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Translation - English English
Presentation of performance for the first half of the fiscal year ending March 3, 2007
I. Overview of performance for the first half of the fiscal year ending March 31, 2007
1. Announcement of revisions to forecasts of performance for the fiscal year (November 1)
2. First half performance highlights
3. Revisions to forecasts of performance (net sales and operating income)
Reference: Highlights of revisions to forecasts of performance for the fiscal year
II. Business plan for the fiscal year ending March 31, 2007
III. Fiscal 2006 medium-term management plan (For the period March 2007 – March 2009)
1. Medium-term management policy
2. Numerical management targets
3. Operational changes during this year and fundamental medium-term stance for the future
II. Important activities by business sector
4. Trends and future directions in the XXX Group business
5. The XXX Group’s business activities
6. YYY peripheral business
7. NGN related activities
8. Support for XXX’s one-stop service
9. Strengthening contracting system in the access field
1-5. Steps toward the addition of 30 million optical cable users by 2010
3-1. Trends and future directions in non-XXX businesses
10. Growth of non-XXX businesses
11. The development of LLL business
12. Fundamental strategy for “commercialization of installation capacity”
Reference 3. The growth of LLL business
13. Strengthening systems through the application of ZYZY functions.
14. Management integration measures
III. An overview of reorganization and M&A in the ZZZ Group
IV. Measures and policies on returns to shareholders
V. Others
1. Responding to various issues in ZYZY’s operating environment
2. Number of engineers with major vendor qualifications
3. Shareholder structure (Top 5 Shareholders)
4. ZZZ Group
5. Corporate history
◇ Both revenue and profit increased during the first half.
◇ In view of the substantial gains in performance during the first half, forecasts of performance for the fiscal year ending March 31, 2008 have been revised upward.
Revisions to forecasts of consolidated performance and dividends, and the acquisition of treasury stock
(1) Numerical revisions to forecasts of consolidated performance for the first half of the fiscal year ending March 31, 2007
Revisions to forecasts of dividends
The acquisition of treasury stock
Year-on-year growth in both revenue and profit
Performance
(13.2% growth)
Up 1.3 percentage points
・Major growth in RRR-related projects
・An increase in the volume of optical technology projects
・Sales growth
・Gain on sales of fixed assets
・Gain on sales of investment securities
Significant increases in comparison to the first half of last fiscal year, and over plans announced at the beginning of the fiscal year
■RRR projects show year-on-year growth
Growth in YYY, LLL, and optical technology projects
■YYY and LLL projects front-loaded in the first half more than planned; targeting further increases in orders received to maintain growth momentum.
In particular, mobile communications, QQQ, and regional government FTTH
(First half performance)
(Forecasts for the fiscal year)
Performance in previous year
Initial plan
Performance this year
Upward revisions
Current plan
Upward revisions based on continuation of the strong performance seen in the first half
・Significant growth in mobile-communications-related projects and steady performance in optical technology projects
Other exchange gains on foreign currency transactions, 200 million
・Expenses of retirement of electrical facilities
◆ Further growth in project volume is forecast, continuing the strong performance seen in the first half
◆ Profit growth as ZZZ-Style Kaizen (improvement) takes hold throughout the Group
Growth of 10.0 billion in net sales and 1.0 billion in profit
In comparison with initial plan
(1) To be the No. 1 company in infrastructure development
(i) Set up a separate entity to ensure proper governance
(ii) Develop ZZZ-Style Kaizen (improvement) to strengthen business front line
(2) Aiming to be a systems integrator in construction business
(i) Product power
(ii) Technological ability
(iii) Advisory ability
(3) Maximizing the effect of management integration
Making the best use of the pure holding company system
(i) Concentration and selection (reorganization of business companies)
(ii) M&A; alliances
Important goals to be achieved by March 2009
In comparison with the previous fiscal year
In comparison with planned performance
Difference
First generation (Analog)
Second generation (PDC)
Third generation (FOMA)
Shield projects
Conversion of conventional telephone lines to optical cable
Removal of conventional telephone lines
Completion of digitization
Linking regional relay stations with optical cable
Privatization of XXX
XXX’s mobile communications network commences operations
Introduction of comprehensive project execution system
Reorganization of XXX and establishment of holding company
ZYZY management integration
P.8
The Sales of the XXX Group will not decline.
