Annual Financial Report 2005

April 20, 2005

Annual Financial Highlights (unaudited)
HOYA CORPORATION and Consolidated Subsidiaries

Contact:Naoji Ito, Manager of Investor Relations Tel:03(3952)1160 Fax:03(3952)0726 E-mail:naoji.ito@mb.hoya.co.jp

Performance for the years ended March 31, 2005 and 2004
( The yen amounts shown therein are rounded down to the nearest million.)
Years ended March 31,
Variance
2005
2004
(%)

(1)Results of Operations
Net sales
Operating income
Ordinary income
Net income
Basic net income per share (Yen)ROE
Ordinary income / total assets
Ordinary income / net sales

308,172
84,92089,52564,135578.84
25.8%
27.9%
29.1%

271,443
68,166
66,55439,548350.96
17.8%
23.6%
24.5%

13.5
24.6
34.5
62.2

Notes : No changes have been made in accounting policy.
Years ended March 31,(2)Dividends
Annual cash dividends per share (Yen)2005
160.002004
100.00(3)Financial Position
Total assets
Shareholders' equity
Shareholders' equity ratio
Shareholders' equity per share (Yen)2005
351,482
277,88979.1%
2,494.37

2004
289,887
218,97875.5%
1,967.60(4)Conditions of Cash Flow
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Cash and cash equivalents at end of period

2005
76,000-35,524-11,692
112,874

2004
78,743-28,338-42,853
80,425

As of March 31,

Ref:Performance of HOYA CORPORATION for the years ended March 31, 2005 and 2004
2005
2004
Variance(%)
Net sales
224,608
183,771
22.2
Operating income
35,131
28,341
24.0
Ordinary income
46,536
33,61038.5
Net income
24,967
15,55860.5
EPS (Yen)
225.55138.24
Total assets
222,313
209,673
Shareholders' equity
159,316
143,617
Hoya Corporation does not guarantee the accuracy or completeness of the information herein. Unless otherwise stated estimates or forecasts aresolely those of our company and subject to change without notice. Hoya Corporation accepts no liability whatsoever for any direct orconsequential loss arising from any use of this report.

11.Global Group Management
The HOYA Group consists of the HOYA CORPORATION (the "Company"), 58 consolidated
subsidiaries (6 in Japan and 52 overseas) and five affiliates (5 in Japan). The HOYA Group is
engaged in manufacturing, sales and businesses related to Electro-Optics, Photonics, Vision Care,
Health Care and Crystal products. Of the five affiliates, one (1in Japan) is accounted for using theequity method (as of March 31, 2005).
Our products are manufactured by the Company itself and by other companies in the Group both inJapan and abroad. In Japan, most of our products are distributed directly to retailers, specialty
stores, assemblers, etc. Some products are exported to various countries abroad through our overseas
Group companies.
The HOYA Group has adopted a global group management system. Global Headquarters at the
HOYA CORPORATION formulate management strategies, which are enacted on a global basis by
the two major business segments such as Information Technology and Eye Care in line with theirrespective business responsibilities.
By area, regional holding companies in North America, Europe and Asia are in charge of reinforcing
relationships with the countries and areas in their respective regions, financial management on aregional basis, legal support and internal audits, thereby supporting the promotion of businessactivities.
In July 2003, the HOYA Group has moved its financial headquarters to HOYA HOLDINGS, N.V. sothat the headquarters control global financial matters.
Global Group Management System
Global Headquarters（Formulation of Group Strategies））

Information Technology

Eye CareCrystalLegal and Financial
Support(area)Japan
Asia(Holding company)
North America(Holding company)
Europe(Holding company &Financial
Headquarters)

Global Business Expansion

2

The Company and its consolidated subsidiaries are engaged mainly in the manufacture and sales of products in
six major industries as per below: Electro-Optics, Photonics, Vision Care, Health Care, Crystal and Service.

Business
Categories

Industries

Products and Services
Photomasks and Maskblanks for semiconductors,

HOYA CORP. Blanks Division, Mask Division,

Masks and Devices for LCDs;

MD Division, Optics Division, etc.

Electro-Optics Glass disks for hard disk drives (HDDs);
Information
Technology
Photonics

Major Subsidiaries

HOYA CORPORATION USA

Optical lenses, Optical glasses,

HOYA MAGNETICS SINGAPORE PTE LTD

Optical communication related devices, etc.
Laser equipments for industrial,
dental, and medical purposes
Light sources for electronics industry, etc.
Eyeglass lenses, Eyeglass frames,
Ophthalmic equipments, etc.

HOYA GLASS DISK (THAILAND) LTD.
HOYA PHOTONICS, INC.
HOYA PHOTONICS CORPORATIONHOYA CANDEO OPTRONICS CORPORATIONHOYA CORP. Vision Care Company
HOYA LENS DEUTSCHLAND GMBH
HOYA LENS U.K. LTD.
HOYA LENS OF AMERICA, INC.

Contact lenses and accessories,

HOYA CORP. Medical Division

Intraocular lenses, etc.
Crystal glass products

HOYA HEALTHCARE CORPORATIONHOYA CORP. Crystal Company
HOYA CRYSTAL, INC.
HOYA SERVICE CORPORATIONWELFARE CORPRATION

Vision Care
Eye Care

HOYA LENS THAILAND LTD.
Health Care

LifestyleRefinement

CrystalService

Design of information systems,
Placement of temporary staff, etc.

3Business Flow Chart

NORTH AMERICA

INFORMATION TECHNOLOGY(Regional headquarters)
HOYA HOLDINGS, INC.
（Consolidated Subsidiaries)

Photonics

HOYA CORPORATION USA
RADIANT IMAGES, INC.
Products,

HOYA LENS OF AMERICA, INC.

（Consolidated Subsidiary)Semi-finished

HOYA LENS CANADA, INC.

HOYA PHOTONICS,

products,

HOYA LENS MEXICO, S.A.DE C.V.

INC.

Materials

Products

EAGLE OPTICS, INC.
HOYA LENS OF CHICAGO, INC.

Electro-Optics

HOYA LENS OF NEW ORLEANS, INC.
HOYA CRYSTAL, INC.

Products

and, Vision Care North America Branches
HOYA CORPORATION
Blanks Division,

Products,

Mask Division,

Semi-finished

MD Division,

products,

Optics Division

Processing

EUROPE(Regional headquarters)
HOYA HOLDINGS N.V.
（Consolidated Subsidiaries)C

HOYA LENS DEUTSCHLAND GMBH
HOYA LENS U.K. LTD.
HOYA LENS ITALIA S.P.A.
HOYA LENS FINLAND OYHOYA LENS NEDERLAND B.V.
HOYA LENS IBERIA S.A.

U
Products

HOYA LENS FRANCE S.A.S.
HOYA LENS POLAND SP.Z.O.O.
HOYA LENS BELGIUM N.V.

S

HOYA LENS HUNGARY RT
HOYA LENS MFG. HUNGARY RT

EYECARE

Products,

HOYA LENS SWEDEN AB

Semi-finished

HOYA LENS DANMARK A/Sproducts

HOYA CONBIO FRANCE EURLASIAVision CareT

(Regional headquarters)
HOYA CORPORATIONHOYA HOLDINGS ASIA PACIFIC PTE LTD（Consolidated Subsidiaries)

Vision Care Company

HOYA MAGNETICS SINGAPORE PTE LTDOHOYA GLASS DISK (THAILAND) LTD.

M

HOYA OPTICS (THAILAND) LTD.
HOYA OPTICAL (ASIA) CO.,LTD.
HOYA OPTO-ELECTRONICS QINGDAO LTD.
HOYA MICROELECTRONICS (SUZHOU) LTD.

E

HOYA OPTICAL TECHNOLOGY (SUZHOU) LTD.
HOYA MICROELECTRONICS TAIWAN CO.,LTD.
HOYA GLASS DISK PHILIPPINES, INC.

