Annual Report 2010
Year ended March 31, 2010
O
M
R
O
N
C
o
r
p
o
r
a
t
i
o
n
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
0
This mark certifies the use of Green Power (solar power).
By using Green Power to print the Annual Report 2010, OMRON Corporation
is promoting the use of natural energy resources in Japan.
IR and M&A Planning Headquarters
Investor Relations Department
3-4-10 Toranomon, Minato-ku, Tokyo 105-0001 JAPAN
Phone: +81-3-3436-7170 Fax: +81-3-3436-7180
Homepage: http://www.omron.co.jp (Japanese)
http://www.omron.com (English)
Our Founder’s Story
Beliefs of Omron Founder
Kazuma Tateisi
“It’s not just about making money.”
In an age when labor disputes were rife in Japan, Omron founder Kazuma Tateisi was thinking of a
corporate philosophy that encourages labor and management to work together in a constructive man-
ner, and at every opportunity he told the company’s board members and managers:
“It’s not just about making money. Even before considering what services a company should offer
to society, it must provide a real contribution to society through the function and use of the products
it makes because, in the end, this too is a service to society. After that, a company serves society by
developing products, one after another, that can be of best use to society. The accumulation of these
services in many ways will help realize a better society that ultimately will allow everyone, including
ourselves, to enjoy better lives, with freedom and peace.”
On May 10, 1959, Mr. Tateisi celebrated the 26th anniversary of the Company’s founding by adopt-
ing these words as the Corporate Motto: “At work for a better life, a better world for all.”
To his young employees and others, Mr. Tateisi would often illustrate his point, using an allegory from
nature involving a bee, nectar, and flowers. “It’s like a bee instinctively collecting nectar by flying from
flower to flower. What does the flower think of this?”
“Well, from the flower’s point of view, by giving its nectar to the bee, the bee will act as an inter-
mediary to deliver its pollen.”
“That’s it. The bee does not intend to gather nectar so it can
transport pollen but in the end he provides the service of delivering
the pollen. A company is the same; its act of seeking to make a prof-
it ultimately becomes a service to society. A company does not
suddenly become a public entity when its president becomes aware
of that; a company is a public entity from the very beginning.”
“There is value to a company’s existence only if it can provide
a beneficial service to society, and only then can it make a profit and
continue to exist.”
Founder Kazuma Tateisi’s beliefs continually get passed on to
employees even today as the Omron Group accelerates its global
development.
Based on “Omron Founder Kazuma Tateisi: Don’t Say ’I Can’t,’ but rather, ’How Can I?,’” by Shoyo Yutani.
Sketch of the Corporate Motto in the
founder’s handwriting
1
A B E T T E R W O R L D F O R A L L T H R O U G H
PHILOSOPHY
SENSING & CONTROL
F u l l S t e a m A h e a d f o r G r o w t h
In the wake of the global economic crisis,
Omron’s earnings structure underwent dramatic changes.
Making its earnings structure even more resilient and
sustainable, while simultaneously aiming to meet the demand
in China and other rapidly growing emerging economies,
Omron is again steering its rudder
toward a growth path.
2
4 Profile
Core Technologies and Business Domains, Business Segments and Key Products
14 Message from the Chairman 16 Message from the President 18
Interview with the President
Omron Group’s Vision
FY 2009 Results and Future Outlook
The Omron Group’s Next Long-Term
Vision Targets an Operating Income
Margin of 15%.
Contents
Profile
To Our Stakeholders
4 Core Technologies and
14 Message from the Chairman
Business Domains
16 Message from the President
6 Business Segments and
Key Products
18
Interview with the President
10
10-Year Financial Highlights
Feature
12 Omron Through the Year
25
“Omron in China”
38 Omron at a Glance
Performance and Outlook by Segment
Caution Concerning Forward-Looking Statements
Statements in this annual report with respect to Omron’s plans, strategies, and benefits, as well as other statements that are not historical facts, are forward-looking state-
ments 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 Greater 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.
3
25
Feature “Omron in China”
China, Our Driving Force for Growth
40 Segment Information
53 An Interview with the
Vice Chairman on
Omron’s Corporate
Governance
63 Financial Section
Segment Information
40
IAB
Industrial Automation Business
42
EMC
53 Corporate Governance, Compliance,
and Risk Management
An Interview with the Vice Chairman
on Omron’s Corporate Governance
Electronic and Mechanical Components Business
44 AEC
60 Corporate Social Responsibility (CSR)
Automotive Electronic Components Business
46
SSB
62 Directors, Corporate Auditors, and
Social Systems Solutions Business
Executive Officers
48 HCB
Healthcare Business
50 Other
63
Financial Section (U.S. GAAP)
Environmental Solutions, Electronic Systems &
107
Internal Control Section
Equipments, Backlight, Micro Devices Businesses
52
Intellectual Property Strategy
109 Corporate and Stock Information
110 Omron’s Management Compass
—SINIC Theory
111 Omron: Advancing Sensing and
Control Technology
Definition of Terms
All references to “Omron” and “the Company” herein are to Omron Corporation and consolidated subsidiaries and affiliates.
4
P r o f i l e
C o r e Te c h n o l o g i e s a n d B u s i n e s s D o m a i n s
Omron is developing a global business of value that supports “safety and security,
Sensing and Control
Sensing and Control: Our Core Technologies
The value that Omron provides is the realization of “the best match between humans and machines,”
where the ideal balance between humans and machines produces the optimal performance, leveraging
its core sensing and control technologies, which provide functions approaching the human five senses
(sight, hearing, smell, taste, and touch).
IAB Industrial Automation
Business
EMC Electronic and Mechanical
Components Business
Net Sales
¥524.7 billion
FY2009
AEC Automotive Electronic
Components Business
SSB Social Systems
Solutions Business
HCB Healthcare Business
Other
Environmental Solutions,
Electronic Systems &
Equipments, Backlight, Micro
Devices Businesses
Sales by Segment
39%
14%
14%
11%
12%
*
10%
* Including “Eliminations and Corporate.”
health, and the environment” in the business domains of industry, society, and lifestyle.
5
Global Network
To provide customers “what they want when they want it,” Omron has established a global network and
a highly localized service system covering its operating bases in Japan, North America, Europe, Greater
China, and the Asia-Pacific region. Omron provides optimal support to its business partners worldwide
from close-by, through its comprehensive support system, from development to production, distribu-
tion, and maintenance.
77.1
07 08
09
Greater China
Subsidiaries 19
Affiliates 2
Europe
Subsidiaries 39
77.6
07 08
09
Regional Headquarters
61.2
07 08
09
North America
Subsidiaries 24
269.1
07 08
09
Japan
Subsidiaries 44
Affiliates 12
*Includes direct exports
Asia Pacific
Subsidiaries 28
Affiliates 2
39.7
07 08
09
Sales Breakdown by Region
Japan
*Includes direct exports
51%
Asia Pacific
8%
Greater
China
15%
Europe
15%
North America
12%
Net Sales
¥524.7 billion
FY2009
Leading
Market Share
*As of July 2010
Control-related Equipment
(domestic market share)
Approximately
40%
Sales Breakdown by Region
（Billions of yen）
Railway Infrastructure Equipment
(domestic market share)
Home-use Digital Blood Pressure Monitors
(global market share)
Approximately
40%
Approximately
50%
Source: Nippon Electric Control Equipment
Source: Omron internal survey
Source: Omron internal survey
Industries Association (NECA)
Core Technologies: What is Sensing & Control Technology?
It is technology that uses a convergence of sensing technology and control technology to “identify and gather the specific data
that is needed by people or a system,” and then “rapidly and skillfully processes the data to provide data output.” Omron
seeks to create machines with intelligence approaching the level of the human five senses, knowledge, and power of
judgment with the objective of realizing machines that can provide the optimal service and data to each individual customer.
Monitoring
Human will and
thoughts
Human body data
Location and
conditions of
a person or
object
Simulation
data
Specified data of
a person or object
Industry
Safety and Security
Gathers
only
the required
data
IN
Sensing
&
Control
Conversion
into value
OUT
Value
Environment
Society
Small
Fast
Easy
Highly
reliable
Efficient Optimal
Health
Lifestyles
Natural environment
6
Business Segments and Key Products
7
8
9
IAB
Industrial
Automation
Business
Segment Information
Go to page
40
The top provider of
control equipment for
the manufacturing
industry in Japan*,
supporting
manufacturing
innovation worldwide
IAB provides a wide spectrum of devices necessary for the optimal operation of manufac-
turing equipment, products ranging from sensors, control devices, and all types of inspection
and processing equipment to equipment meeting the growing demand for products to
enhance worker safety and environmental products that contribute to improving energy
efficiency. IAB’s lineup of products, which meet some 100,000 specifications, support
manufacturing product innovation for customers around the world.
(*As of July 2010, Omron internal survey)
Vision Sensors
Photoelectric Sensors
Proximity
Sensors
Display and Operating Devices
Indicator Display Equipment
Sensing Devices
Telecommunications Equipment
Control Equipment
28
30
36
Power Supply Units
Motion Equipment
Programmable
Logic
Controllers
Temperature
Controllers
Servo Motors and
Drives
Inverters
Substrate
Inspection
Devices
Laser Repair
Devices for
Liquid-crystal
Applications
IAB’s product lines comprise devices for sensing lighting, imaging, vibration, temperature, location, speed, and other data necessary for the oper-
ation of manufacturing equipment; control and motion devices that process large volumes of data into meaningful and useful information and
execute optimal control; and display and operating devices that monitor the control status at the production site and enable configuration and
adjustment. Interconnecting IAB’s devices for data communication enable high-speed, high-precision control to contribute to enhancing “quality, safe-
ty, and the environment” at the production site.
Safety Equipment
Environmental Equipment
IAB’s safety equipment meets inter-
national safety standards and
contributes to the creation of a safe
workplace environment by auto-
matically sounding an alarm or
safely shutting down machinery
when a worker enters a defined
danger zone in the factory.
Safety
Controllers
Air Cleaning Units
IAB’s environmental equipment pro-
vide constant monitoring of
manufacturing environment data, such
as the presence of foreign particles
and temperature and humidity levels,
and provide analysis of electric power
consumption data, thereby contribut-
ing to maintaining product quality
standards while also providing data to
help reduce excess power consump-
tion and improve energy efficiency.
Safety Door Switches
Safety
Sensors
Air Thermal
Sensors
Air Particle
Sensors
Ionizers
EMC
Electronic and
Mechanical
Components
Business
Segment Information
Go to page
42
Provider of ever-
improving digital
components to a wide
range of industries,
leveraging monozukuri
technology
AEC
Automotive
Electronic
Components
Business
Segment Information
Go to page
44
Contributing to safe
and comfortable
automobiles
worldwide
SSB
Social Systems
Solutions
Business
Segment Information
Go to page
46
Japan’s No.1*
supplier of railway
infrastructure
systems and creator
of a wide variety of
social systems
HCB
Healthcare
Business
Segment Information
Go to page
48
Global No.1* market
share for digital home
blood pressure monitors
and a wide range of
products and services for
treating lifestyle-related
diseases
Other
Environmental Solutions
Business,
Electronic Systems &
Equipments Business,
Backlight Business, and
Micro Devices Business
Segment Information
Go to page
50
Discovering and
fostering new
business
opportunities for
achieving Group
growth strategies
The EMC segment’s strength is its advanced monozukuri technology in each stage from
product design to materials, metal molds, product processing and assembly. Its expert-
ise has been cultivated in the production of its vast array of relays, switches, connectors,
and other components utilized in consumer appliances, telecommunications equipment,
mobile devices, amusement devices, office automation (OA), and other equipment.
AEC is an active contributor to the rapidly advancing car electronics market in the drive to
realize a safe, comfortable, and environmentally friendly automotive society. The compa-
ny supplies all types of controllers, sensors, switches, and other components for automakers
and electrical equipment producers around the world. AEC provides the sensing and con-
trol technology for the future of auto manufacturing.
SSB provides a wide variety of systems to support social infrastructure centering on rail-
way and traffic control systems. Recently, SSB has been a major contributor of IC card
equipment for railway systems, building on its position as the top domestic supplier
of automated ticket gates and ticket vending machines. The company has further
expanded its business scope to contribute to the realization of a safe, secure, and com-
fortable society through innovative solutions utilizing image sensing technologies.
(*As of July 2010, Omron internal survey)
HCB provides equipment and services worldwide for personal and professional use to
support the prevention, treatment, and health improvement fields. The company’s digital
home blood pressure monitors command top market shares, with approximately 65%*
of the domestic market and 50%* of the global market. HCB’s bio-information sensing
technology has made it a leader in the home healthcare market, and it is pursuing the
concept of Healthcare at home to advance prevention, treatment, and alleviation of lifestyle-
related diseases. (*As of July 2010, Omron internal survey)
The Other segment explores and develops new businesses outside the realm of the main
five segments. The segment’s Environmental Solutions Business, Electronic Systems and
Equipments Business, and other operations play an important part in advancing the Omron
Group’s growth strategy. The Backlight Business and Micro Devices Business were trans-
ferred to the Other segment in the second half of fiscal 2009.
Connectors
Connectors are used as an interface
between electronic devices and are wide-
ly used in mobile devices, industrial
equipment, and other electronics.
FPC Connectors
Automotive
Switches/Controllers
AEC supplies multi-function control units
that undertake integrated control of
diverse automobile body features, includ-
ing switches to automatically open and
close power windows, lock and unlock
doors, and turn on and off windshield
wipers, using multiple communication
technologies.
Passive Entry and
Push Engine
Start Systems
Surface-mounting
High-frequency
Relays
Surface Mount
Switches
Relays and Switches
Relays are composed of electromagnets that con-
vert electric signals to mechanical movement and
switches that turn electricity on and off. Relays
and switches are used in virtually all electric and
electronic devices, including refrigerators,
microwave ovens, and air conditioners.
OKAO Vision
OKAO Vision is gaining wide use as a technolo-
gy for correcting exposure in digital photography
and brightness in photo printing, and its face
recognition capability is used in mobile phone
user verification as well as estimating age and
determining sex.
Sensors and Modules
Sensors and modules enable miniaturiza-
tion and enhanced functionality for mobile
phones, digital cameras, and other elec-
tronic devices.
Flexible Optical Distribution
Modules
OKAO Vision
Facial Image Sensing
Power Window
Switches
Electric Power Steering
Controllers
Electric power steering controllers are
equipped with high-output and high-pre-
cision sensing functions to enable smooth
steering of the vehicle. These devices
help achieve energy savings and better
mileage.
Transmitter Key
Passive entry systems enable car doors to be locked and unlocked by touch-
ing the door handle or pressing a switch for the door without taking out
the transmitter key.
Combination Jogs
Transmitter Key
Electric Power Steering
Controllers
Passive engine start systems enable car engines to be started or shut down
by pressing a switch from the driver’s seat of the car without taking the
transmitter key out of one’s bag.
Automated Ticket Gates
Train Station Solutions
SSB provides systems solutions, including the
newest models for automated ticket gates and
ticket vending machines using universal designs,
to increase the comfort and efficiency of train
stations.
Healthcare & Medical Devices for Home Use
Digital Blood Pressure Monitors
Pedometers
Ticket Vending Machines
Body Composition Monitors
Sonic Electric Toothbrushes
LCD Backlights
Microlens array technology with several million micron-sized micro lenses to max-
imize light utilization efficiency contributes to brighter and slimmer mobile phones
with lower power consumption.
LCD Backlights
Healthcare at Home
HCB promotes “Healthcare at Home” to prevent,
treat, and manage lifestyle-related diseases by pro-
viding home- and professional-use medical devices
to measure biological and behavior information.
Micro Devices
Omron provides new applications cen-
tering on micro electrical mechanical
systems (MEMS)
MEMS Acoustic Sensors
RF MEMS Switches
Social Sensors
Sensors located in public settings gath-
er data on the movement and conditions
of people, automobiles, and other objects,
and provide optimal information to peo-
ple and control equipment.
Road Traffic Solutions
In addition to control systems for traffic volumes and traffic
conditions, SSB is developing next-generation traffic safe-
ty systems designed to prevent accidents by transmitting
data on pedestrians, bicycles, and other objects collected
by sensors to nearby vehicles.
Traffic Control Systems
Body Glucose Meters
Nebulizers
Portable Electrocardiogram
(ECG) Monitor
Medical Equipment for Hospital Use
Non-invasive Vascular
Screening Devices
CO2 Reduction Solutions
We do not merely provide existing devices related to energy
savings, such as electric monitoring devices, electric sensors
and direct current (DC) relays, but rather we offer a solution-
based business that combines all of these factors for the
reduction of CO2.
Remote Energy
Monitoring Systems
Electronic Systems & Equipment
Business activities related to computers, devices, unin-
terruptible power supplies (UPS), and other electronic
systems and equipment.
Frantio Platform Solution
6
Business Segments and Key Products
7
8
9
IAB
Industrial
Automation
Business
Segment Information
Go to page
40
The top provider of
control equipment for
the manufacturing
industry in Japan*,
supporting
manufacturing
innovation worldwide
IAB provides a wide spectrum of devices necessary for the optimal operation of manufac-
turing equipment, products ranging from sensors, control devices, and all types of inspection
and processing equipment to equipment meeting the growing demand for products to
enhance worker safety and environmental products that contribute to improving energy
efficiency. IAB’s lineup of products, which meet some 100,000 specifications, support
manufacturing product innovation for customers around the world.
(*As of July 2010, Omron internal survey)
Vision Sensors
Photoelectric Sensors
Proximity
Sensors
Display and Operating Devices
Indicator Display Equipment
Sensing Devices
Telecommunications Equipment
Control Equipment
28
30
36
Power Supply Units
Motion Equipment
Programmable
Logic
Controllers
Temperature
Controllers
Servo Motors and
Drives
Inverters
Substrate
Inspection
Devices
Laser Repair
Devices for
Liquid-crystal
Applications
IAB’s product lines comprise devices for sensing lighting, imaging, vibration, temperature, location, speed, and other data necessary for the oper-
ation of manufacturing equipment; control and motion devices that process large volumes of data into meaningful and useful information and
execute optimal control; and display and operating devices that monitor the control status at the production site and enable configuration and
adjustment. Interconnecting IAB’s devices for data communication enable high-speed, high-precision control to contribute to enhancing “quality, safe-
ty, and the environment” at the production site.
Safety Equipment
Environmental Equipment
IAB’s safety equipment meets inter-
national safety standards and
contributes to the creation of a safe
workplace environment by auto-
matically sounding an alarm or
safely shutting down machinery
when a worker enters a defined
danger zone in the factory.
Safety
Controllers
Air Cleaning Units
IAB’s environmental equipment pro-
vide constant monitoring of
manufacturing environment data, such
as the presence of foreign particles
and temperature and humidity levels,
and provide analysis of electric power
consumption data, thereby contribut-
ing to maintaining product quality
standards while also providing data to
help reduce excess power consump-
tion and improve energy efficiency.
Safety Door Switches
Safety
Sensors
Air Thermal
Sensors
Air Particle
Sensors
Ionizers
EMC
Electronic and
Mechanical
Components
Business
Segment Information
Go to page
42
Provider of ever-
improving digital
components to a wide
range of industries,
leveraging monozukuri
technology
AEC
Automotive
Electronic
Components
Business
Segment Information
Go to page
44
Contributing to safe
and comfortable
automobiles
worldwide
SSB
Social Systems
Solutions
Business
Segment Information
Go to page
46
Japan’s No.1*
supplier of railway
infrastructure
systems and creator
of a wide variety of
social systems
HCB
Healthcare
Business
Segment Information
Go to page
48
Global No.1* market
share for digital home
blood pressure monitors
and a wide range of
products and services for
treating lifestyle-related
diseases
Other
Environmental Solutions
Business,
Electronic Systems &
Equipments Business,
Backlight Business, and
Micro Devices Business
Segment Information
Go to page
50
Discovering and
fostering new
business
opportunities for
achieving Group
growth strategies
The EMC segment’s strength is its advanced monozukuri technology in each stage from
product design to materials, metal molds, product processing and assembly. Its expert-
ise has been cultivated in the production of its vast array of relays, switches, connectors,
and other components utilized in consumer appliances, telecommunications equipment,
mobile devices, amusement devices, office automation (OA), and other equipment.
AEC is an active contributor to the rapidly advancing car electronics market in the drive to
realize a safe, comfortable, and environmentally friendly automotive society. The compa-
ny supplies all types of controllers, sensors, switches, and other components for automakers
and electrical equipment producers around the world. AEC provides the sensing and con-
trol technology for the future of auto manufacturing.
SSB provides a wide variety of systems to support social infrastructure centering on rail-
way and traffic control systems. Recently, SSB has been a major contributor of IC card
equipment for railway systems, building on its position as the top domestic supplier
of automated ticket gates and ticket vending machines. The company has further
expanded its business scope to contribute to the realization of a safe, secure, and com-
fortable society through innovative solutions utilizing image sensing technologies.
(*As of July 2010, Omron internal survey)
HCB provides equipment and services worldwide for personal and professional use to
support the prevention, treatment, and health improvement fields. The company’s digital
home blood pressure monitors command top market shares, with approximately 65%*
of the domestic market and 50%* of the global market. HCB’s bio-information sensing
technology has made it a leader in the home healthcare market, and it is pursuing the
concept of Healthcare at home to advance prevention, treatment, and alleviation of lifestyle-
related diseases. (*As of July 2010, Omron internal survey)
The Other segment explores and develops new businesses outside the realm of the main
five segments. The segment’s Environmental Solutions Business, Electronic Systems and
Equipments Business, and other operations play an important part in advancing the Omron
Group’s growth strategy. The Backlight Business and Micro Devices Business were trans-
ferred to the Other segment in the second half of fiscal 2009.
Connectors
Connectors are used as an interface
between electronic devices and are wide-
ly used in mobile devices, industrial
equipment, and other electronics.
FPC Connectors
Automotive
Switches/Controllers
AEC supplies multi-function control units
that undertake integrated control of
diverse automobile body features, includ-
ing switches to automatically open and
close power windows, lock and unlock
doors, and turn on and off windshield
wipers, using multiple communication
technologies.
Passive Entry and
Push Engine
Start Systems
Surface-mounting
High-frequency
Relays
Surface Mount
Switches
Relays and Switches
Relays are composed of electromagnets that con-
vert electric signals to mechanical movement and
switches that turn electricity on and off. Relays
and switches are used in virtually all electric and
electronic devices, including refrigerators,
microwave ovens, and air conditioners.
OKAO Vision
OKAO Vision is gaining wide use as a technolo-
gy for correcting exposure in digital photography
and brightness in photo printing, and its face
recognition capability is used in mobile phone
user verification as well as estimating age and
determining sex.
Sensors and Modules
Sensors and modules enable miniaturiza-
tion and enhanced functionality for mobile
phones, digital cameras, and other elec-
tronic devices.
Flexible Optical Distribution
Modules
OKAO Vision
Facial Image Sensing
Power Window
Switches
Electric Power Steering
Controllers
Electric power steering controllers are
equipped with high-output and high-pre-
cision sensing functions to enable smooth
steering of the vehicle. These devices
help achieve energy savings and better
mileage.
Transmitter Key
Passive entry systems enable car doors to be locked and unlocked by touch-
ing the door handle or pressing a switch for the door without taking out
the transmitter key.
Combination Jogs
Transmitter Key
Electric Power Steering
Controllers
Passive engine start systems enable car engines to be started or shut down
by pressing a switch from the driver’s seat of the car without taking the
transmitter key out of one’s bag.
Automated Ticket Gates
Train Station Solutions
SSB provides systems solutions, including the
newest models for automated ticket gates and
ticket vending machines using universal designs,
to increase the comfort and efficiency of train
stations.
Healthcare & Medical Devices for Home Use
Digital Blood Pressure Monitors
Pedometers
Ticket Vending Machines
Body Composition Monitors
Sonic Electric Toothbrushes
LCD Backlights
Microlens array technology with several million micron-sized micro lenses to max-
imize light utilization efficiency contributes to brighter and slimmer mobile phones
with lower power consumption.
LCD Backlights
Healthcare at Home
HCB promotes “Healthcare at Home” to prevent,
treat, and manage lifestyle-related diseases by pro-
viding home- and professional-use medical devices
to measure biological and behavior information.
Micro Devices
Omron provides new applications cen-
tering on micro electrical mechanical
systems (MEMS)
MEMS Acoustic Sensors
RF MEMS Switches
Social Sensors
Sensors located in public settings gath-
er data on the movement and conditions
of people, automobiles, and other objects,
and provide optimal information to peo-
ple and control equipment.
Road Traffic Solutions
In addition to control systems for traffic volumes and traffic
conditions, SSB is developing next-generation traffic safe-
ty systems designed to prevent accidents by transmitting
data on pedestrians, bicycles, and other objects collected
by sensors to nearby vehicles.
Traffic Control Systems
Body Glucose Meters
Nebulizers
Portable Electrocardiogram
(ECG) Monitor
Medical Equipment for Hospital Use
Non-invasive Vascular
Screening Devices
CO2 Reduction Solutions
We do not merely provide existing devices related to energy
savings, such as electric monitoring devices, electric sensors
and direct current (DC) relays, but rather we offer a solution-
based business that combines all of these factors for the
reduction of CO2.
Remote Energy
Monitoring Systems
Electronic Systems & Equipment
Business activities related to computers, devices, unin-
terruptible power supplies (UPS), and other electronic
systems and equipment.
Frantio Platform Solution
10
10-Year Financ ial Highlights Omron Corporation and Subsidiaries
Operating Results (for the year): (Note 2)
Net sales
Gross profit
Selling, general and administrative expenses
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
¥ 594,259
¥ 533,964
¥ 522,535
¥ 575,157
¥ 598,727
¥ 616,002
218,065
180,535
201,816
235,460
245,298
232,667
(excluding research and development expenses)
131,203
134,907
133,406
139,569
141,185
157,909
Research and development expenses
Operating income
EBITDA (Note 2)
Net income (loss) attributable to shareholders
Cash Flows (for the year):
Net cash provided by operating activities
Net cash used in investing activities
Free cash flow (Note 3)
42,513
44,349
76,566
22,297
50,796
(32,365)
18,431
Net cash provided by (used in) financing activities
(24,582)
41,407
4,221
37,790
(15,773)
33,687
(40,121)
(6,434)
(12,056)
40,235
28,175
57,851
511
46,494
49,397
77,059
26,811
49,441
54,672
83,314
30,176
55,315
60,782
91,607
35,763
41,854
(30,633)
11,221
(1,996)
80,687
(34,484)
46,203
(28,119)
61,076
(36,050)
25,026
(40,684)
51,699
(43,020)
8,679
(38,320)
Financial Position (at year end):
Total assets
Total interest-bearing liabilities
Total shareholders’ equity
Per Share Data:
Net income (loss) attributable
to shareholders (basic)
Shareholders’ equity
Cash dividends (Note 4)
Ratios:
Gross profit margin
Operating income margin
EBITDA margin
Return on shareholders’ equity (ROE)
Ratio of shareholders’ equity to total assets
Grand Design 2010 (GD2010)
Long-term corporate vision
(FY2001–FY2010)
593,144
549,366
567,399
592,273
585,429
589,061
67,213
58,711
71,260
56,687
24,759
3,813
325,958
298,234
251,610
274,710
305,810
362,937
87.4
(63.5)
2.1
110.7
126.5
151.1
1,311.1
1,201.2
1,036.0
1,148.3
1,284.8
1,548.1
13.0
13.0
10.0
20.0
24.0
30.0
36.7%
7.5%
12.9%
6.7%
55.0%
33.8%
0.8%
7.1%
(5.1%)
54.3%
38.6%
5.4%
11.1%
0.2%
44.3%
40.9%
8.6%
13.4%
10.2%
46.4%
41.0%
9.1%
13.9%
10.4%
52.2%
37.8%
9.9%
14.9%
10.7%
61.6%
FY2001–FY2003
1st Stage Establishing a Profit Structure
Concentrating on cost structure reform and
restructuring the Company as a
profit-generating business.
Achievements
• ROE 10%
• Withdrawal from unprofitable business,
spin off of the Healthcare Business.
• Raising the level of corporate governance
to the global standard.
Notes: 1. U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate on March 31, 2010, of ¥93 = $1.
2. EBITDA = Operating income + depreciation and amortization.
3. Free cash flow = Net cash provided by operating activities + net cash used in investing activities.
4. Cash dividends per share represent the amounts applicable to the respective year, including dividends to be paid after the end of the year.
Operating Income
Omron applies the “single step” presentation of income under U.S. GAAP (i.e., the various levels of income are not presented) in its consolidated statements of
income. For easier comparison to other companies, operating income is presented as gross profit less selling, general and administrative expenses and research
and development expenses.
11
Discontinued Operations
Figures for FY2002 onward have been restated to account for businesses discontinued in FY2007.
FY2006
FY2007
FY2008
FY2009
FY2009
Millions of yen
Thousands of
U.S. dollars (Note 1)
¥ 723,866
¥ 762,985
¥ 627,190
¥ 524,694
$ 5,641,871
278,241
293,342
218,522
184,342
1,982,172
164,167
176,569
164,284
133,426
1,434,688
52,028
62,046
95,968
38,280
51,520
65,253
101,596
42,383
40,539
(47,075)
(6,536)
(4,697)
68,996
(36,681)
32,315
(34,481)
48,899
5,339
38,835
(29,172)
31,408
(40,628)
(9,220)
21,867
37,842
13,074
40,088
3,518
406,903
140,581
431,054
37,827
42,759
459,774
(18,584)
(199,828)
24,175
259,946
(20,358)
(218,903)
630,337
617,367
538,280
532,254
5,723,162
21,813
19,809
54,859
38,217
410,935
382,822
368,502
298,411
306,327
3,293,838
Millions of yen
U.S. dollars (Note 1)
165.0
185.9
1,660.7
1,662.3
34.0
42.0
(132.2)
1,355.4
25.0
16.0
1,391.4
17.0
0.17
14.96
0.18
38.4%
8.6%
13.3%
10.3%
60.7%
38.4%
8.6%
13.3%
11.3%
59.7%
34.8%
0.9%
6.2%
(8.7%)
55.4%
35.1%
2.5%
7.6%
1.2%
57.5%
FY2004–FY2007
FY2008–FY2010
2nd Stage Balancing Growth &
Earnings
Reinforcing business
foundations through aggressive
investment in growth areas, such
as M&A, and cost cutting.
Achievements
• Increased EPS (earnings per share)
from ¥110.7 (FY2003) to ¥185.9
(FY2007).
3rd Stage
Achieving a Growth Structure
Fortification of growth business
(high profitability)
Revision of 3rd stage
due to an abrupt change in
the business environment
Revival Stage
(from February 2009 to March 2011)
• Emergency Measures
(Cost reduction target of approx. ¥ 63.0
billion achieved in fiscal 2009)
14 months
• Structural Reform
(February 2009–March 2010)
(Strengthening of profit base over the
medium term) 26 months
Net Sales and Operating Income Margin
(Billions of yen)
1,000
(%)
10
800
600
400
200
0
60
45
30
15
0
-15
-30
400
300
200
100
0
50
40
30
20
10
0
00
01
02
03
04 05 06 07 08 09
Net Sales [left axis]
Operating Income Margin [right axis]
Net Income (Loss) Attributable to
Shareholders and ROE
(Billions of yen)
(%)
8
6
4
2
0
(FY)
20
15
10
5
0
-5
00
01
02
03
-10
04 05 06 07 08 09 (FY)
Net Income (Loss) Attributable to Shareholders [left axis]
ROE [right axis]
Shareholders’ Equity and Ratio of
Shareholders’ Equity to Total Assets
(Billions of yen)
(%)
00
01
02
03
04 05 06 07 08 09
80
60
40
20
0
(FY)
Shareholders’ Equity [left axis]
Ratio of Shareholders’ Equity to Total Assets [right axis]
Cash Dividends
(yen)
*2
*1
00
01
02
03
04 05 06 07 08 09
(FY)
*1. Commemorative dividend amounting to ¥7.0
is included in the dividends for fiscal 2003.
*2. Commemorative dividend amounting to ¥5.0
is included in the dividends for fiscal 2007.
12
Omr on Thr ough the Year
Management Topics
June 5
Other Businesses
Construction of a new building for
the microelectronics business
completed at the Yasu Office
July 30
AEC
Decision made to spin off the Automotive Electronic
Components Business (AEC) segment
September 24
IAB
Organizational restructuring making the two divisions in charge of
industrial equipment and automation systems the core of IAB
EMC
Reorganization of ECB into the Electronic and Mechanical
Components Business (EMC) to fortify mechanical components
(relays, switches, and connectors). The Micro Devices business
formerly part of the ECB segment was transferred to the newly
created Micro Devices Business Promotion Headquarters under
direct control of the Company president
2009
1Q
April
Consolidated net sales
Consolidated operating loss
¥106.9 billion
(¥10.2 billion)
(YoY change)
-37.1%
—
May
June
2Q
July
Consolidated net sales
Consolidated operating income
¥125.5 billion
¥2.5 billion
(YoY change)
-32.1%
-81.7%
August
September
Product-related Topics
■ IAB ■ EMC ■ AEC ■ SSB ■ HCB ■ Other
April 14
■ Launch of the “SYSMAC CP1E” Micro
PLC (Programmable Logic Controller) CPU
unit enabling highly efficient automation
and radical cost-savings
July 1
■ Launch of the Omron Jog Style
Activity Monitor HJA-300 featuring
proprietary data algorithms to accurately calculate the level
of physical exertion during jogging which involves a high
level of physical exertion
May 26–29
■ Participation in the “New Environment Exposition 2009”
Exhibition of proprietary solutions for CO2 reduction “Green
Automation”
July 7
■ Announcement of the selection of EtherCAT* as Omron’s
next-generation motion control system
June 1
■ An industry first! Sonic toothbrush
that automatically adjusts to optimal
bristle movement for the area being
brushed
Launch of HT-B551 MediClean Sonic
Electric Toothbrush
June 30
■ Launch of the H5CX Digital Timer and H7CX Digital
Counter/Tachometer with enhanced easy-to-view display,
safety features, as well as other features, and the shortest
body of any counter in the industry
July 29
■ Launch of the F3SR-B Safety Light Curtain,
which meets international safety planning
standards and provides safe use in severe
manufacturing environments with the world’s
first large-size high-intensity white LED for
adjusting the beam
September 1
■ An industry first! Launch of the Omron digital thermometer
MC-675 that alerts users with a light and buzzer when it slips
out of place
September 1
■ Omron commemorates blood pressure
monitor sales exceeding 100 million units on
an aggregate basis with a campaign to
support UNICEF
September 30
■ Creation of the industry’s top-class service support system
• Call centers are available from 8:00 a.m. to 9:00 p.m., 365 days a year
• Expanded services include a direct repair service,
an engineer dispatch service, and an emergency
maintenance equipment delivery service
* What is EtherCAT?
EtherCAT is an Ethernet-based, next-generation, ultra-high-speed motion network that enables high-speed, highly accurate communication between
devices that control the operations of machine controls and is widely used around the world to meet the increasing need for high-speed, high-precision
control. EtherCAT is being promoted by the EtherCAT Technology Group (ETG) headquartered in Germany and is gaining worldwide usage in the United
States, Japan, China, and Korea. Omron is collaborating with ETG and ETG Japan to promote the adoption of EtherCAT.
13
O
m
r
o
n
T
h
r
o
u
g
h
t
h
e
Y
e
a
r
January 28
AEC
Decision on the details for spinning off the AEC segment (in a simple
incorporation-type separation)
EMC
Decision on the details for spinning off the switches business (in a simple
absorption-type separation)
3Q
Consolidated net sales
Consolidated operating income
¥138.1 billion
¥8.7 billion
(YoY change)
-4.2%
—
2010
4Q
Consolidated net sales
Consolidated operating income
¥154.2 billion
¥12.1 billion
(YoY change)
+20.1%
—
October
November
December
January
February
March
November 1
■ Launch of the commercial-use HBP-9021 automatic blood
pressure monitor which features elbow detection sensors, and
shows on the monitor whether the arm is correctly positioned
January–March
■ A world first for MEMS! Sensor capable of detecting the
lower limit of human audible frequencies
Start of mass production and supply of the MEMS Acoustic
Sensor Chip
November 1
■ Start of clinical trials of a safe, simple, and highly accurate
internal organ fat analyzer using new measuring technology
and unaffected by radiation
November 2
■ Launch of the FZ3-900 Vision Sensor with a Dual Task
Controller featuring the industry’s first complete parallel
processing, which vastly reduces measurement, input and
output processing costs
December 21
■ Japan’s first! A solar-powered, environmentally friendly
blood pressure monitor
Online pre-orders begin for the Omron solar-powered upper
arm blood pressure monitor HEM-4500-SOL
January 1
■ World’s first automatic analysis system
for energy consumption integrating
consultant expertise
Launch of the CO2 Visualization System “ene-brain”
January 18
■ Instantly alerts when detecting
recognized “faces”
Launch of “OKAO Scan” Specified Person Detection System
January 29
■ Launch of OMNUC G5-series of AC servo drives compatible
with ultra-high-speed motion network
EtherCAT communications and certified
under international safety standards for
motion control devices
February 10
■ Omron wins the Minister of Economy, Trade and Industry
Award’s Energy Conservation Grand Prize
Omron and the City of Kyoto Board of Education were
recognized for their efforts to “visualize electric power
consumption volume in Kyoto municipal schools and other
energy-saving activities”
March 12
■ Continua-standard* devices incorporating Bluetooth®
wireless technology
Launch of blood pressure monitors, body composition monitors,
and wireless adapters for those products and pedometers
* What are the Continua standards?
The Continua standards are guidelines created by Continua Health Alliance, a non-profit organization (NPO) group of healthcare providers in the
healthcare, medical, and IT industries promoting connectivity among various medical devices and healthcare management services. By following these
guidelines, health service providers, in-home caregiver providers, and other healthcare professionals can develop applications meeting the Continua
standards, enabling interoperability between various medical devices and facilitating the creation of services that can better meet healthcare needs.
14
To Our Stakeholder s
Message fr om the Chair man
In fiscal 2009, ended March 31, 2010, the Omron Group achieved a return
to profitability. This positive result is attributable to the Group’s “Working
Together as One,” as well as emergency measures and structural reforms
implemented to address the rapid deterioration in its performance from
the second half of fiscal 2008. Here, Omron’s corporate governance
worked to highlight the “Working Together as One” spirit by sharing a
sense of crisis across the entire Group. We have designated fiscal 2010,
ending March 31, 2011, the inaugural year of our “Push for Renewed
Growth” as we set our sights on global growth.
Corporate Governance Inspiring the “Working
Together as One” Spirit
Due to the global economic downturn that began
in the second half of fiscal 2008, the Omron
Group confronted an unprecedented decline in
performance. Nevertheless, we achieved a return
to profitability thanks to our flexible implementa-
tion of swiftly formulated emergency measures
and structural reforms. I believe our ability to
inspire “Working Together as One” amid a shared
sense of crisis was due to the corporate gover-
nance system that we have developed.
Amid ongoing globalization and advances in infor-
mation and communication technologies, it is
impossible to predict what will happen next. Here, we
are in a “survival of the fittest” situation, in which a
keen sensitivity to change and a commitment to self-
transformation represent the key to our continued
existence. Omron will continue pursuing corporate
governance of the highest quality based on common
global values, while carefully determining what needs
preserving and what needs changing, keeping a close
eye on changes in society.
Renewed Growth Sustained by the “Creation of
Social Needs”
The growth of China and other emerging countries
is astounding. These countries are achieving expan-
sion in much shorter time spans than today’s
advanced nations did years ago when they followed
the path to industrialization. Emerging economies are
even leading the world in fields of mass-produced
and mass-marketed, cutting-edge finished goods,
such as flat panel display televisions (including 3D
models) and electric vehicles. The factory automation
markets are also expected to grow as emerging
countries pursue increased production efficiency.
Meanwhile, the economies of advanced nations
are recovering with the help of external demand gen-
erated by the growth of emerging economies. In the
medium and long terms, however, I believe the driver
of growth will shift to domestic demand. This will
depend on how efficiently and effectively we can man-
age various issues—such as the environment, energy,
safety, security, and health—in regional or city-based
units. Meanwhile, the integration of smart grids (next-
generation electricity networks) and other information
and communication technologies with social infra-
structures will bring about “social innovations” that
will lead to significant changes in our industrial struc-
ture. In the process, we can expect expansion of
15
T
o
O
u
r
S
t
a
k
e
h
o
d
e
r
s
l
automation markets as a means of resolving social
problems.
The Omron Group will target renewed growth by
embracing the challenge of “creating social needs.”
Here, we will draw on our strengths in technology,
experience, and personal networks—amassed over
many years in the industrial, social, and lifestyle busi-
ness sectors—to generate new potential for the
automation markets in both emerging and developed
nations.
Identity and Core Competence
To achieve “the creation of social needs,” we will need
to form partnerships that transcend business sectors
and geographical areas. As a Group whose identity
has been underpinned by the corporate core value of
“working for the benefit of society” for half a centu-
ry, I believe that we can build relationships of trust
with global partners. The SINIC (Seed-Innovation to
Need-Impetus Cyclic Evolution) theory, propounded
by Omron founder Kazuma Tateisi 40 years ago, pre-
dicts changes to science, technology, and society.
(Please see page 110 for further details.) Shaping
Omron’s approach to business for many years, this
theory has guided our selection of business and tech-
nology domains and our direction. We will continue
helping society by taking advantage of our core com-
petence in sensing and control technologies. In the
future, companies especially in developed nations will
need to build and implement business models that
contribute to social innovation as a means of solving
social issues. Such models will also help companies
deploy their business operations to fulfill their corpo-
rate social responsibilities.
I appreciate the continuing understanding and sup-
port of all stakeholders as the Omron Group works
toward future growth.
August 2010
Yoshio Tateisi
Chairman of the Board of Directors
16
To Our Stakeholder s
Message fr om the Pr esident
In fiscal 2009, the Omron Group achieved a significant year-on-year increase
in earnings thanks to united efforts including fixed cost reductions. This
was despite our initial forecasts of a substantial decline in profits due to
the impact of the global economic crisis. In fiscal 2010, we will seek to
become leaner to “build a robust earnings structure” while “changing gears
to high growth.”
Fiscal 2009 in Review
Since the autumn of 2009, the world economy has
showed signs of moderate recovery, driven by China
and other emerging nations, as well as the benefits of
economic stimulus measures adopted by various
countries. Similarly, from the second quarter capital
expenditure-related demand has been gradually pick-
ing up in our main customer segments in the industrial
sector, especially automobiles and electronic com-
ponents.
In this environment, the Omron Group took advan-
tage of consumption stimulus measures in various
nations and recovery in capital expenditure-related
demand in its core businesses to achieve a recovery in
revenue. This was evidenced by sales recovery in the
Electronic and Mechanical Components Business
(EMC), Automotive Electronic Components Business
(AEC), and Industrial Automation Business (IAB).
