2010
ANNUAL REPORTFiscal year ended March 31, 2010

Profile
Company
Philosophy

On the basis of “Creativity” and “Research and Development,” JEOL positively
challenges the world’s highest technology, thus forever contributing to thep r o gr e s s i n b o t h S c i e n c e a n d H u m a n S o c i e t y t h r o u g h i t s p r o d u c t s.
Corpor
Co
Cor
p ate
por
at Hi
Histo
sto
t ry
tory
y
JJaap
Jap
pan EEllec
lectrolectroletron
n OptiOpti
ptics
cs Laaborboratoatot ry
ry Co.
C , Ltdd. established

Com
mpan
aan
ny nnamea changededd to JEOL Ltd.
JEOL
L lilistested on the
he SecSecondon Sect
cttionio
on ofo the Tokyo Sto
ock Exchange
JEOL
LCO (USA) INC
INC.. estestablablishished
edd as the first oversea
seas subsidiary

1949
1956
1961
1962
1963

JEO
E L listed on the FiFirst
rst Secti
Sectiono of the Tokyo
T
Stoock Exchange

1966
1967
1968
1972
1974

“Tokyo Meeting,” first overseseas
as marketingg meeting, held

“JEOL 21,” corpororrate management vision forr the 21
2 st cenntuuryry,y, ana nounced
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1976
1982
1983
1989
1990
1991
1993
1995
1996
1999
2000
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Product Development History
JEM-1 Electron microscope completed
JEM-5G Electron microscope first exported to the CEA Saclay Atomic Energy ResearchInstitute, France; JNM-1, Japan’s first nuclear magnetic resonance system, completed
JXA-3 X-ray microanalyzer completed
JMS-01 Double-focusing mass spectrometer completed; JLC-01 General-purpose automaticrecording fluid chromatograph completed
JSM-1 Scanning electron microscope completed; JEM-1000 1000kV ultrahigh voltage
electron microscope completed
JEBX-2A Electron Beam Lithography System completed
JLC-5AH, world’s first fully automated amino acid analyzer, completed
JCA-1KM “Clinalyzer” automated biochemical analyzer completed
JAMP-3 Auger micro probe, JIR-03F Fourier transform infrared spectrometer, andJESCA-2 Photoelectron spectrometer diffraction system completed

JEPAS-1000 Electron beam measuring instrument completed
JIBL-100 Focused ion beam instrument completed
JSTM-4000XV Ultrahigh-vacuum scanning tunnel microscope completed
JWS-7500 Wafer process inspection system completed
JEIP-900F High-density reactive ion plating system completed
High-speed next-generation automated biochemical analyzer “BioMajesty” completed

2002
20
02

JMS
S-T1
T 00
T1
T100L
00L
0 C (Acc(AccuTOAcc uTOTOF)F) TimTii e-of-flight mass spectrometer and the JNM-ECA series ofnucl
ucc eare r mamagne
agne
gn ticgn
i resons ance spectr
so
son
trome
om terometeers completed
JEM-93
JEM-9310F
10FIB
IB
B Focused
ed ioion
n beam
beeam
a sy
syst
s em for speci
stecimeneci
men preparationprcompleted
JBX-30
JBX
-3030
30 se
ser
eriieses of Ellece tro
econ beamm lilitho
thogr
tho
graph
gr
ap y syst
aphystem complete
ted
te
d

2003
3
20
2
004
4

J -51
JCM
JC
5100
51
000 Cara ry scoparr
ccop
ope (por
o tab
table
le sscannanninging electelectectronron
n micrrosc
osc
os
scope
co
op
ope
p ) cocompletted
e

20
005
05

Ion
on so
s
sourcefor masss spect
ectromctrom
rometeroeters, DARTART
R , ccompRTom let
etted
ed

2 07
20
0

BS-60050EB
BS,
S Eva
EvaporEvpooratipor
at on souurc
r e for backscattattereereed electr
ele
lectr
c on,
on ccoompl
m eted

200
20
08
8

JIB--4600F
JIB
0FF M
MultiBeam
mS
Syst
yst
ystem
s em
m com
co ple
leted
ted
e
JS
SMM
M-7600F76760
6 0F
0 Thermal field emissi
sion
on
n sca
c nni
n ng
g eellect
ectronron microscope completed
JSM
JSM
JS
M-6
6510
510/6610 series Scanning electronn micricros
oscopes completed
oscos“BioMajesty series” Automated bioche
hemic
he
mical
mic
ical analyzer won the “Technology Prize”
awarded by the Japan
nS
Soc
So
o iety of Clin
liniccall Chemistry
linic
JCM
C -50
5000
000 “NeNeo
Neo ScopScop
coppe” wonwon thee “To“T
Tookyo Metropolitan Governor’s Award” in the Tokyo
Inv
nvent
ention
tion
on Ex
E hib
Exhib
hibiitiition heh ld
held
ld in 200
08
J -BM
JCA
BM607
6070
0 Auto
tom
mate
ated
d bioci hem
mica
c l aana
n lyz
na
yzzer
e completed
The “Develop
opm
ment of Scancanninni g Electron Mic
icros
roscopcop
o e Capa
Capa
apabl
blee ofblo Observing Cells in Solution,” a joint
developme
pment
nt pr
project wit
withh thet Nat
National
al Instistituttutee ofof Advavaanc
nced Ind
Industndust
ustriariral Science and Technology, announced
ria

Th 60
The
60th
th an
nniv
niversers
ersary
er
rsary
a yo
of ou
o r fouf nda
d ttio
ion
JEOL
JEO
L DAT
DATUM
UM LTD
LTD. and JE
JEO
OL A
ACT
CTIVE
CT
IV CO
C ., LTD. acqu
uired

20
2009
0 9

JMS-T100GC
0GC
CV Gas chr
chromomatography titimeme-ofof--fliflighg t mass
gh
mass spspect
ec romectometer completed
JEM-ARM20
M200F
0 Ato
Atomicmic resol
reso ution anaalyytic
tical
al electttrron
r mic
micro
r sco
cco
ope
p com
omple
pletedpletClaairSi cop
pe JASM
JASM-62-6200
00 comcompleted
ted

JEO
EOL
L BRASB ASILIL Insnsstrutru
umen
me tos Cientificos Ltda. establishedhed
JE L (BEIJING) CO., LTD. establish
JEO
shed
JEO
E L FINETECH CO
CO.,., LTD
TD. andTDan
nd JJEOL ENGINEERING CO., LTD
D. acquuired
The JEEOL
L Group’’s medid um-t-term
erm
m maananagement plan, “CHALLENGE
nag
GE 5,”
5 an
nn
nou
o n
nce
ced
JE L SYSTEM TECHNOLOGY
JE
JEO
GY
Y CO.,O.,., LT
LTD. acq
quir
u ed
ui
e

2010
20

JMS-S3000
00 SpiralTOF
OF™,™, MatMatrix Assi
siist
sted Laser Desorption/Ionizat
zattionon Timime
mee-of
m
-o
-of
o -Fl
F igh
ghtt
Mass Spec
ectro
trometmeter,
er, cocom
mple
pletedteContents

1 Consolidated Financial Highlights
2 To Our Shareholders
4 The JEOL Group Medium-Term
67
8
910 Consolidated Five-year Summary
11 Consolidated Financial Analysis
16 Consolidated Balance Sheets
Management Plan
18 Consolidated Statements of Operations
Research & Development
19 Consolidated Statements of Changes in Equity
Environmental Activities / CSR
20 Consolidated Statements of Cash Flows
The JEOL Group Network
21 Notes to Consolidated Financial Statements
Board of Directors, Corporate Auditors
32 Independent Auditors’ Report
and Corporate Officers
33 Corporate Outline

Disclaimer Regarding Forward-Looking Statements
The information contained in this annual report is given for the sole purpose ofproviding information regarding the business performance of JEOL Ltd. during
the fiscal year ended March 31, 2010, and is not intended to solicit investment inany securities issued by the Company. Any statements with respect to JEOL’s
current plans, strategies and forecasts are forward-looking statements based
upon information available as of March 31, 2010, and involve known andunknown risks and uncertainties.
Actual events and results may differ materially from those anticipated in thesestatements.

Serving Advanced Technology

Consolidated Financial Highlights
JEOL Ltd. and consolidated subsidiaries, for the years ended March 31, 2010 and 2009

Thousands of
U.S. dollars*Millions of yen

2010

2009

2010

¥ 84,770¥ 83,872$ 911,501

Operating income (loss)

508(2,794)

5,457

Income (loss) before income taxes and minority interests308(3,063)

3,316

Net income (loss)

276(1,928)

2,966

3.52

¥ (24.63)

322.15311.93

3.35

Total assets¥102,917¥104,582$1,106,633

Total equity

25,75324,471

276,912For the year:
Net sales

Per share data (in yen and U.S. dollars):¥

Net income (loss)
Total equity

$

0.04

At year-end:

Note: The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥93.0 to U.S.$1 (the approximate exchange
rate on March 31, 2010).

Net sales

Operating income (loss)

Net income (loss)

Total equity

Millions of yen

Millions of yen

Millions of yen

Millions of yen

5,000

5,000

35,000

4,000

4,000

30,000

3,000

3,000

25,000

2,000

2,000

20,0001,000

15,000100,000

84,77080,00060,0001,000
40,000508
00–2,000–1,000276

25,753

10,00020,0000

07

08 09 100

–2,0000–3,000

06

5,000

06

07

08 09 1006

07

08 09 1006

07

08 09 10JEOL ANNUAL REPORT 20101

To Our Shareholders

As a result, the JEOL Group posted consolidated net sales of ¥84,770
million (up 1.1% year on year), operating income of ¥508 million(compared with an operating loss of ¥2,794 million in the previous fiscal
year), ordinary profit of ¥210 million (compared with an ordinary loss of¥2,734 million in the previous fiscal year), and net income of ¥276 million(compared with a net loss of ¥1,928 million in the previous fiscal year).
The JEOL Group consists of the Scientific Instrument Segment andthe Industrial Equipment Segment. For transmission electron
microscopes and surface analysis instruments in the Scientific Instrument
Segment, we met demand in a broad range of fields, from research anddevelopment in cutting-edge areas to materials development, basic
research in medicine and biology, and quality control, etc. As to order
receipts, public demand arising from the government’s supplementarybudget compensated for the drop in domestic private demand.
In the nuclear magnetic resonance (NMR) spectrometer market, there
has been a shift in general-purpose equipment from 400 MHz to 500

Gon-emon Kurihara
President and Representative Director

MHz. However, given that the performance of our general-purpose
equipment is similar to or higher than that of our competitors, both order
receipts and sales grew, benefiting from the supplementary budget. Mass
spectrometers also witnessed a significant increase in orders received
due to the supplementary budget.

Q.

2With regard to the Industrial Equipment business, as the general-

What is your assessment of the Company’s performancefor the fiscal year ended March 31, 2010?

purpose scanning electron microscope is distributed primarily in theprivate-sector market, the benefit from the supplementary budget was

Although signs of the recovery from the serious slump triggered by thelimited, except for a growth of focused ion beam (FIB) systems of

Lehman shock were partially observed, Japan’s economy remained flat

specimen preparation for the transmission electron microscope. However,and lacked the strength that would otherwise have led to a pickup inin the second half of the fiscal year, business inquiries for this segment

investment in the industrial sector of a magnitude to stimulate thewere boosted from the private sector, mainly from Asia. Sales of electron

demand for our products. While the Japanese government’s fiscal

beam evaporation sources and power supplies for optical component

stimulus measures led to a growth in inquiries from governmental offices,manufacturing instruments were sluggish due to the downturn in theproviding us with a tailwind, the concurrent appreciation of the yen

optical market. Business inquiries also decelerated for the highly

brought us into a fierce price competition with foreign manufacturers. As

expected high-power electron beam sources and power supplies, whicha result, the favorable earnings growth realized by the supplementary

are used for purification of solar cell silicon, due to the reduced capitalbudget was offset to a certain extent.

expenditure of Japanese corporations. These products are distributed toUnder this external business environment, unfortunately we ended

meet private-sector demand, with no benefits resulting from thethe final year of our medium-term management plan, “ACTION 60”

supplementary budget. Sales of electron beam lithography systems saw a(FY 2007 to FY 2009), failing to achieve the numerical targets. While our

sharp decline due to a reduction of capital expenditure by domestic andkey strategies comprising the three pillars of “enhancement of researchforeign device manufacturers. In the Medical Equipment business,and development capability,” “rationalization of manufacturing

clinical biochemistry analyzers in their large, medium and small sizes

processes,” and “strengthening of sales/service systems for small, mass-

showed robust sales, particularly in the overseas market, and sales ofmarket products” contributed to an earnings recovery, such recovery

reagents and consumable supplies contributed significantly to the growth

failed to completely overcome the unfavorable external environment.

in profit as a result of an increase in sales of instruments supplied to

JEOL ANNUAL REPORT 2010

Siemens under an original equipment manufacturer (OEM) agreement.

overcome intensifying price competition, by seeking further cost

The medical instruments specialized in metabolic syndrome check-ups

reductions and “value engineering” (VE).

were successful in achieving product differentiation.

• We will aggressively invest our management resources in the rapidly

growing emerging markets. In particular, our emphasis will be placedQ.

on the energetic reinforcement of our presence in the Chinese market,

Please tell us about the JEOL Group medium-term
management plan, “CHALLENGE 5.”

in alliance with the newly established China Business Planning Office

The JEOL Group formulated a new medium-term management plan,• We will pursue further mobility and improvement of swiftness in“CHALLENGE 5” (FY 2010 to FY 2012), following the past medium-term

judgment and actions by reorganizing and streamlining themanagement plans: “Bright Plan 1000” (FY 2001 to FY 2003); “Focus

organization of affiliated companies. Aiming at getting rid of duplicate

Plan 2006” (FY 2004 to FY 2006); and “ACTION 60” (FY 2007 to FY

functions, realizing swift decision making and thus enhancing product2009). “Nanotechnology, life science, environment, and quality control”

quality, we integrated three of our domestic subsidiaries, JEOL

are our target markets to positively develop our solution business. WithFINETECH CO., LTD., JEOL ENGINEERING CO., LTD., which

the target “Global Solution Provider for Advanced Technology” being set,

manufactured components and peripherals, and JEOL SYSTEM

we strive to supply more attractive and more competitive products to the

TECHNOLOGY CO., LTD., which developed software into the Company,

market at the right time. To make this happen, by focusing onin April and July 2010, respectively.

and business offices in China.

strengthening the development and streamlining the production, we build• Aiming at streamlining the organizations, we decided to implement an

up the best system so that the injected resources produce the optimal

early retirement scheme with the scale of as many as 150 employees

outcome.

across the JEOL Group. This is certain to not only increase the

The JEOL Group will implement our critical strategies comprising
five challenges: 1) promotion of management structure reforms; 2)

efficiency of the operation but also improve the profit structure by
reducing fixed costs.

enhancement of research and development capabilities; 3) strengthening• Also, with its cutover targeted for May 2011, the backbone computerof the solution business; 4) further penetration into emerging markets;

system that handles the entire stream from procurement throughand 5) reinforcement of the supply chain.

production down to sales, partially in conjunction with the accounting

In the midst of drastic changes taking place in society, science andprocess, is being reassessed and replaced with the powerful ERP

the market, we acknowledge the necessity of expanding our business fieldsystem. With its database expandability in full use, critical facts andfrom a hardware-oriented style to a more total solution-orientated one.

elements hidden behind the figures can be brought forefront so as

Bearing in mind the responsibilities of meeting the expectations of ourconsequently to enhance the entire Group operations.

stakeholders and shareholders, we are determined to build a more stable
and robust management structure.

