Dear Mr Activist...

Hugh G. Fallis - General Partner
Chief Activist Officer
The Greenmail Fund
Main Street
Greenwich CT
USA


Dear Mr Fallis,

Our company has existed for 117 years. We survived several financial panics, a depression, two world-wars, a syphilitic emperor, an earthquake, two nuclear bombs, hyper-inflation, an occupation by MacArthur, the great bubble, and the most prolonged doldrums the modern world has seen since the great depression. Despite this robust longevity, we now find ourselves wondering whether we will survive the pox that you have brought upon us.

All accounts tell me our founder was a wise, caring and generous man. His ingenuity, drive, and continued curiosity built our foundations. Through his success, he had acquired much land surrounding the site of original factory in town to stage our operations, and was wealthy by any measure. Most of the streets in the vicinity still carry our name in some form, even though ownership is but a distant memory. You see, when the downturn came, my great-grandfather swore he would do everything in his power to insure that the employees, who'd helped make his success, who loyally served him, and gave their energy day-in and day-out to the Company would NOT be fired and thus impoverish their families, so he and his children could continue to live in luxury and keep his land. First he cut his own household's expenses so he could decrease his draw. Then he asked his most loyal and senior managers to do the same. And then his employees. Only then did he sell the land, tsubo by tsubo, to insure that his promises were kept. And so, the Company, and its workers, survived, where many other time-honored enterprises were less fortunate. And as a result, we continued to manufacture our wares, bringing joy to our customers, livelihoods which brought food to tables of our employees - from the factory floor to the export office - and dividends and profits to her owners when times were good.

We've survived the years through understanding what our customers desire, investing in research and the latest technology to insure our products are of the best quality, and the unmitigated dedication, hard work, and harmony with our workers, and through a maintaining conservative approach to financial management which six generations of experience has taught is useful for surviving inevitable downturns, after which we've thrived when such doldrums are exited. But I do not expect you to understand the wisdom of such an approach since they do not teach it in business school, and have little respect for the knowledge of your elders, particularly when it runs counter to the parochial pursuit of short-term profit. More worryingly, they seem to be teaching you methods of so-called financial engineering that go against every instinct of prudence that we've honed from generations of actual experience.

Despite this venerable history, we are not immune to the cycles of the market and our economy. The 1990s were difficult times, requiring sacrifice and perseverance. Profits were low as was the value of our shares. You acquired your initial holdings at a good price, and I do not fault you for this. Had my family greater resources, we too would have acquired more. With such a substantial shareholding, we (admittedly with reluctance because we are cautious people) welcomed you to our constituency and after frank discussions, we did everything you asked. We paid out cash from our reserves. We increased the dividend preventing the rebuilding of reserves. We pared our R&D, and advertising budgets, and curtailed long-term investments that we otherwise would have made. Finally, we sold our cross-shareholdings to continue to pay dividends.

At first, if one looked ONLY at the share price, one would have thought your advice was to a resounding a success. But upon closer scrutiny, this was a mirage. Though our share price was rising, the only perceptible difference in ownership on our register was from entities affiliated with you, which leads me to believe that it was your own buying that caused the share price to rise, and not a vote of confidence from the market more generally. I have my suspicions about what agent/principal dilemmas might cause you to do this, thereby treating your fiduciary responsibility so callously, but this is not the time nor the place to discuss that.

But what a difference two years makes! Today, thanks to your self-serving advice, we find ourselves in a most precarious position as hard times approach. Unlike the past, today we have little reserves to weather the coming storm. Our capital equipment requires updating, but you pressured us to pay our capex budget to you in dividends. Our sales are deteriorating in line with the macro-economy, and it is likely we will slide into loss this year, further limiting our ability to invest and innovate. We could perhaps sell shares, but investors' appetite is very diminished, and with our diminished balance sheet, and our share price much reduced from levels at which you collected your large one-time non-recourse incentive fees, this is a last resort option. And the debt markets are all but closed for a smaller enterprise such ours. Historically, we'd saved for the rainy day, but thanks to you, our cupboard is bare. You, of course, can shut your doors and little will change. If we shutter our factories, a thousand families will be severely hurt, and several thousand more who make up our suppliers and our customers will be similarly impacted. And, I ask you, for what higher purpose? What noble objective have you achieved in the name of "shareholder rights", "optimal capital structure", other than a campaign that resembles "Sherman's March" or the "Sack of Rome"??

Tolstoy famously wrote: "It is worse to deceive yourself than to deceive others". Your rhetoric and your actions are disingenuous and have willfully left this place, and in turn, the earth upon which we share and dwell, a place that is worse off than you found it, whatever and however you may attempt to justify it to your conscience and your investors.

So "thank you" for NOTHING. Like your President, you have destroyed in a few short years what previous calamity, hardship, and time itself could not accomplish, and for this you should feel deeply ashamed.

Truly Yours,

A. Suzuki
Honorary Chairman
Nagoya, JAPAN