Omron Corporation Annual Report 1999

FY1999 Annual Report · Omron Corporation

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ANNUAL REPORT 1999

YEAR ENDED MARCH 31, 1999

CONTENTS

Financial Highlights ........................................................................ 1
To Our Shareholders ...................................................................... 2
Management Topics:

Reform of Management Structure.............................................. 5
Board of Directors ............................................................................9
Review of Operations ................................................................... 10
Omron’s Environmental Conservation Activities ............................16
Financial Section ............................................................................18
Independent Auditors’ Report........................................................43
International Network .....................................................................44
Corporate Data...............................................................................47

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HIGHLIGHTS

OMRON Corporation and Subsidiaries
Years ended March 31, 1999, 1998 and 1997

Millions of yen
(except per share data)

Thousands of
U.S. dollars (Note 3)
(except per share data)

1999

1998

1997

1999

Net sales............................................................................................ ¥555,280
8,249
Income before income taxes and minority interests .........................
2,174
Net income ........................................................................................
Net income per share (yen and U.S. dollars, Note 1):

¥611,795
42,243
18,704

¥594,261
39,248
15,739

Basic..............................................................................................
¥ 8.3
Diluted ...........................................................................................
8.3
13.0
Cash dividends per share (yen and U.S. dollars, Note 2)..................
Total assets ....................................................................................... ¥580,586
321,258
Total shareholders’ equity .................................................................
36,696
Capital expenditures (cash basis) .....................................................
42,383
Research and development expenses ..............................................

¥71.4
69.8
13.0
¥593,129
343,066
35,896
39,914

¥60.1
58.8
13.0
¥610,930
333,102
29,956
35,188

$4,589,091
68,174
17,967

$0.07
0.07
0.11
$4,798,231
2,655,025
303,273
350,273

Notes: 1. Net income per share amounts are computed based on the Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings per Share,” which is

effective from the fiscal year ended March 31, 1998. All prior years’ data presented has been restated to conform with the provisions of SFAS No. 128.

2. Cash dividends per share are the amounts applicable to the respective year, including dividends to be paid after the end of the year.
3. The U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate at March 31, 1999, of ¥121=$1.

NET SALES
(Billion ¥)

612

564

555

525

490

INCOME BEFORE
INCOME TAXES
AND MINORITY
INTERESTS
(Billion ¥)

NET INCOME
(Billion ¥)

TOTAL ASSETS
(Billion ¥)

NET INCOME
PER SHARE
(DILUTED)
(¥)

613 611

587

593 581

69.8

58.8

54.5

49.4

8.3

’95 ’96 ’97 ’98 ’99

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TO OUR SHAREHOLDERS

Yoshio Tateisi
Representative Director and Chief Executive Officer

OMRON’S CORPORATE GOVERNANCE

As part of concrete measures undertaken in fiscal 1999,

OMRON Corporation changed the nature of its corporate

ideals in May 1998. Aiming at setting its corporate gover-

nance in place for the years ahead, OMRON will optimize its

ended March 31, 1999, OMRON initiated a share buyback pro-

gram and retired five million shares and introduced a stock

option plan for its directors to encourage them to keep growth

management philosophies to respond to the challenges occurring

in investors’ value as their chief management goal.

in the social and business environments now and in the future.

The six management philosophies we are focusing on to

BUSINESS PERFORMANCE IN FISCAL 1999

make our corporate motto of “At work for a better life, a better

world for all” a reality are as follows:

• Offer maximum satisfaction to customers

• Consistently accept challenges

• Focus on gaining shareholders’ trust

• Respect individuals

• Become a responsible corporate citizen

• Maintain corporate ethics while promoting

corporate activities

OMRON recorded an unfavorable performance in fiscal

1999, as did many other Japanese companies. Con-

solidated net sales decreased 9.2%, to ¥555,280 million. This

slump is mainly because domestic sales by the Control Com-

ponents and Systems Division, our core business division,

drastically dropped 21.5% from the previous fiscal year due to

a cooling down of the economic environment for domestic

investment in equipment. The division’s domestic sales ac-

counted for nearly half of total sales. Overseas, stalled Asian

To obtain shareholders’ trust and respond to shareholders’

economies, a deceleration of European economies from the

expectations, we must

• improve corporate values,

second half of the term due to depressed exports, and a drop

in customers’ capital investment in the United States affected

• appropriately distribute corporate profits to share-

the division’s sales achievement.

holders’, and

Operating income plummeted 74.3% from the previous fiscal

• disclose management data and achieve transparency

year, to ¥11,849 million, primarily as a result of the sales decrease

(accountability).

in the Control Components and Systems Division, which is tra-

ditionally the most profitable business unit in OMRON.

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RESULTS OF STRUCTURAL REFORMS

A ccording to its Seventh Medium-Term Management

Plan, from April 1996 to March 1999, OMRON promoted

structural reforms to create a growth-oriented structure, estab-

lish an innovative cost structure, and revitalize corporate

resources.

In fiscal 1999, the final year of the Seventh Medium-Term

Management Plan, we had set our overall management goal

as 7% return on equity (ROE) and intended to prepare a plan

for achieving a two-digit ROE in the Eighth Medium-Term

Management Plan. However, OMRON was unable to achieve

OPERATING INCOME
(Million ¥)

FY
’96

’97

’98

’99

6.9

7.5

39,239

40,905

46,032

2.1

11,849

Operating income
Ratio of operating income to net sales

this target, recording a 0.7% ROE in the fiscal year under

In fiscal 1999, within our initial budget, we created a growth-

review. Moreover, OMRON has postponed the start of its

oriented structure and strengthened our sales force. We also

Eighth Medium-Term Management Plan, which had been set to

placed high priority on sharpening our management focus on

begin in April 1999, because drawing up a new management

securing profits and reviewing major projects that affect profits.

plan was difficult amid the uncertain prospects of the Japanese

To be more growth oriented, we revised business projects

economy. Therefore, we will start fiscal 2000 with a short-term

and worked on improving our business infrastructure (by such

management plan, which covers the current fiscal year.

means as suspending the OMRON Total Fair, reviewing office

Regarding the creation of a growth-oriented structure,

integration, and cutting personnel costs and general expenses).

through

the Seventh Medium-Term Management Plan,

Furthermore, we restructured our business based on the con-

although

the business environment appeared daunting,

cepts of prioritization and focus, selling off three businesses:

OMRON executed its corporate growth strategies—a set of

OMRON Microcomputer Systems Co., Ltd. (OMS), a company

visionary concepts comprising the areas of intelligent transport

that sells personal computers and peripherals; a semiconduc-

systems (ITSs); multimedia-oriented factory automation (FA);

tor sales business in Japan; and an electronic cash register

and cyber-community-related, total healthcare, and informa-

business in Europe.

tion sensing businesses.

In line with the current business trend of prioritization and

PERSPECTIVES

focus, OMRON reviewed each operation from the viewpoints

of future growth and profit potential, identifying its strengths

and working to tighten its focus on the most important issues.

B y designating fiscal 2000 as “Year One of OMRON’s

Corporate Transformation,” the Company will further

progress with reforms in management, business, and fixed

As for establishing an innovative cost structure, we have

cost structures, leading to improved corporate value.

integrated various administrative systems to create a new

infrastructure. OMRON will continue to streamline the func-

REFORMING THE MANAGEMENT STRUCTURE

tions of its Head Office by simplifying its organizational roles,

relocating personnel for strengthening line functions, stream-

lining business offices, and constantly reviewing its balance

A s described on pages 5 to 8, the transformation of our

management structure is a prerequisite for both employ-

ees and divisional units to become self-reliant, eliminating an

sheets. Regarding revitalizing corporate resources, we will

excessive codependence among management, divisional

continue the structural reform of fixed costs but with more

units, and staff members. To not only survive but to beat the

emphasis in certain areas, as described in detail later in this

competition in the global market, we urgently need to set up

report.

corporate governance systems and execute them through

In addition, we have reorganized our sales system by re-

customer-oriented business strategies.

structuring sales channels, reinforcing direct sales promotion,

To realize this, while aiming at achieving a simple manage-

and concentrating corporate resources on the sensing business.

ment style that emphasizes speed and flexibility, we will reform

the roles of individual directors and the Board of Directors as a

whole by adding the new position of executive director, whose

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role is to concentrate on OMRON Group management and

Groupwide policies and strategies, initiate meaningful discus-

sion on corporate strategy, guide decision making, increase

shareholder trust, and improve corporate worth. Managing

officers, on the other hand, will focus on the management of

individual business units and promote business activities that

are more clearly focused on customer needs.

In addition, in April 1999 OMRON introduced an internal

company management system that allows the independent

operation of businesses to provide the optimal level of cus-

tomer satisfaction. It is our ultimate vision to turn OMRON into

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
(INCLUDING R&D EXPENSES) TRENDS
(Million ¥)
FY
’96

27.3

’97

’98

’99

27.8

29.1

32.3

143,550

165,351

178,318

179,117

Selling, general and administrative expenses, including R&D expenses
Ratio of selling, general and adminstrative expenses, including
R&D expenses, to net sales

a powerful enterprise group consisting of several different

Utilizing human resources effectively includes:

business units, each with their own highly competitive techno-

• Reducing the domestic full-time workforce by 1,000 employees,

logical strengths.

• Reducing the number of domestic contract workers (part-

time and temporary workers) by 1,000, and

REFORMING THE BUSINESS STRUCTURE

• Shifting a greater share of personnel to frontline positions.

In reforming our business structure, we will further apply the

principles of prioritization and focus to each business unit as

well as each product type, concentrating our corporate

Although we are implementing measures, including Head

Office reform, aimed at utilizing human resources more effec-

tively within two years, we will try to complete the program as

resources on them. By concentrating corporate resources on

early as possible.

selected businesses and forming relationships with outside

Although the business environment in fiscal 2000 appears

organizations, each internal company will reinforce its own

daunting, we will endeavor to avoid a second consecutive year

competitive power and improve its value, transforming the

of a decline in profits and will solidify our footing on the rev-

entire OMRON Group into a highly profitable corporation.

enue recovery path under our profit-oriented management. To

Furthermore, we will shift a considerable number of admin-

these ends, the Company will combine the power of the entire

istrative staff to frontline sales. This will help OMRON more

OMRON Group to strive to reach targets while gathering the

accurately assess the steadily changing needs of its cus-

momentum that will allow it to take the offensive in fiscal 2000.

tomers and offer them greater satisfaction.

To reach our goal of becoming a competitive, high-quality

growth company in the 21st century, we will continue to

REFORMING THE FIXED COST STRUCTURE

progress with our structural reforms.

In fiscal 1999, the ratio of selling, general and administrative

expenses, including R&D expenses, to net sales increased

to a record high of 32.3%. This rise is because sales plunged

drastically due to the deteriorated economic environment dur-

ing the

final year of OMRON’s Seventh Medium-Term

Management Plan for which the initial, aggressive expense

budget was earmarked. Therefore, OMRON has designated

the improvement of overall fixed costs, including selling, gen-

eral and administrative expenses, as its most important issue.

To improve the ratio of selling, general and administrative

expenses, including R&D expenses, to net sales to the same

level as in the past, we will continue to not only efficiently con-

trol expenses but also improve sales efficiency and reduce

personnel costs by utilizing human resources effectively.

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Management
Topics: Reform of
Management
Structure

OMRON will implement

its own sophisticated management

structure reforms so that the

creation of corporate governance

and customer-oriented business

operations can be

thoroughly accomplished.

AIMS OF REFORMING

The functions of Groupwide corporate decision

THE MANAGEMENT STRUCTURE

making and the management of individual business

OMRON is carrying out the necessary management

operations will be clearly distinguished from each

structure reforms for both employees and divisional

other. This will enable decisions to be made more

units to become self-reliant and eliminate an exces-

quickly and flexibly.

sive codependence among management and divi-

sional units and among the divisional units themselves.

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AIMS OF REFORMING THE ROLES
OF DIRECTORS AND THE BOARD
OF DIRECTORS
1) Strengthen OMRON’s corporate
governance and Groupwide
management

2) Enhance the competitive strength

of the Company in the global market
3) Increase the speed of decision mak-

ing at the management level

Directors will be able to concentrate more
on OMRON Group management by over-
seeing the Company’s business opera-
tions from a more global perspective.

Reforming the directors’ roles
We intend to clearly separate decision
making at the management level from
business implementation. Directors will
devote themselves to making OMRON’s
Group strategies and corporate policies.
The number of directors has been
reduced to 7 from 30 to better facilitate
essential discussion on Group direction
and strategies and quick decision mak-
ing at the management level.

In addition, the position of Managing

Officer has been created for directors
who will be responsible for daily busi-
ness operations.

Reinforcement of management
audit function
The functions and authority of auditors
will be strengthened so that they can
monitor and evaluate OMRON’s Board
of Directors more strictly and thor-
oughly in respect to compliance with
laws, regulations, and ethics.

ADVISORY BODIES TO THE BOARD
OF DIRECTORS
Nominating Advisory Committee
• Recommends nominees for the Board
of Directors and as managing officers

Corporate Ethics Advisory Committee
to the Board of Directors
• Expresses opinions regarding high
ethical standards in management

Corporate Management Advisory
Committee to the Board of Directors
• Consults outside experts to get manage-
ment advice from a broad perspective

AIMS OF INTRODUCING
THE INTERNAL COMPANY
MANAGEMENT SYSTEM
1) Reinforce OMRON’s ability to create

market and customer value and prac-
tice customer-oriented business
operations

2) Speed up decision making in

business operations, dispersing the
authority necessary for self-reliant
business management and business
strategy execution Companywide
OMRON is responsible for fulfilling
commitments to goals provided by its
top management before creating mar-
ket and customer value by utilizing the
advantages of each company’s exper-
tise to honor such commitments.

By introducing and establishing an
internal company management system,
the self-reliance of OMRON’s opera-
tions will be enhanced and the resultant
increase in decision-making speed and
market flexibility will be realized.

OUTLINE OF THE COMPANIES
OMRON has been reorganized into five
companies and one business develop-
ment group.

Companies
Industrial Automation Company
Electronic Components Company
Social Systems Business Company
Healthcare Company
Creative Service Company

Business Development Group
To develop areas of business that are
not regulated to operate individually, a
new supervisory group, the Business
Development Group, will be established
to provide the necessary administrative
and management support.

Industrial Automation Company
The Industrial Automation Company
manufactures and sells control compo-
nents and systems used in automatic
systems in industries. Sales by the
Control Components and Systems
Division in fiscal 1999 accounted for a

Soichi Koshio
Company President,
Industrial Automation Company

little more than 40% of OMRON’s con-
solidated net sales, and the overseas
sales ratio is approximately 50%, as
overseas sales have grown steadily.
With a 40% share of the market in
Japan, the company is a leader in con-
tributing to the development of manu-
facturing technologies. Although the
business environment appears daunting
in domestic corporate capital investment,
many business opportunities remain
overseas.

In the global market, the company
offers many services, such as those
involving laborsaving automation, envi-
ronmental protection, safety improve-
ment, and inspection-automization
solutions for highly developed produc-
tion systems. Focusing on such growth
areas, the company will reinforce mea-
sures toward systemizing and network-
ing. The company will continue to supply
customers with high-technology control
systems and promote its abundant
lineup of control components. Further-
more, OMRON is expanding its lineup
of environment-friendly and measure-
of-safety products and next-generation
programmable logic controllers (PLCs)
that will be the core of next-generation
control components and systems.
Finally, the company will be implement-
ing measures to boost its marketing
efforts by strengthening solution pro-
posal capabilities.

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Tsutomu Narita
Company President,
Electronic Components Company

Tadao Tateisi
Company President,
Social Systems Business Company

Tsunehiko Tokumasu
Company President,
Healthcare Company

Electronic Components Company
The Electronic Components Company
manufactures and sells electric and
electronic components found in such
consumer goods as home appliances
and automobiles as well as such business
equipment as telephone systems, vend-
ing machines, and office equipment.
More than 50% of the company’s
consolidated net sales are overseas.
The products of the company are indis-
pensable for companies in the Japanese
electronics industry and sales are ex-
pected to grow further.

