Noritsu Koki Co., Ltd. ("Noritsu") and Seiko Epson Corporation ("Epson") have reached a basic agreement to establish a broad business alliance designed to further consolidate and develop their printing equipment businesses. The board of directors of each company approved the proposed alliance at their respective April 21 meetings.

On September 17, 2002, Noritsu and Epson signed a memorandum of understanding on a strategic alliance to develop and market a digital minilab (a high-speed, compact, commercial photofinishing system) for Noritsu using Epson inkjet devices and technology. The partners have since sought to strengthen their alliance, which has produced the dDP series of "dry" inkjet minilabs as well as other photofinishing systems, including the M300*1 and D701*2.

These products have helped equip the photofinishing market to provide consumers with the ability to conveniently get their photos printed and processed "anytime and anywhere." The partners have also contributed, in a small way, to preserving the environment via photofinishing systems that conserve energy and that do not emit liquid waste.

Under the new alliance, Noritsu and Epson will extend cooperation beyond minilabs and into industrial printing systems, a segment where the partners will collaborate on joint development projects and support each others' development programs. In addition to mutually complementing each other and efficiently using their management resources, the alliance partners will seek to maximize the benefits of collaboration while strengthening their position and presence in both segments.

1. Reasons for the alliance

Today's global minilab market (retail photo printing market) has several universal needs: photo printing systems for every size of photo printing business, the ability to handle diverse media, and prices optimized for every budget. Inkjet systems are among the output devices recently making inroads into the minilab market to answer these needs. Technological innovations in the photo printing business are expected to broaden the base of the minilab market, and Noritsu and Epson share a commitment to further strengthening their relationship as a step toward developing products that capture the needs and business opportunities in this expanding market.

Industrial printers represent a promising area of new business growth for both Noritsu and Epson, and the companies believe that they can leverage their combined management resources to produce synergies. For example, in the label printer market most labels are still printed using an analog printer, yet labels are increasingly being produced in small lots of high variety. Digitization in markets like this is likely to increase, and both companies see significant business opportunities.

With technology thus advancing and diversifying in the photo printer and industrial printer segments, Noritsu and Epson decided to conclude this alliance, as both companies recognize the importance of further bolstering their competitiveness and offering high-quality, highly efficient new value propositions from a customer perspective.

2. Nature of the alliance

(1) Scope of the alliance

"Dry" minilabs

"Dry" minilabs are distinguished from their conventional minilab cousins in several key ways: Their lower power requirements and lack of liquid waste emissions make them more environmentally conscious, while the fact that they are odorless, compact and operate on commonly available commercial power means that there are few limitations on where they can be installed.

Industrial printers

The products to be developed for this segment will employ Epson's inkjet technology to ensure outstanding print quality. They will also enable, for example, the printing of small, high-variation lots at a low cost of ownership.

(2) Roles in the alliance

"Dry" minilabs and industrial printers

• Noritsu will be primarily responsible for product design and production.
• Epson will be primarily responsible for developing inkjet device technology, software, and inks.

3. Noritsu Koki corporate profile

4. Epson corporate profile

5. Schedule

April 21, 2008: Approval by respective boards of directors
April 21, 2008: Conclusion of contract establishing business alliance

6. Outlook

The effects of this alliance on future business results will be monitored and analyzed based on the status of activities conducted by the companies and on the results thereof. Notification of material effects on results will be provided as necessary.

*1 M300: A highly reliable photofinishing system introduced in June 2006 that conserves space and costs less that previous systems. The M300 is manufactured by Noritsu and sold in Japan by Epson under the name "Crystario EasyLab PPPS2-80EL." Noritsu markets the system outside Japan under the "M300" name.

*2 D701: A compact retail inkjet printer launched to market in February 2007. The D701's features enable it to be used in a variety of locations as the main printer of a comparatively low-volume print service. The forerunner of the new dry minilab solution, the D701 is manufactured and marketed by Noritsu.

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