Annual Report 1998 - Omron

ANNUAL REPORT 1998 

YEAR ENDED MARCH 31, 1998

A pioneer in the field of automation, OMRON 

Corporation is one of the world’s premier manufacturers 

of automation components, equipment, 

and systems with advanced computer, 

communications, and control technologies. 

OMRON’s versatile lineup of products 

includes relays, sensors, and switches; computer 

systems for factory automation (FA); and 

large-scale control and information systems. 

Our Seventh Mid-Term Management Plan is 

focused on achieving mid-to-long-term growth 

through structural reforms targeting three 

major goals: 

•creating a growth-oriented structure, 

•establishing an innovative cost structure, and 

•revitalizing corporate resources. 

Significant progress has been made in these 

three areas during the year under review. 

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

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

Progress Report of the Seventh Mid-Term Management Plan ............. 5 

Review of Operations.......................................................................... 8 

Omron’s Commitment to Environmental Protection ..........................15 

Board of Directors ...............................................................................18 

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

International Network.........................................................................43 

Corporate Data ....................................................................................46

FINANCIAL HIGHLIGHTS 

OMRON Corporation and Subsidiaries 

Years ended March 31, 1998, 1997 and 1996 

Thousands of 

Millions of yen U.S. dollars (Note 3) 

(except per share data) 

(except per share data) 

1998 1997 1996 1998 

Net sales ................................................................................ ¥611,795 ¥594,261 ¥525,289 $4,634,811 

Income before income taxes and minority interests.............. 42,243 39,248 32,252 320,023 

Net income............................................................................ 18,300 15,739 14,587 138,636 

Net income per share (yen and U.S. dollars, Note 1): 

Basic .................................................................................. ¥69.8 ¥60.1 ¥55.7 $0.53 

Diluted............................................................................... 68.3 58.8 54.5 0.52 

Cash dividends per share (yen and U.S. dollars, Note 2) ...... 13.0 13.0 13.0 0.10 

Total assets ............................................................................ ¥579,663 ¥590,353 ¥580,815 $4,391,386 

Total shareholders’ equity..................................................... 336,064 323,019 302,458 2,545,939 

Capital expenditures ............................................................. 35,896 29,956 34,079 271,939 

Research and development expenses ................................... 39,914 35,188 34,433 302,379 

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

effective for the fiscal year ended March 31, 1998. The amounts for 1997 and 1996 have been restated to conform with the provisions of SFAS No. 128. 

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

3. The U.S. dollar amounts represent translations of Japanese yen at the approximate exchange rate at March 31, 1998, of ¥132=$1. 

NET SALES 

(Billion ¥) 

INCOME BEFORE 

INCOME TAXES 

AND MINORITY 

INTERESTS 

(Billion ¥) 

NET INCOME 

(Billion ¥) 

TOTAL ASSETS 

(Billion ¥) 

NET INCOME 

PER SHARE 

(DILUTED) 

(¥) 

13 

5 

20.1 

25 

12 

461 

32 

49.4 

490 

15 

54.5 

525 

16 

58.8 

594 

612 

39 

42 

18 

552 

569 

581 

590 

580 

68.3 

’94 ’95 ’96 ’97 ’98 

’94 ’95 ’96 ’97 ’98 

’94 ’95 ’96 ’97 ’98 

’94 ’95 ’96 ’97 ’98 

’94 ’95 ’96 ’97 ’98 

1

TO OUR SHAREHOLDERS 

Yoshio Tateisi 

President and Director 

It gives me great pleasure to 

report that, despite a lackluster 

Japanese economy and the economic 

downturn in Southeast Asia, 

OMRON Corporation achieved a 

record-high performance in fiscal 1998, 

ended March 31, 1998. Consolidated 

net sales rose 3.0%, to ¥611,795 million, 

marking the fourth consecutive 

year of growth. Sales gains can be 

attributed mainly to a strong overseas 

showing by our core operations— 

control components and systems— 

coupled with bullish domestic and 

international healthcare and medical 

equipment sales. This solid sales performance 

and Companywide cost-cutting 

efforts produced a 7.6% increase 

in income before income taxes and 

minority interests, to ¥42,243 million. 

Net income gained 16.3%, climbing to 

¥18,300 million. 

During the fiscal year in review, the 

Japanese economy labored under sluggish 

personal consumption and housing 

investment. Moreover, beginning 

in summer 1997 the decline in business 

confidence in reaction to the stalled 

economy resulted in a drop-off in 

private-sector capital investment. 

Consequently, the economy slowed 

overall despite growth in exports. 

In our global markets, the economic 

turmoil in Asian economies was in 

stark contrast to the continued expansion 

in the United States, which was 

driven by strong consumer spending 

and corporate capital investment. 

European economies were favorable 

in general, with the ripple effects of 

rising exports supporting a recovery 

process. 

Facing the volatile business environment, 

OMRON entered the second 

year of its Seventh Mid-Term Management 

Plan in fiscal 1998. Through 

the plan, we are pursuing structural 

reforms that will support future growth 

and profitability. The objectives of 

those reforms are to create a growthoriented 

structure, establish an 

innovative cost structure, and revitalize 

corporate resources. A progress report 

on those structural reforms and our 

mid-term management plan follows 

on pages 5 to 7. 

BUSINESS PERFORMANCE 

Sales by our Control Components 

and Systems Division rose 7.7%, 

to ¥313,642 million, accounting 

for just over half of consolidated net 

sales. In achieving sales growth, the 

division shrugged off weak domestic 

sales in the second half of the term 

due to the sudden economic downturn 

in Japan and the overall negative 

impact of the currency crises in 

Southeast Asian countries. Favorable 

sales in North America and Europe 

throughout the fiscal year and an 

expanded product lineup provided 

support for this solid performance. 

The Social Business Division’s sales 

declined 4.8%, to ¥138,203 million, 

resulting from a slump in electronic 

fund transfer systems (EFTSs) sales 

2

elated to the troubled financial services 

industries in Japan and Korea, a major 

overseas market. Sales of Public Information 

and Transport Systems (PITSs), 

however, recorded considerable 

growth thanks to the construction of 

a new railway line in the Kansai area 

and greater use of multiroute stored 

fare (SF) card systems. Traffic management 

systems sales remained the 

same as in fiscal 1997, hampered by 

strong competition and restraint in 

public construction programs. 

Sales by the Specialty Products Division 

rose 1.6%, to ¥47,263 million, thanks 

to solid global sales of automotive 

electronic components. In addition, 

the shift to digital color copiers and 

the increased manufacture of copiers 

overseas resulted in high demand 

from copy machine manufacturers. 

Sales by the Healthcare Division 

advanced 12.1%, to ¥40,793 million, 

boosted by a boom in the domestic 

sales of new products, such as bodyfat 

monitors, massage chairs, and eartype 

digital thermometers, as well as 

of traditional big sellers, including 

blood pressure monitors and pedometers. 

Vigorous overseas sales, particularly 

in the People’s Republic of China 

and the United States, also contributed 

to double-digit growth. 

The Open Systems Division posted 

sales of ¥50,131 million, held to approximately 

last year’s level because 

of the further weakening of the Japanese 

economy and heightened competition 

produced by the slump in 

personal computer (PC) sales. Bright 

spots in performance included strong 

showings in the open systems platform 

market for PC servers and in the system 

planning and maintenance services areas. 

JAPANESE MARKET 

Our mid-to-long-term strategy 

for growth in domestic sales 

of control components and 

systems is to strengthen our solution 

proposal capabilities. The Company 

has a long-standing sales system using 

OMRON distributors that is unbeatable 

when it comes to providing a diverse 

range of customers with general-use 

components. To reinforce this competitive 

advantage, we have bolstered 

our personnel, financial, and material 

resource support to distributors who 

demonstrate superior solution-providing 

capabilities and have more than a 

specified number of sales engineers. 

The new system will help us better 

accommodate market needs. 

The OMRON distributor sales system, 

however, does not adequately specify 

customer needs. We addressed this 

problem through a reorganization of 

our sales system in October 1997. 

Specifically, we established a special 

sales team responsible for providing 

our semiconductor and automobile 

clients with more customized products 

and solutions. This allows us to 

insert more direct sales approaches 

into our distributor sales system. 

OMRON is cooperating with distributors 

in creating customized products 

for end users and vendors as well as 

selling directly to clients. Customer 

needs are now served more quickly 

by our ability to select the optimal 

method for providing specific products 

to each customer in each market. 

In addition, we added staff to our 

sales organization to pursue direct 

sales approaches with the goal of 

strengthening our sensor business. 

Through the well-balanced application 

of such measures, we are seeking 

to improve OMRON’s capabilities to 

find the best solution, both Companywide 

and within such related companies 

as OMRON distributors. 

During the reorganization of our sales 

system, we introduced a product 

manager system that permits finer 

control of profitability by managing 

the cost, profitability, and life cycle 

of product groups on an integrated 

basis. In addition, the Company has 

product marketing managers for individual 

areas, including Japan, who 

are responsible for working with 

product managers to ensure that 

OMRON supplies products that meet 

local requirements. 

Our short-term strategy for growth in 

domestic sales of control components 

and systems is to increase our emphasis 

on industries and companies that 

are making relatively strong capital 

investments in new products or rationalization. 

The sudden slowdown in 

Japan’s economy in the second half of 

fiscal 1998 after a strong first half initiated 

a decline in corporate capital 

investment that is ongoing. Due to 

the progressive polarization of business 

performances, even within industries, 

however, some companies 

continue to make significant capital 

investments. 

SOUTHEAST ASIAN MARKET 

The Southeast Asian market 

for control components 

and systems has contracted 

significantly because of the stagnation 

in the economies of the region spurred 

by the currency crises in the latter 

half of fiscal 1998. OMRON is steadily 

taking measures to cope with this 

3

situation from a mid-to-long-term point 

of view. 

Over the past few years, OMRON has 

been strengthening its local sales 

organization in the region, setting up 

sales bases in each country to establish 

a direct sales organization. Similar 

to the Company’s domestic operations, 

this action has been taken to 

strengthen solution proposal capabilities 

in Southeast Asia. These efforts 

have met with favorable results. For 

example, direct marketing permits us 

to accurately gauge customer reaction 

to prices and other sales criteria, 

allowing us to make persuasive sales 

approaches that have been well 

received in local markets. Of course, 

these measures in themselves cannot 

produce profits amid the sudden fall 

in business. We are also introducing 

measures, such as increasing sales 

productivity and managing liabilities, 

to minimize declines in profitability. 

Overall, our fiscal 1998 sales to 

Southeast Asia rose, thanks to the 

growth achieved in the first half of the 

term. In light of the poor performance 

in the second half, however, we expect 

business conditions to be difficult in 

the current fiscal year. It will be necessary 

to adjust responses to the varying 

pace of recovery in each country. 

In the mid-to-long term, we believe 

that the restructuring occurring in 

Southeast Asian economies will result 

in significant progress in industrialization, 

thereby expanding markets for 

our control components and systems. 

We are implementing strategies that 

capitalize on the current opportunity 

to expand market share despite the 

shrinking market size. 

NORTH AMERICAN AND 

EUROPEAN MARKETS 

OMRON’s operations in North 

America and Europe are 

achieving stable growth. The 

U.S. and European markets accounted 

for 10% and 12%, respectively, of 

consolidated net sales in fiscal 1998, 

and these percentages are rising annually. 

They provide strong evidence 

that OMRON is steadily increasing 

its presence in these markets as a 

global corporation. 

In fiscal 1998, against the background 

of the growing economy in the United 

States, we strove to expand our marketing 

efforts there. These efforts 

resulted in a 17% upswing in sales, 

helped by the strengthening of the 

dollar against the yen. 

In Europe, OMRON’s strategy of 

strengthening its system solution 

capabilities to take advantage of the 

ongoing economic recovery was 

rewarded with sales growth. Overall 

sales in the region rose 10%, despite 

European currencies weakening 

slightly against the yen during the 

fiscal year under review. 

We expect U.S. and European markets 

to achieve relatively stable growth in 

the mid-to-long term. Accordingly, 

we will be implementing measures 

to boost our marketing efforts by 

strengthening our solution proposal 

capabilities. 

PERSPECTIVES 

The global business environment 

in fiscal 1999 is again 

one of great contrast. Although 

there is hope that the measures being 

taken to stimulate the Japanese economy 

will take hold, we expect no 

immediate sign of recovery because 

of weak personal consumption and 

declining corporate capital investment. 

On the other hand, the U.S. 

economy should continue to expand 

despite concerns that a slowdown is 

long overdue. Looking at Europe, 

economies there will continue down 

the path to recovery despite monetary 

policy restraint in the lead-up to monetary 

union. Asian economies will be 

implementing reforms, which we 

intend to watch carefully. 

Although the business environment 

appears daunting, we continue to 

focus on growth industries and companies. 

To reach our longer-term 

goal of becoming a competitive, highquality 

growth company in the 21st 

century, we will further progress with 

our structural reforms. In addition, we 

will revise the allocations of management 

resources and the organization 

and strategies of our operations in 

preparing the Eighth Mid-Term 

Management Plan. 

June 25, 1998 

Yoshio Tateisi, 


4

Progress Report 

of the 

Seventh 

Mid-Term 

Management Plan 

Our Seventh Mid-Term 

Management Plan is 

focused on achieving 

mid-to-long-term growth 

through structural reforms 

targeting three major goals: 

• creating a growth-oriented 

structure, 

• establishing an innovative 

cost structure, and 

• revitalizing corporate 

resources. 

Significant progress has 

been made in these three 

areas during the year 

under review. 

CREATING A GROWTH-ORIENTED 

STRUCTURE 

In line with the ongoing shift in global 

industrial structures, from the manufacturing 

to the service and software 

sectors, we are steadily expanding 

business derived from new integrated 

markets, which we develop by extending 

the scope of or combining our 

existing technologies. These new integrated 

markets are steadily expanding, 

and their contributions to revenue are 

growing. Examples of new integrated 

markets include the development of 

applications for our control components 

for service-industry-related 

fields, such as video game equipment 

and solar inverters. 

As its key approach to creating a 

growth-oriented structure, OMRON has 

produced a set of visionary concepts. 

To further improve our growth-oriented 

structure over the mid-to-long term, 

we must take advantage of the trend 

toward customer-oriented software and 

services, rapid advances in information 

technology, and the potential for 

growth as our customers expand their 

infrastructures. Moreover, it is important 

that we steadily invest in raising 

our competitiveness in high-growth, 

high-profit businesses in these areas. 

Accordingly, we have created a set 

of visionary concepts that indicate 

OMRON’s approach to high-growth 

fields in the 21st century and its strategies 

for success in competitive markets. 

The visionary concepts fall under 

the headings of Intelligent Transport 

Systems (ITSs), multimedia-oriented 

factory automation (FA), cybercommunity-related, 

total healthcare, 

and information sensing businesses. 

Revenues from these areas are gradually 

increasing and were slightly less 

than ¥20 billion in fiscal 1998. We expect 

these areas to enter their true 

5

growth phase during the Eighth Mid- 

Term Management Plan. 

ITS 

In preparation for creating growthoriented 

structures in these fields, we 

are currently engaged in determining 

the appropriate allocation of resources, 

the most effective management structure, 

and the required personnel training 

programs based on our estimates 

of business volume. 

ITSs Business 

In the ITSs business, we are developing 

sensors for automobile collision 

prevention systems and an automobile 

category identification system for 

no-stop automated electronic toll collection 

(ETC). The special ITSs organization 

established in November 1996 

was further bolstered in April 1997 

with the addition of 60 additional staff 

members, mainly engineers. We built a 

special test course for our ETC system 

at our Ayabe factory and are steadily 

progressing toward being able to offer 

a commercial product. We were the 

first in the industry to be licensed 

as an auxiliary organization of the 

Ministry of Posts and Telecommunications 

for wireless technology. 

