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T R A N S F O R M I N G ฀
P O S S I B I L I T I E S ฀
I N T O ฀ R E A L I T Y
Nikon฀Corporation฀Annual฀Report฀2003

Table of contents

  • Page 1
    T R A N S F O R M I N G ฀ P OSS I B I L I T I ES ฀ I N T O ฀ R E A L I T Y Nikon฀Corporation฀Annual฀Report฀2003

  • Page 2
    ...optical฀glass.฀Expertise฀ in฀optical฀technologies฀cultivated฀over฀many฀years฀ has฀helped฀Nikon฀to฀gain฀worldwide฀acclaim฀for฀ an฀extensive฀array฀of฀high-quality฀optical฀equipment.฀Besides฀the฀conventional฀film฀and฀digital฀ cameras฀for...

  • Page 3
    ... Operating฀income Net฀loss Per฀share฀of฀common฀stock฀(Yen฀and฀U.S.฀dollars): Net฀loss Cash฀dividends฀applicable฀to฀the฀year ¥ 468,959฀ 4,187฀ (8,143) ¥ (22.03) 0.00฀ (100.0%) AT ฀ Y E A R - E N D Total฀assets Shareholders'฀equity ¥ 576,912฀ 162...

  • Page 4
    ...฀started฀to฀ reduce฀capital฀investment฀once฀more.฀This฀had฀a฀highly฀negative฀effect฀on฀sales฀of฀steppers฀in฀our฀Precision฀Equipment฀ segment.฀On฀a฀more฀positive฀note,฀the฀market฀for฀digital฀ cameras฀continued฀to฀expand฀rapidly...

  • Page 5
    ...฀Officer฀ Teruo฀Shimamura฀(right) President,฀Member฀of฀the฀Board฀and฀ Chief฀Operating฀Officer "The฀entire฀Nikon฀Group฀is฀currently฀ap plying฀itself฀to฀concentrate฀on฀improving฀ results฀from฀a฀variety฀of฀angles.฀While฀ the฀business...

  • Page 6
    ...manufacturing฀to฀sales฀and฀after-sales฀ services. Expansion฀into฀China China฀is฀an฀important฀production฀base฀for฀us฀as฀we฀seek฀to฀ improve฀cost-competitiveness.฀We฀have฀now฀established฀a฀ major฀manufacturing฀plant฀for฀digital฀cameras฀in...

  • Page 7
    ...of฀the฀Board฀and฀ Chief฀Executive฀Officer "The฀challenge฀facing฀Nikon฀is฀to฀construct฀operational฀systems฀capable฀of฀responding฀quickly฀and฀ ...฀also฀ensuring฀that฀we฀conduct฀ all฀our฀business฀at฀the฀highest฀levels฀of฀efficiency." 05

  • Page 8
    ...products฀and฀ business฀activities฀are฀eco -conscious.฀I฀think฀that฀individual฀ awareness฀of฀environmental฀issues฀among฀Nikon฀Group฀ employees฀is฀remarkably฀high.฀As฀an฀example฀of฀this,฀in฀the฀ year฀ended฀March฀2003,฀we฀achieved฀zero...

  • Page 9
    ... equipment. instruments precision equipment Breakdown฀of฀Net฀Sales imaging products 4.0% other Binocular & telescope products, surveying instruments, ophthalmic frames and sunglasses. The฀above฀percentages฀figures฀are฀based฀on฀net฀sales฀for฀ outside฀customers...

  • Page 10
    ...฀is฀especially฀high฀in฀China,฀a฀market฀where฀Nikon฀ from฀Intel฀Corporation฀of฀the฀U.S.฀In฀Japan,฀Nikon฀ already฀has฀the฀leading฀share฀in฀the฀industry.฀Recycling฀of฀the฀installed฀stepper฀base฀ received฀similar฀recognition฀of...

