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 In FY2010, ended March 31, 2011, the Japanese economy struggled due to a decline in exports stemming from an appreciating yen and the rollback of government economic stimulus measures. Although there were signs of a recovery in exports to emerging economies in the second half of the year, the economic situation remained challenging due to the high level of unemployment and other factors.The domestic economy is expected to remain weak for some time as a result of the Great East Japan Earthquake, which struck on March 11, 2011 and made the economic outlook all the more uncertain. The direct effect of the earthquake on the operations of the JRC Group was minor. No employees were injured, and although some buildings and equipment belonging to the Tohoku Regional Branch sustained damage, repairs have already been completed and normal business activities resumed. Under these circumstances, the JRC Group worked hard to expand revenue throughout the year. Our consolidated results for FY2010 are summarized below. In the year under review, consolidated net sales amounted to 107,705 million yen, a 3.2% decline compared with the previous year. Broken down by business, sales in the Marine Electronics Equipment segment rose owing to growth in the commercial shipbuilding sector. However, sales in the Solutions and Specialized Equipment segment declined year-on-year, due to falling demand from the public sector and the impact of the earthquake on sales of water and river management systems, airport control systems and meteorological systems. Sales in the Communications Equipment segment declined due to sluggish sales of ETC equipment for motorcycles and telecommunications infrastructure equipment. Operating income fell 48.3% year-on-year, to 1,551 million yen, as a result of the decline in revenue. Ordinary income dropped 59.6%, to 1,133 million yen, due to foreign exchange losses of 435 million yen, incurred as non-operating expenses. Despite posting extraordinary income of 1,963 million yen on the sale of investment securities, net income was down 17.3%, to 1,921 million yen. This was due to several factors, including a 368 million yen loss on application of Accounting Standards for Asset Retirement Obligations, a 235 million yen loss on the sale of investment securities, and a 146 million yen loss related to earthquake damage. JRC's dividend policy regards the return of profits to shareholders as a top priority. Our basic policy is to provide stable dividends to shareholders while investing in long-term growth taking into account performance and reinforcement of our financial position. In accordance with this policy, we provided annual dividends of 5.00 yen per share. The outlook for the operating environment remains challenging, despite forecasts for continued growth in emerging economies, primarily in Asia. Negative factors include soaring crude oil prices and the ongoing impact on Japan's economy of the Great East Japan Earthquake. Amid fears of cutbacks to some production activities due to damage to equipment and facilities, as well as electricity supply restrictions, various repercussions are expected to surface in the time ahead. Under these circumstances, the JRC Group will strive to put its businesses on a growth trajectory by increasing revenue through aggressive business development underpinned by structural reforms. At the same time, we will continue efforts to reinforce earnings by reducing design and production costs and carrying out extensive restructuring. We will also apply technological innovations to bolster business activities that help protect the environment and save energy. Furthermore, to achieve our goal of zero defects, we will strengthen our emphasis on quality and actively promote the reform of quality controls systems and methods. Due to the Great East Japan Earthquake, meanwhile, the output capacity of suppliers has fallen significantly, underscoring uncertain conditions for procuring materials. In response, we will move swiftly to address the procurement situation and implement a dynamic action plan. On December 29, 2010, Nisshinbo Holdings Inc. became the parent company of JRC. Going forward, we will increase collaboration in many business areas, including the environmental and energy-saving sectors. Drawing on opportunities for enhanced synergies, both JRC and Nisshinbo Holdings will work toward achieving strong growth and enhancing the corporate value of their respective corporate entities.
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