Konica Minolta 2014 Annual Report Download

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Annual Report 2014
The New Medium Term Business Plan
CONTENTS
Summary PDF
1
2
8
13
31
37
40
50
Management's Message
Management Policy
(The New Medium Term Business Plan TRANSFORM 2016)
Special Feature
Review of Operations
15 Business Technologies Business (Offi ce Field)
19 Business Technologies Business (Production Print Field)
23 Industrial Business
27 Healthcare Business
Toward Sustained Growth
Management Bases
Management’s Discussion and Analysis
Consolidated Financial Statements

Table of contents

  • Page 1
    ...2 8 13 Management's Message Management Policy (The New Medium Term Business Plan TRANSFORM 2016) Special Feature Review of Operations 15 19 23 27 31 37 40 50 Business Technologies Business (Office Field) Business Technologies Business (Production Print Field) Industrial Business Healthcare Business...

  • Page 2
    ... higher added value in our businesses while honing development and manufacturing, and support and nurture our human resources. We will put our full strength into to building a company that is stronger and more ï¬,exible. In leading the management at Konica Minolta, I regard the fiscal 2016 goals...

  • Page 3
    ...New Medium Term Business Plan TRANSFORM 2016 The reorganization of the Konica Minolta Group's administrative structure in April 2013 has paved the way to a greater combination of strengths throughout a more united Group. In order to maximize results with this new structure, we will fuse our products...

  • Page 4
    ... business that provides comprehensive solutions (devices and services) from the customer's perspective as well as a functional materials business that offers materials that only Konica Minolta can provide by leveraging our proprietary materials technologies. 2016 describes what we want the Company...

  • Page 5
    ... New Medium Term Business Plan TRANSFORM 2016 Transform into a customer-centric company Have customer insight and understand their needs. All actions and business processes of Konica Minolta should be based on pursuing customer value. Customer Printing General office Medical Manufacturing industry...

  • Page 6
    ... the scale of our businesses as we shift focus in order to grow profit. (Billions of yen) (Billions of yen) Net sales Business Technologies Business Office Services Commercial/Industrial Print Industrial Business Industrial Optical Systems Performance Materials Healthcare Business Group Total...

  • Page 7
    ...100.0 New Medium Term Business Plan TRANSFORM 2016 44.9 FY11 FY12 FY13 FY14-FY16 Average Results Stance Towards Returns to Shareholders To reinforce and enhance shareholder returns, Konica Minolta aims to steadily increase dividends and works to actively repurchase treasury stock. Dividend policy...

  • Page 8
    ... Management): Service that offers print solutions optimized for customers' marketing divisions 6. PP: Production print 7. Modality: The various diagnostic equipment used in the practice of medicine. At Konica Minolta, this refers to CR/DR and diagnostic ultrasound systems 8. TAC Film: General term...

  • Page 9
    Special Feature Business Transformation Results Case 1 Combining "Genre-Top" MFPs with IT services to form hybrid businesses Products Solution & Service In recent years, changes in corporate office environments have often outpaced IT support. Companies routinely adopt new IT systems but ...

  • Page 10
    ...and fax devices generated significant savings for the company. In addition, employees now enjoy the latest in MFP technology. Konica Minolta's Optimized Print Services program is used to manage the entire ï¬,eet of MFPs. Overall, the relationship with Konica Minolta has rewarded Evergreen Packaging...

  • Page 11
    ... All Covered Cloud, enhancing our ability to provide services to a wider range of vertical market and enterprise customers. We can see the effects already in the fact that over 60% of Konica Minolta's hardware sales in North America include a combination of services, solutions and hardware." "We are...

  • Page 12
    ... administration and reducing costs To succeed on the global stage, corporations increasingly seek to optimize asset management, ensure transparency, reduce costs and standardize operations. To meet these needs, Konica Minolta offers global Optimized Print Services (OPS), providing uniform services...

  • Page 13
    ... Minolta bizhub C360 and bizhub C552 with identical panels for high usability. LHT employees now also enjoy standardized printer drivers with graphical user interfaces. The benefits of the new ï¬,eet management include a managed infrastructure for service calls, continuous print meter readings...

  • Page 14
    Review of Operations / Strategy 13 KONICA MINOLTA, INC. Annual Report 2014

  • Page 15
    ... Technologies Business (Office Field) The office field provides products and services that help to optimize office environments. These include advanced MFPs, solutions and IT services that meet the needs of the mobile and cloud-computing era, helping to optimize customers' output environments and...

