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At the Melco Group, we have achieved growth by
expanding the range of our business from computer
peripherals to Internet devices. As technological innovation
fuels changes in consumer needs, we have made great
efforts to anticipate these changes. Our growth has been a
function of our natural ability to translate these observations
into new ideas.
"Buffalo," our main brand, has many fans among the kinds
of consumers who are the most avid and well informed
users of computers and networks. It is the critical eyes of
these well-informed consumers that have provided impetus
for our progress to date and enabled us to stay ahead of the
time in terms of inventing new ideas and developing new
technologies that turn ideas into actual products. Now, we
see another big change about to occur.
More and more audio and video content is becoming
available via the Internet, and people are becoming very
comfortable with the idea of accessing services through
networks. These ways of approaching this content are
gradually evolving into the "digital home," where people
can have unfettered access to music and video through
televisions and personal computers that are connected
through a home network. This process is creating numerous
new business opportunities for our company, as peripheral
devices will be needed to link new digital devices and
existing home electronic devices and personal computers
commingled in home networks.
We at the Melco Group are striving to reinforce our position
as the most trusted provider of the bridge between personal
computers and electronic home appliances in the eyes of not
only the consumers but also the manufacturers of personal
computers and electronic home appliances. Amid these
technological and social changes, we are using our abilities
to anticipate consumer needs and address them with
practical solutions, to expand the range of our business and
advance toward the aim of maximizing our corporate value.
Envisioning the digital home market
Record sales and profit in fiscal 2004We at the Melco Group have a clear vision of growth,
and are making continuous efforts to develop new
markets. At the same time, however, we realize it is also
important that we secure the solid base of profitability
that enable us to make the up-front investments.
In the first half of fiscal 2004, the market for personal
computers and related products was stagnant, creating a
difficult environment for all market participants. We at
Melco made great efforts to enliven the market as a
whole, achieving record levels of sales, operating
Corporate direction
Visions of Growthand Ample Resources to Capture the Digital Home Market
Makoto MakiPresident and CEO MELCO HOLDINGS INC.
Photograph provided by the Yomiuri shimbun.
Looking ahead to the development of the market for
products related to the digital home, we have launched a
new network disk recorder system called Link de Rokku.
This system can be used to command home network
components for TV Capture (recording broadcasts),
network hard disks (storage of recorded data) and media
players (playback) through a single device, enabling
consumers to easily realize their plans for a digital home.
We have also begun offering set-top boxes for customers
of the NTT East/West Flets video distribution services,
which has created a new set of business opportunities for
us, aiming at the era of the digital home. We think that the
offering of video distribution services by major
communications companies is a sure sign that the era of
the digital home is just around the corner.
In the area of wireless LAN, which is the key product in
the digital home sphere, we have launched remote-access
models and high-power models that expand the field of
applications. Our AOSS system,which makes it easy even
for beginners to set up wireless LAN securely, is
beginning to be used in products offered by major
manufacturers of home electronics, as well as in game
consoles, which may further accelerate the adoption of
home networks.
All these developments show that our group is engaged on
many levels in the opening moves of the shaping of the
market for digital home products. In this digital home
market, we will be building on the technological expertise
we have acquired as one of the leading companies in the
area of computer peripherals, to formulate new ideas and
to secure a presence in this growing market.
The strategic moves toward the digital home market
income and ordinary income for the year.
In USB flash memories, the new memory media that
have taken the place of floppy disks, our sales increased
about 40% from the year before. Our products that offer
high speed and unique design particularly have received
a warm welcome from consumers, contributing both to
the growth of the market and the increase in our market
share. Our products featuring well known Disney
characters have played a key role in interesting women
and families in the market for computer peripherals.
As the use of home networks has grown more
widespread, we have seen an increase in the number of
consumers using these networks to view video content,
and our sales of external hard drives increased more
than 25% from the year before. Our TeraStation
network hard disk products, launched in December
2004 for the corporate market, have been a big hit; with
their high reliability. These network hard disks have the
potential to greatly change the office market for storage
devices. TeraStation has received strongly favorable
reviews in computer publications in the U.S., Britain,
Germany, China and other countries, helping to
establish a foothold for the Buffalo brand in these
overseas markets.
Corporate direction
Growth inline with Social
Changes
Digital HomeProducts asthe Next Core
Business
Ubiquitous�Networks
Digital�HomeBroadbandInternet Home�
Networks
Wireless LAN Products
Business Structure
Existing PC Peripherals(Memory, Storage, etc. )Stable Source of Earnings
Digital Home Products
The digitization trend has begun in earnest in the home sector
A digital home is one in which televisions and personal
computers are connected via a home network, creating a
household environment where people can enjoy
broadcastings and recorded video in any room they
wish. Recently, many manufacturers of home
electronics and personal computers have embraced this
concept, and many members of the general public are
becoming familiar with it.
Since the start of 2005, newspapers and other media
have featured many articles dealing with the "digital
home." Some of these articles report that digital home
products have already been developed or launched, but
many of them actually target commercialization around
2006. From this we can see that the market is now
poised for a full-scale take-off in the very near future.
The digital home is starting to become the norm
The concept of components
Connecting televisions to home networksSo, what is the best way to connect a television to a home
network? The simplest solution is to purchase a network-
compatible television. In fact, most digital televisions
available today have the connectors they need to link to
home networks.
There are other ways, however. One is to use a peripheral
device called a media player, which can be used to
connect ordinary televisions to home networks. A
networked television can be used to access the Internet, or
a home computer. Family videos shot with a digital video
camera can be edited on the computer and viewed on a
big-screen TV in the living room without further ado.
The most important element of the digital home is the
home network. Since the dawn of VCRs, we have been
able to record programs we want to watch, and watch
them whenever we want, without having to be in front of
the television when the program is broadcasted. What
was achieved with this is the concept of "whenever."
Now, the digital home introduces the concept of
"wherever": to be able to watch what we want in any
room of the house, even in front of a computer.
To watch videos, three functions are required: a device
for capturing broadcastings, a device for storing it, and a
device for displaying (viewing) it. Even before now,
The Society of the Future
80
2003(Actual)
2004(Actual)
2005(Est.)
2006(Forecast)
2007(Forecast)
2008(Forecast)
2010(Forecast)
2
(Million units) (¥100 million)
4
6
8
10
2,000
3,000
4,000
5,000
6,000
Projected Growth of the Digital TV Market
400
800
650
1,050
Source: Fuji Chimera Research Institute, Inc.
