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Annual Report 2003
Eyes on Diversity Cutting Edge Optical Solutions for an Array of Imaging Devices
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1 t a m r o n c o . , l t d .
corporate profile
Preface
50 Years in Pursuit of “Light ”
We at Tamron are pursuing a dream. For the 50 years that Tamron has been supported by its product users
throughout the world, we have pursued many dreams and challenged the unknown in a spirit of creativity
and faith in ourselves. To fulfill these dreams, we have created products and markets that did not previ-
ously exist, and strode forward to meet the new world of the future strengthened by the ideas of each of us
at Tamron raised in the fields of development, sales and production.
Tamron....Focus On the Future
The new challenge starts now as a comprehensive optical manufacturer capable of integrating digital tech-
nologies with optics.
Corporate Philosophy
With its firm commitment to developing high-quality, innovative
and technologically advanced products that satisfy customer needs,
Tamron is securing a leading position in the worldwide optical
industry.
Our primary objective is to sustain strong corporate growth based
on a high level of customer satisfaction achieved by providing supe-
rior products at the right price, thus also contributing to the pros-
perity of our shareholders and employees.
We at Tamron are advancing into the 21st century with our corporatephilosophy to guide our mission.
financial highlights ...................................................1message from the president .......................................2review of operations ..................................................6 management ...............................................................12financial summary .....................................................13management’s discussion and analysis ......................14consolidated balance sheets ....................................18
consolidated statements of income/consolidated statements of retained earnings .........20consolidated statements of cash flows ......................21notes to consolidated financial statements .............22independent auditors’ report.......................................31investor information/group network ..........................32group network (cont.)/corporate data .......................33
Mission
Customers
ShareholdersEmployees
CorporatePhilosophy
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t a m r o n c o . , l t d . 1
financial highlights
Thousands ofU.S. Dollars
Millions of Yen (Note 1)
Years Ended December 31 2003 2002 2001 2000 1999 2003
For the Year:
Net Sales ¥ 54,837 ¥41,580 ¥30,472 ¥26,943 ¥23,790 $511,779
Operating Income 6,341 3,685 388 881 1,450 59,182
Income before Income Taxes 5,027 2,492 11 508 1,009 46,917
Net Income (Loss) 3,347 1,863 (108) 353 536 31,243
At Year-End:
Total Assets ¥ 32,709 ¥24,840 ¥22,820 ¥23,398 ¥19,013 $305,270
Total Shareholders’ Equity 14,809 11,791 10,196 10,833 10,225 138,209
Number of Employees 2,497 1,552 1,378 1,302 — —
U.S. DollarsYen (Note 1)
Per Share Data:
Net Income (Loss) ¥ 257.75 ¥146.24 ¥ (8.51) ¥ 27.50 ¥ 41.67 $ 2.40
Shareholders’ Equity 1,148.83 925.43 800.03 841.94 794.69 10.72
Cash Dividends 20.00 12.50 7.50 10.00 7.5 0.18
Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥107.15=U.S.$1.2. Net income (loss) per share is computed based on the weighted-average number of shares of common stock outstanding during each year.
net sales (Millions of Yen)
operating income(Millions of Yen)
net income (loss)(Millions of Yen)
roe(%)
99 00
26,94323,790
1,450536
5.4
01
30,472
02
41,580
03
54,837
99 00
881
01
388
02
3,685
03
6,341
99 00
353
01
(108)
02
1,863
03
3,347
99 00
3.4
01-1.0
02
17.0
03
25.2
TAMRON CO., LTD. and Consolidated Subsidiaries
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2 t a m r o n c o . , l t d .
Operating Results
From the beginning of the New Year, the war in Iraq and growing concerns over severe acute
respiratory syndrome (SARS), weighed heavily on the economic environment in Japan. Plagued
by prolonged deflationary conditions, Japan’s economy remained stagnant, exacerbated by
continued downward pressure on employment markets and incomes. Conversely, we saw a
rise in capital investment as corporate results began to improve, boosted by an increase in
exports primarily to the U.S., China and other countries. In line with growth in digital-relat-
ed fields, the stock market experienced an overall upturn from the middle of the year and
despite continued lackluster consumer spending, conditions in Japan exhibited initial signs
of a gradual recovery.
Against this backdrop, the Tamron Group invested management resources in digital-related
fields, markets characterized by continued expansion. Responding to the growth of digitiza-
tion throughout society, we developed a variety of products, in particular strengthening our
lens business for the rapidly growing digital camera market and focusing on expanding pro-
duction. Amid these conditions, the Tamron Group was also successful in significantly improv-
message from the president
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t a m r o n c o . , l t d . 3
ing earnings through increased production overseas, reduction in material costs both at home
and abroad, and cutbacks in lead times.
As a result, net sales for the term under review surged 31.9% year-on-year to ¥54,837 mil-
lion and operating income jumped 72.1% to ¥6,341 million. Despite an extraordinary loss of
¥473 million announced in December 2003 in connection with measures to prevent and reverse
the spread of soil and groundwater contamination, net income for the term increased signif-
icantly to ¥3,347 million, up 79.6%.
Pressing Issues
In line with its medium- and long-term strategies, the Tamron Group will continue to push
ahead with the proactive investment of management resources in optical-related businesses
corresponding to the advancement of digital technologies. Under the corporate slogan,
“Tamron—Eyes on Diversity—Cutting Edge Optical Solutions for an Array of Imaging
Devices,” we will increase our efforts toward corporate reform and by utilizing our expertise
in optical technology to make positive contributions for the benefit of society.
Morio Onopresident & c.e.o.
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4 t a m r o n c o . , l t d .
To achieve these aims, we plan to address the following pressing issues:
1. Promote investment of management resources in an effort to expand digital-relat-
ed operations.
2. Expand R & D structure for strengthening essential technology development capa-
bility, focused on optical technology.
3. Strengthen production facilities focusing on our manufacturing subsidiary in China
and reinforce mold factory operations in Japan.
4. Improve earnings structure groupwide for areas related to photographic business-
es and enhance CCTV (closed circuit TV) camera lens businesses by the Group’s
sales companies.
5. Reduce inventories through the introduction of supply chain management (SCM)
systems, promote cash flow management and improve the balance sheet by cutting
back lead times.
6. Establish global information processing systems, CAD, CAM and other systems.
7. Promote measures to prevent and reverse soil and groundwater contamination at
the Company’s headquarters in Omiya and groupwide initiatives to protect the
global environment.
0099
1.52.8
01(0.5)
02
7.5
03
10.2
roa(%)
total assets(Millions of Yen)
00
23,398
99
19,013
01
22.820
02
24.840
03
32,709
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t a m r o n c o . , l t d . 5
As we work to address these pressing issues, Tamron will continue to focus management
resources on optical technologies and remain conscious of the environment in its efforts to
improve management. We are dedicated to becoming a market creation-, value creation-ori-
ented company with the aim of securing sustainable growth.
As we advance into the 21st century, Tamron will contin-ue advancing into the light, always providing its customerswith products and service that delight them. Following theTamron motto of “Actively challenging without fear of
1. To enhance surrounding optics optical technology andto strengthen the basis of electronics technologyWe aim to become a creative company that leads theworld technologically. With optics technologies as ourcore competency, we will expand our managementexpertise in the field of optical technology integratedwith mechanical, electronic and digital technologies.
2. Globalize Tamron sales, production and developmentTo globalize Tamron management at the highest levelof international standards.
3. To proactively diversify the scope of our business activitiesTo strengthen our existing operations and developoperations with the flexibility to promptly respond toopportunities created by the next generation of growthindustries.
4. To develop our human resourcesEnable our employees to integrate a happy and healthylifestyle with satisfying, challenging work in pursuit ofthe company’s mission.
failure,” Tamron aims to be a value-creation industry ofthe 21st century. Our 4-pronged long range corporate man-agement strategy provides the signposts for the next revo-lution of our corporate activities.
Actively Challenging the 21st Century
Long Term Business Goals
interest-bearing debt(Millions of Yen)
00
8,163
99
5,365
01
9,370
02
7,975
03
8,877
00
1,306
99
1,210
01
1,455
02
1,727
03
1,574
r&d expenditure(Millions of Yen)
Morio Ono, president & c.e.o.
