Presentation Transcripts

I would like to start off with some comments about our performance in the third quarter.

In November 2011, we announced revisions to our earnings forecasts due to the impact of the extensive flooding in Thailand. While we are sorry we could not provide exact figures for the toll the disaster has taken on our performance, we thought it in the interest of our investors to release the best estimates we could as soon as possible. Our facilities were hit so hard we had to suspend or slow down operations for a long period of time at some factories while we built protective dikes. Conditions made it impossible for some of our employees to even commute to work and supply chains were disrupted for an unexpectedly long period. While I regret our failure to anticipate the huge impact of this disaster, we have already put the worst of it behind us and are looking forward to recovering from the temporary setback as production gets back on track between January and March.

Our Navanakorn and Rojana Plants, which produce HDD spindle motor parts, were both severely affected. We are likely to start seeing a rapid recovery in production at our Navanakorn Plant around February followed by the Rojana Plant sometime in early April. We don't expect either factory to make a full recovery earlier than June. When I met with John Coyne, the president and CEO of Western Digital Corporation, in January in Thailand, he said that it would take until at least September for the production volume in the overall HDD market to recover to the pre-flood level. It's against this backdrop that we are working to get back on course as soon as possible. Once we replace the damaged machinery and equipment, production will move into full-swing but for now we are starting from scratch to implement new factory floor layouts and production methods and expect to see the fruits of our labor appear sometime around the end of the first or beginning of the second quarter.

While flooding in Thailand has taken a heavy toll on the entire HDD pivot assembly industry, we are moving ahead as the leading manufacturer to fill the supply gap. We have already begun the groundwork that will enable us to produce 50 million units per month by this April via streamlined production methods that won't take any major capital investment, etc. The latest sales volume figures have reached slightly more than 35 million units per month, marking a record high. Assuming sales will increase this month and next, we expect the volume to exceed 40 million units next month.

This month we expect to ship 550,000 LED backlight units for tablet PCs with even more going out the door in the coming months as the Suzhou Plant fills orders placed in February. We will also start steadily boosting the production capacity of the Lopu Buri Plant between late January and February as we will begin producing LED backlights for a new-model smart phone later this year. Although this fiscal year's ramp-up of LED backlight production was delayed, increased production began full swing in February and we expect to expand even further next fiscal year.