5,400
2,800
2,000
SalesVolume
Volum
e
Sales
5,800 5,800
5,000
3,600
0 0
240
140
Watching onDigital TV
Watching onAnalog TV
Watching Overseas
Watching on PC
Watching On Demand TV
consumers have been able to accomplish these three
functions with a combination of ordinary televisions and
video decks. But the act of viewing has been limited to
locations (rooms) where this combination of equipment
is located, typically in the living room. In the digital
home, each of these three functions will be assigned to a
component that can be located anywhere as long as it is
linked to the home network.
By using these components, the storage and recording
devices can be located near the antenna, and the viewing
device can be in an entirely different location in any
room. The thinking behind the home network offers
many outstanding advantages in terms of both cost and
functionality. If we broaden the concept of component a
bit further, it is possible to include the viewing of content
via the Internet, from anywhere; people who are away
from home will be able to view the videos they have
stored on devices at home. There are already many
Japanese people either on business trips or living abroad
who are able to watch programs that have been recorded
and stored at their homes in Japan. We are already
witnessing the dawn of the digital home era, when
people will be able to enjoy video content both
"whenever" and "wherever" they wish.
Components for Sharing Digital Entertainment
TV Capture Box
STB
Network Attached HDD
CATV
Digital TV
CS/BS
Terrestrial Digital Broadcastings
Wireless LAN
〈Only one antenna is needed〉
Internet
Capturing Storing
Access point
Network Media Player
◎Sharing a single broadcasting source with all the TVs and PCs in the house
All you need is a component for viewing in each room.
It possible to watchTV via the Internet.
The Society of the Future
Steps toward the realization of the digital homeThe basic components needed to create a digital home
are already available in the retail market, and "early
adopters" are already using them. It is believed that
interest in, and implementation of, digital home
concepts will spread rapidly as video distribution
services and terrestrial digital broadcasting take flight.
There is no need for consumers who are interested in
creating a digital home to go out and buy a whole
houseful of equipment. They can add one component
at a time to their home networks, as the early adopters
have been doing.
The first thing needed is an Internet connection, but
most people already have that for their computers. The
next element is the home network; for people just
getting started now, a "wireless LAN" is
recommended, because it can penetrate walls and
floors without rewiring. This allows people to access
the Internet from any room in the house.
Next is the television connection, for which a media
player is recommended. This will also allow content
recorded on the computer to be displayed on other
devices connected to the home network. Many
personal computers now on the market are already
equipped to record television broadcasting; for those
that are not, an after-market "TV Capture" can be
added.
If a network hard disk is added, people will be able to
enjoy the video and audio content they wish from any
room in the house. This is all one really needs to put
together a digital home. Of course, depending on the
number of televisions in the household, more network
hard disks and media players can always be added.
Putting things together piece by piece in this way
keeps the whole process easy to understand, and helps
out-of-pocket expenses down, making it easy for
people to get started.
Bridges between computers and home electronicsThe kinds of technologies we have been talking about
here-for enjoying video content, communicating via
networks, and centrally managing video content stored
on a network-is now in the process of evolving through
active research and development throughout the world.
More new technologies and methods will certainly be
popping up in the future.
In the world of personal computers, peripheral devices
have been developed to add new technologies and
functions to existing computers. And in the world of
home electronics as well, new and old devices coexist
side by side, and we expect to see the emergence of
peripheral devices that allow new functionality to be
added to existing systems.
Melco Group is one of a limited number of companies
in the world that possess technologies for networks,
storage and graphics, and we are making our own
contribution to the shaping of a rich, networked society.
The Society of the Future
Developing Global Standards
The Wireless LAN AirStation Series as Global Standard
AOSSTM-Automatic Wireless LAN Connection and Security Settings
Almost every PC shipped in the world today is equipped with a memory module called the DDR I.
JEDEC, an organization that determines standards for these modules, has adopted the circuit board
design developed for these modules by Buffalo as the global
standard. Having already developed the DDR II, a core product
used in laptop PCs, Buffalo is now working on designing a
standard for DDR III .
AOSSTM (AirStation One-Touch Secure System) is a revolutionary technology that can automatically set
up wireless LAN connections and wireless security
configurations by a single press of the button on
compatible devices,making these kind of settings
simple and easy even for beginners.
This outstanding system is potential for spreading use
of wireless security as well as rapidly increasing the
number of wireless LAN users.And not only for
PCs,this system will also make it easier to hook up
digital home appliances to the home network.
「WLI-CB-G54」 「Wi-Fi CERTIFIED」�
DDR: Double Data Rate. Refers to DRAMs that use technology to achieve a data transfer rate twice as high as a conventional SDRAM.
Memory module: When a PC or other memory device is used, a memory module, which includes DRAMs, is required. There are many types of these modules depending on
the type of DRAM used and the number and configuration of signal pins.
JEDEC: Joint Electron Device Engineering Council. A global industrial association that promotes the standardization of electronic components.
WiFi : Certifies interoperability of wireless LAN products as certified by Wi-Fi Alliance, an organization that sets Wireless LAN standards.
Automatic Settings
Connection&
SecurityPress the AOSS button
on AirStation.Press the AOSS button
on digital home electronics.
Buffalo’s WLI-CB-G54 wireless LAN AirStation is the first product in
Japan to receive Wi-Fi certification for IEEE802.11g, a high-speed
Wireless LAN standard. This product has also been chosen as the official
testing device for wireless interoperability.
R
R
Our Expertise in Foreseeing User Needs and Capacity for Technological Development
Research & Development
Research & Development
DDRⅡ-the Next Generation PC Memory Module
Wireless Products for Creating Home Networks
As the leading company in the wireless LAN market, we are expanding our product line-ups for home networks. We were one of
the first manufacturers to market the MIMO wireless LAN products, that gains wider range of connectivity and higher
communication speeds. We have also introduced the Airstation high power wireless broadband router, which incorporates a remote
access function that allows you to access a home computer from an outside destination, and also boosts the connectivity range.
Also we have marketed models with wireless LAN functions in the "LinkStation" network-attached HDD series and the
"LinkTheater" network media player series,expanding the range of solutions for the digital home era.
These products embed AOSSTM
,making wireless LAN connections and security set-ups an easy task.
