Olympus 2015 Annual Report Download

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Annual Report 2015

Table of contents

  • Page 1
    Annual Report 2015

  • Page 2
    ... sites Continued development of endoscopes to evolve beyond simple viewing tools to become medical equipment for performing treatment and other procedures 65 years History of contributing to early diagnosis 70 % Share of global gastrointestinal endoscope market OLYMPUS Annual Report 2015 1

  • Page 3
    3D images provide a sense of depth perception that helps heighten surgical accuracy and improve speed. Where There's a Will , There's a Way. 3D laparoscopy surgical system Image taken using standard optical imaging (esophagus) Application of robotics technologies to next-generation medical ...

  • Page 4
    ... There's a Way. Olympus' service network offers safety and reliability anywhere in the world based on the belief that medical treatment does not stop at the doors of the hospital. Olympus' endoscopes are used for a variety of life-saving applications and The world's largest endoscope repair center...

  • Page 5
    ...the CFO Analysis of Business Results, Financial Position, and Cash Flows Risk Information Consolidated Financial Statements and Notes Independent Auditor's Report Other Financial Data 118 Olympus Group Companies 120 Corporate Information 6 OLYMPUS Annual Report 2015 OLYMPUS Annual Report 2015 7

  • Page 6
    ... surgical device field in order to expand the breadth of our product lineup to realize further growth. FLUOVIEW FVMPE-RS (Multi-photon laser scanning microscope) OmniScan SX ultrasonic phased array flaw detectors IPLEX series industrial videoscope Imaging Business Mirrorless camera market share...

  • Page 7
    ... per share (yen) Cash dividends per share (yen) Financial Indicators EBITDA margin*2 (%) Return on equity (ROE) (%) Return on assets (ROA) (%) Equity ratio (%) Price earnings ratio (PER)*5 (times) Price book-value ratio (PBR) (times) 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 Net Sales 7% UP...

  • Page 8
    ... development of society through products and solutions One Olympus Share management strategies with employees worldwide and work as a team Profitable Growth Strive for profitable growth through the complete revision of cost structures Medical R&D expenditures Capital expenditures ¥43.3 billion...

  • Page 9
    ...successful in building the foundations for future growth. Fiscal 2016 will be the first year under the new organizational structure. Not just this, but I also feel that fiscal 2016 marks the start of a new Olympus. We are currently in the process of formulating a new medium-term management plan that...

  • Page 10
    ... and ear, nose, and throat (ENT) fields, despite their potential for high growth and their compatibility with Olympus' technologies. Under the new business unit structure, we aim to accelerate investment and business development in these fields, and thereby stimulate the future growth of the Company...

  • Page 11
    ...cameras and security cameras. Strategic investments in the Imaging Business have been directed at these fields since 2014, and a number of projects are already under way. The automobile-mounted camera field is a massive market, and is also highly appealing due to the potential for cameras to be used...

  • Page 12
    ... consulting field, she assumed her current position at Mitsubishi UFJ Morgan Stanley Securities in 2014. Masahiro Nakanomyo Managing Director Barclays Securities Japan Limited Profile Mr. Nakanomyo joined The Mitsubishi Banking Corp. in 1984, where he undertook a variety of industry and corporate...

  • Page 13
    ...aging of populations in Europe, the United States, and Japan, and the resulting government movements to limit medical expenses, the trend toward choosing more affordable equipment over higher-priced, high-quality equipment can be seen in developed countries as well. The endoscope field is relatively...

  • Page 14
    ... to reduce medical expenses limits capital expenditures by hospitals, it will become increasingly difficult to increase the number of facilities using Olympus products, and we therefore cannot hope to expand our business purely through sales of capital products, by which I mean existing systems. For...

  • Page 15
    ... the medium-term vision, which was established together with the new management team in 2012. • Expansion of the Medical Business • Reorganization of non-core business domains • Restructuring of corporate governance • Reinforcement of financial position 26 OLYMPUS Annual Report 2015 27

  • Page 16
    ... States • Launch new surgical endoscopy systems, for which technologies were developed by Sony Olympus Medical Solutions Inc. during fiscal 2016, and work to expand share of surgical endoscope market • Expand lineup of THUNDERBEAT energy device products to provide support for more treatment...

