Omron Corporation Annual Report 2015

Plain-text annual report

Integrated Report 2015 統合レポート 2015 Year ended March 31, 2015 2015 年 3 月期 O M R O N C o r p o r a t i o n I n t e g r a t e d R e p o r t 2 0 1 5 Omron Principles represent our unchanging, unshakeable beliefs. The Omron Principles are the cornerstone of our decisions and actions. They are what binds us together, and they are the driving force behind Omron’s growth. Omron Principles We are a company that improves lives and contributes to a better society In 1959, Omron founder Kazuma Tateishi said, “A company is most valuable when it contributes to society beyond the simple pursuit of proﬁts.” Based on this idea, Tateishi created our corporate motto stating, “With our day-to-day work, let’s improve lives and contribute to create a better society.” Since that time, the spirit of this motto has been a driving force behind our growth, binding us together as we create world-class innovations and contribute to higher standards of living through our businesses. In 1990, we created the Omron Principles, built on the foundation and spirit of our corporate motto. The Omron Principles have evolved in response to the changing times. Today, our businesses are growing across the world faster than ever as we pursue the long- term vision outlined in our Value Generation 2020 (VG2020) plan. We continue to raise our corporate value by providing answers to many of the issues our world faces today. To achieve this vision toward 2020 and beyond, it is important for all Omron employees to act on the Omron Principles. This is why we have decided to revise the Omron Principles to be easier to understand and put into practice. Omron continues to aim for a higher corporate value by being a pioneer in ﬁnding solutions to social needs through our business and by contributing to a better society. Fumio Tateishi Chairman July 2015 1 Integrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionMaking the World Smaller through Sensing and Control Technologies Eliminations and Corporate Omron manufactures and sells market-leading sensing and control products in over 110 countries around the world. Our products include control equipment, electronic components, automotive electronic components, social infrastructure, healthcare, and environmental solutions. Other Businesses Identifying and developing the next generation of Omron businesses 1% ¥5.3 billion 10% ¥87.4 billion Industrial Automation Business (IAB) Omron’s mainstay business; innovating global manufacturing through factory automation (FA) Healthcare Business (HCB) Providing a comprehensive lineup of healthcare products for home and hospital use 12% ¥100.6 billion 10% ¥80.4 billion Fiscal 2014 Net Sales by Segment ¥847.3 billion 39% ¥331.8 billion 16% ¥137.9 billion 12% ¥103.9 billion Asia Paciﬁc 10 % ¥87.8 billion Ratio of overseas sales to net sales 60% Greater China 22 % ¥181.9 billion Fiscal 2014 Net Sales by Region ¥847.3 Japan 40% ¥337.7 billion Europe 13% ¥113.3 billion billion Americas 15% ¥126.6 billion Social Systems, Solutions and Service Business (SSB) Offering social infrastructure systems for a safer, more comfortable society Automotive Electronic Components Business (AEC) Electronic and Mechanical Components Business (EMC) Providing the global market with sophisticated components that create seamless relationships between people and machines Developing new ideas in automotive electronics to make automobiles safer and more environmentally friendly ■ Fiscal 2014 Earnings by Business Segment (Billions of yen) Business Segment Net sales Operating income Operating income margin Industrial Automation Business (IAB) Electronic and Mechanical Components Business (EMC) Automotive Electronic Components Business (AEC) Social Systems, Solutions and Service Business (SSB) Healthcare Business (HCB) Other Businesses Eliminations and Corporate Total 331.8 103.9 137.9 80.4 100.6 87.4 5.3 847.3 54.6 10.2 9.2 5.0 6.5 8.4 (7.3) 86.6 16.5% 9.8% 6.7% 6.2% 6.5% 9.6% － 10.2% Ratio of overseas employees to total employees 70% Asia Paciﬁc 15% 5,618 employees Fiscal 2014 Employee Ratio by Region* 37,572 Employees Worldwide Greater China 42% 15,808 employees * As of March 31, 2015 Note: Regional categories are deﬁned as follows: Americas: North America, Central America, South America Europe: Europe, Russia, Africa, Middle East Greater China: China, Taiwan, Hong Kong Asia Paciﬁc: Southeast Asia, Korea, India, Oceania Japan 30% 11,375 employees Americas 7% 2,714 employees Europe 6 % 2,057 employees 2 3 Integrated Report 2015OMRON CorporationAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionChallenging Ourselves to Make New Technologies that Create a New Era Evolution in automation. Omron continues to challenge traditional ideas to create new and unique value for the market. The Table Tennis Robot that Plays With You, Not Against You At CEATEC JAPAN 2014, we unveiled a table tennis-playing robot that had everyone talking. This robot was our way of showing the world how Omron sensing and control technologies create a seamless partnership between human and machine. Omron sensing and control technologies determine what is necessary from various information, transforming it into valuable information for equipment control. A robot that anticipates human movement The table tennis-playing robot demonstrates a machine’s ability to sense its surroundings and make a correct decision. Using 3D image processing, our robot friend calculates movement and ball position to return a shot easy for its opponent to reach, keeping the volley going as long as possible. Technology that anticipates human movement and reacts properly will play a core role in future industrial, nursing, and in-home care settings. 3D Signage Signage that uses spatial projection comes alive, expressing information in a way that can’t be done in two dimensions. How would you use a 2D arrow on a signboard to tell a visitor to turn around and go back up a ﬂight of stairs? In three dimensions, however, the message is clear and easy to see. Signage made with light is much safer and more space efﬁcient than traditional signage, to boot. You can probably imagine a number of creative ways spatial projection can be used in showrooms, display windows, and maybe even in your own home. Chicken ginseng congee Vegetable congee Real-Time Translation Devices with embedded real-time translation technology interpret and display written characters for the user. Beyond simple translation, we are working to incorporate concierge technology that provides timely and useful suggestions as well. 4 5 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionBusiness Model Omron consists of six main business segments, ﬁlled with talented, skilled, and dedicated professionals. These professionals leverage intellectual and physical capital to deliver products and services that make the world a better place. In each of these business segments we collect information about human will and thoughts, speciﬁed data of a person or an object, etc., converting this information into products and services using sensing and control technologies. This is how we go about directly serving the needs of society. For example, our factory automation (FA) products and services support safer, higher quality of manufacturing work. Our accurate medical equipment contributes to society by assisting in the battle against lifestyle diseases. We take the compensation we receive from our customers and reinvest it into creating solutions for the next generation of issues to come̶that’s the Omron style of value delivery. Social Issues Labor shortages Factory safety and security Quality Anticipate Station overcrowding, traffic congestion Lifestyle diseases Energy shortages, the environment Omron Plan / Develop / Manufacture / Sell Industrial Automation Business Electronic and Mechanical Components Business Automotive Electronic Components Business Social Systems, Solutions and Service Business Healthcare Business Other Businesses f o r S o l v i n g I s s u e s I n f o r m a t i o n U s e f u l ● H u m a n w i l l a n d t h o u g h t s ● S p e c fi e d i d a t a o f a p e r s o n o r a n o b j e c t ● H u m a n b o d y d a t a ● N a t u r a l e n v i r o n m e n t ● L o c a t i o n a n d c o n d i t i o n s o f a p e r s o n o r a n o b j e c t S e n s i n g a n d C o n t r o l T e c h n o o g e s l i Manufac- turers B toB & B toC Value Delivery A better life through manufacturing FA Equipment Electronics Electronic Components Automotive Electronic Components Station Equipment, Traffic Equipment, Maintenance and Services Medical Equipment C o n s u m e r / E n d U s e r Automotive Food/Pharma Infrastructure, Other Railway/Roads Pharmacies Station/road safety, security Health Environment (Energy) PV Inverters Other Housing Construction, Other Improve 6 7 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section 　　　　 Omron Products Control Equipment for Factory Automation Segment Information P. 44 The IAB provides control equipment to automate produc- tion lines. Devices connected over open protocol enable high- speed, high precision control contributing to quality, safety, and environmental conservation in the factory. n o i t a m o t u A l a i r t s u d n I s s e n i s u B l a c i n a h c e M d n a c i n o r t c e l E s s e n i s u B s t n e n o p m o C c i n o r t c e l E e v i t o m o t u A s s e n i s u B s t n e n o p m o C Sensing Equipment Control Equipment Motion Equipment Vision Sensors Fiber Sensors Programmable Controllers Temperature Controllers Inverters Servomotors and Servo Drivers Safety Equipment Emergency Stop Switches Safety Light Curtains Safety Controllers Electronic Components for Home Appliances and Other Industries Segment Information P. 46 Relays and switches for use in refrigerators, microwave ovens, air conditioners and more Devices for use in the digital imaging and amusement industries Surface-Mounted Switches Power Relays for Printed Circuit Boards Printer Toner Sensors Power Supply Units for Amusement Devices Segment Information P. 48 Electronic Automotive Components Electric power steering controllers for a smoother, enjoyable driving experience Power window switches with built-in safety features to prevent accidental injury Passive entry and keyless push-button starters make driving a more enjoyable experience. The AEC provides components to make these features possible. Key Door unlocks Engine starts s n o i t u o S l , s m e t s y S l a i c o S s s e n i s u B e c i v r e S d n a e r a c h t l a e H s s e n i s u B s e s s e n i s u B r e h t O Public Transportation The SSB provides the technology behind the latest automated ticket gate and ticket vending machines to keep traffic moving efficiently through public transportation. Automated Ticket Gates Ticket Vending Machines Segment Information P. 50 Environment Total solutions for energy generation, storage, and savings Road Trafﬁc Central management systems for traffic flow and congestion management Road Trafﬁc Management Systems Healthcare and Medical Devices for Home Use Medical Devices for Professional Use The HCB helps families stay healthy, offering health management and treatment products and services. Medical devices and equipment that relieve symptoms of disease and reduce medical risks Segment Information P. 52 Body Composition Monitors Thermometers Blood Pressure Monitors Spot Check Monitors Environmental Solutions Backlights PV inverters and other products for energy genera- tion, storage, and savings LCD backlights for smartphones and other devices Segment Information P. 54 Hybrid Storage System for Solar Power LCD Backlights Electric Systems and Equipment Micro Devices Uninterruptible power supply units provide electricity during power outages or other emergencies. Micro electro mechanical systems (MEMS) for emerging applications Electric Power Steering Controllers Power Window Switches Uninterruptible Power Supply Units MEMS Pressure Sensors 8 9 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section The Year in Review Fiscal 2014 was a full and eventful year at Omron. We took strategic steps forward in creating a self-driven growth structure. We created a venture investment subsidiary to ﬁnd and fund opportunities for future growth. We acquired a Brazilian company and partnered with others. In addition, our innovative management by ROIC program was recognized and awarded the Corporate Value Improvement Award by the Tokyo Stock Exchange. Manage- ment and Business November 2014 September 2014 Opened the Hu-tech Environmental Laboratory. Omron selected for the ﬁfth This building is a test case for completely new consecutive year as a compo- zero-energy building* and energy concepts nent of the DJSI Asia Paciﬁc Index *Reduce a building’s annual primary energy usage to zero through energy conservation and efﬁciency. July 2014 Established Omron Ventures Co., Ltd. on July 1, 2014 as a corporate venture capital subsidiary http://www.omron.com/media/ press/2014/07/c0701.html October 2014 Acquired NS Industria de Aparelhos Medicos Ltda., the No.1 nebulizer manufacturing and sales company in the Brazilian market http://www.omron.com/media/press/2014/09/h0909.html Industrial Automation Business (IAB) Electronic and Mechanical 　　 Components Business (EMC) Automotive Electronic 　　 Components Business (AEC) Social Systems, Solutions and 　　 Service Business (SSB) Healthcare Business (HCB) Other Businesses December 2014 January 2015 Launched a joint project with JIN Co., Ltd. for the development of a new healthcare product; new product Signed a letter of intent with Cyberdyne Inc. scheduled to be introduced to the market in spring 2016 for a robotics business partnership October– December 2014 First share buyback in six years (2.82 million shares; ¥15.0 billion) and share retirement http://www.omron.com/ir/news/2014/20141028_3.html http://www.omron.com/ir/news/2014/20141126.html Omron named the Grand Prix winner of the Tokyo Stock Exchange Corporate Value Improvement Award See P. 28 for more. http://www.omron.com/ media/press/2015/01/ c0107.html 2014 2015 April−May June July August September October November December January February March April Products and Services June 2014 Omron’s absolute pressure sensor awarded Semiconductor of the Year 2014 in the semiconductor devices category October 2014 Developed a ﬁrst-of-its-kind* Modiﬁed current Japanese spatial projection technolo- passive entry and engine gy to project static 3D images using LED lights and a transparent plate start systems to meet needs in emerging economies; began * September 2014 internal survey marketing systems in India See P. 8 for more. July 2014 Omron introduced the Accumil V7000 Series, a patient monitor offering high operability and diverse functionality to support safe and efﬁcient nursing care Omron’s Table Tennis Robot awarded the U.S. Media Panel Innovation Award at CEATEC 2014* *Award given by U.S. IT/electronics journalists to the most innovative technologies, products, and services exhibited at CEATEC JAPAN deemed to have a signiﬁcant impact on the future U.S. market. http://www.omron.com/media/press/2014/10/c1010.html December 2014 Released vision sensing component, Hu-man Vision Components-Consumer Model (recognizes the status of a person and sends information to a smartphone) http://www.omron.com/media/press/2014/10/e1014_2.html Cumulative production of KP Series PV inverters for solar power systems surpasses 1 million units February 2015 Released HEM- 7280C upper arm blood pressure monitor with communications feature and backlight January 2015 Omron’s uninterruptible power supply (UPS) won the BCN AWARD 2015 for the most outstanding product in the UPS division April 2015 Introduced the world’s lightest, most compact solar power generation hybrid storage battery system (KP48S) Introduced the world’s fastest machine automation controller for the FA industry (NX701); with the addition of the basic NJ101 model. Omron offers control solutions for everything from advanced production systems to general-use equipment *March 2015 internal survey http://www.omron.com/media/ press/2015/04/i0401.html 10 11 Integrated Report 2015OMRON CorporationAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section C O N T E N T S OMRON Corporation Integrated Report 2015 About Omron 1 Omron Principles 2 Making the World Smaller through Sensing and Control Technologies 4 Challenging Ourselves to Make New Technologies that Create a New Era 6 Business Model 8 Omron Products 10 The Year in Review 14 Financial Highlights 16 Non-Financial Highlights 18 11-Year Financial and Non-Financial Highlights 20 Board of Directors and Auditors Editorial Policy The scope of this report covers the 169 companies of the Omron Group, consisting of 158 consolidated subsidiaries and 11 nonconsolidated subsidiaries and afﬁliates accounted for under the equity method (as of March 31, 2015). Through its environmental and governance-related activities, Omron is contributing to the development of a sustainable society. Since 2012, we have included in our annual reports information on activities that had previously only been available in the CSR report. Caution Concerning Forward-Looking Statements Statements in this integrated report with respect to Omron’s plans, strategies, as well as other statements that are not historical facts, are forward-looking statements involving risks and uncertainties. Important factors that could cause actual results to differ materially from such statements include, but are not limited to, general economic conditions in Omron’s markets, which are primarily Japan, the Americas, 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. Where We’re Headed 22 Material Management Issues and Major Initiatives 23 Message from the CEO 29 Message from the CFO 32 Special Feature 1 Management by ROIC 2.0 36 Special Feature 2 Toward Effective Corporate Governance Corporate Value Initiatives 40 42 44 Factory Tour Industrial Automation Business Kusatsu Plant At a Glance Industrial Automation Business (IAB) 46 Electronic and Mechanical Components Business (EMC) 48 Automotive Electronic Components Business (AEC) 50 Social Systems, Solutions and Service Business (SSB) 52 Healthcare Business (HCB) 54 Other Businesses Environmental Solutions Business, Backlights Business, Electronic Systems & Equipment Business, and Micro Devices Business Explanation of Cover We are all charged with the task of ensuring the sustainability of our precious planet. Omron embarked on the EARTH STAGE in April 2014. In this stage, Team Omron will strive unceasingly to create social needs, tackling all challenges placed before it. Corporate Value Foundation 56 Intellectual Property Strategy 57 Sustainability Management 59 Human Resources Management 62 Environmental Management 65 Corporate Governance 70 Compliance and Risk Management 72 Cultivating Strong Relationships through Responsible Engagement 74 Directors, Audit & Supervisory Board Members, Honorary Chairman, and Executive Officers Financial Section 78 Financial Section (U.S. GAAP) Corporate Information/ Other Information 92 93 94 Independent Practitioner's Assurance From the Editor-in -Chief Corporate Information / Stock Information 12 13 Integrated Report 2015OMRON CorporationAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section Financial Highlights Gross Proﬁt Margin ROIC EPS Cash and Cash Equivalents 39.3％ Gross profit margin R&D expenses ratio 13.4％ Return on invested capital (ROIC) Operating income margin Selling, general and administrative expenses ratio (excluding R&D expenses) (%) 50 40 30 20 10 0 34.834.8 35.135.1 26.2 25.4 37.537.5 36.836.8 37.137.1 38.538.5 39.339.3 23.0 23.5 23.4 23.5 23.4 7.7 0.9 7.2 2.5 7.8 6.7 6.5 6.8 7.0 6.7 8.8 10.2 6.2 5.7 (%) 15 10 5 0 -5 -10 1.0 -7.6 ROIC= Net Income Invested Capital* (Net Assets + Interest-Bearing Debt) *Invested capital represents prior year-end actual and average of current year quarterly forecasts 7.8 8.6 4.8 11.3 13.4 Expected cost of capital 6% FY 08 09 10 11 12 13 14 FY 08 09 10 11 12 13 14 Significant growth in IAB segment revenues and profits drive earnings improvement. Operating income margin breaks above the 10% level for the first time in 25 years. Our expected cost of capital for the EARTH-1 STAGE is set at 6%. ROIC management has led to fiscal 2014 ROIC significantly higher than our expected cost of capital. ¥283.9 Earnings per share Cash dividends per share Dividend payout ratio 106.4% 283.9 209.8 121.7 137.2 74.5 37.6% 25 16.0 17 24.7% 30 28 27.0% 25.3% 37 53 (Yen) 300 250 200 150 100 50 0 -50 -100 -150 -132.2 (%) 120 100 80 60 40 71 25.0% 20 0 ¥102.6 billion Cash and cash equivalents Total interest-bearing liabilities (Billions of yen) 120 102.6 102.6 90.390.3 74.774.7 53.0 51.751.7 46.646.6 45.5 45.345.3 55.755.7 36.6 18.8 5.6 0.5 0 90 60 30 0 FY 08 09 10 11 12 13 14 FY 08 09 10 11 12 13 14 Omron paid a record-high ¥71 per-share dividend for fiscal 2014. We expect to record a dividend payout ratio of 30% for fiscal 2015, achieving our stated commitment one year ahead of schedule. We prioritize cash allocation to growth investments designed to achieve our long-term vision (VG2020) goals. We forecast a total of ¥100 billion in investments over the three years of our EARTH-1 STAGE plan. Ratio of Overseas Sales to Total Net Sales Capital Expenditures 60.1％ Overseas Total Japan Americas Europe ¥38.1billion Capital expenditures Depreciation and amortization Greater China Asia Pacific Direct Exports (%) 60 50 40 30 20 10 0 49.7 50.3 50.7 49.3 51.4 52.2 48.6 47.8 51.1 48.9 16.4 14.8 15.7 12.8 12.0 6.4 2.0 14.7 11.7 7.6 2.0 13.7 12.0 8.1 1.9 16.3 16.3 13.5 12.1 8.5 1.8 12.4 8.4 1.6 FY 08 09 10 11 12 60.1 39.9 21.4 14.6 12.8 9.8 1.6 14 55.4 44.6 18.4 13.1 9.3 1.5 13 We continue to see revenue growth in Greater China, Southeast Asia, and other emerging economies. (Billions of yen) 36.8 33.5 38.1 33.7 28.3 28.3 28.3 23.2 23.0 22.6 22.5 25.1 27.0 19.5 40 30 20 10 0 FY 08 09 10 11 12 13 14 Omron plans to steadily increase capital expenditures toward sustained growth. 14 15 Integrated Report 2015OMRON CorporationAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionNon-Financial Highlights Note: The seven non-ﬁnancial indices presented here have been reviewed by Deloitte Tohmatsu Evaluation and Certiﬁcation Organization, an independent evaluation entity. Practicing the Omron Principles (The Omron Global Awards: TOGA) Ratio of Employees with Disabilities No. of Entries 　　3,651 Employees 32,751 No. of Participating No. of participating employees No. of entries (Employees) 40,000 30,000 2,481 2,519 23,524 20,000 20,828 3,651 32,751 10,000 0 FY 12 13 14 (Entries) 4,000 3,000 2,000 1,000 0 Challenging ourselves, being pioneers, putting ourselves in the shoes of our customers. At Omron, we practice the Omron Principles as a means to solve social issues as well as to become a more valuable corporation. TOGA (The Omron Global Awards) recognizes teams from around the world that have worked together to rise to the challenge, delivering results that exemplify the Omron Principles. 　For more about TOGA: 　http://www.omron.com/about/csr/omron_csr/idea/practice/ 3.40% Employees with disabilities at Omron Corporation Japanese national average 2.882.88 3.143.14 3.113.11 3.243.24 3.403.40 1.681.68 1.651.65 1.691.69 1.761.76 1.821.82 (%) 5 4 3 2 1 0 FY 10 11 12 13 14 Note: Ratio of employees with disabilities (including special subsidiaries) is as of June 30 each year. Omron believes in diversity. As a matter of fact, diversity is a central tenet of the Omron Principles. We continue to look for more opportunities to provide disabled individuals a means to find pride in worthwhile work. Global Net Sales to CO2 Emissions*1 Environmental Contribution*2 3.78million yen/ton-CO2 CO2 emissions of global production sites Net sales to CO2 emissions 880,000ton-CO2 CO2 emissions of global production sites Environmental contribution Ratio of Women in Managerial Roles (Japan) Ratio of Non-Japanese in Managerial Positions Overseas 1.9% Ratio of women in managerial roles No. of women in managerial roles (Women managers) 40 (%) 6 4 2 0 3030 2727 5.0%5.0% 2222 2323 1.4%1.4% 1.5%1.5% 1.8%1.8% 3.0%3.0% 1.9%1.9% 30 20 10 0 FY 12 13 14 15 16 (Target) 18 (Target) Note: Figures represent results as of April 20. We are well aware that the low number of women in leadership roles in Japan is not only critical issue̶it's a lost opportunity. We plan to raise the number of women in managerial roles to 3% by the end of fiscal 2016 and to 5% by the end of fiscal 2018. 42% 3636 3131 4242 4242 (%) 50 40 30 20 10 0 FY 11 12 13 14 We believe that local management is the best management. This is why we emphasize having local staff in key positions in our local entities overseas. We will continue to train and appoint local staff to perform managerial roles at our offices around the world. 