May 12, 2009
Miyano Machinery Inc.
36 Sumiyoshi, Ueda-shi, Nagano Prefecture
Yoshiharu Saito, President and Representative Director
(Stock code number: 6162, Tokyo Stock Exchange second section)
Inquiries: Saiji Miyazawa, Director and General Manager,
Administration Division Telephone: +81-(0)268-22-2700

Notice of Adoption of Plan for Structural Reform of Business and Posting of Extraordinary Loss

Miyano Machinery Inc. (the “Company”) hereby announces that a plan for structural reform of business was adopted at a meeting of the Board of Directors on May 12, 2009, as a consequence of which the Company will post an extraordinary loss. Particulars are provided below.

1. Reasons for Structural Reform

During the current fiscal year, the Company has conducted business in accordance with a management plan focused on strengthening cooperation with Citizen Machinery Co., a subsidiary of Citizen Holdings Co., Ltd.
Unfortunately, a sharp drop in demand has continued to impact the machine-tool industry, of which the Company is a part, as a consequence of the global recession that began in 2008. In the first quarter of the current year, the industry as a whole received orders valued at only 60.4 billion yen, a devastating 84.6% decline from the year-earlier period. The Company’s business performance has been similarly impacted, as detailed in the “Financial Results for the First Quarter of the Fiscal Year Ending December 31, 2009” and the “Notice of Revised Earnings Forecast for the Fiscal Year Ending December 31, 2009,” both issued today.
In view of these dramatic changes in the business environment, the current management has reached the decision to adopt a plan for structural reform of business in the conviction that a full-scale structural reform is urgently needed to boost the Company’s earning capacity and strengthen its financial footing, in order to achieve a return to profitability in fiscal 2010 and thereafter.
We ask for the understanding and cooperation of all our stakeholders as we steadily implement the measures of this reform plan and work to improve business performance with the unwavering determination of all our officers and employees.

2. Basics of Structural Reform Plan

First, the Company will seek to increase profitability by selectively focusing on a narrower range of products and concentrating management resources on our most profitable products.
In addition, we intend to rationalize the management structure by consolidating business sites and by optimizing the workforce at each site following a thorough organizational review, with the purpose of streamlining operations and reducing costs.
At the same time, we will redouble efforts to strengthen cooperation with Citizen Machinery Co. at production and sales bases in Japan and overseas.

3. Specific Reform Measures

a. Management resources will be focused more intensively on the manufacture and sales of the Company’s flagship products, CNC turning centers for bar work, to boost profitability and strengthen the Company’s financial footing.

b. Relocation of headquarters

Headquarters will be relocated from Ueda-shi, Nagano prefecture, to Yabuki-machi, Nishi Shirakawa-gun, Fukushima prefecture, and administrative and sales operations consolidated.

c. Consolidation of production sites

(1) Production operations will be consolidated to create an essentially one-plant operation by shutting down the Ueda factory and shifting production operations at the Fukushima factory to the Kitakami factory in Kitakami-shi, Iwate prefecture.
(2) Out of profit considerations, multi-spindle automatic lathe overhaul and special machining operations currently carried out at the Ueda factory will be transferred to subsidiary Miyano Service Engineering, Inc. to establish a self-supporting operation, for which a portion of the Ueda factory will be rented out.
(3) The manufacturing division currently producing compact high-precision CNC chucker lathes (Ocean Brand) at the Ueda factory will be transferred to a new base of operations set up within Citizen Machinery Co.’s Karuizawa headquarters.
(4) Machining of products for internal use, currently carried out at the Kitakami factory, will be transferred to the Company’s Philippines factory. Crisis management and backup in manufacturing emergencies will be handled by making use of machining facilities in Citizen Machinery Co.’s Karuizawa headquarters.

Before restructuring

Site	Major products/ operations
Fukushima factory	High-volume CNC turning centers for bar work
Kitakami factory	High-performance CNC turning centers for bar work CNC chucker lathes Machined products for internal use
Philippines factory	Casting
Ueda headquarters / factory	Headquarters, administrative operations Technical center operations Compact high-precision chucker lathes Multi-spindle automated lathe overhaul Special machining

After restructuring

Site	Major products/ operations
New Fukushima headquarters	Headquarters, administrative operations Technical center operations
Kitakami factory	CNC turning centers for bar work (all) CNC chucker lathes
Philippines factory	Casting Machined products
Miyota site*	Compact high-precision chucker lathes Crisis management and backup
Ueda site*	Multi-spindle automatic lathe overhaul Special machining

*Miyota site: Rent portion of Citizen Machinery Co.'s Karuizawa headquarters.
*Ueda site: Rent portion of (current) Ueda factory.

d. Consolidation of sales offices

(1) Kanto office will be relocated to Citizen Machinery Co.'s Tokorozawa office.
(2) Utsunomiya office will be relocated to Fukushima factory.
(3) Sales subsidiary Miyano Machinery Thailand will be consolidated with Citizen Machinery Co. subsidiary Citizen Machinery Asia.

Relocation/ Transfer Timetable

July 2009
Consolidate Thai sales offices

October 2009
1. Transfer Fukushima factory production to Kitakami factory.
2. Relocate Ueda headquarters to Fukushima factory.
3. Begin gradual transfer of internal-use machined products to Philippines factory.
4. Relocate Ocean Brand manufacturing division to site inside Citizen Machinery Co.’s Karuizawa headquarters.
5. Transfer multi-spindle automatic lathe overhaul and special machining operations to subsidiary.
6. Relocate Utsunomiya office to Fukushima factory.
7. Relocate Kanto office to Citizen Machinery Co.’s Tokorozawa office.

e. Reorganization and workforce adjustment

The current three-division structure (Production & Engineering, Sales, and Administration) will be replaced by a four-division structure (Engineering, Production, Sales, and Administration), and the workforce at each site will be adjusted in an effort to streamline management structure.

f. Continued investment in research and development

To adapt to structural changes in the market in the years ahead, investment in research and development of next-generation machine tools will continue and is expected to form the core of the Company’s future growth strategy.

4. Extraordinary Loss

The Company has thus resolved to rationalize management structure through the restructuring of business sites to streamline business operations and reduce costs and through workforce adjustments at each site based a thorough organizational review. As a consequence of these measures, the Company will record an extraordinary loss in the current fiscal year in the form of business restructuring and adjustment losses amounting to 688 million yen.

5. Future Outlook

For more detailed information on how the extraordinary loss attending the Company’s plan for structural reform of business is expected to impact business performance during the current fiscal year, please see “Notice of Revised Earnings Forecast for the Fiscal Year Ending December 31, 2009,” released today. Information concerning the impact of the reform plan on subsequent performance will be released as the plan progresses and the particulars can be closely examined.