Q.

Please tell us about the tasks to be addressedby the Company.

• In terms of development, we will narrow down the strategic lineup for

efficient investment in order to provide technologically competitive
products on a timely basis.
• We seek maximization of customer satisfaction by strengthening oursolution business, which includes maintenance services, sale ofconsumable supplies, and provision of training sessions, as a followup to instrument sales.

Q.

What are your views on return of profits toshareholders and dividends?

Our basic policy for profit distribution is to maintain stable dividends
from a long-term perspective based on our efforts to improve financial
standing and corporate structure.
For the fiscal year under review, in light of the Company’s businessperformance and financial situation, the year-end dividend for this fiscal
year is ¥1.5 per share. The full-year dividend including the interim
dividend for the fiscal year is therefore ¥4 per share.
We will continue to endeavor to raise the corporate value and increase
earning power. We look forward to your understanding on these matters.

• In terms of production, we will establish a robust cost structure to

JEOL ANNUAL REPORT 2010

3

The JEOL Group Medium-Term Management Plan

CHALLENGE 5
The JEOL Group formulated a new medium-term management plan, “CHALLENGE 5,” following the past medium-term
management plans: “Bright Plan 1000” (FY 2001 to FY 2003); “Focus Plan 2006” (FY 2004 to FY 2006); and “ACTION 60”(FY 2007 to FY 2009). Responding to recent major changes in the market environment, we are firmly determined to growbeyond the frame of a manufacturer of scientific instruments to become a total solution provider, while placing an emphasison building a stable management base.
Image of JEOL business environment[Basic policy]

Position of JEOL and the tailwind

We will develop our solution business aggressively with our target markets placed on“nanotechnology, life science, environment, and quality control.” By reviewing our developmentnt
system in order to maximize the effects of applying our management resources, we will implementnt
reforms toward a system in which competitive products can be provided on a timely basis, andndenergetically realize our aim of becoming a “Global Solution Provider for Advanced Technology.”

Medical treatment
and new drug
development

Materials

Nanotechnology

Nanotechnology/
Materials

Life
Science

Semiconductors

Quality
Control

Environment

Biotechnology[Numerical target]
In the new medium-term management plan, “CHALLENGE 5,” our target for consolidated net salesesand consolidated ordinary profit is ¥100.0 billion and ¥5.0 billion, respectively.
• In the inaugural fiscal year of the plan (FY 2010), we will seek to make our business profitablebleagain (target consolidated ordinary profit is ¥1.0 billion).
• In the second fiscal year (FY 2011), we will build a stable management base.
• In the final fiscal year (FY 2012), we will achieve the target of ¥100 billion in consolidated net
etsales and ¥5 billion in consolidated ordinary profit.

Electronics &electronic parts

ACTI O N 60

Consolidated profit projections

Environment

EnergyCH ALLEN G E 5

FY 2007
Results

FY 2008
Results

FY 2009
Results

FY 2010Plan

FY 2011Plan

FY 2012
Plan

93.9

83.9

84.8

81.0

87.0

100.0

2.2
2.3

(2.8)
−

0.5
0.6

1.7
2.1

3.3
3.8

5.7
5.7

Margin (%)

2.0
2.1

(2.7)
−

0.2
0.2

1.0
1.2

2.6
3.0

5.0
5.0

Net income (loss)

0.1

(1.9)

0.3

0.5

1.3

2.5

Billions of yen

Net sales
Operating income (loss)
Margin (%)

Ordinary profit (loss)[Key strategies]
C HA L LEN G E

1 Promotion of management structure reforms
We will implement five major reforms as listed below:
1 Reduction of production costs >>>In line with the reduction of material procurement costs and logistical costs, we will implement reviews of production methods and develop
outsourcing.

2 Reduction of fixed costs >>>Having made determinations about the types of organizations and the number of personnel needed for the scale of business, we will implement
further streamlining of our organizations.
We will also continue to control and reduce fixed costs other than personnel costs.

3 Organization/Personnel >>>While keeping pace with the introduction of mission-critical systems (ERP), we will streamline the operation of the back-office sections, andtransfer personnel to appropriate sections. Concurrently, we will review the personnel system across Group companies.

4 Business reorganization >>>By consolidating management resources, we will focus on restructuring the optimal business operation models while considering collaborations
with external companies/organizations.

5 Reinforcement of administrative management >>>We will strengthen the five main fields of order receipt/sales management, inventory control, general monthly administrative control,
management of affiliated companies, and progress management of R&D. We will aim to realize accurate financial management and improvetimely operations.

4

JEOL ANNUAL REPORT 2010

C HA L L E N G E

2 Enhancement of research and development capabilities
Investments of management resources will be made on a priority basis by setting “Strategic themes”
from which growth can be expected
Efficient technology components, including business alliances and M&As, will be secured
Speedy decision-making through a business unit system
Establishment of technology components by participating in government projects

We will streamline the strategic lineup for
efficient investment in order to provide
technologically competitive products on atimely basis.

Traditional research and development investments

Target research and development investments

Internal
management
resources

Internal
management
resources

Investment will be made on
a priority basis
as “strategic themes”

Theme
A

Theme
B

Theme
C

Suspensionof development

Theme
A

Research and development investments that are not well-focused
Substantially depending on internal development

External
management
resources

Development through businessalliances and M&As, etc.

Theme
B

Theme
C

Priority investments in “strategic themes”
Development using also external management resources

C HA L L E N G E

3 Strengthening of the solution business
Solution business will be developed in the areas of post-delivery maintenance agreements,
commissioned analysis, education and consulting, etc., focusing on competitive productsthat meet market needs.

We seek maximization of customer
business, which includes maintenanceservices, sale of consumable supplies,
and provision of training sessions, as afollow-up to instrument sales.

Customer satisfaction

satisfaction by strengthening our solution

Maintenance services
Contract analysis service

Consultations

Sales of consumables
and peripheral equipment

Provision of know-how
Salesof equipment

Business domains

C HA L L E N G E

4 Further penetration into emerging markets
We will aggressively invest our management

Modification of organizations

resources in the rapidly growing markets in

China combining sales and services

Establishment of a local company(January 2010)

emerging nations, and focus on promoting
energetic reinforcement of sales andConversion of an agent into

Brazil a local company (established
January 2010)services provision system by converting
local agents into overseas subsidiaries.

Incorporation of local

Russia representative office
India

Conversion of agent to local
subsidiary is under consideration

Middle Restructuring of agent networks
East in each country

Measures and policies

Reinforcement of application engineers, and demonstration systems
Development of local human resources and sales promotion ofstrategic products
Improvement of support for existing users
Development of new users
Establishment of JEOL brand in the Brazilian market
Expansion of sales by reinforcing the sales force
Strengthening competitiveness by improving technical support
Expansion of sales channels
Enhancement of sales promotion by dispatching staff
Development of local human resources
Early securing of large-scale projects

C HA L L E N G E

5 Reinforcement of the supply chain
We will establish a production system thatcan flexibly respond to market conditions.
Concurrently, a robust cost structure shallbe established to overcome intensifying
price competition, by seeking further cost
reduction and “value engineering” (VE).

Review of the production system
We will establish a production system flexibly responding to the market conditions
We will pursue further efficiency through corporate integration of affiliated production companies
Production will be transferred to YAMAGATA CREATIVE CO., LTD. (YMCC).
Reduction of material procurement expenses
Carrying out cost improvement activities in cooperation with Group companies
and development/design sections
Promoting cost reduction in outsourced procurement and purchasing
Reduction of logistic expenses
Redefining transportation channels, promoting cost reductions
Reduction in rental fees for external warehouses by utilizing the internal space

JEOL ANNUAL REPORT 20105

Research & Development
The JEOL Group, which sells cutting-edge equipment such as electron microscopes all over the world, continuously introduces new
products to increase product competitiveness.
In the fiscal year under review, the Group’s R&D costs totaled ¥4,543 million, of which the Scientific Instruments Segment accountedfor ¥1,653 million and the Industrial Equipment Segment accounted for ¥2,890 million.
The following are the results of major R&D activities in the fiscal year under review.

JUN.

JCM-5000 “NeoScope,” desktop scanning electron microscope, was awarded
The Scientists’ Choice Award for Best General Lab Product of 2008.
JCM-5000 “NeoScope,” desktop scanning electron microscope, was awarded “The Scientists’ Choice Award forBest General Lab Product of 2008” at ACHEMA 2009*, which was held in Frankfurt am Main, Germany from May
11 to May 15, 2009.
*ACHEMA 2009: International Exhibition-Congress on Chemical Engineering, Environmental Protection and Biotechnology

JUL.

Visualization of calcium atoms became successful.
As part of the pre-competitive research activities of the Japan Science and Technology Agency, the Company developed an electron
microscope that enables analyses of organic molecules and biological molecules, etc. in a joint study with the National Institute of Advanced
Industrial Science and Technology (AIST) and the National Institute for Materials Science. This electron microscope drastically improved thetechnology for monomolecular and monoatomic element analyses, and in particular, element analysis of monomolecular calcium was realized.
AUG.

ClairScopeTM JASM-6200 launched.

2009

The ClairScopeTM (“Clair Scope”) features the newly developed ASEM (Atmospheric Scanning Electron Microscope),
which enables quick observation of specimens under atmospheric pressure, previously a very difficult procedure. This
microscope is capable of quickly observing moist specimens and cells in solutions and in air. Furthermore, ClairScopeis equipped with an optical microscope mounted on the same axis as the ASEM, which opened the way for complex
analyses by combining the information from both light and electron beams.
OCT.

“BioMajesty®JCA-BM6070,” automated biochemical analyzer, won “Good Design Award.”
The BioMajesty® JCA-BM6070 won the “Good Design Award 2009” (G mark), which is organized by Japan Industrial
Design Promotion Organization. Highly appreciated characteristics included its simple and clear shape releasing theuser from any impression of complex handling, and both space-saving form and distinctive coloring, which improved
the image of the installation site.
NOV.

JEM-1000K RS, ultrahigh voltage electron microscope, was shipped to Nagoya University.
To date, the Company has delivered 21 ultrahigh voltage electron microscope units to domestic and overseas
customers, receiving a high evaluation in terms of the world’s best ultra high-resolution function realized through our
45-year accumulation of comprehensive technologies, and for the stable operation of our optical instruments. In
contrast to the ordinary electron microscope (with an accelerating voltage from 100 kV to 300 kV), the accelerating
voltage of an ultrahigh voltage electron microscope exceeds 1,000 kV, which enables high performance in the observation
and analysis of “thick specimen (real materials),” which is required for observation of materials for practical use.
2010
MAY

JMS-S3000 SpiralTOF launched.
JMS-S3000 adopted a new ion optic system, the only one of its kind in the industry, realizing extraordinary levels ofmass resolution and sensitivity. This product is on the leading edge of analytical technology, and meets research needs
that change on a daily basis, especially in the areas of synthetic polymers, material science, and biological polymers.

Enhancement of lithium ion capacitor business
Advanced Capacitor Technologies, Inc. issued new shares in July 2009 by means of a third-party allotment, andreceived capital contribution from Sojitz Corporation (“Sojitz”), Taiyo Yuden Co., Ltd. (“Taiyo Yuden”), etc. The
company aims to expand its business for photovoltaic power generation and alternative lead-acid batteries through its
business alliance with Sojitz and Taiyo Yuden in the manufacturing and sales of the “Premlis®” lithium ion capacitor.

6

JEOL ANNUAL REPORT 2010

Environmental Activities
ISO policy of
the JEOLGroup

The JEOL Group engages in business activities with an awareness of its responsibility as a “global corporate citizen”
for harmonious coexistence with customers, local residents, shareholders and governmental agencies to ultimately
develop a suitable recycling-based society in the future.
Based on this corporate philosophy, the JEOL Group intends to conduct business activities that contribute to abetter global environment by providing products such as environmental measurement and analyzing equipment andrelated services.

Promotion of Environmental Conservation Activities
The IMS Management Committee plays a central role in carrying out the management system, which combines ISO 9001 and ISO 14001. The
Group set up the WEEE/RoHS Committee in order to meet the requirements of European Union directives on Waste Electrical and Electronic
Equipment (WEEE) and Restrictions on Hazardous Substances (RoHS) contained in electrical and electronic equipment.
Recycling and recovery of gases discharged to the atmosphere during the manufacture and repair of our products have been carried out since
fiscal 2005. From April 2008, this practice is being reinforced to recover all these SF6 gases in principle.

Development of Super-Reductive Water “RUMIC®”
In 1995, the JEOL Group totally eliminated the use of chlorine-based organic solvents (chlorofluorocarbon ethane),
which had been frequently used as an industrial cleaning agent.
Our environmental efforts include starting to use an alternative to chlorofluorocarbon, and we have also developed
an industrial cleaning agent, “RUMIC®,” as a substitute for chlorofluorocarbon which is environment-friendly and safefor humans.

Expansion of “Don’t-Throw-Away” Campaign(Campaign for Cleaning Up Commuting Routes)(The photograph shows a free sample
for household use.)

Since 1994, the JEOL Group has been conducting a campaign that we clean up commuting routes from the Company to nearby stations, as well asaround the Company on a regular basis.

Participation in Network of Enterprises That Consider the Environment in Akishima City
Based on the concept of contribution from the regional level to the global environment, we actively participate in the “Network of Enterprises That
Consider the Environment in Akishima City,” which was set up in April 2005 and which involves Akishima City and enterprises in this city. Since FY
2009, the JEOL Group, as chairman of this network, has assumed the important responsibility of leading activities.

