HOYAe c1 c4-e PDF 03.7.21 9:20 PM ページ 3@K?O2@@@@@@@@@6K@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@?J@@@@@@@@@@@@@@@@@@@@@@@@?7@@@@@@@@@@@@@@@@@@@@@@@@L?
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A N N UA L R E P O RT 2 0 0 3

HOYA2003-e 0711 03.7.21 9:49 PM ページ 1

Hoya Corporation is engaged in three fields of business: Information Technology, Eye Care, andLifestyle Refinement.
The Information Technology field is one of the key earnings drivers of the Hoya Group. In
this field the Company manufactures and markets the mask blanks and photomasks that are essential
to semiconductor manufacturing, large-scale masks used to manufacture liquid crystal display (LCD)
panels, glass disks for the hard disk drives (HDDs) used mainly in computers and other equipment,
as well as optical glass products for digital cameras and other devices.
The Eye Care field is another principal earnings contributor for the Company, and plays animportant role in expanding the Hoya brand. This field is divided into the Vision Care division,
dealing mainly with wholesaling of eyeglass lenses, and the Health Care division, encompassing
retail sales of contact lenses, as well as the development and manufacture of intraocular lenses forophthalmological use.
The Lifestyle Refinement field is small in terms of earnings, but its Crystal division stands
alongside Eye Care as representing the Hoya brand, helping to lay the foundation for the Group’sbusiness.
Each of Hoya’s business fields employs portfolio management emphasizing effective and efficient distribution of resources as an integral part of its organization, and brings to market productswith high degrees of added value derived from its proprietary technologies.

...Between Our Life

Cautionary Statements with Respect to Forward-Looking Statements
Statements made in this annual report with respect to plans and future performance that are nothistorical fact are forward-looking statements. These statements are based on management’s
assumptions and beliefs in light of the information currently available to it. Hoya cautions that a
number of factors could cause actual results to differ materially from those discussed in the for ward-looking statements. Such factors include but are not limited to foreign exchange rates, market
trends and economic conditions.
Hoya’s fiscal year ends on March 31. In this annual report, reference to years indicate the period
ended March 31 of the year indicated.

HOYA2003-e 0711 03.7.21 9:49 PM ページ 2

Financial Highlights
Consolidated (Years ended March 31)
2002

2003

Net sales (Millions of yen)

235,265

246,293

Operating income (Millions of yen)

43,89852,983

Ordinary income (Millions of yen)

45,77450,874

Net income (Millions of yen)

23,741

20,038

Total assets (Millions of yen)

278,068

274,289

Total shareholders’ equity (Millions of yen)

219,180

224,219203.15171.10Per share data (Yen)
Net income

50.00

50.00

Price earnings ratio (Times)

Cash dividends applicable to the year

44.50

41.79

Price cash flow ratio (Times)

23.94

20.83

Price book value ratio (Times)

4.79

3.68

Stock price at year-end (Yen)

9,040

7,150

a n d Te c h n o l o g yContents
To Our Shareholders

2

Our Businesses

5

Information Technology
Electro-Optics
Eye Care6
7
11

Vision Care

12

Health Care

15

Lifestyle Refinement
Crystal16
16

Environmental Efforts

17

Financial Section and Corporate Data

19

Note on segment data:
In addition to the review of operations by segment found on pages 5 through 16 of
this annual report, segment-specific data can be found on pages 26 through 28, in
the financial section.
1

HOYA2003-e 0711 03.7.21 9:49 PM ページ 3

To Our Shareholders
I am pleased to present for our shareholders and investors a summary of the business conditions during fiscal
2003 (covering the period from April 1, 2002 through March 31, 2003), along with a report of the Company’s
performance and our outlook for the future.

Management Guidelines and Strategies
Although there were signs of a slight recovery in the operating environment in the U.S. and Asia in the earlypart of fiscal 2003, negative effects from a later slowdown in the U.S. economy, the stock market slump andcontinuing global deflation held back the overall recovery trend. Demand remained steady, however, comparedto the significant decline in fiscal 2002, and the economy was on par with the previous year. Under these conditions, competition between companies intensified, and there was a further round of culling throughout all ofindustry, with clearly defined winners and losers. Trends in the operating environment became even more difficult to read, with unexpected developments for which previous experience was no guide, such as the deterioration of the situation in Iraq and the spread of SARS.
Faced with such an unclear operating environment Hoya recognized the importance of properly assessing changes and responding with changes to its own operations, concentrating on management. Measures
undertaken during fiscal 2003 can be summarized in the following key principles:
1. Reallocating management resources
2. Responding to the shrinking Japanese economy
3. Increasing market share
The second and third principles are of course important elements that cannot be overlooked in the implementation the first, the reallocation of management resources. This is a point that we remained particularly conscious of while managing the business during the term.
I would now like to turn to some of the specific measures undertaken during the fiscal year.
Although the percentage of Hoya’s overseas sales reached 44% during the fiscal year under review, themajority of our sales are still in Japan. The Japanese economy, however, continues its slump and trend toward
contraction due to the deflation, corporate restructuring and stagnant capital investment that followed the collapse of the IT bubble. Because of this situation, the Hoya Group reexamined each of its businesses in Japan,
and concentrating on those with potential for further growth developed new sales channels and products, aswell as made investments aimed at increasing market share.
2

HOYA2003-e 0711 03.7.21 9:49 PM ページ 4

These measures included, in the Electro-Optics division, a technical alliance formed with Dai Nippon
Printing Co., Ltd. for joint development of mask blanks for next-generation semiconductors. We also madeinvestments to develop other high-precision products. In the Health Care division, meanwhile, new stores arebeing opened to win a larger share of the expanding market for contact lenses.
New product development is best represented by Hoya’s proprietary soft intraocular lenses (IOLs). In
the past, Hoya’s eyeglass and contact lens businesses brought the Company into close contact with the field of
ophthalmology. These new IOL products, however, bring us a step closer to the field of medicine, which weare concentrating on as an area of expected future growth. With an eye toward expansion into the U.S. andEurope, we are pursuing further development and avidly striving toward business expansion.
To advance the goals of expanding overseas and in businesses in which significant growth can be
expected, after determining the potential for future growth, Hoya established manufacturing facilities and pursued mergers and acquisitions aimed at expanding sales channels, ensuring a stable supply and winning a larger
share of the global market. A new factory for IOLs was established in Singapore, and an eyeglass lens processing and sales company acquired in the United States. With the Japanese market shrinking, we are planning tofurther widen our global base in the future.
On the other hand, we are implementing measures to sell off or withdraw from businesses and divisions
that show little sign of growth, or those for which the prospect of positive synergies with other parts of theoperation is minimal. Two examples of this are the sale of the hearing aid business in the Health Care division, and a contraction of the Crystal division.
In summary, Hoya manages its portfolio of numerous businesses by assessing the need for and timing of
nurturing, maintaining, investing, acquiring and/or withdrawing from each of them. As outlined above, in thefiscal year under review the overseas sales network was being strengthened through M&A activity, while otherbusinesses were being scaled back through a streamlining process of selection and emphasis toward businessfields in which Hoya has a competitive advantage. In its portfolio management, Hoya will continue to use
these methods to determine the primacy of each of its businesses, and allocate operating capital accordingly.

Performance
In the Information Technology field, performance was sluggish overall at the high-tech companies that makeup our client base. However, in terms of product development, clients continued to demand precision, highperformance products, and Hoya managed to increase orders by introducing the new cutting-edge equipment
necessary to develop and manufacture such products. Sales of high-value-added products rose as a result, leading to a 7.6% increase in revenue.
In the Eye Care field, the Vision Care division enjoyed strong sales of eyeglass lenses overseas despite
the sluggishness of the domestic market, which along with rising sales of contact lenses and IOLs in the HealthCare division led to a 4.1% rise in revenue.
As a result of these factors, and along with scaling back of the Crystal division and the sale of the section handling physical- and chemical-use lasers in the Photonics division, consolidated net sales increased
4.7% from the previous fiscal year.
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HOYA2003-e 0711 03.7.21 9:49 PM ページ 5

Operating income increased 20.7% from the previous fiscal year, the result of a continuation of profit
enhancement strategies such as greater sales of value-added products and more efficient production of ourmainstay products, as well as a relative increase in highly profitable businesses. Ordinary income, though hurt
by losses on currency exchanges due to a weakening dollar and rising euro, increased 11.1% from the previous
fiscal year. Net income, however, declined 15.6% from the previous year owing to the recording of extraordinary losses of approximately ¥15.0 billion for compensation resulting from the dissolution of the Company’s
employees’ pension fund, which was implemented with the aim of accelerated elimination of future liabilities,
and a loss of approximately ¥3.7 billion for payments to employees accepting the early retirement plan accompanying the business restructuring of the Vision Care and Crystal divisions.
Cash dividends applicable to the year remained unchanged at ¥50 per share. As a result, the dividend
payout ratio was 29.2%, and the ratio of dividends to shareholders’ equity remained unchanged from the previous fiscal year at 2.6%.
Capital expenditures for the year totaled ¥15,948 million, mainly as investments to ensure stable supplyof products with large market shares, as well as to introduce cutting-edge equipment to fulfill customer needs
and to improve technology.
Another issue during fiscal 2003 was the discovery that we had shipped an irregular lot of our shock-resistantreinforced plastic eyeglass lenses. Immediately after this discovery in December 2002 we issued a public
notice, and following an elimination order from the Japan Fair Trade Commission under the Premiums andRepresentations Act, made a further public announcement in April 2003. I sincerely regret the trouble andworry this has caused to our customers and shareholders, and offer my apologies. To prevent a recurrence of
this problem, all of our executives and employees have been made aware of the incident, sufficient measures
have been implemented and training conducted.

Outlook
There are many issues that the Hoya Group must face in order to continue to grow in the future, but these canbe divided roughly into two general areas.
The first is the continuing pace of globalization. Given the shrinking Japanese economy, acquisition of
new customers overseas and the promotion of product development responsive to the needs of customers in
new areas will allow us to increase our market share. We consider it important to further the globalization of
the entire Hoya Group by nurturing these developments so that they continue to benefit the Company, andprovide the impetus for further growth.
The second area is uncovering new businesses that will lead to further growth. Finding businesses to
add to the current portfolio is an important factor in accelerating growth, and we recognize the necessity ofincorporating such businesses into the Group as quickly as possible, whether through independent development or M&A activity.
As Hoya grapples with these issues, we also acknowledge the vital role played by corporate governance. Alongwith separating the management oversight and business administrative functions, and conducting speedy andefficient management, Hoya believes that building a management structure that strengthens the supervisory
functions with impartial judgments from outside experts is essential to meeting the expectations of its customers and shareholders. We therefore, after gaining approval at the general meeting of shareholders held in
June 2003, introduced a committees system, and designated that a majority of the board of directors be outside directors.
The Hoya Group concentrates its management resources into the markets and fields where it recognizes that it
can expand and grow, continually striving to increase its corporate value. I offer my sincerest appreciation to
all our shareholders, and ask for their continued support.

Hiroshi Suzuki, President and CEO

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Our Businesses
Information Technology

Mask Blanks and Photomasks

Electro-Optics

for Semiconductors 7
LCD Photomasks 7Glass Disks for HDDs 9
Optical Glass and Optical Lenses 10
Optical Communications Products 10

Eye Care

Vision Care

Eyeglass-Related Products,
including Lenses and Frames 12

Health Care

Contact Lenses andIntraocular Lenses (IOLs) 15

Lifestyle Refinement

CrystalCrystal Glass Products 16

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HOYA2003-e 0711 03.7.21 9:49 PM ページ 7

Information Technology is one of the key business fields for the Hoya Group, comprising the mask
blanks and photomasks indispensable in the manufacture of semiconductors and liquid crystal displays (LCDs), glass disks for the hard disk drives (HDDs) found mainly in computers and servers,
optical lenses used in digital cameras and video recorders, and other glass materials.

Information
Technology

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HOYA2003-e 0711 03.7.21 9:49 PM ページ 8

Glass Substrates and Mask
Blanks for Semiconductors
The perfectly polished substrate in theforeground is a clear glass panel 15cm
square and 7mm thick. Coated with ametallic layer and a resist it becomes themask blank pictured in the background.
Once the circuit patterns have been
exposed onto the surface with an electron beam it becomes a photomask. Allof these products have been well received
by semiconductor manufacturers.

LCD Photomasks

Optical Glass and Lenses

As LCD televisions get larger and the useof LCD displays for PCs becomes morewidespread, there is a growing need forcost-effective production of LCD panels.
Hoya’s technological expertise withlarge-scale photomasks, particularly
meter-long masks that can produce six
display panels at once, has won it a large
share of the market.

Hoya produces a full range of opticallenses, from imaging lenses used in video
and digital cameras to optical pickups
for DVD players and other devices. Its
cutting-edge production skill withaspherical lenses helps make opticaldevices smaller and lighter. Risingdemand is expected as more mobile telephones and handheld devices incorporate
miniature cameras.

Electro-Optics
Mask Blanks and Photomasks for Semiconductors, and LCD Photomasks
Photomasks are the plates on which electronic circuit patterns are transferred to create semiconductor
chips. The clean material before the pattern is created is called a mask blank. To use photography as ananalogy, the mask blank is the unexposed film, the photomask is the exposed negative, and the semicon ductor chip is the printed picture.
Mask blanks consist of a precisely polished glass substrate coated with a metallic layer, which isfurther coated with a photographic sensitive material known as the resist. Synthetic quartz is used for theglass substrate, polished to a surface roughness of one million parts per millimeter, and a flatness of lessthan 1,000 parts per millimeter.
The market for semiconductor mask blanks during fiscal 2002 was slow, due to the IT slump andthe accompanying adjustments to inventory. The market picked up during fiscal 2003, however, as cus tomers’ streamlining of operations and narrowing of product lineups began to taper off, and demand
increased for such high-performance products as phase shift masks. Hoya’s technical expertise with theseproducts is recognized around the world, allowing it to enjoy a 65% share of the global market.
Because the circuit patterns of semiconductor photomasks are exposed on to mask blanks withelectron beams or lasers, this exposure and the process to remove the extraneous material define the supe riority of the product. Price competitiveness is fierce in the market for low- and medium-quality products,
for which a great deal of technical skill is not required. This made for a difficult operating environment
for semiconductor photomasks, but bolstered by sales of Hoya’s high-quality products with a line width of
0.15 to 0.18 microns, sales remained on par with the previous fiscal year. Technical development thatkeeps the Company ahead of the market is important to further increase its market share in this business.
Hoya has completed development of cutting-edge products with line widths of 0.09 to 0.13 microns, andhas already begun development on the next generation of products.
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LCD photomasks are the original plates for the thin film transistors (TFTs) and color filters neces sary to manufacture the LCD displays used in televisions, PCs and mobile phones. Digital devices incor porating LCD displays are making further inroads to everyday life, and the market for LCDs has grownalong with the number of applications. Many Asian manufacturers, mainly in Korea and Taiwan, haveentered the market, and competition is intense. To survive the price war it is necessary for manufacturers
to produce a large number of panels at once. There is also increasing demand for photomasks on larger
glass substrates. Hoya is meeting this demand by producing such large-scale photomasks, leading theindustry with technology to produce photomasks that are larger and more detailed, while continuing tofocus on promising product fields.
Hoya has made a number of anticipatory investments in mask blanks and photomasks in the years
up to fiscal 2003, and expects that fiscal 2004 will be the year for full-scale business activity in the field.
We have great expectations of positive results in the near future.

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HOYA2003-e 0711 03.7.21 9:49 PM ページ 10

Glass Disks for HDDs
Disks of glass substrate are coated with a magnetic material to make HDDs, the memory devices in com puters and servers. Hoya produces both substrates (glass substrates, the polished glass disks) and media(glass substrates coated with a magnetic layer), handling the manufacturing process from dissolving of theglass to the final processing.
Since the bursting of the IT bubble, the market for PCs, the principal driver of demand for thisbusiness, has continued to languish, and sales during the fiscal year under review remained slow. The
slowdown has led to a shakeout of the industry, however, and the number of companies to contend in
future markets has declined. At the same time, though, the expectations from customers for HDDs andproducts that use them continue to increase. No longer just mass-storage memory devices for PCs orservers, HDDs have come to be incorporated in such products as DVD recorders and digital cameras. As
the field of applications widens, the market grows with it.

9HOYA2003-e 0711 03.7.21 9:49 PM ページ 11

Hoya has continually strived to anticipate latent needs and growth potential in the market, develop
products suited to next-generation technology and create the manufacturing structure to produce them.
We will continue nurturing the HDD glass disk business to become one of the pillars of profitability for
the Company.

Optical Glass
Hoya’s lineup of optical glass products comprises glass materials, as well as the optical lens devices used indigital cameras and video recorders. The Company is involved in all aspects of their production.
The technical advances made in the field of optical lenses are striking. Whereas it was once neces sary to compensate for spherical lenses with several additional lenses in order to focus a beam of light, thedevelopment of aspherical lenses has greatly reduced the number of additional lenses necessary. Greaterlens precision, moreover, has led to significant reduction in size and weight, benefiting innovation in digi tal cameras.
As digital appliances become a more essential part of everyday life, the need for greater functionali ty and higher definition from optical glass products continues to increase. Along with heightened expecta tions for a greater number of applications for optical glass products and the expanding market that
accompanies it, advances in development and production techniques are occurring daily.
Hoya is responding to these trends by fully utilizing the merits of an integrated production systemthat covers raw material to finished product, revising the process of purchasing, production and sales, andupgrading its development and production structure in order to improve competitiveness.