The mission of the company is to
establish a system that can support the
development and supply of advanta-
geous electronic components globally.
The company will develop and expand
high-technology products, such as
microsensors that use semiconductor
processes, microconnectors, and multi-
function power window switches for
vehicles in the global market, aimed
at expanding businesses in the future.

Social Systems Business
Company
The Social Systems Business Company
supplies automatic equipment and sys-
tems to railway and subway companies,
banks and financial institutions, retail
companies, as well as government and
municipal offices, thereby contributing
to providing society with convenience,
amenity, and safety. Typical products
of the company are automated teller

machines (ATMs), ticket vending ma-
chines at train stations, automated
passenger gates, and traffic control
systems. In these domains, the com-
pany is a pioneer, anticipating trends
and developing new models, thus
winning customer confidence. The
company also understands such social
changes as Big Bang deregulation in
the banking industry and the advance-
ment of information technology (IT),
digitization, and networking business
opportunities. Following this, the com-
pany will provide multiple terminal
equipment that features purchasing,
ticket reservation, and issuing capabili-
ties; information retrieval functions;
conventional ATM functions; as well as
new IT-related and public transportation
system related products. At the same
time, the company will strive to
enhance profitability.

Healthcare Company
The Healthcare Company sells health-
care equipment, such as blood pres-
sure monitors, digital thermometers,
body-fat monitors, and ultrasonic elec-
tronic pulse massagers. Such products
draw on OMRON’s highly advanced
sensing technologies. Healthcare is a
growing business, as people today are
increasingly concerned with living an
active life and maintaining good health.
Amid such favorable circumstances,
the company has drawn up the follow-
ing three policies to expand business:

(1) Strengthen the power of technologi-
cal development: Through core vital
sensing technologies, the company will
provide customers with added value.
(2) Globalize: The company aims at
becoming the number one provider in
this area in the world.
(3) Establish a service business: The
company will develop software that
helps customers monitor and analyze
their health conditions in pursuit of
healthier lives. Through this healthcare
consultation service, the Company aims
to establish an integrated healthcare
business, thus maximizing customer
satisfaction.

Creative Service Company
OMRON began its outsourcing busi-
ness 10 years ago and established the
Creative Service Company subsidiary
in 1995. Since then, this subsidiary has
been providing the OMRON Group with
such outsourcing services as distribu-
tion, advertising and public relations,
personnel, information systems, admin-
istration, employee benefit schemes,
and accounting. Now, the company is
expanding its business to provide ser-
vices to companies outside of OMRON
as well. In this expansion, it will use
the technologies and know-how it has
acquired from providing in-house ser-
vices for OMRON. The outsourcing
service industry is expected to grow
significantly in the future. Through the
establishment of its outsourcing business,

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potential. The Office Automation (OA)
Major Accounts Division and the Card
Business Promotion Division implement
mechatronic original-equipment manu-
facturing (OEM) operations. The OA
Major Accounts Division provides the
peripheral equipment loaded in OA
equipment, such as sorters and bank
note recognition units. The Card Busi-
ness Promotion Division provides vari-
ous card systems, such as card readers
and ID tags, which are indispensable in
today’s card-reliant society. The Periph-
eral Equipment Division and OMRON
subsidiaries OMRON Alfa Tech (OAT)
and Sanno Consulting (SCC) carry out
PC-related business and system inte-
gration service business. The Peripheral
Equipment Division supplies modems,
terminal adapters, image scanners, and
uninterrupted power supplies. OAT and
SCC provide computer systems that
satisfy customers through software
and system construction.

Yoshifumi Kajiya
Company President,
Creative Service Company

the company aims to support OMRON’s
further growth and development.

Business Development Group
The Business Development Group con-
sists of businesses with high growth

Masato Mori
Senior General Manager,
Business Development Group

The markets and customers of each
division are changing rapidly. In response,
the group will focus on speed and
develop and strengthen the business
quickly in all divisions of the Group.

OMRON Corporate Organization Chart

Shareholders’
Meeting

Board of
Directors

Corporate Strategy Planning Div.

Corporate Auditing HQ

Industrial Automation Company

Executive Secretarial Dept.

Electronic Components Company

Representative Director
and Chief Executive Officer

Corporate Communications HQ

Board of
Corporate
Auditors

Auditors

Personnel and General Affairs HQ

Corporate Financial and Accounting HQ

Law and Intellectual Property HQ

Healthcare Company

Corporate Auditor
Staff Group

Information Management Promotion HQ

Manufacturing Administration HQ

Creative Service Company

Social Systems Business Company

Quality & Environment HQ

Corporate Research and Development HQ

Business Development Group

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BOARD OF DIRECTORS

aSeated (left to right): Nobuo Tateisi, Yoshio Tateisi
Standing (left to right): Akio Imaizumi, Tatsuro Ichihara, Norio Hirai, Hideki Masuda, Soichi Koshio

Senior Managing Officers
Tsunehiko Tokumasu
Tsutomu Narita
Tadao Tateisi
Masato Mori
Yoshifumi Kajiya

BOARD OF DIRECTORS

CORPORATE AUDITORS

Tomoaki Nishimura
Motoki Tamura
Takayuki Yamashita
Yoshio Nakano

Chairman and
Representative Director
Nobuo Tateisi

Representative Director
and Chief Executive Officer
Yoshio Tateisi

Directors and Executive
Vice Presidents
Soichi Koshio
Hideki Masuda
Norio Hirai
Tatsuro Ichihara

Director and Senior
Managing Officer
Akio Imaizumi

Managing Officers
Masaaki Sadatomo
Shingo Akechi
Hisao Sakuta
Minoru Tamura
Tsukasa Yamashita
Fujio Tokita
Yutaka Takigawa
Keiichiro Akahoshi
Fumio Tateisi
Shinya Tozawa
Kazuo Nomura
Yasuhira Minagawa
Akihiko Otani
Kuniyasu Kihira
Tsutomu Ozako
Toshio Ochiai
Masaki Kobayashi
Soichi Yukawa
Hiroki Toyama
Kojiro Tobita

(As of June 25, 1999)

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REVIEW OF OPERATIONS

Control

Components

and Systems

SALES
(Billion ¥)

314

291

275

268

248

As Component
of Net Sales

In fiscal 1999, the economic downturn accelerated in the domestic market.

In addition to stagnated consumption and structural overcapacity, the decline

in capital investment due to the worsening of corporate earnings continued in

48.2%

all industries.

Sales by the Control Components and Systems Division, which depend

mainly on the demand for production machines accompanying corporate

capital investments in the manufacturing industry, were greatly affected by

the decline in the domestic market. Overseas, North America saw a downturn in semiconductor

production and measurement control businesses, and sales there decreased from the previous

fiscal year, mainly due to stagnated Asian economies. In the term under review, total sales for

the division fell 14.7% from the previous fiscal year.

Due to the deterioration of the business environment, our customers are tending to refrain

from purchasing new equipment and are instead working on improving the productivity of their

existing facilities. In other market trends, demand is shifting toward safety and environmental

protection markets.

We will promote further proposal-type sales activities by solving problems for our customers

from the management level to the production level, providing both products and services in the

areas of computerization, standardization, and globalization to realize improvements in productivity.

’95 ’96 ’97 ’98 ’99

CS1 Programmable controllers and programming software for Windows®

FA SYSTEMS

By applying communication functions linking different kinds of networks and improving design

efficiency, CS1 realizes the function of a large-size PLC in a medium size. With the concepts of

“Windows Support Software” supporting rapid software design and development and “Flexible

Networking” flexibly responding to standard networks in OA/FA fields, we have accelerated

both factory information and standardization at manufacturing sites.

Enhancing DeviceNet

By adapting I/O Link Units (C-200HW-DRT21), Multiple I/O Terminal (GT1 series), Inverter

(3GFV), Digital Controller (E5EK), Intelligent Flag (V600), and RS 232C Interface Unit (DRT1-

232C2) for open networks, we not only enhance our product lines for DeviceNet but dedicate

ourselves to the spread of DeviceNet in Japan through promoting ODVA (Open DeviceNet

Vender Association) activities.

Next-generation programmable
controller SYSMAC-CS1

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SENSING DEVICES AND COMPONENTS

Reinforcing the lineup of universal sensors and advanced sensors products

We have newly introduced the inspection sensor, VISION SENSOR (F400), which recognizes

complex colors, and 3D DIGITAL FINE SCOPE (VC-1000), which boasts high cost performance

for high-quality, low-defect production. We developed the OPTICAL THERMOMETER (Z5R) and

PLASMA MONITOR (Z5pm) for improving semiconductor production. We also released the

DIGITAL FIBER AMPLIFIER (E3X-DA), whose product concepts are easy handling due to clear

display and simple select switches as well as high cost performance with selectable functions.

We are continuously promoting our lineup of new fiber photoelectric sensors and are research-

ing the market for using the UV POWER MONITORS in the food and PCB industries. In addi-

tion, we plan to introduce sensors for safety and environment control in the near future.

INDUSTRIAL DEVICES AND COMPONENTS

In Japan, the Energy Conservation Law was amended in April 1999. Due to the stricter controls

on energy consumption in factories and offices and the increased number of ISO 14000 certifi-

cation applications by companies, demand for products in this area is growing.

Demand for temperature controllers, digital panel meters, and electric-powered monitors is

rising as efforts to conserve energy increase.

New temperature controller NEO
With a housed power supply using the newest control integrated circuits (ICs), the NEO

has achieved 42% lower power consumption with a 22% smaller body. Furthermore, it has a

life expectancy three times longer than our conventional types.

CONSUMER AND COMMERCE (C&C) COMPONENTS

Sales of relays, switches, and connectors were stagnant during the term in review. In the field

of C&C components, the competitive edge provided through strategic manufacturing location,

product procurement, and pricing on a global scale has become increasingly important in

regard to supply-chain management issues. Products in development are microlens arrays for

liquid crystal projectors and micromachined sensors (MMSs) developed for housing liquefied

petroleum gas and city gas meters. The high-precision MMS sensor has been mass produced

for the first time by employing mounted semiconductor sensors.

Digital fiber amp E3X-DA

Temperature controller
NEO

The ultracompact and high-quality
XF2H connector and the B3B tactile
switch are used in portable IT (multi-
media) equipment.

(W) 610pt x (H) 794pt—215 x 280mm

Social Business

As Component
of Net Sales

ELECTRONIC FUND TRANSFER SYSTEMS (EFTS) AND PUBLIC

INFORMATION AND TRANSFER SYSTEMS (PITS)

SALES
(Billion ¥)

145

138 136

127 126

24.5%

In the public transportation systems market in fiscal 1999, sales slipped due

to the decline in the number of large-scale projects that had contributed to

the division’s sales growth in the previous fiscal year.

Although sales of related equipment for specified customers increased

and sales of a new U-type automatic passenger gate rose favorably, overall

divisional sales decreased.

As a new market for PITS, a boarding pass reader for the airline industry and automatic fare

collection systems for overseas markets were developed by utilizing the know-how gained in

developing OMRON’s public transportation systems. These products contributed slightly to sales.

In the traffic control systems market, sales remained approximately the same as in the previ-

ous fiscal year, despite some deliveries of large traffic control systems to locations in Kyushu

being held over to fiscal 2000. One such system has already been delivered there.

In the financial services market, sales stagnated because of capital investment restraint by

domestic banks and the unwillingness of consumer-loan businesses to open new outlets.

However, export of ATMs to other Asian countries was favorable.

In the retail systems market, although some overseas sales subsidiaries were sold, sales of

’95 ’96 ’97 ’98 ’99

maintenance services by domestic subsidiaries increased.

As a result of the preceding factors, total sales by the Social Business Division declined 1.7%

from the previous fiscal year.

Sales of multimedia ATMs, including the Cyber Gate VQ4511, an open system version of our

IX-ATM, and foreign currency exchange machines for the finance market, are expected grow.

Meanwhile, Big Bang deregulation in the banking industry has allowed for automated finance

machines, such as cash dispensers and ATMs, to be installed in such retail outlets as convenience

stores and service stations. Competition to sell and install these machines has become fierce.

In the financial OEM market, demand for lower costs and shorter delivery times has intensified

through market diversification and fierce competition. Among the options we are considering in

order to meet this demand is forming alliances with competitors.

A boarding pass reader

Traffic control systems

Cyber Gate VQ4511

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Specialty

Products

SALES
(Billion ¥)

47 47

This new fingerprint recognition system is
set to revolutionize the security market.

As Component
of Net Sales

Despite a drop in production by copy machine manufacturers, a downturn in

the price of personal computer peripheral devices, and a decline in sales of

scanners for overseas markets, sales of automotive electronic components

9.2%

were brisk in North America, while sales of compact car related products

manufactured under the new standard were favorable. These factors con-

tributed to an 8.6% growth in sales by the Specialty Products Division in

comparison with the previous fiscal year.

AUTOMOTIVE ELECTRONIC COMPONENTS

In North America, mainstay relays occupied the top share of the market, while in the domestic

market they maintained the same share as the previous fiscal year. Electric window switch

sales increased from the previous term, thanks to OMRON’s technological advantages. Keyless

entry systems maintained the top share of the market by having the advantage of being a pio-

neer in the domestic market and expanding into the North American, European, and South

Korean markets.

OFFICE AUTOMATION (OA) MAJOR ACCOUNTS

As the trend toward digitization and networking in the field of copy machines is rapidly expanding,

we are strengthening our performance in proposing solutions to customers regarding sensing

’95 ’96 ’97 ’98 ’99

components, paper-handling equipment, and image-processing units.

PERIPHERAL EQUIPMENT

Sales of our core external modems are expected to fall because of the growing popularity of

internal modems. For this reason, we will increase our marketing efforts with regard to internal

modems and mobile communications related products and focus on the sales of terminal

adapters, which are expected to continue to grow.

Due to growth in the market for security and identity-confirmation products, sales of the

FP-1000 scanner for fingerprint recognition are expected to be substantial.

This power window switch has an
antipinching function to prevent the
window from closing on arms or
other obstacles. When an obstacle
is encountered, the switch causes
the window to stop and reverse
automatically.

Keyless entry systems allow for remote lock-
ing and unlocking of vehicle doors and
trunks.

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The Healthcare Division achieved steadily rising sales in the domestic market,

thanks primarily to its offering a wide range of products that meet the needs

of consumers’ growing interest in maintaining and improving personal health.

7.9%

Sales of HBF-302 body-fat monitors, massagers, and fitness equipment

targeted at consumers’ interest in staying slim and improving overall personal

health were favorable. In the core business of blood pressure monitors and

digital thermometers, sales of the newly introduced HEM-751 digital handy

blood pressure monitor and MC-505 ear-type digital thermometers soared. Overseas, blood

pressure monitor sales, which fluctuated in every selling area, were favorable despite fierce price

competition, resulting in total sales for the division growing 7.2% from the previous fiscal year.

In the healthcare service business area, we promoted a newly created service supporting

people’s health improvement. In the midst of selective spending under sluggish consumer

consumption, we will continue to create valuable products and introduce them to the market

in hopes of raising demand. Furthermore, we will work to develop and offer new retail options in

response to changes in consumer buying patterns.

Healthcare

As Component
of Net Sales

SALES
(Billion ¥)

’95 ’96 ’97 ’98 ’99

OMRON’s body-fat monitor creates a new
alternative to the present standard for daily
health checks.

The smallest and lightest blood
pressure monitor in the world, the
HEM-751 (Upper arm automatic
inflation type)

Ear-type digital thermometers take body
temperature in seconds using advanced
infrared sensor technology.

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Open Systems

As Component
of Net Sales

The movement toward computer investment to sharpen the competitive

edge of businesses is still strong. Increasing focus is being placed on inno-

SALES
(Billion ¥)

vation and improving efficiency of in-house activities, improving customer

service, and strengthening tie-ups with business partners through the use

of IT systems. The Open Systems Division provides services, from systems

5.7%

consultation, design, and implementation to the introduction, installation,

operation, and maintainance of the systems, together with various kinds

50 50

of IT infrastructures.

