Oki Electric Financial Results for the First Half of the Fiscal Year ending March 31, 2005 October 28, 2004 Oki Electric Industry Co., Ltd. 1 Table of Contents 1. Financial Results of the Fiscal Year ending March 2005 1) First Half Results 1-1) Overview 1-2) P/L 1-3) B/S 2) Full Year Projections 3) Segment Information 4) Cash Flows 5) Acquisitions of Property, Plant & Equipment; R&D 6) Number of Employees 2. Focusing Businesses 1) Three Focusing Businesses 1-1) Info-Telecom Systems 1-2) Semiconductors 1-3) Printers 2) Mid-term Business Target * The projections and plans on this material are subject to change depending upon the changes of business environments and other conditions. 2 Overview of First Half Results Business Environment Net sales (consolidated) <Economy> (Billion yen) + 38.4 B yen (13.6%) z Continued relatively steady recovery: Increase in enterprise capital investments and activities in digital home appliances 250.6 281.3 319.7 Sep. 02 Sep. 03 Sep. 04 <Oki’s Business> (Compared with previous FY) z Substantial sales growth from increase in system investments by financial institutions, Operating income (consolidated) 1.5 expansion of IP-related investments by (3.9) telecom carriers, growth of color printer (10.6) market, and favorable demands for + 5.4 B yen (profitable) semiconductors z Operating income restored profitability and net income improved due to sales growth and business structural reforms Net income (consolidated) (11.5) (10.5) (2.9) + 7.6 B yen 3 First Half Profit and Loss Outline z Profitable operating income due to substantial sales increase and business structural reform Comparison of consolidated P/L Sep. 03 (Billion yen) Sep. 04 Consolidated net sales Sep. 03 Variance Info sys. 281.3 319.7 38.4 Telecom (76.0%) (74.7%) (+1.3 %) Devices 213.7 71.5 238.7 79.5 25.0 8.0 Operating income (3.9) 1.5 5.4 Other income (4.3) (2.1) 2.2 Recurring income (8.2) (0.6) 7.6 Net sales (Cost of sales ratio) Cost of sales SG&A Extraordinary income Extraordinary loss Income before taxes Income taxes Net income 0.9 1.0 0.1 7.4 5.1 (2.3) (14.7) (4.2) (4.7) (1.8) 10.0 2.4 (10.5) (2.9) 7.6 Others 151.6 44.5 60.0 25.2 (Billion yen) Sep. 04 Variance 160.1 52.1 76.6 30.9 8.5 7.6 16.6 5.7 Consolidated operating income Sep. 03 (Billion yen) Variance Sep. 04 Others 5.1 (1.6) (2.1) 0.5 1.8 0.3 3.4 1.4 (3.3) 1.9 5.5 0.9 Corp. & eliminates (5.8) (5.4) 0.4 Info sys. Telecom Devices Average currency exchange rate Actual rate 1H, FY 1H, FY Mar. 04 Mar.05 Plan FY Mar. 05 USD 118.1 109.9 105 Euro 133.5 133.3 130 4 First Half Balance Sheet Outline (1) <Balance Sheet: Assets> (Times) z Total assets decreased by 24.4 B yen from same period the previous year, due to reduction of accounts receivables and inventories z Major turnover ratios improved substantially Turnover ratio Sep. 03 Sep.04 Variance Total assets 0.91 1.07 0.16 improvement Notes and accounts receivable 3.71 4.62 0.91 improvement Inventory 3.45 4.45 1.00 improvement (Billion yen) 600 622.9 27.9 609.0 33.9 169.9 133.6 609.6 55.4 584.6 41.1 155.3 121.6 139.0 148.2 30.1 33.9 119.7 128.5 Variance with Sep. 30, 2003 Cash and deposits +7.2 Notes and accounts receivable - 12.0 400 200 157.4 168.9 27.7 33.4 136.4 103.6 131.9 107.3 110.1 Sep. 30, 03 Mar. 31, 04 -20.7 Other current assets + 0.5 Propety, plant and equipment -3.4 Investments and other assets + 4.0 111.3 0 Mar. 31, 03 Inventories Sep. 30, 04 5 First Half Balance Sheet Outline (2) <Balance Sheet: Liabilities and Shareholders’ Equity> z Interest bearing debt decreased by 52.3 B yen from same period the previous year, due to improvement in cash flows Interest-bearing debt ratio Shareholders’ equity ratio (%) Variance Sep. 03 Sep.04 53.5 46.8 6.7 improvement 15.5 18.5 3.0 improvement (Billion yen) 600 400 622.9 609.0 609.6 116.1 110.6 135.8 126.0 126.2 25.6 33.4 209.4 129.8 31.1 584.6 127.6 Notes and accounts payable +17.0 Short-term borrowings +13.6 Other current liabilities - 4.6 139.8 28.8 199.5 161.7 133.7 44.5 44.6 40.7 46.8 101.3 94.7 110.5 107.9 200 Variance with Sep. 30, 2003 0 Bond and Long-term debt - 65.8 Other fixed liabilities and minority + 2.2 interests Shareholders' equity + 13.2 Mar. 31, 03 Sep. 30, 03 Mar. 31, 04 Sep. 30, 04 Bonds due within a year and commercial paper are included in long-term debt and short-term borrowings respectively. 