During the consolidated fiscal year under review, key economic indicators trended uniformly upward. Against the background of an expanding overseas economy, exports continued to increase and earnings soared, encouraging firms to continue pumping funds into capital investment. Gently rising levels of employee income provided a welcome accompaniment to growing consumer spending. In the paper industry, the market was equally bright across many indicators. A solid earnings picture prompted enterprises to increase advertising budgets and brightened the employment environment. Demand for commercial printed materials such as flyers, catalogs and brochures found firm ground in the period under review. It is also true that the Japanese market can no longer expect substantial growth in demand for paper and paper products. Unable to escape a low-growth operating environment, manufacturers and retailers alike redoubled their efforts to strengthen their organization and revenue bases. With these market trends in mind, the Heiwa Paper Group continued to press forward with its current three-year medium-term plan, launched in the previous fiscal year. This plan positions the establishment of a stable, high-earnings base as its top priority, which places a particular focus on operations in the Kanto (Tokyo and surrounding prefectures) area. The Company concentrated its sales efforts and resources in its field of particular advantage : value-added products such as fancy papers and ecology papers. As corporate earnings recovered, a trend toward differentiation in luxury products emerged, and Heiwa Paper enjoyed an increase over the previous fiscal year in sales of fancy papers and other products in higher price ranges. Sales results in products aimed at overseas markets also continued in a favorable trend as in the previous fiscal year. Net sales edged up 0.9% from the previous fiscal year to ¥24,266 million. In earnings, a boost in gross income from sales propelled ordinary income to ¥533 million, a 31.4% increase over the previous fiscal year. Net income, however, shrank3.5% against the previous fiscal year to ¥288 million, owing to such factors as a decline in gain on sale of investment securities.