With burgeoning signs of a recovery in the global economy, in the fiscal year ended March 2011 HOYA actively carried out operations in target markets in its various business sectors. Having converted to a lean, muscular organization in the global financial crisis, the Company promoted five initiatives aimed at further growth. Going forward HOYA will reformulate its business continuity plan, the lifeline of any corporation, based in part on its experience with the Great East Japan Earthquake.

We Achieved Healthy Growth in Our Businesses

Despite being subjected to an entirely unforeseen situation at the end of the term in the form of the Great East Japan Earthquake, we were able to make fiscal 2011 a year of healthy growth, even compared to our competitors.

Information Technology

In the Information Technology segment, prices for digital devices dropped at a faster rate as market players consolidated, and the market itself began to contract. In the area of mask blanks for semiconductor production, we were able to stay a step ahead of the competition with products compatible with extreme ultraviolet (EUV) lithography. In addition, we sold off our hard disk media manufacturing operation and devoted management resources to our HDD glass substrate business. We made a bold decision to invest in the Philippines to construct a new factory, which gave us a framework for accommodating rising demand, while striving to win the fierce price wars.

In the area of PENTAX brand digital cameras, our unique, new SLR camera available in 100 color variations strongly appealed to consumers and gave birth to a new group of PENTAX enthusiasts. The brand's mid-range and medium-format digital SLR cameras delivered the PENTAX legacy in quality and performance and received glowing reviews from the core group of PENTAX loyalists, both professionals and amateurs. The segment returned to operating profit for the full year, thanks in part to promptly implemented structural reforms.

Life Care

In the Life Care segment HOYA achieved growth in overseas markets.

The eyeglass lens business saw the domestic market start to recover as Japan's deflationary economy began to bottom out. We aggressively entered emerging markets, and the business grew faster than the market average.

In the Eyecity contact lens specialty store business, we succeeded in capturing a new customer segment by focusing on online promotions. With a product lineup that takes advantage of the chain's top share of the retail market, Eyecity proved to be overwhelmingly effective at acquiring customers.

In the area of intraocular lenses used in cataract surgery, new pre-loaded products enjoyed steady growth, and we increased our share even in our main market of Japan. We were also successful in steadily expanding market share in the U.S. and emerging market countries.

In endoscopes for medical use, sales slowed temporarily due to the impact of medical reforms in the U.S., but signs of a recovery became apparent in the second half. There was marked growth in emerging market countries, and we were able to build a foundation for regional development going forward.

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Five Initiatives for Restructuring Got Off to a Good Start

In 2010, HOYA formulated five restructuring initiatives as a strategy for future growth. Specifically, the strategy consists of enhancing our core competencies in globalization technological prowess and accelerating HOYA's growth through 1) human resource training and diversification, 2) IT infrastructure upgrades, 3) market-driven business expansion, 4) faster penetration of emerging markets, and 5) efforts to enhance customer satisfaction.

None of the initiatives are meant to be completed in a single fiscal year; they are intended to be carried out over the medium-to-long term. Our achievements in the fiscal year ended March 31, 2011, however, showed competence and we got off to a good start.

As a case in point in human resource diversification, the intraocular lens business relocated its global headquarters to Singapore for reasons that include a diverse talent pool, as well as infrastructure stability. Globalization was also promoted in the endoscope business by hiring talented people from countries around the world.

To upgrade the Group’s IT infrastructure, a new officer in charge of IT was appointed, and we began globally integrating our IT infrastructure. Upgrades to IT infrastructure will be accelerated at the global level from the standpoint of business continuity planning as well.

As mentioned earlier, we made steady progress penetrating the emerging markets during the year under review. We will continue to build on this success, not only in Asia, but in a broader spectrum of emerging markets.

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New Priorities to Create Even More Definitive Value

In addition to the above initiatives, we identified two new priorities for the fiscal year ending March 31, 2012: 1) formulate a more in-depth business continuity plan, and 2) develop innovative products.

1) Build a more in-depth business continuity plan

Fortunately, HOYA’s personnel and facilities were mostly kept out from harm’s way of the Great East Japan Earthquake. This was in part one of the benefits of having globalized and having dispersed our business strongholds throughout the world, rather than having concentrated them in one place. Some of our customers and suppliers, however, suffered major damage from the disaster itself and the subsequent power shortages, and we had our supply chain disrupted temporarily. Based on this experience, we intend to formulate a more in-depth business continuity plan.

2) Develop innovative products

To continue to facilitate the growth of businesses in the Life Care segment, we will focus on developing innovative new products by investing in new technologies and partnering with other companies, while also considering M&A deals at the global level.

In the Information Technology segment, the other of our two business drivers, we have continually maintained a high share of our markets, but many of those markets have matured and industry players are being reshuffled worldwide. To survive this reshuffling and remain a powerful competitor, HOYA put its advanced technical capabilities to good use, to create value and provide customer satisfaction that consistently exceeds market expectations.

Guided by these priorities, I believe that the initiatives we take in the year ending March 31, 2012 will lead, also, to an increase in corporate value from the perspective of our shareholders and our other stakeholders at large. Thank you for your continuing support and understanding.