Omron Corporation Annual Report 2000

FY2000 Annual Report · Omron Corporation

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Unique Competencies,

Profitable Growth

Annual Report 2000
Year ended March 31, 2000

Profile

OMRON develops and markets technologies that help customers offer more

functional and effective products, which in turn help society function more
safely and smoothly. A core area of emphasis is information sensing
technology in the fields of vision sensing, light wave sensing, and fuzzy logic
and human media. To retain the trust of shareholders, OMRON is improving
its management structure, business structure and fixed cost structure, and
has innovated its sales approach to make OMRON a customer-oriented
solutions-providing business. While working to achieve growth, OMRON is
also committed to protecting the environment and contributing to the
communities it serves, with representative achievements including ISO 14001
certification of the environmental management systems of all domestic and
overseas plants.

To realize its corporate motto of “At work for a better life, a better world

for all,” OMRON focuses on six management philosophies:

(cid:2) Offer maximum satisfaction to customers
(cid:2) Consistently accept challenges
(cid:2) Focus on gaining shareholders’ trust
(cid:2) Respect individuals
(cid:2) Become a responsible corporate citizen
(cid:2) Maintain corporate ethics while promoting corporate activities

Contents
Financial Highlights .............................................................................

To Our Shareholders ...........................................................................

Objectives of OMRON’s Eighth Medium-Term

Management Plan........................................................................

Strengthening Profit Structure .........................................................

Investing in New, High-Growth Areas ............................................

Review of Operations..........................................................................

OMRON’s Environmental Conservation Activities ..............................

Board of Directors...............................................................................

Financial Section .................................................................................

Six–year Summary...........................................................................

Management’s Discussion and Analysis .........................................

Consolidated Balance Sheets .........................................................

Consolidated Statements of Income ...............................................

Consolidated Statements of Comprehensive Income.....................

Consolidated Statements of Shareholders’ Equity..........................

Consolidated Statements of Cash Flows ........................................

Notes to Consolidated Financial Statements ..................................

Independent Auditors’ Report .........................................................

International Network ..........................................................................

Investor Information ............................................................................

Financial Highlights

OMRON Corporation and Subsidiaries
Years ended March 31, 2000, 1999 and 1998

Millions of yen
(except per share data)

Thousands of
U.S. dollars (Note 2)
(except per share data)

2000

1999

1998

2000

For the Year:

Net Sales ...................................................................................................

¥555,358

¥555,280

¥611,795

$5,239,226

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

21,036

Net Income ................................................................................................

11,561

8,249

2,174

42,243

18,704

198,452

109,066

Net Income per Share (yen and U.S. dollars):

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

¥ 45.0
44.5

¥ 8.3
8.3

¥ 71.4
69.8

$ 0.42
0.42

Cash Dividends per Share (yen and U.S. dollars, Note 1) ........................

13.0

0.12

Capital Expenditures (cash basis) .............................................................

¥ 31,146

¥ 36,696

¥ 35,896

$ 293,830

Research and Development Expenses .....................................................

36,605

42,383

39,914

345,330

At Year End:

Total Assets...............................................................................................

¥579,489

¥580,586

¥593,129

$5,466,877

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

336,062

321,258

343,066

3,170,396

Notes: 1. Cash dividends per share are the amounts applicable to the respective year, including dividends to be paid after the end of the year.

2. The U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate at March 31, 2000, of ¥106=$1

Net Sales

(Billions of Yen)

Income before Income
Taxes and Minority Interests

(Billions of Yen)

Net Income

(Billions of Yen)

Net Income per Share
(Diluted)

(Yen)

5
2
5

4
9
5

2
1
6

5
5
5

2
3

9
3

2
4

1
2

5
1

6
1

9
1

2
1

5
.
4
5

8
.
8
5

8
.
9
6

3
.
8

5
.
4
4

1996

1997

1998

1999

2000

1996

1997

1998

1999

2000

1996

1997

1998

1999

2000

1996

1997

1998

1999

2000

OMRON Corporation 1

To Our Shareholders

During fiscal 2000 (the fiscal year ended March 31, 2000), OMRON underwent a corporate
transformation to raise the Company’s speed and flexibility. In working to achieve
sustainable recovery in earnings, we implemented a reform program covering our
management structure, business structure and fixed cost structure, and innovated our
sales approach to make OMRON a customer-oriented solutions-providing business. As
a result of these initiatives, we were able to avoid a second successive year of declining
profits, our primary focus for the fiscal year, and to make progress in generating long-term
growth.

Activities and Results: Major Earnings Improvement
Consolidated net sales for the fiscal year of ¥555.4 billion were

our business without any major disruptions.

Environmental protection has long been a critical management

impacted by the transfer of a business division in the previous

task. OMRON has already obtained ISO 14001 certification of the

fiscal year and the appreciation of the yen. Absent the transfer of

environmental management systems of all domestic and overseas

the business division, net sales would have increased

manufacturing facilities, and we will continue to promote

approximately 4 percent year-on-year. Net income before tax

environmental protection throughout the OMRON Group.

increased 155.0 percent to ¥21.0 billion, and net income rose

431.8 percent to ¥11.6 billion. Reflecting this solid improvement

in earnings, return on average total shareholders’ equity (ROE)

rose to 3.5 percent from 0.7 percent for the previous fiscal year.

The deterioration in OMRON’s performance during fiscal 1999

Management Tasks and Strategies: OMRON’s
Corporate Transformation under the Eighth
Medium-Term Management Plan

(the fiscal year ended March 31, 1999) engendered a sense of

The market is undergoing a winnowing process, with a

crisis that spurred the Company to successfully implement three

challenging operating environment marked by factors such as

structural reforms. A restructuring initiated in fiscal 1999 and

ongoing globalization, the revolution in information technology

success in containing selling, general and administrative (SGA)

and changes in the industrial structure. Amid these conditions,

expenses were key factors supporting the increase in earnings.

OMRON will realize a solid, long-term profit structure. The

Moreover, we transformed our approach to sales in emphasizing

Company is moving forward with structural reform and

the solutions-providing business, particularly at the Industrial

implementing strategies for growth in working toward record

Automation Company. Private capital investment began to

earnings in a second consecutive year of higher sales and

recover during the past fiscal year, particularly in the

income during the year ending March 2001. The Eighth Medium-

semiconductor and information and communication industries.

Term Management Plan, begun in April 2000, will guide OMRON

OMRON was therefore well positioned to generate strong sales

in undertaking the required tasks. Essentially, the Plan calls for

growth in the core control systems business.

prioritization and focus to raise OMRON's corporate value, with

The introduction of the internal company system in April 1999

the primary objectives of raising ROE to 6.0 percent and

contributed to earnings that exceeded initial projections. Clearly

achieving record earnings. Continued structural reform during the

more focused on meeting performance objectives, each

year to March 2001 is crucial to achieving our objectives. In

company is also quicker and more purposeful, which has raised

addition, OMRON will invest in future growth in entering and

both responsiveness to customers and earnings.

expanding its presence in new businesses, with each company

In addition, by positioning the Y2K Problem as a management

working to expand earnings by thoroughly serving customer

issue and implementing comprehensive countermeasures at all

interests.

Group companies, we have been able to continuously carry out

2 OMRON Corporation

Goals of Eighth Medium–Term Management Plan
–Performance Objectives

ROE 6%+

Net Income Before Tax (NIBT) ¥45 billion
6%

3.5%

0.7%

ROE

Net
Sales

NIBT

555.4

21.0

2000

555.3

8.2
1999

650.0

45.0

2002

Note: Years ended March 31

Performance Objectives

Yoshio Tateisi
Representative Director
and Chief Executive Officer

Plan. In improving our profit structure, each company will bolster

investment in existing businesses and embrace profit-oriented

management. At the same time, we will continue to contain SGA

expenses and expand profitable sales while improving the

soundness of our financial structure. In entering new businesses

and expanding our presence in them, we will focus investment

on growth sectors according to clearly defined plans to generate

future growth. While implementing these two core strategies, we

will promote management that clarifies the functions and

responsibilities of each company.

Growing the OMRON Group

OMRON’s Grand Design 2000 Project is a long-term vision

covering the 10 years through 2010 geared toward helping the

Company answer the needs of the twenty-first century. The three

main points of this vision are raising corporate value,

organizational and individual self-reliance, and OMRON Group

The Eighth Medium-Term Management Plan emphasizes

cohesion. Ultimately, this vision is designed to make the OMRON

profitability. In the final year of the plan, the year ending March

Group an attractive, innovative corporation that has admirable

2002, OMRON has targeted record net income before tax of

ideals and objectives.

¥45.0 billion and ROE above 6.0 percent. Our profit-oriented

In addition, we are working to further improve management by

approach will help strengthen shareholder trust in the Company,

creating a new Group structure during fiscal 2002 in order to

a core point of OMRON’s management philosophy, and our

enhance the presence of an OMRON Group that is able to

objective of ROE exceeding 6.0 percent is the first step toward

operate in global markets regardless of economic changes.

our next goal of raising it above 10.0 percent.

OMRON is maximizing value for shareholders by effectively

restoring profitability, and we are counting on your continued

Core Strategies

support.

Improving our profit structure and strengthening investment to

enter new businesses and expand our presence in them are

primary components of the Eighth Medium-Term Management

OMRON Corporation 3

Unique Competencies, Profitable Growth

Objectives of OMRON’s Eighth
Medium-Term Management Plan

Main objective:

The main objective of the Eighth Medium-Term Management Plan is to strengthen
OMRON’s profit structure, so that it will be able to attain sustainable profit growth.
Our ultimate goal in doing so is to enhance OMRON’s corporate value. Specifically,
we will actively invest corporate resources for future growth while concentrating on
strengthening profitability. In addition, we will continue promoting structural
reforms in the three area of management, business and corporate resources that
we implemented during fiscal 1999.

Key strategies:

At the internal company level:

Strengthen OMRON’s profit structure for
sustainable profit growth

At the management level:

Invest in new, high-growth areas

4 OMRON Corporation

Strengthening Profit Structure

Strengthening profit structure is one of the core objectives of

the Eighth Medium-Term Management Plan. The following programs
covering sales, cost of sales and SGA expenses are contributing
to better earnings.

Reduce SGA Expenses to 28 Percent of Net Sales

SGA expenses accounted for over 32 percent of net sales in the fiscal year ended March 31, 1999 (fiscal 1999). In

October 1998, OMRON began a concerted effort to lower this ratio, which stood at 30.7 percent for the fiscal year ended

March 2000. The Company intends to continue improving operational efficiency, with the goal of reducing the SGA ratio to

28 percent by the end of March 2002.

We are aggressively cutting costs by reducing the number of employees to lower personnel expenses, consolidating

offices and raising logistics efficiency, and promoting outsourcing. At the same time, OMRON will continuously spend 7

percent of net sales on R&D expenses, which will lead to future growth through the development of new products and

businesses.

SGA Expenses

Reduce SGA ratio to 28 percent

Use personnel efficiently

Reduce expenses

Maintain R&D expenses
at present level

32.3%

30.7%

Total SGA expenses
(including R&D expenses)

29%

28%

1999

2000

2001

2002

OMRON Corporation 5

Maintain Cost of Sales Ratio at 65 Percent of Net Sales

OMRON has reduced the cost of sales ratio from a peak of 67.8 percent of net sales in the fiscal year ended March 31, 1994 to

64.6 percent for fiscal 2000. The Eighth Medium-Term Management Plan calls for maintaining this rate at 65 percent. We will
continue to keep the cost of sales ratio at the 65 percent level by minimizing cost-increasing factors such as lower sales prices,
exchange rate fluctuations and business mix.