Optical Communications Products
The optical communications industry entered a period of structural adjustments following the collapse of
the market for fiber optics in 2001, and the market remains depressed. Internet traffic volume is growing
rapidly, however, and the infrastructure for broadband communications such as ADSL and FTTH issteadily expanding, leading the Company to believe that optical communications remains a long-term
growth field.
Hoya is shrinking its business for WDM filters and microlenses, which are now more commodities
than specialty products, but continues to concentrate on light polarizers for isolators, a market of which
Hoya commands approximately 50%, though the scale is small. At the same time, the Company is contin uing with strategic investments in new technologies and product development of integrated devices, in
anticipation of a recovery in the market.
In the market for optical communications products, restructuring is taking place on the supply
side, while a recovery in the market is not expected to begin until the latter half of fiscal 2004 at the earli est. Fiscal 2004 should be a turning point, therefore, and with an eye toward medium-term growth Hoya
is making strategic upgrades in the optical communications products business.

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HOYA2003-e 0711 03.7.21 9:49 PM ページ 12

The Eye Care field is comprised of two divisions, Vision Care and Health Care. The Vision Caredivision develops, produces and sells lenses and frames for eyeglasses, marketing competitive products in Japan and abroad to make the Hoya brand the first choice around the world. The HealthCare division mainly handles the sale of contact lenses in Japan, but as part of its business expansion toward the field of ophthalmology has recently begun to focus on intraocular lenses (IOLs).
While developing and offering products superior to the foreign-made brands that preceded them,
the IOL business has not only contributed to the practice of ophthalmology in Japan, but has led
the Company’s expansion into overseas markets.

Eye Care

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HOYA2003-e 0711 03.7.21 9:50 PM ページ 13

Vision Care
The Vision Care division manufactures, processes and markets mainly eyeglass lenses in Japan and over seas. Its products are especially well recognized for their high degrees of added value, and Hoya is pursuingdevelopment of this business with the aim of becoming a leading international company.
Glass and plastic are the two main materials used for eyeglass lenses. Hoya produces some glass
lenses, but the majority of its product lineup is plastic. Even among the common single-focus lenses fornear- and far-sightedness there are variations such as spherical lenses, aspherical lenses, and double-sided
aspherical lenses, which along with variations in materials and coatings make for a wide range of lenses andtypes. Hoya boasts an array of value-added products that are internationally recognized for their high levelsof technology and quality, including progressive and high-index lenses, as well as lenses with special coatings.
In the Japanese eyeglass market during fiscal 2003, low-priced products offered by discounters
known as “three-price shops” drew many customers, leading to slack performance among the large-scale
chains that needed to respond to the challenge. This was the result of an influx into Japan of low-priced

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Eyeglass Lenses

Eyeglass Frames

Hoya produces a wide variety of eyeglass
lenses, chiefly high-value-added products
such as progressive focus and high-index
lenses. The Company has also developeda range of coating technologies that have
led to wider adoption of its lenses worldwide, while earning the respect of thesemarkets through business development
tailored to specific areas.

Hoya produces high-quality eyeglass
frames of superior functionality anddesign. Hoya’s technical expertise has
allowed it to develop this business internationally, where it has a loyal followingof customers who recognize its skill withlenses and appreciate the value Hoya
offers.

single-focus lenses, for which the technological barriers to entry are low, from manufacturers in China andKorea, which intensified the competition. In response Hoya strengthened marketing of progressive lenses
and other high-value-added lenses in the seniors eyeglass market, its main target, with the positive resultof strong sales in a domestic eyeglass market that is shrinking overall. The Company won acclaim during
the year under review for new products that balance functionality and price, such as Add Power, progres sive lenses that allow the wearer to see objects near at hand, and HOYALUX iD, the world’s first doublesided aspherical lens. Hoya also developed products designed to increase customer satisfaction,
introducing the SFT Coat, a new kind of coating that offers better smoothness and scratch resistance thanprevious coatings.
In the European market, 80% of Hoya’s business is from five major markets, beginning withGermany and followed by France, U.K., Spain and Italy. Sales were brisk overall, with the exception ofGermany, where the market was sluggish. Sales were particularly strong for progressive lenses and highindex plastic lenses. During the period under review, Hoya also announced development of SunTech, aphotochromic lens that can be manufactured in the lens processing lab by applying a coating after the pre scription has been processed. In October 2002 the Company began a test launch in Europe of Phoenix, an
impact-resistant lens material developed for the U.S. market. Hoya plans to actively market these products
throughout Europe, and expand its lineup of products utilizing double-sided polishing technologies, suchas the HOYALUX iD, which has already been launched in Japan. The Company is also planning to expand
its laboratory in Spain, an area with good market potential.
In the U.S. market, though sales were strong of progressive lenses such as HOYALUX Summit Pro,
sales overall remained on par with the previous fiscal year due to sluggish sales of single-focus lenses,
which command an overwhelming share of the market in terms of volume. The Company is taking steps toinclude the U.S. company it purchased in 2000 in its scope of consolidation as quickly as possible, so that
it will contribute to consolidated earnings. New M&A activity included the acquisition of a processing
laboratory in Chicago in February 2003. Hoya is also planning to introduce the SunTech and SFT Coat
products noted above in the United States.
In Asian markets, the impact of low-priced products such as single-focus lenses has been less thanthat in other markets, and bolstered by strong growth in progressive lenses and special order items that
require laboratory processing, the overall market was healthy. In the Chinese market particularly, progres sive and high-index lenses sold well. Hoya plans to focus more on this market in the future, and taking
into account the nature of the Asian markets, which recognize more fully the value of high-quality lenses,
expand sales of the coated lenses that set Hoya apart from other Asian manufacturers.
In production, Hoya is transferring its mass production facility in Istukaichi, Japan to Thailand.
The Company is also conducting a review of its plants in China and Hungary, with the aim of clarifying
their roles and increasing efficiency.
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Intraocular Lenses (IOLs)

Contact Lenses

IOLs are artificial lenses used to replace
the clouded natural lenses in cataract
patients. Hoya is at the leading edge ofthis field in development of soft IOLs,
incorporating opinions from the medical
community to improve materials, manufacturing processes, design and color,
and winning international praise for its
product performance and high standardsof quality.

The number of contact wearers is steadily increasing, not only of the usual nearand far-sightedness, but also of multifocal and other high-performance lenses.
Hoya develops its own lenses, as well as
operates a chain of retail stores known as
Eye City, offering ophthalmology services, quality products from several companies and a customer-oriented service.

Health Care
The Health Care division handles contact lenses, intraocular lenses (IOLs) and other businesses related toophthalmology.
The contact lens business is the mainstay business for the division, and one of the main earning
contributors for the Company. The division not only develops and manufactures high-value-added prod ucts, but also operates a chain of retail outlets called Eye City, which provide quality service.
Though expansion of the overall market for contact lenses is beginning to slow, several products
have experienced strong growth in recent years, such as soft and hard multifocal contact lenses and toriclenses for astigmatic eyes. The market for multifocal contact lenses in particular is expected to grow, as thefirst generation of contact lens wearers age. Hoya will expand its sales in this field by providing specialized
customer service.
In retail store development, Hoya continues to open 10 to 12 new stores a year, while closing
unprofitable locations. By maintaining this balance of scrap and build, the Company is increasing thenumber of strong performing stores with the aim of greater revenue and profits. In terms of service as well,
Hoya is also taking steps to position itself as the top contact retailer in each area, offering a variety ofguarantees against tearing, loss, change in prescription or other damage, and providing customers withexpert knowledge and service.
Intraocular lenses are one of the most prominent of the Company’s businesses. The demand for
IOLs is increasing as society ages, and Hoya’s foldable soft-type IOLs, introduced in Japan in November
2001, are winning praise from ophthalmologists and the medical community along with a steadily increas ing share of the domestic market. During fiscal 2004 the Company will introduce new products with evenhigher degrees of added value, fueling its business development in Japan and overseas. In the European
market, CE Marking* 1 has already been obtained, and the beginnings of a marketing network established.
Hoya has also begun construction of a main manufacturing facility in Singapore in preparation formass production of IOLs. In the U.S. market, the necessary procedures have been instigated to obtainapproval from the FDA* 2 .
Notes:
1.CE Marking is a certification that a product complies with the relevant health, safety and environmental protection legislationsof the European Union (EU).
2.The FDA (Food and Drug Administration) is the U.S. authority responsible for approving clinical trials and reviews of medicines and foods.

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LifestyleRefinement

Crystal
Hoya’s traditional crystal is crafted withsuperior materials and cutting techniques
to produce world-class products of aquality that is a source of pride for theCompany. Though Europe remains themain source for high-quality crystal, the
Hoya brand has been recognized as therepresentative crystal of Japan.

“Through our business operations we aim to bring affluence into peoples’ lives, and contribute to
the advancement of culture.” Though this is the philosophy that created the Lifestyle Refinement
field, the Crystal division has continued to suffer from slow performance for the last few years. The
Company recognizes, however, the importance of the crystal business as a symbol of the Hoya
brand, and although the scale of the business is being cut back, the quality of the products is being
further improved, helping bolster the brand image.

CrystalThe Crystal division comprises high-quality glass and stemware, interior ornaments such as vases andclocks, and crystal jewelry for women.
In the market for crystal products, the decline in individual consumption and social gift-giving due
to the economic slowdown, along with the change in lifestyles and an increase in inexpensive import prod ucts has had a severe effect on performance in recent years, causing the Company to explore new directions
in which to develop the business for the future.
During the fiscal year under review, as one aspect of the restructuring of the business, the consoli dated subsidiaries Hoya Crystal Corporation and Hoya Crystal Shop Corporation were merged with theparent company, Hoya Corporation, on March 1, 2003. At the same time production levels were reduced
to levels more appropriate to current business conditions, and the product lineup significantly contracted
to specialize in high-quality items, in an effort to restructure the business and the brand.

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HOYA2003-e 0711 03.7.21 9:50 PM ページ 18

Environmental Efforts
It has become exceedingly rare of late not to come across the word “environment” used in relation tobusiness. This is one indication that environmental issues are increasingly a management priority atmany companies. Hoya established pollution countermeasure committees at each of its factories in 1976,
and since that time has made ongoing efforts to protect the environment.
Hoya published its first environmental report, outlining the Company’s environmental efforts,
in 2000. The second edition of that report was published during the year under review. Environment
Report 2002 offers even greater disclosure of information, containing specific examples of environmental
preservation initiatives undertaken by each of the business divisions, site data from each division, andspecific figures on environmental accounting.

Reducing the Burden on the Environment
Hoya has focused on four areas in which continuous efforts are made to reduce the environmental burden
per unit of net sales.

1. Energy Consumption
Hoya has implemented a thorough energy conservation program encompassing all of its business divi sions. At the facilities level, buildings have been properly insulated, pumps and clean room air-condi tioning motors have been converted to energy-efficient inverter styles, and refrigeration units have been
upgraded to be more efficient. Energy conservation has also been extended to the human environment,with temperature controls and more efficient lighting systems. As a result, the ratio of energy consump tion to net sales declined by approximately 16% from the previous fiscal year.

2. Water Usage
Increased water recycling and water conservation efforts helped lower the ratio of water usage to net
sales approximately 11% from the previous fiscal year.

3. Waste Volume
The recycling of concrete sludge, the thermal recycling of waste plastic, recycling of used florescentbulbs and batteries, and the reuse of organic solvents resulted in a decline in the ratio of waste volume
to net sales of approximately 10% from the previous fiscal year.

4. Volume of Packaging Materials
A review of packaging methods and reuse of the cardboard boxes used to ship products led to a signifi cant decline in the ratio of packaging material volume to net sales of approximately 48% from the pre vious fiscal year.

Introduction of an Environmental Management System (ISO 14001 Certification)
Hoya announced its intention to adopt an environmental management system in line with ISO 14001
international standards in October 1996. By the end of fiscal 2000, nearly all mass production facilities
had obtained this certification. The Company has continued to work systematically toward certification
throughout the Group, and four more sites were certified during the fiscal year under review, bringing theCompany’s total number of certified sites to 33.
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HOYA2003-e 0711 03.7.21 9:50 PM ページ 19

Energy Consumption (Oil Conversion*) and
Its Ratio to Net Sales
1999(Oil Conversion kl)

2000

2001

Waste Volume and Its Ratio to Net Sales[Ratio to Net Sales(1999=100)]

2002

2003

(Ton)

125

1999

2000

2001

2002

2003

[Ratio to Net Sales(1999=100)]

125

100

80,000

100

6,000

75

40,000

3,000

50

0

0

75

Energy Consumption

78,378 79,068 81,034 74,961 67,858

Waste Volume5,721 4,241 4,400 2,911 2,894

Ratio to Net Sales

100.0 101.1

Ratio to Net Sales

100.0

86.8

89.7

73.2

74.3

64.6

47.8

42.0

* Based on the oil conversion factor of the Energy Consumption Law (law regarding rationalization of energy
consumption).

Water Use and Its Ratio to Net Sales

Packaging Materials and Their Ratio to Net Sales[Ratio to Net Sales(1999=100)]

(km3)

1999

2000

2001

2002

2003

[Ratio to Net Sales(1999=100)]

125

(Ton)

1999

2000

2001

2002

2003

100

2,000

125

100

2,000

75

1,000

1,000

50

0

0

25

75

Water Use

2,481 2,498 2,399 2,103 2,039

Ratio to Net Sales

100.0 100.9

81.2

79.6

69.1

Packaging Materials

2,416 2,130 1,858 1,423 1,216

Ratio to Net Sales

100.0

88.3

64.6

55.4

28.4

Notes:
1.Ratio to net sales is indicated based on 1999=100.
2.Statistics of the 13 domestic production sites
Hoya Corporation: Nagasaka, Hachioji, Kumamoto, Akishima, Nagano, Itsukaichi, Hamura, Minakuchi,MusashiHoya Optics Corporation: Akishima, Kofu, Iruma
Hoya Health Care Corporation: Kodama

ISO 14001 Certification Status (As of March 31, 2003)

HOYA CORP. (Japan)

Nagasaka Plant (Jan. 27, 1999)

HOYA CORP. (Japan)

Akishima Plant (Jan. 29, 1999)

NH TECHNO GLASS CORP. (Japan)

Yokkaichi Plant (Feb. 12, 1999)

HOYA CORP. (Japan)

Hachioji Plant (Feb. 22, 1999)

KOREA OPTICAL GLASS CO., LTD. (Korea)

Masan (Feb. 25, 2000)

HOYA MAGNETICS SINGAPORE PTE LTD. (Singapore)

Singapore (Mar. 3, 2000)

HOYA OPTICAL TAIWAN CO., LTD. (Taiwan)

Taichung (Sep. 19, 2000)

HOYA GLASS DISK (THAILAND) LTD. (Thailand)

Lamphun (Nov. 24, 2000)

HOYA-SCHOTT CORP. (Japan)

Company-wide (Dec. 20, 2000)

HOYA CORP. Electro-Optics Company (Japan)

Nagano Plant (Jan. 5, 2001)

HOYA OPTICS CORP. (Japan)

Kofu Plant (Jan. 5, 2001)

HOYA OPTICS CORP. (Japan)

Iruma Plant (Jan. 30, 2001)

HOYA OPTICS (THAILAND) LTD. (Thailand)

Lamphun (Feb. 21, 2001)

Note: 1. *Indicates site that attained the certification during the fiscal year under review.
2. The Akishima Plant includes the HOYA OPTICS CORPORATION and R&D center located on the
grounds.

