Pentax 2003 Annual Report Download - page 6

Operating income increased 20.7% from the previous fiscal year, the result of a continuation of profit
enhancement strategies such as greater sales of value-added products and more efficient production of our
mainstay products, as well as a relative increase in highly profitable businesses. Ordinary income, though hurt
by losses on currency exchanges due to a weakening dollar and rising euro, increased 11.1% from the previous
fiscal year. Net income, however, declined 15.6% from the previous year owing to the recording of extraordi-
nary losses of approximately ¥15.0 billion for compensation resulting from the dissolution of the Company’s
employees’ pension fund, which was implemented with the aim of accelerated elimination of future liabilities,
and a loss of approximately ¥3.7 billion for payments to employees accepting the early retirement plan accom-
panying the business restructuring of the Vision Care and Crystal divisions.
Cash dividends applicable to the year remained unchanged at ¥50 per share. As a result, the dividend
payout ratio was 29.2%, and the ratio of dividends to shareholders’ equity remained unchanged from the pre-
vious fiscal year at 2.6%.
Capital expenditures for the year totaled ¥15,948 million, mainly as investments to ensure stable supply
of products with large market shares, as well as to introduce cutting-edge equipment to fulfill customer needs
and to improve technology.
Another issue during fiscal 2003 was the discovery that we had shipped an irregular lot of our shock-resistant
reinforced plastic eyeglass lenses. Immediately after this discovery in December 2002 we issued a public
notice, and following an elimination order from the Japan Fair Trade Commission under the Premiums and
Representations Act, made a further public announcement in April 2003. I sincerely regret the trouble and
worry this has caused to our customers and shareholders, and offer my apologies. To prevent a recurrence of
this problem, all of our executives and employees have been made aware of the incident, sufficient measures
have been implemented and training conducted.
Outlook
There are many issues that the Hoya Group must face in order to continue to grow in the future, but these can
be divided roughly into two general areas.
The first is the continuing pace of globalization. Given 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 these developments so that they continue to benefit the Company, and
provide the impetus for further growth.
The second area is uncovering new businesses that will lead to further growth. Finding businesses to
add to the current portfolio is an important factor in accelerating growth, and we recognize the necessity of
incorporating such businesses into the Group as quickly as possible, whether through independent develop-
ment or M&A activity.
As Hoya grapples with these issues, we also acknowledge the vital role played by corporate governance. Along
with separating the management oversight and business administrative functions, and conducting speedy and
efficient management, Hoya believes that building a management structure that strengthens the supervisory
functions with impartial judgments from outside experts is essential to meeting the expectations of its cus-
tomers and shareholders. We therefore, after gaining approval at the general meeting of shareholders held in
June 2003, introduced a committees system, and designated that a majority of the board of directors be out-
side directors.
The Hoya Group concentrates its management resources into the markets and fields where it recognizes that it
can expand and grow, continually striving to increase its corporate value. I offer my sincerest appreciation to
all our shareholders, and ask for their continued support.
Hiroshi Suzuki, President and CEO
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