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annual฀report
2004
2003. 7
Printed in Japan
Fuji Bldg., 2-3, Marunouchi 3-chome, Chiyoda-ku
Tokyo 100-8331, Japan
www.nikon.co.jp/eng/

Table of contents

  • Page 1
    Fuji Bldg., 2-3, Marunouchi 3-chome, Chiyoda-ku Tokyo 100-8331, Japan annual฀report 2004 www.nikon.co.jp/eng/ Pr

  • Page 2
    ...฀statements฀due฀to฀ changes฀in฀various฀factors,฀including-but฀not฀limited฀to-economic฀conditions฀in฀principal฀markets,฀product฀and฀service฀ demand฀trends,฀customer฀capital฀investment฀trends,฀and฀currency฀exchange฀rate฀ï¬, ฀uctuations.฀

  • Page 3
    ... 2004 F O R฀T H E ฀Y E A R Net฀sales Operating฀income Net฀income฀(loss) Per฀share฀of฀common฀stock฀(Yen฀and฀U.S.฀dollars): Basic฀net฀income฀(loss) Diluted฀net฀income Cash฀dividends฀applicable฀to฀the฀year AT ฀Y E A R - EN D Total฀assets Shareholders...

  • Page 4
    ...฀such฀an฀environment,฀Nikon฀worked฀hard฀ to฀expand฀sales฀and฀increase฀profitability฀by฀developing฀new฀products฀that฀fit฀market฀needs฀and฀expanding฀ overseas฀networks฀of฀production,฀marketing฀and฀customer฀service฀facilities.฀We฀made...

  • Page 5
    ...฀and฀stimulate฀new฀growth฀in฀the฀year฀ending฀March฀2005,฀thereby฀ restoring฀profitable฀earning฀structures.฀Our฀strategy฀is฀to฀ launch฀competitive฀products฀in฀markets฀that฀are฀expanding฀(SLR-type฀digital฀cameras฀and฀LCD฀steppers)฀or...

  • Page 6
    message฀from฀ the฀chief฀executive฀offi ฀cer transformation฀ and฀ progression 4

  • Page 7
    ...฀semiconductor฀market฀and฀ an฀improving฀business฀environment.฀We฀plan฀to฀ adopt฀an฀aggressive฀stance฀to฀achieve฀this฀aim. Reports฀by฀the฀presidents฀of฀each฀in-house฀ company฀within฀the฀Nikon฀Group฀elsewhere฀in฀this฀ report฀provide...

  • Page 8
    ...฀corporate฀ethics,฀environmental฀activities฀and฀contributions฀to฀the฀local฀ community฀to฀deepen฀trust฀from฀all฀stakeholders฀ -฀customers,฀shareholders฀and฀society฀at฀large. Building฀Greater฀Nikon฀Group฀Cohesiveness The฀most฀important฀issue...

  • Page 9
    ...฀Sales precision฀equipment imaging฀products instruments other review฀of฀operations Precision฀Equipment IC฀and฀LCD฀steppers Imaging฀Products digital฀cameras,฀ film฀cameras,฀ interchangeable฀camera฀lenses,฀ film฀scanners Instruments biological฀microscopes...

  • Page 10
    ....฀ We฀made฀steady฀progress฀in฀the฀year฀ended฀March฀ 2004฀by฀taking฀the฀measures฀that฀I฀outlined฀in฀last฀ year's฀annual฀report.฀First,฀we฀worked฀to฀entrench฀ the฀position฀of฀Nikon฀in฀steppers฀based฀on฀the฀latest฀ technical...

  • Page 11
    ...during฀the฀year฀ ended฀March฀2004฀in฀the฀fi ฀eld฀of฀LCD฀steppers.฀We฀ began฀shipments฀of฀the฀FX-61S/63S฀sixth-generation฀ model,฀which฀can฀handle฀the฀largest฀glass฀substrates฀ in฀the฀world,฀currently฀used฀in฀the฀production฀of...