Demand for PC server-centered client server (C/S) system services, such as providing sys-

tems infrastructures, introducing and installing the systems, and supplying system operation

and maintenance services, is growing.

In the systems consulting, designing, and constructing services, we established a business

group specializing in enterprise resources planning and computer telephony integration systems

in the second half of fiscal 1999 and acquired a large-scale project extending through fiscal 2000.

The Open Systems Division’s alliances with the Control Components and Systems Division

and the Social Systems Division are expanding steadily.

We sold OMRON Microcomputer Systems Co., Ltd. (OMS), of the Open Systems Division, to

Soft Bank Corporation. Consequently, OMS was excluded from OMRON’s consolidated finan-

’95 ’96 ’97 ’98 ’99

cial accounts after August 1998. OMS’s main areas of business involve the wholesale of PC-

related hardware, various peripheral devices, and software.

OMRON offers clients added value in IT systems by
combining the latest technology with comprehensive
services.

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OMRON’S ENVIRONMENTAL CONSERVATION ACTIVITIES

Europe

TELFORD
(Feb. ’98)

NUFRINGEN

(Apr. ’99)

DEN BOSCH
(Nov. ’96)

China

DALIAN
(Dec. ’98)

SHANGHAI (3 sites)
(Nov., Dec. ’98 and Feb. 99)

Japan

(16 sites)

(Nov., ’96 to Jan. 99)

SEOUL
(Mar. ’99)

TAIPEI
(Feb. ’99)

KUALA LUMPUR

(Dec. ’98)

JAKARTA

(Aug. ’97)

ASIA/PACIFIC

ACHIEVING ISO 14001 CERTIFICATION
• Recognizing that achieving ISO 14001 certification is a passport to becoming a global and
“green” corporation, OMRON sees the certification as a manifestation of its environmental
management attitude toward promoting continuous reductions in environmental burden.
• Domestically, OMRON established its promotion system in 1995 and acquired ISO 14001
certification in November 1996 and December 1996 for its Ayabe Factory and OMRON
Ichinomiya, respectively, while overseas, OMRON Manufacturing of the Netherlands B.V.
(OMN), a Dutch manufacturing company, achieved ISO 14001 certification around the same
time. In addition, to date, ISO 14001 certification has been achieved at all of OMRON’s 30
sites worldwide: 16 sites in Japan and 14 sites overseas.

• By further strengthening its efforts Groupwide, the OMRON Group is striving to introduce
many innovative ecological products, while working globally to achieve truly environment-
friendly offices and factories.

• The OMRON Group’s major environmental activities include the reduction of factory waste,
the restricted use of harmful substances, and the establishment of a product assessment
system. Such efforts have benefited the Company in a number of ways, including greater
production efficiency and an improved image among our customers.

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North America

TORONTO

(Apr. ’99)

ILLINOIS (2 sites)
(Mar. and May ’99)

DEVELOPMENT OF ENVIRONMENTALLY FRIENDLY PRODUCTS
OMRON is earnestly coping with environmental conservation utilizing the four Rs: Reject,
Reduce, Reuse, and Recycle, as keywords. (Reject the use of harmful substances, Reduce
impact on the environment, and Recycle and Reuse resources)

It is our responsibility as a member of the global community to always conserve the earth’s

limited resources.

In order to continue such environmental activities, many issues must be addressed. OMRON

will continue to develop and improve upon its technologies and products utilizing the four Rs
as its guide.

ECO-PRODUCTS CERTIFICATION SYSTEM
OMRON’s Eco-Products Certification System was introduced before the introduction of the
ISO 14021 Environmental Label Environmental Assertion by Self-Declaration, which is set to
become the global standard. OMRON’s Eco-Products Certification System is intended to pro-
mote the incorporation of environment-friendly features and functions into OMRON products
to enhance their appeal and public recognition. At the same time, this system will help promote
OMRON as a truly environmentally sound company to both its customers and the general public.
OMRON will create the standards for producing the Company’s unique eco-products and
certify those products that satisfy its in-house standards. In catalogs, pamphlets, and on the
products themselves, an eco-label designed by OMRON will be printed or affixed to identify
these eco-products.

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FIVE-YEAR SUMMARY

OMRON Corporation and Subsidiaries
Years ended March 31

Millions of yen (except per share data)

1999

1998

1997

1996

1995

Net Sales:

Control Components and Systems ........................................... ¥267,503
135,872
Social Business .........................................................................
51,338
Specialty Products ....................................................................
43,729
Healthcare .................................................................................
31,908
Open Systems ...........................................................................
24,930
Others ........................................................................................

¥313,642
138,203
47,263
40,793
50,131
21,763

¥291,277
145,172
46,533
36,388
50,187
24,704

¥275,149
125,623
38,687
31,618
38,621
15,591

¥248,023
127,382
42,465
28,790
34,672
8,368

.......................................................................................................

555,280

611,795

594,261

525,289

489,700

Costs and Expenses:

Cost of sales..............................................................................
Selling, general and administrative expenses ...........................
Research and development expenses ......................................
Interest expenses, net ...............................................................
Other, net...................................................................................

364,314
136,734
42,383
862
2,738

387,445
138,404
39,914
682
3,107

388,005
130,163
35,188
1,591
66

342,500
109,117
34,433
2,044
4,943

324,666
100,333
31,223
5,102
3,428

.......................................................................................................

547,031

569,552

555,013

493,037

464,752

Income before Income Taxes and Minority Interests ..............
Income Taxes...............................................................................
Minority Interests.........................................................................
Net Income ...................................................................................
Net Income per Share (yen, Note 1):

8,249
6,044
31
2,174

42,243
23,371
168
18,704

39,248
22,952
557
15,739

32,252
17,039
626
14,587

24,948
12,358
438
12,152

¥ 8.3
Basic .........................................................................................
8.3
Diluted ......................................................................................
Cash Dividends per Share (yen, Note 2) .....................................
13.0
Capital Expenditures (cash basis) ............................................... ¥ 36,696
580,586
Total Assets .................................................................................
321,258
Total Shareholders’ Equity .........................................................

¥71.4
69.8
13.0
¥ 35,896
593,129
343,066

¥60.1
58.8
13.0
¥ 29,956
610,930
333,102

¥55.7
54.5
13.0
¥ 34,079
612,929
318,194

¥50.8
49.4
13.0
¥ 30,954
587,414
297,035

Notes: 1. Net income per share amounts are computed based on the Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings per Share,” which is effective

from the fiscal year ended March 31, 1998. All prior years’ data presented has been restated to conform with the provisions of SFAS No. 128.

2. Cash dividends per share are the amounts applicable to the respective year, including dividends to be paid after the end of the year.

(W) 610pt x (H) 794pt—215 x 280mm

MANAGEMENT’S DISCUSSION & ANALYSIS

SALES

During fiscal 1999, ended March 31, 1999, the third and final year of the Seventh Medium-Term Manage-

ment Plan, OMRON focused on achieving three structural reforms, namely, creating a growth-oriented

structure, establishing an innovative cost structure, and revitalizing corporate resources. To these ends,

we strove to improve business performance by developing new products, strengthening our sales

force, and restructuring our various businesses.

In the course of restructuring, we sold a personal computer and peripherals sales subsidiary, our

semiconductor sales business in Japan, and our electronic cash register business in Europe.

However, during the fiscal year under review, a drastic drop in private-sector capital investment,

such as that in the domestic semiconductor industry, and sluggish capital investment overseas led to a

significant decrease in sales by the Control Components and Systems Division. Consequently, OMRON’s

consolidated net sales fell 9.2%, to ¥555,280 million ($4,589 million), from the previous fiscal year.

Increases or decreases in sales by each product group or division are as follows:

1999

(14.7)%
Control Components and Systems ........................................
(1.7)
Social Business ......................................................................
8.6
Specialty Products .................................................................
7.2
Healthcare ..............................................................................
Open Systems ........................................................................
(36.4)
Others ..................................................................................... 14.6

The composition of net sales is as follows:

1999

Control Components and Systems .......................................... 48.2%
Social Business ........................................................................ 24.5
9.2
Specialty Products ...................................................................
7.9
Healthcare ................................................................................
5.7
Open Systems ..........................................................................
4.5
Others .......................................................................................

1998

7.7%
(4.8)
1.6
12.1
(0.1)
(11.9)

1998

51.3%
22.6
7.7
6.7
8.2
3.5

1997

5.9%

15.6
20.3
15.1
29.9
58.5

1997

49.0%
24.5
7.8
6.1
8.4
4.2

CONTROL COMPONENTS AND SYSTEMS:

Divisional performance was mixed in fiscal 1999. OMRON’s major product group, the Control Compo-

nents and Systems Division, saw a 14.7% drop in net sales compared with the previous fiscal year, due to

the unfavorable business environment created by the stagnant investment conditions in Japan and down-

turns in semiconductor production, machine tool, and measurement control businesses in the United

States as well as sluggish economies in Asia. In contrast, there was a slight sales increase in Europe.

SOCIAL BUSINESS:

The Social Business Division was formed in 1998 by combining the Electronic Fund Transfer Systems

(EFTS) Division and the Public Information and Transfer Systems (PITS) Division into a single division.

Despite an increase in sales by the maintenance and service business of a domestic subsidiary, fiscal

1999 sales by the Social Business Division decreased 1.7% from the previous fiscal year, due mainly to

the decrease in the number of big projects involving public transportation infrastructure, the stagnation

in demand for electronic fund transfer systems in the Japanese market, and the selling off of some

overseas sales subsidiaries.

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SPECIALTY PRODUCTS:

In fiscal 1999, sales by the Specialty Products Division were up a solid 8.6% from the previous fiscal

year. Despite inventory adjustments by copy machine makers, downturns in the prices of peripheral

devices for personal computers and a decline in sales of scanners for overseas markets, our compact

car related products manufactured under the new standard contributed to a rise in sales of automotive

electronic components in the domestic market. Overseas, sales of automotive electronic components

were brisk, supported by the strong automotive industry in the United States.

HEALTHCARE:

The Healthcare Division achieved 7.2% sales growth in fiscal 1999 compared with the previous fiscal

year thanks to consumers’ growing interest in self-maintenance and the improvement of health as well

as steady expansion in sales achieved by offering a wide range of products that meet consumer needs.

Overseas, sales of our mainstay digital thermometers were brisk.

OPEN SYSTEMS:

Sales by the Open Systems Division in fiscal 1999 plunged 36.4% from the previous fiscal year. The

Open Systems Division focused on supplying, introducing, and installing systems infrastructure center-

ing on personal computer servers as well as expanding the operation and maintenance services it

provides to customers. On the other hand, OMRON Microcomputer Systems Co., Ltd. (OMS), was

sold to streamline the business.

Sales by foreign subsidiaries in fiscal 1999 generated 30.2% of net sales due to sluggish domestic

sales, compared with 28.0% of net sales in fiscal 1998 and 25.6% in fiscal 1997.

COSTS, EXPENSES, AND INCOME

The ratios of costs, expenses, and income to net sales are as follows:

1999

Net sales ............................................................................. 100.0%
Cost of sales .......................................................................
Gross profit .........................................................................
Selling, general and administrative expenses ....................
Research and development expenses ...............................
Interest expenses, net ........................................................
Income before income taxes and minority interests ............
Income taxes ......................................................................
Net income .........................................................................

65.6
34.4
24.6
7.6
0.1
1.5
1.1
0.4

1998

100.0%
63.3
36.7
22.6
6.5
0.1
6.9
3.8
3.1

1997

100.0%
65.3
34.7
21.9
5.9
0.3
6.6
3.9
2.6

The cost of sales declined marginally, to ¥364,314 million ($3,011 million), during the period under

review. Despite this decline, the ratio of gross profit to net sales deteriorated to 34.4% in fiscal 1999,

down from 36.7% in fiscal 1998, due to the fall in net sales.

However, selling, general and administrative expenses dropped slightly, to ¥136,734 million ($1,130

million), from the previous fiscal year, while research and development expenses increased 6.2%, to

¥42,383 million ($350 million).

(W) 610pt x (H) 794pt—215 x 280mm

In addition, interest expenses, net, increased to ¥862 million ($7 million) mainly because of higher

debt. Foreign exchange loss—net, totaled ¥2,766 million ($23 million). Income before income taxes and

minority interests plunged 80.5%, to ¥8,249 million ($68 million) from the previous fiscal year, leading

to a decrease in income taxes. Minority interests fell to ¥31 million ($0.3 million).

Net income plummeted 88.4%, to ¥2,174 million ($18 million), from the previous fiscal year, resulting

in a reduction in basic net income per share amounts, from ¥71.4 in fiscal 1998 to ¥8.3 ($0.07) in the

fiscal year under review, and a fall in diluted net income per share, from ¥69.8 to ¥8.3 ($0.07). Neverthe-

less, cash dividends per share applicable to the period were maintained at ¥13.0 ($0.11). ROA and

ROE in fiscal 1999 were 1.4% and 0.7%, respectively, compared with 7.0% and 5.5% in the previous

fiscal year.

FINANCIAL POSITION

Total current assets in fiscal 1999 decreased 2.0%, to ¥322,263 million ($2,663 million), from the previ-

ous fiscal year-end, largely because of declines in inventories and short-term investments. The inventory

turnover rate decreased to 4.2 from 4.3. Total current liabilities, dropped 10.9%, to ¥157,653 million

($1,303 million), due mainly to decreases in notes and accounts payable —trade, accrued liabilities,

income taxes payable, and the current portion of long-term debt. As a result, working capital increased

¥12,811 million, to ¥164,610 million ($1,360 million). The current ratio was 2.04, compared with 1.86 at

the previous fiscal year-end.

Cash and cash equivalents at the beginning of the year were ¥68,365 million ($565 million). Net cash

provided by operating activities declined to ¥29,583 million ($244 million). Depreciation and amortiza-

tion, the main component of cash flows from operating activities, edged up 0.9%, to ¥31,396 million

($259 million), from the previous fiscal year. Net cash used in investing activities climbed to ¥29,011

million ($240 million) and included capital expenditures of ¥36,696 million ($303 million), a rise of 2.2%.

Net cash provided by financing activities was ¥21,629 million ($179 million), mainly reflecting proceeds

from issuance of long-term debt of ¥25,413 million ($210 million). Repayments of long-term debt were

down, at ¥8,956 million ($74 million).

Reflecting the above cash outflows and inflows, cash and cash equivalents at the end of the year

were ¥88,900 million ($735 million). Total indebtedness—bank loans, current portion of long-term debt,

and long-term debt—increased 59.0% to ¥86,723 million ($717 million). Long-term debt increased to

¥56,610 million ($468 million).

Total shareholders’ equity decreased 6.4%, to ¥321,258 million ($2,655 million), from the previous

fiscal year due mainly to climbs in certain elements of accumulated other comprehensive income (loss),

such as cumulative translation adjustments and minimum pension liability adjustments. Total sharehold-

ers’ equity as a percentage of total assets fell to 55.3%, compared with 57.8% at the previous fiscal

year-end. ROE was 0.7%, compared with 5.5% at the previous fiscal year-end.

MEASURES TO ACCOMODATE THE EURO

OMRON has started shifting the currency for most of its business transactions with its subsidiaries in

Europe to the euro since April 1999. Group subsidiaries’ sales in countries that use the euro account

for approximately 10% of consolidated net sales and are expected to be greatly impacted by the intro-

duction of the euro in settling their transactions. We are aware that the impact could be fierce price

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competition caused by price equilibrium or leveling as well as the extinction of foreign exchange risks

among old local currencies in the countries using the euro when currency unification is achieved.

However, we feel it difficult to evaluate fairly and adequately how much profits will be affected by the

commercial transactions of these Group subsidiaries.

We expect that fiscal 1999 expenses related to euro currency introduction measures and other such

necessary expenses after fiscal 1999 will not be large. Up to now, and since the introduction of the

euro in January 1999, no crises have occured.