18

Company Name (Location)

Site (Date of Certification)

Eye CareSite (Date of Certification)

Kumamoto Plant (Dec. 12, 1998)

HOYA LENS DEUTSCHLAND GmbH (Germany)
Müllheim (Dec. 4, 1997)
HOYA LENS DEUTSCHLAND GmbH (Germany)
Mönchengladbach (Dec. 4, 1997)
HOYA LENS DEUTSCHLAND GmbH (Germany)
Hamburg (Dec. 4, 1997)
HOYA CORP. Vision Care Company (Japan)
Lens Technology Center (Feb. 20, 1998)
HOYA CORP. Vision Care Company (Japan)
Hamura Lab. (Apr. 30, 1998)
HOYA CORP. Vision Care Company (Japan)
Minakuchi Lab. (May 5, 1998)
HOYA HEALTH CARE CORP. (Japan)
Kodama R&D Lab. (Dec. 2, 1998)
HOYA LENS THAILAND LTD. (Thailand)
Patumthani (Jul. 8, 1999)
HOYA LENS UK LTD. (United Kingdom)
Wrexham (Dec. 24, 1999)
HOYA LENS ITALIA S.P.A. (Italy)
Milano (Dec. 29, 1999)
HOYA LENS THAILAND LTD. (Thailand)
Ayuttaya (Jan. 20, 2000)
HOYA LENS GUANGZHOU LTD. (China)
Guangzhou (Nov. 9, 2000)
MALAYSIAN HOYA LENS SDN BHD. (Malaysia)
Kuala Lumpur (Apr. 9, 2001)
HOYA LENS NEDERLAND B.V. (Netherland)
Uithoorn (Nov. 1, 2001)
HOYA LENS NANUFACTURING HUNGARY RT (Hungary) Mateszalka (Jun. 10, 2002)*
HOYA LENS AUSTRALIA PTY. LTD. (Australia)
Sydney (Sep. 16, 2002)*
HOYA LENS AUSTRALIA PTY. LTD. (Australia)
Perth (Sep. 16, 2002)*
HOYA LENS KOREA CO., LTD. (Korea)
Seoul (Nov. 4, 2002)*

Other

Information Technology

Company Name (Location)

HOYA CORP. (Japan)

HOYA CORP. Crystal Company (Japan)

Musashi Plant(Dec. 4, 1998)

HOYA2003-e 0711 03.7.21 9:50 PM ページ 20

Ten-Year Summary 20
Management’s Discussion and Analysis 22
Independent Auditors’ Report 33
Financial Data 34
Corporate Data 57
Investor Information 58
Hoya’s Timeline 59
Hoya Directory 60

Financial Section andCorporate Data

19

Ten-Year Summary
1994

1995

1996

1997

¥134,473¥151,470¥167,106¥193,402

Operating income (Millions of yen)

14,232

21,03826,22932,936

Ordinary income (Millions of yen)

12,87821,001

27,37635,086

Net income (Millions of yen)

6,119

8,812

11,05615,300

Selling, general and administrative expenses/net sales (%)

28.9

29.9

29.6

27.7

Return on assets (%)

3.2

4.8

5.7

7.1

Return on equity (%)

5.5

7.6

9.0

11.4

Inventory turnover (Months)

4.0

3.5

3.2

3.2

Financial leverage (Times)

1.6

1.6

1.6

1.7

Capital expenditures (Millions of yen)

10,2259,304

19,43932,318Depreciation and amortization (Millions of yen)

13,81913,56513,01815,705

4.5

4.0

4.5

6.0

51.06

74.12

93.32

129.70————Cash flows

171.70192.70207.31267.00Shareholders’ equity

970.37

1,024.29

1,082.54

1,220.70

Price earnings ratio (Times)*

34.67

32.38

39.43

42.71

Price cash flow ratio (Times)

10.31

12.45

17.75

20.75

Price book value ratio (Times)*

1.82

2.34

3.40

4.54

Stock price at year-end (Yen)

1,770

2,400

3,680

5,540

Net sales (Millions of yen)

Research and development expenses (Billions of yen)
Per share data (Yen)*:
Net income
Diluted net income

share information for the fiscal year under review has been prepared based on the new accounting standard for earnings per share of common stock issued by the Accounting Standards Board of Japan. Figures from* Per
previous fiscal years have been recalculated in accordance with the new accounting standard.
20

1998

1999

2000

2001

2002

2003

¥193,473¥201,290¥201,110¥236,802¥235,265¥246,293

Net sales

26,39531,726

34,68845,12843,89852,983Operating income

26,75933,61235,484

48,18445,77450,874

Ordinary income

12,348

17,837

20,716

21,86023,741

20,038Net income

28.2

26.4

25.4

23.8

24.2

24.4

SG&A expenses/net sales

5.3

7.8

8.9

8.6

8.7

7.3

Return on assets

8.5

11.6

12.4

11.8

11.5

9.0

Return on equity

3.4

3.2

3.3

3.1

3.2

2.9

Inventory turnover

1.6

1.4

1.4

1.4

1.3

1.2

Financial leverage

19,504

13,654

17,77039,673

19,585

15,948

Capital expenditures

17,57018,234

16,051

32,138

20,105

19,792

Depreciation and amortization

7.5

7.8

7.7

7.3

7.3

8.7

R&D expenses
Per share data*:

104.51151.10176.26

186.60203.15171.10Net income

—

—

—

—

—

171.08

Diluted net income

257.64

310.61

316.61464.99377.57343.31

Cash flows

1,270.68

1,362.24

1,506.21

1,680.45

1,886.20

1,945.16

Shareholders’ equity

36.36

44.47

55.03

43.73

44.50

41.79

Price earnings ratio*

14.75

21.63

30.64

17.55

23.94

20.83

Price cash flow ratio

2.99

4.93

6.44

4.86

4.79

3.68

Price book value ratio*

3,800

6,720

9,700

8,160

9,040

7,150

Stock price at year-end

21

Management’s Discussion and Analysis
Scope of Consolidation

Net Sales

The Hoya Group includes Hoya Corporation and its 52 consoli-

Consolidated net sales for the year ended March 31, 2003 in-

dated subsidiaries (six domestic and 46 overseas), as well as six do-

creased 4.7% from the previous fiscal year to ¥246,293 million.

mestic affiliates, two of which are accounted for by the equity

This was due mainly to a rise of 9.8% in sales in the Information

method.

Technology field’s Electro-Optics division, and a significant sales
increase of 15.6% at the Health Care division of the Eye Care

The number of consolidated subsidiaries increased by one during
the year under review. This increase is the result of the establish-

field. The Vision Care division also reported a slight increase in sales.

ment of two new companies and the acquisition of a third compa-

Domestic sales increased 4.4% from the previous fiscal year tony, and the merger of two existing subsidiaries with Hoya Corpora-¥138,006 million, and overseas sales rose 5.1% to ¥108,287 mil-tion. The number of affiliates is unchanged.

lion. This represents a domestic share of 56.0% of total net sales,
and a 44.0% share from overseas. The overseas share increased 0.2
percentage points, as the previous year’s ratios were 56.2% for domestic and 43.8% for overseas.

(Millions of yen)
300,000

1999

2000

2001

2002

2003

201,290

201,110

236,802235,265

246,293

1999

2000

2001

2002

2003

43.2

44.9

47.4

43.1

45.3

4.4

3.6

2.8

3.1

2.2

34.7

35.7

36.4

39.6

38.3

9.7

1.9

5.2
0.9

8.5
4.2
0.7

9.8
3.7
0.7

10.9
2.7
0.6

86,94390,174112,341

101,496

111,461

225,000

Net sales

150,000

75,0000

Net sales (Millions of yen)(% of total)

100

75

Sales
by Business Segment

50

25
9.7

0

Electro-Optics (Millions of yen)

6.1

Photonics (Millions of yen)

8,793

7,248

6,534

7,157

5,485

Vision Care (Millions of yen)

69,85871,75486,19893,184

94,388

Health Care (Millions of yen)

19,552

19,541

20,13023,106

26,717

Crystal (Millions of yen)

12,267

10,516

9,942

8,788

6,719

Service (Millions of yen)

3,877

1,877

1,657

1,534

1,523

22

Because this represents an increase of 0.6% from the previous fiscal

Hoya converts results of overseas subsidiaries from local currencies to Japanese yen using the rate applicable to the period underyear, excluding this foreign exchange gain from the sales growthreview. When compared to the results from previous periods, therate for the fiscal year under review allows the actual growth rate

calculation will be affected by the difference in the exchange rate.

for the business to be calculated as 4.1%.

The U.S. dollar rate used for the period under review was ¥121.20

A year-on-year comparison of fiscal 2003 with the previous fiscal

to one U.S. dollar, reflecting an appreciation of the yen of 3.7%

year shows quarterly net sales up 1.5% in the first quarter, 6.4% in

and pushing down results for the U.S. Group companies when

the second, 8.0% in the third and 3.1% in the fourth. A quarter-

compared to the previous term. The euro rate of ¥121.48 to one

on-quarter comparison of fiscal 2003 with the immediately preced-

euro, however, reflected a depreciation of the yen of 9.5%, swellinging quarter shows a 2.4% increase in the first quarter, a 0.9% in-

results from European subsidiaries enough to cover the falloff fromcrease in the second, a 0.2% decrease in the third, and nearly

the U.S. and resulting in a net increase from the conversion differ-unchanged in the fourth.

ence. The gain on foreign exchange was ¥1,337 million of net sales.

(% of total)
100

1999

2000

2001

2002

2003

71.8

73.4

71.3

67.8

67.5

4.1

4.0

75

Sales by Region

50(Based on the locationof the Company’s offices)
4.2

4.8

10.5

12.3

13.2

11.1

14.5

15.7

14.5

144,516

147,553

168,856

159,368

166,178

8,357

8,076

8,792

9,948

11,705

Europe (Millions of yen)

23,303

23,10924,94428,964

32,639North America (Millions of yen)

25,114

22,372

34,21036,98535,771

1999

2000

2001

2002

2003

61.1

63.1

57.9

56.2

56.0

11.6

10.7

13.3

12.2

12.1
15.2

16.2

15.8

25

11.6

11.5

12.5

Japan (Millions of yen)
Asia (Millions of yen)0(% of total)
100

3.7

75

Sales to DomesticandForeign Customers(Based on the locationof customers)

50

25

14.0

13.8

12.7

11.0

15.3

16.9

14.9

Japan (Millions of yen)

123,062

126,844

137,211132,248

138,006

Asia and Other Areas (Millions of yen)

24,52524,326

27,53725,12732,806

Europe (Millions of yen)

28,067

27,84135,87038,14438,789North America (Millions of yen)

25,63622,09936,18439,746

36,6920

23

Net Income
Selling, general and administrative expenses rose 5.1% from the

The gains in net sales and operating income have been calculated

previous fiscal year to ¥60,035 million. The main reason for thiscompared to the previous fiscal year, but performance in the previ-

increase was a rise of ¥1,332 million in R&D expenses.

ous year was lackluster due the economic downturn that resulted

Operating income increased 20.7% from the previous fiscal year

from the IT slump. This alone would account for the increases, but

to ¥52,983 million, while the operating income ratio rose 2.8 per-the rate of returns for fiscal 2003 also recovered to the level

centage points to 21.5%. By quarter, the operating income ratio

achieved two years prior in fiscal 2001, and even surpassed it towas 20.6% in the first quarter, 22.6% in the second, 21.8% in thereach its highest value in the history of the Company.

third and 21.1% in the fourth.

(Millions of yen)
60,000

1999

2000

2001

2002

2003

Operating Income (Millions of yen)

31,726

34,68845,12843,89852,983

Ordinary Income (Millions of yen)

33,61235,484

48,18445,77450,874Net Income (Millions of yen)

17,837

20,716

21,86023,741

20,03845,000Operating Income,Ordinary Income
and Net Income

30,00015,0000(Millions of yen)
15,0002002-1Q

2002-2Q

2002-3Q

2002-4Q

2003-1Q

2003-2Q

2003-3Q

2003-4Q

Operating income (Millions of yen)

11,613

11,234

10,068

10,983

12,59913,951

13,43313,000Ordinary income (Millions of yen)

12,124

10,573

11,368

11,70910,84814,17912,435

13,412

Net income (Millions of yen)

7,468

6,192

5,142

4,939

6,869

7,977

-2,125*

7,317

10,000Quarterly Profits

5,000

1st quarter of 2002
to 4th quarter of 2003
0

-5,000* An extraordinary loss of ¥14,949 million for compensation resulting from the dissolution of the Company’s employees’ funded pension plan was posted during the third quarter of fiscal 2003, resulting in a net
loss for the quarter of ¥2,125 million.

24

The Company pushed through a number of structural reform

and minority interests fell 23.5% from the previous fiscal year tomeasures during the fiscal year under review with the aim of elimi-¥28,743 million, and net income declined 15.6% to ¥20,038

nating future liabilities. The Company posted ¥14,949 million for

million.

compensation resulting from the dissolution of the Company’s em-

Net income per share fell from ¥203.15 for the previous fiscal

ployees’ funded pension plan, and ¥3,691 million for additional

year to ¥171.10, a decline of ¥32.05. Return on assets (ROA) fell

retirement benefits paid to employees resulting from restructuring

1.4 percentage points to 7.3%, and return on equity (ROE)of 19 domestic businesses. As a result, income before income taxes

dropped 2.5 percentage points to 9.0%.

(%)
30.0

1999

2000

2001

2002

2003

22.5

Profit Ratio

15.0

7.5

0

Operating income ratio (%)

15.8

17.2

19.1

18.7

21.5

Ordinary income ratio (%)

16.7

17.6

20.3

19.5

20.7

Return on sales (%)

8.9

10.3

9.2

10.1

8.1

(%)
30.0

2002-1Q

2002-2Q

2002-3Q

2002-4Q

2003-1Q

2003-2Q

2003-3Q

2003-4Q

Operating income ratio (%)

19.3

19.4

17.7

18.4

20.6

22.6

21.8

21.1

Ordinary income ratio (%)

20.1

18.2

19.9

19.6

17.7

23.0

20.2

21.8

Return on sales (%)

12.4

10.7

9.0

8.3

11.2

12.9

-3.4 *

11.9

20.0

Quarterly Profit Ratio

10.0

1st quarter of 2002
to 4th quarter of 2003
0

-10.0

* An extraordinary loss of ¥14,949 million for compensation resulting from the dissolution of the Company’s employees’ funded pension plan was posted during the third quarter of fiscal 2003, resulting in returnon sales for the quarter of -3.4%.

25

Review by Segment

Information Technology (Electro-Optics Division)(Millions of yen)

Net sales in the Information Technology field increased 7.6% from

120,000

(%)

2001

2002

2003

40.0

the previous fiscal year to ¥116,946 million. This was due mainly to a
9.8% increase in sales by the Electro-Optics division to ¥111,461 million. Sales by product group are as follows. In mask blanks for the

90,00020.0

60,0000manufacture of semiconductors, sales of high-precision products increased. In photomasks for semiconductor manufacture, although thedomestic market tended toward decline, the shift to high-precision
products and a larger percentage of overseas sales kept overall sales on

30,000par with the previous year. In LCD photomasks, increasing demand,
especially for large photomasks, resulted in rising sales. In glass disks0

for HDDs, sales of media products (glass substrates coated with amagnetic layer) rose following increased shipments of HDDs, while

Net sales

112,341 101,496 111,461

sales of substrates (glass substrates, the polished glass disks) remained

Operating income

34,81527,78934,414

30.8%

27.3%

30.8%

flat, leading to an overall decline in revenue. In optical glass products,
sales of lenses for digital cameras and video recorders recovered fromthe inventory adjustment phase that characterized the previous fiscal
year, and revenue increased. In laser products from the Photonics division, as part of the Company’s restructuring plan, the section handling physical- and chemical-use lasers in the Photonics division was

Operating income ratio
Assets112,257 111,806 114,877

Depreciation

10,29912,687

13,129

Capital expenditures

15,23013,28010,444

Notes: 1. The operating income ratio above is calculated on net sales plus intersegment sales. Pleaserefer to details on page 52 Segment Information.
2. Data above doesn’t include Photonics division.

sold off in October, resulting in a decline in sales from the previousrate) to a level above the Company’s consolidated total of 4.7%. Due

fiscal year.
Operating income for the Information Technology field increased

to an increase of 3.5 percentage points in the operating income ratio,

23.8% from the previous fiscal year to ¥33,826 million. The operat-

moreover, the circle representing the segment has moved in a positiveing income ratio for the Electro-Optics division was 29.2% in the

direction to the right along the horizontal axis (representing the oper-

first quarter, 31.8% in the second, 32.8% in the third, and 29.4% inating income ratio). During the period under review, this segment was

the fourth, rising for each corresponding quarter of the previous fiscal

able to recovery significantly the declines of the previous fiscal year,

year, and from 27.3% in the previous term to 30.8% for the full fiscal

and even surpass former levels.

year. This was the principal reason for the notable rise in the operat-

Capital expenditures for the Electro-Optics division were reducedby 21.4% to ¥10,444 million, the result of planned investments being

ing income ratio for the Information Technology field.
The Electro-Optics division’s net sales growth rate improved to aheld over to the next fiscal period. As a result, capital expenditures for

positive 9.8% from a negative 9.7% for the previous year. The graphthe Information Technology field totaled ¥10,595 million. This rep-labeled “Sales Growth and Profitability by Business Segment” on thisresents 66.4% of investment for the entire Group, down 1.7 percent-page shows that the position of the circle representing this segment

age points from the previous fiscal year.

has moved up the vertical axis, (which shows the net sales growthSize of circle shows the volume of operating income.

20

Sales Growth andProfitability by
Business Segment
Fiscal year ended March 31, 2003
(Compared with the previous fiscal year)

10

0

-10

Sales Growth Ratio (%)

Health Care

Consolidated Basis

30

Consolidated Basis
Vision Care

Electro-Optics-20
Crystal
0

26

10

20
Operating Income Ratio (%)

30

Eye Care (Vision Care Division)(Millions of yen)

Net sales in the Vision Care division rose 1.3% from the previous fis-

100,000

(%)

2001

2002

2003

20.0

cal year to ¥94,388 million. At a time when the domestic market foreyeglass lenses is shrinking, the Company managed to increase its
overall share by aggressively marketing high-value-added products

75,00010.0

50,0000such as progressive focus lenses tailored to the particular characteristics of the nation or region. It also implemented strategies to increase
revenue and profit, relocating its domestic mass-production facility toThailand, and better utilizing its factories in Hungary and China.

25,000

Revenue was also given a boost by the rising euro.
Operating income for the division increased 6.8% from the previ-0

ous fiscal year to ¥15,398 million. The operating income ratio by
quarter raised 16.8% in the first and 18.0% in the second, but fell to

Net sales

86,19893,184

94,388

13.1% in the third and 16.0% in the fourth. The ratio for the year

Operating income

10,601

14,414

15,398increased from 15.5% for the previous fiscal year to 16.0%.
The net sales growth rate for the division declined from 8.1% theprevious year to 1.3%, as represented by the declining position of its
circle on the segment graph. However, because operating income increased from the previous term, the circle’s area has increased slightly,
and because the division’s operating income ratio increased 0.5 per-Operating income ratio*

12.3%

15.5%

16.0%

Assets

83,34392,30998,077

Depreciation

5,987

5,516

5,578

Capital expenditures

22,287

5,259

3,935

* The operating income ratio above is calculated on net sales plus intersegment sales. Please refer todetails on page 52 Segment Information.

