Briefing Summary of the Analyst/Investor Meetingndfor the 2

Quarter Financial Results for the Fiscal Year Ending March 31, 2012
Tokyo, October 31, 2011

Note: This memo is posted for reference purposes for the convenience of those who were unable to attend
the meeting and is not a verbatim record of all statements made at the meeting. Please be aware that it has
been compiled in a concise form at the judgment of the Company’s Corporate Communications Group.
Please also refer to the cautionary notes on the final page
Overview of financial results provided by Mr. Ema, CFO<Overview of financial results>•

Let me explain our financial results, using the Quarterly Report(English). The Balance Sheeton page 4 and 5 show assets and liabilities at the time we sold our camera business to Ricoh.
On the asset side, “assets held for sale” of 19,350 million yen appear on the third line fromthe bottom on page 4, and on the liability side, “liabilities held for sale” of 10,341 million yen
appear on the fourth line from the bottom on page 5. These items appear on the Balance
Sheet only this time.

•

The Quarterly Statement of Comprehensive Income is on page 6. This shows the values of all
operations. Sales were 104,113 million yen, down 3,366 million yen year on year. Profit
before tax was 14,876 million yen, down 1,617 million yen (9.8%). Profit for the quarter was
12,569 million yen, down 1,494 million yen.

•

The effect of exchange rate changes when the financial statements of overseas consolidated
subsidiaries converted into the yen appears in Note 1 on page 6. Sales, profit before tax, andprofit for the quarter declined by 2,395 million yen, 786 million yen, and 721 million yen,respectively. These items have been influenced by the effect of exchange rate changes dueto the stronger yen, and their values have an impact on operating income. The effect of thestronger yen was particularly significant in the 2nd quarter, as the yen was 9.4% stronger
against the US dollar, 2.4% stronger against the euro, and 6.6% stronger against the Thaibaht, compared to the exchange rate of the same period last year.

•

Of the decline of 3,366 million yen in sales, the decrease due to the exchange rate changes
was 2,395 million yen. Excluding this, sales from actual business activities declined 970
million yen. Although we posted sales of approx. 3 billion yen from the HDD glass disk media
business in the previous fiscal year, they did not appear in the current fiscal year as we soldthe business. By segment, as this was included in Information Technology, the actual decline
in sales in this segment was approx. 1.2 billion yen. Sales increased by 3.2 billion yen in theLife Care business.

•

Profit before tax declined by 1,617 million yen, of which 786 million yen was due to exchange
rate changes and 831 million yen was the decrease in the profit from actual businessactivities. By segment, Information Technology showed a decline of approx. 1.0 billion yen,while Life Care rose approx. 1.6 billion yen. Other than these, foreign exchange differenceswere included in the item of “Other expenses,” and the amount was 1,592 million yen in the-1-

previous year and 4,483 million yen in the current year. The difference of them was anegative factor of approx. 2.8 billion yen. Of the foreign exchange differences of 4,483 million
yen for the current year, approx. 0.5 billion yen was related to cash, and approx. 3.9 billion
yen was the unrealized portion, of which 2.5 billion yen was the effect of the exchange
conversion of foreign deposits. The unrealized foreign exchange differences for lending andborrowings (investment) between subsidiaries were approx. 1.0 billion yen. Tallying thesevalues, the unrealized foreign exchange differences came to 3.9 billion yen, and the realized
foreign exchange differences were 0.5 billion yen. These values came to be a total of approx.
4.4 billion.
•

Other comprehensive income was negative 21,104 million yen. The value for “Exchange
differences on translation of foreign operations” was approx. 20.5 billion yen. This shows how
much difference of value Group companies would have if they were translated at the current
exchange rates. As a result, comprehensive income for the quarter came to negative 8,535
million yen. This value will invert if the exchange rate of the yen swings in the opposite
direction. If you look at the value taking this into account, I think that it will be easier tounderstand it.

•

Page 7 shows the comprehensive income devided into continuing and discontinued
operations. Sales from continuing operations were 96,505 million yen, up 707 million yen
year on year, and profit before tax was 15,674 million yen, down 1,120 million yen. Profit for
the quarter was 13,030 million yen, down 1,623 million yen. The negative effect of exchange
conversion was 2,220 million yen for sales and approx. 0.7 billion yen for both profit before
tax and profit for the quarter.