Lead-Free Memory Modules
MIMO Wireless �Broadband Router
Wireless Broadband Router
Set-Top Box (STB)
Wireless Network-Attached HDD Network Media Player
Supplying Set-Top Boxes to�NTT EAST/WEST
Buffalo is working in cooperation with On Demand TV,
Inc. and together we have developed and are starting to
supply an On Demand TV dedicated receiver set-top
box (STB) to users of NTT EAST/WEST internet
services. We have started a new business model,
utilizing a major communications carrier and aimed at
the popularization of "digital home" technology.
Environmental Activities
Companies worldwide are stepping up their activities to protect the global
environment. In January 2001, Buffalo earned ISO 14001 certification, a
global standard for environmental management systems. At the same time,
Buffalo began selling PC peripherals that conform to the standards of Japan’s
Green Purchasing Law. In June 2004, Buffalo started selling in Europe 47
lead-free memory modules that conform to the EU RoHS Regulations, which
include restrictions on the use of lead. In this manner, Buffalo is exercising care
to incorporate environmental considerations in the development and
manufacture of its products and the provision of services.
Topics
The AOSSTM Adoption by Home Appliance Manufacturers
Gaining Popularity among Overseas Press
The Buffalo AirStation wireless routers and other products have gained a strong popularity overseas,as well as in Japan. Outside Japan,
where Buffalo has concentrated on developing sales channels, a recent review of sales channels and bolstering of the product lineup in the
United States have begun to yield benefits. Especially the recently launched storage products are off to a strong start.
2005/4/12 U.S.A. �Medium: PC Magazine�Category: Storage Central�Prize: Editor's Choice�Network-Attacheed HDD TeraStation�HD-H1.0TGL/R5
2005/3/28 U.K.��Medium: Trusted Reviews�Prize: Editor's Choice�Network-Attacheed HDD TeraStation�HD-H1.0TGL/R5
2005/3/5 Spain�Medium: PC Plus�Prize: Premio Calidad / Precio�IEEE802.11g wireless LAN AirStation�Broadband router�WBR2-G54S
2005/3 Germany�Medium: PC go!�Prize: Very good�IEEE802.11g wireless LAN AirStation�Broadband router Remote access model�WZR-RS-G54
2005/3/16 U.K.�Medium: Bios Magazine�Prize: Technical Innovation�Network media player�LinkTheater Model incorporating wireless LAN�PC-P3LWG/DVD
2005/3/1 U.K.�Medium: Bios Magazine�Prize: Editor's Choice�Network-Attacheed HDD�LinkStation (high end model)�HD-H120LAN
2005/3 Germany�Medium: Professionell�Prize: Editor's Choice�IEEE802.11g wireless LAN AirStation�Broadband router Remote access model�WZR-RS-G54/WLI-CB-G54S
2005/2/1 U.S.A.�Medium: CNET�Award: Review�Prize: Editor's Choice�Network-Attacheed HDD�LinkStation (high end model)�HD-H250LAN
2005/2 U.K.�Medium: PC Pro�Prize: Recommended�Network-Attacheed HDD�LinkStation (high end model)�HD-H120LAN��
2005/2 Germany�Medium: PG go!�Prize: Very good�Network-Attacheed HDD�LinkStation (high end model)�HD-H120LAN
2005/1/1 U.S.A.�Medium: 2005 International CES�Award: 2005 CES Innovations�Category: Home Data Networking�Prize: Innovations 2005 Design and �
Engineering Showcase Award�Wireless LAN AirStation Remote access model�WZR-RS-G54
2005/1/17 China�Medium: China Computer World�Prize: Product of the year award�IEEE802.11g wireless LAN AirStation�Key-type adaptor for USB 2.0�WLI-U2-KG54
2005/1/15 U.K.�Medium: Trusted Reviews�Prize: Recommended�IEEE802.11g wireless LAN AirStation�Key-type adaptor for USB 2.0�Auto-install model�WLI-U2-KG54-AI��
2005/1 U.K.�Medium: PC Pro�Prize: Recommended�IEEE802.11g wireless LAN AirStation�Broadband router�WBR2-G54S
2004/8/1 Singapore �Medium: Hardware Magazine�Award: Lab-Tested!�Prize: Silver Award�Network-Attacheed HDD�LinkStation (high end model)�HD-H120LAN
2004/5/25 South Korea�Medium: Hankuk Ilbo newspaper�Prize: Best Product 2004�IEEE802.11g wireless LAN AirStation�Broadband router�WBR-G54
2005/1/6 U.S.A.�Medium: CNET�Award: CES 2005�Prize: Next Big Thing CES 2005�Network-Attacheed HDD TeraStation�HD-H1.0TGL/R5��
2005/1/3 U.S.A.�Medium: PC Magazine�Award: Product Guides�Category: Wireless Networking�Prize: Editor's Choice�IEEE802.11g wireless LAN AirStation�Key-type adaptor for USB 2.0 Auto-install model�WLI-U2-KG54-AI
■ SHARP Network Media Players ■ EPSON Wireless Printer Adaptors ■ SANYO "HOVICA" (Home Monitoring Cameras)�
■ SONY PSP Network games ("WIPEOUT PURE" car racing game, "Derby time" horseracing game)�
There are many other award-winning products.�Please refer to the company website.
トピックス�
Topics
Buffalo’s AOSSTM is being adopted in the products of more and more major manufacturers of home appliances.
Wireless LAN connections are neccessary to play network games on Sony’s set PSP (Play Station Portable),
portable game dence which was launched in April 2005, and SONY has adopted AOSSTM for easy network
connection for beginners.
With its superb usability, AOSSTM is an epoch-making technology, being able to perform complex wireless
LAN connection and security configuration easily even for beginners. Now as a leader of the digital home
peripherals market,we will promote AOSSTM to not only computer peripherals but also digital home products,for the development of a more convenient and safe network society.
Business Domains Characterized by Rapid ChangeThe core businesses of Melco Group involve PCs and the
internet, Which are well know for their rapid changes of
invironment. Now, our group is enwidening our range of
business to the digital home market.
Technological progress is rapid in this market, with new key
technologies being developed worldwide. We strive to adopt
these technologies and combine them with our own technology
and know-how to develop products to fulfill user demands.
Accomplishing this demands more than research of leading-
edge technologies or alliance with suppliers around the world,
but also requires the ability to foresee user needs. We do not
just adopt new technologies, we strive to foresee changes in
user needs to stimulate new demands for the future.
