To Our Stakeholders

Fiscal 2004 — the First Year for “Vision-70”

The fiscal year under review (fiscal 2004, ended March 31, 2005) marked the year when we took an important first step forward, after successful completion of the “New Creation 21” plan, under which we undertook diligent efforts to solidify our business foundations.

Consolidated net sales for fiscal 2004 rose 5.6% year on year to ¥178,325 million, while operating income decreased

7.4% to ¥9,582 million. Net income was down 18.9% to ¥5,111 million, with net income per share at ¥18.09.

The rise in sales was the result of a strong OEM market in Japan and vigorous domestic demand for integrated audiovisual / navigation systems, overriding the impact of falling prices brought on by increasingly fierce price competition. The Electronics Manufacturing Service (EMS) business in Mexico also contributed to the increase in sales. Operating income, despite lower variable costs and the net rise in sales, declined due to aggressive investments in R&D and strategic investments for sales promotions and activities to strengthen brand awareness.
Tatsuhiko IZUMI, President

Tatsuhiko IZUMI, President

Net income was down due to transfers to allowance for doubtful accounts and changes in accounting standards for retirement benefits. The fact that we were able to solidify foundations for future growth, however, demonstrates the underlying strength of the Company. The reversal of capital reserves approved at the general meeting of shareholders held in June 2004 eliminated the accumulated loss that we had been carrying on our consolidated financial statements. We shall continue our efforts to improve shareholders’ equity, and to increase retained earnings to allow us to invest more for R&D and other business areas, which will strengthen our market competitiveness. We plan to resume payment of dividends in the fiscal year to March 2006 in accordance with business performance.

Throughout the entire Group we promote cash flow management emphasizing consolidated ROA (the ratio of net

income to total assets). In accordance with that goal, we are working to reduce total assets, including inventories and interest-bearing borrowings, and have set targets for fiscal 2007 to raise the consolidated shareholders’ equity ratio to 30% or higher. We also plan to bring down consolidated net interest-bearing borrowings to under ¥17.0 billion, and increase sales to over ¥210.0 billion.

CONSOLIDATED FINANCIAL HIGHLIGHTS

CONSOLIDATED FINANCIAL HIGHLIGHTS
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President Tatsuhiko Izumi

June 28, 2005

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