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AF28-300mm Ultra Zoom XR F/3.5-6.3 LDAspherical [IF] MACRO
· Awarded European-Lens-Of-The-Year ’02-’03
· Awarded Good-Design ’02-’03
SP AF 90mm F/2.8 DiMACRO 1:1
SP AF 200-500mm F/5-6.3 Di LD[IF]
SP AF28-75mm F/2.8 XR Di LD Aspherical [IF] MACRO
· Awarded European-Lens-Of-The-Year ’03-’04
· Awarded Good-Design ’03-’04
SP AF17-35mm F/2.8-4 Di LD Aspherical [IF]
6 t a m r o n c o . , l t d .
n e w p r o d u c t s
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t a m r o n c o . , l t d . 7
Photographic Products Division
review of operations
exceptionally well received in the mar-
ketplace, earning the Company the
prestigious award “European Lens of
the Year,” for the second year in suc-
cession. Boosted by the performance
of new products, sales of this busi-
ness division grew steadily.
Despite increasing expectations
prompted by expansion in the digital
SLR camera market, overall condi-
tions remained weak as global mar-
This business division focused sales
activities on the Digitally Integrated
design (Di) series and high-zoom-
ratio lenses designed to meet the per-
formance characteristics of digital
SLR cameras, products earmarked for
significant growth.
In April 2003, Tamron launched
sales of a new product, the AF28-
75mm F/2.8XR Di LD Aspherical
[IF] MACRO lens. This lens was
kets for conventional film cameras
continued to shrink.
As a result of these factors, sales
in the photographic products division
edged down 0.2%, compared with the
previous term, to ¥9,468 million.
Operating income on the other hand,
was ¥137 million, a turnaround from
the operating loss of ¥306 million in
the previous term, buoyed by efforts
to reduce sales and marketing expenses.
net sales
99
15,425
00
12,433
01
11,121
02
9,489
03
9,468
(Millions of Yen)
99
1,332
00
292
01
(195)
02(306)
03
137
operating income (loss)(Millions of Yen)
99
8,821
00
11,256
01
10,395
02
7,855
03
7,161
assets(Millions of Yen)
99
690
00
1,585
01
701
02
673
03
978
capital expenditure(Millions of Yen)
net sales composition
17.3%
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Optical Components Division
8 t a m r o n c o . , l t d .
In response to rapid growth in
demand for digital camera lenses and
home video cameras, Tamron strove
to expand production facilities at its
subsidiary in China, address the needs
of principal customers as well as
improve product quality and reduce
costs.
In addition, the Company worked
to develop innovative products in line
with calls from the market for
increased lens magnification and pro-
moted cutting-edge technology to
enhance the performance and increase
production capacity of aspherical
lenses.
Our efforts in this regard result-
ed in sales of ¥38,519 million, a year-
on-year increase of 41.6%. Operating
income also jumped 58.5% to ¥6,741
million.
Tamron has contributed to the growth of the digital camera market and the digitalimage revolution by supplying optical lens units designed to meet the needs of the era’smega-pixel CCDs. Our optical know-how, therefore, plays a key role in the OEMcustomers’ attempts to attain higher market share. Also for supply to OEM customers,Tamron makes high performance, high definition lightweight and compact lens unitsfor home video cameras by making the most of our technologies and expertise accu-mulated over the years.
net sales composition
net sales
99
5,174
00
10,903
01
14,250
02
27,204
03
38,519
(Millions of Yen)
99
294
00
752
01
1,027
02
4,253
03
6,741
operating income(Millions of Yen)
99
5,725
00
6,600
01
6,172
02
10,528
03
13,538
assets(Millions of Yen)
99
87
00
513
01
511
02
351
03
1,590
capital expenditure(Millions of Yen)
70.2%
>>>
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t a m r o n c o . , l t d . 9
Digital Camera Lenses
Video Camera Lenses
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1 0 t a m r o n c o . , l t d .
CCTV [Surveillance] Cameras and Lenses
As a pioneer in this field as well, Tamron has always held the leading position in theindustry since introducing “vari-focal lenses,” epoch-making surveillance camera lens-es that meet the needs of installers requiring high performance, compact and versatilelenses. Tamron also makes a wide array of CCTV cameras and lenses including ultrahigh performance lenses for image processing required for FA (Factory Automation)applications, integrated lens/camera ZoomCam and more.
High Precision Prisms Optical Components for LCD Projectors Aspherical Lenses
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t a m r o n c o . , l t d . 1 1
Commercial/Industrial-Use Optics Division
In lenses for CCTV cameras, demand
remained firm in the security equip-
ment market, as the Company moved
forward with the development of new
products to address the growing trend
toward digitization. In addition to
measures adopted in the U.S. and
China, we also reinforced our sales
structure to meet demand in the
European market. In the area of prod-
uct development, we strove to com-
mercialize unique products such as
surveillance camera lenses that are
compatible with day-&-night cam-
eras. In projectors, Tamron increased
production capacity at its subsidiary
in China, introduced new technolo-
gy focusing on customers’ demands,
pushed ahead with mass production
technologies, and developed optical
components for LCD projectors and
rear-projection TVs.
The overall result for these busi-
ness division was sales of ¥6,849 mil-
lion, up 40.2% from the previous
term, and operating income of ¥610
million, a year-on-year increase of
20.3%.
As a comprehensive manufacturer of quality optics, Tamron produces a variety of opti-cal devices requiring high accuracy and advanced technologies by utilizing our tech-nological edge in designing, processing and measuring. The optical devices that Tamronmanufactures for sophisticated industrial applications include various spherical lenselements, special prisms such as cross-prisms for LCD projectors, devices for laser opti-cal systems, diachronic filter mirrors for color separation, polarizing beam splitters,thin-film layer coated products featuring very special multilayer coatings, ultra-pre-cision standard gauge glass required for prompt and accurate evaluation of lens sur-faces and so on.
net sales
99
3,191
00
3,606
01
5,100
02
4,886
03
6,849
(Millions of Yen)
99
569
00
668
01
391
02
507
03
610
operating income(Millions of Yen)
99
2,249
00
2,862
01
3,336
02
3,369
03
5,599
assets(Millions of Yen)
99
95
00
411
01
389
02
187
03
550
capital expenditure(Millions of yen)
net sales composition
12.5%
>>>
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1 2 t a m r o n c o . , l t d .
management
President & c.e.o.
Morio Ono
Senior Managing Director
Shoji Kono
Senior Managing Director
Hitoshi Ohta
Managing Director
Yoshihiro Shirai
Director
Hisaaki Nagashima
Director
Keisuke Arai
Director
Kunihiro Kanoh
Standing Corporate AuditorTadao Arai*
Standing Corporate AuditorKiyoshi Okawa
Corporate AuditorSojin Hiratsuka*
*Outside Auditors
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financial summary
Thousands ofU.S. Dollars
Millions of Yen (Note 1)
Years Ended December 31 2003 2002 2001 2000 1999 2003
For the Year:
Net Sales ¥ 54,837 ¥41,580 ¥30,472 ¥26,943 ¥23,790 $511,779
Operating Income 6,341 3,685 388 881 1,450 59,182
Income before Income Taxes 5,027 2,492 11 508 1,009 46,917
Net Income (Loss) 3,347 1,863 (108) 353 536 31,243
At Year-End:
Total Assets ¥ 32,709 ¥24,840 ¥22,820 ¥23,398 ¥19,013 $305,270
Total Shareholders’ Equity 14,809 11,791 10,196 10,833 10,225 138,209
Number of Employees 2,497 1,552 1,378 1,302 — —
U.S. DollarsYen (Note 1)
Per Share Data:
Net Income (Loss) ¥ 257.75 ¥146.24 ¥ (8.51) ¥ 27.50 ¥ 41.67 $ 2.40
Shareholders’ Equity 1,148.83 925.43 800.03 841.94 794.69 10.72
Cash Dividends 20.00 12.50 7.50 10.00 7.5 0.18
Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥107.15=U.S.$1.2. Net income (loss) per share is computed based on the weighted-average number of shares of common stock outstanding during each year.
t a m r o n c o . , l t d . 1 3
TAMRON CO., LTD. and Consolidated Subsidiaries
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1 4 t a m r o n c o . , l t d .
management’s discussion and analysis
Operating Results
Term Overview
Buoyed by large-scale expansion of digital-related markets and
significant growth in sales of digital camera lenses, consolidat-
ed net sales in fiscal 2003, the year ended December 31, 2003,
totaled ¥54,837 million, an increase of 31.9% compared with
the previous fiscal year. On the earnings front, operating income
surged 72.1% year-on-year to ¥6,341 million, due to overall
reductions in operating expenses achieved through increased
overseas production, cutbacks in costs both at home and over-
seas, and reduced lead-times.
