Pentax 2005 Annual Report Download

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2005 ANNUAL REPORT

Table of contents

  • Page 1
    2005 ANNUAL REPORT

  • Page 2
    ... two main fields of business: Information Technology and Eye Care. Hoya holds a strong market share in a variety of specialized areas. In the Information Technology field, the Company manufactures products that are essential to digital consumer electronics, such as the optical lenses used in digital...

  • Page 3
    ...Price book value ratio Times Stock price at year-end Yen Contents A Message to Our Stakeholders Hoya at a Glance Information Technology Electro-Optics Division Photonics Division Eye Care Vision Care Division Health Care Division Other Businesses Crystal Division R&D and New Businesses Corporate...

  • Page 4
    At Hoya, we are essentially in the business of "light." My responsibility is to ensure that management resources are allocated in the best possible way. Hiroshi Suzuki, President and CEO

  • Page 5
    ... market demand. In August 2004, a new optical lens plant in China came on line and an intraocular lens (IOL) plant in Singapore commenced production. We opened an LCD photomask plant in Taiwan in January 2005. In Thailand, Hoya invested in the construction of a new eyeglass lens plant and increased...

  • Page 6
    ...half of the fiscal year under review followed by a slowdown in the second half. The optical lens business was particularly symbolic of this trend. With Hoya's high market share in optical lenses used for digital cameras, when production started to fall in the digital camera market in the summer, the...

  • Page 7
    ... had covered the purchase of new eyeglasses in Germany, our largest market in the region, and the temporary adjustments made necessary by the relocation of laboratories in France and Spain. In the contact lens business, we are operating a directly managed specialty retail store chain, Eye City, and...

  • Page 8
    ... in each market. In the year ahead, it will be our objective to actively expand investment in the Eye Care field. We have been working to create a foundation for a soundly profitable business structure, building on the work already done to withdraw from unprofitable product lines and restructure...

  • Page 9
    ... managers and employees all the way down the line. This characteristic of our organization is so deeply ingrained one could call it a part of Hoya's "DNA." It is you, the shareholder, who supports the growth of Hoya as I have described it. Ultimately, the ideal form of corporate governance would...

  • Page 10
    ... products continues to contribute to Hoya's business growth. Over the past four years, sales have grown at an average annual rate of 11.2%, and operating income by an average annual rate of 20.0%. Both sales and profits continue to see double-digit growth. The contribution of Information Technology...

  • Page 11
    ... markets, particularly in Europe, Asia and North America. Net sales (Millions of yen) Operating income ratio (%) 100,000 80,000 60,000 40,000 20,000 0 2002 2003 2004 2005 20 15 10 5 0 Health Care Division The production of contact lenses and their sale in Eye City directly managed retail stores...

  • Page 12
    Digital cameras and LCD TVs depend on Hoya's high technologies. Business Overview I n f o r m a t i o n Te c h n o l o g y It has been several years since the phrase "digital consumer electronics" came to be widely used. Representative products in this area include digital cameras, flat-screen ...

  • Page 13
    ... 70% share of the global market for the mask blanks used in the production of semiconductors, driven by client recognition of Hoya's technological and competitive strengths. Mask blanks are precisely polished*1 glass plates coated with a metallic film and a lightsensitive material (resist). A mask...

  • Page 14
    ... to demonstrate a clear technological advantage in this field. During the fiscal year under review, Hoya proceeded with plans to open new LCD photomask plants in Taiwan (which began operation in January 2005) and South Korea, to ensure that it could continue to respond to increasing demand and meet...

  • Page 15
    ... began in earnest at Hoya. Hoya had developed mass production technologies ahead of the competition, both for the small-size glass substrate and the glass disks coated with magnetic layer (media). In the fiscal year under review, these technologies contributed to the increased use of HDDs. Currently...

  • Page 16
    ... slowdown in digital camera shipments. Despite the temporary dip in demand, Hoya opened a new optical lens plant in Suzhou, China in August 2004. The plant is expected to take advantage of the reduced cost of overseas production, and will produce lenses for camera-equipped mobile telephones, demand...

  • Page 17
    ... end of 2003 as part of a restructuring of several diverse companies in the Hoya Group that had been engaged in the provision of specialized light sources and optics businesses for the electronics industry. In the area of medical treatment, products include laser scalpels used in surgery and laser...