Although the Social Systems Solutions Business (SSB)
struggled due to the completion of railway infrastruc-
ture system renewals and investment restraints, the
Healthcare Business (HCB) posted a solid perform-
ance owing to several factors. These included growth
in demand for digital thermometers following the out-
break of the H1N1 influenza virus, as well as steady
sales of blood pressure monitors amid rising health-
consciousness in China and elsewhere in Asia.
Consolidated net sales declined 16.3% year-on-
year, to ¥524.7 billion, impacted by a substantial
decline in demand until the second quarter of the
period. However, we surpassed our initial net sales
target of ¥510.0 billion by ¥14.7 billion, thanks to the
performances of our IAB, EMC, and AEC business-
es—where recovery exceeded our expectations.
With respect to earnings, we achieved cuts in fixed
and variable costs amounting to around ¥63.0 billion.
As a result, despite the considerable fall in revenue,
we posted operating income of ¥13.1 billion, up
144.9% year-on-year, and net income attributable to
shareholders of ¥3.5 billion, compared with a net loss
attributable to shareholders of ¥29.2 billion in the pre-
vious fiscal year.
Fiscal 2010 Outlook
In fiscal 2010, we expect business conditions to con-
tinue recovering, but we cannot be optimistic across
the board. In addition to the ongoing high level of
unemployment rates in advanced nations, for exam-
ple, there are concerns that the benefits of economic
stimulus measures will start fading in the second half
of the period. Meanwhile, amid worsening fiscal insta-
bility in Europe, triggered by the recent financial crisis
in Greece, the outlook remains uncertain. Having said
that, we anticipate continued economic growth in
Consolidated Operating Income Analysis (YoY)
Consolidated Operating Income by Segment
(Billions of yen)
13.1
＋36.5
Sales down, product mix,
manufacturing fixed costs
5.3
-23.9
Exchange loss
-11.6
Material
costs down
+1.4
＋5.4
SG&A, R&D
down
Exchange gain
(SG&A, R&D)
IAB
EMC
AEC
SSB
HCB
Gross profit down ¥34.1 bn
Operating income gain ¥7.8 bn
(Exchange loss: ¥6.2 bn)
FY2008
Actual
Other
Eliminations & corporate
Total
FY2009
Actual
(Billions of yen)
FY2009
FY2008
13.9
6.7
1.7
2.7
7.1
(7.0)
(12.0)
13.1
18.2
4.2
(7.1)
5.2
4.8
(7.3)
(12.6)
5.3
17
T
o
O
u
r
S
t
a
k
e
h
o
d
e
r
s
l
China and other emerging nations, as well as moder-
ate recovery in capital investments, especially in the
semiconductor, electronic component, and automo-
bile sectors, which relate closely to the Omron Group.
These factors should also underpin the ongoing turn-
around in demand for factory automation control
systems. With respect to electronic components and
automotive electronic equipment, as well, we look for-
ward to a recovery trend.
For fiscal 2010, we forecast a 17.2% year-on-year
increase in consolidated net sales, to ¥615.0 billion; a
251.8% jump in operating income, to ¥46.0 billion; and
a 738.5% surge in net income attributable to share-
holders, to ¥29.5 billion.
Consolidated Income (Loss) Forecast
(Billions of yen)
Net sales
Gross profit
SG&A expenses
R&D expenses
Operating income
Other expenses, net
Income (loss) before
income taxes
FY2010
(Forecast)
FY2009
FY2008
615.0
233.5
144.5
43.0
46.0
1.5
524.7
184.3
133.4
37.8
13.1
2.9
627.2
218.5
164.3
48.9
5.3
44.5
44.5
10.2
(39.1)
Net income (loss) attributable
to shareholders
29.5
3.5
(29.2)
USD (yen)
EUR (yen)
87.0
112.1
92.9
130.3
100.7
144.5
* FY2010 forecast represents the figures as of July 28, 2010, which were
upwardly revised from the initial forecast.
Cash Dividends
For the period under review, we declared a year-end
dividend of ¥10 per share, up from ¥7 at the previous
fiscal year-end, reflecting our better-than-expected
earnings recovery and our cash reserve status. We
also paid a ¥7 interim dividend (¥18 interim dividend
in fiscal 2008), bringing annual cash dividends to ¥17
per share. Although this is ¥8 less than the previous
year, we increased the year-end dividend in light of
our performance recovery in the second half of the
period. The dividend payout ratio was 106.4%, and
the dividend on equity (DOE) ratio was 1.2%.
Seeking to maintain steady returns to shareholders,
we will deepen our emerging reform-driven mindset
sparked by the economic crisis and expedite our shift
to a rock-solid earnings structure. Our most important
task is to translate these initiatives into future leaps for-
ward, and we will take swift measures to this end.
Long-Term Management Vision
Fiscal 2010 is the final year of our long-term manage-
ment vision, entitled “Grand Design 2010.” We have
positioned fiscal 2010 as the completion year for the
“Revival Stage” of the vision. We will then set new
long-term targets for the subsequent 10-year period
starting in fiscal 2011. To help achieve those targets,
we will follow a new long-term management vision
(currently being formulated), the details of which will
be announced later.
During the Revival Stage of our current long-term
management vision, we have built a robust earnings
base. From that base, we will target long-term growth
through sensing and control technology, a key strength
of the Omron Group. We look forward to your ongo-
ing support and cooperation.
August 2010
Hisao Sakuta, President and CEO
18
Inter view with the Pr esident
Hisao Sakuta
President and CEO
“Becoming Leaner to ‘Build a Robust Earnings Structure’” and
“Changing Gears to ‘High Growth’”
The Omron Group’s Next Long-Term Vision Targets an Operating Income Margin of 15%.
Fiscal 2009 in Review
——— Amid a decline in net sales of more than ¥100
billion, earnings were higher than forecast. Looking
back, what sort of year was fiscal 2009?
Fiscal 2009 was a year in which our employees worked
together as one to improve the foundation of the
Omron Group.
It’s now seven years since I was appointed presi-
dent. In the first five years, we were blessed with
favorable external business conditions that drove ongo-
ing improvements in performance, culminating in
record-high net sales and operating income in fiscal
2007. However, we were concerned that under a
favorable operating environment, we tend to amass
management resources that do not generate business
Results of Emergency Measures in FY2009
value, to the point where we gain excess “fat” that
has the potential to endanger momentum on a variety
of fronts. This is why we targeted an operating income
margin of 10% for fiscal 2007. However, although net
sales and operating income reached new records, the
operating income margin, at 8.6%, was well short of
the 9.9% posted in fiscal 2005.
Straight after that, in fiscal 2008, there was a glob-
al economic recession, which hit manufacturers
everywhere extremely hard. Omron’s operating income
margin slumped to 0.9%, and we recorded a net loss
attributable to shareholders for that year. It is precise-
ly during troubled times like this when you can clearly
see what is surplus to requirements. Confronted with
this situation in fiscal 2009, it also became an oppor-
Annual reduction target
(YoY Change)
Actual result
(YoY Change)
Achievement rate
Variable costs
Fixed costs
Total
Manufacturing fixed costs
SG&A expenses
R&D expenses
¥5 bn
¥55 bn
¥60 bn
¥5 bn
Close to target level
¥58 bn
Exceeded target
¥63 bn
Exceeded target
Note: These figures are approximations.
19
I
n
t
e
r
v
e
w
w
i
i
t
h
t
h
e
i
P
r
e
s
d
e
n
t
tunity to come together as a united force.
ture. This is our first challenge.
At the beginning of fiscal 2009, I informed all Group
employees via satellite broadcasts and other means
that we would undoubtedly post an operating loss of
¥60 billion if we did not change our ways. I also declared
that we would not be downsizing our staff. Determined
to avoid an operating loss at all costs, however, we
adopted a range of emergency measures instead of
cutting jobs. For example, we instructed management
to lower costs by ¥60 billion by cutting labor costs
through salary cuts and reductions in overtime work,
as well as extensively reviewing spending. With all
Group employees working together as one, we suc-
ceeded in reducing costs by approximately ¥63 billion.
——— Is there anything in particular to be learned
from past experiences of coping with an econom-
ic recession?
Back in fiscal 2001, the IT bubble burst and we post-
ed a net loss attributable to shareholders, as we did in
fiscal 2008. On that occasion, we cut back on employ-
ment, such as by offering early retirement, in order to
overcome the difficulties we were facing. Although
this resulted in a temporary reduction in costs, we paid
the price of losing longtime employees from our pro-
duction and sales operations. This had a detrimental
effect on “on-site capabilities,” which are most impor-
tant of all.
Because the recent economic crisis has led to an
unprecedented worldwide recession, we’ve heard
some shareholders and investors say, “Shouldn’t the
Company be downsizing its staff?” Based on our expe-
rience in fiscal 2001, however, we formulated and
implemented an action plan (Emergency Measure
items) that did not affect employment. Rather, we
sought to ride out the situation by working together
and sharing the difficulties we faced.
Targets for Fiscal 2010
——— Having ridden out the economic crisis, what
are your aims and what challenges lie ahead in fis-
cal 2010?
First, we must carry on with Structural Reforms.
Implementing our action plan was a united effort, but
if we treat it as a stopgap measure that’s no longer
necessary we will regain all the excess we have shed.
Because a company is primarily a going concern, we
must constantly work hard. Since all Group employ-
ees adopted the attitude required to get us through
the events of last year, next we must continue with a
reform-oriented mindset that will give us a lean struc-
In addition, with our sights set on future growth,
we will resume investment plans that were put on
hold during fiscal 2009. In other words, the main
themes for fiscal 2010 are “becoming leaner to ‘build
a robust earnings structure’” and “changing gears to
high growth.”
Revival Stage and Progress with Structural
Reforms
——— Please tell us what has become stronger as
a result of the structural reforms implemented in
fiscal 2009.
We designated fiscal 2009 as a year for “Emergency
Measures,” and also for “Structural Reforms (Revival
Stage)” in which we targeted medium-term rein-
forcement of the Group’s earnings base. To put it
briefly, the Revival Stage sought to consolidate the
strengths of our three control-based business seg-
ments—the IAB, EMC, and AEC businesses—which
together represent around 70% of the Omron Group’s
consolidated net sales, and reorganize these three
businesses.
These three business segments used to share the
same organization. Amid soaring growth, however,
we spun them off into three companies to help them
evolve into autonomous businesses. All three are
growing as independent entities, but some inefficient
aspects have come to the fore, such as their devel-
opment and production of similar products (relays, for
example). As a manufacturer whose many strengths
rest with its technical capabilities, we must prevent
any of our core technology-related functions, such as
development and production, from becoming diluted
through dispersion, which would lead to the weaken-
ing of our strengths. Here, the consolidation of
strengths has meant redressing inefficiencies and the
adoption of a “selection and concentration” strategy.
——— Can you give some specific examples of
measures you have taken?
We shifted the production and development of uni-
versal relays, switches, and connectors—products in
which Omron excels—away from IAB and AEC and
gave them to EMC. At the same time, we boosted
IAB’s domestic marketing personnel by around 300 in
order to better deploy its strong sales channels and
strengthen the Group’s marketing capabilities.
Meanwhile, AEC’s strengths lie in auto body elec-
tronic equipment, and for this reason it has concentrated
on its own clients and products. Accordingly, we
20
Inter view with the Pr esident
——— What do you mean by IAB’s “competitive
products,” both in Japan and overseas?
When we think of competitiveness, we tend to think
of function, performance, quality, and price. Of course,
price is a vital component, but it’s not everything. It’s
important to use a client’s situation and true needs as
a starting point, and not make a product with specifi-
cations that are too high or start a price-cutting war.
In fact, ensuring proliferation of the Omron brand
among the ultimate end-users (the customers of our
customers) helps bolster competitiveness.
IAB conducts marketing activities in various emerg-
ing countries. These activities indirectly enhance the
product value of customers who export machinery
from Japan to emerging countries. For example, there
are many regions where IAB’s marketing activities
have raised the profile of the Omron brand. In such
regions, when end-users introduce products contain-
ing Omron-brand components, they automatically feel
more assured.
As seen here, competitiveness is not only deter-
mined by superficial elements, such as price and
specifications. It is important that we achieve a bal-
ance with all sorts of added value, including the power
of the Omron brand.
decided to spin off AEC to leverage the benefits of
autonomous management, resulting in the establish-
ment of Omron Automotive Electronics Co., Ltd., on
May 6, 2010.
——— What was involved in strengthening the mar-
keting capabilities of IAB?
One of IAB’s key strengths is domestic marketing,
through which it sells general-purpose products to
many unspecified users via its distributor sales chan-
nels. However, IAB’s share of the domestic market
for control equipment had decreased over the previ-
ous decade (according to NECA* data), so we asked
distributors to help IAB increase its market share by
5 percentage points over the next four-year period. For
our part, we have promised to launch more competitive
products, provide distributors with comprehensive
support, and enhance the sales structure to make a
sales pitch together. By transferring employees in fis-
cal 2009, we increased the number of staff in IAB’s
domestic sales & marketing division and strengthened
customer contact.
Our survey results show that during fiscal 2009,
when we experienced challenging business condi-
tions, we succeeded in raising our domestic market
share by 1.2 points. We will target a further 1.5-point
rise in fiscal 2010, and get as close as possible to our
target increase of 5 percentage points.
*NECA: Nippon Electric Control Equipment Industries Association
Update on Structural Reforms
February 2009
March 2011
Structural Reforms (Revival Stage)
Decided on
March 10,
2009
▼
Decided on
July 30,
2009
▼
Decided on
November 26,
2009
▼
Decided on
January 28,
2010
▼
Implemented
during April-May
2010
▼
Restructuring of
3 control-based
businesses
Consolidation of
production sites
• Spin-off of
the automotive
electronic
components
business
• Establishment of
a new switch
business company
• Management
integration of the
relay business
• Details of the switch
business company
• Details of the
automotive electronic
components business
company
• Establishment of a new switch
business company
• Management integration of
the relay business
• Establishment of an automotive
electronic components
business company
• Dissolution of large-size backlight businesses (3 sites)
• Closure of the Minakuchi factory in Japan
• Closure of OMRON AUTOMOTIVE ELECTRONICS
UK LTD.
• Closure of OMRON MANUFACTURING OF
AMERICA, INC.
• Consolidation of production of OMRON
DUALTEC AUTOMOTIVE ELECTRONICS, INC.
(Operations at production sites in Canada consolidated
into production sites in Chicago.)
21
I
n
t
e
r
v
e
w
w
i
i
t
h
t
h
e
i
P
r
e
s
d
e
n
t
Balance between Business Autonomy and
Synergies
——— From the perspective of synergistic effects,
wouldn’t integration of the three control-based busi-
nesses, like you had before, be more beneficial?
If synergies were the only concern, there is the option
of reverting to the past system and integrating the
three businesses. For Omron, however, being mutu-
ally dependent and less able to address changes in
the business environment are more problematic.
“Business autonomy” is not the same as being able
to do as one pleases.
Omron has five business companies, including the
spun-off entities, as well as their associated busi-
nesses that are still in the incubation stage. However,
these are made up of a further 80 business units. There
are the parts that make up the whole, and the whole
that makes up the parts. They have a complementa-
ry relationship. Maintaining a relationship that is neither
too close nor too remote is not easy, and will depend
on the skills of management. Omron won’t grow if the
parts become too assertive and fragmented, nor if the
whole becomes too strong and subsumes the parts.
The Omron Group has a unique organizational
structure. Our recent structural reforms, including the
spinning off of AEC, reflect the type of Group operat-
ing structure that we believe will survive on the global
stage ten years in the future, after setting priorities
from various viewpoints, including synergies and
autonomous operations.
——— What is the secret to demonstrating syner-
gies while maintaining autonomy between the
different businesses?
I’ll use the analogy of manufacturing to explain.
Omron’s manufacturing processes can be classified
into two broad categories. One is the process of
procuring raw materials to manufacture parts, which
are assembled to create a finished product with a par-
ticular function. The other is the processing of parts
purchased from the marketplace and assembling them
together into a product. To be sure, there are no such
synergies possible in the development of blood pres-
sure monitors and fare payment systems for railway
companies. However, if we think in terms of these
manufacturing processes, there is plenty of room for
synergies in a variety of processes.
Because our three control-based companies were
combined in the past, there should be lots of syner-
gies, not only in product development, but also in
manufacture, sales, and support. However, without a
sense of crisis, the respective companies for some
reason are unable to identify items that could be
shared, even though such an approach would be com-
mon sense. The end result is an inefficient utilization
of resources. Before we knew it, we also lost com-
petitiveness, which should have been one of our
strengths.
For fiscal 2009, we initially forecast zero operating
income, although it ended up being ¥13.1 billion. One
reason for this improvement was our ability to identi-
fy attributes in common that had previously been
ignored, enabling us to generate synergies valued at
between ¥4.0 billion and ¥4.5 billion. Specifically, we
reduced variable costs by using central purchasing for
common materials.
I call this sort of activity “Common, Module,
Option” (CMO), in which we classify our operational
processes into three categories—Common, Module
and Option—to raise overall efficiency through “shar-
ing, standardizing, and creating a common platform.”
If each company were to concentrate senselessly on
their own uniqueness, there is no way we could be
globally competitive. We need to identify and increase
attributes shared laterally across the different com-
panies, create modules, and extend their scope of
application. By doing that alone, however, we’d end
up with a bunch of clones, so we need to add features
that meet market needs and elements that differen-
tiate as options. The key to our generation of synergies
lies in asking what we can use as a platform, to what
extent we can increase attributes which can be shared,
and what features should be added as options.
Building a Robust Earnings Structure for the
Medium and Long Terms
——— So is CMO the keyword for your quest to
make your robust earnings structure sustainable?
Yes, it is. The objective of “building a robust earnings
structure” is to achieve a cost of sales ratio of 58% (it
was 65% in fiscal 2009). I believe that the CMO con-
cept is essential for achieving this ratio.
——— Where does the CMO concept come from?
I first came up with CMO some 20 years ago. At the
time, I was manager of the electronic temperature
controller business. We made them at the Okayama
factory, where we also made timers and counters.
However, because the products were affiliated with
different departments, the parts for each product were
22
Inter view with the Pr esident
selected and made independently, even though there
were a lot of similar internal components. At the time,
I questioned the rationale behind the obsession on
independence.
After I was appointed president in 2003, I decided
to promote CMO on a Group-wide basis. However,
when I set about it, I found, quite naturally as it hap-
pens, that our development and production operations
had sound reasons for their existing ways, such as “we
can make them more cheaply” and “it makes it possi-
ble to improve function and performance.” But from
the perspective of the best interests of the entire
Omron Group, “more cheaply” actually turns out to be
“more expensive.” For example, if you use a wide vari-
ety of materials and parts even though they’re cheap,
you won’t benefit from mass purchasing, and you’ll
need to increase the number of inspection processes.
——— How will you promote the adoption of CMO?
CMO is a concept, rather than a method. Let’s take
Lego, the best-selling children’s toy brand for many
years. Long ago, when I looked at the Lego set I
bought for my children, I thought it was interesting
how, even though the individual parts are to a certain
extent standardized, you can make a wide variety of
objects depending on how you put them together. You
can then dismantle and reuse them as you like.
At Omron too, being able to freely and quickly
rearrange resources, including personnel, enables us
to effectively address change. This is why we must
Changing Gears to High Growth
first standardize our management resources and oper-
ational bases to share, so that they can be mounted
on common platforms. In many ways, the CMO con-
cept is what today’s Omron needs.
The CMO concept can be used to raise productiv-
ity in many ways in all processes, from molds,
assembly, quality, function, and performance through
to work procedures. Since we must think of what’s
best overall, I believe that the managers of each divi-
sion must be committed to CMO from the beginning.
We must then appoint the members of the CMO task
force at the head office to each business division
where they can put it into practice.
It will be some time before each business is able to
feel that they have become stronger as a result of CMO.
Still, I think that now, when all Group employees are
focused on building a rock-solid earnings structure, is
a good opportunity to spread the CMO concept.
Medium- and Long-Term Growth Strategies
——— When “changing gears to high growth” in fis-
cal 2010, where will you make strategic investments?
In fiscal 2010, we will make aggressive investments
in the future with the aim of increasing revenue in the
medium and long terms. We will invest around ¥7.0
billion, including personnel and other expenditures, in
three strategies. The first strategy is to “bolster exist-
ing businesses in developed countries.” This will entail
investing approximately ¥2.0 billion in boosting sales
forces in Japan and other developed countries. The
Targeting Net Sales of ¥750 bn
Bolster existing businesses
in developed countries
Investment: Approx. ¥2 bn
[1] Bolster sales force in Japan and other developed countries
• Strengthen sales channels in Japan
[2] Bolster core products
• Sensors, PLCs*, relays
Focus on
emerging markets
Investment: Approx. ¥3 bn
Changing gears to
high growth with selection
and concentration
of businesses/areas
[1] Bolster sales force in emerging countries (IAB/HCB)
• Strengthen sales in China and India
[2] Develop new products for emerging markets
• Expand general purpose products
(sensors, power supplies, PLCs*)
• Expand healthcare products
Focus on
environmental businesses
Investment: Approx. ¥1 bn
[1] Bolster core products for the environmental solutions business
• e.g. Power conditioners
[2] Develop next-generation environmental products
• e.g. Power conditioners, power electronic devices
[3] Participate in experimental studies related to
environmental businesses
* PLCs: Programmable Logic Controllers
23
I
n
t
e
r
v
e
w
w
i
i
t
h
t
h
e
i
P
r
e
s
d
e
n
t
present opportunities to the Omron Group. In today’s
fast-changing world, where risk lurks behind oppor-
tunity and opportunity lurks behind risk, we must make
decisions taking many factors into account.
(For more details, please refer to our Special
Feature on pages 25-37.)
Shareholder Return
——— If Omron achieves its initial target of net
income attributable to shareholders of ¥29.5 bil-
lion in fiscal 2010, can we expect a dividend on
equity (DOE) ratio of around 2%?
A publicly listed company is tasked with managing
the funds it receives from its shareholders through
its business activities. Therefore, it must return net
income attributable to shareholders to shareholders
in line with a clear policy. Our basic policy is to secure
internal capital resources for growth investment tar-
geting R&D and capital investments which are vital
to future business expansion, in order to “maximize
corporate value over the long term.”
However, shareholders making medium- and long-
term investments desire consistent dividends.
Consequently, because a company’s income varies
from year to year, the ideal is to maintain dividends at a
certain level while steadily increasing them over the
long term. Our policy for securing stable dividends is to
maintain a minimum 20% dividend payout ratio and tar-
get a 2% dividend on equity (DOE) ratio.
In addition to the payment of dividends, another
Trends in DOE, Dividends, Net Income Attributable to Shareholders
Annual dividend (yen)
Total return ratio* (%)
Dividend payout ratio (%)
48.0
19.8
30
2.1
35.8
49.7
20.6
34
2.1
38.3
74.9
22.6
42
2.5
42.4
Net income (loss) attributable
to shareholders (billions of yen)
DOE (%)
2005
2006
2007
25
1.7
-29.2
2008
* Total return ratio =
(Total dividends paid + Amount of Company’s own shares repurchased)
/ Net income attributable to shareholders
106.8
106.4
17
1.2
3.5
2009
(FY)
second is to “focus on emerging markets.” It involves
spending around ¥3.0 billion on upgrading sales capa-
bilities and developing new products for these markets.
The third strategy is to “focus on environmental busi-
nesses.” Here, we will invest approximately ¥1.0 billion
in bolstering our lineup of environmental products.
——— What kind of role do you see the Chinese mar-
ket playing in the future?
Emerging markets are important for increasing sales in
the medium and long terms. China is important not
only as a production base, but also because of its mar-
kets. For Omron too, the Chinese market will definitely
be a growth driver for both production and sales for
some time to come. In recent years, China’s local man-
ufacturing companies have been increasing exports
to developing countries in addition to meeting inter-
nal demand, which presents plenty of scope for
Omron. The Omron Group views Greater China as its
most important overseas region. Our immediate mar-
ket strategy is to provide a comprehensive lineup of
offerings to address each stage of our customers’
development. To this end, we will focus on developing
new products.
Sales in Greater China, including Taiwan, were the
first to recover from the effects of the recent econom-
ic crisis. To give an example using an IAB product, sales
of programmable logic controllers (PLCs) developed for
local Chinese companies were higher than anticipated.
In China, there is the growing risk of inflation, and
soaring labor costs are also becoming a problem. Until
recently, manufacturers from all over the world relo-
cated their factories to China, attracted by high
productivity relative to wages. However, sharp increas-
es in labor costs in the future will lower productivity.
Nonetheless, since rising labor costs will be accom-
panied by a shift to automation of production, this will
24
Inter view with the Pr esident
way to deliver shareholder return is through share buy-
backs. Because such a practice sends a message of
how we evaluate our company’s share price, we
believe it is desirable to institute share buybacks
depending on share price levels in a timely manner.
In fiscal 2009, the total dividends paid (payout ratio
of 106.4%) exceeded that year’s net income attributa-
ble to shareholders, reflecting the importance we attach
to paying stable dividends. Even so, the DOE ratio was
only 1.2%, which is lower than we would have liked.
Needless to say, we aim to see a return to a profit level
that will permit a DOE ratio of 2.0% as soon as possible.
Long-Term Vision for Fiscal 2011 and Beyond
——— Finally, can you outline Omron’s medium-to-
long-term vision?
Omron recently marked its 77th anniversary. If I were
asked what the biggest difference is between Omron
now and when it was founded, I would say that today
we treat the entire world as our market, whereas ini-
tially we focused only on the domestic market. Another
change is that today Japanese employees make up
just one-third of Omron’s workforce. Our major chal-
lenge going forward is to survive on a global scale.
We can expect that powerful rivals will emerge
from China and India in addition to developed Western
countries. When that happens, if capital markets do
not rate us as a global player, we will grow weaker even
if we manage to survive for a further 10 or 20 years.
So what does “being rated as a global player”
mean? One clear answer is that the time has come to
distance ourselves from the notion of the limitless pur-
suit of quantitative targets. Holding the No.1 market
share is an outcome, but being the true top global play-
er means that customers see you as the company that
provides the best products and services. This enables
a company to create new value and be more profitable
than others—a company that can use those profits to
consistently deliver products and services that make
its customers even happier. We intend to devote all
our energies to becoming one of those companies.
Today, our rivals that are rated highly globally have
operating income margins of between 15% and 18%.
For this reason, one of Omron’s long-term earnings
targets is to achieve “an operating income margin of
at least 15%.”
——— How do you intend to achieve this 15% oper-
ating income margin target?
An operating income margin of 15% is new territory
for Omron. We are currently formulating our new long-
term management vision, covering the 10-year period
from April 2011 to March 2021. The new vision calls
for incremental increases in the operating margin to
10% and then 13%. We are already working on a plan
that makes a 13% margin achievable by fiscal 2013.
To attain this target, we must set a cost to sales ratio
of 58%, which combines both the variable cost ratio
and manufacturing fixed cost ratio. This is not an easy
target, but I think that putting the CMO concept into
practice holds the key to achieving it.
If we are able to return to net sales of ¥750 billion
in the near future, we would be able to record operat-
ing income in the vicinity of ¥100 billion. This is equal to
1.5-times our record-high figure posted in fiscal 2007.
My primary goal is for Omron to establish a rock-
solid earnings structure. In other words, it is to achieve
a significantly higher operating income margin, rather
than set one-off targets like ¥750 billion in net sales
and ¥100 billion in operating income. An operating
income margin of 13% is the first step to achieving
this goal.
Target PL Structure
(%)
8.6
13
7.5
Over 15%
0.9
2.5
Operating income margin
(Billions of yen)
763.0
627.2
615.0
524.7
750.0
100.0
65.3
5.3
13.1
46.0
2007
2008
2009
2010
201X
Net sales
Operating income
2020
(FY)
Featur e “Omr on in China”
China, Our Driving Force
for Growth
25
F
e
a
t
u
r
e
“
O
m
r
o
n
i
n
C
h
n
a
”
i
i
C
h
n
a
,
O
u
r
D
r
i
i
v
n
g
F
o
r
c
e
f
o
r
G
r
o
w
t
h
China is geographically 26 times larger than Japan, its popula-
tion represents one-fifth of the world population, and it has
become the world’s top automobile manufacturer. In 2010, China
is expected to surpass Japan in terms of nominal GDP to
become the world’s second largest economy. China’s impor-
tance continues to grow as a driver of the global economy.
Moreover, China is still looking forward to full-fledged growth
stages for its inland regions.
Companies around the world are currently eyeing the Greater
China region, encompassing China and Taiwan, not just as a
manufacturing region but also as a demand region (i.e. mar-
kets) promising ongoing growth. Omron got a major head start
by developing operations in the Chinese market 30 years ago.
This report outlines the deep involvement of the Company’s
Industrial Automation Business (IAB) in the manufacturing
industry and the Healthcare Business (HCB) in the lifestyle in
the Greater China region.
26
Featur e “Omr on in China” China, Our Driving Force for Growth
Greater China Region Sales
Grow Even During
the Economic Crisis
The impact from the global economic crisis has led to
two straight years of substantial declines in sales for
the Omron Group, with consolidated net sales drop-
ping by 16% year on year in fiscal 2009. Nevertheless,
the Group posted increased sales year on year in the
Greater China region on the support of the Chinese
government’s swift and large-scale economic stimu-
lus measures while sales contracted in Japan, North
America, Europe, and other advanced countries.
Omron Pursued Business in
China Immediately after the
Introduction of the “Reform and
Opening Up” Policy
30 Years Expanding the Business Base
Omron founder Kazuma Tateisi immediately recog-
nized the potential for business in China following the
normalization of diplomatic relations between Japan
and China in 1972. Omron began a technological
exchange of traffic control systems with China’s
Ministry of Public Security in 1979, the year after China
launched its “Reform and Opening Up” policy.
Omron continued developing activities in China in
the 1980s, including the conclusion of agreement for
contract assembly of relays with a local company in
Shanghai and the start of consignment production of
thermometers and blood pressure monitors. As the
Sales Trends in the Greater China Region
(Billions of yen)
91.5
75.2
77.1
69.4
41.7
31.0
33.9
26.3
02
03
04
05
06
07
08
09
(FY)
market expanded in the 1990s, the Company’s focus
shifted from consignment production to direct invest-
ment, as it concentrated on constructing its local sales
structure.
After 2000, the Company’s Grand Design 2010
(GD2010) long-term corporate vision was launched in
fiscal 2001. During the plan’s 2nd Stage covering the
four fiscal years, 2004 to 2007, the Company put spe-
cial emphasis on expanding operating bases in China
and made aggressive investments in China to further
fortify the local sales and manufacturing structure. As
a result, sales in the Greater China region nearly tripled
from the 1st Stage to the 2nd Stage of the plan.
Establishment of a Core Base for Monozukuri
In 2005, during the 2nd Stage of GD2010, Omron
established Omron (China) Co., Ltd. (Shanghai) as a
core global development and production base for the
IAB segment with comprehensive monozukuri(product
creation) functions spanning development, design, pro-
duction, distribution, and customer support services.
The Company followed in fiscal 2007 with the
establishment of the Omron R&D Collaborative
Innovation Center, the first overseas R&D base, in
Shanghai. The center brings together the researchers
and students at nearby universities in Shanghai with
exceptional research and development capabilities,
with the Company’s researchers into an R&D facility
focused on “collaborative innovation” for the creation
of new value.
Creating a Manufacturing and Sales
Network with a Hub in Shanghai
The Omron Group located its China headquarters in
Shanghai, in the heart of the Chinese economy, from
where it controls all of its affiliated companies in the
Greater China region. The Company has also set up
major bases centering on the three coastal growth
areas. In Shanghai, the Company operates OMS, a
core global development and production base, and
sales companies for control equipment, trading com-
panies and associated manufacturing companies for
electronic components, and the Omron Shanghai R&D
Collaborative Innovation Center.
The Company maintains an electronic components
manufacturing and sales company in the city of Shen-
zhen. Omron established a company to manufacture
automotive electronic components in Guangzhou, and
plans to expand its presence in regions where the auto-
mobile industry is concentrating its manufacturing
activities. The Company also operates companies that
manufacture and sell backlights for small and medium-
size liquid-crystal devices, acquired through M&As in
fiscal 2006, in the cities of Suzhou and Dongguan.
Business processes related to healthcare equip-
ment are concentrated in the city of Dalian, where the
Company established a manufacturing, development,
and trading hub focusing on its core blood pressure
monitor products. The Company also expanded sales
channel networks throughout China for the industrial
automation business, electronic components busi-
ness, and healthcare business.
40% of All Omron Employees are Chinese
Including these major bases, the Omron Group cur-
rently maintains 27 subsidiary and affiliated companies
in China. The Group currently has approximately 13,000
employees of Chinese nationality, which surpasses
the roughly 12,000 Japanese employees, and repre-
sents roughly 40% of Omron’s workforce.
27
F
e
a
t
u
r
e
“
O
m
r
o
n
i
n
C
h
n
a
”
i
i
C
h
n
a
,
O
u
r
D
r
i
i
v
n
g
F
o
r
c
e
f
o
r
G
r
o
w
t
h
A Very Attractive
Growth Market for Omron
Incalculable Growth Potential
While countries around the world were mired in reces-
sion after the Lehman shock, the Chinese government
promptly implemented a four trillion yuan (approxi-
mately ¥52 trillion) large-scale economic stimulus
package that sparked 9.1% economic growth for the
country in 2009. Moreover, government measures
designed to stimulate consumer activity brought out
the latent and built-up consumer willingness to spend,
producing the growing impression that China, while
remaining the “world’s factory,” is transforming into
the “world’s biggest consumer market.”
At the same time, China’s GDP per capita is just
one-tenth the level in Japan, and its GDP for primary
industries and electric power consumption per capita
are equivalent to the levels in Japan 40 years ago.
China’s growth capacity is still incalculable.
Moving Inland from the Coasts
The Chinese government has been focusing on pro-
moting urbanization and industrialization and developing
its export industry at its three coastal growth areas cen-
tered on Beijing, the Yangtze River Delta, and the Pearl
River Delta. However, the government is fully aware
that raising the economic base of its inland regions will
also be essential to ensure sustained growth of the
Chinese economy. For that reason, development of
the inland economies is a prime target of the four trillion
yuan stimulus package.
Regarding the inland regions, the bottleneck for eco-
nomic development has been the cost and time required
to transport people and goods across the vast distances.
The low income levels have also limited the attractive-
ness of the regions as consumer markets. These
obstacles are already being addressed with the expan-
sion of expressways as well as plans for high-speed
railways into the internal areas. The establishment of
such infrastructure will undoubtedly lead to an economic
transformation emanating from the major urban centers
and surrounding areas in the inland region, which is
home to some 800 million people.
Local Companies Expanding Facilities
The Chinese government’s efforts to generate economic
growth driven by domestic demand are being fueled by
investment in the public sector and purchase subsi-
dies for replacement of consumer electronics and
automobiles. The consumption stimulus measures are
28
Featur e “Omr on in China” China, Our Driving Force for Growth
producing demand for compact cars and products that
appear relatively inexpensive. Local companies are
consequently becoming stronger and expanding their
production facilities. In addition, Chinese consumer
electronics makers, such as the Haier Group, are even
making bids to expand into overseas markets. Soaring
labor costs have become an issue in China recently,
but the flip-side of this trend is the potential that this
will lead Chinese manufacturers to introduce more
automation into their operations.
Meeting Specific Market Needs
The expanding production by manufacturers and the
growth of local companies are leading to rising demand
for control equipment, specifically programmable logic
controllers (PLCs), temperature controllers, sensors,
timers, and counters. In addition, the relays, switch-
es, and connectors are electronic components widely
used in industrial machinery, consumer electronics,
telecommunications equipment, and automobiles.
China’s unit production of automobiles surpassed
both Japan and the United States in 2009, making it
the world’s largest manufacturer of automobiles, and
this was accompanied by growing demand for power
window switches, keyless entry systems, and other
automotive electronic components.
In addition, Omron’s blood pressure monitors cur-
rently command an approximately 65% market share
in China, and the Omron brand is establishing a grow-
ing presence in the business-to-consumer (B to C)
arena. Further growth in demand for healthcare equip-
ment is expected along with the increasing urbanization
of China’s inland regions.
Moreover, global corporations are facing increasing
demands for “safety assurance of workers at produc-
tion sites” and “attention to the environmental burden.”
Omron is contributing to these issues by utilizing its
sensing and control technologies to provide control
equipment and solutions.
The Omron Group views the Greater China region
and other newly emerging countries as future growth
areas, and seeks to provide ever-improving products and
services with a specific focus on “safety and security,
health, and the environment” through its industrial
automation, electronic components, automotive elec-
tronic components, and healthcare businesses.
IAB Development
in China
The Industrial Automation Business (IAB), the core
business segment of the Omron Group, suffered
from the global recession and sluggish demand
conditions in fiscal 2009. Yet the IAB posted an 8%
year-on-year rise in sales in China—the sole region
of sales growth for the year.
China is becoming increasingly important, not
only as one of the world’s manufacturing hubs
but also as a product development, production,
and sales center to meet the demand of the coun-
try’s massive consumer market. While corpora-
tions from around the world are increasing their
investments in China, local companies have been
growing as their technical capabilities improve.
Reflecting this trend, IAB’s customer base in
the region is rapidly broadening from leading
companies in Japan and other developed coun-
tries to include a growing number of local compa-
nies. The Chinese market makes up an expanding
presence in the IAB business, and China has
become essential to IAB’s growth.
This report looks at IAB operations, develop-
ment and production activities in the fast-growing
China region from the perspective of the industri-
al automation business.
IAB Sales Trends in the Greater China Region
(Millions of U.S. dollars)
448
309
261
281
250
219
05
06
07
08
09
10
Forecast
(FY)
29
IAB and the Chinese Market
Takashi Ikezoe
Executive Officer
Chairman and President,
Omron (China) Co., Ltd. (Shanghai)
Q
A
How is IAB perceived in the Chinese
market?
China is often called the “world’s factory,” and
leading manufacturers from countries around
the world are developing production sites in the coun-
try. Competition is also fierce, with companies from
Japan, Europe, the United States, Korea, and Taiwan,
as well as local Chinese companies all vying in what
has become a microcosm of global competition.
In this milieu, IAB is perceived as a comprehensive
producer of factory automation (FA) equipment, boast-
ing the world’s leading lineup of products and capable
of seamlessly responding to customer needs through
its complete operating structure of local operations in
development, production, sales, and service support.
IAB also provides high-level technical support to
customers through the affiliations of its sales network
covering all of China with sales engineer (SE) centers
located at its main bases.
In addition, customers regard IAB highly for the sup-
port services provided by the Customer Support Center
in Shanghai, which includes a call center to respond to
any questions that arise in the manufacturing process-
es; a training center for getting first-hand experience
operating the actual equipment that will be used at the
production site; a repair center, which provides prompt
product repair and analysis; and a solution plaza, with
a showroom for numerous new products and for test
operation of the actual equipment.
F
e
a
t
u
r
e
“
O
m
r
o
n
i
n
C
h
n
a
”
i
i
C
h
n
a
,
O
u
r
D
r
i
i
v
n
g
F
o
r
c
e
f
o
r
G
r
o
w
t
h
IAB Sites in China
Distribution Sites
Sales and Marketing Sites (Branch Offices)
Sales Offices (including Taiwan)
Control Equipment Production and Development Site (OMS)
Customer Support Center
Shanghai
Heilongjiang
Harbin
Jilin
Shenyang
Liaoning
Beijing
Dalian
Tianjin
Hebei
Shanxi
Jinan
Qingdao
Shaanxi
Xi’an
Shandong
Zhengzhou
Henan
Wuxi
Jiangsu
Chengdu
Hubei
Wuhan
Nanjing
Hefei
Anhui
Suzhou
Shanghai
Customer Support Center at Omron (China) Co., Ltd. (Shanghai)
Sichuan
Chongqing
Guizhou
Hangzhou
Zhejiang
Ningbo
Changsha
Nanchang
Wenzhou
Hunan
Jiangxi
Fujian
Fuzhou
Xiamen
Kunming
Yunnan
Guangzhou
Guangxi Zhuang
Guangdong
Dongguan
Taipei
Hsinchu
Taichung
Tainan
Foshan
Shenzhen
Taiwan
Zhongshan
Hong Kong
Hainan
* As of July 2010
30
Featur e “Omr on in China” China, Our Driving Force for Growth
Q
A
Is price competition with local
companies also a threat?
The product lineups of local control equipment
manufacturers are primarily made up of gen-
eral-purpose products, and competition with such
companies is certainly a significant threat, if only price
matters. However, while pricing is an important ele-
ment, overall value in terms of quality, service, and
reliability is most important at the production site.
Omron’s strength is in the balance of its prices and
the value-added features beyond the product price.
IAB maintains product development and production
bases in Shanghai, from which it offers customers in
China a steady flow of customized, value-added prod-
ucts, thereby generating rising sales in that country.
Q
A
There is an image that most of IAB’s
customers in China are manufacturers
affiliated with Japanese companies. Is
this currently true?
Most of Japan’s leading manufacturers have
production bases in China and many of the
Japanese-owned companies utilize our products in
their production facilities. However, Japanese com-
panies account for only about 10% of IAB’s total sales
in China. Local Chinese companies are utilizing our
devices in their products and machinery, which in
some cases are supplied to Japanese companies in
the area. We do not know exactly how many of our
products end up at Japanese companies. The primary
sales destinations for IAB’s control equipment are local
Chinese companies, which represent roughly 80% of
our sales in the country.
The percentage of our sales to Japanese compa-
nies in the region has been rising recently in line with
the trends of Japanese companies shifting their pro-
duction operations to China and increasing their local
procurement activities.
Q
A
What will be the key points for IAB
expanding its business in China?
Local companies that can benefit from the
Chinese government’s four-trillion-yuan invest-
ment package for infrastructure, which is mainly
targeting the development of inland regions, are
increasing plant and equipment investment. Business
is also growing rapidly for local machinery makers who
supply products to Chinese companies and export to
customers in emerging economies.
IAB is targeting customers in growth industries as
it fortifies sales and sales engineering capabilities. We
are also enhancing our sales offices and channels in
the inland regions where the bulk of infrastructure
investment is taking place. We expect support serv-
ices to become increasingly important in the future,
and recognize the need to act quickly to strengthen
service support capabilities so as to get a head-start
over our competitors.
Q
A
Rising labor costs have become an
issue. Will this affect IAB’s operations?
The previous production model relied on abun-
dant and inexpensive labor, with only a portion
of the production lines automated. However, automa-
tion is expected to increase in tandem with the rising
labor costs, which are drawing attention these days.
Already, we can see examples among our customers
of advances in factory automation. For IAB, this is a
positive development. We will do our best to fully meet
the surging demand for automation, and thus expand
our business in China.
