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A Dynamic Commitment to Structural Transformation,
Globalization and Unique Value
2002
Annual Report
Year ended March 31, 2002

Table of contents

  • Page 1
    A Dynamic Commitment to Structural Transformation, Globalization and Unique Value Annual Report Year ended March 31, 2002 2002

  • Page 2
    ...Japan, North America, Europe, Asia-Pacific and China; demand for, and competitive pricing pressure on, Omron's products and services in the marketplace; Omron's ability to continue to win acceptance for its products and services in these highly competitive markets; and movements of currency exchange...

  • Page 3
    ...311,331 Notes: 1. Cash dividends per share represent the amounts applicable to the respective year, including dividends to be paid after the end of the year. 2. The U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate at March 31, 2002, of ¥133=$1. Net Sales...

  • Page 4
    ... automation systems and electronic components, Omron's main products. In addition, restrained investment by financial institutions and railway companies in Japan had a major impact on sales of banking systems and automatic fare collection systems. MANAGEMENT STRATEGY: BUILDING A CORPORATE STRUCTURE...

  • Page 5
    ... in future growth, primarily in our core Industrial Automation and Electronic Components businesses. At the same time, we will carry out the measures drawn up by VIC21 and accelerate structural reforms to execute the urgent task of building a solid corporate structure that does not depend on market...

  • Page 6
    ... and Unique Value Chief Executive Officer Yoshio Tateisi Discusses Omron's Structural Reforms Q: WHAT DOES THE LONG-TERM MANAGEMENT VISION ANNOUNCED IN MAY 2001 ENTAIL? A: The long-term management plan we began in May 2001, known as Grand Design 2010, or GD2010, expresses where we want the...

  • Page 7
    ...the operating and manufacturing structure to create the optimal business management structure. 3. Restructure the fixed cost and expense structure to match the optimum business structure. Head office structure reform will complement the efforts of each company. Q: ASIDE FROM THE GENERAL DIRECTION OF...

  • Page 8
    ... Systems Business Company: Divide and restructure â- Creative Service Company: Assess business independence and review business strategy units Create an optimum global manufacturing network Manufacturing Structure Reform Examples of initiatives: â- Strengthen overseas production, mainly in China...

  • Page 9
    ...one component of progress in structural reform. The Omron Group's domestic operations will need to reassign approximately 2,000 employees. Of this number, we project that approximately 500 will leave the company through natural attrition. We will reassign the remaining employees as a matter of basic...

  • Page 10
    ... software, services and solutions. In addition, we intend to develop and strengthen manufacturing capabilities in China, a critical area for Omron. We will also bolster our development and sales organization. 1. High-value-added module devices Electronic Components Company: Optical device business...

  • Page 11
    ...laser markers, 2-dimensional code readers, etc.) SWITCHES (limit switches, basic switches, manual switches) RELAYS (solid-state relays, I/O relay terminals, etc.) OTHER CONTROL DEVICES (timers, counters, temperature controllers, level devices, protective devices, power supplies, digital panel meters...

  • Page 12
    ... in every process. Furthermore, IAB will establish a firm basis for its growth by developing high-value-added products and business models. 2002, net sales of the Industrial Automation Company (IAB) were ¥187.0 billion, a decline of 17.9 percent compared to the previous fiscal year, as a result...

  • Page 13
    ... impacted. In China, sales were comparatively healthy, centered on electrical appliances. However, price pressures due to competition from local manufacturers and lower sales in the communications sector led to an overall decrease in sales. In the automotive electronic component sector, a difficult...

  • Page 14
    ... following large-scale orders in the previous fiscal year. In the electronic fund transfer systems sector, the business Face Key is a face ID access control system that employs biometrics technology. Social Systems Business Company Despite a rebound in overseas sales, PassNet, a card system for...

  • Page 15
    ...Company's new business model that integrates hardware and service operations is expected to support strong gains in sales. Digital thermometer Ken-on-kun MC-610 is the first thermometer in Japan able to measure body temperature from the underarm in an average of five seconds. Digital blood pressure...

  • Page 16
    ... new competitors, sales of commercial game machines expanded due to an increase in the number of installed units. We also began sales in the "machine-tomachine" business, with products including a tank monitoring system and a vehicle anti-theft system. Sales of subsidiary Omron Alphatech Corporation...

  • Page 17
    ... the company's sensing and control technology, conserving energy and resources, and reducing industrial waste. In addition, as a responsible corporate citizen, Omron is involved in community service activities such as clean-ups, area beautification projects and planting trees. Omron's long-term...

  • Page 18
    ... first Home-use Environmental Accounting Books, distributed to all Omron Corporation employees Implemented at 15 manufacturing sites No cases of law infringement in year ended March 2002 Omron Kyoto-Ekimae office received ISO 14001 certification in March 2002; all 43 domestic and overseas production...