The operating income margin improved 2.6 percentage
points to 11.5%, reflecting a 0.7 percentage point decrease in
the ratio of cost of sales to total net sales, which came to 75.8%,
and a drop of 1.9 percentage points in the selling, general and
administrative (SG&A) expense ratio to 12.7%. Tamron is com-
mitted to maintaining its operating income margin at a level
exceeding 10% going forward.
Despite an extraordinary loss of ¥473 million announced
in December 2003 in connection with measures to halt and
reverse the spread of soil and groundwater contamination, net
income for the term increased significantly to ¥3,347 million,
up 79.6%.
Overseas Sales
Overseas sales for the period under review climbed 19.1% to
¥11,135 million, comprising 20.3% of total consolidated net
sales. As a percentage of consolidated net sales, the Company
recorded 8.3% in North America, 4.8% in Europe and 7.3% in
Asia. Most notable was the jump in sales in Asia, which improved
65.7% compared with the previous fiscal year to ¥3,989 million.
Financial Position
Total assets as of December 31, 2003 stood at ¥32,709 million,
up 31.7% compared with the end of the previous fiscal year.
Major components were cash and cash equivalents of ¥5,998
million, a year-on-year increase of 88.9%, and an increase in
the balance of trade notes and accounts receivable. Current assets
net sales net sales
9999
23,79023,790
0000
26,94326,943
0101
30,47230,472
0202
41,58041,580
0303
54,83754,837(Millions of Yen)(Millions of Yen)
9999
1,4501,450
0000
881881
0101
388388
0202
3,6853,685
0303
6,3416,341
operating incomeoperating income(Millions of Yen)(Millions of Yen)
9999
536536
0000
353353
0101
(108)(108)
0202
1,8631,863
0303
3,3473,347
net income (loss)net income (loss)(Millions of Yen)(Millions of Yen)
タムロン 0610*入稿用 04.6.29 2:19 PM ページ 2
t a m r o n c o . , l t d . 1 5
as of the fiscal year-end totaled ¥24,627 million, up 31.1%.
Inventories as of the year-end increased in line with the increase
in sales. Inventory turnover improved from 6.0 times to 6.8
times reflecting greater efficiencies. Fixed assets as of December
31, 2003 stood at ¥8,082 million an increase of 33.6% compared
with the previous fiscal year-end.
Current liabilities as of the year-end jumped 45.0% to
¥13,766 million while long-term liabilities climbed 16.3% to
¥4,134 million. As a result total liabilities as of December 31,
2003 stood at ¥17,900 million, an increase of 37.2%.
The balance of interest-bearing debt was ¥8,877 million,
up 11.3%, and comprised short-term loans payable of ¥5,564
million and long-term loans payable of ¥3,312 million. On a
consolidated basis, Tamron experienced across-the-board
improvements in financial indicators. The degree of reliance on
borrowings fell 5 percentage points to 27.1%, with repayment
terms declined from 2.4 years to 1.7 years and the interest cov-
erage ratio improved from 18.9 times to 34.8 times.
Total shareholders’ equity as of the year-end stood at
¥14,809 million, up 25.6%. Shareholders’ equity ratio was 45.3%,
a drop of 2.2 percentage points.
Cash Flows
Net cash provided by operating activities amounted to ¥5,332
million, an increase of 63.7% compared with the previous fis-
cal year. This was mainly the result of a substantial jump in
income before income taxes and the increase in trade notes and
accounts payable.
Net cash used in investing activities came to ¥3,333 million,
up 151.1% year-on-year. This was mainly attributed to capital
investments for expanding the Company’s factory in China and
increasing the production of molds required for new products.
Net cash provided by financing activities amounted to ¥968
million, differing from net cash used, ¥1,331 million, in the
previous fiscal year, reflecting a net increase in loans payable.
As a result of these factors, cash and cash equivalents at
the end of the fiscal year totaled ¥5,998 million, up ¥2,822 mil-
lion compared with the previous fiscal year-end.
inventories/ inventories/ (Millions of Yen)(Millions of Yen)
00009999
7,9277,927
5,2175,217
0101
8,4238,423
0202
6,9696,969
0303
8,0878,087
00009999
23,39823,398
19,01319,013
0101
22,82022,820
0202
24,84024,840
0303
32,70932,709
00009999
10,83310,83310,22510,225
3.43.45.45.4
0101
10,19610,196
(1.0)(1.0)0202
11,79111,791
0303
14,80914,809
25.225.2
inventory turnover
total assets/total assets/(Millions of Yen)(Millions of Yen)roa
shareholders’ equity/shareholders’ equity/(Millions of Yen)(Millions of Yen)roe
2.62.6
3.53.53.33.3
2.02.0 1.81.8
2.82.81.51.5
(0.5)(0.5)
7.57.5
10.210.2
17.017.0
(%) (%)(Months)
タムロン 0610*入稿用 04.6.29 2:19 PM ページ 3
1 6 t a m r o n c o . , l t d .
Capital Expenditure
The total amount of capital investment in fiscal 2003 amounted
to ¥3,142 million, and was used to keep pace with the rapid
growth in digital-related businesses, and to secure necessary new
molds that serve as core components of the Company’s business
activities.
Capital expenditure by business segment comprised ¥978
million for Photographic Products Division, ¥1,590 million for
the Optical Components Division, and ¥550 million for
Commercial/Industrial-Use Optics Division.
Based on its three-year management plan, Tamron intends
to actively invest in four priority fields.
1. Reinforce mold factory operations
2. Strengthen projector-related production capacity
3. Expand production capacity of digital camera lens units in
response to the rapidly growing market
4. Bolster other business activities
Capital Expenditure Three-Year Plan (Millions of Yen)
Fiscal 2004 Fiscal 2005 Fiscal 2006
5,900 5,300 4,700
Research and Development
Total R&D expenses for the fiscal year under review totaled
¥1,574 million and comprised ¥344 million for Photographic
Products Division, ¥725 million for the Optical Components
Division, and ¥504 million for Commercial/Industrial-Use Optics
Division.
Tamron has continued to conduct research into the devel-
opment of optical devices, including digital-related lenses, pri-
marily, through its Optical Technology Development
Headquarters and design departments of respective business
units. The Company has also pursued the development of inter-
changeable lenses for 35mm SLR cameras under its own brand.
In addition, Tamron has worked to develop environmen-
tally conscious design engineering technology consistent with
European standards for environmental protection, to pursue the
active reduction of environmentally harmful substances, and to
enhance its environmental technology to meet environment stan-
dards expected to be adopted in Europe in the near future.
The Company plans to make positive investments in effec-
tive R&D, geared toward securing a stronger position in an
increasingly competitive market.
0000
1,1631,163
0101
1,0421,042
0202
2,9072,907
0303
4,4174,417
cash flowscash flows(Millions of Yen)(Millions of Yen)
00009999
809809803803
0101
1,1511,151
0202
1,0431,043
0303
1,0701,070
depreciation expensesdepreciation expenses(Millions of Yen)(Millions of Yen)
capital expenditure capital expenditure (Millions of Yen)(Millions of Yen)
0000
2,5192,519
9999
876876
0101
1,6131,613
0202
1,2201,220
0303
3,1423,142
0404
5,9005,900
0505
5,3005,300
0606
4,7004,700
(Plan)(Plan)
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number of employeesnumber of employees(Consolidated)(Consolidated)
0000
1,3021,302
0101
1,3781,378
0202
1,5521,552
0303
2,4972,497
0404
4,2004,200
0505
4,5004,500
0606
4,8004,800
(Plan)(Plan)
r&d expenditurer&d expenditure(Millions of Yen)(Millions of Yen)
0000
1,3061,306
9999
1,2101,210
0101
1,4551,455
0202
1,7271,727
0303
1,5741,574
0404
2,3002,300
0505
2,5002,500
0606
2,9002,900
(Plan)(Plan)
As part of its three-year management plan, Tamron will
focus on the following four priority fields:
1. Development of fundamental technology by focusing on opti-
cal technology
2. Development of high-precision processing and measure-
ment/evaluation technology
3. Development of fundamental technology for electronic devices
4. Entirely new business development
R&D Three-Year Management Plan (Millions of Yen)
Fiscal 2004 Fiscal 2005 Fiscal 2006
2,300 2,500 2,900
Number of Employees
The number of employees on a consolidated basis was 2,497 as
of December 31, 2003, an increase of 945 from the end of the
previous year. This increase is mainly attributed to efforts to
expand the Company’s manufacturing base in China, primari-
ly for its lens-related business.