Moreover, rising labor costs also mean that personal
income levels will be increasing and private consump-
tion will be growing in China. Increasing consumption
will then become a catalyst for new investment in pro-
ductivity. We think the Chinese market will become
even more attractive both as a production site and as a
market.
31
F
e
a
t
u
r
e
“
O
m
r
o
n
i
n
C
h
n
a
”
i
i
C
h
n
a
,
O
u
r
D
r
i
i
v
n
g
F
o
r
c
e
f
o
r
G
r
o
w
t
h
From the IAB Production Sites
Chinese market.
Koji Doi
Executive Officer
Chairman and President,
Omron (Shanghai) Co., Ltd.
A Core Base for
Competitive Manufacturing
Trust in “Made by Omron”
Omron (Shanghai) Co., Ltd. (OMS) is more than a pro-
duction base, it’s a core base for IAB’s global operations
as it maintains all the functions for manufacturing—
development, production, and distribution—and supplies
products not just to the Chinese market but to markets
around the world. OMS therefore maintains global stan-
dards in the management of all aspects of quality, cost,
and delivery, and plays a crucial role in establishing trust
in the phrase “Made by Omron.”
Timely Product Creation
At OMS, several hundred local developers work every
day to hone their technical expertise with technology
cultivated in and transferred from Japan and develop
new products for the Company. We have worked in
coordination with Japanese staff to develop and pro-
vide a steady stream of sensors, timers, counters,
power sources, PLCs and other core products to the
In addition, we have set up test facilities similar to
those in Japan and are able to expeditiously conduct
testing based on global evaluation standards around
the clock to realize the timely commercialization of
new products. IAB’s ability to develop products that
meet market needs by optimally matching its culti-
vated technical capabilities and China’s abundant
human resources is one of the main strengths of OMS.
Flexible Production Systems
We design production operations that maximize both
quality and cost effectiveness by creating the optimal
blend of automated and manual production lines. OMS
utilizes the latest substrate mounting line technology
and is a global leader for the low level of its in-process
defect rate.
We also make the best use of the abundant local
workforce by utilizing the same system as in Japan of
24-hour, manual cell production with cross-trained
workers. The cell production system uses a workbench
called a cell, which has parts boxes arranged in a U-
shaped line with one or more workers in each cell
fulfilling a complete production process, from parts
installation to assembly, processing, and inspection.
The system has the advantage of allowing easy
changes to the items being produced simply by chang-
ing the operating sequence or the parts in the parts
boxes provided to the cell. Because each cell operates
autonomously, the system is flexible to accommodate
adjustments to production output volume, enabling
rapid response to demand fluctuations in China as well
as on a global scale.
Quick Delivery
This flexible production system enables OMS to match
the production volume to the sales volume and to
implement “post-replenishment production” that
quickly replaces depleted inventory. We control inven-
tory levels to maintain the appropriate inventory
quantities, and have constructed a system of supply
chain management (SCM) that is capable of shipping
products from the distribution center the day after an
order is received to provide speedy delivery to clients
in China and all around the world.
Product Creation is People Creation
OMS’s strong abilities in manufacturing are made pos-
sible by the people who work at OMS. No matter how
solid, the full strength of an operating infrastructure
cannot be realized unless it is used at its full effec-
tiveness. At OMS, we believe “product creation is
32
Featur e “Omr on in China” China, Our Driving Force for Growth
Healthcare Business
Development in China
people creation” and support the development of our
employees by designing food and housing environ-
ments as part of comfortable working conditions, and
by providing a thorough educational system.
When new workers join the company, before start-
ing work on the production line, they spend the first
month learning the 5S workplace organization method-
ology of sorting, straightening, systematic cleaning,
standardizing, and sustaining the discipline. They then
train to master fundamental skills, ranging from tight-
ening screws to soldering techniques, and learn other
essential tasks to pass the Company’s standardized
technical expertise examinations. After passing the
test and starting work on the production line, employ-
ees continue to participate in regularly scheduled
professional training courses, for which the Company
supplies extra motivation through an accreditation sys-
tem, providing wage incentives for acquiring advanced
technical expertise. In fact, the Company’s employee
turnover rate is just one-fifth the level of other com-
panies. The attention we pay to our employees is
manifested in the high quality of our manufacturing.
Selected as a Model Company in the Shanghai
Pudong District
In 2005, OMS received the award for “Best HR
Strategy in Line with Business” in recognition as a
“Company that values people,” and in 2009 success-
fully passed the more than 200 checkpoints in the
Pudong District CSR examination. The Company is
certified as an intern training site for Shanghai Jiao
Tong University and the University of Shanghai for
Science and Technology, and was also selected as a
model company in the Shanghai Pudong District.
These developments show the high expectations for
Omron’s continued future growth in China.
The Omron Group’s Healthcare Business (HCB),
which develops products and services for consumer
markets, posted a 9.7% year-on-year increase to
¥7.4 billion in net sales for the Greater China region
in fiscal 2009. HCB boasts more than a 50% share
of the global market for blood pressure monitors
and produces roughly 80%* of its blood pressure
monitor products at its facilities in Dalian, China.
Sales of blood pressure monitors and other health
and medical products are rising steadily in China
amid growing health management awareness in
both the wealthy and middle-class populations as
the living standards of middle-class populations
have improved.
This report introduces the current conditions
for the healthcare business in the massive and
still-growing Chinese market. (*As of August 2010,
production in Vietnam accounts for the remaining
roughly 20%.)
The Chinese Market for
Digital Blood Pressure Monitors (Units)
(Thousand units)
*As of May 2010, Omron internal survey
3,476
3,035
2,650
2,038
1,570
06
07
08
09
Forecast
10
Forecast
(FY)
Omron Industry &
Trade (Dalian) Co., Ltd.
33
F
e
a
t
u
r
e
“
O
m
r
o
n
i
n
C
h
n
a
”
i
i
C
h
n
a
,
O
u
r
D
r
i
i
v
n
g
F
o
r
c
e
f
o
r
G
r
o
w
t
h
Current State of the Chinese Market
and the Healthcare Business
name is already strongly associated with blood pres-
sure monitors.
Q
A
The market for blood pressure monitors
appears to be growing in China. Are
there special circumstances in China
that are supporting this growth?
In China, there is an expression “the three
highs,” which refers to high blood pressure,
high blood sugar levels, and hyperlipidemia, all of which
can lead to lifestyle-related diseases. China is experi-
encing a soaring number of patients with the “three
highs,” accompanying the country’s rapid economic
development and changes in the people’s living habits,
such as the westernization of the Chinese diet. It is esti-
mated that the number of patients with high blood
pressure will reach approximately 200 million in fiscal
2010, while diabetes patients will increase to 92 mil-
lion and the number of people considered to be obese
will grow to 350 million.
In addition, like Japan, China’s population is aging,
and the government is actively conducting educational
Shinya Tomoda
Assistant Director
Market and Sales Headquarters
Healthcare & Medical Business
Omron (China) Co., Ltd.
Q
A
What is HCB’s market share in China for
its core blood pressure monitors?
Company research found that our products
hold an approximately 65% share (FY2009
forecast, on a value basis) of the Chinese market for
blood pressure monitors and that the Omron brand
HCB Sites in China
Production Site
Development Site
Sales Offices
Service Centers
Xinjiang
Tibet
Heilongjiang
Inner Mongolia
Jilin
Beijing
Liaoning
Dalian
Shanxi
Tianjin
Gansu
Hebei
Ningxia Hui
Qinghai
Shaanxi
Shandong
Henan
Jiangsu
Sichuan
Chongqing
Hubei
Hunan
Anhui
Shanghai
Zhejiang
Guizhou
Jiangxi
Fujian
Yunnan
Guangxi Zhuang Guangdong
Taiwan
Hainan
34
Featur e “Omr on in China” China, Our Driving Force for Growth
campaigns highlighting the importance of health,
disease prevention, and self-medication. These devel-
opments as well as the rising affluence of the population
and people’s increased buying power are having an
influence on demand for blood pressure monitors.
Global Production Bases of the
Healthcare Business
—Omron Industry & Trade (Dalian)
Co., Ltd.
Q
A
Besides blood pressure monitors, what
are the other HCB products selling well
in China?
The healthcare business recorded growth in
both sales and income in fiscal 2009. Sales are
rising for digital thermometers, nebulizers (medical
inhalers), low-frequency therapy equipment, and
pedometers as well as blood pressure monitors. The
outbreak of the H1N1 influenza virus led to particularly
strong demand for thermometers in 2009. While this
demand was a temporary factor, we anticipate contin-
uing demand growth as people switch from mercury to
digital thermometers.
OMD—Expanding Local Product
Development Functions and
Providing Quicker Delivery
and Lower Costs
for Global Products
Q
A
The healthcare equipment business
appears strong, but what strategies are
being implemented for business growth
in the future?
Sales operations of the healthcare business
have focused on the three metropolitan areas
of Beijing, Shanghai, and Guangzhou. We are currently
working on expanding our sales network beyond the
major coastal cities to inland regional urban centers.
We are implementing an aggressive plan to establish
operations in over 20 key strategic cities each year and
are fortifying our marketing activities. We are also for-
tifying our customer service system nationwide so
that customers can feel more assured when pur-
chasing and using Omron products.
Takeshi Nishikawa
Director and General Manager
Omron Industry & Trade (Dalian) Co., Ltd.
80% of the World’s Blood Pressure Monitors
Produced in Dalian
The healthcare business launched its business expan-
sion into China when a subcontracting company began
producing blood pressure monitors and thermome-
ters in Dalian in 1988. That was the Omron Group’s
first venture into China, and was followed in 1993 with
the founding of Omron Industry & Trade (Dalian) Co.,
Ltd. (OMD) as a manufacturing base for healthcare
equipment.
The factory currently has some 2,600 employees,
and many of the original local staff from the compa-
ny’s founding are now divisional general managers.
OMD currently produces roughly 80% of the blood
pressure monitors Omron supplies in the world and
produces some 9.8 million monitors each year.
Omron’s total cumulative sales of blood pressure mon-
itors surpassed 100 million units in September 2009.
Using the Advantages of Geographic Industry
Concentration
The city of Dalian is home to numerous Japanese-affil-
iated companies. Manufacturers of necessary parts
and materials have gradually gathered in the area over
have been continuously researching ways to improve
the accuracy and ease-of-use of our products since
we developed our first blood pressure monitor for in-
home use in 1973. We have also developed close ties
in the medical community and actively supported clin-
ical surveys, research, and other activities in the
medical field. Our products are able to meet such strict
standards because they are the culmination of many
years of technology cultivation and clinical research.
It is recognized worldwide that “quality is the life-
line” of healthcare and medical equipment. We believe
that continuing to make high-precision, high-quality
products is the way to press our advantage, and we
will continue to form production and development
alliances in Dalian as we strive to create even better
products in the future.
35
F
e
a
t
u
r
e
“
O
m
r
o
n
i
n
C
h
n
a
”
i
i
C
h
n
a
,
O
u
r
D
r
i
i
v
n
g
F
o
r
c
e
f
o
r
G
r
o
w
t
h
the past 20 years and now even molded plastic prod-
ucts can be immediately procured. When we first
started business here we procured everything, from
a single screw to cardboard, from Japan. We now have
a local procurement structure, developed through
alliances with all types of parts and materials manu-
facturers, and currently procure over 70% of our parts
and materials locally. While taking full advantage of
this local concentration of industry, we are fortifying
our supply chain management (SCM).
Local Product Planning and Development for
the Chinese Market—Blood pressure monitors
with backlights are a hit—
Omron Healthcare Product Development Dalian Co.,
Ltd. (OHP) is also located in the city of Dalian. OHP
combines existing general-purpose technology with
the common platforms of healthcare equipment
developed in Japan and adds functions, increases
specifications, and changes product designs to create
timely products catered to local needs around the
world. One example is a blood pressure monitor model
featuring backlighting, which has become a big hit. In
Japan, backlighting is not required because the light-
ing in most rooms is sufficient for reading the digital
displays of blood pressure monitors. By adding back-
lighting to our blood pressure monitors for China, where
many rooms are not so well lit, the product quickly
became popular. More recently, we commercialized
solar charging semi-automatic blood pressure moni-
tors designed in Japan for sale in Europe and Africa.
In addition to these product development opera-
tions, OHP also plays a critical role in selecting locally
procured parts with an engineer’s eyes through coop-
eration with production sites to enhance product
quality and reduce costs.
Omron’s Advantage is Quality
The majority of Omron’s blood pressure monitors sat-
isfy the accuracy standards of academic institutions
in Europe and other advanced countries and are rec-
ommended by international evaluation organizations.
Numerous makers have entered the Chinese health-
care equipment market in recent years, and the
intensity of price competition is increasing. Omron’s
advantage is the strong reputation and trust for the
accuracy and ease-of-use of its products.
China’s State Food and Drug Administration (SFDA)
has been tightening its mandatory registration system
standards for medical equipment. We welcome the
heightened standards because we believe they will
serve to highlight the strength of our products. We
36
Featur e “Omr on in China” China, Our Driving Force for Growth
Expectations for Omron—A Voice from China
Growing Safety- and Environment-related Needs
Mr. Wei Ding
Expert in Chief, CAMETA
China Association for Mechatronics Technology and Application
The China Association for Mechatronics Technology & Application (CAMETA, established
in Beijing in 1989) is a non-profit organization (NPO) promoting Chinese industrial devel-
opment through the integration of mechanical and electronic technologies. CAMETA
encourages active technology exchange and provides on-site guidance to ensure the safe-
ty of production sites.
Manufacturers from around the world are setting up production bases in China, and
many factories, particularly those of companies from advanced countries, are bringing in
leading-edge factory automation (FA) systems. At the same time, Chinese companies have
been absorbing the manufacturing technology of the world’s leading companies and in a very
short period have picked up the pace of industrialization, which the leading countries have
developed over decades, and surged ahead with high-speed economic growth. I think
these circumstances make China an extremely attractive “market” for an industry-leading
company like Omron supplying FA systems and related equipment and services.
Also in recent years, the needs of China’s manufacturing sites have grown beyond just
equipment related to manufacturing functions to rapidly increasing needs for control
equipment and services related to safety and the environment. A company that can make
a strong showing in these areas should be in a prime position for growth in China’s future
FA system-related market.
Omron’s strengths in sensing and control technology are already widely contributing to
and increasing its presence in China’s manufacturing sites. The company also has
outstanding experience in applying its unique technological capabilities, such as its systems
for making machines learn and make judgments.
Omron is in a position to create a “win-win” situation by converting its technological
prowess into profits for itself as well as for local Chinese companies. We look forward to
Omron being a major contributor to the development of manufacturing in China.
July 30, 2010
37
F
e
a
t
u
r
e
“
O
m
r
o
n
i
n
C
h
n
a
”
i
i
C
h
n
a
,
O
u
r
D
r
i
i
v
n
g
F
o
r
c
e
f
o
r
G
r
o
w
t
h
China’s Healthcare and Medical Equipment
Market to Continue Growing
Mr. Bin Li
Control Center Chairman
Shanghai Medical Facilities and Equipment Quality Control Department
Most Shanghai residents know of Omron as a healthcare and medical equipment maker of
blood pressure monitors, thermometers, and other devices. It is evidence that Omron’s
products are contributing to the health of people in China. Also, the amount of medical
equipment that Shanghai’s main hospitals are purchasing is growing by about 15% annually,
and Omron equipment is becoming widely used in hospitals and other medical institutions.
We expect Omron’s blood pressure monitors and thermometers to be increasingly used
in the future. Hospital usage of digital blood pressure monitors, in particular, should increase
rapidly as regulations become more strict about mercury disposal methods.
In addition, in 2009 the Chinese government launched an 850 billion yuan, three-year
nationwide medical environment reform program that gives top priority to the country’s
midwest region. This provides Omron with a golden opportunity to broaden its business
domain in China.
As the Chinese people raise their standard of living, they are becoming increasingly
interested in health issues and will likely increase their spending on healthcare equipment.
The increasing prevalence in the urban areas of the “three highs” lifestyle-related dis-
eases (high blood pressure, high blood sugar levels, and hyperlipidemia) and the aging of
the population will also lead to increasing demand for Omron’s blood pressure monitors,
blood glucose meters, body fat monitors, and other home medical equipment. In addi-
tion, since the trend of increasing emphasis on “prevention” is also expected to continue,
demand can also be expected to grow substantially for Omron’s core “Healthcare at
Home” related products.
The year 2011 will be the initial year of the Chinese government’s 12th Five-year Plan.
I have also heard that 2011 will be the first fiscal year of Omron’s new 10-year plan.
I sincerely hope that Omron’s business will continue to grow in China, and look for-
ward to the company’s further contributions to Chinese society.
July 30, 2010
38
Omr on at a Glanc e
Per for manc e and Outlook by Segment
Segment Net Sales and Operating Income
Net Sales by Segment (Billions of yen)
Operating Income by Segment (Billions of yen)
800
700
600
500
400
300
200
100
0
Eliminations and Corporate
Other
HCB
SSB
AEC
EMC
IAB
90
60
30
0
-30
06
07
08
09
10
Forecast
(FY)
06
07
08
09
10
Forecast
(FY)
IAB
INDUSTRIAL AUTOMATION
BUSINESS
Net Sales by Segment
39%
EMC
ELECTRONIC AND MECHANICAL
COMPONENTS BUSINESS
Net Sales by Segment
14%
Net Sales (Billions of yen)
Operating Income (Billions of yen)
Operating Income Margin (%)
Net Sales (Billions of yen)
350
300
250
200
150
100
50
0
271.0
206.2
60
50
40
30
20
10
0
20
15
14.8%
40.0
10
6.7%
13.9
5
0
180
150
120
90
60
30
0
81.0
70.7
Operating Income (Billions of yen)
Operating Income Margin (%)
20
15
13.0%
9.5%
10.5
10
6.7
5
0
20
16
12
8
4
0
06 07 08 09 10
Forecast
(FY)
06 07 08 09 10
Forecast
(FY)
06 07 08 09 10
Forecast
(FY)
06 07 08 09 10
Forecast
(FY)
Outlook
Outlook
IAB is quickly filling out its lineup of control equipment to meet the
various demands of developed countries and the rapidly grow-
ing BRIC markets, and is fortifying its offerings of ultra-high-speed
and high-precision machine automation equipment. The seg-
ment is also introducing a steady stream of products to contribute
to fulfilling the need for ongoing improvement in production site
“quality, safety, and the environment.”
The restructuring of the switch and relay businesses in fiscal
2009 is being followed by further acceleration of the integration
of product planning, design for development, and production.
EMC aims to expand its business by establishing a business
structure capable of creating new products that anticipate mar-
ket changes and responding swiftly to customer needs.
Notes:
1. From fiscal 2009, the Companies adopt the Accounting Standards Codification No.280, “Segment Reporting” (previously Statement of Financial Accounting
Standards No.131, “Disclosures about Segments of an Enterprise and Related Information”). Accordingly, the figures of the segment information for fiscal 2008
have been restated to conform with the current year presentation.
2. The Company’s business segments have been reclassified as IAB, EMC, AEC, SSB, HCB, and Other from the third quarter of fiscal 2009. Figures from fiscal 2008
have been restated to reflect the new classifications.
3. Beginning in fiscal 2010, the Omron Group has been revising the management guidance fees for the purpose of concentrating capital funds at the headquarters
in order to reinforce selection and concentration and allocate resources strategically. This inclusion has had an effect on the operating income of each segment.
4. The forecast for fiscal 2010 is as of July 28, 2010.
39
AEC
AUTOMOTIVE ELECTRONIC
COMPONENTS BUSINESS
Net Sales by Segment
14%
SSB
SOCIAL SYSTEMS
SOLUTIONS BUSINESS
Net Sales by Segment
11%
Net Sales (Billions of yen)
Operating Income (Billions of yen)
Operating Income Margin (%)
Net Sales (Billions of yen)
Operating Income (Billions of yen)
Operating Income Margin (%)
150
120
90
60
30
0
81.5
75.2
2
0
-2
-4
-6
-8
-10
1.7
2.5
2.3%
3.1%
5
0
-5
-10
-15
-20
-25
150
120
90
60
30
0
65.5
58.0
12.5
10.0
7.5
5.0
2.5
0
20
15
10
5
0
4.6%
2.7
3.1%
2.0
06 07 08 09 10
Forecast
(FY)
06 07 08 09 10
Forecast
(FY)
06 07 08 09 10
Forecast
(FY)
06 07 08 09 10
Forecast
(FY)
O
m
r
o
n
a
t
l
a
G
a
n
c
e
Outlook
Outlook
AEC is seeking to develop in parallel with customer global strate-
gies, realize cost reductions, and expand business in the markets
of emerging economies. The segment is focusing specifically
on applying value analysis (VA) and value engineering (VE) to its
core products, and on expanding manufacturing activities at the
factories in China and Asia. AEC is also concentrating on devel-
oping automotive electronics products for environment-friendly
vehicles, which is expected to be a future growth area.
SSB will focus on its “social sensor” products as it aims to expand
its sensing business sales in the transportation, manufacturing,
commercial facilities, and other fields in the social sector. The
segment also aims to expand sales of related maintenance oper-
ations in the engineering and IT-related businesses, and by
developing new business areas using its language and imaging
technology in the software business.
HCB
HEALTHCARE BUSINESS
Net Sales by Segment
12%
OTHER
ENVIRONMENTAL SOLUTIONS, ELECTRONIC
SYSTEMS AND EQUIPMENTS, BACKLIGHT,
AND MICRO DEVICES BUSINESSES
Net Sales by Segment
*
10%
* Including “Eliminations and Corporate.”
Net Sales (Billions of yen)
Operating Income (Billions of yen)
Operating Income Margin (%)
Net Sales (Billions of yen)
Operating Income (Billions of yen)
Operating Income Margin (%)
100
80
60
40
20
0
63.4
64.0
12.5
10.0
7.5
5.0
2.5
0
11.1%
7.1
9.4%
6.0
25
20
15
10
5
0
100
80
60
40
20
0
46.0
41.3
2.0
0
-2.0
-4.0
-6.0
-8.0
-10.0
5
0
-5
-10
-13.0%
-6.0
-17.0%
-7.0
-15
-20
-25
06 07 08 09 10
Forecast
(FY)
06 07 08 09 10
Forecast
(FY)
06 07 08 09 10
Forecast
(FY)
06 07 08 09 10
Forecast
(FY)
Outlook
Outlook
HCB anticipates a downturn in sales in digital thermometers,
which posted a sharp rise in fiscal 2009 due to the outbreak of
H1N1 influenza. However, the segment plans to actively devel-
op new markets, and will introduce products designed to meet
the growing awareness of health management in emerging
economies. HCB will also strengthen its equipment and servic-
es utilizing information technology for the prevention of
lifestyle-related diseases and its proposal-based sales activities
for medical institutions.
The environmental solutions business will continue to provide CO2
reduction solutions while further establishing its business foun-
dation. The electronic systems and equipments business is
focusing on industrial-use computer systems; the micro devices
business is seeking to grow its contract production operation for
semiconductors; and the backlight business is aiming to expand
sales to overseas customers and enter low-cost markets.
40
Segment Infor mation
IAB INDUSTRIAL AUTOMATION BUSINESS
Manufacturing and sales of control systems and components for factory automation and industrial equipment
IAB is strengthening links between its sales, service, development, and
production networks worldwide to enhance its “full lineup of control equip-
ment” and “ultra-high-speed, high-precision machine automation” and
to create products that contribute to fulfilling the need for ongoing improve-
ment in production site “quality, safety, and the environment.”
% of Net Sales
39%
Fiscal 2009 in Review
Substantial declines in sales and earnings reach
bottom, Greater China sales rebound
IAB net sales fell 24.2% year on year to ¥206.2 billion, and
operating income declined 23.5% to ¥13.9 billion in fiscal 2009.
In Japan the strong impact from curbs in production
activity and capital expenditures by the Japanese manu-
facturing industry in the second half of fiscal 2008 led to a
further decline in demand in the first quarter of fiscal 2009.
However, recovering production activity centering on our
customers in the automobile and electronic components
industries helped demand to begin rising in the second
quarter, notably for sensor products.
In the third quarter, a sustaining demand recovery trend
took hold for IAB products as production activity picked up
in the semiconductor industry, and sales also began grow-
ing for safety products, power conditioners for solar power
generation systems, and other energy-related products.
Overseas sales benefited from Chinese government
policies to stimulate domestic demand that boosted
domestic capacity utilization rates and increased capital
investment, which generated growing demand for the
Company’s products that ultimately raised sales in China
above the level in fiscal 2008 on a local currency basis.
Sales in Europe were affected by the slow economic recov-
ery in the Company’s key markets in southern Europe.
Sluggish conditions in the oil-related and automobile indus-
tries impacted sales in North America. However, sales
results began gradually improving in both regions in the
third quarter.
Despite the improving trends as the year progressed,
the impact from sluggish conditions in the first half caused
domestic sales to fall 25.5% year on year to ¥93.5 billion
and overseas sales to decline 23.0% to ¥112.7 billion for
the fiscal year. The profit structure reform and emergency
measures to cut costs made the operating income posi-
tive from the second quarter.
IAB Results and Forecast
Fiscal Year
Net sales*
Domestic
Overseas
North America
Europe
Asia
China
Direct exports
Operating income*
Operating income margin*
R&D expenses
Depreciation and amortization*
Capital expenditures
2006
2007
2008
2009
305.6
140.8
164.8
34.8
81.3
14.0
28.8
5.8
48.5
15.9%
18.1
11.2
13.7
328.8
144.1
184.7
35.6
92.3
16.2
34.6
6.0
51.9
15.8%
19.5
11.7
8.4
272.0
125.5
146.5
31.6
70.7
17.4
25.7
1.0
18.2
6.7%
18.2
10.1
8.9
206.2
93.5
112.7
18.9
51.2
16.8
25.5
0.3
13.9
6.7%
11.4
5.4
2.0
(Billions of yen)
2010
(Forecast)
271.0
126.0
145.0
23.5
55.0
23.5
41.5
1.5
40.0
14.8%
* From fiscal 2009, the Companies adopt the Accounting Standards Codification No.280, “Segment Reporting.” Accordingly, the fig-
ures of the segment information for fiscal 2008 have been restated to conform with the current year presentation.
* The Company’s business segments have been reclassified from the third quarter of fiscal 2009. The net sales, operating income, and
operating income margin figures from fiscal 2008 have been restated to reflect the new classifications. The figures for fiscal 2006 and
2007 have not been restated.
* Beginning in fiscal 2010, the Omron Group has been revising the management guidance fees for the purpose of concentrating capital
funds at the headquarters in order to reinforce selection and concentration and allocate resources strategically. This inclusion has had
an effect on the operating income of each segment.
* Fiscal 2006-2008 figures for R&D expenses, depreciation and amortization, and capital expenditures have not been modified to reflect
the new segment organization.
* The sales figures given indicate sales to external customers and exclude intersegment transactions. Operating income indicates income includ-
ing internal income prior to the deduction of amounts such as intersegment transactions and head office expenses that are not apportionable.
* The forecast for R&D expenses, depreciation and amortization, and capital expenditures is not publicized.
* The forecast for fiscal 2010 is as of July 28, 2010.
Check it out!
Analysis of external environment
Indices of industrial production
and machinery orders,
IAB sales
(Billions of yen)
90
60
30
0
*
150
100
50
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY2008
FY2009
Index of Industrial Production*
(Seasonally adjusted) [left axis]
Machinery orders* [left axis]
IAB sales [right axis]
*Source: The Ministry of Economy, Trade and
Industry and the Cabinet Office,
Government of Japan
IAB sales trends move on a slight
time lag to indices for industrial pro-
duction and machinery orders.
41
Yoshinobu Morishita
Senior Managing Officer
Company President,
Industrial Automation Company
Business Strategy and Outlook for Fiscal 2010
Strengthen products and services, anticipating
automation control needs in emerging economies
and advanced economies
In the IAB segment, we forecast a year-on-year rise of
31.4% to ¥271.0 billion in net sales, and a 187.8% increase
to ¥40.0 billion in operating income in fiscal 2010. (We fore-
cast a 210.8% rise in operating income before the
subtraction of management guidance fees, to ¥43.2 billion
in fiscal 2010.)
IAB is focusing on three areas to meet the need for con-
trol devices in the rapidly growing emerging economies and
for control devices for such fields as safety, the environ-
ment and energy applications.
[1] Fortify the control equipment components business
IAB will further reinforce its world’s leading lineup of con-
trol equipment. The segment is quickly expanding its range
of products to meet the various demands of developed
countries and the rapidly growing BRIC markets. IAB is
also enhancing the coordination of its sales and service
activities between countries with the aim of expanding its
share of the global market.
[2] Strengthen the machine control business
IAB will leverage its sensing and control technologies to take
the initiative in introducing to the global market a steady
stream of the industry’s leading ultra-high-speed, high-
precision machine automation products, and contribute to
product creation innovations in the manufacturing industry.
[3] Respond to new and emerging demand
IAB aims to be a continuous source of new proposals con-
cerning production site safety, manufacturing, and the
environment, and will work with customers and society to
explore new products and applications that can be used in
the development of optimal control technologies for the
production sites of the future.
The IAB segment is enhancing its products and serv-
ices from the customer’s perspective throughout its
worldwide operations, encompassing production, sales,
development, and all departments, to solidify its status as
the leading partner in the manufacturing industry.
S
e
g
m
e
n
t
I
n
f
o
r
m
a
t
i
o
n
What’s New
A new generation of environmental
equipment for visualizing the manu-
facturing environment and saving
energy
In the semiconductor and flat panel display industries, the rapidly
growing solar battery industry, the rechargeable battery industry, and
other industries reliant on factory clean rooms, it is absolutely essen-
tial to monitor the volume of airborne particles (foreign objects) and
settling dust and to measure static electricity and temperature
changes and other conditions affected by production processes to
ensure that product quality is maintained at high levels.
IAB’s development and sales of a steady succession of products
in its environmental equipment series assist clients in the mainte-
nance and enhancement of product quality using sensors to provide
constant monitoring to “visualize” the required manufacturing envi-
ronment conditions for all types of production processes.
In addition, IAB additionally offers the “Wave Inspire” environ-
ment visualization software that enables clients to collect and manage
multipoint and dispersed data within the manufacturing environment.
This data can then be used to establish optimal settings, such as for
fan filter air flow volumes and air conditioner temperatures, which
contribute to energy saving at the worksite.
Air Thermo
Sensor
Air Particle
Sensor
Electrostatic
Sensors
Air Clean
Unit
World’s largest lineup of control equipment
Proximity
Sensors
Photoelectric
Sensors
Temperature
Controllers
Vision
Sensors
Digital
Panel
Indicators
Programmable
Logic
Controllers
Power
Supply
Units
Inverters
Servomotors
and Servo
Drivers
Creating the industry’s highest-level network of
safe, ultra-high speed, and high-precision machine
control equipment
Programmable Logic
Controller and Master
Safety Network
Controllers
Servomotors
and Servo
Drivers
Emergency
Shutdown Switch
Vision
Sensors
Safety Sensors
42
Segment Infor mation
EMC ELECTRONIC AND MECHANICAL COMPONENTS BUS INESS
Manufacturing and sales of electronic components for consumer appliances, telecommunications equipment,
mobile telephones, amusement devices, and office automation equipment
EMC utilizes its cultivated strength in monozukuri(product creation)
technology, integrating its relays, switches, connectors, and other
electromechanical component products to supply products to cus-
tomers in a wide range of industries.
% of Net Sales
14%
Fiscal 2009 in Review
Rapid recovery in earnings from structural reform
and other improvements
EMC posted a net sales decline of 7.6% year on year to
¥70.7 billion, while operating income rose 59.6% to ¥6.7 bil-
lion in fiscal 2009.
Domestic demand for numerous electronic compo-
nents improved during the year following the completion of
inventory adjustments in the business and consumer elec-
tronic equipment industries, as well as the automotive
components industries that continued from the second
half of fiscal 2008 through the first quarter of fiscal 2009.
Demand for electronic components for industrial equip-
ment also improved from the substantial declines which
have been ongoing since fiscal 2008, but the recovery still
has not reached the levels attained prior to the economic
crisis. Overall domestic sales to all industries ultimately
declined 12.7% year on year to ¥22.3 billion in fiscal 2009.
Overseas operations in the European and American
markets were faced with business conditions of unprece-
dented severity, but began to show signs of gradual
improvement in the second half of the fiscal year under
review. Business conditions in China and Southeast Asia
moved into recovery in the second quarter, and demand
recovered for several products, notably for relays for con-
sumer appliances (particularly air conditioners), flexible
printed circuit (FPC) connectors for optical disks, and input
switches for mobile devices. The result was a relatively
small decline on an all-industry basis compared with domes-
tic sales, with overseas sales down 5.0% year on year to
¥48.4 billion.
Operating income from overseas operations also
showed substantial improvement as a result of the emer-
gency measures and improved productivity.
EMC Results and Forecast
Fiscal Year
Net sales*
Domestic
Overseas
North America
Europe
Asia
China
Direct exports
Operating income*
Operating income margin*
R&D expenses
Depreciation and amortization*
Capital expenditures
2006
2007
2008
2009
138.4
58.8
79.6
11.0
12.0
8.6
35.7
12.4
13.1
9.5%
8.1
9.0
12.8
154.2
62.4
91.8
10.4
12.4
10.3
48.3
10.4
12.6
8.2%
8.2
10.5
14.1
76.5
25.6
50.9
8.6
9.2
8.4
20.9
3.8
4.2
5.5%
8.1
10.8
17.3
70.7
22.3
48.4
7.3
11.7
7.6
19.8
1.9
6.7
9.5%
5.0
8.5
4.2
(Billions of yen)
2010
(Forecast)
81.0
25.0
56.0
12.5
12.0
8.5
21.0
2.0
10.5
13.0%
* From fiscal 2009, the Companies adopt the Accounting Standards Codification No.280, “Segment Reporting.” Accordingly, the fig-
ures of the segment information for fiscal 2008 have been restated to conform with the current year presentation.
* The Company’s business segments have been reclassified from the third quarter of fiscal 2009. The net sales, operating income, and
operating income margin figures from fiscal 2008 have been restated to reflect the new classifications. The figures for fiscal 2006 and
2007 have not been restated.
* Beginning in fiscal 2010, the Omron Group has been revising the management guidance fees for the purpose of concentrating capital
funds at the headquarters in order to reinforce selection and concentration and allocate resources strategically. This inclusion has had
an effect on the operating income of each segment.
* Fiscal 2006-2008 figures for R&D expenses, depreciation and amortization, and capital expenditures have not been modified to reflect
the new segment organization.
* The sales figures given indicate sales to external customers and exclude intersegment transactions. Operating income indicates income includ-
ing internal income prior to the deduction of amounts such as intersegment transactions and head office expenses that are not apportionable.
* The forecast for R&D expenses, depreciation and amortization, and capital expenditures is not publicized.
* The forecast for fiscal 2010 is as of July 28, 2010.
Check it out!
Analysis of external environment
Global shipments of
electronic components and
EMC sales
(Billions of yen)
1,500
1,200
900
600
300
0
(Billions of yen)
25
20
15
10
5
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY2008
FY2009
Global [left axis]
Japan [left axis]
EMC [right axis]
Source:JEITA
Demand is recovering after beginning
to rise in the first quarter of fiscal 2009.
43
Akio Sakumiya
Managing Officer
Company President,
Electronic and Mechanical
Components Company
Business Strategy and Outlook for Fiscal 2010
Maximize the monozukuri(product creation) strength
of our mechanical components
In the EMC segment, we forecast a year-on-year increase
of 14.6% to ¥81.0 billion in net sales and 56.7% rise to ¥10.5
billion in operating income in fiscal 2010. (We forecast a
74.6% rise in operating income before the subtraction of
management guidance fees, to ¥11.7 billion in fiscal 2010.)
Although the market environment for electronic com-
ponents included recovering markets, particularly in
emerging economies, conditions in each country will
depend on government policies as economic stimulus
measures run their course, and are thus difficult to predict.
Looking forward, market growth led by the emerging
economies is expected to create a continuous flow of busi-
ness opportunities over the medium and long term. At the
same time, intensifying competition will make it crucial to
maintain the Company’s competitive advantage.
Anticipating this scenario, EMC is focusing on the two
challenges of “fortifying monozukurithrough the reduction
of manufacturing costs and lowering its environmental bur-
den.” The segment is promoting low-cost and low-
environmental-burden monozukuriwith products that enable
shortening the time needed for component molding and
pressing, improving galvanizing methods to reduce the
usage volume of coating material, and reducing the amount
of scrap material (such as from the molding and pressing
processes) generated by the manufacturing operations.
Following the management integration of the relay
business operations, the EMC segment established a com-
pany to handle switch-related operations. The switch
business centralizes the “planning,” “development,” and
“production” of switches, functions which were previously
dispersed among the Group’s various companies, to create
a more efficient business operation.
In fiscal year 2009, the production operations of relays
and switches conducted by AEC and the production oper-
ations of relays and switches for industrial equipment
conducted by IAB were brought into the EMC segment to
create a more efficient production structure.
S
e
g
m
e
n
t
I
n
f
o
r
m
a
t
i
o
n
What’s New
Omron Switch & Device Corporation commences
operation, aiming to be the world leader in the
switch field
On April 1, 2010, EMC fortified its
switch business operations by merg-
ing its switch business division with
Omron Kurayoshi Corporation, which
undertakes development and produc-
tion of switches, and Omron Izumo Co.,
Ltd., to form the new Omron Switch &
Devices Corporation, located within the
Omron Okayama Office.
Omron Switch & Devices Corporation Headquarters in Okayama
The market for switches offers the
promise of ongoing steady growth
along with intensifying global competition, particularly from the entrance of new
competitors in the emerging economies. In order to maximize the company’s
strengths in this competitive environment, and expand our business in the switch
market, which is expected to be a growing market, we will unify our product plan-
ning, design for development, and production activities, and aim to develop a
structure by which to create new products that anticipate market changes and real-
ize speedy product customization that corresponds to clients’ application needs.
As a comprehensive switch manufacturer, the new company will strive to acceler-
ate growth through its “only one, only for you” strategy designed to meet diversifying
customer requirements through state-of-the-art monozukurimanufacturing tech-
nologies.
The relay business was similarly fortified on the same day through the man-
agement integration of Omron Takeo Co., Ltd. with Omron Relay & Devices
Corporation, to enhance the monozukuritechnological expertise and accelerate the
optimization of global production.
High-capacity Relays for Hybrid Cars
Small-sized relays with large capacity capable
of regulating the high-voltage, high-current DC
circuits used in hybrid
vehicles, electric cars,
and other environment-
friendly vehicles.
Automotive Microswitches
Highly reliable and durable sealed-type ultra-
miniature switches, widely used in automo-
biles around the world, such as to detect
whether a door is
open or closed, are
capable of withstand-
ing rigorous usage
conditions.
Multipole FPC Connectors
Omron created an ultrasmall 90-pin, multipole,
FPC (flexible printed circuit) connector to
accommodate the increasing variety of func-
tions being built into the touch panels of mobile
devices, which are requiring more signal lines
and connectors with higher pin counts.
44
Segment Infor mation
AEC AUTOMOTIVE ELECTRONIC COMPONENTS BUS INESS
Production and sales of electronic components for automobiles
AEC conducts business operations catering specifically to the auto-
motive electronics field, and produces technologies and products
designed to create “the best match between people and automobiles.”
% of Net Sales
14%
Fiscal 2009 in Review
Profitability attained from the second quarter
through cuts in fixed costs and restructuring of
production operations
AEC net sales declined 8.5% year on year to ¥75.2 billion,
while operating income came to ¥1.7 billion in fiscal 2009,
compared with a loss of ¥7.1 billion in the previous fiscal year.
Automobile sales remained sluggish in the fiscal first-
half, as the worldwide recession persisted. While
consumption in Japan remained low amid continuing inse-
curity regarding employment and personal income,
government policies, such as tax breaks for eco car pur-
chases, helped spur demand for automobiles beginning in
the third quarter. The ensuing pick-up in auto production
activity led to increasing demand for AEC products.
Domestic sales fell below the previous-year level, declining
4.4% year on year to ¥23.9 billion. However, signs of
improvement appeared near the end of the term, which
prevented an even greater decline in sales.
Overseas sales fell 10.2% year on year to ¥51.3 billion,
largely due to the substantial impact from the failure of
major automobile manufacturers in North America, the pri-
mary market for AEC products. However, prompt action
by the United States government to provide public sup-
port to restructure the troubled automakers and measures
initiated in several countries to stimulate automobile sales
resulted in a gradual improvement in overseas demand for
AEC products beginning in the third quarter. In particular,
sales in Greater China grew 32% year on year, boosted by
the region’s expanding market.
The consolidation and streamlining of overseas facto-
ries as part of the restructuring of production, the transfer
of a portion of the relay unit production operations to the
EMC segment, and the reduction of fixed costs helped
AEC regain profitability in the second quarter.
AEC Results and Forecast
Fiscal Year
Net sales*
Domestic
Overseas
North America
Europe
Asia
China
Direct exports
Operating income*
Operating income margin*
R&D expenses
Depreciation and amortization*
Capital expenditures
(Billions of yen)
2010
(Forecast)
81.5
28.5
53.0
22.5
3.5
12.5
8.0
6.5
2.5
3.1%
2006
2007
2008
2009
93.3
26.1
67.2
37.9
9.8
16.2
1.4
2.0
(1.2)
—
7.1
8.1
8.9
107.5
28.0
79.5
42.4
13.9
18.3
3.1
1.9
1.4
1.3%
8.3
8.0
9.1
82.1
25.0
57.1
27.9
9.0
12.5
4.7
3.0
(7.1)
—
7.3
5.4
5.6
75.2
23.9
51.3
24.0
2.0
13.1
6.3
5.9
1.7
2.3%
5.0
2.1
3.6
* From fiscal 2009, the Companies adopt the Accounting Standards Codification No.280, “Segment Reporting.” Accordingly, the fig-
ures of the segment information for fiscal 2008 have been restated to conform with the current year presentation.
* The Company’s business segments have been reclassified from the third quarter of fiscal 2009. The net sales, operating income, and
operating income margin figures from fiscal 2008 have been restated to reflect the new classifications. The figures for fiscal 2006 and
2007 have not been restated.
* Beginning in fiscal 2010, the Omron Group has been revising the management guidance fees for the purpose of concentrating capital
funds at the headquarters in order to reinforce selection and concentration and allocate resources strategically. This inclusion has had
an effect on the operating income of each segment.
* Fiscal 2006-2008 figures for R&D expenses, depreciation and amortization, and capital expenditures have not been modified to reflect
the new segment organization.
* The sales figures given indicate sales to external customers and exclude intersegment transactions. Operating income indicates income includ-
ing internal income prior to the deduction of amounts such as intersegment transactions and head office expenses that are not apportionable.