Capital expenditures in the division totaled ¥3,935 million, includ-centage points the circle has shifted a little to the right along the hori-ing expenses for a lens processing laboratory purchased in the United

zontal axis.

States during the term.

Eye Care (Health Care Division)(Millions of yen)
30,000Net sales in the Health Care division rose 15.6% from the previous

(%)

2001

2002

2003

20.0

22,50010.0

15,0000fiscal year to ¥26,717 million. For the second consecutive fiscal year,
the division’s share of total net sales increased, rising to 10.9% from
9.8% in the previous fiscal year. In contact lens sales, the Company
increased revenue by aggressively marketing high-value-added prod7,500

ucts such as multifocal contact lenses, undertook effective development of its retail outlets by opening new stores while scrapping andbuilding others, and introducing a customer-oriented sales system.
The Company’s foldable soft-type IOL was well received by ophthalmologists and the medical community in Japan, contributing significantly to the increase in sales in this division.
Operating income for the division jumped up 48.4% from the previous fiscal year to ¥5,089 million. The operating income ratio by
quarter was 16.5% in the first, 21.2% in the second, 18.6% in the0

Net sales

20,13023,106

Operating income

2,405

3,429

5,089

Operating income ratio*

11.1%

14.3%

19.0%

Assets13,366

15,816

16,447

479

554

571

Depreciation

26,717

Capital expenditures

third and 19.6% in the fourth. Even when the ratio of the first quar-

1,138
687
426
* The operating income ratio above is calculated on net sales plus intersegment sales. Please refer to

ter was at its lowest point for the year, it still was greater than thedetails on page 52 Segment Information.

highest quarterly ratio of 16.0% in the third quarter of the previous
fiscal year. For the full year, the operating income ratio increased 4.7

ume of operating income) for this division is significantly greater. The

percentage points, from 14.3% to 19.0%.

circle has also moved to the right along the horizontal axis, due to a

The net sales growth rate for the division rose from 14.8% in therise in the division’s sales growth ratio of 4.7 percentage points. The

previous fiscal year to 15.6%, and the corresponding circle for thisgraph shows how this division, continuing from the previous term,

division on the segment graph has moved upward. Strong growth dur-has grown in terms of sales growth ratio, operating income and oper-

ing the fiscal year under review, coming on the back of significant

ating income ratio.

growth in the previous fiscal year exemplifies the strong performance

Capital expenditures in the division totaled ¥426 million.

of this division. Also, because operating income increased markedly

On March 31, 2003, the hearing aid business was transferred to afrom the previous period, the area of the circle (representing the vol-third party.

27

Lifestyle Refinement (Crystal Division)(Millions of yen)

Net sales in the Crystal division fell 23.5% from the previous fiscal

10,000

(%)

2001

2002

2003

4.0

year to ¥6,719 million, due mainly to the decline in individual consumption and social gift-giving due to the economic slowdown, as

7,500

2.0

5,000

0

well as a shrinking of the business scale implemented as part of thebusiness reform measures aimed at restructuring the brand.
The division recorded an operating loss for the year of ¥12 million.
The net sales growth ratio fell further from a negative 11.6% in the
2,500

previous fiscal year to a negative 23.5%. The position on the graph ofthe circle representing this division has moved down the vertical axis,0

and on the horizontal axis representing the operating income ratio,
the division’s circle has moved from 0% to a negative 0.2%.

9,942

8,788

Operating income

285

-1

-12

the previous fiscal year to ¥776 million. This was due mainly to, in

Operating income ratio*

2.9%

-0.0%

-0.2%

accordance with the Company’s restructuring program, the conver-

Assets

9,828

8,684

8,409

sion of excess facilities to more appropriate functions, in order toDepreciation

552

498

302

avoid further losses.

Capital expenditures

610

254

Net sales

Capital expenditures in the division increased from ¥254 million in

6,719

776
* The operating income ratio above is calculated on net sales plus intersegment sales. Please refer todetails on page 52 Segment Information.

Consolidated Basis

30
Size of circle shows the volume of operating income.

Europe10

Sales Growth andProfitability byGeographical Segment

0

Fiscal year ended March 31, 2003
(Compared with the previous fiscal year)

Sales Growth Ratio (%)

20

North America

Asia

Consolidated Basis

Japan

-10

-20

0

28

5

10

15
Operating Income Ratio (%)

20

25

30

(Millions of yen)
40,000

1999

2000

2001

2002

2003

13,654

17,77039,673

19,585

15,948

1999

2000

2001

2002

2003

30,00020,000Capital Expenditures

10,0000Capital expenditures (Millions of yen)(Billions of yen)
10.0

Research and Development
Expenses

7.5

3.0

5.0

2.0

2.5

1.0

0

0

R&D expenses (Billions of yen)

7.8

7.7

7.3

7.3

8.7

R&D expenses/net sales (%)

3.9

3.8

3.1

3.1

3.5

(% of total)
100

1999

2000

2001

2002

2003

27.4

24.7

22.5

75

39.0

48.2

52.4

15.4

15.8

14.8

12.2

11.3

10.3

Group Employees
by Region

(%)
4.0

33.8

50
45.0
43.0
43.7

25

14.0

0

19.3

3.3

3.9

Total

9,414

10,651

12,966

13,311

14,023

Japan

3,667

3,595

3,553

3,282

3,150

Asia

4,117

4,579

5,838

6,411

7,346

Europe

1,314

2,055

2,000

2,102

2,082

316

422

1,575

1,516

1,445

North America

29Financial Position
Cash and cash equivalents increased 14.1% to ¥75,694 million.

contributory funded pension plan was dissolved and unfunded re-This was primarily due to increases in sales from the Electro-Optics

tirement benefit plan was abolished in the fiscal year under review.

and Health Care divisions, and a decline in capital expenditures. As

Total liabilities declined 15.1% to ¥49,886 million. The Compa-

a result, current assets increased 5.1% from the previous fiscal year

ny’s degree of indebtedness edged down 0.6 percentage points toto ¥178,154 million. Non-current assets declined 11.4% to

0.8%, as interest-bearing debt was reduced by ¥1,656 million to¥96,135 million due to postponement of investment plans to the¥2,292 million.

next fiscal year for the Electro-Optics division, and a decrease of

Retained earnings increased 6.9% to ¥216,272 million. The for-deferred tax assets. Total assets declined 1.4% to ¥274,289 million.

eign currency translation adjustment, which is a debit item against

Current liabilities fell 2.5% from the previous fiscal year toequity, increased ¥1,847 million to ¥7,178 million, while treasury¥47,889 million, the result of significant falls in short-term loans

stock increased ¥7,036 million to ¥7,053, leading to a rise in total

payable (down 32.4%) and income taxes payable (down 46.4%).

shareholders’ equity from ¥219,180 million in the previous term toLong-term liabilities dropped markedly 79.2% to ¥1,997 million,¥224,219 million. The equity ratio rose from 78.8% to 81.7%.

due to elimination of employees’ retirement benefits because the(Millions of yen)
300,000

1999

2000

2001

2002

2003

250,000

(%)

85

80

200,000

Total Assets,
Shareholders’ Equity andShareholders’ Equity Ratio

75
150,000
70
100,000
65

50,000060

Total assets (Millions of yen)

224,335

239,341

267,611

278,068

274,289

Shareholders’ equity (Millions of yen)

158,473

175,146

195,333

219,180

224,219

70.7

73.2

73.0

78.8

81.7

Shareholders’ equity ratio(%)

(%)
20

1999

2000

2001

2002

2003

16

12

Prof itability

8

4

0

Return on equity [ROE](%)

11.6

12.4

11.8

11.5

9.0

Ordinary income/total assets (%)

14.7

15.3

19.0

16.8

18.4

Return on assets [ROA](%)

7.8

8.9

8.6

8.7

7.3

30

Cash FlowsNet cash provided by operating activities totaled ¥38,390 million,ty, plant and equipment, mainly for investment in next-generationa decrease by ¥2,633 million from the previous fiscal year. Basedproducts in the Electro-Optics division, totaling ¥14,213 million

on the performance results recorded in the consolidated balance(decreased by ¥4,788 million from the previous fiscal year).

sheets and statements of income, this was chiefly composed of in-

Net cash used in financing activities totaled ¥14,548 million, an

come before income taxes and minority interests of ¥28,743 mil-increase by ¥6,362 million from the previous fiscal year. The mainlion (decreased by ¥8,845 million), depreciation and amortization

uses of cash were expenditures for repayment of debt of ¥1,699

of ¥19,792 million (increased by ¥156 million), reversal of accrued

million (decreased by ¥149 million), acquisition of treasury stock

retirement benefits of ¥7,256 million (increased by ¥6,063 mil-of ¥7,036 million (increased by ¥7,008 million), and dividendslion), and payment of ¥11,509 million in income taxes (decreased

paid of ¥5,813 million (decreased by ¥599 million).

by ¥3,886 million).

As a result, cash and cash equivalents at the end of the year in-

Net cash used in investing activities was ¥13,583 million, a de-creased ¥9,373 million from the beginning of the fiscal year tocrease by ¥6,071 million from the previous fiscal year. The princi-¥75,694 million.

pal factor affecting cash was expenditures for acquisition of proper-(Millions of yen)
60,000

1999

2000

2001

2002

2003

50,00040,00030,000Cash Flows

20,00010,0000

Depreciation and amortization(Millions of yen)

18,234

16,051

32,138

20,105

19,792

Net income (Millions of yen)

17,837

20,716

21,86023,741

20,038Cash flows (Millions of yen)

36,071

36,76753,99843,846

39,830(Millions of yen)
15,0002002-1Q

2002-2Q

2002- 3Q

2002- 4Q

2003- 1Q

2003- 2Q

2003- 3Q

2003- 4Q

4,435

4,718

4,932

6,020

4,823

4,887

5,021

5,061

10,000Quarterly Cash Flows

5,000

1st quarter of 2002
to 4th quarter of 2003
0

-5,000Depreciation and amortization(Millions of yen)
Net income (Millions of yen)

7,468

6,192

5,142

4,939

6,869

7,977

-2,125

7,317

Cash flows (Millions of yen)

11,903

10,91010,074

10,959

11,692

12,864

2,896

12,37831

(Times)100

Stock Price Data

1999

2000

2001

2002

80

8,000

60

6,000

40

4,000

20

2,000

0

0

Price earnings ratio (Times)

44.47

55.03

43.73

44.50

41.79

Price cash flow ratio (Times)

21.63

30.64

17.55

23.94

20.83

Price book value ratio (Times)

4.93

6.44

4.86

4.79

3.68

Stock price at fiscal year-end (Yen)

6,720

9,700

8,160

9,040

7,150

Stock price (Yen)
12,000Common Stock Price Range
and Trading Volume(Yen)
10,0002003

FY2002

Trading volume(Thousand shares)
18,000FY2003

10,00015,0008,000

12,000

6,000

9,000

4,000

6,000

2,000

3,000

0

0

4

5

6

7

8

9 10 11 12 1

2

3

4

5

6

7

8

9 10 11 12 1

2

3(Month)

(Yen)
60

1999

2000

2001

2002

2003

Period-end dividend (Yen)

16.00

19.00

30.00

25.00

25.00

Interim dividend (Yen)

14.00

16.00

20.00

25.00

25.00

Total dividend (Yen)

30.00

35.00

50.00

50.00

50.00

50
40

Dividend Per Share

30
20
10
0

32

Independent Auditors’ Report33Consolidated Balance Sheets
Hoya Corporation and Consolidated Subsidiaries
March 31, 2003 and 2002

Millions of Yen

ASSETS

CURRENT ASSETS:
Cash and cash equivalents
Notes and accounts receivable:
Associated companies (Note 14)
Other—trade (Note 5)
Other
Allowance for doubtful receivables
Income taxes refund receivable (Note 11)
Inventories (Note 6)
Deferred tax assets (Note 11)
Prepaid expenses and other current assets (Note 14)
Total current assets
PROPERTY, PLANT AND EQUIPMENT:Land
Buildings and structures
Machinery and vehicles
Furniture and equipment
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 4)
Investments in and advances to associated companies (Note 7)
Goodwill
SoftwareRental deposits
Deferred charges
Long-term accounts receivable
Deferred tax assets (Note 11)
Other assets
Allowance for doubtful receivables
Total investments and other assets

TOTAL
See notes to consolidated financial statements.

34

Thousands of
U.S. Dollars(Note 1)

2003

2002

2003

¥(075,694¥(066,321$(0,630,783

720
58,7762,054(1,299)3,900
32,361
3,970
1,978

238
58,9242,570(1,393)
127
35,596
3,615
3,589

6,000
489,800
17,117(10,825)
32,500269,675
33,083
16,484

178,154

169,587

1,484,617

9,326
52,520140,620
20,782
2,636

9,445
54,135
138,252
20,543
4,129

77,717437,667
1,171,833
173,183
21,967

225,884(148,647)

226,504(141,232)

1,882,367(1,238,725)

77,237

85,272643,642

787
4,977
1,744
2,385
2,438
412
1,677
3,211
2,978
(1,711)

1,055
4,761
887
2,529
2,907
429
1,573
7,411
3,237
(1,580)6,558
41,475
14,533
19,875
20,317
3,433
13,97526,75824,817(14,258)

18,89823,209157,483¥ 274,289¥278,068$2,285,742

Thousands of
U.S. Dollars(Note 1)Millions of Yen

LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIES:
Short-term bank loans (Note 8)
Current portion of long-term bank loans (Note 8)
Notes and accounts payable:
Associated companies (Note 14)
Other—trade
Construction and other
Income taxes payable (Note 11)
Accrued bonuses to employees
Accrued expenses
Other current liabilities (Note 14)
Total current liabilities
LONG-TERM LIABILITIES:Long-term bank loans, less current portion (Note 8)
Liability for retirement benefits (Note 9)
Other long-term liabilities
Total long-term liabilities
MINORITY INTERESTS

2003

2002

2003

¥002,251
34¥003,306
73$0,018,758
283

38
20,368
6,311
2,609
3,512
10,9371,829

29
19,889
5,568
4,868
3,882
9,488
2,011

317
169,733
52,592
21,742
29,267
91,141
15,24247,88949,114

399,075

7
316
1,674

569
7,566
1,483

58
2,634
13,950

1,997

9,618

16,642

184

156

1,533

6,264
15,899216,272
15(7,178)6,264
15,899202,255
110(5,331)

52,200132,492
1,802,267
125(59,817)

231,272

219,197

1,927,267(7,053)(17)(58,775)

224,219

219,180

1,868,492¥274,289¥278,068$2,285,742

CONTINGENT LIABILITIES (Notes 13 and 15)
SHAREHOLDERS’ EQUITY (Notes 10 and 17):
Common stock—authorized, 320,000,000 shares;
issued, 116,124,405 shares
Capital surplus
Retained earnings
Net unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Total
Treasury stock—at cost,
951,050 shares in 2003 and 2,059 shares in 2002
Total shareholders’ equity
TOTAL

35

Consolidated Statements of Income
Hoya Corporation and Consolidated Subsidiaries
Years Ended March 31, 2003, 2002 and 2001

Thousands of
U.S. Dollars(Note 1)Millions of Yen

2003

2002

2001

2003

NET SALES (Notes 13 and 14)¥246,293¥235,265¥236,802$2,052,442

COST OF SALES (Notes 13 and 14)

133,275

134,258

135,319

1,110,625

113,018

101,007

101,483

941,81760,035

57,10956,355500,292

52,98343,89845,128441,525624(374)(1,252)
109
725
488
(7)
(111)
(1,947)
418

490
(617)
1,033
137
336

587
(926)
680
126
268

(3,118)(479)(1,529)
533
(469)

(364)
(1,214)(986)
1,865(14,347)

5,200(3,117)(10,434)
908
6,042
4,067
(58)
(925)
(16,225)
3,483

Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 12, 13 and 14)
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Foreign exchange gains (losses)—net
Gain on sales of investment securities
Gain on sales of property, plant and equipment
Gain on transfer of business (Note 3)
Loss on sales of investment securities
Loss on write-down of investment securities
Loss on disposal of property, plant and equipment
Equity in earnings of associated companies
Amortization of goodwill (Note 3)
Additional expense incurred to discontinued contributory
funded pension plan
Additional expense incurred to discontinued unfunded
retirement benefit plan
Additional retirement benefits paid to employees
Temporary plant closure expenses
Other income (expenses)—net(14,949)(124,575)(351)(3,691)(463)(3,459)(1,996)
(778)
147

(176)
867

(2,925)(30,758)(3,858)(28,825)(24,240)(6,310)(13,620)(202,000)

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

28,74337,58831,508239,525

INCOME TAXES (Note 11):
Current
Deferred
Total income taxes

5,648
3,029
8,677

12,002
1,745
13,747

14,720(5,170)9,550

47,06625,24272,308

(28)

(100)

(98)

(234)

¥020,038¥ 23,741¥ 21,860$ 166,983

Other expenses—net

MINORITY INTERESTS IN NET INCOME
NET INCOMEYen

PER SHARE OF COMMON STOCK (Note 17):
Basic net income
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.
36

U.S. Dollars

2003

2002

2001

2003

¥0171.10
171.0850.00¥203.15¥186.60

50.00

50.00

$1.43
1.43
0.42

Consolidated Statements of Shareholders’ Equity
Hoya Corporation and Consolidated Subsidiaries
Years Ended March 31, 2003, 2002 and 2001

