Last year was a tumultuous and challenging year. The devastating March 11th earthquake and tsunami that crippled the Fukushima Dai-ichi Power Plant forced us to close our Fukushima Plant and prevented us from serving our customers as we would have liked. The tumult continued with the Greek financial crisis, which set off wider European woes and a global economic slowdown, followed by massive flooding in Thailand that hobbled manufacturers. Through it all, however, we were blessed with the support of our customers and sales channels, and the dedication of our people.

The earthquake and tsunami in Japan forced us to rethink our business continuity planning (BCP) assumptions. Power outages that lasted for more than 24 hours, followed by severely limited power availability, exceeded all assumptions, crippling industries that rely on cleanrooms. Long-term forced evacuations from areas affected by the nuclear accident were completely unexpected.

Given this, we are reworking our business continuity plans, making our customers the top priority so that they do not experience disruptions. We value our customers and want to keep their patronage.

Meanwhile, the Greek financial crisis has spread to Spain, and we can do nothing but wait and see how the situation evolves. America is also seeing a financial crisis surface. These problems are combining to blunt the sharp growth rates in emerging economies. Yen exchange rates, which have settled in at historic highs in response and are expected to ride high for at least the next couple of years, are another element of concern.

In July of last year, we strengthened our business, increasing our productivity and the competiveness of our products, by integrating Epson Toyocom's quartz device operations into Seiko Epson's Microdevices Operations Division. The goal of this move was to create a business unit that is competitive even in these trying economic times. In addition, we have been shifting production offshore for some time, but in light of the recent global economic situation, we will further accelerate the transfer for production to Southeast Asia.

The challenging economic situation is expected to persist in 2012, but the spread of smartphones, tablet PCs, smart grids, electric vehicles, and cloud computing will present business opportunities. And, while the economic growth rate of emerging nations has slowed, the markets do continue to expand. Also promising continued growth are environmental and health-related markets, in both emerging and economically advanced countries.

Anticipating these environmental changes, we in the Epson Group are focused on making ourselves indispensable to our customers in line with a medium- to long-range corporate vision called "SE15" that maps out our path to 2015. The year 2012 marks the start of the second three-year phase of the plan. In fiscal 2011, a year in which we were again visited by major changes in the business environment, we mainly looked to reorganize and put our businesses on more solid footing. This year we will take last year's accomplishments and implement the plans we have laid so that we can meet the expectations of our customers.

In the crystal timing devices business we will drive further innovations in production. We will also continue to expand our lineup and production volume of compact, high-precision crystal units and crystal oscillators. We will also make advances in sensor devices, launching to market compact, multi-axis, high-performance crystal gyroscopic sensors and high-resolution crystal pressure sensors.

In the semiconductor business we will use our popular electronic paper display controller technology to achieve low-power e-paper for panels of all sizes. We will enhance our lineup of easy-to-use controller products that can help our customers shrink their product design and development turnaround times. And, we will direct energy toward providing low-power, low-noise products that please our customers around the world.

We will also further push the boundaries of these technologies, create new products, introduce production innovations, and revolutionize our logistics so that we are still a company that our customers feel delivers value. I wish you all the best in the new year and look forward to serving you.

Torao Yajima, President
Epson Toyocom Corporation