* The forecast for R&D expenses, depreciation and amortization, and capital expenditures is not publicized.
* The forecast for fiscal 2010 is as of July 28, 2010.
Check it out!
Analysis of external environment
Worldwide automobile
production
(Millions)
6
5
4
3
2
1
0
EU
China
North
America
Asia
Japan
South
America
Middle East, Africa
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY2008
FY2009
Source: CSM Worldwide, Inc.
Various countries’ government
policies to promote auto pur-
chases in fiscal 2009 contributed
to a recovery in demand. China
and other emerging economies
showed remarkable growth.
45
S
e
g
m
e
n
t
I
n
f
o
r
m
a
t
i
o
n
Yoshinori Suzuki
Managing Officer
President and CEO,
OMRON Automotive Electronics Co., Ltd.
Business Strategy and Outlook for Fiscal 2010
Aiming to complete the establishment of a new
management base
We forecast AEC attaining year-on-year increases of 8.4%
to ¥81.5 billion in net sales and 47.1% to ¥2.5 billion in
operating income in fiscal 2010. (We forecast an 88.2%
rise in operating income before the subtraction of man-
agement guidance fees, to ¥3.2 billion in fiscal 2010.)
Automobile manufacturers are transforming their busi-
ness structures and engaging in a battle for survival for the
industry’s next stage, which is epitomized by the arrival of
electric vehicles. We anticipate a whole new level of inten-
sity in global competition in terms of both technology and
cost. In preparation for this business environment, AEC
plans to fortify its operations in three specific areas of
business: systems, including passive entry and engine
push-start systems; modules/switches, such as electric
power steering controllers, power window switches, and
electronic components for electric vehicles; and compo-
nents for motorcycles and automobiles. By focusing its
core strengths in these three business areas, AEC aims to
enhance its creation of customer value, bolster its techni-
cal capabilities, which is the source of its competitive
advantage, and improve its cost competitiveness.
The AEC segment’s operations were split off from the
Company on May 6, 2010, and relaunched as Omron
Automotive Electronics Co., Ltd. The AEC segment was
thoroughly reorganized and its earning structure base was
completely restructured last year prior to the new compa-
ny’s founding. This year, the new company is conducting
business operations with the objective of completing the
establishment of the new management base.
What’s New
Actively contributing to the creation of
eco-friendly vehicles
AEC is active in a variety of ways to fulfill its aim of establishing “harmony with the envi-
ronment and nature” for our car society, such as by contributing to improving fuel efficiency,
promoting the spread of hybrid vehicles, and realizing viable electric vehicles. Through the
close partnerships it has built with automobile manufacturers, the segment applies its
sensing and control technologies to the development and production of a variety of envi-
ronmental technologies and products.
For example, AEC’s electric power steering systems, which are becoming increas-
ingly common, enable better fuel efficiency than conventional hydraulic steering
systems. Moreover, the development and manufacture of the system controllers
have given the segment a wealth of experience and practical accomplishments. AEC
also recently began manufacturing controllers with an idling stop function that pro-
vides significant fuel savings by automatically shutting off the engine when a vehicle
is stopped.
In the promising growth area of electric
vehicles, AEC is moving toward mass pro-
duction of electricity leakage sensors and
voltage monitoring units that will monitor the
electric circuit conditions and support the
more efficient usage of batteries in electric
vehicles. AEC will continue contributing to
the creation of environmentally friendly vehi-
cles following its fundamental concept of
realizing “the best match between people
and automobiles.”
Electricity leakage sensor
Electric Power Steering Controllers
Electric power steering controllers facilitate
automobile steering and improve fuel sav-
ings compared with conventional hydraulic
steering systems.
Passive Entry and Push Engine
Start Systems
Passive entry and push engine start systems
enable automobile owners to lock and unlock
doors by simply touching a button on the car
door, eliminating the need to take the
portable transmitter (key fob) out of a pocket
or bag. Further, in conjunction with another
specific operation, these systems will start or
turn off the engine by pressing a switch on
the driver’s side of the dashboard.
46
Segment Infor mation
SSB S OCIAL S YSTEMS SOLUTIONS BUS INESS
Providing solutions and services for realizing a secure, safe, and comfortable society
SSB provides various equipment, systems, and services to support
secure and comfortable living environments and safe social infra-
structure.
% of Net Sales
11%
Fiscal 2009 in Review
Sales and profits fell due to the completion of
upgrade investment for railway infrastructure sys-
tems and economic weakness
SSB net sales declined 19.8% year on year to ¥58.0 billion
and operating income fell 48.9% to ¥2.7 billion in fiscal 2009.
Railway infrastructure business sales declined sharply,
as railway operators curbed capital investment, due to the
completion of investment in new railway construction and IC
systems and increased competition from highways as a result
of reductions in highway tolls on weekends and holidays.
In our related maintenance operations, sales fell owing
to the restrained capital investment of the manufacturing
sector and the decline in railway-related projects. In the
software business, demand decreased substantially due
to falling unit sales of mobile phones in Japan and
restrained investment by the distribution industry.
The recently launched“Social Sensor Solutions Business”
focuses on applying our sensor technology to meet social
sector needs, and is beginning to develop a new solutions
market to meet a growing need for train station and rail-
way safety and roadway and traffic safety.
SSB successfully reduced its fixed expenses during
the year, but the larger-than-expected decline in sales led
to a drop in the segment’s operating income margin.
SSB Results and Forecast
Fiscal Year
Net sales*
Domestic
Overseas
North America
Europe
Asia
China
Direct exports
Operating income*
Operating income margin*
R&D expenses
Depreciation and amortization*
Capital expenditures
2006
2007
2008
2009
105.9
101.8
4.1
0.5
0.0
0.0
0.0
3.6
8.1
7.6%
5.1
3.3
3.9
85.2
81.0
4.2
0.6
0.0
0.0
0.0
3.6
7.0
8.3%
2.6
3.3
1.7
72.3
70.7
1.6
0.0
0.0
0.0
0.0
1.6
5.2
7.2%
3.4
2.8
1.9
58.0
57.5
0.5
0.0
0.0
0.0
0.0
0.5
2.7
4.6%
2.9
1.4
1.2
(Billions of yen)
2010
(Forecast)
Check it out!
Analysis of external environment
65.5
64.5
1.0
0.0
0.0
0.0
0.0
1.0
2.0
3.1%
[Reference] Change in the
number of rail transport
passengers (year on year)
(%)
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
3
2009
Private
Railways
Total
JR Railway
Company
4 5 6 7 8 9 10 11 12 1 2 3
2010
Source: Rail Transport Overview,
Ministry of Land, Infrastructure,
Transport and Tourism
* From fiscal 2009, the Companies adopt the Accounting Standards Codification No.280, “Segment Reporting.” Accordingly, the fig-
ures of the segment information for fiscal 2008 have been restated to conform with the current year presentation.
* The Company’s business segments have been reclassified from the third quarter of fiscal 2009. The net sales, operating income, and
operating income margin figures from fiscal 2008 have been restated to reflect the new classifications. The figures for fiscal 2006 and
2007 have not been restated.
* Beginning in fiscal 2010, the Omron Group has been revising the management guidance fees for the purpose of concentrating capital
funds at the headquarters in order to reinforce selection and concentration and allocate resources strategically. This inclusion has had
an effect on the operating income of each segment.
* Fiscal 2006-2008 figures for R&D expenses, depreciation and amortization, and capital expenditures have not been modified to reflect
the new segment organization.
* The sales figures given indicate sales to external customers and exclude intersegment transactions. Operating income indicates income includ-
ing internal income prior to the deduction of amounts such as intersegment transactions and head office expenses that are not apportionable.
* The forecast for R&D expenses, depreciation and amortization, and capital expenditures is not publicized.
* The forecast for fiscal 2010 is as of July 28, 2010.
SSB’s business covers a broad range
of society, and there are no specific
economic indicators that link closely
to performance. In the railway seg-
ment, for example, SSB sales are
strongly influenced by customer
budgets for IC card equipment instal-
lation and new railway construction
plans, and these budgets are deter-
mined by railway company revenues,
which largely depend on the number
of passengers in a particular year.
47
Masaki Arao
Managing Officer
Company President,
Social Systems Solutions Business Company
Business Strategy and Outlook for Fiscal 2010
Transforming into a solutions business company
In the SSB segment, we forecast an increase of 12.9%
year-on-year to ¥65.5 billion in net sales, accompanied by
a 25.9% decline to ¥2.0 billion in operating income in fis-
cal 2010. (We forecast a 37.0% rise in operating income
before the subtraction of management guidance fees, to
¥3.7 billion in fiscal 2010.)
While capital investment is in a recovery trend, we
anticipate intensifying price competition in our existing
business fields. In these conditions, SSB will continue to
steadily strengthen its business structure while seeking
to expand the capabilities of its solutions business to
resolve its customers’ management issues. This will be
done by building on the trust SSB has cultivated from cus-
tomers associated with railway, roadway, and other social
infrastructure through its project delivery performance and
by applying its strengths in providing services and its abil-
ity to offer one-stop solutions support from equipment
delivery through maintenance and operation.
SSB contributes to creating a safe and secure society
by providing to social infrastructure companies with whom
we have cultivated strong trust systems for “society sur-
veillance” that integrate our sensing and control technology
centered on our core image sensing technology. The envi-
ronment-related business develops solutions for reducing
CO2 emissions through a system for “CO2 visualization”
involving the monitoring of electricity and gas usage, and
conducts measures for public facilities, such as road traffic
facilities and train stations, to help realize a “low carbon
and energy self-sufficient” eco-city.
SSB aims to realize business growth by achieving the
transformation into a full-fledged solutions company through
the provision of innovative social infrastructure equipment.
S
e
g
m
e
n
t
I
n
f
o
r
m
a
t
i
o
n
What’s New
Identification of specified persons now possible
with our Specified Person Detection System
“Evidence Sensor”—utilizing our face-recognition-
based authentication system
This system can search a collection of stored images of visitors’ faces to instantly
identify specified persons that have visited previously. Potential applications for the
system include identifying important customers, so as to ensure prompt service,
in addition to the usual crime prevention/security applications. The system enables
real-time recognition of facial images captured on camera and recorded on a video
screen, and provides both a visual alert on the screen and an audio message when
a person recorded in the system appears, which reduces the burden of video sur-
veillance. The system is also able to conduct detailed face searches, such as for the
same person appearing at different times or at different sites. The system utilizes
our proprietary “OKAO Vision” face detection and recognition technology devel-
oped using an image database of five million faces collected over a decade to achieve
high-speed, high-precision face recognition processing.
Searching for a specified face
⇒
Searching for the same individual appearing at different times or at different sites
Camera A
Camera B
⇒
New V8 Ticket Vending Machine
The V8 Ticket Vending Machine is our latest
model, which accepts a broader selection of IC
cards and credit cards for payment settlement. It
offers enhanced usability, as the machine’s
wide variety of users will find it easy to operate.
New PG-R Ticket Gate
The new PG-R model railway ticket gates are
slimmer than existing gates, allowing wider
aisles and smoother passage through the gate,
and features an easy-to-read display which
shows the user’s IC card account balance.
48
Segment Infor mation
HCB HEALTHCARE BUS INESS
Providing health and medical devices and services for homes and medical institutions
Omron Healthcare Co., Ltd. (HCB) is aiming to expand business in
emerging economies, and will focus on achieving the popularization of
the concept “Healthcare at Home” from a medium- and long-term
stance and developing related products.
% of Net Sales
12%
Fiscal 2009 in Review
Strong healthcare equipment sales in Japan, Greater
China, and other Asian markets
HCB net sales edged down 0.4% year on year to ¥63.4
billion, while operating income rose 48.0% to ¥7.1 billion
in fiscal 2009.
Sales in Japan were boosted by the completion of
inventory adjustments by major distributor companies in
the first quarter and successful releases of new blood pres-
sure monitor products. Demand for digital thermometers
also rose sharply, largely in response to the outbreak of
H1N1 influenza during the year. At the same time, demand
from medical institutions fell from the previous year as hos-
pitals and private medical practitioners postponed or cut
back equipment investment spending. However, steady
demand for home-use blood pressure monitors, digital ther-
mometers, and other personal healthcare devices led to
a 5.2% year-on-year rise in domestic sales, to ¥29.6 billion.
Sales results overseas included an increase in sales of
HCB’s mainstay blood pressure monitors and blood glu-
cose meters in the Greater China region, supported by
increasing awareness of health management issues in
provincial urban areas in China. Demand for personal health-
care equipment, particularly blood pressure monitors, is
growing steadily throughout Asia in parallel with the rising
living standards. The ongoing severe economic conditions
in North America and Europe, coupled with the strong yen
resulted in sales declining by more than 10% in both
regions. As a result, overseas sales declined 4.8% year on
year to ¥33.8 billion.
Operating income rose substantially over the previous
fiscal year, owing primarily to the steady implementation of
the emergency measures.
HCB Results and Forecast
Fiscal Year
Net sales*
Domestic
Overseas
North America
Europe
Asia
China
Direct exports
Operating income*
Operating income margin*
R&D expenses
Depreciation and amortization*
Capital expenditures
2006
2007
2008
2009
65.7
32.8
32.9
13.8
13.1
2.1
3.6
0.3
8.7
13.2%
3.9
1.0
1.5
71.6
35.0
36.6
12.5
15.9
2.1
5.5
0.7
9.4
13.1%
4.3
1.1
2.4
63.6
28.1
35.5
12.0
14.3
2.1
6.7
0.4
4.8
7.5%
4.4
1.2
1.8
63.4
29.6
33.8
10.8
12.7
2.3
7.4
0.7
7.1
11.1%
5.0
1.3
1.5
(Billions of yen)
2010
(Forecast)
64.0
29.0
35.0
10.5
11.5
3.0
8.5
1.5
6.0
9.4%
* From fiscal 2009, the Companies adopt the Accounting Standards Codification No.280, “Segment Reporting.” Accordingly, the fig-
ures of the segment information for fiscal 2008 have been restated to conform with the current year presentation.
* The Company’s business segments have been reclassified from the third quarter of fiscal 2009. The net sales, operating income, and
operating income margin figures from fiscal 2008 have been restated to reflect the new classifications. The figures for fiscal 2006 and
2007 have not been restated.
* Beginning in fiscal 2010, the Omron Group has been revising the management guidance fees for the purpose of concentrating capital
funds at the headquarters in order to reinforce selection and concentration and allocate resources strategically. This inclusion has had
an effect on the operating income of each segment.
* Fiscal 2006-2008 figures for R&D expenses, depreciation and amortization, and capital expenditures have not been modified to reflect
the new segment organization.
* The sales figures given indicate sales to external customers and exclude intersegment transactions. Operating income indicates income includ-
ing internal income prior to the deduction of amounts such as intersegment transactions and head office expenses that are not apportionable.
* The forecast for R&D expenses, depreciation and amortization, and capital expenditures is not publicized.
* The forecast for fiscal 2010 is as of July 28, 2010.
Check it out!
Analysis of external environment
Changes in domestic
electronics market
(blood pressure monitors)
(Billions of yen)
1.8
1.5
1.2
0.9
0.6
0.3
0.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY2008
FY2009
Omron Products
Other Products
Source: GfK
Sales of blood pressure monitors
remained steady through the adverse
conditions in fiscal 2009.
49
Kiichiro Miyata
Executive Officer
President and CEO,
OMRON Healthcare Co., Ltd.
Business Strategy and Outlook for Fiscal 2010
Targeting business expansion in emerging
economies where health awareness is rising
In the HCB segment, we forecast net sales to rise by 0.9%
year on year to ¥64.0 billion and operating income to decline
15.5% to ¥6.0 billion in fiscal 2010. (We forecast a 1.4%
decline in operating income before the subtraction of man-
agement guidance fees, to ¥7.0 billion in fiscal 2010.)
Changing living habits accompanying rising living stan-
dards and the westernization of diets in emerging
economies, such as China, India, and Central and South
America, are leading to an increasing number of patients
suffering from lifestyle-related diseases. Given this trend,
we anticipate ongoing steady growth for the healthcare
equipment market in those regions.
In Japan and other advanced nations, we anticipate the
sluggish private consumption to continue and restrained
investment by medical institutions to produce an ongoing
low level of demand for home-use healthcare devices and
equipment for medical institutions. However, we also
expect the aging of the population in advanced economies
including Japan to lead to increasing attention to disease
prevention.
In this environment, HCB plans to continue develop-
ing innovative equipment based on its “Healthcare at
Home” concept of personal health management, which
allows medical facilities to utilize data measured at home.
In line with this, HCB is developing healthcare devices com-
patible with wireless Bluetooth, FeliCa contactless IC cards,
and other communications technology, and devices that
are compatible with various types of equipment, such as
computers and mobile phones.
Overseas, we plan to actively introduce products
catered to specific local needs in emerging economies
where health consciousness is rising as a strategy to stim-
ulate demand and further strengthen the Company’s
presence in those markets.
S
e
g
m
e
n
t
I
n
f
o
r
m
a
t
i
o
n
What’s New
Launch of environmentally friendly blood pressure
monitors powered by solar energy
In fiscal 2009, HCB launched its solar-powered blood
pressure monitors. Recharged via solar panels
embedded in the back of the device, the monitors
reduce waste by not requiring disposable batteries,
and lower CO2 emissions by using solar energy. The
solar powered devices also reliably function in areas
without electricity and where batteries are not read-
ily available. This capability can be critical for medical
and healthcare management in areas struck by disasters, and HCB donated 500
monitors to areas devastated by the Haiti earthquake in January 2010.
Omron Solar-powered Manual Blood
Pressure Monitor HEM-4500-SOL
The monitors are also used by “Nurses Overseas”* of Japan Heart, a volun-
teer international medical aid group providing medical assistance to children in
Cambodia, Myanmar, and developing countries around the world. HCB will contin-
ue working to meet the challenge of
“contributing to the improvement of the
health of people around the world” by
providing products useful to society.
* Nurses Overseas follows a guiding philosophy of “pro-
viding medical care where medical care is unavailable,”
and actively offers medical services worldwide with
an emphasis on Cambodia, Myanmar, and Nepal.
Omron Blood Pressure Monitor
HEM-7430
The HEM-7430 blood pressure monitor features
three Omron-only functions, including a function
to confirm the cuff is properly wrapped on the
arm, to support accurate
readings in a home setting.
Omron Body Composition Monitor
HBF-375
The HBF-375 Omron body composition monitor
presents data showing measurement changes
in graph form enabling users to instantly see
the results of their diet plans.
The unit also provides indi-
vidual data on the percent-
ages of body fat and skeletal
muscle for the trunk, arms
and legs.
Omron MC-675 Digital Thermometer
Our MC-675 digital thermometer helps ensure
accurate readings by automatically alerting the
user when it slips out of place with a light and
buzzer, which is a particularly helpful feature
when taking the temperature of active children.
50
Segment Infor mation
Other
Environmental Solutions Business, Electronic Systems &
Equipments Business, Backlight Business, Micro Devices Business
Several other business incubation operations under direct control of the Company president
The main objective of operations in the Other segment is to under-
take incubation activities for future business expansion. The backlight
and micro devices businesses were reorganized under the Other seg-
ment in the second half of fiscal 2009.
% of Net Sales
10%
*
* Including “Eliminations and Corporate.”
Fiscal 2009 in Review
Signs of gradual recovery amid a steep drop in income
Net sales in the Other segment declined 17.8% year on
year to ¥41.3 billion, while the operating loss decreased
from ¥7.3 billion in fiscal 2008 to ¥7.0 billion in fiscal 2009.
The sales breakdown for the year was as follows.
Sales in the backlight business were sluggish in line
with low demand for music players. In the micro devices
business, the second quarter brought the start of a recov-
ery in demand for custom integrated circuits (ICs) for both
consumer and industrial applications and an upturn in con-
tract production orders for semiconductors for liquid-crystal
applications. Internal sales of micro devices also began
increasing, including built-in sensors for blood pressure
monitors.
The Environmental Solutions Business posted strong
results for its in-house developed service to contribute to
energy conservation and CO2 emissions reduction, utiliz-
ing its knowledge information control technology, such as
the world’s first “visualization” system that automatically
identifies potential areas for further energy reductions.
At the Electronic Systems & Equipments Division, sales
achieved a modest recovery in the third quarter for the
device business (contract manufacturing and development
of electronic devices) as business conditions improved,
but sales remained sluggish for the PC business (industri-
al embedded computers) and the UPS business
(uninterruptible power supply units).
The operating income performance of the Other seg-
ment is improving year by year. The segment’s overall
operating loss is largely due to equipment maintenance
expenses of the micro devices business.
Other Results and Forecast
Fiscal Year
Net sales*
Domestic
Overseas
North America
Europe
Asia
China
Direct exports
Operating income*
Operating income margin*
R&D expenses
Depreciation and amortization*
Capital expenditures
2006
2007
2008
2009
15.0
14.9
0.1
0.0
0.0
0.0
0.0
0.1
0.4
2.9%
9.7
1.3
3.6
15.6
15.4
0.3
0.0
0.0
0.0
0.0
0.1
0.1
0.6%
8.6
1.7
1.4
50.2
30.5
19.7
0.0
0.0
0.0
17.0
2.7
(7.3)
—
7.5
3.2
1.4
41.3
22.4
18.9
0.0
0.0
0.0
17.5
1.3
(7.0)
—
1.4
1.1
1.0
(Billions of yen)
2010
(Forecast)
46.0
22.5
23.5
0.0
0.0
0.0
21.5
2.0
(6.0)
—
* From fiscal 2009, the Companies adopt the Accounting Standards Codification No.280, “Segment Reporting.” Accordingly, the fig-
ures of the segment information for fiscal 2008 have been restated to conform with the current year presentation.
* The Company’s business segments have been reclassified from the third quarter of fiscal 2009. The net sales, operating income, and
operating income margin figures from fiscal 2008 have been restated to reflect the new classifications. The figures for fiscal 2006 and
2007 have not been restated.
* Beginning in fiscal 2010, the Omron Group has been revising the management guidance fees for the purpose of concentrating capital
funds at the headquarters in order to reinforce selection and concentration and allocate resources strategically. This inclusion has had
an effect on the operating income of each segment.
* Fiscal 2006-2008 figures for R&D expenses, depreciation and amortization, and capital expenditures have not been modified to reflect
the new segment organization.
* The sales figures given indicate sales to external customers and exclude intersegment transactions. Operating income indicates income includ-
ing internal income prior to the deduction of amounts such as intersegment transactions and head office expenses that are not apportionable.
* The forecast for R&D expenses, depreciation and amortization, and capital expenditures is not publicized.
* The forecast for fiscal 2010 is as of July 28, 2010.
Check it out!
Analysis of external environment
Estimated global greenhouse
gas emission volume
(Carbon dioxide: Gt CO2/year)
20
15
10
5
0
Limiting the rise in air temperatures
to less than 2° Celsius requires
maintaining GHG concentrations
below 475 ppm.
1990 2000 2010 2020 2030 2040 2050
Year
Bau (Business as usual)
GHG-475ppm
GHG-500ppm
GHG-550ppm
GHG-650ppm
GHG: Greenhouse gas
Bau: The assumption of no
specific GHG
countermeasures
Source: Ministry of the Environment
Achieving a sustainable society will
require reducing global CO2 emis-
sions levels to at least half the 1990
level by 2050.
51
S
e
g
m
e
n
t
I
n
f
o
r
m
a
t
i
o
n
Business Strategy and Outlook for Fiscal 2010
Establishing foundations for future businesses
In the Other segment, we forecast the posting of an 11.3%
year-on-year increase in net sales, to ¥46.0 billion, and the
recording of a ¥6.0 billion operating loss in fiscal 2010. (We
forecast an operating loss of ¥5.3 billion before the sub-
traction of management guidance fees in fiscal 2010.)
We aim to improve the profitability of the backlight busi-
ness by raising the level of its technical capabilities for
volume production, fortifying its operating bases in China,
and reorganizing its operations to improve business man-
agement efficiency. We plan to expand sales by increasing
the volume of sales to overseas customers and by con-
tinuing to make inroads in low-cost product markets.
The micro devices business will focus on maintaining
the volume of business for key existing IC and MEMS prod-
uct lines and on pursuing collaborations with business part-
ners in the development of new MEMS products.
The Environmental Solutions Business is active in both
the energy-saving and energy-generation business fields,
and will work to grow the CO2 reduction solutions busi-
ness and to establish forward-looking businesses aimed
at realizing a low-carbon society.
The Electronic Systems & Equipments Division, which
aims to establish the PC business, will focus on putting in
place the business infrastructure while undertaking new
product development.
The device and UPS businesses are employing an
aggressive approach in the market to establish a stable vol-
ume of business and enhance the value added to their
business content.
What’s New
Omron follows Energy Conservation Grand Prize
with plans to popularize the world’s first (*1) CO2
visualization system “ene-brain”
Omron and the City of Kyoto Board of Education have been conducting various activ-
ities to reduce energy consumption since 2006, centered on the installation of energy
management systems enabling the real-time visualization of electric power
consumption volume data at some 300 public schools in Kyoto City (including kinder-
gartens, elementary and middle schools, and high schools).
In recognition of these “activities to ‘visualize’ energy usage volume and con-
serve energy at Kyoto municipal schools,” Omron won the “Minister of Economy,
Trade and Industry Award” in the “support services field” in the organizations cat-
egory of the Energy Conservation Prize awards for fiscal 2009.
Omron also developed the “CO2 Visualization System ‘ene-brain’” to automati-
cally analyze areas for improvement in reducing energy consumption. Omron began
selling the system in January 2010. The system utilizes Omron’s proprietary knowl-
edge information control technology (*2),
integrating the know-how of expert con-
sultants to analyze energy consumption
data collected by sensors and other
devices for electricity, gas, and other ener-
gy sources, and to automatically identify
areas where further reduction is possible.
We plan to aggressively develop applica-
tions centered on the system using
Omron’s extensive lineup of energy meas-
urement instruments and sensor networks.
*1. Omron research (as of December 10, 2009)
*2. Knowledge information control technology incorporates human know-how, knowledge, experience, and
other elements into algorithms for computer processing.
Sheet-type Backlights for
Liquid-crystal Applications
Omron’s groundbreaking sheet-type backlights
are brighter, consume less
energy, and at 0.59 mm, are
about two-thirds thinner than
existing backlights, offering
enhanced
(the
sheets can be used bent).
flexibility
RF MEMS Switches
Omron created the world’s smallest packaged
MEMS chip that realizes high radio frequency
(RF) transmissions of 10 GHz and reliable execu-
tion of over 100 million On/Off switches.
Frantio Platform Solutions
Frantio Platform Solutions incorporate Intel
architecture and FPGA* to enhance the devel-
opment efficiency for embedded devices.
* Field Programmable Gate Array (FPGA) is a semi-
customizable integrated circuit (IC) designed to
be configured by the user, which provides the
advantages of “shorter development periods and
re-programming capability.”
52
Intellec tual Pr oper ty Str ategy
The Intellectual Property Center cultivates high-value technical assets to boost the Group’s competitive strength,
enhances the effectiveness of the Group’s investment in research and development, and contributes to raising the
success rate of the Group’s business activities. Serving as a bridge between the Group’s technology and business
operations, the Center contributes to enhancing the profitability and promoting the growth of the Omron Group.
The Center plays a crucial role in technology management, carrying out activities that will enable the Omron Group
to continue maximizing its corporate value over the long term.
Patent Applications and Approvals in the United States
Patent Applications in China
178
169
163
157
132
127
119
88
82
99
83
77 81
62
44
200
150
137
100
50
0
200
150
100
50
0
162
160
150
142
120
105
73
79
02
03
04
05
06
07
08
09
(FY)
02
03
04
05
06
07
08
09
(FY)
Applications
Approvals
Applications
Intellectual Property Activities Contributing to Business
The Intellectual Property Center invests in intellectual prop-
erty focused on core business themes with the objective
of contributing to business through the efficient and effec-
tive use of limited management resources. Investments
are made from the immediate perspective of fortifying cur-
rent core businesses and from the long-term perspective
of advancing in the direction of next-generation techno-
logical innovation to ensure that the core businesses will
remain vital in the future.
Investment target areas are selected using rigorous
reviews of the investment effects and follow a policy of
focusing necessary investment in areas determined to be
absolutely essential, such as to reduce business risks and
improve business positioning.
The Center also conducts identification and analysis of
technological trends in new markets, such as the devel-
oping energy market, to ensure we are fully prepared “to
create an Omron-style business using fundamental Omron
technology” and respond swiftly to business opportuni-
ties that may appear when the markets begin expanding.
The Center conducts operations that contribute to the
maximization of the results of developmental investment
by strengthening the Group’s internal coordination and abil-
ity to respond to rapidly changing market conditions. This
is done by looking at the Group’s fundamental technolo-
gies through a larger framework and by firmly incorporating
them into each business unit’s operations. The Center is
a key component for supporting the growth of Omron’s
business value over the long term.
Intellectual Property and R&D-related Data
Promoting Globalization of Intellectual Property
Capabilities
The globalization of our intellectual property has been
advancing ahead of the Omron Group’s global business
development.
In China, we have expanded both our production and
development capabilities and are establishing intellectual
property functions to support localized innovation. With
the aim of greatly enhancing our intellectual property capa-
bilities in China, we are also providing intensive training for
Chinese staff to cultivate local intellectual property man-
agement and specialist staff. Similar training and staff
development programs are being conducted at local sub-
sidiaries in the United States.
We are also laying the foundation for future intellectu-
al property management in other newly industrializing
economies with the potential for rapid market expansion,
and are currently creating a structure that will enable ini-
tial control from within Japan.
We are making steady progress fortifying our founda-
tion for global intellectual property capabilities through the
active cultivation of staff capable of providing significant
contributions to the Group’s intellectual property at our
global operating sites. We are also establishing an intel-
lectual property management system and reducing
intellectual property risks to achieve results that are key
components of strong global intellectual capabilities.
Fiscal Year
Number of patents
Applications
Approvals
Total patents
R&D expenses (billions of yen)
Sales/R&D expense ratio
R&D staff (number of employees)
2005
2006
2007
2008
2009
1,509
705
4,538
50.5
8.1%
1,591
1,300
836
5,206
52.0
7.1%
1,630
1,255
943
5,717
51.5
6.7%
1,622
1,119
826
5,205
48.9
7.7%
1,509
794
730
5,218
37.8
7.2%
1,449
Cor por ate Gover nanc e, Complianc e, and Risk Management
53
Omron is committed to maintaining and exercising a proper governance system while increasing
management transparency. To firmly establish a high standard of corporate ethics, we will continue to
enhance our compliance system and strengthen a risk management framework that supports ongoing
improvement in corporate value.
Corporate Governance
Fumio Tateisi
Director and Executive Vice Chairman
An Inter view with the Vic e Chair man
on Omr on’s Cor por ate Gover nanc e
The Omron Principles serve as a “lighthouse”
that both illuminates and guides the Group’s
operations day and night, 24 hours a day,
365 days a year.
——— What are the Corporate Motto and the corporate
philosophy that underpin Omron’s corporate gover-
nance?
Omron was established in 1933, and its Corporate Motto
was created about 50 years ago, in 1959. It was Omron
founder, Kazuma Tateisi, who came up with our current
Corporate Motto.
Corporate Motto: “At work for a better life, a better
world for all.”
At the risk of sounding arrogant, way back in 1959 Omron’s
founder apparently already recognized the significance of
corporate social responsibility (CSR), corporate governance,
and returning profits to society—concepts that are con-
sidered important today.
We established the Omron Principles in 1990 based
on the spirit of our Corporate Motto. They were amend-
ed slightly in 1998, and revised on May 10, 2006 (on the
occasion of Omron’s anniversary) to the principles we
adhere to today.
Value, Management Principles, Management Commitments,
and Guiding Principles for Action. The Corporate Core Value
is “Working for the benefit of society,” while the three
Management Principles are “Challenging ourselves to
always do better,” “Innovation driven by social needs,”
and “Respect for humanity.” Adhering to our Management
Commitments, we aim to conduct fair and transparent
operations while maintaining an honest dialogue and build-
ing a relationship of trust with all stakeholders.
——— What features of Omron’s management struc-
ture come under the domain of corporate governance
initiatives?
Around 1999, when the world had already entered the age
of global “mega-competition,” there was growing demand
in society for companies to strengthen their corporate gov-
ernance. As a global corporation, Omron too had to
establish some sort of governance system to accommo-
date capital markets. We also had to increase our corporate
competitiveness and conduct our business operations in
a highly transparent manner.
The Omron Principles consist of our Corporate Core
In 1999, we introduced an executive officer system and
I
n
t
e
l
l
e
c
t
u
a
l
P
r
o
p
e
r
t
y
S
t
r
a
t
e
g
y
/
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
,
C
o
m
p
l
i
a
n
c
e
,
i
a
n
d
R
s
k
M
a
n
a
g
e
m
e
n
t
54
Cor por ate Gover nanc e, Complianc e, and Risk Management
reduced the number of directors from 30 to 7 in order to
raise the level of corporate governance. Since then, we have
made considerable changes to the governance structure.
At present we have two outside directors. We have
segregated management oversight and business execu-
tion functions, so that directors (excluding the president)
do not execute business. This enhances the transparency
and objectivity of decision-making by management.
Omron has a Board of Corporate Auditors. Under our
governance system, the Board of Directors supervises and
monitors business execution, while the Board of Corporate
Auditors fulfills an auditing function. Moreover, we have incor-
porated the best elements of corporate governance carried
out by companies that operate under a committee system.
Omron strives to raise management fairness and
transparency through its hybrid form of governance sys-
tem, which has four advisory committees: Personnel
Advisory Committee, President & CEO Selection Advisory
Committee, Compensation Advisory Committee, and
Corporate Governance Committee. As in a company that
maintains a committee system, we appoint external direc-
tors to the position of chairman of these four advisory
committees. Corporate auditors are tasked with auditing
the Company’s accounts and legal compliance. Omron’s
Corporate Governance Initiatives
1999
2003
2010
President
1987~ President Yoshio Tateisi
(member of founding family)
2003~ President Hisao Sakuta
(not member of founding family)
Chairman of the Board
of Directors/CEO
President serves as Board of Directors’
Chairman and CEO
Chairman serves as Board of Directors’ Chairman/President
serves as CEO
Separation of
management oversight
and business execution
30 directors
1999~ Number of directors reduced to seven (including external directors)
1999~ Introduction of executive officer system
Advisory board
1999
Advisory Board
External directors
2001
One
member
2003~ Two members (seven directors)
External corporate
auditors
1998
One
member
1999~ Two members
2003~ Three members (four auditors)
Internal company
system/spin-offs
1999
Number of
companies: 5
6
5
4
3
Industrial Automation Company
Electronic Components Company
Social Systems Company
Healthcare Company
Creative Service Company
2003> Spin-off of the healthcare business
2003> Spin-off of the relay business
2004> Establishment of an ATM joint venture
company with Hitachi
2004> Spin-off of the amusement business
2007> Entertainment business
becomes an independent
business
2010> Spin-off of the automotive
electronic components
business
2010> Switch company formed
through a spin-off and merger
1996~ Management Personnel
Advisory Committee
2000~ Personnel Advisory Committee
Advisory committees
2003~ Compensation Advisory Committee
Automotive Electronic Components Company
Corporate
philosophy
Corporate
Motto
formulated
in 1959
Omron Principles
formulated in 1990
Revised in 1998
2006~ President & CEO Selection Advisory Committee
2008~ Corporate Governance Committee
Revised in 2006
Heart and unifying force: Founder and founding family ⇒ The Omron Principles
55
governance system requires that the corporate auditors
meet with the president four times a year and with the
other directors once a year.
——— How are the management and supervisory roles
shared between the five internal directors?
From fiscal 1987 through fiscal 2002, Yoshio Tateisi,
Omron’s current Chairman, served as President, as well
as Chairman of the Board of Directors and Chief Executive
Officer (CEO). However, when Hisao Sakuta, who is not a
member of Omron’s founding family, was appointed
President in fiscal 2003, the Chairman took on the role of
chairing the Board of Directors, and the President took on
the role of CEO, thereby separating the two roles.
Internal directors who do not hold the position of
President or Chairman (that is, myself as Vice Chairman
and the two Vice Presidents) are not involved in business
execution. We monitor and supervise the management
of the Company from a stakeholder’s perspective as a
member of the Board. The two Vice Presidents and I
attend the Executive Council as observers in order to mon-
itor the activities of the executive officers. The purpose
of our attendance at these meetings is to avoid a situa-
tion at Board of Directors’ meetings where the President,
through his role as head of business execution, is in pos-
session of all the information while the other directors
have no information at all.
——— What functions do the external directors fulfill?
The external directors attend monthly Board of Directors’
meetings and directors’ liaison meetings. At these meet-
ings, they adopt an outside perspective from which they
monitor whether or not the directors are functioning prop-
erly as representatives of the Company’s shareholders
and all other stakeholders. The external directors also
monitor the entire process related to formulation and
implementation of management strategies, such as the
formulation of the long-term vision and medium-term man-
agement plans.
——— What do you think about the “independent offi-
cers” which must be registered from fiscal 2010?
At Omron, we consider external directors and external cor-
porate auditors to be “external officers.”
The Company’s Personnel Advisory Committee for-
mulated our in-house developed “External Officer Eligibility
Criteria” for the selection of “external officers” while refer-
ring to criteria for independence defined by a range of
institutions. We then adopted such criteria following the
passing of a resolution by the Board of Directors. According
to these criteria, an external officer cannot have been a
representative or employee of the Omron Group’s inde-
pendent auditor for a five-year period prior to nomination;
a director, auditor, executive officer and/or employee of
any principal shareholder of the Omron Group; or a director,
auditor, executive officer and/or employee of any of
Omron’s principal partners or suppliers. The Personnel
Advisory Committee then selects candidates who meet
these criteria as external officers.
In order to register each external officer as an independ-
ent officer with the Tokyo Stock Exchange, the Corporate
Governance Committee, which is composed solely of out-
side directors and corporate auditors, met and deliberated
this issue in January 2010. The Committee determined
that our “External Officer Eligibility Criteria” complied with
the Tokyo Stock Exchange’s definition of an independent
officer, and consulted the Board of Directors on the regis-
tering of all external officers as “independent officers.” At
a Board of Directors’ meeting held in February 2010, the
Board passed a resolution making all external officers inde-
pendent officers, and registered them with the Tokyo Stock
Exchange and the Osaka Securities Exchange. Details were
also disclosed in a Corporate Governance report.
——— What are your thoughts on Omron’s future sys-
tem of corporate governance?
Omron’s founder used to be the heart and unifying force
of the Company, and the role was subsequently taken over
by his family. However, in fiscal 2003 a person not related
to the Tateisi family was appointed president for the first
time. This was followed by the gradual devolution of author-
ity and rapid globalization of the Company. As a result,
overseas employees came to comprise two-thirds of
Omron’s total workforce. These changes have contributed
to a diversification in values within the Omron Group. Amid
such transformation, Yoshio Tateisi, who is Representative
Director and Chairman, declared on May 10, 2006 (on the
occasion of the Company’s anniversary) that in order to
establish steadfast corporate governance, “Omron’s heart
and unifying force should be transferred from its founder
and founding family to the Omron Principles.” Since then,
we have endeavored to enhance corporate governance
with the Omron Principles as the heart and unifying force
of the Omron Group.
Omron’s creation of a hybrid form of corporate gover-
nance is a distinct feature, as is basing our corporate
governance system on the Omron Principles that serve as
the Company’s heart and unifying force as I just mentioned.
In fact, a strong employee awareness of these principles
has become an Omron tradition.
I often use the analogy of a “lighthouse” for the Omron
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
,
C
o
m
p
l
i
a
n
c
e
,
i
a
n
d
R
s
k
M
a
n
a
g
e
m
e
n
t
56
Cor por ate Gover nanc e, Complianc e, and Risk Management
leads to the improvement of the Company’s global com-
petitiveness. We operate with a Board of Corporate
Auditors, and since the separation of management over-
sight and business execution in fiscal 2003, the Executive
Council has decided important business matters. This has
increased the speed at which we can respond to changes
in the global environment.
With respect to management policy and strategy, we
value the monitoring function of outside directors when it
comes to ensuring that the common sense of the Company
does not go against the common sense of society at large.
For this reason, we adopt Group-wide management with
the aim of improving global competitiveness while having
the outside directors monitor the formulation of each medi-
um-term management plan and the formulation and
implementation of management strategies, in addition to
participating in discussions on the Company’s long-term
management vision. Even here, the philosophy behind the
Omron Principles exerts a considerable underlying influence.
Principles when talking to people within the Company. I
believe that the Omron Principles serve as a lighthouse that
illuminates and steers the operations of the Group on their
correct course day and night, 24 hours a day, 365 days a year.
When thinking of the further enhancement of corpo-
rate governance, a major requirement should be that it
Corporate Governance Structure
Shareholders Meeting
Board of Corporate Auditors
Board of Directors
Chairman: Chairman of the BOD
Board of Corporate Auditors Office
Board of Directors Office
Independent Auditor
Executive Organization
President & CEO
Executive Council
Personnel Advisory Committee
President & CEO Selection Advisory Committee
Compensation Advisory Committee
Corporate Governance Committee
Group CSR Committee
Head office divisions
Business companies (Internal companies)
Corporate Internal Auditing HQ
Board of Directors (BOD)
The BOD decides important busi-
ness matters such as company
objectives and management strate-
gies, while overseeing business
practices.
Corporate Governance
Committee
Chaired by an outside director, this
committee discusses measures to
continuously enhance corporate gov-
ernance and increase fairness and
transparency in management.
Board of Corporate Auditors
This board verifies the effective-
ness of the corporate governance
system and its implementation,
while also monitoring the day-to-
day operations of executives
including directors. The board con-
sists of four corporate auditors,
three of whom are outside auditors.
President & CEO Selection
Advisory Committee
Chaired by an external director, this
committee, dedicated to nomination
of Presidents, deliberates on selec-
tion of the new President for the
next term and a succession plan in
preparation for a contingency.
Personnel Advisory Committee
This committee, chaired by an
outside director, sets election
standards for directors, corporate
auditors, and executive officers,
selects candidates, and evaluates
current executives.
Compensation Advisory
Committee
Chaired by an external director, this
committee determines the compen-
sation structure for directors,
corporate auditors, and executive
officers, sets evaluation standards,
and evaluates current executives.
Executive Council
This council determines and reviews
important business operation mat-
ters that are within the scope of
authority of the President.
57
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
,
C
o
m
p
l
i
a
n
c
e
,
i
a
n
d
R
s
k
M
a
n
a
g
e
m
e
n
t
Comment from the
Chairman of the
Corporate Governance
Committee
Kazuhiko Toyama, External Director
Kazuhiko Toyama has previously held positions at The Boston Consulting
Group K.K. He also helped found and later served as President and
Representative Director of Corporate Directions, Inc., Japan’s first inde-
pendent management strategy consultancy, which successfully turned
around 41 domestic companies. In 2003, Mr. Toyama was appointed
Executive Managing Director and COO of the Industrial Revitalization
Corporation of Japan at its inception. In April 2007, he founded Industrial
Growth Platform, Inc., which provides management support services focused
on realizing long-term sustainable business operations and elevating corpo-
rate value, and assumed the role of CEO and Representative Director.
