Nikon 2006 Annual Report Download

Download and view the complete annual report

Please find the complete 2006 Nikon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 54

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54

Nikon
Annual Report
2006

Table of contents

  • Page 1
    Nikon Annual Report 2006

  • Page 2
    ...such as digital cameras, as well as binoculars and other optical products for consumers, such as glasses frames. These items complement our diverse array of industrial precision equipment that includes semiconductor-related equipment, notably steppers, microscopes and measuring instruments. In order...

  • Page 3
    ... HIGHLIGHTS Nikon Corporation and Consolidated Subsidiaries Years ended March 31, 2006 and 2005 NET SALES (millions...Dollars % 2006 FOR THE YEAR Net sales Operating income Net income Per share of common stock (Yen and U.S. Dollars): Basic net income Diluted net income Cash dividends applicable...

  • Page 4
    ... to enhance user-friendliness such as functions that ensure optimized pictures, but also technologies accumulated in digital SLR cameras. We will continue to deliver to market models with the unique Nikon identity. In the Instruments business, one of the most promising areas for development is in...

  • Page 5
    Ichiro Terato Executive Vice President, Member of the Board & Chief Financial Officer Michio Kariya President, Member of the Board, Chief Executive Officer & Chief Operating Officer N E T I N CO M E ( LOSS ) PA R SH A RE (yen) 06 05 0 4 6.52 03 (22.03 ) 02 (16.23 ) Years ended ...

  • Page 6
    ... on pages 22-23 of this Annual Report. Finally, as members of top management, it is our duty to relay the fact that Nikon is now undergoing immense change. Another key objective of the medium term management plan is to foster a free and open-minded corporate culture so that motivation levels are...

  • Page 7
    ... Term Management Plan Background The business environment surrounding Nikon is changing at a fast rate. There has been further shrinkage of semiconductor devices and the market has expanded through diverse products that use semiconductors. Meanwhile, LCD panels continue to get larger. The digital...

  • Page 8
    ...,000 100,000 50,000 0 30% Expansion of bioscience market 01 02 03 04 05 06 09 Years ended and ending March 31 Management policy The main concept is to move way from the corporate structure that has been greatly inï¬,uenced by changes in the business environment and create a "Strong Nikon...

  • Page 9
    ... to create new markets by developing and proposing new products. In the year ending March 31, 2009, we aim to secure over 40% share of the digital SLR camera market. Instruments Company In the bioscience field, Nikon aims to expand its solutions business in observation of live cells which attracts...

  • Page 10
    ... O F O P E R AT I O N S PRECISION EQUIPMENT Introduction of tandem stage realizes practical application of immersion scanner The newly developed tandem stage consists of an exposure stage and a calibration stage. As the name suggests, the exposure stage occurs when the wafer is placed on the stage...

  • Page 11
    ... present, only immersion scanners support the mass-production of advanced 55 nm and smaller devices. And these immersion scanners will have a significant position in the IC stepper market. In January 2006, Nikon began shipping the NSR-S609B ArF immersion scanner with a lens with an NA value of 1.07...

  • Page 12
    ...fident that it has secured lasting product competitiveness in the LCD exposure system market, including for small- and medium-size panels. Key objectives of the medium term management plan 1. In IC steppers and scanners: a) Nikon aims to gain top market share in ArF systems, including cutting-edge...

  • Page 13
    Kazuo Ushida Managing Director, Member of the Board & Senior Executive Officer President of Precision Equipment Company N E T S A L E S* (millions of yen) 06 05 04 Years ended March 31 *The above figures include intersegment sales. 243,207 214,326 158,05 4 O P E R AT I N G I N CO M E ( LOSS) (...

  • Page 14
    ... Nikon's line-up of high-end to mid-range cameras suited to advanced amateurs and professionals. Nikon intends to further bolster its presence in the digital SLR camera market in the future. *As of November 1, 2005, among digital SLR cameras with interchangeable lenses. Applying original technology...

  • Page 15
    ... March 2006 ensured a substantial increase in sales of these products. In line with this, sales of interchangeable lenses also expanded significantly. In the compact digital camera market, Nikon launched its "Performance (P) series" equipped with a high-precision Vibration Reduction (VR) system as...

  • Page 16
    ... fundamental technologies aimed at developing products for the future. Camera Grand Prix 2006 The Nikon D200 digital SLR camera, launched in 2005, was awarded the "Camera Grand Prix 2006" award in Japan and was also named "Best D-SLR Expert in Europe 2006" by the Technical Image Press Association...

  • Page 17
    Makoto Kimura Senior Managing Director, Member of the Board & Senior Executive Officer, President of Imaging Company N E T S A L E S* (millions of yen) 06 05 04 Years ended March 31 *The above figures include intersegment sales. 416,607 355,4 89 28 4,713 O P E R AT I N G I N CO M E (millions ...

  • Page 18
    ... IM (cell IMaging) cell culture observation systems to meet needs in the growing market for live cell observation. The BioStation CT enables the stable and safe cultivation of cells and facilitates quality control. The BioStation IM (shown at left), which provides video images of cell activities, is...