The user base for Melco Group products is expanding to
include the PC, Internet and digital home electronics domains,
at the same time becoming more diverse. To serve these new
user segments, the group must alter its product lineup and how
it extends customer support, use new sales channels, and adopt
other approaches that differ from those of the past. More brands
and new companies are needed to accomplish this.
Melco Group adopted a holding company structure on October
1, 2003. With this organization, the group is determined to
advance to a new stage of growth, one backed by developing
new markets, like those associated with the digital home,
spinning off businesses as separate companies, establishing
new companies, and forming alliances with companies in other
industries.
The long-term objective of switching to the pure holding
company structure is to establish a management framework
capable of responding even faster to major changes in markets.
Through this speed, the group is aiming to operate in a manner
that maximizes its corporate value by sustaining growth in sales
and earnings.
This signals a shift from being a company that simply aims to
grow fast into an organization with a management framework
able to support long-term growth driven by many elements. The
goal is a management system that is similar to a forest. Each tree
stands alone. But together, they create a forest. And if one tree
dies, others will grow to take its place and preserve the forest. In
this same way, we want to be a collection of small units that
together have great strength along with flexibility. This is the
"forest management" style that Melco Group aims for.
Melco Group will preserve a prominent stature in the
marketplace. The objective is raise the value of the group for
the benefit of stakeholders over a time period measured in
centuries.
Changing the Company Structure to Respond to these Changes
A Forest-like Approach to Management
BUFFALO
CFDUSA
UK
Ireland
Taiwan
OriebleNet
M.O.E.
M.P.S.
M.A.M.
MELCO HOLDINGS
A Constantly Evolving Corporate Group
The "Forest" Management
People, capital and knowledge that underpins the entire group
The "Forest" Management Responding to Shifts in the External Environment with Agility, Constantly Planting Seeds for the Success in the Future
Buf.Lease
M.T.S.
Buf.Logistics
Overseas cu
stom
ersC
usto
mers in
Japan
Products
Overseas
Manufacturing and sales BUFFALO TECHNOLOGY (TAIWAN) INC.
Taiwan
Sales and manufacturing BUFFALO TECHNOLOGY(USA),INC.
U.S.A.
Manufacturing BUFFALO TECHNOLOGY IRELAND LIMITED
U.K.
Ireland
Material
Products
Material
Products
Material
Products
Products
Products
Products
Products
BU
FF
AL
O IN
C. *1*5
Japan
Products
Other business activities
MELCO ONLINE ENTERTAINMENT CORP.
Internet game spot administration
BUFFALO LOGISTICS INC. *2
Logistics
BUFFALO LEASE INC. *2
Rental of broadband equipment
MELCO PERSONNEL SUPPORT INC. *3
Temporary staff service
MELCO HOLDINGS INC. (Holding company) *1
Structure of Melco GroupThe Melco Group is comprised of MELCO HOLDINGS INC. and 13 consolidated subsidiaries.The Group’s main interests are the development, production and sales of computer peripherals; Internet-related services; and other incidental business.
Sales BUFFALO TECHNOLOGY UK LIMITED
ProductsSales CFD SALES INC.
MELCO ASSET MANAGEMENT LIMITED *4
Funds management advice
ORIEBLENET CORP. *2
Sales
MELCO TECHNO-SERVICE INC.*6
IT support and services
Forest-like Management
*1 MELCO HOLDINGS INC. and BUFFALO INC. (the former MELCO INC.) conducted an exchange of shares on October 2003 that resulted in BUFFALO becoming a wholly owned subsidiary, thus creating a holding company structure.
*2 On June 9, 2004, BUFFALO INC. subsidiaries BUFFALO LOGISTICS INC., BUFFALO LEASE INC. and ORIEBLENET CORP. became directly owned subsidiaries of MELCO HOLDINGS INC.
*3 MELCO PERSONNEL SUPPORT INC. was established on June 24, 2004. *4 MELCO ASSET MANAGEMENT LIMITED was established on August 9, 2004.*5 MELCO FINANCE INC. was merged with BUFFALO INC. on August 24, 2004.*6 MELCO TECHNO-SERVICE INC. was established on December 1, 2004.
Digital Home Products
We are currently developing peripheral devices for the digital home market, which will act as a bridge between computers and televisions. TV capture devices,that capture TV broadcastings to be played on PCs, and media players that can be used to play movies or music stored in the PC on TV sets are part of these devices,that are categorized here as "Other Products". As the digital home market expands, we expect markets for wireless LAN and network-attached HDDs to expand accordingly.
TV Capture Device Network Media Player
"Memory" refers to devices for recording data carrying out writing and calculating information. The larger the memory capacity, the larger the available space, and the more efficiently and rapidly processing can be carried out. USB flash memories are memories that make it easy to carry data around. Smart Media and Compact Flash memory cards, which are used as the "film" for digital cameras, are both a type of flash memory products.
MemorySales|¥37.701 billion
Networking PCs by using LAN adapters, switching hubs and routers can improve convenience for the user. A single hard disk drive can be accessed from any other computer by networking. Using Wireless LAN, you can eliminate tangled cables and create a wireless network, and access the Internet wherever you may be in the house.
Network/BroadbandSales|¥19.967 billion
"Other Products" is composed of multimedia products and PC related services. By adding a TV capture to your computer, you can watch and record television programs on your computer. Liquid crystal displays are becoming the most popular type of computer monitor, due to the space-saving and energy-saving capabilities and their flat screen. The service business consists of the BUFFALO SERVICE ALLIANCE, which provides Internet set-up services.
Other ProductsSales|¥11.312 billion
Internet Setup/Installation �On-Call Service�(BUFFALO SERVICE ALLIANCE)
"Storage" refers to a device for storing data. A hard disk is a device to store software, data and images. Some hard disks are built into the computer, others are external hard disks, which may be connected to and placed alongside the computer. Network-attached HDDs are used as sharing hard disks by PCs in a network. DVDs are disks that are capable of storing a large volume of data; they have recently come into general use as the medium for movies. There are a variety of other storage devices including CD-RW drives and MO drives.
