Olympus 2002 Annual Report Download

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ANNUAL REPORT 2002
focusing on our strengths
OPTO-DIGITAL TECHNOLOGY

Table of contents

  • Page 1
    ANNUAL REPORT 2002 focusing on our strengths O P T O - D I G I TA L T E C H N O LO G Y

  • Page 2
    ... technologies. Olympus main- tains excellence in all three of its product groups: the Imaging Systems Group, which includes digital cameras, film cameras, and recorders; the Medical Systems Group, which offers medical endoscopes that lead the world market, biological microscopes, clinical analyzers...

  • Page 3
    ...=US$1. 3. The above figures are based on accounting principles generally accepted in Japan. 4. Diluted net income per share its not presented due to the fact that there were no potentially dilutive common shares. 1 Net Sales (Billions of yen) 600 500 400 300 200 100 0 1998 1999 2000 2001 2002 365...

  • Page 4
    ... for the Olympus Group increased 19.1% to ¥42,283 million (US$338 million). Rising profits from medical products compensated for a deficit caused by worsening profit margins stemming from severe price competition for digital cameras. An income structure in which the profitable Medical Systems Group...

  • Page 5
    ... prices. Olympus holds a leading share of this market, but is in the red. Could you please explain your plans for a turnaround? Our digital camera business has a problem with its profit structure. However, the points for improvement are very clear. O lympus's digital camera business has a problem...

  • Page 6
    ... keyword in this process is "OPTO-Digital Technology." OPTODigital Technology, a fusion of optical and digital technologies, is the base on which our core businesses of endoscopes and cameras have been built. At the same time, this base gives rise to strategic new business fields. Olympus is seeking...

  • Page 7
    ... Company." You might think that "value creation" means rising share prices. But the value creation that Olympus envisions is one in which we offer new value in the course of our business activities, and that brings about a lifestyle of health and happiness for all people. It is also a corporation...

  • Page 8
    ...Imaging Systems Group, with special focus on digital cameras, in order to improve its profit structure. A new corporate structure went into effect on April 1, 2002. By constructing a new business model that integrates all aspects of the process, from development to manufacture and sales, Olympus has...

  • Page 9
    ... ZOOM digital camera has been wildly popular, and we are hearing from stores that they never have enough stock. During the long holiday the factory was in full operation. The approximately 200 employees of Olympus ProMarketing, Inc., the company responsible for marketing in Japan, were integrated...

  • Page 10
    ...camera has been wildly popular, and we are hearing from stores that they never have enough stock. During the long holiday in Japan in May the factory was in full operation. Since we are a producer of consumer goods we must deliver the products that customers need as soon as possible, and an employee...

  • Page 11
    ... to a good start, and as we secure our footing and move forward, all company employees around the world will work together from conception to production. 9 major brand status supplying with efficiency improving quality control There was a time when we held 3.2 months of component stock. That...

  • Page 12
    ... OF OPERATIONS Imaging Systems Group CAMEDIA C-40 ZOOM 10 The Imaging Systems Group handles consumer products such as digital cameras, film cameras, binoculars and recorders. Sales during fiscal 2002 rose 13.5% from the previous fiscal year to ¥208,447 million (US$1,668 million), bolstered by...

  • Page 13
    ... as a versatile mobile voice recording tool. S 11 S ales of film cameras declined 7.3% from the previous fiscal year to ¥60,497 million (US$484 million). New products were launched in our leading series such as µ [mju:] (Stylus in the United States), SuperZoom (Accura Zoom in the United States...

  • Page 14
    REVIEW OF OPERATIONS Medical Systems Group 12 The Medical Systems Group handles products used by medical institutions such as endoscopes, clinical analyzers and biological microscopes. Olympus's endoscopes in particular are trusted by doctors around the world for their high level of picture ...

  • Page 15
    ...6,600 tests per hour, Olympus offers the broadest standardized line of chemistry-immuno analyzers and reagents for serum and urine testing, meeting the high productivity demands of customers from small to mid-size S Clinical analyzer, the AU5400 series Biological microscopes, IX81 (left) and IX71

  • Page 16
    ... of industrial microscopes declined 9.3% to ¥18,771 million (US$150 million). Industrial microscopes are used as part of in-line quality management systems employing microscopes to inspect semiconductors and liquid crystal panels. During fiscal 2002, sales declined due to the downturn in capital...

  • Page 17
    ...million (US$71 million). The principal uses of industrial endoscopes are in the maintenance of buildings and tunnels, and in the inspection and repair of jet engines and nuclear power facilities. During the period under review, sales of the new videoscope system IPLEX were strong. IPLEX features all...

  • Page 18
    ...-dimensional, microscopic new materials. Olympus also launched the MEMS (Micro-Electro Mechanical System) Foundry Services, which provide developed technology to external users. This will allow Olympus O to utilize its accumulated MEMS-related technology assets and production facilities, accepting...

