Olympus 2007 Annual Report Download - page 23

RISKS RELATED TO PRODUCTION AND
DEVELOPMENT ACTIVITIES
1) In the Imaging Systems Business, core production opera-
tions are located in China. Accordingly, a rise in the value
of the yuan could lead to an increase in costs and impact
Group earnings. Moreover, production activities may be
impacted by anti-Japanese sentiment and/or a decline in
political or security conditions.
2) Olympus depends upon certain suppliers to develop
and manufacture some products and components that
cannot be developed and produced inside of the Group.
Accordingly, the Group’s production and supply capacity
may be impacted in the event that it is able to procure
limited amounts of the products and components it needs
owing to conditions of suppliers.
3) Olympus products are manufactured according to
meticulous quality-assurance standards, including prod-
ucts consigned to outside suppliers. However, in the event
that product defects do arise, this situation may result in
product recalls and increased costs, as well as a loss of
consumer confidence in Olympus products, and earnings
may be impacted accordingly.
4) Olympus is making continual advances in developing
digital products by applying its cutting-edge Opto-Digital
Technology. However, the progress of digital technology is
extremely rapid, and the Group’s earnings may be impact-
ed in the event that it is unable to sufficiently foresee mar-
ket changes and develop new products that meet customer
needs in a timely manner.
5) The Group applies a wide range of intellectual prop-
erty in its R&D and production activities, including intel-
lectual property that belongs to the Group and that which
the Group is licensed to use. However, the Group’s earn-
ings may be impacted in the event that it is unexpectedly
accused of having infringed upon the intellectual prop-
erty of a third party, resulting in litigation or other related
consequences.
RISKS RELATED TO INVESTMENTS IN SECURITIES
1) Olympus may not be able to achieve the capital gains
it expects on investments in the event that cultivating a
business takes longer than anticipated, or when such an
investment cannot be sold for the expected price.
2) Stock prices are determined based upon market prin-
ciples, and Olympus may not be able to obtain the sort of
gains it expects on securities owing to changes in market
conditions.
RISKS RELATED TO BUSINESS MERGERS
AND ACQUISITIONS
1) Olympus has formed long-term, strategic partnerships
related to technologies and product development with other
leading companies in the industry. However, the Group’s
business activities may be adversely affected in the event
that financial or other business-related issues arise in such
strategic partnerships, and changes in goals and objectives
do not allow for the continuation of such partnerships.
2) Olympus may acquire total or partial ownership of
other companies for the purpose of business expansion.
However, the Group’s business, performance and/or finan-
cial position may be affected in the event that it is unable to
integrate a businesses it acquires according to the Groups
management strategies, or in the event that it is unable
to efficiently utilize the management resources of existing
businesses or businesses it has acquired.
OTHER RISKS
> Olympus is expanding its business activities in a number of
countries around the world, and the Group’s earnings may
be impacted by the occurrence of natural disasters, dis-
ease, war, terrorist acts or other incidents in areas where
it operates, or by unforeseen increases in interest rates or
changes in currency exchange rates.
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