Multimedia-Oriented FA Business 

Our multimedia-oriented FA business 

addresses emerging on-site manufacturing 

needs. The increasingly sophisticated 

demands of this field include 

achieving more timely production in 

keeping with the trend toward smalllot 

flexible production and shorter 

product life cycles as well as making 

the maximum use of information technology 

through “smart factories.” With 

this in mind, we are promoting more 

software-oriented components, such 

as personal-computer-based FA components, 

as well as versatile general-use 

components. We also are strengthening 

our system installation and management 

and maintenance services. 

Cyber-Community-Related 

Business 

In the cyber-community-related business 

field, we are expanding operations 

that interface service providers 

and consumers in financial, public, 

and retail sectors. In addition, we are 

actively exploring the electronic money 

business. We are taking steps to establish 

an infrastructure for this business, 

such as investing in the Japanese subsidiary 

of Cybercash Corporation, of 

the United States, and taking part in an 

experimental electronic money program 

launched in Tokyo as well as 

conducting other such test runs. 

Total Healthcare Business 

With the progressive graying of the 

world’s population and the growing 

interest in personal healthcare, we are 

keeping a close eye on business opportunities 

in preventative medicine. 

Along with our popular hardware 

products, we intend to offer software 

products and services that contribute 

to the healthcare business as a whole. 

For example, we are progressing with 

6 

establishing such businesses as the 

Health Master service, which provides 

health management support services 

to households in a way similar to correspondence 

education courses; a 

health management system that targets 

corporations and organizations; and 

other businesses. 

Information Sensing Business 

The underlying theme of our visionary 

concepts is the development of highgrowth 

markets through information 

sensing, one of our areas of core competence. 

Examples include a variety 

of automotive sensors for ITSs, the 

Register with counterfeit-detection 

capabilities

ultracompact pressure sensors used in 

our total healthcare business, and the 

currency note recognition sensors used in 

our cyber-community-related business. 

We are also seeking to create new markets 

by introducing innovative sensingtechnology-based 

products. 

ESTABLISHING AN INNOVATIVE 

COST STRUCTURE 

We are implementing innovations that 

will change OMRON’s fundamental 

cost structure over the mid-to-long 

term. Specifically, we are concentrating 

on implementing profitability planning 

and management functions for 

each product line, achieving thorough 

planning of basic costs, and establishing 

a globally diversified production 

organization. 

Profitability Planning and Management 

Functions by Product Line 

In our core business of control components 

and systems, we have introduced 

a product manager system 

under which product managers oversee 

the life cycle of a product line, 

from planning and development to 

production and marketing, on an integrated 

basis. By working together with 

product managers responsible for individual 

areas, we expect to substantially 

boost our sales performance. 

Thorough Planning of Basic Costs 

We are targeting the thorough control 

of product costs from the planning 

and development stages, including the 

centralization of procurement and 

the integration of development and 

production. Specifically, we will be 

implementing such measures as the 

relocation of product development 

sections to their production bases. 

A Globally Diversified 

Production Organization 

Looking to achieve an optimal balance 

between management effectiveness 

and marketing capabilities, we are 

building a globally diversified production 

organization that will increase 

OMRON’s cost efficiency. 

REVITALIZING CORPORATE 

RESOURCES 

To support reform of our growthoriented 

and cost structures, we are 

targeting the maximum revitalization 

of our corporate resources—personnel 

as well as financial, information, and 

physical assets. 

In April 1996, OMRON introduced 

a performance-based—rather than 

seniority-based—salary system for 

senior management to motivate its 

employees. This system was expanded 

to include all managers in April 1997. 

To encourage the effective utilization 

of financial assets, we are advocating 

the Companywide use of a new management 

accounting system that measures 

business performance based on 

consolidated return on assets (ROA). 

One of the factors in evaluating performance 

is whether the set ROA target 

has been met. 

We are building a worldwide internal 

computer network system to bolster 

our information resources. Targeting 

enhanced administrative efficiency, 

the new system will assist in innovating 

business processes. 

MANAGEMENT GOALS 

We had set our overall management 

goal as a 7% return on shareholders’ 

equity (ROE) on a consolidated basis in 

fiscal 1999, the last year of the Seventh 

Mid-Term Management Plan. However, 

this goal now seems difficult because 

the impact of the sudden downturn in 

the Japanese economy has offset the 

gains of our structural reforms. Accordingly, 

we also do not expect to reach 

our goal of a 7% return on sales in 

terms of income before income taxes 

and minority interests. 

Because of the difficult business environment, 

we are pursuing more efficient 

use of investment and operating 

expenditures. During the Eighth Mid- 

Term Management Plan, we will be 

looking to steadily and quickly recoup 

our investments in growth fields to increase 

our corporate worth, thereby 

achieving higher management goals. 

To provide additional momentum 

behind our drive to implement the 

necessary measures for boosting 

corporate worth, we established a set 

of guidelines during the fiscal year that 

require our directors and auditors to 

hold shares in OMRON commensurate 

with their management position. In fiscal 

1999, we are introducing a stock 

option plan for OMRON’s directors 

that will link the interests of management 

with those of shareholders, 

encouraging them to manage the 

Company in the shareholders’ best 

interests. We have also initiated a 

share buyback program. 

7

REVIEW OF OPERATIONS 

Control 

Components 

and Systems 

51.3% 

In fiscal 1998, sales of the Control Components and Systems 

Division rose 7.7%, to ¥313.6 billion. Following favorable business 

conditions during the first half of fiscal 1998, sales deteriorated in 

the second half under the impact of the sudden downturn in the 

Japanese economy following the business failure of several major 

financial institutions and the currency crises in Southeast Asia. 

However, this slack was taken up in part by the continued growth in sales to North 

American and European markets. 

Compact, highly functional G6S telecom 

relays are used in telephone 

exchanges around the world. 

SALES 

(Billion ¥) 

248 

CONTROL COMPONENTS 

Among major products, sales of relays expanded, particularly to overseas markets, such as 

North America, Europe, and China. Mechanical components also recorded sales growth 

based on favorable sales of pressure switches for gas meters and connectors in the domestic 

market and on sales of components for electric power tools in overseas markets. 

By introducing a line of narrow pitch connectors, we achieved double-digit growth in 

sales of connectors to the domestic amusement market in fiscal 1998. Overseas, demand has 

jumped for relays, with dramatic increases in shipments of compact, general-purpose, and 

printed circuit board (PCB) relays to home appliance and FA manufacturers in North 

America, Europe, and China. In addition, sales of trigger switches rose substantially, supported 

by the favorable electric power tool markets in North America and Asia. Exports of 

mouse switches climbed, centered on North America and China. 

Among the new products and technologies that contributed significantly to sales during 

fiscal 1998 were the G6S telecom relays, which are true surface-mountable relays, and micromachined 

pressure sensors for meters used in liquid petroleum gas and consumer gas systems. 

Our main strategy for relays and other control components in the current fiscal year will 

be to achieve strong sales in multimedia and amusement fields as well as expanding sales 

of new relays and other products to growth regions, such as Europe. 

Among sensors, sales of optoelectronic sensors attained double-digit growth, while sales 

of measuring inspection systems posted significant increases as well. Demand was high for 

the automization of inspections, with sales of printed web inspection systems and PCB soldering 

inspection systems advancing. 

In the semiconductor industry, technology enabling the manufacture of 300-millimeter 

wafers is creating a revolution in the field, while demand is growing for equipment to 

reduce pollution and conserve energy and materials. These factors are also generating 

increased demand for sensing technology. 

New photoelectronic sensors that contributed to sales during the term under review included 

the ultracompact E3T sensor inside amplifiers, a fiber sensor (EX-3NH) with an autotuning 

function, and a full color sensor (E3MC). Among other devices, a digital finescope 

231 

275 

291 

314 

’94 ’95 ’96 ’97 ’98 

8

The E3T is an ultracompact photoelectric 

sensor inside amplifiers, fusing 

original OMRON technology in 

achieving wire conservation and 

lower costs. 

Including all the necessary functions 

and properties for temperature control 

applications, the E5DN temperature 

controller is now featured in a 

new size (far right). 

The SYSMAC system is an intelligent 

factory compatible controller incorporating 

information exchange 

capabilities. 

(VC 2400) that features 360-degree viewing; a low-cost, high-performance vision sensor 

(F150); and a laser micrometer (NEW3Z4L) contributed significantly to sales. 

In our sensor operations, in April 1998 we established an application development group to 

improve our sensor application development capabilities. This group will facilitate our ability 

to provide solutions to customers’ problems more rapidly and lead to expanded sales of sensors. 

Our major strategy for sensors in fiscal 1999 is to focus on providing an expanded line of 

inspection and measurement sensors for growth markets, such as the semiconductor industry. 

Among supervisory control products, the domestic market for timers and counters was 

extremely difficult, but sales of power supply and temperature controllers continued to 

achieve growth in domestic and overseas markets. Among general-purpose components, 

sales of large switches and industrial relays were negatively affected by the decline in capital 

investment, remaining at the previous fiscal year’s levels. By industry, demand expanded 

for machine-safety-related products, while power supply and specialty switches continued 

to sell well in the amusement industry. The growing popularity of numerical control applications 

in response to the need for energy conservation and reduced labor related to environmental 

issues is expected to increase demand for temperature controllers and counters. 

Demand is also anticipated to grow for machine-safety-related components, thanks to 

heightened interest in working safety in Japan and Europe as well as the widening market 

penetration of these products. 

New products were introduced not only in Japan but also overseas during the fiscal year under 

review to strengthen sales, including a power supply series (S82J), temperature controllers 

(E5N series), and large switches (A16 and A22). Seeking market expansion, the division entered 

new fields with such products as FA vibration sensors, inclination sensors, and flexible 

monitors. Overseas, the division aimed for stronger sales by promoting global development 

in the markets for timers and counters by introducing products that target regional markets and 

by dispatching liaison personnel to shore up sales activities in North America, Europe, and China. 

SYSTEM COMPONENTS 

Favorable exports by the Japanese automobile and semiconductor industries—our major customers—helped 

system components record double-digit growth in global sales in fiscal 1998. 

Among our core products, programmable logic controllers (PLCs) posted double-digit 

growth in sales. The expansion in sales of our series of FA network (CompoBus/D) products, 

which are used to line PLCs with component devices, was notable. 

Improving cost-competitiveness and efficiency by shortening product development time 

and utilizing flexible, small-lot production systems remained important trends during the fiscal 

year under review. With advances in information technology and in global standardization, 

demand rose for virtual (premanufacturing testing) and more flexible (variable 

production) systems. The progressive downsizing of PLCs and the shift to open systems 

controllers and communication systems are producing heightened competition. In response, 

we are upgrading the features of our PLCs, including making them open system compatible. 

New products and technologies that contributed to sales during the fiscal year included 

CPT, our programmable support tool for PLCs, as well as the C200HX, E, G, and W series of 

upgraded SYSMAC (alpha) systems. The ISA bus compatible SYSMAC board, C200PC-ISA01- 

DRM, and the FA network family of CompoBus/D slave chips and multiple-I/O terminals 

also sold well. 

We have integrated product planning, production, and development to a single location 

to speed up our product development and enable us to focus on the release and sale of 

new versions of this division’s core products—PLCs and programmable terminals. 

9

Social Business 

22.6% 

As of April 1997, our Electronic Fund Transfer Systems (EFTS) 

Division and Public Information and Transfer Systems (PITS) 

Division were merged into a single division, the Social Business 

Division, to combine resources in developing new integrated markets. 

Social Business Division sales declined in fiscal 1998, reflecting 

weak sales of financial systems. 

Since the start of Japan’s 

Big Bang financial regulations, 

we have developed 

foreign currency 

exchange machines for 

the domestic market. 

SALES 

(Billion ¥) 

120 

127 

126 

145 

138 

In the financial services market, domestic sales of automated teller machines (ATMs) to 

banks sank under diminished capital investment from the troubled banking industry. 

However, demand for ATMs remained strong in Japan’s consumer finance industry as companies 

expanded their ATM and unstaffed automated loan application machine networks to 

maintain their customer bases as competition heightened under deregulation in this currently 

profitable market. Overseas, the upheaval in the financial industry in South Korea, which 

has been an important market, resulted in lower overseas sales of ATMs. 

Among market trends, demand for low-cost and open systems products is growing in line 

with the trend of purchasing system solutions rather than packaged systems. The introduction 

of a revised Foreign Exchange and Foreign Trade Law allowing companies other than 

banks to enter the foreign exchange market has prompted a rush in orders for foreign currency 

exchange machines as well as for centralized surveillance and other systems. We 

have introduced an open systems version of our IX-ATM and new foreign currency exchange 

machines to meet the broadened demand in the market. 

We also introduced a CX-ATM model that accepts integrated circuit (IC) cards to the South 

Korean market, where such cards have recently been standardized. In Taiwan, demand for 

an automatic deposit function for paper currency at ATMs led us to launch a new model of 

our AP-ATM, a low-cost machine designed for Asian markets, that features this function. 

In the retail systems market, capital investment declined because volume discount retailers 

and gas stations reduced their capital investment due to the fierce price competition in 

these markets. However, demand for credit authorization terminals (CATs) from consumer 

credit companies remained high, as these companies further expanded their operations. 

Overseas, orders for retail systems from major customers in Europe were favorable. The 

popularity of PC point-of-sale (POS) systems continued to grow in overseas markets, and 

we introduced the PC-POS Compact, including the RS6500 series, to meet this demand. 

Current demand for retail systems in the domestic market centers on achieving low-cost 

operations and minimizing functions. In response, we have developed purchase coupon 

vending machines, equipment, and systems with pared-down functions. 

Major strategies for expanding and improving the content of our EFTSs sales in the current 

fiscal year include full-scale efforts to secure new, major clients. We are also looking at 

developing new integrated markets, particularly in the area of overlap between the financial 

and retail sectors. To improve our cost structure, we are cutting fixed costs while expanding 

production and improving the operating efficiency of our business functions, such as sales, 

production, development, and maintenance. To achieve the most effective use of resources 

inside and outside the Company, we are considering appropriate alliances and the outsourcing 

of certain business functions. 

In the public transportation systems market, the construction of a new subway line in the 

Kansai area and expansion of the number of stored fare (SF) systems, which allow passengers 

to travel on different companies’ lines with the same card, boosted sales of automated 

passenger gates (PGs) and ticket vending machines. 

’94 ’95 ’96 ’97 ’98 

10

Traffic control systems 

utilize information on 

traffic volume and congestion 

to achieve a 

smooth flow of traffic. 

The U-PG automated passenger gate 

is barless and features a new design 

as well as the high-speed processing 

of many types of tickets. 

Capital investment by railway and subway companies remained weak in reaction to a 

lack of growth in the number of passengers. However, there has been firm demand for SF 

systems, which increase the convenience of railway stations, and a check system for cheaton-the-fare 

passengers. In response, we have developed and introduced new types of PGs 

that handle two or more tickets at one time and have enhanced the functions of existing 

models. 

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

previous year, due to increased competition for smaller public construction expenditures 

under fiscal reform measures by the government. We introduced a Ground View Sensor 

(GVS), which allows drivers to continuously monitor road conditions. The GVS was installed 

in a road patrol car displayed at the Nagano ITS Showcase during the 1998 Nagano Winter 

Olympic Games. 

We remain focused on developing the ITSs market. Utilizing advanced networking and 

communication technology to integrate the vehicle, driver, and road with the goal of improving 

traffic efficiency and safety, this market is one with immense growth potential. One 

area where we have concentrated our efforts is the electronic toll collection (ETC) system, 

which Japanese tolling agencies soon will begin installing on major domestic highways. 