17% Improvement vs. 2010 223,945 207,426 （ton-CO₂） 225,000 200,000 191,103 183,953 176,055 3.233.23 3.373.37 3.693.69 3.733.73 4.204.20 3.783.78 Environmental Contribution > CO2 Emissions of Global Production Sites （ton-CO₂） 1,000,000 Targets Achieved for Five Consecutive Years 880,561 671,953 331,222 216,467 211,364 191,103 183,953 176,055 207,426 223,945 ₂） 800,000 600,000 400,000 200,000 0 FY 10 11 12 13 14 20 (Target) FY 10 11 12 13 14 At Omron, we take pride in knowing that our businesses contribute to a sustainable society. We track and improve global net sales to CO2 emissions and environmental contribution as two important indicators of corporate value. *2 Environmental Contribution = Volume of CO2 emissions reduction contributed by society’s use of Omron Group’s energy saving, storage or generation products and services. See our website for more about how we calculate these ﬁgures. Environmental Contribution http://www.omron.com/about/csr/environ/eco_products/eco_contribution/ CO2 Emissions of Global Production Sites http://www.omron.com/about/csr/environ/eco_fac_off_lab/co2_discharge/ data_co2exhaust_volume.html 16 17 *1 Net sales to CO2 emissions = Net sales per one ton of CO2 emissions.0150,000125,000175,000054321（Million yen/ton-COIntegrated Report 2015OMRON CorporationAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section11-Year Financial and Non-Financial Highlights OMRON Corporation and Subsidiaries (As of and for the years ended March 31) FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 Operating Results: 　Net sales 　Gross proﬁt 　Selling, general and administrative expenses (excl. R&D expenses) 　Research and development expenses 　Operating income (Note 2) 　EBITDA (Note 3) 　Net income (loss) attributable to shareholders Cash Flows: 　Net cash provided by operating activities 　Net cash used in investing activities 　Free cash ﬂow (Note 4) 　Net cash provided by (used in) ﬁnancing activities Financial Position: 　Total assets 　Cash and cash equivalents 　Total interest-bearing liabilities 　Total shareholders’ equity Per Share Data: 　Net income (loss) attributable to shareholders (EPS) 　Shareholders’ equity 　Cash dividends (Note 5) 　Dividend payout ratio Financial Indicators: 　Gross proﬁt margin 　Operating income margin 　EBITDA margin 　Return on invested capital (ROIC) 　Return on equity (ROE) 　Ratio of shareholders’ equity to total assets 　Total return ratio (Note 6) 　Capital expenditures 　Depreciation and amortization 　Ratio of overseas sales Non-Financial Data (Note 7) : 　Number of employees 　Ratio of overseas employees to total employees 　Number of patents held (Note 8) 　Environmental contribution (ton-CO2) (Note 9) 　CO2 emissions of global production sites (ton-CO2) (Note 10) ¥598,727 245,298 141,185 49,441 54,672 83,314 30,176 61,076 (36,050) 25,026 (40,684) 585,429 80,619 23,203 305,810 126.5 1,284.8 24.0 19.2% 41.0% 9.1% 13.9% 9.0% 10.4% 52.2% 29.1% 38,579 28,642 39.9% 24,904 58.4% 4,426 ¥616,002 248,642 149,274 50,501 60,782 91,607 35,763 51,699 (43,020) 8,679 (38,320) 589,061 52,285 2,468 362,937 151.1 1,548.1 30.0 19.9% 40.4% 9.9% 14.9% 10.1% 10.7% 61.6% 47.8% 40,560 30,825 43.4% 27,408 61.1% 4,538 ¥723,866 278,241 164,167 52,028 62,046 95,968 38,280 40,539 (47,075) (6,536) (4,697) 630,337 42,995 19,988 382,822 165.0 1,660.7 34.0 20.6% 38.4% 8.6% 13.3% 9.9% 10.3% 60.7% 49.7% 44,447 33,922 47.3% 32,456 64.9% 5,206 ¥762,985 293,342 176,569 51,520 65,253 101,596 42,383 68,996 (36,681) 32,315 (34,481) 617,367 40,624 18,179 368,502 185.9 1,662.3 42.0 22.6% 38.4% 8.6% 13.3% 10.4% 11.3% 59.7% 74.7% 37,072 36,343 52.1% 35,426 65.7% 5,717 ¥627,190 218,522 164,284 48,899 5,339 38,835 (29,172) 31,408 (40,628) (9,220) 21,867 538,280 46,631 52,970 298,411 (132.2) 1,355.4 25.0 ー 34.8% 0.9% 6.2% (7.6%) (8.7%) 55.4% ー 36,844 33,496 49.7% 32,583 63.4% 5,205 ¥524,694 184,342 133,426 37,842 13,074 40,088 3,518 42,759 (18,584) 24,175 (20,358) 532,254 51,726 36,612 306,327 16.0 1,391.4 17.0 106.4% 35.1% 2.5% 7.6% 1.0% 1.2% 57.6% 106.7% 19,524 27,014 50.7% 36,299 68.1% 5,218 ¥617,825 231,702 142,365 41,300 48,037 71,021 26,782 41,956 (20,210) 21,746 3,333 562,790 74,735 45,519 312,753 121.7 1,421.0 30.0 24.7% 37.5% 7.8% 11.5% 7.8% 8.7% 55.6% 25.2% 23,192 22,984 51.4% 35,684 67.8% 5,452 216,467 191,103 ¥619,461 227,887 145,662 42,089 40,136 62,753 16,389 31,946 (26,486) 5,460 (33,492) 537,323 45,257 18,774 320,840 74.5 1,457.5 28.0 37.6% 36.8% 6.5% 10.1% 4.8% 5.2% 59.7% 37.7% 28,341 22,617 52.2% 35,992 67.7% 5,959 211,364 183,953 ¥650,461 241,507 152,676 43,488 45,343 67,795 30,203 53,058 (28,471) 24,587 (18,550) 573,637 55,708 5,570 366,962 137.2 1,667.0 37.0 27.0% 37.1% 7.0% 10.4% 8.6% 8.8% 64.0% 27.0% 28,285 22,452 51.1% 35,411 67.4% 6,448 331,222 176,055 ¥772,966 297,208 181,225 47,928 68,055 93,144 46,185 79,044 (31,125) 47,919 (16,298) 654,704 90,251 488 430,509 209.8 1,956.1 53.0 25.3% 38.5% 8.8% 12.1% 11.3% 11.6% 65.8% 25.3% 33,653 25,089 55.4% 36,842 69.1% 6,635 671,953 207,426 Millions of yen FY2014 Thousands of U.S. dollars (Note 1) FY2014 ¥847,252 $7,060,433 2,771,725 1,650,858 399,275 721,592 957,750 518.083 642.142 (329,308) 312,833 (244,192) 5,925,092 855,183 0 4,081,408 U.S. dollars (Note 1) 2.37 18.79 0.59 317,858 236,158 332,607 198,103 47,913 86,591 114,930 62,170 77,057 (39,517) 37,540 (29,303) 711,011 102,622 0 489,769 Yen 283.9 2,254.4 71.0 25.0% 39.3% 10.2% 13.6% 13.4% 13.5% 68.9% 49.1% 38,143 28,339 60.1% 37,572 69.7% 7,194 880,561 223,945 Notes: 1. U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate on March 31, 2015 of ¥120 = U.S.$1. 2. Operating income for ﬁscal 2005 includes an ¥11,915 million gain recorded on the return of pension assets to the government. 3. EBITDA = Operating income + Depreciation and amortization 4. Free cash ﬂow = Net cash provided by operating activities + Net cash used in investing activities 5. Cash dividends per share represent the amounts applicable to the respective year, including dividends to be paid after the end of the ﬁscal year. 6. Total return ratio = (Total dividends paid + Amount of shares repurchased) / Net income (loss) attributable to shareholders (does not include repurchases of 　 less than one trading unit) 7. The non-ﬁnancial data presented herein was reviewed by Deloitte Tohmatsu Evaluation and Certiﬁcation Organization Co., Ltd., an independent practitioner. See page 92 for more information. 8. Patent information is as of March 15. 9. Environmental contribution = Volume of CO2 emissions reduction contributed by society’s use of the Omron Group’s energy-saving, storage, or generation products and services. 10. CO2 emissions volumes calculated based on fuel consumption and electricity purchase volumes by the Company. Operating Income Omron applies the single step presentation of income under U.S. GAAP (that is, the various levels of income are not presented) in its consolidated statements of income. For comparison with other companies, operating income is presented as gross proﬁt less selling, general and administrative expenses and research and development expenses. Discontinued Operations Figures for FY2006 and prior years have been restated to account for businesses discontinued in FY2007. Long-Term Management Strategy Grand Design 2010 （GD2010） FY2001 – FY2003 1st Stage Establish a Proﬁt Structure Concentrate on cost structure reform and restructure the Company as a proﬁt-generating business Achievements • ROE of 10% • Withdrew from unproﬁtable business, spun off Healthcare Business • Raised the level of corporate governance to the global standard FY2004 – FY2007 2nd Stage Balance Growth and Earnings Reinforce business foundations through aggressive investment in growth areas, including M&A, and cost reduction Achievements • Increased earnings per share from ¥110.7 (FY2003) to ¥185.9 (FY2007) FY2008 – FY2010 3rd Stage Achieve a Growth Structure Fortify growth businesses (high proﬁtability) Revival Stage (February 2009 to March 2011) Revised 3rd-stage targets due to an abrupt change in the business environment, imple- mented cost reductions, and spun off Automo- tive Electronic Components Business and Social Systems, Solutions and Service Business Value Generation 2020 （VG2020） FY2011 – FY2013 GLOBE STAGE Establishment of proﬁt and growth structures on a global basis Target*1 Result Net sales Operating income Gross proﬁt margin Operating income margin ROE ¥750.0 billion ¥773.0 billion ¥68.1 billion ¥100.0 billion 38.5% 42.0% 8.8% 13.3% 11.6% over 15% FY2014 – FY2016 EARTH-1 STAGE Establish self-driven growth structure FY2016 Targets*2 ● Net sales over ¥900 billion ● Gross proﬁt margin over 40% ● Operating proﬁt margin over 10% ● ROIC approx. 13% ● ROE approx. 13% ● EPS approx. ¥290 FY2017 – FY2020 EARTH-2 STAGE ● Net sales over ¥1 trillion ● Operating proﬁt margin15% FY2020 Targets*3 *1 Target values are those announced at the time of the original *2 Announced April 2014 VG2020 announcement (July 2011) *3 Target values are those announced at the time of the original VG2020 announcement (July 2011) 18 19 Integrated Report 2015OMRON CorporationAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section Board of Directors and Auditors As of June 23, 2015 Back row, from left: Eisuke Nagatomo Audit & Supervisory Board Member (Independent) Corporate Governance Committee Member Kiichiro Kondo Audit & Supervisory Board Member Eizo Kobayashi Outside Director Chairman of the Compensation Advisory Committee Vice Chairman of the Corporate Governance Committee Personnel Advisory Committee Member CEO Selection Advisory Committee Member Kazuhiko Toyama Outside Director Chairman of the Personnel Advisory Committee Chairman of the CEO Selection Advisory Committee Chairman of the Corporate Governance Committee Compensation Advisory Committee Member Kuniko Nishikawa Outside Director Personnel Advisory Committee Member CEO Selection Advisory Committee Member Compensation Advisory Committee Member Corporate Governance Committee Member Tokio Kawashima Audit & Supervisory Board Member Yoshifumi Matsumoto Audit & Supervisory Board Member (Independent) Corporate Governance Committee Member Front row, from left: Koji Nitto Director, Senior Managing Executive Officer Senior General Manager, Global Strategy HQ Compensation Advisory Committee Member Yoshinori Suzuki Executive Vice President and CFO Personnel Advisory Committee Member Fumio Tateishi Chairman CEO Selection Advisory Committee Member Yoshihito Yamada President and CEO Akio Sakumiya Executive Vice President Vice Chairman of the Personnel Advisory Committee Vice Chairman of the CEO Selection Advisory Committee Vice Chairman of the Compensation Advisory Committee 20 21 Integrated Report 2015OMRON CorporationAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionMaterial Management Issues and Major Initiatives Message from the CEO In 2011, Omron published Value Generation 2020 (VG2020), a plan that outlined a 10-year vision for our company. VG2020 put us on the path toward becoming a company that delivers global value in terms of both volume and quality. Under this plan, we set a goal and deﬁned speciﬁc activities to achieve net sales of ¥1 trillion with an operating income margin of 15% for ﬁscal 2020. Fiscal 2015 represents the second year of the EARTH-1 STAGE of this plan. We have identiﬁed the following matters as important management issues and initiatives to address moving forward. ▶ EARTH-1 STAGE Policies Establish a self-driven growth structure to grow in any operating environment ▶ Material Issues and Major Initiatives Issues Initiatives Growth Power ● Dramatic growth in Asia ● Innovate to roll out new businesses more quickly ● Grow more quickly through acquisitions and partnerships Improve 3 Powers Earning Power ● Exercise ROIC- and ROE-centric management and matrix management to improve gross profit margins (ability to earn) Power to Deal with Challenge ● Manage Omron as a business portfolio to allocate resources to growth businesses ● Improve integrated global risk management Global Human Resources ● Globalize management by promoting talented individuals versed in global business ● Increase the ratio of women in managerial roles (particularly in Japan) Materiality Identiﬁcation Process In light of our long-term VG2020 strategies, and after considerable discussion at board meetings and other venues, we determine our most pressing issues with respect to our Growth Power, Earning Power, and Power to Deal with Challenge. We value the feedback we receive from shareholders, investors, and other stakeholders, communicating this information throughout our company. Every year we conduct an internal review of important matters, disclosing our results* to the public. * http://www.omron.com/ir/shareholder/pdfs/convocation_notice_78th.pdf ■ VG2020 Strategies GLOBE STAGE EARTH-1 STAGE EARTH-2 STAGE N e t S a e s l New Business Strategy for the Optimization Society Super-Global Growth Strategy Existing Business Strategy (Maximization of IA Business) Proﬁt Structure Reform Global Human Resources Strategy B a s i c S t r a t e g e s i S t r a t e g i e s F u n c t i o n a l FY2011 FY2014 – FY2016 FY2020 Our Mission: To improve lives and contribute to a better society The spirit of this mission, ﬁrst deﬁned by our founder Kazuma Tateishi, lives on in the Omron Principles and in our own beliefs. The Omron Principles are the cornerstone of our decisions and actions. They are what binds us together, and they are the driving force behind Omron’s growth. Through our businesses, we help solve social issues and strengthen our corporate value. Yoshihito Yamada President and CEO July 2015 22 23 Integrated Report 2015OMRON CorporationAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section 1. Revised Principles and Created Management Philosophy 2. Return on Invested Capital To succeed and grow at the highest levels, a company must have a clear mission and inspiring values. But, it’s not enough to simply have a mission and values. Every employee must believe in what the company is trying to accomplish, putting their commitment into everyday practice. In 1959, our founder created our Corporate Motto. In the half-century since that time, the line of successive Omron leadership has held true to the spirit of this Corporate Motto, relying on the Omron Principles to bind the company together and to guide our management decisions. For Omron, our Principles drive us to become a stronger, better company, while at the same time they serve as the engine that supports our ongoing growth. In May 2015, we revised the Omron Principles for the ﬁrst time in nine years. Management Philosophy We believe this revision now clearly communicates Our Mission and Our Values in a way that resonates with and inspires every employee worldwide. This revision reaches out to the very front lines of our businesses to help us all focus on the same goals, working together to achieve the long- term vision outlined in our Value Generation 2020 (VG2020) business plan. We view this as an opportunity to make a deeper connection with our roots, while looking forward to sustained growth toward 2020 and beyond. At the same time, we have created our Management Philosophy, declaring to our stakeholders our stance and approach in carrying out our business based on the Omron Principles. As always, our ultimate mission remains: To improve lives and contribute to a better society. We believe a business should create value for society through its key practices. We are committed to sustainably increasing our long-term value by putting Our Mission and Values into practice. ● We uphold a long-term vision in our business practices to create solutions to society’s needs. ● We operate as a truly global company through our fair and transparent management practices. ● We cultivate strong relationships with all of our stakeholders through responsible engagement. “Driving corporate value through the Omron Principles” Return on invested capital (ROIC) is an important indicator that shows how effectively a company uses its capital to offer value to society. This indicator also shows how well a company meets the expectations of its shareholders. At Omron, our businesses operate across a wide range of formats, from business-to- business to business-to-consumer. Using ROIC as a yardstick provides an effective, fair means for management to measure the performance of these diverse businesses. Today, we manage Omron as a portfolio of businesses, each responsible for delivering return on invested capital. The Down-Top ROIC Tree is the tool we use to establish and execute on key performance indicators tied directly to the front lines of our businesses. As a result, we achieved an ROIC in excess of 13% for ﬁscal 2014, delivering our ﬁscal 2016 target two years ahead of schedule. In January 2015, the Tokyo Stock Exchange recognized Omron for this initiative, honoring us as the Grand Prix recipient of the Corporate Value Improvement Award. This award is the highest recognition given by the Tokyo Stock Exchange, which selects only one ﬁrm each year from among the 3,400 publicly traded 3. FY2014 Results companies on the exchange. Our next challenge is to deliver even higher levels of quality through our front-line activities. We must communicate our values more effectively to all employees, regardless of their place in the company or knowledge of ﬁnancial management concepts. During February 2015, we began a company- wide education project led by our accounting and ﬁnance department. Management by ROIC 1.0 was the original name we gave to this quantitative approach using Down-Top ROIC Tree. Now we are operating under Management by ROIC 2.0 *1, upgrading and accelerating this program of management by key indicators. We believe this approach will help us continue to improve at the front lines of our businesses. *1 See P. 32 for more. Corporate Value Improvement Award Presentation Ceremony Fiscal 2014 was our third consecutive year of higher revenues and proﬁts, as well as our second consecutive year of record earnings. Our mainstay Industrial Automation Business ■ FY2014 Results (Management Indicators) FY2013 Actual FY2014 Actual Net sales (¥ billion) Gross proﬁt margin Operating income margin ROIC ROE EPS (¥) USD rate (¥) EUR rate (¥) 773.0 38.5% 8.8% 11.3% 11.6% 209.8 100.1 134.0 847.3 39.3% 10.2% 13.4% 13.5% 283.9 110.0 138.7 Change +9.6% +0.8P +1.4P +2.1P +1.9P +74.1 +9.9 +4.7 24 25 Integrated Report 2015OMRON CorporationAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section “We moved our plan for EARTH-1 STAGE goals forward by 12 months” earlier than planned (2) Sustain efforts toward higher proﬁtability (GP%) (3) Increase sales and proﬁts in all business segments Our goals for VG2020 (ﬁscal 2020) are net sales of over ¥1 trillion and an operating income margin of 15%. Ongoing investment will be key in accomplishing these goals. We will increase the size of our growth investments, primarily in our Industrial Automation Business and Healthcare Business. We also plan to increase capital investment in our Backlights Business, where the market is growing at a tremendous clip. Omron builds a self-driven growth structure not affected by the ups and downs of external market changes. 5. Building a Better Governance Structure We believe that Omron can help solve social issues through technology and innovation. This is one reason why we established the new position of chief technology ofﬁcer (CTO) in April 2015. The mission of Omron’s CTO is to (1) strengthen our core technologies, (2) promote open innovation by working with outside entities, and (3) develop new technologies looking toward ﬁscal 2020 and beyond. Kiichiro Miyata, formerly president of Omron Healthcare, is serving as our CTO. Together with CFO Yoshinori Suzuki—himself an experienced corporate leader—and I as CEO, we plan to guide the Omron Group as a uniﬁed team. The business environment changes dynamically and on a global scale. Geopolitical risk, labor health and safety, procurement risk, employee safety, and other business issues are becoming more complex. So, with the many new and evolving issues we face, we have decided to place risk management and ■ FY2015 Management Indicators legal affairs directly under the ofﬁce of the president to assure that proper attention is given to these matters. We published the new Omron Corporate Governance Policies in response to the June 2015 enactment of Japan’s Corporate Governance Code. As a company, we continue to observe and improve our stance regarding governance as a good corporate citizen should. We want Omron to be a company valued and appreciated by the people of the world. To do this, we must build a strong corporate culture that combines growth, proﬁts, and the ability to respond to change. Our long-term management vision looks ahead to the year 2020 and far beyond. For Omron to be a company valued by the people of the world, we must continue to endeavor. I ask you for your continued support as we pursue this vision. Net sales (¥ billion) Gross proﬁt margin Operating income margin ROIC ROE EPS (¥) USD rate (¥) EUR rate (¥) *3 Published April 24, 2014 FY2014 Actual 847.3 39.3% 10.2% 13.4% 13.5% 283.9 110.0 138.7 FY2015 Plan 900 39.6% 10.0% > 13% > 13% 306.1 115.0 130.0 EARTH-1 STAGE Goals (FY2016)*3 > 900 > 40% > 10% approx. 13% approx. 13% approx. 290 100.0 135.0 reported strong results, driving overall performance to reach net sales of ¥847.3 billion and operating income of ¥86.6 billion. Operating income margin came in at 10.2%, surpassing the 10% level for the ﬁrst time in 25 years. We are steadily building a more self-driven growth structure, particularly in our Industrial Automation Business. At the same time, we are building more earnings capacity, creating a stronger portfolio of businesses. ROIC jumped 2.1 points over the prior ﬁscal year, reaching 13.4%. ■ Three-Year Total Shareholder Return Comparison*2 350 300 250 200 150 100 TSR (Annual Rate) Omron 47% TOPIX Electric Appliances 24% 50 2012/3/30 2012/6/30 2012/9/30 2012/12/31 2013/3/31 2013/6/30 2013/9/30 2013/12/31 2014/3/31 2014/6/30 2014/9/30 2014/12/31 2015/3/31 *2 Three-year stock trend after dividend adjustments (March 30, 2012 = 100) Source: Internal data; Bloomberg In terms of shareholder value, we made a signiﬁcant repurchase of shares for the ﬁrst time in six years. During ﬁscal 2014, we purchased 2.82 million shares, after which we retired a total of 9.72 million shares including treasury stock. Our dividends were a record ¥71 per share. Total shareholder return (TSR) compared to ﬁscal 2013 was up 29%. Over the past three years, our TSR has been 47%, outperforming the TOPIX average of 24% for the electric appliances sector. 4. Future Goals We have set ﬁscal 2015 targets for net sales and operating income of ¥900 billion and ¥90 billion, moving our EARTH-1 STAGE goals up by 12 months. We project earnings per share to exceed our interim goal of ¥306 per share. Similarly, we have set a target for dividend payout ratio of 30% for ﬁscal 2015, 12 months ahead of our original plan. During ﬁscal 2015, we plan to work even harder on our self-driven growth engine and numerical targets: (1) Achieve EARTH-1 STAGE goals one year 26 27 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section OMRON Corporation Grand Prix Winner of the TSE Corporate Value Improvement Award for FY2014 Why Omron? Corporate Value Improvement Award ● Investor-oriented management goals ● In-depth business portfolio management ● Down-Top ROIC tree approach shared throughout the organization The award was established by TSE to encourage management toward enhancing corporate value and contribute to raising the quality and proﬁle of the Japanese equities market. Selected from the entire TSE market of about 3,400 candidates, companies are recognized for raising the appeal of the market by improving corporate value through efforts that consider capital cost and other investor concerns. Note: Translation of an excerpt from a Tokyo Stock Exchange advertisement in the March 16, 2015 ● Management initiatives resulting in measurable improvements morning edition of the Nihon Keizai Shimbun For more about the Corporate Value Improvement Award, see: http://www.jpx.co.jp/english/equities/listed-co/award/01.html Message from Japan Exchange Group, Inc. The Corporate Value Improvement Award is a conscious and open effort by TSE to encourage management toward raising capital productivity. The award recognizes outstanding initiatives by public companies aimed at improving corporate value. For FY2014, we have selected OMRON Corporation for the Grand Prix award. Omron is a truly worthy winner, demonstrating excellent management through an ROIC approach with a strong emphasis on capital productivity. We look forward to the continued growth of the company as it steadily pursues its highly commendable approach toward business management. Akira Kiyota Director & Representative Executive Officer, Group CEO Japan Exchange Group, Inc. Message from the CFO Aiming for Corporate Value Improvement through Portfolio Management We manage the Omron Group as a portfolio of businesses. The purpose of portfolio management at Omron is to support correct decisions in response to changes in the business environment. We make opportunistic management decisions for M&A, growth acceleration, restructuring, and new lines of business to generate growth for our company. Our cash on hand is another effective tool we use to invest in growth opportunities and to return proﬁts to our shareholders. A b o u t O m r o n W h e r e W e ’r e H e a d e d C o r p o r a t e V a l u e I n i t i a t i v e s l C o r p o r a t e V a u e F o u n d a t i o n Yoshinori Suzuki Executive Vice President and CFO July 2015 l S e c t i o n i F n a n c a i 28 Integrated Report 2015 29 資本生産性の向上を目指した経営が受賞の決め手「輝く、ニッポンの企業力」大賞を受賞した「オムロン株式会社」の企業価値向上への想い　オムロンは資本生産性を表す経営指標である投下資本利益率（ＲＯＩＣ）を重要指標に位置づけ、現場の従業員にどうすれば企業価値が向上するのかを考えさせています。企業価値向上や資本生産性という概念は管理職でも実感しにくいと思います。それをグループ各社の隅々まで浸透させ、日々の仕事に反映させていくという難題にオムロンは取組み、その結果として高水準の成果を生み出していこうと考えています。この取組みの秘訣は、「ＲＯＩＣ逆ツリー展開」と「ポートフォリオマネジメント」の２つです。　ROICを取り入れた経営の革新が成長につながる大賞企業「オムロン」インタビュー上場会社表彰受賞会社山田義仁氏大大大大大大大大賞賞賞賞賞賞賞賞オムロン株式会社代表取締役社長 CEO損保ジャパン日本興亜ホールディングス株式会社株式会社ファンケル東京瓦斯株式会社TOTO株式会社ピジョン株式会社株式会社セブン＆アイ・ホールディングス企業価値向上表彰・優秀賞女性の活躍の推進に向けた積極的な取組み企業行動表彰受賞した理由は日経電子版広告特集「ニッポンの企業力」で公開中http://ps.nikkei.co.jp/tseaward2014/」トンメジネマオリォフトーポ「定設を標目営経たし識意を点視者資投を実践自社の事業を100近い事業ユニットに細分化し、ROICなどを使って事業ユニットの選択と集中を行う「ポートフォリオマネジメント」を実践している。資本生産性を表す経営指標（ROIC※）を経営目標に掲げて、投資者との対話を深めている。※ROICとは、投下資本利益率のことをいう。同社のように借入がほぼゼロの場合、「ROIC」と「ROE」はほぼ同値となる。「逆ツリー展開」るいてれ現に果成の際実がみ組取透浸に体全織組でROIC経営を掲げて経営改革に取り組んだ結果、赤字事業が資本コストを上回る利益を獲得するまでに業績回復を果たすなど、企業価値向上の取組みが、実際に成果に現れている。全社ベースのROICを最終目標としたうえで、各事業ユニットごとにROICと関連性の高いKPIに分解する「逆ツリー展開」により、資本生産性の向上を組織全体に浸透させている。　　　　