OMRON is implementing a number of initiatives to contain cost of sales companywide. We are optimizing and expanding

overseas production while concentrating on reducing raw materials costs for component production. Moreover, we are
consolidating design and production bases to raise manufacturing efficiency, and are also improving logistics efficiency and
reducing inventories in moving forward with supply chain management.

Cost of Sales Ratio

Keep cost of sales ratio at 65 percent level

Expand overseas
production

e-procurement
(centralized
procurement)

Integrate design
and production
bases

Supply chain
management

65.6%

65.2%

65.0%

64.6%

1999

2000

2001

2002

Net Sales of ¥650.0 Billion for Fiscal 2002

Our sales objective for the fiscal year ending March 31, 2002 is ¥650.0 billion. We intend to continue expanding sales

internationally to achieve this goal, and are aggressively working to raise sales in Europe, the United States and Asia. In particular,
overseas sales account for nearly 50 percent of Industrial Automation Company and Electronic Components Company sales, so
we will continue investing corporate resources in the expansion of operations outside Japan. The Industrial Automation Company
is emphasizing the safety market with its control components and systems and the Social Systems Business Company is entering
and expanding its presence in new markets such as the convenience store sector.

OMRON is also rapidly expanding its solutions-providing business, which will innovate the Company’s approach to sales to

increase market share. We are strengthening our e-commerce business through subsidiaries as part of our new approach to
markets.

Net Sales

(Billions of yen)

555.3

555.4

594.0

650.0

650

550

450

350

250

6 OMRON Corporation

1999

2000

2001

2002

Investing in New, High-Growth Areas

In addition to improved earnings, investment to ensure future
growth that is guided by the themes of prioritization and focus
is a core tenet of the Eighth Medium-Term Management Plan.

Information Sensing Technology –
A Key to Expansion in New Technology Markets

Information sensing technology is a core OMRON competency and a high-potential field in which we are concentrating

investment. Our four primary fields of focus are vision sensing, encompassing shapes and written characters; light wave sensing,
covering gloss and chromaticity sensing; semiconductor sensing, covering the production of chips that incorporate components
such as sensors and relays used in semiconductor processes; and fuzzy logic and human media, encompassing face image and
voice recognition. Information technology-related businesses and products will be a primary focus, and we intend to work with
Internet companies in business development as well.

Information Sensing

New Technologies

Vision Sensing

Micro Machined Sensing

Silhouette vision, pattern vision
Omron is building on its leadership in allowing
machinery to “see,” developing sensing
technology that approximates the capabilities
of the human eye.

MLA/MMS/MMR
Micron-miniature machines in chip configuration
are are a core focus at OMRON, particularly the
uses of sensors, relays and other components.

Fuzzy Logic and Human Media

Light Wave Sensing

Face image, voice recognition
Fuzzy logic allows machinery to adjust to the
idiosyncrasies of humans, supporting OMRON’s
leadership in processing numerals, languages,
voices and images.

Gloss sensing, chromaticity sensing
Emphasis on light polarization and light wavelengths
is supporting OMRON’s drive to lead in the fields
of quality control, including gloss and chromaticity
sensing.

Information Technology

¥93.0 Billion in Capital Investment Over Two Years

The Eighth Medium-Term Management Plan calls for capital investment of ¥93.0 billion, which includes expenditures for

manufacturing equipment within cash flow allowance. Main investment themes will be raising production efficiency and
expanding manufacturing facilities outside Japan.

Focus of Planned Capital Investment

Allocation of Planned Capital Investment

(Billions of yen)

45*

Strategic investment: ¥12 billion

36*

Others
(offices, factories, etc.)

New business development

17%

13%

Streamlining/
upgrading
existing facilities

32%

38%

Expansion-oriented
investments

1997

1998

1999

2000

2001

2002

*Investment in facilities and equipment: ¥81 billion

Investment in facilities and equipment: ¥81 billion

OMRON Corporation 7

Review of Operations
OMRON at a Glance

Main Products

% of Net Sales

Industrial Automation
Company

Programmable logic controllers, Programmable terminals,
Photoelectric sensors, Proximity sensors, Printer circuit board
automated solder inspection systems, Switches, Relays,
Timers, Counters, Temperature and process controllers,
Protective relay, Power supplies

¥243,604 million

43.9%

Electronic Components
Company

Tactile switches, Dip switches, Trigger switches, General
purpose relays, Multiplex Controllers, Laser Radars, Actuators,
Buckle switches, Detection switches, Components for
photocopier and printer (counterfeit detectors, tablets, paper
handling machines, controller PCB units, sensors, relays,
switches), Amusement components (Sensors, Keys, ICs,
Game controllers)

¥68,328 million

12.3%

Social Systems
Business Company

Banking systems, (ATMs, Cash dispensers, POS system, FET
terminal), Automatic fare collection systems, Area traffic
control systems, Parking systems, Totalizer systems

¥128,534 million

23.1%

Healthcare Company

Digital blood pressure monitor, Electric digital thermometers,
Electronic pulse massagers, Body-fat monitors, Nebulizer,
Chair massager, Pedometer, Healthcare services

¥42,640 million

7.7%

Peripheral equipment for personal computer (Terminal
Adapter, Modem, Cable-type modem for mobile phone,
Uninterruptible power supply, Scanner) Card readers, Room
access control system, Radio frequency ID systems, Photo-
sticker vending machines, Speech recognition and voice
authentication software.

¥72,252 million

13.0%

Others

8 OMRON Corporation

The superior capabilities of the E3Z
light wave sensor offer excellent
processability and reliability, setting
the standard for next-generation
environmental protection
technologies.

Net Sales

(Billions of Yen)

246

244

1999

2000

Industrial Automation Company

(cid:2) Orientation toward semiconductor industry supports

domestic growth

(cid:2) Environmentally friendly, measure-of-safety

components open new markets

The Micro PLC CPM2A/CPM2C is
both ultracompact and highly
functional, offering added value by
allowing manufacturers to add
capabilities to various kinds of
machinery.

The G Compo Series supports
miniaturization and reduced
footprint by providing enhanced
recognition and ease of use in
operation. This communication
technology contributes to the use
of information in manufacturing.

In fiscal 2000, demand for control components and systems

exchange rate losses that resulted from the appreciation of the

for industrial automation leveled off as the economy in Japan

yen. Consequently, for fiscal 2000 total Industrial Automation

remained sluggish. During the second half of the term,

Company sales amounted to ¥243.6 billion, a 1 percent

however, manufacturers began to implement more proactive

decline from the previous fiscal year. Sales would have

capital investment strategies, which resulted in a recovery in

increased 3 percent if OMRON had not sold its semiconductor

demand for semiconductors and communications-related

business. Environmentally-friendly and measure-of-safety

products. The Industrial Automation Company moved to

components and advanced sensors designed to open new

benefit from this trend by strengthening marketing and its

markets using innovative technology made notable

product lineup for the semiconductor industry. The company

contributions to sales.

has also been steadily increasing the number of OMRON sales

Changes currently taking place in the global market present

representatives dispatched to its major distributors since fiscal

both opportunities and challenges to OMRON. While

2000. These efforts and the gradual upturn in the domestic

accurately accommodating these changes, we will implement

economy supported a significant increase in domestic sales.

strategies tailored to OMRON’s market positioning for each

Sales outside Japan also grew steadily on a local currency

region, product category, customer group and application to

basis in the Asian, European and U.S. markets. This sales

generate sustainable profit growth. Another focus will be

growth was offset, however, by OMRON’s sale of its

strengthening and improving the efficiency of relationships

semiconductor business in the first half of the fiscal year and

with customers.

OMRON Corporation 9

The ultracompact and high-quality
XF2H connector and B3B tactile
switch are used in portable
multimedia equipment.

The compact G6K relay is used in
Internet system equipment.

Keyless entry systems allow remote
locking and unlocking of vehicle
doors and trunks.

Electronic Components Company

(cid:2) Microlens arrays for liquid crystal projectors are a

growth area

(cid:2) Optimized global operations enhance synergy

Net Sales

(Billions of Yen)

1999

2000

In Japan, the market for consumer and commerce (C&C)

In line with the company’s mission to become a superior

components was difficult due primarily to price cuts brought

global electronic components supplier, we are committed to

on by intense competition. Despite the challenging

establishing a global sales network while simultaneously

environment, the Electronic Components Company achieved

promoting low-cost operations and the use of standardized

solid sales growth because of increasing demand for its tactile

parts and materials. In addition, we are working to optimize

switches, which effectively support the trend toward reduced

global manufacturing and procurement to enhance synergy

size and energy consumption in home appliances and

among our operating bases worldwide. The Electronic

business equipment. Rapid sales expansion of microlens

Components Company is also emphasizing the development

arrays for liquid crystal projectors also contributed to results.

or acquisition of new products, customers and applications to

In addition, sales of components for specific industries also

strengthen its presence in high-growth component markets

increased significantly due to such positive factors as greater

such as digital household appliances.

demand for sensors in the amusement industry and growing

production of compact cars that meet new vehicle regulations.

Outside Japan, the automotive electronic component

business performed strongly in North America and the Korean

economy staged a rapid recovery. Despite the appreciation of

the yen, these favorable factors contributed to a 21 percent

year-on-year rise in total Electronic Components Company

sales to ¥68.3 billion.

10 OMRON Corporation

This multifunctional terminal can
handle credit, debit and IC cards.

This boarding pass reader increases
customer convenience at airline
boarding gates.

The Cyber Gate VQ4511 offers
users multiple services, including
ATM functions and the ability to
reserve and purchase tickets.

Net Sales

(Billions of Yen)

136

129

Social Systems Business Company

(cid:2) New Cyber Gate multimedia service terminal

introduced

Structural reform and overseas expansion support
future growth

1999

2000

The Social Systems Business Company expanded its

sales rose due mainly to various new products tailored to the

presence in the market for electronic fund transfer systems by

airline and amusement markets. These products were created

concluding a large-scale OEM contract for financial systems.

by utilizing the know-how gained in developing OMRON’s

OMRON also launched Cyber Gate, a multimedia service

public transportation systems.

terminal that features ticket reservation and purchasing,

In the traffic control and road information systems market,

merchandising functions based on customer relationship

OMRON secured an order for its electronic toll collection (ETC)

management (CRM), and conventional ATM functions.

system. Sales declined, however, because of the increasing

Designed primarily for the rapidly growing convenience store

unwillingness of municipal offices to invest in new projects.

segment in Japan, Cyber Gate allows OMRON to benefit from

Consequently, total Social Systems Business Company

the increasing accessibility of various services and information

sales decreased 5 percent from the previous fiscal year to

to the public, and has become a major contributor to the

¥128.5 billion.

company’s sales.

We will continue promoting concurrent development and

The restructuring of the banking industry accelerated,

cost engineering to cut manufacturing costs, with a focus on

however, and banks and financial institutions continued to

strengthening existing businesses and establishing a more

restrain investment in anticipation of the need to consolidate

profitable business structure. At the same time, we will

branches. This adversely affected OMRON’s electronic fund

implement structural reforms by improving business

transfer system business, causing a year-on-year drop in

processes and information systems. Another objective is

sales.

expanding sales existing products and technologies in

In the public transportation systems market, even though

overseas markets, particularly Asia.

railway companies continued to restrain capital investment,

OMRON Corporation 11

(cid:2)
This small and lightweight nebulizer
is easily portable and excels at
relieving throat and nasal irritation.

The HEM-630 is the world's
smallest and lightest blood pressure
monitor, and encompasses
advanced sensing and fuzzy control
technologies.

The MC-509 needs just one second
to record and display body
temperature.

