Pentax 2006 Annual Report Download

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Table of contents

  • Page 1

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  • Page 3
    ... Division Eye Care Vision Care Division Health Care Division Other Businesses Crystal Division R&D and New Businesses Corporate Governance Corporate Social Responsibility Environmental Initiatives Financial Section and Corporate Data Note on segment data: In addition to the review of operations by...

  • Page 4
    A Message to Our Stakeholders Hiroshi Suzuki, President and CEO

  • Page 5
    ... number of individuals became Hoya shareholders during the fiscal year under review. Many readers probably have an image of Hoya as a company in the eyeglass lens and contact lens business. In fact, the Company has core strengths in two business areas: Information Technology and Eye Care. Eyeglass...

  • Page 6
    ...the Health Care division, net sales were 13.0% higher than the previous year. This growth was driven by healthy sales in Hoya's directly managed contact lens specialty retail store chain, Eye City, where we have been aggressively opening new stores. I credit these good results to Eye City's customer...

  • Page 7
    ...effective use of our shareholders' investments, and to work as one with our employees to further develop the business and enhance Hoya's corporate value. We are all deeply grateful for your ongoing support. Corporate Governance Hoya operates within a company-with-committees system. There is a Board...

  • Page 8
    .... Hoya's core technologies support its development as a "technological creator" company. Hoya's Seven Core Technologies Glass Formation Technologies At any given time, Hoya is producing more than 100 different varieties of optical glass, working from a proprietary "recipe book" that contains over...

  • Page 9
    ... development of higher resolution displays with greater image quality for both digital cameras and mobile phones with cameras. These advanced technologies are also seeing use in the design of eyeglass lenses. Precision Processing (Lithographic Technologies) The photomasks employed in the production...

  • Page 10
    ... directives and provides development technologies to production facilities and sales offices located around the world, ensuring that these quickly reflect local production and sales activities. In addition, regional headquarters in the United States, Europe and Asia work across different operational...

  • Page 11
    ..., the Company has become what it is today-moving steadily from one achievement to the next under a highly responsive management system. Transitions in the Board of Directors Year 1994 1995 1999 2000 2001 2003 to present Total number of directors H o y a 's Global Network Internal directors...

  • Page 12

  • Page 13
    ...) Operating income ratio (%) Percentage of Net Sales (Year ended March 31, 2006) 200,000 150,000 100,000 50,000 0 2003 2004 2005 2006 40 30 20 10 0 55.4% Photonics Division The primary products in this division comprise industrial and medical equipment that utilizes lasers and specialized light...

  • Page 14
    ...1.0% Health Care Division Hoya's Health Care Division oversees the development of the Eye City chain of directly managed contact lens specialty stores, and also produces intraocular lenses (IOLs) for the treatment of cataracts. Eye City is the top player in this field in Japan. Customers appreciate...

  • Page 15
    ... in home electrical appliances such as these is transforming people's daily lives for the better. This change is being accomplished by advances in the technologies used to manufacture such devices as semiconductors, optical glass lenses, LCD panels and HDDs. Hoya, through its Information Technology...

  • Page 16
    ... high-end products. During the fiscal year ended March 31, 2006, full-scale commercial production got under way for 65-nm photomasks. Since semiconductor manufacturers are actively increasing their investment in R&D, Hoya also shipped samples of state-of-the-art photomasks for use in the development...

  • Page 17
    ... panels and to ensure that Hoya builds a dominant position for itself in comparison with the competition, the Company has set a number of operational objectives. On the technical side, these include the development of highvalue-added technology, which can best be represented by the multi-tone mask...

  • Page 18
    ..., it is expected that new commercial applications will be developed. Hoya was quick to commence development work on the media to be used for the perpendicular magnetic recording method, and is proceeding with preparations to commence actual shipments in 2006. Vietnam plant Glass disks, which have...

  • Page 19
    ... used. Because of this, they help to reduce the size and weight of optical equipment. The Company's molded glass aspherical lenses take advantage of these characteristics chiefly for digital cameras, digital video cameras and camera-equipped mobile phones. During the fiscal year ended March 31, 2006...

  • Page 20
    ... of flat panel displays to correct defects, and ultraviolet light source devices used to cure ultraviolet resins in bonding processes for optical parts (such as optical pickups and camera modules). Others are colored glass filters and opto-electronics glass used in optical equipment and industrial...