Marketing capabilities
Construction capacity
◆ Enhanced productivity through ZZZ-style kaizen (improvement)
◆ Strengthening site management
◆ Recruiting engineers to provide one-stop service
Abrupt changes
• Sharp rise in QQQ construction
• Acceleration of construction to respond to RRR
[Second (FY2005) medium-term management plan target values]
• LLL business favorable
• Government sector, private sector, and IT solutions business struggled amid worse-than-expected competition
[FY2006 medium-term management plan target values]
Net sales in XXX YYY business
Net sales in non-XXX business
XXX YYY business: Strive to take full advantage of favorable conditions of XXX YYY-related business
Non-XXX business
1. Further acceleration of net sales in LLL business (firmly held industry No. 1 share)
2. IT Solutions business to maintain high sales growth and emphasize profits
Prevent the XXX market from shrinking by opening up new areas of business.
◆ Full-scale response to the increase in QQQ projects
◆ Bolstering advisory activities in connection with the scrapping of obsolescent facilities
◆ Expanding agency business
◆ Expanding work domain through NGN projects
◆ Responding to needs for one-stop residential service
ZZZ brings its strengths to bear on providing one-stop consulting, design, installation, and after-sale service for today’s increasingly complex and sophisticated family networks.
Home network image
Responding to needs for one-stop service
Networking the home
・Diversification of residential wiring
(Optical, LAN, wireless, PLC, etc.)
Home server
Broadband router
(Consulting and sales)
・Networking various home devices
Consulting on connection
・Consulting on residential wiring
(After-sale service)
・Diagnosis and repair 24 hours a day, 365 days a year
(This is available only during working hours for the time being)
(Design, construction, and setup)
・By specialist engineers
Reliable performance
・Various agency businesses
Expanding the scope of operations using expertise gained in existing businesses
Peripheral Business
Materials-related operations
Demand for goods
Autonomous marketing of inbuilding mobile communication systems (IMCS)
Facilities yet to be introduced
・Selection
・Negotiation, consulting
Information systems/Corporate operations
Software development
Maintenance projects
Installation, replacement, and repair of antennae
Research operations
Radio interferometry
Existing Business
Research and development
Facilities planning
Negotiation
Consulting
Design
Construction
Testing
Inspection
Maintenance
Full turnkey
R & D facilities projects
R & D related operations
・Facilities projects utilizing various new methods
・Participation in testing (WiMAX, etc.)
Microcircuit disposal
XXX (East/West/Com)
・ Disposal of analog TV relay facilities
・ Disposal of analog satellite facilities
・ Change in island circuit frequency band
(From 4GHz to 6GHz)
Switching-center vendor operations
Large-scale server projects
・Basic installation, including operating system
・Settings
・Test operation
・Comprehensive testing
Repair and maintenance operations
Wireless base stations
・Scheduled inspections
・Repairs
・Other
Switching center
・Support for repair and maintenance operations
Operations
One element of ZZZ-style kaizen (improvement)
■ Reorganization of subcontractors in the Tokyo metropolitan area access field
◆ Consolidating from 10 companies mixed in 11 areas to 6 companies in 5 areas
・Quick handling of QQQ projects, which are expanding rapidly in the Tokyo metropolitan area, and productivity increases
・Improved customer service through centralization of customer contact points by region
・Cost reductions through consolidation
● Productivity of the Group overall
→ up 10%
■ Job rectification through information technology
◆ Moving forward with visibility of work sites
・Introducing a data flow system
・Introducing a real-time management system
(Network integration, systems integration, maintenance)
XXX became a holding company
ZZZ nonconsolidated figures
ZYZY consolidated figures
Creating a new business model for the government sector business
CC Boxes and other general civil engineering projects
LLL infrastructure
Fiscal 2006 medium-term management plan
Continuous expansion to achieve management stability
Establishment of a marketing strategy
Enhancing purchasing power
The ZZZ Group: A communications construction SIer
ZZZ Group is a systems integrator with core technologies in network design and construction
Vertical axis: Leverage ZZZ strengths to expand operations through the commercialization of installation capacity.
Horizontal axis: Focus on becoming a one-stop solutions provider
(Note) Figures shown are the simple sums of the companies of the three groups for the fiscal year ended March 31, 2004 (figures for 12 months, including first-half figures for WWWW and TTTT).
