ONLINEHOYA Report 2013

Five points to know about Hoya
Thank you for visiting Hoya's Annual Report 2013.
First, we would like to relate ﬁve distinctive aspects of Hoya as a company.

Profitability comes first at Hoya.

Notation in this annual report on the website
HOYA's fiscal year ends on March 31. In this website, references to years are to the period ended March 31of the year indicated.

Copyright 2013 © HOYA CORPORATIONFive points to know about Hoya

We will keep changing
our business portfolio.

Copyright 2013 © HOYA CORPORATIONFive points to know about Hoya

Fewer directors mean
more speedy decision-making.

Copyright 2013 © HOYA CORPORATIONFive points to know about Hoya

We aim to be“a big fish in a small pond.”

Copyright 2013 © HOYA CORPORATIONFive points to know about Hoya

Ninety percent of
our workforce are non-Japanese.

Copyright 2013 © HOYA CORPORATIONFrom CEO
Message to stakeholders

Aiming at high growth of
the Life Care business and building ofa new business portfolio
Hiroshi Suzuki

President and CEO

To our shareholders and customers: I thank you for your ongoingsupport and understanding.
I am pleased to explain the business results of Hoya, yourcompany, for the fiscal year ended March 31, 2013. In addition,
I would like to tell you about how the Hoya corporate group is
striving, with the aim of creating more corporate value, to use
the precious funds extended to us by all shareholders.

1 Fiscal year ended March 2013 Result Review
2 Business Portfolio Management As Hoyaʼs Way
3 Hoyaʼs sources of strength
4 My job as CEO
5 Concluding message to shareholders
Copyright 2013 © HOYA CORPORATIONFrom CEO1

Fiscal year ended March 2013 Result Review
During the fiscal year ended March 2013

sales and earnings thanks to steady growth of other(from April 1, 2012 to March 31, 2013 ), Hoya's

divisions.

consolidated sales amounted to ¥372,494 million,

Meanwhile, the Information Technology segment

down 1.2% year on year. Excluding sales contributed

posted sales of ¥161,216 million, down 11.5% year on

by the PENTAX Imaging Systems Business, which wasyear, due to a slowdown in market grow th ofsold in October 2011, in the first half of the previous

semiconductors, ﬂat panel TVs, laptop computers, andﬁscal year, sales increased by 3.3% year on year.

other ﬁnal products which use Hoya's products. Sales

The Life Care segment recorded sales of ¥208,968

decreased only 2.8% if sales in the PENTAX Imaging

million, up 8.3% year on year, and grew to contribute

Systems Business, which was sold to Ricoh Company,

56% of group sales. The Eyeglass Lens division, theLtd. in October 2011, were excluded.

main business of the segment, suffered from a

Profit before taxes amounted to ¥89,368 million, up

significant drop in production and sales due to the

52.7% year on year, including special factors such as

massive ﬂooding that occurred in Thailand in Octoberinsurance income of ¥32,187 million related to the2011 (the previous year).

damage from the Thai ﬂoods, a foreign exchange gain

However, the steady recovery through the year hasof ¥12,539 million due to the weaker yen during theenabled the division's sales in the fourth quarterse co nd ha lf, a nd l os se s f rom e quit y-method(January-March 2013) to surpass the pre-ﬂood level.

investments of ¥11,912 million. Even after excluding

Medical Endoscope division continued steadythese extraordinary factors, proﬁt before taxes for the

expansion in the fiscal year under review. The

current year was higher year-on-year. By segment, theIntraocular Lens (IOL) division also showed steadyLife Care segment posted a pretax profit of ¥63,954

results in the first half. In the third quarter (October-million and a segment profit margin of 30 . 6 %.

December 2013), upon receiving higher than expected

Excluding ¥32,187 million in insurance income as part

reported rates of inﬂammation and/or endophthalmitisof compensation for damage caused by the Thai ﬂoods

for some IOL products, we voluntarily suspendedin October 2011 and ¥2,238 million as a gain on step

shipments and recalled those products. I apologize

acquisitions, segment pretax profit would have been

deeply to those concerned for any inconvenience and¥29,529 million with a profit margin of 14.1%. In theworries this might have caused. While the interruption

meantime, the Information Technology segmentof production and voluntary recall of IOLs had a slightrecorded profit before tax of ¥31,841 million and a

impact, the Life Care segment achieved an increase insegment proﬁt margin of 19.7%.

*1 Discontinued businesses include the following:
PENTAX digital camera business (sold on October 1,
2011)
HDD glass memory disk business (magnetic coating)(sold on June 30, 2010)*2 The pretax profit margin of the Life Care segment(continuing business only) is based on pretax profit
which excludes the Thai flood-related insuranceincome and gain on step acquisitions.

Copyright 2013 © HOYA CORPORATIONFrom CEO2

Business Portfolio Management As Hoyaʼs Way
T h e H o y a G r o u p u s e s "p o r t f o l i o

On the other hand, Hoya, with its multiple-business

management" techniques to ensure the profitability,

model, has various businesses at different stages ofstability and growth potential of the Group as a wholeth e i r l i fe cyc l e s, a l l owi n g th e e nti re G rou p toby simultaneously holding several different businesses

sustainably generate steady returns while tolerating aand striking an appropriate balance between them.

certain level of risk.

Generally speaking, some companies focus on one

You may think that Hoya is engaged in numerous

and only business, while other companies concurrently

unrelated businesses of completely different markets.

operate multiple businesses. Clearly Hoya is the latter

In fact, our businesses have a common underlying

type. Every business has a lifecycle of its own andknow-how, which has been accumulated to become

passes from its growth stage via a maturity stage into a

the unique strength of Hoya across our businesses. I

decline stage. While companies with a focus on aﬁrmly believe that this strength will be a key to makesingle business could be efﬁcient, they may suffer fromour businesses distinct.

a start-up cost of a new business.

3

Hoyaʼs sources of strength
So, what is the common underlying know-With the aim of differentiating ourselves, we have expanded

how Hoya possesses? I keep telling everyone at Hoya tofrom glass melting to manufacturing of glass lenses andstrengthen his or her business in charge. Methods may

further to assembly of multiple glass lenses into a lensdiffer by business, as each business has a different market,

module. As we focused on how Hoya can create value inproduct, or competitive landscape. Nevertheless,the scene of capturing an image into picture elements

regardless of the business, our underlying aim is to(pixels), our strategies have become clearly visible.

become "a big ﬁsh in a small pond." It means that we focus

Regarding our business related to hard disk drive glasson our areas of strength and endeavor to obtain and retain

disks, we sold our operation for applying magnetic coating

dominant position in selected niche markets. It may sound(Media business) and decided to concentrate on

simple but is not easy to achieve. What is important for us

fabricating and polishing glass substrates (Substratehere is to think about how to become more competentbusiness) about two years ago. This has enabled us to do

relative to our competitors under given competitive

mass production of high-grade substrates at lower costs,

conditions. It is of vital importance to establish a market or

and this has resulted in raising our market share.

a position where Hoya can be overwhelmingly strong. Let

Concentrate wholeheartedly on how to become "a big

me give an example from the optical lens business, whichﬁsh in a small pond." This issue, in my view, is rooted inis Hoya's original business. Initially Hoya's main operation

the mindset of our employees, which is becoming one

was to melt optical glass.

of our strengths.
Copyright 2013 © HOYA CORPORATIONFrom CEO4

My job as CEO
I believe my job as CEO is to further

entering into a long period of maturity. While it may

enhance Hoya's business portfolio. Namely, tosink into a period of decline, we are not assuming

strengthen and grow our existing businesses, tofurther expansion of this market.

identify what is missing in and appropriate to the

In anticipation of this outlook, we have focused oncompany and adding it to our portfolio, and to decidecreating the condition to generate long-term steadyto shrink or exit our declining businesses in a timely

earnings for our related businesses in the past few

manner. Obviously this is based on the long-term

years. We anticipate that a decrease in the number ofpremise that Hoya will keep growing. Being a CEO, I

players in these markets could stabilize pricing. In

look at our business portfolio as an aggregate ofaddition to no need for heavy capital spending,diverse businesses and ﬁnd it important to maintain amature technologies should mean to lower production

good balance as a whole entity.

costs. Combining all those factors, the related

I believe that the information and technology industry

businesses have fundamentally become able tohas passed the inflection point of its growth and ismaintain proﬁts. At any rate, we have created such astructure by conscious efforts.

cannot ensure a competitive positioning and in which

Let us now think about mask blanks forwe keep generating negative cash flow, we may besemiconductors and photo masks for LCD panels.

forced to select an exit strategy. This is what we have

Change in structure of chips and other technologicaldone in the past, in case of business closures andshift and innovation can be expected in the future.

withdrawal. The most recent example was to close

Nevertheless, the semiconductor industry itself

down our history of more than 60 years in the crystal

should be regarded as maturing. I am keenly aware

glass business in 2009. When we assessed that wethat Hoya's information technology business is based

could not become more competitive in a certain

on such mature industry.

business, we decided to make a speedy sale of that

T hus, I will continue to focus on creating an

business to the most appropriate buyer.

environment that enables our related business to

We sold the media business (HDD glass memory

maintain proﬁts for a long time in the future. On thedisk coating) to Western Digital Corporation inother hand, in the case of a business in which we2010 and the PENTAX digital camera business to

Ricoh Company

the elderly, the global aging trend is positive for us. In

in 2011.

addition, our eyeglass lens business has merely 10%

In contrast, Hoya

share in the global market. We will first approachaims to achievem a ny of o u r u nt a p p e d m a r kets o r c u s to m e r

h i g h g row th i nsegments.

the promising

We have just be gun globa l ex pa nsi o n of our

L i f eIntraocular Lens (IOL) businesses. Many overseas

C a r ebusinesses. I believe our present businessmarkets remain unexplored. In addition, our market

portfolio is insufficient to do so. We need to add

share for medical endoscopes is still small, while

new businesses.

those endoscopes have a great growth potential. At

Having said this, I also firmly believe that we canpresent, endoscopes are mainly used for diagnosis ofachieve a double-digit growth even with the current

lesions. In the near future, technological innovation

businesses alone. As we have various products forwill shift from diagnosis to treatment.

Copyright 2013 © HOYA CORPORATIONFrom CEO

Endoscopes, in my view, will be the products that

present but also for the future, we aim at a long-term

provide a platform for new applications.

sustainable generation of return.

I constantly keep reviewing and developing our

One of my challenges as CEO is how to efficiently

business portfolio in various ways to match the timeuse cash accumulated on our balance sheet. We

and environment. By doing so, I remain committed toh ave c o n s i d e re d va r i o u s M& A o p p o r tu n i ti e s

my task as CEO to the goal of maximizing the returncautiously, as one of the ways to grow. However, in

on funds extended by our shareholders. I think thatmany cases, high valuations have prevented us fromthe company is owned by its shareholders and theconcluding such deals. While we have not achieved

company deser ves to exist by generating theas much as desired, we will continue to address thisexpected return for the shareholders. From apressing issue and intend to ﬁll in whatever is missing

perspective of return to shareholders not only atin our portfolio.

5

Concluding message to shareholders
Hoya is engaged in various businesses

segment and to build a new business portfolio.

with each one striving to strengthen itself, with theWe plan to shift and utilize cash ﬂow, management

aim of becoming "a big fish in a small pond." Eachk n o w - h o w, a n d h u m a n r e s o u r c e s f r o m t h ebusiness has a strategy, is operated by passionate

Information Technology segment to the Life Careemployees who are dedicated to execute thesegment. While it is difﬁcult to foresee the future in

strategy, and is supported by a global system. In

this time of uncertainty, Hoya's visions and strategies

addition, each business is based on a management

are becoming clear. As a person in charge of funds

structure which has been designed to enable

made available to us by shareholders, I am fully

sustainable growth and operate within a transparent

committed to the management of Hoya.

governance system which ensures proper

I thank our shareholders for their ongoing support

functioning. I firmly believe that Hoya's sources ofand understanding.
July 2013

strengths have emerged from such underlying
structure.
As Hoya's CEO, I am dedicated to the mid-termsustainable annual growth of 10%. To achieve this,President and CEO

we intend to realize high growth of the Life Care

Copyright 2013 © HOYA CORPORATION

Special Features for 2013

1

Lifecare Business is a key
for HOYAʼs sustainable growth

Developed countries are facing issues derived from aging populations, expansion of medical service needs forthe elderly, and growth and development of the healthcare service market, while tighter control of medicalrelated expenditures is an imminent issue that must be addressed. Meanwhile, in emerging countries rapid
economic growth has led to an increase in the middle-income population. There, accordingly, medical
infrastructure has to be augmented on an urgent basis, and the importance of improving people's quality of life
(QOL) is rising. Hoya's Life Care Segment is contributing to society in these countries, with products that areassociated with eyes and which therefore have much to do with the people's QOL, as well as with endoscopes
and other medical devices, which, in keeping with medical progress, are in increasing demand.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Lifecare Business is a key for HOYA's sustainable growth*HOYA Group prepares and discloses its consolidated financial statements in accordance with International Financial ReportingStandards (IFRSs), from the fiscal year ending March 31, 2011, instead of Japanese GAAP. In the above graph, profit before tax ratio isdisclosed in 2008 and thereafter instead of operating profit ratio.

M&A Activities in Life Care Segment
Year

Business

Country

Company/Division

Business Activities

1999年

Eyeglass lensBelgium

Buchmann Optical Industries, N.V.

Production and sales of eyeglass
lenses

2000年

Eyeglass lens

U.S.A.

Optical Resources Group, Inc.

Processing and sales of eyeglass
lenses

2008年

Endoscopes,Japan
artificial bones

Pentax Corporation

Development, production, and salesof endoscopes, artificial bones, etc.

2012年

Endoscopes

Germany Digital Endoscopy GmbH

Eyeglass lensBrazil

2013年

Development of endoscopic
imaging products with expertisein software-based computerarchitecture and optical illumination
technologies

Optotal Hoya S.A.

Production and sales of eyeglass
lensesArtificial bones Japan

Japan Universal Technologies, Inc.

Development and production of
metallic implant for orthopedics

Eyeglass lens

Japan

Seiko Epson Corp s eyeglass lensbusiness

Development and production ofeyeglass lenses

Eyeglass lensJapan

Investment in Seiko Optical Products
Co., Ltd.

Sales of eyeglass lenses

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Lifecare Business is a key for HOYA's sustainable growth

1 Aging of the global population

Increase in middle-class population,

2 particularly in emerging countries

Aging of the global population is driving expansion of

In emerging economies, rapid economic growth has

the market for medical and healthcare services, while

led to improvement in living standards and a surge ingovernments everywhere face the challenge of rising

the middle-income population. Accordingly, we are

medical-related expenditures. Accordingly, thewitnessing growing need to improve medical

worldwide need for early detection of a disease andinfrastructures, enhance medical services, andearly medical treatment is rising.

improve the people's quality of life (QOL) in line withchanges in their life style.