  • Page 19
    ... components, materials and other items. Purchasing Green Indirect Materials In addition to the procurement of green parts and materials for use in products, Omron is promoting the purchase of green indirect materials such as office supplies, PCs and copy paper. The green product purchase rate...

  • Page 20
    ...Board of Directors Chairman and Representative Director Nobuo Tateisi Representative Director and Chief Executive Officer Yoshio Tateisi Vice President and Directors Norio Hirai Tatsuro Ichihara Senior Managing Directors Akio Imaizumi Tadao Tateisi Director (Non-executive) Shozo Hashimoto Corporate...

  • Page 21
    ...Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report Omron Corporation 19

  • Page 22
    ... 1999 1998 1997 Net Sales (Notes 2 and 3): Industrial Automation ...Electronic Components ...Social Systems Business ...Healthcare ...Open Systems ...Control Components and Systems ...Specialty Products ...Others ...Costs and Expenses: Cost of sales...Selling, general and administrative expenses...

  • Page 23
    ...control system equipment. As a result, sales of Omron's core Industrial Automation Company and Electronic Components Company declined substantially. Restrained investment by domestic financial institutions and railway companies had a substantial negative impact on the Social Systems Business Company...

  • Page 24
    ... 5.56 26.83 drop in sales in Asia due to worsening conditions in the IT industry. However, sales increased in Europe, due in part to the favorable effect of exchange rate changes, and in 4.36 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 China, boosted by Omron's efforts to strengthen its...

  • Page 25
    ...were generally solid in Europe, North America and Asia. In the healthcare services sector, a new business, Omron worked to create a new business model centered around the Kenko Tatsujin series. Others Net sales of other divisions decreased 4.2 percent yearon-year to ¥53.5 billion, and accounted for...

  • Page 26
    ...Electronic Components Company and the Healthcare Company both performed well. In China, sales of the Industrial Automation Company and the Electronic Components Company were solid, while high growth in personal consumption supported strong growth in Healthcare Company sales. As a result, total sales...

  • Page 27
    ... 2001 2002 -10.1 1998 1999 2000 2001 2002 -5.1 1998 1999 2000 2001 2002 Cash Flow Cash and cash equivalents at March 31, 2002 decreased ¥14.8 billion from a year earlier to ¥70.8 billion. The effect of exchange rate changes increased cash and cash equivalents by ¥3.6 billion. Omron Corporation...

  • Page 28
    Consolidated Balance Sheets Omron Corporation and Subsidiaries March 31, 2002 and 2001 Millions of yen Thousands of U.S. dollars (Note 2) 2001 2002 ASSETS Current Assets: Cash and cash equivalents...Notes and accounts receivable - trade ...Allowance for doubtful receivables...Inventories (Note ...

  • Page 29
    ... 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)...Total Current Liabilities ... 2002 ¥ 14,723 60,000 22,748 3,832...

  • Page 30
    ... of Accounting Change Basic ...Diluted ...Net Income (Loss) Basic ...Diluted ...Cash Dividends ...See notes to consolidated financial statements. ¥(65.0) (65.0) ¥87.4 85.3 ¥45.0 44.5 $(0.49) (0.49) (63.5) (63.5) 13.0 87.4 85.3 13.0 45.0 44.5 13.0 (0.48) (0.48) 0.10 28 Omron Corporation

  • Page 31
    ...of U.S. dollars (Note 2) 2002 Net Income (Loss) ...Other Comprehensive Income (Loss), Net of Tax (Note 14): Foreign currency translation adjustments arising during the year...Minimum pension liability adjustments...Unrealized gains (losses) on available-for-sale securities: Unrealized holding gains...

  • Page 32
    ... income (loss) Common stock Legal reserve Retained earnings Treasury stock Balance, March 31, 2001 ...Net loss ...Cash dividends, $0.10 per share...Transfer to legal reserve...Other comprehensive loss ...Treasury stock...Exercise of stock options ...Balance, March 31, 2002 ...See notes to...

  • Page 33
    ... of long-term debt...(26,970) Dividends paid ...(3,267) Share buyback...- Treasury stock ...(725) Exercise of stock options ...18 Net cash used in financing activities ...(12,056) Effect of Exchange Rate Changes on Cash and Cash Equivalents ...3,648 Net Decrease in Cash and Cash Equivalents...

  • Page 34
    ... markets. Passing gates and automated ticket machines and electronic panels and terminal displays for traffic information and monitoring purposes are also produced for the domestic market. Healthcare sells blood pressure monitors, digital thermometers, body-fat monitors, nebulizers and infra-red...

  • Page 35
    ... and corporate auditors of the Company. Income Taxes Deferred income taxes reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts. Future tax benefits, such as net operating loss carryforwards and tax credit...