Translation - English XXX
A Specified Nonprofit Organization
Constitution
Adopted November 17, 2003
Chapter 1: General
Article 1: Name
Specified Non-profit Organization XXX.
2. The English name of the Corporation is XXX.
Article 2: Offices
The Corporation’s principle offices are located in Taito-ku, Tokyo.
Chapter 2: Objectives and Operations
Article 3: Objectives
The corporation’s objectives are as follows.
(1) To engage in development work and human aid activities that reduce the suffering caused by violations of basic human rights in developing countries, which lead to poverty and conflicts, in an effort to reduce poverty in the world.
(2) To educate the Japanese public on the causes and effects of poverty and injustice, and to support and mentor activists who work to create just societies with high standards of living.
Article 4: Specified Nonprofit Activities
To achieve the objectives set forth in the preceding article, Corporation engages in the following activities.
(1) Activities involving international cooperation.
(2) The promotion of social education.
(3) The protection of human rights and the promotion of peace.
(4) Activities that involve communication with, advising, and supporting the operations and activities of organizations that support the Corporation’s objectives.
Article 5: Types of Operations
The Corporation works to achieve the objectives set forth in article 3 above through the following specified non-profit activities.
(1) The promotion of development projects that will ameliorate poverty and conflicts in developing countries.
(2) Disaster relief operations in developing countries to assist the victims of conflicts and natural disasters.
(3) Research into the problem of poverty.
(4) Raising consciousness of the problem of poverty through seminars, charity events, and publicity programs, and public awareness campaigns regarding economic and psychological support operations.
(5) Other operations that contribute to the attainment of the Corporation’s objectives.
Chapter 3: Membership
Article 6: Categories of Membership
The Corporation offers two categories of membership. The category of “regular member” corresponds to the “corporate member” category described in the Law to Promote Specified Nonprofit Activities (hereinafter, “the law”).
(1) Regular members
Regular members are individuals or organizations that believe in the Corporation’s objectives, and join with the intent of cooperating in the advancement of the Corporation’s activities. They attend general meetings and have voting rights.
(2) Supporting members
Regular members are individuals or organizations that believe in the Corporation’s objectives, and join with the intent of supporting expansion of the Corporation.
Article 7: Eligibility for membership
(1) There are no established requirements for membership.
(2) Individuals or organizations wishing to become members of the Corporation must understand the categories of membership as described in sections (1) and (2) of the preceding article, and must submit an application to the representative director of the Corporation.
(3) In the absence of a legitimate and compelling reason for denial, the representative director shall approve all applications for membership received.
(4) When an application is denied in accordance with section (3) above, the representative director must notify the applicant of the denial.
Article 8: Membership fees
Membership fees are set by and remitted to the Board of Directors.
Article 9: (Termination of membership)
Membership shall be terminated under any of the conditions listed below:
(1) The member submits a written resignation from membership.
(2) An individual member passes away, or a member organization ceases to exist.
(3) A member fails to pay membership fees without a legitimate reason, and, despite reminders, fails to pay for one year or more.
(4) The member is expelled.
Article 10: Resignation
A member may resign by submitting a notice of resignation, described elsewhere, to the representative director.
Article 11: Expulsion
(1) A member may be expelled by resolution of the board of directors, under any of the circumstances set forth below. When this occurs, the expelled member will be notified immediately, and given an opportunity to provide arguments in vindication.
(a) A member violates the Articles of Association of this Corporation.
(b) A member damages the reputation of the Corporation, or acts contrary to the Corporation’s objectives.
(2) When the representative director judges that an urgent need exists, he may expel a member with the concurrence of an assistant representative director. When this occurs, the expelled member will be notified immediately, and given an opportunity to provide arguments in vindication.
Article 12: Return of Fees and Contributions
The Corporation does not return membership fees or other contributions of goods or money.
Chapter 4: Board of Directors
Article 13: (Numbers and categories of director)
(1) The Corporation’s directors shall be as follows.
(a) Directors shall number between 3 and 20.
(b) Auditors shall number 1 or 2.
(2) Of the directors, 1 shall be the representative director, and up to 2 shall serve as assistant representative director.
