Annual Report 2010
For the year ended March 31, 2010

Profile

ysmex Corporation (“the Company”) got its start in 1968 as TOA Medical Electronics Co., Ltd., a specialist
manufacturer of instruments and reagents for the hematology market. Over the ensuing 40 years, theCompany expanded its R&D and production functions and evolved into a global, comprehensive supplierin the diagnostics field. Extending its operations beyond hematology, the Company’s operations now span
the hemostasis, immunochemistry, clinical chemistry, urinalysis and other segments. To symbolize this ongoingtransformation, Sysmex unveiled a completely redesigned corporate logo in October 2008.
Sysmex has developed integrated systems encompassing everything from R&D to production, sales and aftersales support. The Company applies a high degree of specialization and a strong technological orientation in its
pursuit of uncompromising excellence in product development and manufacturing. Sysmex has earned a top-class
reputation with medical institutions around the world for technological excellence paired with the ability topropose solutions that precisely meet customer needs. The Company has established a particularly strong global
leadership position in its core segment of hematology, in which it holds the highest market share worldwide.

Forward-Looking Statements
Statements in this annual report, other than those of historical fact, are forward-looking statements about the future
performance of Sysmex that are based on management’s
assumptions and beliefs in light of information currently
available, and involve both known and unknown risks anduncertainties. Actual events and results may differ materiallyfrom those anticipated in these statements.

Sysmex Annual Report 2010

Sysmex Annual Report 2010

1
ProfileTo provide products and services that satisfy the diverse needs of markets around the world, Sysmex maintains
a global network of business facilities spanning 45 locations in 27 countries. Through this sales and support
network, the Company supplies products and services to customers in more than 160 countries. To grow further,
Sysmex aims to develop its business on a global basis, as well as by developing proprietary technologies and aggressively pursuing opportunities to expand its operations through alliances, mergers and acquisitions.
The Company is striving to enhance corporate value by leveraging its extensive business infrastructure toadvance beyond diagnosis and treatment, encompassing the broader healthcare spectrum that includes disease
prevention and health maintenance. Sysmex is moving into new R&D fields, including hematology diseases, immune
diseases, infectious diseases, cancer and diabetes. Through these endeavors, the Company will continue to provide
high-value-added products and services that help to improve the quality of life (QOL) of people everywhere.

Contents
By anticipating and responding with deftness and agility to the changes that surround it, Sysmex
aims to ensure continued growth in the second decade of the 21st century.

Key Strategies
for Future
GrowthTo Our Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
An Interview with the President and CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SpecialFeatureAs well as an ongoing focus on advanced countries, Sysmex believes that emerging markets
represent important opportunities. Accordingly, we follow three core strategies as we develop
business in these regions, taking specific market characteristics into account.

6

Feature: Growth Model of Agile Company
15 Special
Sysmex’s Global Strategy......................................................................................

2

10

16

Sysmex provides the instruments and reagents needed for hematology, hemostasis and othertests to customers around the world.

Contents

Business
Activities

23

Sysmex at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Major Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction to Sysmex Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24
28
30

As a comprehensive diagnostics supplier, Sysmex has built an integrated business encompassing
R&D, production, sales and after-sales support to provide products and services to healthcare
facilities around the world.

Functional
Structure

33
Corporate
Governance

Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchasing, Production and Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and After-Sales Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sysmex Value.........................................................................................

Intellectual Property Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54
56
60

11-Year Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

62
64
70
85

Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brief History of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

86
88
89
89

.............................................................................................

Corporate
Information

86

Sysmex Annual Report 201045

Founded in Kobe more than 40 years ago, Sysmex is now undergoing a transformation. The
Company is moving its operations to a new stage, in order to fulfill its social responsibilities andcontribute to a comfortable and healthy society, thereby enhancing its corporate value.

New Value
53 Creating
Socially Responsible Activities

61

34
36
39
42

Sysmex considers corporate governance one of its most important management topics. We aim
to maximize the overall corporate value of the Group through management robustness, bettertransparency and improved management speed and efficiency.

45 Corporate Governance

Financial
Section8...............................................................................

3
Contents

Sysmex Annual Report 2010

11-Year Growth and Highlights

For the years ended March 31,

2000

2001

2002

2003

2004

2005

2006

For the year:
Net sales4¥ 37,244¥ 38,817¥ 47,532¥ 57,253¥ 65,970¥ 76,935¥ 87,888

Operating income

3,618

2,975

3,417

5,299

6,615

9,104

10,724

Net income

1,838

1,363

1,308

3,125

3,157

5,731

7,423

Net increase (decrease) in cash and cash equivalents

5,818(2,562)

1,842

1,071

3,465

(3,261)(499)

Cash and cash equivalents, end of year

9,901

7,338

9,181

10,253

13,71810,458

9,416

11-Year Growth and Highlights

Capital expenditure

3,018

2,098

2,455

2,317

2,451

2,729

5,638

Depreciation

2,316

2,541

2,810

3,107

3,203

3,296

3,592

R&D expenditure

3,155

3,527

4,130

4,969

5,549

6,509

8,184

Total assets

49,96755,21966,502

66,44971,983

77,66087,447

Shareholders’ equity

33,596

34,10335,57743,32551,09656,14962,647

Interest-bearing liabilities

5,810

11,02011,606

10,893

4,175

657

695

Shareholders’ equity (yen)¥ 1,606.8¥ 1,631.0¥ 1,701.5¥ 1,879.5¥ 2,042.7¥ 2,244.9¥ 1,251.8

Net income (basic) (yen)

87.9

65.2

62.6

132.2

132.9

225.1

145.5*Net income (diluted) (yen)

87.7

60.8

58.4

121.8

123.1

224.0

143.8*At year-end:

Per share data:

Cash dividends applicable to the year (yen)

22.0

22.0

22.0

25.0

30.0

40.0

36.0*

Dividend ratio (%)

25.0

33.7

35.2

18.9

22.6

17 .8

17.9*

Shareholders’ equity ratio (%)

67.2

61.8

53.5

65.2

71.0

72.3

71.6

Return on equity (ROE) (%)

5.6

4.0

3.8

7.9

6.7

10.7

12.5

Return on assets (ROA) (%)

4.0

2.6

2.1

4.7

4.6

7.7

9.0

Price-earnings ratio (times)

36.7

42.6

35.6

15.9

20.3

27.2

35.3

*Two-for-one stock split in Nov. 2005

Other data:

Price-book value ratio (times)
Number of employees

2.0

1.7

1.3

1.1

1.3

2.7

4.1

1,809

1,985

2,530

2,639

2,907

3,115

3,334

*Including part-time employees
Notes:
1. U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥93 = U.S. $1, the approximate rate of exchange on March 31, 2010.
2. Per share data: Certain retroactive adjustments of previously reported per share information have been made to conform with the current method from the year ended March 31, 2003.
3. ROA = Net Income/Total Assets (Yearly Average)×100

Net Sales by Geographical Region

Japan

Americas(Including Korea, Taiwan and Mongolia)

5.0%(¥ million)

10.2%
33.2%
33.2

(¥ million)

Interarea transfer: exports to group aﬃliates
Sales to customers: including Korea, Taiwan and Mongolia
Operating income
75,00015,00069,09066,880Net Sales

31,501¥116,175 million

45,000

20.2%
20 2

Jap
Japan
AmericasAm
EuropeChina
Asia Paciﬁc

4,672
2,932

15,00037,533037,5892008(Years ended March 31)

Sysmex Annual Report 2010

Operating income

25,00023,36823,4445,000

20,84512,00020,0009,000

15,000

6,000

10,000

3,000

5,000

4,000

27,8577,870

30,00031.4%
1.4%(¥ million)

Sales

66,45260,00029,327(¥ million)

2,775

1,789

3,000

2,000

991

1,000

38,595
2009

2010

0

0

2008

2009

2010

0

2007

2008

(Millions of yen)(Thousands of
U.S. dollars)

2010

2010

2009

We will seek to anticipate upcoming
market changes as we make a newstart on various themes.