Environmentrelated
website

URL http://www.jeol.co.jp/envi/

In order to present our approach toward environmental issues and to provide various
environment-related information, the JEOL Group offers useful, detailed contents
through its environment-related website.

CSR
Science Class Support and Science CampAs part of the commemorative projects for the 60th anniversary of the founding of the JEOL Group,
Science Class Support has been continuously conducted since December 2007 for neighboring
elementary schools, etc.
This special class sees instructors sent from the JEOL Group, and pupils actually observe plantpollens, etc. using portable scanning electron microscopes. We hope that more pupils will become
interested in science.
Furthermore, since March 2004, the JEOL Group has been carrying out training camp-type learning
activities (“Science Camp”) sponsored by the Japan Science and Technology Agency, which is anindependent administrative corporation. In these camps, learning is performed using the JEOL Group’s
cutting-edge devices under the theme of “observing the nanometer world by electrons.”

Kazato Research Foundation
In commemoration of the 20th anniversary of the founding of the Company, the Kazato Research
Foundation was founded in 1969 by a donation from Kenji Kazato, the founder, for the purpose ofpromoting research and development of electron microscopes and related equipment, as well as researchusing electron microscopes and related equipment (in the fields of medical science, biology, material
study, and nanotechnologies, etc.).

JEOL ANNUAL REPORT 2010

7

The JEOL Group Network

Worldwide Network
With overseas branch offices based in more than 30 countries all over the world including the Americas, Europe, Oceania, and Asia, we haveestablished local sales systems and the best possible service systems. In particular, JEOL USA, INC. has built a sales and service network covering
wide areas throughout North and South America since it was established in Boston in 1962. Also in Europe, JEOL has established service support
systems using local companies, with a large number of units of JEOL products delivered to date, since its first overseas delivery to France (in 1956).
Local offices in Europe were established earlier, starting with one in France (1964) followed by the United Kingdom, the Netherlands, Sweden, Italy,
and Germany.
Furthermore, carefully worked-out measures are taken in emerging markets including those of the BRICs, which are continuing to grow.

Domestic

Corporate nameProduction

Development& Design

Service

Training& Others

JEOL TECHNICS LTD.
JEOL FINETECH CO., LTD.
JEOL SYSTEM TECHNOLOGY CO., LTD.
JEOL ENGINEERING CO., LTD.
JEOL TECHNOSERVICE CO., LTD.
YAMAGATA CREATIVE CO., LTD.
Advanced Capacitor Technologies, Inc.
DATUM INSTRUMENTS INC.
Notes: No mark: Consolidated subsidiaries.
: Unconsolidated subsidiary to which the equity method is applied.
The Company acquired JEOL FINETECH CO., LTD. and JEOL ENGINEERING CO., LTD. on April 1, 2010,
and JEOL SYSTEM TECHNOLOGY CO., LTD. on July 1, 2010.

Overseas

Corporate nameLocationFoundation

CapitalEquity ratio

JEOL USA, INC.

USA

1962

US$ 15,060 thousand

100%

JEOL (EUROPE) SAS

France1964

EUR 720 thousand

100%

JEOL (U.K.) LTD.

U.K.

1968

Stg. £ 400 thousand

100%

Netherlands

1973

EUR 1,472 thousand

100%

JEOL (SKANDINAVISKA) A.B.

Sweden1973

S.Kr 3,160 thousand

100%

JEOL (GERMANY) GmbHGermany

1997

EUR 511 thousand

100%

JEOL (ITALIA) S.p.A.

Italy

1984

EUR 300 thousand

100%

JEOL ASIA PTE. LTD.

Singapore

1995

S.$ 350 thousand

100%

JEOL TAIWAN SEMICONDUCTORS LTD.

Taiwan1999

NT$ 7,000 thousand

JEOL (EUROPE) B.V.

Australia

1968

A.$ 500 thousand(JEOL ASIA 100%)JEOL DE MEXICO S.A. DE C.V.

Mexico1991

MXP 650 thousand(JEOL USA 100%)JEOL CANADA, INC.

Canada1993

C.$ 100 thousand(JEOL USA 100%)(JEOL ASIA 100%)JEOL (MALAYSIA) SDN BHD

Malaysia

1995

RM 300 thousand

Beijing Creative Technology Co., Ltd.

China

2002

RMB 74,900 thousand

96.1%

JEOL Shanghai Semiconductors Ltd.

China

2006

RMB 1,599 thousand(JEOL TAIWAN SEMICONDUCTORS LTD. 100%)JEOL DATUM Shanghai Co., Ltd.

China

2007

RMB 1,513 thousand

JEOL BRASIL Instrumentos Cientificos Ltda.

Brazil2010

R.$ 360 thousand

JEOL KOREA LTD.

Korea

1994

Won 600,000 thousand

Notes: No mark: Consolidated subsidiaries.
: Unconsolidated subsidiaries to which the equity method is applied.
: Affiliated company to which the equity method is applied.

8

JEOL ANNUAL REPORT 2010

100%

JEOL (AUSTRALASIA) PTY.LTD.

100%(JEOL USA 40%)

60%
40%

Board of Directors, Corporate Auditors and Corporate Officers(As of June 29, 2010)

President andRepresentative Director

Director andSenior Executive Officer

Gon-emon Kurihara

Masashi Iwatsuki

Directors and Executive Officers

Masaki Saito

Masayuki Tajimi

Youichi Shibuki

Yoshihiro Sawada

Shin-ichi Watanabe

Directorand Corporate Officer

Standing Corporate Auditors

Corporate Auditors

Koichi Fukuyama

Reisuke Izumiyama

Mitsuo Kaneko

Hidetake Horikiri

Yoshiaki Ueda

Vice-President andSenior Executive Officer

Senior Executive Officers

Executive Officers

Corporate Officers

Hideaki Hirano

Yasunobu Suenaga

Kazufumi Adachi

Hirofumi Kusano

Yasuho Toyoda

Kazuyoshi Yasutake

Hideyuki Nimura

Toshihito Suzuki

Muneaki Mitsuta

Wataru Wakamiya

Akihiro Orimo

Tsutomu Morita

Hideaki Suma

Yasutoshi Nakagawa

Note: Hidetake Horikiri and Yoshiaki Ueda are external corporate auditors of the Company.

JEOL ANNUAL REPORT 20109

Consolidated Five-Year Summary
JEOL Ltd. and consolidated subsidiaries, for the years ended March 31, 2010, 2009, 2008, 2007, and 2006.

For the year (Millions of yen):

2010

2009

2008

2007

2006

¥ 84,770¥ 83,872¥ 93,889¥101,776¥ 93,291

Scientific instrument

40,95535,80339,09064,36458,502

Industrial equipment

43,81548,06954,79937,412

34,78924,69027,52929,37228,755

26,912

Operating income (loss)

508(2,794)

2,154

5,313

2,013

Ordinary profit (loss)

210(2,734)

1,952

5,183

1,913

Net income (loss)

276(1,928)

113

2,816

1,289

Capital expenditures

3,257

3,527

6,118

3,092

3,192

Scientific instrument

1,346

1,333

1,911

1,698

1,514

Industrial equipment

1,885

2,104

4,191

1,379

1,671

Eliminations/Corporate

26

90

16

15

7

Depreciation expense

3,403

3,642

2,923

2,672

2,583

Research and development costs

4,543

5,644

6,486

5,984

5,223

Scientific instrument

1,653

2,477

2,809

3,830

3,641

Industrial equipment

2,890

3,167

3,677

2,154

1,582

Total assets¥102,917¥104,582¥106,322¥111,195¥103,940

Total equity

25,75324,471

29,69632,68429,752

3.52¥ (24.63)

Total equity

322.15311.93377.78409.19375.14

Cash dividends

4.00

4.00

7.50

10.00

5.00

Return on equity (ROE)

1.1%(7.1)%

0.4%

9.1%

4.5%

Return on assets (ROA)

0.2

(1.8)

0.1

2.6

1.3

Net sales

Selling, general and administrative expenses

At year-end (Millions of yen):

Per share data (Yen):
Net income (loss)

¥

¥

1.42

¥

35.50

¥

16.25

Value indicators (%):

10

JEOL ANNUAL REPORT 2010

Consolidated Financial Analysis

processes,” and “strengthening of sales/service systems for

Overview of the Fiscal Year Ended March 2010

small, mass-market products” contributed to earnings
The Japanese economy in the consolidated fiscal year underrecovery, such recovery failed to completely overcome thereview remained generally sluggish, despite partial recoveries

unfavorable external environment.

from the global recession stemming from the Lehman shock.

As a result, we posted consolidated net sales of ¥84,770

Reflecting the low motivation for capital investments among

million (up 1.1% from ¥83,872 million in the previous fiscal

the private sector, demand for our products was weak.

year), operating income of ¥508 million (compared with an

While the Japanese government fiscal stimulus measures

operating loss of ¥2,794 million in the previous fiscal year),

led to a growth in inquiries from governmental offices,ordinary profit of ¥210 million (compared with an ordinary

providing us with a tailwind, the concurrent appreciation of theloss of ¥2,734 million in the previous fiscal year), and net

yen brought us into fierce price competition with foreign

income of ¥276 million (compared with net loss of ¥1,928

manufacturers. As a result, the favorable earnings growth

million in the previous fiscal year).

realized by the supplementary budget was offset to a certain
extent.

Segment Information

Under such external business environment, unfortunately
the JEOL Group ended the final year of our medium-term

Information by business segment

management plan, “ACTION 60” (FY 2007 to FY 2009), failing

1. Scientific Instrument

to achieve the numerical targets. While our key strategies

For transmission electron microscopes and surface analysis

comprising the three pillars of “enhancement of research andinstruments, we met demand in a broad range of fields, fromdevelopment capability,” “rationalization of manufacturing

research and development in cutting-edge areas to materials

Sales by geographical segment/Overseas sales ratio
Japan(Millions of yen)

120,000
100,000
80,00060,000

North America and Latin America

42.4

44.6

Other

47.5

Overseas sales ratio

48.1

43.3

40
13,481

71,79530

14,957

8,546
12,950(%)

15,176

13,936

13,311

10,625

9,332

59,311

62,12720

12,186
73,11966,74610
040,00020,000
0
06

07

08

09

10

Note: The primary countries and regions included in geographic classifications outside Japan are as follows:
U North America and Latin America: U.S.A., Canada and Mexico
U Other: Europe, Asia and Australia

JEOL ANNUAL REPORT 201011

development, basic research in medicine and biology, andtransmission electron microscope. However, in the second halfquality control, etc. As to order receipts, public demandof the fiscal year, business inquiries for this segment werearising from the government’s supplementary budget

boosted from the private sector, mainly from Asia.

compensated for the drop in domestic private demand.

Sales of electron beam evaporation sources and power

In the NMR spectrometer market, there has been a shift insupplies for optical component manufacturing instruments

general-purpose equipment from 400 MHz to 500 MHz.

were sluggish due to the downturn in the optical market.

However, given that the performance of our general-purpose

Business inquiries also decelerated for the highly expected

equipment is similar to or higher than that of our competitors,

high-power electron beam sources and power supplies, which

both order receipts and sales grew, benefiting from theare used for purification of solar cell silicon due to the

supplementary budget. Mass spectrometers also witnessed adecreased capital expenditure by Japanese corporations.

significant increase in orders received due to the

These products are distributed to meet private-sector demand,

supplementary budget.

with no benefits resulting from the supplementary budget.

As a result, net sales amounted to ¥40,955 million (up14.4% year on year).

Sales of electron beam lithography systems saw a sharp
decline due to a reduction in capital expenditure by domestic
and foreign device manufacturers.
In the Medical Equipment business, clinical biochemistry

2. Industrial Equipment
As the general-purpose scanning electron microscope isanalyzers in their large, medium and small sizes showed

distributed primarily in the private-sector market, the benefit

robust sales, particularly in the overseas market, and sales offrom the supplementary budget was limited, except for areagents and consumable supplies contributed significantly to

growth of FIB, a system of specimen preparation for thethe growth in profit as a result of an increase in sales of[Main Products]
Scientific Instrument

Sales<Electron Optics Instruments>
Transmission electron microscopes (TEMs), Energy filter electron
microscopes, Electron probe microanalyzers, Auger microprobes,
Photoelectron spectrometers (XPSs), Peripheral equipment<Analytical Instruments>
NMR spectrometers, Electron spin resonance (ESR)
spectrometers, Mass spectrometers (Time-of-flight mass
spectrometers, Gas chromatograph mass spectrometers, Liquid
chromatograph mass spectrometers), Portable gas
chromatographs, Gas monitor analyzers(Millions of yen)

70,00064,36460,00050,00040,00039,09040,95535,80330,00020,00010,000
0

07

12

JEOL ANNUAL REPORT 2010

08

09

10

As a result, sales in Japan amounted to ¥62,127 million

instruments supplied to Siemens under an OEM agreement.
Other differentiating businesses in areas such as health(up 4.7% year on year).

checkup instruments for metabolic syndrome resulted insuccesses.
Accordingly, net sales amounted to ¥43,815 million (down
8.8% year on year).

2. North America and Latin America
Efforts were made to secure sales with priority given toelectron microscopes. However, sales remained low due to theweak recovery of the economy.
As a result, sales in these regions amounted to ¥9,332

Information by geographical area
1. Japanmillion (down 12.2% year on year).

In the Scientific Instrument business, the government’s
supplementary budget contributed to a growth in sales of both

3. Others

electron optical instruments and analytical instruments.

In Europe, Southeast Asia and Australia, despite the stagnant

As to Industrial Equipment, while sales of electron beambusiness conditions and the impact of the sluggish

lithography systems declined significantly, Medical Equipment

semiconductor market, almost the same level of net sales as

secured sales of almost the same level as in the previous fiscal

the previous fiscal year was achieved, mainly due to strong

year. Sales of meteorology inspection equipment, including

sales of electron microscopes.
As a result, net sales amounted to ¥13,311 million (downscanning electron microscopes, decreased slightly, in contrast
to electron beam sources and power supplies for optical thin

4.5% year on year).

films and coating products, securing sales in amounts
comparable to the previous fiscal year.