Health Care

HOYA GLASS DISK MALAYSIA SDN.BHD.

Products
R

HOYA GLASS DISK VIETNAM LTD.
HOYA LENS THAILAND LTD.
HOYA LENS (S) PTE. LTD.

products
HOYA CORPORATIONHOYA LENS AUSTRALIA PTY.LTD.

Medical Division
products

S

HOYA LENS HONGKONG LTD.
HOYA LENS KOREA CO.,LTD.

（Consolidated Subsidiary)
HOYA HEALTHCAREHOYA LENS TAIWAN LTD.

CORPORATIONHOYA LENS PHILIPPINES, INC.

CRYSTAL

MALAYSIAN HOYA LENS SDN.BHD.
HOYA LENS GUANGZHOU LTD.
THAI HOYA LENS LTD.
THAI HOYA HOLDINGS LTD.

HOYA CORPORATION
Crystal Company

HOYA LENS SHANGHAI LTD.
HOYA MEDICAL SINGAPORE PTE LTD.

JAPAN（Consolidated Subsidiaries)
HOYA CANDEO OPTRONICS CORPORATIONSERVICE

HOYA PHOTONICS CORPORATION

Service（Consolidated Subsidiary)

HOYA ADVANCED SEMICONDUCTOR TECHNOLOGIES CORPORATIONHOYA SERVICE CORP.

(Affiliates)

WELFARE CORPORATIONNH TECHNO GLASS CORPORATION(Affiliate)

other 3 companies

Products

Service

TWO COINS CORP.

Italic : affiliates accounted for by the equity method

42. Management Policies
An outline of the management policies of the HOYA Group is as follows:

Top Priority Policy of the Management"Maximization of Corporate Value"
1. SVA management(SVA:Shareholders' Value Added or an increment in shareholder value during one fiscal year)
In order to maximize corporate value, we will streamline our management and carry out SVA
management. We are confident that we will be able to respond to the expectations of our shareholders
and satisfy all stakeholders with an increase in corporate value by producing profits that exceed
capital costs while paying due attention to all expenses.

2. Strategy of "Global Niche"
Applying our original technologies, which have been accumulated over many years, the Company willdevelop technologies that will prevail in the global marketplace, create new business fields withgrowth potential to attain the top market shares therein, and develop them into highly profitablebusinesses.

3. Harmonizing the interests of management, employees and shareholders
In order to improve business results and produce profits for both shareholders andmanagement/employees simultaneously, board members are obliged to own shares in the Company,
stock-options and an employee stock ownership plan have been established that allow employees tohave a sense of participation in the management of the Company.
The Company has adopted new system that places importance on the employees' abilities regardless ofage or sex so that they can work with enthusiasm.

4. Global group management
We will make the best combination of management resources in order to give full play to ourcompetitive edge in a global perspective and strive to increase our share of overseas business.
Measures designed to promote globalization include not only expansion of the worldwide marketing
network and transfer of manufacturing overseas, but also employment of locals in the senior
management of overseas subsidiaries regardless of race.

5. Middle- to long-term policy on appropriation of retained earnings
The Company carries out its globalized management emphasizing consolidated accounting and its
management emphasizing shareholder interests and exerts efforts to increase the enterprise value andshareholder value in response to shareholder expectations.
In terms of the cash dividend, the Company will determine the amount in consideration of the balanceamong repayment of profit to shareholders, welfare of employees and replenishment of retained
earnings for future business development.
Funds from retained earnings will be appropriated for investments for the Company to establish the
HOYA brand, accelerate further growth, enhance competitive edge of its products, and develop nextgeneration products.

5

6. Basic approach to corporate governance and measures being promoted
1) Basic approach
The Company is aware that corporate governance is one of the issues of highest priority in business
management and has thus far promoted initiatives for numerous reforms. We aim to maximize shareholders
value and enhance management efficiency based on the concept that "the company is the possession of theshareholders" and have furthermore established supervisors to monitor operations from the perspective of theshareholders and receive their advice when required in order to avoid implementing business operations thatsolely reflect the Company's own logic. At the same time, we have been promoting the separation ofmanagement supervision and operations and an acceleration in decision making.

2) Conditions of other measures(1) Conditions of the corporate governance infrastructurea) Reduction in the number of directors and participation in management by outside directors
We began gradually decreasing the number of directors in 1989 in order to be able to avoid having the Boardof Directors become a mere facade and stimulate thoroughgoing and lively discussion.
We promoted the separation of management supervision and operations within an organizational
configuration consisting of a divisionalized and company system and operations were executed centered in theheads of the operating divisions.
Meanwhile, in order to prevent promoting decision making based only on our own internal logic, we have hadoutside directors join us since 1995 so as to assure that voices could be heard without regard to internalhierarchy and human relationships and have made it possible for them to supervise management and provide
advice. We further increased outside directors to three in 2001.
The overall number of directors at that time was six, the smallest number ever, and, at the same time, weequalized the number of internal and outside directors. Prompted by this, we established discretionary
Remuneration and Nomination Committees centered in the outside directors, creating a structure in which theCompany would receive the impartial judgments of the outside directors from the perspective of theshareholders. The Company had thus already established a structure similar to a "committee-establishingcompany" before the actual transformation.
b) Transformation to a committee-establishing company
We transformed the Company to a committee-establishing company in June 2003. Through the extensive
transfer of executive officer decision-making authority by the Board of Directors, it became possible for the
executive officers to carry out management rapidly and effectively with the aim of improving performance and areinforcement of the supervisory functions implemented by the three committees, the Nomination, Remuneration
and Audit Committees, was sought based on the impartial decisions of the outside directors invited in from theoutside.
Together with the transformation to a committee-establishing company, the outside directors were increased
two from three to five, thus making up a majority share, the first such case for any listed companies in thedomestic market. In addition, since the Company was first founded, the first female director was appointed with
anticipation of advice also from the perspective of a woman.
The three executive officers elected by the Board of Directors also serve concurrently internal directors.
<Corporate Governance Structure>
General Meeting of Shareholders

elected<Board of Directors><Executive officers>

Internal directors: 3 (serving concurrently as executive officers)
Outside directors: 5
Remuneration
Nomination
Audit
Committee Collaboration Committee Collaboration Committee

5 outside
directors& mutualmonitoring

5 outside
directors& mutualmonitoring

5 outside
directors

Remuneration

Nomination

Audit

Committee

Committee

Committee

Secretariat

Secretariat

Secretariat

6

Election

President
Executive officers(3 internal directors)

Supervision& advice
Execution ofoperations
Operations
Divisionsc) Overview of the committees
The Nomination Committee decides upon proposals for the election and dismissal not only of directors but also
executive officers. The Remuneration Committee decides the compensation of directors and executive officers.
The Audit committee receives reports and explanations from the accounting auditors, verifies the financial
statements, etc., monitors and verifies the internal control system and checks the conditions of operations andassets with the collaboration of the divisions in charge of internal control.
These three committees are all composed solely of the five outside directors and all of the outside directors
participate in all of the committees as outside directors. The three committees undertake the mutual monitoringof the directors and the monitoring of the executive officers while promoting cooperation, thereby further
enhancing corporate governance functions.
d) Placement of staff to assist outside directors
An Audit Committee Secretariat has been established as an organization to assist the auditing functions of thecommittee-establishing company.
The Audit Committee has a full-time secretariat with three employees. The Remuneration and Nomination
Committees have an secretariat with one employee each concurrently in operations in charge of personnel affairs.
e) Operation execution and monitoring and internal control mechanism
Meetings of the Board of Directors are convened every month except February and August and a structure has
been set up so that, while engaging in lively discussion, the outside directors monitor the execution of operations by
the executive officers.
The three internal directors at the Company serve concurrently as executive officers and execute operations.
Specifically, day-to-day operations are executed primarily by the general managers of the operating divisions.
Each of the divisions provides detailed reports to the executive officers and measures for dealing with problem
areas are debated at the regular business activity report meetings held once a month.
The HOYA Conduct Standards, based on the Group fs business philosophy and basic management principles,
were enacted in 1997 as a code of conduct that applies to all employees. They establish guiding principles toassure that the executives and employees conduct themselves in accordance with rigid professional ethics in theperformance of their day-to-day work duties.
Furthermore, the HOYA Help Line, an in-house organization for reporting and consulting, was established in2003 to deal with conduct that violates the code of conduct. Its purpose is to assure the soundness of the entire
Group through the early detection of violations of the code of conduct, laws, prompt notification to the top
management and disposition of the problem, while maximum respect is given to ensure the protection andanonymity of those who report problems. The HOYA Help Line is an exclusive organization set up at the HOYA
headquarters and it also serves as a contact point for outside attorneys.
f) Conditions of attorneys, accounting auditors and other third parties (conditions of involvement in the company
corporate governance system)
The Company maintains a close relationship with a number of attorneys and, when required, receives theiradvice as appropriate. The auditing firm, Tohmatsu & Co. has been appointed as the Company fs accounting
auditor and, besides periodic auditing, it responds to consultation as required and also strives to realizetransparency and accuracy in accounting audits. For tax-related operations, the Company has concluded
contracts with outside professionals and receives their advice as required.

