New Mid-termManagement Plan

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Copyright © 2015 Harmonic Drive Systems Inc.

Driving forth of our growth
Aimed-fornew market
environment

Net sales (non-consolidated)(100 mil. yen)
250

Service robot
mobility, etc.

200

Applications driving growth
150

Flat panel display
manufacturing equipment
Semiconductor manufacturing
equipment

100

50

Industrial robots (further expand)

Machine tools0

Leading-edge medical
equipment
Desired needs
 Large hollow
 Extreme flatness
 Extreme compactness
 High precision
 High torque, long life Extreme lightness
 Lower cost
 Stay on top of trends ofthe times, such as
Industry 4.0 and IoT'71'72'73'74'75'76'77'78'79'80'81'82'83'84'85'86'87'88'89'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12'1314(FY)

22Copyright © 2015 Harmonic Drive Systems Inc.

Business Climate for HDS Group
Business Climate
Overall

Industrialrobots• Rising labor costs have increased incentives for robot use not just in developed nations
but also in emerging economies.
• New-concept robots, such as those that do not remain in a fixed location likeconventional robots but work in collaboration with human beings, are starting to emerge.

New applications• Potential expansion to new applications such as personal mobility, robot-assisted
walking and other living support/nursing care fields, and self-driving control, etc.
• Motorization of hydraulic and pneumatic mechanisms is progressing and applicable
fields are expanding.

Japan• Market centering on industrial robot makers with a large share of the global market.
Many customers, however, are moving their production to China.

China/Asia• Demand is growing among local Chinese robot makers. As Japanese and European
robot makers shift production to China, demand for local service is growing (urgent needfor lower costs, faster delivery, and stronger local support).

USA/Europe• Demand is expected to rise for lightweight, high-precision robot mechanisms to counterhigh labor costs and healthcare costs.
• The startup of new-concept and specialized-service robot markets is possible, with
Google playing a leading role.

Mainapplications

Region• Global speed reducer market is growing at an annual pace of around 6%.

23Copyright © 2015 Harmonic Drive Systems Inc.

The cost-effectiveness of industrial robots
intoroductionRate of labor cost reduction due to rapid expansion of industrial robot use
The more economically developed a country, the higher its labor costs, raising expectations for robot
introduction.
Rate of labor cost reduction due to rapid expansion of industrial robot use (2014 and 2025
compared)(%, based on labor costs
after adjustment for productivity)

Note 1: China figures based on Yangtze River Delta region.
Sources: STAN Bilateral Trade Database, US Bureau of Labor Statistics, BCG analysis

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Copyright © 2015 Harmonic Drive Systems Inc.

HDS Group Business Areas
Provision of Total Motion Control
Product lineup forprovision of Total
Motion Control
Mechatronics
productsSensors

Controllers
Otherelements

Reducer-only lineup
Strain wave
gearing devices
Precision planetary
speed reducers

Speedreducers
MotorsDrivers

The concept of Total Motion Control
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Copyright © 2015 Harmonic Drive Systems Inc.

Basic Policies of New Mid-term Management Plan (1)Business structure aimed for
Establish
unassailable
position byenhancingcompetitive edge
Mechatronics

HarmonicDrive®

Establish our position at
top of niche by improving
ability to offer solutions
to customers’ problems
MechatronicsHarmonicDrive®
PlanetaryBusiness foundation basedon HarmonicDrive®
Current situation
 Business base strongly dependent onHarmonicDrive®
 Sluggish growth of mechatronics
products
 Start of initiatives for marketing
precision planetary speed reducers
outside Japan

Developoverseasmarkets
supported by astronger
business
Planetary structure

Business foundation supporting
three products
By FY ending March 2018
 Steady growth of HarmonicDrive®
 Expansion of mechatronics businessby boosting actuator
competitiveness Raising brand strength of precision
planetary speed reducers in Asianmarkets
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Copyright © 2015 Harmonic Drive Systems Inc.

