2005 ANNUAL REPORTTwo hands firmly grasp each other, unleashing dynamic power.
HOYA Corporation has built its expertise in advanced optics technologies into a powerful presence in
two main fields of business: Information Technology and Eye Care.
Hoya holds a strong market share in a variety of specialized areas.
In the Information Technology field, the Company manufactures products that are essential to digital consumer
electronics, such as the optical lenses used in digital cameras and the glass disks in hard disk drives (HDDs) found inpersonal computers and portable music players. Hoya also produces the mask blanks and photomasks required forthe development of semiconductors and liquid crystal displays (LCDs).
In the Eye Care field, Hoya is widely respected as a manufacturer of eyeglass lenses and contact lenses.
Hoya is devoting all of its energies to continued success in these two fields of business.

Cautionary Statements with Respect to Forward-Looking Statements
Statements made in this annual report with respect to plans and future performance that are not historical 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 forward-looking statements. Such factors include but are not limited to foreign exchange rates,
market trends and economic conditions.
Notes:
Hoya’s fiscal year ends on March 31. In this annual report, references to years indicate the period ended March 31 of the year indicated.
In this annual report, “the previous fiscal year,” “the fiscal year under review,” and “the year ahead” indicate the period ended March 31, 2004, March 31, 2005,
and March 31, 2006, respectively.

Consolidated Financial Highlights（Years ended March 31）

2004

2005

¥271,444¥308,172

Operating income（Millions of Yen）

68,16784,920Ordinary income（Millions of Yen）

66,55489,525

Net income（Millions of Yen）

39,54964,135

Total assets（Millions of Yen）

289,887

351,482

Total shareholders’ equity（Millions of Yen）

218,979

277,889

Net income¥350.96¥578.84

Diluted net income

350.56577.52

Cash dividends applicable to the year

100.00150.00Price earnings ratio（Times）

28.92

20.39

Price cash flow ratio（Times）

17.61

15.07

Price book value ratio（Times）

5.16

4.73

Stock price at year-end（Yen）

10,15011,800Net Sales（Millions of Yen）

Per share data（Yen）

Contents
A Message to Our Stakeholders

2

Hoya at a Glance

8

Information Technology

10Electro-Optics Division

11

Photonics Division

15

Eye Care

16

Vision Care Division

17

Health Care Division

19

Other Businesses

22

Crystal Division

23

R&D and New Businesses

24

Corporate Governance

26

Environmental Initiatives

28

Corporate Social Responsibility

30

Financial Section and Corporate Data

31

Note on segment data:
In addition to the review of operations by segment found on pages 8 to 23 of this annual
report, segment-specific data can be found on pages 34 through 45, in the financial section.

1

At Hoya, we are essentially in the business of “light.”
My responsibility is to ensure that management resources areallocated in the best possible way.

Hiroshi Suzuki, President and CEO
2

A MESSAGE TO OUR STAKEHOLDERS

I am delighted to present a report on Hoya’s consolidated results for the fiscal year ended March 31,
2005, together with an overview of our future business direction.

Hoya engages mainly in two fields of business. Our

At Hoya, we are determined to continue to grow by adeptly

Information Technology field consists of the Electro-Optics

balancing these two fields.

and Photonics divisions, and the Eye Care field consists of
the Vision Care and Health Care divisions. Our main

Review of Fiscal 2005 Results

products in the Information Technology field include optical

Consolidated results for fiscal 2005 were as follows.

lenses for digital cameras and the glass disks for the HDDs

Consolidated net sales rose 13.5% on the previous year tothat are found in personal computers and portable music

reach ¥308,172 million. Operating income was up 24.6%

players, and the mask blanks and photomasks that are

year on year to ¥84,920 million, and ordinary income grew

essential for the production and development of

34.5% to ¥89,525 million. Net income increased 62.2% tosemiconductors and LCD panels. Our main products in the¥64,135 million. During the first half of the fiscal year under

Eye Care field are eyeglass and contact lenses, used byreview, reflecting the strong growth in demand for digitalcountless people every day.

consumer electronics, demand in the Electro-Optics division

At first glance, it may be difficult to discern thewas actually stronger than our ability to maintain supply.

association between the two fields of business. Even the key

During the second half, however, demand softened for digitalconcept of “glass,” which has been Hoya’s core businesscameras and other digital consumer electronics products.

since the beginning, may not provide a completely adequate

When major manufacturers in the market began cutting

explanation. In fact, our Eye Care field utilizes many non-glass

back production, it affected our results.

materials: almost 90% of all eyeglass lenses are made ofplastic.
If you asked me for a single word that links both fields, I

Hoya was bold with investments during the fiscal year
under review, based on its assessments of future market
demand. In August 2004, a new optical lens plant in China

would proudly say that Hoya is in the business of “light.”

came on line and an intraocular lens (IOL) plant in Singapore

Optical lenses, eyeglass lenses, contact lenses—all of thesecommenced production. We opened an LCD photomask

products refract light in ingenious ways. Mask blanks andplant in Taiwan in January 2005. In Thailand, Hoya invested inphotomasks as well are products that assist fine processing

the construction of a new eyeglass lens plant and increased

through adjustments in light patterns. For many years, Hoya

capacity at an HDD glass disk plant. We expect that returns

has excelled in the production and high-precision polishingon these investments will become apparent during the fiscalof advanced glass materials as well as technologies foryear already started and beyond.

coating glass plates with several layers of thin film to enable
light to be manipulated in diverse ways.
So the concept of “light” is the key to understanding thesynergies between the two fields that define Hoya’s business.

3

Digital consumer electronics area driver of good achievement.

<Information Technology>
The Electro-Optics division saw net sales grow by 22.6%
over the previous year, and operating income was up 40.1%.
Both the growth in demand for digital consumer electronics
products and our ability to respond to market demand forthese products contributed to these good results.
Net sales in the Photonics division grew by 161.2%, andthe operating loss turned to operating income. The sales of
HOYA CANDEO OPTRONICS CORPORATION wereposted to the Electro-Optics division until the end of theprevious fiscal year but have now been classified in the
Photonics division beginning in the fiscal year under review,which brought a significant increase over the previous year.
The Information Technology field was characterized by
growth in the first half of the fiscal year under review
followed by a slowdown in the second half. The optical lensbusiness was particularly symbolic of this trend. With Hoya’shigh market share in optical lenses used for digital cameras,
when production started to fall in the digital camera market
in the summer, the adverse effect was quite pronounced.
Hoya’s mask blank and photomask business closely
follows investment trends at our major customers—
semiconductor and LCD panel manufacturers—as they
develop new products. In this area too, activity focused in
the first half of the fiscal year under review, as somemanufacturers reduced their investment for R&D in thesecond half. This produced a clearly discernible difference
between our first- and second-half results.
Demand for glass disks for HDDs, however, continued to
grow throughout the year. In addition to the strong demand
for small-sized disks for portable music players, growth was
supported by the steady demand for personal computersand servers.

4

A MESSAGE TO OUR STAKEHOLDERS<Eye Care>

Other Business Field

Net sales in our Vision Care division decreased 3.3% on the

Hoya’s Crystal division met with lower sales. We are in theprevious year, and operating income was down 2.4%. Net

process of reducing the size of this division to the mostsales in the Health Care division grew 10.7%, and operating

appropriate scale. Hoya manufactures and sells tableware

income by 13.9%. Hoya is promoting a differentiation

including wine glasses and bowls, interior products such as

strategy focusing on high-value-added products, to counter

vases and clocks, and crystal jewelry. Given the contraction

the matured market for eyeglass and contact lenses.

of the market for gifts and the increasing competition from

Hoya is undertaking global development of its eyeglassbusiness. Given the differences in political and economic
systems and business practices in each country, and variations inoverseas products, however, the size of such business isdecreasing year by year.
As CEO, I am always looking for the most appropriate

consumer preferences and lifestyles, we are working hard toways to allocate the finite amount of management resources

ensure that our business strategies are fine-tuned for all of these

we have available. The authority to manage Hoya’s day-to-

local factors. In Japan, the price wars we have witnessed for the

day business has been delegated to a great extent to eachpast several years lost steam, and demand recovered for theinternal company, and I do not micro-manage execution.

high-quality products in which Hoya excels, indicating the

As expressed by the well-known phrase, “selection andpotential for solid improvement in results. A decline in sales inconcentration,” I believe that my role, given Hoya’s diverse

Europe was inevitable, given the elimination of the healthbusiness strategy, is to send people and financial resources toinsurance system that had covered the purchase of new

the areas identified as having the potential for future growth.

eyeglasses in Germany, our largest market in the region, and the

By the same token, this sometimes means I must address the

temporary adjustments made necessary by the relocation ofneed to scale back in fields that show little prospect forlaboratories in France and Spain.

growth.

In the contact lens business, we are operating a directly
managed specialty retail store chain, Eye City, and by the end

Future Prospectsof March 2005 we had a total of 124 stores in Japan.

In fiscal 2004 and 2005, we made large-scale investments in

Throughout the fiscal year, we moved forward boldly with aplant and equipment to position our Information Technology

scrap-and-build program, and this has served to improve ourfield for continued expansion in market demand. We plan tocompetitive position.

achieve further growth in this business by effectively

Hoya’s IOLs, used for the medical treatment of cataracts,

managing those investments in fiscal 2006 and beyond.

enjoy an excellent reputation for high quality in the market,

Although some caution is in order due to the slipping sales

and this business continues to post strong sales growth.

of digital cameras, the factors indicating further growth for

Looking to the future, we expect that the number of older

Hoya outnumber the concerns. These positive indicators

people in developed nations who need cataract treatments

include the trend toward higher resolutions for camera-

will increase. In anticipation of a global growth in demand,

equipped mobile telephones, the growing size of LCD

Hoya took its first real step toward overseas deployment

televisions, and expansion of the market for portable music

during the fiscal year under review.

players. We will seize the opportunity presented by this5

I would like shareholders to communicate
their views on management to us more often.

growing demand by developing an even stronger presence ineach market.
In the year ahead, it will be our objective to actively

One characteristic of the corporate governanceprinciples of Hoya is the fact that management oversight by
third parties is an absolutely natural element of Hoya’s

expand investment in the Eye Care field. We have been

business. Since 1995, when Hoya first welcomed external

working to create a foundation for a soundly profitabledirectors, the number of these outside directors has

business structure, building on the work already done tocontinued to increase, while the total number of directors

withdraw from unprofitable product lines and restructure

has gradually decreased since 1989. Currently, of the total ofwhere necessary. Moreover, due to the growth in demand

eight directors, the five outside directors are in the majority.

for our products used in digital consumer electronics, theThe three executive officers, including myself, always strive toInformation Technology field is now contributing a larger

manage Hoya’s operations with the intensity and energy thatshare of the Group’s overall profitability than it should. To

comes from our accountability to the oversight of theachieve the optimum portfolio balance, we need to devote

outside directors.

additional attention to the Eye Care field in the future. In
particular, we plan to prioritize the European side of thisCompliancebusiness, where there is room for growth.

Corporate social responsibility (CSR) has become a byword

Our position on mergers and acquisitions (M&A) is one

for the general public. The CSR concept implies that aof active pursuit and consideration of good opportunities:

company has the responsibility to contribute, not just to its

we will not necessarily limit our options to our existing

shareholders and employees, but also to the wider society

business fields. Over the past several years, we have been

and the environment. Hoya addresses its CSR obligations bystrengthening our financial position, and as a result our cash

offering products designed to fully meet market needs, only

holdings have become almost too large. Every businessafter they undergo a process that involves checks for strict

undergoes a period of growth after its establishment, andobservation of all compliance requirements. It goes without

later moves into a period of decline toward the end of its

saying that all laws and regulations are rigorously observed,

life cycle. We think companies that are successful in the longand even where issues are not governed by written codes,

term constantly seek to create or acquire new businesses, toHoya is careful to make decisions only after examining basic

improve growth rates into the future. I believe that M&A is

expectations and social norms, and always strives to makeone effective means of achieving this, and I intend to allocate

the appropriate ethical judgment. Toward this end, we havefunds accordingly.

introduced the Hoya Help Line, a system whereby
employees can submit internal reports or discuss issues in a6

Corporate Governancecompletely anonymous manner. This system puts faith in the

The term “corporate governance” has recently received agood sense of our employees, who can lodge complaints

great deal of attention. A number of concepts areabout unfair or unreasonable behavior, which are conveyed

embedded in this phrase, and I am convinced that one ofpromptly to top management. The system now operates

the most important elements is how conscientiously senior

only in Japan, but we are considering introducing it at our

executives approach management.

overseas subsidiaries.

A MESSAGE TO OUR STAKEHOLDERS

A Special Message for Our Shareholders

organization is so deeply ingrained one could call it a part of

Depending on personal outlook, some might say that Hoya’s

Hoya’s “DNA.”

corporate culture is overly cautious. All businesses have a

It is you, the shareholder, who supports the growth of

mission to pursue continued expansion and growth, and to

Hoya as I have described it. Ultimately, the ideal form ofachieve this, a wide range of investments must be made—corporate governance would be a council system thatinvestments in capital, in corporate acquisitions, and in adepends on the input of every shareholder, but that would

growing labor force, for example. However, I have heard

involve far too much inefficiency. Under the current system,

comments to the effect that, despite the good progress of

the Board of Directors undertakes management and the

management reform, we are not aggressive enough about

executive officers operate the businesses of Hoya on yourcapital investment and M&A, and that we may be missing

behalf. I would like to ask you, as a shareholder, to confidently

opportunities. There is a thought behind this, that a company

remember that you are involved in Hoya’s operations. Our

has to use the valuable assets that shareholders entrust to it

management team would be delighted if you continue toin the most effective way possible. At Hoya, when we makeshare your opinions with us on all manner of issues. We areinvestment decisions, we consider such issues as anticipateddeeply grateful for your ongoing support.

profits, losses from missed opportunities, and the entire
spectrum of corporate risks, and we ask whether the total
return will be sufficient to justify the investment. This strong
attitude of good stewardship is shared not only by top
management, but also by division managers and employees
all the way down the line. This characteristic of ourHiroshi Suzuki, President and CEO

Hoya at a Glance

41%

Eye Care
The eyeglass and contact lens business continues
to record steady growth, and remains relatively
unaffected by changes in general economic
conditions. Due to the maturity of thesemarkets, the annual growth rate of net sales overthe past four years was limited to 4.5%.
However, over the past several years, Hoya has
worked to improve profitability, achieving
operating income growth at an average annual
rate of 17.5%. Hoya’s goal is to see the Eye Care
field continue to expand alongside theInformation Technology field.

57%

Information
Te c h n o l o g y

120,000

Outstanding demand for digital consumer
electronics products continues to contribute to
Hoya’s business growth. Over the past four
years, sales have grown at an average annual rateof 11.2%, and operating income by an averageannual rate of 20.0%. Both sales and profits
continue to see double-digit growth. The
contribution of Information Technology sales tooverall sales has risen from 46.2% four years ago
to the current 57.2%, and the contribution tooperating income has risen from 62.2% to 75.6%
over the same period.
Net sales (Millions of yen)

Operating income ratio (%)

200,000

176,413108,65350
40

139,187

150,000

116,94630

100,000
20
50,000

10

0

0
2002

2003

2004

Operating income ratio (%)

Net sales (Millions of yen)

150,000

2005

116,290

121,105

126,584

126,38025
20

90,00015

60,00010

30,000

5

0

0
2002

2003

2004

2005

Other
Businesses
The four-year trend in the Crystal divisionshows continued contraction, reflecting toughmarket conditions such as the decline of the gift
market and the increasingly stiff competition
from overseas products. Hoya will continue toscale back on its product range, pursuing a scaleof business that is a good match for market
needs.
Net sales (Millions of yen)

12,000Operating income ratio (%)

6

10,322

5

8,242

8,000

4
5,673

5,379

4,000

3
2
1

0

0
2002

2003

2004

2005

Electro-Optics Division

Net sales (Millions of yen)

Operating income ratio (%)

The main products in this division include the mask blanks
and photomasks that are essential to the production ofsemiconductors and LCDs, optical lenses for digital
cameras, and HDD glass disks. Thanks to the expanding
market for digital consumer electronics, this divisioncontinues to record favorable results, and it plays a leadingrole in the Hoya Group’s overall sales and profitability.

200,000

40

150,000

30

100,000

20

50,00010Photonics Division

Net sales (Millions of yen)

The primary products in this division are medical andindustrial equipment that utilizes specialized light sources
and lasers. These optical (laser and ultraviolet) devices, built
on the application of optical technologies, are offered tousers in a wide range of fields, including industry and medical
services. Sales increased during the fiscal year under review,as a result of corporate restructuring in fiscal 2005 thattransferred a certain subsidiary that had been part of theElectro-Optics division to the Photonics division.

12,000Vision Care Division

0

0
2002

2003

2004

2005

Operating income ratio (%)

12
8

8,000

4

4,000

-4

0

-12

0
-8
2002

2003

Net sales (Millions of yen)

2004

2005

Operating income ratio (%)

Hoya manufactures and sells mainly eyeglass lenses. The
mature state of the market meant that sales grew only
slowly during the fiscal year under review. However, theintroduction of high-value-added products and the adoptionof more efficient production at overseas plants havecontributed to the maintenance of steady profitability in thisdivision. Business is growing on a global basis, not only inJapan, which has the greatest share of sales, but also in othermarkets, particularly in Europe, Asia and North America.

100,000

20

80,00015

Health Care Division

Net sales (Millions of yen)

60,00010

40,0005

20,000

0

0
2002

2003

2004

2005

Operating income ratio (%)

25

The production of contact lenses and their sale in Eye City
directly managed retail stores accounts for a large share ofsales in this division. Hoya maintains its lead in an
extremely competitive Japanese domestic market, thanks
to its client-focused approach and its unique ability toensure that its products and services are a precise matchfor customer needs.
IOLs for cataract treatment, expected to be a growthfield, are also part of this division’s business.

35,000

Crystal Division

Net sales (Millions of yen)

Crystal products, with their beautiful brilliance and sense ofartistry, continue to be seen as highly appropriate gifts, but
this division has continued to shrink as a result of difficult
economic circumstances, including the overall contractionof the gift market and the competition introduced byimported goods.

10,00020

25,00015
15,000

10
5

5,000
0

0
2002

2003

2004

2005

Operating income ratio (%)

3
0

8,000

-3

6,000

-6

4,000

-9

2,000

-12
-15

0
2002

Service DivisionThis division includes the development and operation of
information systems and the temporary dispatch of
employees, mainly for Hoya Group companies.

2003

Net sales (Millions of yen)

2004

2005

Operating income ratio (%)

10

2,000

8

1,500

6
1,000

4

500

2
0

0
2002

2003

2004

2005

9

Digital cameras and LCD TVs depend on
Hoya’s high technologies.

Business Overview

I n f o r m a t i o n Te c h n o l o g y
It has been several years since the phrase “digitalconsumer electronics” came to be widely used.
Representative products in this area include digital
cameras, flat-screen televisions, DVD recorders andmobile telephones. More recently, portable music
players, which allow people to download music andlisten to it at their convenience, are a cutting-edge
example of the latest hot products.
The large-scale integrated circuits (LSIs)*1 that areused in digital home appliances and personal
computers, the LCD panels in television and personal
computer monitors, digital cameras, and hard disk
drives (HDDs) that are widely used in digitalconsumer electronics and laptop computers—
all of these products utilize technologies that Hoya
provides. As demand grows for digital consumer
electronics products, Hoya’s Information Technology
field will continue to expand.
Note:*1. A silicon chip containing 1,000 or more semiconducting components.

Electro-Optics Division

Mask Blanks

Mask blanks for production of semiconductors(Left) Glass substrate(Middle) Glass plates coated with metallic film
(Right) Completed material coated with lightsensitive material

Mask blanks and photomasks are essential for the production of semiconductor chips and LCD
panels. With the leading-edge technologies and the expertise it has built over many years inthese areas, Hoya is a fundamental partner to the semiconductor and LCD panel industries.
Hoya is particularly proud of its achievement of a more than 70% share of the global market forthe mask blanks used in the production of semiconductors, driven by client recognition of Hoya’s
technological and competitive strengths.
Mask blanks are precisely polished*1 glass plates coated with a metallic film and a lightsensitive material (resist). A mask blank becomes a photomask when circuit patterns are etched
into it with electron beams or lasers. To use the analogy of a photograph, a mask blank is
unexposed film, and a photomask is the developed negative. Just as a photographic print is madeby passing light through the negative, the semiconductor production process uses a light source
to transfer the image of the circuit pattern that is on the photomask onto the semiconductor’ssilicon wafer.
In addition to the need for the extremely high-resolution technologies that permit theaccurate transfer to the silicon wafer of a minutely detailed circuit pattern, clients require flawlessquality control that does not allow the tiniest scratch or the adherence of a minute speck ofdust. As LSI performance and capacity continue to improve, client demand for even more
precise design rules*2 is increasing, from 90 nm*3, through 65 nm to 45 nm, and demand is
expected to continue to grow further for such high-performance products as blanks for phaseshift masks*4. Hoya is committed to playing its part in the technological revolution faced by thesemiconductor industry, and is actively involved in developing next-generation technologies incooperation with major semiconductor manufacturers and photomask makers. Hoya willcontinue to strive to develop state-of-the-art technologies that meet its clients’ needs for evergreater precision.
Transfer image of circuit pattern in the exposure process

Light source

Condenser lens

Mask Blanks/
Photomasks

Notes:*1. The surface roughness of a mask blankmust be no more than one billionth of ameter (one nanometer), and must be
polished flat with an accuracy of less than
one thousandth of a millimeter.
*2. Design rules are constraints placed on thedesign of LSIs to ensure that production
processes can successfully meet the design
intent.
*3. A nanometer (nm) equals one billionth of ameter.
*4. Phase shift masks use phase differences inlight to enable extremely high-resolution
lithography.

