Olympus 2014 Annual Report Download

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Reliable
Annual Report 2014

Table of contents

  • Page 1
    Reliable Annual Report 2014

  • Page 2
    ...of topics. Basic Information 02 04 05 Our Business: Our Business Domain and Key Technologies Our Strategy: Medium-Term Vision (Corporate Strategic Plan) Our Progress under Review: Advances in the Two Years Since the Institution of the New Management Team IR Website http://www.olympus-global.com/en...

  • Page 3
    ... are of great benefit to the other businesses. For example, the digital imaging technologies from digital camera development were used to evolve endoscopes from fiberscopes to videoscopes. * Share of Japanese camera market in 2013 (Source: Olympus Corporation) Universal upper digestive videoscope...

  • Page 4
    ... capital alliance with Sony Corporation is announced. May 2013 Restructuring measures for the Imaging Business are announced. Jun. The Security on Alert designation placed on the Company's stock by the Tokyo Stock Exchange is removed. Jun. A stock option system (linked to performance and stock price...

  • Page 5
    ...,627 66,796 37,810 36,850 1,000 800 600 400 200 0 6.9 35.5 4.2 35.1 4.7 6.0 3.0 0 2010/3 2011/3 2012/3 2013/3 2014/3 Net sales were down due to the September 2012 transference of the Information & Communication Business, but sales were up 13% if this factor is excluded. Operating income...

  • Page 6
    ... low equity ratio, poor balance sheet, and lacking profitability. Today, I believe we are receiving fewer complaints with regard to our corporate governance systems. In terms of performance, the Medical Business, which has been positioned as a major earnings driver, is making massive contributions...

  • Page 7
    ... to address pressing management issues during fiscal 2015. Issues in Core Businesses Medical Business Conduct strategic investment targeting long-term growth to further strengthen the surgical device field Scientific Solutions Business Revise basic strategies to move away from strategies based...

  • Page 8
    ... August 2014 Hiroyuki Sasa President and Representative Director Q A 6 The digital camera market continues to shrink, creating a harsh environment for the Imaging Business. What are the Company's plans for the future of this business? There are technological synergies between the Imaging Business...

  • Page 9
    ... the non-core Information & Communication Business, entering into a business and capital alliance with Sony Corporation, and cutting staff size as part of restructuring measures. Also, we saw the removal of the Security on Alert designation placed on the Company's stock by the Tokyo Stock Exchange...

  • Page 10
    ... equipment manufacturers fall into the latter group. These people tend to specialize in medical companies and hold on to their investments for incredibly long periods of time. It is therefore important for companies in the medical field to consciously issue information targeting these investors...

  • Page 11
    ... was not only limited to governance. I therefore hope that Olympus will serve as an example for capital markets of how a company can move past such adversity. Also, I understand that Olympus is the only Japanese medical equipment manufacturer to conduct its business through collaboration with...

  • Page 12
    ...of an endoscope. Net Sales for the Medical Business (Â¥ Billion) 500 400 311.7 300 216.9 200 100 0 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 230.5 266.3 383.8 Ever since beginning its endoscope business, Olympus has continued striving to enhance its service network based on that mind-set. Currently...

  • Page 13
    ... to direct our sales resources to the most appropriate accounts, customers, and procedures. Moving forward, we are also working to incorporate training as a major part of our Olympus strategy. Q Nacho Abia Division Manager of Medical Business Div. of Americas, Medical Business Group (President of...

  • Page 14
    ... and hospitals are increasingly expecting integrated value propositions and a good understanding of their value chain from medical technology companies. For us, this means to approach customers more holistically, both in terms of our various products and systems as well as in terms of service and...

  • Page 15
    ... District Olympus current principal customer base Elite hospitals with large case numbers of endoscopic treatments and significant purchasing power Division Manager of Medical Business Div. of Asia / Oceania, Medical Business Group (Executive Officer of Olympus Corporation / President of Olympus...

  • Page 16
    ... 2014/3 2015/3 (Forecast) 2012/3 2013/3 2014/3 2015/3 (Forecast) Life science Industrial Operating income Operating margin (right) Imaging Business Digital Cameras Digital single-lens cameras, compact digital cameras, digital camera related products, digital camera lens barrels, optical...

  • Page 17
    ... business expansion by providing technologies, products, services, and solutions of the world's highest caliber. 0 2012/3 2013/3 2014/3 2015/3 (Forecast) 2017/3 (Target) Endoscopes Surgical & endotherapy devices Operating income Operating margin (right) 30 OLYMPUS Annual Report 2014...

  • Page 18
    ... America and Asia, where growth in surgical device market is expected) Aggressively conduct sales promotions in North America, Asia, and other key markets (including sales training expenses and costs related to sample-use medical equipment) Undertake upfront investment for future business growth...

  • Page 19
    ... to the Scientific Solutions Business. In this business, we will revise strategies to move away from strategies based on product lineups to pursue those oriented toward customer groups. This shift will enable us to strategically allocate management resources toward expanding our market share and...

  • Page 20
    ...product lineups, splitting the business between the life science and industrial fields. This split organization will be integrated going forward. Cross-regional integration is already proceeding. In April 2014, North American sales and manufacturing organizations for microscopes and non-destructive...