Our medium-term strategies for the PITSs market include increasing the competitiveness 

of our core businesses through cost reductions. Using that firm base, we will improve our 

marketing and technology capabilities to provide our customers with new technologies and 

products in accordance with market needs in a timely manner. Our PITSs business is still 

mainly a domestic business, but, to achieve growth, we are planning to increase overseas 

business. For this purpose, and to maintain a leading position as more foreign companies 

are able to bid on public projects in Japan, we are strengthening our business system to ensure 

our competitiveness under global standards. 

11

Specialty 

Products 

During fiscal 1998, sales by the Specialty Products Division edged 

up slightly. Domestic sales of automotive electronic components, 

including keyless entry systems, electric window switches, and relays, 

were favorable despite the severe downturn in the Japanese 

7.7% 

automotive industry. We attribute our firm performance to the division’s 

marketing of innovative products rather than the mere development 

of products according to manufacturers’ requests. Overseas, sales of 

automotive electronic components were brisk, supported by the strong automotive 

industry in the United States. 

The MT128-NET/D 

is a network terminal 

adapter that integrates 

router, TA, hub, analog 

port, and DSU functions. 

SALES 

(Billion ¥) 

40 

42 

39 

47 

47 

Sales were strong in the office automation (OA) industry, our other major domestic market, 

because of the current popularity of digital color copiers. In addition, domestic manufacturers 

were shifting overseas their production of analog copiers, thereby contributing to higher 

demand. 

Among our products for PCs, sales of peripheral equipment, including integrated service 

digital network (ISDN) adapters, high-speed modems, uninterruptible power supply units, 

and scanners, declined due to the cooling off of consumer spending, which produced a 

drop in the domestic PC market. In addition, overseas sales of scanners declined as a major 

customer revised its business. 

The Specialty Products Division is pursuing growth opportunities in the ITSs market, as 

are other divisions. In particular, the Advanced Safety Vehicle (ASV) project is expected to 

produce demand for automotive electronic components. In the OA market, we foresee that 

an ongoing shift to digital, color, and network systems will support firm demand for devices 

used in copiers. In the computer peripheral market, the revolution in information systems 

occurring through digital communication, the Internet, and multimedia will support continued 

favorable demand for OMRON products. 

One of our key strategies for the current fiscal year is to expand sales of relays, controllers 

for rear defrosters and daytime running lights, and keyless entry systems to U.S. 

automakers in line with their higher production. In Canada, we are producing more power 

seat switches for sale to the Big Three U.S. automakers. Our European strategy focuses on 

the introduction of our air conditioner panel and our keyless entry system based on increased 

local production. We also are stressing greater sales of relays imported from our 

U.S. plant to manufacturers in the United Kingdom. 

Overseas, we will be reinforcing our copier operating base in Europe in the aftermath of 

the removal of antidumping taxes. Furthermore, we are aiming to expand assembly operations 

in other areas, particularly that of facsimile machines. 

Our OA domestic strategy will revolve around the introduction of Windows 98 ® and the 

expected recovery in the discount PC market, which should support growth in peripheral 

equipment sales. 

This power window switch has an 

antipinching function to prevent it 

from closing on arms or other obstacles. 

When an obstacle is encountered, 

the switch causes the window to stop 

and reverse in motion. 

’94 ’95 ’96 ’97 ’98 

12

Healthcare 

6.7% 

The Healthcare Division attained double-digit sales growth in fiscal 

1998, thanks to excellent performances in a wide range of 

product categories. 

Ear-type digital thermometers 

take body temperature in seconds 

using advanced infrared sensor 

technology. 

SALES 

(Billion ¥) 

In the domestic market, sales of ultrasonic electronic pulse massagers, infrared 

therapy devices, and electric toothbrushes declined, reflecting sluggish consumer 

spending. Sales of newly introduced body-fat monitors, massage chairs, and ear-type digital 

thermometers, however, soared. Traditionally popular blood pressure monitors and pedometers 

also recorded substantial sales growth, riding on the healthcare boom. Overseas, 

prompted by the weaker yen, we focused our efforts on developing sales routes in new 

markets, such as China, and on expanding sales by introducing new products. In particular, 

ear-type digital thermometers were a hit in the United States, contributing strongly to overseas 

sales growth. 

A digital compact wrist blood pressure monitor that was introduced near the end of the 

fiscal year in review was also among the new products that contributed to sales growth in 

fiscal 1998. A significant market is developing for ear-type digital thermometers, especially 

in the United States, as these products gain global popularity. Moreover, our efforts to create 

a special market for our massage chairs were rewarded with greater sales than originally 

anticipated. 

Consumers continue to take a growing interest in maintaining and improving their health. 

Consequently, demand for healthcare services is increasingly focused on self-medication, 

particularly with the revision of regulations regarding medical nursing institutions. Providing 

better healthcare management services, therefore, is the core of our business development 

in this market. Our technology development also concentrates on this goal through advances 

in sensing and healthcare management technologies. We expect our systems service 

business, which aims to provide comprehensive solutions to healthcare needs, to eventually 

become one of the division’s core businesses. The KAZ Healthcare Academy, which offers 

sophisticated healthcare counseling by healthcare professionals supported by advanced software 

for healthcare management, is one of the bases from which we are developing the 

systems service business. 

During fiscal 1999, our basic business aim is to achieve thorough customer satisfaction 

while building a solid foundation for developing OMRON’s visionary concepts, especially 

within the total healthcare business. More concretely, we will continue to promote the total 

healthcare business while nurturing the necessary technology and development capabilities 

to pursue growth based on our visionary concepts. 

29 

29 

32 

36 

41 

Omron’s body-fat monitor 

creates a new alternative 

to the present standard for 

daily health checks. 

’94 ’95 ’96 ’97 ’98 

13

Open Systems 

OMRON offers clients added value in 

information systems by combining 

the latest technology with comprehensive 

services. 

SALES 

(Billion ¥) 

50 

8.2% 

The Open Systems Division maintained sales and profit levels in 

fiscal 1998 amid highly competitive markets. 

With the consumer market for PCs stalled by stagnant consumer spending, 

competitors refocused their sights on corporate information systems 

and network sales, creating a highly competitive environment in the information technology 

market. In the second half of the period under review, the slowdown in Japan’s economy 

further worsened conditions, resulting in falling performances in the PC-oriented wholesale 

market. The market for information systems to boost corporate competitiveness, however, 

remained firm as companies continued to make significant capital investment. 

During fiscal 1998, we cooperated with system integrator companies in winning largescale 

company orders. Consequently, sales were favorable for open platform systems based 

on PC servers and for systems design and installation as well as operating and maintenance 

services. 

Although companies continue to expand their information systems, the process of setting 

up E-mail networks within major corporations is essentially complete. Customer demand 

has now turned from faster information-sharing and decision-making functions to improving 

customer services; various other activities, including sales methods; and strengthening ties 

with leading vendors. 

At present, capital investment in information systems and networks is focused on achieving 

the maximum use of a company’s client-server system, including the thorough management 

of efficiency and security. At the same time, companies are rebuilding their business 

systems, such as core enterprise resource planning (ERP) systems and computer telephone 

integration (CTI) systems. Customers continued to be concerned with system costs, but their 

concern has shifted from start-up costs to overall running costs. 

Demand is currently high for network- and security-related equipment as well as for ERP 

and CTI packages. On the other hand, the increasing complexity of systems has given rise 

to a strong need for comprehensive maintenance and other services. To meet this demand, 

OMRON Alphatec Corporation, an associated company, introduced “Movice,” a comprehensive 

service for multivendor systems, during fiscal 1996. “Movice” allows customers to select 

the services they need from a menu of multiple support services that cover system design 

and installation to management and maintenance. The comprehensive service is highly evaluated 

by manufacturers and customers. To effect further improvements, OMRON Alphatec 

is upgrading its menu by adding preventative maintenance, remote inspection and maintenance, 

a customer help desk, and 24-hour services. 

34 

35 

39 

50 

We are supporting a revolution in 

marketing methods based on information 

technology. 

’94 ’95 ’96 ’97 ’98 

14

OMRON’S COMMITMENT TO ENVIRONMENTAL PROTECTION 

ENVIRONMENTALLY SOUND TECHNOLOGY 

Through industrial and other activities, the global population is consuming increasingly 

large amounts of the world’s limited energy resources and damaging the earth’s environment 

through the use and disposal of hazardous materials. However, through the adaptation 

of better technologies, it is possible to greatly reduce our energy consumption and limit 

the use and disposal of these materials. 

OMRON is creating such environmentally sound technologies and products. We are particularly 

emphasizing the following three areas: 

• developing low energy consumption products, 

• minimizing energy consumption and eliminating hazardous materials in our production 

and manufacturing processes, and 

• reducing industrial waste through recycling. 

ACHIEVING ISO 14001 CERTIFICATION 

ISO 14001 environmental management systems certification is recognized around the world 

as the membership card of “green” corporations. Meeting ISO 14001 standards also indicates 

that a company has established environmental management systems that promote continual 

efforts to prevent pollution. 

OMRON established its Environmental Charter in 1994, having had organizations for the 

promotion of environmental protection activities since 1992. As of April 1998, 13 domestic 

and 3 overseas manufacturing sites had obtained ISO 14001 certification. We expect to 

achieve full certification for all 30 of the OMRON Group’s manufacturing sites by the end of 

the current fiscal year. 

MINIMIZING ENERGY CONSUMPTION 

To minimize the effect of its operations on global warming, OMRON has set 15% as its goal 

by which to reduce its electric energy consumption per unit of product shipments by the 

end of the current fiscal year, relative to the fiscal 1996 level. Thermal electric power generation, 

which burns fossil fuels, is considered one of the main causes of global warming. 

Among other measures to diminish energy consumption, we are managing our use of airconditioning, 

lighting, and office equipment; revising our production processes; and utilizing 

solar power systems. In fiscal 1998, we achieved a 13.5% reduction in energy 

consumption per unit of product shipments compared with the fiscal 1996 level. 

REDUCING INDUSTRIAL WASTE 

Since fiscal 1997, we have made efforts to reduce the volume of industrial waste and to recycle 

resources. 

We now are practicing the thorough separation of waste by category to enable better recycling 

and the proper processing of nonrecyclables. Furthermore, we are developing applications 

for recycled materials to improve our recycling ratio. In fiscal 1998, we achieved a 

36% reduction in our industrial waste volume relative to the fiscal 1996 level, and our recycling 

ratio rose to 60%. Of course, our ultimate goal is zero emissions. 

OMRON’S ECO-PRODUCTS 

OMRON develops and improves upon technologies and products to help solve serious environmental 

issues. The key words for these activities are the Four Rs: Reject, Reduce, 

Reuse, and Recycle. 

15

~ 

~ 

Striving to obtain ISO 14001 certification for all 30 

of the OMRON Group’s manufacturing sites by the 

end of fiscal 1999. 

Reduction in Electric 

Energy Consumption 

CO 2 Emissions (Conversion) 

(t—c) 

12,000 

Reduction (%) 

0 

11,500 

11,000 

5 

10,500 

10 

10,000 

9,500 

9,000 

8,500 

15 

20 

8,000 

FY 1996 1997 1998 1999 2002 

25 

(Projected) 

Mishima Plant, in Japan 

CO 2 emissions from electric power 

generation 

Reduction performance on product 

shipment basis 

Target performance reduction on 

product shipment basis 

Sensing Technology 

Sensor for Conserving Resources and Electric Energy (Proximity Switch) 

OMRON’s DC two-wire proximity sensor reduces the use of resources by 1/3 less copper 

and 1/4 less insulation than the three-wire sensor. The sensor is also highly electric energy efficient, 

requiring 1/15 less electric energy than the three-wire sensor. 

CO 2 Control Technology 

Clean Energy (Solar Power Conditioner) 

OMRON’s solar power conditioner converts environment-friendly clean electric power obtained 

from solar cells into usable commercial electric power to run electric appliances in 

the home. 

Intelligent Transport Systems (ITSs) Technology 

ITSs are designed to integrate driver, vehicle, and road in such a way as to solve many current 

traffic issues. One of the main objectives in the development of ITSs was environmental 

16

~ 

~ 

Weight (tons) Recycling Ratio (%) 

6,000 

Reduction in Waste 

and Recycling Ratio 

100 

5,000 

4,000 

75 

3,000 

50 

2,000 

1,000 

25 

OMRON Manufacturing 

of the Netherlands B.V. 

PT OMRON Manufacturing 

of Indonesia 

protection. In addition to their potential for improving safety, efficiency, and comfort, 

ITSs lessen CO 2 emissions by reducing traffic jams, thereby mitigating global warming. 

OPTIMIZING TRAFFIC CONTROL 

Through the use of signal lights and information displays, traffic control centers ensure the 

smooth and safe movement of traffic, thus avoiding congestion. The centers also contribute 

significantly to reducing CO 2 and NO x emissions, as engines burn cleaner when running 

smoothly. 

0 

0 

FY 1996 1997 1998 1999 2002 (Projected) 

Total of recycling resources and waste 

Waste 

Recycling performance 

Recycling target 

ELECTRONIC TOLL COLLECTION (ETC) SYSTEM 

OMRON’s no-stop automated ETC system allows tolls to be collected “on the run.” Because 

vehicles do not have to stop, the system eliminates bottlenecks on highways, which, in turn, 

helps reduce CO 2 and NO x emissions. 