StorageSales|¥37.372 billion
Liquid Crystal Display
Memory
35.5%�
Other Products
10.6%�
Network
18.8%�
Broadband (Within network business)
15.3%�
35.1%�Storage
35.5%�
35.1%�
18.8%�Broadband�
(Within network business)�15.3%�
10.6%�
Memory Module USB Flash Memory Card Reader/WriterFlash Memory
Portable HDDDVD Drive
Hard Disk Drive TeraStation�Network-Attached HDD
Wireless LAN Card Switching Hub
TV Capture Device
Wireless�Broadband Router
Business Categories
Summary of business
Product MixFY March 2005(consolidated)
Other Products
4,081
5,409 5,519
832
5,000
6,000
4,000
3,000
2,000
1,000
0
2002
6,000
1,868
3,055
2,459
869
2,500
3,000
2,000
1,500
1,000
500
0
Consolidated ordinary income and % of sales Consolidated net income and % of sales
26,430 26,83529,0023,000
2,000
1,500
2,500
1,000
500
0
25
20
15
15
10
5
0
12
10
6
8
4
2
0
12
10
6
8
4
2
0
Consolidated shareholder's equity and return on equity
�
(million yen)� (%) (million yen)� (%) (million yen)� (%)
1.24.7
5.2 5.2 5.11.2
2.12.9 2.3
3,200
2.7
3.3
7.0
10.9
31,618
8.1
Fiscal years ended March 31�Consolidated sales
Others
Network
Storage
Memory
Others NetworkStorage Memory
87,482
8,35522,887
Broadband�(17,957)�
31,228
25,010
8,596
103,703
23,166
37,977
33,963
Broadband�(18,838)�
106,353
11,31219,967
37,372
37,701
Broadband�(16,294)�
117,000
12,50020,500
40,000
44,000
Broadband�(17,500)�
(million yen)�
2002 2003
100,000
80,000
60,000
40,000
20,000
0
Note:"Broadband" is categolized as a part of "Network"� *Consolidated figures for BUFFALO INC. (formerly MELCO INC.) for the fiscal year ended March 31 2003 and earlier are provided for comparison.
�
69,9675,12522,051
24,118
18,671
Broadband�(14,808)�
2004 2005 2006(Projected)�
2003 2004 2005 2006(Projected)� 2002 20022003 2004 2005 2006(Projected)� 2003 2004 2005
�■ Memory ProductsThe aggressive relase of new products and promotional efforts of USB flash memories have resulted the increase of salses figures by contributing to the growth of the market and the expansion of the market share simultaneously. Also, a steady increase of salesvolume of a mainstream memory modules has contributed to the consolidated sales increase 11% ona preceding fiscal year at 37,701 billion yen.
■ Storage ProductsStorage prodcuts have maintained a high market share under the growing demands for video data storage and have succeeded in capturing a new user needs of a network-attached storages. However, the decline of unit price of DVD and the shrink of market size of MO have generated the sales down 1.6% on a preceding fiscal year at 37,372 billion yen.
■ Network / Broadband ProductsBroadband products have been able to maintain a leading position in the market by expanding the applications according to the release of new products with a sophistcated features and a high added value. However, the decline of sales volume of the first half and the shrink of market size of network procts other than broadband products have resulted the sales down 13.8% on a preceding fiscal year at 19,967 billion yen.
Summary of consolidated sales for the fiscal year ended March 31, 2005
Fiscal years ended March 31 Fiscal years ended March 31 Fiscal years ended March 31
Financial data
Consolidated balance sheet
EndedMar. 31, 2005
EndedMar. 31, 2004
(million yen)�
ItemFiscal year
(Assets)�
Current assets
Tangible fixed assets
Intangible fixed assets
Investments, etc.
Total Fixed assets
Total assets
(Liabilities)
Current liabilities
Long-term liabilities
Total liabilities
(Minority interest in consolidated subsidiaries)
(Capital)
Capital
Capital surplus
Profit surplus
Balance of other profits on securities
Exchange adjustment
Treasury stock
Total capital
Total liabilities and capital
�
Consolidated statement of income (million yen)�
Sales
Cost of sales
Selling, general and administrative expenses
Operating income
Non-operating income
Non-operating expenses
Ordinary income
Extraordinary income
Extraordinary loss
Current term net income before taxes and other adjustments
Corporation, resident and enterprise taxes
Adjustment for corporation tax, etc.
Profit or loss in minority interest
Current term net income
106,353�91,563�9,266�5,523�247�251�5,519�77�781�4,815�2,384�▲31�2�
2,459
103,703�89,886�8,589�5,228�367�186�5,409�-�
1,262�4,147�1,254�▲161�▲1�3,055
�
Consolidated statement of surplus (million yen)�
Capital surplus opening balance
Increase in capital surplus/Stock-for-stock exchange
Decrease in capital surplus/Retirement of treasury stock
Capital surplus closing balance
Profit surplus opening balance
Increase in profit surplus/Net profit from current fiscal year
Decrease in profit surplus/Dividend and other payments
Profit surplus closing balance
7,593�5,333�1,249�11,677�14,260�3,055�466�
16,849
11,677�-�0�
11,677�16,849�2,459�474�
18,834
�
Consolidated cash flow statement (million yen)�
�
Operating activity cash flow
Investment activity cash flow
Financial activity cash flow
Balance of cash/cash-equivalent conversions
Increase of cash/cash-equivalents
Cash/cash-equivalent opening balance
Cash/cash-equivalent at newly established consolidated subsidiary
Cash/cash-equivalent closing balance
*On October 1, 2003, MELCO HOLDINGS INC. and BUFFALO INC. switched to a holding company system through a stock swap, with BUFFALO INC. as a complete subsidiary.�*Consolidated earnings for the fiscal year ended March 31, 2004 have been calculated by adding the non-consolidated earnings of MELCO HOLDINGS INC. during the period between the stock-for-stock exchange on October 1st, 2003 and March 31, 2004, to the consolidated earnings of BUFFALO INC. during the period April 1st, 2003 to March 31st, 2004. �
*Consolidated figures for BUFFALO INC. (formerly MELCO INC.) have been used for the 2003 half year comparative figures.
