Olympus 2008 Annual Report Download

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Annual Report 2008
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Table of contents

  • Page 1
    Annual Report 2008 T E C H L NO OG Y OP TO -D IG I T A L

  • Page 2
    ... THE PRESIDENT REVIEW OF OPERATIONS RESEARCH AND DEVELOPMENT CORPORATE GOVERNANCE FINANCIAL SECTION 29 23 CORPORATE SOCIAL RESPONSIBILITY BOARD OF DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS INTELLECTUAL PROPERTY REPORT INVESTOR INFORMATION 65 61 PRINCIPAL BUSINESS BASES / CONSOLIDATED...

  • Page 3
    ... realizing people's healthier and more fulfilling lives, Olympus conducts diverse business activities that mainly focus on its core competencies in Opto-Digital Technology. To give specific examples, the Medical Systems Business addresses the early detection and treatment of cancer and has realized...

  • Page 4
    ...key to the enhancement of productivity at Olympus is increasing the Company's market share of digital single-lens reflex (SLR) cameras. In the fiscal year ended March 31, 2008, Olympus launched three new models, including its flagship E-3, which was expressly designed for the professional, the E-410...

  • Page 5
    OLYMPUS 2008 3

  • Page 6
    ... of U.S. dollars 2008 2007 2006 2008 Net sales ...Operating income ...Net income ...Total assets ...Equity ...Equity ratio (%) ...Capital expenditures ...R&D expenditures ...Operating income ratio (%) ...Earnings per share (yen) ...Cash dividends per share (yen) ...Return on equity (%) ...Net...

  • Page 7
    ... Imaging Systems Business, Olympus released three new digital single-lens reflex (SLR) cameras, including its flagship E-3 model. Imaging Systems Business: Reinforced Earnings Capabilities > The Imaging Systems Business recorded increases in both revenue and earnings for the second consecutive year...

  • Page 8
    ... President Under its Corporate Strategic Plan, Olympus has continuously raised its management quality and awareness to acquire appropriate capabilities as a value creation company. To that end, Olympus marked record-high net sales and profit in the fiscal year ended March 31, 2008. 6 OLYMPUS 2008

  • Page 9
    ...Group PLC, a UK-based medical equipment company, in February 2008 to accelerate the reinforcement of its surgical products business. By integrating Gyrus' strengths in minimally invasive procedures, Olympus will enhance its business in the urological, gynecological and otological fields. For Olympus...

  • Page 10
    ... to consolidated business earnings, ITX Corporation will serve as a catalyst in the creation of new Olympus Group businesses. Aiming for Sustainable Growth > In fiscal 2009, Olympus forecasts net sales of ¥1,150 billion and record-high sales for the 15th consecutive year. On the earnings front...

  • Page 11
    ... Medical Systems Business Growth: Surgical Business Enhanced by Acquisition of Gyrus 1. Olympus acquired the UK-based medical equipment company Gyrus Group PLC in February 2008. Please tell us more about Gyrus. > With approximately 1,400 employees spread over 13 worldwide locations, Gyrus was a UK...

  • Page 12
    ... business. This was based on the synergies expected for both Olympus and Gyrus in terms of products and regional strategies in the surgical field. high-definition video technology. On the other hand, Gyrus excels thanks to its proprietary energy-related processing devices. For example, Gyrus...

  • Page 13
    ...industry. We spent approximately to realize better medical care-which being a leading medical equipment company we see as our mission-by providing treatment technologies that are more patientfriendly, reliable and efficient. Haruhito Morishima President, Olympus Medical Systems Corp. OLYMPUS 2008...

  • Page 14
    ... its design: waterproof to a depth of 10 meters, shock resistant with a high capacity. DIGITAL CAMERA IS maging ystems Business 5. IMAGING SYSTEMS BUSINESS Sales (Millions of yen) 294,303 Domestic sales 29,504 264,799 320,589 38,410 282,179 LINEAR PCM RECORDER LS-10 A voice recorder that...