  • Page 12
    ...฀Nikon฀adopted฀its฀new฀corporate฀brand฀symbol,฀ we฀chose฀the฀branding฀statement฀"At฀the฀heart฀of฀the฀ image"฀to฀summarize฀our฀commitment฀to฀customers.฀ The฀emphasis฀in฀the฀digital฀camera฀market฀continues฀ to฀shift฀toward฀models...

  • Page 13
    ...into฀a฀network฀that฀connects฀Nikon฀to฀ customers,฀while฀also฀allowing฀us฀to฀market฀software฀ that฀we฀have฀developed.฀This฀year฀we฀also฀announced฀ to฀launch฀COOLWALKER,฀a฀products฀that฀allows฀people฀ to฀share฀digital฀images฀that...

  • Page 14
    ...-year). Although฀net฀sales฀for฀the฀year฀ended฀March฀2004฀ dipped฀slightly฀relative฀to฀the฀previous฀year,฀we฀ generated฀signifi ฀cantly฀higher฀operating฀income.฀ Considering฀the฀weakness฀of฀markets฀for฀biological฀ microscopes฀in฀Europe...

  • Page 15
    ...reduce฀costs฀further,฀we฀plan฀to฀ raise฀production฀capacity฀at฀our฀microscope฀production฀facility฀in฀China฀(Nanjing฀Nikon฀Jiangnan฀Optical฀ Instrument฀Co.,฀Ltd.).฀We฀also฀plan฀to฀upgrade฀our฀ marketing฀and฀after-sales฀customer฀service...

  • Page 16
    .... In฀ophthalmic฀products,฀sales฀of฀฀ophthalmic฀lenses฀increased฀ in฀overseas฀markets,฀while฀sales฀of฀frames฀and฀sunglasses฀declined฀amid฀sluggish฀sales฀in฀Japan. 14 Business฀Strategy Three฀new฀businesses฀are฀set฀to฀drive฀future฀growth...

  • Page 17
    ...Nikon฀Corporation฀is฀the฀fi ฀rst฀company฀in฀ the฀world฀to฀develop฀a฀commercial฀product฀based฀on฀ terahertz฀technology.฀The฀terahertz฀pulse฀spectrometer฀is฀able฀to฀recognize฀substances฀using฀terahertz฀light฀ shined฀onto฀the฀object...

  • Page 18
    ...฀emissions฀(converted฀for฀CO2 )฀per฀net฀sales฀compared฀ with฀fi ฀gures฀for฀fi ฀scal฀2002฀by฀fi ฀scal฀2007,฀and฀a฀ 25%฀reduction฀by฀fi ฀scal฀2011 •฀ Use฀of฀eco-glass฀in฀100%฀of฀new฀consumer฀product฀optical฀designs...

  • Page 19
    ... 2002 2001 2000 Thousands of U.S. Dollars 2004 For the year Net sales Cost of sales SG&A expenses Operating income Income (loss) before income taxes and minority interest Net income (loss) Per share of common stock (Yen and U.S. dollars): Basic net income (loss) Diluted net income Cash dividends...

  • Page 20
    ... and the advanced research microscope Eclipse80i. Breaking down results by geographic segment, sales increased in Japan as steady growth in LCD products offset slumping sales of steppers despite a mild recovery in the semiconductor market. Continued expansion in the digital camera market also had...

  • Page 21
    ... INCOME PER SHARE (Â¥) 2004 2003 2002 2001 2000 6.02 CAPITAL EXPENDITURES (Â¥ Million) 2004 2003 2002 2001 2000 22,267 20,226 33,546 25,996 13,881 R&D COSTS (Â¥ Million) 2004 2003 2002 2001 2000 30,165 27,506 27,313 22,794 17,798 SHAREHOLDERS' EQUITY (Â¥ Million) 2004 2003 2002 2001 2000 171,194...

