Working together to earn back your trust.

First of all, I would like to sincerely apologize for all of the inconvenience and worry we caused you, our shareholders, because of the improprieties at the end of last year.

I believe that this crisis, the first of its kind since the establishment of this company, is an opportunity to reform the company, and reforming the company as a whole is exactly what we are doing. We recognize that if these reforms are not carried out swiftly, our company has no future, so it is a question of now, or never.
Our shares have been given an "alert" designation by the Tokyo Stock Exchange; to remove this designation, we need to revamp and reform our internal systems.

We will implement the following, which are the five priorities related to internal reform that we have to focus on.

1. By strengthening our internal management structures through stronger internal governance, we will improve our corporate governance. We will also correct our management system through monitoring with internal audits and corporate auditors.
2. We will improve the awareness of each of our officers so that they look beyond the scope of their immediate responsibilities and look at the broader picture in order to thoroughly establish a mindset of making and following rules.
3. We will work to create a thoughtful management style in which we look at employees as our equals, ask for their opinions, respect them as individuals, and where we can all grow together.
4. The Board of Directors will thoroughly discuss management measures and issues; we will establish reforms so that directors and auditors are able to properly act as checks and balances.
5. We will ensure that there is communication between our corporate auditors, auditing companies, directors, and executives; we will value speed when we decide on and execute various measures, and build a management system that is able to check that we get results in a timely manner.

Additionally, merely enriching our management system and internal governance is not enough. My other important mission is to change the loss-prone nature of this company's bottom line.

This company embarked on a path of extreme growth in the last several years. We expanded overseas and modernized our domestic plants. The resulting depreciation costs are dragging down earnings.

The other major issue that we face is the fact that we lacked the organization, systems, and human resources development and preparations in terms of the management of this enlarged company. In order to restore earnings, I would like to put a priority on implementing the following two points.

1. Enriching our unit cost planning and unit cost management systems: We will put in visual controls of manufacturing unit costs for everything from new product development and when orders are received to the start of production; by ensuring that each of the functions of our company work properly, we will ensure that the management of this company is such that it is able to produce a profit.
2. Restoring a strong manufacturing worksite: Each member of our production departments will work together to go back to the basics of TPS (TOYOTA Production System) and totally eliminate waste using a genchi-genbutsu (go-and-see) approach and create a line that can respond flexibly to production fluctuations.

By carrying out the seven priority measures described above without fail, the officers at Futaba Industrial will work as hard as we can to start earning back the trust of our many stakeholders including our shareholders, employees, and all the companies that we do business with .

We hope for the guidance and encouragement of you, our shareholders, and we look forward to creating a new Futaba Industrial with your support.

Yasuhiro Mishima, President
July 2009