TO OUR SHAREHOLDERS 4 TOSHIBA CORPORATION of products and services that remake our work and living envi- ronments. The changes to come will range wide and deep, extending beyond the office, beyond the home, into areas such as administration and medical services, into pleasure and enter- tainment, and into the fabric of society. The developments we will see will add to the quality of life while respecting the earth and our natural environment. Toshiba is ready to play a central, proactive role in the shift to ubiqui- tous computing networks, both through its advanced technologies and long years of experience in bringing to market high-value-added products. Times of social transition are also those of opportunity, and we will make use of all opportunities to assure that Toshiba Group becomes a highly profitable business across its business domains. Within Toshiba Group, we have defined three key business areas, to which we will channel management resources. Digital products and electronic devices are areas where we anticipate high growth and high profitability, and see rapid progress to a top-three position in world markets. In our social infrastructure domain, we anticipate steady growth, sustained profits, and business expansion. The digital products domain encompasses diverse strength in PCs, mobile products, storage devices, visual imaging and wireless tech- nology. Toshiba’s portable PCs lead the industry and constantly redefine performance standards. Our mobile phones do the same with advanced video imaging. We are a market leader in small-form- factor hard disk drives and in optical storage, both areas where we are defining new applications. Toshiba’s wireless know-how includes leadership in creating the Bluetooth™ standard. And we lead the way in DVD and digital TV. These capabilities will come into play with growing demand for mobile products with wireless functionality. The electronic devices domain covers semiconductors and liquid crystal displays (LCDs). Our continuing world leadership in discrete devices demonstrates Toshiba’s formidable strength in semiconduc- tors, as do our sustained profits in analog devices and NAND flash The earliest realization of goals laid out in the 01 Action Plan will be supported by a series of structural reforms initiated in April 2003. Structural Reform In fiscal 2005, the final year of the current mid-term business plan, Toshiba anticipates dynamic Group operations and a strong profit structure. The Company targets consolidated sales of ¥6,600 bil- lion, operating income of over ¥270 billion, and an enhanced financial standing, with a debt-to-equity ratio of less than 160%. Along with these growth domains, Toshiba considers home appli- ances and network services and content as important business areas where it will promote reorganization and expansion. Under the umbrella of a new marketing company, our businesses related to home appliances will adopt new marketing structures and move more proactively into overseas markets. By combining our network service capabilities, including the Web-based services we have marketed to individuals, we will support the continued emergence of the virtual economy through digital broadcasting systems and services and content, including digital images and music. The social infrastructure domain includes power systems, social sys- tems, communications, solutions and medical equipment. While rooted in hardware, this is also a domain where the development of new services holds the promise of steady profit. The same is true of such emerging business areas as the environment, and new markets, where we are bringing products and services developed for Japan to Asian markets and beyond to the wider global stage. memories. Alongside these, we will continue to develop the system- on-chip (SoC) business that is positioning Toshiba as a solutions provider and that will help assure our place among the world’s top- three semiconductor makers. In LCDs, we will combine innovation in new generations of displays with support for new applications.