YEAR 2000 COMPLIANCE MEASURES

1. Outline

Recognizing the importance of responding to the year 2000 problem, with respect to internal computer

systems, OMRON has been implementing Companywide countermeasures since November 1996, with

each division participating in finding its own most effective solution. In addition, OMRON has launched

year 2000 countermeasures for its infrastructure and facilities.

In November 1998, OMRON established the Year 2000 Readiness Project Team (headed by

OMRON’s head of Corporate Research and Development Headquarters) to further integrate the

Company’s efforts with regard to both the products it markets and OMRON’s in-house information

infrastructure. The main responsibilities of the Year 2000 Readiness Project Team are to make sure the

necessary actions are carried out properly and in a well-balanced manner from a global perspective.

These actions are: (1) checking and inspecting concerned systems and equipment; (2) compiling and

storing the records of completed tasks; (3) communicating the necessary information to OMRON cus-

tomers and associates; and (4) handling customer and associate inquiries.

In February 1999, OMRON’s Year 2000 Readiness Project Team released to all domestic and over-

seas Group companies the Year 2000 Guidebook. This guidebook outlines plans for identifying, reno-

vating, testing, and implementing year 2000 countermeasures. The guidebook itself is divided into two

sections, one that outlines the basic rules to follow in dealing with year 2000 problems and one that

gives guidelines for preparing OMRON’s infrastructure, products, and supply chain to ensure a stable

supply of products to customers after the start of the year 2000.

2. Current Situation

The implementation of countermeasures in each field is proceeding as per the completion deadlines set

out in OMRON’s Year 2000 Guidebook. In some cases, the implementation of countermeasures may

not meet these OMRON deadlines, however, they will be in place before such a time as they could

cause serious problems.

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System Type

Target

Counter-
measures
Completion
Deadlines

Status

Management
information
systems

Divisional
systems

Production
facilities

Office
environment

R&D
environment

Companywide sales, production, End of
and accounting applications

December 1998 accepting dates past the year 2000

Completed. These systems have been

Divisional applications
and systems

Production line facilities
and equipment

Personal use PCs and
associated networks

CAD tools, design and
development equipment

End of
March 1999

since February 15, 1999.

Mostly completed. Will be completed
before problems occur.

Some countermeasures have been
delayed due to holdups at the vendor side.

End of
September 1999 dates reset after December 31, 1999.

Some items will need to have their

End of
June 1999

Location
infrastructure

Building facilities and common
equipment at business locations

End of
June 1999

Logistics center
facilities

Equipment located at
logistics centers

Vendor/
distributor
facilities

Confirming the readiness
of parts vendors and
OMRON distributors, etc.
Includes confirmation of
computer systems used
by vendors for electronic
data interchange

End of
June 1999

With respect to electronic data
interchange:
• Ensure data exchange formats conform

to industry standards

• No changes planned for nonindustry

standard data exchange formats (will use
“Windowing” for two-digit year dates)

Information regarding the current readiness of OMRON products can be found at www.omron.com/y2k/.

3. Testing

In order to confirm the efficacy of year 2000 countermeasures, in addition to the isolated testing of each

system type, we are planning and carrying out dual testing of interconnected systems. Such dual test-

ing is also being carried out with respect to important vendor systems connected to OMRON systems.

4. Countermeasure Costs

We estimate that OMRON Corporation and OMRON Group companies will spend a total of ¥2.6 billion

implementing year 2000 countermeasures with relation to products, internal information systems, and

equipment and facilities (this figure includes human resources costs and payments to outside vendors).

We had used ¥2.0 billion of this figure by March 1999.

We do not expect that the cost of implementing year 2000 countermeasures will have a large influence

on OMRON Corporation or OMRON Group profits or cash flows.

5. Risk Management

In preparation for the unlikely event that system failures do occur, through forecasting problem scenar-

ios OMRON is working on a risk management plan (scheduled to have been completed by the end of

June 1999) which will enable it to contain and respond to problems as quickly as possible. This plan,

concentrating on mission critical systems, will also enable us to ensure that if problems do occur, there

will be no stoppages and that the situation will quickly be resolved. The plan also outlines communica-

tion procedures and chain-of-command details.

This document is intended to show OMRON’s efforts in ensuring that problems arising due to the changeover in
date to the year 2000 are kept to an absolute minimum. It is not a legally binding document nor a guarantee.

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CONSOLIDATED BALANCE SHEETS

OMRON Corporation and Subsidiaries
March 31, 1999 and 1998

ASSETS

Current Assets:

Millions of yen

Thousands of
U.S. dollars (Note 2)

1999

1998*

1999

Cash and cash equivalents ................................................................................... ¥ 88,900
1,054
Short-term investments (Note 4) ...........................................................................
134,183
Notes and accounts receivable—trade .................................................................
(2,450)
Allowance for doubtful receivables .......................................................................
79,535
Inventories (Note 3) ...............................................................................................
11,336
Deferred income taxes (Note 9).............................................................................
9,705
Other current assets ..............................................................................................

¥ 68,365
6,142
138,149
(3,301)
94,981
11,798
12,613

$ 734,711
8,711
1,108,950
(20,248)
657,314
93,686
80,206

Total Current Assets .......................................................................................

322,263

328,747

2,663,330

Property, Plant and Equipment:

Land.......................................................................................................................
Buildings................................................................................................................
Machinery and equipment.....................................................................................
Construction in progress .......................................................................................

50,598
111,263
135,197
4,326

50,166
107,974
143,809
4,124

Total ..................................................................................................................

301,384

306,073

418,165
919,529
1,117,331
35,752

2,490,777

Accumulated depreciation ....................................................................................

(138,489)

(135,591)

(1,144,537)

Net Property, Plant and Equipment ...............................................................

162,895

170,482

1,346,240

Investments and Other Assets:

Investments in and advances to associates .........................................................
Investment securities (Note 4) ...............................................................................
Leasehold deposits ...............................................................................................
Deferred income taxes (Note 9).............................................................................
Other......................................................................................................................

1,770
54,114
12,035
8,834
18,675

Total Investments and Other Assets .............................................................

95,428

1,843
55,336
11,730
7,507
17,484

93,900

14,628
447,223
99,463
73,008
154,339

788,661

Total .......................................................................................................................... ¥580,586

¥593,129

$4,798,231

See notes to consolidated financial statements.

* As restated, see Notes 1 and 15

(W) 610pt x (H) 794pt—215 x 280mm

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Millions of yen

Thousands of
U.S. dollars (Note 2)

1999

1998*

1999

Bank loans (Note 5) ............................................................................................... ¥ 27,946
70,971
Notes and accounts payable—trade.....................................................................
20,924
Accrued expenses.................................................................................................
Income taxes payable ...........................................................................................
9,020
26,625
Other current liabilities...........................................................................................
2,167
Current portion of long-term debt (Note 5) ...........................................................

¥ 12,578
88,756
23,117
15,011
29,020
8,466

$ 230,959
586,537
172,926
74,545
220,041
17,909

Total Current Liabilities...................................................................................

157,653

176,948

1,302,917

Long-Term Debt (Note 5).........................................................................................

56,610

33,500

467,851

Deferred Income Taxes (Note 9) .............................................................................

908

11,335

7,504

Termination and Retirement Benefits (Note 7) ......................................................

40,076

24,913

331,207

Other Long-Term Liabilities....................................................................................

1,525

367

12,603

Minority Interests in Subsidiaries ..........................................................................

2,556

3,000

21,124

Shareholders’ Equity (Note 8):

Common stock, ¥50 par value—

Authorized: 495,000,000 shares in 1999 and

500,000,000 shares in 1998
Issued: 257,107,214 shares in 1999 and

262,107,214 shares in 1998..................................................................
Additional paid-in capital.......................................................................................
Legal reserve .........................................................................................................
Retained earnings..................................................................................................
Accumulated other comprehensive income (loss) (Note 13).................................
Treasury stock .......................................................................................................

64,079
98,702
6,811
166,020
(14,012)
(342)

64,079
98,702
6,314
174,686
(715)
—

529,579
815,719
56,289
1,372,066
(115,802)
(2,826)

Total Shareholders’ Equity .............................................................................

321,258

343,066

2,655,025

Total ......................................................................................................................... ¥580,586

¥593,129

$4,798,231

See notes to consolidated financial statements.

* As restated, see Notes 1 and 15

(W) 610pt x (H) 794pt—215 x 280mm

CONSOLIDATED STATEMENTS OF INCOME

OMRON Corporation and Subsidiaries
Years ended March 31, 1999, 1998 and 1997

Millions of yen

Thousands of
U.S. dollars (Note 2)

1999

1998*

1997

1999

Net Sales .............................................................................................. ¥555,280
Costs and Expenses:

¥611,795

¥594,261

$4,589,091

Cost of sales .....................................................................................
Selling, general and administrative expenses ..................................
Research and development expenses .............................................
Interest expenses, net (Note 5) .........................................................
Foreign exchange loss—net .............................................................
Other income, net .............................................................................

364,314
136,734
42,383
862
2,766
(28)

387,445
138,404
39,914
682
4,419
(1,312)

388,005
130,163
35,188
1,591
860
(794)

3,010,859
1,130,033
350,273
7,124
22,859
(231)

Total .............................................................................................

547,031

569,552

555,013

4,520,917

Income before Income Taxes and Minority Interests .......................

Income Taxes (Note 9) .........................................................................

Income before Minority Interests.......................................................

Minority Interests.................................................................................

8,249

6,044

2,205

42,243

23,371

18,872

168

39,248

22,952

16,296

557

68,174

49,951

18,223

256

Net Income .......................................................................................... ¥ 2,174

¥ 18,704

¥ 15,739

17,967

Net Income per Share (Note 11):

Basic .................................................................................................
Diluted ..............................................................................................
Cash Dividends per Share (Note 11)...................................................

¥ 8.3
8.3
13.0

¥71.4
69.8
13.0

¥60.1
58.8
13.0

$0.07
0.07
0.11

Yen

U.S. dollars (Note 2)

See notes to consolidated financial statements.

* As restated, see Notes 1 and 15

(W) 610pt x (H) 794pt—215 x 280mm

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

OMRON Corporation and Subsidiaries
Years ended March 31, 1999, 1998 and 1997

Millions of yen

Thousands of
U.S. dollars (Note 2)

1999

1998

1997

1999

Net Income ........................................................................................... ¥ 2,174

¥18,704

¥15,739

$ 17,967

Other Comprehensive Income (Loss), Net of Tax (Note 13):

Foreign currency translation adjustments:

Amount arising during the year on investments

in foreign entities held at year-end ..............................................

(6,082)

(2,592)

5,737

(50,264)

Reclassification adjustments for the portion realized upon

sale or liquidation of investments in foreign entities ...................

—

330

Net change in foreign currency translation adjustments

during the year.............................................................................

(6,042)

(2,592)

Minimum pension liability adjustments .............................................

(5,737)

745

5,737

2,493

(49,934)

(47,413)

Unrealized gains on available-for-sale securities:

Unrealized holding gains arising during period .............................
Less: reclassification adjustment for

(2,416)

(3,489)

(6,424)

(19,967)

gains realized in net income ........................................................

898

Net unrealized gains ......................................................................

(1,518)

Other Comprehensive Income (Loss) ................................................

(13,297)

(3,485)

(5,332)

771

(5,653)

2,577

7,421

(12,546)

(109,893)

Comprehensive Income (Loss)........................................................... ¥(11,123)

¥13,372

¥18,316

$ (91,926)

See notes to consolidated financial statements.

(W) 610pt x (H) 794pt—215 x 280mm

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

OMRON Corporation and Subsidiaries
Years ended March 31, 1999, 1998 and 1997

Millions of yen

Number of
common shares
issued

Common
stock

Additional
paid-in
capital

Accumulated
other

Legal
reserve

Retained
earnings

comprehensive Treasury
income (loss)*

stock

Balance, April 1, 1996 ....................... 262,107,214

¥64,079

¥98,702

¥5,473

Net income .....................................
Cash dividends, ¥13.0 per share ....
Transfer to legal reserve .................
Other comprehensive income ........

490

Balance, March 31, 1997 .................. 262,107,214

64,079

98,702

5,963

Net income .....................................
Cash dividends, ¥13.0 per share ....
Transfer to legal reserve .................
Other comprehensive loss..............

351

Balance, March 31, 1998 .................. 262,107,214

64,079

98,702

6,314

Net income .....................................
Cash dividends, ¥13.0 per share ....
Transfer to legal reserve .................
Other comprehensive loss..............
Treasury stock ................................
Share buyback and retirement .......

(5,000,000)

497

¥147,900
15,739
(3,408)
(490)

159,741
18,704
(3,408)
(351)

174,686
2,174
(3,372)
(497)

(6,971)

¥ 2,040

¥ —

2,577

4,617

(5,332)

(715)

—

(13,297)

(342)

Balance, March 31, 1999 .................. 257,107,214

¥64,079

¥98,702

¥6,811

¥166,020

¥(14,012) ¥ (342)

Thousands of U.S. dollars (Note 2)

Common
stock

Additional
paid-in
capital

Legal
reserve

Retained
earnings

Balance, March 31, 1998 ........................................... $529,579

$815,719

$52,182

Net income .............................................................
Cash dividends, $0.11 per share.............................
Transfer to legal reserve ..........................................
Other comprehensive loss.......................................
Treasury stock .........................................................
Share buyback and retirement ................................

4,107

$1,443,686
17,967
(27,868)
(4,107)

(57,612)

Accumulated
other
comprehensive
income (loss)

Treasury
stock

$ (5,909) $ —

(109,893)

(2,826)

Balance, March 31, 1999 ........................................... $529,579

$815,719

$56,289

$1,372,066

$(115,802) $(2,826)

See notes to consolidated financial statements.
* As restated, see Notes 1 and 15

(W) 610pt x (H) 794pt—215 x 280mm

CONSOLIDATED STATEMENTS OF CASH FLOWS

OMRON Corporation and Subsidiaries
Years ended March 31, 1999, 1998 and 1997

Millions of yen

Thousands of
U.S. dollars (Note 2)

1999

1998

1997

1999

¥18,704

¥15,739

$ 17,967

Operating Activities:

Net income .............................................................................................. ¥ 2,174
Adjustments to reconcile net income to net

cash provided by operating activities:

Depreciation and amortization ............................................................
Loss on sales of property, plant and equipment.................................
Valuation loss on property held for sale ..............................................
Net gain on sale of short-term investments

and investment securities..................................................................
Termination and retirement benefits ...................................................
Deferred income taxes ........................................................................
Minority interests .................................................................................
Loss on sale of business entities.........................................................
Changes in assets and liabilities, net of effects of

31,396
458
—

(1,725)
4,178
(6,358)
31
286

business entities sold:

Notes and accounts receivable—trade, net ....................................
Inventories .......................................................................................
Other assets ....................................................................................
Notes and accounts payable—trade...............................................
Income taxes payable .....................................................................
Accrued expenses and other ..........................................................
Other, net.............................................................................................

2,025
10,529
5,306
(11,969)
(5,967)
(970)
189

31,129
268
—

31,234
771
2,040

(1)
2,004
(634)
168
—

(3,537)
(8,412)
(7,004)
(4,315)
(1,998)
4,425
1,289

(2,828)
4,574
(62)
557
—

(7,927)
(4,163)
(2,080)
12,000
4,711
3,232
(629)

Total adjustments ............................................................................

27,409

13,382

41,430

Net cash provided by operating activities ...................................

29,583

32,086

57,169

Investing Activities:

Proceeds from sales or maturities of short-term investments

and investment securities......................................................................
Purchase of short-term investments and investment securities ..............
Capital expenditures ...............................................................................
(Increase) decrease in leasehold deposits ..............................................
Proceeds from sales of property, plant and equipment..........................
Acquisition of minority interests ..............................................................
Proceeds from sale of business entities..................................................

