Epson 2008 Annual Report Download

Download and view the complete annual report

Please find the complete 2008 Epson annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 44

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44

SEIKO EPSON CORPORATION ANNUAL REPORT 2008
3-5 Owa 3-chome, Suwa, Nagano 392-8502, Japan
Tel: +81-266-52-3131 (main)
http://www.epson.co.jp/e/
Seiko Epson Corporation
Annual Report 2008
April 2007 – March 2008
Reform and Focus
Printed in Japan

Table of contents

  • Page 1
    SEIKO EPSON CORPORATION 3-5 Owa 3-chome, Suwa, Nagano 392-8502, Japan Tel: +81-266-52-3131 (main) http://www.epson.co.jp/e/ ANNUAL REPORT 2008 Seiko Epson Corporation Annual Report 2008 April 2007 - March 2008 Reform and Focus Printed in Japan

  • Page 2
    ...Epson to continue to introduce new products and services on a timely basis, consumption trends, competition, technology trends, and exchange rate fluctuations. Corporate Governance Environmental and Corporate Citizenship Programs Research and Development Strategies Patent Strategies Company History...

  • Page 3
    ...Net sales Information-related equipment Electronic devices Precision products Other Eliminations and corporate...and end of year> Cash flows from operating activities Cash flows from investing activities Free cash flow Cash flows from financing activities...Seiko Epson Corporation Annual Report 2008 3

  • Page 4
    ...the information-related equipment segment by taking tangible steps to expand Micro Piezo technology into the business and industrial printing domains, and in the electronic devices segment by mapping out the future direction of the various businesses. In light of these circumstances, Epson worked to...

  • Page 5
    ...resources on amorphous silicon TFTs and LTPS TFTs remains unchanged. In line with this strategy, Epson terminated production of MD-TFDs in the fiscal year under review. Although we completely transferred color STN production offshore as planned, intense competition in the low end of the mobile phone...

  • Page 6
    ... using contract manufacturing plant but streamline Q8. What management issues are you presently facing and what is your medium- to long-term direction? Tottori: a-TFT/LTPS Consolidate panel manufacturing functions Suzhou, China Fortify as main back-end site Japanese Workforce Reduce force from...

  • Page 7
    ... the inkjet printer as an example. Micro Piezo technology, a proprietary Epson technology, has many unexploited possibilities in the business and industrial printing domains. Although we are already moving in this direction, we must use advantages such as high-performance printing and products with...

  • Page 8
    ... and procurement and manufacturing functions. Before addressing volume production, Epson had therefore constructed a system that emphasized rigorous building to cost activities in each department, and restructured the system for managing the whole design process up until a product was transferred to...

  • Page 9
    ... that supports it. Message from the General Administrative Manager of the Production & Procurement General Center To increase both net sales and profitability in the medium- to long-term, it is essential for Epson to improve its competitiveness as a manufacturer. In the Production & Procurement...

  • Page 10
    ... and related supplies, color image scanners, mini-printers, POS systems and related products, and other products) • Visual instruments business (3LCD projectors, LCD monitors, label writers, and other products) • Others (PCs and other products) 80.4 61.6 45.9 45.0 Percentage of net sales 2003...

  • Page 11
    ..., and print heads and ink for digital inkjet textile printers and digital inkjet printers. Epson Stylus Photo PM-A840 (multifunction inkjet printer) Epson EMP-DM1 (home projector with built-in DVD player and speakers) Information-Related Equipment Segment The Information-Related Equipment Segment...

  • Page 12
    ...as product package proofs and remote proofs. In these growth fields, the requirement is for high-speed printers with high image quality and durability, as well as the ability to print with short turnaround times. Epson Stylus Pro 11880 with Next-Generation High-Speed Micro Piezo Thin-Film Print Head...

  • Page 13
    ... as near-constant grayto-gray response times for vivid moving pictures. Beautiful ï¬,icker-free still and video images can be enjoyed on terrestrial digital and one-segment broadcasts on in-car displays and mobile phones. Breakdown of Electronic Devices Segment Net Sales (Year ended March 31, 2008...

  • Page 14
    ... equipment business. TD Tuning fork crystal unit/real time clock module This controls the digital camera's time display, calendar and other functions. TD AT crystal unit Used as a main clock for ICs, they govern the basic movement of digital cameras. 24 Seiko Epson Corporation Annual Report...