Tokyo Stock Exchange, Inc.This year, it is Omron.Next year, your company can win it, too.Effective allocation of equity capital to broaden proﬁt margins---.Today's companies are expected, more than ever, to improve corporate value. The vision of the Abe administration for the recovery and the reconstruction of the Japanese economy must be realized with Japanese companies effectively applying their abundant cash reserves to capital expenditure and other investments to sow the seeds of corporate growth.Tokyo Stock Exchange will continue to support companies that pursue initiatives toward improving corporate value.OMRON Corporation 1. Management of a Portfolio of 100 Businesses Portfolio Management Categories Omron consists of six business segments made up of nearly 100 distinct business units. We consider these business units to be our portfolio of investments. So, how do we measure the results of our portfolio? First, we create an index with return on invested capital (ROIC) as the X axis and revenue growth as the Y axis. Next, we categorize each of our businesses under one of four headings: S, A, B, or C. Businesses we consider to be an S demonstrate promise for strong, sustainable growth. These are the businesses to which we give priority investment. We pay close attention to these businesses to drive even more growth where we see the opportunity for robust, ongoing earnings. Some businesses we categorize as C (target for proﬁt restructuring). For these businesses, we focus on creating and exe- cuting plans to restructure their revenue bases. In some cases, we pull out from the business entirely. Over the past few years, we have been active in exiting businesses, closing factories, or otherwise restructuring businesses that fall under this category. Not every one of our business units is nec- essarily large. As a matter of fact, you could say that Omron is a collection of many small- and medium-sized businesses. The important take-away here is that Omron produces highly competitive products based on sensing and control technologies, marketed globally in nearly 100 different business sectors. This large number of businesses is precisely why we have to exercise effective portfolio man- agement. The type of detailed portfolio control we conduct allows us to optimize the alloca- tion of our resources to create more strength within each business unit, leading to higher levels of corporate value. ) % ( h t w o r G s e a S l B Expecting Growth S Investment C Profit Restructuring A Examining Regrowth ROIC (%) 2. Growth through Investment As part of our strategy to rapidly grow in emerging economies, Omron acquired NS Industria de Aparelhos Medicos Ltda. in October 2014. NS is a top manufacturer of nebulizers in Brazil, and this acquisition has vaulted our Healthcare Business to the top share of the global nebulizer market. At the same time, this new sales channel within Brazil took us to the number one share for blood pressure monitors in that market during fiscal 2014. Prior to our investment, the Brazilian market had presented challeng- es in marketing our blood pressure monitors. We have increased the pace of investment in our Backlights Business to win a greater share of growing demand. Our EARTH-1 STAGE (FY2014–FY2016) deﬁned the estab- lishment of a self-driven growth structure as the medium-term goal for our company. To achieve this goal, management has budgeted ¥100 billion in growth investments for the Company as a whole, and we intend to contin- ue to invest in our future for sustained growth. 3. Improving Shareholder Return Between October and November 2014, we took the opportunity to address shareholder return and our capital structure by buying back almost 2.82 million shares of stock for a total of nearly ¥15 billion. In December, we retired approximately 9.72 million shares of new and existing treasury stock, leaving us with a balance of approximately 140,000 treasury shares. In terms of dividends, we committed in our EARTH-1 STAGE plan to increase our divi- dend payout ratio to 30% by FY2016. We are happy to announce that we have moved the timing up by one year, with a scheduled 30% payout ratio for FY2015. While we have not changed our basic stance in placing the highest priority on growth investments, we believe offering stronger shareholder return is another way to make efficient use of our capital. 30 31 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section Special Feature 1 Management by ROIC 2.0 Takayoshi Oue Executive Ofﬁcer Senior General Manager, Global Finance and Accounting HQ 1. Why Management by ROIC 2.0 ? At Omron Corporation, Management by ROIC consists of two main components: Down-Top ROIC Tree and Portfolio Management. Return on invested capital is the most important indicator we use to measure progress in our business plan. ROIC is an excellent measure for fairly as- sessing business performance across a number of businesses that have different characteris- tics. We began Management by ROIC in earnest three years ago, making signiﬁcant ROIC gains since that time. I am conﬁdent that, at this point, every member of management is at least aware of the concept of ROIC and its impor- tance as a performance indicator at Omron. On the other hand, I am sure there are many who have yet to link ROIC with their own ■ Down-Top ROIC Tree ■ Portfolio Management Categories KPI Drivers Sales in Focus Industries / Areas Sales of New / Focus Products Selling Price Control Variable Costs Reduction, Value % Defect Costs % Per-head Production # Automation % (headcount reduction) Labor Costs-Sales % Inventory Turnover Months Slow-Moving Inventory Months Credits & Debts Months Gross Profit Margin Added- Value % Fixed Manufacturing Costs % SG&A % R&D % Working Capital Turnover Facilities Turnover (1/N Automation Ratio) Fixed Assets Turnover ROS Invested Capital Turnover ) % ( h t w o r G s e a S l B Expecting Growth S Investment C Profit Restructuring A Examining Regrowth ROIC ROIC (%) Special Feature 1: Management by ROIC 2.0 day-to-day duties. ROIC is a relatively easy concept for those in our strategic, accounting, and finance departments to relate to. For our employees in sales or development, this financial management concept is both unfa- miliar and difficult to internalize. Understand- ing this, we have decided to provide a qualita- tive interpretation that tells the story of ROIC in more relatable terms. This is Management by ROIC 2.0. The following chart presents the ROIC formu- la and our own interpretation. The simple logic is this: Add the Necessary Management Re- sources (N) and generate greater levels of Value to Customers (V), while reducing Loss-Making Management Resources (L). Incidentally, we deﬁne loss-making resources as those that involve Muri, Muda, Mura (waste, unevenness, overburden). ROIC Reverse Tree Formula and Interpreted Formula ■ Omron’s ROIC Reverse Tree Formula ■ Interpreted Formula ROIC= Net Profit Sales × Sales Value to Customers (Stakeholders) (V) Invested Capital (Working Capital + Fixed Assets) ROIC≒ Necessary Management Resources (N) + Loss-Making Management Resources (L) (Goods, Money, Time) Muri, Muda, Mura (waste, unevenness, overburden) 2. Case Study Our Electronic and Mechanical Components Business is a good case study to illustrate ROIC Reverse Tree Management. This is a business that involves significant capital invest- ment in production equipment, which means that production facilities turnover is an import- ant performance indicator. Production volume for relays and other me- chanical components varies according to sea- sonality and demand in the home electronics market. In the past, we have had trouble match- ing equipment investment with this changing demand, adding equipment too late, thereby decreasing our return on facilities ratios. This business requires that we minimize wast- ed investment in equipment, while responding correctly to changes in demand. Accordingly, we have focused on downsizing our production equipment, or in other words, reducing produc- tion equipment by a factor of 1/n. Our ﬁrst concern was to reduce Necessary Man- agement Resources (N) , relay or switch production equipment in this case, to the smallest unit possi- ble to still meet the increase in demand. By down- sizing equipment, we limited investment, ﬂoor space requirements, and the energy required to run the machinery. Compared to an “all-or-nothing” approach to adding production capacity, we avoided waste in terms of low utilization / turnover. In other words, we successfully reduced our Loss-Making Resources (L). At the same time, we have enough capacity to protect against order opportunity loss when demand rises further. From the perspective of the customer, our adding capacity in minimum units to meet demand in- creases their order ﬂexibility while reducing excess inventory. This is a deﬁnite increase in Value to Customers (V). This has proven to be a much more efficient approach to investing in capital equipment for the Electronic and Mechanical Components Business. As one example, we have reduced floor space requirements to one-fifth of the space needed just 10 years ago. We are using this 1/n reduction factor in a number of other areas as well, including other types of capital equipment, manufacturing, and energy usage. 32 33 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section Special Feature 1 Special Feature 1: Management by ROIC 2.0 ■ 1/n Reduction in the Electronic and Mechanical Components Business (Ex. Switch manufacturing line) Before After 24m24m 7m7m Reduced by 2/3 3. A New Education Program: The ROIC Dojo In February 2015, we started a new program to spread awareness of Management by ROIC 2.0. This program, called the ROIC Dojo, sends ROIC Ambassadors to visit Omron employees where they work, encouraging an awareness and proper understanding of how we measure our progress using return on invested capital as an indicator. Through communicating with these Ambassadors front-line workers are able to gain a deeper ap- preciation of how their day-to-day activities affect delivery of value to the customer. Honestly speaking, even when we under- stand the ROIC concept intellectually, we tend to focus our efforts on incremental improve- ments or the idea of reduction. That is why the ROIC Dojo isn’t just about one -way communi- cations. It’s about getting everyone to use this knowledge to make leaps ahead in our busi- ness. Moving forward, we must focus on prof- itability if we are to make signiﬁcant ROIC gains. At the same time, we must invest man- agement resources for greater growth. Our employees will play a critical role in our success by taking the initiative to adopt Management by ROIC 2.0 into their own work, delivering higher levels of customer and corporate value. At the root of the Omron Principles is Our Mission: To Improve Lives and Contribute to a Better Society. Reading back over this mission, I believe that the interpreted formula closely mirrors this ideal. Management by ROIC en- courages the potential of our employees (our ultimate management resource), drives us to create inspired solutions for the future (added value for the customer), and inspires us to pursue new challenges. We need the effort of every individual as well as a consolidated com- mitment as a team. ROIC is the measure that binds us together towards a shared goal. You can expect Omron to continue put the Omron Principles into practice, welcoming new ideas and practices to improve lives and contribute to a better society. Management by ROIC at Omron Automotive Electronics, Inc. Omron Automotive Electronics, Inc. is one of the major centers of the AEC Business, pro- ducing and designing components for major auto manufacturers in the U.S. and the EU. The automobile components industry de- mands low-cost, high-quality components from its suppliers. Here, our use of ROIC as a performance indicator is incredibly useful in keeping staff and management focused on operational efﬁciency. We have set key performance indicators based on Down-Top ROIC Tree linking our measures of performance directly to front-line activity. At the same time, we use portfolio manage- ment techniques to make decisions for opti- mal resource allocation. Last year, we spent a great deal of time studying whether restructuring our business would allow us to practice ROIC management at a higher level. As a result, we have decided to restructure our processes for more efﬁcient development, production, and logistics. At the same time, we are looking at shifting produc- tion ratios between our Chicago plant and our new plant in Mexico (opened in 2012) to max- imize our ability to compete in North Amer- ica. More speciﬁcally, we plan on assigning production to each plant according to product type, based on production cost structures and the particular strengths in each location. The automobile industry will only demand more from its suppliers in the future. Develop- ments in automated driving and fuel efﬁciency will require high-tech, highly accurate control- lers. This presents a unique opportunity for Omron and our core sensing and control tech- nologies. Working closely with our customers in the U.S. and the EU, our AEC Business will be in a position to create value and maximize investment returns through ROIC-based man- agement practices. ■ Automotive Electronic Components North America North American Headquarters Plants Design Centers Sales Offices Omron Automotive Electronics, Inc. (St. Charles) Silao, Mexico Randy Wara President Omron Automotive Electronics, Inc. 34 35 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionSpecial Feature 2 Special Feature 2: Toward Effective Corporate Governance Interview with Fumio Tateishi and Kazuhiko Toyama Toward Effective Corporate Governance Omron Corporation and Corporate Governance: A Path, Not a Destination Fiscal 2014 was a year in which many public companies looked to corporate governance as a means to rebuild their earnings capacity. Following Japan's Corporate Governance Code, issued on June 1, 2015, we met with Mr. Fumio Tateishi, Chairman of the Board of Omron Corporation, and Mr. Kazuhiko Toyama, president and CEO of Industrial Growth Platform, Inc. and outside member of the Omron Board of Directors to discuss Omron’s corporate governance. ― Can you give us a brief history of corporate governance at Omron Corporation? Tateishi: We can trace the roots of governance at Omron back to 1996. At the time, our chairman Nobuo Tateishi was a member of the manage- ment advisory group of the Organization for Economic Cooperation and Development (OECD). His service with the OECD instilled in him the importance of corporate governance, and under his guidance Omron established the Per- sonnel Advisory Committee in 1996. In 1999, we reduced the number of Omron board directors from 30 to 7, and adopted an executive ofﬁcer system at the same time. This was the key turning point for Omron as a company. Since then, we embarked on a path of improved corpo- rate governance. In 2001 we brought in our ﬁrst outside director, and in 2003 we separated the positions of chairman of the board and CEO. We also established the Compensation Advisory Committee at that time, chaired by an outside director. In 2006, we set up the CEO Selection Advisory Committee, also chaired by an outside director. And, in 2008, we established the Corpo- rate Governance Committee, which is a commit- tee that consists entirely of outside directors as members. Beginning ﬁscal 2014, we adopted medium-term performance bonuses. The past 20 years has truly been a path and process of Om- ron Corporation*1 building a better and stronger corporate compliance structure. The Omron you see today is the cumulative result of our steady efforts to enhance long-term corporate value over the years. *1 See P. 65 for more. ― Toyama-san, as a member of the Council of Experts Concerning the Corporate Governance Code, and Tateishi-san, from your perspective as a corporate leader, what do you believe is the significance of the new Japan’s Corporate Governance Code to Japan’s public companies? Toyama: Governance is a means to improving a Kazuhiko Toyama President and CEO, Industrial Growth Platform, Inc. Outside Director, Omron Corporation Fumio Tateishi Chairman of the Board, Omron Corporation company, and not an end objective in itself. The ﬁrst consideration of corporate management is the long-term growth of their company. The Corporate Governance Code offers one model for this, but it isn’t necessarily something that needs to be implemented verbatim. At the end of the day, it’s the responsibility of the company to build corporate value. As long as they can do that—with or without the Code—then they have accomplished their duty. They don’t necessarily have to comply with the Code as long as they can explain what they do. In the same vein, corporate governance isn’t a silver bullet. It’s something you need to address honestly and work on over the course of time. Tateishi: As I mentioned earlier, Omron Corpora- tion has been engaged in a 20-year process of improving governance to build sustained corpo- rate value. We saw the publication of the Corpo- rate Governance Code as another chance for us to examine and systematize our own corporate governance initiatives, and we view the Code as a helpful guide in this process. The system we formalized is what we published on June 24 in the Omron Corporate Governance Policies*2. Every member of our board of directors participated in the deliberations and decisions leading up to the announcement of this policy. It provided us an opportunity to stand before our shareholders and stakeholders and proudly present our beliefs about corporate governance at Omron. *2 See P. 65 for more. Toyama: I don’t think Omron could have hoped for better timing between revising the Omron Principles and introducing the Corporate Governance Policies. Tateishi: We ofﬁcially announced the revised the Omron Principles in May 2015. As you say, it was very good timing. At the time that President Yamada took over in 2011, we all felt that our employees had come to interpret our corporate philosophy as simply doing things correctly. We needed more awareness of creating solutions to social needs and challenging ourselves, which lie at the roots of the foundation of Omron as a com- pany. So, in January 2014, the board of directors began discussing how to best go about improving 36 37 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionSpecial Feature 2 “Omron Principles are the basis that connects oversight and supervision all the way through to business execution” Japan’s Corporate Governance Code at about that same time. I remember thinking what a stroke of good timing it was. ― As the chairman of the board of directors and as an outside director, what do you focus on in enhancing sustainable corporate value? What issues do you see ahead for Omron from your individual perspectives? Tateishi: As chairman of the board of directors, I believe that we must use the Omron Principles to connect the entire process from oversight and supervision all the way through to busi- ness execution, speeding up decision making to enhance corporate value. As our internal and external environment changes, I understand that governance is not something that is ever “ﬁnished.” We need to humbly keep working to move forward and build higher levels of value. I believe that one of the issues Omron is facing is the globalization and diversiﬁcation of our board of directors. As the ﬁrst step, we were privileged to welcome Kuniko Nishikawa as the ﬁrst-ever female outside director at Omron in 2015. Ob- viously, we will continue to address this issue in more ways in the future. Toyama： In terms of oversight and supervision, my role is almost entirely in the sphere of mon- itoring. However, since Omron is a company with an audit and supervisory board, I am in- volved in several important areas that affect the company’s continuation as a corporation. Other than that, I essentially keep out of the business of executive decision-making. The CEO Selec- tion Advisory Committee, where I serve as the chair, makes decisions about the current CEO’s performance as a manager, as well as about appropriate future candidates for the CEO posi- tion. I have the chance to form my own impres- sions of different individuals through interaction with candidates outside formal board meetings. I had no reservations when we selected Yamada- san as the next president of Omron. From my own personal dealings, I knew he was a Fumio Tateishi sustainable value at Omron. We identiﬁed several issues, one of which was the conclusion that a solely defensive approach to governance was insufﬁcient. We needed to employ a more active style of governance and create even higher levels of corporate value if we were to accomplish all of the goals of our long-term vision (VG2020). Based on these discussions, we embarked on a major project to revise the Omron Principles, deter- mined to embrace the Omron Principles in our business to a level we had never fully achieved in the past. Just by coincidence, the Japanese gov- ernment began talking about establishing a Special Feature 2: Toward Effective Corporate Governance constantly monitoring this cycle. In my opinion, Omron has been innovating and reforming in terms of corporate governance for nearly 20 years. The ability to constantly evolve is perhaps the most value intangible asset a company has. We tend to let down our guard when the money is rolling in, but companies that relax when things are going well will inevitably backslide. Tateishi: Omron will continue to focus on enhanc- ing corporate value looking toward our 100th anniversary and well beyond. We will continue to work hard to earn the ongoing support and trust of our shareholders and other stakeholders. Kazuhiko Toyama “Diversity in management is one of Omron’s challenges” person blessed with generous talents and a well-suited personality. I do echo Tateishi-san in saying that board of director diversity is an issue for Omron. People of different genders and nationalities bring different opinions to the debate, which I believe can only lead to a new, heightened awareness. Diversity among executive ofﬁcers is another challenge. A lack of diversity on the board and among executive ofﬁcers results in less-constructive discussions than could be generated otherwise. Diversity sharpens deliberations and decisions. I am sure that people of different nationalities, cultures, and histories interpret the Omron Principles in different ways. Reconciling and understanding different social values creates a certain kind of conﬂict that results in better ideas. If Omron Corporation is to grow as a global company, diversity on the board and among executives is of particular importance. ― Please tell us more about your thoughts on Omron’s sustained long-term growth. Tateishi: No matter how much time and effort you put into writing guidelines and policies, they won’t function in practice without an essential underlying spirit or soul. The Omron Principles are the heart and soul of Omron as a company. As we put true spirit into policies and rules, we increase our value as a corporation. This is what makes Omron the company that it is, and I be- lieve this is one of our unique strengths. Toyama： It’s the management structure, deci- sions, and activities as a company that determine whether corporate policies are just for show or whether they are truly a part of the company. Rules for the sake of rules, true intent, formali- ties, and reality all have a reciprocal relationship. Decisions that are mostly formality combined with integrity of action can create a cycle that ties directly to a company’s ability to earn. This cycle results in policies and principles that ultimately be- come a true part of the company. I think this cycle is working very effectively at Omron today. But companies should always innovate and reform, 38 39 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section Factory Tour Industrial Automation Business Kusatsu Plant The Omron Kusatsu ofﬁces opened in Japan’s Shiga Prefecture in 1961. The campus includes the Kusatsu Plant, which produces high- function industrial controllers and sensors. Besides production, this plant also develops new core technologies, standardizes production expertise across our organization, and plays a major role as a source of information for Omron global development. Kusatsu Plant Kyoto Small-Lot Production for More than4,000 Products Programmable Controller Production Process Printed Circuit Board Installation Programmable controllers include printed circuit boards. During the mounting process, workers install electronic components and memory onto the circuit boards. Kusatsu Plant Printed Circuit Board Line Components Mounted on Circuit Boards Completed Circuit Board Assembly Printed circuit boards and other components are assembled to create a programmable controller. Workers operate in a compact U-shaped production line with tools and components all within easy reach. Main Products Vision Sensors Programmable Controllers Programmable Terminals U-Shaped Cell Production Line A worker assembles programmable controllers Completed programmable controllers Omron Improves Productivity through Information and Communications Technology A b o u t O m r o n W h e r e W e ’r e H e a d e d C o r p o r a t e V a l u e I n i t i a t i v e s l C o r p o r a t e V a u e F o u n d a t i o n i F n a n c a i Today, we’re relying on Big Data for further productivity and quality improvements, providing greater visibility into our production process. We’ve installed a system that uses our own controllers to send con- tinuous production line updates and the status of individual products directly to a database. This new system lets us collect much more detailed information for greater insights into our production process. Traditionally, we relied on worker experience and intuition to improve production efﬁciencies. Today, however, we have made dramatic leaps forward in assessing efﬁciency, cutting the time we take from issue identiﬁcation to im- provement implementation by more than 80%. In some areas, we have seen as much as 30% gains in actual productivity on our lines. Big Data still holds plenty of future potential for us. Moving for- ward, we plan to collect and analyze all manner of data to address issues before they happen. Eventually, we hope to create a non-stop, perpetual production line. Engineers identify issues based on collected data l S e c t i o n Direct Conne- ction Database NJ Series Database-Connected Model The ongoing goal of the Kusatsu Plant is to match machine and human in optimal ways for production line efﬁciency. One example of this technology is automated delivery of components to the workers. Sensors detect whether correct parts have been selected or if parts have been overlooked by the assembly workers. This kind of automation allows workers to maximize their skills, while letting the plant respond ﬂexibly to the frequent process and demand changes that accompany this type of low-volume, highly diversiﬁed production. Look at This! A Beautiful Production Line is an Efﬁcient Production Line To Omron, beauty in manufacturing means that the entire production ﬂow and any changes or unusual activity are immediately visible. Stan- dardized line direction, width, and work surfaces provide a uniform lay- out highly appraised by plant visitors. 