In last year's annual report, I expressed my firm confidence in Minebea's ability to attain operating results in keeping with its excellent potential and spoke about our efforts to chart a new course for growth. Unfortunately, we fell short of achieving concrete progress on the first count in fiscal 2004, ended March 31, 2004. We were more successful on the second count, however, as we implemented a variety of strategic measures aimed at maximizing core competencies in our mainstay businesses, reinforcing our competitive edge and positioning ourselves for growth going forward.

 Miniature and small-sized ball bearings
In line with our goal, set in fiscal 2002, of boosting monthly global production and sales to 180 million pieces, we expanded monthly production and sales while maintaining solid profitability.

 HDD spindle motors
We developed two new types of high-performance, competitively priced FDB units (patents pending) for use in HDDs. Mass production of these new FDB units is scheduled to start at the end of 2004.

 Other precision small motors
We established a joint venture with Matsushita Electric Industrial Co., Ltd. (MEI), enabling us to offer an expanded and enhanced lineup of precision small motors.

 PC keyboards
We began shifting production of PC keyboards to China, from Thailand - a move we now anticipate completing by the end of March 2005, approximately six months ahead of schedule. We expect that this will lead to a recovery in competitiveness that will begin to impact on our operating results in the second half of fiscal 2005.

 Lighting devices for LCDs
A favorable market evaluation of the superior performance of these devices supported steady gains in sales and income.

    These achievements are attributable to intensive efforts undertaken in line with our core competencies strategy, which calls for selectively focusing the investment of management resources in businesses that maximize our core competencies. These efforts endeavored to address three ongoing, priority tasks:

Results of Operations

Despite declines in consolidated net sales and operating income, to ¥268.6 billion and ¥18.1 billion, respectively, we recorded consolidated net income of ¥6.0 billion, a solid improvement from fiscal 2003's net loss. Return on assets (ROA), calculated using operating income, was 5.7%, below our stated minimum acceptable level of 6%.
    The decline in net sales was largely attributable to the termination or withdrawal from certain businesses, declines in unit prices and the impact of a strengthening yen on sales denominated in other currencies. Operating income was hampered by an operating loss in the Electronic Devices and Components segment, the consequence of a sharp increase in costs accompanying the shift of our PC keyboard manufacturing operations to China, from Thailand, and the worsening profitability of rotary components, particularly HDD spindle motors. This countered strong profitability in the Machined Components segment, sustained by an increase in production of ball bearings. The Electronic Devices and Components segment accounts for approximately 60% of consolidated net sales; accordingly, we recognize that improving profitability in this segment - and above all, HDD spindle motors - is an urgent challenge for the entire Minebea Group.