The semiconductor chip
manufacturing process iseasy to understand if
compared to the world ofphotography. The mask
blank is the film, thephotomasks are thenegative, and the wafers(the semiconductor chips)
are the completed
photographs.

Reduced projectionlens unit

Wafer(Semiconductor chip)11

Electro-Optics Division

Photomasks Used in the Production of Semiconductors

Photomask for the production of semiconductors(front)Notes:*1. Argon fluoride, wavelength 193 nm.
*2. This is a next-generation lithographic
technology. The gap between the lens andthe wafer is filled with a liquid, which
improves the resolution of the etchingprocess.

In the semiconductor production process, the photomask plays a role similar to that of anegative film in photography. There are strong synergies between the development of mask
blanks for semiconductors and the photomasks used for LCD panel production, and this is oneof Hoya’s key business platforms.
In fiscal 2005, the demand for semiconductors fell steeply from summer onward, and this led
to a slowing in demand for low-end masks. On the other hand, however, the development ofleading-edge technologies by semiconductor manufacturers is proceeding at a healthy pace, andhigh-end photomasks continued to post firm growth. In leading-edge products, Hoya has alreadycommenced the supply of masks for mass production meeting the 90-nm and 65-nm design
rules, and expects that the trend toward increasingly fine tolerances will continue into the future.
Lithography based on an ArF excimer light source*1 is becoming the norm for the mass
production of semiconductors, and by taking advantage of immersion technologies*2, thepotential for this light source to continue to be used for future-generation production processes
is increasing. This approach, while allowing for the continued relevance of existing lithographyequipment, will also give rise to the need for a photomask with the capacity to respond to nextgeneration lithography technologies. Thus, the importance of developing leading-edge masks
continues to grow. In a market characterized by increasingly fierce competition, Hoya willcontinue to stress the development and production of high value-added products, while
maintaining its close collaborative relationships with industry partners.

LCD Photomasks

LCD photomask

Notes:*1. Fifth-generation:
A mother glass plate of
1,100 mm x 1,300 mm, which yields
three 32-inch wide LCD televisions panels.
Sixth-generation:
A mother glass plate measuring
1,500 mm x 1,850 mm, which yields
eight 32-inch LCD television panels.
Seventh generation:
A mother glass plate of
1,870 mm x 2,200 mm, which yields
twelve 32-inch LCD television panels,or three 50-inch LCD television panels.
Eighth generation:
A mother glass plate measuring
2,160 mm x 2,400 mm, which yields
six 50-inch LCD television panels.
*2. Gray tone mask:
A mask that produces an intermediate layer(gray tone) from light interference and thediffraction effect. Use of this mask reduces
the number of lithographic processes of TFT
LCD panels from five to four.

12

LCD photomasks are the master plates inscribed with the patterns needed for the productionof LCD display panels, such as those used in LCD televisions and computer monitors. Today’s
trend has LCD televisions increasing in size every year. Hoya takes pride in its ability to produce
the large-scale LCD photomasks required, and continues to demonstrate a clear technologicaladvantage in this field.
During the fiscal year under review, Hoya proceeded with plans to open new LCD
photomask plants in Taiwan (which began operation in January 2005) and South Korea, toensure that it could continue to respond to increasing demand and meet the needs of largescale flat panel manufacturers. Currently, common panel sizes for large-scale televisions are thefifth- and sixth-generation sizes*1, but Hoya’s new plants in Taiwan and South Korea are for the
production of photomasks for seventh- and eighth-generation panel sizes.
There is no doubt that the rate of adoption of LCD televisions in the market is increasing,both because consumers are replacing their cathode ray tube (CRT)-based TVs with LCD TVs,
and because of the increase in demand for larger televisions. However, to further stimulate
demand, it is widely believed that a reduction in production cost is imperative. Hoya hasdeveloped a gray tone mask*2 ahead of its competitors. This high-value-added mask reduces thenumber of steps in the production of LCD
panels and increases the yield rate, helping
manufacturers to enhance production
efficiencies. Hoya will continue to pursue
technological innovation and assist in theeffort to improve the market acceptance of
LCD-related products.

Taiwan plantElectro-Optics Division

Glass Disks for HDDs

Glass disks for HDDs (substrates and media)

To ensure that data are not damaged when laptop computers are carried, the HDDs insidemust have high shock resistance. These hard disks utilize glass disks, which are much more shock
resistant than the conventional type, usually made of aluminum. Hoya enjoys the largest share of
the global market for glass disks.
The glass disks sizes produced by Hoya can be broadly divided into 3.0-inch, 2.5-inch,
1.8-inch, and 1.0-inch categories. The 2.5-inch disks are widely used in laptop computers. About
80% of such disks are used in laptops, and the remaining 20% are used in external memory
drives, car navigation systems and games machines. The 3.0-inch disks are produced for use inservers, where high levels of reliability are demanded. The market for 1.0-inch and 1.8-inch disks
has recently been expanding rapidly. These disks are built into portable music players, whichallow one to download and listen to music data.
During the fiscal year under review, production of small-size HDDs for portable music
players began in earnest at Hoya. Hoya had developed mass production technologies ahead of
the competition, both for the small-size glass substrate and the glass disks coated with magnetic
layer (media). In the fiscal year under review, these technologies contributed to the increased useof HDDs.
Currently, most of Hoya’s production of glass disks takes place in Southeast Asia. Polishing of
the glass plate to produce the substrate is performed at plants in the Philippines and Thailand.
The finished product (media) is manufactured in Singapore. In March 2004, Hoya increased its
supply capacity through the acquisition of the business of Nippon Sheet Glass Co., Ltd., including
its production facilities. Anticipating further increases in demand as a result of the growing
number of applications for these disks, Hoya has already begun building a third glass disk plant in
Vietnam, and also plans to boost investment in existing plants.

Glass disks mounted on notebook computer (image)13

Electro-Optics Division

Optical Lenses

Optical lenses

Aspherical glass lenses

As one of the few manufacturers with a fully integrated production process for products fromglass materials to optical lenses, Hoya was able to embark on the development of asphericalglass molded lenses from early on, and to contribute to the development of today’s highperformance optical equipment, particularly video cameras and digital cameras. Aspherical lenses
are able to perform superb correction for spherical aberration. Thanks to this feature, shorter
focusing distances are possible, and the number of lens elements can be reduced. And this has
made cameras much smaller and lighter.
Currently about 60% of Hoya’s sales of optical lenses are for digital cameras, 20% for digital
video cameras, and the remainder for projectors and copiers and others. There are a large
number of manufacturers with digital cameras on the market, and wherever glass lenses are usedin those products, Hoya has a strong share of the market.
For several years, demand for digital cameras had been growing consistently, but after thesummer of 2004, it became clear that production was being scaled back in the digital camera
market, and in the second half of the year the trend toward slower sales became more
pronounced. Hoya’s results were affected in proportion to the slowdown in digital camera
shipments. Despite the temporary dip in demand, Hoya opened a new optical lens plant in
Suzhou, China in August 2004. The plant is expected to take advantage of the reduced cost ofoverseas production, and will produce lenses for camera-equipped mobile telephones, demand
for which is expected to increase in the near future. For now, most of the lenses used in cameraequipped mobile telephones are made of plastic, but as the resolution of these cameras begins
to exceed two to three megapixels, Hoya predicts that the need will grow for its lightweight
aspherical glass lenses, with their excellent ability to correct spherical aberration. Additionally,
growth in demand is anticipated for rear projection televisions, a third type of large, flat television
following LCD and plasma versions. For these televisions to be able to offer high-definition
television (HDTV) quality, the projection lenses will require a special type of high-quality glass. In
this field too, Hoya is already in position to leverage its technologies, and will be actively
allocating the necessary resources to this field.

Comparison between aspherical and spherical glass lenses(Aspherical lens)
Focal plane
Light axis

(Spherical lens)
Focal plane

Feature of aspherical molding lensAspherical molding lens that enables
manufacturing high-precision lens without
polishing process. Because the aberration(distortion) decreases compared with thespherical lens, the miniaturization and degreeof freedom of the design of the product havebeen improved since it reduced the number oflenses used.

14

Light axis

Photonics Division

Photonics

Laser oscillator (LASER SYSTEM HSL-4000)

Hoya’s Photonics division provides a range of optical equipment (incorporating laser and UVlight) based on practical applications of optics technologies. Customers are in such diverse areas
as industry and medical treatment. This division is mainly conducted by two organizations: HOYA
PHOTONICS, INC., which produces and sells laser equipment for medical use, and HOYA
CANDEO OPTRONICS CORPORATION, which was established at the end of 2003 as part ofa restructuring of several diverse companies in the Hoya Group that had been engaged in theprovision of specialized light sources and optics businesses for the electronics industry.
In the area of medical treatment, products include laser scalpels used in surgery and laser
equipment used in dental treatment, dermatology and plastic surgery. In the industrial area,
products include specialized light source equipment using UV and excimer light sources, as wellas laser oscillator and laser marker equipment used in the semiconductor manufacturing process.
All of these industrial products target customers in the semiconductor industries, so we expectthat the recent business restructure will yield powerful synergies.
In Latin, “Candeo” means “to shine.” In the truest sense of the term, the goal is for both
Hoya and its products to “shine” in a unique way.

Spot UV light source equipment (EXECURE 4000)

15

Hoya is extremely sincere about caring forpeople’s eyes—the priceless gift of sight.

Business Overview

Eye

Care

Hoya’s Eye Care field consists of the Vision Care division,
which is based on the production and sale of eyeglass
products—primarily eyeglass lenses, with frames as anaccompaniment—and the Health Care division, which
encompasses the production and sale of contact lenses andintraocular lenses (IOLs). Both divisions are eye-related, but thebusiness models they use are different.While eyeglass lenses
are produced and sold on a wholesale basis to eyeglass storesglobally, Hoya operates its contact lens business on a retailbasis, with local production and a directly managed specialty
stores in Japan known as Eye City.The Eye City contact lensbusiness continues to grow steadily, thanks to the increasing
number of stores and their devotion to meeting the needs ofcustomers. IOLs are medical devices used in the treatment ofcataracts, and product development is proceeding mainly on
the basis of alliances with hospitals and clinics.
From a business perspective, different approaches are
required for each product, but only a company like Hoya,
which has been in the “eye” business for years, can offer thishigh level of quality along with services that precisely meetthe needs of clients. Hoya is committed to offering multifaceted, dependable support for people’s eye care.

Vision Care Division

Eyeglass Lenses
The eyeglass market tends to be described as already mature. But Hoya is tirelessly pushing ahead withthe development of new lens technologies, always offering products with superior functionality andhigher quality that meet customer needs even better than before. Hoya continues to develop new
products, offering them to customers ahead of its competitors. In the area of plastic lens materials, theproducts include: the high index material lenses EYAS, EYNOA and EYRY and the high-strength
PHOENIX lens; for the anti-reflection coating, Hoya offers VP Coating, which is easy to wipe clean, andSFT Coating, which is scratch-resistant; and in the area of lens design, “Hoyalux iD,” which is the world’s
first integrated double-surface progressive lens design, with which Hoya has realized a design thatprovides a natural view and optimal performance at every distance—near, far, and in-between.
Hoya is developing its eyeglass business in Japan, Europe, North America and the Asia-Pacificregion. Of these regions, Japan and Europe have been identified as the key strategic markets.The
eyeglass lens business varies in accordance with differences in the market characteristics of eachcountry and region. Given Hoya’s different position in each market, Hoya’s global business development
is guided by business strategies that are fine-tuned for local conditions.
In Japan, starting around 2001, a so-called “three-price shop” business model expanded rapidly,
based on cheap eyeglasses sourced from outside Japan, and this led to a temporary deflationary trend
in the market. However, beginning in the latter half of 2003 there was a pause in the discount boom,
and user demand for high-value-added items recovered. Capitalizing on this trend, Hoya introduced anumber of high-value-added products, including progressive lenses for both near- and far-sightedness, ahigh-function anti-reflection coating, and a new high index material lens. As a result, sales in Japan for
the fiscal year exceeded the previous year’s results.There is an acute need for progressive lenses inthose developed countries including Japan that are experiencing an aging population. Another productthat demonstrates Hoya’s originality is a lens with a high-function anti-reflection coating, which is instrong demand from eyeglass retailers, who place orders to Hoya’s laboratories for custom lens
production. Hoya expects demand for both of these products to continue driving sales results upward.
The next largest market for Hoya after Japan is Europe, where five countries—the United
Kingdom, France, Germany, Italy and Spain—account for close to 70% of total sales in the region.The
European market readily accepts high-performance products utilizing Hoya’s technologies, and Hoya
anticipates continued growth. Despite this basic market strength, however, sales in Germany, thelargest market for Hoya in Europe, slipped significantly in the term under review.This was due to theadverse effect of the elimination of a health insurance subsidy for the purchase of eyeglasses at theend of 2003. European sales were also negatively affected by the temporary adjustments madenecessary by the closure of a laboratory in France, and sales for the region as a whole declined. Hoya
will concentrate on promoting sales of products that have already been well received in Japan, such as
the high-functional VP Coating and Hoyalux iD, as well as its new SunTech series light-sensitive lenses,
which darken in outdoor use and regain their transparency when indoors. Hoya makes efforts related
to marketing as well.
Hoya’s North American business has seen a sudden expansion in the size of operations since theacquisition of a number of laboratories beginning in 2000.The North American market differs fromthe Japanese and European markets, both in terms of consumer needs and the distribution system.
Hoya is working to build structures that ensure
greater profitability, by, for example, promoting
more extensive market penetration of its
specialized, proprietary products including antireflection coatings, stimulating sales growth byaugmenting product lineups with the popular
PHOENIX materials, and improving operational
efficiencies at laboratories.
Mass production plant for eyeglass lenses (Thailand)17

Vision Care Division

Light-sensitive lens “SunTech”

Hoya’s business in the Asia-Pacific region is smaller than the other regional markets, though
the region shows a good deal of promise, with continued double-digit growth. Despite thesimple “Asia-Pacific” appellation, there are in fact many different markets in this region, including
Australia, where the market is seeing strong growth driven by high-value-added products, andChina, where the market is currently price-conscious but has good growth potential. Hoya will
undertake carefully targeted marketing activities in each country in the region, sustaining strong
growth.
Hoya estimates the size of the overall wholesale eyeglass lens market to be around¥70 billion to ¥80 billion in Japan, ¥330 billion in Europe, ¥250 billion in North America, and¥50 billion to ¥60 billion in Asia. Over the medium term, Hoya will focus on growing its
businesses in Europe and North America, where it has a relatively small market share. To achievethis, Hoya will introduce more high-value-added products into these markets and reinforce sales
and marketing systems. On the global level, Hoya will prioritize building stronger profit structuresby developing more responsive production regimes and supply chains.

Comparison between SFT Coating and conventional lens18

Scratched with steel wool

Scratched with sand eraser

SFT Coating

SFT Coating

Conventional lensConventional lensCompared by Hoya

Compared by Hoya

The steel wool wear
endurance test, whichmoves the lens fromside to side 50 times
with a load of four kg
applied to the steel
wool.

The sand eraser wear
endurance test, whichmoves the lens fromside to side 100 times
with a load of one kg
applied to the sanderaser.

Health Care Division

Contact Lenses, and Eye City

Notes:*1. The E-SYSTEM, an after-sales service
unique to Eye City, offers a free exchange
service, under which designated lenses soldby Eye City can be exchanged for lenses
with a different prescription free of charge
within a year of the original purchase. This
also applies to damaged lenses. Should
lenses be lost, they can be replaced withnew lenses any number of times within thefirst year at a cost of ¥5,000.

Hoya’s Health Care division supplies high-quality contact lenses to meet the individual needs of
Hoya’s customers, with the highest priority given to “protecting the health of every customer’s eyes.”
As well as developing Eye City, the largest store chain specializing in contact lenses in Japan, thebusiness sells contact lenses direct to ophthalmic clinics and eyeglass stores.
Contact lenses are a form of medical device designed to correct vision; when Hoya offers these
items for sale, it always strives both to ensure the safety and quality of the lenses, and to offer a highstandard of meticulous service to each and every customer. Hoya’s dedication to these principles
ensures constantly improving product quality and service standards, enabling customers to trust Hoya
contact lenses for their comfort, safety and suitability for their needs.
By the end of March 2005, Eye City had grown to encompass a total of 124 stores across Japan.
In addition to Hoya’s own products, each store supplies safe and effective lenses from around theworld.To ensure that every customer is supplied with products best suited to their eyes and vision
requirements, every effort is made to ensure that sales consultations and after-sales services*1 areprovided by highly experienced specialized employees. By the end of fiscal 2007, Hoya plans toincrease the number of stores to 150, with new stores being located in such convenient locations asstation buildings and shopping malls.This will be done through the continuation of the current scrapand-build program, through which underperforming stores are closed or relocated and new storesare opened, with the objective of attracting more customers and improving profitability.

19

Health Care Division*2. Progressive lenses are made with a
combination of spherical and asphericalcurves, and can only be produced using
precision, computer-controlled processes.

To meet the increasingly diverse needs and tastes of customers, Hoya is allocating additional
resources to the development of high-valued-added products, such as astigmatism-correcting contactlenses, and multifocal contact lenses for middle-aged and older customers. Of these developments,
multifocal contact lenses make the most of Hoya’s advanced technologies, with a progressive lensdesign*2 allowing one to see both nearby and distant objects within a natural field of vision, with noabrupt boundaries.
With the amendment of the Pharmaceutical Affairs Law in April 2005, contact lenses become
highly regulated medical treatment items, and are treated much more carefully than before. As aleading company in the industry, Hoya will ensure that its systems and structures continue to deliver
the most appropriate vision care to its customers.

Intraocular Lenses (IOLs)
In the Eye Care field, sales of IOLs are expected to continue to grow the most. IOLs are used in thesurgical treatment of cataracts. After the eye’s clouded lens has been removed, an IOL, which is an
artificial lens, is inserted in its place to restore vision. Advances in medical treatment have resulted inincreased general longevity, but this success has been accompanied by a sudden rise in the number ofage-related cataract patients, particularly in developed countries. IOLs have evolved from the earlier
hard type to the current mainstream lens, which is a soft foldable lens that can be inserted while
folded during surgery. By allowing the insertion of the lens through a smaller incision, the surgical cut
heals more quickly and causes much less discomfort to patients.

Foldable acrylic IOLHOYA AF-1 (UY)
Yellow-tinted single-piece IOL

Foldable acrylic IOLHOYA AF-1 (UV)

12.5mm

5.5〜6.5mm

Full-size comparison

20

Health Care Division

IOL injector
HOYA Injector System HOYA-IS

In 2004, Hoya introduced a yellow-type soft lens that allows patients to recover their sight with amore natural color cast and that has the added benefit of cutting UV light. We have also commenced
sales in Japan and Europe of an injector cartridge to make surgery even easier. Such developments inperformance and safety have been well received in the market. Sales have continued to grow soundlyin the Japanese market. Hoya has always worked in cooperation with hospitals and specialist
ophthalmology clinics so that its development efforts precisely reflect the needs of the medical
community.This enables Hoya to fulfill its mission of providing patients with high-quality products asquickly as possible.
In the global market too, Hoya has been energetically developing its IOL business, and sales havealready commenced in Germany, France, Italy, Spain and the United Kingdom. Preparations are also
under way to gain U.S. Food and Drug Administration (FDA) certification by 2007. In Asia, sales havebegun in South Korea, China, Malaysia and Singapore.The newly established IOL plant in Singapore
started shipments to Europe in October 2004, and exports to Japan are anticipated to begin during
2005. Evaluative trials of Hoya’s IOLs are being conducted at a national ophthalmic hospital in
Singapore, and Hoya hopes this will be a springboard for expansion of the business into other Asian
countries.
The size of the global IOL market is currently around ¥100 billion, and within five years it isexpected to expand by 150%.There is potential for the development of prescription IOLs that
include eyesight correction, and because this may even engulf the market for eyeglasses and contactlenses, further growth is almost a certainty.

Global Estimate of the Number of Eyes with< 6/60 Due to Cataracts(Millions)
250

200

150

100

50

0
1980

1990

2000

2010

2020

Source:Journal of Community Eye HealthInternational Resource Centre, International Centre of Eye Health21

The harmonious beauty weaved bylight generates vibrant, enriched color.