BALANCE, APRIL 1, 2000
Adjustment of retained earnings
for reorganization of consolidated
subsidiaries to branches (Note 3)
Adjustment of retained earnings
for newly consolidated subsidiaries
Net income
Appropriations:
Cash dividends, ¥39.00 per share
Bonuses to directors
Net increase in unrealized loss
on available-for-sale securities
Net increase in foreign currencytranslation adjustments
Net decrease in treasury stock(1,838 shares)
BALANCE, MARCH 31, 2001
Adjustment of retained earnings
for merger of unconsolidated
subsidiaries (Note 3)
Adjustment of retained earnings
for accounting changes
at foreign subsidiaries
Net income
Appropriations:
Cash dividends, ¥55.00 per share
Bonuses to directors
Net increase in unrealized gain on
available-for-sale securities
Net increase in foreign currencytranslation adjustments
Net increase in treasury stock(2,029 shares)
BALANCE, MARCH 31, 2002
Adjustment of retained earnings
for merger of unconsolidated
subsidiaries (Note 3)
Net income
Appropriations:
Cash dividends, ¥50.00 per share
Bonuses to directors
Net decrease in unrealized gain on
available-for-sale securities
Net decrease in foreign currencytranslation adjustments
Net increase in treasury stock(948,991 shares)
BALANCE, MARCH 31, 2003

Millions of Yen

IssuedNumber of
Shares ofCommon Stock

CommonStockCapitalSurplusRetained
Earnings

116,124,405¥6,264¥15,899¥168,106Net UnrealizedGain(Loss) on Availablefor-sale Securities

Foreign Currency
Translation
Adjustments

Treasury
Stock¥(15,105) ¥

(18)

(820)
(7)
21,860(4,529)(249)¥ (516)
4,430
116,124,405

6,264

15,899184,361(516)(10,675)

18
(0)

667
66
23,741(6,387)
(193)
626
5,344
116,124,405

6,264

15,899202,255

110(5,331)

(17)
(17)

(66)
20,038(5,806)(149)(95)(1,847)116,124,405¥6,264¥15,899¥216,272¥ 15(7,036)¥ (7,178) ¥(7,053)

37

Thousands of U.S. Dollars (Note 1)
CommonStock

BALANCE, MARCH 31, 2002
Adjustment of retained earnings
for merger of unconsolidated
subsidiaries (Note 3)
Net income
Appropriations:
Cash dividends, $0.42 per share
Bonuses to directors
Net decrease in unrealized gain on
available-for-sale securities
Net decrease in foreign currencytranslation adjustments
Net increase in treasury stock (948,991 shares)
BALANCE, MARCH 31, 2003
See notes to consolidated financial statements.

38$52,200

CapitalSurplusRetained
Earnings$132,492$1,685,458

Net Unrealized
Gain on Availablefor-sale Securities$ 917

Foreign Currency
Translation
Adjustments

TreasuryStock$(44,425) $

(142)

(550)
166,983(48,383)(1,241)(792)(15,392)$52,200$132,492$1,802,267$ 125(58,633)$(59,817) $(58,775)

Consolidated Statements of Cash Flows
Hoya Corporation and Consolidated Subsidiaries
Years Ended March 31, 2003, 2002 and 2001

Thousands of
U.S. Dollars(Note 1)Millions of Yen

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Provision for (reversal of) allowance for doubtful receivables
Provision for (reversal of) accrued bonuses to employees
Reversal of accrued retirement benefits
Provision for (reversal of) reserve for periodic repairs
Losses on write-down of investment securities
Gain on sales of investment securities
Gain on sales of property, plant and equipment
Loss on sales of investment securities
Loss on disposal of property, plant and equipment
Foreign exchange loss (gain)
Bonuses to directors
Equity in earnings of associated companies
Gain on transfer of business
Other
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable
Decrease (increase) in inventories
Decrease (increase) in interest and dividend receivable
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable
Increase (decrease) in interest payable
Increase (decrease) in other current liabilities
Total adjustments
Net cash provided by operating activities
INVESTING ACTIVITIES:
Proceeds from sales of investment securities
Purchases of investment securities
Payment for purchase of consolidated subsidiaries, net of cash acquired
Proceeds from sales of property, plant and equipment
Purchases of property, plant and equipment
Decrease in other assets
Increase in other assets
Proceeds from transfer of businessNet cash used in investing activities
FINANCING ACTIVITIES:Net decrease in short-term borrowings
Proceeds from long-term bank loans
Repayments of long-term bank loans
Proceeds from sales of treasury stock
Payments for purchases of treasury stock
Dividends paid
Net cash used in financing activities

2003

2002

2001

2003

¥28,743¥37,588¥31,508$239,525(11,509)
19,792(15,395)
19,636469(1,530)(191)(1,193)
243
479
(137)
(336)
3,118
1,529
(305)
(195)
(533)

(13,421)
17,791
14,347
605
87
(798)
(59)
1,214
(126)
(268)
364
986
(753)
(251)
(1,865)(95,908)
164,933

632

363

(50)
(3,000)(60,467)(3,058)925(908)(6,042)
58
16,225
5,883(1,250)(3,483)(4,067)
7,017

628
3,208
(80)
2,060
555
12
1,247
9,647
38,390

(915)
2,861
194
272
(4,180)1(1,089)3,435
41,023(6,146)(1,749)
463
(510)
1,544
(32)
(556)
11,23042,7385,234
26,733(667)
17,167
4,625
100
10,39280,392319,917321(346)(1,301)
2,254(14,213)563(1,755)894(13,583)

1,631
(119)
(785)
480
(19,001)557(2,417)

1,972(2,706)(16,409)695(21,589)
1,246(2,675)(19,654)(39,466)

2,675(2,883)(10,842)
18,783(118,442)
4,692(14,625)7,450(113,192)(1,265)(1,722)
91
(126)
11
(28)
(6,412)(8,186)

(83)
308
(222)
363
(348)
(4,582)(4,564)(6)(360)(7,256)
(367)
111
(109)
(725)
7
1,947
706
(150)
(418)
(488)
842

(434)
(7,036)(5,813)(14,548)(10,541)(3,617)(58,633)(48,442)(121,233)

39

Thousands of
U.S. Dollars(Note 1)Millions of Yen

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS INCREASED BY MERGED
UNCONSOLIDATED SUBSIDIARIESCASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATEDSUBSIDIARIES, BEGINNING OF YEARFOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase in assets and liabilities due to merger of
unconsolidated subsidiaries:
Assets (primarily inventory and property)
Liabilities (primarily trade payables)
Increase in assets and liabilities due to consolidationof a subsidiary previously unconsolidated:
Assets (primarily inventory and property)
Liabilities (primarily trade payables)
ADDITIONAL INFORMATION:
Assets acquired and liabilities assumed in acquisition:
Assets acquired
Goodwill
Consolidated goodwill
Liabilities assumed
Minority interests
Investments in associated companies
Cash paid, net of cash acquired
Decrease in assets and liabilities due to transfer of business:
Assets (primarily property and rental deposits)
Liabilities (primarily deposit recieved)

See notes to consolidated financial statements.

40

2003

2002

2001

2003

¥10,259¥13,183¥ (1,292)$ 85,492

41

290

341
36

(927)
66,321¥75,694

1,150
51,698¥66,321¥¥01,168
(196)

82
(37)

1,299
51,655¥51,698

¥

¥

262
1,132
(93)

¥ 1,301¥434
028(7,725)552,675$(630,783

$

683
(308)

$

2,184
9,433

453
(423)

¥ 1,211
469
335
(805)
(147)
(278)

¥ 3,847
14,185(1,623)(775)¥¥16,409$ 10,842

785

$

3,617
233

Notes to Consolidated Financial Statements
Hoya Corporation and Consolidated Subsidiaries

N o» 1BASIS OF PRESENTING CONSOLIDATEDFINANCIAL STATEMENTS

The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in theJapanese Securities and Exchange Law and its related accounting
regulations, and in conformity with accounting principles andpractices generally accepted in Japan, which are different incertain respects as to application and disclosure requirements ofInternational Financial Reporting Standards. The consolidated
financial statements are not intended to present the financial
position, results of operations and cash flows in accordance withaccounting principles and practices generally accepted incountries and jurisdictions other than Japan.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order topresent them in a form which is more familiar to readers outside
Japan.
The consolidated financial statements are stated in Japaneseyen, the currency of the country in which Hoya Corporation(the “Company”) is incorporated and operates. The translationsof Japanese yen amounts into U.S. dollar amounts are included
solely for the convenience of readers outside Japan and havebeen made at the rate of ¥120 to U.S.$1, the approximate rateof exchange at March 31, 2003. Such translation should not be
construed as representations that the Japanese yen amounts
could be converted into U.S. dollars at that or any other rate.
Certain reclassifications have been made in the 2002 and2001 consolidated financial statements to conform to theclassifications used in 2003. These reclassifications had no effecton previously reported net income.

N o» 2SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES

a. Consolidation

The consolidated financial statements as of March 31, 2003
include the accounts of the Company and its 52 (51 in 2002
and 46 in 2001) significant subsidiaries (together, the “Group”).
Under the control or influence concept, those companies inwhich the Company, directly or indirectly, is able to exercise
control over operations are fully consolidated, and thosecompanies over which the Group has the ability to exercise
significant influence are accounted for by the equity method.

Investments in 2 (2 in 2002 and 4 in 2001) associatedcompanies in 2003 are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries andassociated companies are stated at cost. If the equity method of
accounting had been applied to the investments in thesecompanies, the effect on the accompanying consolidated
financial statements would not be material.
The differences between the cost and underlying net equity ofinvestment in consolidated subsidiaries and associated companies accounted for by the equity method are charged to income
when incurred, except that goodwill of some subsidiaries
acquired in Europe is being amortized on a straight-line basis
over a period of 5 years and the amortized amount is included inother expenses.
All significant intercompany balances and transactions havebeen eliminated in consolidation. All material unrealized profits
included in assets resulting from transactions within the Groupare eliminated.
b. Cash Equivalents

Cash equivalents are short-term investments that are readily
convertible into cash and that are exposed to insignificant risk ofchanges in value.
Cash equivalents include time deposits, certificate of deposits,commercial paper and mutual funds investing in bonds, all ofwhich mature or become due within three months of the date ofacquisition.
c. Inventories

Inventories are primarily stated at cost, cost being determinedprincipally by the average method.
d. Investment Securities

Investment securities are classified as available-for-sale securities
and are reported at fair value, with unrealized gains and losses,
net of applicable taxes, reported in a separate component ofshareholders’ equity. The cost of securities sold is determinedbased 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 realizable value by a charge toincome.

41

e. Property, Plant and Equipment

i. Leases

Property, plant and equipment are stated at cost. Depreciation of

All leases are accounted for as operating leases. Under Japaneseproperty, plant and equipment of the Company and its consolidated

accounting standards for leases, finance leases that deem to transfer

domestic subsidiaries is computed substantially by the declining-

ownership of the leased property to the lessee are to be capitalized,balance method at rates based on the estimated useful lives of thewhile other finance leases are permitted to be accounted for as

assets, while the straight-line method is applied to buildings of theoperating lease transactions if certain “as if capitalized” information isCompany and its domestic subsidiaries, and to all property, plant

disclosed in the notes to the lessee’s consolidated financial statements.

and equipment of consolidated foreign subsidiaries. The net bookj. Income Taxes

value of tangible fixed assets depreciated by the straight-line method

The provision for income taxes is computed based on the pretax

was approximately 44.6% of total tangible fixed assets in 2003 andincome included in the consolidated statements of income. The

42.8% in 2002. The ranges of useful lives are from 10 to 50 years

asset and liability approach is used to recognize deferred tax assets

for buildings and structures and from 5 to 10 years for machineryand liabilities for the expected future tax consequences of temporary

and vehicles.

differences between the carrying amounts and the tax bases of assets

f. Intangible Assets

and liabilities. Deferred taxes are measured by applying currently

Intangible assets are carried at cost less accumulated amortization,

enacted tax laws to the temporary differences.

which are calculated by the straight-line method. Amortization ofk. Appropriations of Retained Earnings

software is calculated by the straight-line method over 5 years.

Appropriations of retained earnings at each year end are reflected ing. Retirement Benefits

the consolidated financial statements for the following year upon

The Company and certain consolidated subsidiaries had contribu-

shareholders’ approval.

tory funded pension plan and unfunded retirement benefit planl. Foreign Currency Transactions

which covered substantially all of their employees.

All short-term and long-term monetary receivables and payables

Effective April 1, 2000, the Company and domestic consolidated

denominated in foreign currencies are translated into Japanese yen at

subsidiaries adopted a new accounting standard for employees'

the exchange rates at the balance sheet date. The foreign exchange

retirement benefits and accounted for the liability for retirement

gains and losses from translation are recognized in the statements ofbenefits based on projected benefit obligations and plan assets at theincome to the extent that they are not hedged by forward exchangebalance sheet date. The transitional obligation of ¥3,166 million,

contracts.

determined as of April 1, 2000, was being amortized over 15 years

m. Foreign Currency Financial Statements

and presented as other expense in the consolidated statements of

The balance sheet accounts of the consolidated overseas subsidiaries

income.

and associated companies are translated into Japanese yen at the

For the year ended March 31, 2003 the contributory fundedcurrent exchange rates as of the balance sheet dates except for

pension plan was dissolved and unfunded retirement benefit planshareholders’ equity, which is translated at historical exchange rates.

was abolished. The remaining balance of transitional obligation at

Differences arising from such translation are shown as “Foreign

the dissolution of contributory funded pension plan and thecurrency translation adjustments” in a separate component ofabolishment of unfunded retirement benefit plan was charged toshareholders’ equity.

income.
The annual provision for accrued retirement benefits for directors

Revenue and expense accounts of the consolidated overseas
subsidiaries and associated companies are translated into Japaneseand corporate auditors of the Company and its consolidated

yen at the monthly average exchange rates.

domestic subsidiaries is also calculated to state the liability at then. Derivatives and Hedging Activities

amount that would be required if all directors and corporate auditors

The Group uses derivative financial instruments to manage its

retired at each balance sheet date. The provisions for the retirement

exposures to fluctuations in foreign exchange. Foreign exchange

benefits are not funded.

forward contracts are utilized by the Group to reduce foreign

h. Research and Development Expenses

currency exchange risks. The Group does not enter into derivatives

Research and development expenses are charged to income when

for trading or speculative purposes.

incurred.

Derivative financial instruments and foreign currency transactions
are classified and accounted for as follows: (a) all derivatives be42

recognized as either assets or liabilities and measured at fair value,and gains or losses on derivative transactions are recognized in
the statements of income and (b) for derivatives used forhedging purposes, if derivatives qualify for hedge accounting
because of high correlation and effectiveness between thehedging instruments and the hedged items, gains or losses onderivatives are deferred until maturity of the hedged transactions.
The foreign exchange forward contracts employed to hedge
foreign exchange exposures for export sales are measured at thefair value and the unrealized gains/losses are recognized inincome. Forward contracts applied for forecasted (or committed) transactions are also measured at the fair value but theunrealized gains/losses are deferred until the underlying transactions are completed.
Long-term debt denominated in foreign currencies for which
foreign exchange forward contracts are used to hedge the foreign
currency fluctuations are translated at the contracted rate if theforward contracts qualify for hedge accounting.
The 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 are recognized and included in interest expenses orincome.
o. Per Share Information

Effective April 1, 2002, the Company adopted a new accounting
standard for earnings per share of common stock issued by the
Accounting Standards Board of Japan. Under the new standard,basic net income per share is computed by dividing net income
available to common shareholders, which is more precisely computed
than under previous practices, by the weighted-average number ofcommon shares outstanding for the period, retroactively adjusted forstock splits.
Diluted net income per share reflects the potential dilution that
could occur if the outstanding stock options were exercised into
common stock. Diluted net income per share of common stock
assumes full exercise of the outstanding stock options at the beginning of the year (or at the time of grant). Basic net income anddiluted net income per share for the years ended March 31, 2003,
2002 and 2001 are computed in accordance with the new standard.
Cash dividends per share presented in the accompanying consoli-

N o» 3

REORGANIZATION(i) Reorganization of Subsidiaries to the Company’s Branches

On April 1, 2000, the Company purchased ORI Group which
consisted of 11 companies in the United States for ¥15,896
million and on October 31, 2000, Midwest Optical Laboratories, Inc. (“MOL”) for ¥513 million. ORI Group, MOL and a
newly established American company consisted of Hoya Optical
Laboratories, Inc. (“HOL”) and 12 consolidated subsidiaries,
which had been wholly owned American subsidiaries of HOL.
On March 1, 2001, the Company reorganized HOL and the
12 consolidated subsidiaries to the Company’s branches. Due tothe reorganization, goodwill of ¥15,167 million was recorded andsubsequently ¥14,347 million was charged to income. Also an
adjustment of retained earnings for the reorganization of consolidated subsidiaries to branches was recorded in the amount of¥820 million as an adjustment to income from April 1, 2000 to
February 28, 2001 for HOL and subsidiaries.
(ii) Reorganization of Subsidiaries

On September 30, 2001, the Company purchased the minority
interest of Hoya Optikslip AB (“HOSL”) in Sweden for ¥384
million to become a wholly owned consolidated subsidiary.
Previously, HOSL had been accounted for by the equity
method.
On October 1, 2001, Welfare Corporation, which had been awholly owned unconsolidated subsidiary of the Company, wasmerged into Hoya Healthcare Corporation (“HHC”). On
January 1, 2002, Welfare Corporation was then split up fromHHC.
On February 1, 2002, the Company purchased Eagle Optics,
Inc. in the United States for ¥474 million.
On March 31, 2002, the Company increased its ownership ofThai Hoya Lens Ltd. to become a consolidated subsidiary, which
had been accounted for by the equity method.
(iii) Merger of the Company with Subsidiaries

On March 1, 2003, the Company purchased Hoya Lens of Chicago,Inc. in the United States for ¥1,301 million ($10,842 thousand).
On March 1, 2003, the Company merged with Hoya Techno Process
Corporation and two other companies, which had been wholly
owned unconsolidated subsidiaries of the Company.
(iv) Transfer of Businessdated statements of income are dividends applicable to the respective

On March 31, 2003, a part of hearing aid business in Eye-Care field

years including dividends to be paid after the end of the year.

was transferred to a third party.