Article 14: (Appointments)
(1) The board of directors appoints directors and auditors from among the candidates for those offices.
(2) The representative director and assistant representative director(s) are chosen by the members of the board of directors.
(3) The composition of the board of directors must comply with the following.
(a) Each director may have on the board only one relative, where the term relative is defined as a spouse or a person in the third degree of kinship or closer.
(b) Such a director and his spouse or a person in the third degree of kinship or closer must number one-third or less of the total number of directors.
(4) Auditors may not serve concurrently as directors or employees of the Corporation.
(5) No person covered by any of the provisions of article 20 of the law may serve as a director of this Corporation.
Article 15: Duties
(1) The representative director represents the Corporation and directs it overall operations.
(2) The assistant representative director assists the representative director. If the representative director meets with an accident or for some other reason is unable to discharge his duties, the assistant representative director will perform duties in a caretaker role as previously specified by the representative director.
(3) Directors are members of the board of directors, and prosecute the operations The Corporation as established in the Articles of Association, and by resolutions of general meetings and the board of directors.
(4) The duties of auditors are as follows.
(a) To audit the status of the directors’ execution of operations.
(b) To audit the status of the Corporation’s assets.
(c) To report to the general meeting or to the cognizant authority should the audits described in (a) and (b) above disclose improprieties regarding the Corporation’s operations or assets, illegalities, or violations of the Articles of Association.
(d) To convene a general meeting when it is necessary to announce matters such as are described in (c) above.
(e) To offer opinions regarding directors’ performance of duties or the Corporation’s assets, or to demand meetings of the board of directors regarding the same.
Article 16: Terms of Office
(1) A director’s term of office shall be 2 years. However, there is no bar to reelection.
(2) A director who is appointed in mid-term to replace a departing director shall serve the remainder of the term of the director replaced. A director who is appointed in mid-term to increase the number of directors shall serve until the end of the term of the other directors.
(3) Following resignation or expiration of the term of office, directors shall continue to perform their duties until their successors assume office.
Article 17: Filling a vacancy
When the number of directors or auditors falls below two-thirds of the established number, the vacancies must be filled without delay.
Article 18: Resignation
A director may resign by submitting a letter of resignation to the representative director, detailing the reasons for the resignation.
Article 19: Dismissal
(1) A director may be dismissed and replaced by resolution of the board of directors under either of the circumstances described below. In such a case, the director in question must be notified in advance and accorded the opportunity to present evidence and arguments on his own behalf.
(a) A director is considered unable to perform his duties due to physical or mental infirmity.
(b) A director commits a violation of his duties or other act inappropriate to a director.
(2) An auditor committing an act that falls under either of the two preceding paragraphs can be dismissed and replaced by resolution of a general meeting. In such a case, the auditor in question must be notified in advance and accorded the opportunity to present evidence and arguments on his own behalf.
Article 20: Remuneration
(1) Directors receive no remuneration for the performance of their duties as director.
(2) Directors receive reimbursement for expenses incurred in the course of their duties.
Article 21: The secretariat and employees
(1) The Corporation establishes the secretariat, and appoints the director of the secretariat and necessary employees.
(2) The representative director selects the director of the secretariat with a concurring resolution of the board of directors.
(3) The director of the secretariat appoints and dismisses employees with the concurrence of the representative director.
(4) Matters pertaining to the organization and management of the secretariat are determined by the representative director, with concurring resolutions by the board of directors.
Chapter 5: General Meetings
Article 22: Categories of general meeting
The Corporation holds two categories of general meeting: annual and extraordinary.
Article 23: Structure
(1) General meetings are composed of all regular members.
(2) Directors and auditors attend general meetings, providing explanations and opinions as needed.
(3) The director of the secretariat attends general meetings, providing explanations as needed and opinions in a consultative capacity.
Article 24: Scope of resolutions
(1) The general meeting considers resolutions concerning the matters listed below.
(a) Business and financial reports
(b) Election of directors
(c) Dismissal of auditors
(d) Amendment of the Articles of Association
(e) Mergers
(f) Dissolution of the Corporation and related matters
(g) Other important matters related to the Company’s operations.
Article 25: Convening of general meetings
(1) Annual general meetings shall be convened within three months of the end of each fiscal year.
(2) Extraordinary meetings shall be held under any of the circumstances listed below.