17

BOARD OF DIRECTORS 

Seated (left to right): 

Nobuo Tateisi, 

Kohei Jinkawa, 

Yoshio Tateisi 

Standing (left to right): 

Norio Hirai, 

Tomoaki Nishimura, 

Hideki Masuda, 

Isao Hatano, 

Soichi Koshio 

Chairman and Director 

Nobuo Tateisi* 

Vice Chairman 

and Director 

Kohei Jinkawa* 


Yoshio Tateisi* 

Vice Presidents 

and Directors 

Isao Hatano* 

Soichi Koshio* 

Senior Managing 

Directors 

Hideki Masuda* 

Tomoaki Nishimura* 

Norio Hirai* 

Managing Directors 

Kiyohiko Watanabe 

Tsunehiko Tokumasu 

Tsutomu Narita 

Izuru Minami 

Noboru Sano 

Tadao Tateisi 

Tatsuro Ichihara 

Akio Imaizumi 

Directors 

Takao Abu 

Sadao Masuyoshi 

Masaaki Sadatomo 

Yoshikazu Tachi 

Masato Mori 

Shingo Akechi 

Yoshifumi Kajiya 

Hisao Sakuta 

Minoru Tamura 

Tsukasa Yamashita 

Fujio Tokita 

Yutaka Takigawa 

Keiichiro Akahoshi 

Fumio Tateisi 

Standing Corporate 

Auditors 

Kinji Hanamoto 

Isao Suzuki 

Motoki Tamura 

Corporate Auditor 

Takayuki Yamashita 

*Representative Director 

18

FINANCIAL SECTION 

Five-Year Summary ..............................................................................20 

Management’s Discussion & Analysis..................................................21 

Consolidated Statements of Income....................................................25 

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

Consolidated Statements of Shareholders’ Equity ...............................28 

Consolidated Statements of Cash Flows..............................................29 

Notes to Consolidated Financial Statements .......................................30 

Independent Auditors’ Report.............................................................42 

19

1FIVE-YEAR SUMMARY 


Years ended March 31 

Millions of yen (except per share data) 

1998 1997 1996 1995 1994 

Net Sales: 

Control Components and Systems ..................................... ¥313,642 ¥291,277 ¥275,149 ¥248,023 ¥230,983 

Social Business.................................................................... 138,203 145,172 125,623 127,382 120,429 

Specialty Products .............................................................. 47,263 46,533 38,687 42,465 40,323 

Healthcare .......................................................................... 40,793 36,388 31,618 28,790 28,919 

Open Systems ..................................................................... 50,131 50,187 38,621 34,672 33,964 

Others................................................................................. 21,763 24,704 15,591 8,368 6,251 

................................................................................................ 611,795 594,261 525,289 489,700 460,869 

Costs and Expenses: 

Cost of sales........................................................................ 387,445 388,005 342,500 324,666 312,248 

Selling, general and administrative expenses ..................... 138,404 130,163 109,117 100,333 100,193 

Research and development expenses ................................ 39,914 35,188 34,433 31,223 28,698 

Interest expenses, net ........................................................ 682 1,591 2,044 5,102 6,428 

Other, net ........................................................................... 3,107 66 4,943 3,428 240 

................................................................................................ 569,552 555,013 493,037 464,752 447,807 

Income before Income Taxes, 

Minority Interests, and Cumulative Effect 

of Change in Accounting Principle................................... 42,243 39,248 32,252 24,948 13,062 

Income Taxes....................................................................... 23,775 22,952 17,039 12,358 8,822 

Minority Interests................................................................ 168 557 626 438 134 

Cumulative Effect of 

Change in Accounting Principle..................................... — — — — 584 

Net Income ........................................................................... 18,300 15,739 14,587 12,152 4,690 

Net Income per Share (yen, Note 1): 

Basic .................................................................................. ¥69.8 ¥60.1 ¥55.7 ¥50.8 ¥20.3 

Diluted .............................................................................. 68.3 58.8 54.5 49.4 20.1 

Cash Dividends per Share (yen, Note 2) ........................... 13.0 13.0 13.0 13.0 13.0 

Capital Expenditures (cash basis)....................................... ¥ 35,896 ¥ 29,956 ¥ 34,079 ¥ 30,954 ¥ 26,875 

Total Assets........................................................................... 579,663 590,353 580,815 569,151 552,174 

Total Shareholders’ Equity................................................. 336,064 323,019 302,458 288,086 230,706 

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

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

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

20

MANAGEMENT’S DISCUSSION & ANALYSIS 

Sales 

The Japanese economy slowed in the second half of fiscal 1998, ended March 31, 1998, 

buffeted by domestic problems as well as the currency turmoil in Southeast Asia. Consumers 

displayed growing spending restraint in the face of deteriorating corporate performances 

caused by weak personal consumption. The recessionary mood was further reinforced by 

the string of major business failures precipitated by a troubled banking industry. The sudden 

collapse in Asian currencies also contributed to a loss of confidence in the future direction 

of Japan’s economy. 

Despite these significant swings in Japan’s economy as well as in certain Asian currencies, 

OMRON’s consolidated net sales rose 3.0%, to ¥611,795 million ($4,635 million). The weaker 

yen as well as economic growth in overseas markets, particularly in the United States and 

Europe, supported strong sales for the Company’s core control components and systems 

operations. 

The increase or decrease in sales of each product group or division is as follows: 

The composition of net sales is as follows: 

1998 1997 1996 

Control Components and Systems............................. 7.7% 5.9% 10.9% 

Social Business ........................................................... (4.8) 15.6 (1.4) 

Specialty Products...................................................... 1.6 20.3 (8.9) 

Healthcare .................................................................. 12.1 15.1 9.8 

Open Systems............................................................. (0.1) 29.9 11.4 

Others ........................................................................ (11.9) 58.5 86.3 

1998 1997 1996 

Control Components and Systems............................. 51.3% 49.0% 52.3% 

Social Business ........................................................... 22.6 24.5 23.9 

Specialty Products...................................................... 7.7 7.8 7.4 

Healthcare .................................................................. 6.7 6.1 6.0 

Open Systems............................................................. 8.2 8.4 7.4 

Others ........................................................................ 3.5 4.2 3.0 

Divisional performance was mixed in fiscal 1998. OMRON’s major product group, the 

Control Components and Systems Division, attained satisfactory growth—amid a difficult 

business climate, thanks to the beneficial effects of robust economies in the United States 

and Europe—in overseas sales as well as in exports of OMRON’s major domestic customers, 

the automotive and semiconductor industries. The division also made significant inroads in 

selling to the multimedia and amusement industries. In fiscal 1998, we combined our 

Electronic Fund Transfer Systems (EFTS) and Public Information and Transfer Systems 

(PITS) divisions into a single division, the Social Business Division, which posted a small 

decline during the fiscal year under review due mainly to weak domestic and overseas markets 

for financial systems. The division recorded approximately the same level of traffic control 

sales as in the previous fiscal year and continued to make headway developing the 

Intelligent Transport Systems (ITSs) market. Sales by the Specialty Products Division rose 

slightly overall because of the success of marketing efforts to a stagnant domestic automobile 

industry, supported by a strong overseas automobile market and the current boom in 

21

digital and color copiers in the office automation (OA) industry. Sales of products for PCs 

declined because of consumer spending restraint. Healthcare Division sales achieved doubledigit 

growth in fiscal 1998 thanks to strong domestic and overseas demand for new products, 

such as body-fat monitors, massage chairs, and ear-type digital thermometers. 

Traditionally popular products, such as blood pressure monitors and pedometers, continued 

to sell well because of the global boom in self-healthcare. The Open Systems Division’s 

sales stalled in fiscal 1998 after three consecutive years of consolidated sales growth, remaining 

approximately the same as in the previous year. Weak consumer spending depressed 

sales of PCs to individuals, causing a shift in emphasis from sales of PCs to 

individuals to corporate sales of information systems and networks, thus producing heightened 

competition in this market. Strong overall demand in this area, however, helped the 

division maintain sales levels approximately the same as the previous fiscal year’s despite 

the economic downturn in the second half of the term. 

Sales by foreign subsidiaries rose 12.6% and generated 28.0% of net sales, compared with 

25.6% of net sales in fiscal 1997 and 23.4% in fiscal 1996. 

Including direct exports from Japan, the overseas sales ratio climbed to 29.6% in fiscal 

1998, from 27.3% in the previous fiscal year. 

Costs, Expenses, and Income 

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

1998 1997 1996 

Net sales ......................................................................... 100.0% 100.0% 100.0% 

Cost of sales.................................................................... 63.3 65.3 65.2 

Gross profit..................................................................... 36.7 34.7 34.8 

Selling, general and administrative expenses................. 22.6 21.9 20.8 

Research and development expenses ............................ 6.5 5.9 6.6 

Interest expenses, net .................................................... 0.1 0.3 0.4 

Income before income taxes and minority interests ....... 6.9 6.6 6.1 

Income taxes .................................................................. 3.9 3.9 3.2 

Net income..................................................................... 3.0 2.6 2.8 

Cost of sales declined marginally, to ¥387,445 million ($2,935 million), during the period 

under review. Because cost of sales remained flat while net sales gained 3.0%, the gross 

profit ratio improved to 36.7%, from 34.7% in fiscal 1997. Selling, general and administrative 

expenses rose 6.3%, to ¥138,404 million ($1,049 million), and research and development expenses 

increased 13.4%, to ¥39,914 million ($302 million). Interest expenses, net, dropped 

to ¥682 million ($5 million), mainly because of lower debt. Foreign exchange loss, net, totaled 

¥4,419 million ($33 million). Income before income taxes and minority interests was 

¥42,243 million ($320 million), an increase of 7.6% from the previous fiscal year. 

Income taxes climbed slightly, reflecting greater corporate profits. Minority interests declined 

to ¥168 million ($1 million). Net income advanced 16.3%, to ¥18,300 million ($139 million). 

Basic net income per share rose from ¥60.1 to ¥69.8 ($0.53), and diluted net income per 

share rose from ¥58.8 to ¥68.3 ($0.52). Cash dividends per share applicable to the period 

were maintained at ¥13.0 ($0.10). ROA and ROE were 3.1% and 5.6%, respectively, compared 

with 2.7% and 5.0% in the previous fiscal year. 

22

Financial Position 

Total current assets edged down 3.8%, to ¥327,372 million ($2,480 million), largely because 

of the declines in cash and cash equivalents and short-term investments. The inventory 

turnover rate, as determined by cost of sales divided by inventories at year-end, decreased 

to 4.1, from 4.5 at the previous fiscal year-end. Total current liabilities, however, dropped 

8.0%, to ¥176,288 million ($1,336 million), mainly reflecting a large decline in the current 

portion of long-term debt. Working capital increased ¥2,295 million, to ¥151,084 million 

($1,145 million), providing adequate liquidity for operations. The current ratio was 1.86, 

compared with 1.78 at the previous fiscal year-end. 

Cash and cash equivalents at beginning of the year were ¥79,288 million ($601 million). 

Net cash provided by operating activities declined to ¥32,086 million ($243 million). 

Depreciation and amortization, the main component of cash flows from operating activities, 

edged down 0.3%, to ¥31,129 million ($236 million). Net cash used in investing activities 

sunk to ¥17,631 million ($134 million), mainly because of a sharp drop in the purchase of 

short-term investments and investment securities. Capital expenditures rose 19.8%, to 

¥35,896 million ($272 million). 

Net cash used in financing activities was ¥23,637 million ($179 million). Proceeds from issuance 

of long-term debt were ¥648 million ($5 million), and repayments of long-term debt 

were ¥18,013 million ($136 million). Reflecting the above cash outflows and inflows, cash 

and cash equivalents at end of the year decreased to ¥68,365 million ($518 million). 

Total indebtedness—bank loans, current portion of long-term debt, and long-term debt— 

decreased 27.4%, to ¥54,544 million ($413 million). Long-term debt fell 19.9%, to ¥33,500 

million ($254 million). 

Total shareholders’ equity grew 4.0%, to ¥336,064 million ($2,546 million), with higher retained 

earnings being offset somewhat by cumulative translation adjustments and minimum 

pension liability adjustment. Total shareholders’ equity as a percentage of total assets rose 

to 58.0%, compared with 54.7% at the end of fiscal 1997. ROE was 5.6%, compared with 

5.0% at the previous fiscal year-end. OMRON is targeting an ROE of 6.0% by the end of its 

Seventh Mid-Term Management Plan. 

Capital Investments and Finance 

A total of ¥35,896 million ($272 million) in capital expenditures was made during fiscal 1998 

and was principally invested in establishing a growth structure, in expanding our global network 

in Asia and other countries, and in plant and equipment. 

OMRON has not found it necessary to raise capital to fund its current capital expenditure 

program at this stage. 

23

Research and Development 

Research and development expenses were ¥39,914 million ($302 million) during the fiscal 

year under review, representing 6.5% of net sales. 

Year 2000 Compliance 

The Company has developed plans to address the exposure of its computer systems to the 

so-called millennium bug. Key financial, information, and operational systems have been assessed, 

and detailed plans have been developed to achieve Year 2000 compliance by 

December 31, 1999. The financial impact of making the required system changes is not expected 

to be material to the Company’s consolidated financial position, results of operations, 

or cash flows. 

Share Buyback Program 

In accordance with a resolution passed at the general meeting of shareholders in June 1998, 

OMRON will repurchase and retire shares up to a maximum of ¥10 billion, or five million 

shares, during the period before the next general shareholders’ meeting. In addition, the 

Company’s Articles of Incorporation have been amended to allow future share repurchases 

up to a total of 25 million additional shares. 

Stock Option Plan 

The Company has introduced a stock option plan for its directors to further motivate them 

to consider growth in investors’ value as their chief management goal and to otherwise 

manage in a manner that is in the best interest of shareholders. A maximum of 158,000 

shares, or ¥500 million, will be allocated for this purpose in accordance with a resolution 

passed at the general meeting of shareholders. The exercise period will run from July 1999 

to the end of June 2001. 

24

CONSOLIDATED STATEMENTS OF INCOME 



Thousands of 



Net Sales ................................................................................... ¥611,795 ¥594,261 ¥525,289 $4,634,811 

Costs and Expenses: 

Cost of sales .......................................................................... 387,445 388,005 342,500 2,935,189 

Selling, general and administrative expenses ....................... 138,404 130,163 109,117 1,048,515 

Research and development expenses ................................... 39,914 35,188 34,433 302,379 

Interest expenses, net (Note 5) ............................................ 682 1,591 2,044 5,167 

Foreign exchange loss, net ................................................... 4,419 860 5,027 33,477 

Other income, net ................................................................. (1,312) (794) (84) (9,939) 

Total ................................................................................. 569,552 555,013 493,037 4,314,788 

Income before Income Taxes and Minority Interests ....... 42,243 39,248 32,252 320,023 

Income Taxes (Note 9)............................................................ 23,775 22,952 17,039 180,114 

Income before Minority Interests........................................ 18,468 16,296 15,213 139,909 

Minority Interests ................................................................... 168 557 626 1,273 

Net Income .............................................................................. ¥ 18,300 ¥ 15,739 ¥ 14,587 $0,138,636 

Yen U.S. dollars (Note 2) 

Net Income per Share (Note 11): 

Basic...................................................................................... ¥69.8 ¥60.1 ¥55.7 $0.53 

Diluted .................................................................................. 68.3 58.8 54.5 0.52 

Cash Dividends per Share (Note 11)..................................... 13.0 13.0 13.0 0.10 

See notes to consolidated financial statements. 