  • Page 15
    ... Public Accountant Audit Board of Directors Propose/Report Report Elect/Dismiss/Oversee Nomination Committee Compensation Committee Audit Board of Statutory Auditors Report Representative Director (President) Propose/Report Corporate Strategy Council Trust-Based Management Promotion Meeting...

  • Page 16
    ... related to overwork and long working hours (Human Resources Department) • Career counseling (Human Resources Department) • Psychological counseling (General Affairs Department) • Labor union counseling (Labor Union) Clearing up after heavy snow at Epson Toyocom Corporation s Wuxi Plant...

  • Page 17
    ..., Epson (China) Co., Ltd. The IR section of Epson s corporate website: http://www.epson.co.jp/e/IR/ investor_relations_index.htm Japanese website for individual investors http://www.epson.jp/IR/kojin/ Kaname Miyazawa President, Epson Toyocom Corporation Akio Mori Chief Operating Officer, Watch...

  • Page 18
    ...in manufacturing, but also in parts and materials procurement, product transport, during use, collection and recycling. Under its Action 2010 General Environmental Policy the Company established three main areas to pursue its environmental actions: global Basic Policy on Corporate Citizenship Epson...

  • Page 19
    ...-Related Equipment 41% Gold bump Electronic Devices 16% Resin core bump IC Al pad NFC Metal wire Glass substrate Core resin Gold bump IC Gold bump ACF Glass substrate Conductive particles OLED system developed by Epson Section of resin core bump COG Section of gold bump COG 34 Seiko Epson...

  • Page 20
    ... as genuine Epson products, including ink cartridges, toner cartridges, and printer ribbons, the Company is conducting campaigns aimed at their eradication in cooperation with local authorities in each country where such products are manufactured and consumed. Especially in China, Epson is making...

  • Page 21
    .... and Epson Corporation merge to form Seiko Epson Corporation. Epson Europe B.V., Epson s European regional headquarters, is established in Amsterdam, the Netherlands. Complete elimination of CFCs from manufacturing processes is achieved at all factories and affiliates in Japan. Epson receives the...

  • Page 22
    ... ...40 Consolidated Balance Sheets ...50 Consolidated Statements of Operations ...52 Consolidated Statements of Changes in Equity/Net Assets ...53 Consolidated Statements of Cash Flows ...55 Notes to Consolidated Financial Statements ...56 Report of Independent Auditors ...79 Annual Report 2008 39

  • Page 23
    ...-cost products and a shrinkage in sales volumes as a counter-reaction to spending on major projects in the previous fiscal year, serial impact dot matrix printer volumes declined, reï¬,ecting European market contraction and wholesaler inventory adjustments in China. In the electronic devices segment...

  • Page 24
    ... competition or an excess of supply in mobile communications devices and related devices is currently driving a decline in prices of electronic components for mobile communications devices, such as color LCDs and LCD-driver ICs, and could similarly affect other products. Epson is striving to improve...

  • Page 25
    ... overseas sales. Epson has production bases all over Asia, such as in China, Indonesia, Singapore and Malaysia, and in the United States, the United Kingdom, Mexico, etc. It has also established many distribution companies all over the world. Epson's employees overseas as of March 2008 accounted for...

  • Page 26
    ... printer heads in medium- and low-cost printers, because it is difficult to procure an alternative component from another company. On the manufacturing side of business, Epson outsources the manufacturing of parts of products, such as page printers and inkjet printers in the low price range, image...

  • Page 27
    ... other regulations of relevant authorities in its manufacturing and manufacturing/sales of those products in Japan. Also, because a distributor subsidiary of Seiko Holdings sells the plastic corrective lenses, which are manufactured by Epson, in the United States, Europe and Asia, it is also subject...

  • Page 28
    ... Balance Sheets Seiko Epson Corporation and Subsidiaries Thousands of U.S. dollars March 31, Thousands of U.S. dollars March 31, Millions of yen March 31 Millions of yen March 31 ASSETS Current assets: Cash and cash equivalents Time deposits Notes and accounts receivable, trade Inventories...

  • Page 29
    ... Statements of Changes in Equity/Net Assets Seiko Epson Corporation and Subsidiaries Millions of yen Year ended March 31 Number of shares issued 2006 Net sales Cost of sales Gross profit Selling, general and administrative expenses: Salaries and wages Advertising Sales promotion Research and...

