KYOWA EXEO recently deployed an operating officer system to respond more swiftly to changes in the operating climate. Seiji Takashima, Ph.D., and Kunio Ishikawa will remain at the helm as chairman and president, respectively. They will lead the Company forward under the banner of "Aiming Higher: In Pursuit of the EXEO Way," to build corporate value groupwide and overcome the recessionary challenges that the financial crisis caused.       In fiscal 2008, ended March 31, 2009, management did much to prevent consecutive declines in revenues and earnings. Efforts included cultivating and deepening ties with new common carriers and other customer segments to increase orders. We allocated employees more flexibly to enhance construction efficiency and raised profitability by lowering indirect costs. We also harnessed business process reengineering to upgrade our key internal systems and generated synergies from consolidated management of the Group.    Orders decreased in the second half of fiscal 2008 because of the recession, although revenues were basically unchanged. Operating income surged, although it was admittedly lower than the record high of fiscal 2006. We thus led the industry in terms of profits and growth at the operating level. Net income was down owing to extraordinary factors, however, notably a loss on valuation of investment securities and a tax rate hike.    Our prime goal in fiscal 2009 is to cement our growth base by reinforcing groupwide management. Business with telecommunications companies is relatively stable, but we acknowledge that the recession will inevitably affect other private-sector businesses.    We will continue to streamline construction and slash indirect expenses. Still, earnings will probably fall because of lower construction volume, intensifying competition that will erode margins, and higher employee severance and retirement benefits.    We will tackle these challenges by bolstering our foundations for growth so we can prosper as the business environment changes. Among our endeavors will be to expand the scope of our business, fortify Group management, and employ our human resources more efficiently.    We will continue to train engineers to handle fiber-access and next-generation networks, or NGNs while broadening our core ENGINEERING-SOLUTIONS business by marketing intensively to carriers. In the SYSTEM-SOLUTIONS segment, we will again concentrate resources where we can harness Group strengths, thereby creating more value-added business areas.    Telecommunications companies in Japan will continue investing steadily over the medium term. Telecommunications networks are on the cusp of a paradigm shift. Wired access is migrating from copper cable to optical fiber and from legacy networks to NGNs. Mobile communications will see Long-Term Evolution, or LTE take over from third-generation technology. Another anticipated advance will be fixed, mobile, and broadcast convergence services.    Such developments will present exciting new opportunities for KYOWA EXEO. The operational reforms that we have undertaken over the past few years are steadily bearing fruit, sharpening the Group's competitive edge. We are convinced that proper management will empower us to expand sustainably.    The KYOWA EXEO Group aims to earn the trust of shareholders and all other stakeholders by maintaining high standards of integrity and transparency. We will fulfill our social responsibilities by managing our business ethically and ensuring that directors and employees fully comply with laws and ordinances. We will formulate a framework to ensure that governance functions well and that we respond flexibly to changes in the social and regulatory environment. We will also beef up our management structure to streamline Group operations.    We look forward to your ongoing support and encouragement for KYOWA EXEO in the year ahead. June 2009