25

CONSOLIDATED BALANCE SHEETS 


March 31, 1998 and 1997 

Thousands of 


ASSETS 1998 1997 1998 

Current Assets: 

Cash and cash equivalents......................................................................... ¥ 68,365 ¥ 79,288 $ 517,917 

Short-term investments (Note 4) ............................................................... 4,767 25,970 36,114 

Notes and accounts receivable—trade...................................................... 138,149 133,771 1,046,583 

Allowance for doubtful receivables........................................................... (3,301) (3,023) (25,008) 

Inventories (Note 3) .................................................................................. 94,981 85,966 719,553 

Deferred income taxes (Note 9)................................................................ 11,798 10,139 89,379 

Other current assets .................................................................................. 12,613 8,310 95,553 

Total Current Assets .......................................................................... 327,372 340,421 2,480,091 

Property, Plant and Equipment: 

Land ........................................................................................................... 50,166 51,169 380,045 

Buildings .................................................................................................... 107,974 107,036 817,985 

Machinery and equipment......................................................................... 143,809 143,736 1,089,462 

Construction in progress........................................................................... 4,124 2,746 31,242 

Total ..................................................................................................... 306,073 304,687 2,318,734 

Accumulated depreciation ........................................................................ (135,591) (134,277) (1,027,205) 

Net Property, Plant and Equipment................................................ 170,482 170,410 1,291,529 

Investments and Other Assets: 

Investments in and advances to associates................................................ 1,843 2,098 13,962 

Investment securities (Note 4) .................................................................. 43,245 42,198 327,614 

Leasehold deposits .................................................................................... 11,730 11,809 88,864 

Deferred income taxes (Note 9)................................................................ 7,507 6,945 56,871 

Other ......................................................................................................... 17,484 16,472 132,455 

Total Investments and Other Assets ............................................... 81,809 79,522 619,766 

Total.............................................................................................................. ¥579,663 ¥590,353 $4,391,386 


26

Thousands of 


LIABILITIES AND SHAREHOLDERS’ EQUITY 1998 1997 1998 

Current Liabilities: 

Bank loans (Note 5) ................................................................................... ¥ 12,578 ¥ 15,302 $ 95,288 

Notes and accounts payable—trade.......................................................... 88,756 95,552 672,394 

Accrued expenses ..................................................................................... 23,117 22,478 175,129 

Income taxes payable................................................................................ 15,011 16,236 113,720 

Other current liabilities ............................................................................. 28,360 24,040 214,848 

Current portion of long-term debt (Note 5).............................................. 8,466 18,024 64,136 

Total Current Liabilities .................................................................... 176,288 191,632 1,335,515 

Long-Term Debt (Note 5) ........................................................................... 33,500 41,821 253,788 

Deferred Income Taxes (Note 9)............................................................... 5,531 4,214 41,902 

Termination and Retirement Benefits (Note 7)...................................... 24,913 22,909 188,735 

Other Long-Term Liabilities...................................................................... 367 108 2,780 

Minority Interests in Subsidiaries ........................................................... 3,000 6,650 22,727 

Shareholders’ Equity (Note 8): 

Common stock with ¥50 par value: 

Authorized—500,000,000 shares; 

Issued and outstanding—262,107,214 shares in 1998 and 1997 .......... 64,079 64,079 485,447 

Additional paid-in capital........................................................................... 98,702 98,702 747,742 

Legal reserve.............................................................................................. 6,314 5,963 47,833 

Retained earnings ...................................................................................... 174,282 159,741 1,320,318 

Cumulative translation adjustments .......................................................... (5,912) (3,320) (44,787) 

Minimum pension liability adjustment (Note 7) ....................................... (1,401) (2,146) (10,614) 

Total Shareholders’ Equity ............................................................... 336,064 323,019 2,545,939 

Total ............................................................................................................. ¥579,663 ¥590,353 $4,391,386 

27

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY 



Millions of yen 

Number of 

Minimum 

common shares Additional Cumulative pension 

issued and Common paid-in Legal Retained translation liability 

outstanding stock capital reserve earnings adjustments adjustment 

Balance, April 1, 1995 .................... 262,100,942 ¥64,075 ¥98,696 ¥5,087 ¥137,107 ¥(16,879) ¥ —) 

Shares issued upon 

conversion of bonds .................... 6,272 4 6 

Net income .................................... 14,587 

Cash dividends, ¥13.0 per share.... (3,408) 

Transfer to legal reserve ................ 386 (386) 

Translation adjustments ................ 7,822 

Adjustment to minimum 

pension liability............................ (4,639) 

Balance, March 31, 1996................ 262,107,214 64,079 98,702 5,473 147,900 (9,057) (4,639) 

Net income .................................... 15,739 



Translation adjustments................. 5,737 


pension liability............................ 2,493 

Balance, March 31, 1997................ 262,107,214 64,079 98,702 5,963 159,741 (3,320) (2,146) 

Net income .................................... 18,300 



Translation adjustments................. (2,592) 


pension liability............................ 745 

Balance, March 31, 1998................ 262,107,214 ¥64,079 ¥98,702 ¥6,314 ¥174,282 ¥ (5,912) ¥(1,401) 

Thousands of U.S. dollars (Note 2) 

Minimum 

Additional Cumulative pension 

Common paid-in Legal Retained translation liability 

stock capital reserve earnings adjustments adjustment 

Balance, March 31, 1997...................................... $485,447 $747,742 $45,174 $1,210,159 $(25,152) $(16,258) 

Net income ............................................................. 138,636 

Cash dividends, $0.10 per share.............................. (25,818) 

Transfer to legal reserve .......................................... 2,659 (2,659) 

Translation adjustments........................................... (19,635) 

Adjustment to minimum pension liability ............... 5,644 

Balance, March 31, 1998...................................... $485,447 $747,742 $47,833 $1,320,318 $(44,787) $(10,614) 


28

CONSOLIDATED STATEMENTS OF CASH FLOWS 



Thousands of 



Operating Activities: 

Net income .................................................................................. ¥18,300 ¥15,739 ¥14,587 $138,636 

Adjustments to reconcile net income to net 

cash provided by operating activities: 

Depreciation and amortization ................................................ 31,129 31,234 30,196 235,826 

Loss on sales of property, plant and equipment...................... 268 771 677 2,030 

Valuation loss on property held for sale .................................. — 2,040 — — 

Net (gain) loss on sale of short-term investments 

and investment securities ...................................................... (1) (2,828) 22 (8) 

Termination and retirement benefits....................................... 2,004 4,574 (154) 15,182 

Deferred income taxes............................................................. (230) (62) (1,242) (1,742) 

Minority interests ..................................................................... 168 557 626 1,273 

Changes in assets and liabilities: 

Notes and accounts receivable—trade, net ......................... (3,537) (7,927) (16,936) (26,795) 

Inventories ........................................................................... (8,412) (4,163) (7,289) (63,727) 

Other assets.......................................................................... (7,004) (2,080) 494 (53,061) 

Notes and accounts payable—trade .................................... (4,315) 12,000 5,841 (32,689) 

Income taxes payable .......................................................... (1,998) 4,711 1,455 (15,136) 

Accrued expenses and other ............................................... 4,425 3,232 (706) 33,523 

Other, net................................................................................. 1,289 (629) (798) 9,763 

Total adjustments................................................................. 13,786 41,430 12,186 104,439 

Net cash provided by operating activities ....................... 32,086 57,169 26,773 243,075 

Investing Activities: 

Proceeds from sales or maturities of short-term investments 

and investment securities .......................................................... 21,285 43,671 70,382 161,250 

Purchase of short-term investments and investment securities.... (1,427) (45,904) (45,625) (10,811) 

Capital expenditures.................................................................... (35,896) (29,956) (34,079) (271,939) 

Decrease in leasehold deposits .................................................... 5 285 57 38 

Proceeds from sales of property, plant and equipment............... 1,335 2,818 3,427 10,114 

Acquisition of minority interests.................................................. (2,933) (312) (1,056) (22,220) 

Net cash used in investing activities ................................ (17,631) (29,398) (6,894) (133,568) 

Financing Activities: 

Net (repayments) borrowings of short-term bank loans ............. (2,864) 3,738 5,141 (21,697) 

Proceeds from issuance of long-term debt ................................. 648 5,446 1,050 4,902 

Repayments of long-term debt..................................................... (18,013) (43,634) (26,525) (136,462) 

Dividends paid ............................................................................. (3,408) (3,407) (3,355) (25,811) 

Net cash used in financing activities................................ (23,637) (37,857) (23,689) (179,068) 

Effect of Exchange Rate Changes on Cash 

and Cash Equivalents................................................................. (1,741) 1,510 1,618 (13,189) 

Net Decrease in Cash and Cash Equivalents ............................ (10,923) (8,576) (2,192) (82,750) 

Cash and Cash Equivalents at Beginning of the Year............. 79,288 87,864 90,056 600,667 

Cash and Cash Equivalents at End of the Year ........................ ¥68,365 ¥79,288 ¥87,864 $517,917 


29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 


1. Summary of 

Significant 

Accounting 

Policies 

Basis of Financial Statements The accompanying consolidated financial statements, stated in 

Japanese yen, include certain adjustments, not recorded on the books of account, to present these 

statements in accordance with accounting principles as generally accepted in the United States, except 

for the omission of segment information as required by the Statement of Financial Accounting Standards 

(“SFAS”) No. 14, “Financial Reporting for Segments of a Business Enterprise,” and except that the recognition 

and measurement provisions of SFAS No. 115, “Accounting for Certain Investments in Debt and 

Equity Securities,” have not been applied (see Note 4). The principal adjustments include accrual of 

certain expenses, recognition of the value of warrants issued with bonds, accounting for termination and 

retirement benefits, accrual of deferred income taxes relating to these adjustments and other temporary 

differences, and accounting for prior years’ stock dividends at market value. 

Certain reclassifications have been made to accounts previously reported in order to conform to 1998 

classifications. 

Principles of Consolidation The consolidated financial statements include the accounts of 

OMRON Corporation (the “Company”) and its subsidiaries (together the “Companies”). All significant 

intercompany accounts and transactions have been eliminated. Costs in excess of the fair value of net 

assets acquired are amortized on a straight-line basis over five years. 

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

stated at cost plus equity in undistributed net income or loss. 

Use of Estimates The preparation of consolidated financial statements in conformity with generally 

accepted accounting principles requires management to make estimates and assumptions that affect 

the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at 

the date of the consolidated financial statements as well as the reported amounts of revenues and 

expenses during the reporting period. Actual results could differ from those estimates. 

Cash Equivalents Cash equivalents consist of highly liquid investments with original maturities of 

three months or less, including time deposits, securities purchased with resale agreements and money 

market instruments. 

Short-Term Investments and Investment Securities Marketable equity securities are carried at 

the lower of aggregate cost or market. Other investments are stated at the lower of cost or estimated net 

realizable value (see Note 4). The cost of securities sold is determined on the average cost basis. 

Inventories 

or market. 

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

Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation of 

property, plant and equipment has been computed principally on the declining balance method based 

upon the estimated useful lives of the assets. 

Advertising Costs Advertising costs are charged to earnings as incurred. Advertising expenses were 

¥10,329 million ($78,250 thousand), ¥8,473 million and ¥7,477 million for the years ended March 31, 

1998, 1997 and 1996, respectively. 

Termination and Retirement Benefits Termination and retirement benefits are accounted for in 

accordance with SFAS No. 87, “Employers’ Accounting for Pensions.” Provision for termination and 

retirement benefits includes those for directors and corporate auditors of the Company. 

Income Taxes Deferred income taxes reflect the tax consequences on future years of differences 

between the tax bases of assets and liabilities and their financial reporting amounts. Future tax benefits, 

such as net operating loss carryforwards, are recognized to the extent that such benefits are more 

likely than not to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is 

recognized in income in the period that includes the enactment date. 

30

Derivatives Currency derivatives (foreign exchange forward contracts and currency option contracts) 

are used to manage currency risk. Gains and losses on hedges of existing assets or liabilities 

denominated in foreign currencies are recognized currently in income, as are the offsetting foreign 

exchange losses and gains on the items hedged. Gains and losses related to qualifying hedges of firm 

commitments denominated in foreign currencies are deferred and are recognized as adjustments to the 

hedged transaction when such transaction occurs. Derivative contracts that do not qualify as hedges 

are marked to market with the related gains and losses included in Foreign exchange loss, net, in the 

consolidated statements of income. 

Interest rate swaps are used to manage exposure to fluctuations in interest rates arising from the 

Companies’ existing debt. The amounts receivable or payable under interest rate swap agreements are 

recognized as adjustments to interest expenses. 

Cash Dividends Cash dividends are reflected in the consolidated financial statements at proposed 

amounts in the years to which they are applicable, even though payment is not approved by shareholders 

until the annual general meeting of shareholders held early in the following fiscal year. Resulting 

dividends payable are included in Other current liabilities in the consolidated balance sheets. 

Nature of Operations The Company is a multinational manufacturer of automation components, 

equipment and systems with advanced computer, communications and control technologies. The 

Company conducts business in more than 30 countries around the world and strategically manages its 

worldwide operations through five regional management centers: Japan, North America, Europe, Asia- 

Pacific and China. Products, classified by type and market, are organized into five principal business 

units, as described below. 

Control Components and Systems include a wide range of products, including sensors, relays, 

switches, printed circuit boards and computer systems for factory automation. These products are primarily 

used by manufacturers of electronic and high-technology equipment with certain products 

aimed at the consumer and industrial markets. 

Social Business encompasses the production and sale of automated teller machines, credit authorization 

terminals, point-of-sale systems and card readers for both domestic and overseas markets. 

Automated passenger gates and ticket vending machines as well as electronic panels and terminal displays 

for traffic information and monitoring purposes are also produced for the domestic market. 

Specialty Products include the production of automotive electronic components for use by the automotive 

industry and high-technology electronic components and equipment directed at the office 

automation industries. 

Healthcare includes blood pressure monitors, nebulizers and infrared therapy devices aimed at both 

the consumer and institutional markets. 

Open systems supply network and PC systems to institutional and individual consumers. 

New Accounting Standards In July 1997, the Financial Accounting Standards Board issued SFAS 

No. 130, “Reporting Comprehensive Income,” and SFAS No. 131, “Disclosures about Segments of an 

Enterprise and Related Information.” 

These statements are effective for fiscal years beginning after December 15, 1997. The Companies 

will adopt SFAS No. 130 for the year beginning April 1, 1998, except for the effects on shareholders’ 

equity from the provisions of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity 

Securities.” The Companies currently anticipate that the segment information required by SFAS No. 131 

will not be provided. Neither of these statements will have an effect on the Company’s consolidated 

financial position or results of operations. 

31

2. Translation 

into United 

States Dollars 

The consolidated financial statements are stated in Japanese yen, the currency of the country in which 

the Company is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar 

amounts are included solely for convenience and have been made at the rate of ¥132 to $1, the 

approximate free rate of exchange at March 31, 1998. Such translations should not be construed as 

representations that the Japanese yen amounts could be converted into U.S. dollars at the above or any 

other rate. 

3. Inventories Inventories at March 31, 1998 and 1997 consisted of: 


Thousands of 

U.S. dollars 

1998 1997 1998 

Finished products ............................................................................................. ¥56,665 ¥46,564 $429,280 

Work-in-process ................................................................................................ 17,707 19,731 134,144 

Materials and supplies....................................................................................... 20,609 19,671 156,129 

Total .......................................................................................................... ¥94,981 ¥85,966 $719,553 

4. Short-Term 

Investments 

and Investment 

Securities 

The Companies have chosen not to adopt the recognition and measurement principles of SFAS No. 

115 and have instead continued to account for investments in debt and equity securities under previously 

accepted accounting principles. The Companies were of the opinion that the adoption of SFAS 

No. 115 would materially reduce the comparability of the financial statements with those of other 

Japanese companies that follow the Japanese accounting practice of reporting marketable debt and 

equity securities under the lower of cost or market method. Marketable securities included in shortterm 

investments and investment securities at March 31, 1998 and 1997 would be classified as 

available-for-sale securities under SFAS No. 115. The recognition and measurement provisions of SFAS 

No. 115 require that the investments in debt and equity securities which are classified as available for 

sale be reported at fair value with unrealized gains and losses, net of related taxes, reported in a separate 

component of shareholders’ equity. 