Business Overview

L i f e s t y l e

R e f i n e m e n t
Other Businesses
Hoya’s other field includes the Crystal and Service
divisions. Hoya started the operation of the Crystal
business in 1945, and it has a long history andheritage. The Service division engages in thedevelopment and operation of the Hoya Group’s
information systems, as well as operations for the
dispatch of staff.

Crystal Division

Crystal“Constellation”

The appeal of crystal ware comes from the beauty created by the interplay of light with the sense oftransparency imparted by the crystal. Hoya creates highly original products, including wine glasses,
bowls and other tableware, interior products such as vases and clocks, crystal jewelry, and artistic
pieces.The gift market continues to contract, however, and this trend is particularly conspicuous in thecorporate gift market. The competition posed by overseas products with low manufacturing costs
also presents a significant obstacle to Hoya’s Crystal division.
With the year-after-year contraction of the scale of the Crystal division, Hoya continues todownsize its operations. Nevertheless, Hoya is well known for offering highly artistic designs andprecision cutting technologies in this field, and there is a long-standing demand for Hoya brandproducts. Hoya will honor that demand by crafting a product strategy and accompanying sales
approach that enables it to offer a touch of sophistication and elegance to anyone’s life.

“Charcoal collection”

23

R&D and New Businesses
Hoya originally achieved its niche market growth as a “big fish in a small pond” by differentiating its core products and services through theapplication of innovative technologies and business models. However, with the globalization of markets and competition, and the continued
growth in the scale of Hoya’s business, Hoya understands the need to maintain even larger, faster growth in the future. In its commitment tofuture growth, Hoya is tackling the following three particularly important challenges.

1. Technical Innovation inInformation Technology
The foundation of Hoya’s Information Technology field is a range of
products for which Hoya holds a high market share, including mask
blanks, photomasks for large-scale LCD panels, aspherical lenses, and
HDD glass disks. In each of these areas, Hoya must manage two
critical issues. First, Hoya must build a strong foundation for its businessby developing next-generation technologies and products ahead of
the competition. Second, it must strive to continuously develop thesebusinesses, seeking to acquire as soon as possible those newtechnologies that will instantaneously make existing technologies athing of the past.
In the mask blank business, electron beam and extreme ultraviolet(EUV) light sources are in the spotlight as the next-next-generation
technologies for lithography. Hoya completed its basic research anddevelopment for photomask technologies compatible with electron
beam and EUV lithography, and is supplying trial masks for use inetching tests to etching equipment manufacturers and IC device
manufacturers. At the same time, it is working to develop analternative technology using nano-imprint lithography techniques*1.
A number of issues related to next-generation lithography must still
be resolved, but as a leading manufacturer of mask blanks, Hoya willcontinue to address the challenges posed by the need for technicalinnovation.
Against the backdrop of the constant enhancement of digital
imaging technologies seen in digital cameras and camera-equipped
mobile telephones, optical lenses are expected to have a higher levelof performance than ever before, as well as improved miniaturization.
Hoya continues to grow along with the digital optical industry, bydeveloping ultra-precise molding technologies for highly refractive
materials and low dispersion glass materials that further boost the
optical performance of aspherical lenses.
The perpendicular magnetic recording method*2, which will allow
for data recording density to exceed the limitations of previous

longitudinal recording methods, is about to reach the moment ofpractical introduction for small-size HDD glass disks. Hoya isproceeding with plans to establish mass production of a firstgeneration perpendicular magnetic recording glass disk, and isdedicated to contributing to further growth in the HDD market.

2. Growth in the Eye Care Field
Hoya has attempted to achieve steadily growing profit through abalanced business portfolio consisting of two main foundations—the high-growth but high-risk Information Technology field and themore mature Eye Care field, which focuses on consumables.
However, the steep growth of the digital consumer electronics
market over the past few years has tipped the balance in favor of
the Information Technology field, so the second major challenge
facing Hoya is increasing sales in the Eye Care field to ensure
steady overall growth.
Eyeglasses have been used to improve vision for many years
now, but Hoya continues to push the boundaries of technicalinnovation by actively introducing a variety of technologies, frommaterials development through optics design and lens coatings.
Hoya has focused R&D on the development of new lens materials
and optics designs, seeking to produce lighter and high-strength
plastic materials and highly functional coatings. Hoya is determined
to continue to lead the market by introducing clearer and moreconvenient eyeglass lenses.
The market for IOLs, which are used in the treatment ofcataracts, is expected to show more growth. Following thedevelopment of soft hydrophobic acrylic IOLs, Hoya produced an
injector system that greatly simplified surgical procedures, and ayellow-type IOL that helped patients regain a more natural color
tone to their vision. Hoya will continue to augment its sales efforts
around the world, and is actively considering mergers andacquisitions as one element in this growth strategy.

Notes:*1. Nano-imprint lithography techniques are a practical application of a nano-scale press molding process. With these microscopic processing techniques, a mold with an extremely
fine pattern structure is pressed into a resist on the surface of a silicon wafer, creating a pattern in the resist. They enable processing as precise as several tens of nanometers.
They are expected to be suitable for mass production at low cost, and offer time savings in the pattern transfer process.
*2. Using this method, when data are written to an HDD, the recording head magnetizes in a direction perpendicular to the layer, rather than in the usual horizontal direction.
This technique allows for greater recording density.

24

3. New Business Development
The third challenge, after Information Technology and Eye Care, isthe need to develop a new, third line of business. Hoya’s objective
is to develop a new business that capitalizes on Hoya’s proprietary
technologies and can respond to the new trends of the 21st
century by focusing on an area where demand can be expected
to grow over the long term. Hoya will seek to obtain and develop
new technologies by means of its own R&D capabilities andthrough venture capital investments. In addition, it aims to acquire
new business infrastructure through M&A.
Hoya is exploring the potential offered by a variety of fields ofbusiness. Here, three new fields that are currently underdevelopment are introduced. Hoya has good expectations of theirpotential to take root and grow as new businesses.

3C-SiCWith the advent of the practical application of hybrid automobiles
and fuel cell powered vehicles being near at hand, demand is
growing for energy-efficient, high-power electronic devices withlow power loss. Early on, Hoya recognized the potential of siliconcarbide (SiC) as a material for high-power semiconductors, and it
has engaged in the development of large diameter monocrystal
cubic SiC (3C-SiC). It has also commenced device development, asa means of accelerating the practical application of 3C-SiC devices.

Hoya is currently devoting resources to the development of highpower electronic devices for automobiles, with the aim of
deploying these devices in full-scale prototype trials.

Optical Communications Systems
In the telecommunication industry, technologies are being
developed rapidly for high-speed, high-volume optical data transfer
and high-speed wireless mobile communications. Hoya is keeping aclose watch on the development of integrated technologies
affecting the optical devices of these communications andassociated connection technologies. Following the collapse of the
optical fiber communications boom, Hoya has continued to invest
in the development of optical communications technologies with aview to the long term. The optical communications field has beenfloundering for some time, but with the commencement of IP
telephone and video-on-demand services in Japan and the UnitedStates, signs of the next growth stage are beginning to emerge.
Hoya will revitalize its development efforts in this field,
concentrating on low-loss, integrated modules.

Glass Substrates
Utilizing its ultra-precise processing technologies and thin film
coating technologies for glass materials, Hoya has developed glass
substrates for double-sided fine circuitry. Potential practicalapplications in the high-speed wireless communications field arebeing actively examined, given these products’ superior highfrequency characteristics, capability for minutely detailed
processing, and capacity for double-sided electrical connectivity.
These substrates are expected to give an extra boost to theminiaturization and reliability of wireless communication modules,
and Hoya is accelerating development work to make the most of
this potential.

3C-SiC25

Corporate Governance
Hoya treats corporate governance as a key management principle, and has instituted many reforms based on corporate governance ideals.
Based on the fundamental vision that “companies are owned by their shareholders,” we ensure that Hoya is not managed according to
the internal guidelines held by only a small part of the management team. Instead, we have set up a system under which independent
observers take the standpoint of shareholders, undertaking appropriate checks. At the same time, management and operational areas
have been separated, with the objective of accelerating decision-making processes.

Reducing the Number of Directors andInstituting a Majority of Outside Directors

The Move to the Company-with-Committees
System

To guard against the potential for stagnation in the Board of
Directors system, and to ensure lively debate, Hoya has since
1989 been reducing the number of its directors. The number of
directors has been more than halved, from 17 in 1989 to eight in
1995, and the first outside directors were appointed during thisperiod. In 2003, of the eight directors, a majority of five wereoutside directors. The three internal directors serve concurrently
as executive officers, engaged in operation of the business. Withan organizational structure that incorporates a divisionalorganization and internal companies, Hoya has proceeded to
devolve authority from executive officers to the head of eachbusiness division to a great extent. Under this system, the head ofeach business division is responsible for operational execution.

In June 2003, Hoya instituted the company-with-committees system.
Three committees have been established. Proposals to appoint
directors and executive officers or relieve them of their posts are
decided by the Nomination Committee. The Compensation
Committee determines fees paid to directors and executive officers.
The Audit Committee receives reports from an independent
auditor and scrutinizes financial statements, and through observationand scrutiny of internal control, it audits the business conditions andproperty of the Company. The membership of all three committees
is drawn entirely from the five outside directors. This has given Hoyaa system whereby the external directors, who stand for theshareholders, would even be able to relieve the CEO of his post.
Hoya also strives to ensure that sufficient staff members areavailable to assist its external directors. Three such employees are
assigned exclusively to secretariat duties with the Audit Committee,
and one each, with a background in human resource administration,holds concurrent positions with the Nomination Committee andthe Compensation Committee.

Transitions in the Board of Directors
Year

Internal directors Outside directors

Total number of directors

1989

17

17

1990

16

16

1991

15

15

1993

12

12

1994

10

10

Corporate Governance Structure
General Meeting of Shareholders

1995

8

1999

7

2000

6

2001

6

2002

6

2003

8

2004

26

8

Internal Directors: 3(serving concurrently as
executive officers)
Outside directors: 5
Compensation
Committee
Secretariat

Compensation Committee
5 outside directors
Collaboration andmutual monitoring

Nomination
Committee
Secretariat

Nomination Committee
5 outside directors
Collaboration andmutual monitoring

Audit
Committee
Secretariat

Audit Committee
5 outside directors(Executive Officers)
President
Executive Officers(3 internal directors)

Supervision and advice(Board of Directors)

Election

Election

Execution ofoperations

DivisionsHoya Business Conduct Guidelines andthe Hoya Help LineThe Hoya Business Conduct Guidelines, which apply to all
executives and employees, are based on the Hoya Group’s
management philosophy. Should any act violate that code,
employees may use the Hoya Help Line system to make aninternal report or discuss the issue. This system helps to ensurethat any violations of the Business Conduct Guidelines or of otherlaws or regulations will quickly come to light, enabling a swift
response by top management. The aim is to ensure that theoverall health of the Group is maintained.

Proactive, Timely Disclosure
Fair and prompt disclosure ensures that shareholders’ rights areprotected. Statements of financial results for each quarter arereported to the Tokyo Stock Exchange approximately three
weeks after the end of each quarter, and are then simultaneously
posted on Hoya’s website. The CEO, CFO and others offer
briefings to discuss quarterly financial reports, and provide
explanations and respond to questions. Top management also
actively participates in other investor relations activities.
Further, for the convenience of shareholders, the General
Shareholders’ Meeting is held early, avoiding those days on which
many such shareholders’ meetings are usually held. Invitations aresent out well in advance. After the General Shareholders’ Meetingis over, Hoya hosts an informal discussion among shareholders
and management, with the objective of facilitating deeper
dialogue with shareholders.

Members of the Board of Directors

Yoshikazu Hanawa

Eiko Kono

Outside Director

Outside Director

Yuzaburo Mogi

Yukiharu Kodama

Outside Director,
Chairperson of the Compensation Committee

Outside Director
Chairperson of the Audit Committee

Takeo Shiina

Hiroaki Tanji

Outside Director,
Chairperson of the Nomination Committee

Director/Executive Officer,
Strategy & Business Development

Kenji Ema
Director/Executive Officer,
Chief Financial Officer

Hiroshi Suzuki
President and CEO

27

Environmental Initiatives
As a company develops and grows, it is only proper that it should do its utmost to protect the environment. Hoya believes that this is anabsolutely essential condition for any company’s activity. In 1976, Hoya established pollution countermeasure committees at each of its
plants, and has been constantly engaged in environmental protection. Hoya published its third environmental report in 2004, outlining
Hoya’s commitment to the environment. During fiscal 2005, Hoya has dedicated itself to enhancing environmental performance.

1. Reduction of Environmental Burdens
Hoya has identified four important indicators of environmental
burden in its production activities—energy consumption, water
usage, waste volume, and volume of packaging materials—and has
developed indices for each showing the environmental burden perunit of net sales. Hoya is doing everything it can to achieve
ongoing reductions in these indices of environmental burden.

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

100
80,00080

60,00060

40,00040

20,00020

0Energy Consumption
At the facilities level, Hoya has implemented several changes suchas the conversion from LPG fuel to city gas; improving theefficiency of cooling cycles through the use of water misting andevaporative heat in chillers for the cooling water used in clean
room air conditioning systems; and a shift to inverter-type pumps.
It has also expanded its energy-saving activities across the whole ofits operations, including adjustment of air temperatures in offices
and implementation of more efficient interior lighting. As a result,
the ratio of energy consumption to net sales fell by 6% from thelevel of the previous fiscal year.

(Ratio to net sales [1999=100])

100,000

0
1999

2000

2001

2002

2003

Through advances in the re-use of factory waste water, the ratioof water usage to net sales decreased by 4% compared with theprevious fiscal year.

2005

Water Use and Its Ratio to Net Sales(km3)(Ratio to net sales [1999=100])

4,000
100
3,000

80
60

2,000

40
1,000

20

0

0
1999

2000

2001

2002

2003

2004

2005

Waste Volume and Its Ratio to Net Sales(Tons)

Water Usage

2004(Ratio to net sales [1999=100])

8,000
100
6,000

80
60

4,000

40
2,000

20

Waste Volume
Hoya made ongoing efforts to reduce the volume of wastematerials, through such means as recycling sludge produced bypolishing for use as raw material for concrete, thermal recycling ofwaste plastics, and recycling of chemicals. As a result, the ratio ofwaste volume to net sales was reduced by 28% year on year.

Volume of Packaging Materials
Hoya sought to reduce the amount of shock-absorbing materials
by reexamining the size of packaging used to ship finishedproducts. It also promoted the reuse of shipping cardboard boxes
and others. Overall, the ratio of volume of packaging materials to
net sales fell by 17% from the previous fiscal year.

28

0

0
1999

2000

2001

2002

2003

2004

2005

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

4,000
100
3,000

80
60

2,000

40
1,000

20

0

0
1999

2000

2001

2002

2003

2004

2005

Ratio to net sales indicated based on 1999 =100.
Statistics of the 10 domestic production sites
Hoya Corporation: Nagasaka, Hachioji, Kumamoto, Akishima, Nagano, Lens Technology Center,
Minakuchi, Kyushu, Musashi, Kodama

2. Introduction of Environmental Management Systems (ISO14001 Certification)
In October 1996, Hoya announced its intention to introduce environmental management systems in line with ISO14001 certification standards,
and by the end of fiscal 2001 almost all of its mass production plants in Japan and overseas had received certification. Since that time, systematic
introduction of ISO14001 standards has continued, and by the end of March 2005, a total of 35 sites in the Hoya Group had obtained
certification.

Hoya Group ISO14001 Certification Status (As of March 31, 2005)
Company Name (Location)

Site

Date of Certification

Most Recent Renewal

Kumamoto Plant
Nagasaka Plant
Akishima Plant*2
Hachioji Plant
Yokkaichi Plant
Singapore
LamphunHeadquarters, Toda
Nagano Plant
LamphunQingdao
Iruma Plant
LagunaDec. 12, 1998
Jan. 27, 1999
Jan. 29, 1999
Feb. 22, 1999
Feb. 12, 1999
Mar. 3, 2000
Nov. 24, 2000
Dec. 20, 2000
Jan. 5, 2001
Feb. 21, 2001
Feb. 17, 2004
May 10, 2004*3
June 3, 2004*1

Mar. 9, 2005
May 9, 2005
Jan. 29, 2005
Mar. 11, 2005
Apr. 26, 2005
Sep. 9, 2003
Jan. 23, 2004
May 7, 2004
Jan. 4, 2004
Feb. 21, 2004–––

Mullheim
Monchengladbach
Hamburg
Lens Technology Center
Minakuchi Laboratory
Kodama R&D Laboratory
Patumthani
Wrexham
MilanoAyutthaya
Guangzhou
Kuala Lumpur
Uithoorn
Mateszalka
SydneyPerthSeoul
Hsin-Chu
Kyushu Laboratory
MadridMalmo

Dec. 4, 1997
Dec. 4, 1997
Dec. 4, 1997
Feb. 20, 1998
May 5, 1998
Dec. 2, 1998
July 8, 1999
Dec. 24, 1999
Dec. 29, 1999
Jan. 20, 2000
Nov. 9, 2000
Apr. 9, 2001
Nov. 1, 2001
June 10, 2002
Sep. 16, 2002
Sep. 16, 2002
Nov. 4, 2002
May 19, 2003
Aug. 28, 2003
Oct. 16, 2003
Feb. 3, 2004

May 22, 2003
May 22, 2003
May 22, 2003
Feb. 20, 2004
May 6, 2004
Dec. 2, 2004
July 18, 2002
May 16, 2002
Mar. 31, 2003
Mar. 27, 2003
Dec. 3, 2003
Aug. 9, 2004
Nov. 1, 2004
–
–
–
–
–
–
–
–

Musashi Plant

Dec. 4, 1998

Dec. 4, 2004

Information Technology
HOYA CORP. (Japan)
HOYA CORP. (Japan)
HOYA CORP. (Japan)
HOYA CORP. (Japan)
NH TECHNO GLASS CORP. (Japan)
HOYA MAGNETICS SINGAPORE PTE LTD. (Singapore)
HOYA GLASS DISK (THAILAND) LTD. (Thailand)
HOYA CANDEO OPTRONICS CORP. (Japan)
HOYA CORP. (Japan)
HOYA OPTICS (THAILAND) LTD. (Thailand)
HOYA OPTO-ELECTRONICS QINGDAO LTD. (China)
HOYA CANDEO OPTRONICS CORP. (Japan)
HOYA GLASS DISK PHILIPPINES, INC. (Philippines)
Eye Care
HOYA LENS DEUTSCHLAND GmbH (Germany)
HOYA LENS DEUTSCHLAND GmbH (Germany)
HOYA LENS DEUTSCHLAND GmbH (Germany)
HOYA CORP. Vision Care Company (Japan)
HOYA CORP. Vision Care Company (Japan)
HOYA CORP. (Japan)
HOYA LENS THAILAND LTD. (Thailand)
HOYA LENS U.K. LTD. (United Kingdom)
HOYA LENS ITALIA S.P.A. (Italy)
HOYA LENS THAILAND LTD. (Thailand)
HOYA LENS GUANGZHOU LTD. (China)
MALAYSIAN HOYA LENS SDN. BHD. (Malaysia)
HOYA LENS NEDERLAND B.V. (Netherlands)
HOYA LENS MANUFACTURING HUNGARY RT. (Hungary)
HOYA LENS AUSTRALIA PTY. LTD. (Australia)
HOYA LENS AUSTRALIA PTY. LTD. (Australia)
HOYA LENS KOREA CO., LTD. (South Korea)
HOYA LENS TAIWAN LTD. (Taiwan)
HOYA CORP. Vision Care Company (Japan)
HOYA LENS IBERIA S.A. (Spain)
HOYA LENS SWEDEN AB (Sweden)
Other Businesses
HOYA CORP. Crystal Company (Japan)

Notes:*1. A site certified during the fiscal year under review.
*2. Includes the R&D Center Building, which is located on the grounds of the Akishima Plant.
*3. This company was recertified in connection with its transformation from the Iruma Plant of the former HOYA OPTICS CORP.

29

Corporate Social Responsibility
The concept of corporate social responsibility (CSR) has become common parlance. In many ways, companies should not only pursue
their own profitability, but they also have a responsibility to consider the contributions they can make to the community and theenvironment, and to act appropriately as a good corporate citizen. Hoya has established a set of basic principles that all employees must
follow. These principles are based on the Hoya Corporate Mission, and they govern decision-making and conduct for all business activities.
By putting these principles into practice, Hoya aims both to achieve growth for the Hoya Group and to contribute positively to theprosperity and betterment of the society, economy and culture.

Corporate Mission
Dedicated to innovation in information technology,

HOYA Business Conduct
Guidelines is distributed to all
employees.

lifestyles and culture,
Hoya envisions a world where all can enjoy the good
life, living in harmony with nature.

Donation for Tsunami Relief in Thailand

Hoya’s goal is to provide safe, high-quality products andservices that offer true value. We make every effort to increasecustomer satisfaction by continuously improving the quality of
our operations.

