Mar., 2005 Verbatim Confidential DVD Production Process & Key Factors for Quality Discs Verbatim, Product Marketing Mar., 2005 Ronan Ryan /Satoshi Wakabayashi

Mar., 2005 Verbatim Confidential Revenue $18 billion (March 2004) 33,500 employees (1,500 in USA) Performance Chemicals, Pharmaceuticals, Petrochemicals 100% Subsidiary of Mitsubishi Chemical Co. Total Revenue $650 million Optical Disc, Magnetic Media, Flash Memory 100% Subsidiary of Mitsubishi Kagaku Media CO.,LTD.

Mar., 2005 Verbatim Confidential Verbatim / Mitsubishi Kagaku Media Group Vision & Mission Verbatim / MKM is an international sales, marketing and optical technology development organization known as the innovative market leader in removable storage media and related accessories providing reliable, unique technologies and products that are highly sought after and broadly distributed world-wide. Our mission is to develop and market high quality products that users want for storing, moving and using digital content. January 2004 MKM Executive Committee

Mar., 2005 Verbatim Confidential Headquarters Distribution Manufacturing Tijuana, Mexico Floppy/CD-R Charlotte NC Verbatim USA HQ USA DC Toronto Canada Canada DC Mizushima, Japan MO, UDO, Stampers Taipei, Taiwan Floppy, CD-R/RW DVDR, DVDRW Singapore DVDR, DVDR DL DVDRW Frankfurt, Germany Verbatim European DC Tokyo, Japan Mitsubishi Chemical Corp. Uruguay Verbatim South America DC Egham, UK Verbatim EUMEA HQ Odawara, Japan VAP DC Melbourne, Australia VAP DC Sunnyvale, CA MFD/Tape Coating Hong Kong VAP DC Shenzhen, China VAP DC Global Supply Chain India DVDR, DVDRW CD-R

Mar., 2005 Verbatim Confidential MKM Core Competencies Fast Dry Printable

Mar., 2005 Verbatim Confidential Verbatim Product Direction Products are designed and manufactured for the highest compatibility and reliability –Technology is co-developed with hardware OEMs (designed into hardware) –Unique manufacturing partnerships Specify & qualify manufacturing lines Tighter than industry specifications On site Quality Assurance and Engineering support Unique ID codes that insures the highest level of compatibility in the industry Continually expanding our product offering –Latest in core optical technology products Speeds (16X DVDR, 8X DVDRW) Layers (DVD+R and DVD-R DL) Surfaces (Ink-jet and thermal printable, Hardcoat) Blue laser (UDO, Blu-Ray, HD DVD) –Continue to broaden our non-optical lines (imaging, USB, accessories) Always differentiated from the competition –Technology and quality (AZO, SERL, Crystal, etc..) –Product marketing (Digital Vinyl, Gold and Platinum, DigitalMovie, VideoGard, etc.)

Mar., 2005 Verbatim Confidential Verbatim Brand Well established brand (35 years) Clearly recognized as a quality brand Extremely well known & distributed brand throughout the world –#1 World-wide market share for DVD +/- R –#1 World-wide market share for CD-R –#2 World-wide market share for DVD +/- RW –#2 World-wide market share for CD-RW Source: Santa Clara Consulting Q4 2004

Mar., 2005 Verbatim Confidential Major Cause of Problem Effect of bad media shape Recording layer (Dye) has problem Good dye, good media shape and optimized write strategy

Mar., 2005 Verbatim Confidential Dye Coating Dry up Inspection Injection Cooling Sputtering Bonding Cooling (Recording Side) (Dummy Side) Injection Plastic Substrate with grooves Substrate with dye recording layer Reflective layer is added Dummy substrate Glue attached both side Production Process of R-DVD Mastering Stamper

Mar., 2005 Verbatim Confidential Injection Machine Injection Mold Injection Process Key process - to attain flat media shape - avoid micro crack - form uniformed groove shape to prevent recording/reading problem Key factors - quality stamper - quality mold - high grade polycarbonate - optimization of injection condition (pressure, timing, temperature)