40 OMRON Corporation Integrated Report 2015 41 At a Glance Notes: 1. During ﬁscal 2013, certain divisions of the EMC were included in the IAB due to a change in management categorizations. Segment information for ﬁscal 2012 and earlier has been restated to reﬂect this change. 2. Fiscal 2015 forecasts are those as originally disclosed on April 27. Industrial Automation Business (IAB) Electronic and Mechanical Components Business (EMC) Automotive Electronic Components Business (AEC) Social Systems, Solutions and Service Business (SSB) Healthcare Business (HCB) Other Businesses ■ Net Sales/Operating Income/ 　 Operating Income Margin ■ Net Sales/Operating Income/ 　 Operating Income Margin ■ Net Sales/Operating Income/ 　 Operating Income Margin ■ Net Sales/Operating Income/ 　 Operating Income Margin ■ Net Sales/Operating Income/ 　 Operating Income Margin ■ Net Sales/Operating Income/ 　 Operating Income Margin ■ Operating income margin (Billions of yen) 400 % 20 (Billions of yen) 120 331.8 345.0 300 270.8 263.0 291.7 16.5% 16.5%16.5% 15 90 83.0 84.1 97.7 103.9 % 12 109.0 10.3%10.3% 9.8% 8.9% 13.1% 11.9% 13.3% 35.4 31.3 38.8 54.6 57.0 200 100 0 10 5 0 60 30 0 6.2% 5.2% 5.1 4.4 8.7 10.2 11.2 (Billions of yen) 160 120 80 40 0 137.9 140.0 126.6 97.6 85.0 3.2% 5.1% 2.7 5.0 7.2% 6.7% 6.6%6.6% 9.1 9.2 9.3 % 12 9 6 3 0 9 6 3 0 FY 11 12 13 14 15 (Forecast) FY 11 12 13 14 15 (Forecast) FY 11 12 13 14 15 (Forecast) ■ (Billions of yen) 100 75 50 25 0 82.7 80.4 85.0 68.8 6.7% 6.5%6.5% 57.2 6.2% 4.2% 0.2%0.2% 0.1 2.9 5.6 5.0 5.5 FY 11 12 13 14 15 (Forecast) % 10 8 6 4 2 0 (Billions of yen) 120 90 60 30 0 111.0 100.6 89.3 8.5% 62.4 71.5 6.5% 7.0%7.0% 6.2% 4.7% 2.9 4.4 7.5 6.5 7.8 % 12 9 6 3 0 (Billions of yen) 120 90 60 30 0 11.0% 9.6% 105.0 78.9 87.4 9.5% 53.5 59.2 4.3%4.3% 2.5 0 -3.6 8.7 8.4 10.0 % 12 6 0 FY 11 12 13 14 15 (Forecast) FY 11 12 13 14 15 (Forecast) ■ Capital Expenditures/Depreciation 　 and Amortization/R&D ■ Capital Expenditures/Depreciation 　 and Amortization/R&D ■ Capital Expenditures/Depreciation 　 and Amortization/R&D ■ Capital Expenditures/Depreciation 　 and Amortization/R&D ■ Capital Expenditures/Depreciation 　 and Amortization/R&D ■ Capital Expenditures/Depreciation 　 and Amortization/R&D ■ (Billions of yen) (Billions of yen) (Billions of yen) 15.4 16.5 15.7 15.3 4.2 3.8 3.5 2.8 3.6 3.3 3.5 4.2 18 15 12 9 6 3 0 12 9 6 3 0 9.9 7.2 5.5 8.9 7.4 5.2 10.9 7.8 6.0 9.5 8.0 5.4 6.6 5.2 7.0 5.5 2.12.1 2.42.4 8.2 8.5 6.7 6.5 4.74.7 3.43.4 9 6 3 0 ■ (Billions of yen) 2.2 2.2 2.5 1.5 1.11.1 1.5 1.21.2 1.11.1 0.9 2.1 1.7 1.41.4 3 2 1 0 (Billions of yen) (Billions of yen) 5.1 5.0 5.2 3.9 2.32.3 3.1 1.91.9 6 4.5 3 2.8 1.51.5 1.5 0 5.5 3.9 3.33.3 6.9 5.5 2.52.5 4.3 4.0 2.02.0 7 6 5 4 3 2 1 0 2.8 2.1 0.9 3.0 2.5 1.41.4 FY 11 12 13 14 FY 11 12 13 14 FY 11 12 13 14 FY 11 12 13 14 FY 11 12 13 14 FY 11 12 13 14 Yutaka Miyanaga Senior Managing Executive Ofﬁcer Company President, Industrial Automation Company Kenji Matsunami Katsuhiro Wada Managing Executive Ofﬁcer Company President, Electronic and Mechanical Components Company Managing Executive Ofﬁcer President and CEO, OMRON Automotive Electronics Co., Ltd. Toshio Hosoi Isao Ogino Shizuto Yukumoto Shigeki Fujimoto Managing Executive Ofﬁcer President and CEO, OMRON SOCIAL SOLUTIONS Co., Ltd. Managing Executive Ofﬁcer President and CEO, OMRON HEALTHCARE Co., Ltd. Managing Executive Ofﬁcer Senior General Manager, Environmental Solutions Business HQ Managing Executive Ofﬁcer Senior General Manager, Business Development HQ 42 43 Net sales　■ Operating income■ Net sales　■ Operating income Operating income margin■ Net sales　■ Operating income Operating income margin■ Capital expenditures　■ Depreciation and amortization　 R&D■ Capital expenditures　■ Depreciation and amortization　■ R&D■ Capital expenditures　■ Depreciation and amortization　■ R&D Net sales　■ Operating income Operating income margin■ Net sales　■ Operating income Operating income margin■ Net sales　■ Operating income Operating income margin■ Capital expenditures　■ Depreciation and amortization　 R&D■ Capital expenditures　■ Depreciation and amortization　■ R&D■ Capital expenditures　■ Depreciation and amortization　■ R&DAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionOMRON CorporationIntegrated Report 2015Segment Information Industrial Automation Business (IAB) Manufacture and sales of factory automation equipment Ratio of Total Sales (FY2014) Market Share (FY2014) 39% Control-Related Equipment (Japan) Approx. 40% Source: Nippon Electric Control Equipment Industries Association Fiscal 2014 in Review Worldwide revenue and proﬁt gains drive Omron earnings Revenues in Japan were up year on year, reﬂecting an uptick in the economy, as well as heavy capital spending in the automobile and electronic compo- nents sectors. Overseas, a weaker yen resulted in solid earnings performance in all regions. In the Americas, demand in the U.S. automobile industry and growth in the oil and gas business contributed to higher revenues. A gradual economic recovery in Europe helped push growth in that region. We saw major growth in sales Fiscal 2015 Forecast and Strategies Push toward record earnings We have set a target of ¥345 billion for ﬁscal 2015 net sales (4% year-on-year gain), with operating income scheduled to reach ¥57 billion (4.4% in- crease). These ﬁgures will represent another record high for our revenues and proﬁts. In Japan, we expect to see strength in the automobiles, electron- ic components, and semiconductor sectors. Over- seas, we project slowing growth in China and lower demand in the oil and gas business due to low crude prices. On the other hand, we forecast high- er capital spending for automobiles and electronic components, as well as more investment in to the electronic component industries in Asia, despite currency weaknesses in certain Asian nations. Great- er China was another source of signiﬁcant growth, particularly in the electronic components market. Operating income kept pace with net sales in- creases for the year. A weak yen, combined with sales of higher value-added products to emerging economies, contributed to higher overall revenue and proﬁt gains compared to the prior ﬁscal year. manufacturing automation among emerging countries. The advanced nations of the world aren’t the only ones struggling with labor problems. Lately, even emerging economies are dealing with worker shortag- es and rising demands for safer, higher-quality manu- facturing. The market is changing, and we believe that automation is going to be the long-term answer. The Industrial Automation Business leverages our expansive product line and global business infra- structure and services network to deliver valuable products and services to our customers around the world. We grow by helping our customers grow. Market Growth Drivers Emerging economies expand investment in automation Strengths Extensive product lineup; global business infrastructure and services network We Solve Societal Issues How to deal with global labor shortages From manual inspection to automated inspection using vision sensors 5% to 10% Projected annual growth rate in the vision sensor market (IMS Research, Other) The automobile, electronic components, and food industries are relying more and more on vision sensors to perform automated inspection work. Emerging economies have traditionally relied on manual inspections in their manufacturing processes. But labor shortages and demands for higher quality mean that even these nations are looking to use vision sensors in more cases. Drawbacks in the manual inspection process include worker exhaustion, human error, and difﬁculty in detecting minor variances. On the other hand, vision sensors can conduct highly precise inspections non- stop, 24 hours a day. Vision sensors can easily track high-speed manufacturing lines, which would be impossible for the human eye to follow. By providing advanced products, we will contribute to the future development of production lines. ■ Earnings and Projections ■ Machinery Orders Index* ■ Sales by Product (Fiscal 2014) FY2011* FY2012* FY2013 FY2014 (Billions of yen) FY2015 (Forecast)* Machinery orders index (left axis) IAB domestic sales (right axis) Net sales Japan Overseas Americas Europe Asia Paciﬁc Greater China Direct Exports Operating income 270.8 123.1 147.7 29.3 55.3 25.3 36.8 1.0 35.4 263.0 116.3 146.7 31.6 50.4 24.7 39.4 0.6 31.3 291.7 119.4 172.3 36.9 61.9 28.9 43.8 0.8 38.8 331.8 126.7 205.1 47.6 67.8 34.1 55.0 0.7 54.6 345.0 137.0 208.0 44.0 66.0 37.5 60.0 0.5 57.0 Operating income margin 13.1% 11.9% 13.3% 16.5% 16.5% R&D expenses Depreciation and amortization Capital expenditures * See notes on P. 43. 15.4 4.2 3.8 16.5 3.5 2.8 15.7 3.6 3.3 15.3 3.5 4.2 100 80 60 40 20 0 (Billions of yen) 150 120 90 60 30 0 60% Control Equipment (Programmable Logic Controllers, etc.) 10% Safety Light Curtains Safety Equipment (Safety Light Curtains, etc.) 30% Sensing Equipment (Sensors, Switches, etc.) 44 45 (FY) 11 12 13 14 Programmable Controllers Temperature Controllers Fiber Sensors * Machinery orders index calculated by Omron based on Cabinet Ofﬁce (Japan) reports. IAB domestic sales generally correspond to trends in the machinery orders index. About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionOMRON CorporationIntegrated Report 2015Segment Information Electronic and Mechanical Components Business (EMC) Manufacture and sales of electronic components for consumer electronics, automobiles, mobile devices, and amusement equipment Ratio of Total Sales (FY2014) Market Share (FY2014) 12% Relays (Global) Approx. 20% Source: Internal survey Fiscal 2014 in Review Strong performance in sales to the consumer and commercial products, automobile industries In Japan, revenues underperformed prior-year levels. With the exception of consumer electronics, sales of products and services to the consumer and commercial products market were level year on year. Higher consumption tax rates placed down- ward pressure on demand for consumer electronics and automobiles. Overseas, favorable exchange rates continued to have a positive impact on segment earnings. In particular, we leveraged new projects to expand our share of the Greater China consumer electronics market, reporting strong earnings in the consumer and commercial products sector. Sales to the con- sumer and commercial products sector in the Amer- icas and Europe were likewise strong, while steady demand for products in the automobile industry also contributed signiﬁcantly to earnings in Asia. Higher revenues and ongoing cost-reduction measures, along with favorable exchange rates, helped push operating income higher. Fiscal 2015 Forecast and Strategies New businesses in new markets We have set a target of ¥109 billion for ﬁscal 2015 net sales (4.9% year-on-year gain), with operating income scheduled to reach ¥11.2 billion (10.1% increase). Al- though we have several new products in the pipeline, we expect earnings in Japan to be level with the prior year, reﬂecting sluggishness in certain sectors. Over- seas, we plan on higher environment-related relay sales and winning more demand in the automobile industries of China and the Americas. We forecast signiﬁcant growth in the industries that play to our strengths, including the automobile and consumer electronics markets. We intend to release new products that solve customer issues in the medical and building automation sectors, which represent new markets for us. We also have plans to install more compact production lines. This in turn will result in shorter lead-time from develop- ment to mass production to market launch, allowing us to respond quickly to changes in the markets and customer expectations. ■ Earnings and Projections FY2011* FY2012* FY2013 FY2014 (Billions of yen) FY2015 (Forecast)* ■ Global Shipments of Electronic Components Global shipments (left) EMC consumer electronics sales (right) 103.9 109.0 (Billions of yen) 5,000 Net sales Japan Overseas Americas Europe Asia Paciﬁc Greater China Direct Exports Operating income 83.0 25.3 57.7 13.2 12.9 7.6 22.7 1.3 5.1 84.1 26.7 57.4 13.1 11.3 7.1 24.6 1.4 4.4 97.7 28.1 69.6 16.6 14.7 8.7 28.7 0.9 8.7 Operating income margin 6.2% 5.2% 8.9% R&D expenses Depreciation and amortization Capital expenditures * See notes on P. 43. 5.5 7.2 9.9 5.2 7.4 8.9 6.0 7.8 10.9 24.0 85.0 19.0 15.5 12.0 38.0 0.5 11.2 10.3% 23.9 80.0 18.1 15.9 10.1 35.0 0.9 10.2 9.8% 5.4 8.0 9.5 4,000 3,000 2,000 1,000 0 (Billions of yen) 20 15 10 5 0 Market Growth Drivers ● Higher incomes in emerging economies leading to growth in demand for consumer electronics and automobiles ● Needs for more functionality in consumer electronics resulting in demand for more installed components Strengths Manufacturing capacity (product quality, cost-reduction activities, etc.) We Solve Societal Issues A lifeline in times of emergency Making gas appliances safer and more secure 100% Share of the domestic pressure switch market (internal survey) Japanese laws require the installation of intelligent gas meters that automatically turn the ﬂow of gas off when a leak or major earthquake is detected. Pressure gas switches that detect gas leaks and vibration sensors that detect earthquakes are two critical components that make using gas safer. These components also play an important role in preventing secondary damages after an earthquake or other disaster. The Electronic and Mechanical Components Business has manufactured pressure switches and vibration sensors for more than 30 years—ever since these safety laws were introduced. We boast a 100%* share of the domestic pressure switch market, having sold more than 50 million units on a cumulative basis, and we continue to develop technologies that improve the capability of pressure switches and vibration sensors to detect dangerous events. This is just one way that we speed the recovery process and provide a lifeline to citizens in times of emergency. * Internal survey Pressure Switch Isolation Valve Metered Valve Microcomputer Board Vibration Sensor ■ Sales by Product (Fiscal 2014) 29% Other Electronic Components (Amusement Equipment, Image Sensing, etc.) Lithium-Ion Battery Intelligent Gas Meter 71% Relays, Switches, Connectors (FY) 11 12 13 14 Source: Japan Electronics and Information Technology Industries Association Fiscal 2014 EMC consumer electronics sales moved higher, in step with global shipment increases. Image Sensing Power Units for Amusement Equipment Power Relays for Printed Circuit Boards FPC Connectors Surface-Mounted Switches 46 47 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionOMRON CorporationIntegrated Report 2015Segment Information Automotive Electronic Components Business (AEC) Development, manufacture, and sales of on-board automobile electronic components Ratio of Total Sales (FY2014) Market Share (FY2014) 16% Body Control Units for Miniature Vehicles (Japan) Approx. 50% Source: Internal survey Fiscal 2014 in Review Strong earnings in North America; growth in China / Asia despite economic slowdown Revenues in Japan were down year on year, mainly due to higher consumption taxes and slow demand among certain customers. Overseas, favorable exchange rates contributed to sharply higher earnings compared to the prior ﬁscal year. A strong U.S. economy drove revenues in North America, while a more gradual recovery in Europe still supported revenue growth in that region. We found revenue gains in China and the nations of Asia, pushed by slightly weaker—but still positive— economic growth. Revenue growth and the weakness of the yen were two major factors contributing to signiﬁcant operating income gains overseas. Fiscal 2015 Forecast and Strategies Focus on North America and emerging economies; new business projects for greater growth We have set a target of ¥140 billion for ﬁscal 2015 net sales (1.5% year-on-year growth), with operat- ing income scheduled to reach ¥9.3 billion (0.8% growth). We expect domestic revenues to decline, mainly due to bearish automobile demand. Looking overseas, we forecast overall growth, supported by strong North American markets. At the same time, it is difﬁcult to predict the direction of the econ- omies of China and other Asian nations with any certainty. To drive growth under the EARTH-2 STAGE (FY2017-2020) plan, we will focus on developing products that solve new needs arising in our car society. We will also look beyond products that an- swer the stated needs of our clients, actively seeking answers to future car society issues. We intend to answer the challenges presented by the goals set in Omron’s long-term vision (VG2020), winning new projects and building a foundation for a new stage of growth. ■ Earnings and Projections FY2011 FY2012 FY2013 FY2014 (Billions of yen) FY2015 (Forecast)* ■ Worldwide Automobile Production (Millions of units) Net sales Japan Overseas Americas Europe Asia Paciﬁc Greater China Direct Exports Operating income 85.0 28.9 56.1 21.5 2.4 16.2 9.5 6.5 2.7 97.6 30.2 67.4 25.0 2.8 19.5 13.9 6.2 5.0 126.6 28.4 98.2 33.3 3.3 29.2 25.4 7.2 9.1 137.9 25.9 112.0 39.3 3.6 32.2 29.9 7.1 9.2 140.0 20.0 120.0 42.5 4.0 34.0 32.0 7.5 9.3 Operating income margin 3.2% 5.1% 7.2% 6.7% 6.6% R&D expenses Depreciation and amortization Capital expenditures * See notes on P. 43. 6.6 2.1 5.2 7.0 2.4 5.5 8.2 3.4 6.7 8.5 4.7 6.5 30 25 20 15 10 5 0 (FY) China Europe North America Asia Japan Korea South America Other 14 15* 16* 17* 18* 19* 20* * Forecast (as of May 2015) Source: IHS Automotive We expect notable growth in China. Market Growth Drivers ● Stable growth in automobile demand; higher installation rates of electronic automotive components in emerging markets ● Increase in electronic automotive components for safety and environmental impact reduction Strengths ● Development and production delivering high-quality electronic components ● Relationships of trust with a wide range of customers as an independent supplier ● Ability to work closely with customers to plan and develop products that anticipate future car society needs We Solve Societal Issues A more environmentally responsible car society Idle-off for better fuel efficiency 5% to 10% Fuel efﬁciency gains from idle-off technology Stricter CO2 laws and rising consumer awareness of their own carbon footprint have driven improvements in automobile fuel efﬁciency. One example is the popular idle-off function that has become a more visible feature over the past few years. This function reduces the use of fuel when a driver stops their car, leading to expected fuel efﬁciency gains of 5% to 10%, depending on individual driving patterns. However, electric vehicles and hybrids can experience a dramatic drop in voltage once the car is restarted. This can interfere with car audio and other electrical systems. To solve this problem, we invented a compact, high-function DC/ DC converter that provides stable voltage when starting after idle-off. Our business also produces a number of other products that contribute to fuel efﬁciency and smaller carbon footprints, including electronic power steering controllers, fuel pump modules, high-output DC/DC converters for hybrid vehicles, and more. ■ Sales by Product (Fiscal 2014) 52% Other (Passive Entry/Push-Button Engine Start Systems, Keyless Entry Systems, etc.) 23% Switches (Power Window Switches, Power Seat Switches, etc.) Power Window Switches Electronic Power Steering Controllers 25% Motor Controllers (Electronic Power Steering Controllers, Power Sliding Door Controllers, etc.) 48 49 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionOMRON CorporationIntegrated Report 2015Segment Information Social Systems, Solutions and Service Business (SSB) Solutions and services for a safer, comfortable, more secure society Ratio of Total Sales (FY2014) Market Share (FY2014) 10% Station Equipment (Japan) Approx. 45% Source: Internal survey Fiscal 2014 in Review Strength overall; but weak capital spending results in lower revenues and proﬁts While our public transportation business experienced lower demand in the wake of last year’s spending rush prior to Japan’s consumption tax increases in Japan, we recorded strong revenue growth related to station equipment upgrades. As a result, this business reported overall net sales level with the prior ﬁscal year. We struggled to move the needle higher for traf- ﬁc and road management system revenues, as weak capital spending resulted in lower revenues year on year. Second-half demand for environmental solutions business products and services was weak among some customers. However, sales of solar power generation-related products remained strong through- out the year, leading to higher year-on-year revenues for environmental solutions. Operating income was down year on year, mainly due to lower revenues. Fiscal 2015 Forecast and Strategies Provide answers to needs for safety, security, and the environment We have set a target of ¥85 billion for ﬁscal 2015 net sales and ¥5.5 billion for operating income, representing year-on-year increases of 5.7% and 10.2%. We expect that rising demand for safety and security in transportation hubs (stations, etc.) will drive higher revenues for our public transpor- tation business. Customers of our expressway business products are also calling for more safety and security features, which has led us to forecast higher revenues in our trafﬁc and road management systems business as well. In our environmental solutions business, we anticipate growing demand for solar power generation-related products to drive performance higher compared to ﬁscal 2014. We plan to capture a greater share of new de- mand for safety, security, and the environment by offering unparalleled components and systems de- velopment, software development, and engineering services capabilities. Market Growth Drivers Increasing social needs for safety, security Strengths All-in-one solutions through our components and systems development, software development, and engineering services capabilities We Solve Societal Issues Business continuity planning systems We Solve Societal Issues Integrated power systems for energy savings and emergency backup We offer integrated power systems that combine solar power, storage batteries, and bidirectional chargers for electric vehicles. These systems offer customers the minimum power necessary to keep their businesses up and running in the event of a power outage or other unexpected event. During normal operations, power created by solar power systems is stored in batteries that power a company’s electricity needs. This allows for both energy savings and a reduction in carbon footprint. A company can control electricity discharge at certain power levels from their storage batteries during summer peak usage, generating signiﬁcant savings. However, our systems assist in something even more important than business continuity. Using our systems, companies can turn their facilities into a disaster shelter for use by the local community. As you can see, business continuity is just one way in which we plan to contribute to a safer, more secure society. Emergency Command/ Evacuation Center Solar Power Generation Electric Vehicle Charger Storage Batteries Electric Vehicle LED Lighting LED Lighting Emer- gency Office ■ Earnings and Projections ■ Railroad Passengers ■ Sales by Product (Fiscal 2014) Net sales Japan Overseas Americas Europe Asia Paciﬁc Greater China Direct Exports Operating income FY2011 FY2012 FY2013 FY2014 (Billions of yen) FY2015 (Forecast)* 57.2 56.9 0.3 0 0 0 0 0.3 0.1 68.8 68.5 0.3 0 0 0 0.1 0.2 2.9 82.7 82.4 0.3 0 0 0 0.2 0.1 5.6 80.4 79.1 1.3 0 0 0 0.3 1.1 5.0 85.0 83.5 1.5 0 0 0 0.5 1.0 5.5 Operating income margin 0.2% 4.2% 6.7% 6.2% 6.5% R&D expenses Depreciation and amortization Capital expenditures * See notes on P. 43. 2.2 1.1 0.9 2.2 1.1 1.5 2.5 1.2 1.5 2.1 1.4 1.7 50 Japan Railway Group Private railways (Millions) 8,000 7,000 6,000 5,000 0 (FY) 1H 2H 1H 2H 1H 2H 11 12 13 1H 14 Source: Rail Transport Overview, Ministry of Land, Infrastructure, Transport and Tourism The Social Systems, Solutions and Service Business is involved in a wide range of markets. For example, our railway business is involved in everything from IC card system integration to new rail line construction. As such, we do not have a single economic indicator that correlates to our business. 12% Other (Software Development, etc.) 58% Engineering, Environmental Solutions 25% Public Transportation (Automated Ticket Gates, Ticket Vending Machines) Automated Ticket Gates Ticket Vending Machines 5% Road Trafﬁc (Road Trafﬁc Management Systems, etc.) Road Trafﬁc Management Systems 51 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionOMRON CorporationIntegrated Report 2015Segment Information Healthcare Business (HCB) Manufacture, sales, and services related to home-use/ institutional healthcare and medical devices Ratio of Total Sales (FY2014) Market Share (FY2014) 12% Home-Use Blood Pressure Monitors (Global Share) Approx. 