Hoya's intraocular lenses for cataract treatment, eyeglass lenses, medical endoscopes, and other products haveseen a rise in demand due to the aging of the global population, improvement in living standards in emerging
countries, and other reasons. Many of these products also contribute to minimally invasive medical treatment.
Because of these factors, this business is expected to grow in line with long-term growth potential of the market.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Lifecare Business is a key for HOYA's sustainable growth

Due to the aging of the global population and a rise in the middle-income population, the need for both bettermedical infrastructure and enhanced quality of life (QOL) will continue to grow. Given such a macro environmentand Hoya's potential and technologies, the key drivers for Hoya's medium- to long-term growth are the eyeglasslens business and the endoscope business.

Business

Medicalendoscope

CAGR

8% (excluding
impact fromexchange rate
fluctuations)

Hoya's market
share

・Develop differentiatedNo.2 in theworld

3% (2010 to2012; world
ex. Japan;
including
impact fromthe Thaiflooding)

products
・Global expansion
・M&A

・Develop premium

8% (2004 to
2010; world ex.
Japan)

Eyeglass lensFactors for profit growthNo.2 in the
world

products
・Service innovation
・Industry's top costcompetitiveness・Share growth indeveloped countries
・Growth in emerging
markets
・M&A

・Store development

Contact lens
specialty
stores(Eyecity)

10%

No.1 in Japan(store openings andscrap & build)・Increase in customers
through consultingbased sales style・Efﬁcient store
management

Copyright 2013 © HOYA CORPORATION

Future development
Continue to develop products that
respond to needs at medical caresite and promote global operationin production, sales, and services.
Look for M&A opportunities for the
purpose of acquiring advanced
technologies.
In keeping with the aging of
the population, expand salesof integrated double surface
progressive lenses made possibleby advanced optical design
technology, and the industry's topclass coating technology in the highgrowth premium product category.
In the volume zone, expand sales of
low-price products, aiming growthacross the entire global market.

Will increase Eyecity stores from thepresent 200 to 300. Will maintainhigh proﬁtability by efﬁcient store
expansion through use of scrap andbuild approach, enhanced productline-up, unique consulting-based
sales, and management know-how.

G r o w t h

D r i v e r

Medical EndoscopeBusiness Potential

2

The medical endoscope business,
one of HOYA's growth drivers,
has the following characteristics and growth potential.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Medical Endoscope Business Potential

Minimally invasive medical treatment is designed to minimize pain, fever, bleeding, scar formation, and othermanifestations in the patient's body that are, associated with surgery or medical treatment. The beneﬁts of thismethod (such as reduced pain and shortening of hospital stays) have proved attractive not only to patients but
also to national governments seeking to restrain the growth of expenditures for medical care. The medical
endoscope is indispensable for minimally invasive medical treatment. Importantly, it facilitates early detection,accurate diagnosis, and reduced ancillary effects of the treatment (and surgery) on the patient, playing a vitalrole in all those processes.

Global network
HOYA has a global network of bases for R&D, sales and marketing, and customer service for its endoscopebusiness. Overseas group companies in 14 countries and R&D bases in Japan, the U.S., and Germany arepromoting development and use of products that match the needs of each local market.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Medical Endoscope Business Potential

PENTAX EPK-I & 90i series is a high-end series of HOYA's medical endoscopes. It combines the videoscope 90i
series, which mounted a Megapixel CCD for the ﬁrst time in the world for endoscopes, with the video processor
EPK-i which realizes a high-resolution output by adopting the patented image processing function called i-scan.
Combining these two devices satisﬁes the medical ﬁeld's requirements for better pictures, high resolution, andmultiple functions.

In October 2012, EPK-i7000 was released in some markets, with other countries pending regulatory
approvals.
In May 2013, "OE" (Optical Enhancement), a new advanced optical enhancement technology for thei-scan, has been launched for the Japan market, and soon other countries as well. This technology
digitally enhances the visibility of blood vessels, ducts of the glands and surface structures.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Medical Endoscope Business Potential

Targets: Driving Sustainable Double Digit Growth
In order to drive and sustain double digit growth, we have developed and implemented a strategy that consistsof 6 key points:

1. Broaden our portfolio with M&A into complementary & adjacent spaces while simultaneously focusing
our internal R&D on innovative products that are DIFFERENTIATED from competitors by ease of use,clinical relevance, and quality.

2. Strong focus on a global quality system.
3. Grow in emerging markets through localization of resources and management teams.
4. Globalize company operations to reduce our cost position.
5. Build our reputation as #1 in customer satisfaction.
6. Build an energized and world class team.
Against the backdrop of aging populations and global expansion of medical services, the market for flexible
endoscopes and related products and services is expected to remain strong in the foreseeable future andcontinue to grow.
We are determined to concentrate on continuing to gain global market share in ﬂexible endoscopy with gamechanging products as well as enter new endoscopy-related fields, in cooperation with leading medical
institutions and research universities.
We are determined to concentrate on continuing to gain global market share in ﬂexible endoscopy with gamechanging products as well as enter new endoscopy-related fields, in cooperation with leading medical
institutions and research universities.

Copyright 2013 © HOYA CORPORATIONG r o w t h

D r i v e r

Potential of theEyeglass Lens Business3

Eyeglass lenses are another business Hoya is identifying as a key growth driver.
The eyeglass lens market has high growth potential thanks to the aging of global population and other factors.
Here we explain the characteristics and growth potential of Hoya's eyeglass lens business.

The global eyeglass lens wholesale market is expected to increase from $11.3 billion in 2012 to $15.0 billion by 2025,
particularly supported by growth in progressive lenses(PAL). On the back of the aging of the global population and the
expanding middle-income population in emerging countries, the eyeglass lens market is projected to keep growing.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Potential of the Eyeglass Lens Business, a growth driver

Global Network
Hoya's eyeglass lens business covers 52 countries and has a direct sales system in 31 of those countries. The
divisional headquarters is located in Bangkok, Thailand where business strategies are planned and conductedfrom a global perspective.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Potential of the Eyeglass Lens Business, a growth driver

The integrated double-surface
progressive lens that uses
Hoya's proprietary premium lensdesign technology can be ordermade and offers clear, naturally
comfortable vision with little
distortion and swaying.

Hoya's high level of coating
technology makes it top-classin anti-reflection coatings in theindustry.

Hoya's strict quality control
system is at the top international
level and guarantees high quality
in any market.

Hoya's leading-edge plant inThailand operates 24 hours aday, 365 days a year, helping
to ensure speedy delivery tocustomers worldwide.

Hoya's production plant andeye glass stores are directly
connected online and provide
seamless services for precise andspeedy fitting of lenses to frames.

Hoya's production plant andeye glass stores are directly
connected online. Ability to
instantly exchange messages
regarding detailed requirementsfor prescription lenses means
customers receive their
eyeglasses in the shortest
possible time.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Potential of the Eyeglass Lens Business, a growth driver

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 Potential of the Eyeglass Lens Business, a growth driver

We differentiate our products byusing our advanced technology,
such as the world-leading coating
technology and integrated double
surface progressive lens that has
been made possible by use of our
proprietary Free Form technology.

In our industry we were early toshift our production overseas. We
also make efforts in developmentof manufacturing technology inorder to improve productivity,
reduce material wastage,
adopt new low-cost materials,
and make other changes or
improvements. Through thesemeasures, we are dedicated tomaintaining the top-class costcompetitiveness in the industry.

To provide a person withcorrective eyeglasses it is nolonger good enough to have aneyeglass shop make precise
measurements of visual acuity. It
is also important to determine theoptimal eyeglass lens that fits thelifestyle of the wearer. Hoya uses
the latest IT technology to enable
eyeglass shops to determine andrecommend the ideal lenses thatsatisfy the specific needs of eachcustomer. This advance enables
improvement of customer
satisfaction.

We are also seeking M&A
opportunities, as it will help us
to achieve a speedy entry into
unexploited markets, establish or
expand networks, or strengthen
our presence in a market.

In Februar y 2013, Hoya acquired
fr om Seiko Epson eye g la s s le ns
development a nd ma nufactur ing
business.
In June 2013, we also acquired 30%
shares of Seiko Optical Products
Co., Ltd., which sells Seiko brandeyeglass lenses. We will promotesales of the Seiko brand eyeglass
lenses in Japan and overseas by
put ting those products on Hoyas global manufacturing and sales
network.

Copyright 2013 © HOYA CORPORATION

We will be aggressive in
expanding business in emerging
countries which have highgrowth potential, such as India
and China, and where Hoya'spresence is still low, such as
Russia, Eastern Europe, andSouth America.

In Europe, the U.S., Japan,
Australia, and other developed
countries, market demand forprogressive lenses is expected
to grow due to aging of the
population. In addition, an
increasing usage of smartphones,
tablet PCs, and other mobile
devices is driving a growth indemand for special surface
coating to help reduce blue light,
which is one of the reasonsthat cause glare and flicker. We
plan to accelerate growth by
expanding sales in developed
markets of value-added products
such as those with that kind of
coating.

Special Features for 2013 Potential of the Eyeglass Lens Business, a growth driver

We aim at growing at a higher rate than the industry.
In April 2012, Hoya acquired 100% of issued andour strong ﬁnancial base and to offer a wide range ofoutstanding shares of Optotal Hoya S.A., the largest

products that cover low-priced products as well asprescription lens laboratory in Brazil, and made it ahigh value-added products and features including

wholly-owned subsidiary. In February 2013 , thethe integrated double surface progressive lenses andeyeglass lens development and manufacturing

the anti-reﬂection coating.

business of Seiko Epson Corporation was transferredto Hoya. Through these activities, we expanded ourOur team of dedicated high-performance members

business in this fiscal year ended March 2013 andhas made a great start of the new ﬁscal year, with an

our sales in the fourth quarter exceeded the quarterly

exciting product development roadmap that will

sales level prior to the ﬂooding in Thailand.

undoubtedly support our future growth. We will strive
hard to meet your expectations.

In developed countries such as the U.S., Europe,
Japan, and Australia, we are witnessing growing
needs for the integrated double surface designed
progressive lens, as progress in aging of the
population means greater demand for presbyopia
eyeglasses, and for our special surface coating, as
more people use smart-phones, tablet PCs, andother mobile devices. These are the product areas
we have been focusing on. We will continue to do soto accelerate our growth.
Turning into emerging markets such as China, India,
Russia, and South America, our strategy is to use

Copyright 2013 © HOYA CORPORATION

Since 1998 Hoya has introduced SVA (Shareholders Value Added),an innovative management index,
as an indicator for running the company and its businesses.
We would like to explain why SVA is important for us.

Aiming at maximizing corporate value

SVA management
The company's business activities are comprised of various elements. They include "revenues" generated fromoperations, "costs" associated with those operations, "total assets" which are at the base of the activities,"funded capital" that financially supports them, and "cost of shareholders' equity" which is the return thecompany pays to its owners, i.e., shareholders. SVA, which is derived from combining these elements, is ametric to reﬂect an increase of corporate value.

SVA represents a company's

The remaining balance after satisfying all thosestakeholders is an increase of corporate value, i.e.,

worth after satisfying all

SVA. Thus, engaging in a corporate activity to

stakeholders

commitment to satisfy everyone associated withi n c r e a s e S VA r e f l e c t s o u r w i l l i n g n e s s a n d
Hoya and at the same time to keep growing as acompany.

Hoya believes that these elements of corporate

We also want to point out that SVA is different from

activities incorporate determinants of satisfaction of

EVA (Economic Value Added). EVA is a measure thatall stakeholders of the company. "Sales" are thecompares net operating proﬁt to total cost of capital,

result of "satisfaction of customers",

while SVA can be calculated from the ROIA (return on"operational costs" mean "satisfaction of suppliers

invested assets) and the WACA (weighted average

and employees (in a form of salaries)", "tax" indicatescost of assets). As total assets incorporate all"satisfaction of the national and local governments,"

corporate resources for business activities, the"interest paid" results in"satisfaction of financial

calculated figure can be broken down into theinstitutions," and "cost of shareholders' equity"

operating proﬁt to total assets ratio and the cost ofincludes "satisfaction of shareholders."

capital for each business segment.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 What is SVA, that provides for Hoya's sustainable growth?

income, the shareholders' equity ratio (or leverage)

Discounted increase of aneeds to be counted.

corporate value of a single year

to show the amount of increase or decrease ofRather, we decided to adopt SVA, which is intended
corporate value. A relatively new concept= Corporate value

incorporated in SVA was the "cost of shareholders'equity." Historically, the Japanese accounting rules
had used the term "own capital," literally reflecting

In the long corporate history of Hoya, we once

the general idea that reserves, retained earnings, andgenerated net loss and was temporarily under control

the like are the company's cost-free funds and haveof a bank. That was back in 1967. Five years after,

no funding costs. SVA, however, is different. It isthe bitter experience triggered us to adopt cash ﬂow

based on the view that reser ves and retained

management. Since then, we have upgraded ourearnings are part of shareholders' equity, which

major management measure from ordinary proﬁt toincurs a cost, in the form of the expected return of

ROE in 1994, and further to SVA in 1997. ROE is anshareholders. Hence, the amount of net proﬁt minus

effective tool to check the efﬁciency of shareholders'

expected return (cost) ends up to be an increase inequity, but as more debt can also generate more

corporate value.

Copyright 2013 © HOYA CORPORATION

Special Features for 2013 What is SVA, that provides for Hoya's sustainable growth?

Enhancing competitivenessand securing stable earnings
SVA is a more challenging measure than ROE, as it incorporates the expected return of shareholders, which is akind of cost for the company. However, we believe that the proverb, "Necessity is the mother of invention," hasproven to be true. All of our employees strive hard to come up with ways for overcoming a more challenging
hurdle of achieving the target SVA. By doing so, the Hoya Group has been able to enhance competitiveness andmaintain stable earnings, despite some ups and downs caused by economic ﬂuctuation.
We have set a hurdle rate for each business, based on its characteristics, which results in a portfolio of diverse
businesses ranging from high-risk high-return businesses to middle-risk middle-return businesses.

Copyright 2013 © HOYA CORPORATION

Hoyaʼs business segments
and products
Hoya has adopted the portfolio management method. We are engaged in multiple businesses in a balancedmanner and secure group-wide stable earnings and sustained corporate growth.
At present, the pillars that support our business are Information Technology and Lifecare. The Information
Technology segment generates stable earnings by relying on its technological competitiveness and highmarket shares, while the Life Care segment is accelerating growth through aggressive investment ofmanagement resources.