  • Page 21
    ...Vision Care Division produces high-value-added eyeglass lenses for global markets. The Health Care Division operates Hoya's Eye City contact lens specialty stores throughout Japan, and is also working to manufacture and sell on a global basis the intraocular lenses (IOLs) used in cataract operations...

  • Page 22
    ...sensitive lenses, and a scratchresistant SFT Coating. The two most important markets for Hoya are Japan and Europe, both of which have high demand for premium products and similar replacement cycles. The Vision Care headquarters was relocated from Japan to the Netherlands during 2005, reflecting the...

  • Page 23
    ... sales in this business. Optician/Glasses Shop The HOYA Excellent Lens Production (HELP) System HELP Computation HOYA host computer Laboratories (Special order processing) HOYA Cut System Finished design is confirmed through a 3D image simulation Lenses cut to fit the designated frame Data entry...

  • Page 24
    ... "hardware"-the stores themselves-the Company is working to ensure excellent "software," which is how Eye City employees relate to customers, by providing training in the provision of high-quality customer service. During the fiscal year ended March 31, 2006, new training centers were established in...

  • Page 25
    .... The shift to use of the foldable lens type IOL is proceeding quickly in the Japanese market, and in this market Hoya's product quality is valued highly. Market share is growing steadily. In 2004, a new yellow type of IOL was introduced which, in addition to offering the ability to reduce UV light...

  • Page 26
    ..., and have begun reviewing existing business structures and the product lineup under a new conceptual framework. In addition to designing new product concepts, the business will move away from its current focus on the gift market. Purchasers will be carefully targeted, and the objective will be to...

  • Page 27
    .... In addition, the Company continues to develop new optical glass materials with special optical characteristics, and is working to realize the practical application of production technologies for specially shaped lenses that meet the needs of state-of-the-art optical design technologies. In these...

  • Page 28
    ... such middle-end products as plastic lenses with a high refractive index.They are speeding up their drive to catch up technologically. In response to this situation, Hoya is developing a new range of highly functional coatings, including a new anti-reflective coating, photochromic coatings,*5 and...

  • Page 29
    ...vision that "companies are owned by their shareholders," the Company conducts its corporate management with the goal of maximizing shareholder value. To ensure it does not operate according to internal management philosophies alone, Hoya was quick to adopt a system of outside directors who represent...

  • Page 30
    ... the health of the Group as a whole. The Hoya Help Line, a special system that has been established at the Company's headquarters, can also be used as a point of contact with external lawyers available to listen to employees. The system was introduced at Hoya's U.S. companies in 2005, and plans are...

  • Page 31
    ... the Hoya Group has pushed forward according to plan toward the certification of all production plants, including those located overseas. By the end of March 2001, nearly all mass production plants in Japan and abroad had been certified. As of the end of March 2006, a total of 35 plants belonging to...

  • Page 32
    ... 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's Directory 30 32 44 46 47...

  • Page 33
    ...(PCFR) (Times) Price book value ratio (PBR) (Times) Stock price at year-end (Yen) (after adjustment for stock split) Aggregate market value (Billions of yen) Employees (Persons) Effective April 1, 2002, the Company adopted a new accounting standard for net income per share of common stock issued by...

  • Page 34
    ...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 35
    ..., centered on the Information Technology and Eye Care fields, implements the management strategies formulated by the Global Headquarters at Hoya Corporation in line with their independent business responsibilities. By area, the regional headquarters in North America, Europe and Asia conduct...

  • Page 36
    ... income. Sales by Region (Based on the location of the Company's offices) 2002 2003 2004 2005 2006 (% of total) 100 75 67.8 67.5 69.4 71.2 74.9 50 4.2 12.3 15.7 (Millions of yen) 4.8 13.2 14.5 4.6 13.8 12.2 4.1 11.0 10.0 7.1 11.4 10.3 25 0 Japan Asia Europe North America 159,368...

  • Page 37
    ...year under review consisted of an interim dividend of ¥120 per share and a year-end dividend of ¥30 per share, for an aggregate ¥150 per share for the full year. If the interim dividend is adjusted retroactively to reflect the 4-for-1 stock split implemented in November 2005, the dividend payment...