50% Source: Internal survey Fiscal 2014 in Review Introduction of new products and health awareness in emerging countries drive higher revenues Net sales in Japan increased year on year overall, despite higher consumption taxes on medical equip- ment and lower medical reimbursements. For home- use health and medical devices, massagers, and other new products—as well as in-store promotions—were all factors that contributed to strong earnings. Overseas net sales increased sharply for the year, due in part to a weaker yen on the global currency markets. While revenues in Europe struggled to reach parity with the prior ﬁscal year, the North American market provided strong demand for our transcutaneous electrical nerve stimulation equipment and other new products. The emerging economies have been show- ing increasing interest in personal health, which has been a factor aiding revenue growth in those nations. Despite revenue gains for the year, operating in- come underperformed prior-year levels, mainly due to advanced investment activity and dramatic ﬂuctua- tions in exchange rates during the second half of the ﬁscal year. Fiscal 2015 Forecast and Strategies Expand our sales network in emerging economies We have set a target of ¥111 billion for ﬁscal 2015 net sales and ¥7.8 billion in operating in- come, representing 10.3% and 19.8% year-on- year growth. We believe market growth in Japan will be led by the rise of the status of women in society and increasing interest among younger consumers in personal preventive health care. Overseas, new products in North America and our ﬁscal 2014 acquisition of Brazilian nebulizer manu- facturer NS Industria de Aparelhos Medicos Ltda. should contribute signiﬁcantly to earnings. At the same time, we expect to see major revenue gains in China and other Asian markets. In newly emerging economies, changes in lifestyle customs will mean rising levels of lifestyle-related disease. While we cannot applaud the development, we do expect this trend to drive higher demand for lifestyle disease-related products and services. We also plan to expand the number of outlets for our global products in Asia, China, India, and Brazil. We intend to grow from 380,000 outlets currently to 450,000 outlets by the end of ﬁscal 2016. ■ Earnings and Projections FY2011 FY2012 FY2013 FY2014 (Billions of yen) FY2015 (Forecast)* ■ Japanese Blood Pressure Monitor Market (Electronics) Omron Competitors 100.6 111.0 (Millions of yen) 6,000 Net sales Japan Overseas Americas Europe Asia Paciﬁc Greater China Direct Exports Operating income 62.4 27.2 35.2 9.8 13.0 2.9 8.6 0.9 2.9 71.5 29.5 42.0 10.8 15.9 3.5 11.1 0.7 4.4 89.3 30.8 58.5 14.3 21.0 5.5 17.3 0.4 7.5 31.4 69.2 18.6 21.2 6.6 22.4 0.5 6.5 33.5 77.5 24.5 18.5 8.0 26.0 0.5 7.8 Operating income margin 4.7% 6.2% 8.5% 6.5% 7.0% R&D expenses Depreciation and amortization Capital expenditures * See notes on P. 43. 5.1 1.5 2.8 5.0 1.9 3.1 5.2 2.3 3.9 5.5 3.3 3.9 4,500 3,000 1,500 0 (FY) 11 12 13 14 Source: GfK Slight weakening during ﬁscal 2014 due to higher consumption tax rates. Market Growth Drivers Increase in patients with lifestyle-related diseases in emerging countries Strengths Brand recognition, cooperative relationships with medical and research institutions We Solve Societal Issues Treating respiratory diseases Acquisition of Brazilian nebulizer maker extends our reach to respiratory patients throughout South America Approx. 25% Global share of the nebulizer market (internal survey) In recent years, we have seen more cases of asthma, chronic obstructive pulmonary disease, and other respiratory diseases in emerging countries due to pollution and smoking. We have been focused on nebulizers for respiratory patients as the next core business after our blood pressure monitors. In October 2014, Omron acquired Brazilian nebulizer manufacturer NS Industria de Aparelhos Medicos Ltda., leapfrogging to the top share of the global market. Moving forward, we plan to speed up the process by which we supply products to Brazil and throughout South America. The acquisition of NS has made the manufacturing approval process much quicker and easier. In the future, we plan to shift more product development and manufacturing to Brazil, including that of our blood pressure monitors and other products. We believe Omron expertise combined with NS facilities will give us a strong competitive advantage. We also intend to expand our sales channels in emerging countries, delivering more health and medical equipment to customers around the world. 52% Blood Pressure Monitors ■ Sales by Product (Fiscal 2014) 22% Other (Activity Trackers, etc.) 5% Body Composition Monitors 5% Patient Monitors 6% Thermometers 10% Nebulizers 52 53 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionOMRON CorporationIntegrated Report 2015Segment Information Other Businesses Mainly incubating Omron’s next generation of businesses Ratio of Total Sales (FY2014) Market Share (FY2014) 10% Residential-Use PV Inverters (Japan) Approx. 40% Source: Internal survey Fiscal 2014 in Review Environmental Solutions and Backlights Businesses contribute to revenues, despite some weakness in demand During ﬁscal 2014, we reported wide revenue gains as a whole. On the other hand, operating income was down year on year, mainly due to signiﬁcant advanced investment activity. Despite some weakness during the second half of the year, demand in the Japanese market for PV inverters sold by our Environmental Solutions Busi- ness remained strong—a reﬂection of this nation’s growing interest in renewable energy. Accordingly, Environmental Solutions reported higher year-on-year revenues overall. Our Backlights Business likewise reported higher revenues, owing to our ability to capture new demand for thin, high-function backlights used in smartphones. This product is the subject of increasing demand in Greater China and other regions. Our Electronic Systems & Equipment Business recorded revenue gains due to strong sales of uninter- ruptible power supply units and industrial-use built-in computers, as well as for contract development and manufacturing services. Our Micro Devices Business experienced reve- nue gains as well, citing high demand for smart- phone microphones. Fiscal 2015 Forecast and Strategies Sharply higher earnings and proﬁts driven by energy and smartphones We have set a target of ¥105 billion for ﬁscal 2015 net sales and ¥10 billion in operating income, repre- senting year-on-year increases of 20.2% and 19.5%. We plan to grow our Environmental Solutions Busi- ness by generating demand and capturing market share for solar power hybrid storage systems and monitoring products. We intend to move ahead to become a total energy solutions business that helps society generate, store, and use energy intelligently. We plan to make capital investments in our Back- lights Business to expand our production capacity. We also intend to reinforce specialists who will boost our development capacity and productivity. Given the strong demand in the market for thin backlights used in high-spec smartphones, we expect to see signiﬁcant growth in this business. ■ Earnings and Projections FY2011 FY2012 FY2013 FY2014 (Billions of yen) FY2015 (Forecast)* 53.5 29.5 24.0 0 0 0 22.6 1.4 (3.6) ー 2.8 0.9 2.1 59.2 41.4 17.8 0 0 0 16.3 1.5 2.5 78.9 51.0 27.9 0 0 0 25.6 2.3 8.7 4.3% 11.0% 3.0 1.4 2.5 4.3 2.0 4.0 87.4 45.8 41.6 0 0 0 38.2 3.4 8.4 9.6% 5.5 2.5 6.9 105.0 55.0 50.0 0 0 0 46.0 4.0 10.0 9.5% Net sales Japan Overseas Americas Europe Asia Paciﬁc Greater China Direct Exports Operating income (loss) Operating income margin R&D expenses Depreciation and amortization Capital expenditures * See notes on P. 43. ■ Smartphone Shipments Low spec (Less than HD720) High spec (HD720 or higher) 4K class (Millions of units) 2,000 1,500 1,000 500 0 (FY) 12 13 14* 15* 16* 17* 18* * Forecast (as of January 2015) Source: DisplaySearch We anticipate the market for high-spec smartphones to continue to grow. In the Electronic Systems & Equipment Business, we plan to grow sales by expanding our uninterrupt- ible power supply lineup. Our Micro Devices Business should see higher revenues as well, driven by growing demand for smartphone microphones and pressure sensors. We Solve Societal Issues A new energy era Hybrid storage systems for solar power offer energy efﬁciency Approx. 5.2GW PV inverter cumulative shipment volume (equivalent to ﬁve power plants) Since its introduction in 2012, the feed-in tariff scheme has driven major revenue growth in the solar power generation market. Today, the energy-related markets in Japan are going through even more changes. Energy laws promulgated in January 2015 have been revised to deal with output restrictions, and we will see the complete deregulation of electricity retailing during 2016. We expect the future to bring more balanced energy supply and demand, as well as calls for even higher levels of energy-efﬁcient operations. Here, the Environmental Solutions Business has responded by extending our PV inverter lineup and introducing a hybrid storage system for solar power. This system lets customers consume or sell electricity generated during the daylight hours. It also allows them to store extra electricity to use during the night or in case of emergency. We have created the lightest, most compact storage unit in the world, tailored speciﬁcally to the Japanese housing market. This unit offers an optimal balance between supply and demand. We are truly meeting the needs of a new energy era. Hybrid Storage System for Solar Power (lightest, most compact storage battery unit in the world) ■ Main Business and Products Environmental Solutions PV Inverters for Solar Power Generation Systems Backlights LCD Backlights Electronic Systems and Equipment Micro Devices Uninterruptible Power Supply Units Micro Electro Mechanical Systems 54 55 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionOMRON CorporationIntegrated Report 2015Intellectual Property Strategy Sustainability Management Omron Wins the 2015 Intellectual Property Achievement Award Environmental, Social, and Governance Initiatives Japan’s Ministry of Economy, Trade and Industry and the Japan Patent Ofﬁce honored Omron with the Intellectual Property Achievement award for ﬁscal 2015*1. We plan to continue to leverage our intellectual property activities to enhance our corporate value and contribute to the advancement of society. Strategies to Use Intellectual Property for Competitive Advantage Omron follows a speciﬁc policy for our intellectual property activities, based on the Omron Principles. We see intellectual property as the third rail of our business, coordinating intellectual property activities with our businesses and research & development divisions. Our business divisions work closely with intellectual property staff to plan*2 business and technology strategy for patent ﬁlings and other intellectual property activities. A Stronger Stance for Global Intellectual Property To respond to business globalization, Omron is active in securing intellectual property rights in important markets. We anticipate the direction of technology and business models in these markets to secure more freedom for our businesses to operate. In addition to Japan, we also work with local staff to pursue intellectual property rights in China, the United States, Europe, and Singapore. ■ Worldwide Intellectual Property Rights ■ Intellectual Property Data (No. of Patents) Trademark Rights 12% Design Rights 12% Overseas Patent Rights Utility Model Rights 30% Total No. of Intellectual Properties 12,259 (As of March 31, 2015) Patent Rights Utility Model Rights 30% Japan Design Rights 8% Trademark Rights 8% FY 2012 2013 2014 Applications 1,084 1,040 1,129 Approvals 1,172 949 856 Patents held 6,448 6,635 7,194 *1 The Minister of Economy, Trade and Industry Award and the Patent Ofﬁce Commissioner Award are announced by the Ministry of Economy, Trade and Industry/Patent Ofﬁce annually on April 18 (Invention Day). These awards recognize companies whose staff or systems have made notable contributions advancing corporate intellectual property development and education. *2 Reports or plans detailing the acquisition or use of technology assets Omron is an active agent for sustainable business through environmental, social, and governance initiatives (ESG). We engage in clearly deﬁned ESG programs in areas that have a direct and signiﬁcant impact on our businesses. Our selection criteria for ESG issues are based partly on discussions with socially responsible investment research and investment companies and other outside stakeholders. ESG Signiﬁcant Issues Key Initiatives for EARTH STAGE Related Pages Social Diversity Environ -ment Eco- Manufacturing ● Educating the next generation of top-rank managers Key Performance Indicator (KPI): Ratio of non-Japanese in managerial positions overseas ● Supporting career advancement for women KPI: Ratio of women in managerial roles Non-Financial Highlights P. 16–17 Human Resources Management P. 59–61 ● Providing products and services that contribute to the global environment KPI: Environmental contribution ● Adopting measures to combat global warming KPI: Global net sales to CO2 emissions Target: 30% improvement by ﬁscal 2020 (ﬁscal 2010 baseline) Non-Financial Highlights P. 16–17 Environmental Management P. 62–64 Corporate Governance ● Strengthening systems to improve transparency, fairness (Board diversity, compensation) Gover -nance Risk Management ● Adopting measures against signiﬁcant Group risks Corporate Governance P. 65–69 Compliance and Risk Management P. 70–71 Socially Responsible Investment Index References Omron’s sustainability initiatives are highly regarded by and included in some of the leading global socially responsible investment indices: Asia-Paciﬁc (AP) As of July 2015 56 57 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON CorporationCommitment to International Corporate Social Responsibility Standards and Guidelines Sustainability through Superior People Human Resources Management Global human resources strategy is a critical component of the Omron long-term vision, deﬁned in VG2020. In the end, our people are the thing that assures our growth in the EARTH-1 STAGE. Finding and training our next generation of leaders is more important than ever. Personnel System Reform in Japan During 2012, we revised our management-level human resources structure. Our goal was to put the best person in the right position from an overall group perspective. To that point, Omron had been a typically Japanese company, rewarding seniority as the primary factor in employment. Under our new system, rewards are commensurate with the importance of the role played, without regard to age and length of employment with Omron. From FY15, we use the same concept for non-managerial positions, to make compensation and rewards based solely on role and contribution. For this step, we eliminated pre-qualiﬁcation categories for supervisors and managers. By introducing a standardized system, we have opened the door for younger or new employees to advance rapidly, while providing motivation for all to aspire to more challenging work and central roles within our company. A System to Identify and Develop the Next Generation of Omron Leaders In order for Omron to continuously identify and develop the talent of those who will become the next generation of leaders, we created a succession program for key group positions, providing training, practical experience, and career planning. As a global company, we have been focusing on having local staff in key positions at local entities*. Our growth drives a critical need for more talented managers, and we are constantly looking for new ways to identify and develop candidates to take over and lead future generations at Omron. * See P. 16 for more. Omron Corporation is committed to fulﬁlling our corporate social responsibility (CSR) as a global organization. We created the Omron Group CSR Practice Guidelines, referencing the Universal Declaration of Human Rights, the United Nations Global Compact, ISO 26000, the OECD Guidelines for Multinational Enterprises, and other international CSR standards and guidelines. In 2008, we declared our support for the Ten Principles of the United Nations Global Compact (UNGC). These principles are universally accepted standards for human rights, labor standards, environmental impact, and anti-corruption practices. Currently, Omron is a member of the local UNGC chapters in Japan and China. We intend to continue our commitment to international CSR policies, building strong relationships of trust through responsible engagement with our stakeholders. Fumio Tateishi Chairman Omron Corporation July 2015 CSR Activities and Policies Omron contributes to social sustainability through a CSR policy incorporating three main concepts. Please see our website for more. http://www.omron.com/about/csr/ ● Contribute to a better society through business operations Continuously offer advanced technologies and high-quality products and services by stimulating innovation driven by social needs. ● Show a commitment to addressing societal issues as a concerned party Address such issues as human rights, the environment, diversity, and community relations in a way that draws on Omron’s distinctive strengths. ● Always demonstrate fairness and integrity in the promotion of corporate activities Promote more transparent corporate activities that maintain fairness and integrity not only through strict compliance with laws, regulations, and social rules but also through increased accountability. 58 59 59 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON CorporationDeveloping Global Monozukuri* Human Resources Developing Monozukuri Human Resources in China Selected as a Best Company in the U.S. One of our goals at Omron is to be the world’s best manufacturing company which delivers pioneering high-quality products globally. To continue to fulﬁll this mission, we must develop Monozukuri human resources from a long-term perspective. This is why strengthening our global human resources is such an important part of our VG2020 strategy. * Monozukuri: Manufacturing China is a region of increasing strategic importance. Therefore, in 2010, we established the Monozukuri Human Resource Development Department in OMRON Management Center of China to respond to the predicted Monozukuri human resource shortage. To date, this department has trained more than 400 managers and more than 1,000 production and development human resources. Increased automation in China creates the need for securing and developing production engineers. In order to meet this need, we have placed even more emphasis on quickly developing line leaders and production engineers. Omron Class Started in Partnership with Chinese Universities In December 2014, Omron Electronics LLC in the U.S. (Industrial Automation Business) was selected as one of the Best and Brightest Companies to Work for. This award recognized Omron Electronics as an excellent company in terms of staff utilization and training. Omron Electronics was one of 101 companies from among 702 candidates selected for the honor. The company credits its dedication to open and active communications, work-life balance, employee training, and workforce diversity as reasons why it was selected. Omron Electronics plans to continue to build an enjoyable work environment and culture for its employees, improving productivity and contributing to society through Omron products and services. The Omron Class is a program for educating talented Chinese students on Omron’s Monozukuri. We launched this program in 2010 in cooperation with the Shaanxi Polytechnic Institute, and started the second program in 2014 at Guangxi Technological College of Machinery and Electricity. This program has made a signiﬁcant contribution to modern production education in China, and has given us an inside track to ﬁnd and hire skilled human resources. To date, more than 400 Omron Class students have graduated to become part of the Omron family in China. 2014 graduation ceremonies at Shaanxi Polytechnic Institute Awards Ceremony 60 60 61 61 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionOMRON CorporationIntegrated Report 2015Environmental Management The Omron Group Will Contribute to Realizing a Sustainable Society through Our Businesses When we updated the Omron Principles, we also took the opportunity to revise the Green Omron 2020 environmental policy to better align with our long-term vision (VG2020). We interpret the phrase “better society” in Our Mission as our duty to help create an environmentally sustainable society through our businesses. New Environmental Policy New Environmental Targets (FY2020 Goals) Contributing to the Global Environment through Business Activities Greater Volume of Environmental Contribution We intend to further reduce the CO2 emissions of the Omron Group products and services*1 used by society (environmental contribution). Our goal is to generate an environmental contribution in excess of our CO2 emissions as of the end of ﬁscal 2020. Reduced Usage of Toxic Substances Our goal here is to remove 80 tons of harmful mercury from the environment as of the end of ﬁscal 2020. We intend to do this by replacing mercury-based equipment with digital thermometers and blood pressure monitors. In line with Omron Principles, we will contribute to realizing sustainable societies, globally, by providing eco-friendly products or services that can contribute to the global environment and by making efﬁcient use of management resources. *1 Products and services related to energy conservation, energy creation, and energy storage Reduce Impact of Business Activities on the Global Environment 1. Provide Eco-Friendly Products or Services that can Contribute to the Global Environment : Contribution through business activities 2. Prevent Global Warming : Reduce greenhouse gas emissions throughout the entire value chain 3. Use Resources Efﬁciently : Efﬁcient use of all resources needed in our manufacturing processes 4. Co-Existence with Nature : Prevention of water, air or soil pollution including conservation activities 5. Implement Environmental Management : Continual improvement in environmental activities and legal compliance A Sustainable Society: A society that is low-carbon, recycling oriented, and co-exists with nature. Wasted Resources Global Warming Ecosystem Destruction Climate Change and Energy / Resources Low-Carbon A Sustainable Society Climate Change and Ecosystems Recycling Co-Existence with Nature Ecosystems and Environmental Impact Prevent Global Warming Reduce CO2 emissions through efﬁcient electricity usage, improving our net sales to CO2 emissions at least 30% as of the end of ﬁscal 2020 (compared to ﬁscal 2010). Use Resources Efﬁciently Achieve zero emissions*2 at our global production sites, aiming for 98% or greater recycling as of the end of ﬁscal 2020. Co-Existence with Nature To conserve water, air, and soil, and prevent their pollution, we intend to reduce the amount of water usage per employee, as well as reduce the volume and number of chemicals used in our production process. *2 Zero emissions: Completely recycle and reuse waste products of the production process to eliminate the need for external waste disposal. Note: See P. 17 for more on Omron global net sales to CO2 emissions and environmental contribution for ﬁscal 2014. Contributing to the Global Environment through Business Activities Maximize the Effective Use of All Management Resources (Improve energy, resource productivity) Products and Services Useful to Society (Grow our businesses that have a positive impact on the global environment) Reduce Our Environmental Impact Greater Efficiency Greater Volume of Environmental Contribution Greater Contribution 62 63 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON CorporationReducing Toxic Substances in Thailand Omron Continually Reviews and Improves Our Corporate Governance Structures Supporting Sustainable Value Creation Corporate Governance Mercury usage around the globe is major hazard—toxic to both humans and the environment. The government of Thailand has announced a plan to make that nation mercury-free within 10 years; however, many hospitals still rely heavily on mercury-based blood pressure monitors. Here, Omron Healthcare (Thailand) Co., Ltd. has started a digital blood pressure monitor program to solve this social issue. During ﬁscal 2014, we replaced 1,000 old mercury-based monitors with new digital ones. Moving forward, we have set a goal of replacing more than 10,000 monitors by ﬁscal 2018. Blood pressure monitors installed at a Thai hospital Independent Assurance of Greenhouse Gas Emissions To understand the global volume of greenhouse gas emissions from Omron businesses, Omron management began using the Greenhouse Gas Protocol (GHG Protocol) during ﬁscal 2013. The GHG Protocol is an international standard for calculating the generation of gases designated as having a greenhouse effect. We hired an independent assurance organization to conﬁrm the accuracy of our data and calculations for the following categories of emissions. Scope Calculation Scope 1 Direct combustion emissions and 5-gas*1 emissions Volume used for combustion, 5-gas emissions, each multiplied by a CO2 emission factor for production Scope 2 Emissions from electricity usage Multiply electricity usage by the CO2 emission factor for production of the electricity Fiscal 2014 Emissions (ton-CO2) 62,636 213,912 Scope 3 Other indirect emissions　 Category 1 Purchased goods and services Category 2 Capital goods Category 3 Fuel/energy-related activities Category 6 Business travel Category 7 Employee commuting Multiply purchase amount of product and services components by the CO2 emission factor for production of those components 1,067,140 Multiply the total investment in capital goods by the CO2 emission factor for production of those goods Multiply the fuel / energy usage by the CO2 emission factor for production for each energy type Multiply total employee business travel costs by the CO2 emission factor for the method of travel Multiply total employee commuting costs paid by the CO2 emission factor for the method of travel 117,859 197,558 39,173 1,329 Note: See the Omron website for more about the independent