Mask Blanks andPhotomasks for
Semiconductor

Photomasks Glass Memory Disks
for Liquidfor Hard Disk
Crystal Display
DrivesEyeglass Lenses

Contact Lenses

Optical Lenses andOptical Glass

Medical Endoscopes

5-year sales and operating profit

5-year sales and operating profit

Copyright 2013 © HOYA CORPORATION

Business Overview

Information Technology

Mask Blanks andPhotomasks
for Semiconductor
Mask blanks and photomasks are essential in the
production of semiconductor chips. They are themaster plates used to transfer the minute, highly complex
circuit patterns for semiconductors onto the wafers that
become IC chips.
HOYA has a dominant global share in the mask blanks markets.

1 Strong presence with a wide product lineup
In the semiconductor industry, chip miniaturization is advancing based on the aim of developing
semiconductors with advanced performance and reducing costs. What holds the key to this is thelithography (exposure) process, which transfers circuit patterns to wafers.
Hoya manufactures photomasks, the original versions of patterns used in this process, and mask
blanks, which are substrates for these photomasks.
In the fiscal year under review, this business was adversely impacted by the slowdown in thesemiconductor industry, but we displayed a strong presence in the market by virtue of our broad
product lineup, ranging from leading-edge blanks for next-generation EUV* lithography to generalpurpose products.
*The technology of forming fine circuit patterns on silicon wafers by using ultraviolet light with an ultra-shortwavelength, namely, 13.5 nanometers (nm).
This enables finer patterns to be formed than when using conventional light sources.

customer trust by steadily supplying
2 Obtaining
high-quality products in large volume
H oy a's s t r e n g t h s a r e i t s h i g h te c h n o l o g i c a lcapabilities and its production system, which enables
the Company to steadily supply high-quality products
in large volume. Hoya is meeting the diversifying
needs of customers that are expanding in tandemwith advances in miniaturization with customized
products and services. Since starting to manufacture
IC mask substrates in 1974, Hoya has continued toinnovate technologies and strengthen its production
system, and has now established a position as theworld's top manufacturer of mask blanks.

Left: Mask blanks
Right: Photomask incorporating a pattern

Copyright 2013 © HOYA CORPORATION

Business Overview

Information Technology

Mask Blanks and Photomasks for Semiconductor

3 Global organization, risk diversification
In response to the Great East Japan Earthquake,
Hoya constructed a new plant in Singapore and put
it into operation in September 2012 to enhance
production efﬁciency and diversify risks.
Going forward, together with the Nagasaka Plant inJapan, Hoya will promote R&D in cutting-edge ﬁelds
and build an efﬁcient production system that handles
h i g h - p re c i s i o n p ro d u c ts to g e n e r a l - p u r p o s e
products. Moreover, Hoya plans to expand businessSingapore Plant

under an organization that can supply high-quality
products to customers more rapidly and steadily
than before.

that next-generation EUV lithography
4 Expectations
technology will achieve further miniaturization
Chip miniaturization requires smoothness and ﬂatness at a levelof more than ten nanometers with no defects in mask blanks as
well. Further miniaturization of semiconductors is a growth driverfor Hoya, which handles high-end products.
In the semiconductor industry, the development of light sources
used in the lithography process has advanced from conventional
ArF (wavelength of 193 nm) to EUV (extreme ultraviolet light,
wavelength of 13 -14nm), which can draw even finer patterns.
Hoya is also promoting the development of products suited to
EUV lithography at a rapid pace and has already started to supply
mask blanks for development use ahead of its competitors.
Hoya will continue to contribute to the miniaturization ofsemiconductors as the leading supplier of mask blanks.

Copyright 2013 © HOYA CORPORATION

Business Overview

Information Technology

Photomasks for
Liquid Crystal Displays
LCD photomasks are the master plates used in
the manufacture of the LCD panels found in LCD
televisions, computer monitors, and smartphone
screens. They are the essential parts for LCD panel
production.
In 1985, HOYA pioneered the development andproduction of LCD photomasks by applying its
technologies for semiconductor photomasks.

1 Leading company with top global market share
Since Hoya developed photomasks in 1985, it has continued tocontribute to the market penetration of LCD panels as a leading
company among photomask manufacturers. Hoya is naturallyable to supply high-quality products rapidly and steadily, and byconstantly promoting technological innovation, the Company
supplies masks with new functions and high-value-added masks
to create ﬁner patterns and shorten takt time. In such ways, Hoya
has established a position as the leading company in the market
by endeavoring to supply products that customers truly need.

is responding to increasing size and higher
2 Hoyaresolution with its technological capabilities.
Owing to the increasing popularization of laptop
computers and ﬂat-panel TVs, the LCD panel market
has grown substantially during the past ten years. As
part of this trend, photomasks have also becomelarger year by year in response to the development of
TVs with larger screens. There are photomasks with asize of 1.5 meters square, and advanced technology
to guarantee quality homogenously, namely, ﬂatness
and low defectiveness in relation to large areas, hasended up becoming necessary.

Photomask for LCD panel production(8th generation, 1,220mm x 1,400mm)

At present, demand for small, high-definition panelswith advanced performance is expanding in tandem with the market penetration of smartphones.
As a result of this trend, even higher speciﬁcations have become demanded in the photomasks that
Hoya handles as well. Based on the high technological capabilities that we can provide because wehandle semiconductor photomasks, we will continue to aim for growth in this business.
Copyright 2013 © HOYA CORPORATION

Business Overview

Information Technology

Photomasks for Liquid Crystal Displays

rapidly reflect customer needs in product3 We
development with our global network.
Hoya has now established an organization that can respond quickly and precisely to various
customer needs, based on its network of bases in Japan, South Korea and Taiwan. One of Hoya's
strengths is the fact that it puts priority on communication with customers on a regular basis,
accurately ascertains needs, and reﬂects them rapidly in product development.

will accelerate our technological
4 We
distinctiveness and dominate our competitors.
The structure of LCD panels is very similar to that of semiconductor chips, and this is an area
where there is still plenty of room to develop products with higher precision. At present, various
R&D activities are progressing, as even higher resolution with advanced performance is requiredin the industry. Amid growing expectations regarding the future of panels, various possibilities
have also been hinted at in the development of technologies. These include high resolution that far
surpasses high deﬁnition (HD), functions such as touch panels and 3D, and the development of
new pattern circuits that enable power saving. To fulﬁl these demands, Hoya will continue to leadthe way in technological innovation as the leading manufacturer of photomasks.

Copyright 2013 © HOYA CORPORATION

Business Overview

Information Technology

Glass Memory
Disks forHard Disk Drives
Among recording media for mobile
devices such as laptop computers,
car navigation systems and external
hard disk drives (HDDs), glass memory disks areused to prevent data loss caused by vibration and shock. Glass memory disks havesuperior shock-resistance characteristics in comparison to the aluminum disks thatare used in non-portable equipment, and have greatly contributed to the evolution anddiffusion of mobile devices.

in substrates, Hoya has acquired a
1 Specializing
dominant market share
Among disks that are recording media for HDDs as well, Hoya
specializes in glass disks, which have superior shockresistance characteristics, and handles processes ranging fromdevelopment to manufacturing. In 2010, we decided to transfer
operations for applying magnetic coatings to glass disk
substrates to another company and concentrate management
resources on fabricating and polishing glass substrates. As aresult, our business competitiveness increased further, and we
now hold a dominant position in this market.

capacity and supply system that win
2 Production
the trust of customers
The source of Hoya's competitiveness is the ability tosupply high-quality products in large volume rapidly
and steadily. This may appear to be a matter ofcourse, but it is not simple to quickly develop
leading-edge products that customers require andcontinue to supply them steadily in a large quantity.
Quality, quantity and delivery all lead to customer
trust.
State-of-the-art plant in Vietnam that started
operation in 2011

Copyright 2013 © HOYA CORPORATION

Business Overview

Information Technology

Glass Memory Disks for Hard Disk Drives

boosting market share through development
3 Furtherof next-generation products
The recording capacity of HDDs has grown rapidly inthe past five years. Owing to the spread of digital
cameras and smartphones, easily taking photos andvideos and viewing and sharing them via the Internet
have become more common. Such digital data has
been stored on HDDs in PCs and the cloud while therecording capacity of HDDs has also grown from 160
gigaby tes (GB) through 250 GB and 320 GB to

500GB at present.
In anticipation of further capacity expansion, Hoya
aims to promote the development of high-spec glass
substrates that enable growth in memor y disk
storage density and further boost its market share.

outlook for heat-assisted magnetic
4 Promising
recording, a new technology that will support
further capacity growth

New technologies are being developed to increase the recording capacity of HDD media. It has
been claimed that research and development related to heat-assisted magnetic recording (HAMR)
is being promoted as the next candidate for the current perpendicular magnetic recording
method. HAMR is a technology that magnetically records data on media by reducing the coercivity
using laser thermal assistance to heat the material when writing. It will be able to realize ultra-highrecording density of one terabyte per square inch. As media are heated at a high temperature at
the time of processing, glass substrates, which have excellent heat resistance, are said to besuitable for disk substrates.
As the leading company in the glass substrate market, Hoya is developing glass substrates
compatible with heat-assisted technology ahead of its competitors and will continue to contributeto the further growth of HDD capacity.

Copyright 2013 © HOYA CORPORATION

Business Overview

Information Technology

Optical Lenses
and Optical Glass
Optical glass is the business that formed
the foundation for Hoya's establishment in 1941.
Hoya's products, which make use of expertise and echnological capabilities
built up over many years, have won high acclaim from all around the world.
We will continue to strengthen our integrated production system, from thedevelopment of new optical glass materials to optical lenses and lens units,
and achieve further evolution.

1 Hoya has continued to lead the world for a long time.
Hoya's optical glass business already boasts a history of
more than 70 years.
Hoya provides optical glass materials and various kinds oflenses and lens units made of optical glass or plastic,
including high-precision, high-value-added products used inphotography-related optical units such as single lens reflex
cameras and compact digital cameras.
In particular, Hoya's glass aspherical molded lenses are
made into lens products that do not require polishing bydirectly press molding optical glass melted at high temperatures. Because it is possible to design
lenses that offer excellent correction for aberrations and offer a high angle of view, the number oflens elements in optical devices is reduced. This contributes to the smaller size, lower weight andhigher functionality of cameras, which are ﬁnal products.

production from development to
2 Integrated
manufacturing is Hoyaʼs competitive strength.
Since its foundation, Hoya has consistently engaged in operations ranging from accumulated
research and development related to the formation of optical glass to the manufacture of ﬁnishedproducts such as optical lens units. Furthermore, we have established a system enabling mass
production of a variety of products.

Copyright 2013 © HOYA CORPORATION

Business Overview

Information Technology

Optical Lenses and Optical Glass

3 Digital cameras are becoming a mature market.
The digital camera market, which is the main consumer of optical glass, continued to growstrongly in the past. However, during the past several years there have been economic downturnsin European countries and the United States and clouds have begun to gather over the Chinese
market, which was driving economic growth. Consequently, shipment volume for compact digital
cameras has declined after peaking in 2008. Moreover, we believe that the market for single lens
reﬂex cameras, which expanded strongly during the past several years, is expected to ease backfrom 2013, and its rate of growth will become moderate. The factors behind this include a moveaway from compact digital cameras associated with the market penetration of smartphones and adrop in demand for single-lens reflex cameras. Hoya's optical business has been adversely
affected by this trend in the digital camera market.

regarding new market needs created by
4 Expectations“safety and sensing” are growing.
Nevertheless, digital cameras are likely to continue tohold an important position in people's lives. Owing to
the expansion of emerging markets following on theheels of China, worldwide demand is projected toc o n t i n u e. O n a n ot h e r f r o n t, n e e d s f o r h i g h e r
performance cameras and higher zoom power are
expected to require further technological innovation inlenses. In order to reliably reﬂect such requirements in
products, Hoya intends to step up its efforts in thedevelopment of technologies, including optical glass,glass lenses, plastic lenses and lens units combining
glass lenses and plastic lenses, and overcome intense
market competition by responding to needs for higher
performance cameras with higher zoom power.
If we turn our attention to other markets than digital cameras, demand for security in the form ofsurveillance cameras and car-mounted cameras is also projected to expand, and as demand forhigh-precision lenses is expected to grow based on higher resolution and higher angles of view,
we are convinced that Hoya will continue to bring value to the society.

Copyright 2013 © HOYA CORPORATION

Business Overview

LifecareEyeglass Lenses
As the leading company in the global
eyeglass lens market* with a long
business history spanning morethan 50 years, Hoya has continued todevelop high-quality, high-performance
products and provided optimal vision
solutions for people all over the world.
As the main driver of growth in the Life
Care segment, this is a business that is
supporting Hoya's growth.

large global eyeglass lens wholesale market
1 Avalued
at US$11.3 billion*
The global ophthalmic eyeglass lens wholesale market is estimated to be worth US$11.3 billion,and Hoya's global share of it is around 10%. Although we have direct sales networks in the majorcountries and regions of the world, we believe that the business opportunities for Hoya, including
uncultivated markets, are worth US$10 billion or more.
In addition to the major countries in Europe, business expansion can be expected in Russia, North
Africa and Eastern Europe. The North American market, which Hoya entered on a full scale in

2000, is a region where we still have a short track record in the long history of this business.
However, we have steadily increased sales since developing polycarbonate materials in 2010, andwe foresee continued strong growth here. In addition to our business development, various Asian
countries with rapidly growing populations, we have made a full-scale entry into the SouthAmerican region, where we made the eyeglass lens manufacturing and sales company a whollyowned subsidiary in 2012. However, many uncultivated markets such as Mexico and Colombia
remain, and we will actively develop business expansion measures to enhance our presence inthese markets.
* 2012 - Hoya estimates

Copyright 2013 © HOYA CORPORATION

Business Overview

LifecareEyeglass Lenses

ʼs strengths are its proprietary premium
2 Hoyalens design technologies and its unique service

innovation.

The integrated double surface progressive design lenses that Hoya developed for the ﬁrst time in
the world in 2004 offer a wide field of vision and substantially reduce feelings of swaying anddistortion, as their design is completely tailored to the individual based on the use of Free Form*
design technology. Unlike progressive design that is based on either the front surface or the backsurface of the lens, they realize a more comfortable ﬁeld of vision and are even easier to wear.
Furthermore, in the case of coating technologies, Hoya is continuing to propose industry-leading
products in terms of anti-reﬂection and scratch resistance.
Besides developing lenses, Hoya also provides various kinds of innovative services by making
effective use of IT at eyeglass stores. These encompass not only promoting an understanding of
Hoya's technologies and products but also providing customer service, measurement andproduct ordering to ensure that customers are quickly supplied with optimal lenses.
For the sake of the optimal ﬁeld of vision that suits each customer, we are focusing our efforts oninnovating products and services on a daily basis.
*A design technology and processing technology that provides optimal performance to each lens by designing the
optimal aspherical surface for each order.