(2) Summary of human, capital, transaction relationships and other vested interests between the Company
and outside directors
There are no vested interests worthy of note. Importance is placed on the following points in the selection ofcandidates for outside directors.
- Persons who have sufficient experience in management, are cosmopolitan in outlook and are able to see things
impartially from the perspective of the shareholders- Persons who, rather than in formal name only, actually attend the Company fs Board meetings, participate
actively in discussion, are empathetic and willing to express their views(3) Conditions of implementation of initiatives during the most recent year for the enhancement ofcorporate governance at the Company
Important meetings held during the term (April 1, 2004 - March 31, 2005)- General Meeting of Shareholders: 66th Annual General Meeting of Shareholders, June 18, 2004
- Meetings of the Board of Directors: 10 meetings- Meetings of the Remuneration Committee: 9 meetings- Meetings of the Nomination Committee: 5 meetings- Meetings of the Audit Committee: 9 meetings73) Remuneration of executive officers
The compensation of the Company's directors and executive officers during the term is as indicatedbelow.
Personnel as of the end of the term consisted of eight directors, of which three serve as executive officers
as well as internal directors. There were no relocations during the term. The total amount of remunerationof those serving concurrently as both directors and executive officers is entered in the space for executive
officers.

Category

Director
Relevant
Amount paid
personnel

Fixed amount as resolved by
the Remuneration
Committee
Not fixed amount as resolvedby the Remuneration
Committee
Total

Executive officer
Relevant
Amount paid
personnel

Total
Relevant
Amount paid
personnel(person)(million yen)(person)(million yen)(person)(million yen)

5

50

3

73

8

123

－

－

3

180

3

180

－

50

－

253

－

303

4) Remuneration of auditors
The remuneration of the Company's auditors during the term is as indicated below.
Payment amount(million yen)
(1) Remuneration to be paid for the audit certification.

54(2) Amount of remuneration except item (1) above.

68

3. Business Overview
3-1. Results of Operations(1) General Overview
Millions of Yen

Results of Operations
Net sales
Operating income
Ordinary income
Net income
EPS (Yen)

Year ended Mar. 31, 2005

308,172
84,92089,52564,135578.84A trend of recovery in the business climate centered in manufacturing industries driven by robust sales ofdigital appliances was evident during the term. Optimism returned to personal consumption even in thedomestic market sparked by sales of digital appliances for a number of reasons including record-breaking
heat and the Athens Olympics effect. Meanwhile, however, an imbalance emerged between demand andproduction capacity expanded in response to brisk demand, inducing an restriction of production and adrop in some prices, putting pressure on profits and giving rise to uncertainty regarding the future
economic outlook.
In the currency market during the nine-month term under review, the US dollar and Thai baht
depreciated by 4.6% and 3.2%, respectively, while the euro appreciated by 2.3%, all against the yen, on a
year-on-year basis.
Within that context, in the HOYA Group, the Electro-Optics sector saw continued demand for highprecision products backed by favorable sales of digital home appliances. In the Eye Care division, though
eyeglass lenses slowed in reaction to the good conditions of the previous year in markets overseas, amoderate trend toward recovery was seen in the domestic market. In the Health Care division,
performance was steady centered in high-function products, realizing a boost in sales. As a result,consolidated sales during the year under review increased 13.5% year-on-year to 308,172 million yen.

(Million Yen)

Annual net sales (Million Yen) and average exchange rate (Yen/USD & EURO)(Yen/USD or EURO)
160.00350,000
125.89300,000
110.70121.48132.65112.76111.19250,000

107.60140.00120.00121.20100.00110.98200,000

100.4780.00
308,172

150,000
236,802
100,000

135.73201,110235,265

246,293

271,443

60.00
40.00

50,000

20.00

0

0.00
Mar-00Mar-01
Net sales

Mar-02Mar-03average exchange rate (USD)9

Mar-04Mar-05(EURO)

Ratio of Net Sales by Business Segment

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Service
CrystalHealth Care
Vision Care
Photonics
Electro-Optics

Mar-00Mar-01Mar-02Mar-03Mar-04Mar-05

During the year under review, orders for high precision products expanded in the Electro-Optics sector, major
plants remained in full production and revenues also increased. In the Vision Care sector, sales declined inreaction to increased demand stimulated by the reform of the health insurance system during the previous
fiscal year. In the Health Care sector, bifocal contact lenses, soft intraocular lenses and other high-function
products continued to sell well, resulting in increased revenues. As a result, for the Group overall, operating
income, ordinary income and net income for the year increased 24.6%, 34.5% and 62.2% respectively on a
year-on-year basis. Together with net sales, all three represented record resultsfor the annual basis.
Net income per share was 578.84 yen, an increase of 227.88 yen on a year-on-year basis.

Profits (Million Yen)
100,000
80,00060,00043,89745,77423,74052,98250,874
20,037

68,166
66,55439,54884,92089,52564,135045,12748,184
21,86020,00034,68835,484
20,71540,000Mar-00Mar-01Mar-02Mar-03Mar-04Mar-05

Operating Income

Ordinary Income

Net Income

The management at HOYA strives hard to increase shareholder value in response to shareholder expectations.
Considering the results of the fiscal year under review, the management proposes that a year-end dividend forthe fiscal year be 90 yen per share. Consequently, the total dividend for the fiscal year, including an interim
dividend of 60 yen per share already paid, will amount to 150 yen per share, an increase of 50 yen per share ona year-on-year basis.

10(2) Segment Overview
1)Information Technology
Electro-Optics

Annual Net sales of Electro-Optics (Million Yen)
180,000

165,664

160,000
135,071

140,000
112,341

120,000

101,496

111,460

90,174

100,000
80,00060,00040,00020,0000

Mar-00Mar-01Mar-02Mar-03Mar-04Mar-05In mask blanks for semiconductor production, there was an increase in orders for phase shift mask blanks and otherhigh-precision products and sales increased on a year-on-year basis.
Sales of photomasks for semiconductor production increased year-on-year due to an increase in orders for high-precision
products and next-generation products under development. In large LCD masks, LCD panel manufacturers launched
new-generation commercial production lines and price reductions are occurring in the market due to oversupply;
however, the manufacturers were strongly motivated to develop new products and orders for HOYA products also
remained vigorous, resulting in increased sales year-on-year.
In glass disks for hard disk drives (HDDs), an expansion in HDD applications to portable music players and otherdevises stimulated a favorable expansion in demand and sales increased on a year-on-year basis. The sales of the Nippon
Sheet Glass Co.,Ltd. sector transferred to HOYA in the 4th quarter of the previous fiscal year were included beginningin the 1st quarter, resulting in increase in sales.
In optical products, during the first half of the fiscal year under review, sales of digital cameras and other digitalproducts continued robust growth and sales of our molded aspheric lenses and other optical lenses fared well. Sales
increased on a year-on-year basis though the market trend became slow and inventory control started among the camera
manufacturers during the second half.