6 Premises of Full Year Projections <Economy forecast> • While enterprise capital investment expands and consumer spending remains steady, economy outlook is unclear • Concerns include pricing pressure from fiercer competition and impact on economy from rising oil price <Market trend> • Info systems: Financial institutions shift from new banknotes-related investment to IT and network-related investment. Delay in large governmental projects • Telecom: Carriers investments shift to Broadband IP network. Tougher price competition • Device: Semiconductor market growth slows down. LSIs for telecom and digital appliances remain steady until December 2004 <Impact on profit by currency exchange rate> First half actual rate Projected Actual rate rate Projected rate Second half projections Sales in foreign Impact on profit by 1yen change* currency US dollar 105 yen/$ 109.9 yen/$ 105 yen/$ 400 million USD 100 million yen Euro 130 yen/E 133.3 yen/E 130 yen/E 350 million Euro 150 million yen * After deducting purchase in foreign currency and exchange contract <Full year projections> (Billion yen) Net sales Operating income Recurring income Net income Oct. 28 projections 710.0 29.0 21.0 10.0 July 28 projections 680.0 29.0 20.0 10.0 7 Causes of Changes in Operating Income Cause of 7.4 B yen increase from the previous year in operating income z Increase capital investment and R&D for future business development z Sales increase and procurement cost reduction offset causes of profit decline including price down, strong yen, and investments z Though bonuses increase as it links with performance, labor costs decrease by 3.0 B yen due to headcount reduction and decrease in retirement benefit through returning pension funds to the government Increase in fixed cost Sales increase -15.0 +15.0 -8.0 +20.0 Operating income 21.6 B yen -4.6 Decrease in Reduction in sales price procurement cost Project price down in printers and LSIs FY Mar.04 Effect in exchange rate -2.0 Miyagi earthquake impact +3.0 Inventory decrease, etc. -5.6 Labor cost reduction Depreciation R&D expenses Other fixed costs Operating income 29.0 B yen Others +3.0 - 1.4 - 6.9 - 2.7 FY Mar.05 8 Full Year Projection by Segments z Achieve increase in sales and income relative to the previous fiscal year <Full year projection> (Billion yen) Net sales 710.0 654.2 680.0 57.1 65.0 70.0 132.2 150.0 155.0 104.6 105.0 130.0 (Comparison from last FY) Others Increase in sales from EMS and affiliated companies Electronic Devices Sales expansion of focusing products and market recovery Last FY includes impact of earthquakes <First half results> (Billion yen) Net sales 319.7 310.0 281.3 27.0 30.9 75.0 76.6 44.5 50.0 52.1 151.6 158.0 160.1 Sep. 03 July 28 projections 25.2 60.0 Telecom Systems 360.3 360.0 355.0 Increase in IP network related system for carriers Information Systems FY end Mar. 04 Oct. 28 July 28 projections Projections FY end Mar. 05 Printer sales increase Decrease in demand for new banknotes Overall sales decline Oct. 28 Projections Sep. 04 Incomes (Billion yen) Incomes 0.0 1.5 (Billion yen) 29.0 Refer to previous page 29.0 21.6 10.0 1.3 10.0 (6.0) Operating income Net income (2.9) (3.9) (10.5) 9 Full Year Projection: Info Systems z Demand related to new banknote mostly ends in the 1st half. Though sales decrease was partly offset by sales from financial IT solutions and color printers, operating income decreased on an