In the display business of the home entertainment business, which faces profitability issues, the Group restructured its global production, reformed sales systems in the Americas and Europe, reviewed domestic production and sales structures in response to substantial business downsizing in Japan, and reorganized systems for logistics and services. We also improved earnings by reducing in-house development and production of consumer LCD TVs for overseas markets through the use of outsourcing, ODM^*1 and EMS^*2, and shifted development resources to sectors where businesses such as nextgeneration displays are fostered. Going forward, we are accelerating our business expansion into the professional market with the introduction of the industry’s thinnest^*3 (6.4mm^*4) and lightest weight^*3 (5.7kg) professional LCD monitors and professional 3D LCD monitors into domestic and international markets with the goal of enhancing our product lineup by leveraging our strengths.

In the home audio business, the Group endeavored to improve earnings through structural reforms of both companies. We also integrated the planning, engineering, marketing, quality assurance, production and other functions of both companies’ audio business, excluding the domestic and overseas sales functions, into JVC on July 1, 2009, aiming for new growth through further strengthening of our competitiveness and improvement of our presence in the global market. We are capitalizing on the integration effects at the earliest possible time by making the maximum use of both companies’ brands, products and technologies, and increasing our competitiveness by reducing costs. In addition, we are continuing to further enhance sales of profitable AV accessories.

Based on these measures, we are making existing businesses profitable by utilizing the accumulated visual and audio technologies of both companies in the home entertainment market, and making these businesses more profitable by creating new genre products and strengthening the B-to-B business.

*1. ODM (original design manufacturing: production outsourcing from the design phase onward)
*2. EMS (electronics manufacturing service)
*3. As of June 8, 2009: as 32-LCD displays
*4. At the thinnest section: the depth between the LCD panel surface and the rear of the cabinet

In the camcorder (video camera) business of the digital imaging business, sales continued to be weak, especially in Europe, and the entire market suffered from excessive inventory. Under such circumstances, the Group focused on 2008 product sales while adjusting production, which resulted in reducing inventory substantially by the end of the fiscal year ended March 2009.

For the fiscal year ending March 2010, we are introducing into the world market on a full-scale basis new hi-vision models, which are selling well in the domestic market, and launching new products based on new concepts, with light, compact bodies and the ability to record high-definition videos and stills. By doing this, we are further strengthening our high-vision model lineup to meet users’ diverse needs and increasing our products’ added value.

To further improve profitability in this business, the Group is strengthening its products, coming up with new proposals for the market, and implementing efficient development and production systems by making maximum use of its various assets, including optical and signal processing technologies, design and production-related techniques, and brand power in a wide range of video camera-related businesses, such as professional video cameras, security cameras and household video cameras.

With regard to the projector business, we are marketing D-ILA projectors, which use proprietarily-developed high-performance, reflective LCD devices and which can make high brightness consistent with high definition, mainly in the home theater market. Going forward, we are expanding our business in the home theater market by offering projectors featuring enhanced high-quality images and increasing our projector lineup, as well as accelerating the development of new markets by boosting the sales of 4K2K projectors with an ultra-high resolution greater than four times that of full high vision for various professional projector markets.