•

Discontinued operations included the HDD glass disk media business and the camera
business in the previous year, but only the camera business in the current year.

•

Regarding the Quarterly Consolidated Statement of Cash Flows on page 8, the “Net cash
generated from operating activities” was 25,124 million yen, and cash out of “Net cash used
in investing activities” was 7,286 million yen, most of which was capital expenditure. “Net
cash used in financing activities” was outflow of 1,498 million yen.

•

Page 9 shows the segment information of all operations. Page 10 shows the segment
information by dividing our operations into continuing and discontinued operations. The tablein the middle of page 10 shows the segment information for the 2nd quarter under review, andthe values on the right-end column are the results from all operations, of which sales were104.1 billion yen, and profit before tax, which was 14.8 billion yen. Their breakdowns are
written at left, which shows that Information Technology posted sales of approx. 43.7 billion
yen and profit before tax of approx. 8.9 billion yen. Life Care recorded sales of approx. 52.4
billion yen and profit before tax of approx. 11.0 billion yen. Although Information Technology
had accounted for more than 50% of total sales in the past, Life Care exceeded that ofInformation Technology in the quarter under review. The segment profit before tax rate wasalso higher in Life Care than in Information Technology.

•

Page 12 shows further details of the results for each segment. Details of continuing
operations by product, the second table from the top, show that sales in “Electronics related-2-

products” declined by approx. 1.4 billion yen, or 5.0%, year on year. This was mainly becauseof the effect of smaller sales of semiconductors and HDD glass disk substrates.
Imaging-related products are related to the optical business. Sales in this segment increased,
mainly reflecting high sales of optical lenses.
•

In the Life Care segment, health care related products consist of lenses for eyeglasses andcontact lenses. Results in lenses for eyeglasses were affected by exchange rate changes.
Sales in Japan declined reflecting actual business activities, while sales in the United Statesand Europe decreased, reflecting the effect of exchange rate changes. Sales in Asia
increased. In local currency terms, sales increased in each of the United States, Europe, andAsia. Sales of contact lenses showed double-digit growth. Medical-related products mean
intraocular lenses and medical endoscopes. Sales of intraocular lenses and medical
endoscopes both increased, and the growth rate was almost the same for both. Sales of
medical endoscopes were affected by exchange rate changes but increased in local currency
terms, with especially significant growth of 45% in the United States. In Asia, sales wereapproximately tripled.

•

Dividends are written in the financial hilights on page 1. In the previous year, the interim
dividend was 30 yen per share, and the year-end dividend was 35 yen per share. We havedecided to pay an interim dividend of 30 yen per share for the current fiscal year and will
announce the year-end dividend after the full-year results have been compiled. The
consolidated payout ratio for the first half under review is 46%.

Overview of operations provided by Mr. Suzuki, CEO<Flood in Thailand>•

We have two plants for eyeglass lenses in Thailand. One manufactures lenses for finishedproducts, and the other produces custom-made lenses according to the optometry
prescriptions of customers. Both plants have been suspended in production. Inside the plantfor custom-made lenses, the flooding has reached a depth of about one meter. With respect
to the plant for finished products (mass-market products), floodwaters of more than one
meter have reached the outside of the plant, but the interior has not been flooded as thewaters are blocked by sandbags. Our efforts to achieve a cost advantage by concentratingother countries’ plants for custom-made lenses in Thailand have ended up working against us.
We originally amalgamated four plants for custom-made lenses in Japan into one plant inThailand and imported 90% of custom-made lenses from that country. Production of theseimported lenses is at present suspended. As production in Thailand accounts for a sizable
portion of our global eyeglasses business, I think that the impact will be significant.

•With respect to HDD-related products, as drives and parts plants are significantly affected,
production of HDDs will decline in the second half, which will have an impact on our HDD
glass disk substrate business, although our HDD glass disk plant was not directly affected.
Our optical lens business will also be affected, given that the procurement of parts to produce
cameras has become difficult, as some of our customers’ plants have been involved.
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In any event, it is uncertain when the floodwaters will recede from our eyeglasses plants, andeven if they do recede, I think that most of the machinery and equipment will be unusable.
Also, given that hundreds of plants were affected in Thailand, I think that it will take time toresume operations at our plants as contractors for electrical and other work will be hard tofind. Therefore, the damage is still uncertain. I think that the damage will be in the double
digits of billion yen in terms of the impact on sales, and also on profits.

