Olympus 2015 Annual Report Download - page 38

Analysis of Business Results, Financial Position, and Cash Flows
Financial Position
Total Assets
As of March 31, 2015, total assets stood at ¥1,081,551
million, up ¥54,076 million from a year earlier. Total current
assets were up ¥1,016 million due mainly to an increase
innotes and accounts receivable, and total non-current
assets rose ¥53,060 million following capital expenditures.
1,027.5 1,081.6
2014/3 2015/3
Current assets
+1.0
Property,
plant and
equipment
+14.7
Intangible assets
+7.1
Investments and
other assets
+31.3
0
300
600
900
1,200
(¥ Billion)
Liabilities
As of March 31, 2015, total liabilities amounted to
¥724,297 million, up ¥28,106 million from a year earlier.
This increase was due mainly to the recording of provision for
loss related to the investigation under U.S. Anti-kickback
Act and the related Act of ¥58,883 million and an increase
in liabilities for retirement benefits of¥11,114 million, which
offset a decrease in borrowings (long- and short-term) of
¥61,410 million.
Total Net Assets and Equity Ratio
Total net assets at the end of the fiscal year amounted
to¥357,254 million, up ¥25,970 million from the previous
fiscal year-end. This rise was primarily due to an increase in
total accumulated other comprehensive income of ¥34,604
million, which resulted from fluctuations in foreign exchange
rates and stock prices.
As a result of the above, the equity ratio increased
from 32.1% at the end of the previous fiscal year to 32.9%.
331.3 357.3
2014/3 2015/3
Shareholders’ equity
− 8.7
Total accumulated
other comprehensive income
+34.6
Minority interests
− 0.1
Stock acquisition rights
+0.1
0
100
200
300
400
(¥ Billion)
Cash Flows
Cash Flows from Operating Activities
Net cash provided by operating activities was ¥66,811
million, down ¥5,577 million from the previous fiscal year.
Major factors decreasing cash included declines in loss
related to securities litigation of ¥10,440 million and loss
onliquidation of business of ¥9,771 million, an increase in
income taxes paid of ¥10,096 million, and the recording of
increase in accounts receivable of ¥13,020 million, compared
with decrease in accounts receivable of ¥1,950 million
in the previous fiscal year, and of increase in inventories
of¥7,214 million, compared with decrease in inventories
of¥2,890 million. Major factors increasing cash included
the recording of loss related to the investigation under U.S.
Anti-kickback Act and the related Act of ¥53,866 million.
Cash Flows from Investing Activities
Net cash used in investing activities was ¥39,612 million,
up ¥19,339 million from the previous fiscal year. Major fac-
tors decreasing cash included an increase in purchases of
property, plant and equipment of ¥8,613 million, a decrease
in withdrawals from time deposits of ¥5,094 million, and a
decrease in net increase from sales of investments in sub-
sidiaries resulting in changes in scope of consolidation of
¥4,600 million. Major factors increasing cash included a
decrease in deposits in time deposits of ¥2,458 million.
Cash Flows from Financing Activities
Net cash used in financing activities was ¥70,185 million,
up ¥30,492 million from the previous fiscal year. Major
factors decreasing cash included the absence of
¥101,594 million in proceeds from issuance of common
stock and ¥11,067 million in proceeds from disposal of
treasury shares recorded in the previous fiscal year. Major
factors increasing cash included the absence of ¥35,000
million in redemption of bonds recorded in the previous
fiscal year and the recording of increase in short-term
borrowings of ¥7,977 million, compared with decrease in
short-term borrowings of ¥24,714 million in the previous
fiscal year.
As a result, cash and cash equivalents at end of year
amounted to ¥209,809 million, a decrease of ¥41,535
million compared with the end of the previous fiscal year.
0
400
300
200
100
251.3
209.8
Net cash provided
by operating activities
+ 66.8
Net cash
used in
investing
activities
−39.6
Net cash used
in financing activities
−70.2
Effect of exchange
rate changes
on cash and
cash equivalents
+ 1.5
2014/3 2015/3
(¥ Billion)
Risk Information
The following are the main factors, other than management
decisions, and risks inherit to operations that may give rise
to changes in the Group’s business performance. Forward-
looking statements in this section are based on the Group’s
judgment as of the end of the fi scal year under review.
