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ANNUAL REPORT 2003
HOY Ae c1 c4-e PDF 03.7.21 9:20 PM ページ 3

Table of contents

  • Page 1
    ... ?W&@@@@@@@@@@@@@@@@@@@@@@@@(M? 7@@@@@@@@@@@@@@@@@@@@@@@H?eN@@@@@@@@@@@@@@@@@@@@@@@@L ?@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@? 7@@@@@@@@@@@@@@@@@@@@@@@@@@H ?@@@@@@@@@@@@@@@@@@@@@@@@@@L ?V'@@@@@@@@@@@@@@@@@@@@@@@@@@? ?7@@@@@@@@@@@@@@@@@@@@@@@@@H ?J@@@@@@@@@@@@@@@@@@@@@@@5f...

  • Page 2
    ... for the Company, and plays an important role in expanding the Hoya brand. This field is divided into the Vision Care division, dealing mainly with wholesaling of eyeglass lenses, and the Health Care division, encompassing retail sales of contact lenses, as well as the development and manufacture...

  • Page 3
    ...Price cash flow ratio Price book value ratio Stock price at year-end a n d Te c h n o l o g y Contents To Our Shareholders Our Businesses Information Technology Electro-Optics Eye Care Vision Care Health Care Lifestyle Refinement Crystal Environmental Efforts Financial Section and Corporate Data...

  • Page 4
    ..., corporate restructuring and stagnant capital investment that followed the collapse of the IT bubble. Because of this situation, the Hoya Group reexamined each of its businesses in Japan, and concentrating on those with potential for further growth developed new sales channels and products, as...

  • Page 5
    ... Care division, meanwhile, new stores are being opened to win a larger share of the expanding market for contact lenses. New product development is best represented by Hoya's proprietary soft intraocular lenses (IOLs). In the past, Hoya's eyeglass and contact lens businesses brought the Company...

  • Page 6
    ... the shrinking Japanese economy, acquisition of new customers overseas and the promotion of product development responsive to the needs of customers in new areas will allow us to increase our market share. We consider it important to further the globalization of the entire Hoya Group by nurturing...

  • Page 7
    ...Information Technology Electro-Optics Mask Blanks and Photomasks for Semiconductors 7 LCD Photomasks 7 Glass Disks for HDDs 9 Optical Glass and Optical Lenses 10 Optical Communications Products 10 Eye Care Vision Care Eyeglass-Related Products, including Lenses and Frames 12 Health Care Contact...

  • Page 8
    ... fields for the Hoya Group, comprising the mask blanks and photomasks indispensable in the manufacture of semiconductors and liquid crystal displays (LCDs), glass disks for the hard disk drives (HDDs) found mainly in computers and servers, optical lenses used in digital cameras and video recorders...

  • Page 9
    ... bolstered by sales of Hoya's high-quality products with a line width of 0.15 to 0.18 microns, sales remained on par with the previous fiscal year. Technical development that keeps the Company ahead of the market is important to further increase its market share in this business. Hoya has completed...

  • Page 10
    ... manufacturers, mainly in Korea and Taiwan, have entered the market, and competition is intense. To survive the price war it is necessary for manufacturers to produce a large number of panels at once. There is also increasing demand for photomasks on larger glass substrates. Hoya is meeting this...

  • Page 11
    ... fiscal year under review remained slow. The slowdown has led to a shakeout of the industry, however, and the number of companies to contend in future markets has declined. At the same time, though, the expectations from customers for HDDs and products that use them continue to increase. No longer...

  • Page 12
    ... but continues to concentrate on light polarizers for isolators, a market of which Hoya commands approximately 50%, though the scale is small. At the same time, the Company is contin uing with strategic investments in new technologies and product development of integrated devices, in anticipation of...

  • Page 13
    ... Care and Health Care. The Vision Care division develops, produces and sells lenses and frames for eyeglasses, marketing competitive products in Japan and abroad to make the Hoya brand the first choice around the world. The Health Care division mainly handles the sale of contact lenses in Japan...