Copyright 2013 © HOYA CORPORATION

Business Overview

LifecareEyeglass Lenses

Hoya Faculty

Hoya Academy

Copyright 2013 © HOYA CORPORATION

Business Overview

LifecareEyeglass Lenses

3 Accelerating growth with a global organization
Overseas markets, excluding Japan, account for nearly

80 % of sales in Hoya's eyeglass lenses business.
Demand for eyeglass lenses is growing primarily inemerging markets, namely, China, India, South America,
Russia and the Middle East, where economic growth isparticularly striking, and Hoya is also striving to capture
opportunities for business expansion in these growthmarkets by expanding its operations globally.
At present, Hoya is operating in 52 countries, with an
American assuming the role of a top executive and thedivisional headquarters in Thailand, which is equippedwith leading-edge production facilities, taking commandof global strategies. We will further accelerate our global
expansion by leveraging our network, which enables
speedy delivery to customers from efficiently locatedfactories around the world that handle operations ranging
from customized processing of premium lenses to mass
production of general-purpose products.

Copyright 2013 © HOYA CORPORATION

Business Overview

LifecareEyeglass Lenses

will accelerate growth through organic growth
4 We
combined with M&A.
The number of eyeglass wearers is projected to continue to increase due to the worldwide agingof the population and an increase in the middle-income populations of emerging markets.
Hoya's eyeglass lens business experienced a sharp drop in sales because of the large ﬂoods that
occurred in Thailand in the fall of 2011, but sales recovered steadily during the subsequent year. In
addition, we turned an affiliated company that has top market share as an eyeglass lensmanufacturer and sales company in Brazil into a wholly-owned subsidiary in 2012. Then, in 2013,
we acquired the Seiko brand eyeglass lens development and manufacturing business from Seiko
Epson Corporation and decided to take an equity stake in Seiko Optical Products Co., Ltd., acompany that sells Seiko eyeglass lenses. Thus, we are actively promoting business expansion
through M&A as well as through organic growth.
Hoya's strengths are its product capabilities backed by advanced technologies, its efficient
production network that extends globally, and its service innovation that leverages information
technology. Moreover, we aim to achieve further growth as our passionate global personnel deliver
these outstanding values supported by the trust of our customers.

Copyright 2013 © HOYA CORPORATION

Business Overview

LifecareContact Lenses andEyecity, a Chainof Contact Lens
Specialty Stores
HOYA operates 200 Eyecity stores throughout Japan.
This chain of contact lens specialty stores has continued to achieve sales and profit
growth.
We aim to achieve differentiation from other competing stores through consultingbased sales.
Furthermore, based on customers' opinions directly received from stores and market
research, we are developing and supplying Hoya's original high-value-added products
such as bifocal contact lenses and toric contact lenses.

Hoyaʼs chain of contact lens specialty stores,
1 Eyecity,
boasts the largest number of users in Japan*.
In the domestic market, the number of people
wearing contact lenses is in decline due to theimpact of the low bir th rate, but Eyecity has
continued to achieve sales and profit growth andmaintained high profitability as a retail business.
Since starting out as a retail business in 1973,
Eyecity has steadily increased the number of stores
mainly in urban areas, and as of June 2013, thenumber has grown to more than 200 stores.
Eyecity will continue to accelerate new store
openings, continue to build a business model thatEyecity's sales are growing.
(Market shares in sales are estimated by Hoya)

responds to market change, and further increase
its market share.
*Times-Current, Inc.: Survey on Actual Conditions Relating
to Contact Lens Stores (May 2013)

Copyright 2013 © HOYA CORPORATION

Business Overview

LifecareContact Lenses and Eyecity, a Chain of Contact
Lens Specialty Stores

sales strategy
2 Customer-focused
supports differentiation fromcompetitors

Eyecity's consulting-based sales style was cultivated fromour concept of protecting the health of customers' eyes,since we sell contact lenses, which are a specially controlled
medical device. As a chain of contact lens specialty storeswith the largest number of customers in Japan, Eyecity
stocks about 200 types of products. Moreover, the trust in
Eyecity that we acquired by sparing no effort to communicate
with customers is the source of its high market share.

The Eye Care Division, which supervises
Eyecity, has the proprietary principle of"Delightful experience for all customers".
This spirit has indeed accelerated
differentiation from competitors. The
photo shows the Eye Care Division's
original credo that all the staff share.

3 Product strategy support high profits
yecity not only procures and sells products from renowned
contact lens manufacturers around the world but also sells
contact lenses with advanced performance that Hoya itself
developed with its advanced technological capability basedon market research. We have responded to market needs bydeveloping Hoya's own high-value-added products, such as
one-month disposable lenses and toric lenses. Our onemonth disposable lenses use silicon hydrogel, a new material
that enables oxygen to directly permeate the lens, and offer
an enhanced antifouling property based on a special surface"Hoya Airy One Month" soft contactlenses, which can be worn all day forone month, control dryness without
preventing the eye from breathing andrealize sharper vision.

coating technology..
Only Hoya shares the function of a retailer and the function of a manufacturer, and we will use thisstrength to develop better products in tandem with our customers.

into regional areas and overseas markets
4 Expanding̶ the widening potential of Eyecity
As the domestic market is contracting, we will strive to expand our business operations by leveraging
the strengths of Eyecity. In addition to opening stores in urban areas, we will promote businessdevelopment in small regional trading areas and in overseas countries.
By improving services that dominate other stores through sales focused on consulting and developing
products that make use of our function as a manufacturer, we will continue to grow our business.
Copyright 2013 © HOYA CORPORATION

Business Overview

Lifecare

Medical EndoscopeHigh levels of advancement in flexible
endoscopy technology, and market
growth, are anticipated.
Endoscopes are used not only toaccurately diagnose lesions but also
to take samples of mucous tissue
and enable direct treatment ofdisease in a single series of steps.
This kind of treatment, which goes beyond observing the disease, is called "minimallyinvasive medical procedure" and is replacing conventional laparotomy.
Flexible endoscopy not only minimizes the physical burden to the patient's bodyresulting from medical practice but also reduces medical costs. It will provide valuableassistance to many governments' initiatives in curtailing medical expenditures.

1

High growth expectation as medical device
for low-invasive medical treatment
The market for ﬂexible endoscopes is expected to increase by 7-8% a year.
Minimally invasive medical treatment is a promising medical procedure which not only minimizes
the burden to the patient's body but also reduces time and cost spent for medical treatment, byenabling early detection and treatment. In addition to medically developed countries, emerging
countries such as China and India are facing the need to establish medical infrastructureassociated with their economic growth, and improve the people's quality of life (QOL). Against
this background, use of endoscopic diagnosis and treatment is projected to grow solidly.
Moreover, efforts at curtailing medical expenditures in many countries will further increase theadoption of ﬂexible endoscopes in medical practice as one of the ways to detect disease earlythrough physical checkup or to avoid adverse effects of the disease.

Copyright 2013 © HOYA CORPORATION

Business Overview

Lifecare

Medical Endoscope

technological advances
2 Pentax
demonstrated in the mega pixel age
Since the launch of a bronchial ﬁberscope in 1977,
Pentax has been engaged in the development of
medical devices, using its optical and precision
processing technology, which was accumulated inits camera business. While Penta x was
consolidated with Hoya in August 2007 andsubsequently merged with it in March 2008, theendoscope business has kept the PENTAX brandfor its products. At present, we offer endoscopes
for bronchial, digestive tract, ears, nose, and throat
uses, and video processors which offer highdeﬁnition endoscope images. In October 2012, wereleased EPK-i7000, the highest-end model of thei-series, that is also the next-generation high-Clinical images provided by Dr. Shinya Odajima
and Dr. Mitsuhiro Fujishiro, the University ofTokyo Hospital.

function video processor. Combining the video
processor with the i-series endoscope, which
mounted a Megapixel CCD, high-deﬁnition images
can be provided to facilitate diagnosis andtreatment in endoscopic examination.
In May 2013, "OE" (Optical Enhancement), the latest image enhancement technology for thei-scan, was released.This technology digitally enhances the visibility of blood vessels, ducts of theglands and surface structures, in addition to conventional optical enhancement functions(enhancement of surface, contrast, and tones.) The OE facilitates more precise detection andcharacterization of lesions in digestive organ.

Copyright 2013 © HOYA CORPORATION

Business Overview

Lifecare

Medical Endoscope

operational structure promises response
3 Ato global
diverse needs and accelerates growth
The endoscopy market is growing globally. We have established a global organization in order tocapture growth opportunities in China, India, and other high-growth emerging markets, in addition
to Europe and North America. Through efficient deployment of R&D, sales, and service bases
worldwide, and establishment of a system to provide innovative solutions that respond to diverse
needs in each country and region, we are intent on promoting our growth on a global scale.

4 Target 10% annual growth in sales
Hoya aims to achieve 10% annual growth in sales and outperform market growth rates. In addition
to globalizing our organization, we have focused on strengthening our organization in all aspects
including research and development, quality and cost control, and after services in recent years.
This has resulted in establishing an efﬁcient and strategic business structure. Going forward, byfurther strengthening our alliances with medical professionals, we plan to speedily offer to themarket innovative products that use our proprietary technology, and other products that satisfy
diverse needs. Our goal is to expand our business in the globally expanding endoscopy market.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets

Corporate Governance
HOYA promotes management with the aim of maximizing its corporate value based on the recognition that
corporate governance is a matter of utmost importance for management.
As the basis of taking a fair approach to stakeholders, we have adopted a "company with committees" structure
simultaneously with the revision of the Companies Act, which enables us to better distinguish the execution andsupervision of management to prevent management from being conducted based solely on in-house logic. We
have also set forth in the Articles of Incorporation that the majority of Directors consist of Outside Directors, who
actively supervise management by Executive Ofﬁcers and provide advice in order to improve corporate value
from an objective and broad perspective. HOYA also gives Executive Ofﬁcers the authority and responsibility forthe execution of operations, in order to accelerate decision making and improve management efﬁciency.

“Company with Committees” Structure
HOYA corporation employs a "company-with-committees" management system, which was created as a resultof a legislative amendment in June 2003. Under the "company-with-committees" management system, by giving
executive ofﬁcers authority to manage business, business decision makings are accelerated. At the same time,
three committees ̶ the Nomination Committee, the Compensation Committee and the Audit Committee - were
established, with a majority of the members being outside directors (at HOYA, the committees are composed
exclusively of outside directors as of March 31, 2013), to ensure the effectiveness of management supervision by
the Board of Directors.
Adopting the "company-with-committees" management system enables us to clearly separate the execution andsupervision of corporate management, whereas this was not possible with the previous "company-with-auditors"
system. Through this system, we aim to ensure efﬁcient management and improve the overall soundness andtransparency of management.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Corporate Governance

Board of Directors
HOYA's Board of Directors, in which Outside Directors comprise the majority of Board members (a total of 7
Directors, consisting of 6 Outside and 1 Internal Director as of June 21, 2013), convene regular Board meetings

10 times a year as a general rule. Each meeting of the Board of Directors involves lively discussions anddeliberations in a solemn atmosphere, with globally-minded Outside Directors with a wealth of management
experience supervising the execution of operations by Executive Ofﬁcers and providing them with advice fromvarious angles. Also at the meetings, besides approving major business plans, detailed information is provided
to outside directors through means such as presentations by division managers regarding products andbusiness environment.

Executive Officers
At HOYA, ﬁve persons - namely, the Chief Executive Ofﬁcer (CEO), Chief Financial Ofﬁcer (CFO), Executive Ofﬁcer
in charge of Technology , Chief Operating Ofﬁcer (COO) in charge of Information and Technology, and Chief
Operating Ofﬁcer (COO) in charge of Life Care - are nominated by the Nomination Committee as candidates for
Executive Ofﬁcers and elected at the meeting of the Board of Directors as of June 21, 2013 (CEO concurrently
serves as Internal Director). Each of them oversees the execution of operations in their respective jurisdictions
determined by the Board of Directors, and carry out decision-making in a speedy fashion. Respective persons
responsible for business divisions are instructed by the Executive Officers to formulate and execute specificpolicies based on the management policies decided at the meetings of the Board of Directors, and report the
progress of businesses at the business reporting meetings, which are held more or less each month.

Committees
The Board of Directors has internal organizations, namely, "Nomination Committee", "Compensation Committee"
and "Audit Committee", each of which consists solely of Outside Directors.

Nomination
Committee

The Nomination Committee, which is comprised of 6 Outside Directors, selects
candidates for Directors based on the "Basis for Election of Candidates for Directors"
and proposes the candidates to the General Meeting of Shareholders for voting. It also
selects candidates for Executive Ofﬁcers and the Representative Executive Ofﬁcer, andproposes the candidates to the Board of Directors for voting. As necessary, it makes
decisions to propose the dismissal of Directors to the General Meeting of Shareholders
and the dismissal of Executive Ofﬁcers to the Board of Directors for voting.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Corporate Governance●Basis for Election of Candidate for Directors (Outline)

Those with appropriate personalities and insights as director and with no healthproblems in performing their duties. With regards to internal director candidates, theymust have a high level of specialized knowledge in our business, excellent businessdecision-making ability and business execution ability, and excellent leadership,decision-making, analytical, forward-thinking and policymaking skills.
Regarding candidates for outside directors, they must have extensive experience asbusiness managers or be in positions as professionals in law, accounting, financeor similar fields. They must not have significant interests in the HOYA Group, beable to maintain their independence and participate in at least 75% of HOYA
Group's board meetings.
●Criteria for Independence of Candidates for Directors

The Committee sets out the criteria for independence of candidates for directors, whichis stricter than the rules by Tokyo Stock Exchange so that a function of overseeing
executive ofﬁcers required to outside directors is secured.
To ensure the independence of candidates for outside directors, candidates must not
fall under any of the categories below.
<Those related to the HOYA Group>•Those who previously worked for the HOYA Group•Those who have a family member (spouse, children or blood relatives or in-laws up to
the second degree) who has held the position of a director, executive ofﬁcer, auditor or
management employee in the past 5 years.
<Those related to a signiﬁcant business partner>•Those who are operating ofﬁcers, executive ofﬁcers or employees of HOYA Group's
important clients who make up 2% or more of HOYA's consolidated sales in the past 3
consecutive years; or if the HOYA Group is an important client who makes up 2% ormore of the consolidated sales of the candidate's enterprise group in the past 3
consecutive years.
<Those who provide professional services (lawyers, chartered accountants, certiﬁed tax
accountants, patent attorneys, judicial scriveners and those in similar professions.)>•Those who have received remuneration of 5 million yen or more per year from the
HOYA Group in the past 2 years.
<Other categories>•When directors are mutually dispatched between HOYA and the candidate's company
or organization.
•If the candidate's company has any other signiﬁcant interests within the HOYA Group.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Corporate GovernanceCompensation
Committee