Photonics

Annual Net sales of Photonics (Million Yen)
12,00010,74910,000
8,000

7,247

6,533

7,157
5,485

6,000

4,116

4,000
2,000
0
Mar-00Mar-01Mar-02Mar-03Mar-04Mar-05The sales of HOYA CANDEO OPTRONICS (former HOYA-SCHOTT Corp.) were posted to the Electro-Optics sector
until the end of the previous fiscal year but have now been transferred to this sector beginning in the present fiscal year,
which brought a significant increase over the previous year. The former HOYA-SCHOTT Corp. was converted from anaffiliated company to which the equity method applies to a consolidated subsidiary effective as of end of the 1st quarterof the previous fiscal year.

112) Eye Care
Vision Care

Annual Net sales of Vision Care (Million Yen)
120,000
100,000
80,00086,19893,184

94,388Mar-02Mar-03

98,203

94,971Mar-04Mar-0571,75360,00040,00020,0000
Mar-00Mar-01In the domestic eyeglass lens market, the prolonged stagnation seems to have hit bottom and the trend towardmoderate recovery continues. At HOYA, sales grew through value-added enhancement of progressive lenses, coatingsand other products. Overall, sales increased on a year-on-year basis.
Overseas, sales growth in the Asia-Oceania region remained solid reflecting the value-added enhancement of
products promoted by HOYA. In the United States and Europe, HOYA strengthened its sales of high-value-added
products. In Germany, Europe's largest market, however, sales declined in reaction to increased demand stimulatedby the reform of the health insurance system during the previous fiscal year. Aggregate sales in overseas markets
declined on a year-on-year basis.
As a result, the overall sales of the division decreased on a year-on-year basis.

Health Care

Annual Net sales of Health Care (Million Yen)

36,00032,00028,00024,00020,00016,00012,000
8,000
4,000
0

31,40926,71628,38023,105
19,541

20,129Mar-00Mar-01Mar-02Mar-03Mar-04Mar-05In terms of contact lenses, within the context of continued price competition in the market among discount retailers,
HOYA sought to differentiate itself from its competitors by continuing the establishment of new retail stores, taking
advantage of its professional expertise to improve face-to-face customer services and promoting sales of bifocal lenses
and other high value-added products, thereby boosting sales on a year-on-year basis.
Sales of intraocular lenses (IOL) increased on a year-on-year basis due to favorable sales of soft intraocular lenses
during the term both in Japan and overseas.

123) Lifestyle Refinement
CrystalAnnual Net sales of Crystal (Million Yen)
12,00010,516

9,942

10,000

8,788

8,000

6,719

6,000

4,321

4,000

3,672

2,000
0
Mar-00Mar-01Mar-02Mar-03Mar-04Mar-05In terms of crystal, HOYA is reducing the scale of its operations in this sector as part of its business restructuringinitiatives and, since corporate demand in the market remained slow, sales decreased on a year-on-year basis.

3-2. Financial Position
Millions of Yen
As of Mar. 31, 2005
351,482
277,889
79.1%

Total assets
Shareholders' equity
Shareholders' equity ratio

At the end of the year under review, current assets increased Yen 39,592 million and also fixed assets
increased Yen 21,843 million against the end of the previous year. As a result, total assets increased Yen
61,595 million. Shareholders'equity increased Yen 58,911 million due to decrease of treasury stock as anegative factor of Yen 31,626 million in addition to increase of retained earnings.

3-3. Conditions of Cash FlowsNet cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Cash and cash equivalents at end of period

Millions of Yen
Year ended Mar. 31, 2005
76,000-35,524-11,692
112,874

Cash flow from operating activities amounted to 76,000 million yen, comprised of 83,466 million yen inincome before income taxes and minority interests and 21,660 million yen in depreciation andamortization among others. Cash flow from investment activities amounted to 35,524 million yen in cash
payments that were mainly used for investment in order to handle next-generation products. Free cash
flow amounted to 40,476 million yen and used 12,245 million yen for payment of dividends. As a result, theterm-end balance of cash and cash equivalents increased 32,449 million yen from the end of the previous
fiscal year.

133-4. Management Issues and Business Risks
1.

Management Issues Faced by the HOYA Group:
We at HOYA Group hoist maximization of its corporate value as our principal policy and carry out management of the Group witha global perspective in order to acquire top shares in the worldwide market. On steering our manifold business operations, we
determine the best combination of our management resources in order to give full play to our competitive edge, technologicalacumen, development capability and steering force, and face up to improving results.

(1) Flexible Adaptation to Changing Markets and Efficient Implementation of Management Resources
In the manifold business areas of HOYA Group, we will grasp the needs of our customers properly and devise strategies in advanceof market competition in order to adapt nimbly and flexibly to moves in customers, markets, products and competition, etc. We
realize as important management issues that the HOYA Group allocate management resources of the Group appropriately when
judging plant and equipment investment, business tie-ups, M&As, withdrawal from or reduction in business operation, etc.; and wewill keenly face up to the issues.

(2) Creation of New Business and Technologies
Securing corporate earnings and maintaining growth is imperative for any business enterprise. To meet such necessity, we realize it
is an important management issue not only to expand our existing businesses, but also to introduce vectors for growth different fromthe existing ones by developing technologies that others cannot imitate and by creating new businesses and business areas.
We will strive ceaselessly to develop technologies that will prevail across the world and products with an enhanced competitive
advantage; to explore and create new businesses; and to acquire and nurture talent able to carry our next generation of business.

2.

Business Risks(1) Fluctuation of Exchange Rates - As HOYA Group develops its business on a global scale, if the currencies of those countries inwhich HOYA Group has major manufacturing operations appreciate, export prices of its products would rise, which would incur an
increase in costs on a consolidated basis. If the currencies of those countries in which HOYA has major sales operations depreciate,
it would bring about a decrease in sales.
(2) Influence of International Situations - At present, the situation in certain countries, is extremely tense. Hereafter, in the event thatmovement of people, goods or money were restrained extraordinarily in a certain region, or if certain unexpected events took placein those countries in which HOYA Group has business operations - including changes in the political, economic or legal
environments, labor shortages, strikes, or natural calamities, etc., - certain problems may arise in the execution of business
operations.
(3) Our Business as in Production Goods - Every part of the Electro-Optics products range, which constitutes a major portion of the
HOYA Group revenue, involves intermediate production goods, components or materials. Therefore, growth of the business thereof
is affected substantially by the market conditions of such products as semiconductors, LCD panels and HDDs that are manufactured
utilizing HOYA Group products, and by that of personal computers and home appliances, etc. that are manufactured utilizing theresultant products.
(4) Emergence of Discounters and Lowering of Prices in the Consumer Goods Sector - In recent years in the eyeglass and contact lensmarkets, discount shops of an unprecedented type have emerged and brought about a lowering of prices. If the influence of suchdiscount shops swells to an extent that cannot be absorbed by HOYA fs cost reduction efforts and strategies for adding high value
both in Japan and abroad, the business results and financial condition of HOYA Group might be adversely affected.
(5) Competence for Developing New Products - In the industrial sector to which HOYA belongs, technological advances are swift and
HOYA strives at all times to develop state-of-the-art technologies. However, if HOYA Group fails to sufficiently predict changes inthe sector and markets or to develop new products that meet customer needs in time, the business results and financial condition of
HOYA Group might be adversely affected.
(6) Competition - HOYA Group, which has the top market share for its many products in their respective sectors, is constantly exposed
to relentless competition. There is no guarantee that HOYA Group can maintain its overwhelming market share and compete
efficiently in future. If customers shift allegiance due to cost pressures or inefficiency of HOYA's competitiveness, the businessresults and financial condition of HOYA Group might be adversely affected.
(7) Production Capacity - At present, HOYA Group reinforces its production capacity so as to meet orders that exceed existingproduction capacity in multiple business areas. However, if the setting up of such capacity were delayed for any reason, it would
affect not only HOYA's results but also the production and sales plans of its customers, which might bring about increased market
share for its competitors, etc., and adversely affect the business results and financial condition of HOYA Group.
(8) New business - New business is important for future growth. In the event that no promising new business is developed, the growth of
HOYA Group might not be achieved as planned. Besides, HOYA may carry out mergers and acquisitions as a part of its businessstrategy. If unexpected obstacles emerge after such acquisition and unscheduled time and costs are required, the business results
and financial condition of HOYA Group might be adversely affected.
Hoya Corporation does not guarantee the accuracy or completeness of the information herein. Unless otherwise stated estimates or forecasts aresolely those of our company and subject to change without notice. Hoya Corporation accepts no liability whatsoever for any direct or consequential
loss arising from any use of this report.