Hoya has made modest financial contributions to help the victims
and the families of those who lost their lives in the Great HanshinAwaji Earthquake of 1995 and the 9/11 terrorist attacks on the
United States in 2001. As part of its policy of providing assistanceto victims of disasters, Hoya donated ¥30 million in relief funds to
the Royal Thai Government following the earthquake off Sumatrathat led to the Indian
Ocean tsunami ofDecember 2004. Hoya
received a letter ofappreciation from theRoyal Thai Government
the following January.

Commitment to shareholders

Support for the Visually Impaired

Management Principles
Commitment to society
Hoya always strives to be a responsible corporate citizen. We
work hard to ensure that our corporate activities are carried out
with respect for the environment. We are absolutely committed
to legal compliance and ethical practices.

Commitment to customers

Hoya strives to increase corporate value by improving businessresults and maintaining growth. Our goal is to pay fair dividends
and give shareholders a return on investment that meets their
expectations. We willingly and impartially disclose corporate
information.

Commitment to employees
Hoya respects the personality and individuality of each
employee. We offer employees opportunities to maximize theirinitiative and creativity in a safe and fulfilling work environment.
We do our best to ensure a good living for our employees.

Since Hoya supplies eyeglasses, contact lenses and other eyerelated products to the world, it has actively engaged in several
programs to facilitate the participation of visually challenged
people in society. Donation boxes have been placed in various
locations throughout Hoya’s offices, to allow employees to easily
make their own individual contributions to this effort.
The Company added to the contribution of employees as amatching gift and donated more than the equivalent value.

Assistance for Culture and the Arts
Dedication to innovative management
Hoya constantly strives to create new value through innovationand creative technology. We make the most of the advances of
the information age with our worldwide management network.
We take a global perspective while respecting local culture andcustoms.

30

As one element of Hoya’s contribution to culture and the arts,
Hoya has since 2004 been a Supporting Member of the New
National Theatre, Tokyo. Hoya also regularly gives its support tocharity concerts and other events held to offer assistance toneedy children.

Financial Section and Cor por ate Data

Co ntents
Ten-Year Summary

32

Management’s Discussion and Analysis

34

Consolidated Balance Sheets46

Consolidated Statements of Income

48

Consolidated Statements of Shareholders’ Equity

49

Consolidated Statements of Cash Flows51

Notes to Consolidated Financial Statements

53

Independent Auditors’ Report

69

Corporate Data

70

Investor Information

71

Hoya’s Timeline

72

Hoya’s Directory73

31

Te n - Ye a r S u m m a r y

1996

1997

1998

1999

¥167,106¥193,402¥193,473¥201,290

Operating income (Millions of yen)

26,22932,936

26,39531,726

Ordinary income (Millions of yen)

27,37635,086

26,75933,612

Net income (Millions of yen)

11,05615,30012,348

17,837

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

29.6

27.7

28.2

26.4

Return on assets (ROA) (%)

5.7

7.1

5.3

7.8

Return on equity (ROE) (%)

9.0

11.4

8.5

11.6

Equity ratio (%)

64.3

61.0

63.7

71.7

Inventory turnover (Months)

3.2

3.2

3.4

3.2

Capital expenditures (Millions of yen)

19,43932,31819,504

13,654

Depreciation, amortization and other (Millions of yen)

13,01815,705

17,57018,234

Research and development expenses (Billions of yen)

4.5

6.0

7.5

7.8

Net income

93.32

129.70104.51151.10Cash dividends

21.0

23.0

28.0

30.0

Cash flow

207.31267.00257.64

310.61

Shareholders’ equity

1,082.54

1,220.70

1,270.68

1,362.24

Price earnings ratio (PER) (Times)

39.4

42.7

36.4

44.5

Price cash flow ratio (PCFR) (Times)

17.8

20.8

14.8

21.6

Price book value ratio (PBR) (Times)

3.4

4.5

3.0

4.9

Stock price at year-end (Yen)

3,680

5,540

3,800

6,720

Aggregate market value (Billions of yen)

427.3

643.3

441.3

780.4

Employees (Persons)

8,435

9,588

9,320

9,414

Net sales (Millions of yen)

Per share data (Yen)

Effective April 1, 2002, the Company adopted a new accounting standard for net income per share of common stock issued by the Accounting Standards Board of Japan. Net income per shareand related data prior to that date are also calculated according to the standard for purposes of comparison.
Ordinary income: Income before income taxes that is adjusted for non-operating income and expenses. Ordinary income is not reported net of taxes.
Selling, general and administrative expenses/net sales: A calculation of management efficiency, also known as the ”sales expense ratio.“
Return on assets (net income/ average total assets x 100): An index of efficiency and profitability in terms of management of the Company’s assets.
Return on equity (net income/ average total shareholders’ equity x 100): An index of efficiency and profitability in terms of the shareholders’ equity.
Shareholders’ equity ratio: The ratio of shareholders’ equity to total assets; the higher the ratio, the higher the degree of safety.
Inventory turnover (inventory assets at year-end/monthly average cost of goods sold): An index of capital efficiency. The fewer the number of months, the better the production and sales efficiencies.

32

2000

2001

2002

2003

2004

2005

¥201,110¥236,802¥235,265¥246,293¥271,444¥308,172

34,68845,12843,89852,983

68,16784,92035,484

48,18445,77450,87466,55489,52520,716

21,86023,741

20,03839,54964,135

25.4

23.8

24.2

24.4

22.3

21.1

8.9

8.6

8.7

7.3

14.0

20.0

12.4

11.8

11.5

9.0

17.8

25.8

73.2

73.0

78.8

81.7

75.5

79.1

3.3

3.1

3.2

2.9

2.8

2.7

17,77039,673

19,585

15,94830,65940,175

16,051

32,138

20,105

19,792

25,32822,520

7.7

7.3

7.3

8.7

9.8

10.9

176.26

186.60203.15171.10350.96578.84

35.0

50.0

50.0

50.0

100.0

150.0

316.61464.99377.57343.31576.45782.86

1,506.21

1,680.45

1,886.20

1,945.16

1,967.60

2,494.37

55.0

43.7

44.5

41.8

28.9

20.4

30.6

17.6

23.9

20.8

17.6

15.1

6.4

4.9

4.8

3.7

5.2

4.7

9,700

8,160

9,040

7,150

10,15011,8001,126.4

947.6

1,049.8

830.3

1,178.7

1,325.7

10,651

12,966

13,311

14,02318,092

21,234

Capital expenditures: Includes property, plant and equipment as well as intangible fixed assets.
Depreciation, amortization and other: Includes the loss on impairment of long-lived assets and amortization of goodwill.
Price earnings ratio (stock price at year-end/net income per share): An index of valuation that compares the Company’s stock price with its earnings to judge whether the stock is overvalued orundervalued.
Price cash flow ratio (stock price at year-end/cash flow per share): Cash flow is calculated by adding net income, depreciation, amortization and other. It can be used together with the priceearnings ratio, the market average and comparative ratios for other companies in the same industry to judge whether the Company’s stock price is overvalued or undervalued.
Price book value ratio (stock price at year-end/shareholders’ equity per share): An index of valuation that compares the Company’s stock price to the value of its net assets. An index of less than
one suggests that dissolving the company and selling off its assets may be more profitable than holding the company’s stock.

33

MANAGEMENT’S DISCUSSION AND ANALYSISThe Hoya Group and Scope of Consolidation

America, Europe and Asia perform activities such as strengthening
relationships with the countries and areas in their respective regions,providing legal support and conducting internal audits, thereby
supporting the promotion of business activities. The Hoya Groupfinancial headquarters is located in Europe.

The Hoya Group (the “Group”) consists of Hoya Corporation, its 58
consolidated subsidiaries (six in Japan and 52 overseas) and five affiliates
in Japan. One of the five affiliates is accounted for by the equity method.
Compared with the end of the prior consolidated fiscal year, three
consolidated subsidiaries were added through establishment of newcompanies, one consolidated subsidiary was added by an acquisitionand one consolidated subsidiary was eliminated through liquidation.
The Hoya Group is managed through consolidated groupmanagement on a global basis. Each of the Group’s major businessdivisions, centered on the Information Technology and Eye Care fields,
implements the management strategies formulated by the Global
Headquarters at Hoya Corporation in line with their independent
business responsibilities. By area, regional headquarters in NorthNet Sales

2001

Net Sales
Consolidated net sales for the fiscal year ended March 31, 2005
increased 13.5% year on year to ¥308,172 million. By main businesssegment, net sales for the Electro-Optics division of the Information
Technology field rose 22.6% year on year, net sales for the Vision Caredivision of the Eye Care field fell 3.3%, and net sales for the HealthCare division rose 10.7%.
Examining net sales by customer region, net sales to customers in

2002

2003

2004

2005

(Millions of yen)
350,000
300,000
250,000
200,000
150,000
100,000
50,0000

Net sales (Millions of yen)

Sales by Business Segment

236,802235,265

246,293

271,444

308,172

2001

2002

2003

2004

2005

47.4

43.1

45.3

49.8

2.8

3.1

2.2

53.8

1.5

(% of total)
100

75

50

3.5
36.4

Electro-Optics (Millions of yen)

34

39.6

38.3

36.2

30.8

25

0

8.5
4.2
0.7

9.8
3.7
0.7

10.9
2.7
0.6

10.4
1.6
0.5

10.2
1.2
0.5

112,341

101,496

111,461

135,071

165,664

Photonics (Millions of yen)

6,534

7,157

5,485

4,116

10,749Vision Care (Millions of yen)

86,19893,184

94,38898,203

94,971

Health Care (Millions of yen)

20,13023,106

26,71728,381

31,409Crystal (Millions of yen)

9,942

8,788

6,719

4,322

3,672

Service (Millions of yen)

1,657

1,534

1,523

1,351

1,707

Japan increased 12.2% to ¥166,414 million, while net sales overseas
grew 15.1% to ¥141,758 million. As a result, the composition of net
sales were 54.0% domestic and 46.0% overseas. Although this wasnearly unchanged from the prior consolidated fiscal year, when domestic
sales and overseas sales accounted for 54.6% and 45.4% of total net
sales, respectively, overseas net sales continued to increase as apercentage of total net sales.
Hoya calculates the effect of exchange rates on operating results inthe consolidated fiscal year under review by comparing the foreigncurrency denominated financial statements of its overseas subsidiaries,
when converted into yen at the average exchange rates during theconsolidated fiscal year under review, with the same statements whenconverted into yen at the average exchange rates prevailing during theprevious consolidated fiscal year. In currency markets during theSales by Region

consolidated fiscal year under review, the yen strengthened 4.6% against
the U.S. dollar to ¥107.60 and appreciated 3.2% against the Thai baht to¥2.68, while weakening 2.3% against the euro to ¥135.73. Because theyen appreciated against the U.S. dollar and Thai baht, the operating
results of Group companies in the United States and Thailand decreasedon an exchange rate basis. Conversely, because the yen depreciatedagainst the euro, the operating results of Group companies in Europe
increased when converted into yen. The result of the ongoingappreciation of the yen vis-à-vis the U.S. dollar and Thai baht had anegative effect on the operating results of the entire Group, reducing
net sales and net income by ¥692 million and ¥965 million, respectively.

2001

2002

2003

2004

71.3

67.8

67.5

69.4

2005

(Based on the location of the Company’s offices)(% of total)
100

75

74.9
50

3.7
10.5

4.2
12.3

4.8

4.6

13.2

13.8

4.1
11.0

14.5

15.7

14.5

12.2

10.0

Japan (Millions of yen)

168,856

159,368

166,178

188,441

230,946

Asia (Millions of yen)

8,792

9,948

11,705

12,404

12,648Europe (Millions of yen)

24,94428,964

32,63937,48633,803

North America (Millions of yen)

34,21036,98535,771

33,11330,775

Sales to Domestic and Foreign Customers

2001

2002

2003

2004

2005

57.9

56.2

56.0

54.6

54.0

(Based on the location of customers)

25

0(% of total)
100

75

50

11.6
15.2
15.3

10.7
16.2
16.9

13.3

16.5

20.1

15.8

14.8

11.8

14.9

14.1

14.1

25

0

Japan (Millions of yen)

137,211132,248

138,006

148,325

166,414

Asia and Other Areas (Millions of yen)

27,53725,12732,80644,66861,808Europe (Millions of yen)

35,87038,14438,78940,16836,430

North America (Millions of yen)

36,18439,746

36,69238,283

43,52035

Net Income
As net sales expanded, the cost of sales also rose, increasing 10.8% year
on year to ¥158,024 million. Because cost of sales grew less than net
sales, which increased 13.5%, the gross profit margin improved to 48.7%,
up 1.3 percentage points from 47.4% in the previous fiscal year. Selling,
general and administrative (SG&A) expenses also rose with the growthin net sales, increasing 7.6% to ¥65,228 million. SG&A expenses as apercentage of net sales, however, declined 1.2 percentage points, from
22.3% to 21.1%, because SG&A expenses rose at a lower pace than thegrowth rate for net sales.
As a result, operating income increased 24.6% to ¥84,920 million
and the operating margin improved by 2.5 percentage points to 27.6%.
By quarter, the operating margin was 28.1% in the first quarter, 29.4% in
the second quarter, 27.8% in the third quarter and 24.9% in the fourth
quarter.
Net income increased 62.2% to ¥64,135 million. This reflected anincrease of ¥2,008 million in equity in earnings of associated companies
and a significant improvement of ¥3,775 million on foreign exchange

Operating Income,Ordinary Income
and Net Income

2001

gains (losses), from losses of ¥2,900 million in the previous fiscal year to¥875 million in gains for the fiscal year under review.
During the fiscal year under review, the Company's management
decided to close the Kyushu Laboratory in 2005. As a result, theCompany incurred a loss of ¥1,264 million on the closure. And theCompany also incurred a loss of ¥1,980 million on clarification of soil
contamination associated with the closure of other plants.
Net income per share improved by ¥227.88, from ¥350.96, to¥578.84.
Net sales, operating income and net income for the consolidated
fiscal year under review all represented new records as full-year
operating results.
Return on assets (ROA) improved by 6.0 percentage points to
20.0%, and return on equity (ROE) improved by 8.0 percentage points
to 25.8%. For the consolidated fiscal year under review, the Group
increased the annual dividend per share by ¥50 to ¥150.

2002

2003

2004

2005

(Millions of yen)
100,000

80,00060,00040,00020,0000Operating income (Millions of yen)

45,12843,89852,983

68,16784,920Ordinary income (Millions of yen)

48,18445,77450,87466,55489,525

Net income (Millions of yen)

21,86023,741

20,03839,54964,135

Quarterly Profits

2004-1Q

2004-2Q

2004-3Q

2004-4Q

2005-1Q

2005-2Q

2005-3Q

1st quarter of 2004 to 4th quarter of 2005

2005-4Q (Millions of yen)
25,00020,00015,00010,000

5,000

0

36

Operating income (Millions of yen)

14,536

16,40017,67919,552

21,082

23,04721,652

19,139Ordinary income (Millions of yen)

14,757

15,63817,091

19,06822,366

24,40522,314

20,440Net income (Millions of yen)

9,795

9,129

10,41910,206

16,223

16,671

16,123

15,118

Profit Ratios

2001

2002

2003

2004

2005

(%)
30
25
20
15
10
5
0

Operating income ratio (%)

19.1

18.7

21.5

25.1

27.6

Ordinary income ratio (%)

20.3

19.5

20.7

24.5

29.1

Return on sales (%)

9.2

10.1

8.1

14.6

20.8

Quarterly Profit Ratios

2004-1Q

2004-2Q

2004-3Q

2004-4Q

2005-1Q

2005-2Q

2005-3Q

2005-4Q

1st quarter of 2004 to 4th quarter of 2005

(%)
35
30
25
20
15
10
5
0

Operating income ratio (%)

22.7

24.2

25.7

27.5

28.1

29.4

27.8

24.9

Ordinary income ratio (%)

23.1

23.1

24.9

26.8

29.8

31.1

28.7

26.6

Return on sales (%)

15.3

13.5

15.2

14.4

21.6

21.3

20.7

19.6

Profitability

2001

2002

2003

2004

2005

(%)
30
25
20
15
10
5
0

Return on equity [ROE] (%)

11.8

11.5

9.0

17.8

25.8

Ordinary income/total assets (%)

19.0

16.8

18.4

23.6

27.9

Return on assets [ROA] (%)

8.6

8.7

7.3

14.0

20.0

37

Segment Overview
Information Technology (Electro-Optics and Photonics Division)
Net sales in the Electro-Optics division rose 22.6% year on year to ¥165,664
million. In mask blanks for semiconductor production, demand was strong forhigh-precision products such as phase shift mask blanks in response to steady
growth in high-precision products for the semiconductor market. Sales ofphotomasks for semiconductor production increased as a result of robust
demand throughout the year for high-precision products and next-generation
products for R&D. In large-scale LCD photomasks, the market grew severe as
price reductions were implemented in the market for LCD panels during thesecond half of the year. With demand for LCD televisions expanding and LCD
panel manufacturers continuing to launch new models, however, demand formasks remained strong and net sales were steady, centered on masks forlarge-scale panels.
In glass disks for HDDs, in addition to steady demand for disks for laptop
computers, demand for small-size glass disks for applications such as portablemusic players expanded strongly. Net sales were also boosted substantiallycompared to the previous consolidated fiscal year by the addition of the glass
disk business of NIPPON SHEET GLASS CO., LTD., which was transferred to
Hoya in March 2004. In optical glass products, sales of molded aspheric lenses
and other optical lenses fared well, reflecting growth in the digital camera
market in the first half of the consolidated fiscal year under review. Althoughaffected greatly by inventory adjustments because of oversupply in the market
during the second half, net sales increased year on year for the full year.
Operating income of the Electro-Optics division rose 40.1% to ¥63,290
million. In the first half, conditions of strong demand relative to supply capacity
continued for many products, boosting profit margins to very high levels
because plant capacity utilization rates were high. Hoya expanded supply
capacity in the second half of the year through capital investment, but demand
for some products slowed, causing profit margins to erode. Throughout theyear, demand for high-value-added products was strong for every product, andthe operating margin for the full year increased by 4.7 percentage points to
38.1%.
As indicated in the graph for “Sales Growth and Profitability by Business
Segment” (“the graph”), the growth rate for Electro-Optics division net sales
was higher than the consolidated average growth rate for net sales of 13.5%(the circle is above the Consolidated Basis line), and the position of the circle
shifted right as the operating margin improved from the previous consolidated
fiscal year.
By quarter, the operating margin was 38.9% in the first quarter, 40.5% in
the second quarter, 37.3% in the third quarter and 35.5% in the fourth quarter.

Hoya increased capital investment in the Electro-Optics division
substantially during the fiscal year, boosting investment by 43.7% to ¥31,962
million. Capital investments to construct new plants and enhance existing
equipment were made to improve production capacity for products such aslarge-scale LCD photomasks, glass disks for HDDs and optical lenses.
Net sales for the Photonics division jumped 161.2% to ¥10,749 million.
The main factor behind this net sales increase was the transfer of HOYA
CANDEO OPTRONICS CORPORATION, which was part of the ElectroOptics division until the end of the previous consolidated fiscal year, to the
Photonics division at the start of the consolidated fiscal year under review. At
the end of the first quarter of the previous consolidated fiscal year, thiscompany was converted from a company accounted for by the equity
method to a consolidated subsidiary.
2003(Millions of yen)
200,000

Electro-Optics Division

2004

2005
(%)
40

150,000

20

100,000

0

50,0000

Net sales (Millions of yen)

111,461

135,071

165,664

Operating income (Millions of yen)

34,41445,17063,290Operating income ratio* (%)

30.8

33.4

38.1

Assets (Millions of yen)

114,877

132,240

162,638

Depreciation (Millions of yen)

13,12913,205

14,730Capital expenditures (Millions of yen)

10,444

22,24731,962* The operating income ratio above is calculated using net sales plus intersegment
sales. Please refer to details on page 64 Segment Information.

Sales Growth and Profitability by Business Segment
Fiscal year ended March 31, 2005 (Compared with the previous fiscal year)

Sales Growth Ratio (%)

Consolidated Basis

35
Size of circle shows the volume of operating income.
25

Electro-Optics
15

Consolidated Basis

Health Care
5

-5

Vision Care
-15
Operating Income Ratio (%) 15

38

20

25

30

35

40

45

Eye Care (Vision Care Division)
Net sales of the Vision Care division declined 3.3% to ¥94,971 million. In
the domestic eyeglass lens market, the prolonged slump appears tohave hit bottom, and the trend toward moderate recovery continued,
with demand recovering for high-value-added products. Although sharp
price competition for low-priced products continued, Hoya increased
net sales by emphasizing sales of high-value-added products. In overseas
markets, on the other hand, net sales were sharply affected by a sluggish
market overall in Germany, the largest market for Hoya in Europe,
where sales fell in reaction to increased demand stimulated by reformof the health insurance system in the previous consolidated fiscal year.
Under these circumstances, Hoya is pursuing a differentiation strategy
by selling high-value-added products such as high-index lenses andhighly functioned coatings in both the domestic and overseas markets.
Operating income for the Vision Care division decreased 2.4% to¥17,079 million, while the operating margin was 18.0%, 0.2 percentage
point higher than in the previous consolidated fiscal year. Profitabilityrose because of measures such as emphasis on high-value-added
products and a review of the production organization on a global basis.
Although the position of the circle for this division was lower on thegraph because net sales declined, affected mainly by the slump in theEuropean market, the circle shifted to the right somewhat because theprofit margin rose slightly. By quarter, the operating margin was 17.3% in
the first quarter, 17.4% in the second quarter, 20.1% in the third quarterand 17.2% in the fourth quarter.
Capital investment in the Vision Care division decreased by 1.9% to¥6,787 million. During the consolidated fiscal year under review, Hoya
continued to build a global production organization with a focus on
optimal production locations.