  • Page 17
    ... field by developing products that are highly appealing to customers. ENT (Ear, Nose, and Throat) Business Unit Yoshihito Shimizu Olympus develops its global business based on the policy of providing a complete range of repair services to customers, no matter where in the world they are located...

  • Page 18
    ... Share of Net Sales by Region Others Medical Business Gastrointestinal Endoscopes Endoscopy systems (videoscopes, video processors, light sources, liquid crystal display (LCD) panels); Peripheral equipment (image recording device, endoscope cleaning systems, sterilization systems), etc. Surgical...

  • Page 19
    ...50 Olympus' Ever-Growing Medical Business (Â¥ Billion) 600 500 400 300 200 100 0 0 2006/3 2007/3 2008/3 2009/3 Surgical devices 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 200 400 600 179.8 159.6 58.8 274.0 65.3 394.7 127.0 49.1 313.3 218.7 2013/3 2014/3 2015/3 2016/3 (Forecast) 2017/3 (Target...

  • Page 20
    ... growth in training and after-sales service demand in the Chinese market. Going forward, we plan to develop training centers in other Investments in sales and services Approx. 1,000 new hires Establishment of new repair centers 36 OLYMPUS Annual Report 2015 OLYMPUS Annual Report 2015 37

  • Page 21
    ... to the Imaging Business. Haruo Ogawa Scientific Solutions & Imaging Business, Business Management Officer Manisha Shah-Bugaj Executive Director, Marketing Surgical Energy & LESS for Olympus America Inc. Global Market Share (As estimated by the Company) Biological microscopes Others Revenue...

  • Page 22
    ... capacity of this business to an even greater degree while building the systems needed for future growth. 1. Work Closely with Customers to Expand Market Share and Maximize Earnings • Shift from product lineup-based strategies to customer group-oriented strategies We are moving away from our...

  • Page 23
    ... on mirrorless cameras Ability to design and manufacture high-performance lenses that are small and lightweight No. 2 share in mirrorless camera market in Japan High-level imaging technologies and connections with Group customers from Medical Business and Scientific Solutions Business that are...

  • Page 24
    ... Development Office to accelerate their expansion. Mirrorless Camera Sales by Region (Â¥ Billion) 50 40 30 750 500 20 250 10 0 Performance and Strategies by Business 0 2013/3 Results 2014/3 2015/3 2016/3 (Forecast) 2012/3 North America 2013/3 Europe 2014/3 2015/3 Plan Japan Asia...

  • Page 25
    ... target markets and fields 15,000 10,000 28% 2015/3 5,000 Scientific Solutions Business 0 2011/3 2012/3 2013/3 2014/3 2015/3 28% Medical field Imaging field Exploring peripheral fields that are highly compatible with the Medical Business Leveraging Imaging Business technologies to provide...

  • Page 26
    ...President Observers: Auditors, CCO Assistance with decision making Audit CSR Committee Functions divisions, business units, corporate divisions, and Group companies Corporate Governance Structure Basic Corporate Governance Policies Olympus fills the position of chairman of the Board of Directors...

  • Page 27
    ... Risk Management Department Executive groups, affiliated companies, and head office departments OLYMPUS Annual Report 2015 Task Force (activated in the event of a crisis) Risk managers of business units and head office departments Risk Management Promotion Committee 50 OLYMPUS Annual Report 2015...

  • Page 28
    ... the plan. In addition, as part of such efforts, in relation to the Executive Management Committee, we will also consider review of the Board of Directors' agenda. We will provide the Board of Directors of the Company with systematic and organized feedback from the capital market (investors and...

  • Page 29
    ...introduced stock options as well as short-term incentives that reflect one year's performance. In the future, I hope to develop a system that provides long-term incentives in reflection of progress toward medium- to long-term management targets. Response to Japan's Corporate Governance Code Olympus...

  • Page 30
    ..., Non-Olympus members, CCO Reports Requests Instructions / Advice Board of Directors Reports / Proposals President Executive Management Committee CSR Committee CCO Global Compliance Committees Members: CCO, Regional Compliance Officers Europe Americas Asia Japan * Olympus Group Corporate...