  • Page 15
    ... and film cameras, sales of which grew both within and outside Japan, climbed 7.8% year on year to ¥27,023 million (US$257 million). In Japan, sales > The Imaging Systems Business is centered on digital cameras, optical components and voice recorders. In fiscal 2008, ended March 31, 2008, sales in...

  • Page 16
    ...MEDICAL SYSTEMS BUSINESS Sales (Millions of yen) RHINO-LARYNGO VIDEOSCOPE 311,709 Domestic sales 71,262 353,269 75,257 ENF TYPE VQ Using specific light spectra, this rhino-laryngo videoscope realized NBI observation of the nasal lumens and the airway anatomy enabling fullscreen, high-definition...

  • Page 17
    ... products field through the synergistic effects arising from the acquisition of Gyrus. The business integration with Gyrus is also expected to bring broader product lineups and sales networks. In addition, Olympus will continue to focus on its high-value-added hospital management solutions business...

  • Page 18
    ...IMAGE ANALYZING SYSTEM CELAVIEW RS100 This system fully meets the needs of cell screening that can contribute to the development of cellular function analysis that is carried out primarily in the latest life science fields, including drug discovery and the study of disease. LS ife cience Business...

  • Page 19
    ...,722 million (US$502 million). In fiscal 2008, Olympus released the AU680 > The main products of the Life Science Business are biological microscopes, industrial microscopes and clinical hemanalysis systems. Sales in this business rose 6.3% year on year to ¥131,446 million (US$1,252 million), while...

  • Page 20
    ... mainly in such areas as life science, network & technology, mobile phones and business innovation. ITX Corporation invests in diverse businesses, including mobile handset sales, mobile solutions, mobile content services, the development and sale of business packaging software, sales of network...

  • Page 21
    ... overall sales was recorded in the Others business, reflecting ITX Corporation's growth in medical-related businesses, including new business > In the Others business, Olympus mainly engages in the manufacture and sale of industrial endoscopes, non-destructive testing devices, printers and bar code...

  • Page 22
    ... equipped with new technologies, including Auto Focus Live View and Face Detection and Shadow Adjustment, so that even beginners can take high-quality, natural-looking pictures. *1 Of all interchangeable-lens-type digital SLR cameras as of March 5, 2008 (in-house research) 2. Development of OLYMPUS...

  • Page 23
    ... frequently conducted in the cutting-edge life science fields, including drug discovery and the study of disease. R&D Expenditure (Millions of yen) 65,928 55,531 Basic Research 20.0 45,935 Others 6.1 14.7 Imaging Systems Business Life Science Business 19.7 39.5 Medical Systems Business 08...

  • Page 24
    ... promoting our range of Eco-Products. Furthermore, Olympus produces nature-photo calendars and donates the proceeds to WWF Japan as a way of supporting environmental conservation activities. > The Group contributes to society by offering safe, secure and highly efficient medical equipment through...

  • Page 25
    ... Corporate Governance Structure Chart General Meeting of Shareholders Appointment/ dismissal Appointment/dismissal Appointment/dismissal Board of Auditors Audit Board of Directors Advice Special Committee Auditors Audit Directors Supervision and appointment/ dismissal of President The Office...

  • Page 26
    ... officers' responsibilities for business execution. The number of executive officers stands at 28. Outside Directors and Their Principal Activities > Under Japan's Corporation Law companies with an auditor system are not required to have outside directors on their boards of directors. Olympus...

  • Page 27
    ... with several major medical-related companies and holding briefings mainly for individual investors. Olympus has provided details of its Corporate Strategic Plan, financial results and presentation data, including concurrent disclosure in both Japanese and English, on its web site. OLYMPUS 2008 25

  • Page 28
    ... specifically engages in the Medical Systems Business, that offers products involved with human life, Olympus is responsible for ensuring high-level product safety, quality and services. In addition, we developed rules and standards in Pharmaceutical Affairs Law-related fields to comply with a host...

