Omron Corporation Annual Report 2001

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FY2001 Annual Report · Omron Corporation

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Omron is undertaking a
competitive transformation
to remain at the forefront of its rapidly
evolving markets.

Annual Report 2001

Year ended March 31, 2001

Profile

Through its broad range of operations, Omron Corporation is aiming to become

a provider of innovative solutions for industry, society and daily life.

In May 2001, the Company marked its sixty-eighth anniversary with the

unveiling of a new long-term management vision for the years 2001-2010,

entitled Grand Design 2010. With the primary management goal of maximizing

corporate value on a long-term basis, GD2010 outlines the ideal image of the

Omron Group and the basic policies and management strategies needed to

achieve it.

Focusing on its strengths in sensing and control technologies, Omron will

continue striving to transform itself into a global company that contributes to

the advancement of society.

Contents

Financial Highlights .................................................................... 1

To Our Shareholders .................................................................. 2

GD2010: Grand Design for the Year 2010................................. 4

Review of Operations ................................................................. 10

Environmental Activities ............................................................ 16

Board of Directors, Corporate Auditors

and Executive Officers ............................................................ 18

Financial Section......................................................................... 19

Six–year Summary .................................................................. 19

Management’s Discussion and Analysis............................... 20

Consolidated Balance Sheets ................................................. 26

Consolidated Statements of Income...................................... 28

Consolidated Statements of Comprehensive Income.......... 29

Consolidated Statements of Shareholders’ Equity............... 30

Consolidated Statements of Cash Flows............................... 31

Notes to Consolidated Financial Statements ........................ 32

Independent Auditors’ Report ................................................ 45

International Network................................................................. 46

Investor Information................................................................... 49

Statements in this annual report with respect to Omron’s plans, strategies and beliefs, as well as other statements that are
not historical facts, are forward-looking statements involving risks and uncertainties. Important factors that could cause
actual results to differ materially from such statements include, but are not limited to, general economic conditions in
Omron’s markets, which are primarily Japan, North America, Europe, Asia-Pacific and China; demand for, and competitive
pricing pressure on, Omron’s products and services in the marketplace; Omron’s ability to continue to win acceptance for
its products and services in these highly competitive markets; and movements of currency exchange rates.

Financial Highlights

Omron Corporation and Subsidiaries
Years ended March 31, 2001, 2000 and 1999

Millions of yen
(except per share data)

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

2001

2000

1999

2001

For the Year:

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

¥594,259

¥555,358

¥555,280

$4,792,411

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

40,037

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

22,297

21,036

11,561

8,249

2,174

322,879

179,815

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

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

¥ 87.4

¥ 45.0

¥ 8.3

$ 0.71

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

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

85.3

13.0

44.5

13.0

8.3

13.0

0.69

0.10

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

¥ 37,583

¥ 31,146

¥ 36,696

$ 303,089

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

42,513

36,605

42,383

342,847

At Year End:

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

¥593,144

¥579,489

¥580,586

$4,783,419

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

325,958

336,062

321,258

2,628,694

Notes: 1. Cash dividends per share represent 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, 2001, of ¥124=$1.

Net Sales

Income before Income Taxes
and Minority Interests

Net Income

Net Income per Share
(Diluted)

(Billions of Yen)

800

700

600

500

400

300

200

100

1997 1998 1999 2000 2001

(Yen)

100

1997 1998 1999 2000 2001

Omron Corporation 1

To Our Shareholders

YOSHIO TATEISI

Representative Director and

Chief Executive Officer

A core objective for Omron in the year ended March 31, 2001, the first year of our Eighth Medium-Term Management

Plan, was accelerating the transformation of the Company. Accordingly, we worked toward market expansion and

stronger competitiveness to establish a platform for sustained earnings growth. Under the internal company system

introduced in April 1999, each internal company worked to improve its performance through measures such as

strengthening business development in overseas markets, reinforcing business tie-ups with other companies, and

boosting productivity both in and outside Japan. In addition, we invested in new and expanding business fields to

establish the foundation for Omron’s future growth. On the strength of these measures and a strong global economy

that continued through the first half of the period, we achieved record net income in the past fiscal year.

PERFORMANCE:

Consolidated net sales increased 7.0 percent year-on-year to ¥594.3 billion.

SIGNIFICANT GAIN IN PROFITS

Profits were affected by negative factors including temporary expenses associated

with the consolidation of offices, asset impairment costs resulting from the weak

domestic stock market, and exchange rate changes. Despite these factors, the

increase in net sales and a lower cost-of-sales margin led to a 90.3 percent increase

in consolidated income before income taxes and minority interests to ¥40.0 billion

and a 92.9 percent gain in net income to ¥22.3 billion, both up significantly over the

previous fiscal year. Return on equity improved from 3.5 percent to 6.7 percent.

This increase in earnings was driven by several factors. First, we realized the

benefits from our shift to a more customer-oriented approach by emphasizing the

solutions-providing business, particularly in the Industrial Automation Company.

Additional factors included a turnaround in the domestic economy led by IT-related

investment; a continuation of the strong economic climate overseas, particularly in

the United States; and increased sales for the Industrial Automation Company and

the Electronic Components Company. Moreover, the internal company system

introduced in April 1999 has resulted in even greater enthusiasm for achieving

performance objectives, because it spurs each internal company to reach its profit

and cash flow targets and engenders a stronger sense of competition among the

companies.

2 Omron Corporation

Omron has long placed priority on addressing environmental issues. We

collaborate with customers and affiliated companies in implementing measures

to reduce environmental impact in every aspect of our business, including

development, manufacturing and distribution. All of our manufacturing facilities

have achieved ISO 14001 certification, and we are also obtaining this qualification

for our nine non-manufacturing divisions, including offices and research facilities.

MANAGEMENT STRATEGIES AND

In a challenging environment marked by globalization, the IT revolution and a

PERFORMANCE TARGETS

changing industrial structure, the market is undergoing a winnowing process. In

response, Omron is working to establish a solid and sustainable profit structure.

During the fiscal year ending March 2002, to continue strengthening our profit

structure, each internal company will invest in the future growth of its existing

businesses, while managing these businesses with a clear focus on profit. We will

also support earnings growth by expanding sales while improving the SGA expense

and cost of sales ratios, and will work to maintain a sound financial position.

At the same time, we will channel more investment toward entering and

expanding our presence in new businesses. Management will select investment

parameters and conduct focused investment in growth fields that will become the

cornerstones of Omron’s future growth.

The functions and roles of internal companies and management will be clearly

identified to assure the smooth execution of these two key strategies.

As the final step of our structural reform, we will focus on converting the results

of our efforts to date into the concrete benefit of higher productivity. For the fiscal

year ending March 2002, we are aiming for record consolidated income before

taxes of ¥45.0 billion, which would surpass the previous high of ¥43.9 billion in the

fiscal year ended March 1990.

We believe that our policy of emphasizing profitability is key to earning the trust

of shareholders, a central theme of our corporate philosophy.

GROWING THE OMRON GROUP

Grand Design 2010 (GD2010), covering the first 10 years of the new century, is a

vision expressing where we want the Omron Group to be in the year 2010, and the

basic guidelines for the strategies to get us there. The main objective of GD2010 is

maximizing the corporate value of the Omron Group over the long term. To this

end, it presents three visions: a Corporate Transformation Vision for ongoing

change to build a stronger corporate structure and adapt to changes in the

environment; an Identity Vision for preserving the qualities that distinguish Omron;

and an Internal Business Company Vision that determines the direction of

development for each business area necessary for the Omron Group to achieve its

ideal image. I am confident that under GD2010, we will continue evolving as an

admirable company that has ambitious ideals and objectives.

The pages that follow cover this topic in detail, but I envision Omron in 2010 as a

company that can maintain continuous business growth on a global scale in

accordance with its own intentions while maintaining ROE above 10 percent. To

make this vision a reality, we will change our corporate structure to that of a holding

company, with all existing businesses becoming separate companies based on

strategic units. This structure will allow for more effective strategic planning and

execution and help the Omron Group establish an unshakable presence in the

global market economy. Other objectives are strengthening corporate governance

that is evaluated favorably by investors around the world, and listing our stock on

overseas exchanges, including the New York Stock Exchange.

I believe that our efforts to increase corporate value will lead to sustained returns

to Omron’s shareholders. We ask for your continued support.

Omron Corporation 3

GD2010Grand Desig

GD2010

Grand Design for the Year 2010

for the Year 2010

4 Omron Corporation

GD2010 defines the direction in which the Omron Group
must proceed to succeed in global competition. To this end,
all elements of Omron’s corporate vision have been classified
into those that require continuing reform and those that
should be preserved and carried on in the future.
Accordingly, GD2010 incorporates three corporate visions:
the Corporate Transformation Vision; the Identity Vision and
the Internal Business Company Vision.

IDEAL IMAGE OF OMRON
Creating a 21st century company

Mission
Contributing to the
development of society

Management
Objective
Maximizing
corporate value
on a long-term
basis

Offering maximum
satisfaction to customers

Becoming a
global winner

Self-Reliant Management

Self-Reliant Business Units

Self-Reliant Individuals

Vision that requires
consistent evolution
Corporate
Transformation
Vision

Vision that needs
to be preserved

Identity Vision

Corporate Philosophy

Core Competence

Management

Vision supporting the achievement of an ideal image
Internal Business Company Vision
Industrial Business, Social Business, Lifestyle Business

GD2010 OBJECTIVES

1. Mission: To contribute to the development of society

Omron’s corporate motto is “At work for a better life, a better world for
all.” Building on this philosophy, we must be resolute in regularly taking
on the challenge of creating new value and new markets.

2. Management objective: To maximize corporate value on a long-term basis

In connection with our goal of satisfying all our stakeholders, our
management objective is to maximize Omron’s corporate value in the
capital market on a long-term basis.

BASIC STRATEGY: Small but Global

l Build our presence in the global market.

l Focus on our strength in sensing and control technology, our core area of

competence.

l Follow a policy of collaborative creation with other companies, including

customers, to offer the highest value to customers.

STAGE UP VISION
Examining probable changes from a macro-perspective
and flexibly implementing actions

Process for realizing GD2010

Medium-term goals for 2005
l Achieve ROE of 10%
l Accelerate corporate divestitures
l Listings on the New York Stock Exchange
and other international stock markets

20102010

Present

Information
Society Peaking

Phase 1
Establishing a solid
structure that
guarantees profits

2005

Arrival of the
Optimization Society

Phase 2
Aggressive investments
to promote growth

Action

Use 2005 as a mid-point mark
and launch Phase 1 first to
strengthen corporate structure
in order to guarantee sound profits.

ROE 3.5% (Year ended March 2000)

ROE 10%

To cope with an

uncertain future,

examine probable

trends from a macro-

perspective and

identify an ideal image

for Omron

Omron Corporation 5

ACHIEVING GD2010 MEDIUM-TERM MANAGEMENT OBJECTIVES

Omron has set the following targets for the fiscal year ending March 2005, the
midway point toward achieving the objective of maximizing corporate value on
a long-term basis under GD2010.

Return on Equity of 10%

To reach this target, management will focus on earnings by directing
investment capital totaling ¥120 billion toward Omron’s high-earnings core
businesses in the Industrial Automation Company and Electronic
Components Company. This represents 60 percent of Omron’s total projected
cumulative investments over the four-year period to March 2005.

Accelerating Corporate Divestitures and Establishing a Holding Company

Omron Corporation will become a holding company, and all present
businesses will become autonomous companies with strategically based
positions.

MEDIUM-TERM TARGET

FOR RETURN ON EQUITY

3/01

3/05

Listing on New York and Other Overseas Stock Exchanges

As a means of raising recognition of Omron as a global company and
implementing corporate governance that is highly evaluated among
international investors, Omron aims to list its stock on the New York
Stock Exchange and other overseas stock exchanges.

CORE INVESTMENTS DURING PHASE I (PERIOD TO MARCH 2005)

l Improve earnings and growth capabilities by emphasizing investment

in existing businesses.

l Focus investments on core businesses (Industrial Automation Company and

Electronic Components Company).