Net Sales

(Billions of Yen)

Healthcare Company

(cid:2) OMRON products respond to growing consumer health

consciousness in Japan

(cid:2) New services will offer greater added value to

consumers

1999

2000

Although consumer spending in Japan remained stagnant

Europe and the adverse impact of the strong yen.

overall, sales of OMRON’s mainstay healthcare products such

In healthcare systems and services, we promoted several

as blood pressure monitors, digital thermometers, body-fat

new service businesses in an effort to respond to the trend in

monitors, chair-type massagers and fitness equipment soared.

consumer demand toward software and service.

The main factors contributing to this performance were the

Total Healthcare Company sales amounted to ¥42.6 billion,

high level of personal health consciousness among Japanese

down 2 percent from the previous fiscal year.

consumers and OMRON’s wide range of products that

As the reorganization of the retail industry progresses both

accurately respond to changing consumer requirements. New

domestically and overseas with retail outlets polarizing at the

products performed impressively, particularly the ear-type

high and low ends of the market, we will concentrate on

digital thermometer, the upper-arm automatic inflation type

managing our presence at individual outlets using our highly-

blood pressure monitor with high-speed measurement

trained sales force. Furthermore, we will promote healthcare

capability, and the Bio Control Bike with an ergometer that

consultation services that can help consumers improve both

automatically sets exercise programs optimized for each

their diets and overall lifestyles by integrating OMRON’s core

individual. Overseas sales as a whole slipped slightly, although

vital sensing technology with behavioral science. This will

conditions varied considerably by region. Negative factors

allow us to offer consumers greater added value and benefits.

included unsatisfactory sales during the Christmas season in

the United States, increasingly fierce price competition in

12 OMRON Corporation

Net Sales

(Billions of Yen)

Fingerprint recognition systems are
increasingly useful in raising security
efficiency.

1999

2000

The ME64KTIN hyper cable modem
can be used with a mobile phone to
allow effective mobile computing.

Others

(cid:2) Creative Service Company meets needs for operations

outsourcing

(cid:2) Business Development Group makes strides in paper-

handling equipment

In other categories, sales totaled ¥72.2 billion, down

market paper-handling equipment for copy machines and

1 percent from the previous fiscal year.

printers as well as bank note recognition units. In the PC

The Creative Service Company received new consultation

peripheral equipment market, sales of terminal adapters/home

orders involving head office administrative reforms from two

routers and hyper cable modems for mobile equipment

clients. There is a rising need among customers for operations

increased in tandem with the expansion of the ISDN network

outsourcing and business process redesign. OMRON has

and the continuing growth of the cellular phone market.

earned strong recognition among customers for its

We will continue seeking greater profitability for businesses

comprehensive ability to add a competitive advantage through

that do not belong to any of the OMRON internal companies

outsourcing. In individual service markets as well, our efforts

but have high growth potential, while at the same time clearly

to promote solutions-based sales in the fields of information

identifying strategies for developing each business. The

systems, human resource development, accounting, logistics

Business Development Group will also work on building the

and advertising draw on OMRON’s extensive expertise in

structure necessary to develop and strengthen new

various service sectors. We also offer highly specialized

businesses in line with OMRON’s group-wide growth

services in the fields of energy-conservation and food catering

strategies.

through alliances with leading vendors.

In the Business Development Group, office automation

equipment sales grew mainly because of concerted efforts to

OMRON Corporation 13

OMRON’s Environmental Conservation Activities

Environmental Vision System

Since its inception, OMRON has consistently remained committed to fulfilling its public responsibilities through its business

activities and social contributions. OMRON considers an environmental commitment to be a social contribution of prime

importance. Today, we are faced with the adverse effects created by the economy-driven society of the twentieth century.

Now we must work to remedy these effects by improving the efficiency of producing and using resources. Therefore, our

efforts to improve environmental efficiency along with an environmentally sound management system are more important than

ever.

Company with high resource
productivity

Philosophy

Guidelines

Continual improvement of resource
productivity in development, produc-
tion and sales activities

Strategies and Actions

Environmental Declaration
Environmental Policy

Ecological offices,
laboratories and factories

* Building an ISO + alpha system
* Focus on minimizing major factors that
impact the environment
* Activities intended to enhance customer
and corporate satisfaction and meet
societal requirements

ISO 14001 Project

By May 1999, a total of 30 OMRON Group factories (16 sites in Japan and 14 sites overseas) had achieved ISO 14001

certification for environmental management systems. A newly established Filipino manufacturing company is also scheduled

to acquire the certification by August 2000. With this accomplishment, all OMRON Group factories outside Japan will become

ISO 14001 certified. In addition, since 1999 OMRON has been working to achieve ISO 14001 certification for its offices and

laboratories, aiming for acquisition by the end of the present fiscal year.

ISO 14001-certified OMRON Group Factories (Outside Japan)
Factory locations are shown in parentheses

Germany (Nufringen)
Apr. ’99

U.K. (Telford)
Feb. ’98

Netherlands (Den Bosch)
Nov. ’96

Malaysia
(Selangor)
Dec. ’98

Indonesia
(West Java)
Aug. ’97

*3 Philippines (Subic)
Aug. ’00 (scheduled)

Canada (Toronto)
Apr. ’99

Korea (Seoul)
Mar. ’99
Taiwan (Tao-yuan)
Feb. ’99

China (Shanghai)
*1OMP: Nov. ’98
OMC: Dec. ’98
OMR: Feb. ’99
(Dalian) Dec. ’98

U.S.A. (Illinois)
*2OED-C: Mar. ’99
OMA: May ’99

*1 OMP: Shanghai OMRON Automation System Co., Ltd.

OMC: OMRON (Shanghai) Co., Ltd.

OMR: Shanghai OMRON Control Components Co., Ltd.

*2 OED-C: OMRON Automation Electronics, Inc.
OMA: OMRON Manufacturing America, Inc.
*3 Newly established factory in the Philippines

Reduction in Impact of Corporate Activities on the Environment

Centering around the basic concept of “maximizing those beneficial and minimizing those harmful,” OMRON is currently

working to reduce the impact of its business operations on the environment by focusing on enhancing productivity of

resources, recycling and reduction of waste, cutting resource consumption, prevention of global warming and energy

conservation.

14 OMRON Corporation

Environmental Performance Improvements

OMRON’s efforts to reduce environmental impact cover virtually all of its business activities from development production to

distribution, as well as the entire span of product life from input of materials to output of finished products, and even

discarding. Toward this end, OMRON not only integrates its total efforts, but also tries to gain support from concerned public

institutes, customers and associates wherever possible. Centering around the concept of “the 4Rs” (see chart), OMRON is

committed to developing new technologies and refining existing technologies in order to achieve the goals set for reducing

environmental impact.

7Do not use those substances specified as hazardous or those that are
suspicious.

Total abolition of harmful substances
(carcinogenic substances, chronic toxins and specified chemicals whose use is
regulated by international treaties)

REJECT

7Make more efficient use of resources.

REDUCE

Reduce the volume of substances that may have an adverse effect
on people's health, the environment and its ecological systems

7Reuse resources whenever possible or try to make them reusable.

REUSE

Promote repeated use of the same materials
(for enhanced economy and reduced consumption of resources)

7Recover resources and use them for other applications.

RECYCLE

Contribute to the creation of a 'recycling-oriented society'
(by improving the productivity of resources through recycling and recovery of
resources)

Eco-Products Certification System

In 1998, OMRON introduced an Eco-Products Certification System that meets the requirements of the ISO

14021 Environmental Label Assertion by Self-Declaration standards. This system is intended to award an

OMRON eco-label to products that satisfy the Company’s in-house environmental standards. By so doing,

OMRON aims to promote the incorporation of energy- and resource-saving features and environmentally

friendly functions into OMRON products to enhance their appeal and recognition. At the same time, this system

will help to promote OMRON as an environmentally conscious company to both its customers and the public.

By March 2000, a total of 36 products had been designated Eco-Products.

Product Assessment and LCA

With the Eco-Products Certification System and Eco Grand Prix awards, OMRON promotes the development of

environmentally friendly products, while simultaneously incorporating the results of product assessment into these

developments. Product assessment is linked to the Company’s current development system in order to accommodate the

need for inverse manufacturing and to create products that are easy to recycle, save energy and do not use hazardous

chemical substances. The product assessment concept implemented for each development process is as follows:

Eco-products
LCA products

High productivity
(high yield)

Mass production

Development of virtually repair-free products
Standardization of tools, etc.
Factory space-saving
Reduce noise, smell, smoke, etc.

Prototype

Trial production

Reclamation

Equipment assessment

Comparison (with current models/
competitor products/theoretical values)
Energy/resource conservation

Drafting

Reuse

Planning

Reduce material/product types
Minimize use of harmful/toxic/hazardous substances
Reduce time required for assembly/dismantling
Reduce product weight

Promoting redesign/
recycling/reuse

OMRON Corporation 15

(cid:2)
(cid:2)
(cid:2)
(cid:2)
Board of Directors

Seated (left to right): Nobuo Tateisi, Yoshio Tateisi

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

Board of Directors

Corporate Auditors

Senior Managing Officers

Managing Officers

Tomoaki Nishimura
Motoki Tamura
Takayuki Yamashita
Yoshio Nakano

Tsunehiko Tokumasu
Tsutomu Narita
Tadao Tateisi
Yoshifumi Kajiya

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

16 OMRON Corporation

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 27, 2000)

Financial Section
Six-year Summary

OMRON Corporation and Subsidiaries
Years ended March 31

Net Sales (Note 2):

Industrial Automation ......................................

¥243,604

¥245,785

¥ —

2000

1999

1998

1997

1996

1995

Millions of yen (except per share data)

Electronic Components ...................................

68,328

Social Systems Business ................................

128,534

Healthcare .......................................................

42,640

Open Systems .................................................

Control Components and Systems .................

Specialty Products ..........................................

—

56,673

135,872

43,729

—

Others ..............................................................

72,252

73,221

—

138,203

145,172

125,623

127,382

40,793

50,131

36,388

50,187

31,618

38,621

28,790

34,672

313,642

291,277

275,149

248,023

47,263

21,763

46,533

24,704

38,687

15,591

42,465

8,368

—

555,358

555,280

611,795

594,261

525,289

489,700

Costs and Expenses:

Cost of sales....................................................

358,911

364,314

387,445

388,005

342,500

324,666

Selling, general and

administrative expenses ................................

133,662

Research and development expenses ............

36,605

Interest expenses, net .....................................

Foreign exchange loss, net .............................

Other expenses (income), net..........................

750

2,841

1,553

136,734

42,383

862

2,766

(28)

138,404

39,914

682

4,419

(1,312)

130,163

35,188

1,591

860

(794)

109,117

34,433

2,044

5,027

(84)

100,333

31,223

5,102

3,657

(229)

534,322

547,031

569,552

555,013

493,037

464,752

Income before Income Taxes and

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

21,036

Income Taxes ....................................................

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

9,048

427

Net Income.........................................................

11,561

Net Income per Share (yen):

8,249

6,044

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

Basic .............................................................. ¥

Diluted.............................................................

Cash Dividends per Share (yen, Note 1)..........

45.0

44.5

13.0

8.3

13.0

71.4

69.8

13.0

60.1

58.8

13.0

55.7

54.5

13.0

50.8

49.4

13.0

Capital Expenditures (cash basis) ...................

¥ 31,146

¥ 36,696

¥ 35,896

¥ 29,956

¥ 34,079

¥ 30,954

Total Assets .......................................................

579,489

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

336,062

580,586

321,258

593,129

343,066

610,930

333,102

612,929

318,194

587,414

297,035

Value indicators:

Gross profit margin (%) ...................................

35.4

Income before tax/Net sales (%) .....................

Return on sales (%) .........................................

Return on assets (%) .......................................

Return on equity (%)........................................

Inventory turnover (times) ................................

Price/earning ratio (times)................................

Assets turnover (times) ....................................

Debt/equity ratio (times) ..................................

Interest coverage ratio (times) .........................

