Basic Policy on the Distribution of Profits

OMRON views its dividens policy as one of its most important management issues, and applies the following basic policy in regard to distribution of profits to shareholders.

1. In order to maximize corporate value over the long term, internal capital resouces will be secured for measures that will increase corporate value. These measures include investments in R&D and capital investments, which are vital to future business expansion.
2. After taling into consideration the required investments for future growth and the level of free cash flow, surplus will be distributed to the shareholders to the maximim extent possible.
3. For fiscal 2006 (ended March 31, 2007), OMRON set its target payout ratio at around 20% of consolidated net income. For dividends in fiscal 2007 (ending March 31, 2008) and every year thereafter, OMRON´s policy will be to enhance stable, uninterrupted profit distributions by taking into account consolidated results as well as indicators including dividends on equity (DOE), which is return on equity (ROE) multiplied by the payout ratio, although this is subject to the level of internal capital resources nenessary in each fiscal year. Specifically, OMRON will aim to maintain the payout ratio at a minimum of 20% and make profit distributions with a near-term DOE target of 2%.
4. Utilizing retained earnings that have been accumulated over a long period of time, OMRON intends to systematically repurchase and retire the Company´s stock to benefit shareholders.