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What’s the new OLYMPUS?
Annual Report 2013

Table of contents

  • Page 1
    What's the new OLYMPUS ? Annual Report 2013

  • Page 2
    ...Vision (Corporate Strategic Plan) President's Message The Creation of a New Olympus and Future Growth-Conversation with Analysts 27 [ How will OLYMPUS prepare for future growth? ] 28 30 30 34 38 42 46 At a Glance Review of Business Segments Medical Business Business Focus Life Science & Industrial...

  • Page 3
    ... the Company's stock is designated Security on Alert (January 21). June 2012 • The medium-term vision (corporate strategic plan) geared toward creating a new Olympus is announced by the new management team. July 2013 • Plan to offer new shares and existing shares of treasury stock to overseas...

  • Page 4
    ... promoting compliance. For more information regarding the new corporate governance structure, please refer to page 48 June 2013 •  Lossesoninvestmentin financial assets expand following the collapse of Japan's bubble economy. •  Priortotheintroduction of market value accounting...

  • Page 5
    ... effort to share values and goals among all our employees around the world with the aim of building "One Olympus." Key Technologies Olympus has defined the Medical Business, the Life Science & Industrial Business, and the Imaging Business as core businesses. Olympus has developed technical prowess...

  • Page 6
    ...) Group President of the Corporate Center, Olympus (present) Apr. 2013 Officer in charge of Olympus Business Creation Corp. (present) Yasuo Takeuchi (Date of birth: February 25, 1957) Apr. 1980 Joined the Company Apr. 2005 General Division Manager, Olympus Medical Systems Corp. Apr. 2009 Director...

  • Page 7
    ... Manager, Business Support Div. Jun. 2007 President and Representative Director, Aizu Olympus Co., Ltd. Jun. 2010 Executive Managing Officer, Olympus President and Representative Director, Olympus Medical Science Sales Corp. Apr. 2012 Standing Audit & Supervisory Board Member, Olympus (present...

  • Page 8
    ... effectively functioning Board of Directors and stringent governance systems. Looking at our business, Olympus possesses a dominating share of the market for medical endoscopes. In addition, the Company is one of the few makers in the world possessing development and manufacturing technologies that...

  • Page 9
    ..., U.S. and Japan) surgical video endoscopy system Commenced business alliance with Sony Corporation and jointly established Sony Olympus Medical Solutions Inc. Management resource allocation: Increased production capacity of major production sites Introduced new products in mainstay model lines on...

  • Page 10
    ... 2013 June 2013 Renewal of corporate governance • Majority of directors are independent • Separation of chairman of the board and president • Reinforcement of compliance system Announcement of medium-term vision (corporate strategic plan) Sale of Information & Communication Business...

  • Page 11
    ... endoscope manufacturing facilities (3 factories in Tohoku district) R&D expenditures in the Medical Business Sales promotion expenses focused on new Medical Business products Others Total ¥19.7 billion ¥54.0 billion ¥24.0 billion ¥14.9 billion ¥112.6 billion 18 OLYMPUS Annual Report 2013...

  • Page 12
    ...new endoscope products into developed markets, including Japan, North America, and Europe, during fiscal 2013. We expect that these products will help accelerate future earnings Sales Growth of Medical Business after Introduction of New Products and Future Targets Japan (¥ Billion) North America...

  • Page 13
    ...equipment and electronic components sectors. In 2002, he entered J.P. Morgan Securities and was placed in charge of the precision equipment sector. The Creation of a New Olympus and Future Growth-Conversation with Analysts Barclays Securities Japan Limited Goldman Sachs Japan Co., Ltd. President...

  • Page 14
    ... that the Company's product mix may prove less competitive. A number of Japanese technology companies are losing to such trends. Where others fail, I want Olympus to continue to succeed with unrivaled strength, and I hope 24 OLYMPUS Annual Report 2013 that you will develop strategies that allow...

  • Page 15
    ... defined the Medical Business, the Life Science & Industrial Business, and the Imaging Business as core business domains. In particular, the Medical Business will be a driver for future earnings expansion and corporate growth. As such, we will work to further develop our operations centered on the...