  • Page 21
    ...Others Japan IMAGING BUSINESS Message from the Group President Haruo Ogawa President, Imaging Group 13.5% 13.0% Asia / Oceania 2.5% 31.1% Share of Net Sales (Consolidated net sales) Share of Net Sales by Product 22.6% Share of Net Sales by Region Digital cameras Europe North America 87...

  • Page 22
    ... target for sales promotion investments going forward. By utilizing the ï¬,agship OM-D E-M1 model and the accessibly priced OM-D E-M10 model, we aim to expand our market Mirrorless Camera Portfolio by Price Range share by syphoning business from the conventional digital SLR camera market. In...

  • Page 23
    ... 200 160 230 253 195 117 100 53 44 0 2010/3 57 27 2011/3 2012/3 68 62 64 47 2013/3 2014/3 64 356 380 Optical Technology Electronic and Imaging Technology Precision Technology Biomechanical and Biological Fundamental Technology Reliable Support Corporate Governance Structure of Olympus Establishment...

  • Page 24
    ... governance to be practiced worldwide and in accordance with changes in the operating environment and other future developments. United under the mantra of "One Olympus," the Group will push forward with its quest to raise shareholder value. Yasuyuki Kimoto Chairman 44 OLYMPUS Annual Report 2014...

  • Page 25
    ... Board of Directors requests reports on matters that are decided by the Executive Management Committee or by the president. In this manner, the Company is strengthening governance from the perspectives of sharing information and monitoring, thereby creating systems for better ensuring the soundness...

  • Page 26
    ... Chairperson: President Risk Management Department Executive groups, affiliated companies, and head office departments Task Force (activated in the event of a crisis) Risk managers of business units and head office departments Risk Management Promotion Committee Investor Relations Activities The...

  • Page 27
    ... company. Olympus will need to find its own ideal corporate governance system going forward, and this search should include big-picture discussions on such factors as future business plans. Hiruta Olympus is currently in the process of restructuring its business centered on the Medical Business...

  • Page 28
    ... will be used to support social development and provide care to children afï¬,icted with various illnesses. Compliance Promotion System General Meeting of Shareholders Reports / Proposals Compliance Committee Members: Outside Directors, Non-Olympus Members, CCO Reports Requests Board of Directors...

  • Page 29
    .../3 1,717 2012/3 1,929 2013/3 1,898 2014/3 2013/3 2014/3 0 2010/3 2011/3 2012/3 2013/3 2014/3 *1 Changes at all domestic and overseas manufacturing sites only *2 Olympus reports in the following categories under the GHG Protocol. Scope 1: Greenhouse gas emissions resulting from the direct use of...

  • Page 30
    ...) Group President of the Corporate Center, Olympus (present) Apr. 2013 Officer in charge of Olympus Business Creation Corp. 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, Olympus...

  • Page 31
    ...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) Masashi Shimizu (Date of birth: December 19, 1957) Apr. 1982 Joined Nippon Life Insurance Company Mar...

  • Page 32
    ... margin (Medical Business)(*2) (%) R&D expenditures Percentage of net sales (%) Capital expenditures Depreciation and amortization Amortization of goodwill Sales by region Japan North America Europe Asia and Oceania Others Average exchange rates Yen/U.S. dollar Yen/Euro Balance sheet, cash flows...

  • Page 33
    ... these strategies, we steadily implemented initiatives targeting the removal of the Security on Alert placed on the Company's stock by the Tokyo Stock Exchange while increasing capital to strengthen our financial base and reorganizing non-core business domains. Looking at the Olympus Group's focus...

  • Page 34
    ... medical industry. If the Olympus Group is unable to adapt to such environmental changes or obtain the licenses and approvals in various countries necessary for its business activities in a timely manner, earnings may be affected. 2. In the life science sector of the Scientific Solutions Business...

  • Page 35
    ... financial position of the company in question. Such price fluctuations could force the Group to record loss on valuation of investment securities, and the Group's earnings or financial position could be affected as a result. (4) Risks Associated with Financing The Group obtains financing by means...

  • Page 36
    ... on business liquidation Other non-current liabilities Total non-current liabilities Total liabilities CONTINGENT LIABILITIES (Note 16) NET ASSETS (Note 15): Common stock: Authorized 1,000,000,000 shares Issued 305,671,508 and 342,671,508 shares as of March 31, 2013 and 2014, respectively Capital...

  • Page 37
    ... Reversal of provision for loss on restructuring of business Gain on sales of non-current assets Gain on sales of investment securities in subsidiaries and affiliates, net Commission fee for contract modification (Note 1) Bank loans related expenses in conjunction with repayment made prior to due...

  • Page 38
    ...Changes in Net Assets Olympus Corporation and Consolidated Subsidiaries For the years ended March 31, 2013 and 2014 Millions of yen Treasury stock, at cost Total shareholders' equity Thousands of U.S. dollars (Note1) Treasury stock, at cost Total shareholders' equity Common stock Capital surplus...

  • Page 39
    ...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 with accounting principles generally accepted in Japan...

