Olympus 2015 Annual Report Download - page 43

Millions of yen
Thousands of
U.S. dollars (Note 1)
2014 2015 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes and minority interests ¥ 16,425 ¥ 8,934 $ 74,450
Adjustments to reconcile income before income taxes and minority interests
to net cash provided by operating activities:
Depreciation and amortization 36,850 41,219 343,492
Impairment loss on fixed assets (Note 19) 4,871 119 992
Amortization of goodwill 9,457 9,421 78,508
Bank loans-related expenses in conjunction with repayment made prior to due date 1,528 1,117 9,308
Loss related to the investigation under U.S. Anti-kickback Act and the related Act (Note 23) — 53,866 448,883
Penalty charges 700 — —
Loss on liquidation of business 11,591 1,820 15,167
Increase (decrease) in provision for retirement benefits 502 (914) (7,617)
Increase in prepaid pension cost (1,888) (7,501) (62,508)
Loss related to securities litigation 17,256 6,816 56,800
Increase (decrease) in provision for warranty costs 259 (3,580) (29,833)
Interest income (974) (644) (5,367)
Interest expense 11,470 8,918 74,317
Equity in losses of affiliates, net 1,457 2,791 23,258
Gain on available-for-sale securities, net (1,331) (1,121) (9,342)
Decrease in provision for loss on business liquidation — (3,679) (30,658)
Gain on sales of investment securities in subsidiaries and affiliates, net (287) — —
Decrease (increase) in accounts receivable 1,950 (13,020) (108,500)
Decrease (increase) in inventories 2,890 (7,214) (60,117)
Increase (decrease) in accounts payable 2,056 (5,740) (47,833)
(Decrease) increase in other payables (3,659) 3,772 31,433
Increase in accrued expense 2,087 7,672 63,933
Increase in non-current lease receivables (7,337) (3,772) (31,433)
Other, net 1,176 6,460 53,834
Sub-total 107,049 105,740 881,167
Interest and dividends received 1,926 2,247 18,725
Interest paid (11,911) (9,055) (75,458)
Bank loans-related expenses in conjunction with repayment made prior to due date paid (1,528) (1,117) (9,308)
Loss related to securities litigation paid (Note 21) (6,256) (4,716) (39,300)
Penalty charges paid (Note 22) (700) — —
Income taxes paid (16,192) (26,288) (219,068)
Net cash provided by operating activities 72,388 66,811 556,758
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits in time deposits (2,770) (312) (2,600)
Withdrawals from time deposits 6,096 1,002 8,350
Purchases of property, plant and equipment (27,342) (35,955) (299,625)
Purchases of intangible assets (5,242) (5,143) (42,858)
Purchases of investment securities (544) (328) (2,733)
Sales of investment securities 1,196 1,157 9,642
Net increase from sales of investments in subsidiaries resulting
in changes in scope of consolidation (Note 26) 4,854 254 2,117
Payments for loans receivable (45) — —
Proceeds from loans receivable 2,559 29 242
Payment for transfer of business — (798) (6,650)
Other, net 965 482 4,015
Net cash used in investing activities (20,273) (39,612) (330,100)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in short-term borrowings (24,714) 7,977 66,475
Proceeds from long-term borrowings 104 1,545 12,875
Repayments of long-term borrowings (90,274) (77,061) (642,175)
Redemption of bonds (35,000) — —
Proceeds from issuance of common stock 101,594 — —
Proceeds from disposal of treasury shares 11,067 — —
Payments for acquisition of treasury stock (16) (12) (100)
Dividends paid to minority shareholders (267) (46) (383)
Other, net (2,187) (2,588) (21,567)
Net cash used in financing activities (39,693) (70,185) (584,875)
Effect of exchange rate changes on cash and cash equivalents 13,140 1,451 12,092
Net increase (decrease) in cash and cash equivalents 25,562 (41,535) (346,125)
Cash and cash equivalents at beginning of year 225,782 251,344 2,094,533
Cash and cash equivalents at end of year (Note 25) ¥251,344 ¥209,809 $1,748,408
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Olympus Corporation and Consolidated Subsidiaries
For the years ended March 31, 2014 and 2015
Notes to the Consolidated Financial Statements
Olympus Corporation and Consolidated Subsidiaries
1. Summary of Significant Accounting Policies
(a) Basis of Presenting Consolidated Financial Statements
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 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 Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements” (PITF No. 18). In accordance with PITF No. 18, the accompanying consolidated financial
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 the convenience of readers outside Japan, the accompanying consolidated financial statements have been reformatted with
some expanded descriptions and translated into English from the consolidated financial statements of the Company prepared in accordance
with Japanese GAAP and filed 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 financial statements is not pre-
sented in 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 (collectively, the
“Funds”) for the acquisition transactions for three domestic subsidiaries (Altis Co., Ltd., NEWS CHEF, Inc. and Humalabo Co., Ltd., hereinaf-
ter, collectively, the “Three Domestic Subsidiaries”) and Gyrus Group PLC (Gyrus) to settle such losses.
Based on such findings 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 rec-
ognition of losses.
The consequences of these findings were reflected in the current and prior year financial 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 has been investigated by various authorities and received various claims in
connection with various lawsuits brought against the Company (Note 16 “Contingent liabilities” and Note 35 “Supplemental information”).
In addition, certain reclassifications have been made in the 2014 consolidated financial statements to conform to the classification used
in the 2015 consolidated financial 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 ¥120 to US$1.00, the approximate rate of exchange prevailing at March 31, 2015. 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.
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OLYMPUS Annual Report 2015
82 OLYMPUS Annual Report 2015