43

No» 4INVESTMENT SECURITIESInvestment securities as of March 31, 2003 and 2002 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2003

2002

2003

Marketable equity securities
Non-marketable equity securities

¥171
616

¥0,589466$1,425
5,133

Total

¥787

¥1,055$6,558The carrying amounts and aggregate fair values of marketable equity securities at March 31, 2003 and 2002 were as follows:
March 31, 2003
Millions of Yen

Available-for-sale—Equity securities

Cost

Unrealized
Gains

Unrealized
LossesFair Value

¥0145

¥039

¥13

¥171

Cost

Unrealized
Gains

Unrealized
LossesFair Value

¥0400

¥203

¥14

¥589

March 31, 2002
Millions of Yen

Available-for-sale—Equity securities

March 31, 2003
Thousands of U.S. Dollars

Available-for-sale—Equity securities

Cost

Unrealized
Gains

Unrealized
LossesFair Value$1,208$325$108$1,425

Available-for-sale securities whose fair value is not readily determinable as of March 31, 2003 and 2002 were as follows:
Carrying amountMillions of Yen

2003

2002

Thousands of
U.S. Dollars

2003

Equity securities

¥616

¥466

$5,133

Total

¥616

¥466

$5,133

Proceeds from sales of available-for-sale securities for the years ended March 31, 2003, 2002 and 2001 were ¥321 million ($2,675
thousand), ¥1,631 million and ¥1,972 million, respectively. Gross realized gains and losses on these sales, computed on the moving
average cost basis, were ¥109 million ($908 thousand) and ¥7 million ($58 thousand), respectively, for the year ended March 31,
2003, and ¥137 million and ¥3,118 million, respectively, for the year ended March 31, 2002, and ¥126 million and ¥364 million,
respectively, for the year ended March 31, 2001.

44

N o» 5NOTES RECEIVABLE

Notes receivable are reduced when cash is recorded. Due to the fact that the year end fell on a holiday, notes receivable, whosematurity were March 31, 2002 of ¥1,512 million, were included in notes receivable.

N o» 6INVENTORIESInventories at March 31, 2003 and 2002 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2003

2002

2003

Finished products and merchandise
Semi-finished products and work in process
Raw materials
Supplies¥14,201
7,713
5,675
4,772

¥14,652
9,174
6,720
5,050

$118,342
64,27547,291
39,767

Total¥32,361¥35,596$269,675

N o» 7INVESTMENTS IN AND ADVANCES TO ASSOCIATED COMPANIESInvestments in and advances to associated companies at March 31, 2003 and 2002 were as follows :Thousands of
U.S. Dollars

Millions of Yen

2003

2002

2003

Investments
Advances (Long-term loan receivable)¥4,95324¥4,761$41,275
200

Total¥4,977¥4,761$41,475

N o» 8SHORT-TERM BANK LOANS AND LONG-TERM BANK LOANS

Short-term bank loans at March 31, 2003 and 2002 consisted of notes to banks and bank overdrafts. The annual interest rates applicable tothe short-term bank loans ranged from 2.70% to 5.36% and 0.33% to 11.16% at March 31, 2003 and 2002, respectively.

Long-term debt as of March 31, 2003 and 2002 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2003

2002

2003

6.89% unsecured Euro-denominated loans, due through 2005
3.724% unsecured Euro-denominated loans, due through 2004
5.9%-6.2% unsecured Swedish krona-denominated loans, due through 2007
Other loans

¥(38

$(316

3

¥062
380
173
27

Total
Less current portion

41
(34)

642
(73)

341
(283)

Long-term bank loans, less current portion

¥(07

¥569

$(058

25

Annual maturities of long-term bank loans as of March 31, 2003 were as follows:
Millions of Yen

Thousands of
U.S. Dollars

2004
2005

¥34
7

$283,
58,

Total

¥41

$341

Year Ending March 31

45

NO»9

RETIREMENT BENEFITS AND PENSION PLANS

The Company and certain consolidated domestic subsidiaries had two types of pension plans for employees; a non-contributory and acontributory funded pension plan. The Company and certain domestic subsidiaries have severance payment plans for directors andcorporate auditors.
For the year ended March 31, 2003 the contributory funded pension plan was dissolved and the unfunded retirement benefit plan was
abolished.

The liability for employees’ retirement benefits at March 31, 2002 consisted of the following:
Millions of Yen

2002

Projected benefit obligation
Fair value of plan assets
Unrecognized prior service cost
Unrecognized actuarial loss
Unrecognized transitional obligation
Prepaid pension cost
Net liability¥ 66,510(37,126)
1,696(27,757)
2,745
1,244
¥ 07,312

The components of net periodic benefit costs for the years ended March 31, 2003, 2002 and 2001 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2003

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized actuarial loss
Amortization of transitional obligation
Total
Additional expense incurred to discontinue contributory fundedpension plan
Additional expense incurred to discontinue unfunded retirement
benefit plan
Additional retirement benefits paid to employees
Net periodic benefit costs

2002

2001

2003

¥01,695
1,234(1,523)
(122)
1,781
(157)

¥1,667
1,879(2,194)
(163)
1,021
(210)

¥1,7981,810(2,568)
(83)

(210)

$014,125
10,283(12,692)(1,017)
14,842(1,308)

2,908

2,000

747

24,233

14,949124,575

351
3,691

1,996

176

2,925
30,758¥21,899¥3,996¥923$182,491

Additional expense incurred to discontinue contributory funded pension plan is the remaining liability exceeding liability for retirement
benefit at the dissolution of the plan.
Additional expense incurred to discontinue unfunded retirement benefit plan is equal to the difference between retirement benefits paid
to employees due to abolishment and the recorded liability for retirement benefits.

46

Assumptions used for the years ended March 31, 2003, 2002 and 2001 are set forth as follows:
Discount rate
Expected rate of return on plan assets
Amortization period of prior service cost
Recognition period of actuarial gain/loss
Amortization period of transitional obligation

2003

2002

2001

5.5%
12 years
12 years
15 years

2.5%
5.5%
12 years
12 years
15 years

3.5%
5.5%
12 years
12 years
15 years

Remaining balances of prior service cost, actuarial gain/loss and transitional obligation were charged to income when the contributory
funded pension plan was dissolved and unfunded retirement benefit plan was abolished for the year ended March 31, 2003.

Accrued retirement benefits for directors and corporate auditors of the Company and its consolidated domestic subsidiaries arepaid subject to approval of the shareholders in accordance with the Japanese Commercial Code (the “Code”). Accrued retirement
benefits recorded in the accompanying consolidated balance sheets at March 31, 2003 represents the accrued retirement benefits for
directors and corporate auditors and accrued retirement benefits at March 31, 2002, included amounts for directors and corporate
auditors in the amount of ¥254 million.

N o » 10SHAREHOLDERS’ EQUITY

Japanese companies are subject to the Code to which certain

resolution of the Board of Directors beginning April 1, 2002. The

amendments became effective from October 1, 2001.

repurchased amount of treasury stock cannot exceed the amountThe Code was revised whereby common stock par value wasavailable for future dividend plus amount of common stock,eliminated resulting in all shares being recorded with no par value

additional paid-in capital or legal reserve to be reduced in the caseand at least 50% of the issue price of new shares is required to bewhere such reduction was resolved at the general shareholders

recorded as common stock and the remaining net proceeds as

meeting.

additional paid-in capital. The Code permits Japanese companies,

The amount of retained earnings available for dividends under

upon approval of the Board of Directors, to issue shares to existing

the Code was ¥142,630 million ($1,188,583 thousand) as ofshareholders without consideration as a stock split. Such issuance

March 31, 2003, based on the amount recorded in the Company’sof shares generally does not give rise to changes within thegeneral books of account. In addition to the provision thatshareholders’ accounts.

requires an appropriation for a legal reserve in connection with the

The revised Code also provides that an amount at least equal to
10% of the aggregate amount of cash dividends and certain othercash payment, the Code imposes certain limitations on the amountof retained earnings available for dividends.

appropriations of retained earnings associated with cash outlays

Dividends are approved by the shareholders at a meeting held

applicable to each period shall be appropriated as a legal reserve (asubsequent to the fiscal year to which the dividends are applicable.

component of retained earnings) until such reserve and additional

Semiannual interim dividends may also be paid upon resolution ofpaid-in capital equals 25% of common stock. The amount of total

the Board of Directors, subject to certain limitations imposed byadditional paid-in capital and legal reserve that exceeds 25% of thethe Code.

common stock may be available for dividends by resolution of the

On June 21, 2002, the Company’s shareholders approved a stock

shareholders. In addition, the Code permits the transfer of aoption plan for the Group’s directors and key employees. Under the

portion of additional paid-in capital and legal reserve to theplan, 936 thousand options were granted to them to purchase sharescommon stock by resolution of the Board of Directors.

of the Company’s common stock during the exercise period from

The revised Code eliminated restrictions on the repurchase anduse of treasury stock allowing Japanese companies to repurchase

October 1, 2003 to September 30, 2007. The options were
granted at an exercise price of ¥7,670 ($64).

treasury stock by a resolution of the shareholders at the generalshareholders meeting and dispose of such treasury stock by47

N o » 11

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 41.7% for the years ended March 31, 2003, 2002 and 2001.
The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at
March 31, 2003 and 2002 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Current:
Deferred tax assets:
Accrued bonuses to employees
Amortization of goodwill
Inventories—intercompany unrealized profits
Accrued enterprise taxes
Other
Total

2003

2002

2003

¥1,361
1,265,
830
77
772¥1,090
1,266
921
351
622

$11,342
10,542
6,917
641
6,433

4,305

4,250

35,875

Deferred tax liabilities:
Enterprise taxes refund receivable
Prepaid pension cost
Other

335

2,792
518
117

Total

335

635

2,792

Net deferred tax assets¥3,970¥3,615$33,083

Non-current:
Deferred tax assets:
Amortization of goodwill
Devaluation of property, plant and equipment and software
Allowance for doubtful receivables
Accrued retirement benefits
Other¥1,589913
401$13,242
7,608
3,341

1,383

¥2,910
677
247
2,548
2,254

4,286

8,636

35,716

894
181

1,001
224

7,450
1,508

Total
Deferred tax liabilities:
Reserves for special depreciation and otherOther

11,525

Total

1,075

1,225

8,958

Net deferred tax assets¥3,211¥7,411$26,758

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying
consolidated statements of income for the years ended March 31, 2003, 2002 and 2001 is as follows:
2003

2002

2001

Normal effective statutory tax rate
Lower income tax rates applicable to income in certain foreign countries
Expenses not permanently deductible for income tax purposes
Per capita portion
Non-taxable dividend income
Intercompany cash dividend
Adjustments of deferred tax assets and liabilities due to change
the normal effective statutory tax rate
Other—net

41.7%(13.5)
0.6
0.4
(2.1)
2.1
0.3

41.7%
(5.2)
0.5
0.3
(3.9)
3.8

41.7%
(12.1)
0.8
0.4
(3.8)
3.8

0.7

(0.6)

(0.5)

Actual effective tax rate

30.2%

36.6%

30.3%

48

On March 31, 2003, a tax reform law was enacted in Japan which changed the normal effective statutory tax rate from approximately
41.7% to 40.4%, effective for years beginning April 1, 2004. The effect of this change on deferred taxes in the consolidated statements ofincome for the year ended March 31, 2003 was a decrease of approximately ¥94 million ($783 thousand).

N o » 12RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses charged to income for the years ended March 31, 2003, 2002 and 2001 were ¥6,843 million($57,025 thousand), ¥5,511 million and ¥5,161 million, respectively.

N o » 13LEASES

Income from equipment leases for the years ended March 31, 2002, and 2001 was ¥4 million and ¥38 million, respectively.
The Group leases certain machinery, computer equipment, office space and other assets. Total rental expenses for the years ended
March 31, 2003, 2002 and 2001 were ¥7,967 million ($66,392 thousand), ¥8,739 million and ¥8,352 million, including ¥1,344
million ($11,200 thousand), ¥1,413 million and ¥1,745 million of lease payments under finance leases, respectively.
Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligation under finance lease, depreciation
expense of finance leases that do not transfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended
March 31, 2003 and 2002 was as follows:
Millions of Yen
2003
MachineryandVehiclesThousands of U.S. Dollars
2002

FurnitureandEquipment

Total

MachineryandVehicles2003

FurnitureandEquipment

Total

MachineryandVehiclesFurnitureandEquipment

Total

Acquisition cost
Accumulated depreciation¥3,571
1,904¥3,305
2,025¥6,876
3,929¥2,966
1,470¥3,975
2,282¥6,941
3,752$29,758
15,867$27,542
16,875$57,300
32,742Net leased property¥1,667¥1,280¥2,947¥1,496¥1,693¥3,189$13,891$10,667$24,558

The imputed interest expense portion as lessee is included in the above acquisition cost.

Obligations under finance leases:
Millions of Yen

Thousands of
U.S. Dollars

2003

2002

2003

Due within one year
Due after one year

¥1,191
1,756¥1,235
1,954$09,9250
14,6330

Total¥2,947¥3,189$24,5580

The imputed interest expense portion as lessee is included in the above obligations under finance leases.
Depreciation expense for lessee, which is not reflected in the accompanying consolidated statements of income, computed by thestraight-line method was ¥1,344 million ($11,200 thousand), ¥1,413 million and ¥1,745 million for the years ended March 31,
2003, 2002 and 2001, respectively.
Depreciation expense for lessor, which is reflected in the accompanying consolidated statements of income, computed by thestraight-line method was ¥3 million and ¥36 million for the years ended March 31, 2002 and 2001, respectively.
The minimum rental commitments under noncancellable operating leases at March 31, 2003 were as follows:
Millions of Yen

Thousands of
U.S. Dollars

Due within one year
Due after one year

¥0,0991,137$00,825
9,475

Total

¥1,236$10,30049

N o » 14

RELATED PARTY TRANSACTIONSTransactions of the Group with unconsolidated subsidiaries and associated companies for the years ended March 31, 2003, 2002 and2001 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Sales
Purchases
Selling, general and administrative expenses
Other income—net

2003

2002

2001

2003

¥530
337

¥1,029536
36
217¥1,472436
190
271$4,417
2,808

109

908

The balances due to or from these associated companies at March 31, 2003 and 2002 were as follows:
Millions of Yen

Notes and accounts receivable
Other current assets
Notes and accounts payable
Other current liabilities

Thousands of
U.S. Dollars

2003

2002

2003

¥ 720
1
38
4

¥238
6
29

$6,0008317
33Transactions of the Group with a director, his immediate family and two related companies as of and for the years ended March
31, 2003, 2002 and 2001 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Sales
Selling, general and administrative expenses

N o » 15

2003

2002

2001

2003

¥7

¥7

¥12
7

$58

CONTINGENT LIABILITIESAt March 31, 2003, the Group had the following contingent liabilities:
Millions of Yen

Thousands of
U.S. Dollars

2003

2003

Guarantees of borrowings and lease obligations for customers
Guarantees of borrowings for the Group’s employees

¥456
30

$3,800
250

Total

¥486

$4,05050

N o » 16

DERIVATIVESThe Group enters into foreign currency forward contracts to hedge foreign exchange risk associated with certain assets and liabilities
denominated in foreign currencies.
All derivative transactions are entered into to hedge foreign currency exposures incorporated within its business. Accordingly,
market risk in these derivatives is basically offset by opposite movements in the value of hedged assets or liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions, the Group does not
anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate the authorization and credit limit amount.
Foreign currency forward contracts which qualify for hedge accounting for the years ended March 31, 2003 and 2002 and suchamounts which are assigned to the associated assets or liabilities and are recorded on the balance sheets at March 31, 2003 and 2002,
are not subjected to disclose market value information.