3.8

2.1

3.6

3.5

4.56

64.9

0.96

0.724

14.64

34.4

1.5

0.4

1.4

0.7

4.18

175.0

0.95

0.807

5.56

36.7

6.9

3.1

7.0

5.5

4.28

28.3

1.02

0.729

20.05

34.7

6.6

2.6

6.4

4.8

4.66

36.6

0.97

0.834

12.27

34.8

6.1

2.8

5.4

4.7

4.51

42.2

0.88

0.926

8.47

33.7

5.1

2.5

4.4

4.6

4.69

35.4

0.86

0.978

4.37

Notes: 1. Cash dividends per share are the amounts applicable to the respective year, including dividends to be paid after the end of the year.

2. Categories within net sales for 1998 and earlier reflect the categories used at that time, which can not be restated to conform to present

categories following reorganization.

OMRON Corporation 17

Management’s Discussion and Analysis

Financial Strategy

During fiscal 2000, the year ended March 31, 2000, OMRON set up a financial policy of implementing and strengthening its

financial structure to avoid a second consecutive year of lower earnings. This included improving asset efficiency, maintaining

adequate liquidity to counter possible Y2K problems, and securing sufficient capital for operations. In addition, OMRON is

investing capital in accordance with its original plan within the scope of cash flow, while concentrating the items and areas

of capital expenditure to secure profits.

Overview of Operations

Although consumer spending remained restrained, the operating environment in Japan seemed to have bottomed out. Signs

of recovery began to appear, with a partial rebound in private capital investment as a result of government fiscal policies and

the stabilization of the financial system. Outside of Japan, the U.S. economy continued to grow strongly and economic

conditions in Europe were favorable, while the economies of Asia recovered from the currency crisis of prior years and began

staging a sharp rebound. In this environment, OMRON worked during fiscal 2000 to transform its identity and position while

improving earnings to avoid a second consecutive fiscal year of declining profitability. The Company succeeded in improving

competitiveness by consistently managing its businesses to build the foundation for improved performance, and focusing

resources on optimizing the strengths of each of OMRON’s internal companies.

These efforts were supported by a recovery in capital investment in the semiconductor, information and communication

sectors, but net sales were essentially unchanged year-on-year. Factors restraining sales growth included the transfer of a

business division in the prior fiscal year and the appreciation of the yen. Net sales would have increased 4 percent year-on-

year excluding the effect of the transfer. Despite the impact of the disposal of ¥5.3 billion in bad debts at domestic

subsidiaries, earnings improved markedly due to the results of restructuring, a lower cost of sales ratio and decreased selling,

general and administrative (SGA) expenses. Income before income taxes and minority interests increased 2.6 times year-on-

year to ¥21.0 billion, and net income rose 5.3 times to ¥11.6 billion.

Sales

Consolidated net sales were essentially unchanged from the previous fiscal year at ¥555.4 billion. Private capital investment

recovered in the semiconductor, information and communications sectors, which supported solid sales gains in OMRON’s

core control components systems business. The transfer of a business division in the prior fiscal year and the appreciation of

the yen, however, held back sales growth.

Cost of Sales, SGA Expenses and Income

Cost of sales decreased ¥5.4 billion, or 1.5 percent, over the previous fiscal year to ¥358.9 billion, and improved to 64.6

percent of net sales, compared to 65.6 percent for the previous fiscal year. Factors in the improvement included reduced raw

Gross Profit Margin

SGA Expenses/Net Sales
R&D Expenses/Net Sales

(%)

34.8

34.7

36.7

35.4

34.4

21.9

20.8

22.6

SGA Expenses/Net Sales
(excluding R&D expenses)

R&D Expenses/Net Sales

24.6

24.1

6.6

5.9

6.5

7.6

6.6

Income Before Tax/Net Sales
Net Income/Net Sales

(%)

Income Before Tax/Net Sales,

Net Income/Net Sales

6.9

6.6

6.1

3.1

2.8

2.6

1.5

0.4

3.8

2.1

1996 1997 1998 1999 2000

18 OMRON Corporation

material prices and efficiencies from restructuring initiatives such as the divestiture. As a result, gross profit increased 2.9

percent to ¥196.4 billion, and the ratio of gross profit to net sales improved by 1 percentage point to 35.4 percent. SGA

expenses decreased ¥3.1 billion, or 2.2 percent, year-on-year to ¥133.7 billion, and improved to 24.1 percent of net sales from

24.6 percent for the previous fiscal year. Primary factors included a reduction in advertising expenses and in commissions for

outsourcing. Research and development expenses decreased ¥5.8 billion, or 13.6 percent, to ¥36.6 billion, and represented

6.6 percent of net sales, compared to 7.6 percent for the previous fiscal year. OMRON reduced commission expenses for

outsourced research and development by conducting it internally. R&D is central to OMRON’s growth strategy and the

Company intends to maintain the ratio of R&D expenses at approximately 7 percent of net sales.

Main factors in non-operating expenses included a drop in interest expenses due to a reduction in short-term debt, and the

disposal of ¥5.3 billion in bad debts at subsidiaries. Income before income taxes and minority interests increased ¥12.8 billion,

or 155.0 percent, to ¥21.0 billion. Income taxes increased ¥3.0 billion, or 49.7 percent, to ¥9.0 billion, and the ratio of income

taxes to income before income taxes and minority interests improved to 43.0 percent from 73.3 percent for the previous fiscal

year. As a result of the above, net income increased ¥9.4 billion, or 431.8 percent, to ¥11.6 billion. The ratio of net income to

net sales improved to 2.1 percent from 0.4 percent for the previous fiscal year, and return on average total shareholders’

equity improved to 3.5 percent from 0.7 percent for the previous fiscal year. Net income per share improved from ¥8.3 to

¥45.0, and fully diluted net income per share improved from ¥8.3 to ¥44.5.

Costs, expenses and income as percentages of net sales were as follows:

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Review of Operations by Company
Industrial Automation Company

2000

1999

100.0%

1998

100.0%

64.6

35.4

24.1

6.6

0.1

3.8

1.6

2.1

65.6

34.4

24.6

7.6

0.1

1.5

1.1

0.4

63.3

36.7

22.6

6.5

0.1

6.9

3.8

3.1

Net sales for the Industrial Automation Company, excluding intracompany transactions, decreased 0.9 percent year-on-year

to ¥243.6 billion, and represented 43.9 percent of total net sales. The decrease was attributable to the transfer of OMRON’s

Interest Expenses and
Interest Coverage

(Millions of Yen/Times)

Interest Expenses

Interest Coverage

5
7
0
,
5

7
5
5
,
3

2
1
4
,
2

8
1
5
,
2

7
9
8
,
1

20.05

14.64

Earnings per Share and
Price–Earnings Ratio

(Yen/ Times)

Net Income per Employee

Earnings per Share

Price–Earnings Ratio

(Millions of Yen)

5
.
4
5

8
.
8
5

8
.
8
6

3
.
8

5
.
4
4

175.0

6
.
0

7
.
0

8
.
0

1
.
0

5
.
0

12.27

8.47

5.56

42.2

36.6

28.3

64.9

1996 1997 1998 1999 2000

OMRON Corporation 19

semiconductor business and the appreciation of the yen. Net sales would have increased 3.0 percent absent the transfer of

the semiconductor business. A number of factors supported results. Capital investment among manufacturers increased

during the second half of the year, particularly among manufacturers of information- and communication-related products, for

which demand was strong. Moreover, the introduction of an authorized distributor system and expanded cooperation with

authorized distributors strengthened results, supporting a significant expansion in domestic sales. Outside Japan, the rapid

and powerful recovery of the Asian economies and stable expansion in the European and U.S markets on a local currency

basis also supported results.

Electronic Components Company

Net sales for the Electronic Components Company, excluding intracompany transactions, increased 20.6 percent year-on-

year to ¥68.3 billion, and accounted for 12.3 percent of total net sales. Intense price competition led to lower sales prices in

the domestic market, but the shift toward digitalization, miniaturization, reduced footprint and lower energy consumption in

the home electronics and office automation markets supported demand for OMRON products. Moreover, sales of

components to selected industries grew strongly, including sales of sensors and other components to the amusement

industry and sales to the automobile industry to meet demand created by increased production of new models. Overseas,

favorable conditions in the U.S. market, the successful launch of the automotive components business in Europe, and the

solid recovery in the Republic of Korea helped the Automotive Components Division to increase sales despite the appreciation

of the yen.

Social Systems Business Company

Net sales for the Social Systems Business Company, excluding intracompany transactions, decreased 5.4 percent year-on-

year to ¥128.5 billion, and accounted for 23.1 percent of total net sales. The introduction of the multi-functional CyberGate,

primarily in the rapidly growing convenience store sector, supported the results of the electronic fund transfer systems

business. Continued restraint in investment by financial institutions, however, resulted in the year-on-year decrease in sales.

Sales increased in the station management business as sales related to new systems that will be introduced in the Tokyo

metropolitan area and the successful application of related technologies for the airport market compensated for continued

restraint in investment among railway companies. Sales decreased in the traffic management systems business as orders for

electronic toll collection (ETC) systems only partially offset sharply lower investment among local governments.

Healthcare Company

Net sales for the Healthcare Company, excluding intracompany transactions, decreased 2.5 percent year-on-year to ¥42.6

billion, and accounted for 7.7 percent of total net sales. Although domestic consumption remained slack, increased interest in

maintaining and improving health among consumers supported firm growth in sales of relevant Healthcare Company

products, including blood pressure monitors, thermometers, body-fat monitors, chair-style massagers and fitness equipment.

Overseas, fierce competition in the United States during the Christmas season and intensified price competition in Europe led

to a marginal decrease in sales. The appreciation of the yen also negatively affected sales.

Sales by Company

(%)

Industrial Automation Company

Electronic Components Company

Social Systems Business Company

Healthcare Company

Others

1999

2000

44.2

43.9

10.2

12.3

24.5

23.1

7.9

7.7

13.2

13.0

20 OMRON Corporation

Others

Net sales of other divisions decreased 1.3 percent to ¥72.3 billion, and represented 13.0 percent of total net sales. The

Creative Service Company expanded its business by working to commercialize new services and by raising competitiveness

through improved efficiency.

In the copier and printer business, the trend toward digitalization and multi-functional equipment supported performance in

the paper sorting equipment sector. In the PC-related equipment business, OMRON is moving to expand sales by swiftly

developing communications equipment that incorporates the use of ISDN and mobile phones, and by emphasizing solutions

for the open systems business.

The increase or decrease in sales of each internal business company was as follows:

Industrial Automation . . . . . . . . . . . . . . . . . . . . . .

Electronic Components . . . . . . . . . . . . . . . . . . . . .

Social Systems Business . . . . . . . . . . . . . . . . . . . . .

Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . .

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2000

(0.9)%

20.6

(5.4)

(2.5)

(1.3)

1999

N/A%

N/A

1998

N/A%

N/A

Note: Due to a restructuring in April 1999, figures for increase or decrease in sales corresponding to current internal companies are not available for 1999 and previous years.

The composition of net sales was as follows:

Industrial Automation . . . . . . . . . . . . . . . . . . . . . .

Electronic Components . . . . . . . . . . . . . . . . . . . . .

Social Systems Business . . . . . . . . . . . . . . . . . . . . .

Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . .

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2000

43.9%

12.3

23.1

7.7

13.0

1999

44.2%

10.2

24.5

7.9

13.2

1998

N/A%

N/A

Note: Due to a restructuring in April 1999, figures for net sales corresponding to current internal companies are not available for 1998.

Review of Operations by Region
Japan

Although consumer spending remained restrained, a rebound in private capital investment in some sectors indicated that

the economy had bottomed out and was beginning to recover. The Industrial Automation Company, the Electronic

Components Company and the Healthcare Company performed solidly, and sales of the Social Systems Business Company

decreased. Sales to external customers increased 2.5 percent to ¥397.2 billion.