  • Page 29
    ... to Production and Development Activities In the Imaging Systems Business, core production operations 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...

  • Page 30
    ...OF DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS (As of June 27, 2008) Board of Directors Representative Director/President Tsuyoshi Kikukawa Directors/Senior Executive Managing Officers Masaaki Terada Masaharu Okubo Hideo Yamada Haruhito Morishima Masataka Suzuki Directors/Executive Managing...

  • Page 31
    ... Balance Sheets 34 Consolidated Statements of Income 36 Consolidated Statement of Changes in Net Assets 37 Consolidated Statements of Shareholders' Equity 38 Consolidated Statements of Cash Flows 39 Notes to the Consolidated Financial Statements 40 Independent Auditors' Report 60 OLYMPUS 2008...

  • Page 32
    ... number of BX Series research system microscopes sold in the expanding markets of Asia, the Middle East and Latin America. For industrial microscopes, despite intensifying price competition owing to the downward trend in business investment in Japan and overseas, Olympus continued to promote sales...

  • Page 33
    ... year. This was mainly attributable to the increase in short-term borrowings as well as proceeds from long-term debt. Research & Development Expenditures The Olympus Group continuously pursues new technologies through its R&D activities in order to bolster its core competencies in current businesses...

  • Page 34
    ...Total Shareholders' equity Sales by Geographic Area (%) Sales by Business Segment (%) Other areas 2.3 Others 6.2 Asia 12.3 28.4 37.2 Europe 26.9 Japan Information and Communication Business Life Science Business 22.5 Imaging Systems Business 11.6 31.3 21.3 08 North America Medical Systems...

  • Page 35
    Millions of yen (except per share amounts) 2006 2005 2004 2003 2002 2001 2000 1999 376,946 601,181 978,127 120.2 28,564 2.9 45,935 44,444 27,022 105.... 1,561 190,341 35.5 171,378 264,473 18,999 533,584 0.78 342,895 402 190,287 35.7 232,226 264,473 17,874 OLYMPUS 2008 33

  • Page 36
    ...SO LID ATE D BALANCE SHEETS Olympus Corporation and Consolidated Subsidiaries March 31, 2008 and 2007 Millions of yen Thousands of U.S. dollars (Note 1) 2008 2007 2008 ASSETS Current Assets: Cash and time deposits (Notes 17 and 19) ...Securities (Note 4) ...Notes and accounts receivable (Notes...

  • Page 37
    ...283,608 shares as of March 31, 2008 ...Capital surplus...Retained earnings ...Treasury stock, at cost ...Total shareholders' equity ...Net unrealized holding gains on available-for-sale securities, net of taxes ...Net unrealized gains (losses) on hedging derivatives, net of taxes ...Foreign currency...

  • Page 38
    ... D STATEM ENT S O F I NC O M E Olympus Corporation and Consolidated Subsidiaries For the years ended March 31, 2008, 2007 and 2006 Millions of yen Thousands of U.S. dollars (Note 1) 2008 2007 2006 2008 Net sales ...Cost of sales...Gross profit ...Selling, general and administrative expenses...

  • Page 39
    ... as appropriations of earnings at 2006 Annual General Shareholders' Meeting. (Thousands of U.S. Dollars) (Note 1) Net Net unrealized unrealized holding gains gains on available- (losses) on Foreign Total for-sale hedging currency shareholders' securities, derivatives, translation equity net of taxes...

  • Page 40
    ... accounting standard for retirement benefits by the consolidated subsidiary in the UK ...Cash dividends paid ...Bonuses for directors and corporate auditors ...Adjustment on projected benefit obligation of the consolidated subsidiary in the UK ...Balance at end of year...Net Unrealized Holding Gains...

