To our valued stockholders,
I hope that all of you are doing well during this winter, as I offer my greetings in this 42nd report on Alpine’s business results.

Regarding the consolidated business achievements of this term, OEM sales of DVD-Audio systems in our Audio Products segment have increased steadily, as have after-market sales of our Made for iPod® head units. However, as the consumer market peaked and sales competition intensified, sales of Audio Products remained flat overall, rising only 0.4% over the same period of the previous year.

In our Information and Communication Equipment segment, we attempted to expand sales by introducing the X07 Mobile Media Station, a highly advanced next-generation navigation system with full-segment digital terrestrial broadcasting compatibility developed for the domestic market, and the Blackbird portable navigation system designed for the European and American markets. As for our OEM sales to auto manufacturers, there was an increase in the installation ratio of car navigation systems as well as increased sales of new cars, resulting in 7.3% growth in sales over the same period of the previous year. As a result, with the help of the falling yen, during the first half of the period, both income and profits increased, as sales set a new record and operating profits rose 18.1%.

Performance over the second term is unpredictable, with fears of a slowdown in the U.S. economy and the possibility of price rises in crude oil and raw materials. Under these circumstances, Alpine will expand sales by introducing new products to the domestic market: the X075 Mobile Media Station mentioned above, and a flip-down monitor with built-in DVD playback. For OEM sales, we will begin to introduce new large system products for European auto makers. Moreover, we will continue our aggressive investment and development in the information and communication segment, where the market is expanding along with the proliferation of new and improved electronic devices for the automobile. At the same time, we will promote and increase the efficiency of our Challenge 30 program, a mid-term business plan for restructuring and growth. Through this, our goal is to achieve consolidated sales of 255 billion yen and operating profits of 8 billion yen over the specified period.

To all our stockholders, we appreciate your support and look forward to your continued support and confidence.

(Alpine Report 2007/12)