Nikon 2011 Annual Report Download

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Annual Report
Year ended March 31, 2011

Table of contents

  • Page 1
    Annual Report Year ended March 31, 2011

  • Page 2
    ... optics such as digital cameras, camera-related products and binoculars to industrial precision equipment including IC and LCD steppers and scanners, microscopes and measuring instruments. In the fiscal year ended March 2011, Nikon posted an increase in sales and regained profitability, absorbing...

  • Page 3
    ...Interview with the President ...Review of Operations ...Precision Equipment Company ...Imaging Company ...Instruments Company ...Corporate Governance ...Nikon's CSR Initiatives ...Financial Section ...Management's Discussion and Analysis ...2 4 6 7 12 12 15 18 21 22 24 24 Consolidated Balance Sheets...

  • Page 4
    ... common stock information is computed based on the weighted average number of shares outstanding during the year. 2. U.S. dollar figures are translated for reference only at ¥83.15 to U.S.$1.00, the exchange rate at March 31, 2011. 3. Throughout this annual report, EBITDA is calculated as operating...

  • Page 5
    Nikon Corporation Annual Report 2011 3 Millions of Yen 2006 2007 2008 2009 2010 2011 Thousands of U.S. Dollars (Note 2) 2011 ¥ 730,944 468,944 195,413 66,587 87,347 40,925 28,945 ¥ 822,813 494,663 226,143 102,007 124,632 87,...

  • Page 6
    ... sustainable growth. The Four Basic Policies of the Medium Term Management Plan Expanding the Nikon brand Promote the "spirit of innovation" that is the strength of the Nikon brand, and combine this with the idea of "fun." Creating new businesses Create new businesses in existing and new fields...

  • Page 7
    ... Annual Report 2011 5 Key Measures of the Medium Term Management Plan Nikon regained profitability in the fiscal year ended March 2011 despite the impact from the Great East Japan Earthquake, and made progress toward achieving the goals of the previous medium term management plan announced...

  • Page 8
    ... sales pervormance ov the Imaging Company and recovery in the Precision Equipment Company and Instruments Company. The corporate structural revorms we implemented two years ago also contributed to this turnaround. The Nikon Group is working to build leading positions in all ov its major businesses...

  • Page 9
    ... an increase in unit sales of the cutting-edge IC steppers and scanners and LCD steppers and scanners for large-scale LCD panels. This enabled the Precision Equipment Company to post a large increase in net sales and return to profitability. In the Imaging Company, the digital SLR camera market...

  • Page 10
    ..., a product area in which Nikon excels. Based on these conditions, we anticipate substantial increases in net sales and operating income in the Precision Equipment Company in the fiscal year ending March 2012. In the Imaging Company too, we forecast steady growth in the digital SLR camera market and...

  • Page 11
    ... into full swing with sales of our new non-contact, three-dimensional (3D) measurement systems. On a fullyear basis, we are aiming to reach profitability in the Instruments Company. You have said that the Medium Term Management Plan aims to build a corporate group capable of continuously providing...

  • Page 12
    ... instruments business, we are working to build a leading position in the non-contact, 3D measurement systems field. What are your main policies regarding corporate social responsibility (CSR)? The Nikon Group has actively promoted the concept of CSR since 2006, when "CSR-oriented management...

  • Page 13
    Interview with the President Nikon Corporation Annual Report 2011 11 Please explain Nikon's policies regarding shareholder return. Nikon's basic policy regarding the distribution of earnings is to expand capital investment and R&D spending in business and technology development to ensure future...

  • Page 14
    ... earnings by enhancing the capabilities of the NSR-S620D ArF immersion scanner that is used for double patterning* to expand market share, and by increasing sales of products for small to medium-sized highprecision panels. Review of the Fiscal Year Ended March 2011 Unit sales of IC and LCD steppers...

  • Page 15
    ... 2012, we expect unit sales of ArF immersion scanners to be roughly equivalent to those of the previous fiscal year. Sales are gradually shifting from the previous model NSR-S610C system to the highly competitive, KAZU) USHIDA Director, Member of the Board and Senior Executive Officer President...

  • Page 16
    ... with full-fledged mass production emerging around 2018-19. Increase Sales of LCD Steppers and Scanners for Small to Medium-Sized High-Precision Panels For the fiscal year ending March 2012, we expect the market for LCD steppers and scanners (on a unit basis) to be roughly comparable to that of the...

  • Page 17
    .... Review of the Fiscal Year Ended March 2011 In the fiscal year ended March 2011, the Imaging Company achieved growth in unit sales across all three main product categories-digital SLR cameras, compact digital cameras and interchangeable lenses-compared with the previous fiscal year. As a result...

