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Annual Report 2001
Year ended March 31, 2001
Omron is undertaking a
competitive transformation
to rem ain at the forefront of its rapidly
evolving markets.
Annual Report 2001
Year ended March 31, 2001
Annual Report 2001
Year ended March 31, 2001

Table of contents

  • Page 1
    Om ron is undertaking a competitive transformation to rem ain at the forefront of its rapidly evolving m arkets. Annual Report 2001 Annual Report 2001 Annual Report 2001 Year ended March 31, 2001 Year ended M arch 31, 2001 Year ended March 31, 2001

  • Page 2
    ..., Europe, Asia-Pacific and China; dem and for, and com petitive pricing pressure on, Om ron's products and services in the m arketplace; Om ron's ability to continue to w in acceptance for its products and services in these highly com petitive m arkets; and m ovem ents of currency exchange rates.

  • Page 3
    ..., including dividends to be paid after the end of the year. 2. The U.S. dollar am ounts represent translations of Japanese yen at the approxim ate exchange rate at M arch 31, 2001, of ¥124=$1. Net Sales (Billions of Yen) 800 700 Income before Income Taxes and M inority Interests (Billions of Yen...

  • Page 4
    ... PROFITS Consolidated net sales increased 7.0 percent year-on-year to ¥594.3 billion. Profits were affected by negative factors including temporary expenses associated with the consolidation of offices, asset impairment costs resulting from the weak domestic stock market, and exchange rate changes...

  • Page 5
    ... governance that is evaluated favorably by investors around the world, and listing our stock on overseas exchanges, including the New York Stock Exchange. I believe that our efforts to increase corporate value will lead to sustained returns to Omron's shareholders. We ask for your continued support...

  • Page 6
    ... to customers M aximizing corporate value on a long-term basis Vision that needs to be preserved Corporate Philosophy Core Competence Self-Reliant M anagement Self-Reliant Business Units Self-Reliant Individuals Vision that requires consistent evolution Corporate Transformation Vision...

  • Page 7
    ... value to custom ers. â- Follow STAGE UP VISION Exam ining probable changes from a m acro-perspective and flexibly im plem enting actions Process for realizing GD2010 M edium-term goals for 2005 Achieve ROE of 10% Accelerate corporate divestitures â- Listings on the New York Stock Exchange...

  • Page 8
    ... Development of new businesses Advanced sensors/Safety applications Build business model by user segments to increase the number of customers Electronic Components Company Existing business: Build up global production systems Expansion into new businesses: IT-related electronic components (fiber...

  • Page 9
    ... Group so that it can flexibly accommodate changes in the business environment. Self-Reliant M anagement Practices Om ron w ill prom ote corporate transform ation aim ed at establishing a corporate governance system that m eets international standards and enables the Com pany to take advantage of...

  • Page 10
    ... pany's strengths and build brand pow er, Om ron is centering its business on its core com petence in the area of sensing and control. In the near future, w e expect to enter a " Sensor Net" era, w hen sensors w ill be able to detect a broad range of analog inform ation available in the real w orld...

  • Page 11
    ... C data via a netw ork Sensor Net Sensor Human Control Sensor M achine Sensing BUSINESS Communication COLLABORATION Netw ork Computing Developing new business m odels for all Om ron Group business units M erging hardw are, softw are and service businesses Indust rial A ut om at ion Com...

  • Page 12
    ... dispensers, POS system s, FET term inals), Autom atic fare collection system s, Area traffic control system s, Parking system s, Totalizer system s ¥141,928 m illion 23.9% Healthcare Company Digital blood pressure m onitors, Electric digital therm om eters, Electronic pulse m assagers, Body-fat...

  • Page 13
    ... identification (RFID) system s and program m able logic controllers. In addition, sales of vision sensors, autom ated optical inspection (AOI) system s and safety-related products expanded m ore than 30 percent, buoyed by the introduction of new products geared to em erging custom er needs. While...