N o » 17NET INCOME PER SHARE

Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2003, 2002 and2001 is as follows:Year ended March 31, 2003:
Basic EPS
Net income available to common shareholders

Millions of Yen

Thousands ofSharesNet Income

Weighted-average
Shares¥19,851

116,014

Effect of Dilutive Securities
Stock options
Diluted EPS
Net income for computation

Yen

U.S. Dollars

EPS¥171.10

$1.43

$1.43

14
¥19,851

116,028¥171.08

Year ended March 31, 2002:
Basic EPS
Net income available to common shareholders¥23,591

116,123¥203.15

Year ended March 31, 2001:
Basic EPS
Net income available to common shareholders¥21,667

116,123¥186.60

51

N o » 18

SUBSEQUENT EVENTS(1) Appropriations of Retained Earnings
The following appropriations of retained earnings for the year ended March 31, 2003 were approved at the Company’s shareholders
meeting held on June 20, 2003:
Millions of Yen

Thousands of
U.S. Dollars

Year-end cash dividends, ¥25.00 ($0.21) per share
Bonuses to directors¥2,879120$23,992
1,000

Total

¥2,999$24,992

In addition to the cash dividends described above, the Company paid interim cash dividends of ¥2,903 million [$24,192 thousand, ¥25.00 ($0.21) per share] on December 1, 2002 to shareholders of record as of September 30, 2002, based on a resolution of
the Board of Directors.
(2) Stock Option Plan and Purchase of Treasury StockAt the Company’s shareholders meeting held on June 20, 2003, the Company’s shareholders approved the following stock option
plan for the Group’s directors and key employees and the purchase of treasury stock:a. Stock option plan
The plan provides for granting options to the Group’s directors and key employees to purchase up to 1,200 thousand shares of theCompany’s common stock in the period from October 1, 2004 to September 30, 2008. The options are granted at an exercise priceat the fair value at the previous date of the option grant. The Company plans to issue acquired treasury stock upon exercise of thestock options.
b. Purchase of treasury stock
The Company is authorized to repurchase up to 1,150 million shares of the Company’s common stock (aggregate amount of ¥85
billion) as treasury stock until the next general shareholders meeting in June 2004.

N o » 19

SEGMENT INFORMATION

Information about industry segments, geographical segments and sales to foreign customers of the Company and consolidated
subsidiaries for the years ended March 31, 2003, 2002 and 2001 is as follows:(1) Industry Segments
a. Sales and Operating Income

Millions of Yen
2003
Information Technology
Electro-Optics

Photonics

Vision Care

Health Care

CrystalService

Total

Eliminations
and Corporate¥111,461
207¥5,485¥94,388
1,988¥26,717¥6,71935¥1,523
3,025¥246,293
5,255¥(5,255)

Total sales
Operating expenses

111,668
77,254

5,485
6,073

96,37680,97826,717
21,628

6,754
6,766

4,548
4,309

251,548
197,008(5,255)(3,698)

246,293
193,310

Operating income (loss)¥034,414¥ (588)¥15,398¥05,089¥0 , (12)¥0,239¥054,540¥(1,557)¥052,983

Sales to customers
Intersegment sales

52

LifestyleRefinement

Eye CareConsolidated¥246,293

b. Assets, Depreciation and Capital Expenditures

Millions of Yen
2003

Information Technology

AssetsDepreciation
Capital expenditures

LifestyleRefinement

Eye Care

Electro-Optics

Photonics

Vision Care

Health Care

CrystalService

Total

Eliminations
and Corporate

Consolidated¥114,877
13,12910,444¥2,69884
151¥98,077
5,578
3,935

¥16,447571
426¥8,409302
776¥2,43233
12¥242,940
19,697
15,744¥31,34995
204¥274,289
19,792
15,948

Total

Eliminations
and Corporate

Consolidated

a. Sales and Operating Income

Thousands of U.S. Dollars
2003
Information Technology

LifestyleRefinement

Eye Care

Electro-Optics

Photonics

Vision Care

Health Care

CrystalService$928,842
1,725$45,708$786,567
16,567$222,642$55,991292$12,692
25,208$2,052,442$2,052,442
43,792 $(43,792)

Total sales
Operating expenses

930,567
643,784

45,70850,608803,134
674,817

222,642
180,233

56,28356,38337,90035,9082,096,234
1,641,733

Operating income (loss)$286,783$( 4,900) $128,317$042,409$ (100)$01,992$0,454,501 $(12,976) $0,441,525

Sales to customers
Intersegment salesb. Assets, Depreciation and Capital Expenditures(43,792)(30,816)

2,052,442
1,610,917

Thousands of U.S. Dollars
2003

Information Technology

AssetsDepreciation
Capital expenditures

LifestyleRefinement

Eye Care

Electro-Optics

Photonics

Vision Care

Health Care

CrystalService$957,308
109,408
87,033$22,483700
1,258$817,308
46,48332,792$137,059
4,758
3,550

$70,075
2,517
6,467

$20,267275
100

a. Sales and Operating Income

Total

Eliminations
and Corporate

Consolidated$2,024,500 $261,242 $2,285,742
164,141792
164,933
131,200
1,700
132,900

Millions of Yen
2002
Information Technology

LifestyleRefinement

Eye Care

Electro-Optics

Photonics

Vision Care

Health Care

CrystalService

Total

Eliminations
and Corporate¥101,496
481¥7,157¥93,184
29¥23,106
811¥8,78835¥1,534
3,110¥235,265
4,466¥(4,466)

Total sales
Operating expenses

101,977
74,188

7,157
7,624

93,21378,79923,917
20,488

8,823
8,824

4,644
4,392

239,731
194,315(4,466)(2,948)235,265
191,367

Operating income (loss)¥027,789¥ (467)¥14,414¥03,429¥¥0,252¥045,416¥(1,518)¥043,898

Sales to customers
Intersegment salesb. Assets, Depreciation and Capital Expenditures(1)

Consolidated¥235,265

Millions of Yen
2002

Information Technology

AssetsDepreciation
Capital expenditures

LifestyleRefinement

Eye Care

Electro-Optics

Photonics

Vision Care

Health Care

CrystalService

Total

Eliminations
and Corporate

Consolidated¥111,806
12,687
13,280¥4,515227
53¥92,309
5,516
5,259

¥15,816554
687¥8,684498
254¥3,44537
1¥236,575
19,51919,534¥41,493117
51¥278,068
19,636
19,58553

a. Sales and Operating Income

Millions of Yen
2001
Information Technology

LifestyleRefinement

Eye CareEliminations
and Corporate

Electro-Optics

Photonics

Vision Care

Health Care

CrystalService

Total¥112,341
585¥6,534¥86,198
27¥20,130
1,498¥9,94234¥1,657
3,127¥236,802
5,271¥(5,271)

Total sales
Operating expenses

112,926
78,111

6,534
7,422

86,22575,624

21,62819,223

9,976
9,691

4,784
4,633

242,073
194,704(5,271)(3,030)Operating income (loss)¥034,815¥ (888)¥10,601¥02,405¥0,285¥0,151¥047,369¥(2,241) ¥ 45,128

Sales to customers
Intersegment salesb. Assets, Depreciation and Capital Expenditures

Consolidated¥236,802
236,802
191,674

Millions of Yen
2001

Information Technology

AssetsDepreciation
Capital expenditures

LifestyleRefinement

Eye Care

Electro-Optics

Photonics

Vision Care

Health Care

CrystalService

Total

Eliminations
and Corporate

Consolidated¥112,257
10,29915,230¥4,942291
218¥83,343
5,987
22,287¥13,366
479
1,138¥9,828552
610¥4,90759
34¥228,643
17,66739,517¥38,968124
156¥267,611
17,791
39,673

Notes: 1. The Company and consolidated subsidiaries primarily engage in the manufacture and sale of products in six major segments grouped on
the basis of similarities in the types, nature and market of the products. The six segments, namely, Electro-Optics, Photonics, Vision Care,
Health Care, Crystal and Service, consist primarily of the following products:
Electro-Optics: Photomasks and mask blanks for semiconductors, masks for liquid-crystal display (LCD), liquid-crystal devices, glass disks
for hard disk drives (HDDs), optical lenses, optical glasses, electronic glass, optical communication related products, etc.
Photonics:
Laser equipment, etc.
Vision Care: Eyeglasses, eyeglass frames, ophthalmic equipment, etc.
Health Care: Contact lenses and related accessories, intraocular lenses, hearing aids, medical equipment, etc.
On March 31, 2003, hearing aids business was transferred to a third party.
Crystal:Crystal glass products
Service:
Design of information systems, placement of temporary staff, etc.
2. Corporate operating expenses consist primarily of the administration expenses of the Company and two foreign holding companies, which
are not allocated to industry segments. Corporate operating expenses for the years ended March 31, 2003, 2002 and 2001 were ¥2,052
million ($17,100 thousand), ¥1,981 million and ¥2,328 million, respectively.
3. Corporate assets consist primarily of cash, time deposits, investments securities and administrative assets of the Company and the two
foreign holding companies. Corporate assets as of March 31, 2003, 2002 and 2001 were ¥51,571 million ($429,758 thousand), ¥51,632
million and ¥47,211 million, respectively.
4. Consolidated operating expenses are equal to the total of cost of sales and selling, general and administrative expenses shown in theaccompanying consolidated statements of income.

54

(2) Geographical Segments
The geographical segments of the Company and consolidated subsidiaries for the years ended March 31, 2003, 2002 and 2001 aresummarized as follows:
Millions of Yen
2003
Total

Eliminations
and Corporate

Japan

North America

EuropeAsia

Consolidated

Sales to customers
Interarea transfers¥166,178
17,343¥35,77173¥32,639
1,891¥11,705
44,514¥246,293
63,821 ¥(63,821)¥246,293

Total sales
Operating expenses

183,521
148,960

35,84434,89834,53028,411

56,21945,282

310,114257,551(63,821)(64,241)

246,293
193,310

Operating income¥034,561¥00,946¥6,119¥10,937¥052,563¥420¥052,983

Assets¥139,012¥19,505¥34,970¥59,156¥252,643¥21,646¥274,289

Eliminations
and Corporate

Consolidated

Thousands of U.S. Dollars
2003
Japan

EuropeAsia$1,384,817 $298,092
144,525608$271,991
15,759$097,542
370,950$2,052,442$2,052,442
531,842 $(531,842)

Total sales
Operating expenses

1,529,342
1,241,334

298,700
290,817

287,750
236,758

468,492
377,350

2,584,284
2,146,259

Operating income$0,288,008 $007,883$050,992$091,142

Assets$1,158,433 $162,542$291,417$492,967

Sales to customers
Interarea transfers

North America

Total(531,842)(535,342)$438,025 $2,052,442
1,610,917

3,500 $0,441,525$2,105,359 $ 180,383 $2,285,742

Millions of Yen
2002
Total

Eliminations
and Corporate

Japan

North America

EuropeAsia

Consolidated

Sales to customers
Interarea transfers¥159,368
14,964¥36,985
113¥28,964
1,196¥09,948
40,330¥235,265
56,603 ¥(56,603)¥235,265

Total sales
Operating expenses

174,332
143,426

37,09835,13930,16025,91850,278
43,109291,868
247,592(56,603)(56,225)

235,265
191,367

Operating income¥030,906¥01,959¥04,242¥07,169¥044,276 ¥Assets¥138,963¥21,000¥30,356¥55,412¥245,731(378)¥043,898¥(32,337¥278,068

Eliminations
and Corporate

Consolidated

Millions of Yen
2001
Japan

North America

Europe

Asia

Total

Sales to customers
Interarea transfers¥168,856
17,928¥34,210548¥24,944893¥08,792
39,237¥236,802
58,606¥(58,606)

Total sales
Operating expenses

186,784
150,991

34,75834,29525,837
22,811

48,02941,131

295,408249,228(58,606)(57,554)

Operating income¥035,793¥00,463¥03,026¥06,898¥046,180 ¥ (1,052) ¥045,128

Assets¥139,320¥21,073¥27,000¥48,144¥235,537 ¥ 32,074¥236,802
236,802
191,674¥267,611

Notes: 1. The Company and consolidated subsidiaries are summarized in four segments by geographic area based on the countries where the Groupis located. The segments consisted of the following countries:
North America: United States of America, Canada, etc.
Europe:Netherlands, Germany, United Kingdom, etc.
Asia:
Singapore, Thailand, Republic of Korea, Taiwan, etc.
2. Corporate operating expenses consist primarily of the administration expenses of the Company, which are not allocated to segments bygeographic area. Corporate operating expenses for the years ended March 31, 2003, 2002 and 2001 were ¥1,813 million ($15,108
thousand), ¥1,771million and ¥2,149 million, respectively.
3. Corporate assets consist primarily of cash, time deposits, investments securities and administrative assets of the Company. Corporate assets
as of March 31, 2003, 2002 and 2001 were ¥40,280 million ($335,667 thousand), ¥48,342 million and ¥44,664 million, respectively.
4. Consolidated operating expenses are equal to the total of cost of sales and selling, general and administrative expenses shown in theaccompanying consolidated statements of income.
55

(3) Sales to Foreign Customers
The sales to foreign customers of the Company and consolidated subsidiaries for the years ended March 31, 2003, 2002 and 2001
are summarized as follows:
Millions of Yen
2003

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

North America

Europe

Asia

Other

Total

¥36,692¥38,789¥32,773

¥33

14.9%

15.8%

13.3%

0.0%

¥108,287
246,293
44.0%

Other

Total

Thousands of U.S. Dollars
2003
North America

Overseas sales
Consolidated sales

EuropeAsia$305,767 $323,242 $273,108$275$0,902,392
2,052,442

Millions of Yen
2002

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

North America

Europe

Asia

Other

Total

¥ 39,746¥38,144¥ 25,080

¥47

16.9%

16.2%

10.7%

0.0%

¥103,017
235,265
43.8%

Millions of Yen
2001

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

North America

Europe

Asia

Other

Total

¥ 36,184¥35,870¥ 27,492

¥45

15.3%

15.2%

11.6%

0.0%

¥ 99,591
236,80242.1%

Note: The Company and consolidated subsidiaries are summarized in four segments by geographic area based on the countries where the customers
are located. The segments consisted of the following countries:

North America: United States of America, Canada, etc.
Europe:Netherlands, Germany, United Kingdom, etc.
Asia:
Singapore, Thailand, Republic of Korea, Taiwan, etc.
Other:
Saudi Arabia and Brazil, etc.

56Corporate Data
(As of March 31, 2003)

Established
November 1, 1941
Paid-in Capital¥6,264,201,967
Number of Employees
3,289

Directors and Executive Officers (As of June 25, 2003)(increased 147 from the end of the previous period)

Average age:
38.6
Average years of service:
12.9
Total number of employees
in the Hoya Group:
14,023
Date for the Settlement of Accounts
March 31
General Shareholders’ Meeting
June

Directors
Takeo Shiina (Senior Advisor of IBM Japan, Ltd.)
Naotaka Saeki (Senior Advisor of UFJ Bank, Ltd.)
Yuzaburo Mogi (President & CEO of Kikkoman Corporation)
Yoshikazu Hanawa (Advisor and Honorary Chairman of Nissan Motor Co., Ltd.)
Eiko Kono (Chairperson & CEO of Recruit Co., Ltd)
Hiroshi Suzuki
Kenji Ema
Hiroaki Tanji
Executive Officers
Hiroshi Suzuki (President & CEO)Kenji Ema (Chief Financial Officer)
Hiroaki Tanji

HOYA Group (As of March 31, 2003)

Global Headquarters(Formulating group strategy)

Information
Technology

Eye CareCrystal(Area)

Supporting Legal and Financial Operations

Japan

Asia

(Holding Company)

North America(Holding Company)

Europe(Holding Company)

Global Business Expansion

57

Investor Information(As of March 31, 2003)

Listing of the Company’s SharesFirst Section of the Tokyo Stock Exchange

Breakdown of Shareholders—Ownership

Number of Shares of Common Stock
Authorized: 320,000,000
Issued: 116,124,405—Number of Shareholders
Other corporate investors
2.2%

Individuals, Other
13.3%

Financial institutions 2.6%

Trading Unit
100 shares

Financial
institutions
43.3%

Foreign investors
38.1%

Number of Shareholders
7,459

Individuals, Other
88.3%

Other corporate investors
5.3%

Acquisition, Disposal and Ownership by the Company of
Its Own Shares:
Acquisition of shares
Acquisition by resolution in accordance with Article 210,
Paragraph 1, of the Commercial CodeCommon stock:937,000 shares
Aggregate acquisition prices¥6,937,465 thousand
Purchase of less-than-one-unit shares
Common stock:
11,991 shares
Aggregate acquisition prices¥98,710 thousand
Disposal of shares
There was no disposal of shares to be reported.
Number of shares owned by the Company at the endof the fiscal year under review
Common stock
951,050 shares

Principal Shareholders
Shareholders

9,316,500

8.02

2 The Dai-ichi Mutual Life Insurance Company

7,715,300

6.64

3 Japan Master Trust and Banking Corp.

6,893,400

5.94

4 State Street Bank and Trust Company

6,874,127

5.92

5 The Chase Manhattan Bank N.A. London

5,548,300

4.78

6 Nippon Life Insurance Company

5,441,347

4.69

7 The Chase Manhattan Bank N.A. London SL Omnibus
Account
8 Suzuki International Ltd.

4,102,052

3.53

3,850,000

3.32

9 UFJ Trust Bank Ltd. (Trust Account A)

2,709,800

2.33

10 Kohei Yamanaka

2,636,020

2.27

55,086,846

47.44

Issuance of new share subscription rights
In accordance with the approval at the Ordinary General Meeting of Shareholders heldon June 21, 2002 as well as with the resolution of the Board of Directors held on
October 21, 2002, the Company issued new share subscription rights as stock options
as described below:

58

Percentage
of totalshares issued

Shareholdings

1 Japan Trustee Services Bank, Ltd. (Trust Account)(Note) As of March 31, 2002, the Company owned 2,059 shares of its common stock.

First Grant (On November 1, 2002)
1. Number of new share subscription
rights the Company granted:
9,369 rights
2. Class and number of new shares tobe issued upon exercising of newshare subscription rights:
936,900 shares of common stock of
the Company(100 shares for each new sharesubscription right)
3. Price of a new share subscription
right: Free of charge
4. Paid-in amount per share upon
exercising of a new share subscription right: ¥7,670
5. New share subscription period:
From October 1, 2003 to September 30, 2007
Maximum percentage of new sharesubscription rights exercisable during
each period is fixed separately.