Sales by Region

(%)

Japan

North America

Europe

Asia and Other

1996 4.9

11.2

7.3

1997

5.5

11.3

8.8

1998

5.9

12.1

10.0

1999

5.8

13.9

10.5

2000

6.7

11.0

10.7

76.6

74.4

72.0

69.8

71.6

OMRON Corporation 21

North America

Personal consumption and strong capital investment, centered on information technology (IT), supported continued solid

economic growth. The Industrial Automation Company and the Electronic Components Company benefited from favorable

demand in the IT, semiconductor and automobile industries. The Healthcare Company’s performance was impacted by

intense competition during the Christmas season. As a result, sales to external customers increased 2.1 percent to ¥59.5

billion.

Europe

The European economy drew support from the depreciation of the Euro and consequent increase in exports and from an

increase in personal consumption. Recovery was particularly firm in Germany and the United Kingdom. The Industrial

Automation Company and the Electronic Components Company benefited from the positive effect economic recovery had on

orders from equipment manufacturers and other customers. Healthcare Company results were impacted by intensified price

competition. The depreciation of the Euro, however, was a primary factor resulting in a 20.6 percent year-on-year decrease in

sales to external customers to ¥61.3 billion.

Asia and Other

The economies of Southeast Asia and the Republic of Korea recovered strongly from the recession induced by the currency

crisis. The economy of greater China also firmed. In Southeast Asia, the Industrial Automation Company benefited from a

strong recovery in demand from semiconductor and electronics manufacturers, and the performance of the Social Systems

Business Company also improved. The economy of the Republic of Korea recovered despite instability among the large

corporate groups, contributing to strong performance gains by the Industrial Automation Company and the Electronic

Components Company. In greater China, the Industrial Automation Company and the Healthcare Company in particular

generated performance gains. As a result, sales to external customers increased 16.4 percent to ¥37.4 billion.

Assets, Liabilities and Shareholders’ Equity

As of March 31, 2000, total assets decreased ¥1.1 billion, or 0.2 percent, from a year earlier to ¥579.5 billion. Current assets

decreased ¥5.0 billion, or 1.5 percent, from a year earlier to ¥317.3 billion, with trade notes and accounts receivable,

inventories and deferred income taxes lower. Trade notes and accounts receivable decreased ¥3.8 billion, or 2.9 percent, from

a year earlier to ¥130.4 billion, mainly because of the appreciation of the yen. Inventories decreased ¥1.7 billion, or 2.2

percent, from a year earlier to ¥77.8 billion, primarily because of progress in improving supply chain management and the

appreciation of the yen. Deferred income taxes decreased ¥2.3 billion to ¥9.0 billion.

Property, plant and equipment decreased ¥6.9 billion, or 4.2 percent, from a year earlier to ¥156.0 billion due to reductions

in machinery and equipment and shortfalls in conversion amounts due to the appreciation of the yen. Investments and other

assets increased ¥10.8 billion, or 11.3 percent, to ¥106.2 billion. While leasehold deposits and deferred income taxes

Working Capital and Current Ratio

Inventory Turnover

Return on Tangible Fixed Assets

(Millions of Yen/%)

Working Capital

Current Ratio

(Times)

(%)

4
0
4
,
7
3
1

9
8
7
,
8
4
1

173

178

0
1
6
4
6
1

7
9
7
,
9
6
1

215

204

9
9
7
,
2
5
1

186

4.66

4.56

4.51

4.28

4.18

11.0

9.2

8.6

7.2

1.3

1996 1997 1998 1999 2000

22 OMRON Corporation

decreased, the market value of investment securities increased ¥15.3 billion from a year earlier.

The total of current liabilities, long-term liabilities and minority interests in subsidiaries decreased ¥15.9 billion, or 6.1

percent, from a year earlier to ¥243.4 billion. Current liabilities decreased ¥10.2 billion, or 6.5 percent, from a year earlier to

¥147.5 billion. Short-term bank loans decreased ¥17.7 billion from the previous fiscal year-end to ¥10.2 billion, while trade

notes and accounts payable increased. Income taxes payable increased, primarily due to higher parent company earnings.

The current ratio improved to 215 percent from 204 percent, and working capital increased 3.2 percent to ¥169.8 million.

Long-term debt increased 2.4 percent to ¥58.0 billion, mainly from additional loans from banks and other financial institutions.

As a result, interest-bearing liabilities, defined as the sum of bank loans, the current portion of long-term debt and long-term

debt, decreased ¥17.3 billion, or 19.9 percent, from a year earlier to ¥69.5 billion.

Shareholders’ equity increased ¥14.8 billion, or 4.6 percent, over the previous fiscal year-end to ¥336.1 billion. The ratio of

shareholders’ equity to total assets improved to 58.0 percent from 55.3 percent a year earlier. The debt/equity ratio improved

to 0.724 times from 0.807 times a year earlier. Return on average total shareholders’ equity rose to 3.5 percent from 0.7

percent for the pervious fiscal year. In addition, net assets per share of stock issued and outstanding rose to ¥1,308.64 from

¥1,250.28 a year earlier. Foreign currency translation adjustments increased to ¥21.0 billion from ¥12.0 billion a year earlier

due to the appreciation of the yen, and had the effect of reducing shareholders’ equity and minority interests. Net unrealized

gains on available-for-sale securities increased to ¥13.8 billion from ¥5.1 billion a year earlier. No minimum pension liability

adjustments were booked on a consolidated basis.

Cash Flow

At March 31, 2000 cash and cash equivalents and short-term investments increased ¥5.0 billion, or 5.6 percent, from a year

earlier to ¥95.0 billion. Fluctuations in the exchange rate had the effect of reducing cash and cash equivalents by ¥2.2 billion

for the fiscal year.

Cash provided by operating activities increased ¥30.3 billion, or 102.6 percent, to ¥60.0 billion, due mainly to the increase in

net income. Depreciation and amortization increased ¥49.0 million, or 0.2 percent, year-on-year to ¥31.4 billion.

Cash used in investing activities increased ¥5.2 billion, or 17.8 percent, from the previous fiscal year to ¥34.2 billion,

primarily because of a net purchase of short-term investments and investment securities. Capital expenditures decreased ¥5.6

billion, or 15.1 percent, year-on-year to ¥31.1 billion.

Free cash flow totaled ¥25.7 billion. While net income increased, lower accounts receivable and inventories reduced working

capital and OMRON selectively deployed cash in investments.

Cash used in financing activities totaled ¥23.8 billion due to factors including the net repayment of bank loans.

Return on Shareholders’ Equity

Return on Assets

Price/Book Value Ratio

(%)

5.5

4.7

4.8

7.0

6.4

3.5

5.4

3.6

1.4

(Times)

1.94

2.23

1.54

1.73

1.18

0.7

1996 1997 1998 1999 2000

OMRON Corporation 23

Consolidated Balance Sheets

OMRON Corporation and Subsidiaries
March 31, 2000 and 1999

ASSETS

Current Assets:

Millions of yen

Thousands of
U.S. dollars (Note 2)

2000

1999

2000

Cash and cash equivalents............................................................................

¥ 88,670

Short-term investments (Note 4) ...................................................................

6,300

Notes and accounts receivable—trade .........................................................

130,355

Allowance for doubtful receivables................................................................

Inventories (Note 3)........................................................................................

Deferred income taxes (Note 9) .....................................................................

Other current assets ......................................................................................

(2,001)

77,807

9,026

7,116

¥ 88,900

1,054

134,183

(2,450)

79,535

11,336

9,705

$ 836,509

59,434

1,229,764

(18,877)

734,028

85,151

67,132

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

317,273

322,263

2,993,141

Property, Plant and Equipment:

Land ...............................................................................................................

Buildings ........................................................................................................

Machinery and equipment .............................................................................

Construction in progress ...............................................................................

51,082

110,330

129,639

3,933

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

294,984

50,598

111,263

135,197

4,326

301,384

481,906

1,040,849

1,223,009

37,104

2,782,868

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

(138,950)

(138,489)

(1,310,849)

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

156,034

162,895

1,472,019

Investments and Other Assets:

Investments in and advances to associates..................................................

Investment securities (Note 4) .......................................................................

Leasehold deposits........................................................................................

Deferred income taxes (Note 9) .....................................................................

Other ..............................................................................................................

2,013

69,397

10,608

6,415

17,749

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

106,182

1,770

54,114

12,035

8,834

18,675

95,428

18,991

654,689

100,075

60,519

167,443

1,001,717

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

¥579,489

¥580,586

$5,466,877

See notes to consolidated financial statements.

24 OMRON Corporation

Millions of yen

Thousands of
U.S. dollars (Note 2)

LIABILITIES AND SHAREHOLDERS’ EQUITY

2000

1999

2000

Current Liabilities:

Bank loans (Note 5) .......................................................................................

¥ 10,242

¥ 27,946

$ 96,623

Notes and accounts payable—trade .............................................................

Accrued expenses .........................................................................................

Income taxes payable....................................................................................

Other current liabilities (Note 9) .....................................................................

Current portion of long-term debt (Note 5)....................................................

78,467

21,430

11,334

24,741

1,262

70,971

20,924

9,020

26,625

2,167

740,255

202,170

106,924

233,405

11,906

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

147,476

157,653

1,391,283

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

57,968

56,610

546,868

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

3,725

908

35,142

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

30,629

40,076

288,953

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

1,114

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

2,515

1,525

2,556

10,509

23,726

Shareholders’ Equity (Note 8):

Common stock, ¥50 par value:

Authorized: 495,000,000 shares in 2000 and 1999

Issued: 257,109,236 shares in 2000 and

257,107,214 shares in 1999 ..........................................................

Additional paid-in capital ...............................................................................

Legal reserve .................................................................................................

64,082

98,705

7,250

Retained earnings ..........................................................................................

173,804

Accumulated other comprehensive income (loss) (Note 13) .........................

(7,168)

64,079

98,702

6,811

166,020

(14,012)

604,547

931,179

68,396

1,639,660

(67,622)

Treasury stock, at cost— 307,000 shares in 2000 and

158,000 shares in 1999........................................

(611)

(342)

(5,764)

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

336,062

321,258

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

¥579,489

¥580,586

3,170,396

$5,466,877

See notes to consolidated financial statements.

OMRON Corporation 25

Consolidated Statements of Income

OMRON Corporation and Subsidiaries
Years ended March 31, 2000, 1999 and 1998

Millions of yen

Thousands of
U.S. dollars (Note 2)

2000

1999

1998

2000

Net Sales ..................................................................................................

¥555,358

¥555,280

¥611,795

$5,239,226

Costs and Expenses:

Cost of sales ..........................................................................................

Selling, general and administrative expenses .......................................

Research and development expenses ..................................................

Interest expenses, net (Note 5)..............................................................

Foreign exchange loss, net....................................................................

Other expenses (income), net................................................................

358,911

133,662

36,605

750

2,841

1,553

364,314

136,734

42,383

862

2,766

(28)

387,445

138,404

39,914

682

4,419

(1,312)

3,385,953

1,260,962

345,330

7,076

26,802

14,651

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

534,322

547,031

569,552

5,040,774

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

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

21,036

9,048

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

11,988

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

427

8,249

6,044

2,205

42,243

23,371

18,872

168

198,452

85,358

113,094

4,028

Net Income...............................................................................................

¥ 11,561

¥ 2,174

¥ 18,704

$ 109,066

Net Income per Share (Note 11):

Basic .....................................................................................................

Diluted...................................................................................................

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

See notes to consolidated financial statements.

