Konica Minolta to Exit the Camera Business

Konica Minolta has long been a leading company in photo imaging
business covering wide range of imaging from input to output. In
addition, we have provided inspiring products and services by fusing
our unique technologies.

In camera business, we have expanded
picture-taking opportunities by developing innovative technologies such
as the world’s first autofocus cameras. In 1962, our camera,
well-accepted for its high reliability, boarded on the US’s first
manned spaceship “Friendship 7.” Also, ever since introduction of the
world’s first body-integral autofocus SLR camera, Maxxum/Dynax series,
in 1985, SLR cameras have become more popular among picture-takers, and
we have succeeded in selling 16 million units of interchangeable lenses
since then.

However, in today’s era of digital cameras,
where image sensor technologies such as CCD is indispensable, it became
difficult to timely provide competitive products even with our top
optical, mechanical and electronics technologies.

In photo business, represented by the
silver-halide photography such as color film and color paper, we have
produced Japan’s first photographic paper in 1903, and Japan’s first
color film in 1940, thus pioneering joy of photography for more than a
century. In 1984, we introduced the world’s first compact washless
photofinishing system known as a minilab system. The minilabs
contributed to the expansion of worldwide photographic market by making
photos closer to consumers and amazingly shortening delivery time.

However, traditional silver-halide
photographic market is shrinking astonishingly by the surge of the
worldwide digitization. In such a changing world, profits for camera
and photo businesses worsened in recent years, and it became necessary
to drastically reform business structure for the further growth of
Konica Minolta. Ever since we decided and announced restructuring
guidelines of our businesses on November 4, 2005, we have been
considering practical and detailed plan, and we would like to announce
our decision made today as follows:

In camera business, we have reached an agreement with Sony
Corporation(Sony), having numerous image sensor technologies such as
CCD and CMOS, to jointly develop digital SLR cameras in July 2005. In
order to continue to have our customers use Maxxum/Dynax lenses, and to
maximize possibilities of the optical, mechanical and electronics
technologies accumulated through development of SLR cameras in the
years to come, we came to the conclusion that it was best to transfer
assets concerning camera business to Sony. Since then, we have been
negotiating with Sony, and as a result, we have reached an agreement
with Sony to transfer a portion of assets regarding digital SLR camera
system to Sony^*1. In this relation, we have decided to withdraw from camera business^*2, such as film cameras and digital cameras, within Konica Minolta Group as of March 31, 2006.

Sony is planning to develop digital SLR
cameras compatible with Maxxum/Dynax lens mount system, so that the
current Maxxum/Dynax users will be able to continue to use them with
Sony’s digital SLR cameras. In addition, we will consign camera service
operations for Konica Minolta, Konica,Minolta brand cameras and related
equipment to Sony.

*1

Pease refer to the news release, “Partial Transfer of Assets Related to Digital SLR Cameras “, separately announced today.

*2

Except for digital SLR cameras and interchangeable lenses produced for Sony.

In today’s shrinking photographic market represented by color film
and color paper, we have been considering to scale back and to continue
photo business at an appropriate size; however, when we foresee the
photographic market, it is quite difficult to maintain profitability in
this field, and we have decided to withdraw from photo business. As
schemed below, we will, as much as possible, avoid causing any
inconvenience in providing products to our worldwide customers in the
course of withdrawal.

For color film and color paper, while
considering our customer needs, we will step-by-step reduce product
lineup and cease our color film and color paper production by the end
of fiscal year ending March 31, 2007.

For minilab business, we will cease production
of the system by the end of fiscal year ending March 31, 2006; however
we will have such company as Noritsu Koki Co., Ltd to provide
maintenance and customer services so as not to cause any inconvenience
to our customers.

*1

Pease refer to the news release, “Consignment of Service and Maintenance Operations for Minilabs “, separately announced today.

In line with the above scheme, with consideration to our customers
and regional situations, we will step-by-step reorganize our sales
offices and withdraw from all of our photo sales activities by
September 30, 2007.

As
a part of Konica Minolta Group’s restructuring, we will proceed
with withdrawal plan for camera and photo businesses and aggressively
shifted their management resources to other Konica Minolta Group
companies. While continuing this effort, in order to rationalize a
number of empl
oyees, we have decided to reduce worldwide Konica Minolta
Group employees by 3,700 from the current 33,000 including early
retirement offering by September 30, 2007^*.

*

The early retirement offering is for Konica Minolta Group’s holding
company, five business companies and two common function companies in
Japan.