assurance report. The major categories of greenhouse gas emissions have been presented above. http://www.omron.com/about/csr/environ/eco_fac_off_lab/co2_discharge/ *1 5 Gas: Methane (CH4), nitrous oxide (N2O), hydroﬂuorocarbons (HFCs), perﬂuorocarbons (PFCs), and sulfur hexaﬂuoride (SF6) The Omron Corporate Governance Policies* In June 2015, we established the Omron Corporate Governance Policies—Seeking Sustainable Enhancement of Our Corporate Value. These policies reﬂect the spirit of the Omron Principles, revised in May 2015. They deﬁne our attitude and beliefs of how we put the Omron Principles into practice through our business activities. In 1996, we established the Management Personnel Advisory Committee (presently the Personnel Advisory Committee) as our ﬁrst major step toward improving management transparency and fairness. Since then, we have continued to improve on these important principles at the core of management accountability. We brought in outside directors, separated the duties of chairman of the board and corporate CEO, established the CEO Selection Advisory Committee, and set up other committees and systems that make Omron a leading example of governance among Japanese companies. Our Corporate Governance Policies formalize the framework we have developed over the past 20 years, and we intend to pursue the path of ongoing corporate governance improvement. * http://www.omron.com/ir/management/pdfs/20150623_governance_policies_e.pdf ■ Corporate Governance Initiatives 1999 2003 2011 President 1987: Yoshio Tateishi 2003: Hisao Sakuta 2011: Yoshihito Yamada Chair of the Board of Directors / CEO President served as both Chairman serves as chair of the Board of Directors; president serves as CEO Separation of management oversight and business execution 30 directors 1999: Revised articles of incorporation, setting number of board members to 10 or fewer 1999: Adopted executive officer system Advisory Board 1999: Advisory Board Outside Directors 2001: One outside director 2003: Two outside directors (seven directors) 2015: Three outside directors (eight directors) Audit & Supervisory Board (Outside Members) 1998: One member 1999: Two members 2003: Three members (four auditors) 2011: Two members (four auditors) 1996: Management Personnel Advisory Committee 2000: Personnel Advisory Committee Advisory and Other Committees 2003: Compensation Advisory Committee 2006: CEO Selection Advisory Committee 2008: Corporate Governance Committee Corporate Philosophy 1990: Omron Principles 1998: Revised 2006: Revised 2015: Revised 64 65 1959: Corporate MottoAbout OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON CorporationCorporate Governance Framework Omron has elected to be a company with an Audit & Supervisory Board under the provisions of the Companies Act. The Omron Board of Directors is made up of eight members to ensure substantive discussion and deliberation about important corporate matters. Omron has also separated the management oversight and business execution functions with the company, creating a system whereby the majority of board directors are not engaged directly in business operations. We have also adopted a policy setting the ratio of outside directors to at least one third of the total number of directors on the Board. To increase objectivity on behalf of the Board of Directors, the titles and roles of Chairman of the Board and President (CEO) are separated. The Chairman serves as chair of the Board of Directors, without direct corporate representational authority. Omron has established several advisory Audit Functions committees to assist the Board of Directors. These committees include the Personnel Advisory Committee, the CEO Selection Advisory Committee, the Compensation Advisory Committee, and the Corporate Governance Committee. The Personnel Advisory Committee, the CEO Selection Advisory Committee, and the Compensation Advisory Committee are all chaired by outside directors, with at least half of the committee members being outside directors. The chair and members of the Corporate Governance Committee are outside directors and outside corporate auditors, which offers yet another layer of transparency and objectivity onto its decision-making process. In these policies, we have created a hybrid governance framework, combining the best features of a Company with an Audit & Supervisory Board and a Company with a Nominating Committee. The Audit & Supervisory Board performs compliance and validity audits related to director performance and Board of Director supervisory duties. The Audit & Supervisory Board works to provide a basis ensuring the practicability of these audits. The Global Internal Auditing HQ, which reports directly to the president and CEO, periodically conducts internal audits of accounting, administration, business risks, and compliance in each headquarters division and business company. Internal audits are more than just a tool to conﬁrm compliance; they are also a valuable means for providing feedback and advice for operational improvement. Selection of Outside Directors and Auditors The Omron Board of Directors nominates and selects outside directors and outside Audit & Supervisory Board members as a means to oversee business operations as a representative of Omron shareholders and stakeholders. Outside directors are selected based on predeﬁned standards of independence. In addition to the requirements under the Companies Act, Omron has established other rules for governing the independence of outside directors in compliance with independence standards set by the relevant stock exchanges. Based on these standard of independence, three of Omron’s eight members of the Board of Directors are outside directors, and two of the four members of the Audit & Supervisory Board are likewise outside members. Omron has submitted ﬁlings to the relevant stock exchanges designating these individuals as outside independent directors. ■ Number of Major Meetings Held and Rates of Attendance (Fiscal 2014) Meetings of the Board of Directors: Meetings of the Audit & Supervisory Board: Outside Director attendance at board of director meetings: Outside Audit & Supervisory Board member attendance at board of director meetings: Outside Audit & Supervisory Board member attendance at Audit & Supervisory Board meetings: 13 13 92.3% 100% 100% ■ Corporate Governance Structure Shareholders’ Meeting Audit & Supervisory Board Personnel Advisory Committee Board of Directors Chair: Chairman of the Board Audit & Supervisory Board Office Board of Directors Office CEO Selection Advisory Committee Accounting Auditor Executive Organization President & CEO Executive Council Compensation Advisory Committee Corporate Governance Committee CSR-Related Committees* Head Office Divisions Businesses Companies Internal Audit Division * Includes Corporate Ethics & Risk Management Committee, Information Disclosure Executive Committee, and Group Environment Activity Committee Board of Directors Makes decisions related to perfor- mance targets and strategies; over- sees the execution of business op- erations. Audit & Supervisory Board Oversees corporate governance structure and execution business operations; conducts audits of day- to-day business activities, including those performed by directors. Personnel Advisory Committee Sets standards and policies related to selecting and hiring directors, Audit & Supervisory Board members, and executive ofﬁcers; selects candidates and evaluates performance of current directors and executive ofﬁcers. CEO Selection Advisory Committee Deliberates and nominates candi- dates for corporate president & CEO; deliberates succession candi- dates in the event of an emergency. Compensation Advisory Committee Sets policies for director and execu- tive ofﬁcer compensation; evaluates compensation levels, deliberates speciﬁc compensation packages. Corporate Governance Committee Oversees ongoing corporate gover- nance improvement; deliberates policies to advance management transparency and fairness. Executive Council Deliberates and makes decisions regarding important operational matters within the scope of the au- thority of the president and CEO. ■ Advisory Committee Composition Title Name Personnel Advisory Committee CEO Selection Advisory Committee Compensation Advisory Committee Corporate Governance Committee Chairman President and CEO Executive Vice President and CFO Executive Vice President Director Outside Director Outside Director Outside Director Fumio Tateishi Yoshihito Yamada Yoshinori Suzuki Akio Sakumiya Koji Nitto Kazuhiko Toyama† Eizo Kobayashi† Kuniko Nishikawa† □ ○ ◎ □ □ □ ○ ◎ □ □ ○ □ □ ◎ □ Audit & Supervisory Board Member Kiichiro Kondo Audit & Supervisory Board Member Tokio Kawashima Audit & Supervisory Board Member (Independent) Eisuke Nagatomo† Audit & Supervisory Board Member (Independent) Yoshifumi Matsumoto† Note: ◎Committee Chair ○Committee Vice-Chair □Committee Member 　　 †Independent Ofﬁcer ◎ ○ □ □ □ 66 67 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON Corporation Financial Incentives for Directors and Audit & Supervisory Board Members ●Separate from the compensation stated above, the Company shall issue performance-linked The Company has introduced medium-term performance-linked bonuses from ﬁscal 2014 and issued performance-linked stock acquisition rights in an effort to give directors incentive to achieve the medium-term management targets and to strengthen the governance of compensation. In response to the introduction of the new structure, the governance system regarding compensation of directors, etc., consists of: (1) base salary, (2) yearly performance-linked bonuses, and (3) medium term performance-linked bonuses, stock compensation, and performance-linked stock acquisition rights. By introducing the new structure, the Company aims for encouraging directors to continually enhance corporate value by positively achieving short-, medium-, and long-term management targets. Fundamental principles and policy for the compensation for directors and ofﬁcers are as follows: Basic Principles of Compensation for Directors and Executive Ofﬁcers Revised in June 2014 ● Compensation for directors and executive ofﬁcers shall be based on the implementation of the Company’s mission and corporate principles (the Omron Principles). ● The Company shall pay compensation that enables it to recruit, hire, and retain talented personnel as ofﬁcers. stock acquisition rights*2. －－Performance-linked stock acquisition rights shall be issued under the condition of the achievement of medium-term management targets by directors and a rise of the Company’s stock price. The objectives are to create medium-to-long-term shareholder value and encourage directors to own shares of the Company. ●Compensation for outside directors shall consist of a base salary only, reflecting their roles and the need for maintaining independence. ●No retirement bonuses shall be paid. ●The level of compensation shall be determined by taking into account the levels of other companies, based on a survey conducted by an independent compensation consultant. *1 The guidelines for stock compensation shall consist of a ﬁxed amount of compensation given each month to directors, who will use it to make monthly purchases of the Company’s stock (through the ofﬁcers’ stockholding association) and hold this stock during their term of ofﬁce. *2 The performance-linked stock acquisition rights are issued with charge at a price equivalent to the fair value of the stock acquisition rights, thus the amount to be paid in exchange for stock acquisition rights is not necessarily favorable for individuals who are allotted the stock acquisition rights. Because of this, the stock acquisition rights do not fall under the category of compensation for directors, and thus they shall be issued via a resolution by the Company’s Board of Directors. Compensation Policy for Audit & Supervisory Board Members ●Compensation for Audit & Supervisory Board members shall consist only of a base salary that ● The compensation structure shall contribute to long-term maximization of corporate value by reﬂects their roles. It shall enable to recruit, hire, and retain talented personnel. providing motivation for directors and executive ofﬁcers. ● The compensation structure shall maintain a high level of transparency, fairness, and rationality, to ensure accountability to shareholders and other stakeholders. ・ To ensure transparency, fairness, and rationality in the compensation for individuals, each director/executive ofﬁcer’s compensation shall be set by consultation with the Compensation Advisory Committee. ●No retirement bonuses shall be paid. ●The level of compensation shall be determined by taking into account the levels of other companies, based on a survey conducted by an independent compensation consultant. ● The purpose of compensation shall be made clear, and a compensation plan shall be created according to ■ Fiscal 2014 Director and Audit & Supervisory Board Member Remuneration the roles and responsibilities of each director/executive ofﬁcer. Compensation Policy for Directors Compensation for directors shall consist of a base salary, yearly performance-linked bonuses, and medium-to-long-term performance-linked compensation. ●The Company shall provide base salaries that enable it to recruit, hire, and retain talented personnel capable of implementing the Company’s mission and the Omron Principles. ● The Company shall provide yearly performance-linked bonuses as performance incentives with emphasis on yearly results. －－The amount of yearly performance-linked bonuses shall be based on a standard amount for each position, and shall be determined according to the degree of achievement and growth rate for evaluation indicators for bonuses, including income before income taxes, return on invested capital (ROIC), net income attributable to shareholders, and cash dividends per share. ●To ensure thorough implementation of the Company’s long-term management plan, the Company shall provide the following two types of compensation linked to medium-to-long- term performance as incentives for meeting medium-term management targets. －－The Company shall pay medium-term performance-linked bonuses depending on the achievement of medium-term management targets. －－The Company shall grant stock compensation*1 as compensation linked to maximization of corporate value (stock value). To promote greater objectivity and transparency, the Compensation Advisory Committee, chaired by an outside director, offers advice, conducts deliberations, and makes recommendations regarding director compensation. This recommendation is presented before the annual general shareholders’ meeting, which votes on the total scope of compensation for members of the Board of Directors and members of the Audit & Supervisory Board. Within this scope, the Board of Directors determines compensation for each director according to Board resolution, as well as compensation for individual Audit & Supervisory Board members pursuant to discussion and negotiation. Classiﬁcation No. of Individuals Basic Compensation Annual Performance Bonuses Medium-Term Performance Bonuses Total Compensation (Millions of yen) Directors (Outside Directors) Audit & Supervisory Board Members (Outside Members) Total (Outside Directors / Members) 8 （2） 4 （2） 12 （4） 358 （24） 82 （18） 440 （42） 236 （－）－（－） 236 （－）－（－）－（－）－（－） 594 （24） 82 （18） 676 （42） * Basic compensation for directors (excluding outside directors) includes the amount paid as stock compensation. 68 69 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON CorporationCompliance and Risk Management Responding to Global Change through Stronger Integrated Global Risk Management New Global Risk Management and Legal Headquarters placed under ofﬁce of the President and CEO The Omron Group faces a wide range of risks related to compliance and legal issues. We employ Integrated Global Risk Management as the basis of our activities to collect information and make plans related to risk. 　Omron’s basic policies for Integrated Global Risk Management are defined in the Board of Director Basic Policy on Maintenance of Internal Control System. The Omron Group Rules for Integrated Risk Management provide the framework for risk management engagement. This framework is in effect at all Omron locations around the world. Integrated Global Risk Management Vision We will integrate and carry out risk-related activities from a global perspective for the purpose of securing the continued existence of the Companies and enabling them to achieve their targets and fulﬁll their corporate social responsibilities. Based on the Basic Rules of Integrated Global Risk Management, we will endeavor to avoid, reduce, and transfer losses by collecting risk information, conducting risk analyses, and implementing countermeasures against risks. 1. 2. 3. We will identify critical risks to the Group and enable Groupwide responses through the Executive Council. 4. In a time of crisis, we will make reports in accordance with established procedures and form response teams necessary to address the crisis. Advancement Framework The Global Risk Management and Legal HQ acts as the managing ofﬁce administering the operations of the Corporate Ethics and Risk Management Committee. This committee deliberates and carries out measures in coordination with Omron global headquarters, domestic business divisions, and overseas Fiscal 2014 Initiatives The Omron risk matrix is one speciﬁc example of how we deal with risk across our organization. Each year, we identify and analyze global risks. We evaluate these risks and categorize them according to the gravity of the issue. S-rank risks are the most signiﬁcant, while less-signiﬁcant risks are categorized as A-rank risks. Next, the Executive Council discusses and proposes measures to deal with risks that affect the Company as a whole. Omron uses the PDCA cycle (Plan, Do, Check, Act) to conﬁrm execution and take any corrective actions. Finally, we report our results to the Board of Directors and to external shareholders/stakeholders. Looking toward ﬁscal 2015, we identiﬁed several S-rank risks. These risks include business continuity, violation of international laws (bribery, etc.), and information/IT security. As A-rank risks, we identiﬁed employee safety, internal fraud, conformance with the Electronic Industry headquarters. The Company has appointed risk managers charged with compliance and risk management in Group locations around the world. These risk managers use our global network to communicate risk information and quickly organize to take action in response to risk. Citizenship Coalition, conﬂict minerals, occupational health and safety, and global product safety regulations. During ﬁscal years 2013 and 2014, we conducted business continuity training to prepare against a possible disaster at our business headquarters locations. In terms of how we handle personal information, we continue to perform reviews and provide training based on a deﬁned plan to reduce associated risks. During ﬁscal 2015, we will upgrade our use of the PDCA cycle in integrated global risk management, incorporating this practice as a more critical component of our management activities in this area. In particular, we intend to refocus our efforts overseas, giving our global area headquarters more responsibility and authority to lead risk management in a manner appropriate to their local circumstances. 70 71 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON CorporationCultivating Strong Relationships through Responsible Engagement Omron takes advantage of a number of opportunities to receive feedback and opinions from shareholders, customers, and stakeholders at large. We then communicate this information to top management. Our evolution in ROIC management and revised director compensation are just a few of the ways Omron has taken this feedback to heart to improve management efﬁciency and transparency, creating even stronger relationships of trust. Fiscal 2014 Shareholder/Investor Engagement With Individual Investors June 24, 2014 Shareholders’ Meeting No. of Events Total No. of Participants 32 3,245 Investor relations events, including corporate information sessions and investor fairs With Institutional Investors Direct Talks 1,051times ● President’s visits to institutional investors ● IR ofﬁcers’ one-on-one interviews and telephone conferences ● Plant tours and technology seminars Attendees Ratio of Voting Rights Exercised 591 84.6% Market Intelligence We collect and analyze questions received during institutional investor interviews to help us understand changes in the market and interest trends among investors. We report this information to management and share data with related business divisions to promote our two-way communications between Omron and our shareholders. Engagement with Shareholders Engagement with Customers At our last annual shareholders’ meeting, Pres- ident Yamada reported on the state of our busi- ness and progress toward our long-term vision. Shareholders asked questions about Omron technologies, share prices, the role of women in our company, and outside directors, receiving thoughtful answers from our president and exec- utives on stage. The Omron Total Fair is an event showcasing the Omron Group’s technologies, products, and ser- vices. We greet thousands of customers at every fair, looking forward to this valuable opportunity to hear from them directly. Our December 2014 event in Jakarta, Indonesia, attracted more than 5,500 visitors. Engagement with Suppliers Engagement with Employees Each year we invite major suppliers to discuss our purchasing policies and group business strat- egies. Suppliers are important strategic partners in our success. We strive to continually improve supplier relationships through open and frank communications. Omron executives travel hundreds of thousands of miles every year to meet with employees around the globe. This kind of in-person commu- nication is invaluable for creating a shared sense of purpose and understanding. Discussing purchasing policies with suppliers in Japan President Yamada visited an automotive electronics plant in Italy Engagement with Communities Omron takes an active part in our communities, working together with local groups and citizens. The Tateisi Sci- ence and Technology Foundation, the Kyoto Omron Community Fund, and the Omron Foundation in the United States are just a few ways that we support the sciences, technological development, and social welfare. The 77th Annual Shareholders’ Meeting Customers view new products and technologies at the Omron Total Fair Kyoto Omron Community Fund Humanity Awards Ceremony Meal delivery to local senior citizens by the Omron Foundation in the U.S. 72 73 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON CorporationDirectors, Audit & Supervisory Board Members, and Honorary Chairman As of June 23, 2015 Directors Chairman　Fumio Tateishi Aug. 1975 Joined Omron Jun. 1997 Director Jun. 1999 Managing Executive Ofﬁcer Jun. 2001 Senior General Manager, Corporate Strategy Planning HQ Jun. 2003 Executive Ofﬁcer and Executive Vice President; President, Industrial Automation Company Jun. 2008 Executive Vice Chairman Jun. 2013 Chairman (to present) President and CEO　Yoshihito Yamada Apr. 1984 Joined Omron Jun. 2008 Executive Ofﬁcer; President and CEO, OMRON Healthcare Co., Ltd. Mar. 2010 Senior General Manager, Corporate Strategy Planning HQ Jun. 2010 Managing Executive Ofﬁcer Jun. 2011 President and CEO (to present) Executive Vice President and CFO Yoshinori Suzuki Apr. 1975 Joined Omron Jun. 2003 Executive Ofﬁcer and Senior General Manager, Corporate Strategy Planning HQ Jun. 2006 Managing Executive Ofﬁcer Mar. 2007 President, Automotive Electronic Components Company May 2010 President and CEO, OMRON Automotive Electronics Co., Ltd. Apr. 2013 Senior Managing Executive Ofﬁcer and CFO Jun. 2013 Senior Managing Director and CFO Jun. 2014 Executive Vice President and CFO (to present) Executive Vice President　Akio Sakumiya Apr. 1975 Joined Omron Jun. 2003 Executive Ofﬁcer; President and CEO, OMRON Ichinomiya Co., Ltd. (now OMRON Amusement Co., Ltd.) Mar. 2009 President, Electronic and Mechanical Components Company Jun. 2010 Managing Executive Ofﬁcer Jun. 2011 Senior Managing Director Jun. 2014 Executive Vice President (to present) Director, Senior Managing Executive Ofﬁcer　Koji Nitto Apr. 1983 Joined Omron Mar. 2011 Senior General Manager, Global Resource Management HQ Jun. 2011 Executive Ofﬁcer Mar. 2013 Senior General Manager, Global SCM and IT Innovation HQ Apr. 2013 Managing Executive Ofﬁcer Mar. 2014 Senior General Manager, Global Strategy HQ (to present) Apr. 2014 Senior Managing Executive Ofﬁcer (to present) Jun. 2014 Director (to present) Outside Director　Kazuhiko Toyama Apr. 1985 Joined Boston Consulting Group, Inc. Apr. 1986 Established Corporate Direction Co., Ltd. Mar. 1993 Director, Corporate Direction Co., Ltd. Apr. 2000 Managing Director, Corporate Direction Co., Ltd. Apr. 2001 President and CEO, Corporate Direction Co., Ltd. Apr. 2003 COO & Executive Managing Director, Industrial Revitalization Corporation of Japan (IRCJ) Apr. 2007 President and CEO, Industrial Growth Platform, Inc. (to present) Jun. 2007 Outside Director, Omron (to present) Outside Director　Eizo Kobayashi Apr. 1972 Joined ITOCHU Corporation Jun. 2000 Executive Ofﬁcer Apr. 2002 Managing Executive Ofﬁcer Jun. 2003 Representative Director and Managing Director Apr. 2004 Representative Director and Senior Managing Director Jun. 2004 President and CEO Apr. 2010 Chairman and Representative Director Jun. 2011 Chairman (to present) Jun. 2013 Outside Director, Omron (to present) Outside Director　Kuniko Nishikawa Apr. 1986 Joined Citibank N.A. Feb. 1996 Joined A.T. Kearney, Inc. Sep. 2000 President and CEO, Supernurse Co. Ltd. Aug. 2010 Established Firststar Healthcare Co. Ltd., President & CEO (to present) Jun. 2013 President, Benesse MCM Corp. (to present) Jun. 2015 Outside Director, Omron (to present) Audit & Supervisory