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Annual Report 2010
Year ended March 31, 2010

Table of contents

  • Page 1
    Annual Report 2010 Year ended March 31, 2010

  • Page 2
    ... such as digital cameras and other camera-related products, binoculars and ophthalmic lenses, to industrial precision equipment including IC and LCD steppers and scanners, microscopes and measuring instruments. The difficult business environment in the fiscal year ended March 2010 resulted in...

  • Page 3
    ... manufacturing worldwide. Net Sales and Operating Income (Loss) Years ended March 31 (Millions of yen) 400,000 (Millions of yen) 80,000 For a new dimension of pleasure from photography, Nikon develops and markets imaging products worldwide with various features using sophisticated digital imaging...

  • Page 4
    ...) Notes: 1. Per share of common stock information is computed based on the weighted average number of shares outstanding during the year. 2. U.S. dollar figures are translated for reference only at ¥93.04 to U.S. $1.00, the exchange rate at March 31, 2010. 3. Throughout this annual report, ROE is...

  • Page 5
    Nikon Corporation Annual Report 2010 3 To Our Shareholders and Investors MICHIO KARIYA Representative Director, Chairman of the Board MAKOTO KIMURA Representative Director, President, Member of the Board ICHIRO TERATO Representative Director, Member of the Board, Executive Vice President Our ...

  • Page 6
    ... Representative Director, President, Member of the Board How would you assess Nikon's performance for the fiscal year ended March 2010? Also, please give a summary of the three-year Medium Term Management Plan beginning in the fiscal year ending March 2011, which was announced in June 2010. Nikon...

  • Page 7
    ... making digital SLR cameras smaller and lighter. It includes offering image capture devices that allow for new forms of photography. In the Instruments Company, for the industrial instruments field we plan to develop high-value-added products that integrate the non-contact measurement systems of...

  • Page 8
    .... The Imaging Company already derives more than 20% of its sales from China, India and other areas of Asia outside Japan, and we expect that the scale of the Asian market will rival that of Europe and the Americas in the next few years. The Precision Equipment Company entered the Chinese market in...

  • Page 9
    Nikon Corporation Annual Report 2010 7 The Instruments Company completed an M&A in the fiscal year ended March 2010, and it is possible that the Imaging Company will also look to M&A in its bid to become a comprehensive imaging manufacturer, considering that the boundaries for the uses of ...

  • Page 10
    ... the aim of future sales expansion, as planned. In the LCD steppers and scanners field, we won a major order from China. Using these achievements as footholds, the Precision Equipment Company aims to return to profitability during the fiscal year ending March 2011. Note: 1. Double patterning is...

  • Page 11
    Nikon Corporation Annual Report 2010 9 KAZUO USHIDA Director, Member of the Board and Senior Executive Officer President of Precision Equipment Company Review of the Fiscal Year Ended March 2010 During the fiscal year ended March 2010, although signs of recovery started to become visible in ...

  • Page 12
    ...the key to earnings amid the recovery of the semiconductor market. The scale of the ArF immersion scanner market is expected to be on the order of 100 units per year from the fiscal year ending March 2011 through the fiscal year ending March 2013. Nikon plans to steadily increase its share of the...

  • Page 13
    ... in the fiscal year ending March 2011, and then remain around 80 to 100 units per year for the next few years. The Precision Equipment Company will continue striving to maintain its high market share. Developing Business on the Front Lines of Nikon's Core Technologies Our plan calls for a recovery...

  • Page 14
    ... Earnings in an Adverse Business Climate Digital SLR Camera Nikon D3S Despite the tight market environment, the Imaging Company achieved year-on-year increases in unit sales of digital SLR cameras and compact digital cameras of 7% and 11%, respectively, during the fiscal year ended March 2010...

  • Page 15
    Nikon Corporation Annual Report 2010 13 YASUYUKI OKAMOTO Director, Member of the Board and Executive Officer President of Imaging Company Review of the Fiscal Year Ended March 2010 The digital camera market showed signs of recovery from the second half of the fiscal year ended March 2010. ...

  • Page 16
    ... direct sales structures in newly emerging markets, setting up local subsidiaries in India in 2007, Russia in 2008, and Digital Cameras Meeting Customer Needs with a Broad Product Lineup The scale of the digital SLR camera market exceeded 10 million units in the fiscal year ended March 2010...