[Main Products]
Industrial Equipment

Sales<Metrology Inspection Equipment>
Scanning electron microscopes (SEMs), Analytical scanningelectron microscopes, Scanning probe microscopes, Peripheral
equipment, Multibeam system, Focused ion beam system, Cross
section polisher, Ion slicer, Wafer process monitors (review SEM),
Mask observation scanning microscope, Semiconductor failure
analysis systems, Energy-dispersive X-ray fluorescence
spectrometers, Handheld X-ray fluorescence spectrometer(Millions of yen)

60,00054,79950,00048,06943,81540,00037,41230,000<Semiconductor Equipment>
Electron beam lithography systems (variable-shaped electron
beam, Spot beam lithography system)<Industrial Equipment>
Electron beam evaporation source and power supplies, Highpower electron beam source and power supplies, Built-in plasma
source and power supplies, Radio frequency (RF) generators, RF
induction thermal plasma system

20,00010,000
0

07

08

09

10

<Medical Equipment>
Clinical biochemistry analyzers, Laboratory automation systems,
Laboratory information systems, Amino acid analyzers

JEOL ANNUAL REPORT 201013¥308 million, up ¥3,371 million. Net income in the fiscal

Operating Income and Net Income

year under review came to ¥276 million, up ¥2,204 million.
Gross profit increased by 1.9% year on year, to ¥25,198

As a result, net income per share in the fiscal year under

million due to an increase in sales and cost improvements

review stood at ¥3.52.

offsetting the deterioration triggered by the downturn ofmarket prices and the negative impact of foreign

Financial Position

exchange rates.
R&D costs came to ¥4,543 million (down 19.5%

Total assets at the end of the fiscal year in review amounted

year on year), which is equivalent to 5.4% of net sales,to ¥102,917 million, down ¥1,665 million from theas a result of stringent selection in our R&D activities.

previous year.

Selling, general and administrative expenses, other thanR&D costs, turned out to be ¥20,147 million, down 7.9%,

Cash Flows

as a consequence of the efforts made by the entire
Group to reduce expenses. As a result, operating income

Net cash provided by operating activities increased toincreased by ¥3,302 million from the previous fiscal year,¥1,085 million, principally due to a decrease in inventories

to ¥508 million.

and an increase in trade notes and accounts payable despite
an increase in trade notes and accounts receivable.

Income before income taxes and minority interests was

Operating income (loss)
Operating income (loss) to net sales

R&D costs
R&D costs to net sales(Millions of yen)(%)

(Millions of yen)

6,000

6

6,000

6,486
5,984

4

4,000

2.3

5,223

2,154

0.6
–2

–4

–3.3

–4,000JEOL ANNUAL REPORT 2010

07

35.50

08

09

10

20

16.25
8

5.6

10

6.7

5.9

5.4

6

2,000

4

1,000

2

0

0

06

07

08

09

10

3.52

1.42

0

0

–2,000

06

30

10

6.9
3,000

508
–2,794
5,313

(Yen)

12

4,543

2

0

14

5,000
4,000

2,000

2,013

(%)

5,644

5.2

2.2

Net income (loss) per share–20–24.63

–30

06

07

08

09

10

Net cash used in investing activities decreased to ¥258

The projections for the consolidated fiscal year ending

million, due mainly to payment for purchases of property,

March 31, 2011, as the first year of the plan, are as follows:plant and equipment, despite proceeds from sales ofnet sales of ¥81,000 million (compared with ¥84,770

investment securities, etc.

million in the previous fiscal year); operating income of

Net cash used in financing activities decreased to¥1,700 million (compared with ¥507 million in the previous¥2,849 million, primarily reflecting payments forfiscal year); ordinary profit of ¥1,000 million (comparedredemption of bonds and convertible bonds.

with ¥210 million in the previous fiscal year); and net
income of ¥500 million (compared with ¥276 million in the

Outlook for the Current Fiscal Yearprevious fiscal year).

The JEOL Group formulated a new medium-term
management plan, “CHALLENGE 5” (FY 2010 to FY 2012).
Responding to the major changes in the market environment
in recent years, we are focusing on growing out of theframework of a manufacturer and distributor of scientificinstruments toward becoming a total solution provider, byimproving our stable management base.

Shareholders’ equity ratio
Return on equity

(%)

28.6

29.2

Capital expenditures
Depreciation expense

27.8

25

(Millions of yen)

23.4

24.5

20

6,118

6,000

5,000

15
4,000
10

3,527 3,642

9.1
3,000

5

4.5
0.4

1.1

0
–5

3,192

3,092

2,583

2,672

06

07

2,923

3,257 3,403

2,000
1,000

–7.1

0

–10

06

07

08

09

10

08

09

10

JEOL ANNUAL REPORT 201015

Consolidated Balance Sheets
JEOL Ltd. and Consolidated Subsidiaries
March 31, 2010 and 2009

Thousands of U.S. Dollars

Millions of Yen

2010

ASSETS(Note 1)

2009

2010

CURRENT ASSETS:¥

Cash and cash equivalents (Note 13)

6,978

¥

9,038

$

75,035

165

206

1,778

547

1,318

5,884

26,15818,839281,272

Unconsolidated subsidiaries and associated companies

769

783

8,266

Other

778

553

8,356

Allowance for doubtful receivables

(315)

(259)

(3,392)Inventories (Note 5)

34,32940,079369,130

Deferred tax assets (Note 9)

1,764

2,463

18,973

928

1,428

9,974

72,101

74,448775,276

Land

1,480

1,498

15,919Buildings and structures

19,732

19,117

212,175

Machinery and equipment

3,698

3,593

39,761Tools, furniture and fixtures

18,095

17,916

194,572

Lease assets

1,176

167

12,640

510

879

5,485

44,691

43,170480,552(29,422)(27,844)(316,374)

15,26915,326

164,178

Investment securities (Notes 4, 6 and 13)

5,943

5,136

63,905Investments in and advances to unconsolidated subsidiaries andassociated companies

1,416

1,353

15,226

281

215

3,024

Deferred tax assets (Note 9)

5,816

5,350

62,538Other assets

2,091

2,754

22,486

15,547

14,808167,179¥102,917¥104,582$1,106,633

Time deposits
Receivables (Note 13):
Trade notes
Trade accounts

Prepaid expenses and other current assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT (Note 6):

Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
INVESTMENTS AND OTHER ASSETS:

SoftwareTotal investments and other assets
TOTAL
See notes to consolidated financial statements.

16

JEOL ANNUAL REPORT 2010

Thousands of U.S. Dollars

Millions of Yen

LIABILITIES AND EQUITY(Note 1)

2010

2009

2010

¥ 19,287
2,468
2,581

¥ 21,091$ 207,392
26,53827,753CURRENT LIABILITIES:
Short-term bank loans (Notes 6 and 13)
Current portion of long-term bank loans (Notes 6 and 13)
Current portion of bonds (Notes 6 and 13)

2,960
1,281
4,588

Current portion of convertible bonds (Note 6)

251

36

2,698

11,108
6,112
83
1,478
247
5,382
547
4,527
54,071

10,796

119,440
65,725890
15,8962,651
57,8705,880
48,673
581,406

7,019

Liability for employees’ retirement benefits (Note 7)

7,987
7,346
871
6,118

6,105

85,88778,9899,364
65,784Retirement allowances for directors, executive officers
and corporate auditors (Note 7)

432

855

4,648

339
23,093323
20,4083,643
248,315

Common stock–authorized, 200,000,000 shares;
issued, 79,365,600 shares in 2010 and 2009

6,740

6,740

72,473

Capital surplus

6,346
13,5331,199(24)(2,040)6,346(1,949)68,242
145,513
12,896(255)(21,939)

(531)

(531)

(5,714)25,223530
25,753¥102,917

24,423

271,216
5,696
276,912$1,106,633

Current portion of long-term lease obligations (Note 6 and 12)
Payables (Note 13):
Trade notes
Trade accounts
Unconsolidated subsidiaries and associated companies
Other
Income taxes payable
Advances received
Accrued bonuses to employees
Other current liabilities (Notes 6 and 9)
Total current liabilities

6,023
54
1,152
444
5,790
835
4,653
59,703

LONG-TERM LIABILITIES:
Bonds (Notes 6 and 13)
Long-term bank loans (Notes 6 and 13)
Long-term lease obligations (Notes 6 and 12)

Other long-term liabilities (Notes 6 and 9)
Total long-term liabilities

5,961
145

COMMITMENTS AND CONTINGENT LIABILITIES (Notes 12, 14 and 15)
EQUITY (Notes 8 and 17):

Retained earnings
Unrealized gain on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Treasury stock—at cost, 1,070,236 shares in 2010 and
1,068,989 shares in 2009
Total
Minority interests
Total equity
TOTAL

13,570335(88)

48
24,471¥104,582

JEOL ANNUAL REPORT 201017

Consolidated Statements of Operations
JEOL Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2010 and 2009

Thousands of U.S. Dollars

Millions of Yen

NET SALES (Note 11)
COST OF SALES (Note 11)
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 10 and 11)
Operating income (loss)(Note 1)

2010

2009

2010

¥84,770
59,57225,19824,690508¥83,872
59,137

142
284
63
111
125
(651)
44
(184)
(118)
(206)
800
(221)
23
328
52
(372)
(233)
(187)
(200)
308

226

24,73527,529(2,794)$911,501
640,554
270,947
265,490
5,457

OTHER INCOME (EXPENSES):Interest and dividend income
Revenue from acceptance of research and development services
Insurance claim receipt
Insurance return
Surrender value of insurance
Interest expense
Foreign exchange gain—net
Charge for sales of trade receivables
Loss on disposals of inventories
Loss on sales and disposals of property, plant and equipment–net
Gain on sales of investment securities
Loss on write-down of investment securities
Equity in earnings of unconsolidated subsidiaries and associated companies
Gain on change in equity
Gain on prior periods adjustment
Loss on customer claim
Contract penalty
Other–net
Other expenses–net
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTERESTS

276
134
29
(556)
438
(342)
(124)
(23)
(265)
72
43
(87)
(90)
(269)
(3,063)

1,529
3,056
681
1,193
1,345
(6,995)471(1,976)(1,266)(2,214)8,604(2,374)
248
3,526
561
(4,003)(2,501)(2,026)(2,141)
3,316

INCOME TAXES (Note 9):
Current
Deferred
Total income taxes
MINORITY INTERESTS IN NET INCOME (LOSS)NET INCOME (LOSS)

523
(356)
167
135
¥ 276

815
(1,888)(1,073)62¥ (1,928)

Yen

2010

5,625
(3,827)1,798
1,448$ 2,966
U.S. Dollars

2009

2010

PER SHARE OF COMMON STOCK (Notes 2.p and 16):
Basic net income (loss)
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

18

JEOL ANNUAL REPORT 2010

¥3.52
3.45
4.00

¥(24.63)
4.00

$0.04
0.04
0.04

Consolidated Statements of Changes in Equity
JEOL Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2010 and 2009

Millions of Yen

Thousands

BALANCE, APRIL 1, 2008

Number of Sharesof Common Stock
IssuedCommonStockCapitalSurplusRetained
Earnings

79,366¥6,740¥6,346¥15,895

Adjustment of retained earnings due to theadoption of PITF No.18 (Note 2.b)Unrealized Gain Deferred Gain (Loss) Foreign Currency
on Available-for- on Derivatives under Translation
Sale Securities Hedge Accounting
Adjustments¥2,030¥142¥(1,043)

Treasury
Stock

Minority
Interests

Total¥(528) ¥29,582

¥114

Total
Equity¥29,696

(5)

(5)

(5)

(1,928)(1,928)(1,928)For prior year end, ¥2.5 per share

(196)

(196)

(196)

For current year interim, ¥2.5 per share

(196)

(196)

(196)

(3)

(3)

Net loss
Cash dividends paid:(3)

Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2009

79,366

6,740

6,346

13,570(1,695)

(230)

(906)

335

(88)

(1,949)(531)(2,831)(66)(2,897)

24,42348

24,471

276

276

276

For prior year end, ¥1.5 per share

(117)

(117)

(117)

For current year interim, ¥2.5 per share

(196)

(196)

(196)

Net income
Cash dividends paid:

Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2010

79,366¥6,740¥6,346¥13,533

864

64

(91)

837

482

1,319

¥1,199¥ (24)¥(2,040)¥(531) ¥25,223¥530¥25,753

Thousands of U.S. Dollars (Note 1)
CommonStockCapitalSurplusRetained
Earnings

Unrealized Gain Deferred Loss on Foreign Currency
on Available-for- Derivatives underTranslation
Sale Securities Hedge Accounting
Adjustments

Treasury
Stock

Minority
Interests

Total

Total
Equity$(951) $(20,954) $(5,709) $262,616$ 512 $263,128

2,966

2,966

2,966

For prior year end, $0.01 per share(1,263)(1,263)(1,263)For current year interim, $0.02 per share(2,104)(2,104)(2,104)(5)(5)

BALANCE, MARCH 31, 2009
Net income$72,473 $68,242 $145,914 $ 3,601

Cash dividends paid:(5)

Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2010

9,295
$72,473 $68,242 $145,513 $12,896

696

(985)

9,006

$(255) $(21,939) $(5,714) $271,216

5,184

14,190$5,696 $276,912

See notes to consolidated financial statements.

JEOL ANNUAL REPORT 201019

Consolidated Statements of Cash FlowsJEOL Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2010 and 2009

Thousands of U.S. Dollars

Millions of Yen

OPERATING ACTIVITIES:
Income (loss) before income taxes and minority interests
Adjustments for:
Income taxes–paidDepreciation and amortization
Loss on sales and disposals of property, plant and equipment–net
Loss on write-down of investment securities
Surrender value of insurance
Insurance return
Gain on sales of investment securities
Gain on change in equity
Loss on customer claim
Payments for contract penalty loss
Contract penalty
Equity in earnings of unconsolidated subsidiaries and associated companies
Changes in assets and liabilities:(Increase) decrease in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable(Decrease) increase in advances received
Decrease in provision for accrued bonuses to employees
Increase (decrease) in liability for employees’ retirement benefits(Decrease) increase in retirement allowances for directors,
executive officers and corporate auditors
Other–net
Total adjustments
Net cash provided by (used in) operating activities
INVESTING ACTIVITIES:
Increase in time deposits–net
Payment for purchases of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries
Proceeds from maturity of insurance funds
Proceeds from cancellation of insurance funds
Proceeds from sales of property, plant and equipment
Payment for purchases of property, plant and equipment
Payment for purchases of intangible assets
Other–net
Net cash used in investing activities
FINANCING ACTIVITIES:(Decrease) increase in short-term bank loans–net
Proceeds from long-term bank loans
Repayments of long-term bank loans
Proceeds from bonds issuance
Payment for redemption of bonds
Payment for redemption of convertible bonds
Proceeds from stock issuance to minority shareholders
Cash dividends paid
Other–net
Net cash (used in) provided by financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
See notes to consolidated financial statements.