year-on-year basis due to R&D increase <Full year projection> <First half results> Net sales (Billion yen) 360.3 360.0 355.0 149.0 127.0 127.0 95.0 86.5 124.8 FY end Mar. 04 138.0 88.0 140.0 (Comparison from last FY) Financial system solutions New banknote-related demand mostly ends in 1H, causing ATM sales to decrease. However, sales for back-office operation concentration, information and telecom converged systems, and bank counter terminals increase Information solutions Slight increase in sales due to price down by severe competition Delay in some large projects Net sales (Billion yen) 158.0 160.1 61.5 64.5 63.9 30.6 30.5 31.0 59.5 63.0 65.2 151.6 Printers Oct. 28 July 28 projections Projections Sales increase in color NIP Sep. 03 Sep. 04 FY end Mar. 05 (Billion yen) Oct. 28 July 28 projections Projections Operating income Operating income (Billion yen) 24.0 21.0 16.5 Decrease in profit due to sales reduction for financial system solutions and increase in R&D for new printer development 5.1 2.0 1.8 10 Full Year Projection: Telecom Systems z Increase in both sales and operating income backed by carriers’ investments on networks z Enhance R&D investments for future growth <Full year projection> Net sales (Billion yen) (Comparison from last FY) 130.0 104.6 105.0 26.5 30.0 100.0 78.1 75.0 FY end Mar. 04 Net sales (Billion yen) 50.0 Enterprise networks Increase in sales for VoIP-related system, mainly IP-PBX 30.0 <First half results> Carrier networks Expansion of sales due to carriers’ active investments on broadband IP networks Oct. 28 July 28 projectionsProjections 44.5 12.0 11.8 11.5 33.0 Sep. 03 38.0 40.3 Oct. 28 July 28 projections Projections Sep. 04 FY end Mar. 05 (Billion yen) 52.1 Operating income Operating income (Billion yen) 3.4 5.5 7.5 Increase in sales Enhancement of investments for new product developments 0.5 0.3 (1.6) 11 Full Year Projection: Electronic Devices z Demand increase in personal and mobile markets. Though unclear outlook in the second half, sales increase is expected z Increase in operating income due to sales increase and structural reform in optical components business <Full year projection> <First half results> Net sales (Billion yen) 132.2 150.0 2.5 155.0 3.0 1.9 91.1 Optical components 104.0 (Billion yen) 75.0 76.6 49.0 50.5 15.0 15.1 10.0 9.7 North America’s market is bottoming out System LSIs & Logic LSIs 102.5 Net sales (Comparison from last FY) Increase in sales of system LSIs for telecom and digital appliances and driver LSIs 60.0 42.4 System memories 23.7 15.5 FY end Mar.04 28.0 17.0 30.0 18.0 Oct. 28 July 28 Projections projections Sales expansion of large capacity P2ROMs used in electronic dictionary, etc. DRAMs Steady growth 10.0 6.6 Sep. 03 Oct. 28 July 28 Projections projections Sep. 04 FY end Mar.05 (Billion yen) 2.3 Operating income Operating income 11.0 13.0 Operating loss in optical component business reduced due to structural reforms Opportunity loss due to earthquakes in the FY ended Mar. 04 (3.0 B yen) (Billion yen) 3.0 3.4 (2.1) 12 Cash Flows z Free cash flows (FCF) improved 12.3 B yen from previous projections (July 28) due to decrease in operating assets and liabilities, etc. Full year FCF also expected to improve by 5.0 B yen (Billion yen) I. Cash flows from operating activities Income (loss) before income taxes Depreciation & amortization Changes in operating assets & liabilities Others II. Cash flows from investing activities Purchases of property, plant & equipment Others Free cash flows (I+II) III. Cash flows from financing activities Redemption of bonds Changes in other interest bearing debts, etc. Net cash flow (I+II+III) IV. Cash and cash equivalents at the period end V. Interest-bearing debts at the period end FY Mar. 04 FY Mar. 05 FY Mar. 05 (results) (results/projections) (July 28 project.) 