26,780
(22,275)
(36,696)
(527)
1,895
(186)
1,998

21,285
(1,427)
(35,896)
5
1,335
(2,933)
—

43,671
(45,904)
(29,956)
285
2,818
(312)
—

Net cash used in investing activities ...........................................

(29,011)

(17,631)

(29,398)

Financing Activities:

Net borrowings (repayments) of short-term bank loans..........................
Proceeds from issuance of long-term debt ............................................
Repayments of long-term debt ...............................................................
Dividends paid.........................................................................................
Share buyback ........................................................................................

15,515
25,413
(8,956)
(3,372)
(6,971)

(2,864)
648
(18,013)
(3,408)
—

3,738
5,446
(43,634)
(3,407)
—

Net cash provided by (used in) financing activities .....................

21,629

(23,637)

(37,857)

259,471
3,785
—

(14,256)
34,529
(52,545)
256
2,364

16,736
87,016
43,851
(98,917)
(49,314)
(8,017)
1,562

226,521

244,488

221,322
(184,091)
(303,273)
(4,355)
15,661
(1,537)
16,513

(239,760)

128,223
210,025
(74,016)
(27,868)
(57,612)

178,752

Effect of Exchange Rate Changes on Cash

and Cash Equivalents..............................................................................

(1,666)

(1,741)

1,510

(13,769)

Net Increase (Decrease) in Cash and Cash Equivalents........................

20,535

(10,923)

(8,576)

Cash and Cash Equivalents at Beginning of the Year ...........................

68,365

79,288

87,864

169,711

565,000

Cash and Cash Equivalents at End of the Year ...................................... ¥88,900

¥68,365

¥79,288

$734,711

See notes to consolidated financial statements.

1. Summary of
Significant
Accounting
Policies

(W) 610pt x (H) 794pt—215 x 280mm

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OMRON Corporation and Subsidiaries

Basis of Financial Statements
The accompanying consolidated financial statements, stated in Japanese yen, include certain adjustments, not
recorded on the books of account, to present these statements in accordance with accounting principles
as generally accepted in the United States, except for the omission of segment information as required by the
Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise
and Related Information.” The recognition and measurement provisions of SFAS No. 115, “Accounting for
Certain Investments in Debt and Equity Securities,” were applied in the current year, retroactively to April 1,
1994, and all prior years’ financial statements have been restated. The principal adjustments include accrual of
certain expenses, accounting for termination and retirement benefits, accrual of deferred income taxes relating
to these adjustments and other temporary differences, and accounting for prior years’ stock dividends at mar-
ket value.

Certain reclassifications have been made to amounts previously reported in order to conform to 1999 classifi-

cations.

Principles of Consolidation
The consolidated financial statements include the accounts of OMRON Corporation (the “Company”) and its
subsidiaries (together the “Companies”). All significant intercompany accounts and transactions have been
eliminated. Costs in excess of the fair value of net assets acquired are amortized on a straight-line basis over
five years.

The Companies’ investments in companies in which ownership is from 20% to 50% (associates) are stated

at cost plus equity in undistributed net income or loss.

Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting prin-
ciples requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities of three months or less, including
time deposits, securities purchased with resale agreements and money market instruments.

Short-Term Investments and Investment Securities
In 1999, the Companies adopted SFAS No. 115. Under this statement, the Companies classify all their mar-
ketable debt and equity securities as available-for-sale and carry them at market value with a corresponding
recognition of the net unrealized holding gains or losses as a separate component of other comprehensive
income, net of tax, until recognized. Prior to the adoption of SFAS No. 115, marketable debt and equity securi-
ties were carried at the lower of aggregate cost or market. The Companies have restated the prior years’ con-
solidated financial statements to reflect the effects of the retroactive adoption of SFAS No. 115. A summary of
the effects of the restatement is presented in Note 15. Other investments are stated at the lower of cost or
estimated net realizable value. The cost of securities sold is determined on the average cost basis.

Inventories
Inventories are stated at the lower of cost, determined by the first-in, first-out method, or market.

Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation of property, plant and equipment has been com-
puted principally on a declining-balance method based upon the estimated useful lives of the assets.

Advertising Costs
Advertising costs are charged to earnings as incurred. Advertising expense was ¥9,822 million ($81,174 thou-
sand), ¥10,329 million and ¥8,473 million for the years ended March 31, 1999, 1998 and 1997, respectively.

Termination and Retirement Benefits
Termination and retirement benefits are accounted for in accordance with SFAS No. 87, “Employers’
Accounting for Pensions.” The Companies adopted SFAS No. 132, “Employers’ Disclosures about Pensions
and Other Postretirement Benefits,” in the year ended March 31, 1999. SFAS No. 132 revises employers’ dis-
closures about pensions and other postretirement benefit plans. SFAS No. 132 does not change the recogni-
tion and measurement of the plans, and does not affect the Companies’ consolidated financial position and
results of operations. All prior years’ disclosures have been restated to conform with the provisions of SFAS

(W) 610pt x (H) 794pt—215 x 280mm

No. 132. Provision for termination and retirement benefits includes those for directors and corporate auditors
of the Company.

Stock Purchase Plan
In June 1998, the Company introduced stock-based compensation plans under which stock options are
granted to directors to purchase shares of common stock at a price not less than market price at the date of
grant. Pursuant to SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company has elected to
account for its stock option plan under APB Opinion No. 25, “Accounting for Stock Issued to Employees.”
Accordingly, no compensation cost has been recognized for this plan. Compensation cost for the plan deter-
mined based on the fair value of the options at the grant date consistent with SFAS No. 123 was immaterial.

Income Taxes
Deferred income taxes reflect the tax consequences on future years of differences between the tax bases
of assets and liabilities and their financial reporting amounts. Future tax benefits, such as net operating loss
carryforwards, are recognized to the extent that such benefits are more likely than not to be realized. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.

Derivatives
Currency derivatives (foreign exchange forward contracts and currency option contracts) are used to manage
currency risk. Gains and losses on hedges of existing assets or liabilities denominated in foreign currencies are
recognized in income currently, as are the offsetting foreign exchange losses and gains on the items hedged.
Gains and losses related to qualifying hedges of firm commitments denominated in foreign currencies are
deferred and are recognized as adjustments to the hedged transaction when such transaction occurs.
Derivative contracts that do not qualify as hedges are marked to market with the related gains and losses
included in Foreign exchange loss—net in the consolidated statements of income.

Interest rate swaps are used to manage exposure to fluctuations in interest rates arising from the
Companies’ existing debt. The amounts receivable or payable under interest rate swap agreements are recog-
nized as adjustments to interest expenses.

Cash Dividends
Cash dividends are reflected in the consolidated financial statements at proposed amounts in the years to
which they are applicable, even though payment is not approved by shareholders until the annual general
meeting of shareholders held early in the following fiscal year. Resulting dividends payable are included in
Other current liabilities in the consolidated balance sheets.

Comprehensive Income
The Companies adopted SFAS No. 130, “Reporting Comprehensive Income,” from the year beginning April 1,
1998. Comprehensive income consists of net income, foreign currency translation adjustments, minimum pen-
sion liability adjustments and unrealized gains and losses on available-for-sale securities, and is presented in
the consolidated statements of comprehensive income. SFAS No. 130 requires only additional disclosures in
the consolidated financial statements and does not affect the Companies’ financial position and results of
operations. All prior years’ consolidated financial statements have been reclassified to conform with the provi-
sions of SFAS No. 130.

Nature of Operations
The Company is a multinational manufacturer of automation components, equipment and systems with
advanced computer, communications and control technologies. The Company conducts business in over 30
countries around the world and strategically manages its worldwide operations through five regional manage-
ment centers: Japan, North America, Europe, Asia-Pacific and China. Products, classified by type and market,
are organized into five principal business units, as described below.

Control Components and Systems include a wide range of products, including sensors, relays, switches,
printed circuit boards and computer systems for factory automation. These products are primarily used by
manufacturers of electronic and high-technology equipment with certain products aimed at the consumer
and industrial markets.

Social Business encompasses the production and sale of automated teller machines, card authorization
terminals, point-of-sale systems and card readers for both domestic and overseas markets. Passing gates and
automated ticket machines as well as electronic panels and terminal displays for traffic information and moni-
toring purposes are also produced for the domestic market.

(W) 610pt x (H) 794pt—215 x 280mm

Specialty Products include the production of automotive electronic components for use by the automotive
industry and high-technology electronic components and equipment directed at the office automation industries.
Healthcare includes blood pressure monitors, nebulizers and infrared therapy devices aimed at both the

consumer and institutional markets.

Open Systems supply network and personal computer systems to institutional and individual consumers.

New Accounting Standards
In June 1998, the FASB issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.”
SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities.
SFAS No. 133 requires that an entity recognizes all derivatives as either assets or liabilities in the balance
sheet and measures these instruments at fair market value. Changes in the fair market value of derivatives are
recorded each period. The Companies will adopt SFAS No. 133 for the year beginning April 1, 2000. The effect
on the Companies’ consolidated financial statements of adopting SFAS No. 133 has not been determined. In
March 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-1,
“Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” This SOP 98-1
which is effective for financial statements for fiscal years beginning after December 15, 1998 provides guid-
ance on accounting for the costs of computer software developed or obtained to solely meet the entities’ inter-
nal use. The Companies are in the process of evaluating the effect of SOP 98-1.

2. Translation into
United States
Dollars

The consolidated financial statements are stated in Japanese yen, the currency of the country in which the
Company is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts
are included solely for convenience of the readers and have been made at the rate of ¥121 to $1, the approxi-
mate free rate of exchange at March 31, 1999. Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S. dollars at the above or any other rate.

3. Inventories

Inventories at March 31, 1999 and 1998 consisted of:

Finished products ......................................................................................... ¥47,653
14,107
Work-in-process ...........................................................................................
17,775
Materials and supplies ..................................................................................

¥56,665
17,707
20,609

$393,826
116,587
146,901

Total ...................................................................................................... ¥79,535

¥94,981

$657,314

Millions of yen

Thousands of
U.S. dollars

1999

1998

1999

4. Short-Term

Investments and
Investment
Securities

Cost, gross unrealized holding gains and losses and fair value of securities, excluding equity securities with no
public market value, by major security type at March 31 were as follows:

Millions of yen

1999

1998

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value

Cost

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value

Cost

Short-term investments:

Debt securities .................. ¥
Equity securities ................

20
722

Total short-term

investments .........................

742

Marketable investment

securities:

399

— ¥ — ¥

20
1,034

¥ 3,913 ¥ — ¥ — ¥ 3,913
2,229

1,442

854

(67)

(87)

1,054

4,767

1,442

(67)

6,142

Debt securities ..................
Equity securities ................

11
39,070

—
16,562

—
(6,328)

11
49,304

25
39,447

—
17,675

—
(5,584)

25
51,538

Total marketable investment
securities ............................

39,081

16,562

(6,328)

49,315

39,472

17,675

(5,584)

51,563

Total .............................. ¥39,823

¥16,961

¥(6,415) ¥50,369

¥44,239 ¥19,117 ¥(5,651) ¥57,705

(W) 610pt x (H) 794pt—215 x 280mm

Thousands of U.S. dollars

1999

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value

Cost

165 $

— $

5,967

6,132

3,298

(719)

165
8,546

8,711

Short-term investments:

Debt securities.................. $
Equity securities ...............

Total short-term investments..

Marketable investment

securities:

Debt securities..................
91
Equity securities ............... 322,893

—
136,876

—

91
(52,298) 407,471

Total marketable

investment securities ......... 322,984

136,876

(52,298) 407,562

Total .............................. $329,116 $140,174 $(53,017) $416,173

Net unrealized holding gains on available-for-sale securities, net of related taxes, decreased by ¥1,518 mil-
lion ($12,545 thousand) and ¥3,485 million for the years ended March 31, 1999 and 1998, respectively. Debt
securities classified as available-for-sale investment securities mature in various amounts through 2001.

Proceeds from sales of available-for-sale securities were ¥26,478 million ($218,826 thousand), ¥21,160 mil-

lion and ¥43,671 million for the years ended March 31, 1999, 1998 and 1997, respectively.

Gross realized gains on those sales were ¥3,001 million ($24,802 thousand) and ¥2,828 million for the years

ended March 31, 1999 and 1997, respectively, and were not material for the year ended March 31, 1998.

Gross realized losses were ¥1,275 million ($10,537 thousand) and ¥1,255 million for the years ended March

31, 1999 and 1997, respectively, and were not material for the year ended March 31, 1998.

5. Bank Loans and
Long-Term Debt

The weighted average annual interest rates of short-term bank loans at March 31, 1999 and 1998 were 2.5%
and 5.2%, respectively.

Long-term debt at March 31, 1999 and 1998 consisted of the following:

Millions of yen

Thousands of
U.S. dollars

1999

1998

1999

Unsecured debt:

Convertible bonds at 1.7%, due 2004 ...................................................... ¥29,741

¥29,741

$245,793

Notes:

Loans from banks and other financial institutions,

generally at 0.6% to 6.0%, due serially through 2004............................
Other .............................................................................................................

28,794
242

11,615
610

Total ......................................................................................................

58,777

41,966

Less portion due within one year ..................................................................

2,167

8,466

237,967
2,000

485,760

17,909

Long-term debt, less current portion ............................................................ ¥56,610

¥33,500

$467,851

The annual maturities of long-term debt outstanding at March 31, 1999 were as follows:

Years ending March 31,

Millions of yen

2000 ............................................................................................................................
2001 ............................................................................................................................
2002 ............................................................................................................................
2003 ............................................................................................................................
2004 ............................................................................................................................
2005 and thereafter.....................................................................................................

¥ 2,167
694
25,551
181
13
30,171

Total ........................................................................................................................

¥58,777

Thousands of
U.S. dollars

$ 17,909
5,736
211,165
1,496
107
249,347

$485,760

(W) 610pt x (H) 794pt—215 x 280mm

The convertible bonds may be purchased at any time by the Company or its subsidiaries principally at any
price in the open market or otherwise and may be redeemed at the Company’s option prior to maturity. The
convertible bonds are redeemable, in whole or in part, beginning October 1997 at 106% of face value,
decreasing 1% per year.

The number of contingently issuable shares of common stock related to the convertible bonds as of March

31, 1999 was 10,028,661 shares.

The conversion price per share at March 31, 1999 was ¥2,965 ($24.51), subject to antidilutive provisions.
As is customary in Japan, additional security must be given if requested by a lending bank, and banks have
the right to offset cash deposited with them against any debt or obligation that becomes due and, in case of
default and certain other specified events, against all debt payable to the banks. The Companies have never
received any such requests.

As is customary in Japan, the Company and domestic subsidiaries maintain deposit balances with banks with
which they have short- or long-term borrowings. Such deposit balances are not legally or contractually
restricted as to withdrawal.

Total interest cost incurred and charged to expense for the years ended March 31, 1999, 1998 and 1997

amounted to ¥2,518 million ($20,810 thousand), ¥2,412 million and ¥3,557 million, respectively.

The Companies have operating lease agreements primarily involving offices and equipment for varying periods.
Leases that expire generally are expected to be renewed or replaced by other leases. At March 31, 1999, future
minimum rental payments applicable to noncancelable leases having initial or remaining noncancelable lease
terms in excess of one year were as follows:

Years ending March 31,

Millions of yen

Thousands of
U.S. dollars

¥1,909
1,703
804
738
606
2,426

Total ........................................................................................................................

¥8,186

$15,777
14,074
6,645
6,099
5,008
20,050

$67,653

Rental expense amounted to ¥15,193 million ($125,562 thousand), ¥13,917 million and ¥11,105 million for the

years ended March 31, 1999, 1998 and 1997, respectively.

Since December 1997, the Company has entered into an agreement with an outside service organization for
outsourcing computer services. The contract requires an annual service fee of ¥4,460 million ($36,860 thou-
sand) for the year ending March 31, 1999. The annual service fee will gradually decrease each year during the
initial contract term of 10 years to ¥3,769 million for 2008. The contract is cancelable subject to a penalty of 15%
of aggregate service fees payable for the remaining term of the contract.