  • Page 11
    ... ArF excimer stepper for mass production of 100nm devices 133,102 19 8,9 91 23 4, 8 0 8 *The฀above฀figures฀include฀intersegment฀sales. 2 NSR-SF200 KrF scan field stepper, suited for mix-andmatch with ArF excimer steppers 3 F X -70 2 J High-resolution LCD stepper for mass production of...

  • Page 12
    ...to฀boost฀sales฀in฀the฀Chinese฀market.฀Elsewhere,฀we฀ have฀invested฀in฀production฀capacity฀at฀Nikon฀(Thailand)฀Co.,฀Ltd.฀for฀lens฀units,฀which฀are฀key฀ parts฀of฀digital฀cameras.฀These฀moves฀promise฀to฀boost฀our฀cost-฀and฀value...

  • Page 13
    ... camera targeting professionals and amateur photography enthusiasts 2 F75 Compact, lightweight 35mm autofocus camera (N75 in the United States and U2 in Japan) 3 COOLPIX SQ A compact digital camera with many advanced functions in its square, fully metal-cased body 4 C O O L P I X 5 70 0 Features...

  • Page 14
    ...life฀science฀research.฀We฀plan฀to฀expand฀sales฀of฀these฀ products฀further. Another฀product฀area฀with฀substantial฀market฀growth฀potential฀is฀one฀that฀marries฀ optical฀microscopes฀with฀two฀other฀Nikon฀strengths-digital฀cameras฀and฀digital...

  • Page 15
    ...product฀ development฀to฀ensure฀customer฀needs฀are฀met฀ more฀speedily฀and฀accurately." 1 2 3 4 1 COOLSCOPE Digital microscope with numerous userfriendly operational features 2 D I G I T A L E C L I P S E C1 Modular confocal microscope system providing a high-contrast image...

  • Page 16
    ...฀amid฀reduced฀public-works฀spending฀in฀Japan,฀resulting฀in฀lower฀sales฀of฀these฀products.฀Sales฀of฀eyewear฀products฀also฀declined฀overall฀amid฀poor฀market฀ conditions.฀In฀ophthalmic฀lenses,฀sales฀of฀high-added-value฀items,฀such฀as...

  • Page 17
    ...the฀building฀will฀mainly฀accommodate฀Imaging฀Company฀planning฀and฀marketing฀ functions,฀making฀it฀an฀important฀new฀base฀for฀this฀company฀as฀it฀markets฀ Nikon฀technology฀and฀products฀worldwide. Ohi฀West฀Building Nikkor฀Club฀Celebrates...

  • Page 18
    ...฀new฀eco -glass฀in฀ 1998.฀Today,฀eco -glass฀is฀used฀as฀much฀as฀possible฀throughout฀ the฀Nikon฀product฀range,฀from฀steppers฀to฀cameras.฀In฀the฀ year฀ended฀March฀2003,฀the฀proportion฀of฀new฀optical฀designs฀ incorporating฀eco -glass...

  • Page 19
    ... of the digital camera market. Net Sales by Industry Segment Years ended March 31, 2003 and 2002 Millions of Yen, % 2003 2002 Thousands of U.S. Dollars 2003 Precision Equipment Share of net sales Imaging Products Share of net sales Instruments Share of net sales Other Share of net sales Total...

  • Page 20
    ...as the markets in both Japan and the United States contracted, while sales of LCD steppers fell sharply in volume terms as manufacturers cut capital spending related to the production of smaller LCD panels. Imaging Products benefited from continued rapid growth in the digital camera market, posting...

  • Page 21
    ...(LOSS) per Share (Â¥) 2003 2002 2001 2000 1999 (22.0) (16.2) 56.5 21.0 (49.3) CAPITAL EXPENDITURES (Â¥ Billion) 2003 2002 2001 2000 1999 20.2 33.5 26.0 13.9 20.7 R&D COSTS (Â¥ Billion) 2003 2002 2001 2000 1999 27.5 27.3 22.8 17.8 18.7 SHAREHOLDERS' EQUITY (Â¥ Billion) 2003 2002 2001 2000 1999 162...

