Yoshito Tsunoda

President and Chief Executive Officer

We sincerely thank our shareholders for their constant support and cooperation.

The Maxell Group's basic management philosophy is to benefit society by developing outstanding original technologies and products guided by a founding spirit that advocates"Harmony and Cooperation, Working with Heart and Soul, and Being of Service to Society." Also, the Group aims to reflect the perspectives of all stakeholders in its measures to increase corporate value. To that end, the Group stringently pursues equitable, transparent corporate activities while working as a good corporate citizen to truly enrich society by rigorously implementing product's reliability, seeking harmony with the environment and actively contributing to society.

The Effect of the Worldwide Worsening of the Business Climates

Guided by Breakthrough to New Horizons as a long-term vision that focuses on pursuing the fresh possibilities of new technologies, product areas, and corporate structures, the Maxell Group is making an all-out effort to achieve its medium-term mission of Change for Growth. Under that medium-term mission, we are building a highly profitable business structure by accelerating the reweighting of our business portfolio. These efforts involve concentrating management resources to strengthen three priority businesses: batteries, optical components, and functional materials. Based on that reweighting, we aim to achieve an operating income margin of 6% by the fiscal year ending March 2011.

In the fiscal year under review, ended March 31, 2009, the Maxell Group faced tough business conditions. A worldwide worsening of the business climate led to a slump in the cellular phone market, a reduction in vehicles sales in North America, and flat consumer spending. As a result, demand decreased suddenly from the third quarter of the fiscal year under review. Moreover, product prices fell, foreign exchange rates were volatile, and there were hikes in raw material prices.

Advancing Urgent Measures for Business Improvement

In response to those business conditions, from the third quarter of the fiscal year, we launched an Urgent Measures for Business Improvement, tasked with rigorously streamlining management. Under that project, we significantly increased productivity and reduced costs by strengthening our "Monozukuri" manufacturing foundations through Maxell Process Innovation (MPI) activities and other initiatives. Further, under the project, we also restructured operations by merging and absorbing four subsidiaries and integrating head office functions and the R&D Division in the Kansai region. However, because efforts to strengthen the earning power of optical components and functional materials businesses did not progress according to the timeframe set out in our medium-term business plan, I sincerely regret to report that we recorded an operating loss for the fiscal year.

Aiming to Improve Business Results from the Current Fiscal Year

From the current fiscal year, ending March 31, 2010, we will embark upon a radical management reform project comprising aggressive and defensive measures. Although, we expect that net sales will decrease further in the current fiscal year, we aim to move into the black by continuing to focus efforts on such defensive measures as stepping up comprehensive cost reductions. Based on the streamlined management system built by such defensive measures—in preparation for the fiscal year ending March 2011—we will launch aggressive measures to improve business results by strengthening our consolidated management system to increase net sales and earnings significantly. As part of those aggressive measures, we will take advantage of the new electrode plant at our Kyoto Works to further expand battery businesses. Furthermore, we intend to integrate optical components businesses with Maxell Finetech Ltd., which we will launch in July 2009. Also, we will make Sliontec Corporation the main pillar of our functional materials businesses.

Increasing Corporate Value through High-Quality Management

The Maxell Group is working to realize corporate management based on an awareness of the importance of corporate social responsibility by strengthening corporate governance systems, implementing rigorous compliance management, developing internal control systems, ensuring stringent product safety, and protecting the global environment in accordance with the expectations of society. Although, the Maxell Group is likely to continue facing severe business conditions, the Group aims to raise corporate value through high-quality management while stringently pursuing equitable, transparent corporate activities as a good corporate citizen.

I would like to take this opportunity to ask our shareholders for their continued support and understanding.