Olympus 2008 Annual Report Download - page 33

OLYMPUS 2008 31
Net Income
On the earnings front, the Olympus Group reported solid results
for the fiscal year under review. Higher revenue from the Imaging
Systems Business as well as successful cost reduction efforts
achieved through business efficiency enhancements, year-on-year
growth in the Medical Systems Business, particularly for its princi-
pal products mainly in Europe, and other factors contributed to an
increase in operating income of 14.1% year on year, to ¥112,623 mil-
lion (US$1,072 million).
In other income and expenses, the Company recorded a net
expense of ¥18,011 million (US$171 million), an improvement of
28.3% over the previous fiscal year. While Olympus incurred a loss
on investment in partnership totaling ¥2,893 million (US$27 million),
the Company benefited from a number of factors, including a foreign
exchange gain, net of ¥457 million (US$4 million), gain on sales of
property, plant and equipment totaling ¥1,478 million (US$14 million),
gain on changes in equity amounting to ¥1,909 million (US$18 million)
and gain on transfer of business of ¥300 million (US$2 million).
Accounting for these factors, income before provision for income
taxes was ¥94,612 million (US$901 million), an increase of 28.5%
over the previous fiscal year. Provision for income taxes climbed
40.9% year on year to ¥36,760 million (US$350 million), resulting in
net income for the fiscal year under review of ¥57,969 million (US$552
million), up 21.3%. For the fiscal year under review, basic net income
per share came to ¥214.48 (US$2.04), an increase of ¥37.69 over the
previous fiscal year.
ANALYSIS OF FINANCIAL POSITION
Total Assets
As of March 31, 2008, total assets stood at ¥1,358,349 million
(US$12,936 million), up 24.4% over the previous fiscal year-end. This
was mainly attributable to the inclusion of Gyrus Group PLC in the
Group’s scope of consolidation, starting from the fiscal year under
review.
Total current assets decreased 5.1% year on year to ¥543,305 mil-
lion (US$5,174 million) primarily reflecting a drop in cash and time
deposits. Net property, plant and equipment rose 7.1% to ¥150,036
million (US$1,428 million), owing primarily to the year-on-year
increase in machinery and equipment as well as construction in prog-
ress. As of the fiscal year-end, goodwill jumped 280.8% to ¥299,800
million (US$2,855 million). Other assets also more than doubled, ris-
ing 118.7% year on year to ¥161,700 million (US$1,540 million). As a
result, investments and other assets surged 75.5% over the previous
fiscal yea-end to ¥665,008 million (US$6,333 million).
Accounting for these factors, total asset turnover was 0.83 times,
down from 0.97 times in the previous fiscal year.
Total Liabilities and Net Assets
Total liabilities climbed 32.6% year on year to ¥990,473 million
(US$9,433 million), mainly due to increases in short-term borrowings,
current maturities of long-term debt, accrued amount payable and
deferred tax liability.
Total current liabilities surged 61.5% over March 31, 2007 to
¥662,454 million (US$6,309 million), owing primarily to the aforemen-
tioned jump in short-term borrowings. Total non-current liabilities
edged down 2.6%, to ¥328,019 million (US$3,123 million).
As of March 31, 2008, net assets stood at ¥367,876 million
(US$3,503 million), an increase of 6.6% over the previous fiscal year-
end. The major component was retained earnings, which grew 24.4%
year on year to ¥237,817 million (US$2,264 million).
Accounting for these factors, the equity ratio declined 4.4 percent-
age points to 26.2%, owing primarily to total asset growth.
Cash Flows
Cash and cash equivalents as of March 31, 2008 declined ¥54,960 mil-
lion year on year, to ¥119,842 million (US$1,141 million).
Net cash provided by operating activities fell ¥19,394 million from
¥108,400 million in the previous fiscal year to ¥89,006 million (US$847
million). The major cash inflow was income before provision for
income taxes, reflecting positive trends across most of the Company’s
business segments. The major cash outflows comprised increases
in prepaid pension cost and inventories as well as a decrease in
accounts payable.
Net cash used in investing activities jumped ¥207,822 million to
¥304,303 million (US$2,898 million). In the fiscal year under review,
principal cash inflow, including withdrawal from time deposits, was
more than offset by payments for acquisitions of new consolidated
subsidiaries.
Net cash provided by financing activities totaled ¥164,401 million
(US$1,565 million), up ¥162,209 million year on year. This was mainly
attributable to the increase in short-term borrowings as well as pro-
ceeds 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 and create new business areas. In fiscal 2008, R&D expen-
ditures amounted to ¥65,928 million (US$627 million), an increase of
18.7% compared with the previous fiscal year, and equivalent to 5.8%
of total net sales.
Capital Expenditures
Capital expenditures grew 12.0% over the previous fiscal year, to
¥50,070 million (US$476 million). Depreciation and amortization also
climbed 23.4% year on year, to ¥37,522 million (US$357 million).
30,404
37,522
24,249
29,758 27,022
44,696
50,070
41,917
46,127 44,444
Capital Expenditures
(Millions of yen)
04 05 06 07 08
Depreciation and amortization
Capital Expenditures
R&D Expenditures
(Millions of yen)
04 05 06 07 08
55,531
65,928
38,671
47,720 45,935
Rate of Return on Equity
(%)
04 05 06 07 08
15.3
16.8
14.1
–4.8
10.7