<Overall>•

The Life Care business grew steadily. On the other hand, the performance of Information
Technology was not as good as expected.

<Mask Blanks for Semiconductor Manufacturing>•

The performance of mask blanks was particularly weak in the 2nd quarter. There was atendency among our customers to accumulate large volumes of inventories in April and May
after the earthquake. In addition to the deteriorating performance as a reaction, the utilization
rate also declined at foundry makers. As a result, the number of photomasks naturally
dropped. The volumes declined 14 to 15% year on year. Overall, the number ofsemiconductor designs and design activities were sluggish. However, I think that the decline
in the 2nd quarter itself is transitory.

<Photomasks for Semiconductor Manufacturing>•

EUV is being valued. Although trial equipment has been adopted at advanced manufacturers,
they are not yet practical for volume production. There are still many technical hurdles toovercome. They have not yet been capable of manufacturing decent semiconductors. As it
has become more evident that the current exposure systems will be used for the moment, it isnecessary to address the double patterning as a practical manufacturing process.

<Photomasks for Liquid Crystal Displays (LCD)>•

The performance of products for televisions is slumping, while that of small- andmedium-sized products for smartphones is buoyant. Looking at the situation from a macro
perspective, as products for televisions are worsening, the development activities of otherproducts such as oxide semiconductors are beginning to pick up, as something new has to bedone at the same time. Other companies also begin to move toward panels, from which theycan easily make money, thinking that it is not exactly necessary to engage now in the volume
zone such as high-definition.

<Glass Memory Disks for Hard Disk Drives (HDDs)>•

As there was a fairly large shipment at the end of September, I thought that sales might fall in
October and November as a reaction. However, the situation ended up with a decline in the
production volume of HDDs itself. I expect that the production of HDDs will be down 15 to
20% in the 3rd quarter. As it looks unlikely that the production will recovery in the-4-January-March period, I think that it will take some more time to recover. I believe that we willfind the situation where manufacturing PCs will be impossible as HDDs cannot be made.
•As the quantity of our products itself increased by around 12% year on year in the 2nd quarter,
I think that we manufactured a decent amount. However, profitability was not very good
because of problems such as the appreciation of the yen and rare earth prices. I expect thatthe quantity will decrease around 20% going forward.

Overview of performance provided by Mr. Hamada, COO<Digital Cameras and Optical Lenses>•

For the camera business of PENTAX, the 2nd quarter was the final quarter. As the launch of
mirrorless cameras was two months behind schedule due to the effects of the earthquake,the results were lackluster. I believe that demand for cameras overall is pretty muchaccounted for by smartphones. In particular, cameras with a zoom of less than five times willprobably decline by around 15% in volume terms going forward, I think. I thought that if the
new mirrorless segment had been established instead, the quantity of mirrorless cameras
may increase by around 15%, combined with single-lens reflex cameras. However, as thecamera business will miss the Christmas season because of the floods, the outlook is very
uncertain. Given that there are only three countries, namely Japan, Hong Kong, and theUnited Kingdom, in the world where mirrorless cameras account for more than 20% of our
product mix and that mirrorless cameras have not yet been recognized in other countries, we
had put our hopes on their performance this autumn. As such, the camera business had an
regrettable outcome.

•The lens business of HOYA grew around 10% year on year in the 2nd quarter, thanks tocustomers who tried to accelerate the recovery from the earthquake. Although the flooding in
Thailand will have an impact going forward, I think that the overall trend will be positive for
HOYA, as I expect that the performance of both mirrorless and single-lens reflex cameras will
improve, while that of compact cameras will decline.

<Medical Endoscopes>•

I think that medical endoscopes will not grow much as they are, particularly in major EU
countries and the Southern European markets. In Northern and Eastern Europe and the
Middle East, however, there are countries not affected by the economic crisis. Our advanceinto these emerging countries has blossomed, and medical endoscopes returned to growth ofnearly 10% in local currency terms in Europe, the Middle East, and Africa. In the Americas,
medical endoscopes showed growth of more than 40% year on year in local currency terms.