  • Page 19
    ... financi 17 al Financial Review 18 Ten-Year Summary 22 Consolidated Balance Sheets 24 Consolidated Statements of Income 26 Consolidated Statements of Shareholders' Equity 27 Consolidated Statements of Cash Flows 28 Notes to the Consolidated Financial Statements 29 Report of Independent Public...

  • Page 20
    ... investment securities. By business segment, sales of the Imaging Systems Group rose 13.5% due to a considerable increase in sales of digital cameras. The Medical Systems Group increased sales 19.4%, mainly through higher sales in the United States and Europe. Sales of the Industrial Systems Group...

  • Page 21
    ...Sales by Group 240 208.4 180 120 60 0 183.7 39.4 Major Products Film cameras Digital cameras Recorders 2001 2002 2002 Medical Systems Group Sales (Billions of yen) % of Sales by Group 280 254.9 210 140 48.2 70 0 213.5 Major Products Medical endoscopes Clinical analyzers Biological microscopes...

  • Page 22
    ... price competition, sales revenue by digital cameras continued to grow substantially due to the contribution of new products in the CAMEDIA series. By contrast, sales of film cameras continued to decrease due to shrinking market volume in Japan and overseas. In the Medical Systems Group, sales...

  • Page 23
    .... OPTO-Digital Technology was given first priority because of the expansion of the digital field. Total R&D expenditures declined 1.2% to ¥30,477 million (US$244 million) compared with the previous fiscal year, and accounted for 5.8% of net sales. Capital Expenditures Cash and cash equivalents at...

  • Page 24
    TEN-YEAR SUMMARY OLYMPUS OPTICAL CO., LTD. AND CONSOLIDATED SUBSIDIARIES 2002 FOR THE YEAR: 2001 Net sales: Domestic ...Overseas ...Total ...Percentage to previous year...Net income ...Percentage to net sales...R&D expenditures ...Capital expenditures ...Depreciation and amortization...Earnings ...

  • Page 25
    Millions of yen (except per share amounts) 2000 1999 1998 1997 1996 1995 1994 1993 144,993 283,653 428,646 103.6 ...415 17,220 15,332 114,162 196,315 310,477 121.2 2,322 0.7 28,637 15,285 13,455 95,185 160,963 256,148 101.6 2,041 0.8 27,821 13,865 11,452 86,914 165,183 252,097 105.2 3,101 ...

  • Page 26
    ...L I DAT E D B A L A N C E S H E E T S OLYMPUS OPTICAL CO., LTD. AND CONSOLIDATED SUBSIDIARIES March 31, 2002 and 2001 Millions of yen Thousands of U.S. dollars 2002 ASSETS CURRENT ASSETS: 2001 2002 Cash and time deposits...Marketable securities ...Notes and accounts receivable ...Allowance for...

  • Page 27
    ...232 LONG-TERM ...SHAREHOLDERS' EQUITY: Common stock: Authorized-1,000,000,000 shares Issued-264,472,608 shares ...Additional paid-in capital ...Retained earnings ...40,833 65,528 99,032 205,393 Net unrealized holding losses on securities ...Foreign currency translation adjustments ...Treasury stock...

  • Page 28
    ...OLYMPUS OPTICAL CO., LTD. AND CONSOLIDATED SUBSIDIARIES For the years ended March 31, 2002, 2001 and 2000 Millions of yen Thousands of U.S. dollars 2002 NET SALES ...COST OF SALES...marketable and investment securities, net ...Loss on liquidation of specified fund trusts ...Foreign currency exchange...

  • Page 29
    ...OLYMPUS OPTICAL CO., LTD. AND CONSOLIDATED SUBSIDIARIES For the years ended March 31, 2002, 2001 and 2000 Millions of yen Thousands of U.S. dollars 2002 COMMON STOCK: 2001 2000 2002 Balance at beginning of year...Balance at end of year ...ADDITIONAL PAID-IN CAPITAL...SECURITIES......FOREIGN ...

  • Page 30
    ...from long-term debt...Repayments of long-term debt ...Redemption of bonds...Stock issue to minority shareholders ...Dividends paid...Dividends paid to minority shareholders ...Other ...Net cash provided by (used in) financing activities ...Effect of exchange rate changes on cash and cash equivalents...

  • Page 31
    ... presenting consolidated financial statements Olympus Optical Co., Ltd. (the "Company") and its consolidated domestic subsidiaries maintain their accounts and records in accordance with the provisions set forth in the Commercial Code of Japan (the "Code") and the Securities and Exchange Law and in...

  • Page 32
    ... time of termination of service. It is the Company's policy to fund amounts required to maintain sufficient plan assets to provide for accrued benefits based on a certain percentage of wage and salary costs. The plan assets consist principally of interest-bearing bonds and listed equity securities...

  • Page 33
    ...previously reported results of operations or shareholders' equity. 2. MARKETABLE AND INVESTMENT SECURITIES 31 The following tables summarize acquisition costs, book values and fair value of securities with fair value as of March 31, 2002 and 2001: Available-for-sale securities Securities with book...

