REVIEW OF OPERATIONS

Information Systems
Graphic Systems
During the period, Fujifilm introduced Advanced Graphic Arts Evolution (AGE), a new development and marketing concept that will guide its digital graphic systems in the years to come. This concept, which will expand the scope of graphic arts to include everything from prepress through actual printing, involves incorporating our proprietary chemical imaging, electronic imaging and imaging software technologies to achieve three goals: expand our lineup of digital prepress and printing systems, promote systems integration and strengthen customer relations.
        New product releases during the period reflect the spirit of the AGE concept. We expanded our selection of film processing systems with an improved version of the INTEGRA film processing system, which has attracted praise for using less replenisher and delivering higher-quality output than any comparable system in the world. We also reinforced our popular ADVANCED V series of presensitized (PS) plates for offset printing and the Brillia series of photopolymer and thermal plates for computer-to-plate systems. Other new products include PICTUNE, color-management software for digital cameras and printers; LANOVIA, a multipurpose flatbed color scanner; and Celebra-NT RIP, a multipurpose Raster Image Processor. The integration of these products into a variety of graphic systems contributed to expanded sales.

Medical Diagnostic Systems
Since its founding, Fujifilm has developed and supplied X-ray films for medical diagnostic use. Our AD System, a screen/film system for X-ray diagnosis first marketed in 1994, remains the system of choice for many medical professionals. In Japan, we have also developed and commercialized the CEPROS series of easy-to-use and environmentally sound X-ray film processing equipment, which has earned high marks for ease of use and convenience.
        During the period under review, we strengthened our Fuji Computed Radiography (FCR) digital X-ray imaging systems with the highly functional, cost-efficient FCR AC-3 CS/ID image reader and the FCR 5000M magazine-type image reader (available only in Japan). FCR systems have enjoyed a leading share of the global market for digital X-ray imaging systems since their introduction in 1983. Accumulated domestic and overseas sales surpassed 6,000 units during the period.
        In the electronic imaging field, attention is currently focused on dry systems, which produce ultrahigh-quality images without the use of processing chemicals or water. During the period, we launched the Fuji Medical Dry Imager FM-DP3543 (for 35cm x 43cm images), a sister product to the Fuji Medical Dry Imager FM-DP2636 (for 26cm x 36cm images), marketed in the previous period.
        In the field of support equipment for scientific research, we augmented our product lineup with BAS-ND, a neutron detection imaging plate, and the Luminescent Image Analyzer LAS-1000, an image analyzer used in DNA analysis.

Office Automation Systems
Fujifilm's PICTROGRAPHY 4000 Digital Color Printer incorporates an exclusive laser scanning technology and thermal developing-transfer process for ultrahigh-quality printing of photographs in sizes up to 12 inches x 18 inches (tabloid size). In addition to its popularity in the photography field, the PICTROGRAPHY 4000 has earned a solid reputation in areas such as graphic design, testing and image analysis, medical care and research.
        Our KALEIDA series of stand-alone digital printers, which presents a variety of exciting features, including full-color poster printing, is rated highly by users in diverse fields. During the period under review, we added the KALEIDA PRO54, which prints four times faster than its predecessors (five minutes per poster-sized page) and allows printing in widths up to 54 inches, the standard size for outdoor displays. We also expanded the Poster Printer series, used to enlarge ordinary documents to poster size, with the Poster Printer PRO36, which offers standard multicolor printing and a variety of special options, such as gold, silver and fluorescent colors.

Industrial Materials
Sales of FUJITAC, a material for liquid crystal displays (LCDs), and TRANSER, a transfer film for the production of micro color filters, expanded during the period. We also saw a significant rise in sales of WV FILM, a wide-view retardation film for thin-film transistor (TFT) LCDs to manufacturers of, for example, car navigation systems, video cameras and notebook computers. In response to expanding demand for WV FILM, we began work on a new plant at our factory in Odawara, Japan, that will increase production capacity 3.5 times. The new plant is scheduled to begin operating in July 1999.

Data Recording Media
During the period, we continued to strengthen our selection of advanced magnetic recording media, magneto-optical (MO) disks and recordable compact disks (CD-Rs). Recent additions include a CD-R incorporating a newly developed organic pigment for digital recording. This pigment is based on sophisticated organic pigment synthesis technology developed for use in color film.
        The period also saw brisk sales of our high-capacity floppy disks, DLTtapeTM* IV high-capacity data cartridge products and 4mm DDS3 Data Cartridges, all of which utilize our proprietary ATOMM technology.
        Another recent accomplishment was the development, with Sony Corp., of HiFDTM**, a new 3.5-inch floppy disk system. This system combines a new high-capacity recording media technology and a dual discrete gap head to achieve 200MB double-sided recording capacity. Moreover, a high disk rotation speed of 3,600rpm gives the system a maximum 3.6MB/second transfer rate. HiFD drives also have read- and write-compatibility with conventional 3.5-inch floppy disks.

*DLTtape is a registered trademark of Quantum Corp. of the United States.
**HiFD is a registered trademark.


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