20

JEOL ANNUAL REPORT 2010

(Note 1)

2010

2009

2010

¥

308

¥(3,063)$ 3,316

(745)
3,403
206
221
(125)
(111)
(800)
(328)
372
(140)
233
(23)

(1,015)
3,642
23
265

(72)

(8,015)36,5962,214
2,374(1,345)(1,193)(8,604)(3,526)
4,003(1,501)
2,501
(248)

(6,685)
4,818
622
(367)
(288)
43

2,933
(4,236)(1,367)
484
(313)
(221)

(71,878)
51,812
6,684(3,942)(3,092)
458

(423)

166

(4,545)

894
777
1,085

131
420
(2,643)

9,600
8,353
11,669

(42)
(10)
1,229
(24)
194
382
163
(1,652)
(323)
(175)
(258)

(123)
(609)

(453)
(108)
13,218
(257)
2,085
4,111
1,753
(17,759)(3,468)(1,891)(2,769)(1,865)4,300(3,399)3,904(1,731)(4,588)
973
(314)
(129)
(2,849)(38)(2,060)9,038¥ 6,97836(3,307)(224)(254)(4,481)5,291
3,000(2,037)
3,962(721)(1,412)
(393)
(21)
7,669
(671)
(126)
9,164
¥ 9,038(20,059)
46,237(36,546)
41,975(18,613)(49,333)
10,462(3,374)(1,387)(30,638)(407)(22,145)
97,180$ 75,035

Notes to Consolidated Financial Statements
JEOL Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2010 and 2009

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements have been prepared inaccordance with the provisions set forth in the Japanese Financial Instruments
and Exchange Act and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan ("Japanese GAAP"), which are
different in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications
and rearrangements have been made to the consolidated financial statements
issued domestically in order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications have been made in
the 2009 financial statements to conform to the classifications used in 2010.
The consolidated financial statements are stated in Japanese yen, the currencyof the country in which JEOL Ltd. (the "Company") is incorporated and operates.
The translations of Japanese yen amounts into U.S. dollar amounts are included
solely for the convenience of readers outside Japan and have been made at therate of ¥93.0 to $1, the approximate rate of exchange at March 31, 2010. Suchtranslations should not be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation –The consolidated financial statements as of March 31,
2010 include the accounts of the Company and its 16 ( 18 in 2009 )significant subsidiaries (together, the “Group”).
JEOL DATUM LTD. and JEOL ACTIVE CO., LTD. were merged into theCompany on July 1, 2009.
Under the control or influence concept, those companies in which theCompany, directly or indirectly, is able to exercise control over
operations are fully consolidated, and those companies over which theGroup has the ability to exercise significant influence are accounted forby the equity method.
Investments in 9 ( 8 in 2009 ) unconsolidated subsidiaries and 2
associated companies are accounted for by the equity method.
Goodwill represents the excess of the fair value of the net assets of theacquired subsidiaries at the date of acquisition under their cost. Goodwill isamortized on the straight-line basis over five years, with the exception ofminor amounts which are charged to income when incurred.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profit included in assets
resulting from transactions within the Group is eliminated.

process so that net income is accounted for in accordance with Japanese
GAAP unless they are not material: (a) amortization of goodwill;(b) scheduled amortization of actuarial gain or loss of pensions that has
been directly recorded in the equity; (c) expensing capitalized development
costs of R&D; (d) cancellation of the fair value model accounting forproperty, plant and equipment and investment properties and incorporationof the cost model accounting; (e) recording the prior years’ effects ofchanges in accounting policies in the income statement where retrospective
adjustments to financial statements have been incorporated; and(f) exclusion of minority interests from net income, if contained. PITF No.
18 was effective for fiscal years beginning on or after April 1, 2008 with early
adoption permitted.
The Company applied this accounting standard effective April 1, 2008.
In addition, the Company adjusted the beginning balance of retained
earnings at April 1, 2008 as if this accounting standard had been
retrospectively applied.

c. Business Combination –In October 2003, the Business Accounting
Council issued a Statement of Opinion, “Accounting for Business
Combinations,” and in December 2005, the ASBJ issued ASBJ Statement
No. 7, “Accounting Standard for Business Divestitures” and ASBJ GuidanceNo. 10, “Guidance for Accounting Standard for Business Combinations andBusiness Divestitures.” The accounting standard for business combinations
allows companies to apply the pooling of interests method of accounting
only when certain specific criteria are met such that the businesscombination is essentially regarded as a uniting-of-interests. For businesscombinations that do not meet the uniting-of-interests criteria, the businesscombination is considered to be an acquisition and the purchase method of
accounting is required. This standard also prescribes the accounting for
combinations of entities under common control and for joint ventures.

d. Cash Equivalents –Cash equivalents are short-term investments thatare readily convertible into cash and that are exposed to insignificant risk ofchanges in value.
Cash equivalents include time deposits and certificate of deposits, all ofwhich mature or become due within three months of the date of acquisition.

e. Inventories –Finished products are mainly stated at the lower of cost,
determined by the moving-average cost method, or net selling value. Finishedproducts of consolidated foreign subsidiaries are stated at the lower of cost,
determined by the speciﬁc identiﬁcation method. Work in process is mainly
stated at the lower of cost, determined by the speciﬁc identiﬁcation method,or net selling value.
Raw materials and supplies are stated at cost, determined by the lastpurchased price method, or net selling value.

b. Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements–In May 2006, the Accounting Standards Board of Japan (the “ASBJ”)
issued ASBJ Practical Issues Task Force (“PITF”) No. 18, “Practical Solution
on Unification of Accounting Policies Applied to Foreign Subsidiaries for theConsolidated Financial Statements.” PITF No. 18 prescribes ( 1 ) the
accounting policies and procedures applied to a parent company and its
subsidiaries for similar transactions and events under similar circumstances
should in principle be unified for the preparation of the consolidated
financial statements, ( 2 ) financial statements prepared by foreignsubsidiaries in accordance with either International Financial ReportingStandards or the generally accepted accounting principles in the UnitedStates of America tentatively may be used for the consolidation process,(3) however, the following items should be adjusted in the consolidationf. Investment Securities –All securities are classiﬁed as available-forsale securities and are reported at fair value, with unrealized gains and losses,
net of applicable taxes, reported in a separate component of equity. The costof securities sold is determined based on the moving-average method.
Non-marketable available-for-sale securities are stated at cost
determined by the moving-average method. For other than temporary
declines in fair value, investment securities are reduced to net realizablevalue by a charge to income.

g. Property, Plant and Equipment –Property, plant and equipment
are stated at cost. Depreciation of property, plant and equipment of theCompany and its consolidated domestic subsidiaries is computed by the
declining-balance method on the estimated useful lives of the assets, while

JEOL ANNUAL REPORT 201021

the straight-line method is principally applied to the property, plant andequipment of consolidated foreign subsidiaries. The range of useful lives isfrom 7 to 65 years for buildings and structures and from 2 to 15 years fortools, furniture and ﬁxtures.
Lease assets are depreciated by the straight-line method over the respective
lease period. The useful lives for lease assets are the terms of the respective leases.

h. Long-Lived Assets –The Group reviews its long-lived assets for
impairment whenever events or changes in circumstance indicate thecarrying amount of an asset or asset group may not be recoverable. An
impairment loss would be recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash ﬂows expected
to result from the continued use and eventual disposition of the asset or
asset group. The impairment loss would be measured as the amount bywhich the carrying amount of the asset exceeds its recoverable amount,which is the higher of the discounted cash ﬂows from the continued use andeventual disposition of the asset or the net selling price at disposition.

i. Software –Development costs related to software for sale are deferred
and amortized in proportion to the actual sales volume of software soldduring the current year to the estimated total sales volume. Softwaredevelopment costs for internal use are deferred at cost less accumulated
amortization, which is calculated by the straight-line method over theestimated useful lives (ﬁve years).

Under the previous accounting standard, finance leases that deem totransfer ownership of the leased property to the lessee were to be capitalized.
However, other finance leases were permitted to be accounted for as
operating lease transactions if certain “as if capitalized” information isdisclosed in the note to the lessee’s financial statements. The revised
accounting standard requires that all ﬁnance lease transactions should becapitalized to recognize lease assets and lease obligations in the balance
sheet. In addition, the revised accounting standard permits leases which
existed at the transition date and do not transfer ownership of the leased
property to the lessee to be accounted for as operating lease transactions.
The Company applied the revised accounting standard effective April 1,
2008. In addition, the Company accounted for leases which existed at thetransition date and do not transfer ownership of the leased property to thelessee as operating lease transactions.
All other leases are accounted for as operating leases.

m. Income Taxes –The provision for income taxes is computed basedon the pretax income included in the consolidated statements of operations.
The asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted tax laws to thetemporary differences.

n. Foreign Currency Transactions –All short-term and long-term
j. Retirement and Pension Plans –Employees of the Company andcertain consolidated subsidiaries who retire at or after the age of 60 are
entitled to approximately 50% of their beneﬁts in the form of an annuity. The
funds for the annuity payments are entrusted to an outside trustee.
Effective April 1, 2000, the Company and consolidated domestic
subsidiaries adopted a new accounting standard for employees’ retirement
beneﬁts and accounted for the liability for retirement beneﬁts based on the
projected beneﬁt obligations and plan assets at the balance sheet date.
For the transitional obligation of ¥6,981 million in April 2000, theCompany contributed certain available-for-sale securities with a fair value of¥3,601 million to the employees’ retirement beneﬁts trust for the Company’s
non-contributory pension plans, and recognized a non-cash gain of ¥3,201
million. The securities held in this trust are qualiﬁed as plan assets. The
remaining transitional obligation of ¥3,380 million ($36,344 thousand) is
being amortized over 15 years.
On July 31, 2008, the ASBJ has issued an Accounting Standard — ASBJ
Statement No. 19 “Partial Amendments to Accounting Standard for
Retirement Benefits (Part 3).” The Group has adopted this statement
beginning this ﬁscal year. There is no effect of this in the 2010 consolidated
statement of operations.
Retirement allowances for directors, executive ofﬁcers and corporate auditorsof the Company and its consolidated domestic subsidiaries are recorded to state
the liability at the amount that would be required if all directors, executiveofﬁcers and corporate auditors retired at the balance sheet date.

k. Research and Development Costs –Research and development
costs are charged to income as incurred.

l. Leases –In March 2007, the ASBJ issued ASBJ Statement No. 13,“Accounting Standard for Lease Transactions,” which revised the previous
accounting standard for lease transactions issued in June 1993. The revised
accounting standard for lease transactions is effective for fiscal years
beginning on or after April 1, 2008 with early adoption permitted for ﬁscal
years beginning on or after April 1, 2007.

22

JEOL ANNUAL REPORT 2010

monetary receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the exchange rates at the balance sheet date.
The foreign exchange gains and losses from translation are recognized in the
consolidated statements of operations to the extent that they are not hedged
by forward exchange contracts.

o. Foreign Currency Financial Statements –The balance sheet
accounts of the consolidated foreign subsidiaries are translated into
Japanese yen at the current exchange rate as of the balance sheet date except
for equity, which is translated at the historical rate.
Differences arising from such translation are shown as “Foreign currencytranslation adjustments” in a separate component of equity.
Revenue and expense accounts of consolidated foreign subsidiaries aretranslated into yen at the average exchange rate.

p. Derivatives and Hedging Activities –The Group uses derivatives
to manage its exposures to fluctuations in foreign exchange and interest
rates. Foreign exchange forward contracts, currency swaps and interest rate
swaps are utilized by the Group to reduce foreign currency exchange andinterest rate risks. The Group does not enter into derivatives for trading or
speculative purposes.
Gains or losses on derivatives used for hedging purposes, if qualiﬁed forhedge accounting because of a high correlation and effectiveness between
the hedging instruments and the hedged items, are deferred until maturity of
the hedged transactions.
Forward contracts and currency swaps applied to forecasted (or committed)
transactions are also measured at their fair value but the unrealized gains/losses are deferred until the underlying transactions are completed.
Interest rate swaps which qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value but thedifferential paid or received under the swap agreements is recognized
and included in interest expense.

q. Per Share Information –Basic net income per share is computed bydividing net income available to common shareholders by the weightedaverage number of common shares outstanding for the period.
Diluted net income per share reflects the potential dilution that could
occur if securities were converted into common stock. Diluted net income
per share of common stock assumes full conversion of the outstanding
convertible bonds at the beginning of the year with an applicable adjustment
for related interest expense, net of tax.
Cash dividends per share presented in the accompanying consolidated
statements of operations are dividends applicable to the respective years
including dividends to be paid after the end of the year.

r. New Accounting Pronouncements
Business Combinations –In December 2008, the ASBJ issued arevised accounting standard for business combinations, ASBJ Statement
No. 21, “Accounting Standard for Business Combinations.” Major
accounting changes under the revised accounting standard are as follows:(1) The current accounting standard for business combinations allows
companies to apply the pooling of interests method of accounting whencertain specific criteria are met such that the business combination isessentially regarded as a uniting-of-interests. The revised standard
requires to account for such business combination by the purchase method
and the pooling of interests method of accounting is no longer allowed.
(2) The current accounting standard accounts for the research anddevelopment costs to be charged to income as incurred. Under the revised
standard, an in-process research and development (IPR&D) acquired by
the business combination is capitalized as an intangible asset.
(3) The current accounting standard accounts for a bargain purchase gain
(negative goodwill) to be systematically amortized within 20 years. Underthe revised standard, the acquirer recognizes a bargain purchase gain in
profit or loss on the acquisition date after reassessing whether it hascorrectly identified all of the assets acquired and all of the liabilities
assumed with a review of such procedures used.
This standard is applicable to business combinations undertaken on orafter April 1, 2010 with early adoption permitted for ﬁscal years beginningon or after April 1, 2009.

Unification of Accounting Policies Applied to Foreign
Associated Companies for the Equity Method –The current
accounting standard requires to unify accounting policies within the
consolidation group. However, the current guidance allows for theapplication of the equity method for the ﬁnancial statements of its foreign
associated company which have been prepared in accordance withgenerally accepted accounting principles in their respective jurisdictions
without uniﬁcation of accounting policies.
In March 2008, the ASBJ issued ASBJ Statement No. 16, “AccountingStandard for Equity Method of Accounting for Investments.” The newstandard requires adjustments to be made to conform the associate’s
accounting policies for similar transactions and events under similar
circumstances to those of the parent company when the associate’s
ﬁnancial statements are used in applying the equity method unless it isimpracticable to determine adjustments. In addition, ﬁnancial statements
prepared by foreign associated companies in accordance with either
International Financial Reporting Standards or the generally accepted
accounting principles in the United States of America tentatively may be
used in applying the equity method if the following items are adjusted sothat net income is accounted for in accordance with Japanese GAAP

unless they are not material: (1) amortization of goodwill; (2) scheduled
amortization of actuarial gain or loss of pensions that has been directly
recorded in the equity; (3) expensing capitalized development costs of
R&D; (4) cancellation of the fair value model accounting for property,
plant and equipment and investment properties and incorporation of thecost model accounting; (5) recording the prior years’ effects of changes inaccounting policies in the income statement where retrospective
adjustments to the financial statements have been incorporated; and(6) exclusion of minority interests from net income, if contained.
This standard is applicable to equity method of accounting for ﬁscal
years beginning on or after April 1, 2010 with early adoption permitted forﬁscal years beginning on or after April 1, 2009.