If the Companies had followed SFAS No. 115, consolidated net income would have increased ¥404 

million ($3,061 thousand) for the year ended March 31, 1998. There was no effect on income for the 

years ended March 31, 1997 and 1996, of not adopting SFAS No. 115. The effects on the consolidated 

balance sheets as of March 31, 1998 and 1997 of not adopting SFAS No. 115 were as follows: 

Thousands of 


U.S. dollars 


Shareholders’ equity as reported .................................................................. ¥336,064 ¥323,019 $2,545,939 

Net increase in the carrying amount of short-term investments................... 1,375 3,065 10,417 

Net increase in the carrying amount of investment securities ..................... 12,091 17,512 91,598 

Net increase in deferred tax liabilities as a result 

of the above net increases in short-term investments 

and investment securities............................................................................ (6,868) (10,494) (52,030) 

Net increase in net income due to a change in enacted tax rates ................ 404 — 3,061 

Shareholders’ equity based on SFAS No. 115........................................ ¥343,066 ¥333,102 $2,598,985 

32

The carrying amounts, gross unrealized holding gains and losses and fair value of securities, excluding 

equity securities with no public market value, by major security type at March 31, 1998 and 1997 

were as follows: 


1998 1997 

Gross Gross Gross Gross 

Carrying unrealized unrealized Fair Carrying unrealized unrealized Fair 

amount gains losses value amount gains losses value 

Short-term investments: 

Debt securities..................... ¥ 3,913 ¥ — ¥ — ¥ 3,913 ¥13,746 ¥ — ¥ — ¥13,746 

Asset-backed securities........ — — — — 11,250 — — 11,250 

Equity securities................... 854 1,442 (67) 2,229 974 3,095 (30) 4,039 

Total short-term investments... 4,767 1,442 (67) 6,142 25,970 3,095 (30) 29,035 

Marketable investment 

securities: 

Debt securities..................... 25 — — 25 48 — — 48 

Equity securities................... 39,447 17,675 (5,584) 51,538 39,160 21,189 (3,677) 56,672 

Total marketable investment 

securities............................... 39,472 17,675 (5,584) 51,563 39,208 21,189 (3,677) 56,720 

Total................................. ¥44,239 ¥19,117 ¥(5,651) ¥57,705 ¥65,178 ¥24,284 ¥(3,707) ¥85,755 

Thousands of U.S. dollars 

1998 

Gross Gross 

Carrying unrealized unrealized Fair 

amount gains losses value 

Short-term investments: 

Debt securities..................... $ 29,644 $ — $ — $ 29,644 

Asset-backed securities........ — — — — 

Equity securities................... 6,470 10,925 (508) 16,887 

Total short-term investments... 36,114 10,925 (508) 46,531 

Marketable investment 

securities: 

Debt securities..................... 189 — — 189 

Equity securities................... 298,841 133,901 (42,303) 390,439 

Total marketable investment 

securities............................... 299,030 133,901 (42,303) 390,628 

Total................................. $335,144 $144,826 $(42,811) $437,159 

Net unrealized holding gains on available-for-sale securities, net of related taxes, decreased by 

¥3,081 million ($23,341 thousand) and ¥5,653 million for the years ended March 31, 1998 and 1997, 

respectively. Debt securities classified as available-for-sale investment securities mature in various 

amounts through 2001. 

Proceeds from sales of available-for-sale securities were ¥21,160 million ($160,303 thousand), 

¥43,671 million and ¥70,382 million for the years ended March 31, 1998, 1997 and 1996, respectively. 

Gross realized gains on those sales were ¥2,828 million and ¥1,269 million for the years ended 

March 31, 1997 and 1996, respectively, and were not material for the year ended March 31, 1998. 

Gross realized losses were ¥1,291 million for the year ended March 31, 1996 and were not material for 

the years ended March 31, 1998 and 1997. 

33

5. Bank Loans 

and Long-Term 

Debt 

The weighted average annual interest rates of short-term bank loans at March 31, 1998 and 1997 were 

5.2% and 4.4%, respectively. 

Long-term debt at March 31, 1998 and 1997 consisted of the following: 

Thousands of 


U.S. dollars 


Unsecured debt: 

Convertible bonds at 1.7%, due 2004 ........................................................... ¥29,741 ¥29,741 $225,311 

Notes: 

Loans from banks and other financial institutions, 

generally at 2.8% to 6.7%, due serially through 2004 ................................. 11,615 29,570 87,992 

Other................................................................................................................. 610 534 4,621 

Total .......................................................................................................... 41,966 59,845 317,924 

Less portion due within one year ..................................................................... 8,466 18,024 64,136 

Long-term debt, less current portion................................................................ ¥33,500 ¥41,821 $253,788 

The annual maturities of long-term debt outstanding at March 31, 1998 were as follows: 

Thousands of 

Year ending March 31, Millions of yen U.S. dollars 

1999 .............................................................................................................................. ¥ 8,466 $ 64,136 

2000 .............................................................................................................................. 2,161 16,371 

2001 .............................................................................................................................. 844 6,394 

2002 .............................................................................................................................. 272 2,061 

2003 .............................................................................................................................. 229 1,735 

2004 and thereafter ...................................................................................................... 29,994 227,227 

Total.......................................................................................................................... ¥41,966 $317,924 

The convertible bonds may be purchased at any time by the Company or its subsidiaries principally 

at any price in the open market or otherwise and may be redeemed at the Company’s option prior to 

maturity. The convertible bonds are redeemable, in whole or in part, beginning October 1997 at 106% 

of face value, decreasing 1% per year. 

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

March 31, 1998 was 10,028,661 shares. 

The conversion price per share at March 31, 1998 was ¥2,965 ($22.47), subject to antidilutive provisions. 

As is customary in Japan, additional security must be given if requested by a lending bank, and banks 

have the right to offset cash deposited with them against any debt or obligation that becomes due and, in 

case of default and certain other specified events, against all debt payable to the banks. The Companies 

have never received any such requests. 

As is customary in Japan, the Company and domestic subsidiaries maintain deposit balances with banks 

with which they have short- or long-term borrowings. Such deposit balances are not legally or contractually 

restricted as to withdrawal. 

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

1996 amounted to ¥2,412 million ($18,273 thousand), ¥3,557 million and ¥5,075 million, respectively. 

34

6. Leases The Companies have operating lease agreements primarily involving offices and equipment for varying 

periods. Leases that expire generally are expected to be renewed or replaced by other leases. At March 31, 

1998, future minimum rental payments applicable to noncancelable leases having initial or remaining 

noncancelable lease terms in excess of one year were as follows: 

Thousands of 

Year ending March 31, Millions of yen U.S. dollars 

1999 .............................................................................................................................. ¥2,199 $16,659 

2000 .............................................................................................................................. 1,901 14,402 

2001 .............................................................................................................................. 1,588 12,030 

2002 .............................................................................................................................. 614 4,652 

2003 .............................................................................................................................. 560 4,242 

2004 and thereafter ...................................................................................................... 2,760 20,909 

Total.......................................................................................................................... ¥9,622 $72,894 

Rental expense amounted to ¥13,917 million ($105,432 thousand), ¥11,105 million and ¥11,554 million 

for the years ended March 31, 1998, 1997 and 1996, respectively. 

In December 1997, the Company entered into an agreement with an outside service organization for 

outsourcing computer services. The contract requires an annual service fee of ¥4,460 million ($33,788 

thousand) for the year ending March 31, 1999. The annual service fee will gradually decrease each year 

during the initial contract term of 10 years to ¥3,769 million for 2008. The contract is cancelable subject 

to a penalty of 15% of aggregate service fees payable for the remaining term of the contract. 

7. Termination 

and Retirement 

Benefits 

The Company and its domestic subsidiaries sponsor termination and retirement benefit plans which 

cover substantially all domestic employees. Benefits are based on the employee’s years of service, with 

some plans considering compensation and certain other factors. If the termination is involuntary, the 

employee is usually entitled to greater payments than in the case of voluntary termination. 

The Company and its domestic subsidiaries fund a portion of the obligations under these plans. The 

general funding policy is to contribute amounts computed in accordance with actuarial methods 

acceptable under Japanese tax law. The Company and substantially all domestic subsidiaries have a 

contributory termination and retirement plan which is interrelated with the Japanese government 

social welfare program and consists of a basic portion requiring employee and employer contributions 

plus an additional portion established by the employers. 

Periodic pension benefits required under the basic portion, prescribed by the Japanese Ministry of 

Health and Welfare, commence at age 60 and continue until the death of the surviving spouse. Benefits 

under the additional portion are usually paid in a lump sum at the earlier of termination or retirement, 

although periodic payments are available under certain conditions. 

The following table summarizes the financial status of the contributory termination and retirement 

plan and the amounts recognized in the consolidated balance sheets at March 31, 1998 and 1997: 

Thousands of 


U.S. dollars 


Actuarial present value of benefit obligation: 

Vested........................................................................................................ ¥103,861 ¥ 94,024 $ 786,826 

Nonvested ................................................................................................. 12,488 12,800 94,606 

Accumulated benefit obligation.................................................................... 116,349 106,824 881,432 

Effect of projected future salary increases .................................................... 38,265 37,117 289,886 

Projected benefit obligation for service rendered to date ............................ 154,614 143,941 1,171,318 

Less: trusteed fund assets at fair value, including cash equivalents, 

bonds and stocks......................................................................................... 92,927 85,316 703,992 

Projected benefit obligation in excess of plan assets.................................... 61,687 58,625 467,326 

Remaining unrecognized net obligation from April 1, 1989......................... (1,618) (1,888) (12,258) 

Unrecognized net loss from past experience different from that 

assumed and effect of changes in assumptions .......................................... (41,121) (41,496) (311,523) 

Adjustment to recognize minimum pension liability .................................... 4,477 6,267 33,917 

Recognized liabilities for contributory termination and retirement plans.... ¥ 23,425 ¥ 21,508 $ 177,462 

35

The provisions of SFAS No. 87, “Employers’ Accounting for Pensions,” require the recognition of an 

additional minimum pension liability for each defined benefit plan to the extent that a plan’s accumulated 

benefit obligation exceeds the fair value of plan assets and accrued pension liabilities. The adjustment 

to recognize the minimum pension liability is partially offset by an intangible asset, equal to the 

unrecognized net obligation from the adoption of SFAS No. 87 of ¥1,618 million ($12,258 thousand) and 

¥1,888 million at March 31, 1998 and 1997, respectively. The amount of the adjustment in excess of this 

amount is reflected as a separate reduction of shareholders’ equity, net of related deferred tax benefits. 

The unrecognized net obligation and the unrecognized net loss are being amortized over 15 years. 

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

1998 1997 1996 

Discount rate....................................................................................................................... 4.0% 4.0% 4.0% 

Compensation increase rate................................................................................................ 3.8 3.8 4.0 

Long-term rate of return on plan assets............................................................................... 3.5 3.5 3.5 

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

components for the years ended March 31, 1998, 1997 and 1996: 

Thousands of 


U.S. dollars 


Service cost, less employees’ contributions .................................... ¥ 7,680 ¥ 7,795 ¥5,160 $58,182 

Interest cost on projected benefit obligation .................................. 5,758 5,440 3,800 43,621 

Actual return on plan assets ............................................................ (1,556) (3,602) (5,254) (11,788) 

Net amortization and deferral.......................................................... 786 3,557 3,395 5,955 

Net expense............................................................................. ¥12,668 ¥13,190 ¥7,101 $95,970 

The Companies also have unfunded noncontributory termination plans administered by the Companies. 

These plans provide lump-sum termination benefits and are paid at the earlier of the 

employee’s termination or mandatory retirement age, except for payments to directors and corporate 

auditors, which require approval by the shareholders before payment. The Companies record provisions 

for termination benefits sufficient to state the liability equal to the plans’ vested benefits, which 

exceed the plans’ accumulated benefit obligations. 

The consolidated liabilities for the noncontributory termination plans as of March 31, 1998 and 1997 

were ¥1,488 million ($11,273 thousand) and ¥1,401 million, respectively. The consolidated expenses 

for the noncontributory termination and retirement plans for the years ended March 31, 1998, 1997 

and 1996 were ¥146 million ($1,106 thousand), ¥420 million and ¥172 million, respectively. 

8. Shareholders’ 

Equity 

The Japanese Commercial Code (the “Code”) requires at least 50% of the issue price of new shares, 

with the minimum of the par value thereof, to be recorded as common stock. The portion which is to 

be recorded as common stock is determined by resolution of the Board of Directors. Proceeds in 

excess of the amounts designated as common stock have been credited to additional paid-in capital. 

Under the Code, the Company is required to record an amount at least equal to 10% of the amounts 

paid as an appropriation of retained earnings, including dividends and other distributions, to be appropriated 

and set aside as a legal reserve until such reserve equals 25% of the common stock. This reserve 

is not available for dividends but may be used to eliminate or reduce a deficit by resolution of the 

shareholders or may be transferred to common stock by resolution of the Board of Directors. 

The Company may transfer portions of additional paid-in capital and legal reserve to common stock 

by resolution of the Board of Directors. The Company may also transfer portions of unappropriated 

retained earnings, available for dividends, to common stock by resolution of the shareholders. 

Under the Code, the amount legally available for dividends is based on retained earnings as recorded in 

the books of the Company for Japanese financial reporting purposes. At March 31, 1998, retained earnings 

amounting to ¥106,257 million ($804,977 thousand) were available for future dividends, subject to the 

legal reserve requirements. 

36

9. Income Taxes The provision for income taxes for the years ended March 31, 1998, 1997 and 1996 consisted of the 

following: 

Thousands of 


U.S. dollars 


Current income tax expense ........................................................... ¥24,579 ¥22,915 ¥18,107 $186,205 

Deferred income tax (benefit) expense, 

exclusive of the following ............................................................. (1,305) 342 (337) (9,886) 

Change in the beginning of the year balance of 

the valuation allowance for deferred tax assets ............................ (176) (305) (731) (1,333) 

Adjustments of deferred tax assets and liabilities 

for change in enacted tax rates ..................................................... 677 — — 5,128 

Total......................................................................................... ¥23,775 ¥22,952 ¥17,039 $180,114 

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

follows for the years ended March 31, 1998, 1997 and 1996: 

1998 1997 1996 

Normal Japanese statutory rates.......................................................................................... 51.0% 51.0% 51.0% 

Increase (decrease) in taxes resulting from: 

Permanently nondeductible items .................................................................................. 6.0 9.1 7.4 

Losses of subsidiaries for which no tax benefit was provided........................................ 1.0 0.2 0.8 

Difference in subsidiaries’ tax rates ................................................................................ (6.0) (3.7) (5.4) 

Change in the beginning of the year balance of 

the valuation allowance for deferred tax assets ............................................................ (0.4) (0.8) (2.3) 

Effects of change in enacted tax rates............................................................................. 1.6 — — 

Other, net ........................................................................................................................ 3.1 2.7 1.3 

Effective tax rates ........................................................................................................ 56.3% 58.5% 52.8% 

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

deferred tax balances at March 31, 1998 and 1997 were as follows: 

Thousands of 


U.S. dollars 


Deferred Deferred Deferred Deferred Deferred Deferred 

tax tax tax tax tax tax 

assets liabilities assets liabilities assets liabilities 

Inventory valuation ................................................ ¥ 1,476 ¥00— ¥ 1,143 ¥ ,0— $ 11,182 $00,0— 

Accrued bonuses and vacations............................. 2,188 — 2,437 — 16,576 — 

Termination and retirement benefits..................... 5,085 — 3,157 — 38,523 — 

Enterprise taxes ..................................................... 1,129 — 1,577 — 8,553 — 

Intercompany profits ............................................. 3,218 — 1,818 — 24,379 — 

Marketable securities ............................................. — 3,264 — 2,469 — 24,727 

Allowance for doubtful receivables ....................... 462 467 480 419 3,500 3,538 

Gain on sale of land................................................ — 1,229 — 1,306 — 9,311 

Minimum pension liability adjustment .................. 1,372 — 2,233 — 10,394 — 

Other temporary differences ................................. 3,514 1,740 3,005 509 26,621 13,182 

Subsidiaries’ operating loss carryforwards............. 3,256 — 5,312 — 24,667 — 

Subtotal .................................................................. 21,700 6,700 21,162 4,703 164,395 50,758 

Valuation allowance............................................... (2,642) — (4,331) — (20,015) — 

Total ............................................................... ¥19,058 ¥6,700 ¥16,831 ¥4,703 $144,380 $50,758 

The total valuation allowance decreased by ¥1,689 million ($12,795 thousand), ¥715 million and 

¥118 million in 1998, 1997 and 1996, respectively. 

As of March 31, 1998, certain subsidiaries had operating loss carryforwards approximating ¥8,539 

million ($64,689 thousand) available for reduction of future taxable income, most of which expire in 

various amounts through 2010. 

37

The Company has not provided for Japanese income taxes on unremitted earnings of subsidiaries to 

the extent that they are believed to be indefinitely reinvested. The unremitted earnings of the foreign 

subsidiaries which are considered to be indefinitely reinvested and for which Japanese income taxes 

have not been provided were ¥35,315 million ($267,538 thousand) and ¥29,282 million for the years 

ended March 31, 1998 and 1997, respectively. It is not practicable to estimate the amount of unrecognized 

deferred Japanese income taxes on these unremitted earnings. Dividends received from domestic 

subsidiaries are expected to be substantially free of tax. 