The Company and its domestic subsidiaries sponsor termination and retirement benefit plans which cover
substantially all domestic employees. Benefits are based on the employee’s years of service, with some plans
considering compensation and certain other factors. If the termination is involuntary, the employee is usually
entitled to greater payments than in the case of voluntary termination.

The Company and its domestic subsidiaries fund a portion of the obligations under these plans. The general
funding policy is to contribute amounts computed in accordance with actuarial methods acceptable under
Japanese tax law. The Company and substantially all domestic subsidiaries have a contributory termination
and retirement plan which is interrelated with the Japanese government social welfare program and consists of
a basic portion requiring employee and employer contributions plus an additional portion established by the
employers.

Periodic pension benefits required under the basic portions, prescribed by the Japanese Ministry of Health
and Welfare, commence at age 60 and continue until the death of the surviving spouse. Benefits under the
additional portion are usually paid in a lump sum at the earlier of termination or retirement, although periodic
payments are available under certain conditions.

6. Leases

7. Termination and

Retirement
Benefits

(W) 610pt x (H) 794pt—215 x 280mm

The following table is the reconciliation of beginning and ending balances of the benefit obligations and the

fair value of the plan assets at March 31:

Millions of yen

Thousands of
U.S. dollars

1999

1998

1999

Change in benefit obligations:

Benefit obligations at beginning of year............................................... ¥154,614
10,227
Service cost .........................................................................................
5,411
Interest cost .........................................................................................
1,030
Plan amendments ................................................................................
10,653
Actuarial gains and losses ...................................................................
(1,468)
Benefits paid ........................................................................................

¥143,941
8,670
5,758
0
(2,496)
(1,259)

$1,277,802
84,521
44,719
8,512
88,041
(12,132)

Benefit obligation at end of year ...................................................... ¥180,467

¥154,614

$1,491,463

Change in plan assets:

Fair value of plan assets at beginning of year......................................
Actual return on plan assets ................................................................
Employers’ contributions .....................................................................
Employees’ contributions.....................................................................
Benefits paid ........................................................................................

92,927
(1,035)
6,448
1,012
(1,468)

85,316
1,556
6,324
990
(1,259)

767,992
(8,554)
53,289
8,364
(12,132)

Fair value of plan assets at end of year ........................................... ¥ 97,884

¥ 92,927

$ 808,959

Funded status ..........................................................................................
Unrecognized net actuarial loss...............................................................
Unrecognized transition obligation ..........................................................

(82,583)
58,095
1,348

(61,687)
41,122
1,618

(682,504)
480,124
11,140

Net amount recognized.................................................................... ¥ (23,140)

¥ (18,947)

$ (191,240)

Amounts recognized in the statement of

cash flows consist of:

Accrued liability .................................................................................... ¥ (38,379)
1,348
Intangible assets ..................................................................................
13,891
Accumulated other comprehensive income (gross of tax)...................

¥ (23,422)
1,618
2,857

$ (317,182)
11,140
114,802

Net amount recognized.................................................................... ¥ (23,140)

¥ (18,947)

$ (191,240)

Accumulated benefit obligation at end of year ........................................ ¥136,263

¥116,349

$1,126,141

The provisions of SFAS No. 87, “Employers’ Accounting for Pensions,” require the recognition of an addi-
tional minimum pension liability for each defined benefit plan to the extent that a plan’s accumulated benefit
obligation exceeds the fair value of plan assets and accrued pension liabilities. The net change in the minimum
pension liability is reflected as other comprehensive income, net of related deferred tax benefits. The unrecog-
nized transition obligation and the unrecognized net actuarial loss are being amortized over 15 years.

Key assumptions utilized in calculating the actuarial present value of benefit obligations are as follows:

Discount rate................................................................................................................ 3.5%
Compensation increase rate ........................................................................................ 3.6
Expected long-term rate of return on plan assets ....................................................... 3.5

4.0%
3.8
3.5

1999

1998

1997

(W) 610pt x (H) 794pt—215 x 280mm

The expense recorded for the contributory termination and retirement plan included the following compo-

nents for the years ended March 31, 1999 and 1998:

Millions of yen

Thousands of
U.S. dollars

1999

1998

1999

Service cost, less employees’ contributions................................................. ¥10,227
5,411
Interest cost on projected benefit obligation ................................................
(3,252)
Expected return on plan assets ....................................................................
1,982
Net amortization and deferral .......................................................................
(1,012)
Employees’ contributions .............................................................................

¥ 8,670
5,758
(2,938)
2,168
(990)

$ 84,521
44,719
(26,876)
16,380
(8,364)

Net expense .......................................................................................... ¥13,356

¥12,668

$110,380

The Companies also have unfunded noncontributory termination plans administered by the Companies.
These plans provide lump-sum termination benefits and are paid at the earlier of the employee’s termination or
mandatory retirement age, except for payments to directors and corporate auditors, which require approval by
the shareholders before payment. The Companies record provisions for termination benefits sufficient to state
the liability equal to the plans’ vested benefits, which exceed the plans’ accumulated benefit obligations.

The consolidated liabilities for the noncontributory termination plans as of March 31, 1999 and 1998
were ¥1,697 million ($14,025 thousand) and ¥1,488 million, respectively. The consolidated expenses for
the noncontributory termination and retirement plans for the years ended March 31, 1999, 1998 and 1997 were
¥84 million ($694 thousand), ¥146 million and ¥420 million, respectively.

The Japanese Commercial Code (the “Code”) requires at least 50% of the issue price of new shares, with the
minimum of the par value thereof, to be recorded as common stock. The portion which is to be recorded as
common stock is determined by resolution of the Board of Directors. Proceeds in excess of the amounts des-
ignated as common stock have been credited to additional paid-in capital.

Under the Code, the Company is required to record an amount at least equal to 10% of the amounts paid
as an appropriation of retained earnings, including dividends and other distributions, to be appropriated and
set aside as a legal reserve until such reserve equals 25% of the common stock. This reserve is not available
for dividends but may be used to eliminate or reduce a deficit by resolution of the shareholders or may be
transferred to common stock by resolution of the Board of Directors.

The Company may transfer portions of additional paid-in capital and legal reserve to common stock by res-
olution of the Board of Directors. The Company may also transfer portions of unappropriated retained earn-
ings, available for dividends, to common stock by resolution of the shareholders.

Under the Code, the amount legally available for dividends is based on retained earnings as recorded in the
books of the Company for Japanese financial reporting purposes. At March 31, 1999, retained earnings amounting
to ¥100,120 million ($827,438 thousand) were available for future dividends, subject to the legal reserve
requirements.

8. Shareholders’

Equity

9. Income Taxes

The provision for income taxes for the years ended March 31, 1999, 1998 and 1997 consisted of the following:

Millions of yen

Thousands of
U.S. dollars

1999

1998

1997

1999

Current income tax expense ...................................................... ¥12,426
Deferred income tax expense (benefit),

¥24,579

¥22,915

$102,694

exclusive of the following .........................................................

(8,591)

(1,305)

342

(71,000)

Change in the beginning of the year balance of

the valuation allowance for deferred tax assets .......................

(142)

(176)

(305)

(1,174)

Adjustments of deferred tax assets and liabilities

for enacted change in tax rates ................................................

2,351

273

—

19,430

Total.................................................................................... ¥ 6,044

¥23,371

¥22,952

$ 49,950

(W) 610pt x (H) 794pt—215 x 280mm

The effective income tax rates of the Companies differ from the normal Japanese statutory rates as follows

for the years ended March 31, 1999, 1998 and 1997:

1999

1998

1997

Normal Japanese statutory rates .......................................................................... 48.0%
Increase (decrease) in taxes resulting from:

51.0%

Permanently nondeductible items..................................................................... 30.2
Losses of subsidiaries for which no tax benefit was provided ......................... 10.1
Difference in subsidiaries’ tax rates ..................................................................
(18.1)
Change in the beginning of the year balance of

the valuation allowance for deferred tax assets..............................................

(1.7)
Effects of enacted change in tax rates.............................................................. 28.5
Recognition of tax credit carryforward of an overseas subsidiary.................... (28.5)
4.8
Other, net ..........................................................................................................

6.0
1.0
(6.0)

(0.4)
0.6
—
3.1

9.1
0.2
(3.7)

(0.8)
—
—
2.7

Effective tax rates.......................................................................................... 73.3%

55.3%

58.5%

The Company and its domestic subsidiaries are subject to a number of taxes based on income, which in the
aggregate resulted in a normal tax rate of approximately 48.0% in 1999 and 51.0% in 1998 and 1997.
Amendments to Japanese tax regulations were enacted into law on March 31, 1998 and 1999. As a result of
these amendments, the normal income tax rates were reduced from 51.0% to 48.0% effective April 1, 1998
and from 48.0% to 42.0% effective April 1, 1999, respectively. Deferred income tax assets and liabilities as of
March 31, 1999 and 1998 were measured at the respective newly enacted tax rates.

The approximate effects of temporary differences and tax credit and loss carryforwards that gave rise to

deferred tax balances at March 31, 1999 and 1998 were as follows:

Millions of yen

1999

1998

Thousands of
U.S. dollars

1999

Deferred
tax
assets

Deferred
tax
liabilities

Deferred
tax
assets

Deferred
tax
liabilities

Deferred
tax
assets

Deferred
tax
liabilities

Inventory valuation.......................................... ¥ 1,676
2,152
Accrued bonuses and vacations ....................
6,266
Termination and retirement benefits...............
568
Enterprise taxes ..............................................
2,522
Intercompany profits.......................................
—
Marketable securities......................................
407
Allowance for doubtful receivables.................
—
Gain on sale of land ........................................
5,834
Minimum pension liability adjustment ............
4,709
Other temporary differences...........................
5,954
Tax credit carryforwards.................................
4,311
Subsidiaries’ operating loss carryforwards ....

— ¥ 1,476
2,188
—
5,085
—
1,129
—
3,218
—
—
4,429
462
209
—
1,076
1,372
—
3,514
5,169
—
—
3,256
—

—
—
—
—
—
— 36,603
1,727
8,893
—
42,719

— $ 13,851
17,785
—
51,785
—
4,694
—
—
20,843
6,464
467
1,229
—
5,004
—
—

3,364
—
48,215
38,917
49,207
35,628

—

Subtotal ..........................................................
Valuation allowance ........................................

34,399
(4,804)

10,883
—

21,700
(2,642)

13,164
—

284,289
(39,702)

89,942
—

Total ........................................................ ¥29,595

¥10,883

¥19,058

¥13,164

$244,587

$89,942

The total valuation allowance increased by ¥2,162 million ($17,868 thousand) in 1999 and decreased by

¥1,689 million and ¥715 million in 1998 and 1997, respectively.

As of March 31, 1999, certain subsidiaries had operating loss carryforwards approximating ¥10,822 million
($89,438 thousand) available for reduction of future taxable income, most of which expire in various amounts
through 2010.

The Company has not provided for Japanese income taxes on unremitted earnings of subsidiaries to the
extent that they are believed to be indefinitely reinvested. The unremitted earnings of the foreign subsidiaries
that are considered to be indefinitely reinvested and for which Japanese income taxes have not been provided
were ¥37,175 million ($307,231 thousand) and ¥35,315 million at March 31, 1999 and 1998, respectively. It is
not practicable to estimate the amount of unrecognized deferred Japanese income taxes on these unremitted
earnings. Dividends received from domestic subsidiaries are expected to be substantially free of tax.

(W) 610pt x (H) 794pt—215 x 280mm

10. Foreign

Operations

Net sales and total assets of foreign subsidiaries for the years ended March 31, 1999, 1998 and 1997 were as
follows:

Net sales .............................................................................. ¥167,546
122,039
Total assets .........................................................................

¥171,181
143,247

¥151,992
132,714

$1,384,678
1,008,587

Millions of yen

Thousands of
U.S. dollars

1999

1998

1997

1999

11. Amounts per

The Company adopted SFAS No. 128, “Earnings per Share,” in the year ended March 31, 1998. SFAS
No. 128 establishes standards for computing and presenting net income per share and simplifies the stan-
dards for computing net income per share previously found in APB Opinion No. 15, “Earnings per Share.”
SFAS No. 128 replaces the presentation of primary net income per share with a presentation of basic net
income per share. SFAS No. 128 also requires dual presentation of basic and diluted net income per share on
the face of the statements of income for all entities with complex capital structures and requires a reconcilia-
tion of the numerator and denominator of the basic and diluted net income per share computation.

All prior years’ net income per share data presented were restated to conform with the provisions of SFAS

No. 128.

Basic net income per share has been computed by dividing net income available to common shareholders
by the weighted average number of common shares outstanding during each year. Diluted net income per
share reflects the potential dilution of all convertible bonds and has been computed on the basis that all con-
vertible bonds were converted at the beginning of the year.

A reconciliation of the numerators and denominators of the basic and diluted net income per share compu-

tation is as follows:

Millions of yen

Thousands of
U.S. dollars

1999

1998

1997

1999

Net income .................................................................................. ¥2,174

¥18,704

¥15,739

$17,967

Effect of dilutive securities:

Convertible bonds, due 2004 ..................................................

—

292

275

—

Diluted net income....................................................................... ¥2,174

¥18,996

¥16,014

$17,967

Number of shares

1999

1998

1997

Weighted average common shares outstanding ...................... 260,649,752

262,107,214

Dilutive effect of:

Convertible bonds, due 2004 ...............................................

—

10,028,661

Diluted common shares outstanding........................................ 260,649,752

272,135,875

For the year ended March 31, 1999, the assumed conversion of convertible bonds, giving effect to the incre-
mental shares and the adjustment to reduce interest expenses, was anti-dilutive and has, therefore, been
excluded from the computation.

For the year ended March 31, 1999, the assumed exercise of stock options, giving effect to the incremental

shares, was anti-dilutive and has been excluded from the computation.

Cash dividends per share are the amounts applicable to the respective year, including dividends to be paid

after the end of the year.

(W) 610pt x (H) 794pt—215 x 280mm

12. Supplemental

Information for
Cash Flows

13. Other

Comprehensive
Income (Loss)

Supplemental cash flow information for the years ended March 31, 1999, 1998 and 1997 was as follows:

Millions of yen

Thousands of
U.S. dollars

1999

1998

1997

1999

Interest paid................................................................................ ¥ 2,450
Income taxes paid ......................................................................
18,417
Noncash investing and financing activities:

¥ 2,347
25,804

¥ 3,718
18,151

$ 20,248
152,207

Liabilities assumed in connection with capital expenditures...
Exchange of investment securities:

5,559

4,547

5,602

45,942

Investment securities surrendered .....................................
Investment securities received ...........................................

—
—

(1,989)
3,197

—
—

Change in accumulated other comprehensive income (loss) by each component for the years ended March 31,
1999, 1998 and 1997 was as follows:

Millions of yen

Thousands of
U.S. dollars

1999

1998

1997

1999

Foreign currency translation adjustments:

Beginning balances ................................................................ ¥ (5,912)
(6,042)
Change for the year ................................................................

¥ (3,320)
(2,592)

¥ (9,057)
5,737

$ (48,859)
(49,934)

Ending balances .............................................................

(11,954)

(5,912)

(3,320)

(98,793)

Minimum pension liability adjustments:

Beginning balances ................................................................
Change for the year ................................................................

(1,401)
(5,737)

(2,146)
745

(4,639)
2,493

Ending balances .............................................................

(7,138)

(1,401)

(2,146)

Unrealized gains on available-for-sale securities:

Beginning balances ................................................................
Change for the year ................................................................

6,598
(1,518)

10,083
(3,485)

15,736
(5,653)

Ending balances .............................................................

5,080

6,598

10,083

(11,579)
(47,413)

(58,992)

54,529
(12,546)

41,983

Total accumulated other comprehensive income (loss):

Beginning balances ................................................................
Change for the year ................................................................

