Thank you for supporting the XEBIO Group.

Customer satisfaction is our number one priority. We are committed to creating fun and exciting retail spaces where customers can expect a comprehensive product lineup, knowledgeable service, and a unique sports shopping experience. We are working with our business partners and clients to develop new and exciting products, and are constantly our reducing our logistics lead time to allow more active and timely product introduction.

Our mid-term business plan for 2006-2008 is called the "X10 PROJECT." Composed in November 2005, this business plan situates these three years as a period to establish a growth structure for the future that can stand up to a tough business climate. By defining increasing customer loyalty and satisfaction as our shared value, the X10 PROJECT seeks to make XEBIO the "only one" sports corporation through qualitative business expansion.

To achieve sustained growth, over the next one years we must expand our business to establish a firm position as one of Japan's top sports retailers. In addition to meeting quantitative sales goals, it is imperative that we cooperate with our business partners and clients to further improve our business model. To create more added value and differentiate XEBIO from our competitors, we have to entrust more rights and responsibilities to our employees and bring out their full potential.

In recent years, the business climate has undergone rapid and drastic change, including modifications to the legal system, increasing economic interdependence, computerization, and changes in consumer behavior. As stated in our corporate philosophy, we believe in facing new challenges on the principle of fair competition. Outstanding business results do not come from satisfaction with the status quo—we will improve our management practices and competitiveness by mobilizing each and every member of the XEBIO team so that we can be recognized as the "only one" by our stakeholders: shareholders, customers, business partners and clients, employees, and the community.

We look forward to your continued understanding and support.

President and CEO
Tomoyoshi Morohashi