For Strengthened, Decentralized Management
Nikon Announces Corporate Realignment -- Nikon Introduces New In-house Company System

Nikon Corporation (YOSHIDA, Shoichiro, President) introduced a new in-house company system from October 1, 1999, as part of its ongoing program to implement more effective operations of the corporation that is able to meet the demands of fast changing and borderless market.

The new in-house company system features a decentralized management, with an integrated system and responsibilities established for each product sector, including related subsidiaries.
Management authority will be transferred to each individual company, along with responsibility for profit, assets and cash flow management.
As a result of this realignment, the new Nikon will be organized into three(3) administrative support units and four(4) separate profit centers.

It is the firm's first major restructuring since it implemented a divisional organization in 1962.

Background to the in-house company system

In recent years, Nikon's corporate performance has been significantly varied depending upon the IC & LCD equipment business.
The recent slump in equipment and facility investments by semiconductor manufacturers, brought on by Japan(Nippon)'s economic recession, has resulted in a major drop in both revenues and profits.
Nikon's strong dependence on a single division is vulnerable to severe business environment.
In order to well balance its overwhelming dependence on the IC & LCD equipment market against the other's, the company has implemented a variety of management restructuring moves designed to improve the profitability of the entire Nikon group.

In May 1999, for example, the basic agreement was reached with Essilor International S.A. (Xavier FONTANET, Chairman and CEO) of France to establish a joint company (Nikon-Essilor Co. Ltd.) in the ophthalmic lenses business ;
In July, the company introduced new personnel management and salary systems for managerial position ;
And from October the Surveying instruments division is re-launched as independent subsidiary (Nikon Geotecs Co., LTD.).

Taking into account the overall business environment, this moves to the new in-house company system will, Nikon's top management feels confident, promote fast, timely decision making, and result in holding the strong position against competition, with a sharp focus and clearly-defined mission of individual company.

Basic principles of the in-house company system

The basic principles are as follows :

1. The new in-house company system will provide for increased decentralization of authority.
2. An integrated system is to be applied to each business, with related subsidiaries consolidated into company units, and a similar integration of responsibilities to ensure greater accountability in performance.
3. The corporate structure will be rebuilt to enable rapid establishment of new businesses.
4. Yearly plans will be formed, and performance will be evaluated at both the company level and the group level.
5. As a further restructuring move, the possibility of converting companies into independent subsidiaries and establishing a holding company are being considered.

Organizational restructuring will be implemented to meet business characteristics and market demand in each company's business field, with an accompanying reallocation of management resources.
Nikon is working to improve on its business activities in more innovative way for the existing businesses and to reinforce supporting structure for the creation of new businesses, as well as strengthen management checks while ensuring a balance between decentralization and overall group profitability.

Corporate Management

To manage and direct the affairs of Nikon Corporation by the authority of shareholders and the board of Directors, and deliberate and make decision on issues that are above the level of authority delegated to in-house companies, the Managing Directors' Comittee will be replaced by a new Executive Committee.
The new streamlined Committee consists of the Chairman, President, Executive Vice President and the heads of the three administrative units of Business Development Center, Corporate Strategy Center and Business Administration Center.
The entire Managerial Organization will be drawn up after a complete review of the roles and functions of other decision-making bodies.

Core Corporate Management Organization

New Organizational Structure

The major organizational units are as follows :

• Office of the President

  Positioned directly under the President, this unit audits and evaluates operation and performance of each Center and in-house company, providing guidance, supervision or advice as appropriate.

• Business Development Center

  Handles planning, studying and developing of new businesses for the entire group. It will work to establish other in-house company than three in-house companies as mentioned below.

• Corporate Strategy Center

  Plans and implements group management strategy and policies related to the entire group.

• Business Administration Center

  Provides staff functions to support individual centers, in-house companies and subsidiaries.

• Core Technology Center

  Accumulates and develops production technology and core technology used throughout the Nikon group, and protects group intellectual property rights.
  Provides support for prototyping and other tasks by in-house companies.
  Business Development Center and subsidiaries while sharing facilities as many as possible.

• Precision Equipment Company

  Succeeds to the business of the former IC & LCD Equipment Business Headquarters (IC exposure systems, LCD exposure systems, etc.).

• Imaging Company

  Succeeds to the business of the former Imaging Products Division (Cameras, Electronic imaging products, etc.).

• Instruments Company

  Succeeds the business of the former Instruments Division, and the part of the business of New Business Division and Customized Industrial Supplies & Equipment Division (Microscopes, Measuring instruments, Ophthalmic and Ophthalmological equipment, Medical information systems, Custom-order products, etc.), after restructuring.

• Note: These three(3) in-house companies will be responsible for their own profitability, on a consolidated base with related subsidiaries.
  Closely-related production and sales subsidiaries will be positioned as group firms, with consolidated accounts.

Organizational Chart as of 1999-10-01

Nikon's Vision for the Future

Nikon's introduction of the new in-house company system is a part of management strategy to lay the foundation for possible establishment of a holding company in the future. It is the largest restructuring that the Nikon group has ever undergone.
This is only the first step, however, and Nikon will continue to review and evaluate a variety of issues related to Nikon group's business.
A Nikon's vision for the 21st century will be revealed sometime in the next spring.