Presentation Transcripts

Our investors are also concerned that our pivot assembly business may be struggling in the face of the shrinking hard disk drive market. The fact is the external sales volume for ball bearings, which are the main components in pivot assemblies and the major source of our revenue, reached a phenomenal figure in September, totaling 163 million units. If you are thinking this was just a temporary surge in demand ahead of China's National Day holiday in October, think again because sales hit 159 million units in October. This November we expect the sales total to reach 160 million units. In November two years ago I stood right here and introduced our Five Arrows strategy. Back then the monthly external sales volume for ball bearings was 132 million units at the most. When I revealed my intention to go for 150 million units per month, people in the company said to me, "What are you talking about? That's impossible." The fact is over the last two years we have increased monthly sales by 30 million units. Despite concerns over China's slowing economy, there hasn't been any signs of it impacting our small-sized and miniature ball bearing operations. Demand seems to be very strong. In fact some Chinese manufacturers of low-priced mass-produced ball bearings were really in dire straits and those that haven't gone out of business have had a hard time staying afloat. We, however, are in the position of deciding where we should move ahead with our ball bearing business. Our current monthly production capacity is 260 million units, or possibly a little more. We are now looking at how much the manufacturing costs will drop and how much demand we can cultivate when we actually make that much. Even if the quantity of our ball bearings used in-house for pivot assemblies should fall, growing external sales volumes will offset any decline. Sales volumes are quickly rising and that's reflected in our bottom line. We came out with the Five Arrows strategy at just the right time. As you can see from looking at these two graphs, showing the correlation between bearing sales and the semiconductor market as well as the link between GDP growth and ball bearing sales, demand for ball bearings is sure to keep pace with economic growth.