Foreign investors
6.9%

Second Grant (On June 9, 2003)
1.Number of new share subscription
rights the Company granted:
80 rights
2.Class and number of new shares tobe issued upon exercising of newshare subscription rights:
8,000 shares of common stock of
the Company(100 shares for each new sharesubscription right)
3.Price of a new share subscription
right: Free of charge
4. Paid-in amount per share upon
exercising of a new share subscription right: ¥6,690
5. New share subscription period:
From October 1, 2003 to September 30, 2007
Maximum percentage of new sharesubscription rights exercisable during
each period is fixed separately.

Above total

Common Stock Price Range
2002

2003

High

Low

High

Low

Jan.–Mar.

¥9,370¥7,250¥8,620¥6,860Apr.–June

9,970

8,110

July–Sept.

9,070

6,720

Oct.–Dec.

9,100

6,790

Transfer Agent of Common Stock Handling Office
UFJ Trust Bank Ltd.
Corporate Agency Department
7-10-11 Higashisuna, Koto-ku,
Tokyo 137-8081, Japan
Tel. 03-5683-5111

Hoya’s Timeline(As of March 31, 2003)

1941
November

An optical glass production plant was established in the city of
Hoya, in metropolitan Tokyo, and production of optical glass was
initiated.

1944
August

The plant was incorporated with capital of ¥1.2 million.

1945
October

Crystal products were introduced.

1952
February

The manufacture of optical glass BK7 resumed.

1960
November

1961
October
1962
May
October
1963
May
1967
April
1972
December
1973
February
1974
January

1982
October
1983
January

1984
AugustOctober
1985
April

The Optics Division’s Showa Plant (currently Akishima Plant)
was completed in Tokyo. The Company merged with three
affiliates.
Hoya was listed on the Second Section of the Tokyo Stock
Exchange.

Glass disks for HDDs were launched.

1993
October

Hoya Group’s Philosophy of Environment was established.

1994
April

1995
June
1996
AugustNovember
1997
April

The manufacture of eyeglass lenses commenced.
Hoya was listed on the Second Section of the Nagoya Stock
Exchange.
The Crystal Division’s Musashi Plant was completed.
May
The Vision Care Division launched sales of progressive multifocal
lenses.
Sales of soft contact lenses began.
The Company’s listings were advanced to the First Section of theTokyo and Nagoya Stock Exchanges.

December
1998
April

The Electronics Division’s Nagasaka Plant was completed, andthe production of IC substrates began. Hoya’s on-line network tohandle eyeglass lens orders was introduced in the Vision Care
Division.

1999
February
September

Hoya Electronics Co., Ltd., merged with the parent company.

2000
April

The construction of the Hachioji Plant in the Electronics
Division was completed, and the production of IC photomasks
commenced.
The current Head Office was completed.
Hoya Lens Corporation and Hoya Crystal Corporation mergedwith the parent company.
The Kodama Plant was completed for medical-related production
and research.

1986
October

The R&D Center was completed in the city of Akishima.

1987
June
November

The production of intraocular lenses (IOLs) commenced.
The production of aspherical molded-glass lenses commenced.

1989
April

1991
March

July
2001
May
October
2002
May
August2003
JanuaryMarch

Hoya Europe B.V. of the Netherlands (currently Hoya Lens
Europe N.V.) and Hoya Corporation USA were established.

The Hoya Group was reorganized with the establishment of theElectro-Optics Division, the Vision Care Division and the Crystal
Division.
Hoya introduced an outside director system.
Hoya formed an alliance with IBM to develop a next-generation
glass disk for HDDs.
Kumamoto Plant commenced operations as a photomask
manufacturing plant.
Hoya introduced its “internal company system,” reorganizing
Group operations centered on two internal companies (ElectroOptics and Vision Care) and three subsidiaries (Hoya Photonics,
Inc., Hoya Healthcare Corporation, and Hoya Crystal Corporation).
Hoya implemented ERP R/3, an enterprise resource planningsystem developed by SAP AG of Germany.
Hoya Holdings Asia Pacific Pte Ltd. was established as the third
regional holding company after Hoya Holdings N.V. (currently
Hoya Lens Europe N.V.) and Hoya Holdings, Inc., the holding
companies for Europe and North America, respectively.
Hoya Lens Deutschland GmbH became the first Group company
to receive ISO 14001 certification.
Hoya began the quarterly release of consolidated financial results.
The Vision Care Company’s Itsukaichi plant became the Group’s
first domestic facility to receive ISO 14001 certification.
All major domestic plants received ISO 14001 certification.
Hoya acquired Belgian eyeglass manufacturer Buchmann OpticalIndustries N.V.
Hoya acquired Optical Resources Group, Inc. (ORI), a processor
and marketer of eyeglasses in the United States.
(Integrated into Hoya Corporation in March 2001)
Hoya acquired the semiconductor photomask production
division of Oki Electric Industry Co., Ltd.
Hoya began marketing HOYALUX Summit Pro and NuLux
lenses that use EYRY, a high-index, plastic lens material.
Hoya began manufacturing soft intraocular lenses.
Manufacture and sale of 3C-SiC, a new substrate material for semiconductors, begun by a new subsidiary.
Technical alliance formed with Dai Nippon Printing Co., Ltd. tojointly develop mask blanks for next-generation semiconductors.
Company delisted from the first section of the Nagoya Stock Exchange.
Subsidiaries Hoya Crystal Corp. and Hoya Crystal Shop Corp.
merged with Hoya Corporation.
59

Hoya Directory(As of June 1, 2003)

HOYA CORPORATION

Overseas Branches

2-7-5 Naka-Ochiai,
Shinjuku-ku, Tokyo
161-8525, JapanTEL (03) 3952-1151<Blanks Division>

Business Development Division
3-3-1 Musashino, Akishima-shi,
R&D Center Building
Tokyo 196-8510 JapanTEL 042-546-2701

EUROPE BRANCH
Bilton House, 54/58 Uxbridge Road,
Ealing, London, W5 2ST, U.K.
TEL 020-8579-6939

PROGRESSIVE LENS LABORATORIES
12345-B Starkey Rd., Largo,
FL 33773, U.S.A.
TEL 800-882-8131<Vision Care Company>

Q.S.A, OPTICAL
580 Nutmeg Rd. N S. Windsor,
CT 06074-2458, U.S.A.
TEL 800-722-7659

HOYA OPTICAL LABORATORIES, INC.
HEADQUARTERS
651E, Corporate Drive, Lewisville,
TX 75057-6403 U.S.A.
TEL 972-221-4141
3-D OPTICAL
1370 S. Bertelsen Rd. Eugene,
OR 97402, U.S.A.
TEL 541-683-3898
ADVANCE LENS LAB
94 Pelret Parkway, Berea, OH 44017, U.S.A.
TEL 800-861-3661
BENEDICT OPTICAL
651E, Corporate Drive, Lewisville,
TX 75057-6403, U.S.A.
TEL 972-221-4141
COLUMBIAN BIFOCAL
3880 S.E. 8th Ave. Portland,
OR 97202-3704, U.S.A.
TEL 800-547-8064
MARTIN OPTICAL SERVICE
1400 Carpenter Lane Modesto,
CA 95351, U.S.A.
TEL 800-692-5730
MIDWEST OPTICAL LABORATORIES
777 Zapata Drive Fairborn,
OH 45324, U.S.A.
TEL 800-762-9504
MUELLER OPTICAL
301 Vision Dr. Columbia,
IL 62236, U.S.A.
TEL 800-279-3721

60

SIERRA OPTICAL
4757 Morena Blvd. San Diego,
CA 92117, U.S.A.
TEL 858-490-3490
SOUND OPTICAL LABORATORIES
2330 S. 78th Street, Tacoma,
WA 98409-9051, U.S.A.
TEL 800-760-6098

Domestic Subsidiaries and Affiliates

Overseas Subsidiaries and Affiliates<Information Technology>

Asia and Oceania

HOYA OPTICS CORPORATION
109-2, Aza-Shimoshinden,
Oaza-Araku, Iruma-shi, Saitama 358, JapanTEL 042-964-1525

HOYA HOLDINGS ASIA PACIFIC PTE
LTD.
138 Cecil Street, #08-03 Cecil Court, Singapore
069538
TEL 6323-1151

HOYA PHOTONICS CORPORATIONFirst Okada Building,
4-3-5 Shiba, Minato-ku,
Tokyo 108-0014, JapanTEL 03-5730-3096
HOYA ADVANCED SEMICONDUCTORTECHNOLOGIES CO., LTD.
1-17-16 Tanashioda, Sagamihara-shi,
Kanagawa 229-1125, JapanTEL 042-777-5404
HOYA-SCHOTT CORPORATION*
3rd Floor, 711 Building,
7-11-8 Shinjuku, Shinjuku-ku,
Tokyo 160-0023, JapanTEL 03-3369-6911
NH TECHNO GLASS CORPORATION*
6th Floor, Keihin Tatemono Daiichi Building,
2-12-20 Shin-Yokohama, Kohoku-ku,
Yokohama, Kanagawa 222-0033, JapanTEL 045-475-2905<Eye Care>
HOYA HEALTHCARE CORPORATION
2-7-5 Naka-ochiai, Shinjuku-ku,
Tokyo 161-8525, JapanTEL 03-3950-6011

HOYA PHOTONICS SINGAPORE PTE
LTD.
83 Science Park Drive #03-01/02 The Curie,
Singapore Science Park I, Singapore 118258
TEL 6775-3911
HOYA OPTO-ELECTRONICS QINGDAOLTD.
South Side, Mid-section of Songhuajiang
Road, Qingdao Economic & Technological
Development Zone,
Qingdao City, Shandong Province, China
TEL 532-6760997
HOYA MAGNETICS SINGAPORE PTE
LTD.
#3 Tuas, Link2, Singapore 638552
TEL 6863-2911
HOYA GLASS DISK (THAILAND) LTD.
Northern Region Industrial Estate 60/26
Moo 4 Tambol Banklang, Amphur Muang,
Lamphun, 51000 Thailand
TEL 53-581-314
HOYA OPTICS (THAILAND) LTD.
Northern Region Industrial Estate 60/31
Moo 4 Tambol Banklang, Amphur Muang,
Lamphun, 51000 Thailand
TEL 53-581-314<Others>
HOYA SERVICE CORPORATION
10th Floor, HOYA Marketing Building,
1-29-9 Takadanobaba, Shinjuku-ku,
Tokyo 169-8661, JapanTEL 03-3232-7671
WELFARE CORPORATION
8th Floor, HOYA Marketing Building,
1-29-9 Takadanobaba, Shinjuku-ku,
Tokyo 169-8661, JapanTEL 03-3232-1019

HOYA OPTICAL (ASIA) CO., LTD.
Suite 3101-2, Tower 6, The Gateway,
9 Canton Road, Tsim Sha Tsui,
Kowloon, Hong Kong
TEL 2723-6883
KOREA OPTICAL GLASS CO., LTD.
973, Yangduk Dong, Masan, Korea
TEL 055-292-6180
HOYA OPTICAL TAIWAN CO., LTD.
118, 1st Road, Taichung Industrial Zone,
Taichung, Taiwan
TEL 04-2359-3505

VISION CARE COMPANY ASIA
HEADQUARTERS
Payatai Plaza 23rd Floor, 128/251-256
Payathai Road,
Thumg-Phyathai, Rajthavee, Bangkok 10400,
ThailandTEL 02219-3581
HOYA LENS TAIWAN LTD.
3F, No.146, Sung Chiang Road, Taipei Taiwan
TEL 02-2567-3481
HOYA LENS AUSTRALIA PTY. LTD.
44-54 Bourke Road, Alexandria, Sydney, N.S.W.
Australia 2015
TEL 02-9698-1577
THAI HAYA LENS LTD.
Payatai Plaza 23rd Floor, 128/251-256
Payathai Road,
Thumg-Phyathai, Rajthavee, Bangkok 10400,
ThailandTEL 02219-3972
HOYA LENS THAILAND LTD.
392/1 Moo 2 Phaholyothin Road, Prachatipat,
Thanyaburi, Patumthani 12130, Thailand
TEL 02-9012021
HOYA LENS HONG KONG LTD.
16/F, Unison Industrial Centre,
27-31 Au Pui Wan Street, Fo Tan,
Shatin, N.T. Hong Kong
TEL 2556-5266
HOYA LENS KOREA CO., LTD.
3rd Floor of Yunil Building, 1443-15, SeochoDong, Seocho-gu, Seoul 137-865, Korea
TEL 02-585-1911
HOYA LENS GUANGZHOU LTD.
Zhicheng Dong Road, Guangzhou Economic &Technological Development District,
Guangzhou, 510730, P.R.China
TEL 020-8222-3999
MALAYSIAN HOYA LENS SDN. BHD.
No.6 Jalan 7/32A, Off 6 1/2 Miles, Jalan
Kepong, 52000 Kuala Lumpur, Malaysia
TEL 03-6258-8977

61

HOYA LENS (S) PTE LTD.
315 Outram Road, #02-05 Tan Boon Liat
Building, Singapore 169074
TEL 6221-0055
HOYA LENS PHILIPPINES, INC.
10th Floor, Sterling Centre cor Ormaza & Dela
Rosa Sts., Legaspi Village, Makati City,
Philippines
TEL 02-751-7174
EuropeHOYA LENS EUROPE N.V.
Amsterdamseweg 29, 1422 AC Uithoorn,
The Netherlands
TEL 0297-514350
HOYA LENS NEDERLAND B.V.
Amsterdamseweg 27, 1422 AC Uithoorn,
The Netherlands
TEL 0297-514222
HOYA LENS FRANCE S.A.S
ZA Pariest Rue Willy Brandt F-77184 Emerainville,
FranceTEL 00-811904692
HOYA LENS FINLAND OY
Mikkolantie 1, FIN-00640 Helsinki, Finland
TEL 09-72884100
HOYA LENS SWEDEN AB
Scheelegatan 15, 212 28 Malmö, Sweden
TEL 040-6802200
HOYA LENS U.K. LIMITED
Industrial Estate, Wrexham LL13 9UA,
United Kingdom
TEL 01978-663150
HOYA LENS IBERIA S.A.
Avda, Cañada 54, 28820
Coslada (Madrid) Spain
TEL 091-6692628
HOYA LENS ITALIA S.P.A.
Via Bernardino Zenale 27, 20024 Garbagnate
Milanese-Milano, Italy
TEL 02-990711

62

HOYA LENS DEUTSCHLAND GMBH
Hoya-Lens-Strasse 1, 79379 Mülheim, Germany
TEL 07631-186-0
HOYA LENS POLAND SP. Z.O.O.
ul. Olkuska 9, 02-604 Warszawa, Poland
TEL 022-6461200
HOYA LENS BELGIUM N.V.
Lieven Gevaertstraat 15, B-2950 Kapellen, Belgium
TEL 03-660-0100

HOYA LENS OF CHICAGO, INC.
3531 North Martens Street, Franklin Park,
IL60131, U.S.A.
TEL 847-678-4700
HOYA LENS MEXICO S.A. DE C.V.
1 Tuxpan #54, Despacho 808 Col. Roma Sur Mexico
D.F. Del Cuauhtemoc CP 06760, Mexico
TEL 5-2642211

HOYA LENS HUNGARY RT
Telek u, 3 H-1152 Budapest, Hungary
TEL 01 305 85 10

HOYA LENS CANADA, INC.
1555 Bonhill Road, Units 4&5 Mississauga,
Ontario,Canada L5T 1Y5
TEL 905-5650577

HOYA LENS MANUFACTURINGHUNGARY RT
18, Ipari u. H-4702 Mateszalka, Hungary
TEL 044-418 200

HOYA CRYSTAL, INC.
41 Madison Ave. 9th Floor, New York,NY 10010, U.S.A.
TEL 212-679-3100

North America
HOYA HOLDINGS, INC.
101 Metro Drive, Suite 500, San Jose, CA 95110,
U.S.A.
TEL 408-441-0400
HOYA CORPORATION USA
101 Metro Drive, Suite 500, San Jose, CA 95110,
U.S.A.
TEL 408-441-3300
HOYA PHOTONICS, INC.
47733 Fremont Blvd., Fremont, CA94538,
U.S.A.
TEL 510-445-4500
NEW CHROMEX, INC.
2705-B Pan American Freeway, NE,
Albuquerque, NM 87107, U.S.A.
TEL 505-344-6270
HOYA LENS OF AMERICA, INC.
13 Francis J. Clarke Circle Bethel,
CT 06801-2846, U.S.A.
TEL 203-790-0171
EAGLE OPTICS, INC.
591-F Thornton Rord, Lithia Springs,
GA 30122, U.S.A.
TEL 770-944-1800*Equity-method affiliates

HOYAe c1 c4-j PDF+ 03.7.21 9:34 PM ページ 1

For additional information about this ourCompany, contact:
Investor Relations

7-5, Naka-Ochiai 2-chome,
Shinjuku-ku, Tokyo 161-8525, JapanTEL (03) 3952-1160
FAX (03) 3952-0726
URL http://www.hoya.co.jp/

HOYAe c1 c4-e PDF 03.7.21 9:20 PM ページ 2

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7-5, Naka-Ochiai 2-chome, Shinjuku-ku, Tokyo 161-8525, Japan

This annual report is printed on recycled paper.
Printed in Japan