The global economy during the consolidated fiscal year under review generally staged a gradual recovery, supported by a rapid economic turnaround in emerging countries such as China and India, and a retreat of the financial crisis, despite lingering concerns over a double-dip recession and the asset bubble.
In Japan, as political and economic uncertainty persisted, domestic demand - except in areas benefiting from fiscal stimulus - saw sluggish growth due to intensifying price competition in diverse industries, stemming from a rising supply demand gap and increasing consumer preference for cheaper products. From around the beginning of the fourth quarter, however, a number of industries, including semiconductor-related, showed signs of a recovery trend owing to expanding external demand.
Looking at conditions in the Group’s key markets, for vehicles, while the market structure was changing significantly as China in 2009 looked set to become the world’s largest automotive market in terms of number of vehicles sold, competition accelerated over the development and sales of eco-friendly hybrid and electric vehicles, and low-end models, partly due to entries of newcomers from other industries. In the market for semiconductor manufacturing and inspection systems, given the recovery in demand for semiconductors used in notebook PCs, smart phones, and automobile-related products, some semiconductor manufacturers, particularly in Taiwan, resumed making capital investments and achieved a marked recovery in sales. In the cellular phone market, as demand was expected to reverse from the negative growth of the previous year, major global manufacturers were staging serious competition in all types of phones; from low-end to high-end multifunctional.
In this climate, the Group conducted swift and steady implementation of measures in the Companywide Profit Structure Reform Plan set out in the previous fiscal year and nearly completed the execution by the end of July 2009. As a result, though operating loss was suffered in the first quarter (April-June 2009), the second quarter (July-September) onward showed success in drastic streamlining of the fixed cost structure, and posted significant operating income, partly due to a recovery in sales. Based on this streamlining, the Group since last October has been at work on new management goals under the reformulated companywide growth strategies for achieving renewed growth.

As a result of these developments, consolidated sales for the fiscal year under review fell 5.6% year on year to ¥26,025 million. Consolidated operating income, however, posted a significant profit of ¥1,227 million, up ¥2,416 million year on year, reflecting a substantial improvement in the sales cost ratio derived from the innovative fixed cost structure and a marked decrease in selling and general administrative expenses.
Consolidated ordinary income stood at ¥1,051 million, a ¥2,177 million year-on-year increase, despite increases in interest payable on long-term loans and in foreign exchange losses associated with yen appreciation.
Consolidated net income increased to ¥820 million, up ¥4,424 million year on year, primarily due to posting extraordinary gains, including the reversal of an allowance for doubtful accounts and a decrease in tax expenses stemming from a revision of deferred tax asset collectability owing to improved business results. This came despite posting extraordinary losses, including loss on retirement of noncurrent assets and business structure improvement expenses.

The Company plans to distribute year-end dividends of ¥9 per share - a ¥6 per share increase from the previous year-end dividends - after an increase in retained earnings for business development and expansion, as well as needs for ensuring financial stability, are comprehensively taken into consideration. The increase is attributable to greater improvement in earnings, though sales remained at 70%-80% of their peak level. Since the Company already distributed interim dividends of ¥6 per share, combined dividends for the year will therefore total ¥15 per share (consolidated dividend payout ratio: 36.6%).

The global economy is encountering a rapidly evolving paradigm shift, in which production and technological systems and global flows of funds are experiencing dramatic structural changes in the course of facing and overcoming the financial crisis and global recession. Economies of emerging countries are rapidly expanding amid the scenario in which they tow economies of advanced countries that are weak in self-sustaining recovery.
Japan is also further depending on China, India and other emerging countries that are regarded as cost-competitive production bases and huge consumer markets with strong demand.
In our major markets of vehicle communication equipment, semiconductor manufacturing and inspection systems, along with cellular phones, market power relationships not only among companies but also countries and regions are drastically changing.
Amid this business environment, the Group has been striving to achieve its Medium-Term Management Targets (“Minimum 8”) and recovery to consolidated sales of ¥30 billion by rebuilding the companywide growth strategies and, from the third quarter of the fiscal year under review, working on measures for their implementation.
An outline of our measures is as follows:

Outline of Companywide Growth Strategies

• Redefining Entire Business Domains of the Company
• Important Policies of Management Execution

1)		Accelerating product innovation, the basis of our growth strategy, and shifting innovation into full swing
2)		Promoting process innovation, the basis of reinforcing business capabilities
3)		Further accelerating profit structure reform
4)		Strengthening the system of monitoring management indexes
5)		Further accelerating personal innovation

The Group will continue to work on its fundamental efforts, including CSR efforts such compliance, corporate ethics and environmental preservation, as well as improvements in the internal control system and their tighter implementation, and reinforcement of corporate governance. Under the abovementioned companywide growth strategies, officers and employees alike resolve themselves to working as a unit for a solid fulfillment of targets.

We hope that we can count on the continued support and guidance of our shareholders.

May 14, 2010
President   Takayuki Tokuma