Casio 2004 Annual Report Download - page 6

Reinforcement of earnings capacity
(1) Major reductions in the ratio of
materials procurement costs to sales
In December 2003, we established
the Production and Purchasing
Headquarters, which will work in
close cooperation with the Product
Development Headquarters to identify
the optimal cost structure from the start
of development new products, with the
objective of making deep cuts in the
ratio of material procurement costs to
sales. More specically, the following
four points have been identied as
priority measures.
(a) Pursue scale effects through the
selection, concentration, and
narrowing down of suppliers.
(b) Promote cost cutting by expanding
local procurement overseas.
(c) Reduce the number of components.
(d) Shorten development lead times.
(2) Expansion of measures in strategic
business areas
• In the area of digital cameras, we
will roll out advanced models that
feature both portability and high
performance, not only in the domestic
market but also in overseas markets,
which are expected to grow well.
• In the area of electronic dictionaries,
we will continue to maintain our top
domestic share while stepping up our
growth in overseas markets, which
we entered in the rst half of the
reporting term, in an effort to gain
more name recognition and growth in
world markets.
• In the area of solar-powered
radio-controlled watches, we will
broaden the scope for solar-powered
radio-controlled watches in the
world market by launching full metal
models and models compatible with
multi-band, and by expanding our
lineup of products targeted at women
in addition to ultra-thin models.
• In the area of cellular phones, in
April 2004, we established with
Hitachi, Ltd. a joint development
company known as Casio Hitachi
Mobile Communications Co., Ltd.
Concentrating the strengths of both
parent companies, this new company
will develop products with competitive
strengths compatible with innovative
future technologies. In addition, we
intend to improve earnings capacity
by reducing the burdens associated
with development and boosting
development speed through the
building of common development
platforms.
• In the area of TFT LCDs, we expect
ongoing business growth as demand
for the monitors of digital cameras, in
which we held the top market share
in the world as of March 2004, is
forecast to rise favorably.
Reinforcement of Management Strengths
(1) Reinforcement of nancial position,
paving the way for the achievement
of our targets
We are working via a variety of
measures to generate cash ows with
the objective of bolstering our nancial
position. The following two points are
the specic targets that we intend to
achieve over the next two years.
• D/E (debt to equity) ratio: We reduced
the D/E ratio to 1.1 at the end of
March 2004, from 1.3 at the previous
term end. Over the next couple of
years, we plan to slash a further ¥40
billion worth of interest-bearing debt,
with the ultimate goal of bringing the
D/E ratio below 1.0.
• Shareholders’ Equity ratio: The
performance for the reporting term
was up by 0.4 of a percentage point
over the corresponding period of the
previous term to stand at 29.1%. We
are aiming to boost protability even
more in the future, as well as increase
retained earnings, with the ultimate
goal of achieving a ratio of 40.0%.
(2) Corporate Governance
In order to achieve business targets
categorically, reinforce competitive
strengths, and raise our enterprise value,
we recognize the crucial importance of
swift decision-making and appropriate
execution of duties, along with
improvements in the management
supervision system leading toward
greater management transparency.
Consequently, we are taking a wide
range of measures to pave the way for
more substantial corporate governance.
We have thus moved to restate our
business ethics in more concrete terms
by formulating our basic posture to
shareholders and other stakeholders in a
document entitled Charter of Creativity
for Casio. In addition, we are calling
on all of our employees to observe
laws and ordinances and our various
internal rules through the revision of
Casio Code of Conduct, which is based
on the Charter, in an effort to boost
compliance. Similarly, we established
the dedicated CSR Operation Section in
April 2004 to enhance our commitment
to corporate social responsibilities, with
the objective of reinforcing the entire
corporate system.
We will continue to strengthen
corporate governance through further
such measures.
We intend to be a corporation that
can quickly and accurately respond to
changes in the business environment and
share its passion with all stakeholders
through the provision of value-added
and high-quality products — along with
contents and solutions — based on our
proprietary technologies, which offer
the potential for major changes in life
and business styles, and by contributing
to the development of the globally
networked society.
4CASIO COMPUTER CO., LTD.