  • Page 14
    ... that are internationally recognized for their high levels of technology and quality, including progressive and high-index lenses, as well as lenses with special coatings. In the Japanese eyeglass market during fiscal 2003, low-priced products offered by discounters known as "three-price shops" drew...

  • Page 15
    13

  • Page 16
    ... value of high-quality lenses, expand sales of the coated lenses that set Hoya apart from other Asian manufacturers. In production, Hoya is transferring its mass production facility in Istukaichi, Japan to Thailand. The Company is also conducting a review of its plants in China and Hungary, with the...

  • Page 17
    ... high-performance lenses. Hoya develops its own lenses, as well as operates a chain of retail stores known as Eye City, offering ophthalmology services, quality products from several companies and a customer-oriented service. Health Care The Health Care division handles contact lenses, intraocular...

  • Page 18
    ...materials and cutting techniques to produce world-class products of a quality that is a source of pride for the Company. Though Europe remains the main source for high-quality crystal, the Hoya brand has been recognized as the representative crystal of Japan. "Through our business operations we aim...

  • Page 19
    ...of that report was published during the year under review. Environment Report 2002 offers even greater disclosure of information, containing specific examples of environmental preservation initiatives undertaken by each of the business divisions, site data from each division, and specific figures on...

  • Page 20
    ...review. 2. The Akishima Plant includes the HOYA OPTICS CORPORATION and R&D center located on the grounds. HOYA LENS DEUTSCHLAND GmbH (Germany) HOYA LENS DEUTSCHLAND GmbH (Germany) HOYA LENS DEUTSCHLAND GmbH (Germany) HOYA CORP. Vision Care Company (Japan) HOYA CORP. Vision Care Company (Japan) HOYA...

  • Page 21
    Ten-Year Summary 20 Management's Discussion and Analysis 22 Independent Auditors' Report 33 Financial Data 34 Corporate Data 57 Investor Information 58 Hoya's Timeline 59 Hoya Directory 60 Financial Section and Corporate Data 19

  • Page 22
    ....00 1,220.70 42.71 20.75 4.54 5,540 share information for the fiscal year under review has been prepared based on the new accounting standard for earnings per share of common stock issued by the Accounting Standards Board of Japan. Figures from * Per previous fiscal years have been recalculated in...

  • Page 23
    ...2002 2003 ¥193...sales Return on assets Return on equity Inventory turnover Financial leverage Capital expenditures Depreciation and amortization R&D expenses Per share data...Cash flows Shareholders' equity Price earnings ratio* Price cash flow ratio Price book value ratio* Stock price at year-end - ...

  • Page 24
    ... during the year under review. This increase is the result of the establishment of two new companies and the acquisition of a third company, and the merger of two existing subsidiaries with Hoya Corporation. The number of affiliates is unchanged. Net Sales Consolidated net sales for the year ended...

  • Page 25
    ... 2001 2002 2003 75 71.8 73.4 71.3 67.8 67.5 Sales by Region (Based on the location of the Company's offices) 50 25 4.1 11.6 4.0 11.5 11.1 3.7 10.5 14.5 4.2 12.3 15.7 4.8 13.2 14.5 0 12.5 Japan (Millions of yen) Asia (Millions of yen) Europe (Millions of yen) North America (Millions of...

  • Page 26
    ... the IT slump. This alone would account for the increases, but the rate of returns for fiscal 2003 also recovered to the level achieved two years prior in fiscal 2001, and even surpassed it to reach its highest value in the history of the Company. (Millions of yen) 60,000 1999 2000 2001 2002...

  • Page 27
    The Company pushed through a number of structural reform measures during the fiscal year under review with the aim of eliminating future liabilities. The Company posted ¥14,949 million for compensation resulting from the dissolution of the Company's employees' funded pension plan, and ¥3,691 ...

  • Page 28
    ...In optical glass products, sales of lenses for digital cameras and video recorders recovered from the inventory adjustment phase that characterized the previous fiscal year, and revenue increased. In laser products from the Photonics division, as part of the Company's restructuring plan, the section...

