Pentax 2007 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    Hoya-Originating and developing world-class business enterprises Note on segment data: In addition to the review of operations by segment found on pages 6 to 18 of this annual report, segment-specific data can be found on pages 32 through 43, in the financial section.

  • Page 3
    ...In the Information Technology field, Hoya has consistently maintained a high share of the global market for such products as mask blanks, large-sized photomasks for LCD production, glass disks for hard disk drives, and optical lenses. In the Eye Care field, Hoya's eyeglass lenses, contact lenses and...

  • Page 4
    A Message to Our Stakeholders Hiroshi Suzuki, President and CEO 2

  • Page 5
    ... thanks to strategies designed to match the circumstances in each market as well as our commitment to offering high-value-added products and services. We are managing Hoya's business portfolio to ensure that the two fields of Information Technology and Eye Care-each of which possesses very different...

  • Page 6
    ...of contact lens specialty stores, Hoya secured an even more competitive position in the market. Both sales and income grew, continuing the growth reported a year earlier. Thanks to the well-known quality of Hoya's intraocular lenses (IOLs) for cataract surgery, Hoya's market share in Japan increased...

  • Page 7
    ... be "further sharpening Hoya's competitive edge." This is the issue that each business division needs to address. As you may recall, we used the same phrase a year ago, but in the fiscal year ended March 2007 we again faced pressure to increase investment in mass production capacity, despite having...

  • Page 8
    Hoya at a Glance Percentage of Net Sales (Year ended March 31, 2007) Electro-Optics Division Information Technology 56.2% Photonics Division 2.3% Vision Care Division Eye Care 30.7% Health Care Division 10.5% 0.3% 6 Other Businesses

  • Page 9
    ... 2006 2007 10 8 6 4 2 0 -2 The Vision Care Division is engaged in the manufacture and sale of eyeglass lenses in global markets with a focus on four regions: Japan, Europe, North America, and Asia-Pacific. Hoya develops its businesses in this field in ways that best reflect the varying commercial...

  • Page 10
    ... their lives. Hoya's Information Technology business is contributing greatly to the continuing evolution of flat screen televisions, digital cameras and notebook computers, all of which are representative of these new digital products. Information Technology Mask Division, Hachioji Plant, Japan 8

  • Page 11
    ... semiconductor design rules*1 are steadily changing to require ever more precise line width, from 90 nm* through 65 nm to 45-32 nm. During the fiscal year ended March 31, 2007, demand for Hoya's high-end products continued to expand. In particular, very strong growth was seen in sales of phase-shift...

  • Page 12
    ...year ended March 31, 2007, the respective functions of the Kumamoto (Japan), Taiwan and South Korea plants were delineated, and Hoya worked to solidify a tripolar production system. Each plant is located in close proximity to its client LCD panel manufacturers, enabling Hoya to develop products that...

  • Page 13
    ... and game machines. The 3.0-inch disks are used in servers and other high-performance computing equipment that requires a high degree of reliability. Hoya's smaller diameter disks are used in portable music players and digital video cameras, though not in great numbers. the continuing shift from...

  • Page 14
    ... digital cameras and mobile phone cameras and their new zoom function, they need glass molded lenses, which have better optical performance. Digital video cameras also are now mainly of the HD (high definition) type, and these products also use high-precision aspherical lenses. In addition, digital...

  • Page 15
    ... and other specialty glasses used in a wide variety of products and fields-cameras, optical parts, industrial production, medical equipment and instructional materials. Hoya provides many kinds of specialty glasses for different applications. Hoya seeks to boost the competitive standing of each...

  • Page 16
    ... Vision Care Division offers high-value-added eyeglass lenses in many countries across the globe. The Division's overseas business is expanding, and its base is now becoming truly global. In addition to managing Hoya's Eye City chain of contact lens specialty stores throughout Japan, the Health Care...

  • Page 17
    ... offer many customers a new series of lenses which benefit from the same superior technologies that have been proven in iD lens designs. Also during the year, Hoya introduced two new brands to complement the Hoya brand in Asia and Europe, seeking to build market share using a multi-branding strategy...