  • Page 16
    ... management environment) to reduce costs and increase efficiency 3. ppm (Pages Per Minute) : The number of pages a device can output in one minute 4. GMA (Global Major Account) : Large, global-scale corporate customers (and our businesses targeting them) 15 KONICA MINOLTA, INC. Annual Report 2014

  • Page 17
    ... tailored to customers' corporate scale, region, and type of business, we will contribute to their operating efficiency and thus increase the number of our devices installed and print volume. In our global OPS business, we will expand the service menu, promoting a shift toward service businesses in...

  • Page 18
    ...13 14 15 16 11 12 13 14 15 16 (Calendar years) Japan U.S. Europe Emerging markets Source: Konica Minolta estimate 1. MFP (Multi-Functional Peripherals): Units that support a wide variety of functions, such as copying, printing, scanning, and facsimile 17 KONICA MINOLTA, INC. Annual Report 2014

  • Page 19
    ... and output, with the network management and security knowhow of IT service companies acquired in Europe and the United States, we are working to provide solutions, including increasing efficiency, to our customers' problems. Using our direct sales capabilities in Europe and the United States, we...

  • Page 20
    ... unique solutions by combining the on-demand output2 services of Kinko's Japan Co., Ltd., acquired in May 2012, with office unit products and services, strengthening our marketing capabilities targeting large corporations. In Europe, we utilized Charterhouse Print Management Limited, acquired in...

  • Page 21
    ... the number of our products installed and print volume by offering unique print-related services. Our services, including the MPM 1 services of Charterhouse Print Management Limited (headquartered in the UK), acquired in fiscal 2012, and the on-demand output services of FedEx Kinko's Japan Co., Ltd...

  • Page 22
    ... Management): Service that offers print solutions optimized for customers' marketing divisions Worldwide color unit sales forecast HPP 4 (Units) MPP 5 LPP 6 Worldwide color PV3 forecast HPP MPP ELPP 7+LPP Growth rate (Billions of pages) Growth rate 25,000 20,000 15,000 10,000 5,000 0 2012 2013...

  • Page 23
    ... with conventional print media spend. Charterhouse, a European company Konica Minolta acquired in fiscal 2012, has the marketing print management (MPM) service knowhow to solve these kinds of problems. By sharing this knowhow with commercial print customers across the global Group, we will help to...

  • Page 24
    ...acetate Sensing business sales 100 13 87 153 55 +336% M&A Existing 98 +12% FY2012 FY2013 Interchangeable lenses for single-lens cameras sales volume 100 95 FY2012 FY2013 TAC film sales volume 100 86 FY2012 FY2013 *Base index: FY2012=100 23 KONICA MINOLTA, INC. Annual Report 2014

  • Page 25
    ...tablets and automobiles, making use of synergies with Instrument Systems GmbH (acquired in fiscal 2012), while establishing a business structure that is highly responsive to the needs of major customers. In the optical products field, we will position interchangeable lenses for digital single-lens...

  • Page 26
    Review฀of฀Operations฀/฀Strategy Industrial Business 3. Segment Growth Potential Aiming to be the top vendor of measuring instruments Expand genre... of lighting OLED lighting ¥50bn Constantly innovate and expand market FY14 FY15 FY16 FY20 25 KONICA MINOLTA, INC. Annual Report 2014

  • Page 27
    Review฀of฀Operations฀/฀Strategy Industrial Business Growth drivers in the sensing and performance materials fields As the leading manufacturer in display light-source color measurement, Konica Minolta has for some time provided the high-quality measuring instruments that are the industry ...

  • Page 28
    ...Strategy Healthcare Business 1. Fiscal 2013 Results Sales of mainstay cassette-type digital radiography1 systems grew in Japan and the United States, with deliveries to major medical institutions rising We built a business promotion structure for diagnostic ultrasound systems, a new growth driver...

  • Page 29
    ... domains Medical IT Modality growth areas: DR, ultrasound CR, film, purchase 1. Modality: The various diagnostic equipment used in the practice of medicine. At Konica Minolta, this refers to CR/DR and diagnostic ultrasound systems FY2013 FY2014 FY2016 28 KONICA MINOLTA, INC. Annual Report 2014

  • Page 30
    ...฀/฀Strategy Healthcare Business 3. Segment Growth Potential Continued growth in the digital radiology market, and expansion in the medical IT cloud domain, where Konica Minolta has strength Digital radiography market forecast (Millions of U.S. dollars) Diagnostic ultrasound system market...