(a) When the board of directors judges a general meeting to be necessary and calls for one to be convened.
(b) When one-third or more of the regular members sign a written demand for a meeting, in which the purpose of the meeting is specified.
(c) An auditor calls a meeting in accordance with article 15, section 4, item (d) of this constitution.
Article 26: Convening of meetings
(1) General meetings are convened by the representative director except as described in article 26, section (2), item (c).
(2) The representative director must convene an extraordinary general meeting within 30 days of a demand under article 26, section (2), items (a) or (b).
(3) A general meeting may only be convened after 7 days notice. Members must be notified in writing of the time, place, and agenda of the meeting.
Article 27: Chairman
The chairman of the general meeting is elected from among the regular members in attendance.
Article 28: Quorum
A general meeting cannot be convened without a quorum consisting of one-third of the Corporation’s regular members.
Article 29: Resolutions
(1) The purview of resolutions of the general meeting is as previously set forth in article 26, section (3) of this constitution. However, resolutions on other matters requiring urgent action can be passed by a vote of two-thirds of the regular members in attendance.
(2) In addition to matters set forth in the Articles of Association, the general meeting may decide to consider other matters by a majority vote of regular members in attendance. The chairman will break any tie votes.
Article 30: Voting rights
(1) Every regular member shall have an equal vote.
(2) A regular member who is unable to attend a general meeting may cast his votes on items under consideration either through submission of written documentation prior to the meeting or by giving his proxy to another regular member.
(3) A regular member who submits a vote in accordance with article 30, section (2) shall be considered present at the meeting for the purposes of article 29, sections (1) and (2).
(4) No regular member shall vote on a resolution of a general meeting where a conflict of interest exists.
Article 31: Minutes of proceedings
The chairman shall cause minutes of the proceedings of a general meeting to be prepared. He shall maintain custody of these minutes, which are to be signed by the chairman and another signatory elected from among the regular members present.
Chapter 6: Board of Directors
Article 32: Composition and attendees
(1) The board of directors is composed of all directors.
(2) Auditors attend meetings of the board of directors, and may offer opinions.
(3) The director of the secretariat attends meetings of the board of directors, provides necessary explanations, and may offer opinions.
(4) At need and with the approval of the representative director, directors and the director of the secretariat may request the presence of other parties at meetings of the board of directors.
Article 33: Matters subject to vote
(1) The following matters shall be decided by vote of the board of directors.
(a) Operational plans and budgets for income and expenses.
(b) Annual business and financial reports (draft).
(c) Election of directors.
(d) Dismissal of directors.
(e) Amount of membership fees.
(f) Matters related to significant loans.
(g) Matters related to the organization and operations of the secretariat.
(h) Agenda items for general meetings.
(i) The carrying out of the resolutions of the general meeting.
(j) Other matters regarding the operations of the Corporation that do not require the approval of the general meeting.
Article 34: Meetings
(1) The board of directors shall convene under the following circumstances.
(a) When the representative director deems it necessary.
(b) One third or more of the directors demand a meeting in writing, specifying the purpose of the meeting.
(c) When an auditor demands a meeting in accordance with article 15, section (4), item (e).
Article 35: Convening meetings
(1) Meetings of the board of directors shall be convened by the representative director.
(2) When the representative director receives a demand for a meeting of the board of directors in accordance with article 34, section (1), items (b) or (c), he shall convene a meeting within 30 days of the receipt of the demand, and shall provide notice of same.
(3) When a meeting of the board of directors is to be convened, each director and auditor is to be notified in writing not less than five days prior to the meeting of the date, time, location, objectives, and matters to be considered.
Article 36: Chairman
(1) The representative director is chairman of the board of directors.
Article 37: Quorum
(1) A meeting of the board of directors can be convened only if a quorum consisting of more than one half of all sitting directors is present.
Article 38: Deliberations
(1) Matters for consideration at a meeting of the board of directors shall be as described in the advance notice of the meeting, as set forth in article 35, section (3). However, additional matters may be considered and resolutions passed in urgent cases with the concurrence of two-thirds or more of the directors present.
(2) In addition to the matters set forth in the Articles of Association for the consideration of the board of directors, the board may decide to pass resolutions on other matters with the concurrence of a majority of the directors present.