  • Page 18
    ...priced lenses performed strongly. The cumulative production of the NIKKOR lens for SLR cameras reached 60 million units during the fiscal year under review. Measures in the Medium Term Management Plan Bolstering Marketing Capabilities and Brand Strength while Developing Emerging Markets The digital...

  • Page 19
    Review of Operations: Imaging Company Nikon Corporation Annual Report 2011 17 share in such countries as India, China and Russia. Aiming to Expand Market Share in Europe In the European market, where Nikon has been slow to expand its sales, in the fiscal year ending March 2012-continuing on from...

  • Page 20
    ... Measures for the Medium Term Management Plan • Bioscience: Attain the leading position in advanced research fields • Industrial Instruments: Attain the leading position in non-contact, 3D measurement systems • Utilize the strengths of existing businesses to nurture and expand new businesses...

  • Page 21
    ... market for automotive instruments may dip temporarily as a result of the effects of the Great East Japan Earthquake, but we anticipate a growth trend over the medium term led by emerging markets. T)SHIYUKI MASAI Director, Member of the Board and Executive Officer President of Instruments Company

  • Page 22
    ... business on track. The company's business foundation has been in Europe, and we plan to restructure and integrate the development, manufacturing and sales structures to expand sales channels in Japan and other Asian countries. Turning Vision into Information In the instruments business, "precision...

  • Page 23
    ... Financial Instruments and Exchange Law (J-SOX). With business expansion in China and other areas of Asia, an Internal Audit Section was established in August 2010 at the Chinese/Asian regional headquarters in Hong Kong, to enhance the internal auditing functions at overseas Group companies. During...

  • Page 24
    ..., Environmental and Social Contribution committees, which are responsible for facilitating the spread and establishment of CSR measures throughout the Nikon Group. In the fiscal year ended March 2011, Nikon made preparations for the comprehensive promotion of CSR in Nikon Holdings Hong Kong Limited...

  • Page 25
    ... year Nikon's Sagamihara Plant and Sendai Nikon Corporation awarded the Minister's awards from Japan's Minister of Health, Labour and Welfare Received the highest ranking in the digital camera category of the"2010 After-sale Service Satisfaction Ranking" in Nikkei Business magazine Nikon CSR Report...

  • Page 26
    ...global demand for semiconductor devices led to an increase in unit sales for both IC and LCD steppers and scanners, with a considerable rise in revenue that restored profitability in the business. In the Imaging Products Business, the market for digital SLR cameras grew steadily in all regions, with...

  • Page 27
    ... ¥2,712 million (compared to an operating loss of ¥58,557 million the previous fiscal year). In the Imaging Products Business segment, sales of digital SLR cameras were positive, with steady sales of the entry model D3100 were steady, and remained strong for the mid-range D7000 model as well. For...

  • Page 28
    ...strengthen competitiveness." In accordance with this policy, the Company aims for a total return ratio of 25% or more, and to otherwise provide shareholder returns through dividend increases and the acquisition of treasury stock. For the fiscal year ended March 31, 2011, Nikon has increased its year...

  • Page 29
    ... on the earnings and financial position of the Nikon Group. 3. Dependence on Specific Customers The semiconductor industry, which composes the customer base for the Precision Equipment Business, is constantly shifting through mergers and alliances in order to adapt to the growing scale of capital...

  • Page 30
    ... of advanced technology progresses, competitors will launch a price-reduction offensive. In the Instruments Business, the maturing of the microscope market will enhance competition centered on product differentiation. Price competition is becoming tighter particularly in the market for mid-range and...

  • Page 31
    ..., earnings and financial position of the Nikon Group. 11. Information Leaks The Nikon Group possesses technical data and other important information, corporate data on its trading partners and personal information on many customers and other related persons. The Company strictly limits external...

  • Page 32
    30 Consolidated Balance Sheets Nikon Corporation and Consolidated Subsidiaries March 31, 2010 and 2011 Millions of Yen Thousands of U.S. Dollars (Note 1) 2010 ASSETS Current assets Cash and cash equivalents (Note 14) Notes and accounts receivable-trade (Note 14): Customers Unconsolidated ...

  • Page 33
    Financial Section Nikon Corporation Annual Report 2011 31 Millions of Yen Thousands of U.S. Dollars (Note 1) 2010 LIABILITIES AND EQUITY Current liabilities Short-term borrowings (Notes 6 and 14) Current portion of long-term debt (Notes 6 and 14) Notes and accounts payable-trade (Note 14): ...

