Business Risks

The main risks that could affect Amada's operating results, stock price and financial position are as follows.
The matters described below do not represent all of the potential risks relating to Amada's business.

（1） Factors causing changes in operating results

Amada's main business is the manufacture and sale of metalworking machinery and apparatus and metal processing machinery and apparatus, and tools, accessories and components (consumables, electronic equipment, etc.) related to these products.
The machinery and apparatus sold by Amada is used as production equipment in manufacturing processes in a broad range of sectors including automobiles, home electrical appliances, telecommunications equipment, office equipment and building materials. As a result, although Amada's business tends to not be affected easily by fluctuations in the business conditions of a specific industry, there is a possibility the capital investment trend for industries as a whole could affect the Company's operating results.

（2）Overseas development

Amada has responded to the globalization of its markets by developing production and sales bases overseas in North America, Europe, Asia and other regions, and the ratio of overseas sales to consolidated net sales in the fiscal years ended March 2010 and March 2011 was 51.6% and 50.8%, respectively. As a result, although the Company takes steps to hedge risks by using forward exchange agreements and other arrangements, there is a possibility fluctuations in exchange rates, changes in the economic trends and political and social environment in countries where the Company does business or other factors could affect the Company's operating results.

（3）Price competition

The markets where Amada is developing its business are subject to intense price competition. Although the Company strives to maintain its profit margins by introducing new products, focusing resources on its solution proposal-type engineering business and other efforts, there is a possibility fluctuations in sales prices as a result of increasingly aggressive or prolonged price competition could affect the Company's operating results.