  • Page 40
    ...non-current liabilities of the consolidated balance sheets included retirement allowance for directors and corporate auditors as of March 31, 2013 and 2014. (c) Cash and Cash Equivalents In preparing the consolidated statements of cash ï¬,ows, cash on hand, readily-available deposits and short-term...

  • Page 41
    ... report from each division, the Group prepares and updates its cash ï¬,ow plans on a timely basis and keeps its liquidity in hand over a certain ratio of consolidated sales, in order to manage liquidity risk. 3. New Accounting Standards Not Yet Applied On May 17, 2012, the ASBJ issued "Accounting...

  • Page 42
    ... government bonds ...2) Corporate bonds ...Other marketable securities with maturities 1) Corporate bonds ...2) Other ...Total ... ¥252,093 132,233 ¥ - - ¥- - ¥- - - - - 781 ¥385,107 - - - 1,372 ¥1,372 - - - - ¥- - - - - ¥- 80 OLYMPUS Annual Report 2014 OLYMPUS Annual Report 2014...

  • Page 43
    ... Acquisition cost 2014 Book value Difference As of March 31, 2014 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 maturities...

  • Page 44
    ...Millions of yen 2013 As of March 31, 2014, the aggregate annual maturities of long-term debt were as follows: Fiscal years ending March 31, Millions of yen Thousands of U.S. dollars Service costs ...Interest cost on projected benefit obligation ...Expected return on plan assets ...Amortization of...

  • Page 45
    ...the balance sheets as of March 31, 2013 and 2014. The Company did not agree to the fees and is seeking collection of the amounts paid; however, collection of such amounts was determined to be doubtful and full allowance was recorded against the non-current receivable. 86 OLYMPUS Annual Report 2014...

  • Page 46
    ... countries of incorporation. 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 not exceeding one-half of the prices...

  • Page 47
    ... Net Assets for the year ended March 31, 2014 was as follows: Total number and class of shares issued and treasury stock As of April 1, 2013 Class of shares (Number of shares) Cash and deposits ...Lease receivables and leased investment assets ...Buildings and structures ...Machinery and equipment...

  • Page 48
    ... Right of using facilities Patent Software, etc. Long-term prepaid expenses 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 Tokyo, Guangdong...

  • Page 49
    ... the transaction price and proceeds from Japan Medical Data Center Co., Ltd. and 8 other companies, which have been excluded from consolidated subsidiaries due to sale of shares during the fiscal year ended March 31, 2014 were as follows: Millions of yen Thousands of U.S. dollars Equivalent of...

  • Page 50
    ... recognized in the consolidated balance sheets as of March 31, 2013 and 2014 were as follows: Millions of yen 2013 2014 Thousands of U.S. dollars 2014 Operating Lease Transactions (Lessor): Future minimum lease payments under the non-cancelable operating leases having remaining terms in excess of...

  • Page 51
    ... on these business divisions, that are categorized according to products and services, the Olympus Group has the following four reportable segments: Medical Business, Life Science and Industrial Business, Imaging Business, and Others. 98 OLYMPUS Annual Report 2014 OLYMPUS Annual Report 2014 99

  • Page 52
    ... 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 53
    ...2014 (e) Outstanding balances of goodwill by reportable segment as of March 31, 2013 and 2014 were as follows: Millions of yen 2013 Medical Life Science and Industrial Imaging Information and Communication Others Consolidated Total Total net assets ...Amounts deducted from total net assets: Stock...

  • Page 54
    Notes to the Consolidated Financial Statements 2. Accounting treatment (1) Gain on transfer of business, which is reported as and included in "Gain on sales of investment securities in subsidiaries and affiliates, net" for the year ended March 31, 2013 ¥17,600 million ($187,234 thousand) (2) ...

  • Page 55
    ... 18, 2013. (1) Date of filing lawsuit July 23, 2012 (2) Plaintiff 1. Company: 2. Address: 3. Representative: (3) Class and number of shares to be issued upon exercise of stock acquisition rights 41,000 shares of common stock of the Company (4) Qualified beneficiaries 25 in total (5 Directors and...

  • Page 56
    Independent Auditor's Report 108 OLYMPUS Annual Report 2014 OLYMPUS Annual Report 2014 109

  • Page 57
    ... 1, 2014, the Life Science & Industrial Business was renamed the Scientific Solutions Business. Net Sales by Region (Millions of yen) Fiscal years ended March 31 Digital Cameras Medical Scientific Solutions Imaging Information & Communication Others Total Japan North America Europe Asia...

  • Page 58
    ... system solutions in South East Asia Olympus Corporation of the Americas (Pennsylvania, U.S.A.) Regional business center in U.S., Canada, and Latin America Olympus Moscow Limited Liability Company (Moscow, Russia) Sales of all product lines and service of digital cameras and medical endoscopes...

  • Page 59
    ... Tokyo 163-0914, Japan ¥124,520 million 30,702 (Excludes temporary employees, average of 2,978 for fiscal 2014) 2,838 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...

  • Page 60
    This report uses environment-friendly ink and paper. Printed in Japan 2014.08