�46,826�1,640�76�
6,690�8,407�55,233�
�22,684�928�
23,613�2��
1,000�11,677�18,834�364�
▲255�▲2�
31,618�55,233
�37,390�2,015�92�
9,645�11,753�49,143�
�19,330�808�
20,139�1��
1,000�11,677�16,849�▲236�▲287�▲0�
29,002�49,143 6,564�
2,898�▲422�
2�9,042�9,035�4�
18,082
3,586�260�
▲512�▲53�3,280�5,746�8�
9,035
Item
Fiscal year
Apr. 1 2004 toMar. 31, 2005
Apr. 1 2003 toMar. 31, 2004
Apr. 1 2004 toMar. 31, 2005
Apr. 1 2003 toMar. 31, 2004
Apr. 1 2004 toMar. 31, 2005
Apr. 1 2003 toMar. 31, 2004
Item
Fiscal year
Item
Fiscal year
Financial d
ata
■ MELCO HOLDINGS INC.
Capital�
Banks�
Business establishment
Company Profile
The Melco Group is comprised of the holding company MELCO HOLDINGS INC. and 13 consolidated subsidiaries.
■ BUFFALO INC.
Company Profile
〈As of March 31, 2005〉�
As of May 13, 2005
As of June 29, 2005
〈As of March 31, 2005〉�
Board of Directors
Board of DirectorsCompany Profile
President and CEO�Senior Managing Director�Managing Director�Director�Director�Director�Senior Corporate Auditor�Corporate Auditor�Corporate Auditor�Corporate Auditor
Makoto Maki�Kuniaki Saiki�Hiromichi Maki�Hidetoshi Yamaguchi�Hiromi Maki�Iwao Tsusaka�Kiyoshi Kobayashi�Toshio Nishikawa�Yuzuru Kawashima�Tomotsune Sumi
Chairman and CEO�President and COO�Managing Director�Director�Director�Director�Director�Senior Corporate Auditor�Corporate Auditor�Corporate Auditor�Corporate Auditor
Makoto Maki�Kuniaki Saiki�Hidetoshi Yamaguchi�Seishi Toyooka�Takayuki Nishioka�Tamio Matsuo�Masanao Tuduki�Kiyoshi Kobayashi�Iwao Tsusaka�Takashi Koide�Tomotsune Sumi
TEL. 81-52-251-6891 FAX. 81-52-241-7979Headquarters Kamiya Bldg., 11-50, Ohsu 4-chome, Naka-ku, Nagoya, 460-0011, Japan
Company Name�
Incorporated�
President and CEO�
Sales�
Business �
content�
No. of employees�
Banks
Company Name�
Founded�
Incorporated�
Chairman and CEO�
Sales�
Business �
content�
No. of employees�
U R L
Group affiliates�
U R L
Capital
MELCO HOLDINGS INC.�
July 1, 1986�
Makoto Maki�
Consolidated ¥106.353 billion (Actual results for fiscal year ended March 31, 2005) �
Pure holding company of MELCO Group Holds the shares of subsidiaries involved in various businesses, �supports business operations, and carries out integrated administration through directing management.�
24 MELCO Group related: 679�
UFJ, Nagoya
Total of 13 companies (8 domestic, 5 overseas)�
http://melco-hd.jp/
¥1 billion
UFJ, Nagoya, Iyo, Tokyo-Mitsubishi, UFJ Trust Bank�
�
¥6.4 billion�
�
BUFFALO INC.�
May 1, 1975�
August 5, 1978�
Makoto Maki�
¥101.280 billion (results of fiscal year ended March 31, 2005) �
Development, manufacture and sales of computer and broadband equipment, �and supply of related services�
353�
http://buffalo.jp/
Headquarters�Tokyo Branch Office�Headquarters(branch office)�Nagoya Branch Office�Osaka Branch Office�Sendai Sales Office�Fukuoka Sales Office�Sapporo Sales Office
15, Shibata hondori 4-chome, Minami-ku, Nagoya, 457-8520, Japan�Eitaro Bldg., 2-5, Nihonbashi 1-chome, Chuo-ku, Tokyo, 103-0027, Japan�Kamiya Bldg., 11-50, Ohsu 4-chome, Naka-ku, Nagoya, 460-0011, Japan�Kamiya Bldg., 11-50, Ohsu 4-chome, Naka-ku, Nagoya, 460-0011, Japan�Sumitomo Seimei Tanimachi Bldg., 1-18 Tanimachi 9-chome, Chuo-ku, Osaka, 542-0012, Japan�Miyagino center Bldg., 5-22, Tsutsujigaoka 4-chome, Miyagino-ku, Sendai, 983-0852, Japan�Abandant 95, 12-1, Hakataeki Higashi 3-chome, Hakata-ku, Fukuoka, 812-0013, Japan�San Keisei Bldg., 4-1, Kitaichijyo Higashi 1-chome, Chuo-ku Sapporo, 060-0031, Japan
TEL. 81-52-619-1811 FAX. 81-52-619-1800�TEL. 81-3-3242-7777 FAX. 81-3-5203-8551�TEL. 81-52-251-6891 FAX. 81-52-241-7979�TEL. 81-52-249-6600 FAX. 81-52-249-6601�TEL. 81-6-6191-1511 FAX. 81-6-6191-1510�TEL. 81-22-291-0311 FAX. 81-22-298-9470�TEL. 81-92-477-3711 FAX. 81-92-477-3755�TEL. 81-11-200-8150 FAX. 81-11-200-8151
Business establishment
BUFFALO TECHNOLOGY (TAIWAN) INC.TWN �
$100million 100%Production and sales of Internet devices and �computer peripherals
CompanyRatio of�
shareholdings
Company Capital Business content
CFD SALES INC. ¥98 million 100% Sales of Internet devices and computer peripherals
BUFFALO LOGISTICS INC. ¥70 million 100% Packaging and shipment of products
BUFFALO LEASE INC. ¥98 million 100% Lease and rental of Internet-related products
ORIEBLENET CORP. ¥11 million 88.2% Sales of Internet devices and computer peripherals
¥10 million 100% Operation of Internet game center MELCO ONLINE ENTERTAINMENT CORP.