  • Page 22
    ... NIKON CORPORATION AND CONSOLIDATED SUBSIDIARIES MARCH 31, 2004 AND 2003 Millions of Yen 2004 2003 Thousands of U.S. Dollars (Note 1) 2004 ASSETS Current assets Cash and cash equivalents Notes and accounts receivable - trade (Note 6): Customers Unconsolidated subsidiaries and associated companies...

  • Page 23
    ... (Note 8) Retained earnings (Note 8) Unrealized gain (loss) on available-for-sale securities Foreign currency translation adjustments Treasury stock, at cost: 626,596 shares in 2004 and 550,081 shares in 2003 Total shareholders' equity Total See Notes to Consolidated Financial Statements. 36,661 51...

  • Page 24
    consolidated statements of operations NIKON CORPORATION AND CONSOLIDATED SUBSIDIARIES YEARS ENDED MARCH 31, 2004 AND 2003 Millions of Yen 2004 2003 Thousands of U.S. Dollars (Note 1) 2004 Net sales (Note 3) Cost of sales (Note 3) Gross profit ¥ 506,378 346,898 159,480 155,805 3,675 808 (2,356)...

  • Page 25
    consolidated statements of shareholders' equity NIKON CORPORATION AND CONSOLIDATED SUBSIDIARIES YEARS ENDED MARCH 31, 2004 AND 2003 Thousands outstanding Number of Shares of Common Stock Common Stock Capital Surplus Millions of Yen Unrealized Foreign Gain (Loss) on Currency Retained Available-...

  • Page 26
    ... statements of cash ï¬,ows NIKON CORPORATION AND CONSOLIDATED SUBSIDIARIES YEARS ENDED MARCH 31, 2004 AND 2003 Millions of Yen 2004 2003 Thousands of U.S. Dollars (Note1) 2004 Operating activities: Income (loss) before income taxes and minority interest Adjustments for: Income taxes-refund (paid...

  • Page 27
    ... yen, the currency of the country in which Nikon Corporation (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥105.69 to U.S.$1, the...

  • Page 28
    ... useful lives is principally from 30 to 40 years for buildings and structures, and from 5 to 10 years for machinery and equipment. (f) Bond Issue Costs Bond issue costs are charged to income as incurred. (g) Retirement and Pension Plans The Company and major subsidiaries have non-contributory funded...

  • Page 29
    ... applicable to the respective years including dividends to be paid after the end of the year. Cash dividends per share for the year ended March 31, 2003 are not disclosed, because there were no dividends. (p) New Accounting Pronouncements In August 2002, the Business Accounting Council issued...

  • Page 30
    ...2004 Cost Thousands of U.S. Dollars Unrealized Unrealized Gains Losses Fair Value Securities classified as: Available-for-sale: Equity securities Debt securities Total $ 374,180 5 $ 374,185 $ 100,325 $ 100...realized losses on these sales for the fiscal years ended March 31, 2004 and 2003 were ...

  • Page 31
    ..., less current portion ¥ 11,098 165,500 176,598 (12,727) ¥ 163,871 ¥ 10,017 151,000 161,017 (22,208) ¥138,809 $ 105,000 1,565,900 1,670,900 (120,416) $1,550,484 The following was a summary of the terms of bonds which the Company may at any time purchase at any price in the open market or...

  • Page 32
    ... above-mentioned exercise price. The yen zero coupon convertible bonds were issued with stock acquisition rights to subscribe for shares of common stock of the Company. The stock acquisition rights are exercisable through March 14, 2011 at ¥2,058 per share. The stock acquisition rights outstanding...

  • Page 33
    ... 2004 2003 Discount rate Expected rate of return on plans assets Recognition period of actuarial gain (loss) Amortization period of prior service cost 2.5% 2.0% 10 years 10 years 2.5% 2.0% 10 years 10 years 8. SHAREHOLDERS' EQUITY The Company is subject to the Japanese Commercial Code (the "Code...

