The company's fiscal year under review commenced with the world economy plunged into the deepest recession due to the September 2008 financial crisis originated in the U.S. Thereafter, governments of countries across the world adopted economic incentive measures to deal with the financial crisis in such a successful manner that they began to see gradual recovery in both internal and external demand, allowing the world economy to get out of its worst situation. In Japan, however, the employment situation has remained severe, causing our nation to fail to pull its economy out of the lingering deflation.

Our company's group was no exception, being affected by resultant deterioration in the market condition starting at the beginning of 2009, to a significant extent, especially in its automotive business segment on the whole, the gasket business in its electronics business segment, and its KB Seiren's wiping cloth business segment.

In the meantime, our group's product differentiation business segment strongly performed in the clothing market under intensifying price competition. Among this business segment are the sports inner wear business having its differentiation strategy based on the group's integrated production process making use of KB Seiren's special fiber to steadily meet the customers' needs and the fashion business having its differentiation strategy based on the group's signature technology Viscotecs® to expand textile and product sales, both businesses registering increases in income and profit compared to the previous term. In addition, our group's cosmetics business, included in its medical business segment, successfully promoted sales, focusing upon CS improvement, with resultant increases in income and profit compared to the previous term.

In addition, considering the present harsh economic environment to be the best opportunity to strengthen our corporate structure, we, with "conducting business within our size" as our top business priority, have promoted thorough cost reduction and production efficiency improvement (in our line department), operations integration and streamlining (in our staff department), R & D expenses visualization and efficiency improvement (in our R & D department) and other operation reforms. Furthermore, as part of emergency measures to deal with the adverse business situation, our group as a whole has implemented temporary shutdown for production adjustment and employee work structure change for work sharing. Meanwhile, for the betterment of its business management under a corporate policy of "Select and Concentrate", the group has reviewed all its business segments to redistribute its business resources to any of those with promising potentialities for growth in the future; in February 2010, our group successfully completed a merge between its group companies -- Seiren Housing Co., Ltd. which withdrew from the custom-built housing business, and Seiren Shoji Co., Ltd; and our group also decided for withdrawal of Nagoya Seiren Co., Ltd. from the textile business in March 2010 for the purpose of converting the company into a high-value added enterprise designed to make effective use of the assets possessed by the company, while we resolved to have the company's textile business successfully transferred to and integrated within our group to achieve integration of its functions as a whole and improvement of the efficient use of its business resources.

We will continue to conduct our business in a careful and cautious manner with an eye toward the business environment, while promoting, as part of our business strategies, "IT Application/Direct Distribution", "Expansion of Business in Non-clothing/Non-textile Fields" and "Globalization" to commit ourselves to creation of businesses oriented for the 21st century under our policy for the next term -- "A Challenge for New Value Creation".

We would appreciate it if all of you would continue to extend your unwavering support and cooperation for Seiren.