The Lehman Shock in 2008 did not leave Omron unscathed,
as it caused a decline in net sales. At this time of crisis,
when taking the wrong course would have had dire con-
sequences, the Company’s corporate governance came
under the severest scrutiny. As a company whose line of
business is closely related to capital investment, Omron
and others like it suffered most of all from the economic
downturn. By devising countermeasures comparatively
quickly, however, we surmounted the crisis and our per-
formance has since recovered rapidly. In many senses, we
can attribute our recovery to the appropriate functioning
of our corporate governance system.
When resolving an issue involving an important man-
agement-related matter, the issue at hand can affect the
way that one person relates with another. If things get
complicated, therefore, there is no end to how complicat-
Director and Corporate Auditor Remuneration
ed they can become. In Omron’s case, we have the
Corporate Motto and the Omron Principles to fall back onto
if needed. Quite a number of companies have their own
corporate philosophy, but their philosophy is not well under-
stood or shared by all employees. Nothing could be further
from the truth at Omron, where the Omron Principles are
shared Group-wide. When confronted with all sorts of sit-
uations, Omron has the advantage of being able to rely on
the spirit of the Omron Principles to help it make decisions.
Surmounting the recent crisis has enhanced my aware-
ness of the importance of the Omron Principles and corporate
motto. From now on, I believe that the Corporate Governance
Committee, of which I am Chairman, will adopt a similar per-
spective when addressing various issues.
Remuneration for directors and corporate auditors is delib-
erated by the Compensation Advisory Committee, which
is chaired by an outside director to ensure objectivity and
increase transparency, and the committee’s recommen-
dations are submitted for consideration. After consideration
of the recommendations, remuneration amounts for indi-
vidual directors are determined by the resolution of the
Board of Directors and those for corporate auditors are
determined by consent of the corporate auditors within
the scope of the total amount for remunerations for direc-
tors and corporate auditors established by resolution of
the General Meeting of Shareholders.
Fiscal 2009 Director and Corporate Auditor Remuneration
(Millions of yen)
Number of People
Basic Compensation
Bonus
Total Remuneration
Directors
(External Directors)
Corporate Auditors
(External Auditors)
Total
7
(2)
5
(3)
12
369
(20)
77
(46)
446
61
(—)
—
(—)
61
430
(20)
77
(46)
507
• Director compensation consists of basic compensation (monthly salary), bonus, and stock-based compensation*.
• Outside director compensation consists of basic compensation (monthly salary).
• Corporate auditor compensation consists of basic compensation (monthly salary).
* Stock-based compensation is administered following guidelines specifying set remuneration amounts to be paid on a monthly basis and utilized to acquire Company
stock (through a director stock ownership plan), which is then held during the individual’s tenure.
58
Cor por ate Gover nanc e, Complianc e, and Risk Management
Internal Controls
Ensuring healthy and effective
organizational operation
Omron has established the “Basic Policy on the Maintenance
of an Internal Control System” to ensure the healthy and
effective operation of its organization. This Basic Policy
provides the basis for the maintenance and operation of
an internal control system throughout the Omron Group
to ensure the controls are functioning effectively in each
of the four objective areas of financial report accuracy, legal
compliance, operating efficiency, and asset safeguarding.
Regarding the Internal Control Reporting System (the
so-called J-SOX) requirements of the Financial Instruments
and Exchange Act promulgated in June 2006, Omron main-
tains a system for an internal audit department to monitor
the outcomes of in-house inspections of the maintenance
and operation of the business processes of each division
and each affiliated company. The in-house inspections help
each division and affiliated company to deepen its under-
standing of the internal controls associated with financial
reporting, and thereby serve as a system for promoting
self-governing controls.
Compliance
Fortifying against risk from changes in the internal
and external environment
The Omron Group has established the Group Corporate
Ethical Conduct Promotion Committee, comprised of mem-
bers from the head office and each business company,
under the Group CSR Committee as part of its organiza-
tional structure to promote compliance activities throughout
the Group. The Group Corporate Ethical Conduct Promotion
Committee convened three times in fiscal 2009 to delib-
erate such issues as corporate ethics activities to improve
the Group’s capabilities for responding to risk. Initiatives
implemented based on the committee’s decisions includ-
ed the revision and standardization of the Group’s methods
of risk analysis and the formulation of an employee ethics
education system.
In addition, for affiliated companies in Japan, the
Company appointed corporate ethics promotion officers
selected from management or higher positions to be
responsible for implementing compliance education at each
company. The Company also holds an annual Meeting of
Corporate Ethics Promotion Officers, in which all members
of the committee participate. At this meeting, participants
undergo training and exchange information, such as on the
implementation status of PDCA cycle activities that are part
of action plans.
In the future, we plan to continue and strengthen the
activities of the committee to enhance the Group’s ability
Two types of audits to ensure healthy and effective
organizational operation
Omron conducts two types of audits to ensure the healthy
and effective operation of its organization. The Internal
Control Comprehensive Audit is conducted to ensure that
the internal controls are functioning effectively in each of
the four objective areas of financial report accuracy, legal
compliance, operating efficiency, and asset safeguarding.
The Management Audit examines the solutions and improve-
ment measures implemented for specific management
issues. In the event that the result of these audits includes
items recommended for improvement, the Company sup-
ports measures to complete the improvements.
In addition, the Omron Group has established a
Corporate Auditor Office and placed full-time auditors in
each of its four regions of global business (North America,
Europe, Asia Pacific, and Greater China) to implement inter-
nal audits based on local practices and legal systems at its
business sites worldwide.
for early detection and common awareness of risk that aris-
es from changes in external conditions, such as in laws
and regulations, or from changes in internal conditions,
such as from new business activities or business expan-
sion into emerging countries.
Overseas, the Company appointed corporate ethics
promotion officers in the Greater China region in 2006 and
in the Asia-Pacific region in 2008. We are also establishing
a comprehensive compliance system in the Americas,
including appointing a Compliance Officer responsible for
promoting corporate ethics.
Hotline with clarified rules for
whistle-blower protection
In Japan and North America, a whistle-blower hotline is in
place inside and outside of the Company for use by Omron
Group executives, full-time employees and temporary staff,
as well as their families. The internal hotlines link to the
Legal Affairs Department, and the external hotlines link to
the offices of external attorneys. Reporting may be carried
out by telephone or email. In Japan, beginning in fiscal
2008, reporting and consultation may also be conducted
via an Intranet electronic bulletin board.
In fiscal 2009, a total of 17 hotline contacts for report-
ing and consultation were made in Japan and four in North
America. The greatest number of contacts in Japan sought
advice regarding how to create a workplace environment
59
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
,
C
o
m
p
l
i
a
n
c
e
,
i
a
n
d
R
s
k
M
a
n
a
g
e
m
e
n
t
where labor standards and diversity are both respected
(there were 12 inquiries in total).
Clear rules of usage have been established for the inter-
nal whistle-blower hotline to ensure strict confidentiality
and make sure that these individuals are not treated unfair-
ly for having taken action. In addition, employees are
provided with a corporate ethics card and are made aware
of the existence of the hotline via the Company’s Intranet
system, during new employee training sessions, and at
other opportunities.
Omron will continue to keep employees informed about
the system and to implement measures to realize an effec-
tive system for responding to whistle-blowers’ reports.
Applying the PDCA cycle for constantly improving
information security management
Omron constantly endeavors to fortify its information secu-
rity following its basic policy of fulfilling its responsibility
to all stakeholders through the appropriate handling of infor-
mation received from business associates, personal
information, and its own company information.
In fiscal 2007, the Company formed the Information
Security Management Committee to fortify its integrated
management system for confidential information and per-
sonal information, and formulated management rules shaped
by the basic policy. The Company has since followed a
schedule in Japan of annual employee education sessions
and monitoring of workplace management conditions.
Risk Management
The Company established the Omron Crisis Management
Rules (established 1999, amended June 2009) to ensure
all employees can act promptly and accurately when a cri-
sis occurs to minimize damage, facilitate the continuity and
early restoration of business operations, and prevent recur-
rence. In fiscal 2009, the Company’s crisis simulation
exercises, which had previously been held at the Company,
were extended to affiliated companies in Japan.
Moreover, the Company expanded its information secu-
rity activities to include the implementation of measures
in response to leak risk analysis for critical information and
the investigation of information security management con-
ditions at subcontractor sites. In addition, the Company
continuously reviews management rules based on changes
in the external environment and results of worksite moni-
toring, such as adding rules to minimize the risk of
information leaks via mobile phones.
In this way, the Company is conducting information secu-
rity management activities using the PDCA cycle group-wide
under its information security management promotion sys-
tem, centered on the Information Security Management
Committee.
In fiscal 2007, the Company also established common
rules for information security in its overseas operations
and continues to institute rules suited to specific condi-
tions in each overseas regional group. As of the end of
fiscal 2009, the majority of Omron’s overseas affiliated
companies were fully enforcing the rules.
Omron will continue to apply the PDCA cycle approach
group-wide in Japan to constantly improve its information
security management. Overseas, we will seek to estab-
lish rules at all affiliated companies, begin the provision of
information security education and also start conducting
risk analysis.
In addition, the Company created the “Omron Group
Crisis Response (First Action) Manual” using information
accumulated from case studies and observations during
crisis-response exercises to provide guidelines for the oper-
ation of an emergency response headquarters when a crisis
event occurs.
Basic Policies Stipulated in Omron’s Crisis Management Rules
1. Place human life and personal safety at the top of the list of priorities.
2. Give high priority to legal/regulatory compliance and respect for social rules.
3. Minimize the negative impact of crises on customers and society.
4. Curtail the negative impact of crises on Omron’s business and strive to ensure smooth continuation and
quick restoration of business operations.
5. Take necessary measures in a sincere and consistent manner.
6. Disclose information appropriately and remain accountable.
60
Cor por ate Soc ial Responsibility (CSR)
Actively practicing the Omron Principles is an integral part of fulfilling our corporate social responsibility.
CSR is a fundamental aspect of our management strategy, and we accordingly have set specific objectives
for our CSR.
Working for the Benefit of Society
We place the corporate core value of “Working for the ben-
efit of society” at the highest level in the Omron Principles.
This core value reflects our belief that a company exists to
provide value to society, and it is only by fulfilling societal
expectations that we can earn society’s trust as a good
corporate citizen and be allowed to continue to exist. It is
also a declaration of our conducting operations giving due
consideration to the stakeholders that make up society.
CSR Basic Policies
The long-term management vision GD2010 that will cul-
minate in fiscal 2010 places the Company’s involvement
in society at the forefront and outlines three aspects of
our social participation: 1. Contributing to a better socie-
ty through business operations; 2. Always demonstrating
fairness and integrity in our corporate activities; and 3.
Showing a commitment to addressing societal issues as
a concerned party. We are diligently and conscientious-
ly reviewing and addressing issues as we set specific
objectives and exercise CSR management with a view to
enhancing the Company’s long-term corporate value.
CSR Management System
Omron is working to strengthen its global CSR manage-
ment system in line with its belief in the importance of CSR
in its management strategies and of fulfilling its CSR obli-
gations through its business operations.
Omron established the Group CSR Committee at the
end of fiscal 2007 to enable management to assess the
Group’s overall CSR status and identify CSR issues, and
show the direction of the Group’s CSR activities. Chaired
by the president and comprised of presidents of the
b u s iness companies, general managers of head office
administrative divisions, and presidents of overseas
regional group head offices, the committee’s main tasks
include formulating the Omron Group’s CSR policy and
strategies and promoting and monitoring CSR activities
in key areas. The business companies and head office
administrative divisions, including the environment depart-
ment and the legal affairs department, are responsible for
putting into action the policies and strategies determined
by the committee.
Assessment of CSR Performance Conditions at
Global Production Bases
In fiscal 2008, Omron responded to society’s increasing
demand for CSR by creating an assessment question sheet
for self-analysis based on the assessment questions of the
Electronics Industry Code of Conduct (EICC)* to assess
the progress conditions of CSR at the Company’s produc-
tion bases.
In fiscal 2009, CSR assessments were conducted at
three production bases in the Greater China region and
two in the Asia-Pacific region as well as at three suppliers
in the Greater China region, enabling centralized purchas-
ing. The assessments found no significant areas of concern
and, even when compared to other suppliers and similar
companies in the local area, no specific points requiring
improvement. In each region, we plan to deepen employ-
ee understanding of personal rights issues by conducting
CSR training for administrators and CSR managers and
other activities along with continuous monitoring to ensure
steady improvement in labor management.
* Electronics Industry Code of Conduct (EICC): CSR practices of the world’s leading
electronics companies and their suppliers
CSR Management Structure
CSR Management Dept.
Chair: President
Group CSR Committee
President
[Covered Areas]
CSR Policies/Strategies, Corporate Ethics,
Human Rights/Labor Practices, Environment,
CSR Procurement, Information Disclosure, etc
Presidents of
Internal Companies
Head Office Division
General Managers
Regional Group
Head Office Presidents
Issue-specific
Promotion Committees
CSR Managers
of Internal Companies
CSR Promotion Teams
of Internal Companies
Specialized
Committees
Business Divisions
Head Office Divisions
CSR Managers
Japanese Group Companies
Support
Overseas Group Companies
61
CSR through Business Activities: Targets and Results
GD 3rd Stage (FY2008–10) focus activities/targets
Seeking to create products and services that contribute to solving social issues with a focus on the four areas of “safety,
security, health, and the environment.”
*Rating: Self-assessment was conducted to comprehensively evaluate the progress of activities, including the degree of achievement of the Grand Design 2010,
3rd Stage (FY2008-10) targets, degree of global progress, external evaluations, and relative comparison with other companies.
More progress than initially expected
Progress
Needs more effort
FY2009 results
Rating*
FY2010 policy/targets
Safety and Security (Products/services for various sectors of society)
Ensuring safety and security for production sites
Promoted safety businesses (by providing various safety sensors) to maintain safety at pro-
duction sites worldwide.
• Considered expanding the machinery and equipment safety service in operation at North
American sites to the Asian and European regions.
• Assessments were conducted at pilot customer sites, but the service was not started on a
global scale.
Toward a safer, more secure society
Promoted the social sensor solutions business, which contributes to the safety and security
of society in the four domains of train stations, roads, industry and commerce.
• Commenced deliveries of the misplaced vehicle detection system.
• External factors caused the postponement of the Driving Safety Support Systems (DSSS)
demonstration tests, and results verification was not achieved.
Embedding safety and security equipment in personal computers
Implemented and organized a common platform, standardization, and options for RAS sensing
technology enhancing reliability, availability, and serviceability of industrial-use electronic
devices using computer technology; integrated into new products; and commenced marketing.
Health (Products/services supporting lifestyle disease prevention/treatment)
Offered globally home and professional use products and services that help in the prevention,
treatment, and management of lifestyle diseases.
• Increased the number of countries where digital blood pressure monitors are sold and
expanded annual production volume.
• Number of countries: 107 (as of February 2010)
• Annual number of blood pressure monitors produced: See link
www.healthcare.omron.co.jp/english/factory.html
Environment (Products/services supporting a low-carbon society)
Environmental solutions
Promoted the CO2 reduction solutions business to help companies prevent global warming.
• Achieved average CO2 emissions reduction rate of over 10% (value basis) at 10 client com-
pany sites employing Omron solutions.
• Conducted in-house verification tests for further CO2 emissions reductions at four sites.
Environmental components business
• Contributed to reducing CO2 by expanding the solar power conditioner (*1) business relat-
ed to new energy sources.
Year-on-year business growth: 330% (on a domestic unit sales basis)
• Particle sensors (*2) to measure environmental cleanliness of production sites: Launched
sales of two air sensor models that measure air temperature and humidity. Strong interest
for environmental management applications at rechargeable battery manufacturers, with
domestic unit sales up 126% year on year, from fiscal 2008.
• Provided electricity leakage sensors and cell monitoring units (which are used as the bat-
tery management systems for the next-generation electric vehicles) in the i-MiEV of
Mitsubishi Motors.
*1 A solar power conditioner converts DC power from solar panels to home-use AC power, and sends it to the
power supply network of a commercial electric company.
*2 A particle sensor enables high-precision monitoring of airborne particles.
Ensuring safety and security for production sites
Continue seeking to upgrade control systems to provide flexible
total safety control from input to output.
Develop next-generation platforms for total safety systems that
boost both capacity utilization rates and safety.
Toward safer, more secure road transportation
Introduce entry detection systems for highways and other traffic
infrastructure.
Conduct the Driving Safety Support Systems (DSSS) demon-
stration tests with automakers and verify the results.
Embedding safety and security equipment in personal
computers
Continue R&D of common platforms, standardization, and options
for RAS sensing technology and expanding the range of prod-
ucts employing the technology.
Aim to increase sales by meeting needs in emerging and growth
countries.
C
o
r
p
o
r
a
t
e
S
o
c
i
a
l
R
e
s
p
o
n
s
b
i
i
l
i
t
y
(
C
S
R
)
Environmental solutions
Formulate a business model for the advent of “the Smart
Communities Society.”
• Participate in and verify the results of the government’s
demonstration tests for a Japanese smart grid.
Environmental components business
• Advance the environmental components business by releas-
ing new solar power conditioner units and related products.
• Introduce and promote solar power generation systems through
proliferation of Anti-Islanding Control Technology (AICOT).
• Increase to five types of control products that measure and control
environmental conditions following the dual concept of “com-
plete environment visualization” and “energy conservation.”
• Develop products to support proliferation of electric vehicles.
Inclusion in International SRI Indices
Omron’s CSR activities have received high praise from
around the world, and the Company’s shares are included
in two major socially responsible investment (SRI) indices
(*1): the Morningstar Socially Responsible Investment
Index (*2) and the Ethibel Sustainability Index (*3). Omron
is also included in several SRI and eco funds (*4) such as
the Corporate Governance Fund set up by Japan’s Pension
Fund Association. Since fiscal 2008, Omron has also been
included in the SRI trust of ASN Bank, the largest SRI-only
bank in the Netherlands (as of March 31, 2010).
*1 SRI Index
An SRI index refers to an index for social
responsibility investment wherein a com-
pany’s corporate social responsibility (CSR)
is a key criterion for investment along with
its financial performance.
*2 Morningstar Socially Responsible
Investment Index
The Morningstar Socially Responsible
Investment Index is an SRI index com-
prised exclusively of Japanese companies.
*3 Ethibel Sustainability Index
The Ethibel Sustainability Index includes
companies evaluated for SRI by the strict
standards of Ethibel, an SRI consulting
agency in Belgium.
*4 Eco Fund
An eco fund is a type of investment trust
that focuses investment on companies
actively engaged in environmental issues.
For more details about Omron’s CSR activities, please see our Sustainability Report 2010 (online edition).
http://www.omron.com/corporate/csr/ (Scheduled for release in October 2010)
62
Dir ector s, Cor por ate Auditor s, and Exec utive Offic ers
As of June 22, 2010
Kazuhiko Toyama
Director (external)
Masamitsu Sakurai
Director (external)
Hisao Sakuta
President and CEO
Yutaka Takigawa
Director and Executive
Vice President
Fumio Tateisi
Director and Executive
Vice Chairman
Yoshio Tateisi
Chairman of the BOD
Keiichiro Akahoshi
Director and Executive
Vice President
Directors
Corporate Auditors
Executive Officers
Chairman of the BOD
Yoshio Tateisi
Soichi Yukawa
Satoshi Ando
Hidero Chimori
Director and
Eisuke Nagatomo
Executive Vice Chairman
Fumio Tateisi
Executive Advisor
Nobuo Tateisi
President and CEO
Hisao Sakuta
Directors and
Executive Vice
Presidents
Keiichiro Akahoshi
Yutaka Takigawa
Directors (external)
Kazuhiko Toyama
Masamitsu Sakurai
Senior Managing Officer
Yoshinobu Morishita
Managing Officers
Koichi lmanaka
Takuji Yamamoto
Yoshinori Suzuki
Kazunobu Amemiya
Yutaka Fujiwara
Akio Sakumiya
Shigeki Fujimoto
Masaki Arao
Yoshihito Yamada
Executive Officers
Tatsunosuke Goto
Yoshisaburo Mogi
Koichi Tada
Kiichiro Kondo
Masahiro ljiri
Masayuki Tsuda
Hideji Ejima
Masaki Teshigahara
Taiji Sogo
Masaki Haruta
Koji Doi
Hisato Takano
Takashi Ikezoe
Kiichiro Miyata
Kiyoshi Yoshikawa
Shizuto Yukumoto
Shinya Yamasaki
Yutaka Miyanaga
Financial Section (U.S. GAAP)
63
Contents
63
64
65
Financial Highlights
Six-year Summary
Fiscal 2009 Management’s
Discussion and Analysis
70 Business and Other Risks
72
Consolidated Balance Sheets
74 Consolidated Statements of
Operations
75 Consolidated Statements of
Comprehensive Income (Loss)
76 Consolidated Statements of
Shareholders’ Equity
77 Consolidated Statements of
Cash Flows
78 Notes to Consolidated
Financial Statements
106
Independent Auditors’ Report
Notes: Financial Highlights, Six-year Financial Summary, Fiscal 2009 Management’s Discussion and Analysis,
and Business and Other Risks are unaudited.
Financial Highlights
Omron Corporation and Subsidiaries
Years ended March 31, 2010, 2009, and 2008
For the year:
Net sales
Income (loss) from continuing operations before income taxes and
equity in loss (earnings) of affiliates
Income (loss) from continuing operations
Net income (loss) attributable to shareholders
Per share data (yen and U.S. dollars):
Income (loss) from continuing operations
Basic
Diluted
Net income (loss) attributable to shareholders
Basic
Diluted
Cash dividends (Note 1)
Millions of yen
(except per share data)
Thousands of
U.S. dollars (Note 2)
(except per
share data)
FY2009
FY2008
FY2007
FY2009
¥ 524,694
¥ 627,190
¥ 762,985
$ 5,641,871
10,195
3,621
3,518
(39,133)
(29,449)
(29,172)
64,166
39,546
42,383
109,624
38,935
37,827
¥ 16.0
16.0
¥ (132.2)
—
¥ 172.5
172.4
$ 0.17
0.17
16.0
16.0
17.0
(132.2)
—
25.0
185.9
185.8
42.0
0.17
0.17
0.18
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
Capital expenditures (cash basis)
Research and development expenses
¥ 20,792
37,842
¥ 37,477
48,899
¥ 37,848
51,520
$ 223,570
406,903
At year end:
Total assets
Total shareholders’ equity
¥ 532,254
306,327
¥ 538,280
298,411
¥ 617,367
368,502
$ 5,723,162
3,293,838
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, 2010 of ¥93 = $1.
64
Six-year Summary
Omron Corporation and Subsidiaries
Years ended March 31
Net sales (Notes 2, 4, 5, 6, 7):
Industrial Automation Business
Electronic and Mechanical Components Business
Automotive Electronic Components Business
Social Systems Solutions Business
Healthcare Business
Other Businesses
Costs and expenses:
Cost of sales
Selling, general and administrative expenses
Research and development expenses
Subsidy from the government
Other expenses (income), net
Income (loss) from continuing operations
before income taxes and equity in
loss (earnings) of affiliates
Income taxes
Equity in loss (earnings) of affiliates
Income (loss) from continuing operations
Income from discontinued operations,
net of tax (Note 3)
Cumulative effect of accounting change, net of tax
Net income (loss)
Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to shareholders
Per share data (yen):
Income (loss) from continuing operations
Millions of yen (except per share data)
FY2009
FY2008
FY2007
FY2006
FY2005
FY2004
¥ 206,197
70,717
75,163
57,981
63,359
51,277
524,694
¥ 271,951
76,494
82,109
72,336
63,592
60,708
627,190
¥ 339,815
100,668
107,521
76,876
71,706
66,399
762,985
¥ 317,735
96,240
93,321
98,707
65,731
52,132
723,866
¥ 280,749
89,607
77,593
86,637
63,029
18,387
616,002
¥ 258,141
93,315
64,558
111,584
50,715
20,414
598,727
340,352
133,426
37,842
—
2,879
514,499
408,668
164,284
48,899
—
44,472
666,323
469,643
176,569
51,520
—
1,087
698,819
445,625
164,167
52,028
—
(2,233)
659,587
383,335
157,909
55,315
(41,339)
(2,724)
552,496
353,429
141,185
49,441
—
2,225
546,280
10,195
3,782
2,792
3,621
—
—
3,621
103
3,518
(39,133)
(10,495)
811
(29,449)
—
—
(29,449)
(277)
(29,172)
64,166
24,272
348
39,546
3,054
—
42,600
217
42,383
64,279
25,595
1,352
37,332
1,186
—
38,518
238
38,280
63,506
26,701
493
36,312
802
(1,201)
35,913
150
35,763
52,447
21,482
1,483
29,482
958
—
30,440
264
30,176
Basic
Diluted
¥ 16.0
16.0
¥ (132.2)
—
¥ 172.5
172.4
¥ 159.8
159.7
¥ 152.8
152.7
¥ 122.5
120.8
Net income (loss) attributable to shareholders
Basic
Diluted
Cash dividends (Note 1)
Capital expenditures (cash basis)
Total assets
Total shareholders’ equity
Value indicators:
Gross profit margin (%)
Income (loss) 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)
16.0
16.0
17.0
¥ 20,792
532,254
306,327
(132.2)
—
25.0
¥ 37,477
538,280
298,411
185.9
185.8
42.0
¥ 37,848
617,367
368,502
165.0
164.9
34.0
¥ 44,689
630,337
382,822
151.1
151.1
30.0
¥ 40,560
589,061
362,937
126.5
124.8
24.0
¥ 38,579
585,429
305,810
35.1
1.9
0.7
1.9
1.2
4.19
135.8
0.98
0.738
22.15
34.8
(6.2)
(4.7)
(6.8)
(8.7)
4.54
(8.7)
1.09
0.804
6.01
38.4
8.4
5.6
10.3
11.3
4.96
10.7
1.22
0.675
44.34
38.4
8.9
5.3
10.5
10.3
5.27
19.1
1.19
0.647
57.82
37.8
10.3
5.8
10.8
10.7
5.34
22.2
1.05
0.623
69.95
41.0
8.8
5.0
8.9
10.4
5.09
18.5
1.02
0.914
52.05
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. As of October 1, 2004, the ATM and other information equipment business that was included in the Social Systems Business was transferred to
an affiliate accounted for using the equity method.
3. In accordance with the Accounting Standards Codification No.360, “Property, Plant and Equipment” (previously Statement of Financial Accounting
Standards No.144, “Accounting for the Impairment of Disposal of Long-Lived Assets”), the figures of the consolidated statements of income for
the prior years related to the discontinued operations have been separately reported from the ongoing operating results to conform with the cur-
rent year presentation. See Note 15 to the consolidated financial statements.
4. From the fiscal year ended March 31, 2010, the Companies adopt the Accounting Standards Codification No.280, “Segment Reporting” (previously
Statement of Financial Accounting Standards No.131, “Disclosures about Segments of an Enterprise and Related Information”) The figures of
the segment information for the prior years have been restated to conform with the current year presentation.
5. On the fiscal year ended March 31, 2010, “Electronic Components Business” was re-formed to “Electronic and Mechanical Components Business.”
6. From the fiscal year ended March 31, 2010, "Social Systems Solutions Business” was changed to “Social Systems Solution and Service Business.”
7. “Other Businesses” includes “Eliminations and Corporate.”
Fiscal 2009 Management's Discussion and Analysis
65
Note: The business divisions are presented using their abbreviated names. Industrial Automation Business (IAB), Electronic & Mechanical Components
Business (EMC), Automotive Electronic Components Business (AEC), Social Systems Solutions Business (SSB), Healthcare Business (HCB).
Market Environment
1. Macroeconomic Environment
The prolonged global recession, the likes of which are said
to occur only once in a 100 years, created extremely severe
business conditions in the first half of fiscal 2009. The glob-
al economy finally started to turn in autumn when the
effects of economic measures implemented in countries
around the world began gradually appearing.
In these conditions, real domestic GDP growth in Japan
slowed to 5.2% shrinkage on a calendar-year basis and a
1.9% fiscal year contraction, marking the second straight
year of negative growth. Nevertheless, this rate of nega-
tive growth slowed from the 3.7% contraction in the
previous fiscal year. The Japanese economy moved into
a gradual recovery trend in the second half, largely driven
by import demand from China, which was among the first
major economies to rally back.
Growth Rates of Real GDP for Each Country/Region (Calendar-year basis)
2008
2009
2010 Estimates
Source: IMF “World Economic Outlook,” July 2010
Note: Fiscal-year basis for figures marked with asterisk (*)
Domestic Macroeconomic Environment
Japan
* -3.7
* -1.9
-1.2
-5.2
2.4
U.S.
0.0
-2.6
3.3
EU
0.6
-4.1
1.0
China
India
Brazil
Total
9.6
9.1
10.5
6.4
5.7
9.4
5.1
-0.2
7.1
3.0
-0.6
4.6
Real Private Capital Investment
Machinery Orders (Manufacturing)
%
5
0
-5
-10
Q1
Billions of yen
%
2,000
1,500
1,000
500
Q2 Q3
2008
Q4
Q1
Q4
Q2 Q3
2009
(FY)
0
Q1
Q4
Q1
Q2 Q3
2008
Q4
Q2 Q3
2009
20
10
0
-10
-20
-30
-40
(FY)
Note: Seasonally adjusted
Source: Cabinet Office, Government of Japan
Orders［left axis］
Change from the previous quarter［right axis］
Note: Seasonally adjusted
Source: Cabinet Office, Government of Japan
2. The Omron Group Market Environment
Demand for factory automation (FA) equipment, a core
product of the Omron Group, continued low into the first
quarter of the fiscal year amid a general sense of excess
production capacity that produced a declining trend in
demand for investment in equipment.
Beginning in the second quarter, the major fiscal and
monetary policies, environment-themed policies to stim-
ulate consumption, and other measures implemented by
governments around the world generated growing demand
centered on consumer and environment-related products,
leading to gradually improving equipment investment
demand from the manufacturing industry, the Group’s core
customer base.
While demand conditions improved, revenues were
constricted by the appreciating yen, whose average
exchange rates rose to ¥92.9 versus the U.S. dollar, up
¥7.8 from the previous fiscal year, and to ¥130.3 versus
the euro, a ¥14.2 year-on-year rise.
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
Indices of Electronic Parts and Devices
(Seasonally adjusted indices, 2005 average =100)
Silver and Copper Prices
Exchange Rates
250
200
150
100
50
06
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Yen/kg
Yen/kg
1,500
1,200
900
600
300
0
Yen
170
160
150
140
130
120
110
100
90
80
07
08
09
06
07
08
09
06
07
08
09
Productions
Shipments
Inventory
Source: Ministry of Economy, Trade and Industry
Silver［left axis］
Copper［right axis］
US$
EUR
66
F i s c a l 2 0 0 9 M a n a g e m e n t ’ s D i s c u s s i o n a n d A n a l y s i s
Overview of Consolidated Results and Financial Condition
Note: Segment operating income is prepared using the single-step method (that does not show individual income levels) based on U.S. GAAP. For an eas-
ier comparison to other companies, operating income represents gross profit minus selling, general and administrative (SG&A) expenses, and
research and development (R&D) expenses.
In this market environment, the combined impact from the
global recession extending into the second quarter,
restrained capital investment in the manufacturing indus-
try, and the strong yen resulted in a 16.3% year-on-year
decline in consolidated net sales to ¥524.7 billion in fiscal
2009. While sales revenue declined, the Group-wide effort
to reduce costs produced a substantial 144.9% year-on-
year improvement in operating income to ¥13.1 billion.
Income before income taxes amounted to ¥10.2 billion,
and net income attributable to shareholders amounted to
¥3.5 billion.
Total assets declined 1.1% from the previous fiscal
year, primarily due to reduced inventories. The improve-
ment in net profit raised total shareholders' equity by 2.7%
year on year, which raised the equity ratio to 57.5% from
55.4% at the end of the previous fiscal year.
Return on equity (ROE) amounted to 1.2%, and the
return on investment capital (ROIC) was 2.2%.
Net Sales & Income before Income Taxes
Net Income Attributable to Shareholders & ROE
Billions of yen
%
800
600
400
200
0
-200
Billions of yen
Billions of yen
160
120
80
40
0
05
06
07
08
-40
(FY)
09
50
25
0
-25
-50
15
10
5
0
-5
-10
-15
05
06
07
08
09
(FY)
Net sales［left axis]
Income (loss) before income taxes［right axis］
Net income (loss) Attributable to Shareholders［left axis］
ROE［right axis］
* Figures have been restated to account for
businesses discontinued in FY2007.
Review and Analysis of the Statements of Income
Sales
Consolidated net sales amounted to ¥524.7 billion, a year-
on-year decline of ¥102.5 billion or 16.3%, which was
largely due to the substantial drop in demand in the first
half and the strong yen.
While the global economic crisis caused substantial
declines in demand, as the year progressed sales steadily
improved for the electronic components, automotive elec-
tronic components, and domestic FA businesses.
By region, sales declined 18.0% in Japan (including
direct exports) and fell 23.9% in North America, 24.7% in
Europe, and 1.7% in the Asia Pacific. In contrast, sales in
the Greater China region rose 2.5%.
Cost of Sales and SG&A Expenses
The decline in sales led to a 16.7% year-on-year decrease
in cost of sales. The cost to sales ratio decreased 0.3 per-
centage point to 64.9%. The decrease was primarily due to
a respite in the rise of raw materials prices and emergency
measures including reductions in variable costs and man-
ufacturing fixed costs.
SG&A expenses were reduced by ¥30.9 billion, or
18.8%, from the previous fiscal year as the Company
responded to the decline in sales with comprehensive
efforts to lower expenses and strictly limit large invest-
ments. The Company likewise reduced R&D expenses by
¥11.1 billion, or 22.6%. The SG&A expense-to-sales ratio
accordingly declined by 0.8 percentage point to 25.4%,
and the R&D expense-to-sales ratio decreased 0.5 per-
centage point to 7.2%.
Other Expenses (Income) * See Note 12 on page 93
The amount of other expenses, net was a net loss of ¥2.9
billion, representing a ¥41.6 billion decrease in loss in this
category from the previous fiscal year when the Company
recorded impairment losses for goodwill, property, plant
and equipment, and investment securities.
Income before Income Taxes, Net Income
Attributable to Shareholders, and Profit Distribution
As a result of the above, income before income taxes
amounted to ¥10.2 billion in fiscal 2009, an increase of
¥49.3 billion from the ¥39.1 billion loss before income taxes
Dividends per Share
50
40
30
20
10
0
yen
05
06
07
08
09
(FY)
67
in the previous fiscal year. Net income attributable to share-
holders amounted to ¥3.5 billion, an increase of ¥32.7 billion
from the ¥29.2 billion net loss in fiscal 2008.
Basic net income attributable to shareholders per share
improved to ¥16.0 from a ¥132.2 net loss attributable to
shareholders per share in the previous fiscal year.
Based on our profit distribution policy (see page 23) and in
consideration of the earnings results, ordinary dividends of
¥17 per share were distributed in the fiscal year under review.
Costs, Expenses, and Income as Percentages of Net Sales
Net sales
Cost of sales
Gross profit
SG&A expenses
R&D expenses
Other expenses, net
Income (loss) from continuing operations before income taxes and
equity in loss (earnings) of affiliates
Income taxes
Income (loss) from continuing operations
Income from discontinued operations, net of tax
Net income (loss) attributable to shareholders
Segment Information
FY2009
FY2008
FY2007
100.0%
64.9
35.1
25.4
7.2
0.0
1.9
0.7
0.7
—
0.7
100.0%
65.2
34.8
26.2
7.7
0.0
(6.2)
(1.6)
(4.7)
—
(4.7)
100.0%
61.6
38.4
23.1
6.7
(0.1)
8.4
3.2
5.2
0.4
5.6
Note: Segment operating income is prepared using the single-step method (that does not show individual income levels) based on U.S. GAAP. For easier
comparison to other segment companies, operating income represents gross profit minus SG&A expenses and R&D expenses.
Note: In segment information, sales represents sales to external customers and excludes inter-segment transactions. Conversely, operating income includes
income from inter-segment transactions before deductions of headquarters expenses and other non-apportionable amounts.
Please refer to pages 40-51 for detailed segment business results, fiscal 2010 outlook, and strategy.
1. Review of Operations by Business Segment
IAB (Industrial Automation Business)
IAB net sales declined 24.2% year on year to ¥206.2 bil-
lion and operating income fell 23.5% to ¥13.9 billion.
Demand reached bottom for sensors and other items in
the second quarter on recovering production activity in the
automotive and electronic components industries. In the
third quarter, signs began appearing of a rise in production
among customers in the semiconductor industry and reviv-
ing demand for energy-related products. Measures to
stimulate domestic consumption in China began produc-
ing effects in the Greater China region at the start of last
year, but the overall limited production and restrained cap-
ital investment in the manufacturing industry through the
first quarter strongly impacted the IAB segment results.
EMC (Electronic & Mechanical Components Business)
EMC net sales fell 7.6% year on year to ¥70.7 billion.
Emergency measures and improved productivity generat-
ed 59.6% growth in operating income to ¥6.7 billion.
Adjustments to domestic inventories were completed in
the first quarter in the business and consumer equipment
as well as the automotive components sectors, but the sub-
sequent degree of recovery was lower than in previous
years. Overseas demand recovered in the Greater China
and Asia-Pacific regions, particularly for relays for air con-
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
ditioners and other consumer electronics, flexible printed
circuit (FPC) connectors for optical disks, and mobile phone
input devices.
AEC (Automotive Electronic Components Business)
AEC net sales declined 8.5% year on year to ¥75.2 billion
and operating income improved to ¥1.7 billion from a ¥7.1
billion operating loss in the previous fiscal year. The bank-
ruptcy of a major automaker in North America, this
segment's primary market, and the accompanying pro-
duction shutdowns had a substantial impact on AEC results.
At the same time, results were helped by measures taken
by various countries to stimulate car purchases and a move
toward gradual recovery from the weakening demand for
automotive electronic components.
SSB (Social Systems Solutions Business)
SSB net sales declined 19.8% year on year to ¥58.0 bil-
lion, and operating income fell 48.9% to ¥2.7 billion.
Demand for the SSB segment products dropped substan-
tially following a slowdown in investment in new railway
construction plans and IC card equipment installation and
the increasing restraint of capital investment by railway
companies against a backdrop of persisting economic stag-
nation and reduced holiday toll rates for automobile
68
F i s c a l 2 0 0 9 M a n a g e m e n t ’ s D i s c u s s i o n a n d A n a l y s i s
expressways. The restrained investment activity also
impacted the social sensor solutions and related mainte-
nance businesses and the software business.
HCB (Healthcare Business)
HCB net sales edged down 0.4% year on year to ¥63.4 bil-
lion, and operating income increased 48.0% to ¥7.1 billion.
In Japan, digital thermometer demand surged in response
to the H1N1 influenza outbreak. However, demand for med-
ical equipment for hospital use fell below the previous-year
level on restrained and postponed equipment investment
from hospitals and medical practitioners. Overseas demand
remained sluggish in Europe and the United States in the
unfavorable economic conditions but was brisk in the Greater
China region, primarily due to growing health management
awareness in the country's provincial towns and cities.
Other
The Other segment’s net sales declined 17.8% year on
year to ¥41.3 billion, and operating loss amounted to ¥7.0 bil-
lion, compared with the ¥7.3 billion loss in the previous
fiscal year. Sales were brisk in the environmental business
for energy-conservation services using electricity usage
visualization systems and other services. Improving mar-
ket conditions in the electronic systems and equipment
business supported a gradual recovery for contracted pro-
duction and development operations. In the Micro Devices
business, demand recovered for custom integrated circuit
devices as well as for devices for consumer and industrial
applications. The business also recorded increasing contract-
manufacturing orders for semiconductors for LCD-related
projects. Backlight business sales remained sluggish amid
declining demand for music players.
Growth in Net Sales by Business Segment
Composition of Net Sales by Business Segment
FY2009
FY2008
FY2007
FY2009
FY2008
FY2007
IAB
EMC
AEC
SSB
HCB
Other
(24.2)%
(7.6)
(8.5)
(19.8)
(0.4)
(15.5)
(20.0)%
(24.0)
(23.6)
(5.9)
(11.3)
(8.6)
6.9%
4.6
15.2
(22.1)
9.1
27.4
IAB
EMC
AEC
SSB
HCB
Other
39.3%
13.5
14.3
11.1
12.1
9.7
43.4%
12.2
13.1
11.5
10.1
9.7
44.5%
13.2
14.1
10.1
9.4
8.7
Note: The Other segment includes “Eliminations and Corporate.”
Notes: 1. Sales composition is based on the segment categories presented
in the Six-year Summary (page 64).
2. The Other segment includes “Eliminations and Corporate.”
2. Review of Operations by Region
Japan
Production activity gradually picked up during the year in
the domestic automotive, electronic components, and
semiconductor industries, but domestic sales (excluding
direct exports) declined 25.5% year on year for the IAB
segment and 12.7% for the EMC segment owing to the
strong impact from the limited production and restrained
capital investment conditions in the industrial sector that
persisted from the second half of fiscal 2008. SSB seg-
ment domestic sales were down 18.7% due to the
restrained capital investment by railway companies. Net
sales (including direct exports) in Japan declined 18.0%
year on year to ¥269.1 billion, while the emergency meas-
ures and other initiatives produced 37.3% growth in
operating income to ¥11.5 billion.
North America
North America sales in the IAB segment declined 40.3%
year on year amid stagnant conditions in the oil-related and
automotive industries. AEC segment sales fell 13.9% due to
the major impact from production halts caused by the bank-
ruptcy of a major automaker. Net sales in North America
declined 23.9% year on year to ¥61.2 billion, and the oper-
ating loss decreased to ¥0.5 billion, from a ¥0.7 billion
operating loss in the previous fiscal year.
Europe
Signs appeared during the year that demand was moving
into recovery. However, full-fledged recovery failed to mate-
rialize, and sales ended up down 27.6% year on year in the
IAB segment and 11.1% in the HCB segment. Net sales
in Europe ultimately fell 24.7% year on year to ¥77.6 bil-
lion, and operating income decreased 70.1% to ¥1.9 billion.
Greater China
In the Greater China region, encompassing China, Hong
Kong, and Taiwan, rising capacity utilization rates and
increases in capital investment accompanying expanding
domestic demand enabled the IAB segment to post sales
results roughly even with the previous fiscal year. AEC seg-
ment sales jumped 32.0% in the region, with a strong boost
from government policies to stimulate new car purchases.