  • Page 29
    ... contact lens sales, the Company increased revenue by aggressively marketing high-value-added products such as multifocal contact lenses, undertook effective development of its retail outlets by opening new stores while scrapping and building others, and introducing a customer-oriented sales system...

  • Page 30
    ... the volume of operating income. 20 Europe Sales Growth and Profitability by Geographical Segment Fiscal year ended March 31, 2003 (Compared with the previous fiscal year) Sales Growth Ratio (%) 10 North America Asia Consolidated Basis Consolidated Basis 0 Japan -10 -20 0 5 10 15...

  • Page 31
    .../net sales (%) 7.8 3.9 7.7 3.8 7.3 3.1 7.3 3.1 8.7 3.5 (% of total ) 100 1999 2000 2001 2002 2003 75 39.0 33.8 27.4 24.7 22.5 Group Employees by Region 50 45.0 43.0 43.7 48.2 52.4 25 15.4 14.0 19.3 3.9 12.2 11.3 15.8 14.8 10.3 0 3.3 Total Japan Asia Europe North America...

  • Page 32
    ...to increases in sales from the Electro-Optics and Health Care divisions, and a decline in capital expenditures. As a result, current assets increased 5.1% from the previous fiscal year to ¥178,154 million. Non-current assets declined 11.4% to ¥96,135 million due to postponement of investment plans...

  • Page 33
    ... for acquisition of property, plant and equipment, mainly for investment in next-generation products in the Electro-Optics division, totaling ¥14,213 million (decreased by ¥4,788 million from the previous fiscal year). Net cash used in financing activities totaled ¥14,548 million, an increase by...

  • Page 34
    (Times) 100 1999 2000 2001 2002 2003 (Yen) 10,000 80 8,000 60 6,000 Stock Price Data 40 4,000 20 2,000 0 0 Price earnings ratio (Times) Price cash flow ratio (Times) Price book value ratio (Times) Stock price at fiscal year-end (Yen) 44.47 21.63 4.93 6,720 55.03 30.64 6.44 9,700...

  • Page 35
    Independent Auditors' Report 33

  • Page 36
    ...PLANT AND EQUIPMENT: Land Buildings and structures Machinery and vehicles Furniture and equipment Construction in progress Total Accumulated depreciation Net property, plant and equipment INVESTMENTS AND OTHER ASSETS: Investment securities (Note 4) Investments in and advances to associated companies...

  • Page 37
    ... AND SHAREHOLDERS' EQUITY 2003 2002 2003 CURRENT LIABILITIES: Short-term bank loans (Note 8) Current portion of long-term bank loans (Note 8) Notes and accounts payable: Associated companies (Note 14) Other-trade Construction and other Income taxes payable (Note 11) Accrued bonuses to employees...

  • Page 38
    ... Statements of Income Hoya Corporation and Consolidated Subsidiaries Years Ended March 31, 2003, 2002 and 2001 Millions of Yen Thousands of U.S. Dollars (Note 1) 2003 2002 2001 2003 NET SALES (Notes 13 and 14) COST OF SALES (Notes 13 and 14) Gross profit SELLING, GENERAL AND ADMINISTRATIVE...

  • Page 39
    ... Statements of Shareholders' Equity Hoya Corporation and Consolidated Subsidiaries Years Ended March 31, 2003, 2002 and 2001 Issued Number of Shares of Common Stock Millions of Yen Common Stock Capital Surplus Retained Earnings Net Unrealized Gain(Loss) on Availablefor-sale Securities Foreign...

  • Page 40
    ... to directors Net decrease in unrealized gain on available-for-sale securities Net decrease in foreign currency translation adjustments Net increase in treasury stock (948,991 shares) BALANCE, MARCH 31, 2003 See notes to consolidated financial statements. $52,200 $132,492 $1,685,458 (550) 166,983...

  • Page 41
    ... and equipment Loss on sales of investment securities Loss on disposal of property, plant and equipment Foreign exchange loss (gain) Bonuses to directors Equity in earnings of associated companies Gain on transfer of business Other Changes in assets and liabilities: Decrease (increase) in notes and...