¥ 101,041 ¥ 110,724 ¥ 111,843 ¥ 116,175 $ 1,249,194
12,71515,033

15,134

15,709168,914

9,008

9,132
,

8,014

9,765

105,000

3,299(3,044)

(269)

4,403

47,344

12,715

9,679

9,410

13,813

148,527

4,546

8,244

9,340

4,540

48,817

3,959

3,924

7,189

7,034

75,634

9,026

9,221

10,771

11,238120,839
5

109,02709,027

118,522
18,522

120,70220,702

1,297,871

71,34478,75379,18386,358928,581

669

1,081

10,344

2,565

27,581(yen)(U.S. dollars)¥ 1,411.0¥ 1,541.0¥ 1,548.2¥ 1,684.9$ 18,117.2

179.6

178.9

156.7

190.8

2.05

178.0

178.3

156.5

190.5

2.05

36.0

48.0

50.0

56.0

0.60

20.0

26.8

31.9

29.4

70.5

72.2

66.8

71.5

13.4

12.2

10.1

11.8

9.5

8.7

7.0

8.2

23.8

20.1

20.0

28.7

3.0

2.3

2.0

3.3

3,580

3,916

4,148

4,578

EuropeWorking toward Ongoing Growthand Further Profitability Increases

Sales and Earnings Forecast for the Fiscal Year Ending March 31, 20112011

Net sales¥125.0 billion

Operating income¥17.0 billion

Net income¥10.8 billion

Operating margin

13.6%

Net income margin

8.6%

Assumed exchange rates: US$1.00 = ¥90; €1.00 = ¥125

China

Asia Paciﬁc(Excluding Korea, Taiwan and Mongolia)(¥ million)(¥ million)(¥ million)(¥ million)(¥ million)(¥ million)

Sales

Operating income

Sales

Operating income

Sales

Operating income

40,00039,175

10,00035,387

12,50011,84336,44632,000

8,000

5,847

6,000

5,024

10,111

10,000

5,000

4,000

4,800

1,200

8,127
24,000

4,621

5,135

5,304

16,000

6,000

7,500

2,752 3,000

3,600

4,000

5,000

2,000

2,400

1,000

1,200

1,500

5,388

900

547

900

647
600

1,309
8,000

0

2,000

2008

2009

2010

0

2,500

0

824

2008

2009

2010

0

0

300

2008

2009

2010

0

Sysmex Annual Report 2010

11-Year Growth and Highlights

101,225
01,225W

ith technological breakthroughs occurring on a daily basis andemerging countries growing at breakneck speeds, markets arein a constant state of flux. The healthcare reforms underway

in various countries throughout the world are transforming the markets inwhich Sysmex operates, and that change is accelerating. By anticipating and6

responding with deftness and agility to the changes that surround it, Sysmex

Key Strategies for Future Growthaims to ensure continued growth in the second decade of the 21st century.

Sysmex Annual Report 2010

Key Strategies for Future Growth

7
Key Strategies for Future Growth

Sysmex Annual Report 2010

Key Strategies for Future Growth

To Our Stakeholders
During the fiscal year ending March 31, 2011, we aim to make steady progress in line with our core strategies.
We are positioning the second decade of the 21st century as an opportunity to make a new start on various
themes, as we strive to anticipate upcoming changes in the market.

8
Key Strategies for Future Growth

hroughout the fiscal year that ended March 31, 2010,T

the healthcare front, owing to the rising need for preventive

Sysmex’s sales reflected the impact of the yen’s apprecia-

medicine. In emerging markets, growing populations andtion against other major currencies. Nevertheless, we posted

expanding healthcare infrastructures are prompting rapid

a 3.9% increase in net sales, to ¥116,175 million—a new historic

improvements in healthcare levels. Against this backdrop,

high. Overseas performance was particularly robust, with sales

testing demand is increasing steadily, as diagnostics play an

and income rising in all overseas regions. Sales of reagents

extremely important role in preventive medicine and primary

made a strong contribution to operating income, whichcare. Therefore, as many industries are feeling the ripple

expanded 3.8% year on year, to ¥15,709 million. Net income

effects of the downturn, the healthcare industry in general—surged 21.8%, to ¥9,765 million. Although at the beginningand the diagnostics sector in particular—emerged from theof the fiscal year we had forecast dividends of ¥50 per sharerecession relatively unscathed.

(per-share interim and year-end dividends of ¥25 each), we

At the moment, healthcare reforms underway throughout

raised the annual payout to ¥56 per share, ¥6 above the previ-

the world are pushing the industry toward a major turningous year’s level. This was the eighth consecutive year in which

point. In Japan, the management of medical institutions con-

we raised dividends, and our consolidated payout ratio cametinued to present difficulties, such as deteriorating financial

to 29.4%.

conditions, hospital mergers and the combination or closureof some of their departments. On the positive side, however,Continued Market Growth and Healthcare System
Reforms

in 2010 medical remuneration was revised upward for the firsttime in 10 years.

Overall economic conditions throughout the fiscal year ended

Meanwhile, advanced countries in Europe and the

March 31, 2010, were challenging. The worldwide economic

Americas are curtailing medical spending and pursuingrecession caused demand to shrink, resulting in economic

reforms in their healthcare systems. The United States has

downturns in various countries and steep yen appreciation.

passed a healthcare reform bill designed to reduce the num-

From the end of 2009, mounting fears of sovereign bankruptcy,

ber of people without medical insurance. In China, medical

centered on Europe, have clouded the economic horizon.

system reform that is underway aims to build infrastructuresthat provide uniform medical services in cities and farming

Graying populations in Japan and advanced countries

villages throughout the country.

in Europe and the Americas are generating new demand on

Net Sales

Operating Income
Operating Margin(¥ million)
150,000(¥ million)
20,000Operating Income
Operating Margin(%)
25

Net Income(¥ million)
10,000

9,765
9,008

120,000

110,724 111,843

116,175

15,03316,000101,041
90,00015,134

15,709

20

8,000

15

6,000

12,00010,724
12.2

12.6

13.6

13.5

13.5

8,000

10

4,000

30,000

4,000

5

2,000

0

0

2006 2007(Years ended March 31)

8,014
7,423

12,71587,88860,000

0

9,132

0
2008

Sysmex Annual Report 2010

2009

2010

2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

Strategic Signiﬁcance of the Fiscal Year Ending March 31, 2011: The Year That Will Determine Our Future Growth

Beginning of the second decade of the 21st century
Predict changes and try new approaches

Altered rate of change
Technological breakthroughs (IT, life sciences, environmental technologies, etc.)
Shifting balance of power between advanced and emerging markets
g Changing social structures (in advanced countries, declining birthrates and aging
populations; in emerging markets, population increases)g IT enabling borderless medical servicesgg

Implement the plan and achieve its objectives

Initiatives to Reach Our Targets for the Fiscal Year
Ended March 31, 2010

sales and support system in the country.