2003(Millions of yen)
100,000

2004

2005
(%)
40

80,00020

60,000040,00020,0000

Net sales (Millions of yen)

94,38898,203

94,971

Operating income (Millions of yen)

15,39817,496

17,079Operating income ratio* (%)

16.0

17.8

18.0

Assets (Millions of yen)

98,07792,082

90,765

Depreciation (Millions of yen)

5,578

5,735

5,900

Capital expenditures (Millions of yen)

3,935

6,916

6,787

* The operating income ratio above is calculated using net sales plus intersegment
sales. Please refer to details on page 64 Segment Information.

Eye Care (Health Care Division)
Net sales for the Health Care division grew 10.7% to ¥31,409 million. In
contact lenses, within the context of continued price competition in themarket from discount retailers, Hoya sought to increase its
attractiveness to customers by aggressively pursuing scrap and build of
directly managed Eye City stores, and boosted net sales as a result ofoffering customer services with a high level of professional expertiseand promoting multifocal lenses and other high-value-added products.
Net sales for IOLs also expanded strongly, as Hoya continued sales ofsoft intraocular lenses and began selling yellow lenses and injectors, andaggressively pursued business development not only in the domestic
market but also in overseas markets.
Operating income for the Health Care division increased 13.9% to¥7,141 million. The full year operating margin improved by 0.6
percentage point to 22.7%. In addition to pursuing efficientmanagement, Hoya focused on further expansion of the business andinvested aggressively in product development and marketing.
On the graph, the position of the circle has shifted upward to theright side. This shows that the division grew from the perspective ofboth sales growth and profitability, although it lies slightly below theconsolidated average growth rate for net sales of 13.5%. By quarter, theoperating margin was 23.8% in the first quarter, 24.6% in the second
quarter, 21.9% in the third quarter and 20.6% in the fourth quarter.

2003(Millions of yen)
35,000

2004

2005
(%)
40

30,00020

25,00020,0000
15,00010,0005,000
0Net sales (Millions of yen)

26,71728,381

31,409Operating income (Millions of yen)

5,089

6,273

7,141

Operating income ratio* (%)

19.0

22.1

22.7

16,447

18,873

18,330Assets (Millions of yen)
Depreciation (Millions of yen)

571

532

669

Capital expenditures (Millions of yen)

426

1,201

738

* The operating income ratio above is calculated using net sales plus intersegment
sales. Please refer to details on page 64 Segment Information.

39

Segment Overview
Other Businesses (Crystal Division)
Net sales for the Crystal division decreased 15.0% to ¥3,672 million.
Corporate demand in this market remained slow, and Hoya is now in theprocess of reducing its business to an appropriate scale, but the pace of thebusiness restructuring did not match the speed at which net sales declined. As
a result, this division again incurred an operating loss, totaling ¥421 million in
the consolidated fiscal year under review. For the second consecutive year, thevalue of noncurrent assets was reduced on the Group’s books to arecoverable amount, and the amount of this ¥92 million reduction wasrecorded as a loss on impairment of long-lived assets.

2003(Millions of yen)
8,000

2004

2005
(%)
12

6,000

6

4,000

0

2,000

-6

0

-12

-1000

Net sales (Millions of yen)

6,719

4,322

Operating income (Millions of yen)

-12

-496

-421

Operating income ratio* (%)

-0.2

-11.3

-11.3

Assets (Millions of yen)

8,409

2,805

1,900

Depreciation (Millions of yen)

302

352

-

Capital expenditures (Millions of yen)

776

224

92

3,672

* The operating income ratio above is calculated using net sales plus intersegment
sales. Please refer to details on page 64 Segment Information.

Sales Growth and Profitability by Geographical Segment
Sales Growth Ratio (%)

Fiscal year ended March 31, 2005 (Compared with the previous fiscal year)

35
Size of circle shows the volume of operating income.

Japan
25

15

Asia
5

Europe-5

North America-15
Operating Income Ratio (%) 0

40

5

10

15

20

25

30

35

2001

Capital Expenditures

2002

2003

2004

2005

(Millions of yen)
50,00040,00030,00020,00010,0000Capital expenditures (Millions of yen)

Research andDevelopment Expenses(Billions of yen)
12

39,673

19,585

15,94830,65940,175

2001

2002

2003

2004

2005

(%)
4.0

10
3.0
8
2.0

6
4

1.0
2
0

0

R&D expenses (Billions of yen)

7.3

7.3

8.7

9.8

10.9

R&D expenses/net sales (%)

3.1

3.1

3.5

3.6

3.6

2001

2002

2003

2004

2005

22.5

14.2

24.7

16.7

27.4

Group Employees by Region(% of total)
100

75

45.0

48.2

52.4

15.4

15.8

14.8

12.2

11.3

10.3

7.3

8.5
6.2

65.9

71.1

50

25

10.1

Total

12,966

13,311

14,02318,092

21,234

Japan

3,553

3,282

3,150

3,023

3,007

Asia

5,838

6,411

7,346

11,925

15,102Europe

2,000

2,102

2,082

1,821

1,809

North America

1,575

1,516

1,445

1,323

1,316

0

41

Financial Position
In terms of assets at the end of the consolidated fiscal year underreview, cash and cash equivalents grew 40.3% year on year to ¥112,875
million, and notes and accounts receivable rose 8.2% to ¥75,296 million.
These were the major factors behind the large increase in current
assets, which grew 20.5% to ¥232,872 million. Because property, plantand equipment increased 21.5% to ¥95,158 million and investments andother assets rose 28.2% to ¥23,452 million, noncurrent assets expanded
22.8% to ¥118,610 million. Total assets increased 21.2%, to ¥351,482
million.
Current liabilities increased 3.7% to ¥70,792 million. This reflected
higher accrued expenses and notes and accounts payable, althoughincome taxes payable fell 30.4% to ¥10,023 million. Long-term liabilities
rose 1.9% to ¥1,970 million. Total liabilities were ¥72,762 million, up 3.7%.

Total Assets,
Shareholders’ Equity andShareholders’ Equity Ratio(Millions of yen)
400,000

2001

Retained earnings increased 8.5%, or ¥21,079 million, to ¥268,255
million, reflecting the increase in net income of ¥64,135 million and thedecrease of ¥43,056 million comprising dividends paid of ¥12,241
million, retirement of treasury stock of ¥30,702 million, and other items.
In addition, foreign currency translation adjustments shrank by ¥6,138
million, and treasury stock declined ¥31,625 million. As a result, total
shareholders’ equity rose 26.9% to ¥277,889 million. The shareholders’equity ratio increased by 3.6 percentage points, to 79.1%, from 75.5%.

2002

2003

2004

2005

(%)
90
85

300,000
80
75

200,000

70
100,00065
60

0Total assets (Millions of yen)

267,611

278,068

274,289

289,887

351,482

Shareholders’ equity (Millions of yen)

195,333

219,180

224,219

218,979

277,889

73.0

78.8

81.7

75.5

79.1

Shareholders’ equity ratio (%)

42Cash Flows
Based on the operating results previously discussed in the paragraphs
on “Net Sales” and “Net Income,” net cash provided by operating
activities decreased by ¥2,744 million to ¥76,000 million. This mainlyreflects the fact that income before income taxes and minority interests
increased by ¥27,970 million to ¥83,466 million and depreciation andamortization expense increased by ¥1,673 million to ¥21,661 million.
Regarding cash used in operating activities, major items included anincrease in notes and accounts receivable of ¥5,393 million (¥396
million more than in the previous consolidated fiscal year) an increase ininventories of ¥2,526 million (¥2,748 million more than in the previous
consolidated fiscal year) and income taxes paid of ¥23,588 million(¥16,708 million more than in the previous consolidated fiscal year).
Net cash used in investing activities rose by ¥7,185 million to

Cash Flows

2001¥35,524 million. This mainly reflected an increase in purchases ofproperty, plant and equipment, which rose by ¥10,182 million to¥33,394 million.
Net cash used in financing activities was ¥11,692 million, primarily
for payment of dividends, which increased by ¥3,658 million to ¥12,246
million. Because net cash used in financing activities in the previous
consolidated fiscal year was ¥42,853 million, which included substantial
funds used for a net increase in treasury stock, net cash used in financing
activities declined by ¥31,161 million year on year.
As a result of the above, the balance of cash and cash equivalents
at the end of the consolidated fiscal year under review increased by¥32,450 million to ¥112,875 million.

2002

2003

2004

2005

(Millions of yen)
100,000

80,00060,00040,00020,0000

Depreciation, amortization and other (Millions of yen)

32,138

20,105

19,792

25,32822,520Net income (Millions of yen)

21,86023,741

20,03839,54964,135

Cash flows (Millions of yen)

53,99843,846

39,83064,87786,655

Note: Depreciation, amortization and other includes depreciation, amortization of goodwill, and loss on impairment of long-lived assets.

Quarterly Cash Flows

2004-1Q

2004-2Q

2004-3Q

2004-4Q

2005-1Q

2005-2Q

2005-3Q

1st quarter of 2004 to 4th quarter of 2005

2005-4Q (Millions of yen)
25,00020,00015,00010,0005,000

0Depreciation, amortization and other (Millions of yen)

4,645

5,018

5,027

10,638

4,928

5,252

5,368

6,972

Net income (Millions of yen)

9,795

9,129

10,41910,206

16,223

16,671

16,123

15,118Cash flows (Millions of yen)

14,44014,147

15,446

20,844

21,151

21,923

21,49122,090Note: Depreciation, amortization and other includes depreciation, amortization of goodwill, and loss on impairment of long-lived assets.

43

Stock Price Data

2001

(Times)
100

2002

2003

2004

2005

(Yen)
12,00010,000

80

8,000
60
6,000
40
4,000
20

2,000
0

0

Price earnings ratio (Times)

43.73

44.50

41.79

28.92

20.39

Price cash flow ratio (Times)

17.55

23.94

20.83

17.61

15.07

Price book value ratio (Times)

4.86

4.79

3.68

5.16

4.73

Stock price at fiscal year-end (Yen)

8,160

9,040

7,150

10,15011,800Common Stock Price Range
and Trading Volume

Stock price (Yen)
15,000FY2004

Trading volume(Thousands of shares)
25,000FY200520,00010,00015,00010,000
5,000
5,000

0

0

4

Dividend Per Share

5

6

2001

7

8

9 10 11 12 1

2002

2

3

4

2003

5

6

7

8

9 10 11 12 1

2004

2

2005

3 (Month)

(Yen)
150

100

50

0

44

Period-end dividend (Yen)

30.00

25.00

25.00

50.00

Interim dividend (Yen)

20.00

25.00

25.00

50.00

60.00

Total dividend (Yen)

50.00

50.00

50.00

100.00150.0090.00

Business Risk
The main items believed to be potential risk factors for development of the businesses of the Hoya Group are described below.
Matters concerning forward-looking activities included in these statements are based on information evaluated by
Hoya’s management as of the date these materials were prepared.

Fluctuation of Exchange Rates

Competence for Developing New Products

As the Hoya Group develops its business on a global scale, if thecurrencies of those countries in which the Hoya Group has major
manufacturing operations appreciate, export prices of its products
would rise, which would incur an increase in costs on a consolidated
basis. If the currencies of those countries in which the Hoya Group has
major sales operations depreciate, it would bring about a decrease in

In the industrial sector to which the Hoya Group belongs, technologicaladvances are swift and the Hoya Group strives at all times to develop
state-of-the-art technologies. However, if the Hoya Group fails to
sufficiently predict changes in the sector and markets or to develop new
products that meet customer needs in time, the business results andfinancial condition of the Hoya Group might be adversely affected.

sales.

Competition
Influence of International Situations
At present, the situation in some countries, is extremely tense.
Hereafter, in the event that movement of people, goods or money wererestrained extraordinarily in a certain region, or if certain unexpected
events took place in those countries in which the Hoya Group hasbusiness operations—including changes in the political, economic orlegal environments, labor shortages, strikes, or natural calamities, etc.—
certain problems may arise in the execution of business operations.

The Hoya Group, which has the top market share for its many productsin their respective sectors, is constantly exposed to relentlesscompetition. There is no guarantee that the Hoya Group can maintainits overwhelming market share and compete efficiently in future. If
customers shift allegiance due to cost pressures or inefficiency of Hoya’scompetitiveness, the business results and financial condition of the Hoya
Group might be adversely affected.

Production Capacity
Our Business as in Production Goods
Every part of the Electro-Optics products range, which constitutes amajor portion of the Hoya Group revenue, involves intermediate
production goods, components or materials. Therefore, growth of thebusiness thereof is affected substantially by the market conditions ofsuch products as semiconductors, LCD panels and HDDs that are
manufactured utilizing the Hoya Group products, and by that ofpersonal computers and home appliances, etc. that are manufactured
utilizing the resultant products.

Emergence of Discounters andLowering of Prices in the Consumer Goods Sector
In recent years in the eyeglass and contact lens markets, discount shopsof an unprecedented type have emerged and brought about a loweringof prices. If the influence of such discount shops swells to an extent thatcannot be absorbed by the Hoya Group’s cost reduction efforts andstrategies for adding high value both in Japan and abroad, the businessresults and financial condition of the Hoya Group might be adversely

At present, the Hoya Group reinforces its production capacity so as tomeet orders that exceed existing production capacity in multiple
business areas. However, if the setting up of such capacity were delayed
for any reason, it would affect not only the Hoya Group’s results but
also the production and sales plans of its customers, which might bringabout increased market share for its competitors, etc., and adversely
affect the business results and financial condition of the Hoya Group.

New BusinessNew business is important for future growth. In the event that nopromising new business is developed, the growth of the Hoya Groupmight not be achieved as planned. Besides, the Hoya Group may carryout mergers and acquisitions as a part of its business strategy. If
unexpected obstacles emerge after such acquisition and unscheduled
time and costs are required, the business results and financial conditionof the Hoya Group might be adversely affected.

affected.

45

Consolidated Balance Sheets
Hoya Corporation and Subsidiaries
March 31, 2005 and 2004

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

2005

2004

2005

¥ 112,875¥ 80,425$ 1,054,906

CURRENT ASSETS:
Cash and cash equivalents
Notes and accounts receivable:
145

163

1,355

Other—trade73,562

67,174

687,495

Other

2,825

3,608

26,402

Associated companies (Note 14)

Allowance for doubtful receivables
Inventories (Note 5)(1,236)(1,347)(11,551)

36,16532,878337,991

Deferred tax assets (Note 11)

6,501

7,066

60,757

Prepaid expenses and other current assets (Note 14)

2,035

3,312

19,019232,872

193,279

2,176,374

8,937

9,219

83,523

Total current assets
PROPERTY, PLANT AND EQUIPMENT (Note 6):Land
Buildings and structures

56,91653,353531,925

Machinery and vehicles

165,885

140,876

1,550,327

Furniture and equipment

22,85820,421

213,626

Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

6,907

5,276

64,552

261,503229,1452,443,953(166,345)(150,826)(1,554,626)

95,15878,319889,327

INVESTMENTS AND OTHER ASSETS:
897

849

8,383

Investments in and advances to associated companies (Note 7)

9,486

5,701

88,654

Goodwill

1,336

1,358

12,486

Software

3,101

2,645

28,981

Rental deposits

2,633

2,482

24,608Deferred charges

322

162

3,010

Deferred tax assets (Note 11)

3,098

3,012

28,953

Other assets

2,881

2,568

26,925

Allowance for doubtful receivables

(302)

(488)

(2,822)

Investment securities (Note 4)

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

46

23,452

18,289219,178¥ 351,482¥ 289,887$ 3,284,879

Thousands of U.S. Dollars(Note 1)Millions of Yen
LIABILITIES AND SHAREHOLDERS’ EQUITY

2005

2005

2004

CURRENT LIABILITIES:
Short-term bank loans (Note 8)¥

195

Current portion of long-term bank loans (Note 8)

¥

336

$

1,822

151

Notes and accounts payable:
Associated companies (Note 14)
Other—trade
Construction and other
Income taxes payable

42

24

393

24,411

25,747228,140

15,28910,016

142,888

10,023

14,39893,673

Accrued bonuses to employees

3,917

3,723

36,608

Accrued expenses

14,162

12,641

132,355

Other current liabilities
Total current liabilities

2,753

1,216

25,72970,792

68,252

661,608

542

358

5,065

LONG-TERM LIABILITIES:
Reserve for periodic repairs
Other long-term liabilities
Total long-term liabilities
MINORITY INTERESTS

1,428

1,576

13,346

1,970

1,934

18,411

831

722

7,766

6,264

6,264

58,542CONTINGENT LIABILITIES (Notes 13, 15 and 16)
SHAREHOLDERS’ EQUITY (Notes 10 and 18):
Common stock—authorized, 316,224,600 shares in 2005 and 320,000,000 shares in 2004;
issued, 112,349,005 shares in 2005 and 116,124,405 shares in 2004
Capital surplus

15,89915,899148,589

Retained earnings

268,255

247,176

2,507,056

38

(30)

355

Foreign currency translation adjustments(4,688)(10,826)(43,813)

Treasury stock—at cost, 967,762 shares in 2005 and 4,857,867 shares in 2004

(7,879)(39,504)(73,635)

Net unrealized gain (loss) on available-for-sale securities

Total shareholders’ equity
TOTAL

277,889

218,979

2,597,094¥351,482¥289,887$3,284,879

47

Consolidated Statements of Income
Hoya Corporation and Subsidiaries
Years Ended March 31, 2005, 2004 and 2003

Thousands of U.S. Dollars(Note 1)Millions of Yen
2005

2004

2003

2005

NET SALES (Note 14)¥308,172¥271,444¥246,293$2,880,112

COST OF SALES (Notes 9, 12, 13 and 14)

158,024

142,683

133,275

1,476,860

150,148

128,761

113,018

1,403,252

65,22860,59460,035

609,607

84,92068,16752,983

793,645

1,022

558

624

9,551

Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 9, 12, 13 and 14)
Operating income
OTHER INCOME (EXPENSES) (Note 14):
Interest and dividend income
Interest expense

(87)

(189)

(374)

(813)

Foreign exchange gains (losses)—net

875(2,900)(1,252)8,178

Equity in earnings of associated companies

3,708

1,700

418

Loss on clarification of soil contamination(1,980)(18,505)

Loss on closure of plant in the fiscal year

(1,264)(11,813)34,654

Loss on disposal of property, plant and equipment(948)(1,900)Loss on impairment of long-lived assets (Note 6)(859)(2,040)Additional retirement benefits paid to employees (Note 9)(843)(1,090)(3,691)(7,878)Gain on sales of property, plant and equipment and other assets

195

523

725

1,822

Loss on write-down of investment securities

(619)

(111)

Amortization of goodwill(3,300)Additional expense incurred to dissolve the contributory
funded pension plan (Note 9)(888)

Gain on transfer of business (Note 3)(1,947)(8,860)(8,028)488

Additional expense incurred to abolish the unfunded
retirement benefit plan (Note 9)(14,949)(351)(1,273)(2,526)(3,820)(11,897)(1,454)(12,671)(24,240)(13,589)

83,46655,49628,743780,056

Current

18,69018,574

5,648

174,673

Deferred532(2,775)

3,029

4,972

19,222

15,7998,677

179,645

(109)

(148)

(28)

(1,018)¥ 64,135¥ 39,549¥ 20,038$ 599,393

Other expenses—net
Other expenses—net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTSINCOME TAXES (Note 11):

Total income taxes
MINORITY INTERESTS IN NET INCOME
NET INCOME

Yen

U.S. Dollars

2005

2004

2003

2005

PER SHARE OF COMMON STOCK (Notes 2.p and 17):
Basic net income¥578.84¥350.96¥171.10$5.41

Diluted net income

577.52350.56171.08

5.40

Cash dividends applicable to the year

150.00100.00

50.00

1.40

See notes to consolidated financial statements.