Tamron plans to increase the number of employees at its
manufacturing subsidiary in China, in response to a jump in
demand, in the growing digital camera market. Plans are also
afoot to expand the number of research personnel at the Company
with the aim of bolstering the Company’s capability to devel-
op fundamental technology, and at the same time, to increase
the number of employees at its mold factory.
Employee Trend Three-Year Plan (Consolidated)
Fiscal 2004 Fiscal 2005 Fiscal 2006
4,200 4,500 4,800
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Thousands ofThousands of Yen U.S. Dollars
December 31 2003 2002 2003assets
Current assets:
Cash and cash equivalents ¥ 5,998,067 ¥ 3,175,804 $ 55,978
Notes and accounts receivable—trade 8,837,169 7,517,918 82,474
Inventories 8,087,822 6,969,252 75,481
Deferred tax assets 644,478 281,677 6,014
Other current assets 1,149,350 997,683 10,726
Reserve for doubtful accounts (89,243) (152,641) (832)
Total current assets 24,627,643 18,789,694 229,842
Fixed assets:
Property, plant and equipment:
Buildings and structures 2,308,078 2,007,175 21,540
Machinery, equipment and vehicles 2,040,926 1,318,187 19,047
Tools, furniture and fixtures 1,077,167 866,235 10,052
Land 875,455 889,381 8,170
Other 602,219 197,661 5,620
Total property, plant and equipment 6,903,847 5,278,642 64,431
Intangible assets 176,146 199,919 1,643
Investments and other assets:
Investments in securities 532,965 135,269 4,974
Deferred tax assets 309,296 285,142 2,886
Other 168,687 159,405 1,574
Reserve for doubtful accounts (8,892) (7,088) (82)
Total investment and other assets 1,002,056 572,728 9,351
Total fixed assets 8,082,050 6,051,290 75,427
Total assets ¥32,709,694 ¥24,840,985 $305,270
The accompanying notes are an integral part of these statements.
consolidated balance sheetsTAMRON CO., LTD. and Consolidated Subsidiaries
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Thousands ofThousands of Yen U.S. Dollars
December 31 2003 2002 2003liabilities, minority interests and shareholders’ equity
Current liabilities:
Notes and accounts payable—trade ¥ 4,150,999 ¥ 2,417,821 $ 38,740
Short-term loans payable 5,564,371 5,151,470 51,930
Income taxes payable 1,663,400 668,466 15,524
Other current liabilities 2,387,264 1,256,361 22,279
Total current liabilities 13,766,036 9,494,120 128,474
Long-term liabilities:
Long-term loans payable 3,312,996 2,824,390 30,919
Reserve for employees’ retirement benefits 703,898 628,809 6,569
Reserve for directors’ retirement benefits 117,626 101,973 1,097
Total long-term liabilities 4,134,521 3,555,173 38,586
Total liabilities 17,900,557 13,049,293 167,060
Minority interests — — —
Shareholders’ equity:
Common shares — 3,835,575 —
Additional paid-in capital — 4,345,425 —
Retained earnings — 4,079,647 —
Unrealized gain (loss) on other marketable securities — (11,059) —
Foreign currency translation adjustments — (353,087)
— 11,896,500 —
Treasury stock, at cost — (104,808) —
Total shareholders’ equity — 11,791,692 —
Common stock 3,835,575 — 35,796
Capital surplus 4,353,384 — 40,628
Retained earnings 7,234,100 — 67,513
Unrealized gain (loss) on other marketable securities 46,626 — 435
Foreign currency translation adjustments (642,127) — (5,992)
14,827,558 — 138,381
Treasury stock, at cost (18,421) — (171)
Total shareholders’ equity 14,809,136 — 138,209
Total liabilities and shareholders’ equity ¥32,709,694 ¥24,840,985 $305,270
The accompanying notes are an integral part of these statements.
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Thousands ofThousands of Yen U.S. Dollars
Years ended December 31 2003 2002 2003Retained earnings at the beginning of the year ¥ — ¥ 2,311,627 $ —Decrease:
Cash dividends — 95,583 —Bonuses to directors and auditors — — —
Net income ¥ — ¥ 1,863,602 $ —Balance at the end of the year ¥ — ¥ 4,079,647 $ —
Capital surplus at the beginning of the year ¥ 4,345,425 ¥ — $ 40,554Increase:
Gain on sales of treasury stock 7,958 — 74Capital surplus at the end of the year ¥ 4,353,384 ¥ — $ 40,628
Retained earnings at the beginning of the year ¥ 4,079,647 ¥ — $ 38,074Increase:
Net income 3,347,726 — 31,243Decrease:
Cash dividends 159,273 — 1,486Bonuses to directors and auditors 34,000 — 317
Retained earnings at the end of the year ¥ 7,234,100 ¥ — $ 67,513
Thousands ofThousands of Yen U.S. Dollars
Years ended December 31 2003 2002 2003
Net sales ¥ 54,837,131 ¥ 41,580,282 $511,779Cost of sales 41,539,842 31,798,237 387,679Gross profit 13,297,289 9,782,045 124,099Selling, general and administrative expenses 6,955,838 6,096,615 64,916Operating income 6,341,450 3,685,429 59,182Non-operating income 109,492 96,769 1,021Non-operating expenses 950,385 922,844 8,869Ordinary profit 5,500,557 2,859,354 51,335Extraordinary profit — — —Extraordinary loss 473,328 367,064 4,417Income before income taxes 5,027,229 2,492,290 46,917Income taxes—current 2,112,744 747,059 19,717Income taxes—refunded — (104,212) —Income taxes—deferred (433,241) (14,159) (4,043)
Net income ¥ 3,347,726 ¥ 1,863,602 $ 31,243Net income per share (in yen and U.S. dollars) ¥ 257.75 ¥ 146.24 $ 2.40The accompanying notes are an integral part of these statements.
consolidated statements of retained earningsTAMRON CO., LTD. and Consolidated Subsidiaries
consolidated statements of incomeTAMRON CO., LTD. and Consolidated Subsidiaries
Capital surplus
Retained earnings
The accompanying notes are an integral part of these statements.
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Thousands ofThousands of Yen U.S. Dollars
Years ended December 31 2003 2002 2003
Cash flows from operating activities:Income before income taxes ¥ 5,027,229 ¥ 2,492,290 $46,917Depreciation and amortization 1,070,008 1,043,622 9,986Increase in reserve for employees’ retirement benefits 75,088 21,359 700Interest and dividend income (9,746) (7,494) (90)Interest expense 152,803 174,468 1,426Loss on disposal of property, plant and equipment 101,585 154,983 948Loss on valuation of investment securities — 28,880 —Loss on liquidation of subsidiaries — 38,183 —Increase in trade receivables (1,714,359) (3,065,921) (15,999)(Increase) decrease in inventory (1,330,321) 1,264,866 (12,415)Increase in trade payables 2,264,761 1,307,560 21,136Other—net 845,090 53,322 7,886
Sub-total 6,482,139 3,506,122 60,495Interest and dividend received 9,747 7,540 90Interest paid (153,453) (171,971) (1,432)Income taxes paid (1,116,406) (113,364) (10,419)Income taxes refunded 110,862 28,720 1,034
Net cash provided by operating activities 5,332,888 3,257,048 49,770Cash flows from investing activities:
Purchases of property, plant and equipment (3,024,920) (1,057,925) (28,230)Proceeds from sale of property, plant and equipment 22,612 7,067 211Purchases of investment securities (300,000) (40,606) 2,799Proceeds from sale of investment securities — 20,000 —Increase in loans receivable (6,318) (3,783) 58Proceeds from collection of loans receivable 5,063 6,881 47Purchases of intangible fixed assets (2,848) (136,888) 26Other—net (27,248) (122,618) (254)
Net cash used in investing activities (3,333,659) (1,327,873) 31,112Cash flows from financing activities:
Net increase (decrease) in short-term loans 352,147 (502,439) (3,286)Proceeds from long-term loans 2,481,260 1,100,000 23,156Repayment of long-term loans (1,799,986) (1,830,861) (16,798)Proceeds from sale of treasury stock 104,632 — 976Purchases of treasury stock (10,286) (2,466) 95Dividends paid (158,804) (95,561) 1,482
Net cash provided by (used in) financing activities 968,962 (1,331,328) 9,043Effect of exchange rate changes on cash and cash equivalents (145,928) (51,027) 1,361Net increase in cash and cash equivalents 2,822,262 546,818 26,339Cash and cash equivalents at the beginning of the year 3,175,804 2,628,985 29,638Cash and cash equivalents at the end of the year ¥ 5,998,067 ¥ 3,175,804 $55,978
The accompanying notes are an integral part of these statements.