HCB segment sales rose 9.7% on increasing awareness
of personal health management. Total net sales in the
Greater China region rose 2.5% year on year to ¥77.1 bil-
lion and operating income increased 187.7% to ¥9.0 billion.
Sales Breakdown by Region
%
100
80
60
40
20
0
6.1%
12.0%
17.6%
13.4%
6.4%
12.0%
16.4%
12.8%
7.6%
14.7%
14.8%
11.7%
50.9%
52.4%
51.3%
07
08
09
(FY)
Asia Pacific
Greater China
Europe
North America
Japan
*Includes direct exports
69
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
Asia Pacific
Demand levels improved in the Asia Pacific in the second
half of fiscal 2009, but full-year sales declined 3.7% in the
IAB segment and 9.4% in the EMC segment. Net sales in
the Asia Pacific were down 1.7% year on year to ¥39.7 bil-
lion. However, successful cost-cutting efforts resulted in a
140.3% rise in operating income to ¥3.5 billion.
Financial Condition
Assets
Total assets amounted to ¥532.3 billion in fiscal 2009,
representing a decrease of ¥6.0 billion, or 1.1%, from the
end of the previous fiscal year. The decline was primarily
caused by strict control of new capital investment and
reduced inventories, which outbalanced the increased
valuation of investment securities from the rising trend in
stock values since the end of fiscal 2008 and an increase in
notes and accounts receivable accompanying the recovery
in sales in the second half.
Liabilities and Shareholders’ Equity
Total liabilities amounted to ¥225.1 billion, down ¥13.2 bil-
lion from the end of the previous fiscal year. The decline
was the result of an increase in notes and accounts payable
being offset by a decrease in termination and retirement
benefits due to higher valuation of the pension plan assets
and a decrease in loans associated with the reduction in
assets.
Total shareholders’ equity increased to ¥306.3 billion,
an increase of ¥7.9 billion from the end of the previous fis-
cal year. The shareholders' equity ratio rose 2.1 percentage
points to 57.5%, from 55.4% at the previous fiscal year-
end, and the debt/equity ratio decreased from 0.80 to 0.74.
Shareholders' equity per share based on the number
of shares outstanding at the end of the fiscal year (exclud-
ing treasury stock) was ¥1,391.41, compared with
¥1,355.41 at the end of the previous fiscal year.
Working Capital & Current Ratio
Outstanding Interest-bearing Debt & Debt/Equity Ratio
200
150
100
50
0
Billions of yen
%
220
190
160
130
05
06
07
08
100
(FY)
09
Working capital［left axis］
Current ratio［right axis］
60
45
30
15
0
Billions of yen
%
2.0
1.5
1.0
0.5
05
06
07
08
0.0
(FY)
09
Outstanding interest-bearing debt［left axis］
Debt/equity ratio［right axis］
Cash Flow
Cash and cash equivalents at the end of the fiscal year amounted to ¥51.7 billion, a ¥5.1 billion increase from the end of the
previous fiscal year.
Cash Flow from Operating Activities
Net cash provided by operating activities amounted to
¥42.8 billion, an increase of ¥11.4 billion from the previous
fiscal year, primarily due to the increase in net income and
the decrease in working capital from reduced inventories
and other factors.
Cash Flow from Investing Activities
Cash flow used in investing activities amounted to ¥18.6 bil-
lion, a ¥22.0 billion decrease in outflow from the previous
fiscal year, as a result of strictly limiting capital investment.
Cash Flow from Financing Activities
Net cash used in financing activities amounted to ¥20.4
billion, a ¥42.2 billion increase from the net outflow in the
previous fiscal year, which was due to dividend distribu-
tions and the repayment of short-term debt.
Free Cash Flow
40
30
20
10
0
-10
Billions of yen
05
06
07
08
09
(FY)
70
Business and Other Risks
Regarding a number of items described in the Status of
Business and the Status of Accounting of this report, some
items may pose risks and influence the Omron Group’s
management results and financial condition (including share
price), and Omron believes that these items may sub-
stantially affect investor decisions. Note that items referring
to the future reflect the Omron Group’s forecasts and
assumptions as of June 23, 2010 (date of submission of
the Securities Report).
(1) Economic Conditions
The primary business of the Omron Group is consumer
and commercial electronic components used in the man-
ufacture of electrical and electronic equipment, as well as
control system equipment used by manufacturing sectors
and in capital investment-related areas. Accordingly,
demand for Omron Group products is affected by eco-
nomic conditions in these markets.
Both in Japan and overseas, therefore, market forces
affecting suppliers to, and purchasers from, the Omron
Group can result in the contraction of demand for our prod-
ucts, thereby possibly having a negative impact on the
Group’s operating results and financial condition.
(2) Risks Accompanying Overseas Business
Activities
The Omron Group actively conducts business activities
such as production and sales in overseas markets. The
Group may be subject to operating difficulties in countries
outside Japan related to possible social unrest due to fac-
tors including differences in culture or religion, political
turmoil and uncertainty in economic trends, differences in
business customs in areas such as the structure of rela-
tionships with local businesses and collection of
receivables, specific legal systems and investment regu-
lations, changes in tax systems, labor shortages and
problems in the labor-management relationship, terrorism,
wars, and other political circumstances.
These risks associated with overseas operations may
have a negative impact on the Omron Group’s operating
results and financial condition.
(3) Exchange Rate Fluctuation
The Omron Group has 114 overseas affiliated companies
and continues to reinforce its business operations in over-
seas markets, such as China, for which major market
growth is anticipated in the future. The percentage of con-
solidated net sales accounted for by overseas sales during
fiscal 2009 was 50.7%, and Omron expects further increas-
es in the overseas operations ratio due to factors such as
production shifts. The Omron Group seeks to hedge against
exchange rate risk, for example by balancing imports and
exports denominated in foreign currencies. Exchange rate
fluctuations, however, could have a negative impact on the
Omron Group’s operating results and financial condition.
(4) Product Defects
Based on its core corporate value of “Working for the ben-
efit of society,” the Omron Group has declared maximum
customer satisfaction to be one of its management com-
mitments and implements it by providing the best quality
products and services based on the Group’s motto of
“Quality first.” In particular, the Group has established
strict quality control standards and has built a quality con-
trol system, and develops and manufactures its products
accordingly. A Group-wide quality check system is in place
for the ongoing improvement of the quality of the Group’s
entire line of products and services.
While Omron takes every precaution against the occur-
rence of defects, it is virtually impossible to guarantee that
defects will not occur, including defects that arise due to
the changing environments in which the products are used,
or that recalls will not occur in the future. Japan’s revised
Consumer Product Safety Act and the recent creation of
the Consumer Affairs Agency and the National Consumer
Affairs Center of Japan have elevated corporate responsi-
bility and awareness of consumer protection issues.
Product quality is also a major issue overseas as defects
that require large-scale product recalls or that carry dam-
age compensation liability beyond the coverage capability
of product liability insurance could not only incur substan-
tial costs to the Group, but could also seriously damage
trust in the Omron Group and brand. Such a situation could
lead to declining sales for the Group, and has the potential
to negatively impact the Group’s operating results and
financial condition.
In addition, to respond to an EU directive banning the
use of lead, cadmium, and certain other chemical sub-
stances in electric and electronic products in the European
Union from July 2006, the Omron Group has been taking
steps to eliminate those substances from all of the Group
products worldwide. In cooperation with its suppliers, the
Group is investigating the status of regulated chemical sub-
stances in all of the components and materials the Group
uses, and is accelerating efforts to switch to alternative
environmentally-friendly components and materials.
Despite these efforts, risk exists that a quality control
oversight at a supplier or other incident that compromis-
es the content integrity of a Group product could result in
damage compensation liability or a directive violation that
could negatively impact the Group’s operating results and
financial condition.
71
(5) Research and Development Activities
Based on a policy of securing a balance between growth
and income, the Omron Group invests aggressively in R&D
as part of its technology-centered business operations for
the realization of sustainable growth. As a result, the R&D
expenses ratio remains at approximately 7%.
The Omron Group strives to increase the new product
contribution ratio by reflecting such considerations as mar-
ket needs in its R&D projects and goals. However, factors
such as delays in R&D or insufficient technological capa-
bilities that result in a decrease in the R&D new product
contribution ratio could have a negative impact on the
Omron Group’s operating results and financial condition.
(6) Information Leakage
The Omron Group acquires personal information and clas-
sified customer information through its business processes
and acquires important information in the course of busi-
ness. The Omron Group is taking steps to reinforce control
over the information the Group handles and to further
improve employees’ information literacy, with the goal of
preventing external entry into its internal information sys-
tems and misappropriation by third parties resulting from
theft or loss of that information.
Unanticipated leakage of internal information, howev-
er, due for example to invasion of internal information
systems using technology exceeding implemented secu-
rity levels, could exert a negative impact on the Omron
Group’s operating results and financial condition.
(7) Risks Associated with Patent Rights and Other
Intellectual Property Rights
The Omron Group conducts research on technology devel-
oped by other companies and in the public domain in the
course of its R&D and design activities. A very large num-
ber of intellectual property rights exist within the Group’s
range of business and products, and new intellectual prop-
erty rights are declared on a daily basis. The potential
therefore exists that a third party could present a claim
regarding one of the Group’s specific products or compo-
nents, which could have a negative impact on the Group’s
operating results and financial condition.
When exercising our intellectual property rights during
efforts to resolve issues related to the intellectual proper-
ty rights of the Group, disputes with third parties could
arise, such as oppositional tactics from the third party sub-
ject to the exercise of rights. The Omron Group takes
appropriate measures to recognize and compensate
employees for inventions, such as through the Employee
Invention Compensation Program and the Invention
Commendation Program. Disputes regarding the value of
an invention can arise with inventors, including inventors
who have retired from the Group.
The Omron Group has accumulated technology and
expertise allowing it to differentiate its products from those
of its competitors. However, the ever-increasing sophisti-
cation of counterfeit product manufacturing and sales
methods and other factors make it virtually impossible to
completely protect all of the Group’s proprietary technology
and expertise in certain regions, including China. The Group
implements strategic measures to protect its intellectual
property rights, but the circulation of low-quality counterfeit
items fraudulently bearing the Omron brand has the poten-
tial to damage the trust in the Group’s products and the
Group’s brand image and could have a negative impact on
the Group’s operating activities.
Omron has focused on brand management since its
inception and in recent years has initiated prompt and
appropriate countermeasures to the use of domain names
similar to “Omron” that have appeared overseas.
Identifying and taking action against all such fraudulent
domain names that have been registered is virtually impos-
sible. The danger exists that the same or a similar name
to “Omron” could be used in a fraudulent business trans-
action that could damage the trust in the Group.
(8) Natural Disasters
A natural disaster, fire, or other calamity, including a large-
scale earthquake in Japan’s Tokai, Tonankai, or Tokyo
metropolitan areas, could lead to reduced production capa-
bility or temporary disruption of distribution and sales routes.
The Omron Group has implemented the necessary safety
measures and has taken steps to facilitate the continuity
and early restoration of business operations in the case of
such an event. The Group maintains operating bases in
Japan and around the world, making it virtually impossible
to completely avoid the risks that would arise from an
unforeseen natural disaster, fire, or other calamity.
The Omron Group is also formulating action plans,
including establishing policies and business continuity
plans, for the entire Group such as preventive measures
for a worldwide flu epidemic. A rapidly spreading influen-
za virus that develops into a worldwide pandemic within a
short period could lead to temporary closures of operating
facilities and reductions in operations considered unnec-
essary and nonessential that could impact the Group’s
business activities.
Events such as the above could have a negative impact
on the Group’s operating results and financial condition.
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
72
Consolidated Balance Sheets
Omron Corporation and Subsidiaries
March 31, 2010 and 2009
ASSETS
Current assets:
Cash and cash equivalents
Notes and accounts receivable – trade
Allowance for doubtful receivables
Inventories (Note 3)
Deferred income taxes (Note 13)
Other current assets
Millions of yen
Thousands of
U.S. dollars (Note 2)
2010
2009
2010
¥ 51,726
126,250
(2,531)
77,655
19,988
12,670
¥ 46,631
113,551
(2,562)
84,708
16,522
17,141
$ 556,193
1,357,527
(27,215)
835,000
214,925
136,237
Total current assets
285,758
275,991
3,072,667
Property, plant and equipment:
Land
Buildings
Machinery and equipment
Construction in progress
Total
Accumulated depreciation
26,376
127,344
140,200
2,733
26,753
120,244
143,801
9,061
283,613
1,369,290
1,507,527
29,387
296,653
299,859
3,189,817
(173,659)
(167,324)
(1,867,301)
Net property, plant and equipment
122,994
132,535
1,322,516
Investments and other assets:
Investments in and advances to affiliates
Investment securities (Note 4)
Leasehold deposits
Deferred income taxes (Note 13)
Other (Note 6)
13,637
38,556
7,452
45,737
18,120
15,638
31,682
7,784
53,783
20,867
146,634
414,581
80,129
491,796
194,839
Total investments and other assets
123,502
129,754
1,327,979
Total
See notes to consolidated financial statements.
¥ 532,254
¥ 538,280
$ 5,723,162
73
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (Note 8)
Notes and accounts payable – trade
Accrued expenses
Income taxes payable
Other current liabilities (Note 13)
Current portion of long-term debt (Note 8)
Millions of yen
Thousands of
U.S. dollars (Note 2)
2010
2009
2010
¥ 16,612
68,874
25,891
2,710
21,160
20,315
¥ 32,970
58,179
24,791
711
17,899
488
$ 178,624
740,581
278,398
29,140
227,527
218,441
Total current liabilities
155,562
135,038
1,672,711
Long-term debt (Note 8)
Deferred income taxes (Note 13)
1,290
21,401
13,871
886
941
9,527
Termination and retirement benefits (Note 10)
66,964
80,443
720,043
Other long-term liabilities
417
476
4,484
Shareholders’ equity (Note 11):
Common stock, no par value:
Authorized: 487,000,000 shares in 2010 and 2009, respectively
Issued:
239,121,372 shares in 2010 and 2009, respectively
64,100
64,100
689,247
Capital surplus
Legal reserve
Retained earnings
Accumulated other comprehensive income (loss) (Note 17)
Treasury stock, at cost — 18,966,294 shares in 2010 and
99,081
9,363
230,859
(52,614)
99,059
9,059
231,388
(60,744)
1,065,387
100,677
2,482,355
(565,742)
18,958,944 shares in 2009
(44,462)
(44,451)
(478,086)
Total shareholders’ equity
Noncontrolling interests
Total net assets
Total
See notes to consolidated financial statements.
306,327
298,411
3,293,838
808
1,570
8,688
307,135
299,981
3,302,526
¥ 532,254
¥ 538,280
$ 5,723,162
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
74
Consolidated Statements of Operations
Omron Corporation and Subsidiaries
Years ended March 31, 2010, 2009 and 2008
Net sales
Costs and expenses:
Cost of sales
Selling, general and administrative expenses
Research and development expenses
Other expenses, net (Note 12)
Millions of yen
Thousands of
U.S. dollars (Note 2)
2010
2009
2008
2010
¥ 524,694
¥ 627,190
¥ 762,985
$ 5,641,871
340,352
133,426
37,842
2,879
408,668
164,284
48,899
44,472
469,643
176,569
51,520
1,087
3,659,699
1,434,688
406,903
30,957
Total
514,499
666,323
698,819
5,532,247
Income (loss) from continuing operations before income taxes
and equity in loss (earnings) of affiliates
10,195
(39,133)
64,166
109,624
Income taxes (Note 13)
3,782
(10,495)
24,272
40,667
Equity in loss (earnings) of affiliates
2,792
811
348
30,022
Income (loss) from continuing operations
3,621
(29,449)
39,546
38,935
Income from discontinued operations, net of tax (Note 14)
—
—
3,054
—
Net income (loss)
3,621
(29,449)
42,600
38,935
Net loss (income) attributable to noncontrolling interests
103
(277)
217
1,108
Net income (loss) attributable to shareholders
¥ 3,518
¥ (29,172)
¥ 42,383
$ 37,827
Per share data (Note 15):
Income (loss) from continuing operations
Basic
Diluted
Income from discontinued operations
Basic
Diluted
Net income (loss) attributable to shareholders
Basic
Diluted
See notes to consolidated financial statements.
2010
Yen
2009
U.S. dollars (Note 2)
2008
2010
16.0
16.0
(132.2)
—
172.5
172.4
—
—
—
—
13.4
13.4
16.0
16.0
(132.2)
—
185.9
185.8
0.17
0.17
—
—
0.17
0.17
Consolidated Statements of Comprehensive Income (Loss)
Omron Corporation and Subsidiaries
Years ended March 31, 2010, 2009 and 2008
75
Net income (loss)
Other comprehensive income (loss), net of tax (Note 17):
Foreign currency translation adjustments:
Foreign currency translation adjustments arising during the year
Reclassification adjustment for the portion realized in net income
Net change in foreign currency translation
Millions of yen
Thousands of
U.S. dollars (Note 2)
2010
2009
2008
2010
¥ 3,621
¥ (29,449)
¥ 42,600
$ 38,935
(1,400)
—
(16,708)
—
(11,979)
—
(15,054)
—
adjustments during the year
(1,400)
(16,708)
(11,979)
(15,054)
Pension liability adjustments:
Pension liability adjustments arising during the year
Reclassification adjustment for the portion realized in net income
4,531
(514)
(10,838)
(487)
(6,707)
(369)
48,720
(5,526)
Net change in pension liability adjustments during the year
4,017
(11,325)
(7,076)
43,194
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the year
Reclassification adjustment for losses on
impairment realized in net income
Reclassification adjustment for net gains
on sales realized in net income
Reclassification adjustment for net gains on contribution of
securities to retirement benefit trust realized in net income
4,966
(6,722)
(6,647)
53,398
305
2,987
1,315
3,280
(350)
—
(3)
—
(905)
(3,763)
—
—
Net unrealized gains (losses)
4,921
(3,738)
(6,237)
52,915
Net gains (losses) on derivative instruments:
Net gains (losses) on derivative instruments designated
as cash flow hedges during the year
Reclassification adjustment for net gains (losses)
realized in net income
Net gains (losses)
737
787
1,178
7,925
(186)
(1,714)
(727)
(2,000)
551
(927)
451
5,925
Other comprehensive income (loss)
8,089
(32,698)
(24,841)
86,980
Comprehensive income (loss)
Comprehensive income (loss)
11,710
(62,147)
17,759
125,915
attributable to noncontrolling interests
62
(448)
580
667
Comprehensive income (loss)
attributable to shareholders
See notes to consolidated financial statements.
¥ 11,648
¥ (61,699)
¥ 17,179
$ 125,248
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
76
Consolidated Statements of Shareholders’ Equity
Omron Corporation and Subsidiaries
Years ended March 31, 2010, 2009 and 2008
Number of
common shares
issued
Common
stock
Capital
surplus
Legal
reserve
Retained
earnings
Millions of yen
Accumulated
other
comprehensive
income (loss)
Treasury
stock
Total
Shareholders’
Equity
Noncontrolling
interests
Total
Net
Assets
249,121,372
¥ 64,100
¥ 98,828
¥ 8,256
¥ 258,057
¥ (3,013)
¥ (43,406)
¥ 382,822
¥ 1,438
¥ 384,260
Balance, April 1, 2007
Amendment to adoption
of ASC.No.740
(previous FIN No.48)
Net income
Cash dividends, ¥42 per share
Transfer to legal reserve
Other comprehensive income (loss)
Acquisition of treasury stock
Sale of treasury stock
Retirement of treasury stock
Exercise of stock options
Grant of stock options
Balance, March 31, 2008
(10,000,000)
239,121,372
Net loss
Cash dividends, ¥25 per share
Transfer to legal reserve
Other comprehensive income (loss)
Acquisition of treasury stock
Sale of treasury stock
Grant of stock options
Balance, March 31, 2009
239,121,372
Net income
Cash dividends paid to OMRON
Corporation shareholders, ¥17 per share
Cash dividends paid to noncontrolling
interests, ¥17 per share
Equity transactions with
noncontrolling interests and other
Transfer to legal reserve
Other comprehensive income (loss)
Acquisition of treasury stock
Sale of treasury stock
Grant of stock options
Balance, March 31, 2010
239,121,372
(266)
42,383
(9,415)
(417)
417
(23,858)
(33)
266,451
(29,172)
(5,505)
(386)
8,673
386
(25,204)
(22,348)
7
23,858
423
(28,217)
(41,466)
(32,527)
(2,995)
10
9,059
231,388
3,518
(60,744)
(44,451)
(266)
42,383
(9,415)
—
(25,204)
(22,348)
8
—
386
136
368,502
(29,172)
(5,505)
—
(32,527)
(2,995)
7
101
298,411
3,518
(266)
42,600
(9,415)
—
(24,841)
(22,348)
8
—
386
136
370,520
(29,449)
(5,505)
—
(32,698)
(2,995)
7
101
299,981
3,621
217
363
2,018
(277)
(171)
1,570
103
(3,743)
(3,743)
(3,743)
1
(4)
136
98,961
64,100
(3)
101
99,059
64,100
304
(304)
8,130
(13)
2
¥ 9,363
¥ 230,859
¥ (52,614)
¥ (44,462)
(0)
22
¥ 99,081
¥ 64,100
(762)
(762)
—
8,130
(13)
2
22
¥ 306,327
(62)
(41)
¥ 808
(62)
—
8,089
(13)
2
22
¥ 307,135
Thousands of U.S. dollars (Note 2)
Common
stock
Capital
surplus
Legal
reserve
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury
stock
Total
Share-holders’
Equity
Noncontrolling
interests
Total
Net
Assets
$ (653,163)
$(477,968)
$ 3,208,719
37,827
$16,882
1,108
$3,225,601
38,935
Balance, March 31, 2009
$ 689,247
$1,065,151
$ 97,409
Net income
Cash dividends paid to OMRON Corporation
shareholders, $0.18 per share
Cash dividends paid to noncontrolling
interests, $0.18 per share
$2,488,043
37,827
(40,247)
Equity transactions with noncontrolling interests and other
Transfer to legal reserve
Other comprehensive income (loss)
Acquisition of treasury stock
Sale of treasury stock
Grant of stock options
Balance, March 31, 2010
$ 689,247
See notes to consolidated financial statements.
(0)
236
$1,065,387
3,268
(3,268)
87,421
(140)
22
$ 100,677
$2,482,355
$ (565,742)
$(478,086)
(40,247)
(40,247)
(8,194)
(667)
(441)
$ 8,688
(8,194)
(667)
—
86,980
(140)
22
236
$3,302,526
—
87,421
(140)
22
236
$ 3,293,838
Consolidated Statements of Cash Flows
Omron Corporation and Subsidiaries
Years ended March 31, 2010, 2009 and 2008
Operating activities:
Net income (loss)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
Net loss on sales and disposals of property, plant and equipment
Loss on impairment of property, plant and equipment
Net gain on sales of investment securities
Loss on impairment of investment securities and other assets
Loss on impairment of goodwill
Termination and retirement benefits
Deferred income taxes
Equity in loss of affiliates
Net gain on sale of business
Changes in assets and liabilities:
Notes and accounts receivable – trade, net
Inventories
Other assets
Notes and accounts payable – trade
Income taxes payable
Accrued expenses and other current liabilities
Other, net
Total adjustments
Net cash provided by operating activities
Investing activities:
Proceeds from sales or maturities of investment securities
Purchase of investment securities
Capital expenditures
Decrease (increase) in leasehold deposits
Proceeds from sales of property, plant and equipment
Equity transaction with noncontrolling interests
Decrease (increase) in investment in and loans to affiliates
Proceeds from sale of business, net
Payment for acquisition of business entities, net
Net cash used in investing activities
Financing activities:
Net borrowings (repayments) of short-term debt
Proceeds from issuance of long-term debt
Repayments of long-term debt
Dividends paid by the Company
Dividends paid to noncontrolling interests
Acquisition of treasury stock
Sale of treasury stock
Exercise of stock options
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
See notes to consolidated financial statements.
Millions of yen
Thousands of U.S.
dollars (Note 2)
2010
2009
2008
2010
¥ 3,621
¥ (29,449)
¥ 42,600
$ 38,935
27,014
558
217
(636)
632
—
(5,110)
(1,031)
2,792
—
(14,440)
4,977
4,457
13,298
1,995
4,554
(139)
39,138
42,759
1,004
(15)
(20,792)
335
1,490
(106)
(931)
431
—
(18,584)
33,496
1,983
21,203
(64)
5,401
16,813
(1,390)
(13,895)
811
—
47,526
5,776
(7,689)
(34,046)
(8,044)
(8,290)
1,266
60,857
31,408
1,742
(6,151)
(37,477)
228
1,046
—
(16)
—
—
(40,628)
36,343
963
168
(1,571)
2,297
—
(1,722)
(131)
348
(5,177)
4,977
(3,002)
644
5,305
(2,663)
(10,846)
463
26,396
68,996
3,955
(7,456)
(37,848)
417
5,038
—
(850)
8,089
(8,026)
(36,681)
290,473
6,000
2,333
(6,839)
6,796
—
(54,946)
(11,086)
30,022
—
(155,269)
53,516
47,925
142,989
21,452
48,968
(1,495)
420,839
459,774
10,796
(161)
(223,570)
3,602
16,022
(1,140)
(10,011)
4,634
—
(199,828)
(16,282)
305
(524)
(3,083)
(762)
(13)
1
—
(20,358)
1,278
5,095
46,631
¥ 51,726
15,291
20,000
(916)
(9,507)
(13)
(2,995)
7
—
21,867
(6,640)
6,007
40,624
¥ 46,631
(3,523)
28
(772)
(8,252)
(7)
(22,348)
7
386
(34,481)
(205)
(2,371)
42,995
¥ 40,624
(175,075)
3,280
(5,634)
(33,151)
(8,194)
(140)
11
—
(218,903)
13,742
54,784
501,409
$ 556,193
77
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
78
Notes to Consolidated Financial Statements
Omron Corporation and Subsidiaries
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
OMRON Corporation (the “Company”) is a multination-
al manufacturer of automation components, equipment
and systems with advanced computer, communications
and control technologies. The Company conducts busi-
ness in over 30 countries around the world and strategically
manages its worldwide operations through 5 regional
management centers in Japan, North America, Europe,
Asia-Pacific and China. Products, classified by type and
market, are organized into business segments as
described below.
Industrial Automation Business manufactures and
sells control components and systems including pro-
grammable logic controllers, sensors and switches used
in automatic systems in industry. In the global market, the
Company offers many services, such as those involving
labor-saving automation, environmental protection, safe-
ty improvement, and inspection-automization solutions for
highly developed production systems.
Electronic and Mechanical Components Business
manufactures and sells electric and electronic components
found in such consumer goods as home appliances as well
as such business equipment as telephone systems, vend-
ing machines and office equipment.
Automotive Electronic Components Business devel-
ops and produces automotive electronic components and
other components for automobiles and automotive elec-
tronic components manufacturers throughout the world.
Social Systems Solutions Business encompasses
the sale of card authorization terminals mainly for the
domestic markets. Passing gates, automated ticket
machines, electronic panels and terminal displays for traf-
fic information and monitoring purposes are also supplied
for the domestic market.
Healthcare Business sells blood pressure monitors,
digital thermometers, body-fat monitors, nebulizers and
infra-red therapy devices aimed at both the consumer and
institutional markets.
Other handles search and cultivation of new busi-
nesses, and as a headquarters’ direct control business,
has cultivation and enhancement of businesses other than
the above five Business Companies. The group provides
products such as LCD backlights, semiconductors, MEMS,
energy saving businesses, eco-businesses, electronic
devices.
Basis of Financial Statements
The accompanying consolidated financial statements are
stated in Japanese yen. Based upon requirements about
depositary receipts issued in Europe, they are presented
in accordance with accounting principles generally accept-
ed in the United States of America. Certain reclassifications
have been made to amounts previously reported in order
to conform to classifications at March 31, 2010 or for the
year ended March 31, 2010.
Principles of Consolidation
The consolidated financial statements include the
accounts of the Company and its subsidiaries (together
the “Companies”). All significant intercompany accounts
and transactions have been eliminated.
Investments in which the Companies have a 20% to
50% interest (affiliates) are accounted for using the equity
method.
The consolidated financial statements include all the
Company’s subsidiaries (at March 31, 2009: 162 compa-
nies, at March 31, 2010: 154 companies).
Application of Equity Method
Investments in the Company’s affiliated companies are
accounted for using the equity method.
Affiliated companies recorded on the equity method:
As of March 31, 2009
— Hitachi-Omron Terminal Solutions, Corp and others.
Total: 18 companies
As of March 31, 2010
— Hitachi-Omron Terminal Solutions, Corp and others.
Total: 16 companies
Use of Estimates
The preparation of consolidated financial statements in
conformity with accounting principles generally accepted
in the United States of America requires management to
make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contin-
gent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Cash Equivalents
Cash equivalents consist of highly liquid investments with
original maturities of three months or less, including time
deposits, commercial paper, and securities purchased with
resale agreements and money market instruments.
Allowance for Doubtful Receivables
An allowance for doubtful receivables is established in
amounts considered to be appropriate based primarily upon
the Companies’ past credit loss experience and an evalu-
ation of potential losses in the receivables outstanding.
Marketable Securities and Investments
The Companies classify all of their marketable equity and
debt securities as available-for-sale. Available-for-sale secu-
rities are carried at market value with the corresponding
recognition of net unrealized holding gains and losses as
a separate component of accumulated other comprehen-
sive income (loss), net of related taxes, until recognized.
If necessary, individual securities classified as available-
for-sale are reduced to fair value by a charge to income in
the period in which the decline is deemed to be other than
79
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
temporary. The Companies principally consider that an
other-than-temporary impairment has occurred when the
decline in fair value below the carrying value continues for
over nine consecutive months. The Companies may also
consider other factors, including their ability and intent to
hold the applicable investment securities until maturity,
and the severity of the decline 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
Domestic inventories are mainly stated at the lower of cost,
determined by the first-in, first-out method, or market. Also
overseas inventories are mainly stated at the lower of cost,
determined by the moving-average method, or market.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation
of property, plant and equipment has been computed prin-
cipally on a declining balance method based upon the
estimated useful lives of the assets. However, certain of
the Company’s subsidiaries located outside Japan have
computed it on a straight-line method based upon the esti-
mated 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.
Goodwill and Other Intangible Assets
The Companies account for their goodwill and other intan-
gible assets in accordance with the Accounting Standards
Codification (hereinafter “ASC”) No.350, “Intangibles-
Goodwill and Other” (previously SFAS No.142, “Goodwill
and Other Intangible Assets” ), which requires that good-
will no longer be amortized, but instead tested for
impairment at least annually. ASC No.350 (previously SFAS
No.142) also requires recognized intangible assets be amor-
tized over their respective estimated useful lives and
reviewed for impairment. Any recognized intangible asset
determined to have an indefinite useful life is not to be
amortized, but instead tested for impairment until its life
is determined to no longer be indefinite.
Long-Lived Assets
Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the car-
rying amount of an asset might be unrecoverable.
Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to
undiscounted cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceeds the fair
value. Assets to be disposed of other than by sale are con-
sidered held and used until disposed of. Assets to be
disposed of by sale are reported at the lower of the carry-
ing amount or fair value less costs to sell.
Advertising Costs
Advertising costs are charged to earnings as incurred.
Advertising expense was ¥4,957 million ($53,301 thou-
sand), ¥7,146 million and ¥8,648 million for the years ended
March 31, 2010, 2009 and 2008, respectively.
Shipping and Handling Charges
Shipping and handling charges were ¥6,005 million ($64,570
thousand), ¥7,399 million and ¥8,121 million for the years
ended March 31, 2010, 2009 and 2008, respectively, and
are included in selling, general and administrative expens-
es in the consolidated statements of operations.
Termination and Retirement Benefits
Termination and retirement benefits are accounted for and are
disclosed in accordance with ASC No.715, “Compensation-
Retirement Benefits” (previously SFAS No.87, “Employers’
Accounting for Pensions,” previously SFAS No.132 (revised
2003), “Employers’ Disclosures about Pensions and Other
Postretirement Benefits” and previously SFAS No.158,
“Employers’ Accounting for Defined Benefit Pension and
Other Postretirement Plans”) based on the fiscal year-end
fair value of plan assets and the projected benefit obliga-
tions of employees. The provision for termination and
retirement benefits includes amounts for directors and cor-
porate auditors of the Companies.
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, oper-
ating loss carryforwards and tax credit carryforwards.
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 period
that includes the enactment date.
The Companies adopted ASC No.740, “Accounting for
Uncertainty in Income Taxes”(previously FASB Interpretation
(“FIN”) No.48, “Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No.109”). The
amount of tax benefit related to tax position were recog-
nized greater than 50 percent likely of being realized based
on available information at the reporting date.
The Company and certain domestic subsidiaries com-
pute current income taxes based on the consolidated
taxable income as permitted by Japanese tax regulations.
Product Warranties
A liability for the estimated warranty related cost is estab-
lished at the time revenue is recognized and is included in
other current liabilities. The liability is established using his-
torical information including the nature, frequency, and
average cost of warranty claims.
80
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
Derivatives
Derivative instruments and hedging activities are account-
ed for in accordance with ASC No.815, “Derivatives and
Hedging”(previously SFAS No.133, “Accounting for
Derivative Instruments and Hedging Activities,” previously
SFAS No.138, “Accounting for Certain Derivative Instruments
and Certain Hedging Activities, an amendment of FASB
Statement No.133,” previously SFAS No.149, “Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities,” and previously SFAS No.161, “Disclosures
about Derivative Instruments and Hedging Activities-an
amendment of FASB Statement No.133”). This standard
establishes accounting and reporting standards for deriv-
ative instruments and for hedging activities, and requires
that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instru-
ments at fair value.
For foreign exchange forward contracts, foreign cur-
rency swaps and interest rate swaps on the date the
derivative contract is entered into, the Companies desig-
nate the derivative as a hedge of a forecasted transaction
or the variability of cash flows to be received or paid relat-
ed to a recognized asset or liability (“cash flow” hedge or
“foreign currency” hedge). The Companies formally doc-
ument all relationships between hedging instruments and
hedged items, as well as its risk management objective
and strategy for undertaking various hedge transactions.
This process includes linking all derivatives that are desig-
nated as cash flow or foreign currency hedges to specific
assets and liabilities on the consolidated balance sheet or
to specific firm commitments or forecasted transactions.
Based on the Companies’ policy, all foreign exchange for-
ward contracts, foreign currency swaps and interest rate
swaps entered into must be highly effective in offsetting
changes in cash flows of hedged items.
Changes in fair value of a derivative that is highly effec-
tive and that is designated and qualifies as a cash flow or
foreign currency hedge are recorded in other comprehen-
sive income (loss), until earnings are affected by the
variability in cash flows of the designated hedged item.
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 share-
holders held early in the following fiscal year. Resulting
dividends payable are included in Other current liabilities
in the consolidated balance sheets.
Revenue Recognition
The Companies recognize revenue when persuasive evi-
dence of an arrangement exists, delivery has occurred and
title and risk of loss has transferred, the sales price is fixed
or determinable, and collectibility is probable.
Stock-Based Compensation
The Companies applied ASC No.718, “Compensation-Stock
Compensation” (previously revised SFAS No.123, “Share
Based Payment”), and recognized a stock-based com-
pensation cost measured by the fair value method.
Translation of Financial Statement Items of the
Company’s Subsidiaries Located Outside Japan into
Japanese Yen
Financial statements of the Company’s subsidiaries locat-
ed outside Japan are translated based upon ASC No.830,
“Foreign Currency Matters” (previously SFAS No.52,
“Foreign Currency Translation”). Assets and liabilities of
the subsidiaries are translated into Japanese yen at the
rates of exchange in effect at the balance sheet date.
Income and expense items are translated at the average
exchange rates prevailing during the year. And, gains and
losses resulting from translation of financial statements
are reported in Accumulated other comprehensive income
(loss) as Foreign currency translation adjustments.
Comprehensive Income (Loss)
The Companies apply ASC No.220, “Comprehensive
Income” (previously SFAS No.130, “Reporting Comprehensive
Income”). Comprehensive Income (Loss) is composed of
Net Income (Loss) attributable to shareholders, changes
in Foreign currency translation adjustments, changes in
Pension liability adjustments, changes in Unrealized gains
(losses) on available-for-sale securities and changes in Net
gains (losses) on derivative instruments. And Comprehensive
Income (Loss) is disclosed to Consolidated Statements of
Comprehensive Income (Loss).
New Accounting Standards
In June 2009, the FASB issued ASC No.105, “Generally
Accepted Accounting Principles” (previously SFAS No.168,
“The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles”).
ASC No.105 establishes rules that The ASC has become
the source of authoritative U.S.GAAP. ASC No.105 is
effective for fiscal years and interim periods ending after
September 15, 2009. The Companies modified references
that had been previously made to various former authori-
tative U.S. GAAP pronouncements to fit ASC No.105.
In October 2009, the FASB issued ASU No.2009-13,
“Multiple-Deliverable Revenue Arrangements-a consensus
of the FASB Emerging Issues Task Force (hereinafter EITF)”
(previously EITF ASU No.08-01, “Multiple-Deliverable
Revenue Arrangements”). ASU No.2009-13 modifies the
criteria for separating consideration under multiple-deliver-
able arrangements and requires allocation of the overall
consideration to each deliverable using the estimated sell-
ing price in the absence of vendor-specific objective
evidence or third-party evidence of selling price for deliv-
erables. As a result, the residual method of allocating
arrangement consideration will no longer be permitted. The
guidance also requires additional disclosures about how a
vendor allocates revenue in its arrangements and about the
significant judgments made and their impact on revenue
recognition. ASU No.2009-13 is effective for fiscal years
beginning on or after June 15, 2010. The provisions are
effective prospectively for revenue arrangements entered
81
into or materially modified after the effective date, or ret-
rospectively for all prior periods. The Companies are
currently evaluating the effect that the adoption of this guid-
ance will have on their consolidated financial statements.
In October 2009, the FASB issued ASU No.2009-14,
“Certain Revenue Arrangements That Include Software
Elements-a consensus of the FASB EITF (previously EITF
ASU No.09-03, “Certain Revenue Arrangements That
Include Software Elements”). ASU No.2009-14 modifies
the scope of the software revenue recognition guidance
to exclude from its requirements non-software compo-
nents of tangible products and software components of
2. Translation into United States Dollars
tangible products that are sold, licensed, or leased with
tangible products when the software components and non-
software components of the tangible product function
together to deliver the tangible product’s essential func-
tionality. ASU No.2009-14 is effective for fiscal years
beginning on or after June 15, 2010 using the same effec-
tive date and the same transition method used to adopt
the guidance for revenue recognition under multiple-deliv-
erable arrangements. The adoption of ASU No.2009-14
will not have a material impact on the Companies’ consol-
idated financial statements.
The consolidated financial statements are stated in
Japanese yen, the currency of the country in which the
Company is incorporated and operates. The translation of
Japanese yen amounts into U.S. dollar amounts is includ-
ed solely for convenience of the readers outside of Japan
and has been made at the rate of ¥93 to $1, the approxi-
mate rate of exchange at March 31, 2010. Such translation
should not be construed as representations that the
Japanese yen amounts could be converted into U.S. dol-
lars 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
2010
¥ 43,228
12,129
22,298
¥ 77,655
2009
¥ 49,122
13,068
22,518
¥ 84,708
Thousands of
U.S. dollars
2010
$ 464,817
130,419
239,764
$ 835,000
4. Marketable Securities and Investments
Cost, gross unrealized holding gains and losses and fair value of available-for-sale and held-to-maturity securities at March
31, 2010 and 2009 were as follows:
Millions of yen
2010
2009
Cost (*)
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Cost (*)
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Available-for-sale securities
Debt securities
Equity securities
Total
¥ 58
19,723
¥ 19,781
¥
—
13,846
¥ 13,846
¥
—
(85)
¥ (85)
¥ 58
33,484
¥ 33,542
¥ 19
20,602
¥ 20,621
¥ —
7,042
¥ 7,042
¥ —
(1,237)
¥ (1,237)
¥ 19
26,407
¥ 26,426
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
82
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
Thousands of U.S. dollars
2010
Cost (*)
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Available-for-sale securities
Debt securities
Equity securities
$ 624
212,075
$ 212,699
$
—
148,882
$ 148,882
$
—
(914)
$ (914)
$ 624
360,043
$ 360,667
Total
(*) Cost represents amortized cost for debt securities and acquisition cost for equity securities.
Millions of yen
2010
2009
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Held-to-maturity securities
Debt securities
¥ 200
¥ —
¥ —
¥
200
¥ 200
¥ —
¥ —
¥ 200
Thousands of U.S. dollars
2010
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Held-to-maturity securities
Debt securities
$ 2,151
$ —
$ —
$ 2,151
Maturities of debt securities classified as available-for-sale and held-to-maturity securities at March 31 were as follows:
Due within one year
Due after one year through five years
Due over five years
Millions of yen
Thousands of U.S. dollars
2010
2009
2010
Cost
Fair value
Cost
Fair value
Cost
Fair value
¥ 25
¥ 158
¥ 75
¥ 25
¥ 158
¥ 75
¥ —
¥ 119
¥ 100
¥ —
¥ 119
¥ 100
$ 269
$ 1,699
$ 806
$ 269
$ 1,699
$ 806
Gross unrealized holding losses and fair value of certain available-for-sale, equity securities, aggregated by length of time
that such securities have been in a continuous unrealized loss position at March 31 were as follows:
Less than 12 months
Equity securities
Millions of yen
Thousands of U.S. dollars
2010
2009
2010
Fair value
Gross
unrealized
holding losses
Fair value
Gross
unrealized
holding losses
Fair value
Gross
unrealized
holding losses
¥ 486
¥ (85)
¥ 3,740
¥ (1,237)
$ 5,226
$ (914)
83
Proceeds from sales of available-for-sale securities were
¥938 million ($10,086 thousand), ¥26 million and ¥3,403
million for the years ended March 31, 2010, 2009 and 2008,
respectively.
Gross realized gains on sales were ¥592 million ($6,366
thousand), ¥7 million and ¥1,534 million for the years ended
March 31, 2010, 2009 and 2008, respectively.
Realized losses on sales were ¥1 million for the years
ended March 31, 2009, and there were no gross realized loss-
es on sales for the years ended March 31, 2010 and 2008.
Losses on impairment of available-for-sale securities
recognized to reflect declines in market value considered
to be other than temporary were ¥517 million ($5,559 thou-
sand), ¥5,062 million and ¥2,228 million for the years ended
March 31, 2010, 2009 and 2008, respectively.