  • Page 34
    ...years ended March 31, 2004 and 2003 principally consisted of the following: Thousands of U.S. Dollars 2004 Millions of Yen 2004 2003 Advertising expenses Provision of warranty costs Employees' salaries Employees' retirement benefit plan Employees' bonuses and others Research and development costs...

  • Page 35
    ... fiscal years ended March 31, 2004 and 2003 was as follows: Millions of Yen 2004 Furniture and Fixtures Thousands of U.S. Dollars 2004 Furniture Machinery and and Equipment Fixtures Machinery and Equipment Total Total Acquisition cost Accumulated depreciation Net leased property ¥ ¥ 6,510...

  • Page 36
    ... with internal policies which regulate the authorization and credit limit amount. Derivative contracts outstanding at March 31, 2004 and 2003, were as follows: Millions of Yen 2004 Contract or Notional Amount Net Unrealized Gain (Loss) Thousands of U.S. Dollars 2004 Net Contract or Unrealized...

  • Page 37
    ... Net income Thousands of shares Weighted average Shares Yen EPS U.S.Dollars For the year ended March 31, 2004: Basic EPS Net income available to common shareholders Effect of Dilutive Securities Warrants Convertible bonds Diluted EPS Net income for computation ¥ 2,410 400,336 ¥ 6.02 $ 0.057 40...

  • Page 38
    ... at an exercise price of 105% of the fair market value of the Company's common stock at the prior month of the date of option grant. (b) Purchase of treasury stock At the General Meeting of Shareholders held on June 29, 2004, the Articles of Incorporation were partially amended so as to read, "In...

  • Page 39
    ...513 Millions of Yen Japan North America Europe Asia Total (Eliminations) or corporate Consolidated For the year ended March 31, 2003 Net sales Outside customers Intersegment sales Total Operating expenses Operating income (loss) Assets ¥ 179,722 ¥ 158,676 ¥ 100,611 ¥ 218,900 1,741 238 398,622...

  • Page 40
    Thousands of U.S. Dollars Japan North America Europe Asia Total (Eliminations) or corporate Consolidated For the year ended March 31, 2004 Net sales Outside customers Intersegment sales Total Operating expenses Operating income (loss) Assets (c) Export Sales $ 1,859,796 $ 1,406,906 $ 1,174,510 $ ...

  • Page 41
    independent auditors' report 39

  • Page 42
    ... of฀new฀business,฀development฀of฀basic฀technology฀ common฀to฀the฀Nikon฀Group,฀protection฀of฀intellectual฀ property฀and฀manufacturing฀technology Precision฀Equipment฀Company 5 Development,฀manufacture฀and฀sales฀of฀IC฀and฀LCD฀ steppers Imaging...

  • Page 43
    .... Sales฀and฀maintenance฀service฀of฀microscopes,฀measuring฀instruments,฀inspection฀equipment,฀etc. nikon฀group฀companies฀(overseas) AS฀OF฀JULY฀1,฀2004 Name 1 2 5 Beijing฀Nikon฀Ophthalmic฀Products฀Co.,฀Ltd. Nikon฀Americas฀Inc. Nikon฀Holdings฀Europe...

  • Page 44
    ...฀of฀Precision฀Equipment฀Company President฀of฀Core฀Technology฀Center฀&฀General฀Manager฀of฀Production฀Technology฀ Headquarters,฀Core฀Technology฀Center President฀of฀Corporate฀Strategy฀Center฀& Vice฀President฀of฀Business฀Administration฀Center...

  • Page 45
    ...31,฀2004) Price฀Range฀of฀Common฀Stock฀(¥) 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 1st For฀further฀information฀or฀additional฀copies฀of฀this฀annual฀report,฀ please฀contact฀the฀Corporate฀Communications฀&฀IR฀Department. Homepage...

  • Page 46
    Fuji Bldg., 2-3, Marunouchi 3-chome, Chiyoda-ku Tokyo 100-8331, Japan www.nikon.co.jp/eng/ 2003. 7 Printed in Japan