for automobile assistive device to OEM resulted in decreased revenue from the North American Market. Overall, the revenue contribution of overseas markets during this fiscal year was lower than the previous fiscal year.

As a result, the consolidated sales with our subsidiaries for the Fiscal Year were 8,551 Million Yen which was a 2.3% increase from the previous fiscal year.

HKS-Strong Earnings

On the subject of profit, the incremental sales, cost reduction due to a higher level of manufacturing operations, and expense reductions in the sales and marketing area, successfully offset the material cost pressure due to global material cost hike.

As a result, The Operating Profit for the Fiscal Year was 392 Million yen (US$3.92 million) versus previous FY loss of 47 Million Yen (US$-.47 million), the Current Profit was 390 Million Yen (US$3.9 million) versus previous FY loss of 9 Million Yen (US$-.09 million), and the Net Profit was 223 Million Yen (US$2.23 million) versus previous FY loss of 166 Million Yen (US$-1.66 million).

*100JPY = $1 USD

HKS USA, Inc. Financial Highlights (FY 2008)

HKS USA, Inc. FY 2008

As HKS Co., Ltd.’s public disclosure statements show, the HKS Group is financially sound, with its substantial asset base of 11 Billion Yen (US$112.0 million) and liabilities of 3 Billion Yen (US$30 million). In fact, liabilities have been reduced by 9% versus prior fiscal year as a result of efficient operating and accounting controls. HKS’s solid financial standing will allow the company to continue to implement its R&D and dealer support plans during the global downturn.

For the fiscal year, the North American operation (HKS USA, Inc.) made a significant contribution to the HKS Group despite the developing U.S. financial crisis and significant decline in auto sales and aftermarket industry sales. While sales revenue decreased by 18% versus prior fiscal year, profit increased 11% versus prior fiscal year as a result of the implementation of a “lean operations plan” and cost containment.

Plans and Outlook for Next Fiscal Year

The HKS Group forecasts that the global economy will continue to lose momentum into calendar year 2009, placing significant pressure on the auto and aftermarket industries. In spite of the weak global economic outlook, HKS believes it will continue to perform successfully in the Fiscal Year 2009 (FY36) with the benefit of the HKS Group’s strategic direction already in place. The “lean-operations plan” will continue to go forward in HKS’s relentless efforts to contain and reduce costs.

To achieve better capital efficiency – return on capital employed – HKS Group will not participate in major industry shows, including SEMA, PRI and Tokyo Auto Salon. The capital will be employed in operations and R&D to ensure all new products are delivered to the market to better support our loyal customers and strengthen the HKS Dealer network.

HKS will continue to invest in our technological resources (R&D) and continue to lead the industry in innovative driving performance products. The efficiency and productivity improvements described above will have a positive impact on HKS Group earnings and growth

About HKS USA, Inc.

HKS USA, Inc. is a leading manufacturer and supplier of automotive aftermarket performance systems, parts and accessories. Delivering its products to both the import and domestic car markets, HKS has been recognized for its engineering and performance excellence in the automotive industry since 1973. Established in 1982, HKS USA, Inc. is a wholly-owned subsidiary of HKS Company, Ltd. Japan and distributes its products through its worldwide dealer network. For more information about HKS USA., visit their website at www.hksusa.com.

Contact:  Michael Caudill, DRIVEN, (951) 587-9465

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