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of security systems. Nevertheless, leakage of such information due to
unforeseen circumstances may affect the Group’s business performance
or financial position as a result of factors such as damage to the Group’s
corporate value, loss of public trust, or payment of compensation to
customers or other interested parties affected by the leakage.
(7) Risks Associated with Deferred Posting of Past Losses
A case is pending in Tokyo District Court in which the Company is
charged with violations of the Securities and Exchange Act and the
Financial Instruments and Exchange Act with respect to the Company’s
deferring of the posting of losses on investment securities, etc., since
around the 1990s and the use, via multiple funds, of both the fees paid
to financial advisors and funds to buy back preferred stock in relation to
the acquisition of Gyrus Group PLC as well as the funds for the acquisi-
tion of three domestic companies (Altis Co., Ltd, NEWS CHEF, Inc. and
Humalabo Co., Ltd.) to resolve unrealized losses on investment securi-
ties, etc., by deferring the posting of these losses. The results of these
proceedings may affect the Group’s business performance or financial
position.
Furthermore, shareholders of the Company have filed lawsuits
against the Company as a result of the Company’s inappropriate financial
reporting, and there is the risk that other shareholders and shareholder
groups will claim damages or file lawsuits against the Company, which
may affect the Group’s business performance or financial position. One
lawsuit that may have a particularly significant impact is the follwing: On
July 23, 2012, Terumo Corporation, a shareholder of the Company, filed
a suit for damages seeking compensation of ¥6,612 million plus interest
at the rate of 5% per annum from August 22, 2005.
In addition, the Company missed the submission deadline under the
Financial Instruments and Exchange Act for the quarterly securities report
pertaining to the second quarter of the fiscal year ended March 31, 2012
(within 45 days after the end of the second quarter), and the misrepre-
sentation in financial reports and other documents resulting from the
abovementioned deferred posting of past losses conflict with the disclo-
sure and warranties clause and covenants clause with respect to a
portion of borrowings from financial institutions (long-term borrowings of
¥320,000 million). Although this may adversely affect the Group’s financ-
ing and financing costs, the Company is currently discussing with the
financial institutions continuation of the loans without exercise of the
acceleration clause, and at present, the Company believes the financial
institutions will continue to provide financing.
(8) Risks Associated with Internal Control Systems, etc.
The Company has striven to improve and develop its internal control
systems in response to the designation of the Company shares as
“securities on alert” by the Tokyo Stock Exchange (TSE) on January 21,
2012. Nevertheless, if three years after the designation the TSE deems
that problems remain with the Company’s internal control systems, etc.,
or if the TSE deems that there are unlikely to be improvements in the
Company’s internal control systems, etc., even though the TSE has
requested submission of a letter of confirmation about internal control
systems, the Company’s shares may be delisted, which may affect the
Olympus Group’s business performance and financial position.
(9) Other General Risks
Through its domestic and overseas subsidiaries and affiliates, etc., the
Company operates its various businesses around the world, including the
Medical Business, which is a regulated industry. These regulated busi-
nesses may from time to time be subject to various investigations by
domestic and overseas authorities and involve discussions with or report-
ing to authorities with respect to compliance with laws (for instance,
response to investigations concerning compliance with the Antimonopoly
Act or Pharmaceutical Affairs Act or voluntary disclosure to the U.S.
Department of Justice regarding compliance with the Foreign Corrupt
Practices Act (FCPA)), and the results of such investigations and consul-
tations may affect earnings.
In addition, the occurrence of natural disasters, disease, wars, riot
or insurrection, terrorist attacks, or other incidents or the occurrence of
greater than expected interest rate increases or exchange rate fluctua-
tions may affect earnings.
OLYMPUS 󱚈 Annual Report 2012 65