48

Consolidated Statements of Shareholders’ Equity
Hoya Corporation and Subsidiaries
Years Ended March 31, 2005, 2004 and 2003

Millions of Yen
Outstanding
Number of
Shares ofCommon Stock

CommonStockCapitalSurplus116,122,346¥6,264¥15,899

BALANCE, APRIL 1, 2002
Adjustment of retained earnings
for merger of unconsolidated
subsidiaries (Note 3)

Retained
Earnings

Net Unrealized
Gain (Loss) on
Available-forSale Securities

Foreign
Currency
Translation
Adjustments

TreasuryStock¥202,255¥110¥(5,331)

¥

(17)

(66)

Net income

20,038

Appropriations:
Cash dividends, ¥50.00 per share(5,806)

Bonuses to directors(149)

Repurchase of treasury stock(948,991)(7,036)

Net decrease in unrealized gain on
available-for-sale securities(95)

Net decrease in foreign currencytranslation adjustments
BALANCE, MARCH 31, 2003

(1,847)
115,173,355

6,264

15,899Net income

216,272

15(7,178)(7,053)39,549Appropriations:
Cash dividends, ¥75.00 per share(8,440)Bonuses to directors(169)

Repurchase of treasury stock(3,962,711)

Disposal of treasury stock

55,894(32,905)(36)

Net decrease in unrealized gain on
available-for-sale securities

454
(45)

Net decrease in foreign currencytranslation adjustments
BALANCE, MARCH 31, 2004

(3,648)111,266,538

6,264

15,899247,176(30)(10,826)(39,504)

64,135

Net income
Appropriations:(12,241)

Cash dividends, ¥110.00 per share(63)

Bonuses to directors
Repurchase of treasury stock(3,437)

Disposal of treasury stock

118,142(38)

Retirement of treasury stock

(50)

961

(30,702)30,702

Net increase in unrealized gain on
available-for-sale securities

68

Net increase in foreign currencytranslation adjustments
BALANCE, MARCH 31, 2005

6,138
111,381,243¥6,264¥15,899¥268,255¥ 38¥(4,688)¥ (7,879)

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

BALANCE, MARCH 31, 2004

CommonStockCapitalSurplusRetained
Earnings$58,542$148,589$2,310,056

Net Unrealized
Foreign
Gain (Loss) on
Currency
Available-forTranslation
Sale Securities Adjustments$(280)$(101,178)

TreasuryStock$(369,196)

599,393

Net income
Appropriations:(114,402)

Cash dividends, $1.03 per share(589)

Bonuses to directors(355)

Repurchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock

(467)

8,981

(286,935)

286,935

Net increase in unrealized gain on
available-for-sale securities

635

Net increase in foreign currencytranslation adjustments
BALANCE, MARCH 31, 2005
See notes to consolidated financial statements.

50

57,365$58,542$148,589$2,507,056$ 355$ (43,813)$ (73,635)

Consolidated Statements of Cash Flows
Hoya Corporation and Subsidiaries
Years Ended March 31, 2005, 2004 and 2003

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

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paid
Income taxes—refunded
Depreciation and amortization
Amortization of goodwill
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
Loss on write-down of investment securities
Gain on sales of property, plant and equipment and other assets
Loss on disposal of property, plant and equipment
Loss on impairment of long-lived assets
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 dividends receivable
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable
Increase (decrease) in interest payable
Increase in other current liabilities
Total adjustments
Net cash provided by operating activities
INVESTING ACTIVITIES:
Proceeds from sales of investment securities
Purchases of investment securities
Proceeds from sales of property, plant and equipment
Purchases of property, plant and equipment
Collection of loans
Payment of loans
Purchase of goodwill
Proceeds from transfer of business
Decrease in other assets
Increase in other assets
Net cash used in investing activities
FINANCING ACTIVITIES:Net decrease in short-term bank loans
Repayments of long-term bank loans
Proceeds from sales of treasury stock
Payments for purchases of treasury stock
Dividends paid
Other
Net cash used in financing activities

2005

2004

2003

2005

¥ 83,466¥ 55,496¥ 28,743$ 780,056(23,588)330
21,661(11,509)(220,449)
3,084
202,439

(195)
948
859
(233)
(63)
(3,708)(6,880)3,900
19,9883,300(1,169)
191
(293)
94
619
(523)
1,900
2,040
1,209
(169)
(1,700)

554

507

706
(150)
(418)
(488)
740

(5,393)(2,526)(64)
2,428(1,629)(23)
3,142(7,466)76,000(4,997)222
101(1,961)
5,116
34
1,719
23,24878,744

628
3,208
(80)
2,060
555
12
1,247
9,647
38,390(50,402)(23,607)(598)
22,691(15,224)(215)
29,364(69,776)
710,280(10)541(33,394)
211
(97)

102
(379)
814
(23,212)2,169(2,475)(3,300)

321
(346)
2,254
(14,213)
111
(216)

(93)
5,056
(312,093)
1,972
(907)

321
(3,096)(35,524)660(2,718)(28,339)894
452(2,840)(13,583)

3,000(28,935)(332,000)

(158)
(161)
911
(38)
(12,246)(1,738)(44)419(32,921)(8,588)19(42,853)

(345)
194
185

(11,692)

19,792(6)(360)(7,256)
(367)
111
(725)
1,947

(3,224)
1,813
1,729(1,822)8,860
8,028(2,178)(589)(34,654)
5,178(7,036)(5,813)(1,477)(1,505)8,514(355)(114,448)(14,548)(109,271)(1,265)(434)

51

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

NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATEDSUBSIDIARY AT THE DATE OF CHANGE
CASH AND CASH EQUIVALENTS INCREASED BY
MERGED UNCONSOLIDATED SUBSIDIARIESFOREIGN 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:
Retirement of treasury stock
Increase in assets and liabilities due to consolidation of
a subsidiary previously unconsolidated (Note 3):
Assets (primarily accounts receivable, inventory and property)
Liabilities (primarily trade payables)
Increase in assets and liabilities due to merger of unconsolidated
subsidiaries (Note 3):
Assets (primarily inventory and property)
Liabilities (primarily trade payables)
Decrease in assets and liabilities due to transfer of business(Note 3):
Assets (primarily property and rental deposits)
Liabilities (primarily deposit received)
See notes to consolidated financial statements.

52

2005

2004

2003

2005

¥ 28,784¥ 7,552¥ 10,259$ 269,009

378
41
3,666
80,425¥112,875(3,199)75,694¥ 80,425(927)
66,321¥ 75,694¥ 30,702

34,261
751,636$1,054,906$ 286,935¥ 2,607
(870)

¥

82
(37)

434
(28)

Notes to Consolidated Financial Statements
Hoya Corporation and Subsidiaries

No. 1

BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been

The consolidated financial statements are stated in Japanese

prepared in accordance with the provisions set forth in theyen, the currency of the country in which Hoya Corporation (theJapanese Securities and Exchange Law and its related accounting“Company”) is incorporated and operates. The translations ofregulations, and in conformity with accounting principles generally

Japanese yen amounts into U.S. dollar amounts are included solely

accepted in Japan, which are different in certain respects as tofor the convenience of readers outside Japan and have been madeapplication and disclosure requirements of International Financial

at the rate of ¥107 to U.S.$1, the approximate rate of exchange

Reporting Standards.

at March 31, 2005. Such translations should not be construed as

In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to therepresentations that the Japanese yen amounts could be
converted into U.S. dollars at that or any other rate.

consolidated financial statements issued domestically in order

Certain reclassifications have been made in the 2004 and 2003

to present them in a form which is more familiar to readersconsolidated financial statements to conform to the classifications

outside Japan.

used in 2005. These reclassifications had no effect on previously
reported net income.

No. 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as ofc. Inventories—Inventories are primarily stated at cost,

March 31, 2005 include the accounts of the Company and its 58

determined principally by the average method.

(55 in 2004 and 52 in 2003) subsidiaries (together, the “Group”).

d. Investment Securities—Investment securities are classified

Under the control or influence concept, those companies ineither as marketable available-for-sale securities or non-marketable

which the Company, directly or indirectly, is able to exercise con-available-for-sale securities. Marketable available-for-sale securities

trol over operations are fully consolidated, and those companies

are reported at fair value, with unrealized gains and losses, net ofover which the Group has the ability to exercise significant

applicable taxes, reported in a separate component of sharehold-influence are accounted for by the equity method.

ers’ equity. The cost of securities sold is determined based on theInvestment in one (one in 2004 and two in 2003) associatedcompany in 2005 is accounted for by the equity method.

moving-average method.
Non-marketable available-for-sale securities are stated at cost

Investments in the remaining associated companies are stated atdetermined by the moving-average method. For other than tem-cost. If the equity method of accounting had been applied to theporary declines in fair value, investment securities are reduced toinvestments in these companies, the effect on the accompanying

net realizable value by a charge to income.

consolidated financial statements would not be material.
The differences between the cost and underlying net equity ofe. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant andinvestment in consolidated subsidiaries and associated companies

equipment of the Company and its domestic subsidiaries is com-accounted for by the equity method are charged to income when

puted substantially by the declining-balance method at rates based

incurred.

on the estimated useful lives of the assets, while the straight-line

All significant intercompany balances and transactions have been

method is applied to buildings of the Company and its domestic

eliminated in consolidation. All material unrealized profits included insubsidiaries, and to main property, plant and equipment of consol-

assets resulting from transactions within the Group are eliminated.

idated foreign subsidiaries. The net book value of tangible fixedb. Cash Equivalents—Cash equivalents are short-term invest-

assets depreciated by the straight-line method was approximately

ments that are readily convertible into cash and that are exposed

56.3% of total tangible fixed assets in 2005, 45.1% in 2004 andto insignificant risk of changes in value. Cash equivalents include

44.6% in 2003. The ranges of useful lives are from 10 to 50 years

time deposits, certificate of deposits, commercial paper andfor buildings and structures and from 5 to 10 years for machinerymutual funds investing in bonds, all of which mature or becomeand vehicles.

due within three months of the date of acquisition.

53

f. Long-Lived Assets—In August 2002, the Business Accounting

plan was abolished. The remaining balance of transitional obliga-

Council issued a Statement of Opinion, “Accounting for Impairment

tion at the dissolution of the contributory funded pension planof Fixed Assets,” and in October 2003 the Accounting Standards

and the abolishment of the unfunded retirement benefit plan was

Board of Japan (“ASB”) issued ASB Guidance No. 6, “Guidancecharged to income.

for Accounting Standard for Impairment of Fixed Assets.” These

tors and corporate auditors of the Company and its domestic

after April 1, 2005 with early adoption permitted for fiscal years

subsidiaries was also calculated to state the liability at the amountending on or after March 31, 2004.

that would be required if all directors and corporate auditors

The Group adopted the new accounting standard for impairment of fixed assets for the year ended March 31, 2004.

retired at each balance sheet date. The provisions for theretirement benefits are not funded.

The Group reviews its long-lived assets for impairment when-

For the year ended March 31, 2004, the Company and its

ever events or changes in circumstance indicate the carrying amountdomestic subsidiaries abolished the retirement benefit plan forof an asset or asset group may not be recoverable. An impairment

directors and corporate auditors.

loss would be recognized if the carrying amount of an asset ori. Research and Development Expenses—Research and develop-

asset group exceeds the sum of the undiscounted future cash

ment expenses are charged to income when incurred.

flows expected to result from the continued use and eventual dis-j. Leases—All leases are accounted for as operating leases. Under

position of the asset or asset group. The impairment loss would

Japanese accounting standards for leases, finance leases that deembe measured as the amount by which the carrying amount of theto transfer ownership of the leased property to the lessee areasset exceeds its recoverable amount, which is the higher of theto be capitalized, while other finance leases are permitted to bediscounted cash flows from the continued use and eventual

accounted for as operating lease transactions if certain “as if

disposition of the asset or the net selling price at disposition.

capitalized” information is disclosed in the notes to the lessee’s

The effect of adoption of the new accounting standard for

54

The annual provision for accrued retirement benefits for direc-

new pronouncements are effective for fiscal years beginning on orconsolidated financial statements.

impairment of fixed assets was to decrease income before income

k. Income Taxes—The provision for income taxes is computed

taxes and minority interests for the years ended March 31, 2005

based on the pretax income included in the consolidated state-and 2004 by ¥859 million ($8,028 thousand) and ¥2,040 million,

ments of income. The asset and liability approach is used to rec-respectively.

ognize deferred tax assets and liabilities for the expected future

g. Intangible Assets—Intangible assets are carried at cost lesstax consequences of temporary differences between the carrying

accumulated amortization, which is calculated by the straight-line

amounts and the tax bases of assets and liabilities. Deferred taxes

method. Amortization of software is calculated by the straight-line

are measured by applying currently enacted tax laws to themethod over 5 years. Goodwill recognized under the Japanese

temporary differences.

Commercial Code (the “Code”) is fully charged to income whenl. Appropriations of Retained Earnings—Appropriations of

incurred.

retained earnings at each year end are reflected in the consoli-

h. Retirement Benefits—The Company and certain subsidiaries

dated financial statements for the following year upon shareholders’had a contributory funded pension plan and an unfunded retire-

approval or resolution of the Board of Directors.

ment benefit plan which covered substantially all of their employees.

m. Foreign Currency Transactions—All short-term and long-

Effective April 1, 2000, the Company and domestic subsidiaries

term monetary receivables and payables denominated in foreign

adopted a new accounting standard for employees’ retirement

currencies are translated into Japanese yen at the exchange rates

benefits and accounted for the liability for retirement benefits

at the balance sheet date. The foreign exchange gains and losses

based on projected benefit obligations and plan assets at thefrom translation are recognized in the statements of income tobalance sheet date. The transitional obligation of ¥3,166 million,

the extent that they are not hedged by forward exchange contracts.

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

n. Foreign Currency Financial Statements—The balance sheet

years and presented as other expense in the consolidated

accounts of the consolidated overseas subsidiaries and associatedstatements of income.

companies are translated into Japanese yen at the current

For the year ended March 31, 2003, the contributory fundedexchange rates as of the balance sheet dates except for share-pension plan was dissolved and the unfunded retirement benefit

holders’ equity, which is translated at historical exchange rates.

Differences arising from such translation are shown as “Foreign(or committed) transactions are also measured at the fair value

currency translation adjustments” in a separate component of

but the unrealized gains/losses are deferred until the underlying

shareholders’ equity.

transactions are completed.

Revenue and expense accounts of the consolidated overseas

Long-term debt denominated in foreign currencies for which

subsidiaries and associated companies are translated into Japanese

foreign exchange forward contracts are used to hedge the foreign

yen at the monthly average exchange rates.

currency fluctuations are translated at the contracted rate if theo. Derivatives and Hedging Activities—The Group uses deriva-

forward contracts qualify for hedge accounting.

tive financial instruments to manage its exposures to fluctuations

Interest rate swaps which qualify for hedge accounting andin foreign currency exchange rates. Foreign exchange forward

meet specific matching criteria are not remeasured at market

contracts are utilized by the Group to reduce foreign currency

value but the differential paid or received under the swap agree-

exchange risks. The Group does not enter into derivatives forments is recognized and included in interest expense or income.

trading or speculative purposes.

p. Per Share Information—Basic net income per share is com-

Derivative financial instruments and foreign currency transac-

puted by dividing net income available to common shareholders

tions are classified and accounted for as follows: (a) all derivatives

by the weighted-average number of common shares outstanding

are recognized as either assets or liabilities and measured at fair

for the period, retroactively adjusted for stock splits.

value, and gains or losses on derivative transactions are recognized

Diluted net income per share reflects the potential dilution thatin the statements of income and (b) for derivatives used for hedg-

could occur if the outstanding stock options were exercised into

ing purposes, if derivatives qualify for hedge accounting because ofcommon stock. Diluted net income per share of common stockhigh correlation and effectiveness between the hedging instru-

assumes full exercise of the outstanding stock options at thements and the hedged items, gains or losses on derivatives are

beginning of the year (or at the time of grant).

deferred until maturity of the hedged transactions.

Cash dividends per share presented in the accompanying con-

The foreign exchange forward contracts employed to hedge

solidated statements of income are dividends applicable to theforeign currency exchange rate exposures for export sales arerespective years including dividends to be paid after the end of

measured at the fair value and the unrealized gains/losses are

the year.

recognized in income. Forward contracts applied for forecasted

No. 3

REORGANIZATION(1) Reorganization of Subsidiaries(3) Transfer of Business

On June 30, 2003, the Company acquired the voting rights of

On March 31, 2003, a part of the hearing aid business in the eye

Hoya Candeo Optronics Corporation to become a consolidated

care field was transferred to a third party.

subsidiary, which had been accounted for by the equity method.
(2) Merger of the Company with Subsidiaries
On March 1, 2003, the Company merged with Hoya Techno
Process Corporation and two other companies, which had beenwholly owned unconsolidated subsidiaries of the Company.

55

No. 4INVESTMENT SECURITIESInvestment securities as of March 31, 2005 and 2004 consisted of the following:
Millions of Yen

Marketable equity securities
Non-marketable equity securities
Total

Thousands of U.S. Dollars

2005

2004

2005

¥309
588
¥897

¥230
619
¥849

$2,8885,495$8,383The carrying amounts and aggregate fair values of marketable equity securities at March 31, 2005 and 2004 were as follows:
Millions of Yen
Cost

Unrealized
Gains

Unrealized
LossesMarch 31, 2005:
Available-for-sale—Equity securities

¥160

¥149

¥309

March 31, 2004:
Available-for-sale—Equity securities

160

70

230

Fair Value

Thousands of U.S. Dollars

March 31, 2005
Available-for-sale—Equity securities

Cost

Unrealized
Gains$1,495$1,393

Unrealized
LossesFair Value$2,888Available-for-sale securities whose fair value was not readily determinable as of March 31, 2005 and 2004 were as follows:
Carrying AmountMillions of Yen

Equity securities
Investment to limited partnership and others
Total

2005

2004

2005

¥274
314
¥588

¥274
345
¥619

$2,561
2,934$5,495

Proceeds from sales of available-for-sale securities for the years

and zero, respectively, for the year ended March 31, 2004 andended March 31, 2004 and 2003 were ¥102 million and ¥321 mil-¥109 million and ¥7 million, respectively, for the year ended

lion, respectively. Gross realized gains and losses on these sales,

March 31, 2003.

computed on the moving average cost basis, were ¥59 million

56

Thousands of U.S. Dollars

No. 5INVENTORIESInventories at March 31, 2005 and 2004 consisted of the following:
Millions of Yen

Finished products and merchandise
Semi-finished products and work in process
Raw materials
Supplies
Total

No. 6

Thousands of U.S. Dollars

2005

2004

2005

¥14,623
8,084
6,198
7,260
¥36,165¥14,088
7,357
5,347
6,086
¥32,878$136,664
75,551
57,92567,851$337,991

LONG-LIVED ASSETSThe Group reviewed its long-lived assets for impairment as of

The Group also recognized an impairment loss of ¥767 million

the years ended March 31, 2005 and 2004. As a result, the Group($7,168 thousand) for the year ended March 31, 2005 as otherrecognized impairment losses of ¥92 million ($860 thousand) and

expense for a decline in value of the land and other of the¥2,040 million for the years ended March 31, 2005 and 2004,

Maebashi Plant in the Photonics division due to the plant closure.

respectively, as other expense for a decline in value of the property

The carrying amount of the relevant property, plant and equip-

and other of the Musashi Plant and other in the Crystal division

ment was written down to the recoverable amount. The recov-

due to a continuous operating loss of that unit. The carrying

erable amount of that property, plant and equipment group wasamount of the relevant machinery was written down to themeasured based on the land tax assessment for land and net

recoverable amount. The recoverable amount of that machinery

realizable value for others.

group was measured at its value in use and the discount rate used
for computation of the present value of future cash flows was 5%.

No. 7

INVESTMENTS IN AND ADVANCES TO ASSOCIATED COMPANIESInvestments in and advances to associated companies at March 31, 2005 and 2004 were as follows:
Millions of Yen

Investments
Advances (Long-term loan receivable)
Total

Thousands of U.S. Dollars

2005

2004

2005

¥9,486¥5,68912¥5,701$88,654¥9,486$88,654

57

No. 8SHORT-TERM BANK LOANS AND LONG-TERM BANK LOANS

Short-term bank loans at March 31, 2005 and 2004 consisted of notes to banks and bank overdrafts. The annual interest rates applicable tothe short-term bank loans were 4.70% at March 31, 2005 and ranged from 2.70% to 4.98% at March 31, 2004.
Long-term debt at March 31, 2004 consisted of the following:
Millions of Yen
2004

1.54% unsecured yen-denominated loans, due through 2005
Other loans
Total
Less current portionLong-term bank loans, less current portion

No. 9

¥ 150
1
151
(151)

RETIREMENT BENEFITS AND PENSION PLANS

The Company and certain domestic subsidiaries had two types of

For the year ended March 31, 2003, the contributory fundedpension plans for employees; an unfunded retirement benefit plan

pension plan was dissolved and the unfunded retirement benefit

and a contributory funded pension plan. The Company andplan was abolished.

certain domestic subsidiaries had retirement benefit plans for
directors and corporate auditors.
The components of net periodic benefit costs for the years ended March 31, 2005, 2004 and 2003 were as follows:
Millions of Yen
2005

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 dissolve the contributory fundedpension plan
Additional expense incurred to abolish the unfunded retirement
benefit plan
Additional retirement benefits paid to employees
Net periodic benefit costs

Thousands of U.S. Dollars
2003

2005

¥ 1,695
1,234(1,523)
(122)
1,781
(157)
2,908

¥843
¥843

¥ 888

14,9491,090¥1,978351
3,691¥21,899$7,878$7,878Additional expenses incurred to dissolve the contributory

Additional expense incurred to abolish the unfunded retirement

funded pension plan were loss incurred on the dissolution of thebenefit plan was equal to the difference between retirement ben-plan for the year ended March 31, 2004 and the remaining liability

efits paid to employees due to abolishment and the recorded

exceeding liability for retirement benefit at the dissolution of theliability for retirement benefits.

plan for the year ended March 31, 2003.

