Nikon Formulates Medium Term Management Plan for Fiscal 2007/3 - 2009/3

Nikon Corporation has formulated a three-year medium term management plan that will run until the end of fiscal 2009/3.

Building on the improvement in business performance in fiscal 2005/3 and 2006/3, the plan aims to further accelerate expansion of profit-earning capacity and to create a strong business structure that can generate sustainable growth.

• Outline of medium term managementplan
  1. Management policy

     Create a “Strong Nikon” with a business structure that can generate sustainable growth in spite of changes in the business environment.

  2. Key objectives

     Strengthen competitiveness of core businesses
     Create and foster new businesses
     Bolster manufacturing competitiveness
     Improve financial structure
     Practice CSR-oriented management
     Nurture a free and open-minded corporate culture

  3. Consolidated targets for fiscal 2009/3
     • Net sales: ¥900 billion
     • Operating income: ¥90 billion (Operating income to net sales: 10%)
     • Ordinary income: ¥80 billion
     • Debt-equity ratio: Under 30%
• Outline of medium term management plan
  1. Management policy — Aiming to be a Strong Nikon —

     The main concept is to move away from the corporate structure that has been greatly influenced by changes in the business environment and create a “ Strong Nikon ” that can generate sustainable growth. This will be achieved via the following:

     • Highly competitive products that meet customer trust
     • A solid financial structure that allows continuous investment to drive corporate growth
     • Outstanding personnel with a strong will and the aspiration to achieve goals
  2. Key objectives
     1. Strengthen competitiveness of core businesses by leveraging cutting-edge technology and product
     2. Create and foster new businesses by exploiting the peripheral domains of existing businesses and effectively utilizing accumulated technologies
     3. Innovate manufacturing pursuing efficiency and rationalization
     4. Improve financial structure with an emphasis on cash flow
     5. Practice highly transparent, CSR-oriented management
     6. Nurture a free and open-minded corporate structure so that employees' motivation levels are optimum
  3. Consolidated targets for fiscal 2009/3   —Operating income to net sales: 10%—

     Net sales	¥900 billion
     Operating income	¥90 billion
     Ordinary income	¥80 billion
     Debt-equity ratio	Under 30%

     • *Assumed exchange rate: US$1=¥110, Euro€1=¥135
  4. Capital investment and R&D investment (fiscal 2007/3 - 2009/3)

     In the three-year period from fiscal 2007/3 to 09/3, Nikon plans to channel funds primarily into strategic investment to drive corporate growth and into strengthening financial structure. Besides increasing R&D investment and capital investment to boost competitiveness in existing businesses as well as to create and foster new businesses, we will work to build financial foundations that support our ongoing growth strategy and that allow us to withstand changes in the business environment.

     Three-year investment plan

     	Three-year total	Priority areas for investment
     R&D investment	¥165 billion (cf. prior 3 years: +60%)	Increase investment to drive future growth: Develop next-generation steppers and improve productivity Strengthen the development of second-generation digital cameras Strengthen research into biosciences Strengthen development of new products, new businesses and elemental technologies
     Capital investment	¥100 billion (cf. prior 3 years: +20%)

• Business strategy of each Company

  Consolidated targets of each Company for fiscal 2009/3

  Company	Net sales	Operating income	Operating income to net sales
  Precision Equipment	¥310 billion	¥38 billion	12.3%
  Imaging	¥480 billion	¥44 billion	9.2%
  Instruments	¥73 billion	¥8.5 billion	11.6%
  New/other businesses	¥37 billion	-

  1. Precision Equipment Company

     <IC stepper business>

     1. Business strategy

        The cyclical ups and downs of the silicon cycle have lessened somewhat in recent times due to increased diversification in semiconductor end products. Accordingly, although no major variation is expected on a unit basis, Nikon expects the IC stepper market to continue growing in value between fiscal 2007/3 and 2009/3 due to a decrease in i-line steppers and an increase in high-priced ArF steppers and ArF immersion scanners. Consequently, Nikon aims to secure top position in the market for state-of-the-art equipments, beginning with immersion lithography products, while at the same time developing the tools to enhance productivity of our customers, and boosting profitability.

     2. Key objectives
        • Secure top market share in ArF immersion scanners
        • Strengthen cost competitiveness by expanding simplified-designed models and by standardizing platforms

     <LCD stepper business>

     1. Business strategy

        The LCD steppers are continuing to become larger as demand for larger FPD TV grows. Meanwhile, there are concerns about over-capacity in small to mid-sized LCD panels going forward. Amid such a business environment, Nikon aims to grab top share in the market for large LCD steppers by leveraging competitive advantages in the larger panel by exploiting the multi-lens projection lens system.

     2. Key objective
        • Further expand share in the large LCD panel market
  2. Imaging Company
     1. Business strategy

        While the digital compact camera market heads towards maturation, the digital SLR camera market is projected to continue on a growth track with competition intensifying. Under these circumstances, Nikon intends to boost profitability through the provision of highly distinctive products. In addition, we seek to create new markets by developing and proposing new products. In fiscal 2009/3, we aim to secure over 40% share of the digital SLR camera market.

     2. Key objectives
        • Maintain position as the leading pioneer in digital SLR cameras
        • Add more value to compact digital cameras
        • Strengthen manufacturing competitiveness
  3. Instruments Company
     1. Business strategy

        In the bioscience field, Nikon aims to expand its solutions business in observation of live cells which attracts the attention of research market. In the industrial instruments field, with a particular emphasis on semiconductor and electronic businesses as well as non-contact vision based measuring systems, we aim to embark on broader businesses including in automotive industry. We will also try to shorten product development lead-time by 30%.

     2. Key objectives
        • Biosciences: expanding solutions business in the live cell imaging field 
        • Industrial instruments: developing non-contact vision based measuring systems featuring image processing technology and creating series lineup of automatic macro inspection equipment
  4. New businesses

     Nikon is striving to cultivate new businesses in the realms of glass materials, solid lasers, Inspection/fabrication tools for 3D-IC, CMPs and optical components by leveraging from precision and optical technologies to image processing, material and software technologies accumulated throughout Nikon Group.