  • Page 34
    ... Consolidated Statements of Operations Nikon Corporation and Consolidated Subsidiaries Years ended March 31, 2010 and 2011 Millions of Yen Thousands of U.S. Dollars (Note 1) Net sales Cost of sales Gross profit Selling, general and administrative expenses (Note 10) Operating income (loss) Other...

  • Page 35
    ... of Comprehensive Income Nikon Corporation and Consolidated Subsidiaries Year ended March 31, 2011 33 Millions of Yen Thousands of U.S. Dollars (Note 1) Net income before minority interests Other comprehensive income (Note 17): Unrealized loss on available-for-sale securities Deferred loss...

  • Page 36
    ... Nikon Corporation and Consolidated Subsidiaries Years ended March 31, 2010 and 2011 Thousands Millions of Yen Accumulated Other Comprehensive Income (Loss): Outstanding Number of Shares of Common Stock Common Stock Capital Surplus Stock Acquisition Rights Retained Earnings Treasury Stock...

  • Page 37
    ... (increase) in inventories Increase in notes and accounts payable-trade Increase (decrease) in advances received Increase in accrued expenses Other-net Total adjustments Net cash provided by operating activities Investing activities: Purchases of property, plant and equipment Proceeds from sales of...

  • Page 38
    ... used in 2011. The consolidated financial statements are stated in Japanese 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...

  • Page 39
    Financial Section Nikon Corporation Annual Report 2011 37 The Company applied this accounting standard effective April 1, 2008. In addition, the Company adjusted the beginning balance of retained earnings at April 1, 2008 as if this accounting standard had been retrospectively applied. (c) ...

  • Page 40
    ... funded pension plans. Certain foreign subsidiaries also have contributory pension plans. The Group accounts for the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. Retirement allowances for officers are recorded to state...

  • Page 41
    Financial Section Nikon Corporation Annual Report 2011 39 This standard requires companies to recognize compensation expense for employee stock options based on the fair value at the date of grant and over the vesting period as consideration for receiving goods or services. The standard also ...

  • Page 42
    ... consisted of the following: Millions of Yen Thousands of U.S. Dollars 2010 Non-Current: Equity securities Debt securities Investment in a limited liability investment partnership Total ¥52,974 0 926 ¥53,900 2011 ¥45,903 0 876 ¥46,779 2011 $552,044 4 10,532 $562,580 The carrying amounts and...

  • Page 43
    ... than the carrying amounts. The Group reviewed its long-lived assets for impairment as of March 31, 2011 and recognized an impairment loss of ¥398 million ($4,783 thousand) as other expense for machinery, equipment, buildings and structures in Japan, Asia and Europe. This is because these assets...

  • Page 44
    ...$120,265 120,265 120,265 120,265 $481,060 ¥52,900 The aggregate annual maturities of long-term debt at March 31, 2011 are as follows: Year Ending March 31 Millions of Yen Thousands of U.S. Dollars 2012 2013 2014 2015 2016 Thereafter Total ¥ 4,183 6,462 6,002 10,466 15,186 30,204 ¥72,503 $ 50...

  • Page 45
    ... funded pension plans. Certain foreign subsidiaries also have contributory pension plans. The Group accounted for the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. Retirement allowances for officers are recorded to state...

  • Page 46
    ... addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed...

  • Page 47
    Financial Section Nikon Corporation Annual Report 2011 45 (c) Treasury Stock and Treasury Stock Acquisition Rights The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock ...

  • Page 48
    ... ¥ 1,527 The assumptions used to measure the fair value of 2010 Stock Options which were granted on July 14, 2010 Estimated method: Black-Scholes option pricing model Volatility of stock price: 47.928% Estimate remaining outstanding period: fifteen years Estimated dividend: ¥8.00 per share Risk...

  • Page 49
    Financial Section Nikon Corporation Annual Report 2011 47 10. Selling, General and Administrative Expenses Selling, general and administrative expenses for the fiscal years ended March 31, 2010 and 2011 principally consisted of the following: Millions of Yen Thousands of U.S. Dollars ...

  • Page 50
    ... 31, 2010. The Group applied the revised accounting standard and the guidance effective March 31, 2010. (1) Group Policy for Financial Instruments The Group restricts fund management to short-term deposits, and funding is mainly treated by bank loans and bond issuance. Derivatives are used not for...

  • Page 51
    Financial Section Nikon Corporation Annual Report 2011 49 Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign currencies which involve the import of raw materials are exposed to the market risk of fluctuation in foreign currency...