INVESTMENT AREA

AIM

CORE STRATEGIC INVESTMENTS

Investment in information technology to improve productivity
in management/development/production divisions

Industrial Automation
Company

Improve earnings
capability

Development of new businesses
Advanced sensors/Safety applications

Electronic
Components

Company

Improve growth
capability

Build business model by user segments to increase
the number of customers

Existing business: Build up global production systems

Expansion into new businesses: IT-related electronic
components (fiber optics/mobile equipment)

6 Omron Corporation

GD2010

Three Corporate
Three Corporate Visions

Visions

of GD2010
of GD2010

CORPORATE TRANSFORMATION VISION

It is important to focus on issues and procedures that will promote
continuous transformation, both at an individual level and within the
overall Omron corporate structure. Self-reliance is a key concept of GD2010
in maximizing value and carrying out a successful transformation.

The Corporate

Self-Reliant Management Practices

Transformation Vision will

guide the changes in the

Omron Group so that it can

flexibly accommodate

changes in the business

environment.

Omron will promote corporate transformation aimed at establishing a
corporate governance system that meets international standards and enables
the Company to take advantage of the capital market as a global company.
Initiatives will include promoting greater transparency in management and
reinforcing audit functions from the standpoint of representing stockholders,
which is the primary role of the Board of Directors, through measures such as
including outside directors on the Board. At the same time, Omron will
clearly define the roles and functions of the Board of Directors, Corporate
Management and Business Operations. These initiatives are aimed at
maintaining strong corporate governance in order to respond to changes in
the operating environment more flexibly and swiftly.

Self-Reliant Business Units

To maintain an optimum Group management structure, Omron Corporation
will become a holding company and accelerate corporate divestitures to turn
all current strategic business units into independent companies. This will
allow each business to engage in the most appropriate management for its
respective market and provide maximum value to customers.

Omron Corporation 7

Three Corporate Visions of GD2010

Three Corporate

Visions of GD2010

IDENTITY VISION

Building a Powerful Brand:
To create brand value supported by all stakeholders, Omron is implementing
an Identity Vision from the three perspectives of corporate philosophy, core
competence and management.

Corporate Philosophy

Since its inception, Omron has shown a strong commitment to core values
stressing the development and maintenance of social awareness as well as
public responsibility. In this time, Omron has contributed to society with a
steady stream of innovative products. The GD2010 vision will continue to
embody these values as we work to achieve the broader goals of the plan.

Core Competence

The Identity Vision outlines the

consistent elements that have

remained unchanged since

Omron’s establishment.

To clarify the Company’s strengths and build brand power, Omron is
centering its business on its core competence in the area of sensing and
control. In the near future, we expect to enter a “Sensor Net” era, when
sensors will be able to detect a broad range of analog information available
in the real world and freely distribute that data via a network. Omron is ready
to explore the new business opportunities that will arise in the coming
Sensor Net age.

Management

Omron’s management policy focuses on alliances that include mergers and
acquisitions as well as collaborations and partnerships with other companies.
This will allow Omron to facilitate speedy entry into new markets along with
the acquisition of powerful resources from outside companies, and will also
contribute to expanding business operations. Through these initiatives,
Omron can carry out thorough selectivity and focus in its operations.

INTERNAL BUSINESS COMPANY VISION

Based on the key management concepts of GD2010: self-reliance, co-
existence and creativity, the internal business companies are being
encouraged to work towards realizing their individual visions, while
emphasizing their relationship with other companies in the Group, and the
role each company plays in achieving the overall Company objectives.

8 Omron Corporation

Anticipating an era in which

sensors will detect a broad

range of analog

information in the real world

and freely distribute that

data via a network

The Internal Business

Company Vision determines

the direction of development

for each business area

necessary for the Omron

Group to achieve its ideal form.

SENSOR NET VALUE

Offering new value through sensor networks

Supporting IT literate customers

Customer A

Customer B

Customer E

MARKET
COLLABORATION

Customer C

Customer D

Machine

Sensor

((( )))
Surroundings

Sensor Net

Sensor

Human

Sensing

Sensor

Machine

Control

BUSINESS
COLLABORATION

Communication

Computing

Network

Developing new business models for all Omron Group business units
Merging hardware, software and service businesses

Industrial Automation Company
The Industrial Automation Company will help empower customers to create
their own added value by providing them with effective innovations in the
three areas of information technology, the environment and global support.

Electronic Components Company
The Electronic Components Company aims to become a leading electronic
components supplier with a high reputation among international customers.
At the same time, it will continue to assure maximum profitability and
sustained growth.

Social Systems Business Company
Having obtained JQA certification, the Social Systems Business Company
will focus on becoming the number one company in customer satisfaction
and profitability on a global scale.

Healthcare Company
The Healthcare Company aims to develop a business focusing on
technologies that prevent lifestyle-related diseases and improve health. It will
achieve this by drawing on Omron’s core sensing and control technologies as
well as strategic alliances. Through these efforts, the company strives to
continue promoting growth and high profitability.

Creative Service Company
The Creative Service Company is committed to offering unique and creative
services ahead of competitors in the outsourcing industry. The company’s
eventual goal is to become an independent, listed company, a goal it intends
to achieve by consistently offering maximum satisfaction to customers.

Omron Corporation 9

Review of Operations

Omron at a Glance

Main Products

% of Net Sales

Industrial
Automation
Company

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

¥239,225 million

Electronic
Components
Company

Tactile switches, Dip switches, Trigger switches, General
purpose relays, Multiplex controllers, Laser radar,
Actuators, Buckle switches, Detection switches,
Components for photocopiers and printers (Counterfeit
detectors, Tablets, Paper handling machines, Controller
PCB units, Sensors, Relays, Switches), Amusement
components (Sensors, Keys, ICs, Game controllers)

¥117,910 million

Social
Systems
Business
Company

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

¥141,928 million

Healthcare
Company

Digital blood pressure monitors, Electric digital
thermometers, Electronic pulse massagers, Body-fat
monitors, Nebulizers, Chair massagers, Pedometers,
Healthcare services

¥39,327 million

Others

Peripheral equipment for personal computers (Terminal
adapters, Modems, Cable-type modems for mobile
phones, Uninterruptible power supplies, Scanners), Card
readers, Room access control systems, Radio frequency
ID systems, Photo-sticker vending machines, Speech
recognition and voice authentication software

¥55,869 million

10 Omron Corporation

40.3%

19.8%

23.9%

6.6%

9.4%

Industrial Automation Company

In the fiscal year ended March 31, 2001,

manufacturers made aggressive capital
investments centered on the boom in IT-
related businesses. In response, the
Industrial Automation Company
increased sales of conventional control
equipment while also expanding sales of
products that meet new customer needs,
resulting in an 11.2 percent jump in net
sales from the previous fiscal year to
¥239.2 billion.

performance gains. This contributed
strongly to growth in sales of fiber
photoelectric sensors, radio frequency
identification (RFID) systems and
programmable logic controllers. In
addition, sales of vision sensors,
automated optical inspection (AOI)
systems and safety-related products
expanded more than 30 percent, buoyed
by the introduction of new products
geared to emerging customer needs.

In the domestic market, the robust

While responding to changes in global

VT-RBT is a member of
the popular VT-WIN
family of accurate, high-
speed automated optical
inspection (AOI) systems.

expansion in IT investment that started in
the second half of the previous fiscal year
continued. Manufacturers in the
semiconductor, LCD and electronic
component industries substantially
increased capital investment to meet
sharply rising demand from makers of
communications equipment such as
personal computers and cellular phones.

In Europe, the U.S., China and

elsewhere in Asia, market conditions
remained favorable. Strengthening direct
contact with customers and adding more
locally hired engineers enabled us to
provide customized development
capabilities. As a result, the company
achieved sales increases ranging from 10
to 35 percent on a local currency basis
and improved its position in these
markets.

Looking at product categories, the

company’s success in providing solutions
to meet needs created by the increasing
use of IT in production was a key to

markets, we will promote efficient
procedures to deepen relationships with
customers in all business sectors.

Vision sensor F160, the
top vision sensor in the
industry, is easy to use,
with superior accuracy
and functionality.

Net Sales

(Billions of Yen)

300

200

100

2000

2001

The next-generation
programmable logic
controller CJ1 is quick,
compact and seamless.

Omron Corporation 11

Electronic Components Company

Despite signs of weakening demand in
some sectors of the industry during the
latter half of the period, the business
environment in the fiscal year ended
March 31, 2001 was generally favorable,
and the Electronic Components Company
successfully introduced sales initiatives in
response to market demands. As a result,
net sales were ¥117.9 billion, an increase
of 7.5 percent over the previous fiscal
year.

Domestic sales were buoyed by a solid

market for IT-related electronic
components, particularly for cellular
phones and the Internet. In
manufacturing, we implemented a new
strategy for flexibly increasing production
of strong-selling equipment. This resulted
in firm sales of equipment for consumer
and commerce (C&C) components such
as relay switches.

Outside Japan, the U.S. economy

continued to grow steadily through the
first half of the fiscal year. We
restructured our sales network in the U.S.
and Europe, and efforts to strengthen
sales capabilities began to show results,
marked by the start of operations of an
independent subsidiary in Southeast
Asia. Sales of equipment for C&C
components were particularly brisk,
fueled by demand for personal
computers and audiovisual equipment.
Moreover, expanded worldwide
investment in communications
infrastructure continued to underpin
growth in demand for telecom relays
used in telephone exchanges.

In the automotive electronic component
sector, increased automobile production

The type XF2L FPC
connector is used for
mobile devices such as
PDAs and mobile
telephones.

The type XC8 hard metric
connector is used in
communications
infrastructure, including
telephone exchanges,
servers and transmission
devices.

Net Sales

(Billions of Yen)

150

100

2000

2001

The G6K relay, featuring
4th generation design,
offers excellent savings in
board size space.

12 Omron Corporation

Used primarily in
production equipment, the
MY miniature power relay
is made without lead,
cadmium or PVC
materials to reduce
environmental impact.

volume in Japan resulted in growing
sales of high-value-added products such
as keyless entry systems and electric
power steering controllers. Business also
expanded strongly in North America,
propelled by the launch of new products
amid favorable market conditions. In
Europe, however, declining automobile
production volume in the United
Kingdom resulted in a downturn in
component sales.

In order to maintain its position as a
leading global electronic components
supplier, the company is focused on
improving its worldwide sales network,
promoting low-cost operations, and
standardizing parts and materials. In
addition, the selection of optimal locations
for production and procurement is aimed
at building a competitive advantage on a
global basis.

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

Social Systems Business Company

The Social Systems Business Company
posted net sales of ¥141.9 billion, a year-
on-year increase of 10.4 percent. This
performance was supported by demand
for equipment from financial institutions
and the credit card industry as well as a
large increase in the delivery of systems
to the public transportation industry.

Although financial institutions
generally restrained investment in
automated equipment, demand
increased for machine replacement and
conversion to handle the new ¥2,000
note and the redesigned ¥500 coin. In
addition, the company posted strong
sales of electronic fund transfer systems,
including Cyber Gate, a multi-service
terminal designed primarily for
convenience stores, and a debit/credit
terminal that handles IC cards.

In the public transportation systems
sector, sales of equipment to railway
companies increased. Supporting factors
included the delivery of system
equipment for PassNet, a system that
allows passengers to use a single card
on more than 20 train lines in the Kanto
region, as well as delivery of equipment
to the Japan Railways Group. Using
know-how cultivated through our
expertise in public transportation
systems, we are also developing
businesses targeting the airline industry
and the amusement market.

In the traffic control and road

information systems sector, restrained
investment in projects by local
governments led to a year-on-year
decline in sales.

With the advent of the networked

society, we plan to expand into new
types of terminal equipment, primarily
content delivery equipment such as
multifunctional ATMs and multimedia
station terminals.

The Social Systems Business Company

will work to further expand sales, while
placing the highest priority on
strengthening existing businesses to
maximize profitability. Moreover,
measures to improve the soundness
of our operations will include cost
reductions through the promotion of
concurrent development and cost
engineering, in addition to revisions to
business processes and deployment of
information systems.

A next-generation ATM,
the JX-ATM provides
advanced services for the
electronic era.

Using our know-how in
public transportation
systems, we developed the
Universal Studios Japan
turnstile entrance/
exit system.

DCS + music is a
multimedia kiosk terminal
featuring seven different
multi-interfaces.

Net Sales

(Billions of Yen)

150

100

2000

2001

Omron Corporation 13

Healthcare Company

Results for the Healthcare Company

were impacted by continued weak
consumption in Japan as well as
changing consumption patterns. As
a result, sales declined 7.8 percent
year-on-year to ¥39.3 billion.

