Olympus 2014 Annual Report Download - page 39

Millions of yen
Thousands of
U.S. dollars (Note 1)
2013 2014 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes and minority interests ¥ 19,142 ¥ 16,425 $ 159,465
Adjustments to reconcile income before income taxes and minority interests
to net cash provided by operating activities:
Depreciation and amortization 33,899 36,850 357,767
Impairment loss on fi xed assets (Note 19) 7,600 4,871 47,291
Amortization of goodwill 9,683 9,457 91,816
Commission fee for contract modifi cation 3,392 — —
Bank loans related expenses in conjunction with repayment made prior to due date — 1,528 14,835
Settlement charge (Note 22) 1,231 6,256 60,738
Extra severance payments for voluntary retirement (Note 21) 1,336 — —
Penalty charges — 700 6,796
Loss on liquidation of business — 11,591 112,534
Increase in provision for retirement benefi t 794 502 4,874
Decrease (increase) in prepaid pension cost 4,018 (1,888) (18,330)
Increase in provision for loss on litigation — 11,000 106,796
Decrease (increase) in provision for warranty costs (419) 259 2,515
Interest income (1,002) (974) (9,456)
Interest expense 13,942 11,470 111,359
Equity in earnings (losses) of affi liates, net (22) 1,457 14,146
Gain on available-for-sale securities, net (999) (1,331) (12,922)
Decrease in provision for loss on business liquidation (3,060) — —
Gain on sales of investment securities in subsidiaries and affi liates, net (20,026) (287) (2,786)
(Increase) decrease in accounts receivable (10,063) 1,950 18,932
Decrease in inventories 1,048 2,890 28,058
Increase in accounts payable 6,707 2,056 19,961
Increase (decrease) in other payables 3,217 (3,659) (35,524)
Increase in accrued expense 1,458 2,087 20,262
Increase in non-current lease receivables (6,969) (7,337) (71,233)
Other, net (1,203) 1,176 11,417
Sub-total 63,704 107,049 1,039,311
Interest and dividends received 1,843 1,926 18,699
Interest paid (13,852) (11,911) (115,641)
Commission fee for contract modifi cation (3,392) — —
Bank loans related expenses in conjunction with repayment made prior to due date paid — (1,528) (14,835)
Settlement charge (Note 22) (1,231) (6,256) (60,738)
Extra severance payments for voluntary retirement (Note 21) (1,336) — —
Penalty charges paid (Note 36) — (700) (6,796)
Income taxes paid (20,503) (16,192) (157,204)
Net cash provided by operating activities 25,233 72,388 702,796
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits in time deposits (3,846) (2,770) (26,893)
Withdrawals from time deposits 2,913 6,096 59,184
Purchases of property, plant and equipment (24,023) (27,342) (265,456)
Purchases of intangible assets (3,942) (5,242) (50,893)
Purchases of investment securities (373) (544) (5,282)
Sales of investment securities 6,506 1,196 11,612
Net increase from sales of investments in subsidiaries resulting in changes in scope of consolidation (Note 27) 52,629 4,854 47,126
Payments for loans receivable (2,053) (45) (437)
Proceeds from loans receivable 3,885 2,559 24,845
Other, net 1,759 965 9,369
Net cash provided by (used in) investing activities 33,455 (20,273) (196,825)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term borrowings (27,782) (24,714) (239,942)
Proceeds from long-term borrowings — 104 1,010
Repayments of long-term borrowings (42,935) (90,274) (876,447)
Redemption of bonds (20,040) (35,000) (339,806)
Proceeds from issuance of common stock 49,953 101,594 986,350
Proceeds from disposal of treasury shares — 11,067 107,447
Payments for acquisition of treasury stock (4) (16) (154)
Dividends paid to minority shareholders (75) (267) (2,592)
Other, net (1,553) (2,187) (21,235)
Net cash used in fi nancing activities (42,436) (39,693) (385,369)
Effect of exchange rate changes on cash and cash equivalents 10,701 13,140 127,573
Net increase in cash and cash equivalents 26,953 25,562 248,175
Cash and cash equivalents at beginning of year 198,661 225,782 2,192,058
Net increase in cash and cash equivalents associated with newly consolidated subsidiaries 168 — —
Cash and cash equivalents at end of year (Note 26) ¥225,782 ¥251,344 $2,440,233
See accompanying notes to consolidated fi nancial statements.
Consolidated Statements of Cash Flows
Olympus Corporation and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2014
Notes to the Consolidated Financial Statements
Olympus Corporation and Consolidated Subsidiaries
1. Summary of Signifi cant Accounting Policies
(a) Basis of Presenting Consolidated Financial Statements
The accompanying consolidated fi nancial 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 with accounting principles generally accepted in Japan (Japanese GAAP), which are different in certain
respects as to application and disclosure requirements from International Financial Reporting Standards (IFRS).
Effective April 1, 2008, the Company adopted the “Practical Solution on Unifi cation of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements” (PITF No. 18). In accordance with PITF No. 18, the accompanying consolidated fi nancial
statements have been prepared by using the accounts of foreign consolidated subsidiaries prepared in accordance with either IFRS or
accounting principles generally accepted in the United States as adjusted for certain items including those for goodwill, actuarial differences
and capitalized development costs.
Solely for convenience of readers outside Japan, the accompanying consolidated fi nancial statements have been reformatted with some
expanded descriptions and translated into English from the consolidated fi nancial statements of the Company prepared in accordance with
Japanese GAAP and fi led with the appropriate Finance Bureau of the Ministry of Finance as required by the Financial Instruments and
Exchange Act. Certain supplementary information included in the statutory Japanese language consolidated fi nancial statements is not pre-
sented in the accompanying consolidated fi nancial statements.
On November 8, 2011, based on the fi ndings of the independent Third Party Committee, the Company announced that it had deferred
recognition of losses on securities investments from around the 1990s and was using a number of non-consolidated funds (collectively, the
Funds) for the acquisition transactions for three domestic subsidiaries (Altis Co., Ltd., NEWS CHEF, Inc. and Humalabo Co., Ltd., herein after,
collectively, the Three Domestic Subsidiaries) and Gyrus Group PLC (Gyrus) to settle such losses.
Based on such fi ndings of the investigation of the independent Third Party Committee, it was determined that the Company substantially
controlled the Funds, which had losses on securities investments and had not previously been consolidated for the purpose of deferring
recognition of losses.
The consequences of these fi ndings were refl ected in the current and prior year fi nancial statements, including the following:
• Upon discovery of the illegitimate payments to external collaborators, the Company recorded a non-current receivable and off-setting
allowance for doubtful accounts of the Funds (Note 12 “Allowance for doubtful accounts”)
• As an indirect consequence of these events, the Company (a) made a settlement payment to its former president during the year ended
March 31, 2013, (Note 22 “Settlement charge”), (b) has been investigated by various authorities and received various claims in connection
with various lawsuits brought against the Company (Note 35 “Subsequent events” and Note 36 “Supplemental information”) and (c) modi-
fi ed the terms of its syndicated loan due to violation of certain fi nancial covenants and incurred commission fees of ¥3,392 million recorded
in the statement of operations for the year ended March 31, 2013
In addition, certain reclassifi cations have been made in the 2013 consolidated fi nancial statements to conform to the classifi cation used
in the 2014 consolidated fi nancial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the
exchange rate of ¥103 to US$1.00, the approximate rate of exchange prevailing at March 31, 2014. The convenience translations should
not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into
U.S. dollars at this or any other rate of exchange.
75
OLYMPUS Annual Report 2014
74 OLYMPUS Annual Report 2014