2000

¥45.0

44.5

13.0

Yen

1999

¥ 8.3

8.3

13.0

U.S. dollars (Note 2)

1998

2000

¥71.4

69.8

13.0

$0.42

0.42

0.12

26 OMRON Corporation

Consolidated Statements of Comprehensive Income

OMRON Corporation and Subsidiaries
Years ended March 31, 2000, 1999 and 1998

Millions of yen

Thousands of
U.S. dollars (Note 2)

2000

1999

1998

2000

Net Income...............................................................................................

¥11,561

¥ 2,174

¥18,704

$109,066

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 end of year...............................................

(9,044)

(6,082)

(2,592)

(85,321)

Reclassification adjustment for the portion realized upon

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

—

Net change in foreign currency translation adjustments

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

(9,044)

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

7,138

(6,042)

(5,737)

(2,592)

745

Unrealized gains on available-for-sale securities:

Unrealized holding gains (losses) arising during the year ..................

9,050

(620)

(3,481)

Reclassification adjustment for losses on impairment

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

1,202

—

Reclassification adjustment for gains

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

(1,502)

Net unrealized gains (losses) .................................................................

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

8,750

6,844

(898)

(1,518)

(13,297)

—

(4)

(3,485)

(5,332)

(85,321)

67,340

85,377

11,340

(14,170)

82,547

64,566

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

¥18,405

¥(11,123)

¥13,372

$173,632

See notes to consolidated financial statements.

OMRON Corporation 27

Consolidated Statements of Shareholders’ Equity

OMRON Corporation and Subsidiaries
Years ended March 31, 2000, 1999 and 1998

Number of
common shares
issued

Common
stock

Additional
paid-in
capital

Legal
reserve

Retained
earnings

Accumulated
other
comprehensive
income (loss)

Treasury
stock

Millions of yen

Balance, April 1, 1997 ........................ 262,107,214

¥64,079

¥98,702

¥5,963

¥159,741

¥ 4,617

¥ —

Net income.......................................

Cash dividends, ¥13 per share ..........

Transfer to legal reserve ..................

Other comprehensive loss ...............

18,704

(3,408)

(351)

351

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

64,079

98,702

6,314

174,686

Net income.......................................

Cash dividends, ¥13 per share ..........

Transfer to legal reserve ..................

Other comprehensive loss ...............

Treasury stock .................................

Share buyback and retirement.........

(5,000,000)

497

2,174

(3,372)

(497)

(6,971)

(5,332)

(715)

—

(13,297)

(342)

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

64,079

98,702

6,811

166,020

(14,012)

(342)

Net income.......................................

Cash dividends, ¥13 per share ..........

Transfer to legal reserve ..................

Other comprehensive income..........

Treasury stock .................................

Exercise of stock options.................

11,561

(3,338)

(439)

439

6,844

(288)

Conversion of convertible bonds .....

2,022

Balance, March 31, 2000 ................... 257,109,236

¥64,082

¥98,705

¥7,250

¥173,804

¥ (7,168)

¥(611)

Thousands of U.S. dollars (Note 2)

Common
stock

Additional
paid-in
capital

Legal
reserve

Retained
earnings

Accumulated
other
comprehensive
income (loss)

Treasury
stock

Balance, March 31, 1999 ............................................

$604,519

$931,151

$64,255

$1,566,226

$(132,188)

$(3,226)

Net income ................................................................

Cash dividends, $0.12 per share...............................

Transfer to legal reserve............................................

Other comprehensive income ...................................

Treasury stock...........................................................

Exercise of stock options ..........................................

109,066

(31,491)

(4,141)

4,141

64,566

(2,717)

179

Conversion of convertible bonds ..............................

Balance, March 31, 2000 ............................................

$604,547

$931,179

$68,396

$1,639,660

$ (67,622)

$(5,764)

See notes to consolidated financial statements.

28 OMRON Corporation

Consolidated Statements of Cash Flows

OMRON Corporation and Subsidiaries
Years ended March 31, 2000, 1999 and 1998

Millions of yen

Thousands of
U.S. dollars (Note 2)

2000

1999

1998

2000

¥11,561

¥ 2,174

¥18,704

$109,066

31,445
412

31,396
458

31,129
268

Operating Activities:

Net income .............................................................................................
Adjustments to reconcile net income to net

cash provided by operating activities:
Depreciation and amortization ............................................................
Loss on sale of property, plant and equipment ..................................
Net gain on sale of short-term investments

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

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

(2,783)
2,072
5,638
5,778
(5,809)
427
—

2,507
(534)
(3,030)
10,062
2,633
(585)
132

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

48,365

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

59,926

Investing Activities:

Proceeds from sales or maturities of short-term investments

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

32,289
(37,413)
(31,146)
1,456
1,081
(447)
—

(1,725)
—
—
4,178
(6,358)
31
286

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

27,409

29,583

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

(1)
—
—
2,004
(634)
168
—

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

13,382

32,086

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

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

(34,180)

(29,011)

(17,631)

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

(18,087)
775
(3,102)
(3,371)
—

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

(23,785)

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

21,629

(2,864)
648
(18,013)
(3,408)
—

(23,637)

Effect of Exchange Rate Changes on Cash

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

(2,191)

(1,666)

(1,741)

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

(230)

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

88,900

20,535

68,365

(10,923)

79,288

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

¥88,670

¥88,900

¥68,365

See notes to consolidated financial statements.

296,651
3,887

(26,255)
19,547
53,189
54,510
(54,802)
4,028
—

23,651
(5,038)
(28,585)
94,925
24,840
(5,519)
1,245

456,274

565,340

304,613
(352,953)
(293,830)
13,736
10,198
(4,217)
—

(322,453)

(170,632)
7,311
(29,264)
(31,802)
—

(224,387)

(20,670)

(2,170)

838,679

$836,509

OMRON Corporation 29

Notes to Consolidated Financial Statements

OMRON Corporation and Subsidiaries

1. Summary of
Significant
Accounting
Policies

30 OMRON Corporation

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 gen-
erally 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 principal adjustments include accrual of certain expenses, accounting for termina-
tion and retirement benefits, accrual of deferred income taxes relating to these adjustments and accounting for
prior years’ stock dividends at market value.

Certain reclassifications have been made to amounts previously reported in order to conform to 2000 classifi-

cations.

Principles of Consolidation
The consolidated financial statements include the accounts of OMRON Corporation (the “Company”) and its sub-
sidiaries (together the “Companies”). All significant intercompany accounts and transactions have been eliminat-
ed. 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 principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabili-
ties 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, commercial paper, securities purchased with resale agreements and money market instruments.

Short-Term Investments and Investment Securities
The Companies classify all their marketable 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 com-
ponent of other comprehensive income, net of related taxes, until recognized. 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 ¥8,428 million ($79,509 thou-
sand), ¥9,822 million and ¥10,329 million for the years ended March 31, 2000, 1999 and 1998, respectively.

Termination and Retirement Benefits
Termination and retirement benefits are accounted for in accordance with SFAS No. 87, “Employers’ Accounting
for Pensions” and are disclosed in accordance with SFAS No. 132, “Employers’ Disclosures about Pensions and
Other Post-retirement Benefits.” 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. Stock options are granted to directors
and certain employees 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 carry-
forwards and tax credit 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 recognized as adjust-
ments 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 lia-
bilities in the consolidated balance sheets.

Comprehensive Income
Comprehensive income consists of net income, foreign currency translation adjustments, minimum pension liability
adjustments and unrealized gains and losses on available-for-sale securities, and is presented in the consolidated
statements of comprehensive income.

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 internal companies and one business development group, as described below.

Industrial Automation manufactures and sells control components and systems including programmable
logic controllers, sensors and switches used in automatic systems in industries. In the global market, the compa-
ny offers many services, such as those involving labor saving automation, environmental protection, safety
improvement, and inspection-automization solutions for highly developed production systems.

Electronic Components 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, vending
machines, and office equipment.

Social Systems Business encompasses the production and sale of automated teller machines, card autho-
rization terminals and point of sales systems for both domestic and overseas markets. Passing gates and auto-
mated ticket machines and electronic panels and terminal displays for traffic information and monitoring purpos-
es are also produced for the domestic market.

Healthcare sells blood pressure monitors, digital thermometers, body-fat monitors, nebulizers and infra-red

therapy devices aimed at both the consumer and institutional markets.

Creative Service provides such outsourcing services as distribution, advertising and public relations, person-

nel, information systems, administration, employee benefit schemes and accounting.

Business Development Group consists of businesses with high growth potential. The group provides the
peripheral equipment loaded in office automation equipment, card readers, modems, terminal adapters, scanners
and uninterrupted power supplies.

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 expect to adopt SFAS No.133 for the year beginning April 1, 2001. The effect on the
Companies’ consolidated financial statements of adopting SFAS No.133 has not been determined.

OMRON Corporation 31

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 ¥106 to $1, the approximate
free rate of exchange at March 31, 2000. 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 consisted of:

Finished products ...........................................................................................
Work-in-process .............................................................................................
Materials and supplies ....................................................................................

¥44,080
15,242
18,485

¥47,653
14,107
17,775

$415,849
143,792
174,387

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

¥77,807

¥79,535

$734,028

Millions of yen

Thousands of
U.S. dollars

2000

1999

2000

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:

2000

1999

Millions of yen

Gross
unrealized
gains

Gross
unrealized
losses

Cost

Fair
value

Cost

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value

Short-term investments:

Debt securities ............... ¥ 5,008
410
Equity securities.............

Total short-term

¥ — ¥ — ¥ 5,008
1,292

(14)

896

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

5,418

896

(14)

6,300

Marketable investment

securities:

20
722

742

¥ — ¥ — ¥

20
1,034

(87)

399

(87)

1,054

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

8
39,244

—
27,449

—
(2,698)

8
63,995

11
39,070

—
16,562

—
(6,328)

11
49,304

Total marketable

investment securities .......

39,252

27,449

(2,698)

64,003

39,081

16,562

(6,328)

49,315

Total ........................... ¥44,670

¥28,345

¥(2,712) ¥70,303

¥39,823

¥16,961

¥(6,415) ¥50,369

32 OMRON Corporation

Thousands of U.S. dollars

2000

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value

Cost

Short-term investments:

Debt securities............ $ 47,245
3,868
Equity securities .........

Total short-term

$ — $ — $ 47,245
12,189

8,453

(132)

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

51,113

8,453

(132)

59,434

Marketable investment

securities:

76
Debt securities............
Equity securities ......... 370,226

—
258,953

—
(25,453)

76
603,726

Total marketable

investment securities.... 370,302

258,953

(25,453)

603,802

Total ........................ $421,415 $267,406 $(25,585) $663,236

Net unrealized holding gains on available-for-sale securities, net of related taxes, increased by ¥8,750 million
($82,547 thousand) for the year ended March 31, 2000 and decreased by ¥1,518 million for the year ended
March 31, 1999. Debt securities classified as available-for-sale investment securities mature in various amounts
through 2001.

Proceeds from sales of available-for-sale securities were ¥31,964 million ($301,547 thousand), ¥26,478 million

and ¥21,160 million for the years ended March 31, 2000, 1999 and 1998, respectively.

Gross realized gains on those sales were ¥3,456 million ($32,604 thousand) and ¥3,001 million for the years

ended March 31, 2000 and 1999, respectively, and were not material for the year ended March 31, 1998.

Gross realized losses were ¥867 million ($8,179 thousand) and ¥1,275 million for the years ended March 31,

2000 and 1999, 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, 2000 and 1999 were 3.5% and
2.5%, respectively.

Long-term debt at March 31 consisted of the following:

Millions of yen

Thousands of
U.S. dollars

2000

1999

2000

Unsecured debt:

Convertible bonds at 1.7%, due in 2004 ....................................................

¥29,735

¥29,741

$280,519

Notes:

Loans from banks and other financial institutions,

generally at 0.6% to 6.0%, due serially through 2005..............................
Other ...............................................................................................................