14

4. Consolidated Financial Statements (unaudited)(1) Consolidated Balance Sheets
HOYA CORPORATION and Consolidated Subsidiaries
ASSETS
Current assets
Cash and deposits
Notes and accounts receivable - trade
Inventories
Deferred tax assets
Other current assets
Allowance for doubtful receivables
Fixed asstes
Tangible fixed assets
Buildings and structures
Machinery and carriers
Land
Other tangible fixed assets
Intangible fixed assets
Investments and other assets
Investment securities
Deferred tax assets
Other assets
Allowance for doubtful receivables
Deferred charges
Total Assets
LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities
Notes and accounts payable - trade
Short-term bank loans
Income taxes payable
Accrued bonuses to employees
Other current liabilities
Long-term liabilities
Reserve for periodic repairs
Other long-term liabilities
Total Liabilities
Minority interest
Common stock
Additional paid-in capital
Retained earnings
Net unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Treasury stock - at cost
Total Shareholders' Equity
Total
notes:
Accumulated depreciation
Guarantees of borrowings and lease obligations for customers
Number of shares of treasury stock

15

Millions of Yen
As of Mar.31,
2005
2006

Variance
Value(%)

232,871
112,874
73,61936,1656,500
4,947-1,235
118,288
95,15825,11445,016
8,937
16,0905,489
17,64010,383
3,097
4,461
-301
322
351,482

193,279
80,42567,27432,877
7,066
6,982-1,34796,44578,31822,85533,076
9,218
13,167
4,556
13,570
6,537
3,012
4,509
-487
162
289,887

39,59232,449
6,345
3,288
-566
-2,035
112
21,843
16,8402,259
11,940
-281
2,923
933
4,070
3,846
85
-48
186
160
61,59570,792
24,452
194
10,022
3,917
32,204
1,970
542
1,427
72,762830
6,264
15,898268,25537-4,687-7,878277,889
351,482

68,252
25,770486
14,398
3,722
23,874
1,934
357
1,576
70,187721
6,264
15,898247,175-30-10,825-39,504
218,978
289,887

2,540-1,318-292-4,376
195
8,330
36
185
-149
2,575
109
21,08067
6,138
31,626
58,911
61,595

166,626
1,369
967,762

150,826883
4,857,867(Million Yen)
(Million Yen)

(stocks)

20.5

22.6
21.5

20.5
30.0

98.8
21.2
3.7

1.9

3.7
15.1
8.5
-56.7
-80.1
26.9
21.2

(2) Consolidated Statements of Income
HOYA CORPORATION and Consolidated Subsidiaries
Millions of Yen
Years ended Mar. 31,
2005
2004
308,172
271,443
158,023
142,683
150,148
128,760
65,22860,59484,92068,166
6,623
3,829
1,013
553
875
3,707
1,699
1,026
1,576
2,017
5,441
86
189
552
638
2,900
1,378
1,714
89,52566,554
719
989
194
522
59
524
406
6,779
12,047
1,980
1,263
948
1,899
859
2,040
842
1,089
3,300

Variance
Value(%)
36,72913.5
15,34010.8
21,388
16.6
4,634
7.6
16,754
24.6
2,794
73.0
460
875
2,008
-550
-3,424
-62.9
-103
-86
-2,900-336
22,971
34.5
-270
-27.3
-328
-59
118
-5,268
-43.7
1,980
1,263
-951
-1,181-247-3,300Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Foreign exchange gains
Equity in earnings of affiliates
OthersNon-operating expenses
Interest expense
Sales DiscountForeign exchange losses
OthersOrdinary income
Extra-ordinary gains
Gain on sales of property, plant and equipment
Gain on sales of investment securities
OthersExtra-ordinary losses
Maintenance of Environment
Loss on close of factory
Loss on disposal of property, plant and equipment
Loss on impairment
Additional retirement benefits paid to employees
Amortization of goodwill
Additional expense incurred to dissolved contributory
887-887
funded pension plan
Loss on write-down of investment securities
618-618
Others885
2,210-1,325
Income before income taxes and other items
83,46655,49627,97050.4
Income taxes - Current
18,69018,573
117
0.6
Income taxes - Deferred531-2,774
3,305
Minority interests in net income
108
148
-40
-27.0
Net income
64,13539,54824,58762.2
Basic net income per share(Yen)
578.84350.96227.88Notes:
1. Effect of Exchange Rate Change on Net Sales and Incomes ("2005 A" is the actual value of this period. "2005B" is the nominal value of this period which temporarily exchanged by the currency rate of the same period
last year. unit : millions of Yen)
2005 A
2005 Binfluences
Net sales
Million Yen
308,172
308,864-692
Operating income
Million Yen
84,92085,824-904
Ordinary income
Million Yen
89,52590,455-930
Net income
Million Yen
64,135
65,100-965
2. Average rates of major foreign currencies:
US Dollar
Euro
Thail Baht

Yen
Yen
Yen

16

Years ended Mar. 31,
2005
2004
107.60112.76135.73132.652.68
2.77

Variance(%)
4.6%
-2.3%
3.2%

(3) Consolidated Statements of Retained Earnings
HOYA CORPORATION and Consolidated Subsidiaries
Millions of Yen
Years ended Mar. 31,
2005
2004

Variance

Additional Paid-In Capital
Balance at the beginning of the period
Adjustment of retained earnings
Appropriations
Balance at the end of the period

15,89815,89815,89815,898-247,175
64,13564,13543,056
12,24162
30,702
49
268,255

216,271
39,54839,548
8,644
8,439
169
35
247,175

30,904
24,587
24,58734,4123,802-107
30,702
14
21,080Retained Earnings
Balance at the beginning of the period
Adjustment of retained earnings
Net income
Appropriations
1. Cash dividends
2. Bonuses to directors
3. Cancellation of treasury stock
4. Loss on deposit of treasury stock
Balance at the end of the period17(4) Consolidated Statements of Cash Flows
HOYA CORPORATION and Consolidated Subsidiaries

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes - paid
Depreciation and amortization
Loss on impairment of long-lived assets
Amortization of goodwill
Reversal of accrued bonuses to employees
Reversal of accrued retirement benefits
Provision for (Reversal of) reserve for periodic repairs
Equity in earnings of affiliates
Foreign exchange loss (gain)
Bonus to directors
Loss on write-down of investment securities
Gain on sales of property, plant and equipment and investment securities
Loss on disposal of property, plant and equipment and investment securities
Other
Changes in assets and liabilities:(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories(Increase) decrease in other current assets
Increase (decrease) in notes and accounts payable
Increase (decrease) in other current liabilities
Total adjustment
Net cash provided by operating activities
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Purchases of goodwill
Increase in investments and other assets
Decrease in investments and other assets
Payment for loans
Payment from loans
Net cash used in investing activities
FINANCING ACTIVITIES:Net increase (decrease) in short-term bank loans
Repayment of long term bank loans
Net (increase) decrease in treasury stock
Dividends paid
Dividends paid for minority shareholders
Proceeds from minority interests
Net cash used in financing activities
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Cash and cash equivalents of newly consolidated subsidiaries, beginning of year