In the domestic market, the trend in the
retail industry toward a bipolar structure
focused on large-scale stores and
specialized small shops accelerated. In
response, the company worked to expand
sales by closely gearing sales activities to
the needs of each region and by
strengthening the creation of appealing
sales spaces. New products introduced
during the fiscal year included a blood
pressure monitor, a pedometer, fitness
equipment, and a legless massage chair
for home use.

In the healthcare equipment sector,
prices dropped sharply for products for
which growth was expected, such as ear
thermometers, body fat meters and
massage chairs, resulting in sluggish
sales. This limited the beneficial effects of
new product introductions and sales
expansion measures, and led to a
substantial decline in overall sales.

In the healthcare services sector, we

developed and launched the Kenko
Tatsujin (Health Master) series, and
formed a number of alliances with other
companies.
Outside Japan, sales
were firm in the
U.S., reflecting a
strong push

during the Christmas season and
strengthening of sales activities closely
geared to major customers. Fierce price
competition continued in Europe,
particularly in Germany, and was
exacerbated by the market entry of new
low-priced products from other Asian
manufacturers. Nevertheless, sales in
Europe were generally favorable. In Asia,
the increasing sentiment that growth was
slowing compared to the U.S. and
European economies saw consumer
spending decline in our major markets.

Faced with flat consumption and
maturing products, we are aiming to
expand our position as a solution
provider by creating a comprehensive
health business that responds to
changing consumer needs. In the future,
we plan to expand business volume in
our fields of expertise – blood pressure
monitors, thermometers and nebulizers –
by building on our use and knowledge of
biosensing and other technologies. In
addition, we will further strengthen our
sales strategies.

The HJ-111, a full-function
pedometer for aerobic
exercise, can measure
paces walked while tucked
inside the user's pocket.

The HM-404 massage
chair offers the ultimate
in relaxation.

The HEM-770A Fuzz
digital blood pressure
monitor employs a newly
developed cuff and features
a universal design for ease
of use.

Net Sales

(Billions of Yen)

2000

2001

14 Omron Corporation

Results for non-core businesses were

mixed, reflecting the varied impact of
current market conditions on each
business. Overall, however, net sales of
other businesses declined 6.0 percent
year-on-year to ¥55.9 billion.

The Creative Service Company, which

provides consulting and outsourcing
services, focuses on business process
reengineering and on helping clients
raise efficiency by outsourcing or
separating the functions of
administrative operations. The company
expanded its business scope and
achieved higher sales in the fiscal year
ended March 31, 2001 by capitalizing on
its record of success in meeting the
growing needs of businesses for
management structure reform and more
efficient administrative operations.

In the Business Development Group,
competition intensified in the market for
PC peripheral equipment due to
accelerating price declines. However,
sales of terminal adapters and cable
modems for mobile equipment
increased.

Although sales of photo-sticker

vending machines have been adversely
affected since the “print club” boom
subsided, the overall market expanded
significantly during the fiscal year due to
the diffusion of large-sized machines. By
offering new products accurately tailored
to customer needs, this business sector
achieved a substantial increase in sales
over the previous fiscal year. We also

Others

delivered automated voice response
systems with voice recognition
technology to customers in industries
such as securities, computers and
finance.

Subsidiary Omron Alphatech

Corporation shifted its business focus
from hardware sales to service, and
although net sales decreased, a sharper
focus on profit resulted in an increase in
net income.

We will continue pursuing greater

profitability for businesses with
outstanding potential that cannot be
included in any of the core Omron
companies, while simultaneously
mapping out clear strategies for the
growth of each business. Additionally,
we will focus on putting in place the
infrastructure necessary to develop and
strengthen new businesses in line with
the corporate strategies of the whole
Omron Group.

Chaopi is a photo-sticker
machine that can even
take photos from above.

Omron used Bluetooth
technology to develop this
modem for wireless
connections with vibrating
feel H” and H” cellular
phones made by DDI
Pocket, Inc.

Net Sales

(Billions of Yen)

100

2000

2001

Omron Corporation 15

Environmental
Environmental
Activities

Highlights of the Year

Activities

ISO 14001 CERTIFICATION FOR
NINE OFFICES/LABORATORIES

PROMOTING ECO-PRODUCT
DEVELOPMENT
(54 ECO-PRODUCTS IN TOTAL)

AIMING FOR AN ATM RECYCLING
RATIO OF 98%

PROMOTING GREEN
PROCUREMENT

By March 2000, all Omron Group factories worldwide had achieved ISO
14001 certification. During the past fiscal year, six offices (Kyoto and Tokyo
head offices; Osaki, Nagoya, Komaki Automotive and Osaka branch offices)
and three laboratories (Tsukuba, Kyoto and Kumamoto) also became ISO
14001 certified. Certifying the non-manufacturing sector enables Omron to
build a fully-fledged corporate-wide environmental management system. By
doing so, our environmental conservation activities can be implemented
more effectively and swiftly.

From among all the environmentally friendly products developed by the
company, Omron certifies those products that fulfill in-house standards as
”Eco-Products.“ Once a product receives certification, an Omron designed
eco-label is then printed in product catalogs and brochures. By doing so, we
aim to accelerate the development of products that consume less energy and
conserve resources. As of March 2001, a total of 54 products have been
designated Eco-Products.

In January 2001, Omron established a recycling test center for disposed
ATMs at the end of their useful lives. This center collects, disassembles and
breaks down these ATMs for recycling or reuse of parts and materials. Unlike
conventional processing that used shredders, sorting is now done manually
for more precise classification, resulting in higher-quality recycled materials.
Aiming to achieve a recycling ratio for ATMs of 98% (on a weight basis),
including thermal and cascade recycling, the center is planning to make
design suggestions for more easy-to-disassemble/decompose products.

In conformance with company guidelines formulated in 1999, Omron will
launch a green procurement system for the purchase of parts and materials
in April 2003. Preference will be given to those suppliers who have been
evaluated and rated highly for their active involvement in environmental
conservation. Criteria for evaluation were specified in the past fiscal year.

ENVIRONMENTAL ACCOUNTING

During the year ended March 31, 2001, the Industrial Automation

Company implemented environmental accounting practices on a trial basis.
Environmental costs (including investments, personnel costs and other
related expenditures) totaled ¥1.1 billion. The Industrial Automation
Company’s environmental accounting record is characterized by a large
proportion of R&D related expenses (over 60%). Our calculation of
environmental activity effectiveness concentrated on direct benefits, which
amounted to ¥150 million. Based on an analysis of the trial run results, we
will strengthen this environmental accounting system for company-wide
implementation.

16 Omron Corporation

INTELLIGENT OFFICE BUILDING
WITH ECOLOGY IN MIND

Air conditioning system

Omron Kyoto Center Building

Land area: 4,760m2
Total floor area: 36,250m2
Height: 45m
Floors: 11 plus two underground levels

Illumination

Biodegrading
waste disposal

Water-saving
system

Ice generator-based
cooling system

Co-generation
system

1. Fluorescent light

2. Dining room

3. Central control/
monitoring room

4. Electricity control room

5. Co-generation system

6. Water heater/restroom

7. Cold/hot water pump

8. Heat source facility

9. Rain water tank

* High-tech design incorporating
environmentally friendly facilities

* A wealth of innovative sensing
technologies

* Comprehensive energy-saving
measures

* Reducing volume of waste

DEVELOPMENT OF LEAD-FREE
SOLDERS

Completed in August 2000, the Omron Kyoto Center Building serves as the heart of

Omron operations by integrating head office administrative functions, as well as the
operations of internal companies and R&D laboratories. Providing a spacious, open
area, this building has been designed to maintain harmony with the surrounding
environment. The building also features a number of advanced technologies to
enhance environmental conservation as well as to provide a more comfortable
workplace.

For added security, a face recognition system and card gate system are installed for
room entry/exit control. Other automated systems that incorporate Omron’s advanced
sensing technologies include an RFID tag-based fare adjustment system for the dining
room and wireless modem-equipped vending machines.

This building also features a number of energy-saving measures including inverter

control for air conditioning systems. CO2 concentration levels in the building are
monitored, and the outside air intake control is used to maintain a comfortable work
environment. In addition, the building uses a gas co-generation system (with a
maximum 1,040kW electric power generating capacity) that recovers waste heat for hot
water absorption-type freezers. Moreover, a total heat exchanger for the thermal
energy recovery system helps minimize waste heat emissions, while an ice generation
system uses the supply of low-cost electricity at night for more effective energy usage.
Other energy-saving measures include highly efficient fluorescent lighting fixtures and
collected rainwater for trees and plants.

All-in-one printer/copier/fax machine units and PCs that have been installed within
the building are networked. This helps to conserve paper as the network system makes
it easy to assess the volume of paper used by each division. Paper that has been
classified as recyclable is then shredded for use as toilet paper.

A biodegrading waste disposer is also utilized for the production of organic fertilizer

from raw food refuse and leftovers from the dining room. That fertilizer is then
supplied to a subcontracted tea farm. Omron in turn purchases tea produced by that
farm to help promote the recycling of resources.

In the year ended March 1996, Omron launched a study project for lead-

free solder technology. In the year ended March 2000, a company-wide
specialized committee was established to work on: 1) the selection of lead-
free solder/plating materials; 2) the development of lead-free soldering
processes and techniques to evaluate lead-free reliability; and 3) research for
soldering systems. As a result, Omron has been able to choose lead-free
solder materials that satisfy requirements for both reliability and mass-
production. At the same time, work done through the committee has enabled
the establishment of a practical lead-free soldering process. To accompany
this endeavor, we have also adopted a laser-welding technology to achieve
connections that totally eliminate the use of solders.

Omron Corporation 17

Board of Directors, Corporate Auditors and Executive Officers

Left to right: Tadao Tateisi, Akio Imaizumi, Norio Hirai, Nobuo Tateisi, Yoshio Tateisi, Tatsuro Ichihara, Shozo Hashimoto

Board of Directors

Corporate Auditors

Executive Vice Presidents

Managing Officers

Chairman and
Representative Director

Nobuo Tateisi

Representative Director and
Chief Executive Officer

Yoshio Tateisi

Vice President and Director

Norio Hirai

Vice President and Director,
Executive Vice President

Tatsuro Ichihara

Senior Managing Directors

Akio Imaizumi
Tadao Tateisi

Director (Non-executive)

Shozo Hashimoto

18 Omron Corporation

Tomoaki Nishimura
Motoki Tamura
Takayuki Yamashita
Yoshio Nakano

Soichi Koshio
Hideki Masuda

Senior Managing Officers

Yoshifumi Kajiya
Shingo Akechi
Hisao Sakuta
Fujio Tokita
Keiichiro Akahoshi
Akihiko Otani

Masaaki Sadatomo
Minoru Tamura
Tsukasa Yamashita
Yutaka Takigawa
Fumio Tateisi
Shinya Tozawa
Kazuo Nomura
Yasuhira Minagawa
Kuniyasu Kihira
Tsutomu Ozako
Toshio Ochiai
Masaki Kobayashi
Soichi Yukawa
Hiroki Toyama
Kojiro Tobita
Hideo Kawanaka
Tadahiko Otsuka
Yoshio Kushihashi
Susumu Yoshida
Keizo Kadono
Hiroshi Tatebayashi
Hiroyuki Nishimura
Kuninori Hamaguchi

(As of June 26, 2001)

Financial Section
Six-year Summary

Omron Corporation and Subsidiaries
Years ended March 31

2001

2000

1999

1998

1997

1996

Millions of yen (except per share data)

Net Sales (Note 2):

Industrial Automation ......................................
Electronic Components ...................................
Social Systems Business ................................
Healthcare .......................................................
Open Systems .................................................
Control Components and Systems .................
Specialty Products ..........................................
Others ..............................................................

¥239,225
117,910
141,928
39,327
—
—
—
55,869

¥215,087
109,661
128,534
42,640
—
—
—
59,436

¥245,785
56,673
135,872
43,729
—
—
—
73,221

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

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

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

594,259

555,358

555,280

611,795

594,261

525,289

376,194

358,911

364,314

387,445

388,005

342,500

133,662
36,605
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)

534,322

547,031

569,552

555,013

493,037

Costs and Expenses:

Cost of sales....................................................
Selling, general and

administrative expenses ................................
Research and development expenses ............
Interest expenses, net .....................................
Foreign exchange loss, net .............................
Other expenses (income), net..........................

Income before Income Taxes and

Minority Interests ............................................
Income Taxes ....................................................
Minority Interests ..............................................
Net Income.........................................................