Asset Retirement Obligations – In March 2008, the ASBJ
published a new accounting standard for asset retirement obligations,
ASBJ Statement No. 18 “Accounting Standard for Asset Retirement
Obligations” and ASBJ Guidance No. 21 “Guidance on AccountingStandard for Asset Retirement Obligations.” Under this accounting
standard, an asset retirement obligation is deﬁned as a legal obligation
imposed either by law or contract that results from the acquisition, construction,
development and the normal operation of a tangible fixed asset and isassociated with the retirement of such tangible fixed asset. The asset
retirement obligation is recognized as the sum of the discounted cash
ﬂows required for the future asset retirement and is recorded in the period
in which the obligation is incurred if a reasonable estimate can be made. If
a reasonable estimate of the asset retirement obligation cannot be made in
the period the asset retirement obligation is incurred, the liability should
be recognized when a reasonable estimate of asset retirement obligation
can be made. Upon initial recognition of a liability for an asset retirement
obligation, an asset retirement cost is capitalized by increasing thecarrying amount of the related ﬁxed asset by the amount of the liability.
The asset retirement cost is subsequently allocated to expense throughdepreciation over the remaining useful life of the asset. Over time, theliability is accreted to its present value each period. Any subsequent
revisions to the timing or the amount of the original estimate ofundiscounted cash ﬂows are reﬂected as an increase or a decrease in the
carrying amount of the liability and the capitalized amount of the related
asset retirement cost. This standard is effective for ﬁscal years beginningon or after April 1, 2010 with early adoption permitted for fiscal years
beginning on or before March 31, 2010.

Accounting Changes and Error Corrections –In December
2009, ASBJ issued ASBJ Statement No. 24 “Accounting Standard for
Accounting Changes and Error Corrections” and ASBJ Guidance No. 24“Guidance on Accounting Standard for Accounting Changes and Error
Corrections.” Accounting treatments under this standard and guidance areas follows;(1) Changes in accounting policies
When a new accounting policy is applied with revision of accounting
standards, a new policy is applied retrospectively unless the revised
accounting standards include speciﬁc transitional provisions. When therevised accounting standards include speciﬁc transitional provisions, anentity shall comply with the speciﬁc transitional provisions.

(2) Changes in presentations
When the presentation of financial statements is changed, priorperiod financial statements are reclassified in accordance with thenew presentation.

JEOL ANNUAL REPORT 201023

(3) Changes in accounting estimates

100% equity interest and whose main business was the provision oftechnical services and consultations pertaining to JEOL Group’s products
and related equipment thereby expanding the solution business in thestate-of-the-art ﬁelds of nanotechnology, biotechnology, life science,
environment, etc.
The Company also acquired JEOL ACTIVE CO., LTD., which was thesame subsidiary company as JEOL DATUM LTD. and acquired 100%
equity interest, whose main business was the procurement of parts andmaterials pertaining to JEOL Group’s products and related equipment.

A change in an accounting estimate is accounted for in the period of the change
if the change affects that period only, and is accounted for prospectively if thechange affects both the period of the change and future periods.

(4) Corrections of prior period errors
When an error in prior period ﬁnancial statements is discovered, thosestatements are restated.
This accounting standard and the guidance are applicable toaccounting changes and corrections of prior period errors which are madefrom the beginning of the ﬁscal year that begins on or after April 1, 2011.

The acquisition will facilitate further cost reduction and consolidationof production processes (for procurement, production and logistics),
which have been optimally operated in each company onto “Production
Strategy Rationalization of Manufacturing Processes” in the medium-term
management plan ACTION 60 (from FY 2007 to FY 2009). Through theacquisition, the Company will concentrate management resources andeliminate the overlapping of functions, thereby realizing optimization andefﬁciency improvement across the entire Group.

Segment Information Disclosures –In March 2008, the ASBJ
revised ASBJ Statement No. 17 “Accounting Standard for Segment
Information Disclosures” and issued ASBJ Guidance No. 20 “Guidance on
Accounting Standard for Segment Information Disclosures.” Under the
standard and guidance, an entity is required to report financial anddescriptive information about its reportable segments. Reportable segments
are operating segments or aggregations of operating segments that meet
speciﬁed criteria. Operating segments are components of an entity about
which separate ﬁnancial information is available and such information isevaluated regularly by the chief operating decision maker in deciding how toallocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is usedinternally for evaluating operating segment performance and deciding how
to allocate resources to operating segments. This accounting standard andthe guidance are applicable to segment information disclosures for the ﬁscal
years beginning on or after April 1, 2010.

b. Date for the merger
July 1, 2009c. Content of allotments related to the merger
As both JEOL DATUM LTD. and JEOL ACTIVE CO., LTD. were wholly
owned subsidiaries of the Company, no plans existed to issue new sharesor augmented common stock in relation to the merger, nor was any money
delivered due to the merger.

4. INVESTMENT SECURITIESInvestment securities as of March 31, 2010 and 2009 consisted of the following:

3. BUSINESS COMBINATION

Thousands of
U.S. Dollars

Millions of Yen

Transaction under Common Control

2010

2009

2010

JEOL ACTIVE CO., LTD.

Non-current:
Marketable equity securities
Non-marketable securities¥5,85291¥5,054
82$62,930
975(Company to be absorbed)(Company to be absorbed)

Total¥5,943¥5,136$63,905

1156, Nakagamicho, Akishima,Tokyo

1-2, Musashino 3-chome,
Akishima, Tokyo(1) Overview of Companies Involved in the Merger (as of June 30, 2009)
JEOL Ltd.
Company name: (Surviving company)
Head ofﬁce:

1-2, Musashino 3-chome,
Akishima, TokyoJEOL DATUM LTD.

Representative Gon-emon Kurihara,
Yasunobu Suenaga,
Kazuyoshi Yasutake,
name, position: President and Representative Director President and Representative Director President and Representative Director
Common stock: ¥6,740 million
Business
content:

Manufacturing and sales ofscientific instruments andindustrial equipment

The Bank of Tokyo-Mitsubishi
Major
UFJ, Ltd.—3.8%
shareholders
and percentage Mitsubishi Electricof ownership:
Corporation—3.8%¥53 million¥35 million

Engineering services andconsultation services for the
products made by JEOL Ltd.

Procurement and sales of partsand materials for the products
made by JEOL Ltd.

JEOL Ltd.—100%

JEOL Ltd.—100%

The costs and aggregate fair values of investment securities at March 31,
2010 and 2009 were as follows:
Millions of Yen

March 31, 2010

Cost

Unrealized
Gains

Unrealized
LossesSecurities classified asavailable-for-sale
equity securities

Fair Value¥3,865¥2,149¥162¥5,852

Securities classified asavailable-for-sale
equity securities¥4,514¥1,536¥996¥5,054

March 31, 2010

Cost

Unrealized
Gains

Unrealized
LossesFair Value$41,564$23,107$1,741$62,930

March 31, 2009

(2) Form of the Merger
The merger took the form of an absorption-type merger, with the Company, as
the surviving company and JEOL DATUM LTD., and JEOL ACTIVE CO., LTD.,
being dissolved.

(3) Company Name after the Merger
JEOL Ltd.

Thousands of U.S. Dollars

Securities classified asavailable-for-sale
equity securities(4) Outline of the Merger including Objective
a. Objective of the merger
As a part of the strengthening of the Group management, the Company
acquired JEOL DATUM LTD. which was the subsidiary company acquired

24

JEOL ANNUAL REPORT 2010

Available-for-sale securities whose fair value was not readily determinable
as of March 31, 2009 were as follows. The similar information for 2010 isdisclosed in Note 13.

The Company must maintain net assets in excess of ¥13,813 million($148,527 thousand) as of every year end and interim closing dates. As of
March 31, 2010, the Company was in compliance with this requirement.
Annual maturities of long-term debt, excluding finance leases (see Note 12),

Carrying AmountMarch 31, 2009

Millions of Yen

Available-for-sale—Equity securities

¥82

Total

¥82

as of March 31, 2010 for the next five years were as follows:Year Ending March 31

Thousands of
U.S. Dollars

Millions of Yen

5. INVENTORIES

2011¥ 5,049$ 54,291

Inventories at March 31, 2010 and 2009 consisted of the following:

2012

6,273

67,451Thousands of
U.S. Dollars

Millions of Yen

2013

6,175

66,398

2010

2009

2010

2014

2,390

25,704

Finished products¥14,785¥18,254$158,978

2015

495

5,323

Work in process

16,746

18,641

180,067

Total¥20,382$219,167

Raw materials and supplies

2,798

3,184

30,085¥34,329¥40,079$369,130

Total

6. SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2010 and 2009 consisted of notes to banks
and bank overdrafts. The annual interest rates applicable to the short-term bankloans ranged from 1.26% to 4.13% and 1.48% to 5.75% at March 31, 2010 and2009, respectively.
Long-term debt at March 31, 2010 and 2009, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Unsecured 1.42% yen bonds,
due 2011
Unsecured 1.36% yen bonds,
due 2012
Unsecured 1.40% yen bonds,
due 2012
Unsecured 1.50% yen bonds,
due 2012
Unsecured 1.24% yen bonds,
due 2012
Unsecured 1.21% yen bonds,
due 2012
Unsecured 1.29% yen bonds,
due 2013
Unsecured 1.35% yen bonds,
due 2013
Unsecured 1.11% yen bonds,
due 2013
Unsecured 1.07% yen bonds,
due 2014
Unsecured 1.35% yen bonds,
due 2014
Unsecured 0.94% yen bonds,
due 2014
Unsecured 1.01% yen bonds,
due 2014
Unsecured zero coupon yen convertible
bonds, due 2009
Loans from banks and insurance companies,
due serially to 2014 with interest rates
ranging from 1.95% to 6.09% (2010)
and 1.20% to 6.09% (2009):
Collateralized

2010

2009

2010

¥

¥

500

$ 5,376

400

600

4,301

500

700

5,376

500

500

5,376

150

210

1,613

500

850

The carrying amounts of assets pledged as collateral for short-term bank loansof ¥5,497 million ($59,102 thousand), current portion of long-term bank loans of¥165 million ($1,774 thousand), long-term bank loans of ¥3,075 million ($33,065
thousand) and deposit received accounts which were included in other current
liabilities of ¥59 million ($633 thousand) and included in other long-term
liabilities of ¥96 million ($1,032 thousand) at March 31, 2010, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Land

¥ 626

$ 6,733

Buildings and structures–net of accumulated depreciation

3,782

40,665

Machinery and equipmen–net of accumulated depreciation

3

28

Investment securities

3,090

33,227

Total¥7,501$80,653

9,140

In addition to the above loan balances, in order to raise liquidity,
the Company entered into a committed loan facility agreement, aggregatedamount of ¥9,000 million ($96,774 thousand), with a syndicate of six Japanesebanks, arranged by The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Provisions to the loan facility agreement require the Company to maintain its
current net assets at a minimum of 75% of the higher of its net assets of theprevious fiscal year or of March 31, 2008 or the higher of its net assets of theprevious interim periods or of March 31, 2008.

2,000

2,000

21,505

1,400

1,800

15,054

368

490

3,962

800

1,000

8,602

400

500

4,301

900

9,678

1,800

19,355
4,588

3,240

3,420

Unsecured

6,574

5,501

34,83970,689Lease obligations

1,122

181

12,062

Total

21,504

21,990231,229

Less current portion(5,300)(8,865)(56,989)

Long-term debt, less current portion¥16,204¥13,125$174,240

JEOL ANNUAL REPORT 201025

7. RETIREMENT AND PENSION PLANS

8. EQUITYThe Company and its certain consolidated subsidiaries have severance payment
plans for employees, directors, executive officers and corporate auditors. Certain
consolidated foreign subsidiaries also have pension plans.
Under most circumstances, employees terminating their employment areentitled to retirement benefits determined based on the rate of pay at the time oftermination, years of service and certain other factors. Such retirement benefits
are made in the form of a lump-sum severance payment from the Company orfrom certain consolidated subsidiaries and annuity payments from a trustee.
Employees are entitled to larger payments if the termination is involuntary, by
retirement at the mandatory retirement age, by death, or by voluntary retirement
at certain specific ages prior to the mandatory retirement age.
The liability for employees’ retirement benefits at March 31, 2010 and 2009

Japanese companies are subject to the Companies Act. The significant
provisions in the Companies Act that affect financial and accounting matters are
summarized below:

consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2010

2009

2010

Projected benefit obligation¥(16,895)¥(16,592)$(181,670)

Fair value of plan assets

6,367

5,873

68,465

Unrecognized actuarial loss

3,555

4,053

38,227

Unrecognized transitional obligation

1,104

1,347

11,876

Unrecognized prior service cost

59

69

633

Under the Companies Act, companies can pay dividends at any time during
the fiscal year in addition to the year-end dividend upon resolution at theshareholders meeting. For companies that meet certain criteria such as;(1) having the Board of Directors, (2) having independent auditors,(3) having the Board of Corporate Auditors, and (4) the term of service of thedirectors is prescribed as one year rather than two years of normal term by
its articles of incorporation, the Board of Directors may declare dividends(except for dividends in kind) at any time during the fiscal year if thecompany has prescribed so in its articles of incorporation. However, theCompany cannot do so because it does not meet all the above criteria.
Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation ofcompany so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The
limitation is defined as the amount available for distribution to theshareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.