  • Page 18
    ...are eye-related, but the business models they use are different.While eyeglass lenses are produced and sold on a wholesale basis to eyeglass stores globally, Hoya operates its contact lens business on a retail basis, with local production and a directly managed specialty stores in Japan known as Eye...

  • Page 19
    ...and user demand for high-value-added items recovered. Capitalizing on this trend, Hoya introduced a number of high-value-added products, including progressive lenses for both near- and far-sightedness, a high-function anti-reflection coating, and a new high index material lens. As a result, sales in...

  • Page 20
    ... more high-value-added products into these markets and reinforce sales and marketing systems. On the global level, Hoya will prioritize building stronger profit structures by developing more responsive production regimes and supply chains. Comparison between SFT Coating and conventional lens...

  • Page 21
    ... well as developing Eye City, the largest store chain specializing in contact lenses in Japan, the business sells contact lenses direct to ophthalmic clinics and eyeglass stores. Contact lenses are a form of medical device designed to correct vision; when Hoya offers these items for sale, it always...

  • Page 22
    ... the development of high-valued-added products, such as astigmatism-correcting contact lenses, and multifocal contact lenses for middle-aged and older customers. Of these developments, multifocal contact lenses make the most of Hoya's advanced technologies, with a progressive lens design*2 allowing...

  • Page 23
    ... reflect the needs of the medical community.This enables Hoya to fulfill its mission of providing patients with high-quality products as quickly as possible. In the global market too, Hoya has been energetically developing its IOL business, and sales have already commenced in Germany, France, Italy...

  • Page 24
    ...field includes the Crystal and Service divisions. Hoya started the operation of the Crystal business in 1945, and it has a long history and heritage. The Service division engages in the development and operation of the Hoya Group's information systems, as well as operations for the dispatch of staff...

  • Page 25
    ... the year-after-year contraction of the scale of the Crystal division, Hoya continues to downsize its operations. Nevertheless, Hoya is well known for offering highly artistic designs and precision cutting technologies in this field, and there is a long-standing demand for Hoya brand products. Hoya...

  • Page 26
    ... profit through a balanced business portfolio consisting of two main foundations- the high-growth but high-risk Information Technology field and the more mature Eye Care field, which focuses on consumables. However, the steep growth of the digital consumer electronics market over the past few years...

  • Page 27
    ...-precise processing technologies and thin film coating technologies for glass materials, Hoya has developed glass substrates for double-sided fine circuitry. Potential practical applications in the high-speed wireless communications field are being actively examined, given these products' superior...

  • Page 28
    ... three internal directors serve concurrently as executive officers, engaged in operation of the business. With an organizational structure that incorporates a divisional organization and internal companies, Hoya has proceeded to devolve authority from executive officers to the head of each business...

  • Page 29
    ... shareholders' rights are protected. Statements of financial results for each quarter are reported to the Tokyo Stock Exchange approximately three weeks after the end of each quarter, and are then simultaneously posted on Hoya's website. The CEO, CFO and others offer briefings to discuss quarterly...

  • Page 30
    ...of packaging materials to net sales fell by 17% from the previous fiscal year. Ratio to net sales indicated based on 1999 =100. Statistics of the 10 domestic production sites Hoya Corporation: Nagasaka, Hachioji, Kumamoto, Akishima, Nagano, Lens Technology Center, Minakuchi, Kyushu, Musashi, Kodama

  • Page 31
    ...35 sites in the Hoya Group had obtained certification. Hoya Group ISO14001 Certification Status (As of March 31, 2005) Company Name (Location) Information Technology HOYA CORP. (Japan) HOYA CORP. (Japan) HOYA CORP. (Japan) HOYA CORP. (Japan) NH TECHNO GLASS CORP. (Japan) HOYA MAGNETICS SINGAPORE PTE...

  • Page 32
    ... provide safe, high-quality products and services that offer true value. We make every effort to increase customer satisfaction by continuously improving the quality of our operations. Commitment to shareholders Hoya strives to increase corporate value by improving business results and maintaining...

  • Page 33
    ...Discussion and Analysis Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report Corporate Data Investor Information Hoya's Timeline Hoya...