The Compensation Committee, which is comprised of 6 Outside Directors, builds a
remuneration structure that gives more incentives to Directors and Executive Ofﬁcers
and assesses their work in an appropriate manner, with the aim to help improve HOYA's
business performance. The Compensation Committee determines the remuneration of
Directors and Executive Ofﬁcers on an individual basis in accordance with the following
policies.
●Remuneration etc. for Directors and Executive Officers of the Company(i) Basic Policy
The Company has established a Compensation Committee with the objective of"contributing to improvement of results of the Company by constructing a remuneration
system that raises motivation of Directors and Executive Ofﬁcers and by appraising theirperformance appropriately." The Committee is made up of all of 6 Outside Directors
who are not Executive Ofﬁcers of the Company.
(ii) Policy concerning remuneration for Directors
The remuneration of Directors consists of a ﬁxed salary and stock options.
The fixed salaries consist of a basic compensation and compensation for being amember or a chairman of the Nomination, Compensation or Audit Committee. The
compensation levels are set appropriately by taking into consideration such factors as
the Company's business environment and the levels set by other companies as
determined by a survey conducted by an outside professional organization.
(iii) Policy concerning remuneration for Executive Ofﬁcers
The remuneration of Executive Ofﬁcers consists of a ﬁxed salary, performance-based
compensation and stock options.
Fixed salaries are set appropriately according to the ofﬁce and responsibility of each
Executive Ofﬁcer (President, CEO, etc.) and by taking into consideration such factors as
the Company's business environment and the levels set by other companies as
determined by a survey conducted by an outside professional organization.
Performance-based compensation is determined by both financial performance,measured as the percentage of targets met with respect to indicators corresponding tosales, proﬁt for the year and earnings per share, which is given an 80% weight, and thedegree of achievement with respect to management measures set at the beginning of
the ﬁscal year, which is given a 20% weight. Remuneration typically consists of 50%
fixed salary and 50 % performance-based pay. The performance-based portion,
however, can ﬂuctuate widely, depending on the Company's performance.
Benefits granted to expatriates (such as housing) are also set at appropriate
levels in consideration of the Company's business environment and the levels set
by othe r c o mpa ni e s a s d ete r min e d by a sur vey c o nducte d by a n ou ts id e
professional organization.
Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Corporate Governance(iv) Stock Options
In order for newly-appointed Directors and Executive Officers to share the same
perspective as shareholders in regards to share price, and for those re-appointed toshare common interest with shareholders on long-term basis, commensurate stock
options, which are a certain percentage of the granted shares when newly-appointed,
are granted continuously every year in consideration of the exercise price at the time of
granting (a market price one day prior to a Board of Directors resolution regarding stock
option grants), ﬂuctuations in the share price during the exercise period and ﬁxed annual
salaries.
Based on the above, the number of stock options granted to Outside Directors is ﬁxed
each year, whereas the number of stock options granted to Executive Ofﬁcers is basedon Company performance and individuals' evaluations, subject to deliberation by theCompensation Committee and decided by the Board of Directors.
Retirement beneﬁts for ofﬁcers were eliminated in 2003 as it was determined that these
beneﬁts were essentially a service pay for many years of service and had little to do with
Company's performance or shareholder returns, and as such are not appropriate as acomponent of the ofﬁcer compensation scheme.
Total amount of remuneration, etc. of Directors and Executive Ofﬁcers for the ﬁscal year
ended March 2013.

Total
Number ofamount ofpayees remuneration,
etc.

Classification

Total amount of remuneration by type
Fixed salary

Performance
based
remuneration

Stock option

Outside

5

62

51

-

11

Directors Internal

3

18

18

-

-

Total

8

80

68

-

11

Executive
Officers

4

288

182

95

11

Total

9

367

250

95

22

Note 1.At the end of the fiscal year under review, there were 7 Directors and 3 Executive Officers.
Two of the 3 Executive Officers served concurrently as Internal Directors.
Note 2.The total amount of remuneration includes remuneration paid to one Director who retired as of
the conclusion of the 74th Ordinary General Meeting of Shareholders.

●Overview of Liability Limitation Contract

The Company and its Outside Directors have concluded an agreement that limits
possible future liabilities of the latter prescribed in the ﬁrst paragraph, Article 423 of theCompanies Act to the higher of a prefixed amount exceeding 10 million yen or theamount prescribed by the Act.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Corporate Governance

Audit
Committee

The Audit Committee, which is comprised of 6 Outside Directors, formulates the audit
policies and audit plans for each ﬁscal year, and veriﬁes ﬁnancial statements, etc. basedon the quarterly reports and year-end reports received from the Independent Auditor
according to such policies and plans. It also interviews the Internal Audit Division to
obtain the results of operational audits, and veriﬁes the soundness, legality, efﬁciency,
etc. of management. All important matters are reported to the Board of Directors, andcountermeasures are taken as necessary.

Internal Control System
In addition to striving to further strengthen corporate governance, HOYA also works toward the development ofsound internal control systems with the objective of ensuring appropriate and efﬁcient business management.
Each business division and facility develops and improves the control environment, evaluates and responds torisk, and veriﬁes and improves the control processes to ensure that the control systems that operate within eachdivision and facility are the most appropriate for their operating environment. The head of each business division
has managerial authority and is responsible for improving the business results. Each head is also obligated toseek to further improve internal control systems, with the objectives of maintaining compliance, effectivenessand efﬁciency of work practices, the reliability of ﬁnancial reporting and the integrity of management assets. The
Audit Department at HOYA Global Headquarters is responsible for the regular auditing and verification ofadministrative processes for each division and business office from an independent standpoint. It conducts
operational audits, checks that internal control systems are functioning as they should, ensures that there is no
dishonesty, and checks for areas for potential improvement. Problems that come to light as a result of audit
procedures become the subject of a recommendation for improvement. Particularly important matters arereported to the Audit Committee and the Board of Directors, as well as to the Executive Ofﬁcers. The Executive
Ofﬁcers decide upon and issue directives for speedy, appropriate responses.

Frameworks
and Policies
Concerning
Internal Control
Systems① System for Ensuring Adequacy of Operations:Contents of the resolutions the Board of Directors of the Company made with regard tointernal control systems set out in (b) and (e) of ﬁrst item, ﬁrst paragraph, Article 416 of
the Companies Act and Article 112 of the Ordinance for Enforcement of the Companies
Act are as follows:(1) Important matters in the execution of duties by the Audit Committee(i) Matters concerning Directors and employees assisting the Audit Committee in its
duties•The Audit Committee Ofﬁce shall be established to assist the Audit Committee inits duties.
(ii) Matters concerning independence from the Executive Officers of Directors andemployees stated in the above item
•The regulations of the Company shall prescribe that the Audit Committee has thepower to appoint and dismiss staff members of the Audit Committee Ofﬁce.
Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Corporate Governance(iii) Systems required for reports to the Audit Committee, including reports by Executive
Ofﬁcers and employees•The Board of Directors Regulations were amended to require reporting of allimportant matters to the Board of Directors, where Outside Directors comprise themajority of Board members.
As a result, reports to the Board of Directors cover all important matters. For thisreason, no special stipulations are established regarding matters that need to bereported to the Audit Committee.
(iv) Other systems to ensure the effectiveness of audits by the Audit Committee•The Company shall position the Internal Audit Division under the Audit Committee.
The Internal Audit Division shall conduct audits focusing on onsite audits according
to the audit policies and plans adopted or approved by the Audit Committee, andshall report to the Audit Committee as the occasion demands.
•Each internal organization shall promptly report information it retains or manages at
the request of the Audit Committee or the Internal Audit Division.
(2) Matters required for ensuring the adequacy of operations(i) Systems concerning the storage and management of information about the executionof duties by Executive Ofﬁcers•Efforts shall be made to adequately store and manage important matters, including
documents, records and minutes relating to applications for internal approval, in
accordance with laws, regulations and other standards.
(ii) Regulations and other systems concerning the management of the risk of loss
•Each organ and division shall try to identify and manage risks, and shall aim for
improvements as the occasion demands, taking into consideration the instructionsof the Internal Audit Division, etc.
(iii) Systems for ensuring the efﬁciency of duty performance by Executive Ofﬁcers•Each division shall carry out its operations according to the annual plan and thequarterly budget adopted at meetings of the Board of Directors.
The HOYA Group shall ensure the efﬁciency of Group management by evaluating
the levels of target achievement every quarter and working to make improvements
as the occasion demands.
•Executive Ofﬁcers shall be timely and precise in performing their duties based on
the decision-making system for their execution of duties, which covers theirstandards for approving important matters.
(iv) Systems for ensuring compliance with laws, ordinances and the Articles ofIncorporation of the way duties are performed by Executive Ofﬁcers and employees•T he HOYA Group shall se cure syste ms relating to the HOYA BusinessConduct Guidelines that need to be observed by Directors and employees ofthe HOYA Group.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Corporate Governance(v) Systems for ensuring the adequacy of Group operations, including a given company,
its parent and its subsidiaries•The HOYA Group shall observe across its organization the HOYA BusinessConduct Guidelines established based on the Management Policy andManagement Principles of the Group, and shall undertake educational activities
as required. The HOYA Group will reinforce the effectiveness of such activities
with the HOYA Help Line, an intra-Group system for reporting and counseling.
The Group shall operate this system not only in Japan but also overseas toensure the soundness of Group activities.
(3) System for ensuring reliability of ﬁnancial reporting
The HOYA Group shall establish and manage a system of internal controls for ﬁnancial
reporting and build a system for evaluating its ﬁnancial reporting to ensure the reliabilityof its ﬁnancial reporting and valid, appropriate submission of internal control reports asprescribed in the Financial Instruments and Exchange Act.
② Basic Policy against Anti-Social Forces

The Company's Board of Directors has passed the following resolution about basic
policy concerning anti-social forces.
The Company shall have no relationship with anti-social forces and will confront suchforces resolutely in association with professional organizations, in opposition to any
unreasonable demands of those forces.

Basic Policy
on Parties
that Control
DecisionsConcerning
Corporate
Financeand Business
Policies

The Company does not have a specific basic policy in this regard. However, theCompany's basic view is as follows: The Company takes the view that judgment should
ultimately lie with shareholders when an acquisition proposal and the like is made withthe transfer of management control as its objective. No concrete threat regarding
acquisition has emerged so far. The Company has no intention to fix concretearrangements (so-called "countermeasures against takeovers") before the emergenceof any such proposal. The responsibility of management is not to take unnecessary
actions to defend companies from takeovers. As an entity that operates for the beneﬁt
of its shareholders, the Company considers it crucial to increase the return of proﬁt toshareholders and increase its corporate value by constantly monitoring transactions of
its shares and changes to its shareholders, to improve its business performance andincrease its ﬁnancial strength with the greater objective of achieving further growth.
If an acquisition or similar proposal is made, the Company considers it important toprovide the information shareholders require to make a judgment based on an
examination of the proposal made by the proposer. If the Company believes that the
proposal will not increase the corporate value of the Company and benefit thecommon interest of its shareholders, it will clearly explain to the shareholders thereasons that form the background to its position, and try to obtain the understandingof shareholders.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Corporate GovernanceBusiness
Conduct
Guidelines

To achieve the best results from internal control systems, it is essential that all
employees performing duties for an organization work to foster greater awareness.
HOYA has established a set of Business Conduct Guidelines that clarify the guiding
principles under which each employee should perform his or her duties, with resoluteadherence to professional ethics. The Group also conducts a wide range of employee
education activities to foster awareness of regulations and rules.

HOYA
Help Line

In 2003 the Company implemented another initiative, the HOYA Help Line, as aninternal reporting and consultation system for the Group. If there is an act that
contravenes the law or the HOYA Business Conduct Guidelines, the HOYA Help Lineis intended to enable early identification of the problem and quick reporting to top
management, while protecting the informer, which enables timely and appropriate
action to be taken on the issue. This system helps to preserve the integrity of the
HOYA Group as a whole. The HOYA Help Line has two types of points of contact; oneis "HHL" a dedicated section within the Company's headquarters and the other is an
outside legal counsel. The system is designed to preserve anonymity and works tomaintain the system's functional effectiveness. As of March 2013, the system is inplace at Group companies in Japan, North America (the United States and Canada),
Thailand, European countries, Philippines, Singapore, Australia, Malaysia, and South
Korea, and operates in accordance with business practice and laws of each country.
We continue to expand the number of countries covered, giving the HOYA Help Lineworldwide coverage.

Full Disclosure and Investor Relations Activities
HOYA considers fair and prompt disclosure of information and other investor relations activities to be afundamental duty of management. The Company also values communication with shareholders, and it continues
to clearly reﬂect their views in its management practices. In 1998, HOYA started quarterly disclosure of ﬁnancial
statements, ahead of many other Japanese ﬁrms. Since then the Company has sought to increase the timelinessand broaden the scope of disclosure by shortening the period between the account settlement at the end ofeach quarter and the disclosure, and ensuring that the volume of information in the quarterly reports is equivalent
to that in the year-end ﬁnancial reports. Top management is actively involved in investor relations activities.
For example, the CEO attends every quarterly investor meetings to explain results and answer questions fromsecurities analysts and institutional investors.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets

List of Directors
Outside Directors

Yuzaburo Mogi

Yukiharu Kodama

Career Summary

Career Summary

1958 Apr. Joined Noda Shoyu Co. Ltd. (present Kikkoman
Corporation)

1957 Apr. Joined the Ministry of International Trade andIndustry (MITI), Japan (present the Ministry of
Economy, Trade and Industry (METI))

1979 Mar. Director of Kikkoman Corporation
1982 Mar. Managing Director of Kikkoman Corporation
1985 Oct. Managing Director and Representative Director of
Kikkoman Corporation
1989 Mar. Executive Managing Director and Representative
Director of Kikkoman Corporation
1994 Mar. Executive Vice President and Representative
Director of Kikkoman Corporation
1995 Feb. President and Representative Director of
Kikkoman Corporation
2001 Jun. Director of the Company (present post)
2004 Jun. Representative Director, Chairman and CEO of
Kikkoman Corporation
2011

Jun. Honorary CEO, Chairman of the Board of
Kikkoman Corporation(present post)

1985 Jun. Director General of the Minister's Secretariat MITI
1988 Jun. Director General of Industrial Policy Bureau MITI
1989 Jun. Administrative Vice-Minister of MITI
1991 Jun. Retired from MITI
1991 Jun. Advisor to Japan Industrial Policy ResearchInstitute (JIPRI)
1992 Feb. Advisor to the Industrial Bank of Japan (IBJ)
1993 Jun. President of the Shoko Chukin Bank
2001

Jul. Chairman of the Japan Information Processing
Development Corporation (JIPDEC)

2005 Jun. Director of the Company (present post)
2007 Nov. Chairman of the Mechanical Social Systems(Incorporated) Foundation2012 Apr.