consolidated statements of cash flowsTAMRON CO., LTD. and Consolidated Subsidiaries
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notes to consolidated financial statementsTAMRON CO., LTD. and Consolidated Subsidiaries
Basis of presenting Consolidated Financial Statements TAMRON CO., LTD. (the Company) maintains its accounts and
records in accordance with the provisions set forth in JapaneseCommercial Code and the Securities and Exchange Law, and in con-formity with accounting principles and practices generally accepted inJapan (Japanese GAAP). The accounts of overseas-consolidated sub-sidiaries are based on accounting records maintained in conformity withgenerally accepted accounting principles and practices prevailing in thecountries of domicile. Certain accounting principles and practices gen-erally accepted in Japan are different from International AccountingStandards and standards in other countries, particularly in respect toapplication and disclosure requirements; accordingly, the accompany-ing financial statements are intended for use by those who are informedabout Japanese accounting principles and practices.
The accompanying consolidated financial statements are a transla-tion of the audited consolidated financial statements of the Company,which were prepared in accordance with Japanese GAAP, and werefiled with the appropriate Local Finance Bureau of the Ministry ofFinance, as required by the Securities and Exchange Law.
The translation of Japanese yen amounts into U.S. dollars is includ-ed solely for the convenience of readers; the prevailing exchange rateon December 31, 2003, ¥107.15 per U.S. $1.00, was used. The trans-lations should not be construed as representations of Japanese yen thathave been, could have been, or could be converted into U.S. dollars inthe future, at this rate or any other rate of exchange.
1. Scope of consolidationAll subsidiaries are consolidated.Number of consolidated subsidiaries: 5TAMRON USA, Inc.TAMRON Europe GmbH.TAMRON INDUSTRIES (HONG KONG) LIMITEDTAMRON OPTICAL (FOSHAN) CO., LTD.TAMRON France EURL.
2. Application of the equity methodThe Company does not have any unconsolidated or affiliated compa-nies; accordingly, the equity method is not applied.
3. Fiscal termThe fiscal terms of each consolidated subsidiary are the same as theterms of the Company.
4. Accounting policies(1) Methods for valuation of significant assetsa. Investments in securities
With market quotations: stated at fair market value. Unrealized gainsand losses on these securities are reported, net of applicable incometaxes, as a separate component of the stockholders' equity. Realizedgains and losses on the sale of such securities are computed usingthe moving-average cost.Without market quotations: stated at cost using the moving-averagemethod.
b. InventoriesThe Company: valued at cost using the monthly moving-averagemethod.Consolidated subsidiaries: stated at the lower of cost, or market, prin-cipally using the first-in first-out method.
c. DerivativesDerivatives financial positions are stated at fair value.
(2) Depreciation of fixed assetsa. Property, Plant and Equipment
The Company: by the declining-balance method, primarily based onthe following estimated useful lives:
Buildings ..................................................................30 to 40 yearsMachinery and equipment ..........................................5 to 10 years
However, buildings (excluding equipment attached) obtained on orafter April 1, 1998 are depreciated by the straight-line method,according to the Corporation Tax Law.Consolidated subsidiaries: by the straight-line method.
b. Intangible AssetsBy the straight-line method. In-house use software is amortized overa five-year period, the assumed useful life.
(3) Reservesa. Reserves for Doubtful Accounts
Reserves for doubtful accounts are generally provided based on actu-al collection losses incurred in the past. Additionally, for accountsreceivable considered at risk (bankruptcy, companies under rehabil-itation plan), an allowance is booked based on an estimation of theuncollectible amount, on a case-by-case basis.
b. Reserve for Employees’ Retirement BenefitsIn order to provide for retirement benefits to be paid to employees,the amount considered to have accrued, as at the end of the term,is stated, based on the estimated amount of retirement benefit oblig-ations and pension plan assets, as at the end of the term. The actu-arial gains (losses) will be recognized in expenses, in equal amounts,over a five-year period, which is shorter than the average remainingservice years of eligible employees, commencing with the next yearof the accrual.
c. Reserve for Directors’ Retirement BenefitsThe Company provides the reserve for directors’ retirement bene-fits with an amount deemed necessary at the term-end, in line within-house regulations.
(4) Foreign currency translation of significant assets and liabilitiesForeign currency-denominated assets and liabilities held by the Companyare translated into Japanese yen using exchange rates prevailing on thebalance sheet date; and gains and losses on translation are charged toincome. Relevant assets and liabilities held by subsidiaries are translatedinto Japanese yen using exchange rates prevailing on the balance sheetdate; and revenues and expenses are translated using the average exchangerates during the term. Gains and losses on translation are charged to share-holders’ equity under “Foreign currency translation adjustments.”
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(5) Lease transactionsFinance lease transactions, excluding leases where the ownership ofleased objects are deemed to be transferred to the lessee, were account-ed for in the same manner as operating leases.
(6) Hedginga. Hedge Accounting
Derivative financial instruments are stated at fair value and changesin the fair value are recognized as gains or losses, unless derivativefinancial instruments are used for hedging purposes. If derivativefinancial instruments are used as hedges and meet certain hedgingcriteria, the Company defers recognition of gains or losses, result-ing from changes in fair value of derivative financial instruments,until the related losses or gains on the hedged items are recognized.
b. Hedge Instruments and Assets and Liabilities Being HedgedHedge instruments are foreign exchange forward contracts. Assetsand liabilities being hedged are foreign currency receivables andpayables.
c. Hedge Transaction PoliciesThe Company engages in derivative transactions with the aim ofhedging risk on foreign exchange fluctuations in accordance with in-house regulations.
d. Assessment of Effectiveness of HedgingThe Company has realized a high correlation coefficient betweenmarket fluctuations and cash flows (assets and liabilities being hedged)and hedge instruments: it thereby highly evaluates the effectivenessof the derivatives transactions in question.
(7) Other significant accounting policies for preparing consolidated financial statements
a. Consumption TaxConsumption tax is not included.
b. Accounting for Treasury Stock and Transfer of Statutory ReservesThe Company has applied Business Accounting Standard No. 1,
“Accounting Standard for Treasury Stock and Transfer of LegalReserves,” beginning with the period under review. The adoption ofthis accounting standard had an immaterial effect on earnings forthe period under review. Furthermore, beginning with the periodunder review, the Company has presented the shareholders’ equitysection of the balance sheet and the consolidated statements ofretained earnings, in accordance with amended guidelines for thepreparation of consolidated financial statements.
c. Per Share DataEffective April 1, 2002, the Company has adopted new accountingstandards for net income per share in accordance with “AccountingStandards for Net Income Per Share” (Business Accounting StandardNo. 2) and “Guidelines for Application of Accounting Standards forNet Income Per Share” (Guidelines for Business Accounting StandardsNo. 4). The impact of the adoption of the new accounting standardsis outlined in the note to per share data.
5. Assets and liabilities of consolidated subsidiaries
Assets and liabilities of consolidated subsidiaries were valued at the fairvalue.
6. Appropriation of retained earningsAppropriations of retained earnings of consolidated subsidiaries werecarried out based on the actual appropriations at the subsidiaries.
7. Scope of cash and cash equivalents in the statements of cash flows
In preparing the consolidated statements of cash flows, cash on hand,readily available deposits, and short-term highly liquid investments,with maturity not exceeding three months at the time of purchase, areconsidered to be cash and cash equivalents.