  • Page 17
    ...up regions and sales locations where Nikon's sales strength is weak and develop marketing strategies targeting new customer segments such as young people and women. We will improve cost-competitiveness and earnings capacity through efforts including bolstering of overseas production and procurement,

  • Page 18
    ... 2010, but the industrial instruments field was adversely affected by cutbacks in capital expenditure due to the weak economy. Our goals for the fiscal year ending March 2011 will be to expand the scope of our business and reinforce our earnings base by introducing a new line of super resolution...

  • Page 19
    Nikon Corporation Annual Report 2010 17 TOSHIYUKI MASAI Director, Member of the Board and Executive Officer President of Instruments Company Review of the Fiscal Year Ended March 2010 Sales in the bioscience field recorded steady growth during the fiscal year ended March 2010, particularly in...

  • Page 20
    ... value of the Nikon brand by adopting a total approach that includes upgraded software and improved customer support services. Industrial Instruments Focus on Merging New Technologies to Develop High-Value-Added Measuring Instruments In the industrial instruments field, the market for displays and...

  • Page 21
    ... to promote development of high-value-added measuring instruments that will enable us to expand our customer base and increase sales. in fields related to live-cell imaging. Nikon aims to boost sales and market share by focusing especially on high-end products, such as super resolution microscopes...

  • Page 22
    ... in market conditions. The glass-related business increased in sales on steady performance from LCD photomask substrates. EDG 10Ã-42 The sport optics products business decreased in sales primarily as a result of the downturn in consumer spending overseas. EDG Fieldscope 85 + Fieldscope Digital SLR...

  • Page 23
    .... Nikon technologies for observing cells and other samples using confocal microscopes, the Perfect Focus System (PFS) continuous auto-focus system or other products, help to support leading research being conducted by research institutions, joint-research facilities at universities and other centers...

  • Page 24
    ... of CSR measures throughout the Nikon Group. In the fiscal year ended March 2010, a new Biodiversity Working Group was set up to help Nikon develop concrete measures to promote biodiversity. CSR Promotion Organization CSR Committee Business Conduct Committee Export Control Committee Environmental...

  • Page 25
    ...by the Nikon Business Conduct Committee, the Compliance Section of Nikon Corporation, in cooperation with the persons in charge of promoting CSR and Compliance within the Company and at Nikon Group companies, carries out a variety of educational and awareness training activities. Risk Management To...

  • Page 26
    ...-Year Summary Nikon Corporation and Consolidated Subsidiaries Years ended March 31 Millions of Yen 2010 2009 2008 2007 2006 Thousands of U.S. Dollars 2010 For the year Net sales Cost of sales Selling, general and administrative expenses Operating income (loss) Income (loss) before income taxes...

  • Page 27
    ...been on a declining trend. Nikon's performance exceeded that of the market due to the introduction of a new ï¬,agship model of digital SLR camera, and efforts to introduce the joy of photography. In the Instruments Business, sales of products for the industrial instruments market was sluggish due to...

  • Page 28
    ... accounted for 19.1% (compared to 25.0% the previous fiscal year), the Imaging Products Business 72.5% (67.8%), the Instruments Business 5.7% (5.1%), and Other Business 2.7% (2.1%). Geographic Segment Results Looking at results by geographic segment, sales in Japan decreased sharply, North America...

  • Page 29
    ...basic policy, the Company has aimed at a total return ratio of at least 25% and otherwise provided shareholder returns through dividend increases and the acquisition of treasury stock. For the fiscal year ended March 31, 2010, in view of the declines in both sales and income, Nikon set the year-end...

  • Page 30
    28 Consolidated Balance Sheets Nikon Corporation and Consolidated Subsidiaries March 31, 2010 and 2009 Millions of Yen Thousands of U.S. Dollars (Note 1) 2010 2009 2010 ASSETS Current assets Cash and cash equivalents (Note 14) Notes and accounts receivable-trade (Note 14): Customers ...

  • Page 31
    Nikon Corporation Annual Report 2010 29 Millions of Yen Thousands of U.S. Dollars (Note 1) 2010 2009 2010 LIABILITIES AND EQUITY Current liabilities Short-term borrowings (Notes 6 and 14) Current portion of long-term debt (Notes 6 and 14) Notes and accounts payable-trade (Note 14): Suppliers...