Under these circumstances, Sysmex pursued initiatives to addresssion of solutions that meet clients’ needs, and sales of diagnostic

changes in the business environment from several angles, fromreagents increased, helping to push up sales in various countries

R&D to production, sales and after-sales support. In Japan, weon a local currency basis. Despite the effects of yen appreciation

expanded our range of diagnostic reagents for the HISCL-2000i,

against other major currencies, the Sysmex Group recorded

our fully automated immunoassay analyzer, thereby reinforcing

overseas sales of ¥79,354 million, up 4.4% from the preceding

our business strength in the immunochemistry market. The

fiscal year. The overseas sales ratio was 68.3%, up 0.3 percentage

spread of a new strain of influenza prompted a surge in demand

point from the same period of the previous fiscal year.

for our simplified test kits; we responded by ramping up production capacity. As a result, we were able to respond to the demand
created by this outbreak, and sales expanded for our influenza

In overseas markets, we made steady progress in the provi-* POCT: Point of care testing. Testing that may be performed rapidly, easily
and accurately anywhere, such as at the patient’s bedside or practitioners’
offices, and in emergency situations.

testing kit, POCTEM. Boosted by this factor, sales in Japan edged
up 2.8% year on year, to ¥36,821 million.

Our Positioning for the Year Ending March 31, 2011

Overseas, we converted two local distributors in theSysmex continues to reinforce its operations in line with

Benelux region (Belgium, the Netherlands and Luxemburg)

three core strategies: “Global Niche No. 1,” “Focus on Asia”

to subsidiaries, enabling us to further strengthen our salesand “Focus on Life Science.” During the year ending March

activities through the direct provision of solutions to various

31, 2011, we aim to continue making steady headway on thesechallenges confronting medical institutions. In Germany,

strategies. Positioning the second decade of the 21st century

Europe’s single largest market, we converted to a subsidiaryas the start of a new stage in the Company’s history, we will

the HITADO Group. Boasting a broad customer base that cov-

seek to anticipate upcoming changes in the market as we

ers clinics and specialized physicians as well as large hospitals,

strive to make a new start on various themes.

HITADO focuses on products for rapid tests such as glucose

On behalf of the Sysmex Board of Directors, I thank ourmonitoring, all being conducted “near-patient.” Accordingly,

shareholders for your ongoing support, our customers for

we commenced new initiatives in the POCT* market throughyour loyalty and our employees for your dedication. We looktheir sales system and network by utilizing telemarketing

forward to sharing our future progress with you.

and other approaches. We also established a new subsidiary,
Sysmex Espana S.L., to reinforce the sales structure of ourJuly 2010

expanding life science business in the Spanish market, which
is moving forward in the intraoperative diagnosis of sentinel
lymph node breast cancer metastasis. In Vietnam, which isachieving some of the highest rates of market growth in all of

Hisashi Ietsugu

Asia, we established a subsidiary to continue enhancing our

President and CEO

Sysmex Annual Report 2010

Key Strategies for Future Growth

Steady implementation of the current mid-term plan9Key Strategies for Future Growth

An Interview with the President and CEO
Aiming for growth in the second decade of the 21th century, we will progress on a number of themes,
while anticipating change in a business environment that is growing more complex and uncertain.

Q

What are your thoughts on the various
changes taking place in Sysmex’s operating
environment?

10

A

Amid a global economy still reeling from the effects
of recession, the healthcare industry remains robust,and the forecast calls for further market expansion.

The rapid graying of populations in Japan and other advanced
countries is pushing up healthcare-related demand. As efforts

Key Strategies for Future Growth

to stem rises in healthcare costs evolve as a major issue, weare seeing a significant shift in focus in the healthcare arenafrom treatment to prevention, and the importance of diagnostics is growing accordingly. Companies from other industries
are moving into the healthcare sector, and we can expect themarket to be invigorated by the emergence and fusion of newtechnologies and business models. Meanwhile, in emerging
markets we look forward to expansion, as economic growthencourages these countries to strengthen their healthcare
infrastructures. The rapid progress in building foundations
for medical services that is underway in China, India, Eastern
Europe, the Middle East, Russia and Africa will spawn new
demand.
These stable increases in healthcare needs are also altering industry characteristics. Among recent changes in thebusiness environment, one point of particular importance isthe reform of various countries’ medical insurance systems.
Assuming that the health insurance reform bill recently
passed in the United States actually goes into effect, newcoverage will be provided for some 32 million people. We

Sysmex Annual Report 2010

External Environment

Market environment

Industry realignment

Advanced countries:

3KDUPDFHXWLFDOLQGXVWU\

Graying populations, greater demand for advanced medical careȉ0 $VDPRQJOHDGLQJSOD\HUVȉ&URVVERUGHU0 $VEHWZHHQ-DSDQHVHDQGRYHUVHDVFRPSDQLHV
ȉ,QGLDQSOD\HUVDFTXLULQJ-DSDQHVHJHQHULFVPDQXIDFWXUHUVȉ8QLWHG6WDWHV Healthcare reform bill passed
Number of tests expected to increase as coverage extended to more
people, medical expenses (testing fees) possibly curbed
ȉ-DSDQ Medical remuneration scheme revised(ﬁscal year ended March 31, 2011)

Emerging markets:
Increasing populations, development of medical infrastructures

IVD industry:ȉ%HFNPDQ&RXOWHUȂVDFTXLVLWLRQRI2O\PSXVȂV,9'EXVLQHVVȉ6WDJRȂVDFTXLVLWLRQRI7ULQLW\ȂVKHPRVWDVLVEXVLQHVVȉ*OREDOPDMRUVDFTXLULQJ&KLQHVH,9'SOD\HUV

11

ȉ&KLQD Healthcare system expanding

8 Ensure growth during the second decade of the 21st century by predicting changes in the business environmentand responding with agility.
8 Invest in anticipation of changes in the external environment (business foundation, R&D, M&A and alliances).

can expect an increase in demand for testing, which is one offields, we succeeded in raising sales substantially in China

the initial healthcare processes. Given the scale of the U.S.

and other parts of Asia. Particularly in China, higher levels ofmarket, this potential demand expansion is a breath of fresh

healthcare are prompting an increase in demand to upgrade

air for Sysmex.