1st Half Full year 1st Half Full year Full year 27.1 (14.7) 92.3 2.3 30.8 (4.7) 65.0 16.0 55.0 18.0 16.8 33.6 15.7 35.0 36.0 16.7 8.3 (10.4) 40.1 16.3 (19.2) 18.0 1.8 (28.5) 10.0 4.0 (45.0) 0 1.0 (40.0) (10.1) (24.0) (22.0) (36.0) (31.0) (0.3) 4.8 (6.5) (9.0) (9.0) 16.7 73.1 2.3 20.0 15.0 (9.3) (7.7) (1.6) 7.4 36.3 325.7 (43.6) (39.9) (3.7) 29.5 58.1 291.4 (15.7) (10.0) (5.7) (13.4) 45.3 273.4 (25.0) (15.0) (10.0) (5.0) 53.1 266.4 (25.0) (15.0) (10.0) (10.0) 48.1 266.4 13 Acquisitions of Property, Plant and Equipment; R&D Expenses Acquisitions of Property, Plant and equip. (Billion yen) 40.0 (Including leased assets) Common Devices Telecom Info systems 25.3 1.1 35.0 4.5 36.0 Common Devices Telecom Info systems 5.0 26.8 3.2 17.5 15.2 17.5 15.4 2.0 1.3 7.7 0.0 FY Mar. 03 (Billion yen) 11.0 7.3 2.0 30.0 July28 Oct. 28 FY Mar. 04 FY Mar. 05 27.0 24.4 28.0 0.0 Depreciation 10.0 11.5 (projections) 50.0 25.0 0.9 23.0 20.0 20.0 20.0 15.2 R&D expenses (Billion yen) 30.0 16.1 2.0 2.6 5.4 4.8 2.2 2.2 2.9 2.7 5.6 6.3 4.5 3.5 5.6 6.5 FY Mar. 03 FY Mar. 04 0.0 7.5 10.0 July 28 Oct. 28 FY Mar.05 (projections) • Expand printer lineups • Enhance information and telecom converged products such as SS9100 • Focus on software development for system LSIs 14 Number of Employees To respond to changes in business environment, promote optimal human resource allocation • Actively promote mid-career recruiting as immediate workforce for focusing businesses Æ Increase 200 employees in FY ending Mar. 05, a three fold increase from previous years • Put brakes on decreasing trend of newly graduate recruitment • Maintain the number of total employees appropriate to business operation size Number of Employees in Japan (including non-consolidated subsidiaries and affiliates) (thousand) 18.3 (thousand) Others 16.8 3.9 12.2 4.5 3.6 Mar. 31, 03 16.6 3.7 Related companies 11.1 3.7 2.4 2.4 2.4 5.3 Mar. 31, 04 5.4 6.8 Sept. 31, 04 FY ended Mar. 04 3.6 11.2 3.7 7.0 FY ended Mar. 03 16.5 11.5 3.8 2.7 6.1 7.3 Number of people Devices Telecom Information Oki Electric 5.4 6.8 Mar. 31, 05 (projections) FY ending Mar. 05 First half Full year New graduates 240 190 200 200 Mid-career 70 60 60 200 310 250 260 400 Retirement, transfer, etc. -2.000 -1,750 -460 -700 Total 18,300 16,800 16,600 16,500 Recruit 15 Three Focusing Businesses Restructure business targeting FY ending Mar. 2007 Info-Telecom System business Enhance solution provisioning for each market based on information and telecom convergence, AP@PLAT Semiconductor business Strengthen to provide unique products for the personal and mobile markets Printer business Increase world market share for color NIP, utilizing advantages of LED Current Information Telecom Electronic devices • Strengthen to create top class products • Enhance access to markets • Accelerate convergence and focus of various resources • Reinforce service and business model development 16 Info-Telecom System Business FY ending Mar. 2007 target: Net sales 400 B yen, Operating income 35 B yen Sales target for FY ending Mar. 07 Financial Institutions Telecom Carriers Central and Local Governments Enterprises 150 B yen 100 B yen 70 B yen 80 B yen “Obediently provide products that customers desire or will desire” Strengthen access to Oki’s strong markets with information and telecom converged products Iris MediaServer recognition SipAs SS9100 Products with advantage CTstage AP@PLAT AP@PLAT VoIP Oki’s unique technologies Provide solutions to strong markets ATM Mechatronics Security CTI Network Video delivery 17 [Info-Telecom] Financial Market Solutions New banknote-related demand ends in the 1st half of the FY Mar. 2005 Increase R&D investment for new business deployment for the FY Mar. 2006 and after Expand solution business and strengthen ATM business (market share: 40%) further [Business Strategy] z Enhance sales for back-office operation Bank branch office/ATM concentration systems* Bank branch systems