  • Page 18
    ... its high-value-added, high-end products, mostly in top performance coatings and newly designed progressive lenses. However, as a result of price competition in the lower price brackets, the company's total sales in Japan Hoya Pursues Larger Share of Asia-Pacific Market with Multi-branding Strategy...

  • Page 19
    ... deal of publicly available information in China on the appropriate use of contact lenses, so Hoya would like to concentrate on promoting the high-quality Eye City brand with an emphasis on complete eye examination and lens fitting services. At present, Eye City sells only certain Hoya products-high...

  • Page 20
    ... technical specialists to key countries, holding seminars, and conducting surgery demonstrations. The company is also seeking to boost recognition of the Hoya brand by enhancing its collaboration with ophthalmologists. Sales are growing in Asia. In addition to its existing markets in China and South...

  • Page 21
    R&D and New Businesses Intellectual Property Management Environmental Initiatives Corporate Governance 19

  • Page 22
    ...'s core technologies, while at the same time promoting the development of new fields that differ from those with existing businesses. The R&D Center is thus sowing the seeds of the new businesses that will support Hoya's future growth. More information on each of these three research themes appears...

  • Page 23
    ... offer lower production costs thanks to the smaller size and lower weight of cooling systems. The aim is to have the new technology incorporated into high efficiency power devices across a variety of fields. Hoya is engaged in the development of optical communications parts...

  • Page 24
    ... held by other companies. To achieve these ends, careful technical search and observation of patent information on other companies is implemented and Hoya promotes the patent prosecution that is most appropriate for each different business environment. Additionally, given the increasing speed of the...

  • Page 25
    ... information. 3. Intellectual Property: Current Status Number of Registered Patents and Global Application Ratios Hoya held 967 registered patents and utility models in Japan as of March 31, 2007. Of these, the Electro-Optics Division and Vision Care Division held approximately 85%. Over 30% of new...

  • Page 26
    ...that all employees are thoroughly aware of the Hoya Group Environmental Philosophy and Fundamental Environmental Principles by offering education programs and using internal communications. 2. Examples of Activities Aimed at Reducing Environmental Impact Initiatives designed to reduce CO2 emissions...

  • Page 27
    ... used or emitted in production processes, and the introduction of chemical substitutions, in response to various laws and regulations, such as Japan's Law Concerning Reporting, etc. of Releases to the Environment of Specific Chemical Substances and Promoting Improvements in Their Management...

  • Page 28
    ...-with-committees system. By broadly devolving decision-making authority from the Board of Directors to executive officers, the Company has set up a system that helps executive officers improve business results by allowing them to manage operations in a more timely and efficient manner. At the same...

  • Page 29
    ... business conditions, financial results and standards adopted by other companies. Divisions Internal Control Systems In addition to striving to further strengthen its corporate governance, the Hoya Group also devotes resources to development of sound internal control systems with the objective...

  • Page 30
    .... The Hoya Help Line is a dedicated system located within the Company's headquarters, and it can also be used as a point of contact with external lawyers who are available to listen to employees. This preserves anonymity and works to maintain the system's functional effectiveness. As at the end of...

  • Page 31
    ... Management's Discussion and Analysis Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Net Assets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report Corporate Data Investor Information Hoya...

  • Page 32
    ... issued by the Accounting Standards Board of Japan on September 25, 2002). Net income per share and related data prior to that date are also calculated according to the standard for purposes of comparison. 2. From the fiscal year ended March 31, 2007, the Company has applied "Accounting Standard for...

  • Page 33
    ... high or low in comparison with its earnings. A company's PER is compared against the market average or that of competitors to determine the standard for the share price and other data. Price cash flow ratio (stock price at fiscal year-end/cash flow per share): Cash flow is calculated by adding...

  • Page 34
    ... supporting the promotion of business activities. The Group's financial headquarters is located in Europe. Net Sales Consolidated net sales for the fiscal year ended March 31, 2007 increased 13.3% year on year to ¥390,093 million. By main business segment, net sales for the Electro-Optics division...