  • Page 36
    ...one accounting model for long-lived assets that are to be disposed of by sale. The Companies are currently reviewing these statements to determine their impact on future financial statements. 2. Translation into United States Dollars The consolidated financial statements are stated in Japanese yen...

  • Page 37
    ... and 2000, respectively. Gross realized losses on those sales were ¥321 million ($2,413 thousand), ¥8 million and ¥867 million for the years ended March 31, 2002, 2001 and 2000, respectively. 5. Bank Loans and Long-Term Debt The weighted average annual interest rates of short-term bank loans at...

  • Page 38
    ... welfare program and consists of a basic portion requiring employee and employer contributions plus an additional portion established by the employers. Periodic pension benefits required under the basic portion are prescribed by the Japanese Ministry of Health, Labour and Welfare, commence at age 65...

  • Page 39
    ... unrecognized net actuarial loss and the prior service credit are being amortized over 15 years. Key assumptions utilized in calculating the actuarial present value of benefit obligations are as follows: 2002 2001 2000 Discount rate ...Compensation increase rate ...Expected long-term rate of return...

  • Page 40
    ... resolution of the Board of Directors, subject to certain limitations imposed by the Code. Under the Code, the amount legally available for dividends is based on retained earnings as recorded in the books of the Company for Japanese financial reporting purposes. At March 31, 2002, retained earnings...

  • Page 41
    ... of the headquarters within Kyoto, Japan. In 2002, the Companies assessed the potential impairment of certain long-lived assets in consideration of future alternate uses, including potential disposal. As a result, certain land and buildings, principally dormitories for employees were deemed...

  • Page 42
    ... 12. Per Share Data The Company accounts for its earnings per share in accordance with SFAS No. 128, "Earnings per Share." Basic net income (loss) per share has been computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding...

  • Page 43
    ...2002 2001 2000 2002 Foreign currency translation adjustments: Beginning balance...Change for the year...Ending balance...Minimum pension liability adjustments: Beginning balance...Change for the year...Ending balance...Unrealized gains on available-for-sale securities: Beginning balance...Change...

  • Page 44
    ... of U.S. dollars 2002 Before-tax amount Tax (expense) benefit Net-of-tax amount Foreign currency translation adjustments arising during the year ...Minimum pension liability adjustments...Unrealized gains (losses) on available-for-sale securities: Unrealized holding gains (losses) arising during...

  • Page 45
    ...estimated amounts that the Companies would receive or pay to terminate the contracts at the reporting date, thereby taking into account the current unrealized gains or losses of open contracts. Dealer quotes are available for most of the Companies' derivatives; otherwise, pricing or valuation models...

  • Page 46
    ... and liabilities are translated at spot rates in effect on the balance sheet date. The effects of changes in spot rates are reported in earnings and included in Foreign exchange loss, net in the consolidated statements of operations. Currency forward contracts and options designated as hedges of the...

  • Page 47
    ... to the date of the June 2003 general meeting of shareholders. On May 29, 2002 the Company management authorized a voluntary early retirement program to all employees between the ages 30 and 59, with over ten years employment at the Company. This program is entirely optional and will be available to...

  • Page 48
    ... position of Omron Corporation and subsidiaries as of March 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2002 in conformity with accounting principles generally accepted in the United States of America. Our...

  • Page 49
    ... OMRON Business Systemas Eletrônicos da América Latina Ltda. (Brazil) Phone: 55-11-251-0073 Fax: 55-11-251-1053 ASIA-PACIFIC Regional Headquarters OMRON Asiapacific Pte. Ltd. (Singapore) Phone: 65-835-3011 Fax: 65-835-2711 [Electronic Components Company] OMRON Malaysia Sdn. Bhd. (Malaysia) Phone...

  • Page 50
    ... OMRON Taiwan System Inc. (Taiwan) Phone: 886-2-2375-2200 Fax: 886-2-2375-2233 [Healthcare Company] OMRON Dalian Co., Ltd. (China) Phone: 86-411-761-4222 Fax: 86-411-761-6602 OMRON Industry & Trade (Dalian) Co., Ltd. (China) Phone: 86-411-7317201 Fax: 86-411-7317191 [Other] OMRON Shanghai Computer...

  • Page 51
    ... Exchange Tokyo Stock Exchange Nagoya Stock Exchange Frankfurt Stock Exchange Ticker Symbol Number 6645 Transfer Agent The Mitsubishi Trust and Banking Corporation 2-11-1, Nagatacho, Chiyoda-ku, Tokyo 100-8212, Japan Stock Price Range/Trading Volume (Osaka Securities Exchange) Monthly Stock Price...

  • Page 52
    This annual report is printed on recycled paper. Printed in Japan 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)