Net Income per Share (yen):

131,203
42,513
111
1,389
2,812

554,222

40,037
17,318
422
22,297

21,036
9,048
427
11,561

87.4
Basic .............................................................. ¥
85.3
Diluted.............................................................
Cash Dividends per Share (yen, Note 1)..........
13.0
Capital Expenditures (cash basis) ................... ¥ 37,583
593,144
Total Assets .......................................................
325,958
Total Shareholders’ Equity ...............................

¥ 45.0
44.5
13.0
¥ 31,146
579,489
336,062

Value indicators:

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

36.7
6.7
3.8
6.8
6.7
4.44
23.6
1.01
0.820
26.83

35.4
3.8
2.1
3.6
3.5
4.56
64.9
0.96
0.724
14.64

8,249
6,044
31
2,174

8.3
8.3
13.0
¥ 36,696
580,586
321,258

34.4
1.5
0.4
1.4
0.7
4.18
175.0
0.95
0.807
5.56

42,243
23,371
168
18,704

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

36.7
6.9
3.1
7.0
5.5
4.28
28.3
1.02
0.729
20.05

39,248
22,952
557
15,739

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

34.7
6.6
2.6
6.4
4.8
4.66
36.6
0.97
0.834
12.27

32,252
17,039
626
14,587

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

34.8
6.1
2.8
5.4
4.7
4.51
42.2
0.88
0.926
8.47

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

2. Certain reclassifications have been made to the net sales amounts previously reported for 2000 in order for them to conform to 2001 categories. The
amounts previously reported for 2000 were: Industrial Automation, ¥243,604 million; Electronic Components, ¥68,328 million; Others, ¥72,252 million.
These same reclassifications could not be made to net sales amounts previously reported for 1999 and prior years because the necessary data is not
readily available.

Omron Corporation 19

Management’s Discussion and Analysis

Financial Strategy

improved competitiveness.

During the fiscal year ended March 31, 2001, Omron
posted record consolidated net income as a result of the
policies the Company implemented to strengthen its
earnings structure. These included improving asset
efficiency, disciplined liquidity management, and efforts
to raise competitiveness. In addition, Omron is investing
capital according to specific plans and keeping capital
expenditures within the scope of cash flow, while
focusing on high-profit businesses to increase corporate
value.

Overview of Operations

In Japan, while consumer spending remained
restrained, favorable exports and increased private
capital investment supported a modest recovery.
Overseas, during the first half of the fiscal year, the U.S.
economy maintained a strong rate of growth, while the
economies of Asia continued to recover and economic
conditions in Europe were favorable. During the second
half, however, weakness in the U.S. information
technology (IT) sector contributed to a pronounced
slowdown in the overall U.S. economy. The Japanese
economy weakened as a result, evidenced by factors
including an increase in inventories in the domestic
semiconductor industry. In this environment, Omron
worked during the year ended March 31, 2001 to
transform its identity and position while consistently
improving its earnings base. The Company also
expanded its position in its markets and emphasized

These efforts were supported by firm capital
investment in the Japanese semiconductor and IT
sectors. Domestic sales increased as a result. Overseas
sales also expanded.

The consolidation of operating bases and lower
production costs resulted in a decrease in the ratio of
cost of sales to net sales. This and other positive factors
resulted in a 90.3 percent increase in income before
income taxes and minority interests to ¥40.0 billion. Net
income rose 92.9 percent to ¥22.3 billion, a record high,
and ROE improved to 6.7 percent.

Sales

Consolidated net sales increased 7.0 percent to ¥594.3

billion, supported by firm capital investment in the
semiconductor and IT sectors and increased demand in
Omron’s core control components systems business.
Both domestic and overseas sales increased.

Cost of Sales, SGA Expenses and Income

Cost of sales increased ¥17.3 billion, or 4.8 percent,
over the prior fiscal year to ¥376.2 billion, and improved
to 63.3 percent of net sales, compared to 64.6 percent for
the previous fiscal year. Factors in the improvement
included higher productivity and lower raw material
prices resulting from the yen’s strength during the first
half of the fiscal year. As a result, gross profit increased
11.0 percent to ¥218.1 billion, and the ratio of gross
profit to net sales improved by 1.3 percentage points to

Gross Profit Margin

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

(%)

36.7

34.7

36.7

35.4

34.4

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

R&D Expenses/Net Sales

24.6

24.1

22.6

21.9

22.1

6.5

5.9

7.6

7.1

6.6

Income Before Tax/Net Sales
Net Income/Net Sales

(%)

Income Before Tax/Net Sales

Net Income/Net Sales

6.9

6.7

6.6

3.8

3.1

2.6

2.1

1.5

0.4

1997 1998 1999 2000 2001

20 Omron Corporation

36.7 percent. SGA expenses decreased ¥2.5 billion, or
1.8 percent, year-on-year to ¥131.2 billion, and improved
to 22.1 percent of net sales from 24.1 percent for the
previous fiscal year. Primary factors included a reduction
in commissions for outsourcing. Research and
development expenses increased ¥5.9 billion, or 16.1
percent, to ¥42.5 billion, and represented 7.1 percent of
net sales, compared to 6.6 percent for the previous fiscal
year. R&D is essential to Omron’s growth strategy and
the Company intends to maintain the ratio of R&D
expenses at approximately 7 percent of net sales.

Costs, Expenses and Income as Percentages of Net Sales

2001

2000

1999

65.6
34.4

63.3
36.7

64.6
35.4

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

1.5
1.1
0.4

3.8
1.6
2.1

6.7
2.9
3.8

7.6
0.1

7.1
0.0

6.6
0.1

24.1

22.1

24.6

Main factors in non-operating expenses included a
drop in interest expenses due largely to a reduction in
short-term debt. Income before income taxes and

minority interests increased ¥19.0 billion, or 90.3
percent, to ¥40.0 billion. Income taxes increased ¥8.3
billion, or 91.4 percent, to ¥17.3 billion, and the ratio of
income taxes to income before income taxes and
minority interests stood at 43.3 percent compared to 43.0
percent for the previous fiscal year. As a result of the
above, net income increased ¥10.7 billion, or 92.9
percent, to ¥22.3 billion. The ratio of net income to net
sales improved to 3.8 percent from 2.1 percent for the
prior fiscal year, and ROE improved to 6.7 percent from
3.5 percent for the prior fiscal year. Net income per share
improved by ¥42.4 to ¥87.4, and diluted net income per
share improved by ¥40.8 to ¥85.3.

Review of Operations by Company

In April 2000, Omron restructured marketing channels,

resulting in a change in the assignment to its internal
companies of sales of certain products and sales from
certain regions. Figures for the previous fiscal year have
been restated to conform with the new structure.

Composition of Net Sales

Industrial Automation .............
Electronic Components ...........
Social Systems Business ........
Healthcare ................................
Others .......................................

1999

2000
2001
40.3% 38.7% 44.2%
19.8
19.8
23.1
23.9
7.7
6.6
10.7
9.4

10.2
24.5
7.9
13.2

Note: The composition of net sales is based on the classifications reported in the

Six-year Summary.

Interest Expenses and
Interest Coverage

(Millions of Yen/Times)

7
5
5
,
3

2
1
4
,
2

8
1
5
,
2

7
9
8
,
1

1
3
7
,
1

Interest Expenses

Interest Coverage

Earnings per Share and
Price–Earnings Ratio

(Yen/Times)

Net Income per Employee

Earnings per Share

Price–Earnings Ratio

(Millions of Yen)

8
.
8
5

8
.
9
6

3
.
8

5
.
4
4

3
.
5
8

175.0

7
.
0

8
.
0

1
.
0

5
.
0

9
.
0

26.83

20.05

14.64

12.27

5.56

64.9

36.6

28.3

23.6

1997 1998 1999 2000 2001

Omron Corporation 21

Industrial Automation Company

Net sales for the Industrial Automation Company,
excluding intercompany transactions, increased 11.2
percent year-on-year to ¥239.2 billion, and represented
40.3 percent of total net sales. In Japan, factors
supporting the increase included strong IT-related
investment, growth in sales of Omron’s key control
components systems products, and the Company's
success in providing industrial IT solutions. Outside
Japan, sales for the fiscal year increased solidly in the
United States, although a slowdown in capital spending
centered on the semiconductor industry became
apparent in the second half. Results also improved in
Europe for the fiscal year, despite the impact of factors
that emerged in the second half including higher crude
oil prices and the appreciation of the Euro. In China and
elsewhere in Asia, continuing economic recovery
favorably influenced performance.

Electronic Components Company

Net sales for the Electronic Components Company,

excluding intercompany transactions, increased 7.5
percent year-on-year to ¥117.9 billion, and accounted for
19.8 percent of total net sales. In Japan, IT-related
demand lent strength to the electronic components
market, and sales of consumer and commerce (C&C)
components were firm. Outside Japan, the strength of
the U.S. economy in the first half of the fiscal year
supported the electronic components market, and
Omron benefited from its restructuring of marketing

bases. In China and elsewhere in Asia, the establishment
of marketing bases led to improved performance in the
C&C sector, including the home electronics industry.
Omron’s automotive components business benefited
from increased unit production among domestic auto
manufacturers. Outside Japan, new product
introductions drove strong sales growth, although sales
in Europe were affected by cooling demand in the United
Kingdom.

Social Systems Business Company

Net sales for the Social Systems Business Company,

excluding intercompany transactions, increased 10.4
percent year-on-year to ¥141.9 billion, and accounted for
23.9 percent of total net sales. Sales of electronic fund
transfer systems were affected by restraint in investment
among financial institutions, but drew support from
government demand for systems to handle Japan's new
¥2,000 note and ¥500 coin. Sales of multi-functional
terminals and equipment to handle debit cards also
increased. In the public transportation systems sector,
sales of equipment to railway companies rose sharply
due to the implementation of the PassNet system and
equipment purchases by Japan Railways Group
companies. Sales decreased in the traffic control and
road information systems business because of
restrained spending by local governments.

Healthcare Company

Net sales for the Healthcare Company, excluding

Sales by Company

(%)

Industrial Automation Company

Electronic Components Company

Social Systems Business Company

Healthcare Company

Others

2000

2001

38.7

40.3

19.8

23.1

23.9

7.7

10.7

6.6

9.4

22 Omron Corporation

intercompany transactions, decreased 7.8 percent year-
on-year to ¥39.3 billion, and accounted for 6.6 percent
of total net sales. Domestic consumption remained
weak, with the resulting drop in demand igniting
downward pressure on product prices. Overseas, the
economic slowdown in North America affected sales,
while performance in Europe was stable. Sales in Asia
were off as demand in several key countries slackened.

Others

Net sales of other divisions decreased 6.0 percent to

¥55.9 billion, and represented 9.4 percent of total net
sales. Strong demand for the Creative Service
Company’s outsourcing services, which reduce indirect
costs for clients, led to an increase in sales.

Falling prices and intensifying competition impacted

the PC-related equipment business, and sales of
information terminals to convenience stores, which had
been a growth business, were down. Success in meeting
customer needs resulted in strong sales growth in the
copier and printer business.

Increase (Decrease) in Sales of
Internal Business Companies

Industrial Automation .............
Electronic Components ...........
Social Systems Business ........
Healthcare ................................
Others .......................................

2000

2001
11.2% (0.9)%

7.5
10.4
(7.8)
(6.0)

20.6
(5.4)
(2.5)
(1.3)

1999
N/A
N/A
N/A
N/A
N/A

Notes: 1. Due to a reorganization in April 1999, figures for increase or decrease in

sales corresponding to current internal companies are not available for 1999.

2. The increase or decrease in sales for 2000 is based on the amounts

previously reported for 2000, prior to the reclassifications made in the
current year.

Review of Operations by Region

Japan

Although consumer spending remained restrained,
exports and increased capital spending, particularly IT-
related investment, helped the economy enter a modest
recovery phase. The Industrial Automation Company,
the Electronic Components Company and the Social
Systems Business Company each generated sales
growth, while reduced demand and lower prices
negatively impacted Healthcare Company sales. Total
sales to external customers increased 6.7 percent to
¥423.8 billion.

North America

High growth in personal consumption and capital

investment focused on IT throughout the first half of the
fiscal year cooled rapidly following downward revision
of results for IT-related companies in the second half.
Despite the impact of the second-half slowdown, the
Industrial Automation Company, the Electronic
Components Company and the Healthcare Company all
posted solid performance. Overall, sales to external
customers increased 8.2 percent to ¥64.4 billion.