Aggregate cost of non-marketable equity securities
accounted for under the cost method totaled ¥4,839 million
($52,032 thousand) and ¥5,256 million at March 31, 2010
and 2009, respectively. Investments with an aggregate cost
of ¥4,812 million ($51,742 thousand) were not evaluated for
impairment because (a) the Companies did not estimate the
fair value of those investments as it was not practicable to
do so and (b) the Companies did not identify any events or
changes in circumstances that might have had a significant
adverse effect on the fair value of those investments.
5. Acquisition
In June 2007, the Company acquired 95% of the issued
common stock of Laserfront Technologies Co., Ltd. (now
OMRON Laserfront Inc., “OLFT”) for cash in the aggre-
gate amount of ¥8,099 million.
This acquisition was to expand laser business by
enhancing line-up of products focusing on laser process-
ing technology.
The consolidated financial statements for the year
ended March 31, 2008 include the operating results of
OLFT from July 2007. The estimated fair values of the
assets acquired and liabilities assumed at the date of acqui-
sition were as follows:
6. Goodwill and Other Intangible Assets
Millions of yen
Current assets
Property, plant and equipment
Investments and other assets (*)
Current liabilities
Long term liabilities
Minority interest
Net assets acquired
(*) Investments and other assets include acquired goodwill of ¥3,668
¥ 6,186
619
7,354
(3,863)
(1,940)
(257)
¥ 8,099
million.
The components of acquired intangible assets excluding goodwill at March 31, 2010 and 2009 were as follows:
Millions of yen
2010
2009
Thousands of U.S. dollars
2010
Gross amount
Accumulated
amortization
Gross amount
Accumulated
amortization
Gross amount
Accumulated
amortization
Intangible assets
subject to amortization:
Software
Other
Total
¥ 34,000
3,274
¥ 37,274
¥ 24,547
2,502
¥ 27,049
¥ 30,280
3,458
¥ 33,738
¥ 21,900
2,535
¥ 24,435
$ 365,591
35,205
$ 400,796
$ 263,946
26,903
$ 290,849
Aggregate amortization expense related to intangible assets was ¥4,775 million ($51,344 thousand), ¥6,462 million and
¥6,769 million for the years ended March 31, 2010, 2009 and 2008, respectively.
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
84
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
Estimated amortization expense for the next five years ending March 31 is as follows:
Years ending March 31
2011
2012
2013
2014
2015
Millions of yen
Thousands of
U.S. dollars
¥ 3,792
2,762
1,776
1,236
334
$ 40,774
29,699
19,097
13,290
3,591
Intangible assets not subject to amortization at March 31, 2010 and 2009 were immaterial.
The carrying amount of goodwill in each segment at March 31, 2009 and changes in its carrying amount in each segment for
the year ended March 31, 2009 were as follows:
Balance at beginning of year
Goodwil
Accumulated impairment loss
Total
Acquisition
Impairment
Sales of business entity
Foreign currency translation
adjustments and other
Balance at end of year
Goodwil
Accumulated impairment loss
Total
IAB
EMC
AEC
SSB
HCB
Other
Total
Millions of yen
¥ 11,792
—
11,792
—
(9,406)
—
¥ 1,229
—
1,229
—
(265)
—
¥ 680
—
680
—
(588)
—
¥ —
—
—
—
—
—
¥ 6,554
—
6,554
—
(6,554)
—
¥ 1,981
—
1,981
—
—
—
¥ 22,236
—
22,236
—
(16,813)
—
(1,411)
48
(92)
—
—
—
(1,455)
10,381
(9,406)
¥ 975
1,277
(265)
¥ 1,012
588
(588)
¥ —
—
—
¥ —
6,554
(6,554)
¥ —
1,981
—
¥ 1,981
20,781
(16,813)
¥ 3,968
The carrying amount of goodwill in each segment at March 31, 2010 and changes in its carrying amount in each segment for
the year ended March 31, 2010 were as follows:
Balance at beginning of year
Goodwil
Accumulated impairment loss
Total
Acquisition
Impairment
Sales of business entity
Foreign currency translation
adjustments and other
Balance at end of year
Goodwil
Accumulated impairment loss
Total
IAB
EMC
AEC
SSB
HCB
Other
Total
Millions of yen
¥ 10,381
(9,406)
975
—
—
—
¥ 1,277
(265)
1,012
—
—
(743)
¥ 588
(588)
—
—
—
—
¥ —
—
—
—
—
—
¥ 6,554
(6,554)
—
—
—
—
¥ 1,981
—
1,981
—
—
(43)
¥ 20,781
(16,813)
3,968
—
—
(786)
(20)
(191)
—
—
—
—
(211)
10,361
(9,406)
¥ 955
343
(265)
¥ 78
588
(588)
¥ —
—
—
¥ —
6,554
(6,554)
—
¥
1,938
—
¥ 1,938
19,784
(16,813)
¥ 2,971
85
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
Balance at beginning of year
Goodwil
Accumulated impairment loss
Total
Acquisition
Impairment
Sales of business entity
Foreign currency translation
adjustments and other
Balance at end of year
Goodwil
Accumulated impairment loss
Total
IAB
EMC
AEC
SSB
HCB
Other
Total
Thousands of U.S. dollars
$ 111,624
(101,140)
10,484
—
—
—
$ 13,731
(2,849)
10,882
—
—
(7,989)
$ 6,323
(6,323)
—
—
—
—
$ —
—
—
—
—
—
$ 70,473
(70,473)
—
—
—
—
$ 21,301
—
21,301
—
—
(462)
$ 223,452
(180,785)
42,667
—
—
(8,451)
(215)
(2,054)
—
—
—
—
(2,269)
111,409
(101,140)
$ 10,269
3,688
(2,849)
$ 839
6,323
(6,323)
—
$
—
—
$ —
70,473
(70,473)
—
$
20,839
—
$ 20,839
212,732
(180,785)
$ 31,947
In accordance with ASC No.350, “Intangibles-Goodwill and
Other” (previously SFAS No.142, “Goodwill and Other
Intangible Assets”), the Companies recognized the impair-
ment losses for the fiscal year ended March 31, 2009. Due
to the sharp deterioration of business environment in auto-
mobile sector, FPD sector and medical equipment sector,
the fair value of the associated reporting unit was decreased.
The impairment losses are included in other expenses, net
in the consolidated financial statements of operations. And,
the fair value of the reporting unit was estimated using the
expected present value of future cash flows. Furthermore,
the amounts of impairment losses are disclosed after being
reclassified into new operating segments, which resulted
from series of reorganizations.
7. Impairment Loss on Long-Lived Assets
In accordance with ASC No.360, “Property, Plant and
Equipment” (previously SFAS No.144, “Accounting for the
Impairment or Disposal of Long-Lived Assets”), the
Companies recognized the impairment losses for the fis-
cal year ended March 31, 2009 on long-lived assets in
Industrial Automation business, Electronic and Mechanical
Components Business, Automotive Electronic Component
Business and Other Business. The amounts were ¥5,361
million, ¥354 million, ¥9,699 million and ¥5,789 million,
respectively. Due to the sharp deterioration of the
business environment in the automobile, FPD and semi-
8. Short-Term Debt and Long-Term Debt
Short-term debt at March 31 consisted of the following:
Commercial Paper
The weighted average annual interest rates
2009
2010
0.8%
0.1%
Unsecured debt:
conductor sectors, the carrying amount of certain groups
of assets exceeded their fair value. The impairment losses
are included in other expenses, net in the consolidated
statements of operations. The fair value of the group assets
was estimated using the expected present value of future
cash flows. Furthermore, the amounts of impairment loss-
es are disclosed after being reclassified into new operating
segments, which resulted from a series of reorganizations.
There was no material impairment loss for the fiscal
years ended March 31, 2010.
Millions of yen
Thousands of
U.S. dollars
2010
2009
2010
¥ 16,000
¥ 31,000
$ 172,043
The weighted average annual interest rates
612
1,970
6,581
2009
2010
3.9%
1.8%
Total
¥ 16,612
¥ 32,970
$ 178,624
86
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
Long-term debt at March 31 consisted of the following:
Unsecured debt:
The weighted average annual interest rates
2009
2010
1.3%
1.3%
Other
Total
Less portion due within one year
Long-term debt, less current portion
Millions of yen
Thousands of
U.S. dollars
2010
2009
2010
¥ 20,000
¥ 20,000
$ 215,054
1,605
21,605
20,315
¥ 1,290
1,889
21,889
488
¥ 21,401
17,258
232,312
218,441
$ 13,871
The annual maturities of long-term debt outstanding at March 31, 2010 were as follows:
Years ending March 31
2011
2012
2013
2014
2015
Thereafter
Total
Millions of yen
Thousands of
U.S. dollars
¥ 20,315
49
50
52
54
1,085
¥ 21,605
$ 218,441
527
538
559
581
11,666
$ 232,312
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 obli-
gation 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 also customary in Japan, the Company and
domestic subsidiaries maintain deposit balances with
banks with which they have short- or long-term debt. Such
deposit balances are not legally or contractually restrict-
ed as to withdrawal.
Total interest cost incurred and charged to expense for
the years ended March 31, 2010, 2009 and 2008 amount-
ed to ¥650 million ($6,989 thousand), ¥1,257 million and
¥1,537 million, respectively.
9. Leases
The Companies do not have any material capital lease
agreements.
The Companies have operating lease agreements pri-
marily involving offices and equipment for varying periods.
Leases that expire generally are expected to be renewed
or replaced by other leases. At March 31, 2010, future min-
imum 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
2011
2012
2013
2014
2015
Thereafter
Total
Millions of yen
Thousands of
U.S. dollars
¥ 3,008
2,431
2,011
1,629
1,358
6,684
¥ 17,121
$ 32,344
26,140
21,624
17,516
14,602
71,871
$ 184,097
Rental expense amounted to ¥12,507 million ($134,484 thousand), ¥13,787 million and ¥13,292 million for the years ended
March 31, 2010, 2009 and 2008, respectively.
10. Termination and Retirement Benefits
The Company and its domestic subsidiaries sponsor ter-
mination and retirement benefit plans which cover
substantially all domestic employees (hereinafter, “the
funded contributory termination and retirement plan in
Japan”). Benefits were based on the employee’s years of
service, with some plans considering compensation and
certain other factors. The Company, effective from April
2004, and its domestic subsidiaries, effective from April
2005, introduced an amended plan to establish a new for-
mula for determining pension benefits including a
“point-based benefits system,” under which benefits are
calculated based on accumulated points allocated to
employees each year according to their job classification
and performance. 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 por-
tion of the obligations under these plans. The general
funding policy is to contribute amounts computed in accor-
dance with actuarial methods acceptable under Japanese
tax law.
Obligations and Funded Status
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:
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost, less employees’ contributions
Interest cost
Actuarial loss (gain)
Benefits paid
Settlement paid
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employers’ contributions
Benefits paid
Settlement paid
Fair value of plan assets at end of year
Fair value of assets in retirement benefit trust at beginning of year
Actual return on assets in retirement benefit trust
Fair value of assets in retirement benefit trust at end of year
Funded status at end of year
Millions of yen
Thousands of
U.S. dollars
2010
2009
2010
¥ 162,952
3,978
3,259
1,267
(5,701)
(898)
¥ 164,857
¥ 80,245
10,533
8,616
(4,574)
(898)
¥ 93,922
7,040
316
¥ 7,356
¥ (63,579)
¥ 159,025
3,976
3,180
2,877
(5,064)
(1,042)
¥ 162,952
¥ 89,729
(9,723)
5,272
(3,991)
(1,042)
¥ 80,245
10,828
(3,788)
¥ 7,040
¥ (75,667)
$ 1,752,172
42,774
35,043
13,624
(61,301)
(9,656)
$ 1,772,656
$ 862,850
113,258
92,645
(49,183)
(9,656)
$ 1,009,914
75,699
3,398
$ 79,097
$ (683,645)
Other Current Liabilities
Amounts recognized in the consolidated balance sheet at March 31, consist of:
Other current liability
Termination and retirement benefit
Total
Millions of yen
Thousands of
U.S. dollars
2010
2009
2010
¥
(1,048)
(62,531)
¥ (63,579)
¥ (859)
(74,808)
¥ (75,667)
$
(11,269)
(672,376)
$ (683,645)
87
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
88
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
Amounts recognized in accumulated other comprehensive income (loss) at March 31, consist of:
Net actuarial loss
Prior service cost
The accumulated benefit obligation at March 31 was as follows:
Accumulated benefit obligation
Millions of yen
Thousands of
U.S. dollars
2010
2009
2010
¥ 78,485
(16,002)
¥ 62,483
¥ 87,474
(17,855)
¥ 69,619
$ 843,925
(172,065)
$ 671,860
Millions of yen
Thousands of
U.S. dollars
2010
2009
2010
¥ 160,077
¥ 158,225
$ 1,721,258
Components of Net Periodic Benefit Cost
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
Net periodic benefit cost
2010
¥ 3,978
3,259
(3,316)
873
¥ 4,794
Millions of yen
2009
¥ 3,976
3,180
(3,128)
826
¥ 4,854
2008
¥ 3,992
3,091
(2,955)
625
¥ 4,753
Thousands of
U.S. dollars
2010
$ 42,774
35,043
(35,656)
9,387
$ 51,548
The unrecognized net actuarial loss and the prior service benefit are being amortized over 15 years.
The estimated net actuarial loss and prior service benefit
that will be amortized from accumulated other compre-
hensive income (loss) into net periodic benefit cost for the
year ending March 31, 2011 are summarized as follows:
Net actuarial loss
Prior service cost
Millions of yen
¥ 2,963
(1,853)
Thousands of
U.S. dollars
$ 31,860
(19,925)
Measurement Date
The Company and certain of its domestic subsidiaries use March 31 as the measurement date for projected benefit obliga-
tion and plan assets of the termination and retirement benefits.
Assumptions
Weighted-average assumptions used to determine benefit obligations at March 31, 2010 and 2009 are as follows:
Discount rate
Compensation increase rate
2010
2.0%
2.0%
2009
2.0%
2.0%
Weighted-average assumptions used to termination and retirement benefit cost for the years ended March 31, 2010, 2009
and 2008 are as follows:
Discount rate
Compensation increase rate
Expected long-term rate of return on plan assets
2010
2.0%
2.0%
3.0%
2009
2.0%
2.0%
3.0%
2008
2.0%
2.0%
3.0%
The expected return on plan assets is determined by estimating the future rate of return on each category of plan assets con-
sidering actual historical returns and current economic trends and conditions.
Plan Assets
The Company investment policies are designed to ensure
that adequate plan assets are available to provide future
payments of pension benefits to eligible participants. Taking
into account the expected long-term rate of return on plan
assets, the Company formulates a model portfolio com-
prised of the optimal combination of equity and debt
securities in order to produce a total return that will match
the expected return on a mid-term to long-term basis.
Joint trusts of Equity securities consist of approximately
50% Japanese companies’ listing stocks and 50% foreign
companies’ listing stocks. And, Joint trusts of Debt secu-
rities consist of approximately 50% Japanese government
bonds and 50% foreign government bonds.
The Company evaluates the gap between long-term
expected return and actual return of invested plan assets
to determine if such differences necessitate a revision in
the formulation of the model portfolio. And, in the event
that the Company determines the need for a revision of
the model portfolio to accomplish the expected long-term
rate of return on plan assets, the Company revises the
model portfolio to the extent necessary to achieve it.
Target allocation of plan assets is 20% equity securi-
ties, 66% debt securities and life insurance general account
assets and 14% other. Equity securities are mainly com-
posed of stocks that are listed on the securities exchanges.
The Company has investigated the business condition of
the investee companies and appropriately diversified the
investments by type of industry, brand and other relevant
factors. Debt securities are primarily composed of gov-
ernment bonds, public debt instruments, and corporate
bonds. The Company has investigated the quality of the
issue, including rating, interest rate, and repayment dates
and appropriately diversified the investments. As for invest-
ments in life insurance general account assets, the
contracts with the insurance companies include a guaran-
teed interest and return of capital.
The Company’s fair value of pension plan assets (except for assets in retirement benefit trust) by asset category for the
year ended March 31, 2010 are as follows:
Millions of yen
Thousands of U.S. dollars
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
¥ 2,533
1,945
—
¥
—
—
16,939
¥ —
—
—
¥ 2,533
1,945
16,939
$ 27,237
20,914
—
$ —
—
182,140
$
—
46,128
—
46,128
—
496,000
—
—
—
—
$ 27,237
20,914
182,140
496,000
Equity securities
Domestic stocks
Overseas stocks
Joint trusts (*)
Debt securities
Joint trusts
Other assets
Life insurance general:
account assets
Others
—
43
¥ 4,521
13,899
11,580
¥ 88,546
—
855
¥ 855
13,899
12,478
¥ 93,922
—
462
$ 48,613
149,452
124,516
$ 952,108
—
9,193
$ 9,193
149,452
134,171
$ 1,009,914
Total
(*) Joint trusts of Equity securities include common stock of the Company in the amounts of ¥11 million ($ 118 thousand) for the year ended March 31, 2010.
Level 1 assets are comprised principally of equity securi-
ties, which are valued using unadjusted quoted market
prices in active markets with sufficient volume and fre-
quency of transactions.
Level 2 assets are comprised principally of joint trusts
and life insurance general account assets that invest in
equity and debt securities. These joint trusts are valued at
their net asset values that are calculated by the sponsor
of the fund. These life insurance general account assets
are valued at net asset value.
Level 3 assets are comprised of private equities and
hedge funds, which are valued at net asset value.
89
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
90
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
The Company’s pension plan assets classified as Level 3 (except for assets in retirement benefit trust) for the year ended March
31, 2010 are as follows:
Balance at beginning of year
Total gain and loss
(realized or unrealized)
Current period’s holding
Current period’s sale
Purchase, issuance and settlement
Current period’s
transfer to (from) Level 3
Balance at end of year
Millions of yen
Thousands of U.S. dollars
Private equity
Hedge fund
Total
Private equity
Hedge fund
Total
¥ 1,025
¥ 1,408
¥ 2,433
$ 11,022
$ 15,140
$ 26,162
122
—
(800)
5
—
(905)
127
—
(1,705)
1,311
—
(8,602)
54
—
(9,731)
1,365
—
(18,333)
—
¥ 347
—
¥ 508
—
¥ 855
—
$ 3,731
—
$ 5,463
—
$ 9,194
Cash Flows
Contributions
The Companies expect to contribute ¥8,912 million ($95,828 thousand) to their domestic termination and retirement benefit
plans in the year ending March 31, 2011.
Benefit Payments
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
Years ending March 31
2011
2012
2013
2014
2015
2016–2020
Millions of yen
Thousands of
U.S. dollars
¥ 6,517
7,017
7,227
6,948
7,273
37,142
$ 70,075
75,452
77,710
74,710
78,204
399,376
Certain employees of European subsidiaries are covered
by a defined benefit pension plan. The projected benefit
obligation for the plan and related fair value of plan assets
were ¥3,401 million ($36,570 thousand) and ¥2,801 mil-
lion ($30,118 thousand), respectively, at March 31, 2010
and ¥2,691 million and ¥2,135 million, respectively, at
March 31, 2009.
The Companies also have unfunded noncontributory
termination plans administered by the Companies. These
plans provide lump-sum termination benefits which 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 share-
holders before payment. The Companies record provisions
for termination benefits sufficient to state the liability equal
to the plans’ vested benefits, which exceed the plans’ pro-
jected benefit obligations.
The aggregate liability for the termination plans exclud-
ing the funded contributory termination and retirement
plan in Japan, as of March 31, 2010 and 2009 was ¥4,546
million ($48,882 thousand) and ¥4,776 million, respec-
tively. The aggregate net periodic benefit cost for such
plans for the years ended March 31, 2010, 2009 and 2008
was ¥515 million ($5,538 thousand), ¥702 million and ¥258
million, respectively.
11. Shareholders’ Equity
Japanese companies are subjected to the Corporate Law.
The Corporate Law requires that all shares of common
stock be issued with no par value and at least 50% of
amount paid of the issue price of new shares is required
to be recorded as common stock and the remaining net
proceeds are required to be presented as additional paid-
in capital, which is included in capital surplus. The Corporate
Law permits Japanese companies, upon approval of the
Board of Directors, to issue shares to existing shareholders
without consideration by way of a stock split. Such issuance
of shares generally does not give rise to changes within
the shareholders’ accounts.
91
The Corporate Law also requires that an amount equal
to 10% of dividends must be appropriated as a legal reserve
or as additional paid-in capital (a component of capital sur-
plus) depending on the equity account charged upon the
payment of such dividends until the total of aggregate amount
of legal reserve and additional paid-in capital equals 25% of
the common stock. Under the Corporate Law, the total
amount of additional paid-in capital and legal reserve may be
reversed without limitation of such threshold. The Corporate
Law also provides that common stock, legal reserve, addi-
tional paid-in capital, other capital surplus and retained
earnings can be transferred among the accounts under cer-
tain conditions upon resolution of the shareholders.
The Corporate Law also provides for companies to pur-
chase treasury stock and dispose of such treasury stock
by resolution of the Board of Directors. The amount of
treasury stock purchased cannot exceed the amount
available for distribution to the shareholders which is deter-
mined by specific formula.
Under the Corporate Law, companies can pay divi-
dends at any time during the fiscal year in addition to the
year-end dividend upon resolution at the shareholders
meeting. For companies that meet certain criteria such as;
(1) having the Board of Directors, (2) having independent
Stock Options
The Company has authorized the grant of options to pur-
chase common stock of the Company to certain directors
and executive officers of the Company under a fixed stock
option plan.
Under the above plan, the exercise price of each option
exceeded the market price of the Company’s common
Fixed options
Options outstanding at March 31, 2007
Granted
Exercised
Expired
Options outstanding at March 31, 2008
Granted
Exercised
Expired
Options outstanding at March 31, 2009
Granted
Exercised
Expired
Options outstanding at March 31, 2010
Options exercisable at March 31, 2010
auditors, (3) having the Board of Corporate Auditors, and
(4) the term of service of the directors is prescribed as one
year rather than two years of normal term by its articles of
incorporation, the Board of Directors may declare dividends
(except for dividends in kind) if the company has prescribed
so in its articles of incorporation.
The Corporate Law permits companies to distribute
dividends-in-kind (non-cash assets) to shareholders sub-
ject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a
year upon resolution by the Board of Directors if the articles
of incorporation of the company so stipulate. Under the
Corporate Law, certain limitations were imposed on the
amount of capital surplus and retained earnings available for
dividends. The Corporate Law also provides certain limita-
tions on the amounts available for dividends or the purchase
of treasury stock. The limitation is defined as the amount
available for distribution to the shareholders, but the amount
of net assets after dividends must be maintained at no less
than ¥3 million. Such amount available for the dividends
under the Corporate Law was ¥56,040 million ($602,581
thousand) at March 31, 2010, based on the amount record-
ed in the parent company’s general books of account.
stock on the date of grant and the options expire 5 years
after the date of the grant. Generally, options become fully
vested and exercisable after 2 years. A summary of the
Company’s fixed stock option plan activity and related infor-
mation for the year ended March 31, 2010 are as follows:
Shares
(number)
905,000
237,000
(181,000)
(3,000)
958,000
—
—
(120,000)
838,000
—
—
(179,000)
659,000
659,000
Yen
Weighted-average
exercise price
Weighted-average fair
value of options granted
during the year
¥ 744
¥ —
¥ —
¥ 2,570
3,432
2,131
1,913
¥ 2,868
—
—
2,435
¥ 2,930
—
—
2,580
¥ 3,026
¥ 3,026
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
92
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
Fixed options
Options outstanding at March 31, 2009
Granted
Exercised
Expired
Options outstanding at March 31, 2010
Options exercisable at March 31, 2010
Shares
(number)
838,000
—
—
(179,000)
659,000
659,000
U.S. dollars
Weighted-average
exercise price
Weighted-average fair
value of options granted
during the year
$ —
$ 31.51
—
—
27.74
$ 32.54
$ 32.54
The following summarizes information about fixed stock options at March 31, 2010:
Shares
(number)
Weighted-average
remaining
contractual life
Options outstanding
659,000
1.30 years
Options exercisable
659,000
1.30 years
Range of exercise prices
Weighted-average exercise price
Yen
¥ 2,550
to
¥ 3,432
¥ 2,550
to
¥ 3,432
U.S. dollars
Yen
U.S. dollars
¥ 3,026
$ 32.54
¥ 3,026
$ 32.54
$ 27.42
to
$ 36.90
$ 27.42
to
$ 36.90
The fair value of each option grant was estimated as of the grant date using the Black-Scholes option-pricing model with
the following assumptions:
Risk-free interest rate
Volatility
Dividend yield
Expected life
2008
1.343%
27.8%
1.166%
3.5 years
No fixed stock options were granted for the years ended March 31, 2009 and 2010.
The Black-Scholes option-pricing model used by the
Company was developed for use in estimating the fair value
of fully tradable options, which have no vesting restrictions
and are fully transferable. In addition, option valuation mod-
els require the input of highly subjective assumptions
including the expected stock price volatility. It is manage-
ment’s opinion that the Company’s stock options have
characteristics significantly different from those of traded
options and because changes in the subjective input
assumptions can materially affect the fair value estimate,
the existing models do not necessarily provide a reliable
single measure of the fair value of its stock options.
Stock-based compensation cost recognized for the
year ended March 31, 2010 was ¥22 million ($237 thou-
sand). As of March 31, 2010, there was no unrecognized
compensation expense.
There were no cash received from options exercised
under the plan for the year ended March 31, 2010.
When options are exercised, the Company will reissue
the Company’s treasury stock.
93
12. Other Expenses, Net
Other expenses, net for the years ended March 31, 2010, 2009 and 2008 consisted of the following:
Millions of yen
2010
2009
Net loss on sales and disposals of property, plant and equipment
Loss on impairment of property, plant and equipment
Loss on impairment of goodwill
Loss on impairment of investment securities and other assets
Net gain on sales of investment securities
Interest income, net
Foreign exchange loss, net
Dividend income
Net loss on sales of business entity
Other, net
Total
¥ 558
217
—
632
(636)
(72)
723
(609)
966
1,100
¥ 2,879
¥ 1,983
21,203
16,813
5,401
(64)
(173)
(1,060)
(786)
—
1,155
¥ 44,472
Thousands of
U.S. dollars
2010
$ 6,000
2,333
—
6,796
(6,839)
(774)
7,774
(6,548)
10,387
11,828
$ 30,957
2008
¥ 963
168
—
2,297
(1,571)
(828)
1,251
(525)
—
(668)
¥ 1,087
13. Income Taxes
The provision for income taxes for the years ended March 31, 2010, 2009 and 2008 consisted of the following:
Current income tax expense
Deferred income tax expenses, exclusive of the following
Change in the valuation allowance
Total
Millions of yen
Thousands of
U.S. dollars
2010
2009
2008
2010
¥ 4,813
(904)
(127)
¥ 3,782
¥ 3,400
(14,866)
971
¥ (10,495)
¥ 24,403
(367)
236
¥ 24,272
$ 51,753
(9,720)
(1,366)
$ 40,667
Total amount of income taxes for the years ended March 31, 2010, 2009 and 2008 are respectively allocated to the follow-
ing items:
“Income Taxes” in consolidated statement of operations
Accumulated other comprehensive income (loss)
Foreign currency translation adjustments
Pension liability adjustments
Unrealized gains (losses) on available-for-sale securities
Net gains (losses) on derivative instruments
Total
Millions of yen
Thousands of
U.S. dollars
2010
2009
2008
2010
¥ 3,782
¥ (10,495)
¥ 24,272
$ 40,667
72
2,792
3,420
383
¥ 10,449
(517)
(7,869)
(2,598)
(645)
¥ (22,124)
(42)
(4,918)
(4,334)
314
¥ 15,292
774
30,022
36,774
4,118
$ 112,355
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 41.0% in 2010, 2009 and 2008.
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
94
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
The effective income tax rates of the Companies differ from the normal Japanese statutory rates as follows for the years ended
March 31:
Japanese statutory effective tax rates
Increase (decrease) in taxes resulting from:
permanently non-deductible items
Tax credit for research and development expenses
Losses of subsidiaries for which no tax benefit was provided
Difference in subsidiaries’ tax rates
Change in the valuation allowance
Other, net
Income taxes burden rates after the application of tax effect accounting
2010
41.0%
1.1
(3.5)
2.3
(3.6)
(0.9)
0.7
37.1
2009
41.0%
(1.6)
1.2
(11.9)
6.7
(7.1)
(1.5)
26.8
2008
41.0%
0.9
(4.6)
1.0
(1.7)
0.4
0.8
37.8
The approximate effect of temporary differences and tax credit and loss carry forwards that gave rise to deferred tax bal-
ances at March 31, 2010 and 2009 were as follows:
Millions of yen
Thousands of U.S. dollars
2010
2009
2010
Deferred
tax assets
Deferred
tax liabilities
Deferred
tax assets
Deferred
tax liabilities
Deferred
tax assets
Deferred
tax liabilities
Inventory valuation
Accrued bonuses and vacations
Termination and retirement benefits
Enterprise taxes
Marketable securities
Property, plant and equipment
Allowance for doubtful receivables
Pension liability adjustment
Other temporary differences
Tax credit carryforwards
Operating loss carryforwards
Subtotal
Valuation allowance
Total
¥ 5,933
4,871
4,338
499
—
3,360
2,034
25,619
15,538
4,370
12,982
¥ 79,544
(9,776)
¥ 69,768
¥ —
—
—
—
4,056
—
—
—
884
—
—
¥ 4,940
—
¥ 4,940
¥ 6,145
4,626
6,446
—
—
4,607
3,018
28,544
13,683
4,275
13,691
¥ 85,035
(10,343)
¥ 74,692
¥ —
—
—
246
1,350
—
—
—
3,888
—
—
¥ 5,484
—
¥ 5,484
$ 63,796
52,376
46,645
5,366
—
36,129
21,871
275,473
167,076
46,989
139,591
$ 855,312
(105,118)
$ 750,194
$ —
—
—
—
43,613
—
—
—
9,505
—
—
$ 53,118
—
$ 53,118
The total valuation allowance decreased by ¥567 million
($6,097 thousand) in 2010 and increased by ¥1,752 million
in 2009.
As of March 31, 2010, the Companies had operating
loss carryforwards approximating ¥34,865 million ($374,892
thousand) available for reduction of future taxable income,
the majority of which expire by 2016.
The Company has not provided for Japanese income
taxes on unremitted earnings of certain foreign subsidiaries
to the extent that they are believed to be indefinitely rein-
vested. Under Japanese Tax Reform on March, 2009, up to
95% of a dividend received by a company from the foreign
subsidiaries is free of tax. As a result of these conditions,
the accumulated unremitted earnings of the foreign sub-
sidiaries which the Company has not recognized deferred
tax liabilities were ¥84,642 million ($910,129 thousand)
and ¥71,174 million at March 31, 2010 and 2009, respec-
tively. Dividends received from domestic subsidiaries are
expected to be substantially free of tax.
The Companies have adopted ASC No.740, “Accounting
for Uncertainty in Income Taxes” (previously FIN No.48,
“Accounting for Uncertainty in Income Taxes, an interpre-
tation of FASB Statement No.109”). As a result of this
adoption, the Companies decreased ¥266 million of the
beginning retained earnings of the year beginning April 1,
2007. The Companies believe that the total amount of unrec-
ognized tax benefits as of March 31, 2010 is not material to
its result of operations, financial condition or cash flows.
The Companies recognize interest and penalties
accrued related to unrecognized tax benefits in income
taxes in the consolidated statements of operations.
The Companies file income tax returns in Japanese
and foreign jurisdictions. With few exceptions, tax exam-
inations in Japan for the year on and before ended March
31, 2009 have been finished. With few exceptions, tax
examinations in foreign countries for the year on and before
ended March 31, 2003 have been finished.
95
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
14. Discontinued Operations
On April 1, 2007, the Company sold the entire business of
Omron Entertainment Co., Ltd, which had been a consoli-
dated subsidiary, to a third party. In accordance with ASC
No.360, “Property, Plant and Equipment” (previously SFAS
No.144), the Companies presented the gains (net of tax) of
its disposal of the business and the results of discontinued
operations (including operations of subsidiaries that either
have been disposed of or classified as held for sale) as sep-
arate line item in the consolidated statements of operations
under “Income from discontinued operations, net of tax.”
Prior years’ consolidated statements of operations includ-
ing segment information and other related matters were
restated to compare with the consolidated statements of
operations for the year ended March 31, 2009. On the other
hand, the cash flows attributable to the operating, invest-
ing and financing activities of the discontinued operations
were not presented separately from the cash flows attrib-
utable to activities of the continuing operations.
The Companies have no continuing involvement with
the business of Omron Entertainment Co., Ltd.
The following table summarizes selected financial information for the year ended March 31, 2008 for the discontinued operations.
Net sales
Cost of sales and expenses
Income from discontinued operations before income taxes
Net gain on sales of business entities
Income taxes
Income from discontinued operations, net of tax
15. Per Share Data
Millions of yen
2008
¥
—
—
—
5,177
2,123
¥ 3,054
The Company accounts for its net income per share in accor-
dance with ASC No.260, “Earnings Per Share” (previously
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 num-
ber of common shares outstanding during each year. Diluted
net income per share reflects the potential dilution of con-
vertible bonds and stock options, and has been computed
by the if-converted method for convertible bonds and by
the treasury stock method for stock options.
A reconciliation of the numerators and denominators of the basic and diluted net income per share computations is as follows:
Numerator
2010
2009
2008
2010
Income (loss) from continuing operations
¥ 3,621
¥ (29,172)
¥ 39,329
$ 38,935
Diluted income (loss) from continuing operations
¥ 3,621
¥ (29,172)
¥ 39,329
$ 38,935
Millions of yen
Thousands of
U.S. dollars
Income from discontinued operations, net of tax
Diluted income from discontinued operations, net of tax
Millions of yen
Thousands of
U.S. dollars
2010
2009
2008
2010
¥
¥
—
—
¥
¥
—
—
¥ 3,054
$ —
¥ 3,054
$ —
Millions of yen
Thousands of
U.S. dollars
2010
2009
2008
2010
Net income (loss) attributable to shareholders
¥ 3,518
¥ (29,172)
¥ 42,383
$ 37,828
Diluted net income (loss) attributable to shareholders
¥ 3,518
¥ (29,172)
¥ 42,383
$ 37,828
96
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
Denominator
Weighted average common shares outstanding
Dilutive effect of:
Stock options
Diluted common shares outstanding
2010
2009
2008
220,158,389
220,747,962
228,005,106
—
220,158,389
—
220,747,962
61,624
228,066,730
16. Supplemental Information for Cash Flows
Supplemental cash flow information for the years ended March 31, 2010, 2009 and 2008 was as follows:
Millions of yen
2009
¥ 1,257
18,776
2008
¥ 1,536
27,216
Thousands of
U.S. dollars
2010
$ 7,011
30,247
1,567
2,202
3,215
—
23,858
—
2010
¥ 652
2,813
299
—
Interest paid
Income taxes paid
Non-cash investing and financing activities
Liabilities assumed in connection with capital expenditures
Decrease in retained earnings as a result of
extinguishment of treasury stock
17. Other Comprehensive Income (Loss)
The change in each component of accumulated other comprehensive income (loss) for the years ended March 31, 2010,
2009 and 2008 was as follows:
Foreign currency translation adjustments
Beginning balance
Change for the year
Ending balance
Pension liability adjustments
Beginning balance
Change for the year
Ending balance
Unrealized gains (losses) on available-for-sale securities
Beginning balance
Change for the year
Ending balance
Net gains (losses) on derivative instruments
Beginning balance
Change for the year
Ending balance
Total accumulated other comprehensive loss
Beginning balance
Change for the year
Ending balance
Millions of yen
Thousands of
U.S. dollars
2010
2009
2008
2010
¥ (22,319)
(1,359)
(23,678)
¥ (5,782)
(16,537)
(22,319)
¥ 6,560
(12,342)
(5,782)
$ (239,989)
(14,613)
(254,602)
(40,570)
4,017
(36,553)
2,763
4,921
7,684
(618)
551
(67)
(29,245)
(11,325)
(40,570)
6,501
(3,738)
2,763
309
(927)
(618)
(22,169)
(7,076)
(29,245)
12,738
(6,237)
6,501
(142)
451
309
(436,237)
43,194
(393,043)
29,710
52,914
82,624
(6,645)
5,925
(720)
(60,744)
8,130
¥ (52,614)
(28,217)
(32,527)
¥ (60,744)
(3,013)
(25,204)
¥ (28,217)
(653,161)
87,420
$ (565,741)
Tax effects allocated to each component of other comprehensive income (loss) including other comprehensive income
(loss) attributable to noncontrolling interests and reclassification adjustments for the years ended March 31, 2010, 2009
and 2008 were as follows:
2010
Millions of yen
2009
2008
Before-tax
amount
Tax (expense)
benefit
Net-of-tax
amount
Before-tax
amount
Tax (expense)
benefit
Net-of-tax
amount
Before-tax
amount
Tax (expense)
benefit
Net-of-tax
amount
Foreign currency
translation adjustments:
Foreign currency translation
adjustments arising during the year
Reclassification adjustment for
the portion realized in net income
Net change in foreign currency
translation adjustments
during the year
Pension liability adjustments:
Pension liability adjustments
¥ (1,328)
¥ (72)
¥ (1,400)
¥(17,225)
¥ 517
¥(16,708)
¥(12,021)
¥ 42
¥(11,979)
—
—
—
—
—
—
—
—
—
(1,328)
(72)
(1,400)
(17,225)
517
(16,708)
(12,021)
42
(11,979)
arising during the year
7,681
(3,150)
4,531
(18,368)
7,530
(10,838)
(11,369)
4,662
(6,707)
Reclassification adjustment for the
portion realized in net income
Net pension liability adjustments
Unrealized gains (losses)
on available-for-sale securities:
Unrealized holding gains (losses)
arising during the year
Reclassification adjustment for
losses on impairment
in net income
Reclassification adjustment for
net gains on sales
in net income
Net unrealized gains (losses)
Net gains (losses) on
derivative instruments:
Net gains (losses) on derivative
instruments designated as cash flow
hedges during the year
Reclassification adjustment for net
gains (losses) realized in net income
Net gains (losses)
Other comprehensive
income (losses)
(872)
6,809
358
(2,792)
(514)
4,017
(826)
(19,194)
339
7,869
(487)
(11,325)
(625)
(11,994)
256
4,918
(369)
(7,076)
8,417
(3,451)
4,966
(11,393)
4,671
(6,722)
(11,266)
4,619
(6,647)
516
(212)
304
5,062
(2,075)
2,987
2,229
(914)
1,315
(592)
8,341
243
(3,420)
(349)
4,921
(5)
(6,336)
2
2,598
(3)
(3,738)
(1,534)
(10,571)
629
4,334
(905)
(6,237)
1,250
(513)
737
1,333
(546)
787
1,997
(819)
1,178
(316)
934
130
(383)
(186)
551
(2,905)
(1,572)
1,191
645
(1,714)
(927)
(1,232)
765
505
(314)
(727)
451
¥ 14,756
¥ (6,667)
¥ 8,089
¥(44,327)
¥11,629
¥(32,698)
¥(33,821)
¥ 8,980
¥(24,841)
97
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
98
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
Foreign currency translation adjustments:
Foreign currency translation adjustments arising during the year
Reclassification adjustment for the portion realized in net income
Net change in foreign currency translation adjustments during the year
Pension liability adjustments:
Pension liability adjustments arising during the year
Reclassification adjustment for the portion realized in net income
Net pension liability adjustments
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the year
Reclassification adjustment for losses on impairment in net income
Reclassification adjustment for net gains on sales in net income
Net unrealized gains (losses)
Net gains (losses) on derivative instruments:
Net gains (losses) on derivative instruments designated as cash flow hedges during the year
Reclassification adjustment for net gains (losses) realized in net income
Net gains (losses)
Other comprehensive income (losses)
Thousands of U.S. dollars
2010
Before-tax
amount
Tax (expense)
benefit
Net-of-tax
amount
$ (14,280)
—
(14,280)
$ (774)
—
(774)
$ (15,054)
—
(15,054)
82,591
(9,376)
73,215
90,505
5,548
(6,365)
89,688
(33,870)
3,849
(30,021)
(37,107)
(2,279)
2,612
(36,774)
48,721
(5,527)
43,194
53,398
3,269
(3,753)
52,914
13,441
(3,398)
10,043
$ 158,666
(5,516)
1,398
(4,118)
$ (71,687)
7,925
(2,000)
5,925
$ 86,979
18. Financial Instruments and Risk Management
Fair Value of Financial Instruments
The following table presents the carrying amounts and estimated fair values as of March 31, 2010 and 2009, of the Companies’
financial instruments.
Millions of yen
Thousands of U.S. dollars
2010
2009
2010
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Nonderivatives
Long-term debt, including current portion
¥ (21,605)
¥ (21,606)
¥ (21,889)
¥ (21,897)
$ (232,312)
$ (232,323)
Derivatives
Included in Other current assets (liabilities)
Forward exchange contracts
Foreign currency swaps
Interest rate swaps
29
(27)
(65)
29
(27)
(65)
(779)
(27)
(24)
(779)
(27)
(24)
312
(290)
(699)
312
(290)
(699)
The following methods and assumptions were used to estimate the fair values of each class of financial instruments for
which it is practicable to estimate that value:
Nonderivatives
(1) Cash and cash equivalents, notes and accounts receiv-
able, short-term debt and notes and accounts payable:
The carrying amounts approximate fair values.
(2) 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 readily determinable public
market value, and it is not practicable to estimate their
fair values.
(3) Long-term debt including current portion:
The fair values are estimated using present value of
discounted future cash flow analysis, based on the
Companies’ current incremental issuing rates for sim-
ilar types of arrangements.
Derivatives
The fair value of derivatives generally reflects the estimated
amounts that the Companies would receive or pay to ter-
minate 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. For the rest of the companies’
derivatives, pricing or valuation models are applied to cur-
rent market information to estimate fair value. The
Companies do not use derivatives for trading purposes.
99
19. Derivatives and Hedging Activities
The Companies enter into foreign exchange forward con-
tracts and combined purchased and written foreign
currency swap contracts to hedge foreign currency trans-
actions (primarily the U.S. dollar and the EURO).The
Companies do not use derivatives for trading purposes.
The Companies are exposed to credit risk in the event of
non-performance by counterparties to derivatives, but man-
agement considers the exposure to such risk to be minimal
since the counterparties are major financial institutions.
Changes in the fair value of foreign exchange forward
contracts, foreign currency swaps and interest rate swaps
designated and qualifying as cash flow hedges are report-
ed in accumulated other comprehensive income (loss).
These amounts are subsequently reclassified into other
expenses, net in the same period as the hedged items
affect earnings. Substantially all of the accumulated other
comprehensive income (loss) in relation to foreign
exchange forward contracts at March 31, 2010 is expect-
ed to be reclassified into earnings within twelve months.