  • Page 32
    30 Consolidated Statements of Operations Nikon Corporation and Consolidated Subsidiaries Years ended March 31, 2010 and 2009 Millions of Yen Thousands of U.S. Dollars (Note 1) 2010 2009 2010 Net sales Cost of sales Gross profit Selling, general and administrative expenses (Note 10) Operating...

  • Page 33
    Nikon Corporation Annual Report 2010 31 Consolidated Statements of Changes in Equity Nikon Corporation and Consolidated Subsidiaries Years ended March 31, 2010 and 2009 Thousands Outstanding Number of Shares of Common Stock Stock Acquisition Rights Millions of Yen Unrealized Deferred Loss Gain ...

  • Page 34
    32 Consolidated Statements of Cash Flows Nikon Corporation and Consolidated Subsidiaries Years ended March 31, 2010 and 2009 Millions of Yen Thousands of U.S. Dollars (Note 1) 2010 Operating activities: Income (loss) before income taxes Adjustments for: Income taxes-refund (paid) Loss on ...

  • Page 35
    ... Years ended March 31, 2010 and 2009 1. Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting...

  • Page 36
    ... property and related disclosures at the end of the fiscal years ending on or after March 31, 2010. The Company applied the new accounting standard and guidance effective March 31, 2010. (j) Retirement and Pension Plans The Company has a defined benefit corporate pension plan (cash balance plan...

  • Page 37
    ... that they are not hedged by forward exchange contracts. (r) Foreign Currency Financial Statements The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate as of balance sheet date except for equity, which is translated at...

  • Page 38
    ... of pensions that has been directly recorded in the equity; 3) expensing capitalized development costs of R&D; 4) cancellation of the fair value model accounting for property, plant, and equipment and investment properties and incorporation of the cost model accounting; 5) recording the prior years...

  • Page 39
    ... and 2009 consisted of the following: Millions of Yen Thousands of U.S. Dollars 2010 2009 2010 Non-Current: Equity securities Debt securities Investment in a limited liability investment partnership Total ¥52,974 0 926 ¥53,900 ¥40,718 0 952 ¥41,670 $569,364 3 9,954 $579,321 The carrying...

  • Page 40
    ... Dollars 2010 2009 2010 Available-for-sale: Equity securities Investment in a limited liability investment partnership Total ¥ 224 926 ¥1,150 ¥ 400 952 ¥1,352 $ 2,407 9,954 $12,361 Proceeds from sales of available-for-sale securities were ¥771 million for the fiscal year ended March...

  • Page 41
    Nikon Corporation Annual Report 2010 39 5. Long-lived Assets The Group reviewed its long-lived assets for impairment as of March 31, 2009 and recognized an impairment loss of ¥721 million as other expense for land, building, machinery and equipment in Japan, Asia and Europe. This is because the ...

  • Page 42
    ...as follows: Year ending March 31 Millions of Yen Thousands of U.S. Dollars 2011 2012 2013 2014 2015 Thereafter Total ¥46,381 3,805 6,132 5,723 239 25,209 ¥87,489 $498,511 40,887 65,909 61,516 2,574 270,940 $940,337 The yen zero coupon convertible bonds were issued with stock acquisition rights...

  • Page 43
    ...fined contribution pension plan to income for the fiscal years ended March 31, 2010 and 2009, respectively. Assumptions used for the fiscal years ended March 31, 2010 and 2009 were principally as set forth below: 2010 2009 Discount rate Expected rate of return on plans assets Recognition period...

  • Page 44
    ... among the accounts under certain conditions upon resolution of the shareholders. (c) Treasury Stock and Treasury Stock Acquisition Rights The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount...

  • Page 45
    Nikon Corporation Annual Report 2010 43 The stock option activity is as follows: (Shares) 2001 Stock Options 2003 Stock Options 2004 Stock Options 2005 Stock Options 2007 Stock Options 2007 Stock Options 2008 Stock Options 2009 Stock Options For the year ended March 31, 2009 Non-vested March 31...

  • Page 46
    ... years ended March 31, 2010 and 2009 principally consisted of the following: Millions of Yen Thousands of U.S. Dollars 2010 2009 2010 Advertising expenses Provision for doubtful receivables Provision of warranty costs Employees' salaries Net periodic retirement benefit cost Employees' bonuses...

  • Page 47
    ...fiscal years ending before March 31, 2010. The Group applied the revised accounting standard and the new guidance effective March 31, 2010. (1) Group Policy for Financial Instruments The Group restricts the fund management to short-term deposits, and funding is mainly treated by bank loans and bond...

