Revised Projections for FY March 2009 January 8, 2009 Mr. Takehiro Kamigama President & COO Revised Projections for FY March 2009 (Jan. 8, 2009) 1 Cautionary Statements with Respect to Forward-Looking Statements This Thismaterial materialcontains containsforward-looking forward-lookingstatements, statements,including includingprojections, projections,plans, plans,policies, policies, management managementstrategies, strategies,targets, targets,schedules, schedules,understandings understandingsand andevaluations, evaluations,about aboutTDK TDKand anditsits group groupcompanies companies(TDK (TDKGroup). Group). These Theseforward-looking forward-lookingstatements statementsare arebased basedon onthe thecurrent current forecasts, forecasts,estimates, estimates,assumptions, assumptions,plans, plans,beliefs beliefsand andevaluations evaluationsofofTDK TDKGroup Groupininlight lightofof information informationcurrently currentlyavailable availabletotoit,it,and andcontain containknown knownand andunknown unknownrisks, risks,uncertainties uncertaintiesand andother other factors. TDK Group therefore wishes to caution readers that, being subject to risks, uncertainties factors. TDK Group therefore wishes to caution readers that, being subject to risks, uncertainties and andother otherfactors, factors,TDK TDKGroup’s Group’sactual actualresults, results,performance, performance,achievements achievementsororfinancial financialposition position could couldbe bematerially materiallydifferent differentfrom fromany anyfuture futureresults, results,performance, performance,achievements achievementsororfinancial financial position positionexpressed expressedororimplied impliedby bythese theseforward-looking forward-lookingstatements, statements,and andTDK TDKGroup Groupundertakes undertakes no noobligation obligationtotopublicly publiclyupdate updateororrevise reviseany anyforward-looking forward-lookingstatements statementsafter afterthe theissue issueofofthis this material except as provided for in laws and ordinances. material except as provided for in laws and ordinances. The Theelectronics electronicsmarkets marketsininwhich whichTDK TDKGroup Groupoperates operatesare arehighly highlysusceptible susceptibletotorapid rapidchanges. changes. Risks, Risks,uncertainties uncertaintiesand andother otherfactors factorsthat thatcan canhave havesignificant significanteffects effectson onTDK TDKGroup Groupinclude, include,but but are arenot notlimited limitedto, to,shifts shiftsinintechnology, technology,fluctuations fluctuationsinindemand, demand,prices, prices,interest interestand andforeign foreign exchange exchangerates, rates,and andchanges changesinineconomic economicenvironments, environments,conditions conditionsofofcompetition, competition,laws lawsand and regulations. regulations. Revised Projections for FY March 2009 (Jan. 8, 2009) 2 Projections for FY March 2009 Consolidated FY Mar. 2008 (Unit : Yen billions) Net Sales Results Projections for FY Mar. 2009 Previous(Oct.) Revised(Jan.) Difference from previous projections Y-o-Y change 866.3 795.0 673.0 (122.0) (193.3) Operating income 87.2 35.0 (26.0) (61.0) (113.2) Income before income taxes 91.5 31.6 (32.0) (63.6) (123.5) Net income 71.5 25.0 (28.0) (53.0) (99.5) Exchange rate(U.S.$=Yen) 114 103 99 ¾Structural reform expenses of 20.3 billion yen have been reflected in TDK’s revised consolidated projections. ¾Forecast results for EPCOS AG have not been reflected in TDK’s revised consolidated projections. ¾An average yen-U.S. dollar exchange rate of 90 yen is assumed for the fourth quarter of fiscal 2009. Revised Projections for FY March 2009 (Jan. 8, 2009) 3 Projections for the Second Half of FY March 2009 Consolidated Comparison with previous second half (six months) (Unit : Yen billions) Net Sales 2nd Half of FY Mar. 2008 Results Projections for the 2nd Half of FY Mar. 2009 Previous(Oct.) Revised(Jan.) Difference from previous projections Change from FY March 2008 second half 433.2 398.5 276.5 (122.0) (156.7) Operating income 40.1 20.6 (40.4) (61.0) (80.4) Income before income taxes Net income 43.1 36.9 16.8 13.1 (46.8) (39.9) (63.6) (53.0) (90.0) (76.7) Exchange rate(U.S.$=Yen) 109.5 100.0 92.8 3Q 95.5 4Q 90.0 ¾Structural reform expenses of 16.7 billion yen have been reflected in TDK’s revised consolidated projections. ¾Forecast results for EPCOS AG have not been reflected in TDK’s revised consolidated projections. ¾An average yen-U.S. dollar exchange rate of 90 yen is assumed for the fourth quarter of fiscal 2009. Revised Projections for FY March 2009 (Jan. 8, 2009) 4 Urgent Countermeasures Established Earnings Structure Reform Committee To implement structural reforms immediately under the direction of the Earnings Structure Reform Committee chaired by the President. Urgent actions to achieve structural reforms - Bolster cash-flow-driven management – 1) Discontinuation of unprofitable products 2) Realignment and consolidation of operating network 3) Personnel Rationalization 4) Reduction of selling, general and administrative expenses 5) Others Revised Projections for FY March 2009 (Jan. 8, 2009) 5 Urgent Actions I 1) Discontinuation of unprofitable products > Immediately discontinue (within fiscal 2009) severely unprofitable products (marginal profit of +10% or less) > Sales of these unprofitable products: approx. 5.0 billion yen per month Improvement of 1.4 billion yen per month is possible 2) Realignment and consolidation of operating network > Overseas manufacturing bases Close 4 bases > Overseas R&D bases Close 1 base > Consolidation of capacitor production bases 3) Personnel rationalization > Additional personnel rationalization Overseas: more than 8,000 (Incl. TDK subcontractor personnel) Revised Projections for FY March 2009 (Jan. 8, 2009) 6 Urgent Actions II 4) Reduction of selling, general and administrative expenses Rectify high-cost structure: Reduce SG&A expenses Target: Aim for SG&A expenses of 120 billion yen, with expected cost savings of approx. 22.0 billion yen - Reason for 120 billion yen target ＜First step to rectifying high-cost structure will be to immediately establish a management structure capable of generating sales of around 800 billion yen per year with an SG&A expenses ratio of around 15%＞ 5) Others Other structural improvements are currently under consideration. Revised Projections for FY March 2009 (Jan. 8, 2009) 7 Summary of Urgent Actions Expected benefits (annual operating income basis) (Unit : Yen billions) Restructuring costs Costs arising in FY March 2009 15.0 Discontinuation/improvement of unprofitable products Realignment of operating bases Personnel rationalization Reductions in SG&A expenses Total Annual expected benefits 15.0 16.8 7.0 16.6 22.5 62.9 *Of the 15.0 billion yen in restructuring costs, TDK expects a cash outflow of around 2.0 billion yen. Revised Projections for FY March 2009 (Jan. 8, 2009) 8