Europe

During the second half of the fiscal year, rising oil

prices and the appreciation of the euro dampened
business conditions in Europe. The Industrial
Automation Company generated sales growth on a local
currency basis, as did the Healthcare Company despite

Sales by Region

Japan

North America

Europe

Asia and Other

(%)

1997

1998

1999

2000

2001

74.4

72.0

69.8

71.6

71.3

8.8

11.3

10.0

12.1

10.5

13.9

10.7

11.0

10.8

10.3

5.5

5.9

5.8

6.7

7.6

Omron Corporation 23

growing competition, but the strong euro reduced these
gains on translation into yen. The Electronic
Components Company faced challenges related to
declining demand. Consequently, sales to external
customers were down marginally to ¥61.0 billion.

Asia and Other

Despite the impact of the cooling U.S. economy in the
second half, the economies of Southeast Asia continued
their solid recovery, and growth in China was
particularly strong. Favorable conditions for
semiconductor-related and electronics products in
Southeast Asia spurred sales growth for the Industrial
Automation Company and the Electronic Components
Company. Both companies also did well in China,
although slowing consumer demand reduced Healthcare
Company sales there. As a result, sales to external
customers increased 20.5 percent to ¥45.0 billion

Assets, Liabilities and Shareholders’ Equity

As of March 31, 2001, total assets increased ¥13.7
billion, or 2.4 percent, from a year earlier to ¥593.1
billion. Current assets increased ¥11.6 billion, or 3.7
percent, from a year earlier to ¥328.9 billion, with
increases in trade notes and accounts receivable,
inventories and deferred income taxes offsetting
decreases in cash and cash equivalents and short-term
investments. Trade notes and accounts receivable
increased ¥3.4 billion, or 2.6 percent, from a year earlier
to ¥133.8 billion mainly because of the increase in net

sales. Inventories rose ¥13.8 billion, or 17.7 percent, from
a year earlier to ¥91.6 billion as Omron prepared to meet
increased orders received. Deferred income taxes
increased ¥3.2 billion to ¥12.2 billion.

Net property, plant and equipment increased ¥3.1

billion, or 2.0 percent, from a year earlier to ¥159.1
billion due primarily to disciplined capacity expansion to
meet growing demand. Investments and other assets
decreased ¥1.0 billion, or 1.0 percent, to ¥105.1 billion. A
decrease in the market value of investment securities
offset an increase in deferred income taxes.

The total of current liabilities, long-term liabilities and
minority interests in subsidiaries increased ¥23.8 billion,
or 9.8 percent, from a year earlier to ¥267.2 billion.
Current liabilities increased ¥35.9 billion, or 24.4 percent,
from a year earlier to ¥183.4 billion, primarily because of
an increase in the current portion of long-term debt.
Bank loans decreased ¥1.3 billion from the prior fiscal
year-end to ¥8.9 billion, while trade notes and accounts
payable increased due to higher net sales. The current
ratio stood at 179 percent, compared to 215 percent as of
March 31, 2000, and working capital decreased 14.3
percent to ¥145.5 billion. Long-term debt decreased 44.9
percent to ¥32.0 billion, mainly because Omron will
retire a significant portion of long-term debt during the
year ending March 2002. 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
¥2.3 billion, or 3.3 percent, from a year earlier to ¥67.2
billion.

Working Capital and Current Ratio

Inventory Turnover

Return on Tangible Fixed Assets

(Millions of Yen/%)

Working Capital

Current Ratio

(Times)

(%)

9
8
7
,
8
4
1

9
9
7
,
2
5
1

0
1
6
,
4
6
1

7
9
7
9
6
1

9
8
4
5
4
1

215

204

186

178

179

4.66

4.56

4.28

4.18

4.44

14.1

11.0

9.2

7.2

1.3

1997 1998 1999 2000 2001

24 Omron Corporation

current assets and liabilities due to sales growth and the
pension liability adjustment discussed above.

Cash used in investing activities decreased ¥1.8 billion,

or 5.3 percent, from the prior fiscal year to ¥32.4 billion,
primarily because of reduced net purchases of short-
term investments and investment securities. Capital
expenditures increased ¥6.4 billion, or 20.7 percent, year-
on-year to ¥37.6 billion.

Free cash flow totaled ¥18.4 billion. While net income

increased, higher accounts payable and cash reserves
set aside for the pending repayment of long-term debt
reduced working capital.

Cash used in financing activities totaled ¥24.6 billion
due to factors including the repurchase of Omron shares.

Shareholders' equity decreased ¥10.1 billion, or 3.0

percent, over the previous fiscal year-end to ¥326.0
billion, mainly because of the use of retained earnings to
fund share repurchases, a decrease in unrealized gains
on investment securities, and an increase in pension
benefit obligations. The ratio of shareholders’ equity to
total assets stood at 55.0 percent, compared to 58.0
percent a year earlier. The debt/equity ratio was 0.820
times, compared to 0.724 times a year earlier. ROE rose
to 6.7 percent from 3.5 percent for the previous fiscal
year. In addition, net assets per share of stock issued and
outstanding rose to ¥1,311.12 from ¥1,308.64 a year
earlier. Foreign currency translation adjustment
decreased to ¥13.7 billion from ¥21.0 billion a year
earlier due to the depreciation of the yen, and had the
effect of reducing shareholders’ equity and minority
interests. Net unrealized gains on securities decreased
to ¥3.6 billion from ¥13.8 billion a year earlier. Omron
booked a minimum pension liability adjustment totaling
¥7.3 billion.

Cash Flow

Cash and cash equivalents and short-term investments

at March 31, 2001 decreased ¥9.3 billion, or 9.8 percent,
from a year earlier to ¥85.6 billion. Exchange rate changes
had the effect of increasing cash and cash equivalents by
¥3.1 billion.

Cash provided by operating activities decreased ¥9.1
billion, or 15.2 percent, to ¥50.8 billion. Higher net income,
depreciation and amortization were offset by changes in

Return on Shareholders’ Equity

Return on Assets

Price/Book Value Ratio

(%)

5.5

4.8

6.7

3.5

(%)

6.4

7.0

6.8

3.6

(Times)

2.23

1.73

1.54

1.62

1.18

0.7

1.4

1997 1998 1999 2000 2001

Omron Corporation 25

Consolidated Balance Sheets

Omron Corporation and Subsidiaries
March 31, 2001 and 2000

ASSETS

Current Assets:

Millions of yen

Thousands of
U.S. dollars (Note 2)

2001

2000

2001

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

¥ 85,621

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

—

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

133,798

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

(2,194)

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

Deferred income taxes (Note 10) ...................................................................

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

91,593

12,186

7,875

¥ 88,670

6,300

130,355

(2,001)

77,807

9,026

7,116

$ 690,492

—

1,079,016

(17,693)

738,653

98,274

63,508

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

328,879

317,273

2,652,250

Property, Plant and Equipment:

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

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

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

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

50,479

113,414

132,945

5,680

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

302,518

51,082

110,330

129,639

3,933

294,984

407,089

914,629

1,072,137

45,806

2,439,661

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

(143,399)

(138,950)

(1,156,443)

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

159,119

156,034

1,283,218

Investments and Other Assets:

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

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

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

Deferred income taxes (Note 10) ...................................................................

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

853

57,500

11,159

17,986

17,648

2,013

69,397

10,608

6,415

17,749

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

105,146

106,182

6,879

463,710

89,992

145,048

142,322

847,951

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

¥593,144

¥579,489

$4,783,419

See notes to consolidated financial statements.

26 Omron Corporation

Millions of yen

Thousands of
U.S. dollars (Note 2)

LIABILITIES AND SHAREHOLDERS’ EQUITY

2001

2000

2001

Current Liabilities:

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

¥ 8,916

¥ 10,242

$ 71,903

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

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

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

Other current liabilities (Note 10) ...................................................................

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

82,225

24,484

14,797

26,628

26,340

78,467

21,430

11,334

24,741

1,262

663,105

197,452

119,331

214,741

212,419

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

183,390

147,476

1,478,951

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

31,957

57,968

257,718

Deferred Income Taxes (Note 10) ...................................................................

3,725

185

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

48,929

30,629

394,589

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

370

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

2,517

1,114

2,515

2,984

20,298

Shareholders’ Equity (Note 8):

Common stock, ¥50 par value:

Authorized: 487,000,000 shares in 2001 and 495,000,000 shares in 2000

Issued: 249,109,236 shares in 2001 and

257,109,236 shares in 2000 ..........................................................

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

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

64,082

98,705

7,652

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

174,077

Accumulated other comprehensive loss (Note 14)........................................

(17,346)

Treasury stock, at cost — 498,000 shares in 2001 and

64,082

98,705

7,250

173,804

(7,168)

516,790

796,008

61,710

1,403,847

(139,887)

307,000 shares in 2000 .......................................

(1,212)

(611)

(9,774)

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

325,958

336,062

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

¥593,144

¥579,489

2,628,694

$4,783,419

See notes to consolidated financial statements.

Omron Corporation 27

Consolidated Statements of Income

Omron Corporation and Subsidiaries
Years ended March 31, 2001, 2000 and 1999

Millions of yen

Thousands of
U.S. dollars (Note 2)

2001

2000

1999

2001

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

¥594,259

¥555,358

¥555,280

$4,792,411

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 (Note 9) ..................................................

376,194

131,203

42,513

111

1,389

2,812

358,911

133,662

36,605

750

2,841

1,553

364,314

136,734

42,383

862

2,766

(28)

3,033,822

1,058,089

342,847

895

11,202

22,677

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

554,222

534,322

547,031

4,469,532

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

Income Taxes (Note 10) ...........................................................................

40,037

17,318

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

22,719

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

422

21,036

9,048

11,988

427

8,249

6,044

2,205

322,879

139,661

183,218

3,403

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

¥ 22,297

¥ 11,561

¥ 2,174

$ 179,815

Net Income per Share (Note 12):

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

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

Cash Dividends per Share (Note 12) ......................................................

See notes to consolidated financial statements.

2001

¥87.4

85.3

13.0

Yen

2000

¥45.0

44.5

13.0

U.S. dollars (Note 2)

1999

2001

¥ 8.3

8.3

13.0

$0.71

0.69

0.10

28 Omron Corporation

Consolidated Statements of Comprehensive Income

Omron Corporation and Subsidiaries
Years ended March 31, 2001, 2000 and 1999

Millions of yen

Thousands of
U.S. dollars (Note 2)

2001

2000

1999

2001

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

¥22,297

¥11,561

¥ 2,174

$179,815

Other Comprehensive Income (Loss), Net of Tax (Note 14):

Foreign currency translation adjustments:

Amount arising during the year on investments

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

7,286

(9,044)

(6,082)

58,754

Reclassification adjustment for the portion realized upon

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

—

Net change in foreign currency translation

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

7,286

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

(7,251)

(9,044)

7,138

(6,042)

(5,737)

Unrealized gains (losses) on available-for-sale securities:

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

(8,532)

9,050

Reclassification adjustment for losses on impairment

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

391

Reclassification adjustment for gains realized in net income ............

(2,072)

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

(10,213)

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

(10,178)

1,202

(1,502)

8,750

6,844

(620)

—

(898)

(1,518)

(13,297)

58,754

(58,476)

(68,809)

3,150

(16,704)

(82,363)

(82,085)

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

¥12,119

¥18,405

¥(11,123)

$ 97,730

See notes to consolidated financial statements.

Omron Corporation 29

Consolidated Statements of Shareholders’ Equity

Omron Corporation and Subsidiaries
Years ended March 31, 2001, 2000 and 1999

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, 1998 ........................ 262,107,214

¥64,079

¥98,702

¥6,314

¥174,686

¥ (715)

¥ —

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)

(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)

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

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

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

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

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

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

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

(8,000,000)

402

22,297

(3,284)

(402)

(18,338)

(10,178)

(749)

148

Balance, March 31, 2001 ................... 249,109,236

¥64,082

¥98,705

¥7,652

¥174,077

¥(17,346)

¥(1,212)

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, 2000 ............................................

$516,790

$796,008

$58,468

$1,401,645

$ (57,802)

$(4,927)

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

Cash dividends, $0.10 per share...............................

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

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

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

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

179,815

(26,484)

(3,242)

3,242

(82,085)

(6,040)

1,193

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

(147,887)

Balance, March 31, 2001 ............................................