  • Page 14
    ... Japan resulted in grow ing sales of high-value-added products such as keyless entry system s and electric pow er steering controllers. Business also expanded strongly in North Am erica, propelled by the launch of new products am id favorable m arket conditions. In Europe, how ever, declining autom...

  • Page 15
    ... to handle the new ¥2,000 note and the redesigned ¥500 coin. In addition, the com pany posted strong sales of electronic fund transfer system s, including Cyber Gate, a m ulti-service term inal designed prim arily for convenience stores, and a debit/credit term inal that handles IC cards. In the...

  • Page 16
    ... of sales activities closely geared to m ajor custom ers. Fierce price com petition continued in Europe, particularly in Germ any, and w as exacerbated by the m arket entry of new low -priced products from other Asian m anufacturers. Nevertheless, sales in Europe w ere generally favorable...

  • Page 17
    ... diffusion of large-sized m achines. By offering new products accurately tailored to custom er needs, this business sector achieved a substantial increase in sales over the previous fiscal year. We also delivered autom ated voice response system s w ith voice recognition technology to custom ers in...

  • Page 18
    ... product catalogs and brochures. By doing so, w e aim to accelerate the developm ent of products that consum e less energy and conserve resources. As of M arch 2001, a total of 54 products have been designated Eco-Products. In January 2001, Om ron established a recycling test center for disposed ATM...

  • Page 19
    ... 5 7 8 Water-saving system Ice generator-based cooling system Co-generation system 6 4. Electricity control room 5. Co-generation system 6. Water heater/restroom 7. Cold/hot w ater pum p 8. Heat source facility 9. Rain w ater tank Omron Kyoto Center Building Land area: 4,760m 2 Total floor area: 36...

  • Page 20
    ... Tateisi, Tatsuro Ichihara, Shozo Hashimoto Board of Directors Chairman and Representative Director Corporate Auditors Tomoaki Nishimura Motoki Tamura Takayuki Yamashita Yoshio Nakano Executive Vice Presidents Soichi Koshio Hideki Masuda Managing Officers Masaaki Sadatomo Minoru Tamura Tsukasa...

  • Page 21
    ... Years ended M arch 31 Millions of yen (except per share data) 2001 2000 1999 1998 1997 1996 Net Sales (Note 2): Industrial Automation ...Electronic Components ...Social Systems Business ...Healthcare ...Open Systems ...Control Components and Systems ...Specialty Products ...Others...

  • Page 22
    ... in Om ron's core control com ponents system s business. Both dom estic and overseas sales increased. Cost of Sales, SGA Expenses and Income Cost of sales increased ¥17.3 billion, or 4.8 percent, over the prior fiscal year to ¥376.2 billion, and im proved to 63.3 percent of net sales, com pared to...

  • Page 23
    ...com panies of sales of certain products and sales from certain regions. Figures for the previous fiscal year have been restated to conform w ith the new structure. Composition of Net Sales Industrial Autom ation ...Electronic Com ponents ...Social System s Business ...Healthcare ...Others ...2001 40...

  • Page 24
    ... business benefited from increased unit production am ong dom estic auto m anufacturers. Outside Japan, new product introductions drove strong sales grow th, although sales in Europe w ere affected by cooling dem and in the United Kingdom . Social Systems Business Company Net sales for the Social...

  • Page 25
    ...ponents Com pany and the Social System s Business Com pany each generated sales grow th, w hile reduced dem and and low er prices negatively im pacted Healthcare Com pany sales. Total sales to external custom ers increased 6.7 percent to ¥423.8 billion. North America High grow th in personal consum...

  • Page 26
    ...152,799 164,610 169,797 Working Capital Current Ratio Inventory Turnover (Times) Return on Tangible Fixed Assets (%) 145,489 4.66 4.56 4.44 4.18 9.2 7.2 11.0 14.1 204 178 186 215 179 4.28 1.3 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 24 Omron Corporation

  • Page 27
    ... ¥13.8 billion a year earlier. Om ron booked a m inim um pension liability adjustm ent totaling ¥7.3 billion. Cash Flow Cash and cash equivalents and short-term investm ents at M arch 31, 2001 decreased ¥9.3 billion, or 9.8 percent, from a year earlier to ¥85.6 billion. Exchange rate changes had...