58

2004

Assumptions used for the year ended March 31, 2003 were set forth as follows:
2003

Expected rate of return on plan assets
Amortization period of prior service cost
Recognition period of actuarial gain/loss
Amortization period of transitional obligation

5.5%
12 years
12 years
15 years

Remaining balances of prior service cost, actuarial gain/loss

Accrued retirement benefits for directors and corporate audi-

and transitional obligation were charged to income when the con-tors of the Company and its domestic subsidiaries were paid sub-tributory funded pension plan was dissolved and the unfunded

ject to approval of the shareholders in accordance with the Code.

retirement benefit plan was abolished in the year ended March

The Company and its domestic subsidiaries abolished the retire-

31, 2003.

ment benefit plan for directors and corporate auditors for theyear ended March 31, 2004.

No. 10SHAREHOLDERS’ EQUITY

Japanese companies are subject to the Code.
The Code requires that all shares of common stock are

The amount of retained earnings available for dividends under
the Code was ¥135,550 million ($1,266,822 thousand) as ofrecorded with no par value and at least 50% of the issue price ofMarch 31, 2005, based on the amount recorded in the Company’s

new shares is required to be recorded as common stock and thegeneral books of account. In addition to the provision thatremaining net proceeds as additional paid-in capital, which is

requires an appropriation for a legal reserve in connection withincluded in capital surplus. The Code permits Japanese companies,

the cash payment, the Code imposes certain limitations on theupon approval of the Board of Directors, to issue shares toamount of retained earnings available for dividends.

existing shareholders without consideration as a stock split. Such

The general shareholders meeting held in June 2003 approved

issuance of shares generally does not give rise to changes within

the introduction of the Committees System stipulated in thethe shareholders’ accounts.

Code. Before the Committees System was introduced, dividends

The Code also provides that an amount at least equal to 10%

had been approved by the general shareholders meeting held sub-of the aggregate amount of cash dividends and certain othersequent to the fiscal year to which the dividends were applicable.

appropriations of retained earnings associated with cash outlays

After introducing the Committees System, dividends may be paid

applicable to each period shall be appropriated as a legal reserve

upon resolution of the Board of Directors, subject to certain limi-(a component of retained earnings) until such reserve and addi-

tations imposed by the Code. Semiannual interim dividends may

tional paid-in capital equals 25% of common stock. The amount ofalso be paid upon resolution of the Board of Directors, subject tototal additional paid-in capital and legal reserve that exceeds 25%

certain limitations imposed by the Code.

of the common stock may be available for dividends by resolution

On June 18, 2004, June 20, 2003 and June 21, 2002, theof the shareholders. In addition, the Code permits the transfer ofCompany’s shareholders approved a stock option plan for thea portion of additional paid-in capital and legal reserve to theGroup’s directors and key employees. Under the plan, 1,076 thou-common stock by resolution of the Board of Directors.

sand options were granted to them to purchase shares of the

The Code allows Japanese companies to repurchase treasury

Company’s common stock during the exercise period fromstock and dispose of such treasury stock by resolution of theOctober 1, 2005 to September 30, 2009, from October 1, 2004

Board of Directors. The repurchased amount of treasury stock

to September 30, 2008 or from October 1, 2003 to September

cannot exceed the amount available for future dividend plus

30, 2007. The options were granted at exercise prices of ¥10,850,

amount of common stock, additional paid-in capital or legal¥9,750, ¥6,690 or ¥7,670.

reserve to be reduced in the case where such reduction was
resolved at the shareholders meeting.

59No. 11

INCOME TAXESThe Company and its domestic subsidiaries are subject to

On March 31, 2003, a tax reform law was enacted in Japan

Japanese national and local income taxes which, in the aggregate,

which changed the normal effective statutory tax rate fromresulted in a normal effective statutory tax rate of approximately

approximately 41.7% to 40.4%, effective for years beginning

40.4% for the year ended March 31, 2005 and 41.7% for the years

April 1, 2004. The effect of this change on deferred taxes in theended March 31, 2004 and 2003.

consolidated statements of income for the year ended March 31,
2003 was a decrease of approximately ¥94 million.

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at March 31,
2005 and 2004 were as follows:
Millions of Yen

Current:
Deferred tax assets:
Inventories—intercompany unrealized profits
Accrued bonuses to employees
Accrued enterprise taxes
Accrued expenses
Inventories—loss on write-down
Amortization of goodwill
Other
Total
Non-current:
Deferred tax assets:
Amortization of goodwill and property, plant and equipment
Loss on impairment of long-lived assets
Loss on closure of plant in the fiscal year
Allowance for doubtful receivables
Other
Total
Deferred tax liabilities:
Reserves for special depreciation and other
Other
Total
Net deferred tax assets

60

Thousands of U.S. Dollars

2005

2004

2005

¥1,711
1,529
692
498
455
285
1,331
¥6,501¥1,604
1,410
1,201
171

$15,991
14,290
6,467
4,654
4,252
2,664
12,439$60,757¥1,876
862
510
117
624
3,989

¥2,069
824
182
859
3,934

$17,533
8,056
4,766
1,093
5,832
37,280700
191891¥3,098756
166
922¥3,012

6,542
1,785
8,327
$28,953

1,493
1,187
¥7,066

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, 2005, 2004 and 2003 was as follows:
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 and transactions
Equity in earnings of associated companies
Special tax credit on experiment and research expenses
Adjustments of deferred tax assets and liabilities due to change the normal effective
statutory tax rate
Other—net
Actual effective tax rate

No. 12

2005

2004

2003

40.4%
(13.8)
0.4
0.1
(2.6)
0.8
(1.8)
(0.8)

41.7%
(12.4)
0.7
0.2
(2.1)
1.6
(1.2)
(1.1)

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

0.3
23.0%

1.1
28.5%

0.3
1.3
30.2%

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses charged to income formillion ($102,402 thousand), ¥9,847 million and ¥8,681 million,

the years ended March 31, 2005, 2004 and 2003 were ¥10,957

respectively.

No. 13LEASESThe Group leases certain machinery, computer equipment, office

the Group recorded an impairment loss of ¥276 million on certain

space and other assets. Total rental expenses including lease

leased property held under finance leases that do not transfer

payments for the years ended March 31, 2005, 2004 and 2003

ownership and an allowance for impairment loss on leased

were ¥5,802 million ($54,224 thousand), ¥6,748 million andproperty, which is included in current liabilities.

¥7,967 million, respectively. For the year ended March 31, 2004,
Pro forma information of leased property such as acquisition cost, accumulated depreciation, accumulated impairment loss, obligation
under finance lease and 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, 2005 and 2004 was as follows:
Millions of Yen
2005
Machinery Furniture
andand
Vehicles Equipment

Acquisition cost
Accumulated depreciation
Accumulated impairment loss
Net leased property¥3,796
2,191¥1,605¥2,409
1,667
203
¥ 539

Thousands of U.S. Dollars
2005

2004

Total

¥6,2053,858
203¥2,144

Machinery Furniture
andand
Vehicles Equipment¥4,064
2,037¥2,027¥3,277
2,201
276
¥ 800

Total

¥7,341
4,238
276¥2,827

Machinery Furniture
andand
Vehicles Equipment$35,477
20,477$15,000$22,514
15,5791,897$ 5,038

Total$57,991
36,056
1,897$20,038

61

The imputed interest expense portion as lessee is included in the above acquisition cost.
Obligations under finance leases:
Millions of Yen

Due within one year
Due after one year
Total

Thousands of U.S. Dollars

2005

2004

2005

¥ 786
1,358
¥2,144¥ 962
1,865¥2,827$ 7,346
12,692$20,038

Allowance for impairment loss on leased property of ¥170 million ($1,589 thousand) and ¥276 million as of March 31, 2005 and 2004 is
not included in obligations under finance leases.
Depreciation expense and other information under finance leases:
Millions of Yen

Depreciation expense
Lease payments
Reversal of allowance for impairment loss on leased property
Impairment loss

Thousands of U.S. Dollars

2005

2004

2003

2005

¥959
959
105

¥1,297
1,297¥1,344
1,344$8,963
8,963
981

276

The imputed interest expense portion as lessee is included in the above obligations under finance leases.

No. 14

RELATED PARTY TRANSACTIONSTransactions of the Group with associated companies for the years ended March 31, 2005, 2004 and 2003 were as follows:
Millions of Yen

Sales
Purchases
Other income—net

Thousands of U.S. Dollars

2005

2004

2003

2005

¥433
301
170

¥436
37
115

¥530
337
109

$4,0472,813
1,589

The balances due to or from these associated companies at March 31, 2005 and 2004 were as follows:
Millions of Yen

Notes and accounts receivable
Prepaid expenses and other current assets
Notes and accounts payable

Thousands of U.S. Dollars

2005

2004

2005

¥145

¥163
1
24

$1,35542393

Transactions of the Group with a director, his immediate family and two related companies as of and for the years ended March 31, 2004
and 2003 were as follows:
Millions of Yen

Selling, general and administrative expenses

62

2004

2003

¥1

¥7

No. 15

CONTINGENT LIABILITIESAt March 31, 2005, the Group had the following contingent liabilities:

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

No. 16

Millions of Yen

Thousands of U.S. Dollars

2005

2005

¥1,364
5¥1,369$12,747
47$12,794

DERIVATIVESThe Group enters into foreign currency forward contracts to

Derivative transactions entered into by the Group have been

hedge foreign currency exchange risk associated with certain

made in accordance with internal policies which regulate theassets and liabilities denominated in foreign currencies.

authorization and credit limit amount.

All derivative transactions are entered into to hedge foreign

Foreign currency forward contracts which qualify for hedge

currency exposures incorporated within its business. Accordingly,

accounting for the years ended March 31, 2005 and 2004 andmarket risk in these derivatives is basically offset by opposite

such amounts which are assigned to the associated assets ormovements in the value of hedged assets or liabilities.

liabilities and are recorded on the balance sheets at March 31,

Because the counterparties to these derivatives are limited
to major international financial institutions, the Group does not2005 and 2004, are not subject to disclosure of market value
information.

anticipate any losses arising from credit risk.

No. 17NET INCOME PER SHARE

Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2005, 2004 and2003 is as follows:Year ended March 31, 2005:
Basic EPS—Net income available to common shareholders
Effect of dilutive securities—Stock options
Diluted EPS—Net income for computation
Year ended March 31, 2004:
Basic EPS—Net income available to common shareholders
Effect of dilutive securities—Stock options
Diluted EPS—Net income for computation
Year ended March 31, 2003:
Basic EPS—Net income available to common shareholders
Effect of dilutive securities—Stock options
Diluted EPS—Net income for computation

Millions of Yen

Thousands ofSharesYen

U.S. Dollars

Net Income

Weighted-Average
SharesEPS

EPS

110,690253
110,943¥578.84$5.41¥577.52$5.40

112,545
129
112,674¥350.96¥64,072¥64,072¥39,500¥39,500¥19,851¥19,851

116,01414
116,028¥350.56¥171.10¥171.0863

No. 18

SUBSEQUENT EVENTS(1) Appropriations of Retained Earnings
The following appropriations of retained earnings for the year ended March 31, 2005 were resolved by the Company’s Board of Directors
on May 27, 2005:
Millions of Yen

Thousands of U.S. Dollars¥10,024$93,682

Year-end cash dividends, ¥90.00 ($0.84) per share

In addition to the cash dividends described above, the Company paid interim cash dividends of ¥6,678 million ($62,411 thousand, ¥60.00($0.56) per share) on November 26, 2004 to shareholders of record as of September 30, 2004, based on a resolution of the Board of Directors.
(2) Stock Option Plan

300 thousand shares of the Company’s common stock in the

At the Company’s shareholders meeting held on June 17, 2005,

period from October 1, 2006 to September 30, 2015. The

the following stock option plan for the Group’s directors and key

options are granted at an exercise price at the fair value at theemployees was approved. The plan provides for granting options

previous date of the option grant. The Company plans to issue

to the Group’s directors and key employees to purchase up toacquired treasury stock upon exercise of the stock options.

No. 19SEGMENT INFORMATION

Information about industry segments, geographical segments and sales to foreign customers of the Company and subsidiaries for the years
ended March 31, 2005, 2004 and 2003 was as follows:(1) Industry Segments
a. Sales and Operating Income
Millions of Yen
2005
Information
Technology
Electro-Optics Photonics

Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income (loss)¥165,664
526
166,190102,900¥ 63,290¥10,749
234
10,983
10,090¥ 893

LifestyleRefinement

Eye Care
VisionCare

HealthCare¥94,97118
94,98977,910¥17,079¥31,40931,40924,268¥ 7,141

CrystalService¥3,672 ¥1,707
50
5,054
3,722
6,761
4,143
6,088
¥ (421) ¥ 673

Total¥308,172
5,882
314,054
225,399¥ 88,655

Eliminations
and Corporate Consolidated¥308,172¥(5,882)(5,882)(2,147)¥(3,735)

308,172
223,252¥ 84,920

b. Assets, Depreciation, Impairment Loss and Capital Expenditures
Millions of Yen
2005
Information
Technology

AssetsDepreciation
Impairment loss
Capital expenditures

64

Electro-Optics

Photonics¥162,638
14,730¥7,648126
767
191

31,962

LifestyleRefinement

Eye Care
VisionCare

HealthCare¥90,765
5,900¥18,330
669

6,787

738

CrystalService

Total¥1,900¥3,21682¥284,497
21,507859
39,98992
92

219

Eliminations
and Corporate Consolidated¥66,985154
186¥351,482
21,661
859
40,175

a. Sales and Operating Income
Thousands of U.S. Dollars
2005
Information
Technology
Electro-Optics Photonics

Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income (loss)

LifestyleRefinement

Eye Care
VisionCare

HealthCare

CrystalService

Total

Eliminations
and Corporate Consolidated$1,548,262 $100,458 $887,579 $293,542 $34,318 $15,953 $2,880,112$2,880,112
4,916
2,187
168
467 47,234
54,972 $(54,972)
1,553,178 102,645 887,747 293,542 34,785 63,187 2,935,084(54,972)
2,880,112
961,682
94,299 728,131 226,804 38,720 56,897 2,106,533(20,066)
2,086,467$ 591,496 $ 8,346 $159,616 $ 66,738 $ (3,935) $ 6,290 $ 828,551 $(34,906) $ 793,645

b. Assets, Depreciation, Impairment Loss and Capital Expenditures
Thousands of U.S. Dollars
2005
Information
Technology
Electro-Optics Photonics

AssetsDepreciation
Impairment loss
Capital expenditures$1,519,981
137,664
298,710

LifestyleRefinement

Eye Care
VisionCare

HealthCare

CrystalService

Total

Eliminations
and Corporate Consolidated$71,477 $848,271 $171,309 $17,757 $30,056 $2,658,851 $626,028
1,178
55,1406,252
766
201,000
1,439
7,168
860
8,028
1,785
63,430
6,897
860
2,047
373,729
1,738$3,284,879
202,4398,028
375,467

a. Sales and Operating Income
Millions of Yen
2004
Information
Technology
Electro-Optics Photonics

Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income (loss)¥135,071
81
135,152
89,982¥ 45,170

LifestyleRefinement

Eye Care¥4,116
4,116
4,193¥ (77)

VisionCare

HealthCare¥98,20318
98,22180,725¥17,496¥28,381
28,381
22,108¥ 6,273

CrystalService

Total¥4,322
62
4,384
4,880
¥ (496)¥1,351
5,804
7,155
6,547
¥ 608

¥271,444
5,965
277,409
208,435¥ 68,974

Eliminations
and Corporate Consolidated¥271,444¥(5,965)(5,965)(5,158)¥ (807)

271,444
203,277¥ 68,167b. Assets, Depreciation, Impairment Loss and Capital Expenditures
Millions of Yen
2004
Information
Technology
Electro-Optics Photonics

AssetsDepreciation
Impairment loss
Capital expenditures

LifestyleRefinement

Eye Care
VisionCare

HealthCare¥132,240
13,205¥1,74859¥92,082
5,735¥18,873532

22,247

36

6,916

1,201

CrystalService

Total¥2,805
352
2,040
224

¥2,79730¥250,545
19,9132,040
30,63814

Eliminations
and Corporate Consolidated¥39,34275
21¥289,887
19,9882,040
30,65965

a. Sales and Operating Income
Millions of Yen
2003
Information
Technology
Electro-Optics Photonics

Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income (loss)¥111,461
207
111,668
77,254¥ 34,414

LifestyleRefinement

Eye Care¥5,485
5,485
6,073¥ (588)

VisionCare

HealthCare¥94,388
1,988
96,37680,978¥15,398¥26,717
26,717
21,628¥ 5,089

CrystalService

Total¥6,719
35
6,754
6,766
¥ (12)¥1,523
3,025
4,548
4,309
¥ 239

¥246,293
5,255
251,548
197,008¥ 54,540

Eliminations
and Corporate Consolidated¥246,293¥(5,255)(5,255)(3,698)¥(1,557)

246,293
193,310¥ 52,983

b. Assets, Depreciation and Capital Expenditures
Millions of Yen
2003
Information
Technology
Electro-Optics Photonics

AssetsDepreciation
Capital expenditures¥114,877
13,12910,444

LifestyleRefinement

Eye Care¥2,69884
151

VisionCare

HealthCare

CrystalService

Total¥98,077
5,578
3,935

¥16,447571
426¥8,409302
776¥2,43233
12¥242,940
19,697
15,744

Eliminations
and Corporate Consolidated¥31,34995
204¥274,289
19,792
15,948Notes: 1. The Company and subsidiaries primarily engage in the manufacture and sale of products in six major segments grouped on the basis of similarities in the types, nature andmarket 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), parts for glass panels of LCD, glass disks for hard disk drives(HDDs), optical lenses, optical glasses, electronic glasses, etc.
Laser equipment, light sources for use in the electronics industry, special optical glass, etc.
Eyeglasses, eyeglass frames, ophthalmic equipment, etc.
Contact lenses and related accessories, intraocular lenses, hearing aids, etc. On March 31, 2003, the hearing aids business was transferred to a third party.
Crystal glass products
Design of information systems, placement of temporary staff, outsourcing, etc.

Photonics:
Vision Care:
Health Care:
Crystal:Service:

2. Corporate operating expenses consist primarily of the administration expenses of the Company and regional headquarters, which are not allocated to industry segments.
Corporate operating expenses for the years ended March 31, 2005, 2004 and 2003 were ¥2,873 million ($26,850 thousand), ¥2,424 million and ¥2,052 million, respectively.
3. Corporate assets consist primarily of cash, time deposits, investments securities and administrative assets of the Company and the regional headquarters. Corporate assets
as of March 31, 2005, 2004 and 2003 were ¥75,076 million ($701,645 thousand), ¥52,594 million and ¥51,571 million, respectively.
4. Consolidated operating expenses are equal to the total of cost of sales and selling, general and administrative expenses shown in the accompanying consolidated statements
of income.