Board Members Honorary Chairman Honorary Chairman　Yoshio Tateishi Apr. 1963 Joined Omron May 1973 Director Jun. 1976 Managing Director Jun. 1983 Senior Managing Director Jun. 1987 President and CEO Jun. 2003 Representative Director and Chairman of the Board May 2007 Chairman, Kyoto Chamber of Commerce and Industry (to present) Jun. 2011 Honorary Chairman (to present) Audit & Supervisory Board Member　 Kiichiro Kondo Apr. 1977 Joined Mitsui Ocean Development & Engineering Co., Ltd. Jan. 1988 Joined Mitsui Trust and Banking Company, Limited (now Sumitomo Mitsui Trust Bank, Limited) Apr. 1999 Joined Omron Apr. 2007 Senior General Manager, Public Solutions Business Department, Social Systems Solutions and Service Business Company Jun. 2007 Executive Ofﬁcer Apr. 2011 President and CEO, OMRON Social Solutions Co., Ltd. Jun. 2011 Managing Executive Ofﬁcer Jun. 2015 Audit & Supervisory Board Member, Omron (to present) Audit & Supervisory Board Member　 Tokio Kawashima Apr. 1982 Joined Mitsubishi Bank Ltd. (now The Bank of Tokyo-Mitsubishi UFJ, Ltd.) Sep. 2008 Regional Head for Germany and General Manager, Düsseldorf Branch, The Bank of Tokyo-Mitsubishi UFJ, Ltd. Apr. 2011 Joined Omron Jun. 2011 Audit & Supervisory Board Member (to present) Audit & Supervisory Board Member (Independent)　 Eisuke Nagatomo Apr. 1971 Joined Tokyo Stock Exchange, Inc. Nov. 2001 Executive Ofﬁcer Jun. 2003 Managing Director Jun. 2007 Advisor Oct. 2007 Representative Director, EN Associates Co., Ltd. (to present) Jun. 2008 Audit & Supervisory Board Member (Independent), Omron (to present) Audit & Supervisory Board Member (Independent) Yoshifumi Matsumoto Apr. 1989 Registered as attorney with the Osaka Bar Association; joined Miyake Law Ofﬁce (now Miyake & Partners) Jan. 1996 Partner, Miyake & Partners (to present) Jun. 1997 Registered as patent attorney with the Japan Patent Attorneys Association Jun. 2013 Audit & Supervisory Board Member (Independent), Omron (to present) 74 75 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON CorporationExecutive Officers Senior Managing Executive Ofﬁcer Koji Nitto Senior General Manager, Global Strategy HQ Yutaka Miyanaga Company President, Industrial Automation Company Managing Executive Ofﬁcers Shigeki Fujimoto Senior General Manager, Business Development HQ Kenji Matsunami Company President, Electronic and Mechanical Components Company Kiichiro Miyata CTO and Senior General Manager, Technology & Intellectual Property HQ Satoshi Ando Senior General Manager, Global Investor Relations & Corporate Communications HQ Katsuhiro Wada President and CEO, OMRON Automotive Electronics Co., Ltd. Shizuto Yukumoto Senior General Manager, Environmental Solutions Business HQ Toshio Hosoi President and CEO, OMRON SOCIAL SOLUTIONS Co., Ltd. Isao Ogino President and CEO, OMRON HEALTHCARE Co., Ltd. Executive Ofﬁcers Koji Doi　 President, OMRON (CHINA) Co., LTD. Takashi Ikezoe Hideji Ejima General Manager, Business Planning Department and General Manager, Application Engineering Center, Environmental Solutions Business HQ Senior General Manager, Product Business Division HQ, Industrial Automation Company Seigo Kinugawa Senior General Manager, Strategy Planning Division HQ, Industrial Automation Company Kiyoshi Yoshikawa Senior General Manager, Global Manufacturing Innovation HQ Takashi Kitagawa Yoshihiro Taniguchi Representative Director and CEO, OMRON SWITCH & DEVICES CORPORATION Senior General Manager, Board of Directors Ofﬁce Masahiko Tomita General Manager, Corporate Planning Department, Global Strategy HQ Nigel Blakeway　 Chairman, President and CEO, OMRON MANAGEMENT CENTER OF AMERICA, INC. and Chairman and CEO, OMRON ELECTRONICS, LLC. Munenori Odake Senior General Manager, Sales & Marketing Division HQ, Industrial Automation Company Goshi Oba　 Kenji Sugawa Chairman and President, OMRON INDUSTRIAL AUTOMATION (CHINA) Co., Ltd. Director, Executive Vice President, and Senior General Manager, Global Sales and Marketing Group HQ, OMRON HEALTHCARE Co., Ltd. Takayoshi Oue Senior General Manager, Global Finance and Accounting HQ Izumi Echizen Senior General Manager, Global Human Resources and Administration HQ Shuji Tamaki Senior General Manager, Global Risk Management and Legal HQ Ken Tanikawa President and Representative Director, OMRON PRECISION TECHNOLOGY Co., Ltd. 76 77 About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionIntegrated Report 2015OMRON CorporationFinancial Section (U.S. GAAP) 79 Six-Year Summary 80 Fiscal 2014 Management’s Discussion and Analysis 86 Consolidated Balance Sheets 88 Consolidated Statements of Income 89 Consolidated Statements of Comprehensive Income 90 Consolidated Statements of Shareholders’ Equity 91 Consolidated Statements of Cash Flows For more information, please refer to the Company’s audited annual ﬁnancial report: http://www.omron.com/ir/irlib/annual.html Six-Year Summary OMRON Corporation and Subsidiaries　 Years ended March 31 Net sales (Note 1): Industrial Automation Business (IAB) Electronic and Mechanical Components Business (EMC) Automotive Electronic Components Business (AEC) Social Systems, Solutions and Service Business (SSB) Healthcare Business (HCB) Other Businesses Eliminations and Corporate (Total) Costs and expenses: FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 Millions of yen　(except per share data) ¥203,917 ¥271,894 ¥270,835 ¥262,983 ¥291,739 ¥331,840 70,717 81,216 83,002 84,107 97,699 103,946 75,163 84,259 85,027 97,643 126,620 137,883 57,981 63,359 43,592 9,965 63,846 60,629 49,672 6,309 57,200 62,446 53,535 7,416 68,754 71,520 59,240 6,214 82,695 89,275 78,949 5,989 80,410 100,615 87,382 5,176 524,694 617,825 619,461 650,461 772,966 847,252 Cost of sales Selling, general and administrative expenses (excl. R&D expenses) Research and development expenses Other expenses (income), net (Total) 340,352 386,123 391,574 408,954 475,758 133,426 142,365 145,662 152,676 181,225 37,842 2,879 41,300 6,344 42,089 6,589 43,488 4,106 47,928 6,048 514,645 198,103 47,913 (797) 514,499 576,132 585,914 609,224 710,959 759,864 Income before income taxes and equity in earnings of afﬁliates Income taxes Equity in loss (earnings) of afﬁliates Income from continuing operations Net income (loss) Net income attributable to shareholders Per share data (yen): Income from continuing operations Basic Diluted Cash dividends (Note 2) Capital expenditures (cash basis) Total assets Total shareholders’ equity Financial indicators: Gross proﬁt margin (%) Operating income margin (%) Income before tax / Net sales (%) Return on sales (%) ROIC (Return on invested capital) (%) ROE (Return on equity) (%) ROA (Return on asset) (%) Asset turnover (times) Inventory turnover (times) Debt / Shareholders’ equity ratio (times) 10,195 3,782 2,792 3,621 103 3,518 16.0 16.0 17.0 20,792 532,254 306,327 41,693 14,487 190 27,016 234 26,782 121.7 121.7 30.0 21,647 562,790 312,753 33,547 17,826 (631) 16,352 (37) 41,237 62,007 87,388 14,096 (2,976) 30,117 (86) 19,475 (3,782) 46,314 129 46,185 28,893 (3,937) 62,432 262 62,170 16,389 30,203 74.5 74.5 28.0 27,502 537,323 320,840 137.2 137.2 37.0 30,383 573,637 366,962 209.8 ー 53.0 32,218 654,704 430,509 283.9 283.9 71.0 37,123 711,011 489,769 35.1 37.5 36.8 37.1 2.5 1.9 0.7 1.0 1.2 1.9 1.0 4.2 7.8 6.7 4.3 7.8 8.7 7.6 1.1 4.7 6.5 5.4 2.6 4.8 5.2 6.1 1.1 4.4 7.0 6.3 4.6 8.6 8.8 7.4 1.2 4.5 0.73 0.80 0.67 0.56 38.5 8.8 8.0 6.0 11.3 11.6 10.1 1.3 5.0 0.52 39.3 10.2 10.3 7.3 13.4 13.5 12.8 1.2 4.8 0.45 Notes: 1. During ﬁscal 2010, the PV inverter business in the Industrial Automation Business was transferred to Other. Segment information ﬁgures for prior years have been restated to conform to the current year presentation. 2. Cash dividends per share represent the amounts applicable to the respective year, including dividends to be paid after the end of the ﬁscal year. 78 79 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionFiscal 2014 Management’s Discussion and Analysis Market Environment ■ Net Sales and Income before Income ■ Net Income Attributable to Share- ■ Total Shareholders’ Equity and Ratio Taxes and Equity in Earnings of Afﬁliates holders and ROE of Shareholders’ Equity to Total Assets Many economies around the world appear to be in recovery to one degree or another. The Japanese economy continued to improve throughout the ﬁscal year, despite the negative impact of higher consumption taxes on certain sectors. The European economy was essentially ﬂat for the year, while the U.S. continued to recover, showing greater corporate activity and higher personal consumption. China remains a powerhouse of capital investment, mainly in the electronics components industry. Both Thailand and Indonesia trended to a moderate recovery, with the economy of Korea likewise in recovery. The Omron Group deals in many major markets around the world. During ﬁscal 2014, the global automobile market experienced strong capital investment particularly so for components in markets outside Japan. The machine tools and the smartphone markets continue to grow, driving recovery in demand for capital investment in these sectors, as well as for semiconductors. We have also seen a gradual recovery in capital investment for the consumer electronics and electronic components markets, and strong demand for related components in the world’s emerging economies. While the medical devices market has struggled somewhat due to the slowdown in the Russian economy, demand from other emerging economies remains strong. Turning toward the currency markets, we saw that the weakened yen contributed to the Group’s revenue growth for the year. The average exchange rate for the ﬁscal year was ¥110.0 to the U.S. dollar (a ¥9.9 increase), and ¥138.7 to the Euro (¥4.7 increase). The average per-kilo price for silver was ¥65,260, a ¥5,395 decrease compared to the prior ﬁscal year. Copper cost an average of ¥766 per kilo, which was a ¥9 increase compared to the prior ﬁscal year. ■ Index of Electronic Parts and Devices (Seasonally adjusted indices, 2010 average = 100) ■ Silver and Copper Prices ■ Exchange Rates 200 175 150 125 100 75 50 10 11 12 13 Production Inventory Shipments 14 (FY) Source: Ministry of Economy, Trade and Industry Yen/kg 120,000 100,000 80,000 60,000 40,000 20,000 0 Yen/kg 1,200 1,000 800 600 400 200 0 Yen 150 140 130 120 110 100 90 80 70 10 11 12 13 14 Silver [left axis] Copper [right axis] (FY) 10 11 12 13 14 USD EUR (FY) Overview of Consolidated Results and Financial Condition Note: Segment operating income is prepared using the single-step method (which does not show individual income levels) based on U.S. GAAP. For inter-company comparison, we have deﬁned operating income as gross proﬁt minus selling, general and administrative (SG&A) expenses and research and development (R&D) expenses. The Omron Group recorded consolidated net sales of ¥847.3 billion for the ﬁscal year ended March 2015. This represented a 9.6% year-on-year increase, mainly driven by signiﬁcant revenue gains in our Industrial Automation Business. Operating income improved 27.2% year on year, reaching ¥86.6 billion. This increase was again mainly due to Industrial Automation Business revenues and higher added value ratio. The Group reported income before income taxes and equity in earnings of afﬁliates of ¥87.4 billion (40.9% higher year on year) and net income attributable to shareholders of ¥62.2 billion (34.6% increase). In all, the Omron Group marked a third consecutive year of revenue and proﬁt gains, as well as a second consecutive year of record earnings. Total assets at the end of the period amounted to ¥711.0 billion, which was 8.6% higher compared to the end of the prior ﬁscal year. This increase was mainly due to increases in cash and cash equivalents, inventories, and other current assets. Acquisitions of property, plant and equipment also contributed to this total. Total shareholders’ equity was ¥489.8 billion at the end of the period, up 13.8%. This increase was mainly due to signiﬁcant gains in net income attributable to shareholders and ﬂuctuations in foreign currency translation adjustments. Our shareholders’ equity ratio rose 3.1 points to 68.9% for the year-end. Return on equity rose nearly 2 points, from 11.6% to 13.5%, while return on invested capital improved from 11.3% to 13.4%. Billions of yen 1,000 Billions of yen 200 847.3 Billions of yen （%） 15 Billions of yen 800 600 400 200 0 617.8 619.5 650.5 773.0 41.7 33.5 41.2 87.4 62.0 10 11 12 13 14 (FY) Net sales [left] Income before income taxes and equity in earnings of affiliates [right] 160 120 80 40 0 75 50 25 0 8.7% 8.8% 11.6% 46.2 13.5% 62.2 26.8 5.2% 30.2 16.4 10 11 12 13 14 (FY) Net income attributable to shareholders [left] ROE [right] 10 5 0 500 400 300 200 100 0 489.8 （%） 100 68.9% 312.8 320.8 430.5 367.0 55.6% 59.7% 64.0% 65.8% 10 11 12 13 14 (FY) Total shareholders’equity [left] Ratio of shareholders’ equity to total assets [right] 80 60 40 20 0 Review and Analysis of Consolidated Statements of Income Net Sales The Omron Group recorded ¥847.3 billion in net sales for the year, which represented a ¥74.3 billion (9.6%) gain year on year. Among the goals we set in our EARTH-1 STAGE medium-term business plan, we made particularly notable progress in the Existing Business Strategy (strengthening of IA business), the Super-Global Growth Strategy, and the New Business Strategy for Optimization Society. Looking at our performance by region, we see that Greater China once again reported the greatest gains in net sales and operating income. Japan struggled to a 2.1% year-on-year decrease, mainly due to the impact of higher consumption taxes on ﬁrst-half performance. On the other hand, the Americas, Europe, Greater China, and Asia Paciﬁc all reported higher revenues, with year-on-year gains of 22.3%, 7.4%, 27.0%, and 14.9%. Cost of Sales and SG&A Expenses ¥70,655 for the prior year), while copper prices averaged ¥766 per kilo (compared to ¥757 for the prior year). Selling, general, and administrative expenses rose ¥16.9 billion (9.3%) year on year. However, this increase was generally in proportion to net sales when compared to the prior year (23.4% for ﬁscal 2014 vs. 23.5% for ﬁscal 2013). R&D expenses were level year on year, falling to 5.7% of net sales, compared to a 6.2% mark for the prior ﬁscal year. Other Expenses (Income) The Omron Group recorded a net amount of ¥0.8 billion in other income, mainly from the sale of investment securities. This was a ¥6.8 billion decrease year on year. Income before Income Taxes and Equity in Earnings of Afﬁliates, Net Income Attributable to Shareholders, and Proﬁt Distribution The Omron Group saw cost of sales rise 8.2% for the ﬁscal year. This increase was mainly in line with revenue gains, coming in at 60.7% in cost of sales ratio, just 0.8-points lower than the prior ﬁscal year. The average per-kilo price of silver fell to ¥65,260 (compared to The Omron Group reported income before income taxes and equity in earnings of afﬁliates of ¥87.4 billion, representing a ¥25.4 billion gain year on year. Net income attributable to shareholders amounted to ¥62.2 billion, a ¥16.0 billion increase compared to the prior ﬁscal year. ■ Consolidated Operating Income Analysis (YoY) Net sales increase, added value ratio improvement Fixed manufacturing cost increase -4.1 SG&A increase Billions of yen ＋26.4 -10.7 R&D decrease 86.6 +0.6 Forex, raw material costs 68.1 +6.3 Gross profit +22.3 (Excluding forex and raw materials) Operating income +18.5 FY2013 Actual FY2014 Actual 80 81 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionPer-share net income attributable to shareholders amounted to ¥283.9, an increase of ¥74.1 compared to the prior ﬁscal year. The Company’s basic policy for dividend payments is to secure sufﬁcient internal capital resources for future growth while at the same time providing consistent shareholder returns. More speciﬁcally, our target for ﬁscal 2014 was a dividend payout ratio of 25% or greater. The Group has moved the ﬁscal 2016 payout ratio goal of 30% up by one year to ﬁscal 2015. We have left our target ratio for dividend on equity unchanged at 2%. Given these policies, the Group was pleased to report an annual dividend of ¥71 for ﬁscal 2014, ¥18 per share higher than the prior ﬁscal year. Our consolidated ■ Costs, Expenses, and Income as Percentages of Net Sales dividend payout ratio was 25.0%, with a dividend on equity result of 3.4%. We project a ¥92 per share divided for ﬁscal 2015. ■ Dividends per Share Yen 80 70 60 50 40 30 20 10 0 71 53 30 28 37 10 11 12 13 14 (FY) Net sales Cost of sales Gross proﬁt Selling, general and administrative expenses Research and development expenses Other expenses (income), net Income before income taxes and equity in earnings of afﬁliates Income taxes Net income attributable to shareholders FY2010 FY2011 FY2012 FY2013 FY2014 100.0% 100.0% 100.0% 100.0% 100.0% 62.5 37.5 23.0 6.7 1.1 6.7 2.3 4.3 63.2 36.8 23.5 6.8 1.1 5.4 2.9 2.6 62.9 37.1 23.4 6.7 0.7 6.3 2.2 4.6 61.5 38.5 23.5 6.2 0.8 8.0 2.5 6.0 60.7 39.3 23.4 5.7 (0.1) 10.3 3.4 7.3 Segment Information Note: Operating income Segment operating income is prepared using the single-step method (which does not show individual income levels) based on U.S. GAAP. For inter- company comparison, we have deﬁned operating income as gross proﬁt minus selling, general and administrative (SG&A) expenses and research and development (R&D) expenses. Note: Inter-segment transactions market in particular̶led to overall favorable results for the segment. In Asia as well, we saw growth in demand in the automobile-related industries. Automotive Electronic Components Business (AEC) The Automotive Electronics Components Business recorded net sales of ¥137.9 billion, an 8.9% year-on-year gain. Operating income grew 1.6% to ¥9.2 billion. Domestically, higher consumption tax rates and slow sales among certain customers combined to drive sales lower year on year. Meanwhile, the weaker yen contributed to revenue gains overseas. In particular, the Americas reported strong sales growth, supported by the healthy U.S. economy, most notably during the fourth quarter. Asia and Greater China, where we continue to build market share, also reported strong sales for the year. Social Systems, Solutions and Service Business (SSB) The Social Systems, Solutions and Service Business recorded ¥80.4 billion in net sales for ﬁscal 2014, representing a 2.8% year-on-year decrease. Operating income experienced a 10.1% decrease to ¥5.0 billion. Our railway infrastructure business delivered strong results due to railway infrastructure equipment facility upgrades, despite the lull in sales following the rush of purchases during the prior year in advance of consumption tax increases. Meanwhile, our trafﬁc control and road control systems business underperformed the prior year due to the lack of capital investment in trafﬁc control systems and other systems. Despite a decline in customer demand during the second half of the year, the Environmental Solutions Business was able to show overall sales gains, buoyed by demand for solar power generation system-related products. The sales ﬁgure within segment information 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-allocable amounts. Healthcare Business (HCB) 1. Review of Operations by Business Segment Industrial Automation Business (IAB) Our Industrial Automation Business recorded net sales of ¥331.8 billion for ﬁscal 2014, a 13.7% gain year on year. Higher revenues and production efﬁciencies resulted in a 40.9% increase in operating income, up to ¥54.6 billion. Japan experienced a gradual economic recovery throughout the year, with demand particularly strong for capital investment in the automobile and electronics components ﬁelds. Overseas, the weakened yen contributed to greater sales in every region. Of particular note was the growth in the Americas, supported by strong demand in automobiles and oil and gas. Greater China proved again to be a strong growth market for electronics components. The segment experienced a gradual recovery in Europe, while demand for electronics components in Asia was strong, driven in part by the devalued yen. Electronic and Mechanical Components Business (EMC) The Electronic and Mechanical Components Business recorded net sales of ¥103.9 billion, representing a 6.4% year-on-year gain. Operating income was higher by 17.5% year on year, reaching ¥10.2 billion. In Japan, demand in the consumer electronics market and automobile industries was slow due to the increase in consumption tax rates. While demand in the consumer and commercial product industries other than consumer electronics remained level with the prior year, net sales decreased. Meanwhile, the weakened yen helped push net sales overseas signiﬁcantly higher. In the Americas and Europe, demand for consumer and commercial products was strong, while new customers in Greater China̶and our growth in consumer electronics in that The Healthcare Business reported a 12.7% year- on-year gain in net sales, recording ¥100.6 billion in revenues. Meanwhile, operating income fell 13.7% to ¥6.5 billion. This decline was mainly due to our advance investments overseas, as well as to dramatic ﬂuctuations in the currency trading markets during the second half of the year. In Japan, higher consumption taxes and a revision in the medical payments system combined to place downward pressure on demand for institutional medical devices. However, successful in-store promotions and the introduction of new products such as massagers served to drive higher sales for our home-use healthcare and medical devices. Overseas, a slowing Russian economy and the political instability in Ukraine placed a drag on sales growth in Europe. Sales of new products, such as TENS, in the Americas helped drive earnings, as did strong performance of healthcare and medical devices in China, India, and other emerging countries. Other Businesses Other Businesses reported net sales of ¥87.4 billion, a year-on-year increase of 10.7%. Operating income came in at ¥8.4 billion, which was a decrease of 3.6% year on year, mainly due to investment activity. Despite falling demand among certain Environmental Solutions Business customers during the second half of the year, increasing interest in renewable energy pushed domestic demand for PV inverters higher, resulting in strong demand during the year overall. The Electronic Systems & Equipment Business experienced demand for uninterruptible power supply units, industrial-use computers, and development and contract production services for electronic devices. Strong markets for smartphone microphones also helped drive earnings growth in our Micro Devices Business. A growing market for smartphones in Greater China has driven demand for thin, high-performance backlights in our Backlights Business. ■ Growth in Net Sales by Business Segment IAB EMC AEC SSB HCB Other FY2012 (2.9)% FY2013 10.9% FY2014 13.7% 1.3 14.8 20.2 14.5 10.7 16.2 29.7 20.3 24.8 33.3 6.4 8.9 (2.8) 12.7 10.7 ■ Composition of Net Sales by Business Segment IAB EMC AEC SSB HCB Other FY2012 40.4% FY2013 37.7% FY2014 39.2% 12.9 15.0 10.6 11.0 9.1 12.6 16.4 10.7 11.5 10.2 12.3 16.3 9.5 11.9 10.3 Note: The composition of net sales is based on the classiﬁcations reported under Six-Year Summary on P. 79. 