Chairman of the Mechanical Social Systems(General Incorporated) Foundation (present post)

Itaru Koeda

Yutaka Aso

Career Summary

Career Summary

1965 Apr. Joined Nissan Motor Co., Ltd.

1973 Nov. Joined Osawa Shokai (present J. Osawa Group
Co., Ltd.)

1993 Jun. Director of Nissan Motor Co., Ltd.
1998 May Managing Director of Nissan Motor Co., Ltd.
1999 May Vice President of Nissan Motor Co., Ltd.
2003 Apr. Representative Director of Nissan Motor Co., Ltd.
2003 Jun. Co-Chairman of Nissan Motor Co., Ltd.
2003 Jun. Chairman of Calsonic Kansei Corporation
2003

Jul. Director of Renault SA

2005 Mar. Chairman of JATCO, Ltd.
2008 Jun. Chairman Emeritus and Advisor of Nissan MotorCo., Ltd.(present post)
2009 Jun. Director of the Company (present post)

1975

May Auditor of Aso Cement Co., Ltd. (present Aso
Corporation)

1977 Jun. Senior Managing Director of Aso Cement Co., Ltd.
1979 Dec. President of Aso Cement Co., Ltd.
2001 Aug. President and Representative Director of Aso
Cement Co., Ltd.
2001 Aug. President and Representative Director of
LAFARGE ASO CEMENT Co., Ltd. (present Aso
Cement Co., Ltd.) (present post)2010 Jun. Chairman and Representative Director of Aso
Corporation (present post)
2011

Jun. Director of the Company (present post)

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets List of Directors

Yukako Uchinaga

Mitsudo Urano

Career Summary

Career Summary

1971

1971

Jul. Joined IBM Japan ,Ltd.

1995 Apr. Director in charge of Asia Pacific Products of IBM
Japan ,Ltd.
2000 Apr. Managing Director and Head of Software
Development Laboratory of IBM Japan ,Ltd.
2004 Apr. Director and Corporate Senior Executive
Vice President in charge of Development andManufacturing of IBM Japan, Ltd.
2007 Apr. Technical Advisor to IBM Japan, Ltd2007 Jun. Director of Benesse Corporation
2008 Apr. Director and Vice Chairman of Benesse
Corporation, Chairman of the Board, CEO, andPresident of Berlitz Corporation2009 Oct. Director and Vice Chairman of Benesse Holdings,
Inc.
2013

Apr. Honorary Chairman of the Board of Berlitz
Corporation (present post)

Apr. Joined Nippon Reizo Kabushiki Kaisha.
(present Nichirei Corporation)

1999 Jun. Director and General Manager of Strategic
Planning Division of Nichirei Corporation
2001 Jun. Representative Director and President of Nichirei
Corporation2005 Jan. Representative Director and President of Nichirei
Corporation, and Representative Director andPresident of Nichirei Foods Inc.
2007 Apr. Representative Director and President of Nichirei
Corporation, and Director and Chairman of
Nichirei Foods Inc.
2007 Jun. Representative Director and Chairman of Nichirei
Corporation, and Director and Chairman of
Nichirei Foods Inc.
2013 Jun. Director of Hoya Corporation (present post)
Senior Corporate Advisor of Nichirei Corporation(present post)2013 Jun. Director of the Company (present post)

Internal Director

Hiroshi Suzuki

Career Summary
1985 Apr. Joined Hoya Corporation
1993 Jun. Director of the Company
1997 Jun. Managing Director of the Company
1999 Apr. Managing Director of the Company,
President of Electro Optics Company
1999 Jun. Executive Managing Director of the Company
2000 Jun. President and Representative Director of theCompany
2003 Jun. Director, President, and CEO of the Company(present post)2011 Dec. Chief Representative of Singapore Branch of theCompany (present post)

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets

Messages from Outside Directors
Yuzaburo Mogi

Honorary CEO,
Chairman of the Board of
Kikkoman Corporation

Hoya's strength in our globalized society is, I believe, in ability to devise strategy in a longterm global perspective ̶ and to implement it. The company has worldwide business
operations and has hired many talented non-Japanese division managers in addition to its
CEO who has extensive overseas work experience.
All outside directors including myself are internationally-minded and all have a wealth ofexperience. In addition to overseeing Hoya's activities, we bring a global perspective in
our advice on Hoya's strategies.
In my view, what is most important for Hoya today is to develop its highly promising Life Carebusinesses into a growth-leading basis of the company. Hoya's speedy decision-making andOutside director
Chairman of theNomination
Committee
Member of theCompensation
Committee
Member of the
Audit Committee

execution capabilities are sources of strength but can become weaknesses as well.
We, as outside directors, intend to help grow the company by overseeing whether thecompany is properly managed from a different perspective than that of the internalmanagement.

Yukiharu Kodama

Chairman of the
Mechanical Social Systems
Foundation, Incorporated Foundation

I ﬁnd that Hoya's strength includes the management's ﬂexibility and speed in decisionmaking and execution as well as having an efﬁcient system to instill the strength in eachbusiness division, which operates on a global scale. In addition, Hoya's corporate
governance is functioning properly. This was evidenced by the efﬁciency of management
as provided by a "company with committees" system. The system for listening andproperly responding to employees' complaints and dissatisfactions is additional evidence.
Hoya has sustained high proﬁt and high growth by developing niche markets which larger
companies would ﬁnd difﬁcult to penetrate. In order to globally develop and expand thisbusiness model, Hoya will need to make further efforts in gathering information, R&D, andhiring talented people globally. I am confident that Hoya is willing and capable ofovercoming those challenges and keeping on its growth path.
I intend to make the best-possible effort to contribute to Hoya's development based on
my 34 years of working in government service and then being in an executive position in
the ﬁnancial industry and various associations, as well as on my knowledge and insightwith regard to economic and political matters.
Copyright 2013 © HOYA CORPORATION

Outside director
Chairman of the
Audit Committee
Member of theNomination
Committee
Member of theCompensation
Committee

HOYA's Invisible Assets Messages from Outside Directors

Itaru Koeda

Chairman Emeritus and Advisor of
Nissan Motor Co., Ltd.

Each of the Hoya business units is adept at assessing its positioning and strength in themarket, and ﬂexibly and actively addressing the challenges of changes in the environment.
Management's decision making is quick and clear, and executed with speed.
Regarding corporate governance, outside directors are fully functioning and engage invigorous discussions at each meeting of the Board of Directors.
I believe that Hoya, by using its strengths, has a lot of potential. The company is planting
various seeds for the future and is expected to keep growing by adapting to changes overtime. I think Hoya's shareholders and other stakeholders all have high expectations of thecompany, particularly of its future growth. I hope Hoya will aim high and strive hard to

Outside director
Chairman of theCompensation
Committee
Member of theNomination
Committee
Member of the
Audit Committee

meet expectations of the stakeholders. I am involved in lively, candid discussions at themeetings of the Board and assess whether executive ofﬁcers are appropriately managing
the company. On top of that, what I have in mind is to contribute to developing Hoya's
management to capitalize on its strengths.

Yutaka Aso

Chairman and Representative Directorof Aso Corporation

In my view, Hoya, being run by the founder's family, has distinctive strength in its capability
to make decisions and speedy judgments, and its continuity in missions and commitment.
Moreover, Hoya is specialized in the niche businesses where it has outstanding strength.
While a typical owner-manager company may lack fairness or appropriateness in making
or executing decisions, Hoya has welcomed many outside directors ̶ extremely rareamong Japanese corporations ̶ and those members of the board tend to be seniorcitizens with rich experience. The open, active discussions at board meetings should also
be included in the list of Hoya's strengths. As one of the reasons why Hoya's corporate
governance is functioning well, I would like to give the nature of the CEO, who has acheerful and fair personality and a wealth of knowledge. During board meetings, outside
directors are encouraged to speak out with straight-forward opinions and comments.
The Life Care segment has high growth potential, and products made in Japan havehighly regarded and trusted in Asian countries. I am conﬁdent that the Life Care segment
will do much to drive Hoya's sales and earnings.
As is the case with many companies including Hoya, it is indispensable to increase
Japanese who can work in the global business scene as well as non-Japanese staff.
Leveraging my experience in medical-related business and my information on the market
trend and others, I would like to actively make remarks and give hints to the Company. I
am willing to share my views as a corporate owner, difficulties in management, andexperiences of risks and others.
Copyright 2013 © HOYA CORPORATION

Outside director
Member of theNomination
Committee
Member of theCompensation
Committee
Member of the
Audit Committee

HOYA's Invisible Assets

Employees talk about "Invisible Assets"
We interviewed employees that are playing an active role in the HOYA Group to convey the essence of "humanresources" and "organization", which are HOYA's invisible assets, to all stakeholders.

HOYA s culture is
all about thorough discussion

I think the spe e d of de cisi o n-ma k ing is a lso
inﬂuenced by the strong relationship of trust between
superiors and their subordinate staff. The divisional

The members of the Blanks Division engage ind i re cto r re a l l y tr u sts m e. He h a s c re ate d a nvarious discussions every day. The themes are wide

environment where it is easy to work. In the sameranging and include products, customers, andway, the CEO trusts the divisional director. I believe

technology, but at any rate, this is a team thatthat I have a responsibility to diligently fulﬁl the trust

conducts lively discussions. These discussions areof the divisional director in the form of results.

very effective in advancing the development of

By working at HOYA, I came to realize that a

HOYA. First, mistakes are prevented. As employees

company that values its employees is a company

repeatedly engage in sufﬁcient discussion to advancethat trusts its employees.

their work, mistakes can be predicted and avoided inadvance. Second, decision-making is fast. Decisions
are made swiftly based on a consensus that isestablished through sufficient discussion involving
many employees. This is the same not only within thedivision but also between the divisional director andthe CEO. There are cases where we make a proposal
to the divisional director, the divisional director
proposes this to the CEO, and feedback comes to us
at an amazing speed. I believe that the speed of thisdecision-making is the source of HOYA's strength.
Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Employees talk about "Invisible Assets"

Aiming for true globalization

Of course, HOYA also has its challenges. HOYA is aJapanese company that is developing businessglobally. However, I feel that it still has to advance insome aspects to become a truly global company.
Mind sets of people have to change and various
innovations are also needed. I believe that, as a toolfor innovation, having a universal language is one ofessential factors toward becoming a truly global
c o m p a n y. A t p r e s e n t , a l l m e e t i n g s a r e n o tnecessarily carried out in English. This is perhaps achallenge for HOYA, but I believe it is a challengethat can be quickly resolved.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Employees talk about "Invisible Assets"

Eyecity continually
passes on DNA focused on profit

In this way, I can take on various challenges by

The mission given to store managers is to increase

managing the store. Also, I feel that we can take on

the proﬁt of the stores of which they are in chargec h a l l e n g e s b e c a u s e t h i s i s a s y s te m w h e r e

and to contribute to the growth of Eyecity and thesuperiors and the head ofﬁce give advice and follow

creation of value. As in the case of the manager ofup on things.

leading on the spot. I really feel that being in suchenvironment is a power ful weapon in terms of

the store where I was working as a staff member
and various superiors, I also manage the store while
having a strong focus on "profit". Since I have thekind of personality that thoroughly gets to the coreof something if I do something at all, I am striving toincrease proﬁts while checking data that appears on
preliminary reports every day and also undertaking
various schemes and endeavors. As I have been
given the authority to manage the store, I formulate
strategies that pool ever yone's opinions whilelooking at preliminary figures, and put them into
action immediately at my own responsibility.
When a strategy works admirably, that is special. I
am of course happy when ﬁgures actually increase,
but above all the faces of the staff that appear
happy when we achieve a target become mymotivation and driving force.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets Employees talk about "Invisible Assets"

Consulting sales are the strength ofEyecity and its distinctiveness.

current situation.A high-priced product is notnecessarily a good product for each person.
Proposals that are from the point of view of the

There is a difference between Eyecity and othercustomer are indeed the strength of Eyecity and its

contact lens shops. This is the fact that Eyecity

distinctiveness. By further reinforcing our strengthc a r r i e s o u t c o n s u l t i n g -t y p e s a l e s b a s e d o n

and making use of it, I believe staff will be able toconversations with customers. I have also inspected

feel pride and confidence in the fact that they arecompeting stores, and many stores recommend theworking at Eyecity, and I think we will create ansame contact lenses that the user is currently

Eyecity where our personnel have brand value sowearing or a slightly better version provided by thethat more customers use our stores with a sense ofsame manufacturer. At Eyecity, we talk to eachassurance. I feel that we need to make further

cu sto me r a b ou t th e i r u se of c o ntact l e nse s,efforts to ensure that more customers say "theincluding when they wear them, their sense ofbrand value of Eyecit y is its staf f!" And, I am

dryness, and whether they use eye drops or not,convinced that day will deﬁnitely come.

and we recommend the ideal product for their

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets

VOICE From Vision Care Company"What do you think are HOYA's invisible assets?"
When preparing this report, we asked this question to some of our customers such as ophthalmologists andeyeglass shop owners, and our global staff in the Eyeglass Lens Division.

Meet some HOYA customers

Region : Singapore Customer

Dr. Koh Liang Hwee
Designs, coatings and materials, combined with Strong Technical and Sales
Support from HOYA team Singapore!

Region : Hong Kong Customer

Mr. ChanThe high reliability and stability of quality, as well as, coating of Hoya lens hashelped us to keep our customers being loyalty since they think we really haveprovided the best choice to them.

Region : U.S. Customer

Dr. Charles Aldrdge
When it comes to eyewear, one size does not ﬁt all. Each patient is unique and has
their own special visual needs. HOYA has done a remarkable job of providing alarge variety lens designs and materials that meet and match those needs.

Region : U.S. Customer

Dr. Weise
The value that Hoya brings to our ofﬁce based on quality products is great. Hoya
makes us look innovative. The value that Hoya brings to our ofﬁce by supporting
our research, by not only helping that single child, but all those who come after welearn the answers to our research questions is amazing. Hoya wants to give backand makes us look smarter. The value that Hoya brings to the lives of each smilingchild is priceless. I look forward to learning what Hoya will do next!"

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets VOICE From Vision Care Company

Meet some HOYA customers
Region : U.S. Customer

LaFollette Clinic
HOYA partners with our consulting ﬁrm, Cleinman Performance Partners, whichenables us to provide our patients with the latest techonology while managing
our bottom line. Patient satisfaction is consistently high with these products andservices. Brandi Watson, our HOYA representative, adds the personal touch thatprivate practices need in order to stay competitive in today's eye care market. This
allows private practices to differenciate themselves from the big box retailers.

Region : U.S. Customer

Dr. Mark Skowron
It is comforting to know that we are prescribing the best, and latest in technology
offered in the Eyecare industry. When patients wear a Hoya Digital Progressive andthey can see the increase in reading area and feel the softness of the distortion.
They tell me it is the best lens they have ever had. That is value.