Notes to consolidated balance sheets1. Assets pledged as collateral(1) Industrial foundation
Thousands of Yen
Buildings and structures 775,444Machinery, equipment and vehicles 778,583Tools, furniture and fixtures 67,852Land 96,179Other 11,049
Total 1,729,108
(2) OtherThousands of Yen
Buildings and structures 435,319Land 210,765
Total 646,084
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(3) Loans secured by the above assetsThousands of Yen
Short-term loans payable 2,033,780Long-term loans payable (including loans due within one year) 3,220,576
Total 5,254,356
2. Accounting for notes matured at end of fiscal yearThe end of the 2003 fiscal year coincided with a bank holiday, and the following notes that matured at the end of the fiscal year were account-ed for as if they were settled on their date of maturity. Notes receivable ......................................................................................¥9,512 thousand
3. The Company’s total number of shares outstanding was 12,867,500 ordinary shares.
4. The Company has 13,351 ordinary shares of treasury stock.
Notes to consolidated statements of incomeResearch and development expenses included in selling, general and administrative expenses and manufacturing costs totaled ¥1,574,391 thousands.
Notes to consolidated statements of cash flowsReconciliation between amounts shown in cash and cash equivalents at the end of the year on the statements of cash flows, and in cash and cashequivalents on the consolidated balance sheets, as of December 31, 2003, is not required, and is as follows:Cash and cash equivalents on the statement of cash flows.................¥5,998,067 thousandCash and cash equivalents at the end of the year ..............................¥5,998,067 thousand
I. Notes to leasesFinance leases are accounted for in the same manner as operating leases.1. Acquisition cost, accumulated depreciation and net book value of lease assets
Thousands of Yen
Acquisition Accumulated Net cost depreciation book value
Machinery and equipment 1,276,905 605,754 671,150Tools, furniture and fixtures 509,231 291,321 217,909
Total 1,786,136 897,075 889,060
2. Unpaid lease expenses as of December 31, 2003Thousands of Yen
Due within one year 268,795Due after one year 659,077
Total 927,872
3. Lease expense payments, depreciation and interest expensesThousands of Yen
Lease expense payments 319,800Depreciation 283,719Interest expense 37,198
4. Method of calculating depreciationDepreciation expense on leased assets is calculated by using the straight-line method, over the lease period and has a residual value of zero.
5. Method of calculating interest expenseThe difference between total lease expense and acquisition cost of leased assets, is considered as the interest portion, and the allocation of thisinterest is calculated by the interest method.
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II. Notes to investments in securities1. With quoted market value
Thousands of Yen
Type of securities As of December 31, 2002 As of December 31, 2003
Acquisition Carrying Difference Acquisition Carrying Differencecost amount cost amount
Securities whose carrying amounts (1) Stocks — — — 108,890 188,043 79,153on consolidated balance (2) Debt securities — — — — — —sheets exceed their acquisition (3) Others — — — — — —costs Total — — — 108,890 188,043 79,153Securities whose (1) Stocks 153,134 134,066 (19,067) 44,244 43,719 (525)acquisition costs exceed (2) Debt securities — — — — — —carrying amounts on (3) Others — — — — — —consolidated balance sheets Total 153,134 134,066 (19,067) 44,244 43,719 (525)
Total 153,134 134,066 (19,067) 153,134 231,762 78,628
Notes:1. The Company recognized loss on the write down of the stocks, amounting to ¥28,880 thousand, for the fiscal year ended December 31, 2002.2. The Company shall write down the stocks, whose fair market values fall below 50% or more of acquisition costs; and for those securities,
whose fair market values fall between 30% or more and 50% or less, and whose fair market values were not judged to recover, a write downfor those securities will also be made.
2. Without quoted market valueThousands of Yen
As of December 31, 2002 As of December 31, 2003
Carrying amount Carrying amount
Investments in securitiesPreference fund certificates — 300,000Non-listed stocks (excluding OTC stocks) 1,202 1,202
III. Notes to derivativesCurrent transactions(1) Derivative financial instrumentsDerivative financial instruments utilized by the Company are comprised principally of foreign exchange forward contracts and currency options.Consolidated subsidiaries do not utilize derivative financial instruments.
(2) Policy relating to derivative financial instrumentsThe Company is exposed to market risks from changes in foreign currency exchange rates and interest rates, and enters into financial instru-ments and derivative financial instruments for the purpose of reducing such risks. The Company does not hold or issue derivative financial instru-ments for speculation.
(3) ObjectivesThe Company utilizes derivative transactions to secure stable profits by hedging against those risks arising from changes in foreign exchangerates in connection with its foreign currency assets and liabilities. The Company adopts hedge accounting in connection to the application ofderivative transactions.
Hedge Accounting MethodologyThe Company applies the deferral hedge method in hedge accounting, if certain hedging criteria are met. Foreign exchange forward contractsare accounted for by using the appropriated method for contracts that fulfill requirements for appropriated method hedge accounting. Hedging Instruments and CoverageThe Company uses foreign exchange forward contracts and currency option transactions as hedging instruments. Hedging covers foreign-cur-rency-denominated receivables and payables, as well as scheduled transactions in foreign currency. Hedging MethodBased on internal rules for derivative transactions, the Company hedges against the risk of fluctuations in foreign currency exchange rates. Evaluation of Hedging Effectiveness The Company evaluates the effectiveness of hedging based on the strong correlation between changes in market rates under hedging cover-age, cash flow, and hedging instruments.
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(4) Transaction riskForeign exchange forward contracts and other transactions carry the risk of changes in exchange rates. However, derivative transactions con-ducted by the Company are entirely for the purpose of hedging, and the Company does not engage in transactions that may have a significantimpact on management. In addition, transactions are conducted with financial institutions with high credit ratings. As a result, there is mini-mal credit risk.
(5) Transaction risk management structureThe Company has rules for transaction management that determine a maximum limit and authority on derivative transactions. Based on theserules, the accounting department administers the transactions and risk management with the approval of the management.
Market value of transactionsAll derivative transactions fall under hedge accounting, accordingly the market value information is not required.
IV. Notes to retirement benefits as of december 31, 2003(1) Retirement benefit system usedThe Company has a defined benefit plan comprising a welfare pension fund plan, a qualified pension plan, and a lump-sum retirement paymentplan. For the retirement of employees, the Company may pay additional retirement benefits.(2) Retirement benefit obligation
Thousands of Yen
(1) Retirement benefit obligation (1,654,401)(2) Plan assets at fair value 619,305(3) Unfunded retirement benefit obligation (1) + (2) (1,035,095)(4) Unrecognized actuarial differences 331,196(5) Accrued retirement benefits (3) + (4) (703,898)
Note: Welfare pension fund plan assets totaling ¥3,081,692 thousand are not included in the aforementioned breakdown of retirement benefitobligation.
(3) Retirement benefit expensesThousands of Yen
(1) Service expenses 253,032(2) Interest expenses 36,562(3) Expected return on plan assets (8,779)(4) Amortization of net actuarial difference 57,130(5) Retirement benefit expenses (1) + (2) + (3) + (4) 337,945
Note: A contribution amount of ¥157,020 thousand to the welfare pension fund is included in service expenses.
(4) Basis for calculation of retirement benefit obligation
(1) Periodic allocation method for projected benefits Straight-line method(2) Discount rate 2.0%(3) Expected rate of return on plan assets 2.0%(4) Amortization period for net actuarial difference 5 years
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V. Notes to accounting for deferred income tax(1) Breakdown of the major components for deferred tax assets and liabilities as of December 31, 2003Deferred Tax Assets
Thousands of Yen
Accrued enterprise tax 165,355Reserve for doubtful accounts 25,566Unrealized intercompany profits 92,031Reserve for employees’ retirement benefits 244,136Subsidiaries’ net operating tax loss carryforwards 55,367Reserve for directors’ retirement benefits 47,873Loss on disposal of inventories 66,123Loss on devaluation of inventories 50,026Soil improvement expenses 189,000Other 108,017Subtotal 1,043,500Valuation allowance assets (57,510)Net deferred tax assets 985,989
Deferred Tax LiabilitiesThousands of Yen
Unrealized loss on investments in securities (32,215)Deferred tax liabilities (32,215)Net deferred tax assets 953,774
(2) Breakdown of the major differences between the statutory tax rate and the effective tax rate after adoption of tax effect accounting
Statutory tax rate 42.0%(Adjustments)Permanent non-deductible expenses (entertainment expenses) 0.4Per capita tax 0.4Tax deductions (6.6)Valuation allowance assets 1.3Difference in tax rates applicable to overseas subsidiaries (5.4)Adjustments of deferred tax assets for enacted changes in tax laws and rates 0.2Other 1.1Effective tax rate after adoption of tax effect accounting 33.4
(3) Due to the implementation of the “Revision of Local Tax Law” (Legislation No. 9, 2003) on March 31, 2003, the calculation ofdeferred tax assets and liabilities will be based on the following: (1) the pre-revision tax rate will be applied to transitional differ -ences present at the end of the fiscal year under review for the timing differences which are settled by December 31, 2004, and (2)the revised tax rate will be applied to the timing differences which are settled after January 1, 2005. As a result, net deferred tax assets(after accounting for deferred tax liabilities) as of December 31, 2003 decreased ¥9,879 thousand, income taxes—deferred increased¥10,901 thousand, and unrealized loss on investments in securities increased ¥1,022 thousand.