10. Foreign 

Operations 

Net sales and total assets of foreign subsidiaries for the years ended March 31, 1998, 1997 and 1996 

were as follows: 

Thousands of 


U.S. dollars 


Net sales.................................................................................. ¥171,181 ¥151,992 ¥122,716 $1,296,826 

Total assets.............................................................................. 143,247 132,714 107,476 1,085,205 

11. Amounts 

per Share 

The Company adopted SFAS No. 128, “Earnings per Share,” in the year ended March 31, 1998. SFAS 

No. 128 establishes standards for computing and presenting net income per share and simplifies the 

standards for computing net income per share previously found in APB Opinion No. 15, “Earnings per 

Share.” SFAS No. 128 replaces the presentation of primary net income per share with a presentation of 

basic net income per share. SFAS No. 128 also requires dual presentation of basic and diluted net 

income per share on the face of the statements of income for all entities with complex capital structures 

and requires a reconciliation of the numerator and denominator of the basic and diluted net 

income per share computation. 

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

SFAS No. 128. 

Basic net income per share has been computed by dividing net income available to common shareholders 

by the weighted average number of common shares outstanding during each year. Diluted net 

income per share reflects the potential dilution of all convertible bonds and has been computed on the 

basis that all convertible bonds were converted at the beginning of the year. 

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

computation is as follows: 

Thousands of 


U.S. dollars 


Net income.................................................................................... ¥18,300 ¥15,739 ¥14,587 $138,636 

Effect of dilutive securities: 

Convertible bonds, due 2004.................................................... 292 275 248 2,212 

Diluted net income ....................................................................... ¥18,592 ¥16,014 ¥14,835 $140,848 

Number of shares 

1998 1997 1996 

Average common shares outstanding............................................. 262,107,214 262,107,214 262,107,214 

Dilutive effect of: 

Convertible bonds, due 2004 ..................................................... 10,028,661 10,028,661 10,028,661 

Diluted common shares outstanding.............................................. 271,135,875 272,135,875 272,135,875 

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

be paid after the end of the year. 

38

12. Supplemental 

Information for 

Cash Flows 

Supplemental cash flow information for the years ended March 31, 1998, 1997 and 1996 was as follows: 


Thousands of 

U.S. dollars 


Interest paid..................................................................................... ¥ 2,347 ¥ 3,718 ¥ 5,256 $ 17,780 

Income taxes paid ........................................................................... 25,804 18,151 16,499 195,485 

Noncash investing and financing activities: 

Liabilities assumed in connection with capital expenditures...... 4,547 5,602 4,269 34,447 

Exchange of investment securities: 

Investment securities surrendered .......................................... — (1,989) — — 

Investment securities received ................................................ — 3,197 — — 

Conversion of convertible bonds into common stock ................ — — 10 — 

13. Financial 

Instruments 

and Risk 

Management 

Financial Instruments 

The following table presents the carrying amounts and estimated fair values as of March 31, 1998 and 

1997 of the Companies’ financial instruments, both on and off the balance sheets. 


Thousands of 

U.S. dollars 


Carrying Fair Carrying Fair Carrying Fair 

amount value amount value amount value 

Nonderivatives: 

Short-term investments ............................... ¥ 4,767 ¥ 6,142 ¥25,970 ¥29,035 $ 36,114 $ 46,531 

Investment securities for which 

it is practicable to estimate fair value........ 39,472 51,563 39,208 56,720 299,030 390,628 

Long-term debt, including 

current portion.......................................... (41,966) (42,170) (59,845) (59,885) (317,924) (319,470) 

Derivatives: 

Included in other current assets 

(other current liabilities): 

Options purchased.................................. 288 208 — 10 2,182 1,576 

Forward exchange contracts................... (267) (307) (188) (186) (2,023) (2,326) 

Interest rate swaps .................................. — (59) — (137) — (447) 

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

instruments for which it is practicable to estimate that value: 

Nonderivatives 

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

payable: 

The carrying amounts approximate fair values. 

(2) Short-term investments and investment securities: 

The fair values are estimated based on quoted market prices or dealer quotes for marketable securities 

or similar instruments. Certain equity securities included in investments have no public market 

value; as it is not practicable to estimate their fair values, they have been excluded from the preceding 

table. 

(3) Long-term debt: 

For convertible bonds, the fair values are estimated based on quoted market prices. For other 

issues, except capital lease obligations, the fair values are estimated using the present value of discounted 

future cash flow analysis, based on the Companies’ current incremental issuing rates for 

similar types of arrangements. 

39

Derivatives 

The fair value of derivatives generally reflects the estimated amounts that the Companies would receive 

or pay to terminate the contracts at the reporting date, thereby taking into account the current unrealized 

gains or losses of open contracts. Dealer quotes are available for most of the Companies’ derivatives; otherwise, 

pricing or valuation models are applied to current market information to estimate fair value. The 

Companies do not use derivatives for trading purposes. 

(1) Interest rate swap contracts: 

The Companies enter into interest rate swap agreements to manage exposure to fluctuations in 

interest rates. These agreements involve the exchange of interest obligations on fixed and floating 

interest rate debt without exchange of the underlying principal amounts. The agreements generally 

mature at the time the related debt matures. The differential paid or received on interest rate swap 

agreements is recognized as an adjustment to interest expenses. Notional amounts are used to 

express the volume of interest rate swap agreements. The notional amounts do not represent cash 

flows and are not subject to risk of loss. In the unlikely event that the counterparty fails to meet the 

terms of an interest rate swap agreement, the Companies’ exposure is limited to the interest rate 

differential. Management considers the exposure to credit risk to be minimal since the counterparties 

are major financial institutions. 

At March 31, 1998 and 1997, the notional amounts on which the Companies had interest rate 

swap agreements outstanding aggregated ¥6,000 million ($45,455 thousand) and ¥12,500 million, 

respectively. The estimated fair values of interest rate swap contracts are based on the present values 

of discounted future cash flow analysis. 

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

The Companies enter into foreign exchange forward contracts and engage in the purchase and 

writing of foreign currency option contracts to hedge foreign currency transactions (primarily the 

U.S. dollar, the deutsche mark and other European currencies) on a continuing basis for periods 

consistent with their committed exposure. Some of the contracts involve the exchange of two foreign 

currencies, according to local needs in foreign subsidiaries. The terms of the currency derivatives 

are rarely more than 10 months. The credit exposure of foreign exchange contracts and 

currency purchase options are represented by the positive fair value of the contracts at the reporting 

date. Management considers the exposure to credit risk to be minimal since the counterparties 

are major financial institutions. 

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

options purchased and written outstanding at March 31, 1998 and 1997 were as follows: 

Thousands of 


U.S. dollars 


Related to receivables and future sales: 

Forward contracts......................................................................................... ¥24,867 ¥20,221 $188,386 

Options purchased and written.................................................................... 8,885 2,690 67,311 

The notional amounts do not represent the amounts exchanged by the parties to derivatives and are 

not a measure of the Companies’ exposure through their use of derivatives. The amounts exchanged 

are determined by reference to the notional amounts and the other terms of the derivatives. 

The Companies hedge certain exposures to fluctuations in foreign currency exchange rates that 

occur prior to conversion of foreign currency denominated monetary assets and liabilities into the 

functional currency. Prior to the conversion of the functional currency, these assets and liabilities are 

translated at the spot rates in effect on the balance sheet date. The effects of changes in spot rates are 

reported in earnings and included in Foreign exchange loss, net, in the consolidated statements of 

income. The Company hedges its exposure to changes in foreign exchange with forward contracts. 

Because monetary assets and liabilities are marked to spot and recorded in earnings, forward contracts 

designated as hedges of the monetary assets and liabilities are also marked to spot with the resulting 

gains and losses similarly recognized in earnings. Gains and losses on forward contracts are included in 

40

Foreign exchange loss, net, in the consolidated statements of income and offset losses and gains on the 

net monetary assets and liabilities hedged. 

The Companies hedge future sales denominated in foreign currencies with purchased and written 

currency options to reduce the effective cost of the purchased options. The premiums paid for currency 

options purchased and premiums received for currency options written are included in other 

assets and other liabilities, respectively, in the statements of cash flows and are amortized to Foreign 

exchange loss, net, in the consolidated statements of income over the terms of the agreements. Gains 

or losses on forward exchange contracts and currency options purchased and written that do not qualify 

for deferral for accounting purposes are recognized in income on a current basis and recorded in 

Foreign exchange loss, net, in the consolidated statements of income. 

Concentration of Credit Risk 

Financial instruments which potentially subject the Companies to concentrations of credit risk consist 

principally of short-term cash investments and trade receivables. The Companies place their short-term 

cash investments with high-credit-quality financial institutions. Concentrations of credit risk with 

respect to trade receivables, as approximately 75% of total sales are concentrated in Japan, are limited 

due to the large number of well-established customers and their dispersion across many industries. Bad 

debts have been minimal. The Company normally requires customers to deposit with it funds to serve 

as security for ongoing credit sales. 

Guarantees 

Contingent liabilities at March 31, 1998 with respect to loans guaranteed were ¥2,921 million ($22,129 

thousand), of which ¥1,400 million ($10,606 thousand) are jointly and severally guaranteed with other 

unrelated companies. 

14. Subsequent 

Events 

At the meeting of the Board of Directors (the “Board”) on May 18, 1998, the Board declared a plan to purchase 

the Company’s shares for the purpose of retirement of the shares, subject to approval at the general 

meeting of shareholders. The execution of the plan is at the Company’s discretion with a maximum 

limit of ¥10,000 million ($75,758 thousand), or 5,000,000 shares, for the period up to the date of the 

June 1999 general meeting of shareholders. 

In addition, the Board decided to propose an amendment to the Company’s Articles of Incorporation 

for approval at the general meeting of shareholders to allow the Board to authorize the purchase of up to 

an additional 25,000,000 of the Company’s shares for the purpose of retirement of the shares. Under the 

Code, all amounts paid to purchase the Company’s own shares for retirement are charged to retained 

earnings and thus are not available for future distribution to shareholders. 

The Board also resolved to introduce a stock purchase option plan for the Company’s directors, 

subject to approval at the general meeting of shareholders. All directors would be granted stock purchase 

options with certain restrictions. The Company would purchase its own shares with a maximum limit 

of ¥500 million ($3,788 thousand), or 158,000 shares, in order to sell them to directors upon exercise of 

the options. 

41

INDEPENDENT AUDITORS’ REPORT 

To the Board of Directors and Shareholders of OMRON Corporation 

We have audited the accompanying consolidated balance sheets of OMRON Corporation and subsidiaries as of 

March 31, 1998 and 1997, and the related consolidated statements of income, shareholders’ equity and cash flows 

for each of the three years in the period ended March 31, 1998, all expressed in Japanese yen. These financial statements 

are the responsibility of the Company’s management. Our responsibility is to express an opinion on these 

financial statements based on our audits. 

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

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the 

amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used 

and significant estimates made by management, as well as evaluating the overall financial statement presentation. 

We believe that our audits provide a reasonable basis for our opinion. 

OMRON Corporation and subsidiaries have not adopted the recognition and measurement principles prescribed 

in Statement of Financial Accounting Standards (“SFAS”) No. 115 in accounting for certain investments in debt and 

equity securities. The effects on the consolidated financial statements of not adopting SFAS No. 115 are summarized 

in Note 4 to the consolidated financial statements. 

Certain information required by SFAS No. 14 has not been presented in the accompanying consolidated financial 

statements. In our opinion, presentation of various segment information regarding operations is required for a complete 

presentation of the Company’s consolidated financial statements in accordance with accounting principles generally 

accepted in the United States. 

In our opinion, except for the effects of the departure from SFAS No. 115 and the omission of segment information 

as discussed in the preceding paragraphs, the consolidated financial statements referred to above present fairly, in all 

material respects, the financial position of OMRON Corporation and subsidiaries as of March 31, 1998 and 1997, and 

the results of their operations and their cash flows for each of the three years in the period ended March 31, 1998 in 

conformity with accounting principles generally accepted in the United States. 

Our audits also comprehended the translation of Japanese yen amounts into United States dollar amounts and, in 

our opinion, such translation has been made in conformity with the basis stated in Note 2 to the consolidated financial 

statements. Such United States dollar amounts are presented solely for convenience. 

Osaka, Japan 

May 18, 1998 

42

INTERNATIONAL NETWORK 

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

REGIONAL HEADQUARTERS 

OMRON Asia Pacific Pte. Ltd. 

83, Clemenceau Avenue, #11-01, UE Square, 

Singapore 239920, Singapore 

Phone: (65) 835-3011 

Fax: (65) 835-2711 

MARKETING AND/OR MANUFACTURING 

OF CONTROL COMPONENTS 

AND SYSTEMS 

OMRON Asia Pacific Pte. Ltd. 



Phone: (65) 835-3011 

Fax: (65) 835-2711 

––Indonesia Representative Office 

W; isma Danamon Aetna Life Tower, Suite 1602, 

JL Jend. Sudirman Kav. 45-46, 

Jakarta 12930, Indonesia 

Phone: (21) 577-0838 

Fax: (21) 577-0840 

––Vietnam Representative Office 

6F, Vinaconex Bldg., 2 Lang Ha, 

Hanoi, Socialist Republic of Vietnam 

Phone: (4) 8313-121 

Fax: (4) 8313-122 

––Philippines Representative Office 

2F, Kings Court II Bldg., 

2129 Pasong Tamo St. 1231, 

Makati City, Metro Manila, The Philippines 

Phone: (63) 2811-2831 

Fax: (63) 2811-2582 

––India Representative Office 

59 Hemkunt, Opp. Nehru Place, 

New Delhi 110 048, India 

Phone: (11) 623-8431 

Fax: (11) 623-8434 

OMRON Electronics Sales 

and Service (M) Sdn. Bhd. 

10F, Block B Menara Pkns-Pj No. 17, 

Jalan Yong Shook Lin, 46050 Petaling Jaya, 

Selangor, Darul Ehsan, Malaysia 

Phone: (3) 754-7323 

Fax: (3) 754-6618 

OMRON Electronics Pty. Ltd. 

71 Epping Road, North Ryde, 

NSW 2113, Australia 

Phone: (2) 9878-6377 

Fax: (2) 9878-6981 

OMRON Electronics Ltd. 

65 Boston Road, Mt. Eden, 

Auckland, New Zealand 

Phone: (9) 358-4400 

Fax: (9) 358-4411 

OMRON Korea Co., Ltd. 

3F, New Seoul Bldg., #618-3 Shin Sa-dong 

Kang Nam-gu, Seoul, South Korea 

Phone: (2) 549-2766 

Fax: (2) 517-9033 

OMRON Electronics Co., Ltd. 

20F, Rasa Tower, 555 Phaholyothin Road, 

Ladyao, Chatuchak, 

Bangkok 10900, Thailand 

Phone: (2) 937-0500 

Fax: (2) 937-0501 

OMRON Malaysia Sdn. Bhd. 

Lot 15, Jalan SS 8/4 Sungei Way, 

Free Trade Zone, 47300 Petaling Jaya, 

Selangor, Darul Ehsan, Malaysia 

Phone: (3) 776-1411 

Fax: (3) 777-4507 

PT OMRON Manufacturing of Indonesia 

Ejip Industrial Park Plot 5C, Lemahabang, 

Bekasi 17550, West Java, Indonesia 

Phone: (21) 8970111 

Fax: (21) 8970120 

MARKETING AND MANUFACTURING 

OF AUTOMOTIVE COMPONENTS 

OMRON Automotive Electronics 

Korea Co., Ltd. 