Region : U.S. Customer

Tom Krasnoff
Our relationship is a partnership where we work together to satisfy our customer's
needs. The support we get from our Hoya representative and the customer
service people at the lab are second to none.

Region : France Customer

Jean Francois Amé
The working relationship established with Hoya is widely based on the permanent
research of innovations. Many new products such as PAL geometries, coatings andnew cutting edge tools designed to improve the optician's work (i.e. Hoyanet, Visureal,iLog, HVCviewer and Photo).
What's more, Hoya teletraining and Hoya Faculty are capital aspects of our partnership.

Region : U.K. Customer

David Goad
The combination of knowledgeable staff, a "can do" attitude and superb
products enables us to give our patients the best products in the world with great
conﬁdence. The new technology helps us demonstrate and re-enforce value to ourpatients, we also ﬁnd that Hoyanet is an excellent resource for marketing.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets VOICE From Vision Care Company

Meet some HOYA employees
Region : Hong Kong

George Kwan
I am proud of the quality and corporate governance of HOYA, they are the corestone of HOYA to success in the past and also in the future.

Region : Malaysia

Lew Vhee Quin
The uniqueness of the organization culture creates a strong committed management
team. Each individual roles and responsibilities was clearly deﬁned. This has enable
speedy and efﬁcient decisions in their respective areas on every matters.

Region : Taiwan

Tu Jiu-Ting
We have continuously increased with our quality and sales signiﬁcantly in the past

5 years. In Taiwan market, especially to be a leader it is to have a good evaluationfrom both customer and consumer.

Region : U.S.

Doug McClure
I am driven by the fact that I take great pride in the Hoya name, I never want to
let anyone down, whether it's our customers who depend on us to give them
the best in eye care by providing the best in eye glasses technology or our fellow
associates here at Hoya; who's families depend on our success.
Region : U.S.

Heather Padgett
My job is my passion, knowing that everyday no matter what I do or how I feel
what I am doing in the end helps someone be able to see and gives them the giftof sight…this is what drives me…not the people not my job but knowing that nomatter what I am doing it is helping someone.

Region : U.S.

Juli Dewalt
I take pride in the fact that HOYA supports the private Eye Care Professionals
from the time they are students in Optometry school and continuing through theircareers in optometry. This builds great brand loyalty.

Copyright 2013 © HOYA CORPORATIONHOYA's Invisible Assets VOICE From Vision Care Company

Meet some HOYA employees
Region : U.S.

Rodney Webb
New challenges are the driving force. While there are repetitive duties in our jobs,
each day holds new challenges and unique situations that require the best possible
solutions. Challenges allow the opportunity to learn something new every day.

Region : U.S.

Sara Mayhew
Management is a word that does not adequately describe the structure at HOYA.
The term team leader is a better ﬁt. The "management" at HOYA is more like theteam captain that works with you and allows a person to feel like they have madetheir own accomplishments.
Region : U.S.

Juanita Goodyear
My position requires a close relationship with our region's management team.
They are an experienced and intelligent group of people. We respect one another,and work with the same values and goals. It's great to work with people that you
feel are family.
Region : German

AGotzen
The management for me is very visible in crisis. During the Thai ﬂood, which has
been a real crisis for all of us, we could learn that the management is working welland effective. Decisions were taken on short term but still balanced and on a longterm view.

Region : Finland

I NAAPI
Hoya respects local differences. Appreciation of employees is one of the secrets
why people want to stay long with Hoya.

Copyright 2013 © HOYA CORPORATION

11-year Financial Data
2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Net sales(Millions of yen)

246,293 271,443 308,172 344,228 390,093 481,631 453,870 413,726 423,063 376,940 372,494

Operating profit(Millions of yen)

52,982

68,16684,920 101,095

107,213

95,073

-

-

-

-

-

Ordinary profit(Millions of yen)

50,87466,55489,525 103,637 102,909

100,175

-

-

-

-

-

50,76851,55773,92058,53089,368

Pretax profit(Millions of yen)
Net profit(Millions of yen)

20,03739,54864,13575,62083,391

81,72529,38041,51759,57942,68071,242Return on total
assets attributableto owners of theCompany (ROA)

7.3

14.0

20.0

21.2

20.6

14.4

4.6

7.4

10.5

7.5

11.9

Return on equity
attributable toowners of theCompany (ROE)

9.0

17.8

25.8

27.1

25.9

21.6

8.0

11.8

16.3

11.3

16.6

Ratio of assets
attributable toowners of theCompany (%)

81.7

75.5

79.1

77.3

81.6

56.7

56.1

63.8

65.1

66.9

76.2

Capital expenditure(Millions of yen)

15,94830,65940,17548,78554,432

39,46534,83829,02038,48833,18545,011

Depreciation andamortization*1(Millions of yen)

19,792

25,32822,51927,48436,42545,45780,48835,33633,23826,904

31,991R&D expenses(Millions of yen)

8,681

9,847

10,957

14,134

14,92017,412

17,63017,311

16,711

16,094

15,703Per share data (adjusted for stock split)*2 (Yen)Net profit

42.77

87.74

144.71

171.71

193.50189.01

67.87

95.24

138.49100.18164.78Dividend

12.50

25.00

37.50

60.00

65.00

65.00

65.00

65.00

65.00

65.00

65.00

Cash flow fromoperating activities
*3

82.72

174.91

171.65240.57229.23277.09213.34

193.49214.44170.87206.24

Assets attributableto owners of theCompany *4

486.29491.90623.59648.87845.98903.49788.27828.82873.49891.93 1,091.25

Copyright 2013 © HOYA CORPORATION

11-year Financial Data

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Price to earnings
ratio (PER)

41.8

28.9

20.4

27.7

20.2

12.4

28.4

27.0

13.7

18.6

10.6

Price to cash flow
ratio (PCFR)

21.6

14.5

17.2

19.7

17.1

8.4

9.0

13.3

8.9

10.9

8.5

Price to per-shareassets attributableto owners of theCompany ratio
(PBR)

3.7

5.2

4.7

7.3

4.6

2.6

2.4

3.1

2.2

2.1

1.6

Stock price at yearend (Yen)

1,787

2,537

2,950

4,750

3,910

2,340

1,930

2,569

1,898

1,859

1,752

Number of
employees

14,02318,092

21,23425,17628,45035,54534,592

34,45036,54732,36335,130Notes: • Hoya has prepared its consolidated financial statements in accordance with International Financial ReportingStandards (IFRS), since fiscal 2011, instead of accounting principles generally accepted in Japan ("Japanese
GAAP"). Financial data for fiscal 2009 and fiscal 2010 have been retroactively adjusted in accordance with IFRS.
• Due to the adoption of IFRS, operating profit and ordinary profit have not been disclosed since fiscal 2009.
• Net sales, pretax profit, and net profit for fiscal 2009 and after include all businesses, namely continuingbusinesses and discontinued businesses.
• Figures displayed as "return on total assets attributable to owners of the Company (ROA)", "return on assets
attributable to owners of the Company (ROE)", "ratio of assets attributable to owners of the Company", and "priceto per-share assets attributable to owners of the Company ratio (PBR)" prior to fiscal 2008 are "ratio of net profit
to total assets (ROA)", "ratio of net profit to shareholders' equity (ROE)", "ratio of shareholders' equity to total
assets", and "ratio of price to book value per share (PBR)", respectively.
• Results for fiscal 2008 include the second-half results of PENTAX Corporation and its subsidiaries (from October
1, 2007 to March 31, 2008), as PENTAX and its subsidiaries were consolidated with Hoya Corporation as ofAugust 14, 2007. They were merged with Hoya on March 31, 2008.
*1 Depreciation and amortization includes goodwill amortization and impairment losses.
*2 Per share data are retroactively adjusted reflecting a four for one stock split effective on November 15, 2005.
*3 Cash flow from operating activities per share: The figures for fiscal 2002 and after are the amount of cash flow fromoperating activities divided by the average number of shares outstanding for the term.
*4 Assets attributable to owners of the Company per share: The figures for fiscal 2006 and before are "shareholders' equity
per share", and those for fiscal 2007 and 2008 are "net assets per share".

Copyright 2013 © HOYA CORPORATION

Financial Review

Management Discussion and Analysis (All Operations*)

1

Scope of Consolidation
As of March 31, 2013, the HOYA Group ("HOYA") consisted of the HOYA CORPORATION, 101 consolidated
subsidiaries (6 of which are domestic and 95 overseas) and eight afﬁliates (4 of which are Japanese and theother 4 overseas).

HOYA is operated and managed through global consolidated group management. The independent
management teams of business segments, including Information Technology, and Life Care, are responsible for
executing management strategies. Regional headquarters in America, Europe and Asia support business
operations by strengthening relationships with countries and areas in the respective regions, such as byproviding legal support and conducting internal audits. In particular, HOYA has its treasury base in the
Netherlands.

2

Adoption of International
Financial Reporting Standards
HOYA prepares its consolidated financial statements in compliance with International Financial ReportingStandards (IFRS), under the provision of Article 93 of the "Ordinance on Terminology, Forms and Preparation
Methods of Consolidated Financial Statements" (Ministry of Finance Regulation No.28, 1976).
The reportable segment are constituent units of the Group for which separate ﬁnancial information is obtained andexamined on a regular basis by the Board of Directors, the chief operation decision maker, to determine theallocation of management resources and evaluate the business performance.
In accordance with its management philosophy, the Group has categorized "Information Technology" and "Life andCulture" as its business domains, to achieve sustainable growth in corporate value in these business domain. theGroup has been making decisions on the allocation of management resources and monitoring the operating
results. As a result, the Group consists of three reportable business segments: the Information Technology
business, the Life Care business and the Others business, which are consistent with the above business domains.
The Information Technology business handles products for the myriad of applications spawned by the digitalizationof information and the emergence of the Internet. This segment produces and sells a broad array of I/O (input/
output) device related products in the information technology sector, including electronics related products that are
essential for modern digital information and communications technologies, and optical technology-based imaging
related products that are necessary to import pictures and video images as digital information.
The Life Care business produces and sells health care related products for daily use in the healthcare and medical
sectors, and medical related products, including equipment and materials for use in medical procedures. This
segment is typically required to obtain approvals and permissions in accordance with the Pharmaceutical Affairs
Act in Japan and other regulations. As a result, sophisticated technologies and highly reliable quality control
systems are critical for smooth business operation in this sector.
The Other Businesses segment mainly offers information system services, and takes charge of new businesses.

Copyright 2013 © HOYA CORPORATION

Financial Review

3
Sales

During the consolidated ﬁscal year ended March 31, 2013, the global economy continued to slow, reﬂecting
the prolonged European ﬁnancial problems, which had global repercussions, and sluggish economic growthin China and other emerging economies. In Japan the economy continued to see reconstruction demand after
the Great East Japan Earthquake but the country's exports decreased due to the strong yen and the sluggish
overseas economy. However, since the change of government in December 2012, hopes for new economic
measures and easing monetary policy have contributed to the depreciation of the yen and an upturn in thestock market.
In this environment, sales in HOYA's Information Technology segment decreased from the previous year. This
was attributable to a shift in demand from notebook PCs and compact digital cameras, ﬁnal products that use
many of our main products, to smartphones, tablet PCs, and other products that do not use our products asmuch. The Life Care segment posted an increase in sales from the previous year. Sales in the eyeglass lensbusiness recovered from the impact of the ﬂooding in Thailand and were supported by higher sales at a newly
consolidated subsidiary, while sales of medical endoscopes and contact lens were steady.
As a result, HOYA's sales in all operations for the ﬁscal year under review amounted to ¥372,494 million, down
¥4,446 million (1.2%) year on year. Excluding sales contributed by the PENTAX Imaging Systems Business,
which was sold in October 2011, in the first half of the previous fiscal year, sales on a continuing basis
increased by 3.3% year on year on year in the ﬁscal year under review.
By business segment, sales in the Information Technology segment were down 11.5% on an overall businessbasis but down 2.8% on a continuing business basis, which excludes sales in the PENTAX Imaging Systems
Business. The Life Care segment recorded an 8.3% increase in sales.
By customer region, net sales to customers in Japan decreased 5.6%, to ¥136,896 million, and net sales tooverseas customers increased 1.6%, to ¥235,597 million. As a result, domestic sales and overseas sales
accounted for 36.8% and 63.2% of total net sales, respectively. The overseas sales ratio was 1.7 percentage
points higher than in the previous year.
HOYA calculated the effect of exchange rates on operating results during the fiscal year under review bycomparing the foreign currency-denominated ﬁnancial statements of its overseas subsidiaries when converted
into yen at average exchange rates during the ﬁscal
year under review with the same statements whenconverted into yen at the average exchange rates
prevailing during the previous fiscal year. In theforeign exchange market, the average exchange
rates for the yen were ¥83.32 against the U.S. dollar(the yen weakened by 5.5% from the previous ﬁscalyear), ¥107.39 against the euro (the yen appreciatedby 2.0%), and ¥2.72 against the Thai baht (the yen
weakened by 5 . 4%). For the Group overall, theeffect of exchange rates increased net sales by¥3,670 million and net proﬁt by ¥2,086 million.

Copyright 2013 © HOYA CORPORATION

Financial Review

4Transfer of Seiko Epson s eyeglass lensdevelopment and manufacturing business
On Februar y 1, 2013 , the eyeglass lens development and manufacturing business of Seiko Epson
Corporation was transferred to HOYA. Sales and proﬁts for the ﬁscal year under review have incorporated
this business since the date of the transfer. On November 16, 2012, HOYA also executed an agreement with
Seiko Holdings Corporation ("SEIKO") to acquire 50% ownership of Seiko Optical Products Co., Ltd. ("SOP")
by March 31, 2014 and acquired an initial tranche of 30 % on June 1, 2013. SOP was a wholly owned
subsidiary of SEIKO as of March 31, 2013, and is responsible for sales of eyeglass-related products.
Through this business alliance with SEIKO, including the partial share acquisition, HOYA will use its global
manufacturing and sales network and expand sales of SEIKO branded eyeglass lenses, with the aim ofenhancing the corporate value of both companies.

5

Recovery from the Flood Damage in Thailand
The massive ﬂooding that occurred in Thailand in October 2011 inﬂicted damage directly on two plants operatedby HOYA LENS THAILAND LTD., which is HOYA's ﬂagship manufacturing site for eyeglass lenses. Efforts weremade to restore its infrastructure and manufacturing facilities, which resulted in the resumption of operations at
the beginning of April 2012 and the completion of the restoration in September 2012. On a quarterly basis, sales
recovered to the pre-ﬂooding level in the fourth quarter of the ﬁscal year under review.
We sincerely apologize for having caused substantial inconvenience to many customers during the suspensionof operations. Insurance income of ¥32,187 million as compensation for damage caused by the ﬂooding wasrecorded in the ﬁscal year under review.

