Management plans for the third stage (2008-2010) of GD2010, including our medium-term management goal of "achieving a growth structure," are described below.

Achieved Planned Sales and Profit Growth

In the first and second stages of GD2010, OMRON increased both sales and profit more or less according to plan. We achieved ROE of 10%, our goal for FY2004, one year ahead of schedule in FY2003 (the final year of the first stage). We are now on track to meet our second stage goal of "doubling total business value"* in FY2007, the final year of the second stage.

* Business value is defined as the total current value of future free cash flows generated by individual businesses.

Aiming to Achieve Annual Sales of JPY 1 Trillion by FY2010

"Raising business value by an annual average of at least 10%" is OMRON's medium-term goal for the third stage of GD2010, which begins in April 2008. OMRON will work to strengthen core businesses in each segment via a strategy geared to shift businesses into the global no. 1 position in their respective markets. This will contribute to profitability, as will the return on investments made in Greater China and continued business growth in that market.

From the third stage onwards, OMRON will leverage its strengths in sensing and control technology, setting its sights over a decade into the future with a focus on the fields of safety/security, healthcare and environmental preservation, to expand and create new businesses driven by social needs.

While OMRON's medium-term goal for the third stage is to raise business value by an annual average of at least 10%, in terms of concrete performance indicators, OMRON envisages revenues of JPY 1 trillion and operating income of JPY 95-100 billion (with an operating margin of approximately 10%) as it aims to complete its transformation into a profitable, growth company by 2010.

Key Strategies

Key management strategies for third stage of GD2010 include strengthening existing businesses by shifting core businesses into the no. 1 position in their respective fields and prioritizing sales growth in Greater China, and expanding new businesses.

1. Strengthening existing businesses
   1. Becoming global no.1
      OMRON will focus on key businesses in each segment and implement strategies designed to make them global no. 1 in their respective markets, thus ensuring a rise in profitability. OMRON defines "global no. 1" as the business that boasts the greatest business value in a given market.
   2. Sales Growth in Greater China
      OMRON aims to achieve growth of at least 20% in the third stage while working to secure returns on investments made in the second stage. The sales forecast for 2010 is approximately USD 1.8 billion.
2. Expanding new businesses
   1. Looking over a decade into the future, OMRON will focus on the areas of security/safety, health and environmental preservation, and create and expand new businesses driven by social needs. OMRON aims to grow these new businesses so that they account for approximately 15% of total consolidated revenue by FY 2020.

To measure business value improvement in the third stage, OMRON has made the following projections for FY 2010 sales and operating income.