  • Page 52
    ...of investment securities are measured at the quoted market price of the stock exchange. Investment securities whose fair value is not readily determinable (the carrying values of ¥1,150 million as of March 31, 2010 and ¥1,100 million ($13,230 thousand) as of March 31, 2011) are excluded because it...

  • Page 53
    Financial Section Nikon Corporation Annual Report 2011 51 15. Derivatives The Group enters into derivative contracts, including foreign exchange forward contracts, currency option contracts, foreign currency swap contracts and interest rate swap contracts to hedge foreign exchange risk and ...

  • Page 54
    ... are based on information provided by financial institutions. In case of transacting zero cost option contracts, only the fair value and unrealized loss (gain) corresponding option premiums are shown. Derivative transactions to which hedge accounting was applied at March 31, 2010 and 2011 were as...

  • Page 55
    Financial Section Nikon Corporation Annual Report 2011 53 Millions of Yen March 31, 2010 Hedged Item Contract Amount Contract Amount due after One Year Interest rate swaps: (fixed rate payment, floating rate receipt) Long-term debt ¥11,500 ¥1,500 Thousands of U.S. Dollars Contract ...

  • Page 56
    .../LCD steppers and scanners markets. As a part of this reform, the Precision Equipment Company's currently operating four production subsidiaries in Japan were reorganized and integrated into two subsidiaries for establishment of a production structure to substantially reduce fixed costs and enhance...

  • Page 57
    ... in the area of measuring instruments by achieving geographic synergy and further enhancing product line-up by increasing the Group's technological advantage through the promotion of product development based on the technological merger of the two companies. 4) Date of business combination: August...

  • Page 58
    ... domain, such as digital SLR cameras, compact digital cameras and interchangeable camera lenses. The Instruments Business provides products and services of microscopes, measuring instruments and inspection equipments. 2. Methods of Measurement for the Amounts of Sales, Profit (loss), Assets...

  • Page 59
    ... Nikon Corporation Annual Report 2011 57 Millions of Yen Reportable Segment Precision Equipment Imaging Products Instruments Total Other Total Reconciliations Consolidated For the year ended March 31, 2011 Sales Sales to external customers Intersegment sales or transfers Total Segment profit...

  • Page 60
    ... 37,525 Major products of each Industry: Precision Equipment: IC steppers, LCD steppers and scanners Imaging Products: Digital cameras, film cameras, interchangeable lenses Instruments: Microscopes, measuring instruments, inspection equipment Other: LCD photomask substrates, sport optics products

  • Page 61
    ... ...U.S.A., Canada Europe ...The Netherlands, Germany, United Kingdom, France, etc. Asia/Oceania ...China, South Korea, Taiwan, Thailand, Australia, etc. Notes: 1. Prior to April 1, 2008, inventories of the Company and its domestic subsidiaries were stated at cost, determined principally using the...

  • Page 62
    60 Independent Auditors' Report

  • Page 63
    )rganization of the Nikon Group 61 (As of March 31, 2011)

  • Page 64
    ... Nikon Group Companies ( Consolidated as of March 31, 2011) Europe â- â˜... Nikon Holdings Europe B.V. Centralized supply, administration and management of funds of affiliates in Europe Asia-Oceania â- â˜... Nikon Holdings Hong Kong Limited Promotion of CSR and Internal Audit to affiliates in Asia...

  • Page 65
    Nikon Corporation Annual Report 2011 63 Domestic â-Ž â-Ž The Americas â- â˜... Nikon Americas Inc. Centralized supply, administration and management of funds of affiliates in the U.S. 1 Nikon )ptical Shop Co., Ltd. Retail sales of ophthalmic frames and lenses Nikon-Essilor Co., Ltd.* ...

  • Page 66
    ... of Production Headquarters, Precision Equipment Company Kenichi Kanazawa Director, Member of the Board Norio Hashizume Executive Officer General Manager of Finance & Accounting Headquarters )samu Shimoda Operating Officer Deputy General Manager of Business Development Headquarters Corporate...

  • Page 67
    ...-ku, Tokyo 100-8212, Japan (As of March 31, 2011) For further information or additional copies of this annual report, please contact the Corporate Communications & IR Department. Homepage: Nikon has created a Web site specifically for investors containing released financial reports, fact books and...

  • Page 68
    Shin-Yurakucho Bldg., 12-1, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-8331, Japan www.nikon.com This report is printed on Forest Stewardship Counmil (FSC)â„¢-mertified paper using volatile organim mompound (VOC)-free ink montaining no volatile organim solvents. A waterless printing method has been ...