  • Page 19
    ... distinctive features, including the new spectral imaging confocal microscope C1Si and the Perfect Focus System. Sales in the industrial instruments business exceeded levels posted in the prior year. Nikon expanded sales of the NEXIV series of CNC video measuring systems with the introduction of the...

  • Page 20
    ... product development costs, which in turn will contribute to expanded sales and profits. 2. In the biological microscopes field, Nikon seeks to expand business in live cell imaging systems. 3. With the cooperation of other departments, Nikon Focus on video measuring systems Non-contact measuring...

  • Page 21
    ... wide wavelength range to the 4-dimensional data acquisition function of the C1 and you get 5-dimensional capability (previously impossible) with this true spectral imaging confocal laser scanning microscope system BioStation CT BioStation CT (Cell Tracking) cell culture observation system enabling...

  • Page 22
    ... strong in customized products and glass-related operations. 2. Significant sales growth was posted in the sport optics products business as a result of efforts to expand sales of new products such as in the Laser Rangefinder and Fieldscope series. 3. Sales of ophthalmic products declined owing...

  • Page 23
    ..., demand has been increasing for a system that allows users to both observe and take pictures of microscopic images easily. The Fieldmicroscope EZ-Micro was developed to do just that by incorporating a COOLPIX digital camera (limited to certain models) equipped with a special bracket and a light...

  • Page 24
    ... accounting auditors access to the data when required. In terms of information security, we have clearly elucidated Implementation of policies concerning corporate governance In October 1999, Nikon introduced an in-house company system featuring decentralized management, with an integrated system...

  • Page 25
    ... the effectiveness of its information management. The Risk Management Committee was created in April 2006 to formulate risk management policies that incorporate business continuity plans and internal controls in numerous fields, including corporate ethics, environmental management, quality control...

  • Page 26
    ... management, Nikon's Basic Environmental Policy was formulated in 1992, and since then, efforts have focused on environmental protection based on the central ideals of "recycling" and "coexistence." Specifically, an Environmental Committee has been set up to encourage eco-conscious activities group...

  • Page 27
    ...Products, the digital camera market continued moderate expansion. Net Sales by Industry Segment Years ended March 31, 2006 and 2005 Millions of Yen, % 2006 2005 Thousands of U.S. Dollars 2006 Precision Equipment Share of net sales Imaging Products Share of net sales Instruments Share of net sales...

  • Page 28
    ...the COOLPIX line and the range of digital SLR cameras. The Instruments Business registered net sales of ¥53,280 million, up 5.2%, and operating income of ¥4,085 million. This result was due to aggressive efforts to raise sales of new products and the CNC video measuring system NEXIV. Breaking down...

  • Page 29
    ... Analysis March 31, 2006 and 2005 2006 (% of Total Assets) 2005 Total assets Total current assets Inventories Property, plant and equipment Investments and other assets Total current liabilities Short-term borrowings Long-term debt, less current portion Shareholders' equity 100.0% 67.9 34.6 16...

  • Page 30
    ... 2005 Thousands of U.S. Dollars (Note 1) 2005 2006 Millions of Yen 2006 ASSETS Current assets Cash and cash equivalents Notes and accounts receivable - trade: Customers Unconsolidated subsidiaries and associated companies Allowance for doubtful receivables Inventories (Note 4) Deferred tax assets...

  • Page 31
    ...Retained earnings (Note 8) Unrealized gain on available-for-sale securities Foreign currency translation adjustments Treasury stock, at cost: 585,198 shares in 2006 and 484,180 shares in 2005 Total shareholders' equity Total See Notes to Consolidated Financial Statements. 185 36,661 51,933 130,405...

  • Page 32
    ...sales of property, plant and equipment Gain on sales of investment securities Proceeds from settlement of legal proceedings against patent Proceeds from patents and know-how licenses Loss on patent settlement Cumulative effect of accounting change for the retirement benefits to directors, corporate...

  • Page 33
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Nikon Corporation and Consolidated Subsidiaries Years ended March 31, 2006 and 2005 Thousands Outstanding Number of Shares of Common Stock Millions of Yen Unrealized Foreign Gain on Currency Retained Available-for- Translation Earnings sale Securities ...

  • Page 34
    ...) in inventories Increase (decrease) in notes and accounts payable-trade Other-net Total adjustments Net cash provided by operating activities Investing activities: Capital expenditures Proceeds from sales of property, plant and equipment Purchases of investment securities Proceeds from sales of...

  • Page 35
    ... of shareholders' equity. Non-marketable available-for-sale securities are stated principally at moving-average cost. For other than temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income. (d) Inventories Inventories of the Company and...

  • Page 36
    ...The Group is active in research and development, and such costs are charged to income as incurred. (k) Leases All leases are accounted for as operating leases by the Company and its domestic subsidiaries. Under Japanese accounting standards for leases, finance leases that deem to transfer ownership...