  • Page 41
    ... O N S O L IDATED STAT EM ENTS O F C A SH FLO W S Olympus Corporation and Consolidated Subsidiaries For the years ended March 31, 2008, 2007 and 2006 Millions of yen Thousands of U.S. dollars (Note 1) 2008 2007 2006 2008 Cash Flows from Operating Activities: Income before provision for income...

  • Page 42
    ... ACCOUNTING POLICIES (a) Basis of Presenting Consolidated Financial Statements Olympus Corporation (the "Company") and its consolidated domestic subsidiaries maintain their accounts and records in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law...

  • Page 43
    ... the Company's Annual Shareholders' Meeting on June 29, 2006, the Company terminated the policy relating to retirement benefits to directors and corporate auditors of the Company. The amounts of pension payments and retirement allowances are generally determined on the basis of length of service and...

  • Page 44
    ... of Net Assets in the Balance Sheet In the year ended March 31, 2007, the Company has adopted new accounting standards, "Accounting Standard for Presentation of Net Assets in the Balance Sheet" (Statement No. 5 issued by the Accounting Standards Board of Japan on December 9, 2005), and the...

  • Page 45
    ...loss of investment in affiliated companies carried on the equity method In the year ended March 31, 2008, "Net loss of investment in affiliated companies carried on the equity method", formerly included in Other of cash flows from operating activities, was shown as an independent item. The amount of...

  • Page 46
    ... earnings and other key measures. The following table summarizes book values of securities not stated at fair value as of March 31, 2008 and 2007: Available-for-sale securities Book value Millions of yen Thousands of U.S. dollars 2008 2007 2008 Non-listed equity securities ...Non-listed foreign...

  • Page 47
    ... incubation securities in affiliates that were held by subsidiaries of the Company were included in investment securities on the consolidated balance sheets as of March 31, 2008 and 2007. Business incubation securities amount to ¥4,762 million ($45,352 thousand) and ¥9,316 million, respectively...

  • Page 48
    ... loans. The annual interest rates on these borrowings ranged from 1.00% to 13.40% and from 0.58% to 13.40% as of March 31, 2008 and 2007, respectively. 9. LONG-TERM DEBT Long-term debt as of March 31, 2008 and 2007, consisted of the following: Millions of yen Thousands of U.S. dollars 0.80% yen...

  • Page 49
    ...of expected return on plan assets used by the Company is mainly 4.0% in fiscal 2008 and 2007. The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using the estimated number of total service years. Prior service costs were...

  • Page 50
    ... of information regarding the consolidated subsidiaries stock option plans for the year ended March 31, 2008 was as follows: ITX Corporation Other consolidated subsidiaries Qualified beneficiaries ... 5 directors 1 corporate auditor 91 employees 6 directors of subsidiaries of ITX Corporation 39...

  • Page 51
    ... between the statutory tax rate and the Company's effective tax rate for consolidated financial statement purposes for the years ended March 31, 2008, 2007 and 2006. 2008 2007 2006 Japanese statutory tax rate ...Non-deductible expenses ...Effect of foreign tax rate differences...Increase (decrease...

  • Page 52
    .... Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may, by a resolution of its board of directors, designate an amount not exceeding one-half of the price of the new shares as additional paid-in capital, which...

  • Page 53
    ... date General Shareholders' Meeting (June 27, 2008) ... Common Stock ¥5,405 (Thousands of U.S. dollars) Retained earnings ¥20.00 March 31, 2008 June 30, 2008 (U.S. dollars) $51,476 $0.19 A summary of information regarding the Consolidated Statement of Changes in Net assets for the year ended...

  • Page 54
    ... of shares Record Date Effective date General Shareholders' Meeting (June 28, 2007) ... Common Stock ¥6,488 Retained earnings ¥24.00 March 31, 2007 June 29, 2007 15. CONTINGENT LIABILITIES The Company and its consolidated subsidiaries were contingently liable for notes and bills discounted...