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR

18

Millions of Yen
Years ended Mar.31,
2005
2004
Variance
83,46655,49627,970-23,257
21,660859
194
184-3,707
-233
-63
-194
948
553

-2,98019,988
2,040
3,300
191
-292
93
-1,699
1,209
-169
618
-581
1,899
565

-20,277
1,672-1,181-3,3003292
91-2,008-1,442
106
-618
387
-951
-12

-5,795-2,4672,363-1,6293,119-6,166222-1,860
5,115
1,753

371
-2,6894,223-6,744
1,366

76,00078,743-2,743-33,393540-10-3,096321-96
211-35,524-23,211
813
-378
102
-3,300-2,718660-2,474
2,168-28,338-10,182
-273
368
-102
3,300
-378
-339
2,378
-1,957-7,186

-157
-161
873
-12,245
0-11,692
28,783-1,73843-32,503-8,433-155
19-42,853
7,552

1,581
-204
33,376-3,812155-19
31,161
21,231

3,665
80,425
112,874-3,198377
75,69480,425

6,863
-377
4,731
32,449(5) Preparation of the Consolidated Financial Statements
Scope of Consolidation and Application of the Equity Method1.

Number of consolidated subsidiaries : 58 companies(Major consolidated subsidiaries :<overseas> HOYA HOLDINGS, INC., HOYA HOLDINGS N.V.,
HOYA HOLDINGS ASIA PACIFIC PTE LTD., HOYA PHOTONICS, INC.
<domestic> HOYA CANDEO OPTRONICS CORPORATION, HOYA HEALTHCARE CORPORATION

2.

Number of unconsolidated subsidiaries : None3.

Number of affiliates : 5 companies(Number of affiliates accounted for by the equity method : 1company, NH TECHNO GLASS CORPORATION)

Notes: Changes in Accounting Policies and Others
1. Changes in scope of consolidation and application of the equity met (In comparison to March 31, 2004): 3 companies increased in total.
1) Scope of consolidation
3 companies increased due to the establishment:
HOYA ELECTRONICS KOREA CO. LTD. (Korea)
HOYA GLASSS DISK VIETNAM LTD. (Vietnam)
HOYA LENS OF NEW ORLEANS, INC. (USA)1company increased due to the acquisition :RADIANT IMAGES, INC. (USA)1company decreased due to the closing:

KOREA OPTICAL GLASS CO., LTD. (Korea)

2) Application of the equity method
None

Consolidated
subsidiaries
Nonconsolidated
subsidiaries
Affiliates(accounted for by the equity
method)as of Mar. 31, as of Mar. 31,
2005
2004
58
55
(do 6, os52)(do 6, os49)(do -, os -)(do -, os -)55(do 5, os -)(do 5, os -)(1)(1)(do 1, os -)(do 1, os -)variance+3(do-, os +3)(do-, os -)(do-, os-)(-)
(do-, os-)

Total Hoya Group

63

60

+3

(accounted for by the equity
method)

(1)

(1)

(-)

(do : domestic, os : overseas)
2. Changes in accounting policies
None

19

Notes Relating to Consolidated Statements of Cash Flows
1. Cash and Cash Equivalents at the End of the Period
Cash and deposits
Marketable securities
Total

Millions of Yen
Years ended Mar. 31,
2005
2004
112,874
80,425
112,874
80,425

2. Details of Asstets and Liabilities of the Newly Consolidated Subsidiaries by Increase of
Proxy Rights:
Year ended Mar. 31, 2005
None

Year ended Mar. 31, 2004
HOYA-SCHOTT CORPORATION (as of June 30, 2003)(This company has changed its corporate name to HOYA CANDEO OPTRONICS CORPORATION)
Millions of Yen
Current assets
2,052
Fixed assets
554
Total assets
2,607
Current liabilities
701
Long-term liabilities
168
Total liabilities
870

3. Details of Important Non-financial Trading
Year ended Mar.31, 2005

Millions of Yen
Cancellation of treasury stock
30,702(with effect on June 1, 2004 for 3,775,400 shares)

Year ended Mar.31, 2004
None

20

Notes Relating to Investment Securities and Derivatives
1.Investment securities with market values:（Millions of Yen））
As of Mar. 31,
2005
Available-for-sale

Securities ofwhich fair value
exceeds cost

Cost

2004

Fair Value

Variance

Cost

Fair Value

Variance

Marketable Equity securities

159

308

148

159

230

70

Government bonds
Corporate bonds

159

308

148

159

230

70

-

-

-

-

-

-

159

308

148

159

230

70

Others
Sub total
Marketable Equity securities
Securities ofwhich fair value
Government bonds
does NOT exceed
Corporate bonds
cost
Others
Sub total
Total

2. Condition of sales of marketable securitiearket during this fiscal year:（Millions of Yen））
Years ended March 31,
2005
Value of sales
Total of gains from sales

2004

-

Total of losses from sales

102
59
-

3. Investment securities of without market values:（Millions of Yen））
As of Mar. 31,
2005
Non-marketable stock of subsidiaries

9,486
588

Non-marketable equity securities

4. Derivatives
None

21

2004

5,689
617

Notes Relating to Income Taxes
1. Breakdown of major factors giving rise to deferred tax assets and liabilities:
Millions of Yen
As of Mar. 31,
2004
2005

(1) Current deferred tax assets and liabilities
Deferred tax assets
Inventories - intercompany unrealized profits
Accrued bonuses to employees
Accrued enterprise taxes
Amortization of goodwill
Other
Total amount of deferred tax assets - current(2) Non-current deferred tax assets and liabilities
Deferred tax assets
Amortization of goodwill and property, plant and equipment
Loss on impairment of long lived assets
Loss on close of factory
Allowance for doubtful receivables
Other
Total amount of deferred tax assets - fixed
Deferred tax liabilities
Reserve for deferred income taxes on fixed assets
Special depreciation reserve
Net unrealized gain on available-for-sale securities
Other
Total amount of deferred tax liabilities - fixed
Net amount of deferred tax assets - fixed

2,166
1,529
691
285
1,828
6,500

1,604
1,409
1,200
1,493
1,358
7,066

1,876
861
510
117
681
4,047

2,069
824
181
859
3,934

-434
-313
-35
-165
-949
3,097

-467
-289
-165
-922
3,012

2. The effective income tax rates of the companies differed from the statutory tax rate for the following reasons:Years ended Mar.31,
2005
2004
Statutory tax rate of the Company(Adjustment)
Lower income tax rates applicable to income in certain foreign countries
Expenses not permanently deductible for income tax purposes
Per capita portion
Non-taxable dividend income
Intercompany cash dividend and transactions
Equity in earnings of affiliates
Tax credit on experiment and research expenses
Other adjustment - net
Effective income tax rate

40.4 %

41.7 %

-13.8
0.4
0.1
-2.6
0.8
-1.8
-0.8
0.3
23.0

-12.4
0.7
0.2
-2.1
1.6
-1.2
-1.1
1.1
28.5

Notes Relating to Employees' Retirement Benefits
1. Systems of employees' retirement benefits the Company adopts
The Company had systems to support lump sum severance pay and an employees' pension fund (Kosei Nenkin Kikin).
During the third quarter of the fiscal year ended in March 2003, the system of lump sum severance pay was abolished.
The employees' pension fund was dissolved with approval for its dissolution sanctioned by the Minister of Health, Laborand Welfare on January 29, 2003 and this has been in the process of completion. During the first quarter of the fiscal year
under review, on May 26, 2004, the Company obtained approval from the Minister of Health, Labor and Welfare for thecompletion of the liquidation thereof.

