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Revised Mid-term Business Plan and Management Strategies

21 March, 2001

Tokyo--Toshiba Corporation today announced a revised mid-term business plan that anticipates continued global growth, a strengthened management system, enhanced corporate value and reinforced mobile and network IT-related businesses. The mid-term business plan fully reflects Toshiba's recently unveiled group management vision: 'To grow with excellence as the leading edge, Internet-Ready enterprise globally by accelerating innovation with agility, and to create a 21st century of success hand-in-hand with our customers.'

Through implementation of the plan, Toshiba aims to achieve consolidated net sales of 7,900 billion yen, operating income of 450 billion yen and net income of 200 billion yen in fiscal 2003.

  1. Basic strategy

    (1)Enhance corporate value by reinforcing the in-house company system
    In realizing its group management vision, Toshiba will strengthen the managerial autonomy of its in-house companies and enhance corporate governance. At the corporate level, Toshiba will promote corporate governance and an overarching business direction toward growth, providing a unifying centripetal force that balances the centrifugal force of autonomous operations.
    To put it concretely;
    (a)Operations in two promising growth areas will be reorganized into dedicated in-house companies, giving them greater functional integration and management autonomy. The e-Solution Company will integrate IT-related business units while the Mobile Communications Company will concentrate on the rapidly growing mobile equipment business. Both companies will start operation on April 1.
    (b)Toshiba understands that the basic reason for its existence is to increase corporate value and emphasizes this as a central management issue. With this in mind, we will introduce Toshiba Value Created (TVC) as a core management index. TVC measures capital returns against the cost of capital. Each in-house company will use its own target TVC to evaluate business results, providing criteria for investment and a framework for investment budgets.

    (2)Moving toward a market-centric management and culture
    The plan calls for accelerated moves toward a corporate culture based on the 'voice of the customer,' (VOC) and that makes the methodology of Toshiba's six sigma based program for restructuring management structure, an integral part of all aspects of daily business activities. Toshiba aims to maximize customer satisfaction and to be an excellent company that raises corporate value through development of advanced products and manufacturing technologies, that enjoys the confidence of its customers, and that develops a Internet-ready management organization. The group-wide numbers of MI-trained Quality Experts (QE) and Senior Quality Expert (SQE) are expected to increase to 3,200 by fiscal 2003. The 15,000 projects and cost-saving benefits before taxes of 131.7 billion yen achieved in fiscal 2000 are to climb to 28,000 projects and 210 billion yen in fiscal 2003.

    (3)Directing resources to IT
    The IT revolution continues in the global economy, and IT business remains the key for continued growth. Toshiba is honing its competitiveness in the mobile- and network-related business areas. Here, the company will draw on its advanced capabilities in core electronic components and promote global strategic management of development, manufacturing and sales. Toshiba will enhance corporate value and expand business by reinforcing penetration of the ICVC. This will promote cooperation among companies in such core businesses as mobile products and seek optimized resource-sharing that maximizes value-creating synergies. The inter-company value chain established in 2000 will continue to promote cross-company projects that integrate the diverse capabilities of the in-house companies in new products and in product areas that add to corporate value.

    (a)Group-wide IT-related investment with a value of 310 billion yen is planned for the three years starting fiscal 2001, and an in-house IT-usage rate of 40% in December 2000 is expected to climb 100% by 2003.
    (b)Consolidated corporate-wide investment of 1,240 billion yen for the three years to 2003 is planned, approximately 1,000 billion yen of which will be directed to IT-related fields.
    (c)R&D investment will reach approximately1,200 billion yen over the next three years, with 70% (900 billion yen) directed to the IT field.

    (4)Strengthen the profitability of legacy businesses
    In our legacy businesses, such as power systems, home appliances, medical systems and elevator and building systems, we are strengthening profitability through reshaping our portfolio and business structures and seeking new businesses.

  2. Targets

    The consolidated targets of the mid-term business plan are as follow.

    (billion yen)
    *Excluding Toshiba Credit Corp. and Toshiba Building & Lease Corp.

    Sales target of major businesses in FY2003;
    (a)Sales targets for the e-Solution Company for Internet solution and digital broadcasting service; The consolidated sales target for fiscal 2003 is ¥750 billion, up from ¥600 billion in fiscal 2000.
    (b)Sales for mobile phones and PDAs of 550 billion yen are projected for FY2003. (200 billion yen in FY2000)
    (c)Toshiba will differentiate its technological advantages through such capabilities as Bluetooth, miniaturization and low power consumption. Products developed in an agile response to VOC will be brought to market, particularly in the Japanese consumer market. Products designed to cultivate new markets will be developed as the PC domain extends into such areas as Wireless Internet Appliances (WIA) and home servers. PC sales of 1,000 billion yen are projected for FY2003. (720 million yen in FY2000)
    (d)Toshiba will maintain its position as the world's No1 supplier of discrete devices and continue to enjoy stable profitability. The focus will be on growth markets, such as communications and digital home appliances, and on cementing a profitable business organization. Sales of 1,650 billion yen are projected for FY2003. (1,120 billion yen in FY2000)
    (e)LCD business resources will be focused on low temperature polysilicon TFT LCDs. A new factory in Singapore, a joint venture with Matsushita, will support Toshiba in achieving its target of becoming one of the top LCD suppliers by 2003. The sales of LCD in FY2003 is projected at 320 billion yen. (FY2000: 150 billion yen)

Supplementary Explanation

Information in the press releases, including product prices and specifications, content of services and contact information, is current on the date of the press announcement,but is subject to change without prior notice.

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