(715)
(13,297)

4,617
(5,332)

2,040
2,577

(5,909)
(109,893)

Ending balances ............................................................. ¥(14,012)

¥ (715)

¥ 4,617

$(115,802)

Tax effects allocated to each component of other comprehensive income (loss) and reclassification adjustments for the years ended

March 31, 1999, 1998 and 1997 was as follows:

1999

Tax

Millions of yen

1998

Tax

1997

Tax

Foreign currency translation adjustments:

Amount arising during the year on investments

Before-tax
amount

(expense) Net-of-tax Before-tax (expense) Net-of-tax Before-tax (expense) Net-of-tax
or benefit amount
or benefit

or benefit

amount

in foreign entities held at end of year ......................... ¥ (6,082) ¥ — ¥ (6,082) ¥(2,592) ¥ — ¥(2,592) ¥ 5,737 ¥ — ¥ 5,737

Reclassification adjustments for the portion realized

upon sale or liquidation of investments
in foreign entities ........................................................

Net change in foreign currency translation

adjustments during the year.......................................
Minimum pension liability adjustments ............................
Unrealized gains on available-for-sale securities:

Unrealized holding gains arising during period ............
Less: reclassification adjustment

—

(6,042)

(11,032) 5,295

— (6,042)
(5,737)

(2,592)
1,520

— (2,592)
745

(775)

5,737
5,088

— 5,737
2,493

(2,595)

(4,646) 2,230

(2,416)

(7,118) 3,629

(3,489)

(13,110)

6,686

(6,424)

for gains realized in net income .................................
Net unrealized gains.....................................................

771
(5,653)
Other comprehensive income (loss)..................... ¥(19,994) ¥6,697 ¥(13,297) ¥(8,183) ¥2,851 ¥(5,332) ¥ (712) ¥3,289 ¥2,577

1,726
(828)
(2,920) 1,402

(3)
(7,111) 3,626

1,573
(11,537)

898
(1,518)

4
(3,485)

(802)
5,884

(W) 610pt x (H) 794pt—215 x 280mm

Thousands of U.S. dollars

1999

Tax
(expense)
or benefit

Net-of-tax
amount

Before-tax
amount

Foreign currency translation adjustments:

Amount arising during the year on investments

in foreign entities held at end of year ...................................................................................................... $ (50,264) $

— $ (50,264)

Reclassification adjustments for the portion realized upon

sale or liquidation of investments in foreign entities ...............................................................................

330

Net change in foreign currency translation

adjustments during the year....................................................................................................................

(49,934)

—

Minimum pension liability adjustments .........................................................................................................

(91,173)

43,760

330

(49,934)

(47,413)

Unrealized gains on available-for-sale securities:

Unrealized holding gains arising during period.........................................................................................
Less: reclassification adjustment

(38,397)

18,430

(19,967)

for gains realized in net income ..............................................................................................................

14,264

(6,843)

7,421

Net unrealized gains..................................................................................................................................

(24,133)

11,587

(12,546)

Other comprehensive income (loss).................................................................................................. $(165,240) $55,347

$(109,893)

14. Financial

Instruments
and Risk
Management

Financial Instruments
The following table presents the carrying amounts and estimated fair values as of March 31, 1999 and 1998 of
the Companies’ financial instruments, both on and off the balance sheets.

Millions of yen

1999

1998

Thousands of
U.S. dollars

1999

Carrying
amount

Fair
value

Carrying
amount

Fair
value

Carrying
amount

Fair
value

Nonderivatives:

Long-term debt, including

current portion ...................................... ¥(58,777) ¥(59,301)

¥(41,966) ¥(42,170)

¥(485,760) ¥(490,091)

Derivatives:

Included in other current assets

(other current liabilities):

Options purchased .............................
Forward exchange contracts..............
Interest rate swaps .............................

—
(16)
—

—
(62)
(172)

288
(267)
—

208
(307)
(59)

—
(132)
—

—
(512)
(1,421)

The following methods and assumptions were used to estimate the fair value of each class of financial

instruments for which it is practicable to estimate that value:

Nonderivatives
(1) Cash and cash equivalents, notes and accounts receivable, bank loans and notes and accounts payable:

The carrying amounts approximate fair values.

(2) Short-term investments and investment securities (see Note 4):

The fair values are estimated based on quoted market prices or dealer quotes for marketable securities or
similar instruments. Certain equity securities included in investments have no public market value, for
which it is not practicable to estimate their fair values.

(3) Long-term debt:

For convertible bonds, the fair values are estimated based on quoted market prices. For other issues, except
capital lease obligations, the fair values are estimated using the present value of discounted future cash
flow analysis, based on the Companies’ current incremental issuing rates for similar types of arrangements.

(W) 610pt x (H) 794pt—215 x 280mm

Derivatives
The fair value of derivatives generally reflects the estimated amounts that the Companies would receive or pay
to terminate the contracts at the reporting date, thereby taking into account the current unrealized gains or losses
of open contracts. Dealer quotes are available for most of the Companies’ derivatives; otherwise, pricing or valua-
tion models are applied to current market information to estimate fair value. The Companies do not use deriva-
tives for trading purposes.
(1) Interest rate swap contracts:

The Companies enter into interest rate swap agreements to manage exposure to fluctuations in interest
rates. These agreements involve the exchange of interest obligations on fixed and floating interest rate debt
without exchange of the underlying principal amounts. The agreements generally mature at the time the
related debt matures. The differential paid or received on interest rate swap agreements is recognized as
an adjustment to interest expense. Notional amounts are used to express the volume of interest rate swap
agreements. The notional amounts do not represent cash flows and are not subject to risk of loss. In the
unlikely event that the counterparty fails to meet the terms of an interest rate swap agreement, the
Companies’ exposure is limited to the interest rate differential. Management considers the exposure to
credit risk to be minimal since the counterparties are major financial institutions.

At March 31, 1999 and 1998, the notional amounts on which the Companies had interest rate swap
agreements outstanding aggregated ¥12,000 million ($99,174 thousand) and ¥6,000 million, respectively.
The estimated fair values of interest rate swap contracts are based on the present values of discounted
future cash flow analysis.

(2) Foreign exchange forward contracts and foreign currency options:

The Companies enter into foreign exchange forward contracts and engage in the purchase and writing of
foreign currency option contracts to hedge foreign currency transactions (primarily the U.S. dollar, the
deutsche mark and other European currencies) on a continuing basis for periods consistent with their com-
mitted exposure. Some of the contracts involve the exchange of two foreign currencies, according to local
needs in foreign subsidiaries. The terms of the currency derivatives are rarely more than 10 months. The
credit exposure of foreign exchange contracts and currency purchase options are represented by the posi-
tive fair value of the contracts at the reporting date. Management considers the exposure to credit risk to
be minimal since the counterparties are major financial institutions.

The notional amounts of contracts to exchange foreign currency (forward contracts) and currency

options purchased and outstanding at March 31, 1999 and 1998 were as follows:

Millions of yen

Thousands of
U.S. dollars

1999

1998

1999

Related to receivables and future sales:

Forward contracts ............................................................................... ¥13,974
—
Options purchased ..............................................................................

¥24,867
8,885

$115,488
—

The notional amounts do not represent the amounts exchanged by the parties to derivatives and are not
a measure of the Companies’ exposure through its use of derivatives. The amounts exchanged are deter-
mined by reference to the notional amounts and the other terms of the derivatives.

The Companies hedge certain exposures to fluctuations in foreign currency exchange rates that occur
prior to conversion of foreign currency denominated monetary assets and liabilities into the functional cur-
rency. Prior to the conversion of the functional currency, these assets and liabilities are translated at the spot
rates in effect on the balance sheet date. The effects of changes in spot rates are reported in earnings and
included in Foreign exchange loss—net in the consolidated statements of income. The Company hedges
its exposure to changes in foreign exchange with forward contracts. Because monetary assets and liabili-
ties are marked to spot and recorded in earnings, forward contracts designated as hedges of the monetary
assets and liabilities are also marked to spot with the resulting gains and losses similarly recognized in
earnings. Gains and losses on forward contracts are included in Foreign exchange loss—net in the consoli-
dated statements of income and offset losses and gains on the net monetary assets and liabilities hedged.

The Companies hedge future sales denominated in foreign currencies with purchased and written cur-
rency options to reduce the effective cost of the purchased options. The premiums paid for currency
options purchased and premiums received for currency options written are included in other assets and
other liabilities, respectively, in the consolidated balance sheets and are amortized to Foreign exchange
loss—net in the consolidated statements of income over the terms of the agreements. Gains or losses on

(W) 610pt x (H) 794pt—215 x 280mm

forward exchange contracts and currency options purchased and written that do not qualify for deferral for
accounting purposes are recognized in income on a current basis and recorded in Foreign exchange loss—
net in the consolidated statements of income.

Concentration of Credit Risk
Financial instruments which potentially subject the Companies to concentrations of credit risk consist
principally of short-term cash investments and trade receivables. The Companies place their short-term cash
investments with high-credit-quality financial institutions. Concentrations of credit risk with respect to trade
receivables, as approximately 75% of total sales are concentrated in Japan, are limited due to the large number
of well-established customers and their dispersion across many industries. Bad debts have been minimal. The
Company normally requires customers to deposit with it funds to serve as security for ongoing credit sales.

Guarantees
Contingent liabilities at March 31, 1999 with respect to loans guaranteed were ¥2,681 million ($22,157 thou-
sand), of which ¥1,400 million ($11,570 thousand) are jointly and severally guaranteed with other unrelated
companies.

15. Restatement
of Financial
Statements

The Companies applied SFAS No. 115 in the current year, and the prior years’ consolidated financial state-
ments have been restated. The following table presents a summary of the effects.

Consolidated Statements of Income:

Net income (due to a change in enacted tax rates) .........................................................
Net income per share (in yen):

Millions of yen

1998

As previously
reported

As restated

¥18,300

¥18,704

Basic ............................................................................................................................
Diluted..........................................................................................................................

69.8
68.3

71.4
69.8

Consolidated Balance Sheets:

Millions of yen

1998

Short-term investments .................................................................................................. ¥ 4,767
43,245
Investment securities......................................................................................................
5,531
Deferred income taxes (liability)......................................................................................
Retained earnings...........................................................................................................
174,282
Net unrealized gains on securities included in

As previously
reported

As restated

6,142
55,336
11,335
174,686

accumulated other comprehensive income .................................................................
Shareholders’ equity.......................................................................................................

—
336,064

6,598
343,066

Consolidated Statements of Shareholders’ Equity:

Millions of yen

Net unrealized gains on securities
included in accumulated other
comprehensive income

Balance, April 1, 1996.....................................................................................................
Other comprehensive loss..........................................................................................

Balance, March 31, 1997................................................................................................
Other comprehensive loss..........................................................................................

As previously
reported

¥—
—

—
—

Balance, March 31, 1998................................................................................................

¥—

As restated

¥15,736
(5,653)

¥10,083
(3,485)

¥ 6,598

(W) 610pt x (H) 794pt—215 x 280mm

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Shareholders of OMRON Corporation

We have audited the accompanying consolidated balance sheets of OMRON Corporation and subsidiaries as of March 31,
1999 and 1998, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash
flows for each of the three years in the period ended March 31, 1999, all expressed in Japanese yen. These financial state-
ments are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reason-
able basis for our opinion.

Certain information required by Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about

Segments of an Enterprise and Related Information,” (which superseded SFAS No. 14 “Financial Reporting for Segments of
a Business Enterprise” in 1999), has not been presented in the accompanying consolidated financial statements. In our opinion,
presentation concerning operating segments and other information is required for a complete presentation of the Company’s
consolidated financial statements.

In our report dated May 18, 1998, we expressed an opinion that the consolidated financial statements as of March 31,
1998, and for the years then ended contained a departure from generally accepted accounting principles because the Com-
pany had not adopted SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” Effective April 1,
1998, as discussed in Notes 1 and 15, the Company adopted retroactively to April 1, 1994 SFAS No. 115 and restated its
prior years’ consolidated financial statements. Accordingly, our present opinion on the prior years’ financial statements, as
presented herein, is different from that expressed in our previous report.

In our opinion, except for the omission of segment information as discussed in the third paragraph, the consolidated finan-

cial statements referred to above present fairly, in all material respects, the financial position of OMRON Corporation and
subsidiaries as of March 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three
years in the period ended March 31, 1999 in conformity with accounting principles generally accepted in the United States.
Our audits also comprehended the translation of Japanese yen amounts into United States dollar amounts and, in our
opinion, such translation has been made in conformity with the basis stated in Note 2 to the consolidated financial statements.
Such United States dollar amounts are presented solely for convenience.

Osaka, Japan
May 11, 1999

(W) 610pt x (H) 794pt—215 x 280mm

INTERNATIONAL NETWORK

A S I A - P A C I F I C

REGIONAL HEADQUARTERS

OMRON Asia Pacific Pte. Ltd.
83, Clemenceau Avenue, #11-01, UE Square,
Singapore 239920, Singapore
Phone: 65-835-3011
Fax: 65-835-2711

MARKETING AND/OR MANUFACTURING
OF CONTROL COMPONENTS
AND SYSTEMS

OMRON Asia Pacific Pte. Ltd.
83, Clemenceau Avenue, #11-01, UE Square,
Singapore 239920, Singapore
Phone: 65-835-3011
Fax: 65-835-2711

––Indonesia Representative Office
W; isma Danamon Aetna Life Tower, Suite 1602,
JI Jend. Sudirman Kav. 45-46,
Jakarta 12930, Indonesia
Phone: 62-21-5770838
Fax: 62-21-5770840

––Hanoi Representative Office
6F, Vinaconex Bldg., 2 Lang Ha,
Hanoi, Socialist Republic of Vietnam
Phone: 84-4-8313121
Fax: 84-4-8313122

––Manila Representative Office
2F, Kings Court II Bldg.,
2129 Pasong Tamo St. 1231,
Makati City, Metro Manila, The Philippines
Phone: 63-2811-2831
Fax: 63-2811-2582

––India Representative Office
59 Hemkunt, Opp. Nehru Place,
New Delhi 110 048, India
Phone: 91-11-623-8431
Fax: 91-11-623-8434

C H I N E S E E C O N O M I C A R E A

REGIONAL HEADQUARTERS

OMRON (China) Group Co., Ltd.
601-9, Tower 2,
The Gateway No. 25, Canton Road,
Tsimshatsui, Kowloon, Hong Kong
Phone: 852-2375-3827
Fax: 852-2375-1475

OMRON (China) Co., Ltd.
21F, Beijing East Ocean Centre,
No. 24A Jian Guo Men Wai Da Jie,
Chao Yang District,
Beijing 100022, China
Phone: 86-10-6515-5788
Fax: 86-10-6515-5799

OMRON Electronics Sales
and Service (M) Sdn. Bhd.

2. 01, Level 2, Wisma Academy 4A,
Jalan 19/1 46300 Petaling Jaya,
Selangor, Malaysia
Phone: 60-3-754-7323
Fax: 60-3-754-6618

OMRON Electronics Co., Ltd.
20F, Rasa Tower, 555 Phaholyothin Road,
Ladyao, Chatuchak,
Bangkok 10900, Thailand
Phone: 66-2-937-0500
Fax: 66-2-937-0501

OMRON Electronics Pty. Ltd.
71 Epping Road, North Ryde,
NSW 2113, Australia
Phone: 61-2-9878-6377
Fax: 61-2-9878-6981

OMRON Electronics Ltd.
65 Boston Road, Mt. Eden,
Auckland, New Zealand
Phone: 64-9-358-4400
Fax: 64-9-358-4411

OMRON Korea Co., Ltd.
3F, New Seoul Bldg., #618-3 Shinsa-Dong
Kang Nam-ku, Seoul, South Korea
Phone: 82-2-549-2766
Fax: 82-2-517-9033

OMRON Malaysia Sdn. Bhd.
Lot 15, Jalan SS 8/4 Sungei Way,
Free Trade Zone, 47300 Petaling Jaya,
Selangor, Darul Ehsan, Malaysia
Phone: 60-3-776-1411
Fax: 60-3-777-4507

PT OMRON Manufacturing of Indonesia
Ejip Industrial Park Plot 5C, Lemahabang,
Bekasi 17550, West Java, Indonesia
Phone: 62-21-8970111
Fax: 62-21-8970120

MARKETING AND MANUFACTURING
OF AUTOMOTIVE COMPONENTS

OMRON Automotive Electronics

Korea Co., Ltd.