2. Details of liabilities for employees' retirement benefits(1) Breakdown of liabilities for employees' retirement benefits
None(2) Breakdown of expenses for employees' retirement benefits
Additional expense incurred to dissolved contributory funded pension plan
Additional retirement benefits paid to employees
Expenses for employees' retirement benefits(3) Calculation basis of liabilities for employees' retirement benefits
None

22

Millions of Yen
Years ended Mar.31,
2005
2004

842
842

887
1,089
1,977

Notes Relating to Impairment of Fixed Assets
Since the 4th quarter of the last fiscal year (three monthe ended March 31, 2004), the Company has
adopted impairment accounting for fixed assets :1. Crystal Division(1) Group of assets applied :Production facilities of crystal glassware at Musashi Factory, Crystal Division(2) Breakdown of impairment

Buildings
Machinery
Furniture and equipment
Assets on lease
Others
Total

Millions of Yen
Years ended Mar.31,
2005
2004
1,004
29
461
35
67
276
27
230
92
2,040

2. Photonics Division(1) Group of assets applied :Production facilities of photonics products at Maebashi Factory, HOYA CANDEO OPTRONICSCORPORATION(2) Breakdown of impairment

Land
Buildings and Others
Total

Millions of Yen
Years ended Mar.31,
2004
2005
449
317
766

23

-

5. Segment Information (unaudited)
HOYA CORPORATION and Consolidated Subsidiaries(1) Industry Segments
Annual : for the year ended March 31, 2005
Millions of Yen

Net sales:
To outside customers
Intersegment
Total
Operating expenses
Operating income
Operating margin
AssetsDepreciation
Loss on impairment
Capital Expenditures
R&D Expenses
Number of employees (p)ElectroOptics

Photonics

VisionCare

HealthCare

CrystalService

Total

Elimin.
Consolidated
or corp.*

165,664
526
166,190102,899
63,29038.1%
162,638
14,72931,962
7,797
13,462

10,749233
10,982
10,090
892
8.1%
7,648
126
766
191
894
226

94,971
17
94,98877,90917,07818.0%
90,765
5,899
6,786
1,523
6,464

31,409031,40924,2677,141
22.7%
18,329
668
737
716
601

3,672
50
3,722
4,143
-420
-11.3%
1,899
92
92
25
168

1,706
5,054
6,760
6,087
673
10.0%
3,215
81
218
256

308,172
5,881
314,054
225,398
88,65528.2%
284,497
21,506859
39,98910,957
21,177(5,881)(5,881)(2,146)(3,735)66,985
154
186
57

Total

Elimin.
Consolidated
or corp.*271,4435,964
277,408
208,434
68,97324.9%
250,544
19,9132,040
30,6389,846
18,042(5,964)(5,964)(5,157)(807)
39,34275
20
050

Elimi. or
Consolidated
corp.*

308,172
308,172
223,252
84,92027.6%
351,482
21,660859
40,175
10,957
21,234

Annual : for the year ended March 31, 2004
Millions of Yen

Net sales:
To outside customers
Intersegment
Total
Operating expenses
Operating income
Operating margin
AssetsDepreciation
Loss on impairment
Capital Expenditures
R&D Expenses
Number of employees (p)ElectroOptics

Photonics

VisionCare

HealthCare

CrystalService

135,07180
135,152
89,98245,16933.4%
132,240
13,20522,246
7,376
11,039

4,116
0
4,116
4,192
-76
-1.9%
1,747
58
36
243
76

98,20318
98,22180,724
17,496
17.8%
92,082
5,735
6,915
1,342
5,944

28,380028,381
22,108
6,272
22.1%
18,872
532
1,201
855
556

4,321
61
4,383
4,879
-496
-11.3%
2,805
351
2,040
224
29
169

1,350
5,803
7,154
6,546
607
8.5%
2,797
29
14
258

271,443
271,443
203,277
68,16625.1%
289,887
19,9882,040
30,6599,847
18,092

Ref : Differences between the years ended Mar.31, 2005 and 2004
Millions of Yen
ElectroOptics
Net sales:
To outside customers
Variance
Intersegment
Total
Operating expenses
Operating income
Variance
AssetsDepreciation
Loss on impairment
Capital Expenditures
R&D Expenses
Number of employees (p)Photonics

VisionCare

HealthCare

CrystalService

Total

30,593
6,633-3,232
3,029-649
22.6% 161.2%-3.3%
10.7% -15.0%
446
233
-1
0
-11
31,0386,866-3,233
3,028-661
12,917
5,898-2,815
2,159-736
18,121
968
-418
869
76
40.1%
-2.4%
13.9%
30,398
5,901-1,317
-543
-906
1,524
68
164
136
-351
766
-1,948
9,716
155
-129
-464
-132
421
651
181
-139
-4
2,423
150
520
45
-1
*Elimi. or corp. : Eliminations or corporate

356
26.4%
-749
-394
-459
66
10.9%
418
52
204
-2

36,72913.5%-8336,646
16,964
19,682
28.5%
33,953
1,593-1,181
9,351
1,111
3,135

24

83
83
3,011
(2,928)27,64379
166
0
736,72913.5%
36,72919,975
16,754
24.6%
61,595
1,672-1,181
9,516
1,110
3,142

Notes:1. Products and Services of each Business Division:
Business Category
Information Technology

Division
Electro-Optics

Photonics
Eye Care

Vision Care
Health Care
CrystalService

Lifestyle Refinement

Products and Services
Photomasks and Maskblanks for semiconductors,
Masks and devices for liquid-crystal displays (LCDs)
Glass disks for hard disk drives (HDDs), Optical Communication,
Optical lenses, Optical glasses, Electronic glasses, etc.
Laser equipments for industrial, dental and medical purposes,
Light sources for electronics industry, Special optical glasses, etc.
Eyeglass lenses, Eyeglass frames, Ophthalmic equipments, etc.
Contact lenses, Intraocular lenses, etc.
Crystal glass products
Design of information systems, Placement of temporary staff, etc.

The sales of HOYA CANDEO OPTRONICS (former HOYA-SCHOTT Corp.) were posted to the Electro-Optics sector until
the end of the previous fiscal year but have now been transferred to the Photonics sector beginning in the present term. The
former HOYA-SCHOTT Corp. was converted from an affiliated company to which the equity method applies to a consolidated
subsidiary effective as of end of the 1st quarter of the previous fiscal year.

2. Amounts and composition of unallocable operating expenses are included in "Eliminations or Corporate".
Corporate operating expenses mainly consist of the administration expenses of the headquarters of the Company
and the overseas regional holding companies, which are not allocated to each industry segment. Corporate
operating expenses for the years ended Mar. 31, 2005 and 2004 are as follows:
2005
2004

2,873 Million Yen
2,423 Million Yen

3. Corporate assets included in "Eliminations or Corporate" mainly consist of cash, time deposits, investments
securities and administrative assets of the Company and the overseas regional holding companies. Corporate assets
as of Mar. 31, 2005 and 2004 are as follows:
2005
2004

75,075 Million Yen
52,594 Million Yen

25

(2) Geographical Segments
Annual : for the year ended March 31, 2005
Millions of Yen
Japan
Net sales:
To outside customers
Intersegment
Total
Operating expenses
Operating income
Operating margin
AssetsNorth
America

Europe

Asia

Total

30,775
199
30,97530,91262
0.2%
17,12833,803
255
34,05828,195
5,863
17.2%
32,927

12,64789,748102,396
71,00331,39330.7%
104,191

308,172
109,252 (109,252)
417,424 (109,252)
334,524 (111,272)
82,9002,020
19.9%
320,185
31,297

230,945
19,048249,994
204,41245,581
18.2%
165,938

Elimi. or
Consolidated
corp.
308,172
308,172
223,252
84,92027.6%
351,482

Annual : for the year ended March 31, 2004
Millions of Yen
Japan
Net sales:
To outside customers
Intersegment
Total
Operating expenses
Operating income
Operating margin
Assets

188,441
16,789205,231
167,668
37,562
18.3%
161,335

North
America

Europe

Asia

Total

Elimi. or
Consolidated
corp.