  • Page 37
    ... ASBJ issued, "Accounting Standard for Stock Options" and related guidance. The new standard and guidance are applicable to stock options newly granted on and after May 1, 2006. This standard requires companies to recognize compensation expense for employee stock options based on the fair value at...

  • Page 38
    ... ASBJ Practical Issues Task Force (PITF) No.13, "Accounting Treatment for Bonuses to Directors and Corporate Auditors," which encouraged companies to record bonuses to directors and corporate auditors on the accrual basis with a related charge to income, but still permitted the direct reduction of...

  • Page 39
    ... $ 107,534 Millions of Yen 2006 2005 Thousands of U.S. Dollars 2006 Loans, principally from banks and insurance companies: 2006: 0.33188%-5.510% due 2007-2013 2005: 0.50%-5.510% due 2006-2013 Bonds Total Less: Current portion Long-term debt, less current portion ¥ 20,699 145,500 166,199 (77,556...

  • Page 40
    ...Dollars 2007 2008 2009 2010 2011 Thereafter Total ¥ 77,556 21,686 7,576 10,381 44,500 4,500 ¥ 166,199 $ 660,218 184,610 64,496 88,372 378,820 38,308 $1,414,824 The yen zero coupon convertible bonds were issued with stock acquisition rights to subscribe for shares of common stock of the Company...

  • Page 41
    ...period of prior service cost 2.5% 2.0% 10 years 10 years 2.5% 2.0% 10 years 10 years 8. SHAREHOLDERS' EQUITY Through may 1, 2006, Japanese companies are subject to the Commercial Code of Japan (the "Code"). The Code requires that all shares of common stock be issued with no par value and at least...

  • Page 42
    ... price of 105% of the fair market value of the Company's common stock at the prior month of the date of option grant. 17,000 shares of the stock option approved by the Company's shareholders on June 27, 2003 were exercised for the year ended March 31, 2006. On May 1, 2006, a new corporate law...

  • Page 43
    ...-down of inventories Warranty reserve Liability for employees' retirement benefits Depreciation and amortization Net operating loss carryforwards Accrued bonus Other Total Deferred tax liabilities : Deferred gains on sales of property to be replaced Unrealized gain on available-for-sale securities...

  • Page 44
    ... contracts to hedge foreign exchange risk and interest rate exposures. The Group does not hold or issue derivatives for trading purposes. Derivatives are subject to market risk and credit risk. Market risk is the exposure created by potential ï¬,uctuations in market conditions, including in changes...

  • Page 45
    ... 15 5 (4) ¥ 20,000 10,000 ¥ 30,000 ¥ ¥ 517 (462) 55 ¥ ¥ 517 (462) 55 Derivatives which qualified for hedge accounting and related amounts are included with the associated assets and liabilities, and were excluded from disclosure of market value information in the preceding table. 43

  • Page 46
    ... appropriations of retained earnings at March 31, 2006 were approved at the Company's shareholders meeting held on June 29, 2006: Millions of Yen Thousands of U.S. Dollars Year-end cash dividends, ¥6.00 ($0.05) per share Bonuses to directors and corporate auditors ¥ 2,216 72 $ 18,866 613 44

  • Page 47
    ...,348 7,844 26,357 219,776 219,776 IC steppers, LCD steppers Digital cameras, Cameras, Interchangeable camera lenses Microscopes, Measuring instruments, Inspection equipment Sport optics products, Ophthalmic frames, Surveying instruments Note: Amortization of Goodwill is included in "Depreciation...

  • Page 48
    ...(888) ¥ 30,545 ¥ (19,282) ¥ 633,426 Thousands of U.S. Dollars Japan North America Europe Asia Total (Eliminations) or corporate Consolidated For the year ended March 31, 2006 Net sales Outside customers Intersegment sales Total Operating expenses Operating income Assets $ 2,340,234 $ 1,845,993...

  • Page 49
    INDEPENDENT AUDITORS' REPORT 47

  • Page 50
    .... Core Technology Center 4 Activities related to investigation and development 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...

  • Page 51
    ... Sales, maintenance and servicing of microscopes, measuring instruments, and inspection equipment OV E R SE A S CO M PA N I ES Name 1 2 5 Beijing Nikon Ophthalmic Products Co., Ltd. Nikon Americas Inc. Nikon Holdings Europe B.V. Nikon Precision Inc. Nikon Research Corporation of America Nikon...

  • Page 52
    ... & Accounting Department, Corporate Strategy Center General Manager of Marketing Management Department, Imaging Company General Manager of Development Headquarters, Precision Equipment Company General Manager of Customized Products Division & General Manager of Sales Department, Customized Products...

  • Page 53
    ... 1.600 1.500 1.400 1,300 1,200 1,100 1,000 1st 2nd 3rd 4th 1st 2nd 3rd 4th Year ended March 31, 2005 Year ended March 31, 2006 For further information or additional copies of this annual report, please contact the Corporate Communications & IR Department. Homepage: Nikon has created a Web...

  • Page 54
    WWWNIKONCOJPENG ฀ ฀ Printed in Japan