ConsulStation ATM Auto Contract Terminal Cash management terminal High demand in back-office systems as progress in restructuring and consolidation in financial institutions Æ Expand sales based on the top share (24%) in Japan z Focus on financial IT solutions Strengthen sales channel to attract customers Æ Provide IT solutions for bank branch office, e-finance and back-office SS9100 z Expand ATM business to non-financial sectors Expand sales of multifunctional ATMs and ticket issuing system to non-financial sectors such as retail, travel and transportation markets Voice integrated Broadband IP Network Back-office systems z Deploy ATM business for overseas market Launched a multifunctional ATM dedicated to the Chinese market Target 30% of the Chinese market by the FY Mar. 06 (based on units) Back-office operation concentration system ChannelNavigator IP contact center e-finance TxHub* Net payment Security * Back-office operation concentration system: money order, personal seal check, personal identification, etc. * TxHub: An application hub used in banks to control and transfer account-type transactions between terminals and hosts servers 18 [Info-Telecom] Telecom Carrier Solutions Telecom Carriers Investment Trends z Active investment towards backbone network accelerates/ Local IP network expands as B-FLETS sales increase/ Optical access investment increases Æ Full scale introduction of GE-PON z Full scale CPE sales expansion as optical IP telephony service demand increases, highly functioned CPE integrated into HGW z Softbank/ Japan Telecom’s entrance to the fixed phone services Æ Provide new services z Demand increase in AP@PLAT including IP telephony, video delivery, and web-linked SIP-based applications, as IP network expands ¾Expand application & service platform business = Oki’s solutions ¾Enhance optical access (GE-PON) &CPE/HGW business ¾Advantage ¾Advantage of of Oki’s Oki’s GE-PON GE-PON 9 9 Abundant Abundant extended extended functions functions 9 9 High-quality High-quality QoS QoS function function 19 [Info-Telecom] Government Solutions Focus on large projects based on e-Japan II Strategy • Deploy e-government solutions with security as a core for applications and networks 9Focus on government portals/ mission critical systems / government official portal based on AP@PLAT • Focus on ITS related systems including VICS and ETC that promote sophisticated road traffic Government portal system: Provide one-stop governmental service to citizens and enterprises Mission critical system/ government official portal system: Promote business efficiency to each governmental agencies e-government solutions Users (Citizens/enterprises) PSTN PC, info home appliances, phones, FAXes Internet Mobile phones, PDA IC cards Government Portal Front office service Central government Mission critical system E-applications/ notifications Education Disaster prevention systems Government CRM systems Network. security monitoring Front Office BackBack-office service Users (Government officials) Personnel wage Kasumigaseki WAN Secure Network Portal base system Video delivery systems Government Official Portal Governmental document control Information clearing Portal base system Integrated government network Mission critical systems Local agencies Official document exchange systems Government help desk Network, security monitoring Mobile phones, PDA, IC cards Back Office 20 [Info-Telecom] Enterprise Solutions z Enterprise-use info-telecom system market expands rapidly as info and telecom converges z Progress of network convergence in channel systems such as ticket reservation and issuing systems and KIOSKs z Increase sales based on Oki’s top share in VoIP, call center systems and ticket issuing terminals Info-telecom solutions for enterprise Solutions for Travel Industry Provide business process improvement with SS9100 as a core