Toru Kobayashi, President

The Company’s consolidated business performance for the fiscal year ended December 31, 2009 was characterized by the reduction in revenues and profits for the second consecutive year for the first time since its establishment: sales declined 27.7% year-over-year to ¥15,124 million, operating profit fell 76.7% to ¥620 million, current profit dropped 70.5% to ¥735 million, and net profit fell 66.9% to ¥332 million.
This was due to such factors as the weak demand for automatic doors and security-related products stemming from the slow recovery in construction demand especially in Japan and in other developed countries, in addition to the appreciating yen. Delays in the scheduled launch of new products also affected the Company’s business performance. Nevertheless, we secured positive figures for both operating profit and net profit, having made efforts to slash personnel expenses and other selling, general and administrative expenses.
An observation of the market conditions and the outlook by business segment reveals that the Security Products Business has been recovering gradually since bottoming out in the first quarter of 2009, due in part to the completion of the inventory adjustment cycle in distribution channels worldwide. Demand is expected to remain steady in projects for nuclear power plants, pipelines, embassies and other major public facilities with advanced technology requirements.
The business climate for our Automatic Door Sensors Business is expected to remain harsh, due to the impact of the struggling construction market both at home and abroad. Especially in Japan, plans to launch new shops including shopping centers and department stores have been frozen one after the other, not to mention the series of shop closures. Their impact is expected to last for at least a year.
The Factory Automation Products Business was heavily affected by the curtailment of capital expenditures attributable to economic stagnation. In Japan, sales of sensors targeted at semiconductor and automotive industries, etc. were sluggish, whereas sales targeted at the food products, pharmaceutical products and cosmetic products sectors were solid. Overseas sales, especially in our main market in Europe, have been recovering since bottoming out in the second quarter.

Over the past few years, we had been making efforts to develop a new product for security systems intended for important facilities. We released this new product in the European market in the spring of 2009. It is a high-precision sensor to be used in “Remote Video Response (RVR) systems” which can track the position of intruders when linked to a PTZ camera with a vertical and horizontal swivel function and a zoom function. It is highly distinctive in that the high-precision sensor installed outdoors can efficiently capture the movements of intruders, thereby making it possible to reduce the monitoring workload and give clear instructions to the police officers or the security guards as to where the intruders are located. We have received many inquiries for the new product from power plants, data centers and other facilities where security is crucial. It has already progressed into trial adoption and demonstration experiment stages. We hope to popularize the product on a worldwide scale by making further efforts to tap sales channels.
Another field in which we are directing our efforts is “3D range image sensing technology”, which is our new elemental technology. This technology enables you to stereoscopically capture an object with one camera and instantly determine the distance, direction, speed, etc. of the object relative to the camera. The technology is promising in a wide range of applications such as the much-talked-about digital signage (electronic billboards) and arcade game input devices, in addition to uses as industrial robots and safety devices for automated guided vehicles in factories, etc. We intend to spend two or three years developing this technology into our flagship product from 2010 onwards.

We will aim to acquire new customers especially in the three fields of LED lighting control system, automatic doors, and traffic-related products.
Firstly, in the field of LED lighting control system, the trend to switch from mercury lamps to LED illumination from an energy-saving perspective is gaining momentum in the market. The Company regards this trend as a business opportunity. By combining these systems with the outdoor sensing technology we have developed in security products, we can substantially save energy and reduce CO₂ emissions. Based on the LED lighting control system, we intend to establish a solid status in the future.
Secondly, in the field of automatic doors, domestic construction demand is expected to remain weak for the foreseeable future. However, given that our technological prowess is highly rated overseas, we will seek to expand our market share by making leading automatic door manufacturers overseas (in USA and Europe) adopt more of our products.
Transportation safety, we will strive to popularize Safe-Meter, which proposes a new concept to the market of safe-driving support tools. Despite there being a need for safe driving of company cars, there were previously no tools with high cost performance that could meet such need. Safe-Meter is a promising new product targeted at this market. We will aim to acquire new customers by highlighting its low cost, ease of installation and user-friendliness.

Our sales target for 2011 is to restore sales to the record-high level reached in FY2007. We expect sales to increase 14% year-over-year to ¥17,300 million in the stepping-stone year of FY2010. Having obtained solid feedback from customers about their appreciation of the new products we had launched in the market since 2009, we will make utmost efforts to fulfill that target. For the medium term, one of our objectives is to generate ¥30 billion in sales. In order to achieve this objective, we will further refine our technological capabilities that form the core of our businesses, and develop groundbreaking applications that spearhead the next generation. We will also develop “service-oriented businesses” that go beyond “sell-and-forget-type businesses” into a new driver for growth.
On the other hand, it is indispensable to develop human resources of the next generation. Given that OPTEX is a company that specializes in development and marketing and pursues added value, we have regarded human resources as our most important business resources. For the future, we intend to enhance human resources development more than ever before to establish new businesses and create a tough corporate organization that undergoes steady growth.

The Company’s basic policy is to pay dividends to return its profits to shareholders, by taking into consideration the dividend payout ratio and stable dividends based on its business performance in a comprehensive manner. The Company’s dividends have been based on a dividend payout ratio of 30% to date. While the current dividend payout ratio exceeds 30% relative to the current earnings forecast, we plan to pay an annual dividend of ¥30 per share for FY2010, as was the case in FY2009, taking into account the recovery in business performance in the coming years.

I recognize that “growth” is what shareholders expect from the Company more than anything else. While the economy still lacks strength, signs of recovery are beginning to emerge. In response, we will aggressively release new products and new systems that are highly unique in the market, and take on further challenges in order to attain “regrowth” with momentum, beyond mere “recovery”.
We sincerely request our shareholders to observe the developments at the Company in a strict yet supportive fashion.