Rohm Announces Increased Year-end Dividend Forecast, Together with New Policy for Return to Shareholders

Rohm announced today that its Board of Directors has determined to revise upward the year-end dividend forecast for the fiscal year ended March 2007, and to implement a new shareholder return policy. The year-end dividend is subjected to approval at the company’s annual shareholders meeting to be held in June 2007.

1.Details for Revision of Dividend Forecast

	Interim Dividend per Share	Year-end Dividend per Share	Annual Dividend per Share
Revised forecast for FY 2007/3	45 yen	55 yen	100 yen
Previous forecast for FY2007/3 (Announced May 11, 2006)	45 yen	45 yen	90 yen
Dividends for FY 2006/3 (For reference)	45 yen	45 yen	90 yen

Note: Distribution of the interim dividend of 45 yen per share for the fiscal year 2007/3 has been completed.

2.Background for Revision of Dividend Forecast
In relation to the fiscal year ended March 2007, Rohm had initially scheduled to distribute an interim and year-end dividend of 45 yen per share respectively, totaling to annual dividend of 90 yen per share. However, after considering the company’s future business performance, financial position and expected requirements for funds for business investment aimed at improving corporate value, our Board of Directors has decided to place on the agenda the increase of year-end dividend to 55 yen per share during the upcoming company’s annual shareholders meeting in June 2007. Upon approval of this motion, annual dividend will become 100 yen per share.

3.New Policy for Providing Return to Shareholders
Historically, Rohm’s shareholder return policy had been aimed at improving the total return ratio by (1) declaring stable dividend in a consistent manner, taking into account payout ratio on a consolidated basis, and (2) carrying out share repurchases flexibly depending upon the amount of the free cash flow generated.
In line with this policy, Rohm has steadily increased the return of profits to shareholders. At the same time, based on the company’s financial position, funds requirements and the increasing expectation of investors for enhanced profit distribution, our Board of Directors has been considering various ways to further enhance total return to shareholders.
As a result, our Board of Directors has concluded to implement a new, enhanced shareholder return policy that aims at maximizing corporate value while, at the same time, continuing to make an utmost effort on pursuing long-term sustainable growth.
Specifically, Rohm will return to shareholders not less than 100% of its consolidated free cash flow(*) in each of the next three years. The form of this capital return will be by regular dividends, share repurchases or special dividends, while the company continues to aim at declaring stable regular dividend in a consistent manner, increasing the consolidated dividend payout ratio from the current 20% to approximately 30%.
While the advancement of the highly sophisticated information society is expected to fuel the growth of the semiconductor industry over the medium to long-term, global competition is becoming increasingly intense amid the shakeout and industry consolidation. To ensure future growth and improve business performance under these circumstances, we believe it is imperative to continue development of unique and cutting-edge products and to continuously improve our cost advantages. Accordingly, existing cash and future cash flows will continue to be invested in both capital expenditures to strengthen development and manufacturing technologies and strategic investments through alliances/M&As that are expected to deliver synergy and attractive investment returns, ultimately allowing us to further enhance our corporate value.
Through the implementation of the new shareholder return policy, Rohm will aim at improving both earnings per share (EPS) and return on equity (ROE).

* As a simplified calculation method, “free cash flow” is defined as the sum of consolidated net income and depreciation, less capital expenditures and working capital requirements.