  • Page 34
    ...Board of Japan. Net income per share and related data prior to that date are also calculated according to the standard for purposes of comparison. Ordinary income: Income before income taxes that is adjusted for non-operating income and expenses. Ordinary income is not reported net of taxes. Selling...

  • Page 35
    ...can be used together with the price earnings ratio, the market average and comparative ratios for other companies in the same industry to judge whether the Company's stock price is overvalued or undervalued. Price book value ratio (stock price at year-end/shareholders' equity per share): An index of...

  • Page 36
    ... internal audits, thereby supporting the promotion of business activities. The Hoya Group financial headquarters is located in Europe. Net Sales ฀ Consolidated net sales for the fiscal year ended March 31, 2005 increased 13.5% year on year to ¥308,172 million. By main business segment, net sales...

  • Page 37
    ... Thai baht had a negative effect on the operating results of the entire Group, reducing net sales and net income by ¥692 million and ¥965 million, respectively. Sales by Region (Based on the location of the Company's offices) 2001 2002 2003 2004 2005 (% of total)฀ 100 75 71.3 67.8 67...

  • Page 38
    ...fiscal year under review all represented new records as full-year operating results. Return on assets (ROA) improved by 6.0 percentage points to 20.0%, and return on equity (ROE) improved by 8.0 percentage points to 25.8%. For the consolidated fiscal year under review, the Group increased the annual...

  • Page 39
    ....1 24.5 14.6 27.6 29.1 20.8 Quarterly Profit Ratios 1st quarter of 2004 to 4th quarter of 2005 2004-1Q 2004-2Q 2004-3Q 2004-4Q 2005-1Q 2005-2Q 2005-3Q 2005-4Q (%) 35 30 25 20 15 10 5 0 Operating income ratio (%) Ordinary income ratio (%) Return on sales (%) 22.7 23.1 15.3 24.2 23.1 13...

  • Page 40
    ... disk business of NIPPON SHEET GLASS CO., LTD., which was transferred to Hoya in March 2004. In optical glass products, sales of molded aspheric lenses and other optical lenses fared well, reflecting growth in the digital camera market in the first half of the consolidated fiscal year under review...

  • Page 41
    ... and build of directly managed Eye City stores, and boosted net sales as a result of offering customer services with a high level of professional expertise and promoting multifocal lenses and other high-value-added products. Net sales for IOLs also expanded strongly, as Hoya continued sales of soft...

  • Page 42
    ... Segment Information. Sales Growth and Profitability by Geographical Segment Fiscal year ended March 31, 2005 (Compared with the previous fiscal year) Size of circle shows the volume of operating income. Sales Growth Ratio (%) 35 Japan 25 15 Asia 5 Europe North America -5 -15 Operating Income...

  • Page 43
    ...,948 30,659 40,175 Research and Development Expenses (Billions of yen) 12 10 2001 2002 2003 2004 2005 (%) 4.0 3.0 8 6 4 1.0 2 0 0 2.0 R&D expenses (Billions of yen) R&D expenses/net sales (%) 7.3 3.1 7.3 3.1 8.7 3.5 9.8 3.6 10.9 3.6 Group Employees by Region 2001 2002 2003 2004...

  • Page 44
    ..., plant and equipment increased 21.5% to ¥95,158 million and investments and other assets rose 28.2% to ¥23,452 million, noncurrent assets expanded 22.8% to ¥118,610 million. Total assets increased 21.2%, to ¥351,482 million. Current liabilities increased 3.7% to ¥70,792 million. This reflected...

  • Page 45
    ... million (¥16,708 million more than in the previous consolidated fiscal year). Net cash used in investing activities rose by ¥7,185 million to ¥35,524 million. This mainly reflected an increase in purchases of property, plant and equipment, which rose by ¥10,182 million to ¥33,394 million. Net...

  • Page 46
    Stock Price Data (Times) 100 2001 2002 2003 2004 2005 (Yen) 12,000 10,000 8,000 80 60 6,000 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) 43.73 17.55 4.86 8,160 44.50 23.94 4.79 9,040...

  • Page 47
    ... not only the Hoya Group's results but also the production and sales plans of its customers, which might bring about increased market share for its competitors, etc., and adversely affect the business results and financial condition of the Hoya Group. New Business New business is important for...

