TOSHIBA Toshiba s Mid-term Business Plan March 21 2000

TOSHIBA Toshiba’s Mid-term Business Plan March 21, 2000

Toshiba’s Mid-term Business Plan ・For the three fiscal years to March 31, 2003 ・The first mid-term business plan under the in-house company system ・Strategies for each company to win in the highly competitive global marketplace

Fundamentals of The Plan ■ Provision of value-added products and services by fully utilizing IT ■ Advance in-house company system and create inter-company value chain ■ Enhance corporate value and corporate governance

Utilize IT to Provide Value Creating Products And Services Emergence of wireless and mobile technologies Product development utilizing world class technologies Notebook PCs Semiconductors LCD Media cards Bluetooth i. Value Creation Company to take lead in mobile services business Promote B 2 B business MPEG 4

Promote IT and Establish a New Business Style Mobile ＆ Network Provide solutions that meet customer requirements Create products with the advanced technologies

Advancing The In-house Company System and Create an Inter-company Value Chain ■ Strategies to make each company a winner ■ Collaboration of companies in products, components, systems, services and content Inter-company Value Chain

Inter-company Value Chain S&S Wireless Products Satellite Network Home Appliances Digital Broadcasting Service Internet Service ITS/ Automotive Semiconductor DDC SD Card Flash Application Memory Products Media Card Mobile DM i. VC PS HA Content Distribution PC/ Cellular Telecom LSI LCD/ Battery Content Network AV System Digital TV LSI LCD Battery Mobile Data Broadcasting Digital White goods Bto. C Content Bto. B ASP Infrastructure PC for car System LSI Application CPU System Content Distribution Bto. C Content LCD Fuel Cell

Enhancing Corporate Value and Heightening Corporate Governance ■ Heighten customer satisfaction by creating value-added products and services ■ Enhance corporate value

Reinforce Financial Status ■ Intensive cash-flow oriented management　　　 →　 cash-flow increase 100 billion +　（FY 99） ■ Create value and profits exceeding the cost of investment ROI ROE Free cash-flow

Enhancing Corporate Value and Heightening Corporate Governance ■ Win satisfaction from stakeholders: customers, shareholders, employees and the local community ■ Increase disclosure

Outline Consolidated Billion yen

Achieving High Growth 7, 800 billion ５, 700 billion Global business operation focuses on IT ROE： 15. 5%

Emphasize Cash-flow Management - Reduce total debt in consolidated-base ■ Maximization of cash-flow aimed to increase company value 200 150 120 150 Increase cash-flow 370 billion in three years 100+ 100 50 0 FY９９ Reduce total debt in consolidated-base FY００ FY０１ FY０２ (billion） FY 99 （FY 02　D/E ratio≦ 100％） Total debt D/E ratio 1, 990 (％) 146 （exclude Toshiba Credit Corp. and Toshiba Building & Lease Corp. ） FY 02 1, 750 89

Sales by Segment billion Information & Communication and Industrial Systems Digital Media Power Systems Electronic Devices Home Appliances Others FY 99 FY 02

Sales by Segment Others 440 Home Appliances 530 Information & Communications and Industrial Systems 10% 7% 1, 900 500 6% 700 Power Systems 680 Power Systems Home Appliances 8% 550 Information & Communication and Industrial Systems 2, 250 25% 6% 29% Electronic Devices & Components 8% Electronic Devices & Components Digital Media 1, 550 1, 420 Digital Media 2, 550 2, 300 29% 26% 22% 24% FY 99 FY 02 5, 700 billion 7, 800 billion

Operating Income by Segment Others Home Appliances Information & Communications and Industrial Systems 28 2 15 3. 5% 7% 100 24% 32% Electronic Devices & Components 2% Digital Media 160 9% Information & Communications and Industrial Systems 40 22% Power Systems 11 15 Power Systems Others Home Appliances 30 Digital Media 38% 100 24% 44 35% Electronic Devices & Components FY 99 100 billion -25 billion yen FY 02 420 billion

Essentials for Mid-term Business Plan ■ Growth by focusing on IT business ■ Establish solid profit base ■ Establish new management style

Growth by Focusing on IT Business System solutions, services, contents Mobile network equipment Components

Reinforce Internet Business i-Value Creation Mobile Internet service Bto. C business Content business Advanced Systems by Internet Technologies 500 billion yen electric administration system for government in FY 2003 Retail/ manufacturing/ Financing e-Net Division Bto. B／System solution Digital broadcasting ITS Wireless access

Focusing on Mobile and Network-related fields Notebook PCs Next-generation cellular phone, W-CDMA Mobile AV network products Media cards Digital broadcasting

Notebook PC Business Provide attractive products that define market trend and expand business in services Reinforce competitiveness and improve customer satisfaction through the completion of global SCM and CRM systems

W-CDMA Business Opening of broadband era in Japan Establish W-CDMA Business Development Division The world’s first MPEG 4 single chip LSI

Mobile AV Network Internet MPEG 4 Outdoos Mobile AV Memory card Mobile AV W-CDMA Mobile AV Bluetooth Mobile AV Home

Media Card Business Notebook PC NAND Flash Memory Components Business Digital Mobile Devices I/O function MPEG camera Bluetooth Digital Audio Player DVD Distribution Business Content Production Content

Strengthening The Components Business Semiconductors System LSI NAND flash memory LCDs Polysilicon LCDs Rechargeable Batteries Concentrate resources on mobile network

Strengthen Services Business Billion yen 1, 050 1, 550 Others 1600 1400 i. Value 1200 Medical/Elevators and Building Systems Energy 1000 800 600 Digital Media 400 200 0 Information Systems FY 99 FY 02

Establish a Solid Profit Base - Review The Organizational Structure power systems, consumer products, medical systems, elevator & escalator systems, industrial equipment • Globalization through alliances • Reshape business structure • Reshape business portfolios Stabilize and improve profitability

Acceleration of IT-based Management Enhance productivity by strategic utilization of IT 　　　　　 150 billion investment in IT over three years 100% on-line procurement 　　　　　procurement costs for FY 2002 to be 200 billion lower than in FY 1999 Introduce integrated SCM, CRM, ERP system in semiconductor and PC business Improve customer service

Group Management Corporate In-house companiy Subsidiaries and affiliates In-house company Subsidiaries and affiliates Reinforce monthly consolidated system in April 2000

Shape A New Corporate Culture Thorough implementation of Management Innovation 2001 program ・Introduced in April, 1999 to all in-house companies ・Concrete targets utilizing IT ・560 billion in improvement over three years

Environmental Management Start environmental accounting from FY 1999 Full employment of zinc-free soldering Zero emission of trash Promote PRTR in all facilities Green procurement 30% reduction of chemical material disposal Investment in environmental protection

Performance-based Human Resources Evaluation Performancebased treatment Creative and innovative corporate culture Add flexibility to remuneration structure Original remuneration systems in separate entity

Resource Investment Plan Investment in products and technologies to maintain superior competitiveness Over 350 billion investment in R&D Centering on IT and components 350 billion for capital expenditure

Head Count Plan 192, 000 190. 500

Toshiba in The 21 st century Contribute to society through products and services A value-creating company Achieve continuous high growth and high profit