BUFFALO TECHNOLOGY (USA), INC. US $3 100% Production and sales of Internet devices and computer peripherals
BUFFALO TECHNOLOGY UK LIMITED US $5,728,000 100% Sales of Internet devices and computer peripherals
BUFFALO TECHNOLOGY IRELAND LIMITED 790,000 100% Production of Internet devices and computer �peripherals
Asia
15, Shibata hondori 4-chome, Minami-ku, Nagoya, 457-8520, Japan TEL.81-52-619-1311 FAX.81-52-619-7785
Chukyo Warehouse No. 33, 1-3, Mutsuno 2-chome, Atsuta-ku, Nagoya, 456-0023, Japan TEL.81-52-883-3035 FAX.81-52-883-3042
Eitaro Bldg., 2-5, Nihonbashi 1-chome, Chuo-ku, Tokyo, 103-0027, Japan TEL.81-3-5203-8199 FAX.81-3-5203-8551
4030 West Braker Lane, Suite 120, Austin, TEXAS 78759-5319 U.S.A. TEL.1-512-794-8533 FAX.1-512-794-8520 �
4F, NO.18, LANE609, SEC.5, CHUNG HSIN RD., SANCHUNG CITY, TAIPEI HSIEN, TAIWAN TEL.886-2-2999-9860 FAX.886-2-2999-2264 �
Fukuei Akihabara Bldg., 14-3, Sotokanda 3-chome, Chiyoda-ku, Tokyo, 101-0021, Japan TEL.81-3-3252-4141 FAX.81-3-3252-4141
Kamiya Bldg., 11-50, Ohsu 4-chome, Naka-ku, Nagoya, 460-0011, Japan TEL.81-52-251-6823 FAX.81-52-241-7979
15, Shibata hondori 4-chome, Minami- ku, Nagoya, 457- 8520, Japan TEL.81-52-619-7756 FAX.81-52-619-7737
East Park, Shannon Free Zone, Shannon, Co.Clare, Ireland TEL.353-61-708090 FAX.353-61-360140
176 Buckingham Avenue, Slough, Berkshire SL1 4RD, United Kingdom TEL.44-1753-555-000 FAX.44-1753-535-420
Chukyo Warehouse, 1-3, Mutsuno 2-chome, Atsuta-ku, Nagoya, 456-0023, Japan TEL.81-52-882-3302 FAX.81-52-882-3302���
Europe
U.S.A.
Japan
¥10 million MELCO PERSONNEL SUPPORT INC.
MELCO ASSET MANAGEMENT LIMITED 100,000 100% Funds management advice
East Park, Shannon Free Zone, Shannon, Co. Clare, Ireland TEL.353-61-708032 FAX.353-61-360140
Capital
Ratio of�shareholdings
100% Agency for temporary staff
MELCO TECHNO-SERVICE INC. Internet-related support and services
Company P
rofile
¥10 million 100%
Business content
Company P
rofile
Evolution of the Melco GroupBusiness/OthersHistory
Aug���
Jul��
Sep�Oct�Oct�Jan��
Jun������
Jan�Aug���
Sep�Oct�Oct�Jan��
Dec����
Aug�Oct���
Jan�Mar�May��
Mar�May�Oct�Oct�Oct�Oct�Mar����
Jun���
Jun�Aug��
Dec
Aug�Jul�Nov��
Oct����
Jul�Aug��
May��
Oct�Feb��
Sep��
Nov��
Oct���������
Jan�Nov�Apr�Oct�Jan�Jan�Jul�Dec�Mar�Dec�����
Jan�Feb�Apr��
Jul�Sep
Began marketing a string-driven turntable�Entered the personal computer peripherals market in earnest�Began marketing an internal printer buffer��Began marketing Japan's first EMS board����Began marketing CPU accelerator products�Began marketing LAN products��Began marketing window accelerators; �entered the multimedia market in earnest�Received top prize in PCB Technology Leadership Awards�Began marketing hard disks; shifted emphasis to manufacture of computer peripheral devices�MELCO INC. obtained ISO9001 certification, �the international quality assurance standard�Began marketing DOS/V component PCs; �shifted emphasis to manufacture of PC components�Began marketing LCD monitors���������Entered the wireless LAN market; released "AIRCONNECT"�Began marketing memory for Rambus devices�Began marketing the wireless LAN "AirStation"�Developed worldwide standard specification of DDR memory for notebook computers�Began Internet service business�MELCO INC. obtained ISO14001 certification, the environmental management system standard�Proposed FREESPOT to promote Internet wireless spot service�Released LinkStation, a Network Storage Center�Began broadband equipment rental business�Formed "BSA Ladies Set-up Service"�����Established new Digital Home Solutions Business Div.�Launched the Network Media Player "LinkTheater"�Cumulative sales of the Wireless LAN "AirStation" exceed 5 million units�Entered the computer supplier market�Wireless spot service "FREESPOT" exceeds 2,000 registered locations
Incorporated for the purpose of manufacturing and selling audio equipment���
Established BUFFALO (now MELCO HOLDINGS INC.)��
Made packaging/distribution business independent by establishing BUFFALO LOGISTICS INC.�MELCO INC. (now BUFFALO INC.)registered with JASDAQ�
MELCO INC. established MELCO INTERNATIONAL INC. (now BUFFALO LEASE INC.)�MELCO INC. opened High-Tech Center (now BUFFALO INC. headquaters)as�
TECHNICAL R&D center�Made Taiwan office a local corporation by establishing BAPILU PRODUCTS INC. (now BUFFALO TECHNOLOGY (TAIWAN)INC.)�
�����
MELCO INC. listed in second section of Nagoya Stock Exchange�MELCO INC. listed in second section of Tokyo Stock Exchange�
��
MELCO INC. listed in first section of Tokyo Stock Exchange & Nagoya Stock Exchange�MELCO INC. made CFD SALES INC. a subsidiary�MELCO INC. introduced divisional organization�
MELCO INC. made TechWorks (Delaware), Inc. �(now BUFFALO TECHNOLOGY (USA),INC.)a subsidiary�
MELCO INC. made TechWorks (UK), Limited. �(now BUFFALO TECHNOLOGY UK LIMITED.)a subsidiary�
MELCO INC. made TechWorks (Ireland), Limited.� (now BUFFALO TECHNOLOGY IRELAND LIMITED.)a subsidiary�MELCO FINANCE INC. began investment management of securities�
BUFFALO INC. reorganized into holding company���
MELCO INC. launched BUFFALO Service Alliance service system�Established joint venture Digital Reuse Inc. for reuse business�
Established OriebleNet Corp. sales company��
BUFFALO LEASE INC. began renting broadband devices�BUFFALO INC. changed trade name to MELCO HOLDINGS INC., moved head office�MELCO INC. changed company name to BUFFALO INC., moved head office�MELCO HOLDINGS INC. and BUFFALO INC. swapped stock and shifted to holding company system�MELCO HOLDINGS INC. listed in first section of Tokyo Stock Exchange & Nagoya Stock Exchange�
Established Melco Online Entertainment Corp.�The following five companies ceased to be subsidiaries of BUFFALO INC., and became directly-financed subsidiaries of MELCO HOLDINGS INC.: CFD SALES INC., BUFFALO TECHNOLOGY(TAIWAN)INC., BUFFALO TECHNOLOGY (USA), INC., BUFFALO TECHNOLOGY UK LIMITED,
and BUFFALO TECHNOLOGY IRELAND LIMITED.�The following three companies ceased to be subsidiaries of BUFFALO INC., and became directly-
financed subsidiaries of MELCO HOLDINGS INC.: BUFFALO LOGISTICS, INC., BUFFALO LEASE, INC., and OriebleNet Corp. sales company�
Established MELCO PERSONNEL SUPPORT INC. as an agency for temporary staf�Established MELCO ASSET MANAGEMENT LIMITED to provide advice on funds management�
Merged MELCO FINANCE INC. with BUFFALO INC.�Established Melco Techno-Service Inc.