that converges large scale IP-PBX function with mission-critical business applications on Microsoft .NET Business applications Knowledge management ERP CRM SCM Video conference Enterprise network IP telephony PSTN Mobile phone IP network IP CONVERGENCE Server SS9100 My-office environment Internet PDA Hot Spot Terminal Soft phones IP phones Ticket issuing terminal market share: No.1 in Japan (60%) Auto reservation and ticket issuing terminal for railways: 40% Airport check-in system Application integration Carrier networks Strength in mechatronics and security Wireless IP phones Legacy terminals IP Contact center CTstage A leader in the Japanese CTI market 9 38% of the Japanese call center market Cumulative sales: 4,000 sets 9 Fuji Xerox, Toshiba, NTT DATA, etc. 120+ partners 9 Microsoft, IBM, Intel, NEC, etc. 21 Semiconductor Business FY ending Mar. 2007 target: Net sales 170 B yen, Operating income 17 B yen Growth strategy with advanced technologies Establish business structure strong to market changes and to generate profit (BEP: 110.0 B yen strategy) Converge semiconductor technology and system technology/ Actively promote global alliances Provide high value added products to personal and mobile markets with low power consumption Establish new business model (Oki’s Fab-free model) Plan products not restricted to Oki-fabs Æ Enhance agile product creation and flexible production Mobile phone/ PHS Printers Digital audio FAX, DCP DSC, DVC Watch, dictionaries Car navigation FPD(TV) Games PDA, Laptops Mobile and Personal Markets In-house system technologies • Telecom • Information processing • Wireless Global alliances Fab-free Strategy •Development: ARM, Cadence •Production: UMC, GSMC •Sales: SAC • µPLAT • Voice and sound Unique Technologies • Low power consumption • SOI/SOS • High voltage process • High density packaging (WCSP) • Memory (EPROM, Fe-RAM, image memory, DRAM) 22 [Semiconductors] Product Strategy Expand business through advanced technologies such as low power consumption, high voltage process, SOI/SOS, etc. Expand products by converging internal system technologies (information/ telecom) (ZigBee, VoIP, analog-mixed) Enhance product planning and development through working together with customers and partners (Billion yen) Worldwide market share for focusing products (Projections for FY end. Mar. 2005) Focusing product trend 90 80 14.0 [PHS Baseband] 40% 70 14.0 60 9.0 50 40 30 20 10 8.0 10.6 9.0 30.0 18.0 26.0 0 03 [P2ROM] 35% (ROM market) 25.0 17.0 11.0 [Sound Generator LSI] 25% (40% in GSM market) 04 05 (projections) 06 (target) [Large TFT driver] 5% (40% in large LCD TV) Further growth with products for market that are expected to grow i.e) world’s first single chip ZigBee-LSI, silicon audio LSI, organic EL driver, etc. Other major product market share (worldwide: Estimated by Oki for the FY Mar. 2004) • LSIs for cordless phone: 40% • Voice synthesis LSIs: 25% • Memories for TV (FIFO) 80% • Digital camera drivers: 30% • Silicon audio LSIs: 30% • LSIs for ADSL modems: 24% 23 Printer Business FY ending Mar. 2007 target: Net sales 180 B yen, Operating income 15 B yen Color NIP: ¾ Dell joining the market stimulates the color NIP market ¾ Achieve 20% worldwide market share utilizing LED advantages (compact, high speed, high quality) SIDM: ¾ Maximize profit by increasing SIDM share and decreasing costs Provide world’s best cost performance product by increasing customer satisfaction SIDM Color NIP Worldwide share: over 20% • Maintain top share in N. America (over 50%) • Capture Chinese market • Low cost, high-quality • SOHO/ enterprise use business domain • LED tandem/ single pass technology • Actively deploy markets in China, Eastern Europe and South America • Cultivate replacement demand 24 [Printer] Business Domain Deploy business targeting office use for SOHO/ enterprises Printer market (hardware