272-2 Kyerukri, Miyangmyon, Ansong-gun, 

Kyonggi-Do, 456-840, South Korea 

Phone: (334) 677-4262 

Fax: (334) 677-4268 


OF SOCIAL BUSINESS SYSTEMS 

OMRON Business Systems Singapore 

(Pte.) Ltd. 



Phone: (65) 736-3900 

Fax: (65) 736-2736 

OMRON Business Systems 

Malaysia Sdn. Bhd. 

No. 9, Jalan 16/11, Off Jalan Damansara, 

46350 Petaling Jaya, Selangor, Malaysia 

Phone: (3) 460-9119 

Fax: (3) 460-9559 

OMRON Mechatronics of the 

Philippines Corporation 

Subic Techno Center Bldg., 

Along Argonaut Highway, Boton Area, 

Subic Bay Freeport Zone, 2222, The Philippines 

Phone: (63) 47-252-1490 

Fax: (63) 47-252-1491 

MARKETING OF HEALTHCARE 

EQUIPMENT 

OMRON Healthcare Singapore PTE Ltd. 



Phone: (65) 736-2345 

Fax: (65) 736-2500 

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


OMRON (China) Group Co., Ltd. 

601-9, Tower 2, 

The Gateway No. 25, Canton Road, 

Tsimshatsui, Kowloon, Hong Kong, S.A.R., China 

Phone: 2375-3827 

Fax: 2375-1475 

OMRON (China) Co., Ltd. 

21F, Beijing East Ocean Centre, 

No. 24A Jian Guo Men Wai Da Jie, 

Chao Yang District, 

Beijing 100022, China 

Phone: (10) 6515-5788 

Fax: (10) 6515-5799 



AND SYSTEMS 

OMRON Electronics Asia Ltd. 

601-9, Tower 2, 

The Gateway No. 25, Canton Road, 

Tsimshatsui, Kowloon, Hong Kong, S.A.R., China 

Phone: 2375-3827 

Fax: 2375-1475 

OMRON Taiwan Electronics Inc. 

6F, Home Young Bldg., No. 363, 

Fu-Shing North Road, Taipei, Taiwan, R.O.C. 

Phone: (2) 715-3331 

Fax: (2) 712-6712 

Shanghai OMRON Automation 

System Co., Ltd. 

500 Omron Road, Jinqiao Export 

Processing District, Pudong New Area, 

Shanghai 201206, China 

Phone: (21) 5854-0044 

Fax: (21) 5854-2658 

Shanghai OMRON Control 

Components Co., Ltd. 

388 Omron Road, Jinqiao Export 

Processing District, Pudong New Area, 


Phone: (21) 5854-0012 

Fax: (21) 5854-8413 

OMRON (Shanghai) Co., Ltd. 

Block No. 77, Jinqiao Export 

Processing Area, Pudong, 


Phone: (21) 5854-0055 

Fax: (21) 5854-0614 

OTE ENGINEERING INC. 

No. 9, Lane 201, Sec. 2, Nankan Road, 

Lu-Chu Village, Tao-Yuan, Taiwan, R.O.C. 

Phone: (3) 352-4442 

Fax: (3) 352-4239 

YAMRON Co., Ltd. 

3F, No. 86 Chien-Kuo North Road, 

Sec. 2 Taipei, Taiwan, R.O.C. 

Phone: (2) 505-5288 

Fax: (2) 505-5675 

43

MARKETING OF SOCIAL BUSINESS 

SYSTEMS 

Beijing GOT Business Computer 

System Co., Ltd. 

8F, Yujing Building, Xueqing Road, 

Haidian District, Beijing 10083, China 

Phone: (10) 6231-1985 

Fax: (10) 6231-2177 

MANUFACTURING OF HEALTHCARE 

EQUIPMENT 

OMRON (Dalian) Co., Ltd. 

No. 3 Song Jiang Road, 

Dalian Economic and Technical Development Zone, 

Dalian 116600, China 

Phone: (411) 761-4222 

Fax: (411) 761-6602 

RESEARCH AND DEVELOPMENT 

OMRON Shanghai Computer Corporation 

14F, Meike Building, 1 Tianyaoqiao Road, 


Phone: (21) 6468-9626 

Fax: (21) 6468-9489 

LOGISTICS 

OMRON Trading (Shanghai) Co., Ltd. 

Room 1212, Rui-jin Building, 

205 Mao Ming Road (South), 


Phone: (21) 6472-8812 

Fax: (21) 6472-6959 

T H E A M E R I C A S 

North America 


OMRON Management Center 

of America, Inc. 

1300 Basswood, Suite 100, 

Schaumburg, IL 60173, U.S.A. 

Phone: (847) 884-0322 

Fax: (847) 884-1866 



AND SYSTEMS 

OMRON Electronics Inc. 

1 East Commerce Drive, 


Phone: (847) 843-7900 

Fax: (847) 843-7787 

OMRON Canada Inc. 

885 Milner Avenue, 

Scarborough, Ontario, M1B 5V8 Canada 

Phone: (416) 286-6465 

Fax: (416) 286-6648 

OMRON Manufacturing of America, Inc. 

3705 Ohio Avenue, 

St. Charles, IL 60174, U.S.A. 

Phone: (630) 513-0400 

Fax: (630) 513-1027 


OF AUTOMOTIVE COMPONENTS 

OMRON Automotive Electronics Inc. 

(MARKETING) 

30600 Northwestern Hwy., Suite 250, 

Farmington Hills, MI 48334, U.S.A. 

Phone: (248) 539-4700 

Fax: (248) 539-4710 

(MANUFACTURING) 

3709 Ohio Avenue, 

St. Charles, IL 60174, U.S.A. 

Phone: (630) 443-6800 

Fax: (630) 443-6898 

OMRON Dualtec Automotive 

Electronics, Inc. 

2270 Bristol Circle, Oakville, 

Ontario, L6H 5S3 Canada 

Phone: (905) 829-0136 

Fax: (905) 829-0432 

MARKETING OF OFFICE AUTOMATION 

EQUIPMENT 

OMRON Office Automation Products, Inc. 

3945 Freedom Circle, Suite 700, 

Santa Clara, CA 95054, U.S.A. 

Phone: (408) 727-1444 

Fax: (408) 970-1149 


SYSTEMS 

OMRON Systems, Inc. 

55 East Commerce Drive, 


Phone: (847) 843-0515 

Fax: (847) 843-7686 

MARKETING OF HEALTHCARE 

EQUIPMENT 

OMRON Healthcare, Inc. 

300 Lakeview Parkway, 

Vernon Hills, IL 60061, U.S.A. 

Phone: (847) 680-6200 

Fax: (847) 680-6269 

RESEARCH AND DEVELOPMENT 

OMRON Advanced Systems, Inc. 

3945 Freedom Circle, Suite 700, 

Santa Clara, CA 95054, U.S.A. 

Phone: (408) 727-6644 

Fax: (408) 727-5540 

OMRON Management Center 

of America, Inc. 

––Information Technology Center 

160 West Santa Clara Street, Suite 800, 

San Jose, CA 95113, U.S.A. 

Phone: (408) 271-1720 

Fax: (408) 271-1721 

South America 

MARKETING AND MANUFACTURING OF 

CONTROL COMPONENTS AND SYSTEMS 

OMRON Eletrônica do Brasil Ltda. 

Av. Santa Catarina, 935/939 04378-300, 

São Paulo, Brazil 

Phone: (11) 5564-6488 

Fax: (11) 5564-7751 

OMRON Componentes Eletro Eletrônicos 

da Amazônia Ltda. 

Av. Constantino Nery, 2800 Chapada, 

69050-002-Manaus, Amazonas, Brazil 

Phone: (92) 236-5850 

Fax: (92) 236-1356 

MARKETING OF RETAIL SYSTEMS 

EQUIPMENT 

OMRON Business Sistemas Eletrônicos 

da América Latina, Ltda. 

Av. Paulista 949 12-Ander, conj. 122, 

CEP 01311-100, São Paulo, Brazil 

Phone: (11) 251-0073 

Fax: (11) 251-1053 

44

E U R O P E 


OMRON Europe B.V. 

Wegalaan 67, N1-2132 JD Hoofddorp, 

The Netherlands 

Phone: (23) 5681-300 

Fax: (23) 5681-391 



AND SYSTEMS 

OMRON Europe B.V. 

Wegalaan 67, N1-2132 JD Hoofddorp, 


Phone: (23) 5681-300 

Fax: (23) 5681-391 

OMRON Electronics Ges.m.b.H. 

Altmannsdorfer Strasse 142, 

P.O. Box 323, A-1231, 

Vienna, Austria 

Phone: (1) 801900 

Fax: (1) 8044846 

OMRON Electronics N.V./S.A. 

Stationsstraat 24, 

B-1702 Groot-Bijgaarden, Belgium 

Phone: (2) 4662480 

Fax: (2) 4660687 

OMRON Electronics A.G. 

Sennweldstrasse 44, 

CH-6312 Steinhausen, Switzerland 

Phone: (41) 748-1313 

Fax: (41) 748-1345 

OMRON Electronics SPOL S.R.O. 

Srobarova 6, Prague 10, 101 00, 

Czech Republic 

Phone: (2) 6731-1254 

Fax: (2) 7173-5613 

OMRON Electronics G.m.b.H. 

P.O. Box 10 10 20, 

40710 Hilden, Germany 

Phone: (2103) 203-3 

Fax: (2103) 203-400 

OMRON Electronics A/S 

Odinsvej 15, 2600 Glostrup, Denmark 

Phone: (43) 44-00-11 

Fax: (43) 44-02-11 

OMRON Electronics S.A. 

c/Arturo Soria 95, E-28027 Madrid, Spain 

Phone: (1) 377-7900 

Fax: (1) 377-7956 

OMRON Electronics S.a.r.l. 

BP33, 19, Rue du Bois-Galon 94121 

Fontenay-Sous-Bois, Cedex, France 

Phone: (1) 4974-7000 

Fax: (1) 4876-0930 

OMRON Electronics S.r.l. 

Viale Certosa 49, 20149 Milano, Italy 

Phone: (2) 32-68-1 

Fax: (2) 32-51-54 

OMRON Electronics Sp. z.o.o. 

Ul Fortaczna 6, PL-01540 Warsaw, Poland 

Phone: (22) 6399810 

Fax: (22) 6399813 

OMRON Electronics, kft 

1046 Budapest, Kiss Ern u.3, Hungary 

Phone: (1) 399-3050 

Fax: (1) 399-3060 

OMRON Electronics Norway A/S 

Ole Deviks Vei 4, P.O. Box 109, Bryn, 

N-0611 Oslo, Norway 

Phone: (22) 657500 

Fax: (22) 658300 

OMRON Electronics B.V. 

Wegalaan 61, 

Postbus 5822132 JD 2130 An Hoofddorp, 


Phone: (23) 5681-100 

Fax: (23) 5681-188 

OMRON Electronics Lda. 

Edificio OMRON, Rua de Sao Tomé, 

Lote 131, 2685 Prior Velho, Portugal 

Phone: (1) 942-9400 

Fax: (1) 941-7899 

OMRON Electronics A.B. 

Norgegatan 1, P.O. Box 1275, 

S-164 28 Kista, Sweden 

Phone: (8) 632-3500 

Fax: (8) 632-3510 

OMRON Electronics oy 

Metsänpojankuja 5, 

Fin 02130 Espoo, Finland 

Phone: (9) 5495-800 

Fax: (9) 5495-8150 


1 Apsley Way, Staples Corner, 

London NW2 7HF, U.K. 

Phone: (181) 450-4646 

Fax: (181) 450-8087 


Acibadem Caddesi, Palmiye Sokak 12, 

TR-81020 Kadikoy, Istanbul, Turkey 

Phone: (216) 326-2980 

Fax: (216) 326-2979 

OMRON Manufacturing of the 

Netherlands B.V. 

Zilvernberg 2, 5234 GM Den Bosch, 


Phone: (73) 6481811 

Fax: (73) 6420195 

OMRON Electronics Manufacturing 

of Germany G.m.b.H. 

Robert-Bosch Strasse 1, P.O. Box 1165, 

D-71154 Nufringen, Germany 

Phone: (7032) 8110 

Fax: (7032) 81199 


OF OFFICE AUTOMATION EQUIPMENT 

OMRON Telford Ltd. 

Hortonwood 2, Telford, 

Shropshire TF1 4GW, U.K. 

Phone: (1952) 279444 

Fax: (1952) 279456 


SYSTEMS 

OMRON Systems Europe G.m.b.H. 

Süder Strasse 16, 

20097 Hamburg, Germany 

Phone: (40) 237050 

Fax: (40) 23705120 

OMRON Systems U.K. Ltd. 

Victory House, Cox Lane, 

Chessington, Surrey KT9 1SG, U.K. 

Phone: (181) 974-2166 

Fax: (181) 974-1864 


OF HEALTHCARE EQUIPMENT 

OMRON Healthcare Europe B.V. 

Wegalaan 57, 2132, 

JD Hoofddorp, The Netherlands 

Phone: (23) 5681-200 

Fax: (23) 5681-201 

OMRON Medizintechnik 

Handelsgesellschaft G.m.b.H. 

Windeck Strasse, 81, 

68613 Mannheim, Germany 

Phone: (621)-83348-8 

Fax: (621)-83348-20 

45

CORPORATE DATA 

HEAD OFFICE 

Karasuma Nanajo, Shimogyo-ku, 

Kyoto 600-8530, Japan 

Phone: (075) 344-7000 

Fax: (075) 344-7001 

Telex: 542 2889 OMRON KJ 

TOKYO HEAD OFFICE 

3-4-10, Toranomon, Minato-ku, 

Tokyo 105-0001, Japan 

Phone: (03) 3436-7227 

Fax: (03) 3436-7165 

Telex: 3242 4086, 3242 4087 OMRON TJ 

OSAKA OFFICE 

Osaka Center Bldg., 

4-1-3, Kyutaro-cho, Chuo-ku, 

Osaka 541-0056, Japan 

Phone: (06) 282-2511 

Fax: (06) 282-2789 

KYOTO R&D LABORATORY 

20, Igadera, Shimo-kaiinji, 

Nagaokakyo-shi, 

Kyoto 617-8510, Japan 

Phone: (075) 951-5111 

Fax: (075) 957-2871 

DATE OF ESTABLISHMENT 

May 10, 1933 

INDUSTRIAL PROPERTY RIGHTS 

Number of patents: 

2,546 (Japan) 

1,437 (Overseas) 

Number of patents pending: 

7,714 (Japan) 

596 (Overseas) 

NUMBER OF EMPLOYEES 

24,048 

PAID-IN CAPITAL 

¥64,079 million 

COMMON STOCK 

Authorized: 500,000,000 shares 

Issued: 262,107,214 shares 

Number of shareholders: 25,961 

STOCK LISTINGS 

Tokyo Stock Exchange 

Osaka Securities Exchange 

Kyoto Stock Exchange 

Nagoya Stock Exchange 

Frankfurt Stock Exchange 

TRANSFER AGENT 

The Mitsubishi Trust and Banking 

Corporation 

1-4-5, Marunouchi, Chiyoda-ku, 

Tokyo 100-8388, Japan 

(As of March 31, 1998) 

46

Karasuma Nanajo, Shimogyo-ku, Kyoto 600-8530, Japan 

Phone: (075) 344-7000 Fax: (075) 344-7001 

Home page: http://www.omron.co.jp 

This annual report is printed on paper made 

using a mixture of bagasse and recycled paper. 

c4 

Printed in Japan

Annual Report 1998 - Omron

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