  • Page 55
    ... Company and its consolidated subsidiaries recorded for the years ended March 31, 2008, 2007 and 2006 were as follows: (For the year ended March 31, 2008) Use Type of assets Location Millions of yen Thousands of U.S. dollars Assets used for Life Science Business Idle properties Total (For the year...

  • Page 56
    ... consolidated, acquisition costs of shares, and payments for acquisition of Gyrus Group PLC for the year ended March 31, 2008 were as follows: Millions of yen Thousands of U.S. dollars Notes and accounts receivable...Inventories ...Other current assets ...Property, plant and equipment ...Goodwill...

  • Page 57
    ... for outstanding derivative financial instruments by risk category and instrument type as of March 31, 2008 and 2007: (As of March 31, 2008) Notional amount Millions of yen Book value Fair value Thousands of U.S. dollars Notional amount Book value Fair value Foreign exchange forward contracts To...

  • Page 58
    ...years ended March 31, 2008, 2007 and 2006 are shown in the tables below: Millions of yen 2008 Imaging Systems Business Medical Systems Business Information and Life Science Communication Business Business Elimination and Consolidated Corporate Total Others Total Net sales: Unaffiliated customers...

  • Page 59
    ...: Industrial endoscopes, Non-destructive testing equipment, Printers, Bar code data processing equipment, Software development, etc. 3. In fiscal 2007, these five business segments included the following products : Imaging Systems Business: Digital cameras, Film cameras, Voice Recorders Medical...

  • Page 60
    ... Germany, the United Kingdom, France and other countries. Asia includes Singapore, Hong Kong, China, South Korea, Australia and other countries. (c) Overseas sales information Millions of yen 2008 2007 2006 Thousands of U.S. dollars 2008 Export sales (A) ...to North America ...to Europe ...to Asia...

  • Page 61
    ... The directors' meeting held on May 8, 2008 approved the acquisition of treasury stock in accordance with Article 156 applied by reading of terms pursuant to the provisions of Article 165(3) of the Japanese Corporate Law. The details were as follows: Class of shares: Common stock Number of shares...

  • Page 62
    ...TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF OLYMPUS CORPORATION We have audited the accompanying consolidated balance sheets of Olympus Corporation and consolidated subsidiaries as of March 31, 2008 and 2007, the related consolidated statements of income for each of the three years in the period...

  • Page 63
    ... installed in digital SLR cameras for industry-best image stabilization, ultrasonic motors for interchangeable lens-type digital SLR cameras, optical encoders and AF sensor modules. Cell-related technology at Olympus, which is aimed at creating new business opportunities in the fields of bioscience...

  • Page 64
    ... of the fiscal year ended March 31, 2008 are shown in the table below. Olympus holds patents that offer business potential in each of its Imaging Systems, Medical Systems, Life Science and Industry-Related businesses. The Company's core Imaging Systems and Medical Systems businesses account for 67...

  • Page 65
    ...Olympus Intellectual Property Services Co., Ltd. (Tokyo) Research, administration and foreign application of intellectual property rights ITX Corporation (Tokyo) Investment and business incubation IT Telecom, Inc. (Tokyo) Sale of information and communication equipment Soliste Corporation (Tokyo...

  • Page 66
    ... non-destructive testing equipment Olympus (Guangzhou) Industrial Ltd. (Guangzhou, China) Manufacture of optical equipment and electronic products Olympus Europa Holding GmbH (Hamburg, Germany) Parent company of European subsidiaries, offering corporate support services to Group companies Olympus...

  • Page 67
    ... OF SHARES BY TYPE OF SHAREHOLDER Number of shareholders Number of shares Percentage of total held (thousands)* shares outstanding (%) Japanese financial institutions ...Japanese companies trading in financial instruments ...Other Japanese corporations ...Japanese individuals and others ...Foreign...

  • Page 68
    AN-0808D Printed in Japan This report uses environment-friendly ink, and its main sections are printed on environment-friendly paper.