  • Page 31
    ... will increase the number of our medical diagnostic instruments installed and our number of contracts for various medical-related services, expanding the business and creating higher added value. 2. Probe: A sensor that detects reï¬,ected ultrasound waves 30 KONICA MINOLTA, INC. Annual Report 2014

  • Page 32
    ... fiscal 2016 aimed at achieving the goals for fiscal 2018. The 40,000 employees of the global Konica Minolta Group, representing diverse nationalities, languages and backgrounds, share the Group's: •฀Management฀philosophy฀ •฀Pledge฀to฀customers฀of฀"Giving฀Shape฀to฀Ideas...

  • Page 33
    ... to each item of the charter. The guidance stipulates that Group companies are to respect international social codes such as the UN Global Compact, to which Konica Minolta, Inc. is a signatory, and the Universal Declaration of Human Rights, and act in accordance with such principles. Setting Key...

  • Page 34
    ... processes, from product development to procurement, production, distribution, sales and service, and collection and recycling, we are enhancing corporate value while reducing the environmental burden posed by the Group. CO2 emission reduction targets 33 KONICA MINOLTA, INC. Annual Report 2014

  • Page 35
    ... with government procurement and other standards Restoring and preserving biodiversity Environmental protection around plants Legally compliant waste management Non-financial information disclosure Materiality for business Materiality for business 34 KONICA MINOLTA, INC. Annual Report 2014

  • Page 36
    ... our corporate social responsibility and achieving corporate growth. 10 0 FY2013 Target FY2013 Result FY2016 Target Green Products sales ratio % 60 50 40 30 20 Environmental Accounting Konica Minolta has implemented global-scale, consolidated environmental accounting in order to quantitatively...

  • Page 37
    ... socially responsible investment (SRI) index, and selected for the Dow Jones Sustainability Asia Pacific Index (DJSI Asia Pacific) for five years running. Konica Minolta is also included in the FTSE4Good Global index of the U.K.-based FTSE Group, as well as the Morningstar SRI Index in Japan...

  • Page 38
    ... *Committees related to internal controls Risk฀Management฀Committee฀/฀Compliance฀Committee฀/฀Corporate฀Information฀Disclosure฀ Committee฀/฀Business฀Assessment฀Committee฀/฀Group's฀Technology฀Strategy฀Council,etc. 37 KONICA MINOLTA, INC. Annual Report 2014

  • Page 39
    ...overseas sites, strategically acquiring future-oriented technologies, and perfecting core technologies to continually produce business. Under the Medium Term Business Plan TRANSFORM 2016 we have laid out the key theme of creating an advanced and efficient incubation process unique to Konica Minolta...

  • Page 40
    ... total number of patents that Konica Minolta holds in China has risen to about 250% the 2009 level, at to 687, a result of the Group's efforts to secure intellectual property rights in the country. The operating environments of many of the Group's businesses are rapidly changing. To select suitable...

  • Page 41
    Financial Review and Data 40 KONICA MINOLTA, INC. Annual Report 2014

  • Page 42
    Financial Review and Data Management's Discussion and Analysis Management's Discussion and Analysis Operating Environment With indications that the economy in Europe bottomed out in mid-2013, corporate results improved. The United States continued to register signs of recovery, characterized by ...

  • Page 43
    ...medium-sized companies in Europe and the United States that combines IT business solution services with MFPs. By doing so, we cultivated new customers, expanded the scale of projects and realized added value. In the production print field, sales volumes of color units and monochrome units grew year...

  • Page 44
    ...to ¥15.1 billion. Healthcare Business In the Healthcare Business, sales of the cassette-type digital radiography system AeroDR remained solid with sales volume growth in Japan and the United States and a steady increase in completed deliveries to large-scale medical institutions. We have gradually...

  • Page 45
    ... included development and commercialization of five models in the bizhub C554e MFP series, which can use data and documents stored on cloud services, in the office field, and of the bizhub PRESS C1070 series in print production. R&D expenses in the Industrial Business decreased ¥0.6 billion, or...

  • Page 46
    ... Company recorded negative remeasurements of defined benefit plans of ¥8.4 billion due to the application of accounting standards for retirement benefits. Net assets (Billions of yen) 600 500 400 300 200 100 0 FY2011 FY2012 FY2013 434.9 466.4 480.0 45 KONICA MINOLTA, INC. Annual Report 2014

  • Page 47
    ... Fiscal Year Ending March 31, 2015 Looking at the global economic conditions surrounding the Group, moderate economic recovery is expected in Europe while corporate results are projected to remain strong in the United States and Japan. Economies in emerging countries are forecast to keep expanding...

  • Page 48
    .... In the Business Technologies Business, which drives Group growth as its largest segment, the Group adopted the Genre-top strategy, for focusing management resources on expanding the business for color MFPs for office use and production printing systems in advance of other companies and joined the...