  • Page 28
    ...Sheets Omron Corporation and Subsidiaries March 31, 2001 and 2000 Millions of yen Thousands of U.S. dollars (Note 2) 2000 ASSETS Current Assets: Cash and cash equivalents...Short-term investments (Note 4) ...Notes and accounts receivable - trade ...Allowance for doubtful receivables...Inventories...

  • Page 29
    ...(Note 2) 2000 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Bank loans (Note 5) ...Notes and accounts payable - trade ...Accrued expenses ...Income taxes payable...Other current liabilities (Note 10) ...Current portion of long-term debt (Note 5)... 2001 2001 ¥ 8,916 82,225 24,484 14...

  • Page 30
    Consolidated Statements of Income Omron Corporation and Subsidiaries Years ended March 31, 2001, 2000 and 1999 Millions of yen Thousands of U.S. dollars (Note 2) 1999 2001 2000 2001 Net Sales ...Costs and Expenses: Cost of sales ...Selling, general and administrative expenses ...Research and ...

  • Page 31
    Consolidated Statements of Comprehensive Income Omron Corporation and Subsidiaries Years ended March 31, 2001, 2000 and 1999 Millions of yen Thousands of U.S. dollars (Note 2) 1999 2001 2000 2001 Net Income ...Other Comprehensive Income (Loss), Net of Tax (Note 14): Foreign currency ...

  • Page 32
    ...Corporation and Subsidiaries Years ended March 31, 2001, 2000 and 1999 Millions of yen Accumulated other comprehensive income (loss) Number of common shares issued Common stock Additional paid-in capital Legal reserve Retained earnings Treasury stock Balance, April 1, 1998 ...262,107,214 Net...

  • Page 33
    ... expenses ...Termination and retirement benefits ...Deferred income taxes ...Minority interests...Loss on sale of business entities ...Changes in assets and liabilities, net of effects of business entities sold: Notes and accounts receivable - trade, net ...Inventories ...Other assets ...Notes and...

  • Page 34
    ... at cost plus equity in undistributed net income or loss. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities...

  • Page 35
    ...and sells electric and electronic components found in such consumer goods as home appliances and automobiles as well as such business equipment as telephone systems, vending machines, and office equipment. Social Systems Business encompasses the production and sale of automated teller machines, card...

  • Page 36
    ... dollars 3. Inventories 2001 2000 2001 Finished products...Work-in-process...Materials and supplies...Total... ¥52,188 15,114 24,291 ¥91,593 ¥44,080 15,242 18,485 ¥77,807 $420,875 121,886 195,892 $738,653 4. Short-Term Investments and Investment Securities Available-for-sale securities...

  • Page 37
    .... Gross realized losses on those sales were ¥8 million ($63 thousand), ¥867 million and ¥1,275 million for the years ended March 31, 2001, 2000 and 1999, respectively. 5. Bank Loans and Long-Term Debt The weighted average annual interest rates of short-term bank loans at March 31, 2001 and 2000...

  • Page 38
    ...% of face value, decreasing 1% per year. At March 31, 2001 the convertible bonds were redeemable, in whole or in part, at 103% . The number of contingently issuable shares of common stock related to the convertible bonds as of March 31, 2001 was 10,026,639 shares. The conversion price per share at...

  • Page 39
    ... and the unrecognized net actuarial loss are being amortized over 15 years. Key assumptions utilized in calculating the actuarial present value of benefit obligations are as follows: 2001 2000 1999 Discount rate ...Compensation increase rate ...Expected long-term rate of return on plan assets...

  • Page 40
    ... earnings as recorded in the books of the Company for Japanese financial reporting purposes. At March 31, 2001, retained earnings amounting to ¥85,285 million ($687,782 thousand) were available for future dividends subject to legal reserve requirements. Stock Options In June 1998, the Company...