  • Page 31
    ...been very rewarding to see the way the diverse companies of Olympus have worked together to build a more unified culture of integrity throughout the world. There have been many positive changes in governance, communications, business methods, and management process. On a global scale, by cultivating...

  • Page 32
    .../Â¥100 million) 25 20 2011/3 2012/3 2013/3 2015/3 *1. Scope: Olympus Corporation and its domestic and overseas subsidiaries (excluding those of small scale) *2. Olympus reports in the following categories under the GHG Protocol. Scope 1: Greenhouse gas emissions resulting from the direct use...

  • Page 33
    .... 2015 Head of Manufacturing Group, Olympus (present) Haruo Ogawa (Date of birth: April 13, 1957) Apr. 1982 Joined the Company Jul. 2009 Deputy Division Manager Imaging Business Div., Olympus Imaging Corp. Oct. 2010 Division Manager Medical Technology R&D Div., Olympus Apr. 2011 Executive Officer...

  • Page 34
    ... Joined the Company Jun. 2005 Executive Officer Apr. 2006 Division 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...

  • Page 35
    ...) 1,038.64 - 4.3 1,530.0 10 31,540 (1,374) Financial Strategy: Improving Capital Efficiency Aiming to use capital more efficiently, return on invested capital (ROIC) was positioned as a key performance index under the medium-term vision (corporate strategic plan). This index displays the degree of...

  • Page 36
    ...Improve capital efficiency and profitability 600 560.4 415.8 Shareholder Returns Continue issuing dividend payments 400 354.4 300.0 200 0 Increase Free Cash Flow 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2017/3 (Target) 68 OLYMPUS Annual Report 2015 OLYMPUS Annual Report 2015 69

  • Page 37
    ... to support endoscopic surgery-as well as for videoscopes for use in clinical departments such as general surgery and urology, our 3D laparoscopy surgical system, and the THUNDERBEAT energy device. In the endotherapy device field, sales were up in all product 70 OLYMPUS Annual Report 2015 OLYMPUS...

  • Page 38
    ... and the occurrence of a dispute may affect earnings. (3) Risks Associated with Business Partnerships and Corporate Acquisitions 1. Olympus has formed long-term strategic partnerships related to technologies and product development with leading companies in the industry. Inability to maintain such...

  • Page 39
    ... was intentional, the Company's business activities, financial position, performance, cash flows, and stock price could be affected. Since November 2011, U.S. subsidiary Olympus Corporation of the Americas (OCA) has been under investigation by the U.S. Department of Justice in relation to potential...

  • Page 40
    ... Total non-current liabilities Total liabilities CONTINGENT LIABILITIES (Note 16) NET ASSETS (Note 15): Common stock: Authorized-1,000,000,000 shares Issued-342,671,508 shares as of March 31, 2014 and 2015 Capital surplus Retained earnings Treasury stock, at cost Total shareholders' equity Net...

  • Page 41
    ...): Interest expense, net Gain on available-for-sale securities, net Foreign currency exchange loss, net Equity in losses of affiliates, net Gain on sales of non-current assets Gain on sales of investment securities in subsidiaries and affiliates, net Bank loans-related expenses in conjunction...

  • Page 42
    ... in Net Assets Olympus Corporation and Consolidated Subsidiaries For the years ended March 31, 2014 and 2015 Millions of yen Common stock Capital surplus Retained earnings Treasury stock, at cost Total shareholders' equity Common stock Thousands of U.S. dollars (Note 1) Capital surplus Retained...

  • Page 43
    ... the accompanying consolidated financial statements. On November 8, 2011, based on the findings 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...

  • Page 44
    ... based on the estimated useful lives of the relevant assets. The effective annual rates of depreciation for the years ended March 31, 2014 and 2015 were as follows: 2014 2015 (q) Income Taxes The Company recognizes tax effects of temporary differences between the financial reporting and the tax...

  • Page 45
    ... forward foreign exchange contracts. Marketable securities and investment securities are exposed to market risk. Those securities are composed of mainly the shares of common stock of other companies with which the Group has business relationships or affiliated companies and the investment trust fund...