$516,790

$796,008

$61,710

$1,403,847

$(139,887)

$(9,774)

See notes to consolidated financial statements.

30 Omron Corporation

Millions of yen

Thousands of
U.S. dollars (Note 2)

2001

2000

1999

2001

¥22,297

¥11,561

¥ 2,174

$179,815

32,217
760

31,445
412

31,396
458

Consolidated Statements of Cash Flows

Omron Corporation and Subsidiaries
Years ended March 31, 2001, 2000 and 1999

Operating Activities:

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

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

and investment securities .................................................................
Loss on impairment of investment securities and other assets..........
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 ............................................................................................

(3,703)
2,460
3,810
4,990
(5,402)
422
—

(5,593)
(13,320)
875
3,620
3,438
4,140
(215)

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

28,499

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

50,796

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 sales of business entities ...............................................

9,746
(5,761)
(37,583)
(538)
1,953
(182)
—

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

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

48,365

59,926

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

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

(32,365)

(34,180)

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

(1,371)
715
(1,650)
(3,337)
(18,338)
(749)
148

(18,087)
775
(3,102)
(3,371)
—
—
—

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

(24,582)

(23,785)

Effect of Exchange Rate Changes on Cash

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

3,102

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

(3,049)

(2,191)

(230)

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

88,670

88,900

(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

(29,011)

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

21,629

(1,666)

20,535

68,365

259,815
6,129

(29,863)
19,839
30,726
40,242
(43,565)
3,403
—

(45,105)
(107,419)
7,056
29,194
27,726
33,387
(1,734)

229,831

409,646

78,597
(46,460)
(303,089)
(4,339)
15,750
(1,468)
—

(261,009)

(11,057)
5,766
(13,306)
(26,911)
(147,887)
(6,040)
1,193

(198,242)

25,016

(24,589)

715,081

$690,492

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

¥85,621

¥88,670

¥88,900

See notes to consolidated financial statements.

Omron Corporation 31

Notes to Consolidated Financial Statements

Omron Corporation and Subsidiaries

1. Summary of
Significant
Accounting
Policies

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 generally
accepted in the United States of America, except for the omission of segment information required by Statement of
Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and Related
Information.”

Certain reclassifications have been made to amounts previously reported in order to conform to 2001 classifica-

tions.

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 eliminated.
Costs in excess of the fair value of net assets acquired are amortized on a straight-line basis over five years.

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

plus equity in undistributed net income or loss.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and 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 esti-
mates.

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 of their marketable debt and equity securities as available-for-sale. Available-for-sale
securities are carried at market value with the corresponding recognition of net unrealized holding gains and losses
as a separate component of accumulated other comprehensive income, net of related taxes, until recognized.
Individual securities classified as available-for-sale are reduced to net realizable value by a charge to income for
other than temporary declines in fair value.

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 comput-
ed principally on a declining balance method based upon the estimated useful lives of the assets. The estimated
useful lives primarily range from 3 to 50 years for buildings and from 2 to 15 years for machinery and equipment.

Advertising Costs

Advertising costs are charged to earnings as incurred. Advertising expense was ¥8,796 million ($70,935 thousand),

¥8,428 million and ¥9,822 million for the years ended March 31, 2001, 2000 and 1999, 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 Postretirement Benefits.” The provision for termination and retirement benefits includes those for directors
and corporate auditors of the Company.

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 carryfor-
wards 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 peri-
od that includes the enactment date.

32 Omron Corporation

Derivatives

Currency derivatives (foreign exchange forward contracts and foreign currency options) are used to manage cur-
rency risk. Derivative contracts that do not qualify as hedges are marked to market with the related gains and loss-
es 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 expense.

In June 1998 the Financial Accounting Standards Board (“FASB”) issued SFAS No.133 “Accounting for Derivative
Instruments and Hedging Activities.” In June 2000 the FASB also issued SFAS No.138, “Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement No.133.” Both standards
establish accounting and reporting standards for derivative instruments and for hedging activities, and require that
an entity recognizes all derivatives as either assets or liabilities in the balance sheet and measure these instruments
at fair market value. Changes in the fair market value of derivatives are recorded each period. SFAS No.133, as
amended, and No.138 are effective for fiscal years beginning after June 15, 2000. The Companies adopted SFAS
No.133 and No.138 as of April 1, 2001. The cumulative effect on retained earnings as of April 1, 2001, of adopting
SFAS No.133 and No.138 was immaterial to the consolidated financial statements.

Cash Dividends

Cash dividends are reflected in the consolidated financial statements at proposed amounts in the year 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 liabili-
ties in the consolidated balance sheets.

Comprehensive Income

Comprehensive income consists of net income, foreign currency translation adjustments, minimum pension liabili-
ty adjustments and unrealized gains and losses on available-for-sale securities, and is presented in the consolidat-
ed 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 5 regional management 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 company offers
many services, such as those involving laborsaving 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 authoriza-
tion terminals and point of sales systems for both domestic and overseas markets. Passing gates and automated
ticket machines and electronic panels and terminal displays for traffic information and monitoring purposes are also
produced for the domestic market.

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

apy devices aimed at both the consumer and institutional markets.

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

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.

Revenue Recognition

The Companies recognize revenue when persuasive evidence of an arrangement including title transfer exists,
delivery has occurred, the sales price is fixed or determinable, and collectibility is probable. These criteria are met
when products are shipped or services are performed.

Omron Corporation 33

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 ¥124 to $1, the approximate
free rate of exchange at March 31, 2001. 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.....................................................................................
Total.............................................................................................................

Millions of yen

2001
¥52,188
15,114
24,291
¥91,593

2000
¥44,080
15,242
18,485
¥77,807

Thousands of
U.S. dollars

2001
$420,875
121,886
195,892
$738,653

4. Short-Term

Investments and
Investment
Securities

Available-for-sale securities are recorded at fair value, with unrealized gains and losses excluded from income

and reported in other comprehensive income, net of tax.

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:

2001

2000

Millions of yen

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value

Cost (*)

Available-for-sale securities:
Short-term investments:

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

—

¥ — ¥ — ¥ 5,008
1,292

896

(14)

Total short-term

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

—

5,418

896

(14)

6,300

Marketable investment securities:

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

20
43,392

—
15,646

—
(7,622)

20
51,416

8
39,244

—
27,449

—
(2,698)

8
63,995

Total marketable

investment securities .......

43,412
Total available-for-sale securities.. ¥43,412

15,646
¥15,646

(7,622)

51,436
¥(7,622) ¥51,436

39,252
¥44,670

27,449
¥28,345

(2,698)

64,003
¥(2,712) ¥70,303

(*) Cost represents amortized cost for debt securities and acquisition cost for equity securities.

34 Omron Corporation

Thousands of U.S. dollars

2001

Gross
unrealized
gains

Gross
unrealized
losses

Cost (*)

Available-for-sale securities:
Short-term investments:

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

$ —
—

Total short-term investments ..........................................

—

Marketable investment securities:

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

161
349,936

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

350,097

$ —
—

—

—
126,177

126,177

$ —
—

—

—
(61,468)

(61,468)

Fair
value

$ —
—

—

161
414,645

414,806

Total available-for-sale securities....................................

$350,097

$126,177

$(61,468)

$414,806

(*) Cost represents amortized cost for debt securities and acquisition cost for equity securities.

Net unrealized holding gains on available-for-sale securities, net of related taxes, decreased by ¥10,213 million
($82,363 thousand) for the year ended March 31, 2001 and increased by ¥8,750 million for the year ended March
31, 2000. Debt securities classified as available-for-sale investment securities mature in various amounts through
2003.

Proceeds from sales of available-for-sale securities were ¥9,372 million ($75,581 thousand), ¥31,964 million

and ¥26,478 million for the years ended March 31, 2001, 2000 and 1999, respectively.

Gross realized gains on those sales were ¥3,579 million ($28,863 thousand), ¥3,456 million and ¥3,001 million

for the years ended March 31, 2001, 2000 and 1999, respectively.

Gross realized losses on those sales were ¥8 million ($63 thousand), ¥867 million and ¥1,275 million for the

years ended March 31, 2001, 2000 and 1999, respectively.

5. Bank Loans and
Long-Term Debt

The weighted average annual interest rates of short-term bank loans at March 31, 2001 and 2000 were 2.9%

and 3.5%, respectively.

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

Millions of yen

Thousands of
U.S. dollars

2001

2000

2001

Unsecured debt:

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

¥29,735

$239,798

Loans from banks and other financial institutions,

generally at 0.9% to 6.0%, due serially through 2005 ..............................
Other................................................................................................................

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

26,415
2,147

58,297
26,340

29,199
296

59,230
1,262

213,024
17,315

470,137
212,419

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

¥31,957

¥57,968

$257,718

The annual maturities of long-term debt outstanding at March 31, 2001 were as follows:

Years ending March 31

2002 .............................................................................................................................
2003 .............................................................................................................................
2004 .............................................................................................................................
2005 .............................................................................................................................
2006 .............................................................................................................................
2007 and thereafter ......................................................................................................

Millions of yen

¥26,340
1,207
528
29,941
129
152

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

¥58,297

Thousands of
U.S. dollars

$212,419
9,734
4,258
241,460
1,040
1,226

$470,137

Omron Corporation 35

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. At March 31, 2001 the convertible bonds were redeemable, in whole or in part, at 103%.

The number of contingently issuable shares of common stock related to the convertible bonds as of March 31,
2001 was 10,026,639 shares. The conversion price per share at March 31, 2001 was ¥2,965 ($23.92), 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, 2001, 2000 and 1999

amounted to ¥1,731 million ($13,960 thousand), ¥1,897 million and ¥2,518 million, respectively.

6. Leases

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, 2001, 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
2002 .............................................................................................................................
2003 .............................................................................................................................
2004 .............................................................................................................................
2005 .............................................................................................................................
2006 .............................................................................................................................
2007 and thereafter ......................................................................................................

Millions of yen
¥ 2,208
2,179
2,098
2,025
1,995
20,984

Thousands of
U.S. dollars
$ 17,806
17,573
16,919
16,331
16,089
169,226

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

¥31,489

$253,944

Rental expense amounted to ¥11,232 million ($90,581 thousand), ¥11,120 million and ¥15,193 million for the

years ended March 31, 2001, 2000 and 1999, respectively.

The Company has a contract with an outside service organization for outsourcing computer services. The con-
tract requires an annual service fee of ¥4,998 million ($40,306 thousand) for the year ending March 31, 2002. The
annual service fee will gradually decrease each year during the contract term to ¥4,518 million ($36,435 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 portion are prescribed by the Japanese Ministry of Health,
Labour and Welfare, commence at age 60 and continue until the death of the surviving spouse. Benefits under
the additional portion are usually paid in a lump sum at the earlier of termination or retirement although periodic
payments are available under certain conditions.

7. Termination and

Retirement
Benefits

36 Omron Corporation

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

value of the plan assets at March 31:

Millions of yen

Thousands of
U.S. dollars

2001

2000

2001

Change in benefit obligation:

Benefit obligation at beginning of year........................................................
Service cost, less employees’ contributions ...............................................
Interest cost.................................................................................................
Employees’ contributions ............................................................................
Actuarial (gains) and losses .........................................................................
Benefits paid (including benefits paid by the Companies) ..........................

¥189,263
8,846
6,624
1,010
4,022
(3,858)

¥180,467 $1,526,315
71,339
53,419
8,145
32,435
(31,113)

9,147
6,316
1,000
(4,012)
(3,655)

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

¥205,907

¥189,263 $1,660,540

Change in plan assets:

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

129,137
(12,879)
6,528
1,010
(1,921)

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

1,041,428
(103,863)
52,645
8,145
(15,492)

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

¥121,875

¥129,137 $ 982,863

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

(84,032)
49,639
808

(60,126)
30,232
1,078

(677,677)
400,314
6,516

Net amount recognized ........................................................................... ¥ (33,585) ¥ (28,816) $ (270,847)

Amounts recognized in the consolidated balance sheets:

Accrued liability ........................................................................................... ¥ (46,895) ¥ (28,816) $ (378,183)
6,516
Intangible assets..........................................................................................
100,820
Accumulated other comprehensive income (gross of tax) ..........................

808
12,502

—
—

Net amount recognized ........................................................................... ¥ (33,585) ¥ (28,816) $ (270,847)

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

¥168,769

¥146,248 $1,361,040

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 tax effect. The unrecognized transition obligation
and the unrecognized net actuarial loss are being amortized over 15 years.