shipment) 18% annual growth in color NIP/ MFP Stable business in SIDM mainly for specific applications, expand Chinese market (by JEITA) (Billion$) 550 0 SIDM CAGR -8% Inkjet CAGR 1% 440 0 330 0 220 0 Mono NIP/MFP CAGR 0% 110 0 0 Color NIP/MFP CAGR 18% 2 2003 003 22004 004 22005 005 2006 2006 2007 2007 <Oki’s Business Area> Hardware priceÎ $100 Usage $1K $10K Business use Commercial printing $100K Large laser, etc. In-house printing Graphic design Color NIP Enterprise/ SOHO Special use Thermal Consumer use NIP: Non-Impact Printer Mono NIP SIDM MFP: Multi Function Printer Inkjet Workgroup MFP Line printer Oki’s business area LED: Light-Emitting Diode SIDM: Serial Impact Dot Matrix Printer 25 [Printers] Color NIP Market Share Europe and US market share increases steadily from FY ending March 2004 Rank into high market share group in major countries <Accumulated color NIP shipment in Europe and US> <Market share by major countries> (Since January 2002) (K) Line graph shows Oki’s accumulated share 2500 8.1% 9.0% 6.5% 2000 5.0% Market ratio 4.3% 1500 IDC Jan-Jun/04 Oki’s share Share Ranking Worldwide 100% 8.6% No.5 US 29.8% 9.6% No.4 Samsung Japan 13.7% 4.0% No.5 Epson Germany 7.9% 10.5% No.4 UK 7.5% 6.5% No.6 France 4.4% 6.2% No.5 Italy 3.8% 14.9% No.2 Spain 2.9% 40.8% No.1 Switzerland 1.8% 8.9% No.3 Sweden 1.5% 16.0% No.2 Netherlands 1.5% 3.7% No.6 25.3% 5.7% No.5 Others Lexmark 1000 Xerox 500 Konica Minolta HP OKI 0 Others - Jun.02 - Dec. 02 - Jun. 03 - Dec. 03 - Jun. 04 (IDC) 26 Mid-term Business Target [New Business Segment] <Sales/ Operating income ratio> 3.8 (Billion yen) 800 740.2 600 57.8 110.0 170.2 400 200 0.2 3.3 (4.5) 48.9 112.0 104.9 53.4 108.0 116.0 760.0 (%) 710.0 Others 59.0 124.8 73.0 140.0 Printers 130.3 152.0 345.0 654.2 604.4 585.5 5.3 4.1 402.2 338.6 308.1 340.1 Mar.01 Mar.02 Mar.03 Mar.04 10.0 180.0 Semiconductors 170.0 Info- telecom 400.0 systems 0 Net Sales Operating income Net income ROE D/E ratio Mar.05 (Projections) FY Mar. 05 (Projections) 710.0 B yen Mar.07 (Target) FY Mar. 07 (Target) 760.0 B yen FY Mar. 03 (Result) 585.5 B yen FY Mar. 04 (Result) 654.2 B yen 1.4 B yen 21.6 B yen 29.0 B yen 40.0 B yen or more (6.6) B yen 1.3 B yen 10.0 B yen 20.0 B yen or more - 1.2％ 8.3 % 15% or more 3.3 times 2.6 times 2.2 times 1.5 times or less 27 Glossary P3 P7 P12 IP IT LSI R&D EMS ATM NIP VoIP PBX P2ROM P16 P17 P19 DRAM LED CTI GE-PON P8 P9 P10 P11 P20 CPE SIP HGW SW/CA STB MGW AGW OLT QoS ITS VICS Internet Protocol Information Technology Large Scale Integration Research and Development Electric Manufacturing Service Automated Teller Machine Non-Impact Printer Voice over Internet Protocol Private Branch eXchange Production Programmed Read Only Memory Dynamic Random Access Memory Light-Emitting Diode Computer and Telephony Integration Giga-bit Ethernet Passive Optical Network Customer Premises Equipment Session Initiation Protocol Home Gate Way Soft Switch / Call Argent Set Top Box Media Gate Way Access Gate Way Optical Line Terminal Quality of Service Intelligent Transport System Vehicle Information Communication System P20 P21 P22 P23 P24 ETC PDA PSTN CRM ERP SCM BEP PHS DSC DVC DCP FPD SOI SOS WCSP EPROM Fe-RAM GSM TFT EL FIFO ADSL SIDM SOHO MFP Electronic Toll Collection Personal Digital Assistance Public Switched Telephone Network Customer Relationship Management Enterprise Resource Planning Supply Chain Management Break Even Point Personal Handy-phone System Digital Still Camera Digital Video Camera Digital Cordless Phone Flat Panel Display Silicon on Insulator Silicon on Sapphire Wafer level Chip Size Package Erasable Programmable Read Only Memory Ferroelectric Random Access Memory Global System for Mobile Communications Thin Film Transistor Electro-Luminescence First-In First-Out Asymmetric Digital Subscriber Line Serial Impact Dot Matrix Small office / Home office Multi Function Printer 28