Article 39: Voting rights
(1) Each director shall have an equal vote.
(2) A director who is unable to attend a meeting of the board of directors can vote on previously announced agenda items by submitting his votes in writing, and in advance.
(3) A director who submits a vote in accordance with article 39, section (2) shall be considered present at the meeting for the purposes of article 38, sections (1) and (2).
(4) A director may not vote on a matter when a conflict of interest exists.
Article 40: Minutes of proceedings
(1) The chairman shall cause minutes of the proceedings of a meeting of the board of directors to be prepared. He shall maintain custody of these minutes, which are to be signed by the chairman and another signatory elected from among the regular members present.
Chapter 7: Assets and Accounts
Article 41: Composition of Assets
(1) The composition of the Corporation’s assets is as listed below.
(a) Assets recorded on the initial inventory prepared upon the Corporation’s establishment.
(b) Membership fees
(c) Contributions of money and goods
(d) Income generated from assets
(e) Income generated from operations
(f) Other income
(2) These assets are to be employed only in the Corporation’s specified nonprofit activities.
Article 42: Management of Assets
(1) The representative director manages the Corporation’s assets, and the director of the secretariat carries out day-to-day operations as specified elsewhere by the board of directors.
Article 43: Accounting principles
(1) The Corporation’s financial accounts are kept in accordance with article 27 of the law.
(2) The Corporation’s financial accounts include only those related to its specified nonprofit activities.
Article 44: Operational Plans and Budget
(1) The representative director prepares the Corporation’s operational plans and income and expenses budgets each fiscal year, which must be approved by resolution of the board of directors.
Article 45: Interim budgets
(1) If a new budget is not approved, the representative director may by resolution of the board of directors continue to make expenditures in line with the previous fiscal year’s budget, until such time as a new budget is approved.
(2) Income and expenditures as described in the preceding paragraph will be treated as part of the new budget.
Article 46: Additions or Corrections to Budgets
(1) When there is a risk of a departure from a suitable budget, or when it is judged that there is a need to deal with an important financial matter, these shall be handled by resolution of the board of directors.
Article 47: Business and Financial Reports
(1) The representative director shall prepare the Corporation’s business and financial reports promptly after the end of the fiscal year. After auditing by the Corporation’s auditors, these must be approved by the board of directors, and then the general meeting.
(2) Any surplus funds on the financial statements shall be carried forward to the next fiscal year.
Article 48: The fiscal year
(1) The Corporation’s fiscal year runs from April 1 to March 31.
Chapter 8: Amendments to the Articles of Association, and the Dissolution or Merger of the Corporation
Article 49: Amendments to the Articles of Association
(1) Amendments to the Articles of Association must be approved by a vote of three quarters of the regular members present at a general meeting, and approved by cognizant government authority unless it is a “trivial matter” as described in article 25, section 3 of the law.
(2) When an amendment is made to the Articles of Association involving a “trivial matter” as described in the preceding paragraph, said amendment shall be reported promptly to the cognizant authorities.
Article 50: Dissolution
(1) The Corporation shall be dissolved under any of the following circumstances.
(a) By resolution of a general meeting.
(b) Should it be determined that the objectives of the Corporation’s specified nonprofit activities are impossible to achieve.
(c) Should there be an insufficiency of regular members.
(d) Should the Corporation undergo a merger.
(e) In the event of the Corporation’s bankruptcy.
(f) Should the Corporation’s charter be revoked by cognizant government authority.
(2) The Corporation can only be dissolved for the reasons listed above by a vote of three quarters of the Corporation’s regular members.
(3) The Corporation can only be dissolved according to article 50, section (1), item (b) with the concurrence of the cognizant government authority.
Article 51: Ownership of Remaining Assets
(1) In accordance with article 11 section 3 of the Law, assets remaining at the dissolution of the Corporation (with the exception of the cases of dissolution by merger or bankruptcy) shall be assigned to such person as may be selected by vote of three quarters of all regular members in general meeting.
Article 52: Merger
(1) A merger of the Corporation must be approved by vote of three quarters of all regular members in general meeting, and by the cognizant government authority.
Chapter 9: Method of Advertisement
Article 53: Advertisement
The Corporation’s shall advertise through its bulletin board and by publication in official gazettes.