from instruments that can analyze three types of white blood

China is also pushing forward a robust expansion of its

cell to those capable of analyzing five types. We establishedhealthcare system. For example, in 2009 the National People’s

a subsidiary in Vietnam, which is undergoing remarkable

Congress called for the addition of more than 9,000 medical

market expansion, to reinforce our sales structure in theinstitutions during the three years from 2009, earmarking

country. This move should enable us to respond more expedi-

CNY 850 billion in new healthcare infrastructure spending

tiously to future demand increases. In the United States, we

during the period.

have received orders from commercial labs and integrated

Such expansion represents a major opportunity for

healthcare networks (IHNs). We also commenced direct sales

Sysmex. Overall, healthcare is a growth industry, and I am

in Europe’s Benelux region, which we expect to accelerate ourconfident that the pace of growth will accelerate. That being

growth in that market.

said, I recognize that gaining a stronger presence in this mar-Pushing forward with efforts to commercialize ourket in the face of stiff competition will require us to accurately

operations in the life science category, we are building thepredict changes in the operating environment and to act

foundations for future growth in the cancer and diabetes

quickly and strategically.

fields. In this area, we are steadily increasing our installedbase of breast cancer lymph-node metastasis rapid detection

QA

systems, which are being sold in Europe and Japan. Within

Please describe some of Sysmex’s initiatives during the fiscal year ended March 31,
2010.

Europe, Spain is particularly advanced in sentinel lymph-node
histopathological diagnosis for breast cancer screening. To
drive growth in this area, Sysmex established a subsidiary in
Spain to reinforce direct sales and after-sales support activi-

To achieve ongoing growth and raise profitability

ties for its life science products.

further, we are pursuing three core strategies—

R&D activity at Technopark, the center that we completed

Global Niche No. 1, Focus on Asia and Focus on

in 2008, is helping us to develop new technologies centered

Life Science—based on the mid-term management plan weon the disease management concept, and we are pursuing aannounced in May 2009. Targeting sustained growth in our

host of R&D themes in this regard. One such theme involves

mainstay hematology segment, as well as in non-hematology*

joint R&D with Oncolys BioPharma, Inc. With this company,

Sysmex Annual Report 2010

Key Strategies for Future Growth

Respond as an agile company

Key Strategies for Future Growth12

Sysmex has developed a new technology for detecting living

hematology fields. In emerging countries, and particularly

tumor cells freely suspended in blood, known as “circulatingin rapidly expanding Asian markets, we will concentrate on

tumor cells,” or CTCs, by using a virus that replicates andthe high-speed deployment of our “Focus on Asia” strategy.

emits florescence in tumor cells. By accurately detecting

Of the top 10 companies in the IVD sector, Sysmex is thecirculating tumor cells, we expect this method to contributeonly one that hails from Asia. We will leverage this uniqueto the development of new diagnostic methods.

status, as well as the strengths cultivated as a comprehensive

In overseas development bases, we opened the Diagnostic

supplier in Japan, to extend operations into other countries

Reagent Development Center in China and expanded the R&D

while tailoring our business to match individual countries’

Center Europe. These moves are designed to raise Sysmex’s

characteristics. We continue to boost our presence in thestanding as a technology-oriented company.

Chinese market, which is experiencing major market growth

Key Strategies for Future Growth* “Non-hematology” refers to in vitro diagnostics fields, excluding hematology but including hemostasis, immunochemistry, urinalysis, clinicalchemistry and others.

at present. We will also reinforce our sales strategies in other
Asian countries, including India, Indonesia and Vietnam.
Next, to establish our base in the life science business, wewill launch products that employ the OSNA method, whichQ

is a rapid gene amplification technique that does not require

As you move into the second year of the
mid-term management plan, please outline
some of the major issues you face as you
work steadily to achieve the plan’s objectives.

the purification of genes (mRNA) that have been taken fromA

our corporate culture. Specifically, we will put into practicea living organism, thereby commercializing this technology.
We are also pushing ahead with efforts to strengthen our R&D
activities at each stage. Finally, we will promote change within

It is clear that the fiscal year ending March 31,

our new corporate philosophy, the Sysmex Way, accelerate

2011, which kicks off the second decade of the 21st

HR development, revise the personnel system and reinforce

century, will play an extremely important role in

the HR departmental function.

determining Sysmex’s future growth. Sysmex must react more

The mid-term management plan that we announced inquickly than ever before to keep ahead of accelerating change

May 2009 calls for net sales of at least ¥140 billion by thein the business environment. In keeping with its growth,fiscal year ending March 31, 2012, the final year of the plan.

Sysmex needs to achieve a structural shift toward operations

For the period of the mid-term management plan, we assume

on a Group scale.

exchange rates of US$1.00 = ¥95 and €1.00 = ¥125. At theFirst, we need to redouble our capacity for growth in the

moment, the yen is trading at higher levels than the plan’score IVD business. In addition to making steady progress intargets assume*, but by redoubling efforts to raise the quality

the development of new technologies and products, we willof our management I believe we will continue making steadydevelop our operations in line with a strategy tailored toprogress in our core operations.

address the specific characteristics of the hematology market.
We will also endeavor to expand our operations in non-Sysmex Annual Report 2010

* Our forecast for the fiscal year ending March 31, 2011, assumes exchange
rates of US$1.00 = ¥90 and €1.00 = ¥125.

Business Model(Institutional sales model)
Proﬁt

Maintenanceservice & parts+
Automatically ensures sustained
and stable revenues
from reagents and services

Proprietary
reagents

13
Key Strategies for Future Growth+
Proﬁtability :Instruments

reagents > instruments
1st year

2nd year

3rd year

4th year

Composition of net sales
Instruments
Maintenance service & parts
g Proprietary reagentsggCreates a basefor generating
stable earnings

Stablesource of
earnings

2004

2005

2006

2007

2008

2009

2010

(Years ended March 31)

Q

A

What do you see as being Sysmex’s corecompetencies?

for approximately 60% of the Company’s consolidated net
sales. In addition to instruments, sales include the proprietary
reagents that are needed after their initial sale. We also
provide maintenance and other after-sales services, sustaining

Sysmex is achieving steady growth that centers onstrong ongoing customer relationships. Moreover, our role inoverseas markets, despite such adverse factors as aour customers’ businesses grows in line with the number ofworldwide economic recession and sharp exchange

Sysmex instruments installed at their facilities. These points

rate fluctuations. The Sysmex brand is enjoying a growing

are the essence of our stable business model. Furthermore,presence in advanced countries and emerging markets alike,our products are achieving critical mass in specific markets,and its market share is expanding. Furthermore, we are

and we are making rapid progress in introducing our products

making steady progress in the fields we are targeting in thein advanced countries and emerging markets alike.

non-hematology and life science sectors.
Sysmex’s area of business, the healthcare industry, isSecond, our products derive their strength from a solidorganizational structure. In our instrument, reagent andrelatively impervious to changes in economic conditions.

