I would like to introduce the overall sales activities and future issues concerning our company for your further understanding of our business. Ryosuke Hiruma, President Term 86 Business Report We completed our Term 86 (from April 1, 2009 to March 31, 2010). We would like to report the business status in this term. The Japanese economy during the year ended March 31, 2010 continued to experience extremely severe conditions, as corporate earnings plunged and capital investments declined under the effects of the rapid economic downturn from the latter part of 2008. The paper and pulp industry, the main customers of our group, continued to experience harsh conditions as manufacturers continued to reduce output in response to drastically declining demand. Under such circumstances, our group recorded consolidated sales of 11,081 million yen (a 12.0% decrease from the previous year). In the papermaking equipment-related business, our group�fs core business, we were forced to record a significant decline in domestic sales as a result of reduced domestic demand due to reduced paper and cardboard output, and the effects for inventory adjustment of papermaking equipment. Overseas, sales of papermaking felt and papermaking belts recorded declines due to the economic recession and the resulting downturn in demand. In terms of profit and loss, despite our relentless company-wide efforts to reduce costs, it was not enough to compensate for the drastic decline in sales, and our group recorded a consolidated operating loss of 656 million yen (compared with a consolidated operating income of 269 million yen in the previous year) and a consolidated ordinary loss of 619 million yen (compared with a consolidated ordinary income of 320 million yen in the previous year). Furthermore, an extraordinary loss in the form of business structure improvement expenses incurred due to reformation of the profit structure, along with a major increase in income taxes-deferred due to a 1,303 million yen reversal in deferred tax assets due to deteriorated corporate earnings, resulted in a net loss of 2,492 million yen (compared with a net income of 0 million yen in the previous year). Due to the effects of world-wide business down-turn, the business environment for our group is in an extremely severe status that we have never experienced. This state of affairs is likely to be persistent and protracted. Amid such an environment, our group has formulated a medium-term management plan for the three years starting with the financial year 2010, and established a management policy and management targets as outlined below, with the aim of building an organization that can generate continuous profits with a high level of expertise in papermaking equipment. Management Policy: Aim to become a company with a high level of expertise through high-level human resources and high-level products. - Increase consolidated net income per share - Provide high-function products - Emphasize improving the skills of employees and business performance and results Management Targets: (1) Consolidated net income per share: 30 yen (2) Return on Assets (ROA): 3% (3) Price Book Ratio (PBR): 1 times We have named this new medium-term management plan "New Enterprise 2012" (NE-12), and will deploy it throughout our group going forward. Under NE-12, we will raise our international competitiveness by working to enhance new product development capabilities and strengthen production technology capacity, as well as by focusing on cultivation of human resources. Through these efforts we will strive to restore our performance, coming together as a group and pushing vigorously ahead to raise our corporate value. We appreciate your further support in the future. ©Copyright 2005. ICHIKAWA CO.,LTD.