  • Page 42
    ... (primarily inventory and property) Liabilities (primarily trade payables) ADDITIONAL INFORMATION: Assets acquired and liabilities assumed in acquisition: Assets acquired Goodwill Consolidated goodwill Liabilities assumed Minority interests Investments in associated companies Cash paid, net of cash...

  • Page 43
    ... Hoya 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 outside Japan and have been made at the rate of ¥120 to U.S.$1, the approximate rate of exchange at March 31, 2003...

  • Page 44
    ... method at rates based on the estimated useful lives of the assets, while the straight-line method is applied to buildings of the Company and its domestic subsidiaries, and to all property, plant and equipment of consolidated foreign subsidiaries. The net book value of tangible fixed assets...

  • Page 45
    ... method. (iii) Merger of the Company with Subsidiaries On March 1, 2003, the Company purchased Hoya Lens of Chicago, Inc. in the United States for ¥1,301 million ($10,842 thousand). On March 1, 2003, the Company merged with Hoya Techno Process Corporation and two other companies, which had been...

  • Page 46
    No» 4 INVESTMENT SECURITIES Investment securities as of March 31, 2003 and 2002 consisted of the following: Millions of Yen Thousands of U.S. Dollars 2003 2002 2003 Marketable equity securities Non-marketable equity securities Total ¥171 616 ¥787 ¥0,589 466 ¥1,055 $1,425 5,133 $6,558 ...

  • Page 47
    ...2003 Investments Advances (Long-term loan receivable) Total ¥4,953 24 ¥4,977 ¥4,761 ¥4,761 $41,275 200 $41,475 N o» 8 SHORT-TERM BANK LOANS AND LONG-TERM BANK LOANS Short-term bank loans at March 31, 2003 and 2002 consisted of notes to banks and bank overdrafts. The annual interest rates...

  • Page 48
    ... types of pension plans for employees; a non-contributory and a contributory funded pension plan. The Company and certain domestic subsidiaries have severance payment plans for directors and corporate auditors. For the year ended March 31, 2003 the contributory funded pension plan was dissolved and...

  • Page 49
    ... by the Code. On June 21, 2002, the Company's shareholders approved a stock option plan for the Group's directors and key employees. Under the plan, 936 thousand options were granted to them to purchase shares of the Company's common stock during the exercise period from October 1, 2003 to September...

  • Page 50
    ...The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 41.7% for the years ended March 31, 2003, 2002 and 2001. The tax effects of significant temporary differences...

  • Page 51
    ...March 31, 2002, and 2001 was ¥4 million and ¥38 million, respectively. The Group leases certain machinery, computer equipment, office space and other assets. Total rental expenses for the years ended March 31, 2003, 2002 and 2001 were ¥7,967 million ($66,392 thousand), ¥8,739 million and ¥8,352...

  • Page 52
    ...000 8 317 33 Transactions of the Group with a director, his immediate family and two related companies as of and for the years ended March 31, 2003, 2002 and 2001 were as follows: Millions of Yen Thousands of U.S. Dollars 2003 2002 2001 2003 Sales Selling, general and administrative expenses...

  • Page 53
    ... derivatives are limited to major international financial institutions, the Group does not anticipate any losses arising from credit risk. Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate the authorization and credit limit amount...

  • Page 54
    ... Board of Directors. (2) Stock Option Plan and Purchase of Treasury Stock At the Company's shareholders meeting held on June 20, 2003, the Company's shareholders approved the following stock option plan for the Group's directors and key employees and the purchase of treasury stock: a. Stock option...

  • Page 55
    ... Information Technology Electro-Optics Photonics Eye Care Vision Care Health Care Millions of Yen 2002 Lifestyle Refinement Crystal Service Total Eliminations and Corporate Consolidated Sales to customers Intersegment sales Total sales Operating expenses Operating income (loss) ¥101,496 481 101...

  • Page 56
    ... lenses, optical glasses, electronic glass, optical communication related products, etc. Photonics: Laser equipment, etc. Vision Care: Eyeglasses, eyeglass frames, ophthalmic equipment, etc. Health Care: Contact lenses and related accessories, intraocular lenses, hearing aids, medical equipment...