software segments, we conduct joint research and develop

Within this environment, our stable business model is one key

technologies to enhance the capabilities, usability and func-

reason for our strength. The hematology business accounts

tionality of our products. In addition, Japan enjoys a strong

Sysmex Annual Report 2010

Key Strategies for Future Growth

reputation for the quality of its precision instruments. That

14

I also believe that ensuring ongoing growth is one of the“made in Japan” cachet, which extends to our instruments,

most important ways in which we can fulfill our corporate

helps us to earn trust from customers throughout the world.

social responsibility. To this end, we have established as the

We offer a full lineup of products, ranging from downstream

long-term vision of becoming “A Unique & Global Healthcare

to upstream markets, and robotics technologies and network

Testing Company.” As we contribute to the creation of afunctionality contribute to testing efficiency. Through ourbountiful and healthy society, we also enhance our corporate

service network, we provide customers with after-sales ser-value and meet the expectations of our shareholders andvices such as remote maintenance and daily quality control,

other investors.

as well as academic support. The Company receives highAs we move into the second decade of the 21st century,

Key Strategies for Future Growthmarks for these high-value-added services that it has created

we have already begun addressing the challenges of trans-

from a customer-first orientation. For Sysmex, this integrated

forming ourselves in preparation for the next stage of growth.

system constitutes a solid competitive advantage that other

As we progress to this next phase, I ask for the ongoingcompanies cannot easily mimic.

support of our investors.

We will leverage these core competencies to create new
testing technologies in the hematology, non-hematology
and life science fields. Having already set the stage for suchdevelopment, we are now in a position to make up-front
investments in other areas that will drive future growth, suchas laying our foundations for business in emerging markets.
The strength of a company’s management foresight isclearly reflected in its ability to read future market directions
accurately and implement measures with flawless timing.
I see this as an area in which Sysmex still has ample room for
improvement.

Q

A

What closing message would you like toleave with stakeholders?

I aim to earn the Company the trust of our stakeholders by truly enacting our corporate philosophy,
the “Sysmex Way.” Returning profits to shareholders

is one of our most important management objectives. Of
course, we must strike a balance between this goal and putting aside ample funds for the aggressive investment that isneeded to ensure high levels of stable growth.

Sysmex Annual Report 2010

Special Feature:
Growth Model of an Agile Company

15
Special Feature: Growth Model of an Agile Company

Sysmex Annual Report 2010

Special Feature: Growth Model of an Agile Company

Sysmex’s Global Strategy
From the time of its establishment, Sysmex has followed a steady growth trajectory,
and the Group now provides products and services to people in more than 160 countries throughout the world. As well as an ongoing focus on such advanced countries
as Japan, the United States, Germany and the United Kingdom, Sysmex believes
that the BRICs and other emerging markets represent important opportunities.
Accordingly, we follow three core strategies as we develop business in these regions,taking specific market characteristics into account.
16
Special Feature: Growth Model of an Agile Companyuts abo .
u
o
i
r
es
m cu
ategi
. I a basic str
yourThree Core Strategies• In addition to hematology, we aim to be the global No. 1
company in hemostasis and urinalysis.

Global Niche
No. 1• The Company will leverage its leading position and take theinitiative in developing business that seizes the new opportunities being brought about by expansion in emerging markets, aswell as technical innovation and changing healthcare needs inadvanced countries.

• From our position as a global company in the in vitro diagnostics arena with bases in Asia, we plan to become the leading
company in Asia, including Japan, in this segment.

• In addition to hematology, we have in place a full lineup of
Focus onAsia

instruments and reagents in non-hematology* fields, and weare reinforcing our after-sales support services. Through thesemoves, we plan to enhance our position in Japan, China and therest of the Asia-Pacific region.

* “Non-hematology” refers to in vitro diagnostics fields, excluding hematology but including hemostasis, immunochemistry, urinalysis, clinicalchemistry and others.

• Based on the concept of disease management,* we will develop
new testing technologies targeting cancer, diabetes andother diseases, as we work to develop our business in the life

Focus on theLife Sciences

sciences.

• By developing and popularizing high-value diagnostics, we aim
to increase patients’ quality of life, standardize healthcare andcontribute to the development of personalized medicine.
* For Sysmex, disease management is the concept of preventing theoutbreak of disease and keeping disease from recurring or worsening by
providing patients with optimum healthcare.

Sysmex Annual Report 2010

T

he societies of Japan and other advanced countries are aging rapidly. As the populations of thesecountries also tend to be highly health-conscious, in the healthcare industry there is a marked shift

th
grow
r
u
o
ey
nt
at ar
iﬀere
. Wh egies in dstrat s?
etmarkfrom treatment to prevention, and the focus on diagnosis (testing) and demand for new testing technologies is growing accordingly. In emerging markets, meanwhile, growing populations and economic growth
are encouraging the development of healthcare infrastructures, prompting rapid growth in these markets.
Particularly in the field of hematology, we believe there is ample room for growth by increasing market
share in Europe and North America. Given our global No. 1 position in this category, we also believe thatmarket expansion in emerging markets throughout Asia, Central and South America, Eastern Europe and17

Russia offers promising growth opportunities.
Special Feature: Growth Model of an Agile Company

Sysmex currently derives approximately 70% of its net sales from regions outside Japan. This highpercentage reflects the mindset that we have sustained since our time of establishment, as we worked todevelop business that was closely attuned to the needs of markets throughout the world. We were one of
the first Japanese companies in the healthcare sector to embark on a course of global business development,
which began bearing fruit in the 1990s. The results of our technical innovation to meet the market needs ofcustomers in Japan and other advanced countries have evolved into a strong foundation for our business.

Net Sales by Destination(Years ended March 31)
Japan
Overseas
Americas27.0%EuropeAsia Paciﬁc(Including China))

Japan
Overseas
Americas10.2%EuropeChina
Asia Paciﬁc

7.4%

6.4%

2000

2010

Net sales

Net sales¥37.2 billion¥116.2 billion

OVERSEASJAPANOVERSEAS

51.3%

48.7%

68.3%

¥19.1 billion¥18.1 billion¥79.4 billion

JAPAN

31.7%

31.4%
20.3%

16.9%
16
9%

¥36.8 billion

Net sales by destination is deﬁned as the sales amount recorded by Group companies to customers in a particular region.
However, net sales by geographical region refers to the sales amount made by a Group company in a particular location.

Market Segment

High

United States

More than$200 billion

Growing rapidly

China$80–200
billionHealthcare
spending

BrazilIndia$10–80billionJapan
Germany

RussiaSpain

MexicoSouth Korea

South Africa

Vietnam

Czech

Philippines

Less than$10 billion

United Kingdom
Australia
Belgium
Singapore

Emerging markets

Advanced countries

Low$1,000Low$3,000$30,000

Per-capita GDP

High

Sysmex Annual Report 2010

Special Feature: Growth Model of an Agile Company

Sysmex’s Growth Model in Advanced Countries
By rapidly responding to increasingly sophisticated and diverse customer needs
through technical innovation, we seek to hone our foresight in creating new markets.
Since its development of Japan’s first hematology analyzer in the 1960s, Sysmex has worked to meetcustomer needs by following a path of technical innovation. Hematology analyzers developed in Japan
at the time required preprocessing—specimens had to be diluted prior to testing—so they were called“semi-automated analyzers.” Even so, this development marked a major improvement from the mainstream
18

hematology testing process at the time—a human counting blood cells while peering into a microscope.

