Omron 2005 Annual Report Download - page 45

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•Other Businesses
Sales of Other Businesses for this year increased 9.4 percent over
the previous year to ¥26,786 million (accounting for 4.5 percent of
consolidated net sales). Other businesses are focused primarily on
two pillars: (1) the Business Development Group’s exploration and
nurturing of new businesses, and (2) fostering and strengthening
of businesses not covered by a specific internal company.
Within existing business lines, intensified competition for com-
mercial game machines continued in the entertainment area.
However, there was a favorable trend in mobile contents, and
overall sales showed an increase over those of the previous year.
In addition, in terms of the PC peripherals business, modems and
broadband routers recorded firm sales. Also, the systems integra-
tion business also expanded smoothly against a backdrop of
business IT investment.
As for the exploration and nurturing of new businesses, in
terms of the wireless sensing business, sales of personal auto-
motive antitheft devices grew. The RFID (radio frequency identifi-
cation) business also underwent steady growth.
Operating income decreased 0.2 percent over the previous
year to ¥3,796 million, due to an increased burden from R&D
expenses.
2. Review of Operations by Region
•Japan
Sales for all business segments grew, with the exception of a
decrease in the Social Systems Business (SSB) given the transfer
of the financial equipment business to the joint venture Hitachi-
Omron Terminal Solutions, Corp. in October 2004. As a result,
there was an increase in domestic sales of 3.0 percent over the
previous year to ¥387,627 million.
•North America
Sales increased steadily for the Industrial Automation Business
(IAB), Automotive Electronics Components Business (AEC) and
Healthcare Business (HCB). The fall in income in the Electronic
Components Business (ECB) due to growth issues for digital con-
sumer electronics as well as the impact of a strong yen was cov-
ered by increased income from other business segments. As a
result, the increase in sales in North America was 1.5 percent
over the previous year to ¥65,612 million.
71.3%
67.0%
63.7%
64.3%
63.7%
10.8%
12.3%
12.7%
11.0%
10.8%
10.3%
12.2%
13.7%
14.4%
15.2%
7.6%
8.5%
9.9%
10.2%
10.3%
Sales Breakdown by Region
FY00
FY01
FY02
FY03
FY04
Japan North America Europe Asia and Other
•Europe
With the exception of the Social Systems Business (SSB), proactive
developmental operations showed good results. Supplemented by
a high euro and low yen, all business sectors saw growth in sales.
As a result, there was an increase in sales in Europe of 9.4 percent
over the previous year to ¥92,239 million.
•Asia and Other
Sales of the Electronic Components Business (ECB) and Automotive
Electronics Components Business (AEC) increased. Conversely, while
there were firm sales in China, there was also a large-scale impact
from reductions in the digital economic conditions throughout the rest
of Asia, and the Industrial Automation Business (IAB) experienced a
loss in income. As a result, sales in Asia increased 5.8 percent over
the previous year to ¥63,110 million.
Explanation of Balance Sheets
Assets, Liabilities and Shareholders’ Equity
Small, efficient and firm financial development continued, resulting
in total assets at the end of this year being reduced by 1.2 percent
over the previous year to ¥585,429 million. A primary cause of
asset reductions was a 6.4 percent decrease in current assets
over the previous year to ¥295,940 million. The reduction in cur-
rent assets was primarily caused by the following: (1) a reduction
in free cash flow of ¥21,177 million through tax and other payment
increases, resulting in a reduction of ¥14,440 million in cash and
cash equivalents (15.2 percent reduction over the previous year)
and (2) thorough inventory management, and a reduction in inven-
tory assets of ¥1,756 million (2.5 percent) over the previous year.
Conversely, growth investment for property, plant and equipment
was proactively implemented, leading to an increase of ¥3,966 mil-
lion (2.6 percent) over the previous year. Investments and other
assets increased ¥9,476 million (7.6 percent) over the previous
year due to acquisition of relay companies in Europe.
The total for current liabilities, long-term debt and minority
interests in subsidiaries at the end of the current year was
reduced by ¥6,844 million (1.2 percent) over the previous year to
¥585,429 million. In accordance with a bond redemption in
September 2004, the long-term debt scheduled to be repaid with-
in one year was reduced ¥19,533 million to ¥10,503 million, and
the current ratio increased to 182 percent from 171 percent at the
end of previous year. Also, as an aspect of long-term debt, bond
redemption was advanced as an underlying asset for stable cash
inflow, and long-term debt was reduced ¥9,375 million compared
to the end of previous year to ¥1,832 million. As a result, total
interest-bearing liabilities were reduced ¥31,928 million (56.3 per-
cent) over the previous year to ¥24,759 million. Termination and
retirement benefits were reduced ¥7,750 million (6.5 percent) in
comparison with the end of previous year to ¥111,988 million.
Shareholders’ equity increased 11.3 percent over the previous
year to ¥305,810 million. The primary cause was an increase in
“other” surplus funds of ¥24,255 million resulting from increased
net income. Treasury stock increased ¥2,943 million compared to
the end of previous year to ¥23,207 million, due to acquisitions dur-
ing that time. As a result, the ratio of shareholders’ equity to total
assets increased to 52.2% from 46.4% at the end of the previous
year, and the debt/equity ratio improved to 0.91 from 1.16 in the