  • Page 48

  • Page 49
    ... EQUIPMENT (Note 6): 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 50
    ... LONG-TERM LIABILITIES: Reserve for periodic repairs Other long-term liabilities Total long-term liabilities MINORITY INTERESTS CONTINGENT LIABILITIES (Notes 13, 15 and 16) SHAREHOLDERS' EQUITY (Notes 10 and 18): Common stock- authorized, 316,224,600 shares in 2005 and 320,000,000 shares in 2004...

  • Page 51
    ... Corporation and Subsidiaries Years Ended March 31, 2005, 2004 and 2003 Millions of Yen 2005 2004 2003 Thousands of U.S. Dollars (Note 1) 2005 NET SALES (Note 14) COST OF SALES (Notes 9, 12, 13 and 14) Gross profit SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 9, 12, 13 and 14) Operating...

  • Page 52
    ' Hoya Corporation and Subsidiaries Years Ended March 31, 2005, 2004 and 2003 Millions of Yen Outstanding Number of Shares of Common Stock Net Unrealized Gain (Loss) on Available-forSale Securities Foreign Currency Translation Adjustments Common Stock Capital Surplus Retained Earnings Treasury ...

  • Page 53
    ... stock Retirement of treasury stock Net increase in unrealized gain on available-for-sale securities Net increase in foreign currency translation adjustments BALANCE, MARCH 31, 2005 See notes to consolidated financial statements. $58,542 $148,589 $2,310,056 599,393 (114,402) (589) $(280) $(101...

  • Page 54
    ...Purchases of investment securities Proceeds from sales of property, plant and equipment Purchases of property, plant and equipment Collection of loans Payment of loans Purchase of goodwill Proceeds from transfer of business Decrease in other assets Increase in other assets Net cash used in investing...

  • Page 55
    ... EQUIVALENTS INCREASED BY MERGED UNCONSOLIDATED SUBSIDIARIES FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR NON-CASH INVESTING AND FINANCING ACTIVITIES: Retirement of treasury stock Increase in...

  • Page 56
    ... form which is more familiar to readers outside Japan. The consolidated financial statements are stated in Japanese yen, the currency of the country in which Hoya Corporation (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included...

  • Page 57
    ...the Company and its domestic subsidiaries abolished the retirement benefit plan for directors and corporate auditors. i. Research and Development Expenses-Research and development expenses are charged to income when incurred. j. Leases-All leases are accounted for as operating leases. Under Japanese...

  • Page 58
    ... 1, 2003, the Company merged with Hoya Techno Process Corporation and two other companies, which had been wholly owned unconsolidated subsidiaries of the Company. (3) Transfer of Business On March 31, 2003, a part of the hearing aid business in the eye care field was transferred to a third party.

  • Page 59
    ... follows: Carrying Amount Millions of Yen 2005 2004 Thousands of U.S. Dollars 2005 Equity securities Investment to limited partnership and others Total Proceeds from sales of available-for-sale securities for the years ended March 31, 2004 and 2003 were ¥102 million and ¥321 million, respectively...

  • Page 60
    ... to the recoverable amount. The recoverable amount of that property, plant and equipment group was measured based on the land tax assessment for land and net realizable value for others. Investments in and advances to associated companies at March 31, 2005 and 2004 were as follows: Millions of Yen...

  • Page 61
    ... certain domestic subsidiaries had two types of pension plans for employees; an unfunded retirement benefit plan and a contributory funded pension plan. The Company and certain domestic subsidiaries had retirement benefit plans for directors and corporate auditors. For the year ended March 31, 2003...

  • Page 62
    ...abolished the retirement benefit plan for directors and corporate auditors for the year ended March 31, 2004. ' Japanese companies are subject to the Code. The Code requires that all shares of common stock are recorded with no par value and at least 50% of the issue price of new shares is required...

  • Page 63
    ... Other Total Non-current: Deferred tax assets: Amortization of goodwill and property, plant and equipment Loss on impairment of long-lived assets Loss on closure of plant in the fiscal year Allowance for doubtful receivables Other Total Deferred tax liabilities: Reserves for special depreciation and...

  • Page 64
    ...,402 thousand), ¥9,847 million and ¥8,681 million, respectively. The Group leases certain machinery, computer equipment, office space and other assets. Total rental expenses including lease payments for the years ended March 31, 2005, 2004 and 2003 were ¥5,802 million ($54,224 thousand), ¥6,748...