<Intraocular Lenses>•

Although sales volumes of intraocular lenses are smaller than those of medical endoscopes,
it has nearly doubled on a year-on-year basis in Europe, and we plan to gradually extend theoperations into Eastern Europe and the so-called “stan” countries such as Kazakhstan. I-5-expect that our share of the Japanese market will increase from the current 32% to 35% earlynext year to reach a top in the market.
<Contact Lenses>•

The number of stores has not increased significantly, but growth of around 10% continues asboth sales per store and unit prices are rising.

Q&A
Q: In circumstances where the macro-environment has changed due to the flooding, etc., whatkinds of management strategies will you adopt to increase earnings this year and next year?
A: (Suzuki, CEO) Our strategies will not change substantially, but the most important thing at thisstage is to put our plants in Thailand back to work soon. The fact that 90% of the production of
our lenses for eyeglasses, which have a market share of 40% in Japan, has shutdown iscausing our customers a great deal of trouble. As other companies don’t have the ability to fillthis need, we have to get the plants back to work as soon as possible. However, I think that theeffect will drag on for a while, as customers will not return soon even if our plant resume
operation.
From a macro perspective, we are basically focusing on growing Life Care and improving
profitability in Information Technology. As the Information Technology business is a cash cow,
we can even improve profitability by reducing capital expenditure. At the same time, ourstrategy of increasing sales in Life Care even at the cost of profitability to a certain extent
remains unchanged. Although things have not proceeded as we expect, given that profitability
in Information Technology has not improved as expected due to the stronger yen and thateyeglasses, which we seek to expand, are affected by the floods, the direction of ourstrategies remains unchanged.
Q: If there is any competitor in Life Care whose reputation has deteriorated, is it possible for
HOYA to increase market share? Are acquisitions attractive as a business opportunity?
A: (Hamada, COO) Most doctors are not aware of such things, and even if they are, they will use
whatever they want to use, irrespective of these things. So for now, there is no effect.
(Suzuki, CEO) Although some talk about M&A is continuing in Life Care, they are not likely to
be concluded in a few months.
Q: You expected that profit before tax for the first half would be 38 billion yen in the previous
forecast. Please tell me the reasons for the gap with 34.1 billion yen of the actual results, interms of foreign exchange and actual business activities.
A: (Ema, CFO) The impact of foreign exchange was large. Compared with the 1st quarter, the yen
in the 2nd quarter became slightly stronger against the US dollar. Also, the yen fluctuatessignificantly at term ends (June and September). We were affected by US dollar-denominatedcash and deposits we hold in Japan, and an unrealized exchange loss of 4.0 billion yen arosefrom the deposits for the first half. For the 2nd quarter, this had an impact of 2.5 billion yen,-6-

which primarily explains the gap.
(Suzuki, CEO) Results of actual business activities were, roughly speaking, in line withexpectations.
Q: Are there any changes in your forecasts for depreciation and amortization and capital
expenditure due to the effects of the flooding in Thailand?
A: (Ema, CFO) According to our plan at the end of September, which did not include the effects ofthe floods, capital expenditure is 42 billion yen. Depreciation and amortization are expected to
be around 32 billion yen.
(Suzuki, CEO) In relation to Thailand, there are machinery assets of around 10 billion yen.
Unless I see them for myself, I cannot say how badly they have been damaged. Althoughthese assets are posted as capital expenditure, I cannot say to what extent they are coveredby insurance, either, until we negotiate with the insurers. As capital expenditure for the second
half has already been committed and cannot be terminated, it will not decline.
Q: Can the plant in Pathum Thani be used when the floodwaters recede? When do you think it
can resume operation, roughly? Also, please tell me about the situation of alternative
production while operations are shutdown.
A: (Suzuki, CEO) As the plant for mass-market lenses in Pathum Thani has not been flooded, it
can be used soon after the surrounding floodwaters recede. However, we cannot makecontact with about half of its employees, as their homes are flooded. As our workforce will notsoon return even if we reopen, I think that it will take time to resume production. Of the twoplants, the one for mass-market lenses manufactures a much larger volume, but the other forcustom-made lenses is larger in sales terms. In that regard, the effect of losing the productionin the plant for custom-made lenses is more significant. As we have small custom-made plants
in different places, we have quickly dispatched Thai employees to plants that are able toincrease production, so that the lost production can be offset to a certain extent. However, we
can only make up about 10 to 15% of the lost production. As we have concentrated mostadvanced facilities in Thailand, we cannot fully compensate for the lost production even if
plants in other regions increase their production.
Q: I imagine that LCD glass substrate operations will be difficult, given the situation of AvanStrate.
Please tell me what you will be doing with the LCD glass substrates business going forward,
given the postponed IPO of AvanStrate. I believe that they have corporate bonds that will be
redeemed in 2015. Are they going to issue additional bonds?
A: (Suzuki, CEO) We are saying that the IPO will be impossible unless the market is ready. I also
believe that the listing will be more difficult given the operating environment, as prices arelikely to fall. Although I think that production of LCD glass substrates is not necessarily hugely
overcapacity since shipments are steady quantitatively, price competition will intensify as ourlargest competitor announced that they would maintain market share even if that means
reducing prices. As I believe that AvanStrate has a higher cost structure, we will build a solid-7-