  • Page 22
    ...2002 Thousands of U.S. Dollars (Note 1) 2002 2003 Millions of Yen 2003 ASSETS Current assets Cash and cash equivalents Notes and accounts receivable - trade (Note 5): Customers Unconsolidated subsidiaries and associated companies Allowance for doubtful receivables Inventories (Note 4) Deferred tax...

  • Page 23
    ...shares Issued - 369,945,332 shares in 2003 and 2002 Capital surplus (Note 7) Retained earnings (Note 7) Unrealized gain (loss) on available-for-sale securities Foreign currency translation adjustments Total Treasury stock, at cost: 550,081 shares in 2003 and 139,969 shares in 2002 Total shareholders...

  • Page 24
    ... (loss) before income taxes and minority interest Income taxes (Note 9) Current Deferred Total income taxes 2,755 3,454 5,304 8,758 Minority interest Net loss 1 (6,004) Yen U.S. Dollars (Note 1) Per share of common stock (Note 2(o)): Net loss Cash dividends applicable to the year See Notes to...

  • Page 25
    ... Nikon Corporation and Consolidated Subsidiaries Years ended March 31, 2003 and 2002 Thousands Issued Number of Shares of Common Stock Millions of Yen Unrealized Foreign Gain (Loss) on Currency Retained Available-for- Translation Earnings sale Securities Adjustments Common Stock Capital Surplus...

  • Page 26
    ...STATEMENTS OF CASH FLOWS Nikon Corporation and Consolidated Subsidiaries Years ended March 31, 2003 and 2002 Thousands of U.S. Dollars (Note1) 2002 2003 Millions of Yen 2003 Operating activities: Income (loss) before income taxes and minority interest Adjustments for: Income taxes-refund (paid...

  • Page 27
    ... which Nikon Corporation (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥120.20 to U.S.$1, the rate of exchange at March 31, 2003. Such...

  • Page 28
    ...5 to 10 years for machinery and equipment. (f) Bond Issue Costs Bond issue costs are charged to income as incurred. (g) Retirement and Pension Plans The Company and major subsidiaries have non-contributory funded pension plans covering substantially all of its employees. Certain foreign subsidiaries...

  • Page 29
    ... at market value and the differential paid or received under the swap agreements are recognized in income. (o) Per Share Information Effective April 1, 2002, the Company adopted a new accounting standard for earnings per share of common stock issued by the Accounting Standards Board of Japan. Under...

  • Page 30
    ...Thousands of U.S. Dollars 2003 Millions of Yen 2003 2002 Available-for-sale: Equity securities Other securities Total ¥ ¥ 4,117 4,117 ¥ ¥ 4,329 2 4,331 $ $ 34,251 34,251 Proceeds from sales of available-for-sale securities for the fiscal years ended March 31, 2003 and 2002 were ¥5,890...

  • Page 31
    ... for Sale Due in one year or less Due after one year through five years Total ¥ ¥ 1 3 4 ¥ ¥ 0 4 4 $ $ 6 28 34 4. INVENTORIES Inventories at March 31, 2003 and 2002 consisted of the following: Millions of Yen 2003 2002 Thousands of U.S. Dollars 2003 Finished and semi-finished products...

  • Page 32
    ..., 2003 were as follows: Year Ending March 31 Thousands of U.S. Dollars Millions of Yen 2004 2005 2006 2007 2008 Thereafter Total ¥ 22,208 12,061 15,531 76,017 20,200 15,000 ¥ 161,017 $ 184,755 100,343 129,213 632,416 168,053 124,792 $1,339,572 The yen zero coupon convertible bonds were issued...

  • Page 33
    ... of net periodic benefit costs for the fiscal years ended March 31, 2003 and 2002 were as follows: Thousands of U.S. Dollars 2003 Millions of Yen 2003 2002 Service cost Interest cost Expected return on plan assets Amortization of transitional obligation Recognized actuarial loss Amortization of...