82 83 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section 2. Review of Operations by Region Japan Greater China Total net sales for Japan came in at ¥337.7 billion, representing a 2.1% year-on-year decline. Operating income, however, grew a healthy 17.2% to ¥55.6 billion, due mainly to productivity and added value ratio improvements. During the ﬁscal year, the Japanese market experienced strong demand for capital investment in the automobile and electronic components sectors. This demand helped push earnings growth in our Industrial Automation Business. In our Healthcare Business, sales of home-use healthcare and medical devices and other new products made a signiﬁcant contribution to earnings. Meanwhile, the impact of higher consumption taxes was seen widely across our businesses in Japan, causing challenges in growing our Electronic and Mechanical Components Business, Automotive Electronic Components Business, and our Social Systems, Solutions and Service Business. Americas Our businesses in the Americas reported net sales of ¥123.5 billion, a 22.3% improvement year on year. Operating income was 713.5% higher, reaching ¥1.7 billion. The Americas are in an overall recovery economically. Greater corporate activity, higher employment, and rising payrolls are all indicators pointing to a clear recovery in the United States. Strength in automobile demand in the Americas drove signiﬁcantly improved earnings for our Industrial Automation Business and Automotive Electronic Components Business. At the same time, growth in the oil and gas sectors pushed demand for our Industrial Automation Business, while consumer and commercial product demand resulted in gains for our Electronic and Mechanical Components Business. Recovering consumer spending supported growth in our Healthcare Business during the ﬁscal year. Europe In Europe, our businesses reported net sales of ¥108.4 billion, representing a 7.4% increase year on year. Operating income came in 51.8% higher at ¥5.9 billion. Despite the slowdown in the Russian economy and political instability in Ukraine, the European economy overall showed indications of a gradual recovery, with demand essentially level with the prior ﬁscal year. While our Healthcare Business in Russia and surrounding regions had been growing, we experienced slower growth in this region this year. However, earnings were supported by strong demand for products in our Industrial Automation Business and Electronic and Mechanical Components Business. Our businesses in Greater China reported net income of ¥181.0 billion, 27% higher than the prior ﬁscal year. Operating income amounted to ¥19.7 billion, representing 9.8% year-on-year growth. This result for revenues and proﬁts was the highest of any of our regions. Experts cited concerns of a slowdown in certain sectors of the Chinese economy during the ﬁscal year. Even so, we experienced signiﬁcant earnings growth for our Industrial Automation Business, driven by higher demand in the electronic components market and steady capital investment. This region is demonstrating growing interest in mobile communications, home electronics, and electronic components for automobiles. As well, rising interest in personal health has spurred growth is sales of our health and medical equipment. ■ Sales Breakdown by Region (%) 50 40 30 20 10 0 Japan Asia Pacific Americas Direct Exports Europe Greater China 48.9 44.6 39.9 21.4 14.6 12.8 9.8 1.6 14 (FY) 16.3 12.4 8.4 12.4 1.6 12 18.4 13.1 13.1 9.3 1.5 13 Asia Paciﬁc Our businesses in Asia Paciﬁc reported net sales of ¥83.1 billion, 14.9% higher year on year. Operating income came in at ¥7.9 billion, representing an 11% gain. Despite currency weaknesses, the economies of Thailand, Indonesia, and Korea were generally strong throughout the year. Our Industrial Automation Business was supported by strong demand in the electronic components industry. Electronic components for automobiles and consumer health and medical equipment likewise experienced strong demand. Financial Condition Assets Total assets at the end of the period amounted to ¥711.0 billion, which was ¥56.3 billion (8.6%) higher compared to the end of the prior ﬁscal year. This increase was mainly due to increases in cash and cash equivalents, inventories, and other current assets. Acquisitions of property, plant and equipment also contributed to this total. ■ Working Capital and Current Ratio (Billions of yen) 300 240 229.0% 201.5% 180 180.7% 188.0 146.5 155.2 120 60 0 243.7% 245.6% （%） 250 233.8 257.3 220 190 160 130 100 Liabilities and Shareholders’ Equity 10 11 12 13 14 (FY) Working capital [left] Current ratio [right] Total liabilities amounted to ¥218.9 billion, which was a ¥3.0 billion (1.4%) decrease compared to the end of the prior ﬁscal year. This decrease was mainly due to a reduction in allowance for retirement beneﬁts. Shareholders’ equity amounted to ¥489.8 billion, an increase of ¥59.3 billion (13.8%). This increase was mainly due to signiﬁcantly higher net income attributable to shareholders, ﬂuctuations in foreign currency translation adjustments associated with a weaker yen on the foreign exchange markets, and a decrease in treasury stock. As a result, shareholders’ equity ratio improved 3.1-points compared to the prior ﬁscal year, up to 68.9%. Our debt/equity ratio likewise improved to 0.45 versus 0.52 in the prior year. Shareholders’ equity per share was ¥2,254.37 compared to ¥1,956.06 in the prior year. ■ Outstanding Interest-Bearing Debt and Debt/Equity Ratio (Billions of yen) 60 45 30 15 0 45.5 0.80 0.67 18.8 10 11 0.45 0.56 0 0.52 5.6 12 0.5 13 Outstanding interest-bearing debt [left] Debt/equity ratio [right] (Times) 2.0 1.5 1.0 0.5 0 0.45 0 14 (FY) Cash Flows Cash and cash equivalents at the end of the ﬁscal year amounted to ¥102.6 billion, an increase of ¥12.4 billion compared to the end of the prior ﬁscal year. Cash Flows from Operating Activities Net cash provided by operating activities amounted to ¥77.1 billion for year, down ¥2.0 billion compared to the prior ﬁscal year. This decrease was mainly due to a lower allowance for retirement beneﬁts stemming from contributions to employee pension funds. Cash Flows from Investing Activities Net cash used in investing activities amounted to ¥39.5 billion for the year, an increase of ¥8.4 billion over the prior year. This increase was mainly due to investments in production and other facilities, as well as our acquisition of a nebulizer manufacturing and sales company in Brazil. Cash Flows from Financing Activities Net cash used in ﬁnancing activities amounted to ¥29.3 billion, an increase of ¥13.0 billion compared to the prior ﬁscal year. This result was mainly due to payments of dividends and stock repurchases. ■ Free Cash Flow (Billions of yen) 50 40 30 20 10 0 21.7 10 5.5 11 47.9 37.5 24.6 12 13 14 (FY) 84 85 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial SectionConsolidated Balance Sheets OMRON Corporation and Subsidiaries March 31, 2014 and 2015 ASSETS Current Assets: Cash and cash equivalents Notes and accounts receivable-trade Allowance for doubtful receivables Inventories Deferred income taxes Other current assets Millions of yen FY2013 FY2014 ¥ 90,251 ¥ 102,622 174,216 (1,812) 97,677 22,688 13,473 178,775 (1,624) 116,020 19,941 18,362 Thousands of U.S. dollars FY2014 $ 855,183 1,489,792 (13,533) 966,833 166,175 153,017 Total Current Assets 396,493 434,096 3,617,467 Property, Plant and Equipment: Land Buildings Machinery and equipment Construction in progress Total Accumulated depreciation 26,344 140,495 171,192 7,126 345,157 (209,591) 26,721 147,120 202,149 6,619 382,609 (231,157) 222,675 1,226,000 1,684,575 55,158 3,188,408 (1,926,308) Net Property, Plant and Equipment 135,566 151,452 1,262,100 Investments and Other Assets: Investments in and advances to afﬁliates Investment securities Leasehold deposits Deferred income taxes Other assets Total Investments and Other Assets Total 21,349 51,117 6,950 20,918 22,311 122,645 ¥ 654,704 24,318 57,106 6,971 6,366 30,702 125,463 ¥ 711,011 202,650 475,883 58,092 53,050 255,850 1,045,525 $ 5,925,092 Note: U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate on March 31, 2015, of ¥120 = U.S. $1. LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Short-term debt Notes and accounts payable-trade Accrued expenses Income taxes payable Other current liabilities Millions of yen FY2013 FY2014 Thousands of U.S. dollars FY2014 ¥ 488 ¥ − $ − 85,218 39,897 6,340 30,764 92,702 41,942 3,680 38,438 772,517 349,517 30,667 320,317 Total Current Liabilities 162,707 176,762 1,473,018 Deferred Income Taxes Termination and Retirement Beneﬁts Other Long-Term Liabilities 2,167 50,683 6,369 697 30,393 11,065 5,808 253,275 92,208 Shareholders’ Equity: Common stock, no par value: Authorized: 487,000,000 shares in 2013 and 2014 Issued: 217,397,872 shares in 2014 227,121,372 shares in 2013 Capital surplus Legal reserve Retained earnings Accumulated other comprehensive income (loss) Treasury stock, at cost: 144,467 shares in 2014 64,100 64,100 534,167 99,067 11,196 287,853 (15,162) 99,070 13,403 301,174 12,489 825,583 111,692 2,509,783 104,075 　　　　　　　　 7,032,043 shares in 2013 (16,545) (467) (3,892) Total Shareholders’ Equity Noncontrolling Interests Total Net Assets Total 430,509 2,269 432,778 ¥654,704 489,769 2,325 492,904 ¥711,011 4,081,408 19,375 4,100,783 $5,925,092 86 87 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section Consolidated Statements of Income OMRON Corporation and Subsidiaries Years ended March 31, 2013, 2014 and 2015 Consolidated Statements of Comprehensive Income OMRON Corporation and Subsidiaries Years ended March 31, 2013, 2014 and 2015 Millions of yen FY2012 FY2013 ¥650,461 ¥772,966 FY2014 ¥847,252 Net Sales Costs and Expenses: Cost of sales Selling, general and administrative expenses Research and development expenses Other expenses (income), net Total Income before Income Taxes and Equity in Earnings of Afﬁliates Income Taxes Equity in Loss (Earnings) of Afﬁliates Net Income Net Income (Loss) Attributable to Noncontrolling Interests 408,954 152,676 43,488 4,106 609,224 41,237 14,096 (2,976) 30,117 (86) 475,758 181,225 47,928 6,048 710,959 62,007 19,475 (3,782) 46,314 129 Thousands of U.S. dollars FY2014 $7,060,433 4,288,708 1,650,858 399,275 (6,641) 514,645 198,103 47,913 (797) 759,864 6,332,200 87,388 28,893 (3,937) 62,432 262 728,233 240,775 (32,809) 520,267 2,184 Net Income Attributable to Shareholders ¥ 30,203 ¥ 46,185 ¥ 62,170 $ 518,083 Per Share Data: Net Income Attributable to Shareholders Basic Diluted FY2012 Yen FY2013 FY2014 U.S. dollars FY2014 ¥137.20 137.20 ¥209.82 − ¥283.89 283.89 $2.37 2.37 Note: U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate on March 31, 2015, of ¥120 = U.S. $1. Net Income Other Comprehensive Income (Loss), Net of Tax: Foreign currency translation adjustments: Foreign currency translation adjustments arising during the year Reclassiﬁcation adjustment for the portion realized in net income Net unrealized gain (loss) Pension liability adjustments: Pension liability adjustments arising during the year Reclassiﬁcation adjustment for the portion realized in net income Net unrealized gain (loss) Unrealized gains (losses) on available-for-sale securities: FY2012 ¥30,117 Millions of yen FY2013 ¥46,314 FY2014 ¥62,432 Thousands of U.S. dollars FY2014 $520,267 22,523 (43) 22,480 (21) (894) (915) 18,946 (1) 18,945 326 1,375 1,701 21,846 − 21,846 227 1,316 1,543 182,050 − 182,050 1,892 10,967 12,859 Unrealized holding gains (losses) arising during the year 2,317 10,002 7,074 58,950 Reclassiﬁcation adjustment for losses on impairment realized 　in net income Reclassiﬁcation adjustment for net gains on sale realized 　in net income Net unrealized gain (loss) Net gains (losses) on derivative instruments: 693 (425) 2,585 − − − (1,116) 8,886 (3,062) 4,012 (25,517) 33,433 Unrealized holding gains (losses) arising during the year (455) (1,409) (656) (5,467) Reclassiﬁcation adjustment for net gains (losses) 　realized in net income Net unrealized gain (loss) Other Comprehensive Income (Loss) Comprehensive Income Comprehensive Income (Loss) Attributable to 　Noncontrolling Interests Comprehensive Income attributable to shareholders 549 94 24,244 54,361 74 ¥54,287 1,249 (160) 29,372 75,686 314 ¥75,372 975 319 27,720 90,152 8,125 2,658 231,000 751,267 331 2,758 ¥89,821 $748,509 Note: U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate on March 31, 2015, of ¥120 = U.S. $1. 88 89 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section Consolidated Statements of Shareholders’ Equity Consolidated Statements of Cash Flows OMRON Corporation and Subsidiaries Years ended March 31, 2013, 2014 and 2015 OMRON Corporation and Subsidiaries Years ended March 31, 2013, 2014 and 2015 Number of common shares issued Common stock Capital surplus Legal reserve Millions of yen Accumulated other comprehensive income (loss) Retained earnings Treasury stock Total shareholders’ equity Noncontrolling interests Total net assets 239,121,372 ¥ 64,100 ¥ 99,078 ¥ 10,034 ¥ 260,557 30,203 ¥ (68,433) ¥ (44,496) ¥ 320,840 30,203 ¥ 840 ¥ 321,680 30,117 (86) (8,145) (8,145) (8,145) Operating Activities: Net income 　Adjustments to reconcile net income to net cash 　 provided by operating activities: Depreciation and amortization ̶ (2) (2) Net loss on sales and disposals of property, plant and equipment Balance, March 31, 2012 Net income Cash dividends paid to OMRON Corporation shareholders, ¥37 per share Cash dividends paid to noncontrolling interests Equity transaction with noncontrolling interests and other Transfer to legal reserve Other comprehensive income (loss) Acquisition of treasury stock Sale of treasury stock Retirement of treasury stock Balance, March 31, 2013 Net income Cash dividends paid to OMRON Corporation shareholders, ¥53 per share Equity transaction with noncon- trolling interests and other Transfer to legal reserve Other comprehensive income (loss) Acquisition of treasury stock Sale of treasury stock Balance, March 31, 2014 Net income Cash dividends paid to OMRON Corporation shareholders, ¥71 per share Cash dividends paid to noncontrolling interests Equity transaction with noncontrolling interests and other Transfer to legal reserve Other comprehensive income (loss) Acquisition of treasury stock Sale of treasury stock Retirement of treasury stock Issuance of stock acquisition rights (12) 842 (842) (12,000,000) 227,121,372 64,100 99,066 10,876 24,084 (44,349) (9) 1 28,119 (16,385) (0) (28,119) 253,654 46,185 (11,666) 320 (320) 227,121,372 64,100 1 99,067 11,196 29,187 (15,162) (161) 1 (16,545) 287,853 62,170 (15,513) 2,207 (2,207) (12) ̶ 24,084 (9) 1 ̶ 366,962 46,185 889 160 1,801 129 877 ̶ 24,244 (9) 1 ̶ 368,763 46,314 (11,666) (11,666) ̶ ̶ 29,187 (161) 2 430,509 62,170 (15,513) 154 185 2,269 262 154 ̶ 29,372 (161) 2 432,778 62,432 (15,513) ̶ ̶ ̶ (277) (277) 2 2 ̶ (9,723,500) Balance, March 31, 2015 217,397,872 ¥ 64,100 27,651 27,651 69 27,720 0 (2) 5 ¥ 99,070 (31,129) (15,054) 1 31,131 ¥ 13,403 ¥ 301,174 ¥ 12,489 ¥ (467) (15,054) 1 ̶ 5 ¥ 489,769 (15,054) 1 ̶ 5 ¥ 492,094 ¥ 2,325 Millions of yen Thousands of U.S. dollars FY2012 FY2013 FY2014 FY2014 ¥ 30,117 ¥ 46,314 ¥ 62,432 $ 520,267 22,452 578 3,265 (677) 1,086 153 (4,433) 3,762 (2,976) (5,827) 8,641 21 (5,927) 3,121 1,519 (1,817) 22,941 53,058 1,658 (0) (30,383) 457 836 (1,884) 90 141 (10) 624 25,089 1,146 804 (1,714) 501 − (4,417) 2,170 (3,782) (6,613) (325) (32) 5,824 2,277 10,883 919 32,730 79,044 2,840 (2,179) (32,218) 75 794 209 26 (672) − − 28,339 3,432 137 (4,337) 166 − (17,427) 11,938 (3,937) 3,384 (10,671) (2,828) 1,658 (3,127) 6,318 1,580 14,625 77,057 5,274 (603) 236,158 28,600 1,142 (36,142) 1,383 − (145,225) 99,483 (32,808) 28,200 (88,925) (23,567) 13,817 (26,058) 52,650 13,167 121,875 642,142 43,950 (5,025) (37,123) (309,358) 118 768 (30) − 983 6,400 (250) − (8,003) (66,692) − 82 − 684 Loss on impairment of long-lived assets Net gain on sale of investment securities Loss on impairment of investment securities Loss on impairment of goodwill Termination and retirement beneﬁts Deferred income taxes Equity in loss (earnings) of afﬁliates Changes in assets and liabilities: Decrease (increase) in notes and accounts receivable-trade Decrease (increase) in inventories Decrease (increase) in other assets Increase (decrease) in notes and accounts payable-trade Increase (decrease) in income taxes payable Increase in accrued expenses and other current liabilities Other, net 　Total adjustments 　Net cash provided by operating activities Investing Activities: Proceeds from sale or maturities of investment securities Purchase of investment securities Capital expenditures Decrease in leasehold deposits, net Proceeds from sale of property, plant and equipment Decrease (increase) in investment in and loans to afﬁliates Proceeds from sale of business Acquisition of business, net of cash acquired Purchase of noncontrolling interests Other, net Thousands of U.S. dollars Net cash used in investing activities (28,471) (31,125) (39,517) (329,308) Number of common shares issued Common stock Capital surplus Legal reserve Retained earnings Accumulated other comprehensive income (loss) Treasury stock Total shareholders’ equity Noncontrolling interests Total net assets Balance, March 31, 2014 227,121,372 $ 534,167 $ 825,558 $ 93,300 $ 2,398,775 $ (126,350) $ (137,875) $ 3,587,575 $ 18,908 $ 3,606,483 Net income Cash dividends paid to OMRON Corporation shareholders, $0.59 per share Cash dividends paid to noncon- trolling interests Equity transaction with noncontrolling interests and other Transfer to legal reserve Other comprehensive income (loss) Acquisition of treasury stock Sale of treasury stock Retirement of treasury stock Issue of stock acquisition rights 518,083 (129,275) 518,083 2,183 520,266 (129,275) (129,275) 18,392 (18,392) 230,425 (9,723,500) 0 (17) 42 (259,408) − − − (125,450) 8 259,425 230,425 (125,450) 8 − 42 (2,308) (2,308) 17 17 − 575 231,000 (125,450) 8 − 42 Balance, March 31, 2015 217,397,872 $ 534,167 $ 825,583 $ 111,692 $ 2,509,783 $ 104,075 $ (3,892) $ 4,081,408 $ 19,375 $ 4,100,783 Note: U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate on March 31, 2015, of ¥120 = U.S. $1. Financing Activities: Net repayments of short-term debt Dividends paid by the Company Dividends paid to noncontrolling interests Proceeds from equity transactions with noncontrolling interests Acquisition of treasury stock Other, net 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 (13,273) (6,164) (5,135) (10,566) (2) 819 (9) 79 (18,550) 4,414 10,451 45,257 − 22 (161) (458) (16,298) 2,922 34,543 55,708 (853) (12,985) (277) − (15,054) (134) (29,303) 4,134 12,371 90,251 (7,108) (108,208) (2,308) − (125,450) (1,118) (244,192) 34,450 103,092 752,091 Cash and Cash Equivalents at End of the Year ¥ 55,708 ¥ 90,251 ¥ 102,622 $ 855,183 Note: U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate on March 31, 2015, of ¥120 = U.S. $1. 90 91 OMRON CorporationIntegrated Report 2015About OmronWhere We’re HeadedCorporate Value InitiativesCorporate Value Foundation Financial Section Independent Practitioner’s Assurance From the Editor-in-Chief Omron believes the independent assurance process is important to improve the accuracy and objectivity of its Integrated Report 2015. The following information contained in the Integrated Report was reviewed by an independent third party*1. The process leading to issuance of the Independent Practitioner’s Assurance Report was as follows. *1 Deloitte Tohmatsu Evaluation and Certiﬁcation Organization Co., Ltd.: A related company of Deloitte Touche Tohmatsu LLC, a member ﬁrm of Deloitte Touche Tohmatsu Limited. Independent Practitioner’s Assurance Process STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 STEP 6 Planning Perform Procedures Reporting Check Final Report Quality Assurance Issue Assurance Report Determine scope, categories, proce- Perform procedures at Report the results of Omron headquarters and procedures, including Follow up on issues identiﬁed in Step 3 dures, and schedule other ofﬁces (site visit, identiﬁed issues analytical procedures, vouching, document reviews, inquiries, etc.) A professional separate Obtain management from the assurance representation letter, and team performs a quality issue the independent control check practitioner’s assurance report Scope of Independent Practitioner’s Assurance Report ● Number of employees (P. 18–19) ● Ratio of overseas employees to total employees (P. 18–19) ● Ratio of non-Japanese in managerial positions overseas (P. 16) ● Ratio of women in managerial roles (Japan) (P. 16) ● Ratio of employees with disabilities (P. 17) ● Number of TOGA entries and participants (P. 16) ● Number of patents held (P. 18–19, 56) ● CO2 emissions of global production sites (P. 17, 18–19) ● Global net sales to CO2 emissions (P. 17) ● Environmental contribution (P. 17, 18–19) Omron began planning for integrated reporting during ﬁscal 2011, issuing our ﬁrst Integrated Report in 2012, combining our ﬁnancial and non-ﬁnancial CSR report. In both 2013 and 2014, we received the Award for Excellence in Integrated Reporting from the World Intellectual Capital Initiative Japan, a partner with the International Integrated Reporting Council (IIRC). Nikkei Inc., publisher of the Nikkei Shimbun, likewise honored Omron as the 2014 winner of the Nikkei Annual Report Awards Grand Prix, as well as the most outstanding company in the integrated reporting category. The Tokyo Stock Exchange singled out Omron from among 3,400 publicly traded ﬁrms to receive their highest recognition, the Corporate Value Improvement Award. The award has recognized Omron for our earnings capacity, made possible through our management professionalism and information disclosure practices. We believe that issuing integrated reports over the past three years has led us to better practice our management philosophy: Provide the products and services that society requires, thereby contributing to the development of global society while growing as a company. At the same time, writing these reports has helped deepen our critical integrated thinking. It has helped us manage with an eye ﬁxed on long-term, sustainable corporate value improvement. Our Integrated Report 2015 conforms to the integrated reporting framework recommended by the IIRC and the World Intellectual Capital Initiative. At the same time, we worked harder on our coverage of materiality (important management issues) and connectivity (between ﬁnancial and non-ﬁnancial information). Speciﬁcally, we have described our process for selecting material information to disclose, as well as visualizing our business model. Now, we can tell a much more effective story of how Omron keeps creating unique corporate value. We have also taken steps to improve reliability by contracting an independent assurance to prove how important management indicators are related to non- ﬁnancial information. This is in answer to the call of the IIRC for providing more assurance in this area. As the editor-in-chief of this Integrated Report, I can assure the reader of the validity of the process by which it was created, as well as the accuracy of the content herein. At Omron, we will continue to lead the way in integrated reporting in Japan. I encourage you to help us in this endeavor by sharing your frank opinions and ideas with us. Satoshi Ando Managing Executive Ofﬁcer Senior General Manager Global Investor Relations & Corporate Communications HQ July 2015 Omron Integrated Report 2014: Awarded for Excellence Omron Integrated Report 2014 was selected winner of the Award for Excellence in Integrated Reporting from the World Intellectual Capital Initiative Japan. Our integrated reporting has also been recognized by Nikkei Inc., as the winner of the Nikkei Annual Report Awards 2014 Grand Prix, as well as most outstanding in the integrated reporting category. 92 Integrated Report 2015 93 OMRON CorporationCorporate Information / Stock Information As of March 31, 2015 Date of Formation 　May 10, 1933 Securities Code 　6645 Date of Establishment 　May 19, 1948 Fiscal Year-End 　March 31 Paid-in Capital 　¥64,100 million Number of Employees (Consolidated) 　37,572 Common Stock 　Issued 　217,398 thousand shares 　Trading Unit 　100 shares 　Number of Shareholders 　34,832 Stock Listings 　Tokyo Stock Exchange, 　Frankfurt Stock Exchange Annual Shareholders’ Meeting 　June Custodian of Register of Shareholders 　Mitsubishi UFJ Trust and Banking Corporation Depositary and Transfer Agent for American Depositary Receipts 　JPMorgan Chase Bank, N.A. Head Ofﬁce 　Shiokoji Horikawa, Shimogyo-ku, Kyoto 600-8530, Japan 　Tel: +81-75-344-7000 Fax: +81-75-344-7001 Overseas Headquarters 　Europe 　OMRON MANAGEMENT CENTER OF EUROPE (The Netherlands) 　North America 　OMRON MANAGEMENT CENTER OF AMERICA (Illinois) 　Brazil 　OMRON MANAGEMENT CENTER OF BRAZIL (São Paulo) 　Asia Paciﬁc 　OMRON MANAGEMENT CENTER OF ASIA PACIFIC (Singapore) 　India 　OMRON MANAGEMENT CENTER OF INDIA (Haryana) 　Greater China 　OMRON MANAGEMENT CENTER OF CHINA (Shanghai) Major Manufacturing & Development, Sales & Marketing, and Research & Development Centers in Japan Manufacturing & Development 　Kusatsu Ofﬁce Ayabe Ofﬁce Yasu Ofﬁce Research & Development 　Keihanna Technology Innovation Center Okayama Ofﬁce Sales & Marketing 　Tokyo Ofﬁce Mishima Ofﬁce Nagoya Ofﬁce Osaka Ofﬁce ■ Stock Price and Daily Trading Volume Tokyo Stock Exchange and Osaka Securities Exchange Management Compass̶The SINIC Theory Omron announced this predictive theory at the First Future Research World Congress in April 1970. From the 1990s onward, Omron has set a long-term management vision based on this predictive theory formulated every 10 years with the aim of achieving sustainable growth from a long-term perspective. Seed Technology Innovation Impetus Need Progress- oriented motivation Science Society ciety o S e itiv im r P A g r i cul tura Society l c i e t y o S Colle ctiv e i o n a l h n i c s r T d i t c e a T Handicraft Technics Handicraft S o ci e t y Ancient Science a r y Pri m S cie n c e Primitive Technics imitive eligio r P R n In d u T e c s t r i a l i z h n i 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 Renais Scie n s a n c c e e M S c o i d e n e r c e n Seed Innovation Need Impetus Cyclic Evolution ciety o S al r u t a N gic 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 C o n t r o l S c i e n c e T e c h n c s i M o d e r n M e c S h o a c n i i z e t y a t i o n A u t o m T a e c ti c h C n ic s o ntr ol C y b ern etics s u o m o n ciety So Auto A S m uto ociety ation p ti m ization S o ciety O Cybernatio n Society ElectronicControl Technics n tr o l s o C n i c B i o l o g i c T e c h Bionetics Psycho-Biologic Technics y c h o n etics s P Daily Trading Volume Omron TOPIX TOPIX Electric Appliances TSR*1 (annualized rate) Holding Period Omron TOPIX TOPIX Electric Appliances 3 years 47% 24% 24% 5 years 21% 11% 9% 10 years 10% 4% 4% (Index) 250 200 150 100 50 0 Website For more information, please visit our website. (1,000 Shares) 2,000 1,600 1,200 800 400 0 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 Notes: 1. Share index (2005/3E = 100) 2. Stock price and trading volume information is for the 1st section of the Osaka Securities Exchange before July 16, 2013, and for the 1st section of the Tokyo Stock Exchange thereafter. 3. TSR holding period indexed to March 2015 *1 TSR (Total Shareholder Return): Total investment return, combining capital gains and dividends ■ 52-Week High / Low, Volatility*2 FY 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 High (¥) Low (¥) Volatility (%) 3,620 3,590 3,510 2,385 2,215 2,418 2,357 2,478 4,730 5,800 2,210 2,615 1,950 　940 1,132 1,749 1,381 1,436 2,213 3,365 25.5 27.1 36.3 52.4 35.9 34.7 36.5 29.9 39.7 30.9 ■ Ownership and Distribution of Shares (%) 100 19.3% 14.5% 12.4% 80 60 40 20 0 44.1% 48.2% 5.6% 0.7% 5.5% 1.0% 47.6% 5.7% 1.8% 30.3% 30.8% 32.5% Individuals and others Foreign investors Other corporations Financial instru- ments dealers Financial institutions 2012 2013 2014 （FYE） *2 Volatility: Price ﬂuctuation risk, expressed in standard deviations 94 About Omron http://www.omron.co.jp/ (Japanese) http://www.omron.com/ (English) Investor Relations http://www.omron.co.jp/ir/ (Japanese) http://www.omron.com/ir/ (English) CSR http://www.omron.co.jp/about/csr/ (Japanese) http://www.omron.com/about/csr/ (English) INQUIRIES Shinagawa Front Building 7F 2-3-13, Konan, Minato-ku, Tokyo 108-0075, Japan Global Investor Relations & Corporate Communications HQ Investor Relations Department Tel: +81-3-6718-3421　Fax: +81-3-6718-3429 Board of Directors Ofﬁce Corporate Social Responsibility Department Tel: +81-3-6718-3410　Fax: +81-3-6718-3411 95 Integrated Report 2015OMRON Corporation O M R O N C o r p o r a t i o n I n t e g r a t e d R e p o r t 2 0 1 4 Printed in Japan

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