Chapter 10: Miscellaneous
Article 54: Committees
(1) The Corporation may, by resolution of the board of directors, establish various committees to further the smooth execution of its operations.
(2) Committees may be established for purposes ranging from the promotion of existing operations to the planning of future operations.
(3) Committee chairman, who are in principle directors or employees of the Corporation, shall be appointed by the board of directors upon the establishment of the committee.
(4) Upon request, committee chairman shall make interim and final reports to the board of directors regarding the status of their activities.
(5) The representative director, with the approval of the board of directors, shall establish the fundamental mission of each committee. Committee chairmen will determine the routine operations of their respective committees.
Article 55: Detailed rules or regulations
(1) The representative director, with the concurrence of the board of directors, shall establish the detailed rules or regulations required to pursue the Articles of Association.
Supplementary Provisions
(1) The Articles of Association are in effect as of the date of the Corporation’s establishment.
(2) Notwithstanding the provisions of article 14, section (1), the Corporation’s initial officers upon its establishment are as follows.
----
(3) The provisions of article 16, section (1) notwithstanding, the terms of the initial officers shall begin on the date of the Corporation’s establishment and end on the date of its first general meeting.
(4) The provisions of article 44 notwithstanding, the Corporation’s initial operational plan and budget shall be set by the general meeting held at the time of the Corporation’s establishment.
Japanese to English: President's Message from Annual Report
Translation - English President’s Message
The fiscal year ended March 31, 2002, saw both the bursting of the IT bubble and a worldwide slump in IT-related markets, and the effects of these on ZZZ were not insignificant. The fiscal year, and in particular the first half, was spent responding to these developments. Increases in manufacturing efficiency allowed globalization to move up another level, and this resulted in a contraction of the role of our Japanese operations. However, viewing globalization as a form of optimization, it is clear that Japan still plays an important role in the development of next-generation technology and in product improvement.
Whatever the era, whatever the business environment, ZZZ stresses business portfolio management matched to existing conditions. During this term, changes in the external environment were significantly more pronounced than forecast, and the Company invested significant energy in a swift and appropriate response to those changes. Portfolio management allowed us to put a brake on the decline in the earnings of the group as a whole. Therefore, it can be said that the Company reaped significant benefits from its policies during this term.
Performance
Consolidated net sales for the fiscal year were 235,265 million, a decline of 0.6% from the previous term. Domestic net sales fell 3.6%, and overseas sales contracted by 3.4%. The ratio of overseas net sales to total net sales increased from last year’s 42.1% to 43.8%, bringing the Company a step closer to its goal of 50%.
In the field of information and communications, the Company increased its sales of large masks for liquid crystal displays. However, as mentioned above, ZZZ took a blow when the IT bubble burst during the first half of the term, and sales dropped off. Going into November 2000, however, faint indications prompted the Company to take another look at its portfolio. Early in 2001, we reduced our income from the information and communication fields to the maximum possible extent.
The Eye Care Company succeeded in increasing income, though, and this partially offset the revenue decline in the information and communications sector. In the vision care sector, products developed for the European market turned in solid performance, and sales of graduated refractivity lenses and other high-value-added products increased both overseas and in the domestic market.
In the health care sector, expansion of the Company’s chain of contact lens stores brought increases in efficiency, and Ministry of Health approval of soft intraocular lens manufacturing in October 2001 also made a contribution to performance. In the final analysis, the sales increase in these areas was not enough to offset the entire contraction in the information and communications sector, but it was sufficient to hold consolidated net sales to only a slight decline. We believe this to have been a timely response to the changes in the external environment.
Consolidated operating income fell 2.7% to 43,897 million, and consolidated current income declined 5.0% to 45,774 million. As previously noted, net sales contracted. However, ZZZ employed cutting-edge technology in every field to increase the weight of high-value-added and high-performance products in sales, with the result that consolidated net income grew 8.6% to 23,740 million.
ZZZ’s measures to increase revenues bore fruit in the vision care and health care sectors. Not only did net sales increase, but operating income increased by 8.1% and 14.% percent, respectively in these two companies. This was sufficient to slow the declining trend in ZZZ’s overall profits.
Dividends of 50 per share were declared for the year, for a consolidated payout ratio of 24.5%. The ratio of consolidated shareholders’ equity to dividends was 2.6%.
