The fiscal year ended March 2011 was witness to a string of economic events, from the European financial crisis to a persistently strong yen, the rise of emerging countries, and further deflation in Japan. And, in March, Japan was hit with a disaster of unprecedented proportions, the Earthquakes and Tsunami. It was therefore simultaneously a year of momentous change in HOYA's operating environment.

Despite navigating such rough waters, HOYA pursued a management strategy of capturing value in Information Technology and concentrating management resources in Life Care to accelerate growth.

Reviewing the past year, I will provide an overview of the year and report on prospects for the future.

Initiatives and Achievements: Review of Fiscal 2011

HOYA is pursuing calls for maintaining our competitive edge with the aim of capturing a certain level of revenues in Information Technology, which pivots on our exceptional optical technology, and accelerating growth in Life Care by injecting management resources on a priority basis. In Life Care, there was marked growth in the global market and among the emerging market countries in particular.

As a result of the above, in the fiscal year under review we achieved consolidated net sales of ¥413,349 million from continuing operations, an increase of 2.7% over the previous year, and income before income taxes and minority interests of ¥63,758 million, a year-on-year increase of 26.2%. The hard disk glass media manufacturing business was transferred, so it is classified as a discontinued operation. We recorded a gain on transfer of ¥10,343 million, and income from discontinued operations totaled ¥9,873 million. As a result, net income for the HOYA Group overall was ¥59,579 million, a year-on-year increase of 43.5%.

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Fundamentals and Future Prospects: A Roadmap to Growth

Since its establishment in 1941 as Japan's first optical glass manufacturer, HOYA has pursued a basic business strategy of being "a big fish in a small pond." The "pond" is the market and the "fish" is the share of that market. This expresses the basic strategy of gaining a dominant position by capturing the top market share in limited niche markets. We believe that finding many small ponds and creating our own new ponds will translate into sustained growth for the HOYA Group as a whole.

To put it another way, subdividing otherwise large markets on the basis of different axes (region, product and technology), selecting segments that allow us to leverage our strengths, and focusing energy and resources in them makes it possible to gain an overwhelming presence in those segments. As a school of big fish in small ponds, we will continue striving for a balanced form of management while maintaining our competitiveness.

Globalization is also an important concept that speaks to the future of HOYA.

In 1974 we established our first overseas production site in Thailand and subsequently established regional headquarters in Europe, North America and Asia, as we actively worked to globalize the organization. Although we are still only halfway there in terms of globalization in the true sense. True globalization goes beyond production and sales; it means having head office functions and decision-making for development and the like spread out all over the world. We firmly believe that making optimal management decisions quickly from a global perspective will ensure sustained corporate growth over the long term.

With the spotlight on health and medicine continuing to get brighter, it is expected that the market itself will continue to steadily grow in a way that is relatively impervious to economic ups and downs. HOYA intends to apply the optical technology it has cultivated to the field of medicine and raise its presence in businesses related to health and medicine. The Group strongly believes that by providing enduring solutions that meet needs in areas closely connected to people's lives, such as the areas we are currently involved in, endoscopes, eyeglass lenses and intraocular lenses, it will be able to bring about changes in the quality of those lives. Moreover, HOYA will continually search for the seeds of new businesses in which it can leverage its strengths and conduct focused investment for growth.

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To Our Shareholders

Reconstruction in the aftermath of the Great East Japan Earthquake will be without a doubt a major task for Japan, as well as for industry and commerce at the global level. The first steps are already being taken. As a member of the industrial community, HOYA is fully committed to the recovery and reconstruction of the affected regions.

Optical Technology comprises the DNA of HOYA. With this DNA as our core competence, we intend to provide value to society in various forms to make our presence even stronger.

We thank our shareholders and customers for their ongoing support and understanding.