Benefits paid

(308)

(855)

(3,315)Net liability¥ (6,118)¥ (6,105)$ (65,784)

b. Increases/Decreases and Transfer of Common Stock,
Reserve and Surplus

The components of net periodic retirement benefit costs for the years ended
March 31, 2010 and 2009 are as follows:

The Companies Act requires that an amount equal to 10% of dividends must
be appropriated as a legal reserve (a component of retained earnings) or as
additional paid-in capital (a component of capital surplus) depending on theequity account charged upon the payment of such dividends until the total of
aggregate amount of legal reserve and additional paid-in capital equals 25%of the common stock. Under the Companies Act, the total amount ofThousands of
U.S. Dollars

Millions of Yen

2010

2009

2010

Service cost

¥ 894

¥ 995

$ 9,614

Interest cost

334

350

3,594

Expected return on plan assets

(124)

(228)

(1,338)

Recognized actuarial loss

516

405

5,550

Amortization of transitional obligation

229

240

2,463

Amortization of prior service cost

6

7

65

Net periodic retirement beneﬁt costs¥1,855¥1,769$19,948

The above service cost does not include additional retirement payments of¥178 million ($1,916 thousand) and ¥215 million for the years ended March 31,
2010 and 2009, respectively.
Assumptions used for the years ended March 31, 2010 and 2009 are set forth
as follows:

Discount rate

2010

2009

2.0%

2.0%

Expected rate of return on plan assets

2.0%

3.0%

Recognition period of actuarial gain/loss

12 years

12 years

Amortization period of transitional obligation

15 years

15 years

Retirement allowances for directors and corporate auditors are paid
subject to approval of the shareholders in accordance with the Companies
Act of Japan (the “Companies Act”).

26

a. Dividends

JEOL ANNUAL REPORT 2010

additional paid-in capital and legal reserve may be reversed without
limitation. The Companies Act also provides that common stock, legal
reserve, additional paid-in capital, other capital surplus and retained
earnings can be transferred among the accounts under certain conditions
upon resolution of the shareholders.

c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stockand dispose of such treasury stock by resolution of the Board of Directors.
The amount of treasury stock purchased cannot exceed the amount available
for distribution to the shareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as aseparate component of equity.
The Companies Act also provides that companies can purchase bothtreasury stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.

9. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national
and local income taxes which, in the aggregate, resulted in a normal effective
statutory tax rate of approximately 40.7% for the years ended March 31,
2010 and 2009.
The tax effects of significant temporary differences and tax loss
carryforwards which resulted in deferred tax assets and liabilities at March
31, 2010 and 2009 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2010

Deferred tax assets–Current:
Accrued bonuses to employees
Research and development costAccrued enterprise taxes
Unrealized intercompany profits of inventories
Loss on write-down of inventories
Tax loss carryforwards
Other
Less valuation allowance
Total
Deferred tax liabilities–Current
Net deferred tax assets–Current
Deferred tax assets–Non-current:
Amortization of software
Loss on write-down of investment securities
Liability for employees’ retirement benefits
Retirement allowances for directors, executive
officers and corporate auditors
Tax loss carryforwards
Other
Less valuation allowance
Total
Deferred tax liabilities–Non-current
Net deferred tax assets–Non-current
Deferred tax liabilities–Current:
Advances received
Other
Total
Deferred tax assets–Current
Net deferred tax liabilities–Current
Deferred tax liabilities–Non-current:
Unrealized gain on availablefor-sale securities
Undistributed earnings ofassociated companies
Other
Total
Deferred tax assets–Non-current
Net deferred tax liabilities–Non-current

2009

2010

¥ 219
411
15
75
393
68
686
(11)

¥ 325
585
26
226
702
246
539
(5)

$ 2,359
4,419
165
804
4,226
730
7,375
(118)

1,856
(92)
¥ 1,764

2,644
(181)
¥ 2,463

19,960(987)$ 18,973

2010

2009

Normal effective statutory tax rate

40.7%

40.7%

Expenses not deductible for income tax purposes

43.3

(4.0)

Capitation of local inhabitant tax

8.6

(0.9)

Unrealized inter company profits(58.6)

2.7

Difference in tax rates of foreign subsidiaries(20.9)

3.7

Less valuation allowance

72.4

(3.8)

Other–net(31.3)(3.4)

Actual effective tax rate

54.2%

35.0%

At March 31, 2010, certain subsidiaries have tax loss carryforwards
aggregating approximately ¥8,148 million ($87,609 thousand) which areavailable to be offset against taxable income of such subsidiaries in future years.
These tax loss carryforwards, if not utilized, will expire as follows:Year Ending March 31

2012

Millions of Yen

Thousands of
U.S. Dollars

¥

$

2

20

2013

96

1,030

2014

145

1,557

2015

250

2,690

2016 and thereafter

7,655

82,312

Total¥8,148$87,609¥ 1,041263
2,568¥ 1,058263
2,310$11,191
2,832
27,617

175

349

1,880

3,286
408
(932)

2,108
421
(711)

35,330
4,395(10,025)

Research and development costs charged to income were ¥4,543 million($48,855 thousand) and ¥5,644 million for the years ended March 31, 2010 and2009, respectively.

6,809
(993)
¥ 5,816

5,798
(448)
¥ 5,350

73,220(10,682)$62,538

11. RELATED PARTY DISCLOSURES¥ (94)
(94)
92
¥ (2)

¥ (53)
(131)
(184)
181
¥ (3)

10. RESEARCH AND DEVELOPMENT COSTS

Transactions of the Group with unconsolidated subsidiaries and associated$ (1,005)(1,005)987$ (18)¥ (788)¥ (205)$ (8,470)

(161)

(166)

(1,727)(88)(1,037)993¥ (44)

(126)
(497)
448
¥ (49)(957)(11,154)
10,682$ (472)companies for the years ended March 31, 2010 and 2009, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Sales

2010

2009

2010

¥2,504¥2,740$26,925

Purchases

170

171

1,828

Selling, general and administrative expenses

242

169

2,601

A reconciliation between the normal effective statutory tax rates and the actual
effective tax rates reflected in the accompanying consolidated statements ofoperations for the years ended March 31, 2010 and 2009 is as follows:

JEOL ANNUAL REPORT 201027

Obligations under finance leases:

12. LEASES

Thousands of
U.S. Dollars

Millions of Yen

The Group leases certain machinery, computer equipment, office space andother assets.
Total rental expenses including lease payments under finance leases for theyears ended March 31, 2010 and 2009 were ¥1,963 million ($21,108 thousand)and ¥1,805 million, respectively.
Obligations under finance leases and future minimum payments under
noncancelable operating leases were as follows:

Due within one year
Due after one year
Total

Millions of Yen

Thousands of
U.S. Dollars

2010

2010

2010

Due within one year

2009

¥ 79

OperatingleasesFinanceleasesOperatingleases

¥ 251

¥ 558

$ 2,698$ 6,000

871

953

9,364

10,244¥1,122¥1,511$12,062$16,244

Pro Forma Information of Leased Property Whose Lease
Inception Was before March 31, 2008
ASBJ Statement No.13, “Accounting Standard for Lease Transactions” requiresthat all finance lease transactions should be capitalized to recognize lease assets
and lease obligations in the balance sheet. However, the ASBJ Statement No. 13
permits leases without ownership transfer of the leased property to the lessee
whose lease inception was before March 31, 2008 to be accounted for as
operating lease transactions if certain “as if capitalized” information is disclosed
in the note to the financial statements. The Company applied the ASBJ
Statement No. 13 effective April 1, 2008 and accounted for such leases as
operating lease transactions. Pro forma information of leased property whose
lease inception was before March 31, 2008 such as acquisition cost,
accumulated depreciation, obligations under finance leases, depreciation
expense, interest expense and other information of finance leases that do nottransfer ownership of the leased property to the lessee on an “as if capitalized”
basis was as follows:
Millions of Yen
2010

$ 843

Due after one year

102

191

1,100

Total

¥181

¥296

$1,943

Depreciation expense, interest expense and other information under finance leases:
Thousands of
U.S. Dollars

Millions of Yen

2010

Financeleases2010¥105

Depreciation expense
Interest expense

2009

¥ 66

2010

¥121

$ 712

10

16

105

Total

¥ 76

¥137

$817

Lease payments

¥106

¥163

$1,145

Depreciation expense and interest expense, which are not reflected in theaccompanying consolidated statements of operations, were computed by the
declining-balance method and the interest method, respectively.
No loss on impairment of leased assets was recorded for the years ended
March 31, 2010 and 2009.

13. F I N A N C I A L I N S T R U M E N T S A N D R E L A T E D
DISCLOSURESOn March 10, 2008, the ASBJ revised ASBJ Statement No. 10 “AccountingStandard for Financial Instruments” and issued ASBJ Guidance No. 19“Guidance on Accounting Standard for Financial Instruments and Related
Disclosures.” This accounting standard and the guidance are applicable tofinancial instruments and related disclosures at the end of the fiscal years
ending on or after March 31, 2010 with early adoption permitted from the
beginning of the fiscal years ending before March 31, 2010. The Group applied
the revised accounting standard and the new guidance effective March 31, 2010.

Buildings
andStructures

MachineryandEquipment

Furniture and
Fixtures

SoftwareTotal

Acquisition cost

¥7

¥69

¥228

¥182

¥486

The Group uses financial instruments, mainly long-term debt including bankAccumulated depreciation

6

27

191

159

383

Net leased property

¥1

¥42

¥ 37

¥ 23

¥103

loans and bonds to finance capital investment for Scientific instrument andIndustrial equipment businesses. Cash surpluses, if any, are invested in low

Buildings
andStructures

Thousands of U.S. Dollars
2010
Machinery
Furniture andandSoftwareFixtures
Equipmentrisk financial assets. Bank loans are used to fund its ongoing operations.
Derivatives are used, not for speculative purposes, but to manage exposure
to financial risks as described in (2) below.
Total

Acquisition cost

$73

$740

$2,457$1,952$5,222

Accumulated depreciation

67

282

2,057

1,706

4,112

Net leased property

$ 6

$458

$ 400

$ 246

$1,110Millions of Yen
2009

Acquisition cost

(1) Group Policy for Financial Instruments

Buildings
andStructures

MachineryandEquipment

Furniture and
Fixtures

Software

Total

¥7

¥80

¥279

¥214

¥580

Accumulated depreciation

6

26

205

162

399

Net leased property

¥1

¥54

¥ 74

¥ 52

¥181

(2) Nature, Extent of Risks and Risk Management for Financial
Instruments
Receivables such as trade notes and trade accounts are exposed to customer
credit risk. Although receivables in foreign currencies are exposed to themarket risk of fluctuation in foreign currency exchange rates, the position,
net of payables in foreign currencies, is hedged by using forward foreign
currency contracts. Investment securities, mainly equity instruments ofcustomers and suppliers of the Group, are exposed to the risk of market
price fluctuations.
Payment terms of payables, such as trade notes and trade accounts, areless than one year.
Maturities of bank loans, convertible bonds and lease obligation are lessthan five years after the balance sheet date. Although a part of such bankloans and convertible bonds are exposed to market risks from changes invariable interest rates, those risks are mitigated by using derivatives ofinterest-rate swaps.

28

JEOL ANNUAL REPORT 2010

Derivatives mainly include forward foreign currency contracts andinterest-rate swaps, which are used to manage exposure to market risks fromchanges in foreign currency exchange rates of receivables, and from changes
in interest rates of bank loans and bonds.
Derivative transactions entered into by the Group have been made inaccordance with internal policies which regulate the authorization and credit
limit amount. Please see Note 14 for more detail about derivatives.

Long-Term Debt
The fair value of long-term debt is determined by discounting the cash flows
related to the debt at the Group’s assumed corporate borrowing rate.
Derivatives
The information of the fair value for derivatives is included in Note 14.
(b) Financial instruments whose fair value cannot be reliably(3) Fair Values of Financial Instruments

determined

Fair values of financial instruments are based on quoted prices in active
markets. If quoted prices are not available, other rational valuation
techniques are used instead. The results of valuation may differ amongassumptions because the rational valuation techniques include variablefactors. Also please see Note 14 for the detail of fair value for derivatives.

Carrying amountMarch 31, 2010

Investments in equity instruments that
do not have a quoted market price in an
active market

Thousands of
U.S. Dollars

Millions of Yen

¥91

$975

(4) Maturity Analysis for Financial Assets and Securities with
Contractual Maturities(a) Fair value of financial instruments
Millions of Yen

March 31, 2010

Carrying
amountFair value

Cash and cash equivalents
Receivables
Investment securities¥ 7,144
27,474
5,852¥ 7,144
27,474
5,852

Total

¥40,470¥40,470

Short-term bank loans
PayablesLong-term debt¥(19,287)(17,303)(20,382)¥(19,287)(17,303)(20,520)¥(138)

Total¥(56,972)¥(57,110)¥(138)

Millions of Yen

Unrealized
gain/loss

March 31, 2010

Due in one year or less

Cash and cash equivalents
Receivables¥ 7,144
27,474

Total¥34,618

Thousands of U.S.Dollars

Thousands of U.S.Dollars

March 31, 2010

Due in one year or less

Cash and cash equivalents
Receivables$ 76,813
295,423

Total$372,236

Please see Note 6 for annual maturities of long-term debt.

March 31, 2010

Carrying
amountFair value

Unrealized
gain/loss

Cash and cash equivalents
Receivables
Investment securities$ 76,813
295,423
62,930$ 76,813
295,423
62,930Total$435,166$435,166

Short-term bank loans
PayablesLong-term debt$(207,392)(186,055)(219,167)$(207,392)(186,055)(220,656)$(1,489)

Total$(612,614)$(614,103)$(1,489)

14. DERIVATIVES

Cash and Cash Equivalents
The carrying values of cash and cash equivalents approximate fair value

The Group enters into foreign currency forward contracts to hedge foreignexchange risk associated with certain assets denominated in foreign currencies.
The Group also enters into interest-rate swap contracts to manage its interest
rate exposures on certain liabilities.
All derivative transactions are entered into to hedge interest and foreign
currency exposures incorporated within its business.
Because the counterparties to these derivatives are limited to majorinternational financial institutions, the Group does not anticipate any losses
arising from credit risk.
With respect to derivative transactions, basic policies are decided by the

because of their short maturities.

Board of Directors meeting. Derivative transactions are executed within thenecessary range and managed by financial affairs division.

Investment Securities
The fair values of investment securities are measured at the quoted market

As noted in Note 13, the Group applied ASBJ Statement No. 10 “AccountingStandard for Financial Instruments” and ASBJ Guidance No. 19 “Guidance on

price of the stock exchange for the equity instruments, and at the quoted
price obtained from the financial institution for certain debt instruments. The
information of the fair value for the investment securities by classification is
included in Note 4.

Accounting Standard for Financial Instruments and Related Disclosures.” Theaccounting standard and the guidance are applicable to financial instruments
and related disclosures at the end of the fiscal years ending on or after March
31, 2010; therefore, the required information is disclosed only for 2010.

Receivables, Payables and Short-Term Bank Loans
The fair values of receivables, payables and short-term bank loans aremeasured at the amount to be received or paid at maturity discounted at theGroup’s assumed corporate discount rate.