Business Risks
(1) Risks Associated with Sales Activities
1. In the Medical Business, it is possible that healthcare
policies may be amended in an unforeseeable and mate-
rial manner due to healthcare system reforms or that
some other signifi cant change may occur in the medical
industry. If the Olympus Group is unable to adapt to
suchenvironmental changes or obtain the licenses and
approvals in various countries necessary for its business
activities in a timely manner, earnings may be affected.
Inaddition, earnings may be affected if government
budgets are decreased due to changes in macroeco-
nomic conditions or other factors.
2. In the life science sector of the Scientifi c Solutions
Business, the supply of systems for research funded
bythe national budgets of countries accounts for a high
proportion of earnings. The curtailment of these budgets
for such reasons as macroeconomic changes may affect
earnings.
3. In the digital camera fi eld of the Imaging Business,
market conditions are growing ever harsher. If the market
contracts more rapidly than anticipated, the Group may
be unable to adequately counter the resulting sales
decline with its restructuring measures, and earnings
may be impacted as a result.
(2) Risks Associated with Production and
Development Activities
1. In the Imaging Business, core production sites are
located in China and Vietnam. Accordingly, fl uctuations
inforeign currency exchange rates could result in cost
increases, which may affect earnings. In addition, the
destabilization of conditions or the deterioration of public
safety in China, or anti-Japan sentiment in this country
among other factors, may affect production activities.
2. The Group depends on certain specifi c suppliers for pro-
cesses from development to production of products and
components that cannot be developed and produced
within the Group. Accordingly, procurement constraints
resulting from conditions impacting these suppliers may
affect production and supply capacity.
3. Olympus products, including products consigned to
outside suppliers, are manufactured in accordance with
strict quality standards. Nevertheless, the occurrence of
product defects may result in substantial costs, such as
for product recalls, as well as loss of confi dence in the
Olympus Group, which may affect earnings.
4. The Group is making continuous advances in the devel-
opment of products that incorporate cutting-edge tech-
nologies. Nevertheless, technical progress is increasingly
rapid, and the inability to suffi ciently foresee market
changes and develop new products that meet customer
needs in a timely manner may affect earnings.
5. The Group applies various intellectual property rights in
its R&D and production activities and believes that these
are rights owned by the Group or are rights for which the
Group has legally obtained licenses. However, assertion
by a third party that the Group has unknowingly infringed
on intellectual property rights and the occurrence of a
dispute may affect earnings.
(3) Risks Associated with Business Partnerships and
Corporate Acquisitions
1. Olympus has formed long-term strategic partnerships
related to technologies and product development with
leading companies in the industry. Inability to maintain
such partnerships due to the occurrence of fi nancial or
other business-related issues with strategic partners,
changes in goals, or other reasons may hinder the
Group’s business activities.
2. Olympus may acquire companies for the purpose of
business expansion. Inability to integrate acquired busi-
nesses in accordance with the Group’s management
strategies or inability to effi ciently utilize the management
resources of existing businesses or acquired businesses
may affect the Group’s operations, business perfor-
mance, or fi nancial position for such reasons as the
recording of impairment of goodwill, loss on sales of
businesses associated with business reorganizations,
orexpenses for business liquidation.
3. As of March 31, 2015, the Olympus Group held listed
stocks with a total value of ¥67,483 million and unlisted
stocks with a total value of ¥2,069 million as investments
for the purpose of facilitating business alliances. The
stock price of listed stocks is determined based upon
market principles. Accordingly, fl uctuations in market
trends could cause the value of these stocks to decline.
For unlisted stocks, it is possible that the estimated value
of these stocks could decline due to changes in the
fi nancial position of the company in question. Such price
fl uctuations could force the Group to record loss on valu-
ation of investment securities, and the Group’s earnings
or fi nancial position could be affected as a result.
(4) Risks Associated with Financing
The Group obtains fi nancing by means of borrowings from
fi nancial institutions and other sources, and changes in con-
ditions in fi nancial markets may affect the Group’s fi nancing.
In addition, an increase in fi nancing costs as aresult of
suchfactors as deterioration in the Group’s business
performance may adversely affect the Group’s fi nancing.
73
OLYMPUS Annual Report 2015
72 OLYMPUS Annual Report 2015