  • Page 16
    ...focus on being small and light weight and having high image quality and operability. The Company also provides unique digital cameras, such as its high-end, high-power zoom compact cameras, as well as voice recorders that command a high market share. The segment is developing business in the medical...

  • Page 17
    ... sales) Share of Net Sales by Product Surgical & Endotherapy 44.6% Europe 26.0% Share of Net Sales by Region North America 34.9% ITknife nanoTM disposable, high-frequency knife (Endotherapy device) Grasping forceps (Endotherapy device) 30 OLYMPUS Annual Report 2013 OLYMPUS Annual Report 2013...

  • Page 18
    ...*, a video endoscopy system designed for use in surgical applications. Going forward, Olympus will work to further expand its medical business by introducing new products that will serve as future growth drivers. * Introduced into the Japanese market in October 2011 0 2007 2008 2009 2010 2011...

  • Page 19
    ... on endoscopy system 2012 EVIS EXERA RA III Surgical Devices Solid id Gl Global b l Operations O Aiming to provide the world with technologies, products, services, and solutions of the highest caliber, Olympus is developing networks in the Medical Business that reach across the globe. • Industry...

  • Page 20
    ... changing medical industry as we strive to achieve higher profitability and further growth. In this manner, we are dedicated to supplying quality products from Japan to the world. Nobuyuki Koga Aizu Olympus Co., Ltd. President Image development technologies Investment: ¥9.4 billion Investment...

  • Page 21
    ..., 2013) Life Science 45.5% Others 7.8% Asia / Oceania 24.4% Japan 20.9% Opto-Digital Microscope DSX100 (high-performance model) IPLEX TX industrial videoscope 11.5% Share of Net Sales (Consolidated net sales) Share of Net Sales by Product Share of Net Sales by Region Industrial 54.5% Europe...

  • Page 22
    ... as we target a higher market share. Customer Bases Technology/Product Microscopes Endoscopes Ultrasound X-ray analysis Development of new business fields through the acquisition of new technologies and products Energy Aviation and transportation Net Sales (Â¥ Billion) 120 Operating...

  • Page 23
    ... number of compact camera models (cease production of low-priced models) Reduce target for compact camera sales volumes to half of FY2013's target (FY2014 forecast: 2.7 million units) North America 15.6% Construct cost structure appropriate for business scale P. 45 42 OLYMPUS Annual Report 2013...

  • Page 24
    ...) Digital cameras Fiscal 2013 Business Results and Activities In the field of digital single-lens reï¬,ex (SLR) cameras, the OLYMPUS OM-D E-M5, a highly functional, mirrorless camera equipped with an electronic viewfinder and the world's first 5-axis image stabilization system, recorded higher...

  • Page 25
    ... 150 100 50 0 93 53 70 44 2009/3 2010/3 27 2011/3 57 272 256 279 230 160 257 Optical Technology Electronic and Imaging Technology Precision Technology Biomechanical and Biological Fundamental Technology 322 How can OLYMPUS increase corporate value? 230 253 195 68 62 2012/3 64 47 2013/3 Core...

  • Page 26
    ... 3 13 Business divisions, corporate divisions, and Group companies Note: Numbers of directors and audit & supervisory board members above include 11 directors and 3 audit & supervisory board members who resigned as of April 20, 2012. 48 OLYMPUS Annual Report 2013 OLYMPUS Annual Report 2013 49

  • Page 27
    ...directors will not be hesitant to point it out. I feel confident that this sort of frank discussion will help Olympus develop in the right direction. OLYMPUS Annual Report 2013 51 CSR Committee Chairperson: President Risk Management Department Executive groups, affiliated companies, and head office...

  • Page 28
    ... to various stakeholders, namely our employees and their families, customers, business partners, shareholders, local communities, and society. CCO Global Compliance Meeting Members: CCO, Regional Compliance Officers Europe Americas Asia Japan Executive Management Committee CSR Committee Each...

  • Page 29
    ...in Myanmar. North America: Olympus Corporation of the Americas (OCA) / Olympus America Inc. (OAI) / Olympus Imaging America Inc. (OIMA) Support for Early Cancer Detection and Treatment Aiming to communicate the importance of the early detection of cancer, two Olympus employees are sharing their own...

