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Cash Flow Prospects for Fiscal 2011 Net cash provided by operating activities is likely to be in the region of \19.0 billion. Due to increased purchases of property, plant and equipment, we expect net cash used in investing activities to total \15.0 billion. Net cash used in financing activities is expected to total \9.0 billion, due to increased purchases of treasury stock. Basic Policy on Shareholder Returns and Dividends for Fiscal 2010 and 2011 Regarding shareholder returns, our basic policy is to pay stable dividends of 8 yen per share annually, taking into account the performance for the term in question, the future outlook, and forecast performance figures. However, we also place importance on ensuring a sufficient amount of retained earnings to maintain a sound financial position. We must secure sufficient funding to finance R&D activities and capital investment needed to prepare us for an expected intensification of competition. For fiscal 2010, ended December 31, 2010, we made a termend dividend payment of \5.50. We have already paid an interim dividend of \3.50, bringing the total payment for the full term to \9.00 per share. For the current term, ending December 31, 2011, we are planning an interim dividend payment of \4.50, and a term-end payment of the same sum, for an annual dividend of \9.00 per share. 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. 06 07 08 09 10 0 20 40 60 80 (%) 53.1 57.7 57.6 61.5 63.4 Net worth ratio 06 07 08 09 10 0 3,000 6,000 9,000 12,000 (Millions of yen) 9241 6949 6689 5971 10349 3.6 3.4 1 2.1 7.5 Capital expenditures 24 Annual Report 2010