(2) Geographical Segments
The geographical segments of the Company and subsidiaries for the years ended March 31, 2005, 2004 and 2003 are summarized as follows:
Millions of Yen
2005

Sales to customers
Interarea transfers
Total sales
Operating expenses
Operating income
Assets

66

Japan

North
America

Europe

Asia

Total

¥230,946
19,048249,994
204,413¥ 45,581¥165,938¥30,775
200
30,97530,912¥
63¥17,129¥33,803
255
34,05828,195¥ 5,863¥32,927¥ 12,648
89,749102,397
71,004¥ 31,393¥104,191¥308,172
109,252
417,424
334,524¥ 82,900¥320,185

Eliminations
and Corporate Consolidated¥308,172¥(109,252)(109,252)(111,272)¥ 2,020¥ 31,297

308,172
223,252¥ 84,920¥351,482

Thousands of U.S. Dollars
2005

Sales to customers
Interarea transfers
Total sales
Operating expenses
Operating income
Assets

Japan

North
America

Europe$2,158,374
178,019
2,336,393
1,910,402$ 425,991$1,550,822$287,617
1,869
289,486
288,897$589$160,084$315,916
2,383
318,299
263,505$ 54,794$307,729

Asia

Total

Eliminations
and Corporate

Consolidated$118,205 $2,880,112$2,880,112
838,776
1,021,047 $(1,021,047)
956,981
3,901,159 (1,021,047)
2,880,112
663,589
3,126,393 (1,039,926)
2,086,467$293,392 $ 774,766 $
18,879 $ 793,645$973,748 $2,992,383 $ 292,496 $3,284,879
Millions of Yen
2004

Sales to customers
Interarea transfers
Total sales
Operating expenses
Operating income
Assets

Japan

North
America

Europe

Asia

Total

¥188,441
16,790205,231
167,669¥ 37,562¥161,336¥33,11391
33,204
31,390¥ 1,814¥19,059¥37,486
849
38,33529,294¥ 9,041¥26,691¥12,404
60,196
72,60054,693¥17,907¥66,338¥271,444
77,926349,370
283,046¥ 66,324¥273,424

Eliminations
and Corporate Consolidated¥271,444¥(77,926)(77,926)(79,769)¥ 1,843¥ 16,463

271,444
203,277¥ 68,167¥289,887

Millions of Yen
2003

Sales to customers
Interarea transfers
Total sales
Operating expenses
Operating income
Assets

Japan

North
America

Europe

Asia

Total

¥166,178
17,343
183,521
148,960¥ 34,561¥139,012¥35,77173
35,84434,898¥ 946¥19,505¥32,639
1,891
34,53028,411¥ 6,119¥34,970¥11,705
44,51456,21945,282¥10,937¥59,156¥246,293
63,821
310,114257,551¥ 52,563¥252,643

Eliminations
and Corporate Consolidated¥246,293¥(63,821)(63,821)(64,241)¥420¥ 21,646

246,293
193,310¥ 52,983¥274,289

Notes: 1. The Company and subsidiaries are summarized in four segments by geographic area based on the countries where the Group is located. The segments consisted of thefollowing countries:
North America: United States of America, Canada, etc.
Europe:Netherlands, Germany, United Kingdom, etc.
Asia:
Singapore, Thailand, China, Republic of Korea, Taiwan, etc.
2. Corporate operating expenses consist primarily of the administration expenses of the Company and one regional headquarters, which are not allocated to segments
by geographic area. Corporate operating expenses for the years ended March 31, 2005, 2004 and 2003 were ¥2,562 million ($23,944 thousand), ¥2,074 million and¥1,813 million, respectively.
3. Corporate assets consist primarily of cash, time deposits, investments securities and administrative assets of the Company and one regional headquarters. Corporate assets
as of March 31, 2005, 2004 and 2003 were ¥72,841 million ($680,757 thousand), ¥47,511 million and ¥40,280 million, respectively.
4. Consolidated operating expenses are equal to the total of cost of sales and selling, general and administrative expenses shown in the accompanying consolidated statements
of income.

67

(3) Sales to Foreign Customers
The sales to foreign customers of the Company and subsidiaries for the years ended March 31, 2005, 2004 and 2003 are summarized asfollows:
Millions of Yen
2005

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

North America

Europe

Asia

Other

Total

¥43,520¥36,430¥61,798

¥10

14.1%

11.8%

20.1%

0.0%

¥141,758
308,172
46.0%

Thousands of U.S. Dollars
2005

Overseas sales
Consolidated sales

North America

Europe

Asia

Other

Total

$406,729$340,467$577,551$94$1,324,841
2,880,112

Millions of Yen
2004

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

North America

Europe

Asia

Other

Total

¥38,283¥40,168¥44,656

¥12

14.1%

14.8%

16.5%

0.0%

¥123,119271,444
45.4%

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
246,29344.0%

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

68

69

Corporate Data
(As of March 31, 2005)

Established
November 1, 1941
Paid-in Capital¥ 6,264,201,967
State of Employees
Number of employees of HOYA Corporation:
3,173 (increased 190 from the end of the previous fiscal year)
Average age: 40.8
Average years of service: 13.6
Total number of employees in the Hoya Group:
21,234 (increased 3,142 from the end of the previous fiscal year)
Date for the Settlement of Accounts
March 31

Directors and Executive Officers (As of June 17, 2005)
Directors
Takeo Shiina (Senior Advisor of IBM Japan, Ltd.)
Yuzaburo Mogi (Chairman & CEO of Kikkoman Corporation)
Yoshikazu Hanawa (Advisor and Honorary Chairman of Nissan Motor Co., Ltd.)
Eiko Kono (Chairperson of the Board of Recruit Co., Ltd.)
Yukiharu Kodama (President of Japan Information Processing Development Corporation)
Hiroshi Suzuki
Kenji Ema
Hiroaki Tanji
Executive Officers
Hiroshi Suzuki (President & CEO)Kenji Ema (Chief Financial Officer)
Hiroaki Tanji (Strategy & Business Development)

General Shareholders’ Meeting
June

HOYA Group
Global Headquarters(Formulating group strategy)

Information Technology

Eye Care

Other Businesses

HOYA Corporation: Blanks Division,
Mask Division, MD Division, andOptics Division

HOYA Corporation: Vision Care
Company, Medical Devision and
HOYA Healthcare Corporation

HOYA Corporation:
Crystal Company and
HOYA Service Corporation(Area)

Legal Support and Internal Audit

Japan

ASIA
（Regional Headquarters）

US（Regional Headquarters）

EU/FHQ(Regional Headquarters/
Financial Headquarters)

Global Business Expansion

70Investor Information(As of March 31, 2005)

Breakdown of Shareholders

Listing of the Company’s SharesFirst Section of the Tokyo Stock Exchange<Ownership>

Number of Shares of Common Stock
Authorized: 316,224,600 (※)
Issued: 112,349,005 (※)<Number of Shareholders>
Financial institutions
30.96%

Individuals,
Other11.95%

Financial institutions
2.63%

Other corporate
investors
2.00%

Trading Unit
100 shares
Foreigninvestors
55.58%

Number of Shareholders
7,443

Foreigninvestors
8.33%

Individuals,
Other87.04%

Other corporate
investors
1.51%※ As of June 1, 2004, the Company retired 3,775,400 shares of treasury stock,
thereby reducing the number of shares of common stock authorized and issued.

Acquisition, Disposal and Ownership by
the Company of Its Own Shares:
Acquisition of shares
Common stock:3,437 shares
Aggregate acquisition price: ¥38 million
Disposal of shares
Common stock:
Aggregate disposal price:
Retirement of Shares
Common stock:

Principal Shareholders

118,142 shares¥911million

3,775,400 shares

Number of shares owned by the Company atthe end of the fiscal year under review
Common stock:967,762 shares(Note) As of March 31, 2004, the Company owned
4,857,867shares of its common stock.

Shareholders

Number of shares(Hundreds of shares)

Percentage ofvoting rights (%)

1

The Master Trust Bank of Japan, Ltd. (Trust Account)

69,068

6.20

2Japan Trustee Services Bank, Ltd. (Trust Account)

66,966

6.01

3

The Chase Manhattan Bank, N.A. London

60,7405.45

4State Street Bank and Trust Company

58,462

5.25

5The Dai-ichi Mutual Life Insurance Company

57,653

5.17

6State Street Bank and Trust Company 505103

44,282

3.97

7

Nippon Life Insurance Company

36,4393.27

8

The Chase Manhattan Bank, N.A. London, SL Omnibus Account24,5192.20

9Mamoru Yamanaka

22,5492.02

10State Street Bank and Trust Company 505041

19,670

1.76

Above total

460,349

41.36

Issuance of New Share Subscription Rights

Common Stock Price Range

Following the approval at the 66th Ordinary General Meeting of Shareholders, in connection withthe resolution of the Board of Directors, the Company issued new share rights as stock option.
Details are disclosed as below:
Fourth issue of new subscription rights for common stock(Resolved by the Board of Directors on November 25, 2004)
1. Number of new share subscription rights
the Company granted: 1,589 rights
2. Class and number of new shares to be issued
upon exercising of new share subscription
rights: 158,900 shares of common stock of
the Company(100 shares for each new share subscription
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: ¥ 10,850
5. New share subscription period: From
October 1, 2005 to September 30, 2009
Maximum percentage of new sharesubscription rights exercisable during eachperiod is fixed separately.

2004

2005

High

Low

High

Low

Jan.–Mar.

¥ 10,890¥ 9,580¥ 12,150¥ 10,580

Apr.–June

12,1909,920

July–Sept.

11,660

10,150Oct.–Dec.

11,86010,520Transfer 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

71

Hoya’s Timeline(As of March 31, 2005)

1941
November

1995
An optical glass production plant was established in the city of Hoya,
in metropolitan Tokyo, and production of optical glass was initiated.

August1944
August

The plant was incorporated with capital of ¥1.2 million.
November

1945
October

Crystal products were introduced.

1952
February

June

April

The Optics Division’s Showa Plant (currently Akishima Plant) wascompleted in Tokyo. The Company merged with three affiliates.

1961
October

Hoya was listed on the Second Section of the Tokyo Stock Exchange.
May

1962
May
October

The manufacture of eyeglass lenses commenced.
Hoya was listed on the Second Section of the Nagoya Stock Exchange.

1963
May

The Crystal Division’s Musashi Plant was completed.

December

The Vision Care Division launched sales of progressive
multifocal lenses.

1998

1967
April

April

1972
DecemberSales of soft contact lenses began.

1973
February

February

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

2000

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

July

The construction of the Hachioji Plant in the Electronics Division wascompleted, and the production of IC photomasks commenced.

2001

The current Head Office was completed.
Hoya Lens Corporation and Hoya Crystal Corporation merged withthe parent company.

2002

September

April

1982
October

1983
JanuaryMay

1984
AugustOctober

October

May

1985
April

The Kodama Plant was completed for medical-related production andresearch.

1986
October

AugustNovemberJanuary

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

March

June

1989
April

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

1991
March

72

July

February
March

Hoya Group’s Philosophy of Environment was established.
October

1994
April

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 andmarketer 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. to jointly
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. mergedwith Hoya Corporation.
Hoya established a company-with-committees system.
Global financial management operations were transferred to a holding
company in Europe.

2004
Glass disks for HDDs were launched.

1993
October

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.

2003
The R&D Center was completed in the city of Akishima.

1987
June

Hoya introduced its “internal company system,” reorganizing Group
operations centered on two internal companies (Electro-Optics andVision Care) and three subsidiaries (Hoya Photonics, Inc., Hoya
Healthcare Corporation, and Hoya Crystal Corporation).
Hoya implemented ERP R/3, an enterprise resource planning systemdeveloped by SAP AG of Germany.
Hoya Holdings Asia Pacific Pte Ltd. was established as the third
regional holding company after Hoya Holdings N.V. and Hoya
Holdings, Inc., the holding companies for Europe and North America,
respectively.
Hoya Lens Deutschland GmbH became the first Group company toreceive ISO 14001 certification.

1999
The Company’s listings were advanced to the First Section of theTokyo and Nagoya Stock Exchanges.

1974
January

Hoya formed an alliance with IBM to develop a next-generation glass
disk for HDDs.
Kumamoto Plant commenced operations as a photomask
manufacturing plant.

1997
The manufacture of optical glass BK7 resumed.

1960
November

Hoya introduced an outside director system.

1996

The Hoya Group was reorganized with the establishment of theElectro-Optics Division, the Vision Care Division and the Crystal
Division.

Subsidiary Hoya Optics Corp. was merged with Hoya Corporation.
Hoya acquired the HDD glass disk business of Nippon Sheet GlassCo., Ltd.
Established a Level-1 American Depositary Receipt (ADR) program.

Hoya’s Directory(As of March 31, 2005)

GLOBAL HEADQUARTERS

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

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

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

HOYA VISION CARE, NORTH AMERICAHEADQUARTERS
651E, Corporate Drive, Lewisville,
TX 75057-6403, U.S.A.
TEL 972-221-4141

HARTFORD FACILITY
580 Nutmeg Rd., N S. Windsor,
CT 06074-2458, U.S.A.
TEL 860-289-5367

LARGO FACILITY
CLEVELAND FACILITY
94 Pelret Industrial Parkway, Berea, OH 44017,
U.S.A.
TEL 440-239-0692

DALLAS FACILITY
651E, Corporate Drive, Lewisville,
TX 75057-6403, U.S.A.
TEL 972-221-4141

DAYTON FACILITY
1730 Dalton Drive New Carlistle, OH 45344,
U.S.A.
TEL 937-849-1000

12345-B Starkey Rd., Largo, FL 33773, U.S.A.
TEL 727-531-8964

MODESTO FACILITY
1400 Carpenter Lane Modesto, CA 95351 U.S.A.
TEL 209-579-7739

PORTLAND FACILITY
3880 S.E. 8th Ave. Portland,
OR 97202-3704, U.S.A.
TEL 503-233-6211

SAN DIEGO FACILITY
4255 Ruffin Road San Diego, CA 92123 U.S.A.
TEL 858-309-6050

EUGENE FACILITY
1370 S. Bertelsen Rd. Eugene, OR 97402,
U.S.A.
TEL 541-683-3898

SEATTLE FACILITY
2330 S.78th Street Tacoma, WA 98409-9051,
U.S.A.
TEL 253-475-7809

ST. LOUIS FACILITY
301 Vision Dr. Columbia, IL 62236, U.S.A.
TEL 618-281-3344

73

Hoya Group Companies(As of March 31, 2005)

DOMESTIC SUBSIDIARIES AND
AFFILIATESOVERSEAS SUBSIDIARIES
Asia and Oseania<Information Technology>

HOYA CANDEO OPTRONICSCORPORATIONREGIONAL HEADQUARTERS

HOYA LENS AUSTRALIA PTY. LTD.

HOYA HOLDINGS ASIA PACIFIC PTE LTD.

3-5-24 Hikawa-cho, Toda-shi, Saitama 335-0027, JapanTEL 048-447-6052

138 Cecil Street, #08-03 Cecil Court, Singapore
069538
TEL 6323-1151

44-54 Bourke Road, Alexandria, Sydney, N.S.W.
Australia 2015
TEL 02-9698-1577

HOYA PHOTONICS CORPORATION

THAI HOYA LENS LTD.

3-5-24 Hikawa-cho, Toda-shi, Saitama 335-0027, JapanTEL 048-447-6050

HOYA MICROELECTRONICS TAIWAN CO.,LTD.

HOYA ADVANCED SEMICONDUCTORTECHNOLOGIES CO., LTD.

No.36, Kedung 3rd Rd., Science-Based Industrial Park,
Churan, Miaoli County 350,Taiwan
TEL 37-580-085

1-17-16 Tanashioda, Sagamihara-shi, Kanagawa
229-1125, JapanTEL 042-777-5404

HOYA OPTO-ELECTRONICS QINGDAOLTD.

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

Payatai Plaza 23rd Floor, 128/251-256 PhyathaiRoad,Thung-Phyathai, Rajthavee, Bangkok
10400,Thailand
TEL 02219-3972

HOYA LENS THAILAND LTD.

No.66 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<Eye Care>853 Phaholyothin RD., Prachatipat,
Thanyaburi, Patumthani 12130, Thailand
TEL 02-901-2021

HOYA LENS HONG KONG LTD.
16/F, Unison Industrial Centre,
27-31 Au Pui Wan Street, Fo Tan,
N.T. Hong Kong
TEL 2556-5266

HOYA LENS KOREA CO., LTD.

HOYA HEALTHCARE CORPORATIONHOYA GLASS DISK (THAILAND) LTD.

7th Floor, HOYA Marketing Building, 1-29-9
Takadanobaba, Shinjuku-ku, Tokyo 169-8661, JapanTEL 03-3232-7062

Northern Region Industrial Estate 60/26
Moo 4 Tambol Banklang, Amphur Muang,
Lamphun, 51000 Thailand
TEL 53-581-314<Other Businesses>

HOYA GLASS DISK PHILIPPINES, INC

HOYA SERVICE CORPORATION
10th Floor, HOYA Marketing Building, 1-29-9
Takadanobaba, Shinjuku-ku, Tokyo 169-8661, JapanTEL 03-3232-7671

111 East Main Avenue Special Export Processing
Zone (SEPZ) Laguna Technopark
Binan, Laguna Philippines
TEL 049-541-2730

WELFARE CORPORATIONHOYA OPTICS (THAILAND) LTD.

8th Floor, HOYA Marketing Building, 1-29-9
Takadanobaba, Shinjuku-ku, Tokyo 169-8661, JapanTEL 03-3232-1019

Northern Region Industrial Estate 60/31
Moo 4 Tambol Banklang, Amphur Muang,
Lamphun, 51000 Thailand
TEL 53-552-413

HOYA OPTICAL TECHNOLOGY(SUZHOU) LTD.
229 Taishan Road, Suzhou New District, Jiangsu
Province, 215129, P.R. China
TEL 0512-6665-0752

HOYA OPTICAL (ASIA) CO., LTD.
Suite 3101-2, Tower 6, The Gateway,
9 Canton Road, Tsim Sha Tsui, Kowloon,
Hong Kong
TEL 2723-6883

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

HOYA LENS SHANGHAI LTD.
SHANGHAI HEAD OFFICE
3F (W.), No.10 Lane 561, Nujiang Rd. (N.),
Shanghai, 200333, P.R.China
TEL 021-5281-9663

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

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

HOYA LENS TAIWAN LTD.
3rd Floor, No.146, Sung Chiang Road, Taipei,
TaiwanTEL 02-2567-3481

74

HOYA MEDICAL SINGAPORE PTE, LTD.
455A Jalan Ahmad lbrahim Singapore 639939
TEL 6862-3673

Europe
REGIONAL HEADQUARTERS/FINANCIAL HEADQUARTERS

HOYA HOLDINGS N.V.
Amsterdamseweg 29, 1422 AC Uithoorn,
P.O. Box 250, 1420 AG Uithoorn,
The Netherlands
TEL 0297-514-356

HOYA LENS NEDERLAND B.V.
Amsterdamseweg 27, 1422 AC Uithoorn,
P.O. Box 535, 1420 CA Uithoorn,
The Netherlands
TEL 0297-514-202

HOYA LENS BELGIUM N.V.
Lieven Gevaertstraat 15, B-2950 Kapellen, Belgium
TEL 03-660-0100

HOYA LENS OF NEW ORLEANS, INC.
(NEW ORLEANS FACILITY)
5039 Farefield St. Metairie, LA 70006, U.S.A.
TEL 504-780-7112

HOYA LENS HUNGARY RT.
Telek. U. 3, H-1152 Budapest, Hungary
TEL 01-30-585-19

HOYA LENS MANUFACTURINGHUNGARY RT.
18, Ipari ut, 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※Equity-method affiliate

HOYA LENS FRANCE S.A.
ZA Pariest Rue Willy Brandt, 77184
Emerainville, France
TEL 01-6037-7253

North America
REGIONAL HEADQUARTERS

HOYA HOLDINGS, INC.
HOYA LENS FINLAND OY
Mikkolantie 1, FIN-00640 Helsinki, Finland
TEL 09-72884100

101 Metro Drive, Suite 500, San Jose,CA 95110, U.S.A.
TEL 408-441-0400

HOYA LENS SWEDEN AB

HOYA CORPORATION USA

Scheelegatan 15, SE-212 28 Malmo, Sweden
TEL 040-6802200

101 Metro Drive, Suite 500, San Jose,CA 95110, U.S.A.
TEL 408-441-3300

HOYA LENS U.K. LIMITED
Industrial Estate, Wrexham, LL13 9UA,
United Kingdom
TEL 01978-663153

HOYA PHOTONICS, INC.
47733 Fremont Blvd., Fremont, CA 94538
U.S.A.
TEL 510-445-4500

HOYA LENS IBERIA S.A. Unipersonal
Paseo de las Flores, 23, 28820-Coslada,
Madrid, Spain
TEL 091-6603511

HOYA LENS OF AMERICA INC.
(BETHEL FACILITY)HOYA LENS ITALIA S.P.A.

13 Francis J. Clarke Circle Bethel,
CT 06801-2846, U.S.A.
TEL 203-790-0171

Via Bernadino Zenale, 27, 20024 Garbagnate,
Milanese, Milan, Italy
TEL 02-99071371

EAGLE OPTICS, INC(ATLANTA FACILITY)HOYA LENS DEUTSCHLAND GMBH
Hoya-Lens Strasse 1, D-79379 Mullheim/Baden,
Germany
TEL 07631-1860

HOYA LENS DANMARK A/S

591-F Thornton Road, Lithia Springs,
GA 30122, U.S.A.
TEL 770-944-1800

HOYA LENS OF CHICAGO, INC.
(CHICAGO FACILITY)

Hφ rskaetten 28, 2630 Taastrup, Denmark
TEL 4355-8200

3531 Martens Street, Franklin Park, IL 60131,
U.S.A.
TEL 847-678-4700

HOYA LENS POLAND SP. Z.O.O.

HOYA LENS CANADA, INC.

ul. Olkuska 9,02-604 Warsaw, Poland
TEL 022-6461200

21-3330 Ridgeway Drive, Mississauga, Ontario,
Canada L5L 5Z9
TEL 888-258-4692

For additional information
about the Company, contact:
Investor Relations

2-7-5 Naka-Ochiai, Shinjuku-ku,
Tokyo 161-8525, JapanTEL (03)3952-1160
FAX (03)3952-0726
URL http://www.hoya.co.jp/75

2-7-5 Naka-Ochiai, Shinjuku-ku, Tokyo 161-8525, JAPANT h is a n n u a l re po r t is prin t e d o n rec y c l e d p a p e r.
Pr i n te d i n J a p a n