  • Page 35
    ... of exchange rates added ¥6,823 million to net sales and ¥5,421 million to net income. Sales by Region (Based on the location of the Company's offices) (% of total) (Millions of yen) Japan Asia Europe North America Sales to Domestic and Foreign Customers (Based on the location of customers...

  • Page 36
    ...funds between Group companies, along with a decline in equity in earnings of affiliates from ¥1,285 million the previous fiscal year to ¥642 million for the subject fiscal year. Other income and expenses included a ¥9,520 million increase in gain on sales of property, plant and equipment, against...

  • Page 37
    ..." (Guidance No.8 issued by the Accounting Standards Board of Japan on December 9, 2005), replacing "Return on shareholders' equity" used to date with "Return on owners' equity." The figures for "Return on owners' equity" presented for the fiscal year ended March 31, 2006 and earlier correspond to...

  • Page 38
    ...Hoya has focused on cutting-edge development, there was also a rise in sales of high-precision products. In photomasks for large-sized LCD panels, however, sales were down as a result of falling unit prices arising from greater competition in the photomask market. In glass disks for hard disk drives...

  • Page 39
    ... increase in customers specifically requesting Hoya's high-value-added products. Further, a focus on marketing activities tailored to the market characteristics of the Asia-Pacific region, such as the introduction of new brands, led to a 14.5% rise in sales. In North America as well, the market...

  • Page 40
    ... opening of new locations of directly managed Eye City stores, along with customer appreciation of high-quality service. In intraocular lenses (IOLs) used for surgical treatment of cataracts, sales rose both in Japan and overseas as a result of Hoya's growing share of the domestic market, where high...

  • Page 41
    ... depreciation, amortization of goodwill, and loss on impairment of long-lived assets. Research and Development Expenses (Billions of yen) R&D expenses (Billions of yen) R&D expenses/net sales (%) Group Employees by Region (% of total) (Persons) Total Japan Asia Europe North America 39

  • Page 42
    ...,722 million. The rate of growth in cash and deposits was particularly high owing to a decline in expenditures for acquisition of treasury stock, from ¥64,032 million in the previous fiscal year to ¥13 million during the subject fiscal year. Total property, plant and equipment increased 18.8% year...

  • Page 43
    ... expenditures of ¥52,379 million for purchases of property, plant and equipment (up ¥4,637 million year on year), the decline stemmed mainly from proceeds from sales of property, plant and equipment of ¥10,218 million (up ¥9,951 million). Net cash used in financing activities amounted to ¥23...

  • Page 44
    Stock Price Data (Times) (Yen) 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) Stock Price and Trading Volume Stock price (Yen) Trading volume (Thousands of shares) (Month) ...

  • Page 45
    ... 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 Emergence of Discounters and Lowering of Prices in the Consumer Goods Sector...

  • Page 46
    Consolidated Balance Sheets Hoya Corporation and Subsidiaries March 31, 2007 and 2006 Millions of Yen Thousands of U.S. Dollars (Note 1) ASSETS 2007 2006 ¥ 83,574 2007 CURRENT ASSETS: Cash and cash equivalents Notes and accounts receivable: Trade Other Allowance for doubtful receivables ...

  • Page 47
    ... Capital surplus Retained earnings Treasury stock, at cost-3,447,681 shares in 2007 and 4,401,607 shares in 2006 Total shareholders' equity ACCUMULATED GAINS (LOSSES) FROM REVALUATION AND TRANSLATION ADJUSTMENTS Net unrealized gain (loss) on available-for-sale securities, net of tax Foreign currency...

  • Page 48
    Consolidated Statements of Income Hoya Corporation and Subsidiaries Years Ended March 31, 2007, 2006 and 2005 Millions of Yen Thousands of U.S. Dollars (Note 1) 2007 NET SALES COST OF SALES (Notes 9 and 10) Gross profit SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 9 and 10) Operating ...