  • Page 34
    ... 1, 2002, the Company made Tochigi Nikon Corporation a wholly owned subsidiary through exchange offer procedures. The share exchange ratio was 1 common share of Tochigi Nikon Corporation for 0.58 shares of the Company. As a result, 17,748 shares of the Company's common stock were issued and capital...

  • Page 35
    ... of U.S. Dollars 2003 Millions of Yen 2003 2002 Deferred tax assets : Write-down of inventories Warranty reserve Liability for employees' retirement benefits Depreciation and amortization Net operating loss carryforwards Other Total Deferred tax liabilities : Deferred gains on sales of property...

  • Page 36
    ... that do not transfer ownership of the leased property to the lessee on an "as if capitalized" basis as of and for the fiscal years ended March 31, 2003 and 2002 was as follows: Millions of Yen 2003 Furniture and Fixtures Thousands of U.S. Dollars 2003 Furniture Machinery and and Equipment Fixtures...

  • Page 37
    ...were as follows: Millions of Yen 2003 Thousands of U.S. Dollars 2003 As the endorser of trade notes receivable discounted with banks As the guarantor for bank loans and indebtedness, principally of employees, unconsolidated subsidiaries and associated companies Total ¥ 983 7,221 $ 8,180 60,071...

  • Page 38
    ... (a) Industry Segments Millions of Yen Precision Equipment Imaging Products Instruments Other Total (Eliminations) or corporate Consolidated For the year ended March 31, 2003 Net sales Outside customers Intersegment sales/transfer Total Operating expenses Operating income (loss) Assets Depreciation...

  • Page 39
    ... U.S. Dollars Precision Equipment Imaging Products Instruments Other Total (Eliminations) or corporate Consolidated For the year ended March 31, 2003 Net sales Outside customers Intersegment sales/transfer Total Operating expenses Operating income (loss) Assets Depreciation and amortization Capital...

  • Page 40
    ... MATTERS On December 21, 2001, the Company and its wholly-owned subsidiaries, Nikon Precision Inc. and Nikon Research Corporation of America, filed a complaint with the U.S. International Trade Commission (the "ITC") against ASM Lithography Holding N.V. and ASM Lithography B.V. in The Netherlands...

  • Page 41
    INDEPENDENT AUDITORS' REPORT 39

  • Page 42
    ...film฀scanners Instruments฀Company 6 Development,฀manufacture฀and฀sales฀of฀biological฀ microscopes,฀industrial฀microscopes,฀measuring฀ instruments฀and฀inspection฀equipment Customized฀Products฀Division Development,฀manufacture฀and฀sales฀of฀ customized...

  • Page 43
    ...M PA N I ES ฀ ( OV E R S E A S ) Name 1 2 4 Beijing฀Nikon฀Ophthalmic฀Products฀Co.,฀Ltd. Nikon฀Americas฀Inc. Nikon฀Holdings฀Europe฀B.V. Nikon฀Precision฀Inc. Nikon฀Research฀Corporation฀of฀America Nikon฀Precision฀Europe฀GmbH Nikon฀Precision฀Korea฀Ltd. Nikon...

  • Page 44
    ...฀of฀financial,฀overseas,฀IR฀and฀group-wide฀strategies In฀charge฀of฀company's฀operations Assistant฀of฀President,฀ President฀of฀Business฀Administration฀Center President฀of฀Precision฀Equipment฀Company President฀of฀Corporate฀Strategy฀Center President...

  • Page 45
    ...chome, Chiyoda-ku,฀Tokyo฀100 -8212,฀Japan (As฀of฀March฀31,฀2003) Price฀Range฀of฀Common฀Stock฀(¥) 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 1st For฀further฀information฀or฀additional฀copies฀of฀this฀annual฀report,฀ please฀contact...

  • Page 46
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