  • Page 49
    ... as a new growth driver, by utilizing the resources gained following the transfer of the business from Panasonic Healthcare Co., Ltd. The Group considers further alliances with other companies and acquisitions as an option for future growth strategies. 48 KONICA MINOLTA, INC. Annual Report 2014

  • Page 50
    .... (15) Information Leaks Through its diverse business activities, the Group acquires personal and confidential information relating to its customers and business partners. The Group has established internal systems, conducts employee training, and takes other measures relating to the management of...

  • Page 51
    ...assets ...Allowance for doubtful accounts ...Total current assets ...Property, Plant and Equipment (Note 16): Buildings and structures ...Machinery and equipment (Note 13) ...Tools and furniture ...Land ...Lease assets ...Construction in progress ...Rental business-use assets ...Total ...Accumulated...

  • Page 52
    ... retirement obligations ...Other long-term liabilities (Note 7) ...Total long-term liabilities ...Total liabilities ...Contingent Liabilities (Note 12) Net Assets (Notes 10 and 28): Common stock: Authorized-1,200,000,000 shares in 2014 and 2013 Issued -531,664,337 shares in 2014 and 2013 ...Capital...

  • Page 53
    ... ... ¥41.38 41.28 17.50 ¥28.52 27.86 15 $0.40 0.40 0.17 The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 52 KONICA MINOLTA, INC. Annual Report 2014

  • Page 54
    ...securities, net of taxes ...Unrealized gains (losses) on hedging derivatives, net of taxes...Foreign currency translation adjustments ...Share of other comprehensive income of associates accounted for using equity method...part of these financial statements. 53 KONICA MINOLTA, INC. Annual Report 2014

  • Page 55
    ... $1,983,482 $2,355,810 $(168,305) $49,417 $(369) $146,279 $7,190 $4,664,351 The accompanying Notes to the Consolidated Financial Statements are an integral part of these financial statements. 54 KONICA MINOLTA, INC. Annual Report 2014

  • Page 56
    ...sales and disposals of property, plant and equipment ...Gain on sales and valuation of investment securities ...Increase (Decrease) in provision for bonuses ...Decrease in accrued retirement... Statements are an integral part of these financial statements. 55 KONICA MINOLTA, INC. Annual Report 2014

  • Page 57
    ...credited to income. Translation of Foreign Currency Financial Statements The translation of foreign currency financial statements of foreign consolidated subsidiaries into Japanese yen is done by applying the exchange rates prevailing at the balance sheet 56 KONICA MINOLTA, INC. Annual Report 2014

  • Page 58
    ... Group applied the Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012 (hereinafter, the "Statement No. 26")) and Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012 (hereinafter, the 57 KONICA MINOLTA, INC. Annual Report 2014

  • Page 59
    ..., and the market values of listed stocks are determined on a quarterly basis. The Companies try to reduce the credit risk of customers arising on notes and accounts receivable-trade through regular monitoring and comprehensive management of aging balances. 58 KONICA MINOLTA, INC. Annual Report 2014

  • Page 60
    ... the relevant currency swaps or interest-rate swaps is discounted with a rate that is assumed to be applied when a new, similar debt is issued. (4) Bonds The fair value of bonds payable is based on the value provided by third-party financial institutions. 59 KONICA MINOLTA, INC. Annual Report 2014

  • Page 61
    ... year Short-term debt Bonds Long-term debt Total 2013...2014...2015...2016...2017...2018 and thereafter ... ¥67,398 - - - - - ¥ - - ¥23,990 27,004 5,000 4,000 9,000 18,501 ¥91,389 27,004 25,000 24,000 19,000 38,501 20,000 20,000 10,000 20,000 60 KONICA MINOLTA, INC. Annual Report 2014

  • Page 62
    ...ficantly declined." For securities without quoted market values, if the net assets per share have fallen by more than 50% from the acquisition cost, the Companies recognize an impairment loss, assuming that the market value has "significantly declined." 61 KONICA MINOLTA, INC. Annual Report 2014

  • Page 63
    ...of the Company and its domestic consolidated subsidiaries comprise corporate income taxes, local inhabitants' taxes and enterprise taxes. The reconciliation of the Japanese statutory income tax rate to the effective income tax rate for the years ended March 31, 2014 and 2013 is as follows: 2014 2013...

  • Page 64
    ... corporate value and is designed to achieve"innovative management capabilities in the Business Technologies Business," "strategic and agile utilization of management resources," and "systems to support efficient operation." (2) Legal Form of the Business Combination (i) Method of absorption-type...

  • Page 65
    ... ii) Description of business iii) Capital iv) Net assets v) Total assets Konica Minolta Business Technologies, Inc. Manufacturing and sale of multi-functional peripherals (MFP), printers, and equipment for production printing systems and graphic arts, and providing related solution services ¥400...