  • Page 49
    ...of Changes in Net Assets Hoya Corporation and Subsidiaries Years Ended March 31, 2007, 2006 and 2005 Millions of Yen Outstanding Number of Shares of Common Stock Net Unrealized Gain (Loss) on Availablefor-Sale Securities, Net of Tax Foreign Stock Currency Subscription Translation Rights Adjustments...

  • Page 50
    ... in unrealized gain on available-for-sale securities Net increase in foreign currency translation adjustments Net increase in stock subscription rights Net increase in minority interests Other increase BALANCE, MARCH 31, 2007 See notes to consolidated financial statements. $53,062 $134,680 $2,256...

  • Page 51
    ...Payments for investment securities Acquisition of majority shares Proceeds from sales of property, plant and equipment Payments for property, plant and equipment Proceeds from transfer of business Proceeds from other assets Payments for purchases of other assets Net cash used in investing activities...

  • Page 52
    ... of Yen Thousands of U.S. Dollars (Note 1) 2007 FINANCING ACTIVITIES: Net decrease in short-term loans Payments for purchases of treasury stock Proceeds from sales of treasury stock Dividends paid Other Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...

  • Page 53
    ..., plant and equipment of consolidated foreign subsidiaries. The net book value of tangible fixed assets depreciated by the straight-line method was approximately 66.2% of total tangible fixed assets in 2007 and 66.4% in 2006. The ranges of useful lives are from 10 to 50 years for buildings and...

  • Page 54
    ... of the consolidated overseas subsidiaries and associated companies are translated into Japanese yen at the current exchange rates as of the balance sheet dates except for shareholders' equity, which is translated at historical exchange rates. Differences arising from such translation are shown as...

  • Page 55
    ...in Net Assets-Effective from the year ended March 31, 2007, the Company and its consolidated subsidiaries adopted the new accounting standard, "Accounting Standard for Statement of Changes in Net Assets" (Statement No.6 issued by the Accounting Standards Board of Japan on December 27, 2005), and the...

  • Page 56
    u. Stock Option-Effective April 1, 2006, the Company and its consolidated subsidiaries adopted the new accounting standard, "Accounting Standard for Share-based Payment" (Statement No.8 issued by the Accounting Standards Board of Japan on December 27, 2005) and the implementation guidance, "Guidance...

  • Page 57
    ... 2005. As a result, the Group recognized impairment losses of ¥88 million ($745 thousand), ¥864 million and ¥92 million for the years ended March 31, 2007, 2006 and 2005, respectively, as other expense for a decline in value, mainly from property of certain plants including the Tokyo Studio (in...

  • Page 58
    ...for new shares is required to be designated as common stock. However, 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. Under the Law, in cases where...

  • Page 59
    No. 8 INCOME TAXES 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 40.4% for the years ended March 31, 2007, 2006 and 2005. Significant components of ...

  • Page 60
    ... DEVELOPMENT EXPENSES Research and development expenses charged to income for the years ended March 31, 2007, 2006 and 2005 were ¥14,920 million ($127,565 thousand), ¥14,135 million and ¥10,957 million, respectively. No. 10 LEASES The Group leases certain machinery, computer equipment, office...

  • Page 61
    ... exposures incorporated within its business. Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged assets or liabilities. Because the counterparties to these derivatives are limited to major international financial institutions, the Group does...

  • Page 62
    ...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 stock in issue has increased to 449,396,020 shares. If the stock split had gone into effect at the beginning of the year ended March 31, 2005, net income per...

  • Page 63
    No. 15 STOCk OPTION PLANS (For the year ended March 31, 2007) 1. Description of Stock Option (1) Description of Stock Option Plans 1st stock subscription rights Directors of the Company Type and number of recipients Number of stock options by type of stock to be issued (Note 1) Grant date Vesting ...

  • Page 64
    ... rights 6th stock subscription rights Note: Number of shares in the above table is adjusted taking into account a four-for one stock split for common stock as of November 15, 2005. b. Per unit information 1st stock subscription rights Exercise price (yen) (Note 1) Average stock price on exercise...