Mar., 2005 Verbatim Confidential Mastering Process & Design of Mold Mastering is the key process - for making quality stamper Key factor - sophisticated operation of the cutting machine - deep knowledge/experience of polycarbonate and injection process Mold is the key material - for injection process - for attaining higher production cycle time Key factor - deep knowledge/experience of polycarbonate and injection machines

Mar., 2005 Verbatim Confidential Dye coating Baking Oven Dye Coating & Drying Process Key process - to attain good recording performance - to achieve superior archival performance Key factor - quality dye material (ability to develop quality dye) - optimization of spin coater condition (rotation speed, speed control, temperature, humidity) - optimization of the baking condition

Mar., 2005 Verbatim Confidential Dye is Important! Spec =8% Even though you optimize the process condition, you have no chance to produce quality discs using wrong dye. We should develop the dye which can - absorb laser of 650 to 660 nm wavelength - yet, reflect enough for playback - have good margin against the variation of wavelength

Mar., 2005 Verbatim Confidential Sputtering Process Key process - to attain stable recoding/reading performance - to achieve superior archival performance Key factor - deep knowledge of forming thin metal film - optimization of the sputtering condition - material Sputtering Machine

Mar., 2005 Verbatim Confidential Bonding Process Bonding Machine Key process - to attain flat media shape - to achieve superior archival performance Key factor - quality bonding glue in terms of both media shape and durability - optimized process condition Aging Test Result for Selection of the Glue

Mar., 2005 Verbatim Confidential Inspection Process Inline 100% Defect Inspection Machine Off line Compatibility Test Key process - to attain consistent quality among production lots - to confirm expected compatibility among major writers Key factor - Appropriate setting of defect criteria - tight communication with major writer manufactures

Mar., 2005 Verbatim Confidential Dye Layer A Power off Power on Time: X Power: Y Dye Layer B Power off Power on Time: X-a Power: Y-b Writing Strategy Every dye material has its own recording characteristics, so recoding power and laser exposing time should be optimized separately for the quality recording. (Writing Strategy: WS) Also Problem! Power off Power on Recording with optimized WS Power off Power on Recording with default WS

Mar., 2005 Verbatim Confidential Summary of Key Factors for Quality Discs Material - Stamper, Mold, Polycarbonate, Dye, Bonding Glue - Capability of developing these materials and deep chemical knowledge are required Process Control - Optimization of the process condition of Injection, Dye coating/drying, Sputtering, Bonding process - Capability of designing each process and ample experience of the production of optical discs are necessary Quality Control - In-process control should be carefully designed and feedback procedure should be consistently implemented to all of the production lines for quality consistency among production lots - Strict engineering change control should be taken place Writing Strategy - Ideally, optimized writing strategy should be implemented in all of major writers before the shipment of the discs - Tight communication with major writer manufacture from the development stage is crucial

Mar., 2005 Verbatim Confidential Verbatim (MKM) Material - one of the leading developing company of key materials like dye, stamper and polycarbonate, and have designated chemical engineers for each material development - also a major supplier of those materials Process Control - years of experience of producing all type of optical discs. (CD-R, CD-RW, DVD+/-R, DVD+/-RW, MO and UDO) - capable of designing each process Quality Control - possesses an established quality control procedure which has been refined through OEM business with major PC, writer and other disc manufactures Writing Strategy - has been in good communication with all of major writer manufactures from the development stage of high speed (8X, 16X), high capacity (double layer) or unique (UDO or LightScribe) writers/discs - member of the key industry organization like DVD-Forum or DVD+RW Alliance

Mar., 2005 Verbatim Confidential We are convinced that we are supplying quality discs in terms of complete compliance with industry specification (DVD forum, DVD+RW alliance) and superior compatibility with all of major writers We are developing discs and materials very carefully with paying attention to both recording performance and durability We are supporting the efforts by NIST to better define archival test methods. Bottom Line