  • Page 30
    ...-Products. Cumulative Total of Olympus Eco-Products (Products) 500 418 400 300 200 130 100 3 (FY) 0 2004 7 2005 2006 2007 2008 2009 2010 2011 2012 92 40 190 286 349 467 2013 Manufacturing-Related Initiatives Olympus monitors and works to reduce environmental loads at all stages of product life...

  • Page 31
    ... 60 40 20 0 2009/3 2010/3 2011/3 2012/3 2013/3 The percentage of R&D expenditures accounted for by the Medical Business is rising. The ratio of R&D expenditures to net sales was up following lower net sales; however, if net sales from the Information & Communication Business are excluded, the ratio...

  • Page 32
    ...60 OLYMPUS Annual Report 2013 compact camera market, outweighed the benefits of higher sales in the Medical Business. (¥ Billion) 1,000 848.5 800 600 400 200 0 Medical Business +45.5 Life Science & Imaging Industrial Business Information & Others Business (20.9) Communication (7.2) (6.9) Business...

  • Page 33
    ... science sector of the Life Science & Industrial Business, the supply of systems for research funded by national budgets of countries accounts for a high proportion of earnings, and the curtailment of national budgets for such reasons as macroeconomic changes may affect earnings. 200 Net cash used...

  • Page 34
    ..., loss on sales of businesses associated with business reorganizations, or expenses for business liquidation. 3. As of March 31, 2013, the Olympus Group held listed stocks with a total value of ¥43,904 million and unlisted stocks with a total value of ¥2,584 million as investments for the purpose...

  • Page 35
    ...: Authorized 1,000,000,000 shares Issued 271,283,608 and 305,671,508 shares as of March 31, 2012 and 2013, respectively Capital surplus Retained earnings Treasury stock, at cost Total shareholders' equity Net unrealized holding gains on available-for-sale securities, net of taxes 48,332 54,788 60...

  • Page 36
    ... on sales of fixed assets Gain (loss) on sales of investment securities in subsidiaries and affiliates, net Commission fee for contract modification (Note 1) Gain on transfer of business Amortization of negative goodwill Impairment loss on fixed assets (Note 19) Write-off of previously recorded...

  • Page 37
    Consolidated Statements of Changes in Net Assets Olympus Corporation and Consolidated Subsidiaries For the years ended March 31, 2011, 2012 and 2013 Millions of yen Treasury stock, at cost Total shareholders' equity Thousands of U.S. dollars (Note1) Treasury stock, at cost Total shareholders' ...

  • Page 38
    ...The accompanying consolidated financial statements of Olympus Corporation (the "Company") and its consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity...

  • Page 39
    ... and losses on available-for-sale securities are reported, net of applicable income taxes, as a separate component of net assets. Cost of securities sold is computed using the moving-average method. (l) Research and Development Expenses relating to research and development activities are charged to...

  • Page 40
    ... of net assets. 2. Accounting Standard for Accounting Changes and Error Corrections Effective April 1, 2011, the Company adopted the "Accounting Standard for Accounting Changes and Error Corrections" (Accounting Standards Board of Japan ("ASBJ") Statement No. 24 issued on December 4, 2009) and...

  • Page 41
    ... The fair value of stocks is based on quoted market prices. The fair value of debt securities and investment trust fund is based on either quoted market prices or prices provided by the financial institutions making markets in these securities. For information on securities classified by holding...

  • Page 42
    ... March 31, 2013 Thousands of U.S. dollars 5. Securities Over ten years $- - Within a year Cash and deposits ...Notes and accounts receivable ...Investment securities Held-to-maturity debt securities 1) National and local government bonds ...2) Corporate bonds ...Other marketable securities with...

  • Page 43
    ... goods ...Work in process and raw materials ...Total ... ¥ 61,963 40,530 ¥102,493 ¥59,740 39,567 ¥99,307 $ 635,532 420,925 $1,056,457 Write-downs of inventories for the years ended March 31, 2011, 2012 and 2013 were included in the following account: Millions of yen 2011 2012 2013 Thousands...