  • Page 48
    ... on government securities and credit risk. Long-term loans are included in current portion of long-term debt and long-term debt in consolidated balance sheets. Bonds: The fair values of bonds are determined by the market price, if it is available, or by discounting the future cash ï¬,ows related to...

  • Page 49
    Nikon Corporation Annual Report 2010 47 (4) Maturity Analysis for Financial Assets and Securities with Contractual Maturities Millions of Yen Due in One Year or Less Due after One Year through Five Years Thousands of U.S. Dollars Due in One Year or Less Due after One Year through Five Years ...

  • Page 50
    ... Liabilities At March 31, 2010, the Group had the following contingent liabilities: Millions of Yen Thousands of U.S. Dollars 2010 2010 As the guarantor of bank loans and indebtedness, principally of employees, unconsolidated subsidiaries and associated companies Total ¥2,089 ¥2,089 $22...

  • Page 51
    Nikon Corporation Annual Report 2010 49 17. Net Income per Share Reconciliation of the differences between basic and diluted net income (loss) per share ("EPS") for the years ended March 31, 2010 and 2009 was as follows. Diluted net income (loss) per share for the year ended March 31, 2010 is not...

  • Page 52
    ...control, all intercompany transactions were eliminated and there was no accounting effect for this transaction on the consolidated financial statements for the year ended March 31, 2010. (c) Business Combinations of Metris NV (Adoption of purchase method) 1. Name and business description of company...

  • Page 53
    ... Corporation Annual Report 2010 51 19. Segment Information Information about industry segments, geographic segments and sales to foreign customers of the Group for the fiscal years ended March 31, 2010 and 2009, was as follows: (a) Industry Segments Millions of Yen Precision Equipment Imaging...

  • Page 54
    ... and Pension plans issued in June 1998. There was no effect from this change. (b) Geographic Segments Millions of Yen Japan North America Europe Asia/Oceania Total (Eliminations) or Corporate Consolidated For the year ended March 31, 2010 Net sales Outside customers Intersegment sales Total...

  • Page 55
    ... accounting standard for Retirement and Pension plans issued in June 1998. There was no effect from this change. (c) Export Sales For the years ended March 31, 2010 and 2009 Millions of Yen, % Thousands of U.S. Dollars 2010 (A)/(B) 2009 (A)/(B) 2010 Export sales (A) North America Europe Asia...

  • Page 56
    54 Independent Auditors' Report

  • Page 57
    ... Nikon Group General Shareholders' Meeting Corporate Auditors / Board of Corporate Auditors Executive Committee As of June 29, 2010 Board of Directors President, Member of the Board Internal Audit Department Corporate Planning Department Finance & Accounting Headquarters Corporate Communications...

  • Page 58
    ... instruments Development, manufacturing, sales, maintenance and servicing related to measuring and inspection products ȣ Nikon Imaging (China) Sales Co., Ltd. Import, sales and servicing of cameras ȣ Nikon Australia Pty Ltd Import, sales and servicing of cameras ȣ Nikon India Private Limited...

  • Page 59
    ... of ophthalmic lenses © Nikon-Trimble Co., Ltd.*1 Development, manufacture, sales and servicing of surveying instruments The Americas © Nikon Americas Inc. k Nikon Precision Inc. k Nikon Research Corporation of America R&D for IC-related equipment v Nikon Systems Inc. Development and support of...

  • Page 60
    ... overseeing Customized Products Division Hiroshi Ohki Operating Officer General Manager of Research & Development Headquarters, Core Technology Center Toshiyuki Masai Director, Member of the Board Takaharu Honda Operating Officer General Manager of Business Planning Department, Imaging Company...

  • Page 61
    ... 100-8212, Japan (As of March 31, 2010) 2,000 1,500 1,000 500 0 1st 2nd 3rd 4th 1st 2nd 3rd 4th Year ended March 31, 2009 For further information or additional copies of this annual report, please contact the Corporate Communications & IR Department. Homepage: Nikon has created a Web site speci...

  • Page 62
    Shin-Yurakucho Bldg., 12-1, Yurakucho 1-chome, Chiyoda-ku Tokyo 100-8331, Japan www.nikon.com This report is printed on Forest Stewardship Council (FSC)-certified paper using VOC (volatile organic compound)-free ink containing no volatile organic solvents. A waterless printing method has been ...