Origin of Company NameMelco Group shifted to a holding company system on October 1, 2003 with MELCO HOLDINGS INC. as the pure holding company. At the same time, MELCO INC. changed its name to BUFFALO INC. unifying the company and brand names. The long-established and well-known Buffalo brand name is now also the company name.
MELCO�
The company was named MELCO in 1975. "M" is for Maki, the family name of the company founder and president, Makoto Maki, "E" is for engineering, "L" is for laboratory, and "CO" is for company.
Many years ago, users had to wait until printing was complete before they could continue using their computer. Then came the printer buffer, a revolutionary product that stored printing data in its memory, instantly releasing the computer which could be used even during printing. Melco's built-in printer buffer released in 1982 represented a significant
step forward for the computer industry. It also met a market need and was a huge hit. When the new product was released Melco advertised publicly for a brand name, eventually adopting "BUFFALO". The name had a pleasant ring to it, sounding similar to "buffer" and also conjuring up an image of a strong animal running. It was the perfect product name for such a progressive company as Melco. Since then, the Buffalo brand has been developed into a solutions business providing ease of use.
MELCO HOLDINGS INC. Investor Information(As of March. 31, 2005)�
The BUFFALO name is derived from "printer buffer" products.
MELCO stands for "Maki Engineering Laboratory Company".
BUFFALO
MELCO�Maki�Engineering�Laboratory�Company
Accounts closed�
Scheduled shareholder's meeting�
Dates to determine stock ownership��
��
��
Listed Stock Exchanges�
�
Stock code�
Number of shares issued�
Number of shareholders�
Number of shares per unit
March 31�
June�
Shareholders entitled to vote �March 31�
Shareholders entitled to year-end dividend �March 31�
Shareholders entitled to interim dividend �September 30�
First Section of Tokyo Stock Exchange and �
First Section of Nagoya Stock Exchange�
6676�
26,125,773 �
13,682�
100
http://melco-hd.jp/koukoku/�
UFJ Trust Bank Limited �4-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo�
UFJ Trust Bank Limited Security Agent Department�10-11, Higashi-suna, 7-chome, Koto-ku, Tokyo 137-8081�Tel. 0120-232-711 (toll free) �Requests for share related documentation can be handled by the UFJ Trust Bank, or on the Internet 24 hours a day.�Tel.0120- 244- 479 (toll free) �http://www.ufjtrustbank.co.jp/�
(main)Daiwa Securities SMBC�(others)Nomura Securities� Mizuho Investors Securities� Nikko Cordial Securities��
notice to shareholders�
Transfer agent��
Handling office��������
Managing underwriters�
�
At the World’s Fair "EXPO 2005 AICHI JAPAN" Expo being held from
March to September 2005, Buffalo has installed a wireless LAN in Chubu
University’s solar airship which will be moored above the site for the duration
of the Expo, and we will be providing a FREESPOT service for visitors to the
Expo for the duration of the event (March 25 - September 25). Using
electricity generated from the light of the sun, this is an environmentally
friendly communications system that is well suited to the Aichi Expo. This
service is combined with an experiment aimed at developing a conventional
emergency communications system for use in disasters.
"EXPO 2005 AICHI JAPAN" Expo's SOLAR airship SoLan
http://melco-hd.jp/MELCO Group
This booklet was made from recycled paper.
On October 1, 2003, MELCO HOLDINGS INC. and BUFFALO INC.(formerly MELCO INC.) switched to a holding company system
through a stock swap, with BUFFALO INC. as a complete subsidiary. At the same time, MELCO INC.'s trading name was changed to
BUFFALO INC.
Domestic operations�CFD SALES INC.�
BUFFALO LOGISTICS INC.�
BUFFALO LEASE INC.�
ORIEBLENET CORP.�
MELCO ONLINE ENTERTAINMENT CORP.�
MELCO PERSONNEL SUPPORT INC.�
MELCO TECHNO-SERVICE INC.
Overseas operations�BUFFALO TECHNOLOGY (TAIWAN) INC. �
BUFFALO TECHNOLOGY (USA), INC. �
BUFFALO TECHNOLOGY UK LIMITED �
BUFFALO TECHNOLOGY IRELAND LIMITED �
MELCO ASSET MANAGEMENT LIMITED
Headquarters Kamiya Bldg., 11-50, Ohsu 4-chome, Naka-ku, Nagoya, 460-0011, Japan Tel:81-52-251-6891 Fax:81-52-241-7979
Headquarters�Tokyo Branch Office�Headquarters(branch office)�
15, Shibata hondori 4-chome, Minami-ku, Nagoya, 457-8520, Japan�Eitaro Bldg., 2-5, Nihonbashi 1-chome, Chuo-ku, Tokyo, 103-0027, Japan�Kamiya Bldg., 11-50, Ohsu 4-chome, Naka-ku, Nagoya, 460-0011, Japan
Tel:81-52-619-1811 Fax:81-52-619-1800�Tel:81-3-3242-7777 Fax:81-3-5203-8551�Tel:81-52-251-6891 Fax:81-52-241-7979
MELCO HOLDINGS INC. http://melco-hd.jp/ (Code 6676)�
BUFFALO INC. (formerly MELCO INC.)http://buffalo.jp/
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