Tetsuya Nakamura President and Chief Operating Officer

First, we would like to extend our heartfelt sympathy to those affected by the Great East Japan Earthquake in March 2011, and we pray that the recovery will happen as quickly as possible.

SMK has set high annual targets for reducing the environmental burden, and have worked towards reaching these targets. Last year, our total emissions of CO2 increased, but this was due to the fact that we brought some in-house production that we had previously outsourced, in order to increase competitiveness. Real CO2 emissions have in fact been steadily reduced.

Considering environmentalism means honing our awareness as good “corporate citizens,” as well as seeking ways to eliminate all waste and loss. We will continue to pursue “All Quality Aspects on the Job with Zero Defect.”

A single defect not only results in a loss of profit, but also leads to the waste of precious natural resources in every channel, such as procurement, manufacturing, distribution, and sales.

Maintaining product quality through the application of steady efforts – we believe that this is the most effective to reduce our environmental burden.

In the future, we will continue to make efforts to reduce the environmental burden, in particular CO2 emissions. We will enhance product assessment at the stage of end-use as well as in production processes, attempting always to reduce the environmental burden. Our aim is increase the number of customers who rely on SMK on both the product quality and environmental fronts.

This report summarizes our efforts and achievements over the past year. I appreciate and look forward to hearing all your questions and comments.

	Yoshio Sakurai Vice President of Environment Div

The Earthquake in March drastically changed our awareness regarding energy and made us realize again how dependent our life is on energy.

There has been a renewed focus on natural energy (renewable energy), which is being treated seriously as an alternative to nuclear power since the earthquake. SMK has contributed to environmental preservation from long before this by supplying parts for a variety of eco-friendly products, including energy-saving home electronic appliances, solar and wind power facilities, and hybrid cars. We have also made active efforts to expand the repertoire available to products that take the environment into consideration, reducing energy consumption and increasing efficiency by improving product performance, saving materials through the reduction of size and weight, and using materials sourced from nature. We believe that these efforts, by virtue of stimulating economic activity, can play some part in the recovery of the region stricken by the disaster.

We are also applying unceasing efforts to the reduction of the environmental burden occasioned by production activities, which is a natural responsibility for a corporate entity. The following pages provide a detailed introduction to our specific efforts in this area, and we hope that readers will give consideration to these efforts. In the area of CO2 emissions, it should be noted that while recent progress that we have made in conducting in-house production in order to enhance technical capacity has resulted in an increase in emissions figures, in substantive terms emissions are actually declining.

We will go on supplying products that in the environmental market and eco-friendly products-related fields relies on, and realize ambitious targets to reduce our own environmental burden, as we strive to be an eco-friendly company.