JEOL ANNUAL REPORT 201029

Derivative Transactions to Which Hedge Accounting Is Applied at
March 31, 2010
Millions of Yen
March 31, 2010

Hedged item

Foreign currency
forward contracts:
Selling U.S.$

Receivables

Contract
Amount Dueafter One Year

Contract
AmountSelling
Interest rate swaps

Receivables¥2,726¥ 269(ﬁxed rate payment,
ﬂoating rate receipt)

Long-term debt

¥5,680

Fair
Value

¥(63)
¥ 19
¥4,186

Foreign currency
forward contracts:
Selling U.S.$

Contract
Amount Dueafter One Year

Contract
AmountHedged item

Selling
Interest rate swaps

Receivables$29,317$ 2,892(ﬁxed rate payment,
ﬂoating rate receipt)

Long-term debt

$61,075

Receivables

The following appropriation of retained earnings at March 31, 2010 was
approved at the Company’s shareholders meeting held on June 29, 2010:
Millions of Yen

Thousands of
U.S. Dollars¥117$1,258Year-end cash dividends, ¥1.5($0.02) per share

The Group decided to implement an early retirement program at the Board of
Directors meeting on April 19, 2010 in order to take the drastic measures tomake more profit as a result of the investigation of the management
environment. The Group will focus on the structural management reform topromote the concentration of management resources.

Thousands of U.S. Dollars
March 31, 201017. SUBSEQUENT EVENTS

Fair
Value

$(678)$ 206$45,011

The fair value of derivative transactions is measured at the quoted price obtained
from the financial institution.
The above interest-rate swaps which qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value but the differential
paid or received under the swap agreements is recognized and included ininterest expense or income. In addition, the fair value of such interest rate swaps
is included in that of hedged items (i.e. long-term debt).

(1) Details of the program were as follows:a. Staff targeted:
Full-fledged employee
b. Application required:
About 150
c. Application acceptance period: From May 17, 2010 to May 27, 2010
d. Date of retirement:
June 30, 2010
e. Preferential treatment:(a) Payment of an additional special
severance allowance for this group of
retirees(b) Re-employment support
by out-sourcing company(2) Result
Number of applicants was 146 people.
The Group estimates that approximately ¥1,700 million ($18,280 thousand)will be recognized as extraordinary loss during the fiscal year ending March
31, 2011 for payment of an additional special severance allowance.

15. CONTINGENT LIABILITIESAt March 31, 2010, the Group had the following contingent liabilities:

18. SEGMENT INFORMATION

Millions of Yen

Thousands of
U.S. Dollars¥3,543$38,093

185

1,987

Trade notes discounted
Guarantees of advance received of
unconsolidated subsidiary

Information about operations in industry segments, geographical segments andsales to foreign customers of the Group for the years ended March 31, 2010 and2009, is as follows:(1) Industry Segments
a. Sales and Operating Income

16. NET INCOME (LOSS) PER SHARE

Millions of Yen

Reconciliation of the differences between basic and diluted net income per share

2010(“EPS”) for the years ended March 31, 2010 and 2009 is as follows:

Millions of Yen

Year Ended March 31, 2010

Basic EPS–Net income
available to common shareholders
Effect of dilutive securities–
Convertible bonds
Diluted EPS–Net incomef
for computation

Net
Income (Loss)¥276

Thousandsof Shares
WeightedAverage
Shares78,296

Sales to customers
Yen

U.S. Dollars

Total sales
$0.04

1,665
¥276

79,961JEOL ANNUAL REPORT 2010

¥40,955¥43,815¥84,770

40,95543,81536,91944,052¥ 3,291

84,770Operating income (loss)¥ 4,036¥ (237)¥(3,291)

84,262¥508

b. Total Assets, Depreciation and Capital Expenditures
¥3.45

$0.04

Millions of Yen

2010¥(1,928)

78,300¥(24.63)

Diluted EPS is not disclosed because of the net loss in 2009.

30

Eliminations/
Consolidated
Corporate

Operating expenses

Scientific
Instrument

Industrial
Equipment

Eliminations/
Consolidated
Corporate

Total assets¥41,119¥47,405¥14,393¥102,917

Depreciation

1,497

1,829

77

3,403

Capital expenditures

1,346

1,885

26

3,257

Year Ended March 31, 2009

Basic EPS–Net loss
available to common shareholders

Industrial
EquipmentIntersegment sales

EPS

¥3.52

Scientific
Instrument

a. Sales and Operating Income

Thousands of U.S. Dollars

2010

Thousands of U.S. Dollars

2010

Japan

Scientific
Instrument

Industrial
Equipment

Eliminations/
Consolidated
Corporate

Sales to customers
Intersegment sales
Total sales
Operating expenses$440,374$471,127$911,501

440,374
396,975

471,127473,675

Operating income (loss)$ 43,399$ (2,548) $(35,394) $ 5,457$ 35,394

911,501
906,044

North America,
Latin America

Sales to customers $668,027
Interarea transfer
95,035
Total sales 763,062
Operating expenses 734,592$100,339
1,778
102,117100,206$143,135$ 911,501
1,319 $ (98,132)(98,132) 911,501
144,454(68,352) 906,044
139,598

Operating income$ 28,470$ 1,911$ 4,856 $ (29,780) $Total assets$848,261$ 61,375$ 89,618$107,379 $1,106,633

2009

Thousands of U.S. Dollars

2010
Scientific
Instrument

Industrial
Equipment

Eliminations/
Consolidated
Corporate$442,142
16,094
14,468$509,730
19,664
20,274$154,761 ¥1,106,633
838
36,596281
35,023

Sales to customers
Interarea transfer
Total sales
Operating expenses

a. Sales and Operating Income
Millions of Yen

2009
Scientific
Instrument

Industrial
Equipment

Eliminations/
Consolidated
Corporate

Sales to customers
Intersegment sales
Total sales
Operating expenses¥35,803¥48,069¥83,872

35,80336,14048,06947,495¥ 3,031

83,872
86,666

Operating (loss) income¥ (337)574¥(3,031)¥ (2,794)

Japan

North America,
Latin America¥59,311
12,44871,75972,723¥10,625207
10,832
10,536

Operating (loss) income ¥ (964) ¥Total assets

¥

5,457

Millions of Yen

b. Total Assets, Depreciation and Capital Expenditures

Total assets
Depreciation
Capital expenditures

Eliminations/
Consolidated
Corporate

Other¥78,147296¥ 6,032

Eliminations/
Consolidated
Corporate

Other¥13,936¥ 83,872
196 ¥(12,851)
14,132 (12,851) 83,872
13,408 (10,001) 86,666¥

724 ¥ (2,850) ¥ (2,794)¥ 8,958 ¥ 11,445 ¥104,582

Note:
Each area primarily refers to the following countries:
North America, Latin America: U.S.A., Canada and Mexico
Other:
Europe, Southeast Asia and Australia(3) Sales to Foreign Customers
Sales to foreign customers of the Group for the years ended March 31,
2010 and 2009 are summarized as follows:
Millions of Yen

2010

b. Total Assets, Depreciation and Capital Expenditures

North America,
Latin America

Millions of Yen

2009
Scientific
Instrument

Industrial
Equipment¥34,778
1,364
1,333

¥54,211
2,219
2,104

Total assets
Depreciation
Capital expenditures

Eliminations/
Consolidated
Corporate¥15,59359
90¥104,582
3,642
3,527

Note:
The Group primarily engages in the manufacture and sale of products
in two major segments, grouped on the basis of similarities in the type,nature and market of the products. The two segments, namely,
scientific instrument and industrial equipment, consist of the following
main products:
Scientific instrument: Transmission electron microscopes, NMR
spectrometers, Mass spectrometers, etc. Industrial equipment: Scanningelectron microscopes, Electron beam lithography system, Wafer inspection
systems, High frequency plasma generators, Clinalyzers, etc.

(2) Geographical Segments
The geographical segments of the Group for the years ended March 31,
2010 and 2009 are summarized as follows:
Millions of Yen

Overseas sales (A)Consolidated sales (B)(A)/(B)

Other

Total

¥16,849¥19,845

19.9%

23.4%

¥36,694
84,77043.3%

Thousands of U.S. Dollars

2010

Overseas sales (A)Consolidated sales (B)(A)/(B)

North America,
Latin America

Other

Total

$181,169$213,385$394,554
911,501
43.3%

19.9%

23.4%
Millions of Yen

2009
North America,
Latin America

Overseas sales (A)Consolidated sales (B)(A)/(B)

Other

Total

¥17,700¥22,623

21.1%

27.0%

¥40,323
83,87248.1%

Note: The Group is summarized in these segments by geographic area andthe countries where the customers are located. The segments
consisted of the following countries:
North America, Latin America: U.S.A., Canada and Mexico
Other:
Europe, Asia and Australia

2010
Japan

North America,
Latin America

Other

Eliminations/
Consolidated
Corporate

Sales to customers
Interarea transfer
Total sales
Operating expenses
Operating income¥62,127
8,838
70,96568,317¥ 2,648¥9,332
165
9,497
9,319
¥ 178

¥13,311123
13,434
12,982¥ 452¥(9,126)(9,126)(6,356)¥(2,770)

Total assets¥78,888¥5,708¥ 8,335¥ 9,986 ¥102,917¥ 84,770
84,77084,262¥508

JEOL ANNUAL REPORT 201031

Independent Auditors’ Report

32

JEOL ANNUAL REPORT 2010

Corporate Outline(As of March 31, 2010)

Corporate Name:JEOL Ltd.

Address:

1-2, Musashino 3-chome, Akishima, Tokyo 196-8558, Japan
TEL: +81-42-543-1111 FAX: +81-42-546-3353

Establishment:

May 30, 1949

Capital:¥6,740 million

Number of Employees:

Consolidated 3,114

Stock Information:

Authorized shares: 200,000,000

Non-consolidated 1,960

Issued shares: 79,365,600
Number of shareholders: 11,134

Head Officeand Branch Offices:

Overseas Subsidiaries

Head Office: FactoryTokyo Office
Tokyo Branch Office
Sapporo Branch OfficeSendai Branch Office
Tsukuba Branch Office
Yokohama Branch Office
Nagoya Branch OfficeOsaka Branch OfficeKansai Application Research Center
Hiroshima Branch Office
Fukuoka Branch Office

Domestic Subsidiaries JEOL TECHNICS LTD.
and Affiliated Companies: JEOL FINETECH CO., LTD.

JEOL SYSTEM TECHNOLOGY CO., LTD.
JEOL ENGINEERING CO., LTD.
JEOL TECHNOSERVICE CO., LTD.
YAMAGATA CREATIVE CO., LTD.
Advanced Capacitor Technologies, Inc.
DATUM INSTRUMENTS INC.
Note: The Company acquired JEOL FINETECH
CO., LTD. and JEOL ENGINEERING CO.,LTD. on April 1, 2010, and JEOL SYSTEMTECHNOLOGY CO., LTD. on July 1,
2010.

JEOL USA, INC. [USA]11 Dearborn Road, Peabody, MA 01960, USA
TEL. 1-978-535-5900

JEOL (EUROPE) SAS [France]

Espace Claude Monet, 1 Allee de Giverny 78290 Croissy-sur-Seine, France
TEL. 33-13015-3737

JEOL (U.K.) LTD. [U.K.]

JEOL House, Silver Court, Watchmead, Welwyn Garden City, Herts AL7 1LT, U.K.
TEL. 44-1707-377117

JEOL (EUROPE) B. V. [the Netherlands]

Lireweg 4, NL-2153 PH Nieuw-Vennep, The Netherlands
TEL. 31-252-623500

JEOL (SKANDINAVISKA) A.B. [Sweden]

Hammarbacken 6A Box 716 191 27 Sollentuna, Sweden
TEL. 46-8-28-2800

JEOL (GERMANY) GmbH [Germany]

Oskar-Von-Miller-Strasse 1, 85386 Eching, Germany
TEL. 49-8165-77512

JEOL (ITALIA) S.p.A. [Italy]

Centro Direzionale Green Office Via Dei Tulipani, 1, 20090 Pieve, Emanuele (MI), Italy
TEL. 39-2-9041431

JEOL ASIA PTE. LTD. [Singapore]

2 Corporation Road #01-12 Corporation Place, Singapore 618494
TEL. 65-6565-9989

JEOL TAIWAN SEMICONDUCTORS LTD. [Taiwan] 11F, No.346, Pei-Ta Road, Hsin-Chu City 300, Taiwan, Republic of China
TEL. 886-3-523-8490

JEOL (AUSTRALASIA) PTY. LTD. [Australia]

Unit 9, 750-752 Pittwater Road, Brookvale, N.S.W. 2100, Australia
TEL. 61-2-9905-8255

JEOL DE MEXICO S.A. DE C.V. [Mexico]

Av. Amsterdam #46 DEPS. 402 Col Hipodromo, Mexico 06100, Mexico D.F. Mexico
TEL. 52-5-55-211-4511

JEOL CANADA, INC. [Canada]5757 Cavendish Boulevard, Suite 504, Montreal, Quebec H4W 2W8, Canada
TEL. 1-514-482-6427

JEOL (MALAYSIA) SDN BHD [Malaysia]

205, Block A, Mezzanine Floor, Kelana Business Center 97, Jalan SS 7/2, Kelana Jaya, 47301 Petaling Jaya, Selangor, Malaysia
TEL. 60-3-7492-7722

Beijing Creative Technology Co., Ltd. [China]

Room 415, Building B, No.18 Xihuannan Road, BDA (Beijing Economic-technological Development Area) Beijing, China
TEL. 86-10-6737-2198

JEOL Shanghai Semiconductors Ltd. [China]

34A World Plaza No.855 PuDong Nan Road. Shanghai, China
TEL. 86-21-6888-0770

JEOL DATUM Shanghai Co., Ltd. [China]

Room No.2201, Suncome Liauw’s Plaza No.738 ShangCheng Road, PuDong New Area. Shanghai 200122, China
TEL. 86-21-5836-6350

JEOL BRASIL Instrumentos Cientificos Ltda. [Brazil] Av. Itaberaba, 3563 02739-000 Sao Paulo SP BRASIL
TEL. 55 11-3983-8144

JEOL KOREA LTD. [Korea]

Sunmin Building. 6th Fl., 218-16, Nonhyun-Dong, Kangnam-Ku, Seoul 135-010, Korea
TEL. 82-2-511-5501

JEOL ANNUAL REPORT 201033

Serving Advanced Technology
1-2, Musashino 3-chome, Akishima, Tokyo 196-8558, Japan
TEL: +81-42-543-1111 FAX: +81-42-546-3353
E-mail: ir@jeol.co.jp
URL http://www.jeol.com/

Printed in Japan