  • Page 57
    ... on the countries where the Group is located. The segments consisted of the following countries: North America: United States of America, Canada, etc. Europe: Netherlands, Germany, United Kingdom, etc. Asia: Singapore, Thailand, Republic of Korea, Taiwan, etc. 2. Corporate operating expenses consist...

  • Page 58
    ... on the countries where the customers are located. The segments consisted of the following countries: North America: Europe: Asia: Other: United States of America, Canada, etc. Netherlands, Germany, United Kingdom, etc. Singapore, Thailand, Republic of Korea, Taiwan, etc. Saudi Arabia and Brazil...

  • Page 59
    ... Shareholders' Meeting June HOYA Group (As of March 31, 2003) Global Headquarters (Formulating group strategy) Information Technology Eye Care Crystal (Area) Supporting Legal and Financial Operations Japan (Holding Company) Asia (Holding Company) North America (Holding Company) Europe...

  • Page 60
    Investor Information (As of March 31, 2003) Listing of the Company's Shares First Section of the Tokyo Stock Exchange Number of Shares of Common Stock Authorized: 320,000,000 Issued: 116,124,405 Trading Unit 100 shares Number of Shareholders 7,459 Breakdown of Shareholders -Ownership Individuals, ...

  • Page 61
    ... lenses. Sales of soft contact lenses began. The Company's listings were advanced to the First Section of the Tokyo and Nagoya Stock Exchanges. The Electronics Division's Nagasaka Plant was completed, and the production of IC substrates began. Hoya's on-line network to handle eyeglass lens orders...

  • Page 62
    ...As of June 1, 2003) HOYA CORPORATION 2-7-5 Naka-Ochiai, Shinjuku-ku, Tokyo 161-8525, Japan TEL (03) 3952-1151 Business Development Division 3-3-1 Musashino, Akishima-shi, R&D Center Building Tokyo 196-8510 Japan TEL 042-546-2701 Overseas Branches EUROPE BRANCH Bilton House, 54/58...

  • Page 63
    ..., Thailand TEL 02-9012021 HOYA LENS HONG KONG LTD. 16/F, Unison Industrial Centre, 27-31 Au Pui Wan Street, Fo Tan, Shatin, N.T. Hong Kong TEL 2556-5266 HOYA LENS KOREA CO., LTD. 3rd Floor of Yunil Building, 1443-15, SeochoDong, Seocho-gu, Seoul 137-865, Korea TEL 02-585-1911 HOYA LENS GUANGZHOU...

  • Page 64
    ...CP 06760, Mexico TEL 5-2642211 HOYA LENS CANADA, INC. 1555 Bonhill Road, Units 4&5 Mississauga, Ontario,Canada L5T 1Y5 TEL 905-5650577 HOYA CRYSTAL, INC. 41 Madison Ave. 9th Floor, New York, NY 10010, U.S.A. TEL 212-679-3100 North America HOYA HOLDINGS, INC. 101 Metro Drive, Suite 500, San Jose, CA...

  • Page 65
    For additional information about this our Company, contact: Investor Relations 7-5, Naka-Ochiai 2-chome, Shinjuku-ku, Tokyo 161-8525, Japan TEL (03) 3952-1160 FAX (03) 3952-0726 URL http://www.hoya.co.jp/

  • Page 66
    ...fO&@@@5e@@@?e?N@@@1?J@@@(M?g@@@@L?e@@@?g@@@@e3@@@)Kg@@@@H??@@@f?3@@@@@@hg ?@@@h?@@@e?3@@@@)KeO&@@@@5?f?@@@@?e7@@@H?g?3@@@Lh?N@@@@@6K?eO@e3@@@@6K??O&@@@(Ye@@@@f?@@@@L?@@@he?V'@@@@6K?O2@@@@(Ye@@@?f3@@@W&@@@Hh3@@@1?e@@@?g@@@@eN...Shinjuku-ku, Tokyo 161-8525, Japan This annual report is printed on recycled...