It has been two years since we initially introduced "Project New TORAY 21 (NT21)," Toray's management reform program designed to advance the "Transformation into a New Toray for the 21st Century." Sharing a common sense of crisis, Toray Group has worked together as a team to make headway over this two-year period in developing innovative attitudes and ideas and coordinating our focus in reaching a common goal, and the Group has emerged with a clear vision of the course we should pursue. This progress has boosted corporate performance and generated confidence in Toray's ability to achieve specific results when our entire team pulls together to carry out solid NT21 reforms. Thanks to the ongoing concentrated and focused effort by the entire Toray Group, we are on track to meet the initial three-year profit improvement target set out in NT21 one year earlier than originally planned. Toray Group posted 33 billion yen in consolidated operating income in the fiscal year ended March 2003, with 56 billion yen estimated for the fiscal year ended March 2004.

The seven "innovation projects" implemented under the NT21 program - namely, "promoting marketing innovation,"" strengthening cost competitiveness (TC Project)," "rationalizing global production (GR Project)," "re-engineering corporate structure (CS Project)," "strengthening financial structure (FK Project)," "promoting R&D innovation," and "promoting salary and pension system innovation" - set forth the radical steps needed to strengthen Toray Group's corporate structure. The results achieved through these reforms have exceeded expectations, and have in turn brought significant progress in corporate restructuring as we cut back on unprofitable businesses and companies or brought them into the black. Having laid the groundwork with the first stage of reform, we are now ready to move into the next stage on the way to transforming Toray Group into a highly profitable business group, the long-term goal set out in NT21. To mark this transition, Toray Group finalized NT21 reforms at the end of March of this year and introduced "Project NT-II (NT-II)." As the second stage of corporate reform, the NT-II builds on the results achieved through NT21 by addressing the mid-term management issues that must be resolved for Toray Group to reemerge as a dynamic and highly profitable business group.