Special Feature: Growth Model of an Agile Company

Once semi-automated analyzers had become commonplace, demand for fully automated analyzers
began to emerge. We met these market needs by developing and introducing a simplified, fully automatedhematology analyzer that separated white blood cells into three categories.* This launch marked the inauguration of Sysmex’s current business model: first sell the instruments and then continue to generate sales
by providing proprietary reagents on an ongoing basis.
To further meet customer needs for instruments with higher throughput and lower power consumption,
we created instruments that were faster (enabling higher testing volume) and capable of multiple simultaneous measurements. We developed a multifunctional, fully automated hematology analyzer capable ofmeasuring all five categories of white blood cell, and we now offer the world’s fastest analyzer, which canprocess 150 specimens per hour. We also augmented the varieties of reagents and consumables that workwith this instrument to enable additional functions. Our systems are also available in many configurations;
we provide customers with a choice of multiple instruments to suit the needs of their individual testing
Growth Model in Advanced Countries (Hematology)ȉ *RLQJIRUZDUGZHH[SHFWWRFUHDWHQHZPDUNHWV WKURXJKLQQRYDWLYHWHVWLQJWHFKQRORJLHV QHZSURGXFWVEven higher-valueadded solutions
ȉ *UDGXDOPDUNHWJURZWKGXHWRFKDQJLQJFXVWRPHUQHHGVand technological breakthroughs

Systems (HST)ȉ $IWHUHDFKPDUNHWJURZVLWFDQEHH[SHFWHGWRFRQWLQXH ȉ (YHQIDVWHU KLJKHUWKURXJKSXW GHOLYHULQJVWDEOHUHYHQXHVDQGSURȽWV
ȉ +LJKHURSHUDWLRQDO
HȿFLHQF\
Multifunctional fully automatedanalyzers )LYHSDUWGLȼHUHQWLDWLRQȉ 0RUHHȿFLHQWPHDVXUHPXOWLSOHLWHPV
simultaneouslyȉ (QKDQFHGDIWHUVDOHVHUYLFHVInauguration of Sysmex’s
Sysmex’ s
current business model

Simpliﬁed fully automated analyzers
7KUHHSDUWGLȼHUHQWLDWLRQȉ )DVWHU KLJKHUSURFHVVLQJWKURXJKSXWȉ 0RUHDFFXUDWH

Semi-automated analyzers

Now

Sysmex Annual Report 2010

Growth and change

Marketscale

labs. In addition to hematology, we are aggressively developing business in such non-hematology fields ashemostasis and urinalysis, and we are extending our business offerings in services, finance and other areas.
The Group has grown gradually through technical innovation designed to meet the increasingly
sophisticated needs of customers in the hematology and other testing markets in advanced countries, such
as Japan. Our operating environment is evolving as advanced populations age and the primary focus ofhealthcare shifts from treatment to prevention. Accordingly, we forecast major changes in the function of19

testing and the role Sysmex plays in the market.

Special Feature: Growth Model of an Agile Company* Divided simply into three types, white blood cells are either lymphocyctes, neutrophils or others.

Sysmex is breaking new ground in the life science fields of cancer and diabetes,
designing a new role for itself in step with advances in healthcare.
Since its establishment of the Central Research Laboratories in 2000, Sysmex has pursued research in
the life sciences. Our goal has been to create new types of testing, particularly in the areas of cancer anddiabetes. In 2008, we opened the doors to Technopark, an expanded central research facility for the Sysmex
Group. This new R&D center was designed as a place for preeminent researchers from throughout the world
to gather and provide an environment to facilitate the generation of creative ideas and the accumulationof leading-edge technical information. We also intended for Technopark to accelerate research related todisease, ecology and life science technologies, ultimately leading to high-value testing and diagnosis.
One of our successes has been the development of a system for rapid detection of breast cancer lymph
node metastasis. First introduced in Europe in 2006, the system’s availability is now increasing steadilyin Spain and other European countries. In 2008, Japan’s Ministry of Health, Labour and Welfare approved
the system for coverage under the national insurance system. Going forward, we will introduce the systemin the United States and other major countries throughout the world. We are also working to extend its
application to other types of cancer, including colon and stomach cancer (see page 32 for technical details).
Furthermore, as a technology-oriented company we are moving ahead with R&D involving cervical cancer
screening technology, post-prandial hyperglycemia monitoring technology and technology for detecting
living tumor cells suspended in blood (CTC detection technology).

Sysmex Annual Report 2010

Special Feature: Growth Model of an Agile Company

By extending its application of technologies such as these, Sysmex is convinced that there is no limit to
its potential for creating new testing applications, thereby continuing to fulfill its role as a leading healthcare company. At the same time, however, technological innovation in the markets of advanced countries
is moving forward at a breathtaking pace. To establish a dominant competitive position under thesecircumstances, we believe it will be essential to forge alliances and take part in M&A activities involving
synergistic technologies and complementary products, as well as to reinforce our sales networks. We will
20

work to remain flexible in our thinking and nimble in our developments as we grow into our new role.

Special Feature: Growth Model of an Agile Company

Sysmex’s Growth Model in Emerging Markets
We are ensuring smooth product introduction by tailoring our expansion of sales andsupport to match regional characteristics.
In emerging countries, rates of growth differ by country, and in some cases healthcare levels vary even
within the same country. For instance, the markets of China’s coastal areas have different characteristics
from its inland markets. Also, compared to advanced countries, the scale of markets in emerging markets
is significantly increasing, particularly for in vitro diagnostics. Therefore, whereas in advanced countries
technical innovation tends to gradually push the level of market sophistication ever higher, many emerging

Growth Model in Emerging Markets (Hematology)ȉ &RXQWULHVZLWKUDSLGO\H[SDQGLQJHFRQRPLHVVXFKDVWKH%5,&QDWLRQV PD\H[SHULHQFHVLPXOWDQHRXVJURZWKLQHDFKRIWKHVHPDUNHWVHJPHQWV+HDOWKFDUHLQIUDVWUXFWXUHGHYHORSPHQW(Market creation)$VKHDOWKFDUHOHYHOVULVHFXVWRPHUVXSJUDGHIURPVLPSOLȽHGWRPXOWLIXQFWLRQDODQDO\]HUV
0DUNHWH[SDQVLRQgOnce healthcare levels reach a certain stage,
market growth accelerates.

g

The growth curve is steep,and discontinuous expansion is likely.