  • Page 66
    ... thousand). Assets pledged as collateral at March 31, 2013 for short-term debt of ¥31 million are accounts receivable-trade and lease investment assets of ¥31 million. 14. Cost of Sales The Companies have recognized valuation losses associated with the write-down of inventories of ¥1,552 million...

  • Page 67
    ...March 31, 2014 include expenses related to structural reform of sales sites in Europe and the North America for the Business Technologies Business, a review of the production system for lens units used in mobile phones in the Industrial Business and termination of the Group's film production in the...

  • Page 68
    ... maturities of future lease rental payments on such lease contracts at March 31, 2014 and 2013 are as follows: Thousands of U.S. dollars 23. Retirement Benefit Plans Retirement benefit plans of the Companies for the year ended March 31, 2014 are as follows: (1) The Companies have defined...

  • Page 69
    ... ...g. Prepaid pension costs ...h. Accrued retirement benefits (f-g) ... ¥(168,817) 109,085 (59,731) 18,214 (987) (42,504) 1,249 ¥ (43,754) 11,536 ¥11,305 Note: Certain subsidiaries use a simplified method for the calculation of benefit obligation. 68 KONICA MINOLTA, INC. Annual Report 2014

  • Page 70
    ... officer. Market risks and credit risk for subsidiaries are controlled and assessed based on internal rules. Derivative instruments are approved by the Finance Manager of the Company and the President or equivalent of other subsidiaries, respectively. 69 KONICA MINOLTA, INC. Annual Report 2014

  • Page 71
    ...term debt is subject to designated hedge accounting under accounting principles generally accepted in Japan, their fair values are included as a single line item with the hedged underlying liability, long-term debt is not included in the above information. 70 KONICA MINOLTA, INC. Annual Report 2014

  • Page 72
    ... No provisions From August 18, 2008 to June 30, 2009 From August 19, 2008 to June 30, 2028 Directors and Executive Officers: 25 Common Stock: 199,500 August 19, 2009 No provisions From August 19, 2009 to June 30, 2010 From August 20, 2009 to June 30, 2029 71 KONICA MINOLTA, INC. Annual Report 2014

  • Page 73
    ...500 47,500 6,000 1,148,000 257,500 27,500 5,000 1,373,000 Per unit information Exercised Exercise price of stock options...Average market price of the stock at the time of exercise ...Fair value per unit (as of grant date) ... ¥ 1 833 728 ¥ 1 - 737 72 KONICA MINOLTA, INC. Annual Report 2014

  • Page 74
    ... and Rental Property (1) Conditions and Fair Values of Investment and Rental Property The Companies have office buildings for rent and idle assets, etc., in Japan and overseas. The book value on the consolidated balance sheet, the changes and the fair value as of March 31, 2014 and 2013 are...

  • Page 75
    ... MFPs, printers, and equipment for production printing systems and graphic arts, and provides related solution services. The Industrial Business manufactures and sells electronic materials (TAC films, etc.), performance materials, optical products (pickup lenses, etc.), and measuring instruments...

  • Page 76
    ... in property, plant and equipment and intangible fixed assets primarily represent capital expenditure on buildings in relation to the holding company. Thousands of U.S. dollars Total amounts in consolidated financial Adjustments statements 2014 Business Technologies Industrial Healthcare...

  • Page 77
    ... ¥224,817 ¥132,678 ¥63,596 ¥813,073 Note: Sales are divided into countries and regions based on the locations of customers. Thousands of U.S. dollars 2014 Japan U.S.A. Europe Asia Other Total Net sales...ii) Property, Plant and Equipment $2,072,843 $1,999,709 $2,937,855 $1,398...

  • Page 78
    ... Goodwill by Reportable Segments Information on amortization of goodwill and balance of goodwill for the years ended March 31, 2014 and 2013 is presented as follows: Millions of yen 2014 Business Technologies Industrial Healthcare Subtotal Other Eliminations and Corporate Total Amortization...

  • Page 79
    ... 30, 2014, Konica Minolta, Inc. (the "Company") approved the item related to the acquisition of its own shares based on Article 156 of the Japanese Corporate Law, which is applicable in accordance with Article 165, Paragraph 3 of the same law as well as the retirement of its treasury stock based on...

  • Page 80
    Independent Auditor's Report 79 KONICA MINOLTA, INC. Annual Report 2014

  • Page 81
    JP TOWER, 2-7-2 Marunouchi, Chiyoda-ku, Tokyo 100-7015, Japan Tel (81) 3-6250-2111 http://konicaminolta.com