272-2 Kyerukri, Miyangmyon, Ansong-gun,
Kyonggi-Do, 456-840, South Korea
Phone: 82-334-677-4262
Fax: 82-334-677-4268

MARKETING AND MANUFACTURING
OF SOCIAL BUSINESS SYSTEMS

OMRON Business Systems Singapore

(Pte.) Ltd.

83, Clemenceau Avenue, #11-02, UE Square,
Singapore 239920, Singapore
Phone: 65-736-3900
Fax: 65-736-2736

OMRON Business Systems

Malaysia Sdn. Bhd.

501, Block D. Pusat Perdagangan Philoe
Damansara 1, No. 9, Jalan 16/11,
Off Jalan Damansara,
46350 Petaling Jaya, Selangor, Malaysia
Phone: 60-3-460-9119
Fax: 60-3-460-9559

OMRON Mechatronics of the

Philippines Corporation

Subic Techno Park Boton Area,
Subic Bay Freeport Zone,
2222, The Philippines
Phone: 63-47-252-1490
Fax: 63-47-252-1491

MARKETING OF HEALTHCARE
EQUIPMENT

OMRON Healthcare Singapore PTE Ltd.
83, Clemenceau Avenue, #11-02, UE Square,
Singapore 298135, Singapore
Phone: 65-736-2345
Fax: 65-736-2500

MARKETING AND/OR MANUFACTURING
OF CONTROL COMPONENTS
AND SYSTEMS

OMRON Electronics Asia Ltd.
601-9, Tower 2,
The Gateway No. 25, Canton Road,
Tsimshatsui, Kowloon, Hong Kong
Phone: 852-2375-3827
Fax: 852-2375-1475

OMRON Taiwan Electronics Inc.
6F, Home Young Bldg., No. 363,
Fu-Shing North Road, Taipei, Taiwan, R.O.C.
Phone: 886-22-715-3331
Fax: 886-22-712-6712

Shanghai OMRON Automation

System Co., Ltd.
No. 1600 Jinsui Road,
Jinqiao Export Processing Zone, Pudong,
Shanghai 201206, China
Phone: 86-21-5854-2080
Fax: 86-21-5854-2658

Shanghai OMRON Control

Components Co., Ltd.

1500 Jinsui Road,
Jinqiao Export Processing Zone,
Pudong, Shanghai 201026, China
Phone: 86-21-5854-0012
Fax: 86-21-5854-8413

OMRON (Shanghai) Co., Ltd.
No. 789 Jinji Road,
Jinqiao Export Processing Zone,
Pudong, Shanghai 201206, China
Phone: 86-21-5854-0055
Fax: 86-21-5854-0614

OTE ENGINEERING INC.
No. 9, Lane 201, Sec. 2, Nankan Road,
Lu-Chu Villege, Tao-Yuan, Taiwan, R.O.C.
Phone: 886-3-352-4442
Fax: 886-3-352-4239

YAMRON Co., Ltd.
5Fl.-1, No. 70, Min Chuan West Road,
Taipei, Taiwan, R.O.C.
Phone: 886-22-523-6158
Fax: 886-22-523-6642

(W) 610pt x (H) 794pt—215 x 280mm

RESEARCH AND DEVELOPMENT

OMRON Shanghai Computer Corporation
14F, Meike Building, 1 Tianyaoqiao Road,
Shanghai 200030, China
Phone: 86-21-6468-9626
Fax: 86-21-6468-9489

LOGISTICS

OMRON Trading (Shanghai) Co., Ltd.

Rui Jin Office

Room 1212, Rui-jin Building,
205 Mao Ming Road (South),
Shanghai 200020, China
Phone: 86-21-6473-3330
Fax: 86-21-6473-3343

South America
MARKETING AND MANUFACTURING OF
CONTROL COMPONENTS AND SYSTEMS

OMRON Eletrõnica do Brasil Ltda.
Av. Santa Catarina, 935/939 04378-300,
São Paulo-SP-Brazil
Phone: 55-11-5564-6488
Fax: 55-11-5564-7751

OMRON Componentes Eletro Eletrônicos

da Amazônia Ltda.

Av. Constantino Nery, 2800 Chapada,
69050-002-Manaus-AM-Brazil
Phone: 55-92-236-5850
Fax: 55-92-236-1356

MARKETING OF RETAIL SYSTEMS
EQUIPMENT

OMRON Business Sistemas Eletrônicos

da América Latina, Ltda.

Av. Paulista 949 12-Ander, conj. 122,
CEP 01311-100, São Paulo, Brazil
Phone: 55-11-251-0073
Fax: 55-11-251-1053

MARKETING OF SOCIAL BUSINESS
SYSTEMS

MANUFACTURING OF HEALTHCARE
EQUIPMENT

Beijing GOT Business Computer

System Co., Ltd.

8F, Yujing Building, Xueqing Road,
Haidian District, Beijing 10083, China
Phone: 86-10-6231-1985
Fax: 86-10-6231-2177

OMRON (Dalian) Co., Ltd.
No. 3 Song Jiang Road,
Dalian Economic and Technical Development
Zone, Dalian 116600, China
Phone: 86-411-761-4222
Fax: 86-411-761-6602

T H E A M E R I C A S

North America
REGIONAL HEADQUARTERS

OMRON Management Center

of America, Inc.

1300 Basswood, Suite 100,
Schaumburg, IL 60173, U.S.A.
Phone: 1-847-884-0322
Fax: 1-847-884-1866

OMRON Finance Canada, Inc.
885 Milner Avenue,
Scarborough, Ontario, M1B 5V8 Canada
Phone: 1-416-286-6465
Fax: 1-416-286-6648

MARKETING AND/OR MANUFACTURING
OF CONTROL COMPONENTS
AND SYSTEMS

OMRON Electronics Inc.
1 East Commerce Drive,
Schaumburg, IL 60173, U.S.A.
Phone: 1-847-843-7900
Fax: 1-847-843-7787

OMRON Canada Inc.
885 Milner Avenue,
Scarborough, Ontario, M1B 5V8 Canada
Phone: 1-416-286-6465
Fax: 1-416-286-6648

OMRON Manufacturing of America, Inc.
3705 Ohio Avenue,
St. Charles, IL 60174, U.S.A.
Phone: 1-630-513-0400
Fax: 1-630-513-1027

MARKETING AND/OR MANUFACTURING
OF AUTOMOTIVE COMPONENTS

OMRON Automotive Electronics Inc.

(MARKETING)
30600 Northwestern Hwy., Suite 250,
Farmington Hills, MI 48334, U.S.A.
Phone: 1-248-539-4700
Fax: 1-248-539-4710

(MANUFACTURING)
3709 Ohio Avenue,
St. Charles, IL 60174, U.S.A.
Phone: 1-630-443-6800
Fax: 1-630-443-6898

OMRON Dualtec Automotive Electronics, Inc.
2270 Bristol Circle, Oakville,
Ontario, L6H 5S3 Canada
Phone: 1-905-829-0136
Fax: 1-905-829-0432

MARKETING OF OFFICE AUTOMATION
EQUIPMENT

OMRON Office Automation Products, Inc.
3945 Freedom Circle, Suite 700,
Santa Clara, CA 95054, U.S.A.
Phone: 1-408-727-1444
Fax: 1-408-970-1149

MARKETING OF SOCIAL BUSINESS
SYSTEMS

OMRON Systems, Inc.
55 East Commerce Drive,
Schaumburg, IL 60173, U.S.A.
Phone: 1-847-843-0515
Fax: 1-847-843-7686

OMRON Transaction Systems, Inc.
55 East Commerce Drive,
Schaumburg, IL 60173, U.S.A.
Phone: 1-847-843-0515
Fax: 1-847-843-7686

MARKETING OF HEALTHCARE
EQUIPMENT

OMRON Healthcare, Inc.
300 Lakeview Parkway,
Vernon Hills, IL 60061, U.S.A.
Phone: 1-847-680-6200
Fax: 1-847-680-6269

RESEARCH AND DEVELOPMENT

OMRON Advanced Systems, Inc.
3945 Freedom Circle, Suite 700,
Santa Clara, CA 95054, U.S.A.
Phone: 1-408-727-6644
Fax: 1-408-727-5540

OMRON Management Center of America, Inc.

––Information Technology Center

3945 Freedom Circle, Suite 700,
Santa Clara, CA 95054, U.S.A.
Phone: 1-408-919-0895
Fax: 1-408-919-2829

(W) 610pt x (H) 794pt—215 x 280mm

OMRON Manufacturing of the

Netherlands B.V.

Zilvernberg 2, 5234 GM Den Bosch,
The Netherlands
Phone: 31-73-6481811
Fax: 31-73-6420195

OMRON Electronics Manufacturing

of Germany G.m.b.H.

Robert-Bosch Strasse 1, P.O. Box 1165,
D-71154 Nufringen, Germany
Phone: 49-70-32-8110
Fax: 49-70-32-81199

MARKETING AND MANUFACTURING
OF OFFICE AUTOMATION EQUIPMENT

OMRON Telford Ltd.
Hortonwood 2, Telford,
Shropshire TF1 4GW, U.K.
Phone: 44-1952-279-444
Fax: 44-1952-279-456

MARKETING OF
HEALTHCARE EQUIPMENT

OMRON Healthcare Europe B.V.
Wegalaan 57, 2132,
JD Hoofddorp, The Netherlands
Phone: 31-23-5681-200
Fax: 31-23-5681-201

OMRON Medizintechnik

Handelsgesellschaft G.m.b.H.

Windeck Strasse, 81,
68163 Mannheim, Germany
Phone: 49-0621-83348-8
Fax: 49-0621-8334820

E U R O P E

REGIONAL HEADQUARTERS

OMRON Europe B.V.
Wegalaan 67, NL-2132 JD Hoofddorp,
The Netherlands
Phone: 31-23-5681-300
Fax: 31-23-5681-391

MARKETING AND/OR MANUFACTURING
OF CONTROL COMPONENTS
AND SYSTEMS

OMRON Europe B.V.
Wegalaan 67-69, 2132 JD Hoofddorp,
The Netherlands
Phone: 31-23-5681-300
Fax: 31-23-5681-388

OMRON Electronics Ges.m.b.H.
Altmannsdorfer Strasse 142,
P.O. Box 323, A-1231,
Vienna, Austria
Phone: 43-1-80190-0
Fax: 43-1-804-48-46

OMRON Electronics N.V./S.A.
Stationsstraat 24,
B-1702 Groot-Bijgaarden, Belgium
Phone: 32-2-4662480
Fax: 32-2-4660687

OMRON Electronics A.G.
Sennweidstrasse 44,
CH-6312 Steinhausen, Switzerland
Phone: 41-41-748-1313
Fax: 41-41-748-1345

OMRON Electronics SPOL S.R.O.
Srobarova 6, Prague 10, 101 00,
Czech Republic-CZECH
Phone: 420-2-6731-1254
Fax: 420-2-7173-5613

OMRON Electronics G.m.b.H.
P.O. 10 10 20,
40710 Hilden, Germany
Phone: 49-2103-203-3
Fax: 49-2103-203-400

Schoenbuch Elektronik Hanesch
G.m.b.H. & Co., KG
Daimlerstrabe 13,
D-71083, Hervenberg, Germany
Phone: 49-7032-946810
Fax: 49-7032-946849

OMRON Electronics A/S
Odinsvej 15, DK-2600 Glostrup, Denmark
Phone: 45-43-44-00-11
Fax: 45-43-44-02-11

OMRON Electronics S.A.
C/Arturo Soria 95, E-28027 Madrid, Spain
Phone: 34-1-377-7900
Fax: 34-1-377-7956

OMRON Electronics S.a.r.l.
BP33, 19, Rue du Bois-Galon 94121
Fontenay-Sous-Bois, Cedex, France
Phone: 33-1-49747000
Fax: 33-1-48760930

OMRON Electronics S.r.l.
Viale Certosa 49, 20149 Milano, Italy
Phone: 39-2-32-681
Fax: 39-2-32-5154

OMRON Electronics Sp. z.o.o.
UL Jana Sengera Cichego 1,
02-790 Warsaw, Poland
Phone: 48-22-645-7860
Fax: 48-22-645-7863

OMRON Electronics, kft
Kiss Erno u. 1-3,
H-1046 Budapest, Hungary
Phone: 36-1-399-3050
Fax: 36-1-399-3060

OMRON Electronics Norway A/S
Ole Deviks Vei 4, P.O. Box 109, Bryn,
N-0611 Oslo, Norway
Phone: 47-22-657500
Fax: 47-22-658300

OMRON Electronics B.V.
Wegalaan 61/Postbus 5822132,
JD/2130 AN Hoofddorp,
The Netherlands
Phone: 31-23-5681100
Fax: 31-23-5681188

OMRON Electronics Lda.
Edificio OMRON, Rua de Sao Tomé, Lote 131,
Prior Velho-2685 Prior Velho, Portugal
Phone: 351-1-942-9400
Fax: 351-1-941-7899

OMRON Electronics A.B.
Norgegatan 1, P.O. Box 1275,
S-164 28 Kista, Sweden
Phone: 46-8-632-3500
Fax: 46-8-632-3510

OMRON Electronics O.Y.
Metsänpojankuja 5,
Fin 02130 Espoo, Finland
Phone: 358-9-5495-800
Fax: 358-9-5495-8150

OMRON Electronics Ltd.
1 Apsley Way, Staples Corner,
London NW2 7HF, U.K.
Phone: 44-181-450-4646
Fax: 44-181-450-8087

OMRON Electronics Ltd.
Acibadem Caddesi, Palmiye Sokak 12,
TR-81020 Kadikoy, Istanbul, Turkey
Phone: 90-216-326-2980
Fax: 90-216-326-2979

HEAD OFFICE
Karasuma Nanajo, Shimogyo-ku,
Kyoto 600-8530, Japan
Phone: 81-75-344-7000
Fax: 81-75-344-7001

TOKYO HEAD OFFICE
3-4-10, Toranomon, Minato-ku,
Tokyo 105-0001, Japan
Phone: 81-3-3436-7227
Fax: 81-3-3436-7165

OSAKA OFFICE
Osaka Center Bldg.,
4-1-3, Kyutaro-cho, Chuo-ku,
Osaka 541-0056, Japan
Phone: 81-6-6282-2511
Fax: 81-6-6282-2789

KYOTO R&D LABORATORY
20, Igadera, Shimo-kaiinji,
Nagaokakyo-shi,
Kyoto 617-8510, Japan
Phone: 81-75-951-5111
Fax: 81-75-957-2871

CORPORATE DATA

DATE OF ESTABLISHMENT
May 10, 1933

INDUSTRIAL PROPERTY RIGHTS
Number of patents:
2,514 (Japan)
1,385 (Overseas)
Number of patents pending:
6,493 (Japan)
593 (Overseas)

NUMBER OF EMPLOYEES
23,742

PAID-IN CAPITAL
¥64,079 million

COMMON STOCK
Authorized: 495,000,000 shares
Issued: 257,107,214 shares
Number of shareholders: 27,733

STOCK LISTINGS
Tokyo Stock Exchange
Osaka Securities Exchange
Kyoto Stock Exchange
Nagoya Stock Exchange
Frankfurt Stock Exchange

TRANSFER AGENT
The Mitsubishi Trust and Banking

Corporation

1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8388, Japan

(As of March 31, 1999)

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Karasuma Nanajo, Shimogyo-ku, Kyoto 600-8530, Japan
Phone: (075) 344-7000 Fax: (075) 344-7001
Home page: http://www.omron.co.jp (Japanese)

http://www.omron.com (English)

This annual report is printed on paper made
using a mixture of bagasse and recycled paper.

Printed in Japan