Business Performance Prospects for Fiscal 2010 For the current term, ending December 31, 2010, we forecast sales of \148,000 million, operating income of \13,000 million, and net income of \6,200 million. Cash Flow Prospects for Fiscal 2010 Due to an expected increase in working capital, net cash provided by operating activities is likely to be in the region of \15,000 million. Net cash used in investing activities is forecast at \16,000 million, due to the planned purchases of property, plant and equipment. Net cash provided by financing activities is expected to total \1,000 million, due to planned fund procurement. Business Risks (1) Cost competition The Group manufactures and sells many products that are difficult to differentiate from those of other companies in terms of their function and performance. Given the present trend of intensifying price competition, there is a possibility that the Group, despite its efforts to strengthen marketing activities and reduce costs, may not be able to maintain its competitive edge over rival companies that are able to sell products with the same qualities at lower prices. This could adversely affect the business performance and financial position of the Group. (2) Changes in the price of crude oil and naphtha The purchase prices of the major raw materials of products manufactured and sold by the Group are affected by changes in crude oil and naphtha prices. Therefore, if the Group is unable to sufficiently raise its product prices, and/or if the Group is unable to rationalize its operations sufficiently to offset the rising prices of crude oil and naphtha, there is a possibility that the Group’s business performance and financial position will be adversely affected. (3) Product liability In spite of our efforts to ensure a high level of product quality, there is a possibility that a customer or other party may experience financial losses or other forms of damage as a result of an unexpected defect in products manufactured and sold by the Group. As not all losses incurred will be covered by product liability insurance, this factor may adversely affect the business performance and financial position of the Group. (4) Impact of natural disasters The production plants of the Group are located mostly in the Tokai Region of Japan, which is said to be particularly at risk of the occurrence of a major earthquake. If such an earthquake were to occur, substantial losses . including the suspension of operations . could result, and this would adversely affect the business performance and financial position of the Group. 05 06 07 08 09 0 20 40 60 80 (%) 53.3 53.1 57.7 57.6 61.5 Net worth ratio 05 06 07 08 09 0 2,500 5,000 7,500 10,000 (Millions of yen) 7071 9241 6949 6689 5971 Capital expenditures 22 Annual Report 2009