  • Page 65
    ... information under finance leases: Millions of Yen 2005 2004 2003 Thousands of U.S. Dollars 2005 Depreciation expense Lease payments ...24 $1,355 393 Transactions of the Group with a director, his immediate family and two related companies as of and for the years ended March 31, 2004 and 2003 ...

  • Page 66
    ...and are recorded on the balance sheets at March 31, 2005 and 2004, are not subject to disclosure of market value information. Reconciliation of the differences between basic and diluted net income per share ("EPS") for the years ended March 31, 2005, 2004 and 2003 is as follows: Millions of Yen Net...

  • Page 67
    ...: (1) Industry Segments a. Sales and Operating Income Millions of Yen 2005 Information Technology Electro-Optics Photonics Eye Care Vision Care Health Care Lifestyle Refinement Crystal Service Total Eliminations and Corporate Consolidated Sales to customers Intersegment sales Total sales Operating...

  • Page 68
    ... Thousands of U.S. Dollars 2005 Information Technology Electro-Optics Photonics Eye Care Vision Care Health Care Lifestyle Refinement Crystal Service Total Eliminations and Corporate Consolidated Sales to customers Intersegment sales Total sales Operating expenses Operating income (loss) $1,548...

  • Page 69
    ... industry, special optical glass, etc. Eyeglasses, eyeglass frames, ophthalmic equipment, etc. Contact lenses and related accessories, intraocular lenses, hearing aids, etc. On March 31, 2003, the hearing aids business was transferred to a third party. Crystal glass products Design of information...

  • Page 70
    ...: North America: United States of America, Canada, etc. Europe: Netherlands, Germany, United Kingdom, etc. Asia: Singapore, Thailand, China, Republic of Korea, Taiwan, etc. 2. Corporate operating expenses consist primarily of the administration expenses of the Company and one regional headquarters...

  • Page 71
    ... 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 72

  • Page 73
    ... (Chief Financial Officer) Hiroaki Tanji (Strategy & Business Development) HOYA Group Global Headquarters (Formulating group strategy) Information Technology HOYA Corporation: Blanks Division, Mask Division, MD Division, and Optics Division Eye Care HOYA Corporation: Vision Care Company, Medical...

  • Page 74
    ... (As of March 31, 2005) Listing of the Company's Shares First Section of the Tokyo Stock Exchange Number of Shares of Common Stock Authorized: 316,224,600 ( ) Issued: 112,349,005 ( ) Trading Unit 100 shares Number of Shareholders 7,443 Breakdown of Shareholders Individuals, Other 11...

  • Page 75
    ... lenses. Sales of soft contact lenses began. 1999 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...

  • Page 76
    ... Bilton House, 54/58 Uxbridge Road, Ealing, London, W5 2ST, U.K. TEL 020-8579-6939 Business Development Division 3-3-1 Musashino, Akishima-shi, R&D Center Building, Tokyo 196-8510, Japan TEL 042-546-2701 ฀ HOYA VISION CARE, NORTH AMERICA HEADQUARTERS 651E, Corporate Drive...

  • Page 77
    ...Building, 1-29-9 Takadanobaba, Shinjuku-ku, Tokyo 169-8661, Japan TEL 03-3232-7062 HOYA LENS GUANGZHOU LTD. Zhicheng Dong Road, Guangzhou Economic & Technological Development District, Guangzhou, 510730, P.R.China TEL 020-8222-3999 HOYA GLASS DISK PHILIPPINES, INC 111 East Main...

  • Page 78
    ...-method affiliate฀ ฀ HOYA LENS FRANCE S.A. ZA Pariest Rue Willy Brandt, 77184 Emerainville, France TEL 01-6037-7253 ฀ ฀ North America ฀ REGIONAL HEADQUARTERS HOYA HOLDINGS, INC. HOYA LENS FINLAND OY Mikkolantie 1, FIN-00640 Helsinki, Finland TEL 09-72884100 101 Metro Drive, Suite 500...

  • Page 79
    2-7-5 Naka-Ochiai, Shinjuku-ku, Tokyo 161-8525, JAPAN T h is a n n u a l re po r t is prin t e d o n rec y c l e d p a p e r. Pr i n te d i n J a p a n