structure, taking into account that the higher cost structure is attributable to factors related tointernal operations, such as the way in which the products are manufactured and the yield.
Although the operation was inefficient last year as the furnace was enlarged and glass was
improved, I think that AvanStrate has become a more competitive company than last year as aresult of these initiatives. With respect to the listing, I think that the hurdle has become higher,
looking at the current conditions.
The issuing of corporate bonds cannot be known until the time comes.
Q: You explained that production of HDDs will decline 15 to 20% in the December quarter from theSeptember quarter because of the effects of the flood. Are you talking about HOYA
production? Have you made any progress in alternatives to rare earths? What about prices?
Rare earth prices have declined slightly.
A: (Suzuki, CEO) In saying that production would decline, I was referring to drive manufacturers.
With respect to alternatives to rare earths, we were hoping to make much greater progress but
we have not yet received approval from our customers. Since we have a considerable volumeof rare earth inventories that we bought when the price was at its peak and we have notobtained approval for alternative materials, we are making our products at fairly high costs. In
the second half, if alternative materials are in use more than before, with approval obtained,
the environment will improve. Therefore, even if the quantity declines, I think that our
profitability will not fall as much as expected.
Q: What are the factors for your forecast that intraocular lenses will have the largest share of theJapanese market?
A: (Hamada, COO) A major factor is that we are constantly launching new products and that our
products (injector-type) that enable surgery to be done accurately and quickly are wellreceived. As these products are very difficult to design, they are one of our competitive
advantages.
Q: Is there any impact of introducing the IFRS on the CEO’s decision-making? Please tell me yourfeeling as a producer of financial statements under the IFRS.
A: (Suzuki, CEO) What surprised me was that comprehensive income for the 2nd quarter became
negative. It has become evident that we cannot run the Company by referring to thisinformation. I believe that when I actually make a business decision, making a judgment on an
operating basis, the former profit and loss basis, or the so-called operating income basis willserve as the most useful reference. Speaking from a more macro perspective, as we think
about management on a cash flow basis, there is no difference between the IFRS and the
JGAAP.
(Ema, CFO) As we have been compiling the budget under the International AccountingStandards since 2008, I think that nothing new has arisen in our financial statements. I thinkthat all accounting standards have shortcomings of some kind. As financial statements underthe IFRS are not prepared with readers in mind, we are making our financial statements easier-8-

for them to understand by preparing supplementary materials like this “Quarterly Report”. I
think that we should take advantage of the positive aspects of each accounting standard.
Certain statements contained in this report constitute forward-looking statements regarding theCompany’s future performance and environment of the industry in which the Company is involved.
Forward-looking statements are based on the judgments of the Company and corporate group obtained
based on information obtainable at the time the statements are made and they also contain risks anduncertainties. The Company does not guarantee the completeness or accuracy of the content.
Consequently, you are advised to refrain from making investment judgments relying entirely on these
forecasts. Actual performance and the industry environment may differ materially from those expressedby the forward-looking statements for a number of reasons. You are requested to make final decisions
regarding investment, etc., on your own. Please be aware that we cannot take responsibility for theoutcome of investments.

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