  • Page 38
    ....5 10.1 21.5 20.7 8.1 25.1 24.5 14.6 27.6 29.1 20.8 29.4 30.1 22.0 2005 2006 3Q 4Q 1Q 2Q 3Q 4Q (%) 35 30 25 20 15 10 5 0 Quarterly Profit Ratios 1Q 2Q (%) Operating income ratio Ordinary income ratio Return on sales 28.1 29.8 21.6 29.4 31.1 21.3 27.8 28.7 20.7 24.9 26.6 19.6 30.6 33...

  • Page 39
    ...of camera lenses for new applications such as mobile phones. Operating income in the Electro-Optics division rose 18.3% to ¥74,862 million. In the first half, demand exceeded supply capacity for many products, boosting profit margins to high levels because plant capacity utilization rates were high...

  • Page 40
    ... sales for the Health Care division grew 13.0% to ¥35,484 million. In contact lenses, net sales expanded strongly due to efforts by directly managed Eye City stores to open new locations and increase the ability to attract customers, along with promotion of consulting sales requiring a high level...

  • Page 41
    ... and Profitability by Geographical Segment Fiscal year ended March 31, 2006 (Compared with the previous fiscal year) Size of circle shows the volume of operating income. Consolidated Basis Sales Growth Ratio (%) 120 Asia 100 80 60 40 North America Consolidated Basis 20 0 Japan Operating Income...

  • Page 42
    ...Billions of yen) 15 4 12 3 9 2 6 1 3 0 0 R&D expenses (Billions of yen) R&D expenses/net sales (%) 7.3 3.1 8.7 3.5 9.8 3.6 10.9 3.6 14.1 4.1 Group Employees by Region 2002 2003 2004 16.7 2005 14.2 2006 11.1 (% of total) 100 24.7 22.5 75 48.2 52.4 65.9 71.1 75.6 50 25...

  • Page 43
    ... from an increase in expenditures for acquisition of treasury stock (up ¥63,994 million year on year), and an increase in dividend payments (up ¥11,157 million). Because property, plant and equipment increased 26.7% to ¥120,604 million, and investments and other assets rose 22.2% to ¥28,660...

  • Page 44
    ... ¥5,011 million). Net cash used in investing activities amounted to ¥52,013 million, an increase of ¥16,489 million from the previous fiscal year. This mainly reflected purchases of property, plant and equipment of ¥47,742 million (up ¥14,348 million year on year), a significant rise that has...

  • Page 45
    ... (Times) 100 2002 2003 2004 2005 2006 (Yen) 5,000 80 4,000 60 3,000 40 2,000 20 1,000 0 0 Price earnings ratio (Times) Price cash flow ratio (Times) Price book value ratio (Times) Stock price at fiscal year-end (Yen) (after adjustment for stock split) 44.5 25.6 4.8 2,260 41.8 21...

  • Page 46
    ..., the business results and financial condition of the Hoya Group might be adversely affected. Emergence of Discounters and Lowering of Prices in the Consumer Goods Sector In recent years in the eyeglass and contact lens markets, discount shops of an unprecedented type have emerged and brought about...

  • Page 47
    ..., PLANT AND EQUIPMENT (Note 5): 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 3) Investments in associated companies...

  • Page 48
    ... LIABILITIES: Reserve for periodic repairs Other long-term liabilities Total long-term liabilities MINORITY INTERESTS CONTINGENT LIABILITIES (Notes 12, 13 and 15) SHAREHOLDERS' EQUITY (Notes 9 and 17): Common stock- authorized, 1,250,519,400 shares in 2006 and 316,224,600 shares in 2005; issued, 435...

  • Page 49
    Hoya Corporation and Subsidiaries Years Ended March 31, 2006, 2005 and 2004 Millions of Yen 2006 2005 2004 Thousands of U.S. Dollars (Note 1) 2006 NET SALES COST OF SALES (Notes 11 and 12) Gross profit SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 7, 11 and 12) Operating income OTHER INCOME...

  • Page 50
    ... Corporation and Subsidiaries Years Ended March 31, 2006, 2005 and 2004 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 Stock...

  • Page 51
    ... Net income Appropriations: Cash dividends, $1.79 per share Bonuses to directors Stock split (Note 16) Repurchase of treasury stock Disposal of treasury stock Retirement of treasury stock Net increase in unrealized gain on available-for-sale securities Net increase in foreign currency translation...