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VI. Notes to segment informationBusiness segment information
Thousands of Yen
2002
Commercial/ EliminationsPhotographic Optical industrial-use Total and / or Consolidated
products components optics corporate
Sales:Sales to outside customers ¥9,489,453 ¥27,204,697 ¥4,886,131 ¥41,580,282 ¥ — ¥41,580,282Sales or amounts transferred among segments — — — — — —
Total 9,489,453 27,204,697 4,886,131 41,580,282 — 41,580,282Operating expenses 9,796,165 22,951,261 4,378,318 37,125,745 769,107 37,894,852Operating income (loss) ¥ (306,712) ¥ 4,253,436 ¥ 507,812 ¥ 4,454,536 ¥ (769,107) ¥ 3,685,429Assets ¥7,855,315 ¥10,528,649 ¥3,369,386 ¥21,753,350 ¥3,087,634 ¥24,840,985Depreciation expenses 522,322 307,971 202,603 1,032,897 10,724 1,043,622Capital expenditures 673,156 351,776 187,768 1,212,701 7,589 1,220,290
Thousands of Yen
2003
Commercial/ EliminationsPhotographic Optical industrial-use Total and / or Consolidated
products components optics corporate
Sales:Sales to outside customers ¥9,468,348 ¥38,519,748 ¥6,849,034 ¥54,837,131 ¥ — ¥54,837,131Sales or amounts transferred among segments — — — — — —
Total 9,468,348 38,519,748 6,849,034 54,837,131 — 54,837,131Operating expenses 9,331,329 31,778,138 6,238,303 47,347,771 1,147,910 48,495,681Operating income ¥ 137,019 ¥ 6,741,610 ¥ 610,730 ¥ 7,489,360 ¥(1,147,910) ¥ 6,341,450Assets ¥7,161,395 ¥13,538,814 ¥5,599,429 ¥26,299,638 ¥ 6,410,055 ¥32,709,694Depreciation expenses 476,685 314,681 265,476 1,056,842 13,165 1,070,008Capital expenditures 978,171 1,590,833 550,590 3,119,594 22,461 3,142,056
Notes:1. Business segmentation
Main products by business segment are as follows:(1) Photographic products
Interchangeable lenses for 35mm single-lens reflex cameras, medium-format cameras, interchangeable lenses for medium-format camerasand related accessories
(2) Optical componentsLenses for digital video camcorders, lenses for digital still cameras
(3) Commercial/industrial-use opticsLens units for CCTV cameras, projection lenses, precision injection mold, plastic molded engineering parts and components, test plates, etc.
2. Unallocated operating expenses included in “Eliminations and / or corporate” totaled ¥769,107 thousand for the fiscal year ended December31, 2002. These expenses consisted principally of expenses related to general affairs, accounting and other departments of the Company.Unallocated operating expenses included in “Eliminations and / or corporate” totaled ¥1,147,910 thousand for the fiscal year ended December31, 2003. These expenses consisted principally of expenses related to general affairs, accounting and other departments of the Company.
3. As of December 31, 2002, total assets included in “Eliminations and / or corporate” of ¥3,087,634 thousand, mainly represent cash, long-term investment funds (investments in securities), and assets related to the administration department. As of December 31, 2003, total assetsincluded in “Eliminations and / or corporate” of ¥6,410,055 thousand, mainly represent cash, long-term investments funds (investments insecurities), and assets related to the administration department.
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t a m r o n c o . , l t d . 2 9
Segment information by locationThousands of Yen
2002
EliminationsJapan Americas Europe Asia Total and / or Consolidated
corporate
Sales:Sales to outside customers ¥35,454,141 ¥3,972,969 ¥1,632,688 ¥ 520,483 ¥41,580,282 ¥ — ¥41,580,282Sales or amounts transferred
among segments 3,461,718 — — 8,709,414 12,171,132 (12,171,132) —Total 38,915,859 3,972,969 1,632,688 9,229,897 53,751,415 (12,171,132) 41,580,282
Operating expenses 35,263,949 3,830,759 1,639,354 8,599,249 49,333,313 (11,438,460) 37,894,852Operating income (loss) ¥ 3,651,910 ¥ 142,209 ¥ (6,665) ¥ 630,647 ¥ 4,418,101 ¥ (732,671) ¥ 3,685,429Assets ¥17,972,888 ¥2,007,620 ¥1,086,466 ¥3,238,932 ¥24,305,908 ¥ 535,076 ¥24,840,985
Thousands of Yen
2003
EliminationsJapan Americas Europe Asia Total and / or Consolidated
corporate
Sales:Sales to outside customers ¥48,385,720 ¥3,826,793 ¥1,680,234 ¥ 944,384 ¥54,837,131 ¥ — ¥54,837,131Sales or amounts transferred
among segments 3,573,150 — — 11,336,356 14,909,507 (14,909,507) —Total 51,958,871 3,826,793 1,680,234 12,280,740 69,746,638 (14,909,507) 54,837,131
Operating expenses 45,406,479 3,756,034 1,713,652 11,459,793 62,335,960 (13,840,278) 48,495,681Operating income (loss) ¥ 6,552,391 ¥ 70,758 ¥ (33,418) ¥ 820,947 ¥ 7,410,678 ¥ (1,069,228) ¥ 6,341,450Assets ¥21,502,626 ¥1,693,501 ¥1,090,076 ¥ 5,932,619 ¥30,218,823 ¥ 2,490,870 ¥32,709,694
Notes:1. Country and regional segments are classified on the basis of geographic proximity.2. Principal markets in the above designated areas:
(1) Americas: U.S.A.(2) Europe: Germany, France(3) Asia: Hong Kong, China
3. Unallocated operating expenses included in “Eliminations and / or corporate” totaled ¥769,107 thousand for the fiscal year ended December31, 2002. These expenses consisted principally of expenses related to general affairs, accounting and other departments of the Company.Unallocated operating expenses included in “Eliminations and / or corporate” totaled ¥1,147,910 thousand for the fiscal year ended December31, 2003. These expenses consisted principally of expenses related to general affairs, accounting and other departments of the Company.
4. As of December 31, 2002, total assets included in “Eliminations and / or corporate” of ¥3,087,634 thousand, mainly represent cash, long-term investment funds (investments in securities), and assets related to the administration department. As of December 31, 2003, total assetsincluded in “Eliminations and / or corporate” of ¥6,410,055 thousand, mainly represent cash, long-term investment funds (investments insecurities), and assets related to the administration department.
Overseas salesThousands of Yen
2002
Americas Europe Asia Total
I Overseas sales 4,577,167 2,365,776 2,407,089 9,350,033II Consolidated sales 41,580,282III Overseas sales as a percentage of consolidated sales (%) 11.0 5.7 5.8 22.5
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Thousands of Yen
2003
Americas Europe Asia Total
I Overseas sales 4,540,748 2,605,041 3,989,275 11,135,066II Consolidated sales 54,837,131III Overseas sales as a percentage of consolidated sales (%) 8.3 4.8 7.3 20.3
Notes:1. Country and regional segments are classified on the basis of geographic proximity.2. Principal markets in the above designated areas:
(1) Americas: U.S.A., Canada(2) Europe: Germany, U.K., France, Northern Europe and other European countries(3) Asia: Hong Kong, China and other Asian countries
3. Overseas sales represent those of Tamron Co., Ltd. and consolidated companies in countries and regions other than Japan.
VII. Notes to per share informationYear ended December 31, 2003: Net assets per share ..................................................................¥1,148.83Net income per share ...................................................................¥257.75
Information for diluted net income per share is omitted because potentially dilutive securities are not issued.