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

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

3.0%
3.0
4.0

3.5%
3.6
4.0

3.5%
3.6
3.5

2001

2000

1999

Omron Corporation 37

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

for the years ended March 31:

Service cost, less employees’ contributions ...................................................
Interest cost on projected benefit obligation...................................................
Expected return on plan assets.......................................................................
Amortization ....................................................................................................

Millions of yen

2001
¥ 8,846
6,624
(4,451)
2,215

2000
¥ 9,147
6,316
(4,088)
2,652

Thousands of
U.S. dollars

2001
$ 71,339
53,419
(35,895)
17,863

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

¥13,234

¥14,027

$106,726

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 obligations.

The consolidated liability for the noncontributory termination plans as of March 31, 2001 and 2000 was ¥2,034
million ($16,406 thousand) and ¥1,813 million, respectively. The consolidated expense for the noncontributory
termination and retirement plans for the years ended March 31, 2001, 2000 and 1999 was ¥1,015 million ($8,185
thousand), ¥1,041 million and ¥84 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 recorded as common stock is
determined by resolution of the Board of Directors. Proceeds in excess of the amounts designated as common
stock are 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, 2001, retained earnings amount-
ing to ¥85,285 million ($687,782 thousand) were available for future dividends subject to legal reserve require-
ments.

Stock Options

In June 1998, the Company introduced stock-based compensation plans. Stock options are granted to direc-
tors and certain officers to purchase shares of common stock at a price not less than market price at the date of
grant. Options are granted with vesting periods of 1-2 years. As of March 31, 2001, options outstanding are sum-
marized as follows:

Grant date

June 25, 1998

Authorized and
granted shares

158,000

Option
exercise price

¥2,162

June 25, 1999

158,000

¥1,839

June 27, 2000

260,000

¥2,936

Exercisable
term

Exercised and
(forfeited) shares

July 1, 1999 -

June 30, 2001

July 1, 2001 -
June 30, 2004

July 1, 2002 -

June 30, 2005

73,000

(5,000)

—

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 would have been
insignificant.

8. Shareholders’

Equity

38 Omron Corporation

9. Other Expenses
(Income), net

Share Buyback and Retirement

During 2001, the Company reduced the number of authorized shares as a result of the buyback and subse-

quent retirement of 8,000,000 shares of common stock.

Other expenses (income), net for the years ended March 31, 2001, 2000 and 1999 consisted of the following:

Loss on relocation ...........................................................
Loss on impairment of investment

Millions of yen

Thousands of
U.S. dollars

2001

¥2,312

2000

1999

2001

¥ —

$18,645

securities and other assets..........................................

2,460

2,072

—

19,839

Net loss (gain) on sales and disposal of

property, plant and equipment,
excluding loss on relocation ........................................

Net gain on sales of short-term investments

(43)

412

458

(347)

and investment securities ............................................
Other, net.........................................................................

(3,703)
1,786

(2,783)
1,852

(1,725)
1,239

(29,863)
14,403

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

¥2,812

¥ 1,553

¥ (28)

$22,677

During the year ended March 31, 2001 the Company recognized a net loss of ¥2,312 million ($18,645 thou-
sand) as a result of an office relocation plan, primarily consisting of the relocation of the headquarters within
Kyoto, Japan.

10. Income Taxes

The provision for income taxes for the years ended March 31, 2001, 2000 and 1999 consisted of the following:

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

Millions of yen

Thousands of
U.S. dollars

2001

2000

1999

2001

¥22,720

¥14,857

¥12,426

$183,226

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

(5,367)

(5,809)

(8,591)

(43,282)

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

(35)

—

(142)

(283)

2,351

—

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

¥17,318

¥ 9,048

¥ 6,044

$139,661

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:

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 carryforwards of an overseas subsidiary.................
Other, net .........................................................................................................

2001

2000

1999

42.0%

48.0%

2.4
2.6
(2.5)

(0.1)
—
—
(1.1)

2.8
2.9
(3.0)

—
—
—
(1.7)

30.2
10.1
(18.1)

(1.7)
28.5
(28.5)
4.8

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

43.3%

43.0%

73.3%

Omron Corporation 39

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 2001 and 2000, and 48.0% in 1999. An
amendment to Japanese tax regulations was enacted into law on March 31, 1999. As a result of this amendment,
the normal income tax rate was reduced from 48.0% to 42.0% effective April 1, 1999. Deferred income tax
assets and liabilities as of March 31, 1999 were measured at the newly enacted tax rate.

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

deferred tax balances at March 31, 2001 and 2000 were as follows:

Millions of yen

Thousands of U.S. dollars

2001

2000

2001

Deferred
tax
assets

Deferred
tax
liabilities

Deferred
tax
assets

Deferred
tax
liabilities

Deferred
tax
assets

Deferred
tax
liabilities

¥ — ¥ 1,477
3,224
9,312
896
2,208

Inventory valuation ............................................ ¥ 1,882
4,067
Accrued bonuses and vacations .......................
10,809
Termination and retirement benefits..................
1,094
Enterprise taxes.................................................
2,270
Intercompany profits .........................................
—
Marketable securities ........................................
611
Allowance for doubtful receivables ...................
4,118
Bad debt expenses ...........................................
—
Gain on sale of land...........................................
5,251
Minimum pension liability adjustment ...............
8,596
Other temporary differences .............................
3,473
Tax credit carryforwards....................................
4,415
Subsidiaries’ operating loss carryforwards .......

—
—
—
—
3,370
116
—
1,311
—
4,424
—
—

32,802
87,167
8,826
18,304

¥ — $ 15,180 $ —
—
—
—
—
— 27,180
932
—
— 10,572
—
35,675
—
—

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

42,344
69,318
28,006
35,607

4,927
33,210

879
2,368
—
—
5,464
3,245
5,104

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

46,586
(7,795)

9,221
—

34,177
(6,485)

16,566
—

375,691
(62,864)

74,359
—

Total ........................................................... ¥38,791

¥9,221

¥27,692

¥16,566

$312,827

$74,359

The total valuation allowance increased by ¥1,310 million ($10,565 thousand), ¥1,681 million and ¥2,162 million

in 2001, 2000 and 1999, respectively.

As of March 31, 2001, certain subsidiaries had operating loss carryforwards approximating ¥11,065 million
($89,234 thousand) available for reduction of future taxable income, most of which expire in various amounts
through 2006.

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 ¥50,052 million ($403,645 thousand) and ¥41,900 million at March 31, 2001 and 2000, 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.

11. Foreign

Operations

Net sales and total assets of foreign subsidiaries for the years ended March 31, 2001, 2000 and 1999 were as

follows:

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

¥170,434
¥141,966

¥158,122
¥115,532

¥167,546
¥122,039

$1,374,468
$1,144,887

Millions of yen

Thousands of
U.S. dollars

2001

2000

1999

2001

12. Amounts per

The Company accounts for its earnings per share in accordance with SFAS No.128, “Earnings per Share.”
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.

40 Omron Corporation

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

tions is as follows:

Net income ......................................................................
Effect of dilutive securities:

Millions of yen

Thousands of
U.S. dollars

2001

2000

1999

2001

¥22,297

¥11,561

¥2,174

$179,815

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

325

—

2,626

Diluted net income...........................................................

¥22,622

¥11,886

¥2,174

$182,441

Number of shares

2001

2000

1999

Weighted average common shares outstanding ................. 255,031,698
Dilutive effect of:

256,841,987

260,649,752

Convertible bonds, due 2004 ...........................................
Stock options ...................................................................

10,026,639
62,449

10,028,349
28,106

—
—

Diluted common shares outstanding ................................... 265,120,786

266,898,442

260,649,752

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 represent the amounts applicable to the respective year, including dividends to be

paid after the end of the year.

Supplemental cash flow information for the years ended March 31, 2001, 2000 and 1999 was as follows:

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

Liabilities assumed in connection with capital

2001

¥ 1,765
19,257

Millions of yen

2000

¥ 1,980
12,543

Thousands of
U.S. dollars

1999

2001

¥ 2,450
18,417

$ 14,234
155,298

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

1,803

3,467

5,559

14,540

The change in each component of accumulated other comprehensive income (loss) for the years ended

March 31, 2001, 2000 and 1999 was as follows:

Millions of yen

Thousands of
U.S. dollars

2001

2000

1999

2001

Foreign currency translation adjustments:

Beginning balance .......................................................
Change for the year .....................................................

¥(20,998)
7,286

¥(11,954)
(9,044)

¥ (5,912)
(6,042)

$(169,336)
58,754

Ending balance ....................................................

(13,712)

(20,998)

(11,954)

(110,582)

Minimum pension liability adjustments:

Beginning balance .......................................................
Change for the year .....................................................

Ending balance ....................................................

—
(7,251)

(7,251)

Unrealized gains on available-for-sale securities:

Beginning balance .......................................................
Change for the year .....................................................

13,830
(10,213)

Ending balance ....................................................

3,617

(7,138)
7,138

—

5,080
8,750

13,830

(1,401)
(5,737)

(7,138)

6,598
(1,518)

5,080

—
(58,476)

(58,476)

111,534
(82,363)

29,171

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

(7,168)
(10,178)
¥(17,346)

(14,012)
6,844
¥ (7,168)

(715)
(13,297)
¥(14,012)

(57,802)
(82,085)
$(139,887)

Omron Corporation 41

13. Supplemental

Information for
Cash Flows

14. Other

Comprehensive
Income (Loss)

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

31, 2001, 2000 and 1999 were as follows:

2001

Tax

Millions of yen

2000

Tax

1999

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 ...................... ¥ 7,286 ¥

— ¥ 7,286 ¥ (9,044) ¥ — ¥(9,044) ¥ (6,082) ¥ — ¥ (6,082)

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

7,286

— 7,286

(9,044)

— (9,044)

(6,042)

— (6,042)

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

(12,502)

5,251

(7,251) 13,891

(6,753)

7,138

(11,032) 5,295

(5,737)

Unrealized gains (losses) on available-for-sale securities:

Unrealized holding gains (losses)

arising during period ...............................................

(14,711)

6,179

(8,532) 15,604

(6,554)

9,050

(1,194)

574

(620)

Reclassification adjustment for losses on

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

674

(283)

391

2,072

(870)

1,202

—

Reclassification adjustment for gains realized

in net income...........................................................
Net unrealized gains (losses).....................................

(898)
(1,518)
Other comprehensive income (loss) .................. ¥(22,824) ¥12,646 ¥(10,178) ¥19,934 ¥(13,090) ¥ 6,844 ¥(19,994) ¥6,697 ¥(13,297)

1,499
(2,072)
(2,589)
7,395 (10,213) 15,087

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

(3,571)
(17,608)

1,087
(6,337)

(1,502)
8,750

Thousands of U.S. dollars
2001

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

$ 58,754

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

58,754

—

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

(100,820)

42,344

$ 58,754

—

58,754

(58,476)

Unrealized gains (losses) on available-for-sale securities:

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

(118,636)

49,827

(68,809)

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

5,431

(2,281)

3,150

Reclassification adjustment for gains realized

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

(28,800)

12,096

(16,704)

Net unrealized gains (losses) .......................................................................................................
Other comprehensive income (loss) ....................................................................................

(142,005)
$(184,071)

59,642
$101,986

(82,363)
$(82,085)

42 Omron Corporation

15. Financial

Financial Instruments

Instruments
and Risk
Management

The following table presents the carrying amount and estimated fair value as of March 31, 2001 and 2000, of

the Companies’ financial instruments, both on and off the balance sheet.

Millions of yen

2001

2000

Thousands of
U.S. dollars

2001

Carrying
amount

Fair
value

Carrying
amount

Fair
value

Carrying
amount

Fair
value

Nonderivatives:

Long-term debt, including

current portion ........................................ ¥(58,297) ¥(62,460)

¥(59,230)

¥(68,213) $(470,137) $(503,710)

Derivatives:

Included in Other current assets

(Other current liabilities):

Forward exchange contracts ................
Foreign currency options ......................
Interest rate swaps ...............................

(377)
(334)
—

(377)
(334)
(49)

269
—
—

269
—
(45)

(3,040)
(2,694)
—

(3,040)
(2,694)
(395)

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, and 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.

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 valu-
ation 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 relat-
ed 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 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, 2001 and 2000, the notional amounts on which the Companies had interest rate swap agree-
ments outstanding aggregated ¥4,500 million ($36,290 thousand) and ¥4,000 million, respectively. The estimated
fair values of interest rate swap contracts are based on present value of discounted future cash flow analysis.