  • Page 46
    ... government bonds ...2) Corporate bonds ...Other marketable securities with maturities: 1) Corporate bonds ...2) Other ...Total ¥209,829 148,127 ¥ - - ¥- - ¥- - - - - 382 ¥358,338 - - - 1,269 ¥1,269 - - - - ¥- - - - - ¥- 88 OLYMPUS Annual Report 2015 OLYMPUS Annual Report 2015...

  • Page 47
    ... Acquisition cost 2015 Book value Difference 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: 1) Corporate bonds...

  • Page 48
    ... 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 changes in retirement benefit obligation during the years ended March 31, 2014 and 2015 were as follows (excluding...

  • Page 49
    ...the current and anticipated allocation to each asset class and the expected long-term returns on assets held in each category. The assumptions used in accounting for the above plans were as follows: 2014 Discount rate ...Expected rate of return on plan assets... mainly 1.5% mainly 4.0% 2015 mainly...

  • Page 50
    ...31, 2015. 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 of the new shares as...

  • Page 51
    ... System, etc. on June 27, 2013. Since November 2011, Olympus Corporation of the Americas, which is the Company's Americas regional headquarters, has been under investigation by the U.S. Department of Justice relating to the U.S. Anti-kickback Act and the U.S. False Claims Act, and is currently...

  • Page 52
    ... 31, 2015 Use Type of assets Location Millions of yen Thousands of U.S. dollars Idle properties Total Buildings and structures Aomori ¥119 ¥119 $992 $992 The Company and its consolidated subsidiaries mainly classify their assets for business use into groups based on business segment. However...

  • Page 53
    ... price for business ...Cash and cash equivalents ...Proceeds from sales of investment securities in subsidiaries, net ... ¥ 3,050 324 (1,836) (120) (6) (1,122) 290 (36) ¥ 254 $ 25,417 2,700 (15,300) (1,000) (50) (9,350) 2,417 (300) $ 2,117 102 OLYMPUS Annual Report 2015 OLYMPUS Annual Report...

  • Page 54
    ... assets recognized in the consolidated balance sheets as of March 31, 2014 and 2015 were as follows: Millions of yen 2014 2015 Thousands of U.S. dollars 2015 Operating Lease Transactions (Lessor): Future minimum lease payments under the non-cancelable operating leases having remaining terms...

  • Page 55
    ... devices and other products. The Scientific Solutions 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...

  • Page 56
    ..., profit (loss), assets and other items by reportable segment Millions of yen For the year ended March 31, 2014 Medical Scientific Solutions Imaging Others Total Adjustments Consolidated Total (4) Related information (a) Sales by destination Net sales to third parties by countries or areas grouped...

  • Page 57
    ... of a Board of Directors' meeting held on December 19, 2014. 1. Overview of transactions (1) Absorption-type company split (i) Name and description of business involved in combination Name of business Medical systems business Description of business Manufacture and sales of medical endoscopes and...

  • Page 58
    ...work for medium- to- long-term performance improvement and corporate value enhancement. (1) Date of rights granted July 13, 2015 (2) Number of stock acquisition rights to be issued Directors (excluding Outside Directors) Executive Officers Total 119 268 387 112 OLYMPUS Annual Report 2015 OLYMPUS...

  • Page 59
    Independent Auditor's Report 114 OLYMPUS Annual Report 2015 OLYMPUS Annual Report 2015 115

  • Page 60
    ...,709 90,962 2010 2011 2012 2013 2014 2015 Endoscopes Surgical Medical Endotherapy Total (Medical) Life Science Industrial Scientific Solutions Diagnostic Systems (Blood Analyzers) Total (Scientific Solutions) Note: On April 1, 2014, the Life Science & Industrial Business was renamed the...

  • Page 61
    ... of medical endoscopes and microscopes in Latin America Olympus (Thailand) Co., Ltd. (Bangkok, Thailand) Marketing, sales, and service all product lines in Thailand Olympus Corporation of Asia Pacific Limited (Hong Kong) Regional business center in Asia and Oceania Olympus Europa SE & Co. KG...

  • Page 62
    ...,540 (Excludes temporary employees, average of 1,374 for fiscal 2015) 2,790 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...

  • Page 63
    This report uses environment-friendly ink and paper. Printed in Japan 2015.08