Basic Policies of New Mid-term Management Plan (2)Strengthen the competitiveness and business base of ourthree main product lines
Mechatronics
products

 Establish our position at the top of the niche by improving
problem-solving ability
 Strengthen our service and sales structures
 Aggressively introduce new products by strengthening
core technologies

Precisionplanetary speed
reducers

 Take on overseas markets by strengthening businessstructure Strengthen sales structure in markets outside Japan Build up R&D organizational structure

HarmonicDrive®

 Increase our competitive edge and establish anunassailable position
 Extend and develop robot applications
 Develop and market new products able to meet diverseneeds
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Copyright © 2015 Harmonic Drive Systems Inc.

Basic Policies of New Mid-term Management Plan (3)Develop Asian markets and build up business base
Aggressively expand sales in
Asian markets

 Establish a community-based
structure, and strengthen/popularize
the brand

Realize a high-level
customer-orientedorganization by resolutely
pursuing QCDS Raise the organizational capability tosatisfy market needs

Develop the humanresources for achieving
sustained growth Develop global and managementhuman resources

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Copyright © 2015 Harmonic Drive Systems Inc.

Net Sales Plans per Region
Europe• Industrial robots• Aerospace-related• Semiconductor
manufacturing
equipment• Next-generation robots• Machine tools

3,000(values shown aremillions of yen)

2,000
1,000
0

15/0316/03

Asia• Industrial robots• Machine tools• Semiconductor manufacturing
equipment

18/03

NorthAmerica

Japan• Industrial robots• Semiconductor
manufacturing equipment• FPD manufacturing
equipment• Next-generation robots• Machine tools
30,00020,000

8,000
10,0006,000

04,00015/0316/03

18/03• Aerospace-related• Semiconductor
manufacturing
equipment• Leading-edge medicalequipment• Next-generation robots
6,000
5,000
4,000
3,000
2,000
1,000
0

15/0316/03

18/03

2,000
0

15/03 16/03

18/03

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Copyright © 2015 Harmonic Drive Systems Inc.

Production Structure Consisting of Sites in Japan,
USA, Europe, and South Korea
Maintain and expand existing 4-location production structure
Hessen, Germany
Harmonic Drive AG

Germany

Harmonic Drive AG Location: Limburg, Hessen,Germany

USAHarmonic Drive LLC
Massachusetts, USASouth Korea
Japan

SAMICK ADM Co., Ltd.
Daegu Metropolitan City, South Korea

Harmonic Drive Systems Inc.
Azumino City, Nagano

SAMICK ADM Co., Ltd.
 Location: Daegu Metropolitan
City, South Korea

Harmonic Drive LLC
 Location: Peabody,Massachusetts, USA

Harmonic Drive Systems Inc.
 Location: Azumino-shi, Nagano, Japan30
Copyright © 2015 Harmonic Drive Systems Inc.

Production Plants in Japan, USA, Europe, andSouth Korea(Germany) Harmonic Drive AG(USA) Harmonic Drive LLC(South Korea) SAMICK ADM Co., Ltd.
Harmonic Drive Systems New Hotaka Plant(artist rendition)

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Copyright © 2015 Harmonic Drive Systems Inc.

New Mid-term Management Plan: Consolidated Sales
New Mid-term Management Plan(mil. yen)

40,00030,00020,00010,00035,00025,951
2,664
4,648

29,000

3,700

2,800
5,200

6,700

18,63821,000FY2014FY201524,6000HarmonicDrive®

Mechatronics

FY2017
Planetary speed reducers
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Copyright © 2015 Harmonic Drive Systems Inc.

New Mid-term Management Plan:
Consolidated financial targets(Millions of Yen)FY ended Mar. 2015 (actual)

FY ending Mar. 2016 (planned)

FY ending Mar. 2018 (planned)

AmountPercent (%)

AmountPercent (%)

AmountPercent (%)

Net sales

25,951

100.0

29,000100.0

35,000100.0

Operatingincome

7,066

27.2

7,800

26.9

9,500

27.1

Net income

4,833

18.6

5,500

19.0

7,000

20.0

Cumulative total for three years
of previous Mid-term Plan

Cumulative total for three yearsof new Mid-term Plan

(actual for FY ended March 2013 to FY
ended March 2015)(planned for FY ending March 2016 to FY
ending March 2018)

Capital investment

5,158

10,000Depreciation costs

3,595

6,000

R&D costs

3,690

4,800
33Copyright © 2015 Harmonic Drive Systems Inc.