33,112
91
33,20331,390
1,813
5.5%
19,05837,485849
38,33429,293
9,041
23.6%
26,691

12,40460,19572,59954,693
17,906
24.7%
66,337

271,443
77,926349,369
283,045
66,32419.0%
273,423(77,926)(77,926)(79,768)
1,842
16,463

271,443
271,443
203,277
68,16625.1%
289,887

Ref : Differences between the years ended Mar.31, 2005 and 2004
Millions of Yen
Japan
Net sales:
To outside customers
Variance
Intersegment
Total
Operating expenses
Operating income
Variance
AssetsNorth
America

EuropeAsia

42,504-2,337-3,682
243
22.6%
-7.1%
-9.8%
2.0%
2,259
108
-594
29,55344,763-2,228-4,276
29,79736,744-478-1,09816,3108,019-1,751-3,17813,48721.3%-96.6% -35.2%
75.3%
4,603
-1,9306,236
37,854*Elimi. or corp. : Eliminations or corporate

Total
36,72913.5%
31,326
68,05551,47916,57625.0%
46,762Elimi. or
Consolidated
corp.
-31,326-31,326-31,504178
14,83436,72913.5%
36,72919,975
16,754
24.6%
61,595

Notes:
1. The Company and subsidiaries are summarized in four segments by geographic area based on the countries where theGroup offices are located. The segments consisted of the following countries:
North America:
Europe:Asia:

United States of America, Canada, etc.
Netherlands, Germany, United Kingdom, etc.
Singapore, Thailand, China, Republic of Korea, Taiwan, etc.

2. Amounts and composition of unallocable operating expenses are included in "Eliminations or Corporate". Corporate
operating expenses mainly consist of the administration expenses of the headquarters of the Company and the overseas
regional holding companies, which are not allocated to each industry segment. Corporate operating expenses for theyears ended Mar. 31, 2005 and 2004 are as follows:2005

2,561 Million Yen

2004

2,074 Million Yen

3. Corporate assets included in "Eliminations or Corporate" mainly consist of cash, time deposits, investments securities
and administrative assets of the Company and the overseas regional holding companies. Corporate assets as of Mar. 31,
2005 and 2004 are as follows:
2005

72,840 Million Yen

2004

26

47,511 Million Yen

(3) Sales to Foreign Customers
Annual : for the year ended Mar. 31, 2005
Millions of Yen

Overseas Sales (A)Total Consolidated Net Sales (B)Overseas Sales ratio A/B
Regional Sales ratio

North
America

EuropeAsia

43,51936,43061,797

10

14.1%
30.7%

11.8%
25.7%

20.1%
43.6%

0.0%
0.0%

Other

Total

141,758
308,17246.0%
100.0%

Annual : for the year ended Mar. 31, 2004
Millions of Yen

Overseas Sales (A)Total Consolidated Net Sales (B)Overseas Sales ratio A/B
Regional Sales ratio
Ref:

EuropeAsia

38,28240,16844,656

11

14.1%
31.1%

14.8%
32.6%

16.5%
36.3%

0.0%
0.0%

Other

Total

123,118
271,44345.4%
100.0%

Differences between the years ended Mar.31, 2005 and 2004
Millions of Yen

Overseas Sales (A)Total Consolidated Net Sales (B)Variance of Overseas Sales

Note:

North
America

North
America

Europe

Asia

5,237

-3,73817,141

-1

13.7%

-9.3%

38.4%

-9.1%

Other

Total

18,64036,72915.1%

The Company and subsidiaries are summarized in four segments by geographic area based on the
countries where the Customers are located. The segments consisted of the following countries:
North America:
United States of America, Canada, etc.
Europe:Netherlands, Germany, United Kingdom, etc.
Asia:
Singapore, Republic of Korea, Taiwan, etc.
Other:
Saudi Arabia, Brazil, etc.

27

6. Composition of Net Sales by Business Category(Unaudited)

HOYA CORPORATION and Consolidated Subsidiaries
Millions of Yen [%]Business Category
Company
Electro-Optics
Domestic
Overseas
total
Photonics
Domestic
Overseas
total
Information Technology
Domestic
Overseas
total
Vision Care
Domestic
Overseas
total
Health Care
Domestic
Overseas
total
Eye Care
Domestic
Overseas
total
CrystalDomestic
Overseas
total
Service
Domestic
Overseas
total
Lifestyle Refinement
Domestic
Overseas
total
Total Net Sales
Domestic
Overseas
Total

Years ended March 31,
2005
2004

Variance
Value%

86,964 (78,699 (165,664 [52.5 )
47.5 )
53.8 ]

77,344 (57,726 (135,071 [57.3 )
42.7 )
49.8 ]

9,620
20,97330,593

12.4
36.3
22.6

7,291 (
3,457 (
10,749 [67.8 )
32.2 )
3.5 ]

2,394 (
1,721 (
4,116 [

58.2 )
41.8 )
1.5 ]

4,897
1,736
6,633

204.6
100.9
161.2

94,256 (82,157 (176,413 [53.4 )
46.6 )
57.3 ]

79,739 (59,448 (
139,187 [57.3 )
42.7 )
51.3 ]

14,51722,70937,226

18.2
38.2
26.7

36,601 (
58,370 (94,971 [38.5 )
61.5 )
30.8 ]

35,251 (62,952 (98,203 [35.9 )
64.1 )
36.2 ]

1,350-4,582-3,232

3.8
-7.3
-3.3

30,692 (716 (31,409 [97.7 )
2.3 )
10.2 ]

28,142 (238 (28,380 [99.2 )
0.8 )
10.5 ]

2,550
478
3,029

9.1
200.8
10.7

67,293 (59,086 (126,380 [53.2 )
46.8 )
41.0 ]

63,393 (63,190 (
126,584 [50.1 )
49.9 )
46.6 ]

3,900-4,104
-204

6.2
-6.5
-0.2

3,158 (
514 (
3,672 [

86.0 )
14.0 )
1.2 ]

3,841 (
480 (
4,321 [

88.9 )
11.1 )
1.6 ]

-683
34
-649

-17.8
7.1
-15.0

1,706 ( 100.0 )- (-)
1,706 [
0.5 ]

1,350 ( 100.0 )- (-)
1,350 [
0.5 ]

356
356

26.4
26.4

4,864 (
514 (
5,378 [

5,192 (
480 (
5,672 [

91.5 )
8.5 )
2.1 ]

-328
34
-294

-6.3
7.1
-5.2

148,325 ( 54.6 )
123,118 ( 45.4 )
271,443 [ 100.0 ]18,08918,64036,729

12.2
15.1
13.5

90.4 )
9.6 )
1.7 ]

166,414 ( 54.0 )141,758 ( 46.0 )
308,172 [ 100.0 ]Notes: 1.Figures of less than a million yen are omitted.
2.Figures in ( ) are percentages of business category sales.
3.Figures in [ ] are percentages of total net sales.

28

7. Changes in Directors and Officers of HOYA CORP.
(With effect on June 17, 2005)
1. Change in Representative Officers
No change
2. Change in the Other Directors
1) Candidates for New Directors
Outside Director

Yukiharu Kodama

Presently Chairman of Japan Information
Processing Development Corporation (JIPDEC)# It is subject to the election (as a Director) at the 67th Ordinary General Meeting of Shareholders of the Company
scheduled for June 17, 2005.
# The Outside Director in the paragraph above is a director who satisfies the requirements of outside directors asprovided for in Article 188, Paragraph 2, Item 7-2 of the Commercial Code.

2) Retiring Directors
Outside Director

Naotaka Saeki

3. Date of Newly Appointment / Retirement
June 17, 2005

29