  • Page 30
    ...accounts Increase in accrued bonuses Decrease in accrued warranty costs Accrual for net pension and severance costs, less payments Interest and dividend income Interest expenses Foreign exchange losses Net gain on sales of fixed assets Loss on disposal of fixed assets Net gain on sales of investment...

  • Page 31
    ... key devices and solutions for the digital color imaging markets through the application of its proprietary technologies. The Company operates its manufacturing and sales business mainly in Japan, the Americas, Europe and Asia/Oceania. accepted accounting principles in the United States tentatively...

  • Page 32
    ... granted prior to the termination date were included in other long-term liabilities account. (17) Research and development costs Research and development costs are expensed as incurred. (18) Leases Epson leases certain office space, machinery and equipment and computer equipment from third parties...

  • Page 33
    ... succeeding company, Epson Toyocom Corporation ("Epson Toyocom"). Under the business merger agreement and corporate split agreement, the Company splitoff its quartz device business (excluding optical devices) and transferred it to Epson Toyocom. The Company acquired 99,000,000 shares of common stock...

  • Page 34
    ... exchange contracts assigned individually to monetary items denominated in foreign currencies are excluded from the above table. There were no interest rate swap transactions outstanding at March 31, 2007 and 2008, other than derivatives eligible for hedge accounting. 62 Seiko Epson Corporation...

  • Page 35
    ...-credit agreements with twenty-eight financial institutions for an aggregate maximum amount of ¥80,000 million ($798,482 thousand). As at March 31, 2008, there were unused lines of credit of ¥50,000 million ($499,051 thousand) outstanding and available. 64 Seiko Epson Corporation Annual Report...

  • Page 36
    ... common stock. The Japanese Corporation Law stipulates requirements on distributions of retained earnings similar to those of the Commercial Code of Japan. Under the Japanese Corporation Law, such distributions can be made at any time by resolution of the shareholders, or by the board of directors...

  • Page 37
    ..., plant and equipment and intangible assets Net operating tax loss carry-forwards Inter-company profits on inventories and write downs Accrued bonuses Devaluation of investment securities Accrued pension and severance costs Accrued warranty costs Accrued litigation and related expenses One-time...

  • Page 38
    ... buildings and structures, ¥10,670 million for machinery and equipment, ¥3,785 million for furniture and fixtures, ¥2,772 million for goodwill, and ¥8,977 million for future lease payments. For the year ended March 31, 2008, Epson incurred impairment losses on its liquid crystal panel production...

  • Page 39
    ...panels for 3LCD projectors, crystal units, crystal oscillators, optical devices and CMOS LSI. Precision products segment mainly includes watches, watch movements, plastic corrective lenses, precision industrial robots, IC handlers and industrial inkjet equipment. 72 Seiko Epson Corporation Annual...

  • Page 40
    ..., Mexico and Peru. "Europe" mainly includes the United Kingdom, the Netherlands, Germany, France, Italy, Spain, Portugal and Russia. "Asia/Oceania" mainly includes China (including Hong Kong), Singapore, Malaysia, Taiwan, Thailand, the Philippines, Australia, New Zealand, Indonesia, Korea and...

  • Page 41
    ..., and mainly comprised cash and deposits, securities and short-term loans receivable. Consolidated Japan The Americas Europe Asia/ Oceania As described in Note 3 (6), in line with the fiscal year 2007 Japanese tax reforms, effective April 1, 2007, the Company and its Net sales: Customers...

  • Page 42
    ... before the merger with the quartz device business of the Company. Epson Toyocom used one special purpose entity (the "SPE"), which is a special limited company under Japanese law, for the securitization. Epson Toyocom procured funds by transferring the trust beneficiary rights of the Real Estate to...

  • Page 43
    ... Name Location Main Business Epson Sales Japan Corporation Epson Direct Corporation Tohoku Epson Corporation Epson Imaging Devices Corporation Epson Toyocom Corporation Orient Watch Co., Ltd. Tokyo Nagano Yamagata Nagano Tokyo Tokyo Long Beach Long Beach San Jose Portland El Paso Amsterdam Hemel...

  • Page 44
    ... Data and Investor Information (As of March 31, 2008) Company Name Founded Head Office Seiko Epson Corporation May 1942 3-5 Owa 3-chome, Suwa, Nagano 392-8502, Japan Tel: +81-266-52-3131 (main) Shinjuku NS Building, 4-1 Nishishinjuku 2-chome, Shinjuku-ku Tokyo 163-0811, Japan Tel: +81-3-3348...