Omron Corporation 43

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

The Companies enter into foreign exchange forward contracts and combined purchased and written for-
eign currency option contracts to hedge foreign currency transactions (primarily 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, 2001 and 2000 were as follows:

Millions of yen

Thousands of
U.S. dollars

2001

2000

2001

Related to future sales:

Forward exchange contracts ...................................................................
Foreign currency options .........................................................................

¥17,130
10,445

¥15,374
—

$138,145
84,234

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 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 rates with the resulting gains and losses recorded in earnings, currency forward
contracts and options designated as hedges of the monetary assets and liabilities are also marked to spot
rates with the resulting gains and losses similarly recognized in earnings. Gains and losses on forward
contracts and options 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.

Concentration of Credit Risk

Financial instruments that potentially subject the Companies to concentrations of credit risk consist principal-
ly 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, 2001 with respect to loans guaranteed were ¥2,144 million ($17,290 thou-
sand), of which ¥1,204 million ($9,710 thousand) were jointly and severally guaranteed with six other unrelated
companies. According to an agreement between the seven companies, any losses on these guarantees are to be
equally borne among the companies.

In August 2000, the Company entered into an operating lease agreement for a new head office, including land
and a building, with a company owned by the family of the Company's founder, including the Company's chair-
man and representative director, representative director and chief executive officer, and certain managing offi-
cers. This lease agreement has an initial non-cancelable lease term of 20 years and requires a monthly rental
payment of ¥106 million ($854 thousand) and a security deposit of ¥2,600 million ($20,968 thousand) which is
refundable when the agreement expires. During 2001, the Company paid ¥954 million ($7,694 thousand) for
monthly rentals and ¥2,600 million ($20,968 thousand) for the security deposit.

16. Related Party
Transaction

44 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,
2001 and 2000, 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, 2001, 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 of America. 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 disclo-
sures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
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, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in
the period ended March 31, 2001 in conformity with accounting principles generally accepted in the United States of America.
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 7, 2001

Omron Corporation 45

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

OMRON Asiapacific Pte Ltd.
— Singapore Sales Office
55 Ubi Avenue 1 #05-01
Singapore 408935, Singapore
Phone: 65-547-6789
Fax: 65-547-6766

OMRON Electronics Components Co., Ltd.
408/166 Phaholyothin Place Building, 41st Floor,
Phaholyothin Road, Samsen-nai, Phayathai,
Bangkok 10400, Thailand
Phone: 66-2-619-0292
Fax: 66-2-619-0624

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

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

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

OMRON Electronics Sdn. Bhd.
2.01, Level2, Wisma Academy, 4A, Jalan19/1,
46300 Petaling Jaya, Selangor Darul Ehsan, Malaysia
Phone: 603-79547323
Fax: 603-79546618

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.
481-2, Kasan-Dong, Kumchun-Ku,
Seoul 153-023, Korea
Phone: 82-2-850-5700
Fax: 82-2-859-1687

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.
119, Jalan ss25/2. Taman Mewah,
47301 Petaling Jaya, Selangor D.E., Malaysia
Phone: 603-7880-9119
Fax: 603-7880-9559

MARKETING OF HEALTHCARE EQUIPMENT

OMRON Healthcare Singapore Pte Ltd.
83, Clemenceau Avenue, #11-01, UE Square,
Singapore 239920, Singapore
Phone: 65-736-2345
Fax: 65-736-2500

OMRON Electronic Components Pte Ltd.
750D Chai Chee Road, #05-02/03 Technopark
@ Chai Chee, Singapore 469004, Singapore
Phone: 65-244-3939
Fax: 65-244-3938

OMRON Electronics Co., Ltd.
Rasa Tower 20th Floor, #555 Phaholyothin Rd,
Chatuchak, Bangkok 10900, Thailand
Phone: 66-2-937-0500
Fax: 66-2-937-0501

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: 86-10-8391-3005
Fax: 86-10-8391-3688

— Shanghai Office
Room 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

46 Omron Corporation

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: 886-2-2715-3331
Fax: 886-2-2712-6712

OMRON Trading (Shenzhen) Co., Ltd.
112-115, Block 1, 1001 Honghua Road, Futian Free
Trade Zone, Shenzen. 518038, China
Phone: 86-755-359-9028
Fax: 86-755-359-9628

Shanghai OMRON Automation System Co., Ltd.
No.1600 Jinsui Road, Jinqiao Export Processing Zone,
Pu Dong New Area, 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,
Pu Dong New Area, Shanghai 201206, China
Phone: 86-21-5854-0012
Fax: 86-21-5854-8413

OMRON Electronics Components (Shenzhen) Ltd.
Tongfu Industrial Area No. 2, Pingshan, longgang
District, Shenzhen, 518118, China
Phone: 86-755-462-0000
Fax: 86-755-462-1111

YAMRON Co., Ltd.
5Fl.-1, No. 70, Min Chuan West Road,
Taipei, Taiwan, R.O.C.
Phone: 886-2-2523-6158
Fax: 886-2-2523-6642

MARKETING OF SOCIAL BUSINESS SYSTEMS

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

MARKETING OF HEALTHCARE
EQUIPMENT

OMRON (Dalian) Co., Ltd.
— Shanghai Office/Shanghai Branch
Rm.2107 Rui-jin Blg., Mao Min Nan Ru 205,
Shanghai 200020, China
Phone: 86-21-6472-8184
Fax: 86-21-6472-5119

— Beijing Office
Guang Hua Chang An 2-1023, Jian Guo Mei Nei-Dajie
7, Dong Cheng District, Beijing, 100005, China
Phone: 86-10-6510-2030
Fax: 86-10-6517-1354

— Guangzhou Branch
Guangzhou International Electrical Building Room
1901 East Huansi Road 403,
Guangzhou, 510095, China
Phone: 86-20-8732-2115
Fax: 86-20-8732-2200

— Chengdu Branch
Xin Shi Dai Square Blg, 12-D, Wen Wu Road 42,
Xin Hua Da Dao, Chengdu, 610017, China
Phone: 86-28-651-2475
Fax: 86-28-651-3565

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

MARKETING AND/OR MANUFACTURING
OF CONTROL COMPONENTS AND SYSTEMS

OMRON Electronics Llc.
1 East Commerce Drive,
Schaumburg, IL 60173-5302, U.S.A.
Phone: 1-847-843-7900
Fax: 1-847-843-7787

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

MARKETING AND/OR MANUFACTURING
OF AUTOMOTIVE COMPONENTS

OMRON Automotive Electronics Inc.
(MARKETING)
29185 Cabot Drive, Novi,
Michigan 48377 U.S.A.
Phone: 1-248-893-0200
Fax: 1-248-488-5430

— Shenyang Office
Room 1504 Dongyu Blg. No.2 Heping South Avenue
Heping Distr, Shenyang Liaoning 110001, China
Phone: 86-24-23258910
Fax: 86-24-23258911

— Jinan Office
Room 1708 B/B Yinzuo Blg. World Trading Centre,
No.66 Luoyuan Avenue
Jinan Shan Dong 250063, China
Phone: 86-531-6065601
Fax: 86-531-6065604

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

— Mori Build Office
(Social Systems Business Company)
Room 032 14th Floor Shanghai Senmao International
Building 101 Yin Cheng East Road,
Pu Dong New Area, Shanghai, 200120, China
Phone: 86-21-6841-3322
Fax: 86-21-6841-3092

— Wai Gao Qiao Office
(Industrial Automation Company)
The 4th floor of No.3 Building, No 253 Ai Du Road,
Wai Gao Qiao Free Trade Zone,
Shanghai 200131, China
Phone: 86-21-5046-0660
Fax: 86-21-5046-0998

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

LOGISTICS

OMRON Trading (Shanghai) Co., Ltd.
— Pu Dong Office (Industrial Automation Company)
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

(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, Llc.
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

MARKETING OF OFFICE AUTOMATION
EQUIPMENT

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

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.
Dock 3&4, 3705 Ohio Avenue,
St. Charles, IL 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 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 171, 5o. andar cjto 52, Bela Vista,
São Paulo-SP, Brazil, cep 01311-000
Phone: 55-11-251-0073
Fax: 55-11-251-1053

Omron Corporation 47

MARKETING AND MANUFACTURING
OF AUTOMOTIVE COMPONENTS

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

MARKETING OF HEALTHCARE EQUIPMENT

OMRON Healthcare Europe B.V.
Kruisweg 577, 2132 NA Hoofddorp, The Netherlands
Phone: 31-20-354-8200
Fax: 31-20-354-8201

OMRON Medizintechnik

Handelsgesellschaft G.m.b.H.

Windeckstrasse, 81, 68163 Mannheim, Germany
Phone: 49-621-83348-8
Fax: 49-621-8334820

OMRON Healthcare UK Limited
18-20 The Business Park, Henfield, West Sussex BN5
9SL, U.K.
Phone: 44-1-273-495033
Fax: 44-1-273-495123

E U R O P E

REGIONAL HEADQUARTERS

OMRON Europe B.V.
Wegalaan 67-69, 2132 JD Hoofddorp,
The Netherlands
Phone: 31-23-5681300
Fax: 31-23-5681391

MARKETING AND/OR MANUFACTURING
OF CONTROL COMPONENTS AND SYSTEMS

OMRON Europe B.V.
Wegalaan 67-69, 2132 JD Hoofddorp,
The Netherlands
Phone: 31-23-5681300
Fax: 31-23-5681388

OMRON Electronics Ges.m.b.H.
Brunner Strasse 81,
Box 323, A–1230 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: 41-41-748-13-13
Fax: 41-41-748-13-45

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

OMRON Electronics A/S
Odinsvej 15, DK-2600 Glostrup, Denmark
Phone: 45-4344-0011
Fax: 45-4344-0211

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.
19 rue du Bois Galon B.P. 33 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: 39-02-32681
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
H-1046 Budapest Kiss Erno u. 1-3. 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, 2132 JD Hoofddorp, The Netherlands
Phone: 31-23-5681100
Fax: 31-23-5681188

OMRON Electronics Lda.
Edificio OMRON, Rua de S.Tomé, Lote 131,
2689-510 Prior Velho, Portugal
Phone: 351-21-942-9400
Fax: 351-21-941-7899

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

OMRON Electronics Ltd.
1 Apsley Way, Staples Corner
London NW2 7HF, U.K.
Phone: 44-20-8450-4646
Fax: 44-20-8450-8087

OMRON Electronics Manufacturing

of Germany G.m.b.H.

Carl-Benz-Str. 4 71154 Nufringen, Germany
Phone: 49-7032-811-111
Fax: 49-7032-811-199

OMRON Electronics G.m.b.H.
Elisabeth-Selbert-Strasse 17,
40764 Langenfeld, Germany
Phone: 49-2173-6800-0
Fax: 49-2173-6800-400

48 Omron Corporation

Investor Information

Head Office

Date of Establishment

Stock Listings

Osaka Securities Exchange
Tokyo 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, 2001)

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: 81-3-3436-7170
Fax: 81-3-3436-7189

Osaka Office

Osaka Center Bldg., 4-1-3, Kyutaro-cho,
Chuo-ku, Osaka 541-0056, Japan
Phone: 81-6-6282-2511
Fax: 81-6-6282-2782

Kyoto R&D Laboratory

20, Igadera, Shimo-kaiinji,
Nagaokakyo-shi, Kyoto 617-8510, Japan
Phone: 81-75-951-5111
Fax: 81-75-957-9846

May 10, 1933

Industrial Property Rights

Number of patents:
2,380 (Japan)
1,414 (Overseas)
Number of patents pending:
6,293 (Japan)
578 (Overseas)

Number of Employees

25,067

Paid–in Capital

¥64,082 million

Common Stock

Authorized: 495,000,000 shares
Issued: 249,109,236 shares
Number of shareholders: 25,299

Stock Price Range/Trading Volume
(Osaka Securities Exchange)

Monthly Stock Price Range (¥)

3,500

3,000

2,500

2,000

1,500

1,000

500

25,000,000

22,500,000

20,000,000

17,500,000

15,000,000

12,500,000

10,000,000

7,500,000

5,000,000

2,500,000

High price= ¥3,200

Low price= ¥1,702

Monthly Trading Volume (shares)

4/00

1/01

9
Month

Omron Corporation 49

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