The notional amounts of contracts to exchange foreign currency outstanding at March 31, 2010 and 2009 were as follows:
Millions of yen
Thousands of
U.S. dollars
2010
2009
2010
¥ 28,780
¥ 2,026
¥ 20,000
¥ 63,784
¥ 2,646
¥ 20,000
$ 309,462
$ 21,785
$ 215,054
Liabilities
Forward exchange contracts
Foreign currency swaps
Interest rate swaps
Millions of yen
2009
¥ (1,654)
(27)
(24)
Forward exchange contracts
Foreign currency swaps
Interest rate swaps
The fair values of derivatives at March 31, 2009 were as follows:
Derivatives designated as hedges
Assets
Forward exchange contracts
Millions of yen
2009
¥ 875
The fair values of derivatives at March 31, 2010 were as follows:
Derivatives designated as hedges
Millions of yen
Thousands of
U.S. dollars
Millions of yen
Thousands of
U.S. dollars
Assets
2010
Liabilities
2010
Forward exchange contracts
¥ 217
$ 2,333
Forward exchange contracts
Foreign currency swaps
Interest rate swaps
¥ (188)
(27)
(65)
$ (2,022)
(290)
(699)
The effects on consolidated statements of operations in fourth quarter of the year ended March 31, 2009 were as follows:
Derivatives designated as hedges
Cash flow hedge
Forward exchange contracts
Foreign currency swaps
Interest rate swaps
Profit and loss of other
comprehensive income (loss)
(Hedge effective part)
Transfer from other comprehensive
income (loss) to profit and loss
(Hedge effective part)
Millions of yen
Fourth quarter of 2009
¥ 809
(8)
(14)
¥ (1,714)
0
—
The amount of the hedging ineffectiveness was not material.
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
100
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
The effects on consolidated statements of operations for the year ended March 31, 2010 were as follows:
Derivatives designated as hedges
Cash flow hedge
Forward exchange contracts
Foreign currency swaps
Interest rate swaps
Profit and loss of other
comprehensive income (loss)
(Hedge effective part)
Transfer from other comprehensive
income (loss) to profit and loss
(Hedge effective part)
Millions of yen
Thousands of
U.S. dollars
Millions of yen
Thousands of
U.S. dollars
2010
¥ 771
(9)
(24)
$ 8,290
(97)
(258)
¥ (186)
0
—
$ (2,000)
0
—
The amount of the hedging ineffectiveness was not material.
20. Commitments and Contingent Liabilities
The Company has commitments at March 31, 2010 of
¥11,506 million ($123,720 thousand) related to contracts
for outsourcing computer services through 2013. The con-
tracts require an annual service fee of ¥3,586 million
($38,559 thousand) for the year ending March 31, 2010.
The contract is cancelable at any time subject to a penal-
ty of 15% of aggregate service fees payable for the
remaining term of the contract.
The Company and certain of its subsidiaries are defen-
dants in several pending lawsuits. However, based upon
the information currently available to both the Company
and its legal counsel, management of the Company
believes that damages from such lawsuits, if any, would
not have a material effect on the consolidated financial
statements.
imately 51% of total sales are concentrated in Japan, are
limited due to the large number of well-established cus-
tomers and their dispersion across many industries. The
Company normally requires customers to deposit funds
to serve as security for ongoing credit sales.
Guarantees
The Company provides guarantees for bank loans of other
companies. The guarantees for the other companies are
made to ensure that those companies operate with less
finance costs. The maximum payments in the event of
default at March 31, 2010 and 2009 are ¥295 million
($3,172 thousand) and ¥712 million, respectively. The car-
rying amounts of the liabilities recognized under those
guarantees at March 31, 2010 were immaterial.
Concentration of Credit Risk
Financial instruments that potentially subject the
Companies to concentrations of credit risk consist princi-
pally 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 approx-
Product Warranties
The Companies issue contractual product warranties under
which they generally guarantee the performance of prod-
ucts delivered and services rendered for a certain period
or term. Changes in accrued product warranty cost for the
years ended March 31, 2010 and 2009 are summarized as
follows:
Balance at beginning of year
Addition
Utilization
Balance at end of year
Millions of yen
2010
¥ 1,501
1,483
(1,547)
¥ 1,437
2009
¥ 1,619
1,475
(1,593)
¥ 1,501
Thousands of
U.S. dollars
2010
$ 16,140
15,946
(16,634)
$ 15,452
101
21. Fair Value Measurements
ASC No.820, “Fair Value Measurements and Disclosures”
(previously SFAS 157 “Fair Value Measurements” (“SFAS
157”)) defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measure-
ment date. ASC No.820 (previously SFAS 157) establishes
a three-level fair value hierarchy that prioritizes the inputs
used to measure fair value as follows:
Level 1— Inputs are quoted prices in active markets for
identical assets or liabilities.
Level 2— Inputs are quoted prices for similar assets or lia-
bilities in active markets, quoted prices for
identical or similar assets or liabilities in markets
that are not active, inputs other than quoted prices
that are observable, and inputs that are derived
principally from or corroborated by observable
market data by correlation or other means.
Level 3— Inputs are significant to measure fair value of
assets or liabilities and unobservable.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2009:
Assets
Investment securities
Debt securities
Equity securities
Derivatives
Foreign exchange forward contracts
Liabilities
Derivatives
Foreign exchange forward contracts
Interest rate swaps
Foreign currency swaps
Amount of Fair Value Measurements
Millions of yen
Level 1
Level 2
Level 3
Total
¥ 19
26,407
¥ —
—
¥ —
—
¥ 19
26,407
—
—
—
—
875
1,654
24
27
—
—
—
—
875
1,654
24
27
The following table presents assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2010:
Amount of Fair Value Measurements
Millions of yen
Thousands of U.S. dollars
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets
Investment securities
Debt securities
Equity securities
Derivatives
Foreign exchange
forward contracts
Liabilities
Derivatives
Foreign exchange
forward contracts
Interest rate swaps
Foreign currency swaps
¥ 58
33,484
¥ —
—
¥ —
—
¥ 58
33,484
$ 624
360,043
$ —
—
$ —
—
$ 624
360,043
—
217
—
—
—
188
65
27
—
—
—
—
217
—
2,333
—
2,333
188
65
27
—
—
—
2,022
699
290
—
—
—
2,022
699
290
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
102
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
Investment Securities
Investment securities mainly consist of listed stocks. These
are classified as Level 1, because the fair value of the
investment securities is valued using a quoted market price
in active markets for identical assets and can be observed.
Derivatives
Derivatives consist of foreign exchange forward contracts,
foreign currency swaps and interest rate swaps. These are
classified as Level 2, because the fair value is valued using
the observable market data such as foreign exchange rates
or interest rates.
Assets and Liabilities Measured at Fair Value on a
Nonrecurring Basis
Long-lived assets with a carrying amount of ¥217 million
22. Segment Information
The Companies have adopted ASC No.280, “Segment
Reporting” (previously SFAS No.131, “Disclosures about
segments of Enterprise and Related Information”) since
the year ended March 31, 2010.
Segment Information
ASC No.280 (previously SFAS No.131) establishes the dis-
closure of information about operating segments in financial
statements. Operating segments are defined as compo-
nents of an enterprise about which separate financial
information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate
resources and in assessing performance. The operating
segments are determined based on the nature of the prod-
ucts and services offered.
The Companies disclosure operating segments in five
segments: “Industrial Automation Business,” “Electronic
and Mechanical Components Business,” “Automotive
Electronic Components Business,” “Social Systems Solutions
Business” and “Healthcare Business,” which are mainly
based on the Companies’ consideration of their lines of
business, positioning within the Companies of their busi-
nesses. And, the Companies totalize operating segments
other than the above five segments and disclosures them
in “Other.”
The primary products included in each segment are as
follows:
(1) Industrial Automation Business (IAB): Relays, sensors,
switches, programmable logic controllers, timers, vision
sensors, automated optical inspection devices, safety
components, temperature controllers, motion con-
trollers.
(2) Electronic and Mechanical Components Business
(EMC): Relays, switches, components and units for
amusement devices, connectors, combination jogs.
(3) Automotive Electronic Components Business (AEC):
Smart entry devices, power window switches, various
auto motive relays.
(4) Social Systems Solutions Business (SSB): Railway infra-
($2,333 thousand) were written down to their fair value of
¥0 million ($0 thousand), resulting in an impairment loss
of ¥217 million ($2,333 thousand), which was included in
earnings for the fiscal year ended March 31, 2010. These
assets were classified as Level 3, because these fair val-
ues were not valued using observable inputs.
Non-marketable investment securities with a carrying
amount of ¥142 million ($1,527 thousand) were written
down to their fair value of ¥27 million ($290 thousand),
resulting in an other-than-temporary impairment charge of
¥115 million ($1,237 thousand), which was included in earn-
ings for the fiscal year ended March 31, 2010. These
investments were classified as Level 3, because these fair
values were not valued using observable inputs.
structure systems, traffic control and road control sys-
tems, security systems, payment systems.
(5) Healthcare Business (HCB): Digital blood pressure mon-
itors, digital thermometers, body composition monitors,
pedometers, patient monitors, nebulizers.
(6) Other: Computer peripheral equipments, MEMS
acoustic sensors, remote monitoring notice systems,
LCD backlight.
The accounting policies of the segment information are
substantially the same as those described in the signifi-
cant accounting policies in Note 1.
Revenues and expenses directly associated with spe-
cific segments are disclosed in the figures of each segment’s
operating result.
Based on the Companies’ allocation method used by
their management to evaluate results of each segment,
revenues and expenses not directly associated with spe-
cific segments are allocated to each segment or included
in “Eliminations and others.”
In addition, on the year ended March 31, 2010, the
Companies re-formed “Electronic Components Business”
to “Electronic and Mechanical Components Business”
to aim to enhance their Mechanical-Compo. And, the
Companies transferred their LCD backlight business and
their micro device business under Electronic Components
Business umbrella to a new organization under direct con-
trol of the President. With these changes, the Companies’
operating segments are altered from “Industrial Automation
Business,” “Electronic Components Business,” “Automotive
Electronic Components Business,” “Social Systems Business,”
“Healthcare Business” and “Other” to “Industrial Automation
Business,” “Electronic and Mechanical Components
Business,” “Automotive Electronic Components Business,”
“Social Systems Solutions Business” and “Healthcare
Business.” To reflect the results, the Companies have restat-
ed the figures of the segment information for the prior years to
conform to the current year presentation.
For the year ended
March 31, 2008
I Sales and Segment
profit (loss)
[1] Sales to external
[2]
customers
Intersegment
Sales
Total
Segment profit (loss)
II Assets, depreciation and
capital expenditures
Assets
Depreciation and amortization
Capital expenditures
IAB
EMC
AEC
SSB
HCB
Other
Total
Eliminations
and
others
Consolidated
Millions of yen
¥ 339,815
¥ 100,668
¥ 107,521
¥ 76,876
¥ 71,706
¥ 56,187
¥ 752,773
¥ 10,212
¥ 762,985
10,085
349,900
¥ 48,208
35,231
135,899
¥ 17,387
2,926
110,447
¥ 705
4,341
81,217
¥ 6,863
103
71,809
¥ 9,019
53,855
110,042
¥ (10,586)
106,541
859,314
¥ 71,596
(106,541)
(96,329)
¥ (6,343)
—
762,985
¥ 65,253
¥ 234,508
8,687
5,985
¥ 117,137
8,598
13,120
¥ 75,027
7,793
8,206
¥ 77,032
1,774
1,155
¥ 47,228
1,651
1,714
¥ 33,739
837
1,016
¥ 584,671
29,340
31,196
¥ 32,696
7,003
5,876
¥ 617,367
36,343
37,072
Annotations about the above segment information:
-No.1 Intersegment sales are recorded at the same prices used in transactions with third parties.
-No.2 Eliminations and others include items such as unclassifiable expenses and eliminations of internal transactions among segments.
-No.3 Depreciation and amortization and Capital expenditures include expenses and expenditures arising from intangible assets.
-No.4 The above figures are different from those presented on pages 40–51 due to reclassification.
For the year ended
March 31, 2009
I Sales and Segment
profit (loss)
[1] Sales to external
[2]
customers
Intersegment
Sales
Total
Segment profit (loss)
II Assets, depreciation and
capital expenditures
Assets
Depreciation and amortization
Capital expenditures
IAB
EMC
AEC
SSB
HCB
Other
Total
Eliminations
and
others
Consolidated
Millions of yen
¥ 271,951
¥ 76,494
¥ 82,109
¥ 72,336
¥ 63,592
¥ 50,242
¥ 616,724
¥ 10,466
¥ 627,190
10,483
282,434
¥ 18,175
47,562
124,056
¥ 4,223
3,515
85,624
¥ (7,115)
5,753
78,089
¥ 5,194
240
63,832
¥ 4,767
5,263
55,505
¥ (7,318)
72,816
689,540
¥ 17,926
(72,816)
(62,350)
¥ (12,587)
—
627,190
¥ 5,339
¥ 173,503
7,630
4,017
¥ 98,902
11,165
7,678
¥ 49,927
6,178
4,461
¥ 73,591
1,800
800
¥ 38,288
1,579
1,333
¥ 25,453
1,566
4,077
¥ 459,664
29,918
22,366
¥ 78,616
3,578
14,478
¥ 538,280
33,496
36,844
Annotations about the above segment information:
-No.1 Intersegment sales are recorded at the same prices used in transactions with third parties.
-No.2 Eliminations and others include items such as unclassifiable expenses, eliminations of internal transaction among each segment.
-No.3 Depreciation and amortization and Capital expenditures include expenses and expenditures arising from intangible assets.
103
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
104
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Omron Corporation and Subsidiaries
For the year ended
March 31, 2010
I Sales and Segment
profit (loss)
[1] Sales to external
[2]
customers
Intersegment
Sales
Total
Segment profit (loss)
II Assets, depreciation and
capital expenditures
Assets
Depreciation and amortization
Capital expenditures
For the year ended
March 31, 2010
I Sales and Segment
profit (loss)
[1] Sales to external
[2]
customers
Intersegment
Sales
Total
Segment profit (loss)
II Assets, depreciation and
capital expenditures
Assets
Depreciation and amortization
Capital expenditures
IAB
EMC
AEC
SSB
HCB
Other
Total
Eliminations
and
others
Consolidated
Millions of yen
¥ 206,197
¥ 70,717
¥ 75,163
¥ 57,981
¥ 63,359
¥ 41,312
¥ 514,729
¥ 9,965
¥ 524,694
5,324
211,521
¥ 13,900
43,961
114,678
¥ 6,739
691
75,854
¥ 1,731
3,898
61,879
¥ 2,654
86
63,445
¥ 7,055
8,318
49,630
¥ (7,028)
62,278
577,007
¥ 25,051
(62,278)
(52,313)
¥ (11,977)
—
524,694
¥ 13,074
¥ 185,019
5,360
1,954
¥ 104,354
8,480
4,231
¥ 52,520
2,099
3,607
¥ 69,794
1,378
1,181
¥ 45,808
1,342
1,500
¥ 27,705
1,113
984
¥ 485,200
19,772
13,457
¥ 47,054
7,242
6,067
¥ 532,254
27,014
19,524
Thousands of U.S dollars
IAB
EMC
AEC
SSB
HCB
Other
Total
Eliminations
and
others
Consolidated
$2,217,172
$ 760,398
$ 808,204
$ 623,452
$ 681,280
$ 444,215
$5,534,721
$ 107,151
$5,641,872
57,247
2,274,419
$ 149,462
472,699
1,233,097
$ 72,463
7,430
815,634
$ 18,612
41,914
665,366
$ 28,538
925
682,205
$ 75,861
89,441
533,656
$ (75,570)
669,656
6,204,377
$ 269,366
(669,656)
(562,505)
$ (128,785)
0
5,641,872
$ 140,581
$1,989,452
57,634
21,011
$1,122,086
91,183
45,495
$ 564,731
22,570
38,785
$ 750,473
14,817
12,699
$ 492,559
14,430
16,129
$ 297,903
11,968
10,581
$5,217,204
212,602
144,700
$ 505,957
77,871
65,237
$5,723,161
290,473
209,937
Annotations about the above segment information:
-No.1 Intersegment sales are recorded at the same prices used in transactions with third parties.
-No.2 Eliminations and others include items such as unclassifiable expenses, eliminations of internal transaction among each segment.
-No.3 Depreciation and amortization and Capital expenditures include expenses and expenditures arising from intangible assets.
Reconciliation between segment profit (loss) and income (loss) from continuing operations before income taxes and equi-
ty in loss of affiliates for the years ended March 31, 2010, 2009 and 2008 is as follows:
Total amount of segment profit
Other expenses, net
Eliminations and others
Income (loss) from continuing operations
Millions of yen
Thousands of
U.S. dollars
2010
2009
2008
2010
¥ 25,051
2,879
(11,977)
¥ 17,926
44,472
(12,587)
¥ 71,596
1,087
(6,343)
$ 269,366
30,957
(128,785)
before income taxes and equity in loss of affiliates
¥ 10,195
¥ (39,133)
¥ 64,166
$ 109,624
Geographic Information
Information by the Companies’ sales to external customers and property, plant and equipment separated into major geo-
graphic area as of and for the years ended March 31, 2010, 2009 and 2008 is as follows:
For the year ended
March 31, 2008
Japan
North America
Europe
Greater China
Asia Pacific
Consolidated
Millions of yen
Sales to external customers
Property, plant and equipment
¥ 388,586
¥ 102,180
¥ 101,884
¥ 11,044
¥ 134,389
¥ 9,600
¥ 91,467
¥ 21,365
¥ 46,659
¥ 8,486
¥ 762,985
¥ 152,675
For the year ended
March 31, 2009
Japan
North America
Europe
Greater China
Asia Pacific
Consolidated
Millions of yen
Sales to external customers
Property, plant and equipment
¥ 328,063
¥ 93,423
¥ 80,397
¥ 6,009
¥ 103,128
¥ 6,343
¥ 75,242
¥ 20,430
¥ 40,360
¥ 6,330
¥ 627,190
¥ 132,535
For the year ended
March 31, 2010
Japan
North America
Europe
Greater China
Asia Pacific
Consolidated
Millions of yen
Sales to external customers
Property, plant and equipment
¥ 269,143
¥ 85,247
¥ 61,154
¥ 5,108
¥ 77,607
¥ 5,483
¥ 77,136
¥ 20,853
¥ 39,654
¥ 6,303
¥ 524,694
¥ 122,994
For the year ended
March 31, 2010
Japan
North America
Europe
Greater China
Asia Pacific
Consolidated
Thousands of U.S dollars
Sales to external customers
Property, plant and equipment
$ 2,894,011
$ 916,634
$ 657,570
$ 54,925
$ 834,484
$ 58,957
$ 829,419
$ 224,226
$ 426,387
$ 67,774
$ 5,641,871
$ 1,322,516
Annotations about the above Geographic information:
-No.1 Segmentation of country or area is based upon the degree of geographical connection.
-No.2 Major Countries or areas belonging to segments other than Japan are as follows:
(1) North America: the United States of America and Canada
(2) Europe: the Netherlands, Great Britain, Germany, France, Italy and Spain
(3) Greater China: China, Hong Kong and Taiwan
(4) Asia Pacific: Singapore, Republic of Korea and Australia
-No.3 As for Sales and Property, plant and equipment, there is no important country required as a separate disclosure.
-No.4 For the years ended March 31, 2010, 2009 and 2008, there are no sales to important single external customer, which is required to be disclosed.
23. Subsequent Events
From the fiscal year ended March 31, 2010, the Companies adopted ASC No.855, “Subsequent Events” (previously SFAS
No.165, “Subsequent Events”). ASC No.855 (previously SFAS No.165) establishes the disclosure of the date that subse-
quent events are recognized and the estimate of nature and financial effect of unrecognized subsequent events.
No significant event took place as of June 22, 2010, which was the date that Yukashouken-houkokusho (Annual Securities
Report filed under the Financial Instruments and Exchange Act of Japan) for the fiscal year ended March 31, 2010 was avail-
able to be issued after being authorized by the Company’s Board of Directors.
105
i
F
n
a
n
c
i
a
l
S
e
c
t
i
o
n
(
U
S
.
.
G
A
A
P
)
106
Independent Auditors’ Report
To the Board of Directors and Stockholders of OMRON Corporation
We have audited the accompanying consolidated balance sheets of OMRON Corporation and subsidiaries
(the “Company”) as of March 31, 2010 and 2009, and the related consolidated statements of operations,
comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the
period ended March 31, 2010, all expressed in Japanese yen. These financial statements are the respon-
sibility 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 considera-
tion of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, 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.
In our report dated June 8, 2009, we expressed a qualified opinion, because certain information required
by Accounting Standards Codification (“ASC”) No.280, “Segment Reporting” had not been presented in
the 2009 and 2008 consolidated financial statements. As discussed in Note 22 to the consolidated finan-
cial statements, the Company has now presented segment information required by ASC No.280 in 2009
and 2008 consolidated financial statements. Accordingly, our present opinion on the 2009 and 2008 con-
solidated financial statements, as expressed herein, is different from that expressed in our prior report on
the previously issued 2009 and 2008 consolidated financial statements.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of OMRON Corporation and subsidiaries as of March 31, 2010 and 2009,
and the results of their operations and their cash flows for each of the three years in the period ended
March 31, 2010, 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 opinion, such translation has been made in conformity with the basis stated in Note 2 to the
consolidated financial statements. Such United States dollar amounts are presented solely for the con-
venience of readers outside Japan.
Kyoto, Japan
June 22, 2010
Internal Control Section
Management’s Report on Internal Control
107
NOTE TO READERS:
Following is an English translation of the management’s report on internal control over financial reporting (“ICFR”) filed under the
Financial Instruments and Exchange Act of Japan. This report is presented merely as supplemental information.
There are differences between an assessment of ICFR under the Financial Instruments and Exchange Act (“ICFR under FIEA”) and
one conducted under the standards of the Public Company Accounting Oversight Board (United States) (“ICFR under PCAOB”);
• In an assessment of ICFR under FIEA, there is detailed guidance on the scope of an assessment of ICFR, such as quantitative
guidance on business location selection and/or account selection. In an assessment of ICFR under PCAOB, there is no such detailed
guidance. Accordingly, regarding the scope of assessment of internal control over business processes, we selected locations and
business units to be tested based on the previous year’s consolidated net sales (after the elimination of transactions between
consolidated companies), and the companies whose net sales reaches two-thirds of total amount on a consolidation basis were select-
ed as “significant locations and/or business units.” At selected “significant locations and/or business units,” we included in the
scope of assessment, business processes leading to sales, accounts receivable and inventories as significant accounts that may
have a material impact on our business objectives. Further, in addition to selected significant locations and/or business units, we
also included in the scope of assessment, as business processes having greater materiality, business processes relating to (i)
greater likelihood of material misstatements and/or (ii) significant accounts involving estimates and the management’s judgment
and/or (iii) a business or operation dealing with high-risk transactions, taking into account their impact on the financial reporting.
Management’s Report on Internal Control
1. Matters relating to the basic framework for internal
control over financial reporting
Hisao Sakuta, President and Chief Executive Officer is responsi-
ble for designing and operating effective internal control over
financial reporting of Omron Corporation (the “Company”) and
has designed and operated internal control over financial report-
ing in accordance with the basic framework for internal control
set forth in “The Standards and Practice Standards for
Management Assessment and Audit Concerning Internal Control
Over Financial Reporting (Council Opinion)” released by the
Business Accounting Council.
The internal control is designed to achieve its objectives to
the extent reasonable through the effective function and com-
bination of its basic elements. Therefore, there is a possibility
that misstatements may not be completely prevented or detect-
ed by internal control over financial reporting.
2. Matters relating to the scope of assessment, the basis
date of assessment and the assessment procedures
The assessment of internal control over financial reporting was
performed as of March 31, 2010 which is the end of this fiscal
year. The assessment was performed in accordance with
assessment standards for internal control over financial report-
ing generally accepted in Japan.
In conducting this assessment, we evaluated internal
controls which may have a material effect on our entire financial
reporting on a consolidation basis (“entity-level controls”) and
based on the results of this assessment, we selected business
processes to be tested. We analyzed these selected business
processes, identified key controls that may have a material
impact on the reliability of the Company’s financial reporting,
and assessed the design and operation of these key controls.
These procedures have allowed us to evaluate the effectiveness
of the internal controls of the Company.
We determined the required scope of assessment of
internal control over financial reporting for the Company, as
well as its consolidated subsidiaries and equity-method affiliated
companies, from the perspective of the materiality that may
affect the reliability of their financial reporting. The materiality
that may affect the reliability of the financial reporting is
determined by taking into account the materiality of quantitative
and qualitative impacts on financial reporting. In light of the
results of assessment of entity-level controls conducted for
the Company and its consolidated subsidiaries, we reasonably
determined the scope of assessment of internal controls over
business processes. Consolidated subsidiaries and equity-
method affiliated companies determined to have an insignificant
quantitative and qualitative influence on the reliability of financial
reporting are not included in the scope of assessment of entity-
level controls.
Regarding the scope of assessment of internal control over
business processes, we selected locations and business units
to be tested based on the previous year’s consolidated net
sales (after the elimination of transactions between consolidated
companies), and the companies whose net sales reaches two-
thirds of total amount on a consolidation basis were selected as
“significant locations and/or business units.” At selected
“significant locations and/or business units,” we included in
the scope of assessment, business processes leading to sales,
accounts receivable and inventories as significant accounts that
may have a material impact on the business objectives of the
Company. Further, in addition to selected significant locations
and/or business units, we also included in the scope of
assessment, as business processes having greater materiality,
business processes relating to (i) greater likelihood of material
misstatements and/or (ii) significant accounts involving estimates
and the management’s judgment and/or (iii) a business or
operation dealing with high-risk transactions, taking into account
their impact on the financial reporting.
3. Matters relating to the results of the assessment
The above assessments determined that the Company’s inter-
nal control over financial reporting was effective as of the last
day of the fiscal year under review.
4. Additional notes
No material items to report.
5. Special notes
No material items to report.
Hisao Sakuta
President
Chief Executive Officer
Omron Corporation
I
n
t
e
r
n
a
l
C
o
n
t
r
o
l
S
e
c
t
i
o
n
108
Internal Control Section
Independent Auditors’ Report
(filed under the Financial Instruments and Exchange Act of Japan)
NOTE TO READERS:
Following is an English translation of the Independent Auditors’ Report filed under the Financial Instruments and Exchange Act of
Japan. This report is presented merely as supplemental information.
There are differences between an audit of internal control over financial reporting (“ICFR”) under the Financial Instruments and
Exchange Act (“ICFR under FIEA”) and one conducted under the standards of the Public Company Accounting Oversight Board
(United States) (“ICFR under PCAOB”);
• In an audit of ICFR under FIEA, the auditors express an opinion on management’s report on ICFR, and do not express an opin-
ion on the Company’s ICFR directly. In an audit of ICFR under PCAOB, the auditors express an opinion on the Company’s ICFR
directly.
• In an audit of ICFR under FIEA, there is detailed guidance on the scope of an audit of ICFR, such as quantitative guidance on busi-
ness location selection and/or account selection. In an audit of ICFR under PCAOB, there is no such detailed guidance. Accordingly,
regarding the scope of assessment of internal control over business processes, we selected locations and business units to be
tested based on the previous year’s consolidated net sales (after the elimination of transactions between consolidated compa-
nies), and the companies whose net sales reaches two-thirds of total amount on a consolidation basis were selected as “significant
locations and/or business units.” At selected “significant locations and/or business units,” we included in the scope of assess-
ment, business processes leading to sales, accounts receivable and inventories as significant accounts that may have a material
impact on the business objectives of Omron Corporation (the “Company”). Further, in addition to selected significant locations
and/or business units, we also included in the scope of assessment, as business processes having greater materiality, business
processes relating to (i) greater likelihood of material misstatements and/or (ii) significant accounts involving estimates and the
management’s judgment and/or (iii) a business or operation dealing with high-risk transactions, taking into account their impact
on the financial reporting.
(TRANSLATION)
Independent Auditors’ Report
June 22, 2010
To the Board of Directors of OMRON Corporation.
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner, Engagement Partner, Certified Public Accountant: Yuji Morita
Designated Unlimited Liability Partner, Engagement Partner, Certified Public Accountant: Hiroyuki Asaga
Designated Unlimited Liability Partner, Engagement Partner, Certified Public Accountant: Hiroaki Sakai
Audit of Financial Statements
Pursuant to the first paragraph of Article 193-2 of the Financial
Instruments and Exchange Act, we have audited the consolidated
financial statements included in the Financial Section, namely, the con-
solidated balance sheet and the related consolidated statements of
income, comprehensive income, shareholders’ equity and cash flows,
and consolidated supplementary schedules of OMRON Corporation
and consolidated subsidiaries for the fiscal year from April 1, 2009 to
March 31, 2010. These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based
on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in Japan. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements. An
audit also includes assessing the accounting principles used and sig-
nificant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
OMRON Corporation and consolidated subsidiaries as of March 31,
2010, and the consolidated results of their operations and their cash
flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
Supplementary Information
As discussed in Note II-R to the consolidated financial statements, the
segment information has been presented in accordance with the
Accounting Standards Codification No.280, “Segment Reporting” (pre-
viously Statement of Financial Accounting Standards No.131) since
the year ended March 31, 2010.
Audit of Internal Control over Financial Reporting
Pursuant to the second paragraph of Article 193-2 of the Financial
Instruments and Exchange Act, we have audited management’s report
on internal control over financial reporting of OMRON Corporation as
of March 31, 2010. The Company’s management is responsible for
designing and operating effective internal control over financial report-
ing and preparing its report on internal control over financial reporting.
Our responsibility is to express an opinion on management’s report
on internal control over financial reporting based on our audit. There
is a possibility that material misstatements will not completely be pre-
vented or detected by internal control over financial reporting.
We conducted our audit in accordance with auditing standards
for internal control over financial reporting generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether management’s report on inter-
nal control over financial reporting is free of material misstatement.
An audit includes examining, on a test basis, the scope, procedures
and results of assessment of internal control made by management,
as well as evaluating the overall presentation of the management’s
report on internal control over financial reporting. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, management’s report on internal control over finan-
cial reporting referred to above, which represents that the internal
control over financial reporting of OMRON Corporation as of March
31, 2010 is effectively maintained, presents fairly, in all material
respects, the assessment of internal control over financial reporting
in conformity with assessment standards for internal control over finan-
cial reporting generally accepted in Japan.
Our firm and the engagement partners do not have any financial
interest in the Company for which disclosure is required under the pro-
visions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese language.
C o r p o r a t e a n d S t o c k I n f o r m a t i o n
As of March 31, 2010
Date of Establishment
May 10, 1933
Number of Employees
(Consolidated)
36,299
Depositary and Transfer
Agent for American
Depositary Receipts
JPMorgan Chase Bank, N. A.
4 New York Plaza, New York,
NY 10004, U. S. A.
Overseas Headquarters
Europe
Omron Europe B.V.
(The Netherlands)
Tel 31-23-568-1300
Fax 31-23-568-1391
Paid-in Capital
¥64,100 million
Common Stock
Authorized
487,000,000 shares
Issued
239,121,372 shares
Number of shareholders
33,847
Stock Listings
Osaka Securities
Exchange
Tokyo Stock Exchange
Frankfurt Stock Exchange
Ticker Symbol Number
6645
Custodian of Register of
Shareholders
Mitsubishi UFJ Trust and
Banking Corporation
1-4-5, Marunouchi,
Chiyoda-ku, Tokyo
100-8212, Japan
ADR Holder Contact :
JPMorgan
Service Center
P.O. Box 64504
St. Paul, MN
55164-0504 U.S.A.
Tel 1-800-990-1135
E-mail jpmorgan.adr@
wellsfargo.com
Homepage
http://www.omron.co.jp
(Japanese)
http://www.omron.com
(English)
Head Office
Shiokoji Horikawa,
Shimogyo-ku, Kyoto
600-8530, Japan
Tel 81-75-344-7000
Fax 81-75-344-7001
Tokyo Head Office
3-4-10, Toranomon,
Minato-ku, Tokyo
105-0001, Japan
Tel 81-3-3436-7011
Fax 81-3-3436-7035
North America
Omron Management Center of
America, Inc. (Illinois)
Tel 1-224-520-7650
Fax 1-224-520-7680
Asia-Pacific
Omron Asia Pacific Pte. Ltd.
(Singapore)
Tel 65-6835-3011
Fax 65-6835-2711
Greater China
Omron (China) Co., Ltd.
(Shanghai)
Tel 86-21-5888-1666
Fax 86-21-5888-7633/7933
Major Domestic
Manufacturing, Marketing, and
Research & Development
Locations
Manufacturing
Kusatsu Office
Tel 81-77-563-2181
Fax 81-77-565-5588
Ayabe Office
Tel 81-773-42-6611
Fax 81-773-43-0661
Stock Price Osaka Securities Exchange
Monthly Volume
Omron
Nikkei 225 Index
Index
180
160
140
120
100
80
60
40
20
0
100
80
60
40
20
0
1,000
Shares
30,000
20,000
10,000
0
2001/3
2002/3
2003/3
2004/3
2005/3
2006/3
2007/3
2008/3
2009/3
2010/3
Note: Share index (2001/3E=100)
Yearly High and Low Prices
Yasu Office
Tel 81-77-588-9000
Fax 81-77-588-9901
Sales & Marketing
Osaki Office
Tel 81-3-5435-2000
Fax 81-3-5435-2030
Mishima Office
Tel 81-55-977-9000
Fax 81-55-977-9080
Nagoya Office
Tel 81-52-571-6461
Fax 81-52-565-1910
Osaka Office
Tel 81-6-6347-5800
Fax 81-6-6347-5900
Fukuoka Office
Tel 81-92-414-3200
Fax 81-92-414-3201
Research & Development
Keihanna Technology
Innovation Center
Tel 81-774-74-2000
Fax 81-774-74-2001
Komaki Automotive
Electronics Office
Tel 81-568-78-6160
Fax 81-568-78-6188
Okayama Office
Tel 81-86-277-6111
Fax 81-86-276-6013
Ownership and
Distribution of shares
%
23.2%
25.1%
24.4%
44.1%
37.9%
39.2%
4.2%
0.4%
5.6%
0.4%
5.6%
0.3%
28.1%
31.0%
30.5%
0.0%
0.0%
0.0%
0.0%
09
(FY)
(As of March 31)
07
08
Individuals and others
Foreign institutions and individuals
Other corporations
Securities firms
Financial institutions
Government local authority
FY
High (¥)
Low (¥)
2000
3,200
1,702
2001
2,560
1,390
2002
2,115
1,320
2003
2,740
1,648
2004
2,885
2,150
2005
3,620
2,210
2006
3,590
2,615
2007
3,510
1,950
2008
2,385
940
2009
2,215
1,132
* Stock prices listed in the First Section of Osaka Securities Exchange
109
C
o
r
p
o
r
a
t
e
a
n
d
S
t
o
c
k
I
n
f
o
r
m
a
t
i
o
n
110
Omron’s Management Compass—SINIC Theory
SINIC DIAGRAM
Seed-Innovation to Need-Impetus Cyclic Evolution
A g r i cultural Society
c i e t y
o
Colle ctiv e S
d i t i o n a l
h n i c s
c
e
r
T
a
T
Handicraft
Technics
ciety
o
e S
itiv
m
i
r
P
Primitive
Technics
a r y
Prim
Scie n c
e
A ncient
Science
e
n
imitiv
eligio
r
P
R
Seed
Innovation
Need
Impetus
Cyclic Evolution
Seed
Technology
Innovation
Impetus
Need
Progress-
oriented
motivation
Science
Society
Renaiss
Scie
n
c
e
a
n
c
e
s
c
s
d
t
S
r
o
i
a
c
l
i
i
e
z
t
a
y
t
I
n
I
n
d
u
d
s
u
t
r
i
a
l
S
o
c
i
e
t
y
i
o
n
Handicraft S
o
cie
t
y
I
n
d
u
T
e
c
s
t
r
i
a
l
i
z
h
n
i
e
M
S
c
o
i
d
e
n
c
e
r
n
e
C
o
n
t
r
o
l
S
c
i
e
n
c
e
T
e
c
h
n
i
c
s
M
o
d
e
r
n
M
e
c
S
h
o
a
c
i
n
i
z
e
t
y
a
t
i
o
n
A
u
t
o
m
T
a
e
c
ti
c
h
C
n
i
c
o
s
n
tr
ol
C
y
b
ern
etics
ciety
al S
o
r
u
t
a
N
s
u
o
m
o
ciety
So
Auton
ic
g
o
l
o
h
c
y
s
p
-
a
t
e
M
i
s
c
n
h
c
e
T
s
c
i
t
e
n
o
h
c
y
s
Meta-P
A
S
m
uto
o
ciety
ation
p ti m ization
S o ciety
O
Cybernation
Society
Electronic Control
Technics
n tr o l
s
o
B i o l o g i c C
T e c h n i c
Bionetics
Psycho-Biologic
Technics
h o n etics
c
s y
P
What is the SINIC Theory?
The SINIC theory grew from the idea that in order to manage a
business by anticipating social needs, it is necessary to predict
future society. Based on this theory, Omron has been able to
continually make social proposals marked by foresight.
The SINIC theory is a future prediction method that Omron
founder Kazuma Tateisi developed and presented at the
International Future Research Conference in 1970. Announced
in the midst of Japan’s rapid-paced economic growth, before
PCs and the Internet even existed, this theory drew a highly
accurate picture of society up to the middle of the 21st century,
including the appearance of the Information Society.
SINIC stands for Seed-Innovation to Need-Impetus Cyclic
Evolution. According to the SINIC theory, science, technology,
and society share a cyclical relationship, mutually impacting and
influencing each other in two distinct ways. In one direction, sci-
entific breakthroughs yield new technologies that help society
to advance. In the other direction, social needs spur on techno-
logical development and expectations for new scientific
advancement. Thus, both of these factors affect each other in a
cyclical manner, propelling further social evolution.
The Future Envisioned by Omron’s Founder
According to the SINIC theory, the world established an
Industrialized Society upon the foundation of a conventional
Agricultural Society in the 14th century. The SINIC theory divides
this Industrialized Society into five phases: first, there was a
shift from a Handicraft Society to an Industrialization Society;
then, 1870 saw the advent of a Mechanization Society; an
Automation Society developed in the 20th century; and from
the end of the 20th century until the dawn of the 21st century
was an Information Society. According to the SINIC theory, the
Optimization Society will follow the Information Society, the
final phase of the Industrialized Society, in 2005, which will sub-
sequently shift to the Autonomous Society in 2025. Presently,
Japan is about to enter that Optimization Society.
While the Industrialized Society generated material wealth,
it also left behind many negative factors. These included
increasing energy and resource depletion, growing industrial
waste, food shortages, as well as problems related to human
rights and ethics among many others. In the Optimization
Society, it is predicted that these negative effects will be
redressed and people will shift from the values of the
Industrialized Society, as typified by the pursuit of efficiency and
productivity, to values in which psychological abundance is
sought and the quality and true joy of life become increasingly
important. With its unique technologies, Omron is well
positioned to help the Optimization Society create a complete
balance and harmonious relationship between individuals and
society, between humans and the environment, and between
people and machines.
Omron in the Optimization Society
In the Information Society, knowledge information could only
be exchanged as numerical data in the form of ONs and OFFs or
1s and 0s. The Optimization Society will see further progress in
technologies that support and extract knowledge and sensitiv-
ity, with the result that aspects such as natural language and
human knowledge and sensitivity will be directly exchanged,
expressed, and acted on. In other words, technologies that auto-
mate parts of our human intellect and sensations will form the
foundation for future development.
In the Optimization Society, people and machines will find an
ideal level of harmony. Instead of pursuing productivity and effi-
ciency, people will then place more emphasis on finding new
ways to live their lives and searching for self-fulfillment. When
this happens, it is predicted that people will begin to place their
priority on more fundamental desires, such as the desire to be
healthy and live a long life, the desire for a comfortable life, the
quest of lifelong learning, and the wish to enjoy leisure time.
In order to further advance the fields of safety/security, health-
care, and environmental preservation, Omron is also placing its
priority on activities that bring technologies ever closer to peo-
ple and fulfill these fundamental desires, while maintaining an
optimal balance between individuals and society, between
humans and the environment, and between people and
machines.
Omron: Advancing Sensing and Control Technology
111
Founding 1933
10th Year 1943
Microswitches
Electromagnetic
Relays
20th Year 1953
Omron has a long history of developing and
advancing a variety of sensing and control
technology products that are ahead of our
time. The company continues to apply the
SINIC theory as a compass to anticipate
social needs in various fields and offers lead-
ing-edge product and technologies.
l
o
r
t
n
o
C
&
g
n
i
s
n
e
S
:
y
g
o
l
o
n
h
c
e
t
e
r
o
C
Proximity
Switches
Contactless
Switches
Coin-operated Timers
Pressure Switches
30th Year 1963
Automatic Ticket Gates
Miniature Power Relays
Automatic Food
Ticket Vending
Machines
Automated
Teller Machines
(ATMs)
40th Year 1973
Sequence Controllers
Electronic Blood
Pressure Monitors
Photoelectric
Switches
Calculators
Electronic Temperature Controllers
Servomotors
Electronic Registers
Solid-state Relays
50th Year 1983
PCB Solder Inspection
Equipment
Digital Thermometers
Radio Frequency Smart Entry Systems
Electric Power Steering Controllers
60th Year 1993
Switch Mode
Power Supplies
Smart Sensors
Travel Time Measurement Systems
LCD Backlights
Body Composition
Monitors
Ultra-small Pressure
Sensors for
Wrist Blood
Pressure Monitors
70th Year 2003
Current
Business
Divisions
IAB
Industrial
Automation
Business
EMC
Electronic and
Mechanical
Components
Business
AEC
Automotive
Electronic
Components
Business
SSB
Social Systems
Solutions
Business
HCB
Healthcare
Business
Other
O
m
r
o
n
’
s
M
a
n
a
g
e
m
e
n
t
C
o
m
p
a
s
s
I
I
—
S
N
C
T
h
e
o
r
y
/
O
m
r
o
n
:
A
d
v
a
n
c
n
g
i
S
e
n
s
n
g
i
a
n
d
C
o
n
t
r
o
l
T
e
c
h
n
o
o
g
y
l
Annual Report 2010
Year ended March 31, 2010
O
M
R
O
N
C
o
r
p
o
r
a
t
i
o
n
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
0
This mark certifies the use of Green Power (solar power).
By using Green Power to print the Annual Report 2010, OMRON Corporation
is promoting the use of natural energy resources in Japan.
IR and M&A Planning Headquarters
Investor Relations Department
3-4-10 Toranomon, Minato-ku, Tokyo 105-0001 JAPAN
Phone: +81-3-3436-7170 Fax: +81-3-3436-7180
Homepage: http://www.omron.co.jp (Japanese)
http://www.omron.com (English)