  • Page 41
    ... (29,863) 14,403 $22,677 During the year ended March 31, 2001 the Company recognized a net loss of ¥2,312 million ($18,645 thousand) as a result of an office relocation plan, primarily consisting of the relocation of the headquarters within Kyoto, Japan. 10. Income Taxes The provision for income...

  • Page 42
    ... per share has been computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during each year. Diluted net income per share reflects the potential dilution of convertible bonds and stock options, and has been computed by the if...

  • Page 43
    ..., due 2004 ...Diluted net income... ¥22,297 325 ¥22,622 ¥11,561 325 ¥11,886 ¥2,174 - ¥2,174 $179,815 2,626 $182,441 Number of shares 2001 2000 1999 Weighted average common shares outstanding ...Dilutive effect of: Convertible bonds, due 2004 ...Stock options ...Diluted common shares...

  • Page 44
    ... to each component of other comprehensive income (loss) and reclassification adjustments for the years ended March 31, 2001, 2000 and 1999 were as follows: Millions of yen 2001 Before-tax amount Tax (expense) benefit Net-of-tax amount Before-tax amount 2000 Tax (expense) benefit Net-of-tax...

  • Page 45
    ... gains or losses of open contracts. Dealer quotes are available for most of the Companies' derivatives; otherwise, pricing or valuation models are applied to current market information to estimate fair value. The Companies do not use derivatives for trading purposes. (1) Interest rate swap contracts...

  • Page 46
    ... short-term cash investments with high-credit-quality financial institutions. Concentrations of credit risk with respect to trade receivables, as approximately 75% of total sales are concentrated in Japan, are limited due to the large number of well-established customers and their dispersion across...

  • Page 47
    ... financial position of Omron Corporation and subsidiaries as of March 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2001 in conformity with accounting principles generally accepted in the United States of America...

  • Page 48
    ...-8391-3688 - Shanghai Office Room 2211, Bank of China Tower, 200 Yin Cheng Zhong Road, Pu Dong New Area, Shanghai, 200120, China Phone: 86-21-5037-2222 Fax: 86-21-5037-2200 MARKETING AND/OR MANUFACTURING OF CONTROL COMPONENTS AND SYSTEMS OMRON Electronics Asia Ltd. 601-9, Tower 2, The Gateway No. 25...

  • Page 49
    ... Dong New Area, Shanghai, 200120, China Phone: 86-21-5037-2222 Fax: 86-21-5037-2200 T H E A M E R I C A S (MANUFACTURING) 3709 Ohio Avenue, St. Charles, IL 60174, U.S.A. Phone: 1-630-443-6800 Fax: 1-630-443-6898 OMRON Dualtec Automotive Electronics, Inc. 2270 Bristol Circle, Oakville, Ontario, L6H...

  • Page 50
    ...-405508 MARKETING AND/OR MANUFACTURING OF CONTROL COMPONENTS AND SYSTEMS OMRON Europe B.V. Wegalaan 67-69, 2132 JD Hoofddorp, The Netherlands Phone: 31-23-5681300 Fax: 31-23-5681388 OMRON Electronics Ges.m.b.H. Brunner Strasse 81, Box 323, A-1230 Vienna, Austria Phone: 43-1-80190-0 Fax: 43-1-804-48...

  • Page 51
    ...6,293 (Japan) 578 (Overseas) Number of Employees Ticker Symbol Number 6645 Transfer Agent The Mitsubishi Trust and Banking Corporation 2-11-1, Nagatacho, Chiyoda-ku, Tokyo 100-8212, Japan Osaka Office Osaka Center Bldg., 4-1-3, Kyutaro-cho, Chuo-ku, Osaka 541-0056, Japan Phone: 81-6-6282-2511 Fax...

  • Page 52
    Shiokoji Horikawa, Shimogyo-ku, Kyoto 600-8530, Japan Phone: 81-75-344-7000 Fax: 81-75-344-7001 Home page: http://www.omron.co.jp (Japanese) http://www.omron.com (English) This annual report is printed on recycled paper. Printed in Japan