  • Page 52
    ... Net cash provided by operating activities INVESTING ACTIVITIES: Proceeds from sales of investment securities Payments for investment securities Acquisition of majority shares Proceeds from sales of property, plant and equipment Payments for property, plant and equipment Payments for purchases of...

  • Page 53
    ... CONSOLIDATED SUBSIDIARY AT THE DATE OF CHANGE 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 assets and...

  • Page 54
    ... in the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. The...

  • Page 55
    ..., plant and equipment of consolidated foreign subsidiaries. The net book value of tangible fixed assets depreciated by the straight-line method was approximately 66.4% of total tangible fixed assets in 2006 and 56.3% in 2005. The ranges of useful lives are from 10 to 50 years for buildings and...

  • Page 56
    ... the end of the year. p. Reclassifications-Certain reclassifications have been made for the 2005 and 2004 consolidated financial statements to conform to the classifications used in 2006. These changes had no impact on previously reported results of operations or cash flows or shareholders' equity...

  • Page 57
    ... Carrying Amount Millions of Yen 2006 2005 Thousands of U.S. Dollars 2006 Equity securities Investment to limited partnership and others Total ¥ 802 279 ¥1,081 ¥274 314 ¥588 $6,827 2,375 $9,202 There were no sales of available-for-sale securities for the years ended March 31, 2006 and 2005.

  • Page 58
    ... of the relevant property, plant and equipment was written down to the recoverable amount, which was measured in consult of appraised value of land facing a thoroughfare and sales amount among others. The Group reviewed its long-lived assets for impairment as of the year ended March 31, 2006, and as...

  • Page 59
    ... benefit costs for the years ended March 31, 2006, 2005 and 2004 were as follows: Millions of Yen 2006 2005 2004 Thousands of U.S. Dollars 2006 Additional expense incurred to dissolve the contributory funded pension plan Additional retirement benefits paid to employees Net periodic benefit costs...

  • Page 60
    ...common stock, although, generally, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus. Japanese Company Law ("the Law") became effective on May 1, 2006...

  • Page 61
    ... of goodwill and property, plant and equipment Loss on impairment of long-lived assets Loss on closure of plant in the next year Allowance for doubtful receivables Other Total Deferred tax liabilities: Reserves for special depreciation and other Other Total Net deferred tax assets ¥1,692...

  • Page 62
    ... reflected in the accompanying consolidated statements of income for the years ended March 31, 2006, 2005 and 2004 was as follows: 2006 ...Group leases certain machinery, computer equipment, office space and other assets. Total rental expenses including lease payments for the years ended March 31, 2006...

  • Page 63
    ...the Company's shareholders' meeting held on June 16, 2006, the following stock option plan for the Group's directors and key employees was approved. The plan provides for granting options to the Group's directors and key employees to purchase up to 1,200 thousand shares of the Company's common stock...

  • Page 64
    ... for computation On November 15, 2005, the Company effected four-for-one stock split of its shares of common stock pursuant to a resolution approved at a meeting of the Board of Directors held on July 20, 2005. As a result, the number of shares of the Company's common ¥75,555 - ¥75,555 ¥64,072...

  • Page 65
    ... the years ended March 31, 2006, 2005 and 2004 was as follows: (1) Industry Segments a. Sales and Operating Income Millions of Yen 2006 Information Technology Electro-Optics Photonics Eye Care Vision Care Health Care Lifestyle Refinement Crystal Service Total Eliminations and Corporate Consolidated...

  • Page 66
    ...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 expenses Operating income (loss) ¥165,664 526 166,190 102,900...

  • Page 67
    ...), optical lenses, optical glasses, electronic glasses, optical communication products, etc. Photonics: Laser equipment, light sources for use in the electronics industry, special optical glass, etc. Vision Care: Eyeglasses, eyeglass frames, etc. Health Care: Contact lenses and related accessories...

  • Page 68
    Thousands of U.S. Dollars 2006 Japan North America Europe Asia Total Eliminations and Corporate Consolidated Sales to customers Interarea transfers Total sales Operating expenses Operating income Assets $2,085,622 203,465 2,289,087 1,961,471 $ 327,616 $1,394,739 $301,958 1,890 303,848 294,594 $ ...

  • Page 69
    ... 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...

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