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

29,199
296

59,230
1,262

28,794
242

58,777
2,167

275,462
2,793

558,774
11,906

Long-term debt, less current portion..............................................................

¥57,968

¥56,610

$546,868

The annual maturities of long-term debt outstanding at March 31, 2000 were as follows:

Years ending March 31

Millions of yen

2001 .........................................................................................................................
2002 .........................................................................................................................
2003 .........................................................................................................................
2004 .........................................................................................................................
2005 .........................................................................................................................
2006 and thereafter .................................................................................................

¥ 1,262
26,053
357
24
29,745
1,789

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

¥59,230

Thousands of
U.S. dollars

$ 11,906
245,783
3,368
227
280,613
16,877

$558,774

OMRON Corporation 33

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 con-
vertible 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,
2000 was 10,026,639 shares. The conversion price per share at March 31, 2000 was ¥2,965 ($27.97), subject to
anti-dilutive 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, 2000, 1999 and 1998

amounted to ¥1,897 million ($17,896 thousand), ¥2,518 million and ¥2,412 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, 2000, future
minimum rental payments applicable to non-cancelable leases having initial or remaining non-cancelable lease
terms in excess of one year were as follows:

Years ending March 31

Millions of yen

Thousands of
U.S. dollars

¥1,546
682
662
637
631
2,447

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

¥6,605

$14,585
6,434
6,245
6,009
5,953
23,085

$62,311

Rental expense amounted to ¥11,120 million ($104,906 thousand), ¥15,193 million and ¥13,917 million for the

years ended March 31, 2000, 1999 and 1998, respectively.

The Company has a contract with an outside service organization for outsourcing computer services. The con-
tract requires an annual service fee of ¥5,076 million ($47,887 thousand) for the year ending March 31, 2001. The
annual service fee will gradually decrease each year during the contract term to ¥4,518 million ($42,623 thou-
sand) 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 sub-
stantially all domestic employees. Benefits are based on the employee’s years of service, with some plans con-
sidering 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 are 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 addi-
tional portion are usually paid in a lump sum at the earlier of termination or retirement, although periodic pay-
ments are available under certain conditions.

6. Leases

7. Termination and

Retirement
Benefits

34 OMRON Corporation

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

value of the plan assets at March 31:

Millions of yen

2000

1999

Change in benefit obligation:

Benefit obligation at beginning of year .........................................
Service cost ..................................................................................
Interest cost ..................................................................................
Plan amendments .........................................................................
Actuarial (gains) and losses ..........................................................
Benefits paid (including benefits paid by the Companies) ....................

¥180,467
10,147
6,316
—
(4,012)
(3,655)

¥154,614
10,227
5,411
1,030
13,366
(4,181)

Thousands of
U.S. dollars

2000

$1,702,519
95,726
59,585
—
(37,849)
(34,481)

Benefit obligation at end of year ...............................................

¥189,263

¥180,467

$1,785,500

Change in plan assets:

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

97,884
25,555
6,504
1,000
(1,806)

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

923,434
241,085
61,359
9,434
(17,038)

Fair value of plan assets at end of year ....................................

¥129,137

¥ 97,884

$1,218,274

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

(60,126)
30,232
1,078

(82,583)
58,095
1,348

(567,226)
285,207
10,170

Net amount recognized.............................................................

¥ (28,816)

¥ (23,140)

$ (271,849)

Amounts recognized in the consolidated balance sheets:

Accrued liability.............................................................................
Intangible assets ...........................................................................
Accumulated other comprehensive income (gross of tax) ...........

¥ (28,816)
—
—

¥ (38,379)
1,348
13,891

$ (271,849)
—
—

Net amount recognized.............................................................

¥ (28,816)

¥ (23,140)

$ (271,849)

Accumulated benefit obligation at end of year ............................

¥146,248

¥136,263

$1,379,698

The provisions of SFAS No. 87, “Employers’ Accounting for Pensions,” require the recognition of an additional
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 lia-
bility is reflected as other comprehensive income, net of related deferred tax benefits. The unrecognized transi-
tion obligation and the unrecognized net actuarial loss are being amortized over 15 years.

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

Discount rate ............................................................................................................ 3.5%
Compensation increase rate .................................................................................... 3.6
Expected long-term rate of return on plan assets.................................................... 4.0

2000

1999

3.5%
3.6
3.5

1998

4.0%
3.8
3.5

OMRON Corporation 35

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

for the years ended March 31:

Millions of yen

Thousands of
U.S. dollars

2000

1999

2000

Service cost ....................................................................................................
Interest cost on projected benefit obligation ..................................................
Expected return on plan assets ......................................................................
Net amortization and deferral .........................................................................
Employees’ contributions ...............................................................................

¥10,147
6,316
(4,088)
2,652
(1,000)

¥10,227
5,411
(3,252)
1,982
(1,012)

$ 95,726
59,585
(38,566)
25,019
(9,434)

Net expense ............................................................................................

¥14,027

¥13,356

$132,330

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 manda-
tory 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 lia-
bility equal to the plans’ vested benefits, which exceed the plans’ accumulated benefit obligation.

The consolidated liability for the noncontributory termination plans as of March 31, 2000 and 1999 was ¥1,813
million ($17,104 thousand) and ¥1,697 million, respectively. The consolidated expense for the noncontributory
termination and retirement plans for the years ended March 31, 2000, 1999 and 1998 was ¥1,041 million ($9,821
thousand), ¥84 million and ¥146 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 com-
mon stock is determined by resolution of the Board of Directors. Proceeds in excess of the amounts designated
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 divi-
dends 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 resolu-
tion of the Board of Directors. The Company may also transfer portions of unappropriated retained earnings,
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, 2000, retained earnings amount-
ing to ¥91,132 million ($859,736 thousand) were available for future dividends, subject to legal reserve require-
ments.

8. Shareholders’

Equity

9. Income Taxes

The provision for income taxes for the years ended March 31, 2000, 1999 and 1998 consisted of the following:

Current income tax expense ...........................................
Deferred income tax expense (benefit),

Millions of yen

Thousands of
U.S. dollars

2000

1999

1998

2000

¥14,857

¥12,426

¥24,579

$140,160

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

(5,809)

(8,591)

(1,305)

(54,802)

Change in the beginning of the year balance of

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

Adjustments of deferred tax assets and liabilities

for enacted changes in tax rates ...................................

—

(142)

2,351

(176)

273

—

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

¥ 9,048

¥ 6,044

¥23,371

$ 85,358

36 OMRON Corporation

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

the years ended March 31:

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

2000

42.0%

1999

1998

48.0% 51.0%

Permanently non-deductible items ..................................................................
Losses of subsidiaries for which no tax benefit was provided ........................
Difference in subsidiaries’ tax rates .................................................................
Change in the beginning of the year balance of

the valuation allowance for deferred tax assets ............................................
Effects of enacted change in tax rates ............................................................
Recognition of tax credit carryforward of an overseas subsidiary...................
Other, net .........................................................................................................

2.8
2.9
(3.0)

—
—
—
(1.7)

30.2
10.1
(18.1)

(1.7)
28.5
(28.5)
4.8

6.0
1.0
(6.0)

(0.4)
0.6
—
3.1

Effective tax rates.........................................................................................

43.0%

73.3% 55.3%

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 42.0% in 2000, 48.0% in 1999 and 51.0% in 1998.
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, 2000 and 1999 were as follows:

Millions of yen

Thousands of U.S. dollars

2000

1999

2000

Deferred
tax
assets

Deferred
tax
liabilities

Deferred
tax
assets

Deferred
tax
liabilities

Deferred
tax
assets

Deferred
tax
liabilities

Inventory valuation ............................................ ¥ 1,477
3,224
Accrued bonuses and vacations .......................
9,312
Termination and retirement benefits..................
896
Enterprise taxes.................................................
2,208
Intercompany profits .........................................
Marketable securities ........................................
Allowance for doubtful receivables ...................
Bad debt expenses ...........................................
Gain on sale of land...........................................
Minimum pension liability adjustment ...............
Other temporary differences .............................
Tax credit carryforwards....................................
Subsidiaries’ operating loss carryforwards .......

879
2,368
—
—
5,464
3,245
5,104

¥ — ¥ 1,676
2,152
6,266
568
2,522
—
407
—
—
5,834
4,709
5,954
4,311

—
—
—
—
— 10,766
308
—
1,076
—
4,416
—
—

30,415
87,849
8,453
20,830

— $ 13,934 $ —
—
—
—
—
—
—
—
—
— 101,566
4,429
2,906
209
—
—
— 10,151
1,076
—
—
—
41,660
51,547
5,169
—
30,613
—
—
48,151
—

8,292
22,340

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

34,177
(6,485)

16,566
—

34,399
(4,804)

10,883
—

322,424
(61,179)

156,283
—

Total ........................................................... ¥27,692

¥16,566

¥29,595

¥10,883

$261,245 $156,283

OMRON Corporation 37

The total valuation allowance increased by ¥1,681 million ($15,858 thousand) and ¥2,162 million in 2000 and

1999, respectively, and decreased by ¥1,689 million in 1998.

As of March 31, 2000, certain subsidiaries had operating loss carryforwards approximating ¥13,320 million
($125,660 thousand) available for reduction of future taxable income, most of which expire in various amounts
through 2005.

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
which are considered to be indefinitely reinvested and for which Japanese income taxes have not been provided
were ¥41,900 million ($395,283 thousand) and ¥37,175 million at March 31, 2000 and 1999, respectively. It is not
practicable to estimate the amount of unrecognized deferred Japanese income taxes on these unremitted earn-
ings. Dividends received from domestic subsidiaries are expected to be substantially free of tax.

10. Foreign

Operations

Net sales and total assets of foreign subsidiaries for the years ended March 31, 2000, 1999 and 1998 were as fol-
lows:

Net sales .................................................................
Total assets ............................................................

¥158,122
¥115,532

¥167,546
¥122,039

¥171,181
¥143,247

Millions of yen

2000

1999

1998

Thousands of
U.S. dollars

2000

$1,491,717
$1,089,925

11. Amounts per

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 convertible bonds and stock options, and has been computed by the if-converted
method for convertible bonds and by the treasury stock method for stock options.

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

tions is as follows:

Millions of yen

Thousands of
U.S. dollars

2000

1999

1998

2000

Net income............................................................................. ¥11,561
Effect of dilutive securities:

¥2,174

¥18,704

$109,066

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

325

—

292

3,066

Diluted net income ................................................................. ¥11,886

¥2,174

¥18,996

$112,132

Number of shares

2000

1999

1998

Weighted average common shares outstanding ................. 256,841,987
Dilutive effect of:

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

10,028,349

Stock Options...................................................................

28,106

260,649,752

262,107,214

—

10,028,661

—

Diluted common shares outstanding ................................... 266,898,442

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 exclud-
ed 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.

38 OMRON Corporation

12. Supplemental

Information for
Cash Flows

13. Other

Comprehensive
Income (Loss)

Supplemental cash flow information for the years ended March 31, 2000, 1999 and 1998 was as follows:

Interest paid.....................................................................
Income taxes paid ...........................................................
Non-cash investing and financing activities:

Liabilities assumed in connection with capital

Millions of yen

Thousands of
U.S. dollars

2000

1999

1998

2000

¥ 1,980
12,543

¥ 2,450
18,417

¥ 2,347
25,804

$ 18,679
118,330

expenditures ..............................................................

3,467

5,559

4,547

32,708

The change in each component of accumulated other comprehensive income (loss) for the years ended
March 31, 2000, 1999 and 1998 was as follows:

Millions of yen

Thousands of
U.S. dollars

2000

1999

1998

2000

Foreign currency translation adjustments:

Beginning balances ..................................................... ¥(11,954)
(9,044)
Change for the year .....................................................