$WWKHKLJKHQGRIWKH
PDUNHWGHPDQGLVVWURQJ
IRUWKHVDPHDGYDQFHG
V\VWHPVDVDUHXVHGLQDGYDQFHGFRXQWULHV(New market creation)

Systems (HST)

Multifunctional fully automated analyzers)LYHSDUWGLȼHUHQWLDWLRQ

Simpliﬁed fully automated analyzers
7KUHHSDUWGLȼHUHQWLDWLRQ

Growth and change

Emerging markets healthcare levels change in line with their economic growth

Sysmex Annual Report 2010

Marketscale

21Special Feature: Growth Model of an Agile Company

markets are growing in a complex manner that spans low-end to high-end demand. For example, thedevelopment of China’s healthcare infrastructure is driving an expansion of the hematology market itself. At
the same time, the rising level of healthcare is prompting demand for upgrades—from analyzers capable ofdetecting three types of white blood cell to instruments that measure five. Sysmex must quickly respond tosuch market needs that vary by country.
Responding to regional characteristics in each country enables Sysmex to leverage the experience andexpertise it has built up in these markets through indirect sales via strong distributors. In addition to some
160 local distributors in China, Central and South America, Russia and other areas, we have extended oursales systems through a major global pharmaceutical manufacturer.
We also conduct numerous scientific seminars in different parts of the world, including emerging markets. Through these seminars, we update doctors, laboratory technicians and other healthcare professionals
about breaking news in the field of hematology, which helps to raise the level of healthcare in these regions.
We have held such scientific seminars in Japan since 1978. We have also held such seminars in China since1998, and this year marked our 12th large-scale seminar in the country. We also hold small-scale seminars
throughout China; to date, we have hosted more than 200. As we continue our scientific educational activities, we will work to raise the quality of testing around the world, as well as to enhance awareness of theSysmex brand.

Sysmex Annual Report 2010

Special Feature: Growth Model of an Agile Company

Sysmex is sustaining the pioneering spirit of an agile company by anticipatingchange and by designing growth strategies for the future.
In the early 1990s, while other companies were concentrating on advanced markets, Sysmex was creating sales
facilities in Asia. In 1995, we established a reagent production joint venture in China, which is now experiencing
rapid growth. At that time, restrictions on such operations were strict, but we persevered in setting up a local
reagent factory, believing that the Chinese market had great potential, a decision that proved to be insightful.
Building our business around a model of local production of reagents for local consumption has enabled us toremain cost competitive in the face of rising demand, and we have now built a second factory there.

22

In 2009, we took our operations in China a step further by establishing the Diagnostic Reagent
Special Feature: Growth Model of an Agile Company

Development Center in preparation for our planned entry into the immunochemistry market. As the incidence of hepatitis is high in China, expectations for early detection and treatment are increasing. Throughthis new center, we aim to expedite the development of diagnostic reagents that will meet Chinese market
needs.
In 2010, we established Sysmex Vietnam Company Limited to build a sales and support system to interact directly with customers. This effort is helping to solidify the base from which to expand our operations
in Vietnam, which has one of the highest levels of economic growth in Asia and is making advances in its
healthcare environment.
We are also taking proactive steps to develop business in emerging markets outside of Asia, including
Eastern Europe, Russia, the Middle East, Brazil and Africa, and these regions account for a percentage ofsales that rises steadily each year. Through this development, Sysmex is striving to form the foundations for
its growth strategy for the next 10 years and beyond.
Sales Trends (Our Presence in Emerging Markets)gPercentage of Net Sales(Years ended March)

EEmergingEmerging markets

Emerging markets

12.2%

22.2%

2004

2010
Advanced countries

DAdvanced
Advanced countries

77.8%

87.8%

Emerging markets: Countries in Latin America, Eastern Europe, Russia, Middle East, Africa, China, Southeast Asia and South Asia
Advanced countries: Those not indicated aboveg

Net Sales(Billions of yen)

150
g Consolidated
g Emerging markets

120
90
60
30
0

2004

(Years to March 31)

Sysmex Annual Report 2010

2005

2006

2007

2008

2009

2010

2011
(Forecast)Business Activities

Sysmex provides the instruments and reagents needed for hematology,
hemostasis and other tests to customers around the world.

23
Business Activities

Sysmex Annual Report 2010

Business Activities

Sysmex at a Glance’ssmex s?
ySern
at a mai. Wh siness dobuBusiness Segments

S

24
Business Activities

ysmex derives approximately 94% of its revenues from thediagnostics field in the business of testing samples of humanbody fluids, such as blood and urine, with hospital and commercial
laboratories as its principal customers. More specifically, our main
field of business is hematology, which involves measuring the number
and type of red, white and other blood cells. This business accounts foraround 62% of net sales. Hematology uses specific reagents, and thesale of hematology instruments leads to an automatic and sustainablesource of revenue through the sales of reagents.
Sysmex also operates in the IT field, providing testing information
systems to meet demand for network systems to manage medical
data. There are synergies between this business and the field of diagnostics. The Company also provides such products as influenza testing
kits for point-of-care (POC) use by general practitioners and clinics.
Applying the specialized particle analysis technologies it has
cultivated in the diagnostics field, Sysmex is also expanding into otherbusiness categories such as industrial and sports applications.

(¥ million)
2006

2007

2008

2009

2010

81,75093,581

103,801

106,316

109,353

Q Hematology

52,11860,216

68,414

71,216

72,295

Q Hemostasis

12,15014,145

13,834

13,97014,599Q Immunochemistry

4,061

3,400

2,866

2,639

2,426

Q Clinical chemistry

3,008

2,760

2,667

2,479

3,374

Q Urinalysis

5,142

6,295

7,509

8,154

8,233

Q POC testing

3,444

3,823

3,995

2,793

3,584

Q Others

1,825

2,938

4,513

5,062

4,839

Q IT

3,812

4,807

4,399

3,145

2,870

Q New business

2,325

2,652

2,522

2,381

3,951

2006

2007

2008

2009

2010

Q Instruments

30,79037,847

38,95838,20235,940

Q Reagents

39,14142,03847,297

48,96653,471Q Maintenanceservices

6,773

8,127

9,668

9,684

11,500Q Others

11,182

13,027

14,80014,98915,262

2006

2007

2008

2009

2010

Q Japan

35,41837,87335,96135,82836,821Q Americas

15,762

19,227

20,90823,414

23,622Q Europe

25,43831,65839,23535,45436,495Q China

6,411

6,848

8,128

10,111

11,843Q Asia Pacific

4,857

5,432

6,492

7,036

7,394

Q Diagnostics

Product Segments

Sysmex enjoys a unique revenue structure. On one hand, we
conduct a stock type of business in which we sell the instruments
needed for in vitro diagnostics, offer the specific reagents needed
for long-term testing and provide support and maintenance services.
Reagents deliver higher gross profit margins than instruments, while
instrument sales drive increased reagent usage. Therefore, this segment
should generate stable earnings growth.
Sales of reagents and the provision of maintenance and otherservices currently account for approximately 69% of net sales.
Industrywide, sales are trending upward, with instrument sales
focused on the second and fourth quarters of the fiscal year.