Consolidated capital investments totaled 19,585 million, largely concentrated in the development of next-generation products in the information and communications field, particularly in the Electro-Optics Company. That company’s share of total capital investments rose to 67.8%, while investments in the Eye Care Company declined to 30.4%, primarily for acquisitions.
Operations
During this term, ZZZ took three key precepts as the pillars of its management policies. First, it is necessary to properly manage each separate sector of operations and combine revenues; second, it is vital not to miss the proper moment to react to changes in the environment; and third, it is important to make structural changes to strengthen enterprise as a whole.
With regard to the first and second of these precepts, ZZZ practiced management policies tailored to the conditions the Company encountered during this term, and this allowed us to meet objectives. Business portfolio management is not limited to individual management of business sectors, such as those in the Eye Care Company that offset the decline in the information and communications sector, but extends to exacting scrutiny of all key factors, including area and the competitiveness of products in the marketplace. A close look at one of those key factors, area, led us to concentrate resources in areas where it would lead to growth in revenues and profits, and to scale back operations in other areas. The Company energized operations at several manufacturing bases, achieving the enhancement of efficiency in production, taking no half measures, but hammering out and executing clear policies that also led to the shut-down of some manufacturing facilities. We addressed another key area, the competitiveness of ZZZ products, by seeking to heighten the competitiveness of already-competitive products, and taking the emphasis off products easily impacted by changes in the external environment, and products in losing ground in the marketplace to the products of ZZZ’s competitors. This comprehensive scrutiny allowed us to give form to our portfolio management.
We have applied management resources to the development of next-generation products in markets that are currently slumping. The changeover to the next generation of products will be made when these markets break out of their doldrums and begin again to grow.
The third of our key precepts, structural changes, is a little different in approach from the first two. The structural reforms we are considering are not management strategies that respond to the external environment, as with the first two key precepts. Instead, we propose continuous changes in the Company and its operations, designed to result in enhanced competitiveness in the medium term, three to four years down the line. We must create a consciousness that the base and structure of the Company’s earnings will be different three years from now. It is certain that there will be changes in our operating regions, technological changes, and changes in our relations with our competitors. Looking at production and marketing locations, the balance of investments, and R&D from a global and medium to long term standpoint, it is necessary to boost competitiveness, and to break with our past mindset and take a management posture that holds the maintenance and growth of revenues to be indispensable. The implementation of structural reforms will continue on a permanent basis, and the fact that we have commenced these reforms will make fiscal 2003 a significant year indeed.
Outlook
In the first half of the fiscal year ending March 31, 2003, it is predicted that markets will take a mild upswing, but will enter a period of no growth in the second half. Rapid changes such as seen in the previous fiscal year are not expected, however, as mentioned above, a variety of structural changes will be seen. The markets will have their ups and downs, and there is also a technology cycle. In accordance with these changes, the Company will be required to alter its existing businesses. ZZZ believes that the changes to its business structure implemented in the fiscal year ended March 31, 2002 will allow the Company to remain highly competitive in this endlessly shifting economic environment.
ZZZ’s crystal business, in recent years beset by poor market conditions, has long epitomized the ZZZ brand. In the course of our structural reforms, we plan to craft a glamorous business model for this sector. At the same time, it is essential that the Company enter new fields of business.
The creation of a new business to drive revenue growth is a perennial topic, and the Company must not neglect the restructuring of its business portfolio. Noteworthy in this connection are the investments ZZZ is making in the development of next-generation products. Development of next-generation products in the optical-fiber communications field is progressing, but it will be some time will yet before that market recovers. Still, this market has significant potential, and may evolve into one of the Company’s principal engines of growth.
ZZZ’s continuous growth in revenues and profits was interrupted by this term’s deteriorating external environment. At the same time, though, speed in grasping the changes in the environment and our employment of the complementary characteristics of the two internal companies to enhance efficiency allowed us to ameliorate the downturn to some extent.
ZZZ continues to implement the best and most appropriate policies possible to support revenue maintenance and growth. We ask the continued support of our shareholders in this endeavor.
XXX, President and Chief Executive officer
Representative Director
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Years of experience: 36. Registered at ProZ.com: May 2007.
Over 20 years of experience translating and writing for hundreds of Japanese companies and individuals, including lawyers, doctors, and research scientists.
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