  • Page 34
    ...thousand) issued by specific purpose company which is based on the scheme for securitization of real estate own the risk of fluctuations for redemption price caused by future changing utilization value of real estate. Maturities of available-for-sale securities with maturity are following: Millions...

  • Page 35
    ..., due March 2003 ...2.15% to 9.77% loans from foreign banks, due June 2006 ...2.65% loans from Japanese insurance companies, due February 2004 ...2.105% loan from a Japanese bank, due March 2005 ...1.45% loan from a Japanese bank, due March 2006 ...(Secured long-term debt) ¥ - 10,000 - 15,000 15...

  • Page 36
    ... As explained in "Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES", effective April 1, 2000, the Company and its consolidated subsidiaries adopted the accounting standard for employees' severance and retirement benefits, under which the liabilities and expenses for severance and retirement...

  • Page 37
    ...12,448 $73,304 The discount rate and the rate of expected return on plan assets used by the Company are 2.5% and 3.5%, respectively. The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using the estimated number of total...

  • Page 38
    10. SHAREHOLDERS' EQUITY Under the Code, the followings are provided: • The maximum amount that the Company can distribute as dividends is calculated based on the individual financial statements of the Company. • At least 50% of the issue price of new shares, with a minimum of the par value ...

  • Page 39
    ...no residual value. Equivalent of interest expense is computed using interest rate method over the lease terms for the difference between acquisition cost and total lease payments. Future minimum lease payments under the non-cancellable finance and operating leases having remaining terms in excess of...

  • Page 40
    ... minimum lease receipts ... ¥1,377 2,497 ¥3,874 $11,016 19,976 $30,992 15. DERIVATIVE FINANCIAL INSTRUMENTS 38 The Company and its consolidated subsidiaries uses derivative financial instruments in the normal course of their business to manage the exposure to fluctuations in foreign exchange...

  • Page 41
    ..., 2002, 2001 and 2000 were shown in the tables below: (a) Information by business segment Millions of yen 2002 Imaging Systems Group Medical Systems Group Industrial Systems Group Elimination and Corporate Consolidated total Others Total Net sales: Unaffiliated customers ...Intersegment ...Total...

  • Page 42
    ... products: Imaging Systems Group: Film cameras, Digital cameras, Recorders. Medical Systems Group: Medical endoscopes, Clinical analyzers, Biological microscopes. Industrial Systems Group: Industrial microscopes, Industrial endoscopes, Printers, Magneto-optical disk drives, Barcode data processing...

  • Page 43
    ... group includes compact cameras, digital cameras, microcassette tape recorders and tapes. Medical product group includes fiberscopes, rigidscopes, videoscopes and clinical analyzers. Integrated System and Information product group includes microscopes, measuring equipment, printers, magneto-optical...

  • Page 44
    ... Singapore, Hong Kong, China, Australia and other countries. 2. As mentioned at Note 1 (i) Pension and retirement allowance plans, effective April 1, 2000, the Company and the domestic consolidated subsidiaries changed the method of accounting standard for employees' severance and pension benefits...

  • Page 45
    ... prospectively adopted new Japanese accounting standards for financial instruments, employees' severance and retirements benefits, and foreign currency transactions in the year ended March 31, 2001, consolidation and equity method accounting in the year ended March 31, 2000. Also, Olympus Optical Co...

  • Page 46
    ...barcode data processing devices Olympus Systems Corporation (Tokyo) Computerized information network system services KS Olympus Co., Ltd. (Tokyo) Sales of endoscopes, microscopes, clinical analyzers and other products Olympus A.V.S. Co., Ltd. (Tokyo) Sales of optical equipment, medical equipment and...

  • Page 47
    ... information peripheral equipment Olympus Winter & Ibe GmbH (Hamburg, Germany) Manufacture and sales of endoscopes Olympus (U.K.) Ltd. (London, U.K.) Holding company Olympus Optical Co. (U.K.) Ltd. (London, U.K.) Sales of cameras, microscopes and other products KeyMed (Medical & Industrial Equipment...

  • Page 48
    ...Ohkubo Standing Corporate Auditors Minoru Ohta Hitoshi Komata Corporate Auditors Seiya Ikoma Koushi Kawashima Masatoshi Kishimoto Chairman* Executive Managing Officers ... Morishima Hideo Yamada Masataka Suzuki 46 Tsuyoshi Kikukawa President* **Representative Directors **Jointly Serving Directors

  • Page 49
    ... York 101 Barclay Street, New York, NY 10286, U.S.A. Tel: (212) 815-2204 U.S. toll free: 888-269-2377 (888-BNY-ADRS) http://www.bankofny.com/adr/ Stock Exchange Listings in Japan Tokyo and Osaka Stock Exchange Listings Overseas Frankfurt, Paris and Switzerland Total Shares of Common Stock Issued and...

  • Page 50
    AN-0802D Printed in Japan Printed on recycled paper