  • Page 44
    ... and basic salary at the time of termination of service. It is the Company's policy to fund amounts required to maintain sufficient plan assets to provide for accrued benefits. The plan assets consist principally of interest-bearing bonds and listed equity securities. Provision for retirement bene...

  • Page 45
    ...stated as net loss before income taxes was recorded. 2011 2012 2013 15. Net Assets Under the Japanese Corporate Law (the "Law"), 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...

  • Page 46
    ... information regarding the consolidated statement of changes in net assets for the year ended March 31, 2012 was as follows: Total number and class of shares issued and treasury stock As of April 1, 2011 Increase Decrease (Number of shares) (Number of shares) (Number of shares) As of March 31, 2012...

  • Page 47
    ...-term prepaid expenses Assets used for Others business Land Buildings and structures Tools, furniture and fixtures Machinery and equipment Construction in process Leased assets Goodwill Patent Software, etc. Technology-related assets Marketing rights Software Massachusetts in America and others 10...

  • Page 48
    ...,553 million was recorded as part of fund investment assets on the consolidated balance sheet as of April 1, 2010 and recorded as an investing activity in-ï¬,ow of cash on the statement of cash ï¬,ows for the year ended March 31, 2011. 92 OLYMPUS Annual Report 2013 OLYMPUS Annual Report 2013 93

  • Page 49
    ... and are accounted for in the same manner as operating leases. Certain information for such non-capitalized finance leases was as follows: As of March 31: 2012 Millions of yen 2013 Thousands of U.S. dollars 2013 Finance Lease Transactions (Lessor): Leased investment assets recognized in the...

  • Page 50
    ...which meet specific matching criteria and have been hedged by foreign exchange forward contracts are translated at the foreign exchange rate stipulated in the contracts (special hedge accounting for foreign exchange forward contracts). 96 OLYMPUS Annual Report 2013 OLYMPUS Annual Report 2013 97

  • Page 51
    ... and other products. The "Life Science and Industrial Business" manufactures and sells biological microscopes, industrial microscopes, industrial endoscopes, non-destructive testing equipment and other products. The "Imaging Business" manufactures and sells digital cameras, voice recorders and other...

  • Page 52
    ... reportable segment as of March 31, 2011, 2012 and 2013 were as follows: Millions of yen 2011 Medical Life Science and Industrial Imaging Information and Communication Others Consolidated Total (4) Related information (a) Sales by destination Net sales to third parties by countries or areas grouped...

  • Page 53
    ...company of a partnership operated and managed by Japan Industrial Partners, Inc. ITX Corporation changed its trade name to Impress Development K.K. on the same date. 2. Accounting treatment (1) Gain on transfer of business, which is reported as and included in "Gain on sales of investment securities...

  • Page 54
    ... executed on September 28, 2012. (1) Purpose of establishment Sony Olympus Medical Solutions aims to align Sony's electronics technologies in areas such as digital imaging with Olympus' manufacturing and R&D expertise in the area of medical products including lenses and optical technologies in order...

  • Page 55
    Independent Auditor's Report 106 OLYMPUS Annual Report 2013 OLYMPUS Annual Report 2013 107

  • Page 56
    ...in the Life Science & Industrial Business segment. Net Sales by Region (Millions of yen) Fiscal years ended March 31 Medical Life Science & Industrial Imaging Information & Communication Others Total Japan North America Europe Asia and Oceania Others Total Japan North America Europe Asia and...

  • Page 57
    ...lines, and development and manufacture of endoscopes and related equipment Olympus Singapore Pte Ltd (Singapore) Sales of all product lines in ASEAN, India, and Pakistan Olympus Imaging Corp. (Tokyo) Manufacture and sale of digital cameras and voice recorders Olympus America Inc. Olympus Business...

  • Page 58
    ...240 for fiscal 2013) 2,819 http://www.olympus-global.com/en/ Securities Identification Code: Stock Exchange Listing: Fiscal Year: General Meeting of Shareholders: Share Trading Unit: Number of Shares Issued: Number of Shareholders: Transfer Agent for Common Stock: Depositary and Transfer Agent for...

  • Page 59
    This report uses environment-friendly ink and paper. Printed in Japan 2013.08