¥ (5,912)
(6,042)

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

(20,998)

(11,954)

Minimum pension liability adjustments:

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

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

(7,138)
7,138

—

Unrealized gains on available-for-sale securities:

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

5,080
8,750

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

13,830

(1,401)
(5,737)

(7,138)

6,598
(1,518)

5,080

¥(3,320)
(2,592)

(5,912)

(2,146)
745

(1,401)

10,083
(3,485)

6,598

$(112,773)
(85,321)

(198,094)

(67,340)
67,340

—

47,925
82,547

130,472

Total accumulated other comprehensive income (loss):
Beginning balances .....................................................
Change for the year .....................................................

(14,012)
6,844

(715)
(13,297)

4,617
(5,332)

(132,188)
64,566

Ending balances .............................................................. ¥ (7,168)

¥(14,012)

¥ (715)

$ (67,622)

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

31, 2000, 1999 and 1998 were as follows:

2000

Tax

Millions of yen

1999

Tax

1998

Tax

Before-tax
amount

(expense) Net-of-tax

benefit

amount

Before-tax
amount

(expense) Net-of-tax

benefit

amount

Before-tax
amount

(expense) Net-of-tax

benefit

amount

Foreign currency translation adjustments:

Amount arising during the year on investments

in foreign entities held at end of year ...................... ¥ (9,044) ¥ — ¥(9,044) ¥ (6,082) ¥ — ¥ (6,082) ¥(2,592) ¥ — ¥(2,592)

Reclassification adjustment for the portion

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

Net change in foreign currency translation

—

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

(9,044)

— (9,044)

(6,042)

— (6,042)

(2,592)

— (2,592)

Minimum pension liability adjustments .................... 13,891

(6,753)

7,138

(11,032) 5,295

(5,737)

1,520

(775)

745

Unrealized gains on available-for-sale securities:

Unrealized holding gains arising during period......... 15,604

(6,554)

9,050

(1,194)

574

(620)

(7,104) 3,623

(3,481)

Reclassification adjustment for losses on

impairment realized in net income ..........................

2,072

(870)

1,202

—

Reclassification adjustment for gains realized

in net income...........................................................

(2,589)

1,087

(1,502)

(1,726)

828

(898)

—

(7)

—

(4)

Net unrealized gains.................................................. 15,087

(6,337)

8,750

(2,920) 1,402

(1,518)

(7,111) 3,626

(3,485)

Other comprehensive income (loss) .................. ¥19,934 ¥(13,090) ¥ 6,844 ¥(19,994) ¥6,697 ¥(13,297) ¥(8,183) ¥2,851 ¥(5,332)

OMRON Corporation 39

Thousands of U.S. dollars
2000

Before-tax
amount

Tax
(expense)
benefit

Net-of-tax
amount

Foreign currency translation adjustments:

Amount arising during the year on investments

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

$(85,321)

$ —

$(85,321)

Reclassification adjustment for the portion realized upon

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

—

Net change in foreign currency translation

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

(85,321)

—

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

131,047

(63,707)

—

(85,321)

67,340

Unrealized gains on available-for-sale securities:

Unrealized holding gains arising during period ...........................................................................
Reclassification adjustment for losses on

147,207

(61,830)

85,377

impairment realized in net income...........................................................................................

19,547

(8,207)

11,340

Reclassification adjustment for gains realized

in net income ...........................................................................................................................

(24,425)

10,255

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

142,329

(59,782)

(14,170)

82,547

Other comprehensive income (loss) ....................................................................................

$188,055

$(123,489)

$ 64,566

14. Financial

Instruments
and Risk
Management

Financial Instruments
The following table presents the carrying amounts and estimated fair values as of March 31, 2000 and 1999 of
the Companies’ financial instruments, both on and off the balance sheet.

Millions of yen

2000

1999

Thousands of
U.S. dollars

2000

Carrying
amount

Fair
value

Carrying
amount

Fair
value

Carrying
amount

Fair
value

Nonderivatives:

Long-term debt, including

current portion ........................................ ¥(59,230) ¥(68,213) ¥(58,777) ¥(59,301) $(558,774) $(643,519)

Derivatives:

Included in Other current assets

(Other current liabilities):

Forward exchange contracts ................
Interest rate swaps ...............................

269
—

269
(45)

16
—

16
(172)

2,538
—

2,538
(425)

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

ments 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, the fair values
are estimated using the present value of discounted future cash flow analysis, based on the Companies’ cur-
rent incremental issuing rates for similar types of arrangements.

40 OMRON Corporation

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, 2000 and 1999, the notional amounts on which the Companies had interest rate swap agree-
ments outstanding aggregated ¥4,000 million ($37,736 thousand) and ¥12,000 million, respectively. The estimated
fair values of interest rate swap contracts are based on the present value of discounted future cash flow analysis.

(2) Foreign exchange forward contracts:

The Companies enter into foreign exchange forward contracts to hedge foreign currency transactions (primar-
ily the U.S. dollar and the EURO), on a continuing basis for periods consistent with their committed 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 are represented by the 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) outstanding at March

31, 2000 and 1999 were as follows:

Millions of yen

Thousands of
U.S. dollars

2000

1999

2000

Related to receivables and future sales:

Forward contracts .................................................................................

¥15,374

¥13,974

$145,038

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 determined
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 currency.
Prior to conversion to 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. 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 earn
ings. Gains and losses on forward contracts are included in Foreign exchange loss, net in the consolidated
statements of income and offset losses and gains on the net monetary assets and liabilities hedged. Gains or
losses on 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.

OMRON Corporation 41

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-estab-
lished customers and their dispersion across many industries. The Company normally requires customers to
deposit with them funds to serve as security for ongoing credit sales.

Guarantees
Contingent liabilities at March 31, 2000 with respect to loans guaranteed were ¥2,502 million ($23,604 thousand),
of which ¥1,400 million ($13,208 thousand) are jointly and severally guaranteed with other unrelated companies.

42 OMRON Corporation

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,
2000 and 1999, 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, 2000, 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 man-
agement, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

Certain information required by Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an
Enterprise and Related Information,” 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 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 sub-
sidiaries as of March 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in
the period ended March 31, 2000 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 opin-

ion, 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, 2000

OMRON Corporation 43

International Network

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

REGIONAL HEADQUARTERS

OMRON Asiapacific 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 Asiapacific 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, Philippines
Phone: 63-2811-2831
Fax: 63-2811-2582

— India Representative Office
59 Hemkunt, Opp. Nehru Place,
New Delhi -110048, India
Phone: 91-11-623-8431
Fax: 91-11-623-8434

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

2. 01, Level 2, Wisma Academy 4A,
Jalan 19/1 46300 Petaling Jaya,
Selangor, Malaysia
Phone: 60-3-7954-7323
Fax: 60-3-7954-6618

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.
Rm 1028, Office Building, Beijing Capital Times Square,
No. 88 West Chang’an Ave., Beijing 100031 China
Phone: 8610-8391-3005
Fax: 8610-8391-3688

44 OMRON Corporation

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

FS Automation Pte. Ltd.
83, Clemenceau Avenue, #11-01, UE Square,
Singapore 239920, Singapore
Phone: 65-839-8518
Fax: 65-839-8435

OMRON Korea Co., Ltd.
3F, New Seoul Bldg., #618-3 Sinsa-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: 603-7876-1411
Fax: 603-7876-1954

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, 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 201206, 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

MARKETING OF SOCIAL BUSINESS
SYSTEMS

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

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 Management Center of America, Inc.
— Information Technology Center
3945 Freedom Circle, Suite 700,
Santa Clara, CA 95054, U.S.A.
Phone: 1-408-919-2828
Fax: 1-408-919-2829

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 Idm Controls, Inc.
9510 N.Houston-Rosslyn Rd.,
Houston, TX 77088
Phone: 1-713-849-1900
Fax: 1-713-849-4666

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

LOGISTICS

OMRON Trading (Shanghai) Co., Ltd.

Rui Jin Office

Rm 2211, Bank of China Tower,
200 Yin Cheng Zhong Road, Pu Dong New Area,
Shanghai, 200120, China
Phone: 86-21-5037-2222
Fax: 86-21-5037-2200

OMRON (Tianjin) International Trade Co., Ltd.
No. 77 Tianbao Road, Tianjin Port Free
Trade Zone, 300456 China
Phone: 86-22-2576-0295
Fax: 86-22-2576-3032

MANUFACTURING OF HEALTHCARE
EQUIPMENT

OMRON (Dalian) Co., Ltd.
Song Jiang Lu, 3-hao, Dalian Economic and
Technical Development Zone, Dalian, 116600, China
Phone: 86-411-761-4222
Fax: 86-411-761-6602

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

Nanjing Southeast Omron Traffic Information

Systems Co., Ltd.

6F Huihong Building, 91 Baixia Road Nanjing,
210001, China
Phone: 86-25-469-1665
Fax: 86-25-469-1650

MARKETING AND/OR MANUFACTURING
OF AUTOMOTIVE COMPONENTS

MARKETING OF OFFICE AUTOMATION
EQUIPMENT

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 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

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

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

LOGISTICS

OMRON Logistics of America, Inc.
3705 Ohio Avenue, St. Charles, Illinois 60174 U.S.A.
Phone: 1-630-513-6750
Fax: 1-630-513-1382

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

MARKETING OF RETAIL SYSTEMS
EQUIPMENT

OMRON Business Sistemas Eletrônicos

da América Latina, Ltda.

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

OMRON Corporation 45

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

OMRON Electronics G.m.b.H.
Postfach 40 04 42 40244 Langenfeld
Phone: 49-2173-6800-0
Fax: 49-2173-6800-400

MARKETING AND MANUFACTURING OF
AUTOMOTIVE COMPONENTS

OMRON Electronic Components Ltd.
Vantage Point, The Pensnett Estate,
Kingswinford, West Midlands
DY6 7FP, United Kingdom
Phone: 44-1384-405500
Fax: 44-1384-405508

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.

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

OMRON Healthcare UK Limited
Rede House, New Barn Lane, Henfield,
West Sussex BN5 9SJ
Phone: 44-1-273-495033
Fax: 44-1-273-495123

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 Fabrikautomation 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: 34-91-37-77-9-00
Fax: 34-91-37-77-9-56

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: 39-2-32681
Fax: 39-2-325154

OMRON Immobiliare S.r.l.
Viale Certosa 49, 20149 Milano, Italy
Phone: 39-02-32681
Fax: 39-02-325154

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 Administracao De Imovels Ltda.
Rua De Sao Tome, Lote 131 2685 Sacavem
Portugal
Phone: 351-1-941-7599
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

46 OMRON Corporation

Investor Information

Head Office

Date of Establishment

Stock Listings

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

Ticker Symbol Number

6645

Transfer Agent

The Mitsubishi Trust and Banking
Corporation
2-11-1, Nagatacho, Chiyoda-ku,
Tokyo 100-8212, Japan

(As of March 31, 2000)

Shiokoji Horikawa, 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

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

24,915

Paid–in Capital

¥64,079 million

Common Stock

Authorized: 495,000,000 shares
Issued: 257,109,236 shares
Number of shareholders: 25,058

Stock Price Range/Trading Volume
(Osaka Securities Exchange)

Monthly Stock Price Range (¥)

3,500

3,000

2,500

2,000

1,500

1,800,000

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

Monthly Trading Volume (shares)

High price= ¥3,450

Low price= ¥1,500

4/99

1/00

Month

OMRON Corporation 47

Shiokoji Horikawa, Shimogyo-ku, Kyoto 600-8530, Japan

Phone: 81-75-344-7000 Fax: 81-75-344-7001

Home page: http://www.omron.co.jp (Japanese)

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

This annual report is printed on recycled paper.

Printed in Japan