From the 2003 fiscal year, the Company is adopting “Accounting Standards for Net Income Per Share” (Business Accounting Standard No. 2)and “Guidelines for Application of Accounting Standards for Net Income Per Share” (Guidelines for Business Accounting Standards No. 4).Application of the new accounting standards for the previous fiscal year would have affected per share data as follows. Net assets per share ....................................................................¥922.76Net income per share ...................................................................¥143.57
Note: The basis for calculating net income per share is as follows.
2002 2003
Net income per shareNet income (Thousands of Yen) — ¥3,347,726Amount not returned to ordinary shareholders (Thousands of Yen) — 41,900
(Portion for directors’ bonuses appropriated for retained earnings) — (41,900)Net income for ordinary shares (Thousands of Yen) — 3,305,826Average number of shares outstanding during the term (Shares) — 12,825,516
VIII. Notes to subsequent eventsNot applicable.
Treasury stock for stock option planapproved at General ShareholdersMeeting on March 29, 2001Ordinary shares: 1,000 shares
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independent auditors’ report
To the Board of Directors of
TAMRON CO., LTD.
We have audited the accompanying consolidated balance sheets of TAMRON CO., LTD. and its subsidiaries as of December
31, 2003 and 2002, and the related consolidated statements of income, retained earnings, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclo-
sures in the consolidated financial statements. An audit also includes assessing the accounting principles used and signif-
icant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the finan-
cial position of TAMRON CO., LTD. and its subsidiaries as of December 31, 2003 and 2002, and the results of their
operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in
Japan.
The United States dollar amounts shown in the consolidated financial statements have been translated solely for
convenience. We have reviewed this translation and, in our opinion, the consolidated financial statements expressed in
Japanese Yen have been translated into United States dollars on the basis described in Note 1.
Tokyo, Japan
June 27, 2004
Wako Audit Corporation
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3 2 t a m r o n c o . , l t d .
Hirosaki Plant 3-2 Shimizu 3-chome, Hirosaki-city, Aomori 036-8254Tel: 81-172-34-1144 Fax: 81-172-33-2340
Namioka Plant64-1 Shimo Shimada, Kita Nakano, Namioka-machi, Minami Tsugaru-gun, Aomori 038-1325Tel: 81-172-62-9555 Fax: 81-172-62-9302
Owani Plant31-1 Maeda, Hachimandate, Owani-machi, Minami Tsugaru-gun, Aomori 038-0243Tel: 81-172-47-6713 Fax: 81-172-47-6715
TAMRON OPTICAL (FOSHAN) CO., LTD.West of LangBao Road City-West IndustrialDevelopment Zone Foshan, GuanDong, CHINA Tel: 86-757-82982222 Fax: 86-757-82203442URL: http://www.tamron.com.cn
TAMRON USA, Inc.10 Austin Boulevard, Commack, NY 11725 USATel: 1-631-858-8400 Fax: 1-631-543-3963URL: http://www.tamron.com
TAMRON Europe GmbH.Robert Bosch-Str. 9, 50769 Koln, GERMANYTel: 49-221-970325-0 Fax: 49-221-970325-4URL: http://www.tamron-europe.com
TAMRON INDUSTRIES (HONG KONG) LIMITED Sales DepartmentUnits 53&55, 5/F., Hong Kong International Trade & Exhibition Center, 1 Trademart Drive,Kowloon Bay, HONG KONGTel: 852-2721-7388 Fax: 852-2311-7830
Purchase DepartmentUnits 21&23, 5/FHong Kong International Trade & Exhibition Center, 1 Trademart Drive,Kowloon Bay, HONG KONG Tel: 852-2721-7797 Fax: 852-2620-1631
TAMRON France EURL.5, avenue Georges Bataille, F-60330 Le Plessis-Belleville France Boite postale 31,FRANCETel: 33-3-44-60-73-00 Fax: 33-3-44-60-23-34
TAMRON OPTICAL (FOSHAN) CO., LTD. Shanghai OfficeNo.1 Office (Overseas sales & marketing)Room 1010, 10/F Shanghai Times Square Office, 93 Huai Hai Zhong Road,Shanghai 200021 CHINATel: 86-21-6391 0519Fax: 86-21-6391 0521
No.2 Office (Industrial Optics Division)Room No. 1702, Ruijin Building, 205 Maoming Road, Shanghai, 200020CHINATel: 86-21-5466 0155 Fax: 86-21-5466 0229
investor information
group network
Company ProfileCompany Name:Tamron Co., Ltd.
Established:November 1, 1950
Incorporated:October 27, 1952
Headquarters:1385 Hasunuma, Minuma-ku, Saitama-City, Saitama
Capital:¥3,836 million
Account Settlement:End of December
Employees:2,497 (Consolidated) (As of December 31, 2003)
Principal Shareholders (As of December 31, 2003)
New Well Co., Ltd. 2,449 19.03Sony Corporation 1,564 12.16Kouyu Kosan Co., Ltd. 764 5.94State Street Corporation 588 4.56Saitama Resona Bank, Ltd. 520 4.04The Master Trust Bank of Japan, Ltd.
(Trust Account) 380 2.95Uhyoe Tamura 292 2.26Japan Trustee Services Bank, Ltd.
(Trust Account) 290 2.25Northern Trust Company
Sub-Account American Client 265 2.05Trust & Custody Services Bank, Ltd.
(Securities Trust Account) 251 1.95
Number of Shares Held
(Thousands of Shares)ShareholdersPercentage of Shares Held
Shareholders’ MemoBalance date:December 31
Scheduled Annual Shareholders Meeting:March
Eligibility date for year-end dividend payments:December 31
Eligibility date for mid-term dividend payments:June 30
Transfer Agent:33-1 Shiba 3-chome, Minato-ku, Tokyo, JapanThe Chuo Mitsui Trust and Banking Company, Limited
Stock trading unit: *1,000 shares*The stock trading unit will be amended to 100 shares from April 1, 2004
Announcements:Nihon Keizai Shimbun
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corporate data
Tamron Co., Ltd. 1385 Hasunuma, Minuma-ku, Saitama-city, Saitama 337-8556 JapanTel: 81-48-684-9111 Fax: 81-48-683-8289
· OEM Component Business Unit, Sales Dept. .......Tel: 81-48-684-9116 Fax: 81-48-684-9465· Industrial Optics Business Unit, Sales Dept. .........Tel: 81-48-684-9129 Fax: 81-48-683-8594· Optical Device & Component Business Unit.........Tel: 81-48-684-9176 Fax: 81-48-684-9472
URL: http://tamron .co.jp
By Public transport· From JR Omiya Station, catch Tobu Noda
Line to Nanasato Station, then walk 10minutes.
· From JR Omiya Station east exit, catch theTobu bus to the Yagi Antenna (20 min-utes) then walk for 1 minute.
Headquarters
Tokyo Sales Office 17-11 Takinogawa 7-chome, Kita-ku, Tokyo 114-0023Tel: 81-3-3916-0136 Fax: 81-3-3916-8977
Osaka Sales Office Floor 6, Miki Building, 4-1 Minami Senba 2-chome, Chuo-ku, Osaka-city, Osaka 542-0081Tel: 81-6-6271-4281 Fax: 81-6-6271-4283
Chubu Regional Sales Representative Office 5-43 Kamiigiki, Ginan-cho, Hashima-gun, Gifu 501-6001Tel: 81-58-240-5719 Fax: 81-58-240-5719
Fukuoka Regional Sales Representative Office18-12 Ikimatsudai 3-chome, Nishi-ku, Fukuoka-city, Fukuoka 819-0044Tel: 81-92-812-6955 Fax: 81-92-812-6945
Sapporo Regional Sales Representative OfficeSuda Palace 210, 8-4-15 Nishimachi Minami, Nishi-ku, Sapporo-city, Hokkaido 063-0062Tel: 81-11-676-0560 Fax: 81-11-664-9655
Overseas Sales & Marketing Unit 17-11 Takinogawa 7-chome, Kita-ku, Tokyo 114-0023Tel: 81-3-3916-0131 Fax: 81-3-3916-1860
Hirosaki Plant
TAMRON USA, Inc. TAMRON Europe GmbH. TAMRON INDUSTRIES (HONG KONG) LIMITED
TAMRON France EURL.
TAMRON OPTICAL (FOSHAN) CO., LTD. Namioka Plant Owani Plant
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Tamron Co., Ltd.1385 Hasunuma, Minuma-ku, Saitama-city, Saitama 337-8556 JapanTel: 81-48-684-9111URL: http://www.tamron.com
Printed in Japan on Recycled Paper
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