Copyright 2013 © HOYA CORPORATION

Financial Review

6
IncomeProﬁt before taxes amounted to ¥89,368 million and proﬁt for the year amounted to ¥71,242 million, marking asignificant year-on-year increase of 52.7% and 66.9%, respectively. The pretax profit margin was 24.0%, anincrease of 8.5 percentage points over the previous ﬁscal year's level of 15.5%.
As for other income, the eyeglass lens business recorded ¥32,187 million in insurance income as part ofcompensation for ﬁxed assets and lost proﬁt suffered from the ﬂooding in Thailand and ¥2,238 million as a gain
on step acquisitions, associated with the additional acquisition of shares in Optotal Hoya LIMITADA (formerly
Optotal Hoya S.A.), HOYA's afﬁliate engaged in the manufacturing and sales of eyeglass lenses in Brazil, whichbecame a wholly owned subsidiary. In addition, the yen depreciated against other major currencies toward theend of the ﬁscal year, which resulted in recording foreign exchange gain of ¥12,539 million on foreign currencydenominated cash and deposits, and credits and debts which were held by the Group, and loans andborrowings within the Group. Moreover, share of losses from associates of ¥11,912 million was recorded for the
structural reforms of AvanStrate Inc., an equity-method afﬁliate. Even after excluding these extraordinary factors,
proﬁt before taxes for the current year exceeded year-on-year.
In the Information Technology segment, mask blanks for semiconductors secured a similar level of sales to theprevious year, despite the sluggish semiconductor market, as HOYA became more competitive in the blanks
market. As for photomasks for LCD panels, sales of small- and medium-sized photomasks for smartphones andtablet PCs were ﬁrm, while sales of large-sized ones for LCD televisions showed signs of a recovery toward theend of the fiscal year and drove earnings. On the other hand, sales of glass memory disks for HDDs wereaffected by the shift in demand from notebook PCs to other products, including tablets and smartphones, andwere subdued. Among imaging related products, sales of optical lenses declined in the second half of the ﬁscal
year, due to the shrinking digital camera market. As a result, the Information Technology segment recorded proﬁt
before tax of ¥31,841 million and a segment proﬁt margin of 19.7%.
In the Life Care segment, the major plants in Thailand which suspended operations as a result of the massive
ﬂooding resumed operations in April 2012, and sales of eyeglass lenses recovered to the pre-ﬂooding level by
the fourth quarter of the ﬁscal year. In addition, Optotal Hoya LIMITADA (formerly Optotal Hoya S.A.), HOYA's
afﬁliate engaged in manufacturing and sales of eyeglass lenses in Brazil, became a wholly owned subsidiary,
while the eyeglass lens development and manufacturing business of Seiko Epson Corporation was transferred
to HOYA. These developments contributed to an increase in sales and profit in the eyeglass lens businesscompared to the previous year. At the same time, the Eye City chain of contact lens specialty stores enjoyedcontinued growth in sales and proﬁt from the previous ﬁscal year, thanks to new store openings and growth insales of high-value-added lenses. The medical endoscope business also achieved increased sales and proﬁt
against the previous year thanks to brisk sales mainly in emerging markets such as Russia, the Middle East, andAsia. In addition, the launch of new products stimulated replacement demand in some regions and the trend of
the weaker yen contributed positively. With regard to intraocular lenses (IOL), we ranked No. 1 in sales in thedomestic market and enjoyed strong sales. In the fourth quarter, however, we suspended supply of someproducts and undertook a voluntary recall of those products because incidence rates of inflammation andendophthalmitis were reported to have exceeded certain levels in the third quarter. This resulted in a decrease insales and proﬁt from the previous year.
In sum, the Life Care segment offset the profit decline for intraocular lenses with profit growth in otherbusinesses and posted pretax profit of ¥63,954 million and a segment profit margin of 30.6%. Pretax profit
included ¥32,187 million in insurance income as part of compensation for damage caused by the Thai ﬂooding in
October 2011 and ¥2,238 million as a gain on step acquisitions, associated with the additional acquisition ofshares in Optotal Hoya S.A. Excluding such factors, segment pretax proﬁt would have been ¥29,529 million with
Copyright 2013 © HOYA CORPORATION

Financial Review

a proﬁt margin of 14.1%.
Return on assets (ROA) was 11.9%, and return on equity attributable to owners of the Company (ROE) was 16.7%.

7

Dividends
HOYA determines dividends for each fiscal year by taking into account the Company's performance andmedium- and long-term capital requirements. It also tries to strike a balance between returning profits toshareholders and supplementing internal reserves to fund future growth. HOYA's policy regarding internal
reserves is to continue to actively appropriate resources for marketing for consumer products, primarily in the
medical ﬁeld, while also making timely investments incorporate mergers and acquisitions and R&D for
future growth, as well as investing to ensure sufﬁcient
production capacity and to develop next-generation
technologies and new products.
In the ﬁscal year under review, after balancing the needfor internal reserves for future growth, HOYA paid aninterim dividend of ¥30 per share and a year-end
dividend of ¥35 per share, for an aggregate dividend of¥65 per share for the full year, on a par with the previous
ﬁscal year. The consolidated payout ratio was 39.4%.
Copyright 2013 © HOYA CORPORATION

Financial Review

8

Financial Position
Total assets at the end of the fiscal year under review increased ¥42,839 million, or 7.4% year on year, to¥618,074 million.

Non-current assets increased ¥24,357 million (14.2%) year on year, to ¥195,917 million. The cost of restoration
for major eyeglass lens production sites damaged by the flooding in Thailand and construction of a plant toproduce mask blanks for semiconductors in Singapore and others led to an increase of ¥32,343 million inproperty, plant and equipment – net, while investments in associates decreased ¥12,401 million as a share oflosses from associates was recorded.
Current assets increased ¥18,483 million (4.6%) year on year, to ¥422,157 million. The increase was primarily due
to a rise in trade and other receivables of ¥13,133 million and a ¥44,124 million increase in cash and cash
equivalents, while other short-term ﬁnancial assets decreased by ¥38,062 million partly due to payments forredemption of corporate bonds.
Liabilities amounted to ¥147,389 million, a ¥43,193 million decrease from the level of a year earlier. This wasprimarily due to a ¥39,333 million decrease in interest-bearing short-term debt, which was mainly caused by
payments for redemption of corporate bonds and a¥ 4 , 224 million decrease in retirement benefits
obligation, stemming from the completion of aclosed-end defined-benefit plan (former Pentax
retirement fund plan), which was transferred at thetime of the business integration with Pentax.
Total equity increased by ¥86,032 million year on
year, to ¥470,685 million, partly due to a ¥43,055
m i l l i o n i nc re a s e i n reta i n e d e a r n i ng s. Eq u i t y
attributable to owners of the Company, which is
obtained by deducting non-controlling interest in
equity from total equity, amounted to ¥470 , 872
million, improving the ratio of equity attributable toequity holders of the parent by 9.3 percentage points
from a year earlier levels, to 76.2%.

Copyright 2013 © HOYA CORPORATION

Financial Review

9

Capital Expenditures / Depreciation and Amortization
The total capital investment increased by 35.6% from the previous year to ¥45,011 million during the ﬁscal year
under review. Investment in the Information Technology business amounted ¥24,771 million and investment inLife Care business amounted ¥20,018 million, which account for 55.0% and 44.5% of the total investment by
the Group respectively.
In the Information Technology business, major investments, from the perspective of risk diversification,
included construction of a plant to produce mask
blanks for semiconductors in Singapore and a new
production line at a plant producing glass disks for
HDDs in Vietnam. In the Life Care business, major
expenditures included the reconstruction cost for
the eyeglass lens production sites which weredamaged by the flooding in Thailand in October

2011, a n d ex p e n s e s to e n h a n c e p ro d u c ti o ncapacity in group factories located in places otherthan Thailand, as an alternative production site.
Depreciation and amortization (including impairment
loss) for the fiscal year under review increased

14 . 6 %, to ¥ 31 , 9 91 m i l l i o n . T h e I n f o r m a t i o n
Technology segment accounted for approximately

60% of this, at ¥18,103 million.

Copyright 2013 © HOYA CORPORATION

Financial Review

10Cash Flow

Net cash provided by operating activities amounted to ¥88,991 million, an increase of ¥15,271 million from theprevious ﬁscal year. The main positive factors were proﬁt before taxes from continuing operations of ¥89,368
million (up ¥35,347 million year on year), depreciation and amortization of ¥30,872 million (up ¥2,945 million), andshare losses of associates of ¥11,912 million (up ¥13,776 million). The main negative factors included an increasein trade and other receivables of ¥8,216 million (down ¥19,007 million), a decrease of trade and other payables of¥7,692 million (up ¥964 million), and a decrease in retirement beneﬁts obligation and other provisions of ¥4,188
million (up ¥4,140 million).
Net cash used in investing activities amounted to ¥948 million, a decrease of ¥21,549 million compared with theprevious ﬁscal year.
This was primarily attributable to ¥40,000 million in withdrawals of time deposit (up ¥30,000 million), proceedsfrom sales of property, plant and equipment of ¥7,573 million (up ¥7,012 million), payments for acquisition ofproperty, plant and equipment of ¥43,049 million (up ¥11,865 million), and net cash outﬂow on acquisition ofsubsidiary of ¥10,127 million (up ¥10,047 million).
Net cash used in financing activities amounted to¥68,997 million, an increase of ¥39,738 million. Thiswas mainly due to a total of ¥ 28 , 071 million in
dividends paid (up ¥68 million year on year) and¥40, 287 million yen payments for redemption of
corporate bonds.
As a result of the above, the balance of cash andcash equivalents as of March 31, 2013, increased¥44,124 million from the previous year to ¥248,896
million, including ¥25,078 million effects of exchange
rate changes.

11

Subsequent Events
Nothing of note.

Copyright 2013 © HOYA CORPORATION

About Us
Corporate Data
Corporate
ProfileMarch 31, 2013

Company NameHOYA CORPORATIONHead Office

2-7-5 Naka-Ochiai, Shinjuku-ku, Tokyo 161-8525 JapanFoundedNovember 1, 1941

Established

August 23, 1944

Business Domains

HOYA is a Japanese multinational company and the leading supplier of innovative
precision products based on its optics technologies. HOYA is active in thefields of Life Care and Information Technology providing eyeglasses, medical
endoscopic system, intraocular lenses, optical lenses as well as key components
for the semiconductor devices, LCD panels and HDDs.

Paid-Capital

6,264,201,967 yen

Number of Employees HOYA Group Total; 32,363

Main
Products

Directors

Revenue

372,494 million yen (2013.3 Consolidated, all operations)

Profit before Tax

89,368 million yen (2013.3 Consolidated, all operations)Electronics

Mask blanks/photomasks for semiconductors /Photomasks for LCDs / Glass disks for hard disk drives

Imaging

Optical lenses/glasses / Lens modules for digital camera /Micro lenses / Lazer equipments / Eyeglass lenses

Health Care

Contact lenses and accessories

Medical

Medical endoscopes

Other

Intraocular lenses / Bone prosthesis / System architecture

Board of Directors (as of June 21, 2013)
Board of Directors

Yuzaburo Mogi (Chairman of the Board of Kikkoman Corporation)
Yukiharu Kodama (President of the Mechanical Social Systems Foundation)
Itaru Koeda (Chairman Emeritus and Advisor of Nissan Motor Co., Ltd.)
Yutaka Aso (Chairman and Representative Director of Aso Corporation)
Yukako Uchinaga (Board Chairman of J-WIN (Japan Women's Innovative Network))
Mitsudo Urano (Senior Corporate Advisor of Nichirei Corporation)
Hiroshi Suzuki

Executive Officers (as of June 21, 2013)
President

CEO

Hiroshi Suzuki

Executive Officers

Technology
CFO
COO
COO

Taro Hagiwara
Ryo Hirooka
Eiichiro Ikeda
Girts Cimermans

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About Us

Stock Information

March 31, 2013

Stock Information Listing of theFirst Sections of the Tokyo Stock Exchanges

Company's Shares
Number of Sharesof Common Stock

Authorized: 1,250,519,400
Issued: 435,017,020

Trading Unit

100 shares

Number of
Shareholders

83,560*the Company implemented four for one stock split for the shareholders registered as of
September 30, 2005.
New shares took effect on November 15, 2005.
*14,379,000 treasury shares were cancelled as of February 1, 2006.

Transfer Agent of Mitsubishi UFJ Trust and Banking Corporation Corporate Agency
Department10-11, Higashisuna 7-chome, Koto-ku,
Common Stock
Tokyo 137-8081, Japan
Handling OfficeTel. 03-5683-5111
Principal
Shareholders

Shareholders

Shareholdings

Percentage of
total sharesissued(%)(as of March 31, 2013)1

State Street Bank and Trust Company

26,548,415

6.10

2

Japan Trustee Services Bank, Ltd. (Trust Account)

25,375,800

5.83

3

Northern Trust Company (AVFC) Sub Account
American Client

16,869,198

3.87

4

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

14,883,000

3.42

5

State Street Bank and Trust Company 505225

10,942,998

2.51

6

SSBT OD05 OMNIBUS ACCOUNT - TREATY CLIENTS

9,895,500

2.27

7The Chase Manhattan Bank NA London SL
Omnibus Account9,536,758

2.19

8

Mamoru Yamanaka

9,020,424

2.07

9Northern Trust Company (AVFC) Re US Tax
Exempt Pension Funds

6,639,000

1.52

10

JP Morgan Chase Bank 380055

6,242,227

1.43

Above total 135,953,320

31.3

Copyright 2013 © HOYA CORPORATION

Disclaimers
HOYA has made all possible efforts with regard to information posted on this website and other linked
company's websites. However, no guarantee is given regarding the accuracy, completeness, validity,
immediacy or timeliness of this information, any of which could include errors, misprints or other defects.
HOYA and its information providers accept no responsibility whatsoever for any losses, financial orotherwise, arising from the use of this information. In addition, HOYA and its information providers
accept no responsibility whatsoever for any losses, ﬁnancial or otherwise, arising from computer system
malfunction or any other cause resulting in error, invalidity, delay, omission, defect or suspension of theinformation provided.
HOYA may make comments and disclose information which include forward-looking statements withrespect to HOYA's plans and future performance. Such forward-looking statements that are nothistorical fact are based on management's assumptions and beliefs in light of the information available
to it when such statements were prepared. We do not guarantee the accuracy or completeness of theinformation herein.
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 ﬂuctuation of
exchange rates and interest rates, international situations, market trends and economic conditions,competition, production capacity and research and development capabilities and so on. Please refer toBusiness Risk.
The information posted on this HOYA Annual Report website is not provided for the purpose of
inducing investment activities. Investors are advised that any investment must be made at theinvestor's own discretion.

Copyright 2013 © HOYA CORPORATION

HOYA

2013

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