  • Page 65
    ... management for the Group; HOYA HEALTHCARE CORPORATION, which currently engages in retail of contact lens, is expected to be able to reflect market needs more rapidly and effectively into development and production by combining the related production function. 2. Shares to Be Issued No shares...

  • Page 66
    ... to a broader customer base. Following the management integration, the Company and PENTAX aim to optimize their business portfolios and to further strengthen competitiveness. 2. Terms of Tender Offer (1) Purchase Price a. Common stock of PENTAX: ¥770 per share. However, if PENTAX's annual general...

  • Page 67
    ... the Company and subsidiaries for the years ended March 31, 2007, 2006 and 2005 was as follows: (1) Industry Segments a. Sales and Operating Income Millions of Yen 2007 Information Technology Electro-Optics Photonics Eye Care VisionCare Health Care Other Businesses Total Eliminations and Corporate...

  • Page 68
    ... of Long-Lived Assets and Capital Expenditures Thousands of U.S. Dollars 2007 Information Technology Electro-Optics Photonics Eye Care Vision Care Health Care Other Businesses Total Eliminations and Corporate Consolidated Assets Depreciation Impairment loss Capital expenditures $2,191,834 232,520...

  • Page 69
    ...: 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, intraocular lenses, etc. Other Businesses: Crystal glass products, construction of information systems...

  • Page 70
    ... area based on the countries where the Group is located. The segments consist of the following countries: North America: United States of America, Canada, etc. Europe: Netherlands, Germany, United Kingdom, etc. (including South Africa) Asia: Singapore, Thailand, China, Republic of Korea, Taiwan...

  • Page 71
    ...The segments consist of the following countries: North America: United States of America, Canada, etc. Europe: Netherlands, Germany, United Kingdom, etc. (including South Africa) Asia: Singapore, Thailand, Republic of Korea, Taiwan, etc. (including Australia) Other: Saudi Arabia and Brazil, etc. 69

  • Page 72
    70

  • Page 73
    ... MD Division, and Optics Division Eye Care HOYA Corporation: Vision Care Company, Medical Division and HOYA Healthcare Corporation Other Businesses HOYA Corporation: Crystal Company and HOYA Service Corporation (Area) Japan Legal Support and Internal Audit ASIA Regional Headquarters US Regional...

  • Page 74
    Investor Information (As of March 31, 2007) Listing of the Company's Shares First Section of the Tokyo Stock Exchange Number of Shares of Common Stock Authorized: 1,250,519,400 Issued: 435,017,020 Trading Unit 100 shares Number of Shareholders 93,566 Breakdown of Shareholders ...

  • Page 75
    ..., Inc., the regional headquarters for Europe and North America, respectively. Hoya Lens Deutschland GmbH became the first Group company to receive ISO 14001 certification. Hoya began the quarterly release of consolidated financial results. The Vision Care Company's Itsukaichi Plant became the Group...

  • Page 76
    ... HOYA HEALTHCARE CORPORATION 7th Floor, HOYA Marketing Building, 1-29-9 Takadanobaba, Shinjuku-ku, Tokyo 169-8661, Japan TEL 03-3232-7062 HOYA GLASS DISK VIETNAM LTD. Plot J3&4,Thang Long Industrial Park Dong Anh District, Hanoi, Vietnam TEL 04-951-6399 GLOBAL HEADQUARTERS...

  • Page 77
    ... Sandton 2148 South Africa TEL 011-444-1992 For additional information about this publication, contact: HOYA MEDICAL EUROPE GMBH Europe REGIONAL HEADQUARTERS Anwesen Arabella Burocenter, Lyoner Strasse 44-48, 60528 Frankfurt am Main, Germany TEL 69-962 37 68-0 Corporate Communications 2-7-5 Naka...

  • Page 78
    2-7-5 Naka-Ochiai, Shinjuku-ku, Tokyo 161-8525, JAPAN This annual repor t is printed on recycled paper. Printed in Japan