(¥ million)

Regional Segments by Destination

S

ysmex supplies products and services to customers in more than160 countries. Net sales* are well balanced among three key
regions—Japan, Europe and the Americas. We are also accelerating
business development in China, which is experiencing remarkably
strong economic growth, and the Asia Pacific region, which is expected
to enjoy future market growth. These growing markets constitute a
steadily increasing percentage of consolidated net sales.

* Net sales by destination is defined as the sales amount recorded by Group companies tocustomers in a particular region. However, net sales by geographical region refers to thesales amount made by a Group company in a particular location.

Sysmex Annual Report 2010(¥ million)

Sales Composition by Business(¥ million)

120,000

110,724

111,843

116,175

101,041

90,000n Diagnostics

87,88894.1%

n Hematology

62.2%
12.6%
n Immunochemistry 2.1%
n Clinical chemistry 2.9%
n Urinalysis
7.1%
n POC testing
3.1%
n Others
4.2%
n Hemostasis

60,000n New business

25
Business Activitiesn IT

Net sales¥116,175 million

2.5%
3.4%

(Particle-analysis, etc.)

30,000

0

2006

2007

2008

2009

2010

(Years ended March 31)

Sales Composition by Product(¥ million)

120,000

110,724

111,843

116,175

101,041
90,00087,888n Instruments
n Reagents

60,000n Maintenance

30.9%
46.0%

services

9.9%

n Others

13.1%

n Japan

31.7%
20.3%
31.4%
10.2%
6.4%

Net sales¥116,175 million

30,000

0

2006

2007

2008

2009

2010

(Years ended March 31)

Sales Composition by Destination(¥ million)

120,000

110,724

111,843

116,175

101,041
90,00087,888n Americas
n Europe

60,000n Chinan Asia Paciﬁc

Net sales¥116,175 million

30,000

0

2006

2007

2008

2009

2010

(Years ended March 31)

Sysmex Annual Report 2010

Business Activities

Diagnostics
Hematology
Hematology tests are a type of screening that counts red, white orother blood cells to determine whether a more detailed examinationis necessary. In addition to instruments, these tests require specificreagents, which constitutes an ongoing demand. Sysmex estimatesthat the global hematology market accounts for annual sales of$1,800 million. Furthermore, the market is dominated by only threemajor suppliers: Sysmex, Beckman Coulter and Abbott.
26
Business Activities

Hemostasis
Hemostasis involves testing for coagulation, an important functionof the blood. By testing specimens of blood plasma, it is possible todiagnose hemophilia and thrombosis and to examine hepatic (liver)function.
As a rule, hemostasis tests can be performed using generalpurpose reagents, rather than specific reagents. However, analysis
data varies slightly depending on the reagents used, and the needfor precise control has caused sales of specific reagents to represent
a high share of the market.
Sysmex estimates that the global hemostasis segment generates
annual sales of $1,000 million. In 1995, we concluded a distributionagreement with Siemens (previously, Dade Behring Inc.), forging
a synergistic relationship that reinforced our respective strengths
in the hematology segment. As a result, we now enjoy the leading
share of the global market for coagulation analyzers.
Immunochemistry
Immunochemistry tests are performed on blood serum, the supernatant fluid isolated after blood separation. Antigen-antibody reactions
are used to test for the presence of HIV and hepatitis and to look forcancer markers.
Manufacturers of analyzers apply their own measurement principles, and specific reagents depend on the principles used. Sysmex
estimates annual sales in the global immunochemistry market at$8,200 million, and the market is expected to expand.
We aim to expand sales in Japan of the HISCL-2000i, a fully
automated immunoassay analyzer that enables highly sensitive,
high-speed assays, as well as our lineup of related reagents, to boost
our share of the immunochemistry testing market.

Clinical Chemistry
Clinical chemistry involves examining the enzymes, sugars and proteins in blood serum and plasma to determine the nutritional status,
liver and kidney functions, and testing for contraction of conditions
such as hyperlipidemia and arteriosclerosis.
Like hematology, clinical chemistry is commonly performed
around the world not only at times of illness, but also during routine
health checkups. Accordingly, the total number of examinations isextremely high.
Sysmex estimates that the global clinical chemistry market
accounts for sales of $4,300 million. In Japan, we have a high shareof the market for quality control serum used with various generalpurpose reagents.
Urinalysis
Urinalysis entails testing for the presence of sugar, protein or bloodin urine and can be broadly divided into two types: qualitative
urinalysis and quantitative urinalysis. Urinalysis is an important
screening tool that typically yields clues for diagnosing a number of
diseases.
Sysmex estimates that the global urinalysis market accounts forsales of $380 million, including $130 million from urine sediment
analysis. We introduced the world’s first urine formed sediment
analysis system—the UF series—that uses the flow cytometry
method. This series enjoys an excellent reputation with customers
and has the leading share of the global market for urine sediment
analysis.
POC Testing
POC is an abbreviation for point-of-care. POC testing can be carriedout on the spot in operating rooms, intensive care units, clinics orat the patient’s bedside, rather than in central laboratories, making
possible rapid diagnosis and treatment. Currently, Sysmex markets
rapid detection kits to assist in influenza diagnoses and easy-to-use
devices to measure intravesical urine volume.

IT

New BusinessLaboratory Information Systems
Advances in information technology have generated demand in thehealthcare industry for IT-driven medical information networks.
Such networks contribute to effective diagnoses by collecting
and analyzing test data and consolidating this information into a
convenient database. Sysmex plans to accelerate its IT deployment
to expand business with hospitals, clinics and remote medical carecapabilities.

Scientific Measurement and Healthcare
In the scientific measurement segment, we are developing industrial
applications for particle analysis technology that we originallydeveloped for our mainstay hematology business. This technology
is used in many industrial processes, including research and quality
control of copier toner and ceramic particles.
In the healthcare segment, peripheral artery monitoring devices
that can measure hemoglobin levels without blood sampling areused at fitness centers and various other sites. Sysmex also sells
support software for health management and childcare services.

Sysmex Annual Report 2010

Testing Essential to the Realization of a Healthy SocietyClinical testing, used in medical diagnosis and treatment or
in monitoring the effects of drug administration, is essential
to the realization of a healthy society. Clinical testing can bebroadly divided into two categories: in vitro diagnostics (IVD)
that involve the examination of blood, urine or cell samples
taken from the body and in vivo tests that involve direct examination using X-rays, electrocardiograms (ECGs) or brain waves.

The global in vitro diagnostics market is worth some $34,700
million. Sysmex provides a wide variety of products and support
services, ranging from individual instruments and reagents for invitro diagnostics to full laboratory information systems.
Sysmex now ranks ninth in the world in the in vitro diagnostics field. We also command the leading share of the global
hematology segment.
27

Segment

Market size ($ million)

IVD total$ 34,700

Hematology

1,800

Hemostasis

1,000

Immunochemistry

8,200

Clinical chemistry

4,300

Market Share

Roche
AbbottBeckman Coulter
bioMérieux
SysmexOthers

IVD total$34,700 million

380

Urinalysis

Siemens
J&J
Bayer Diabetes
Becton Dickinson
Inverness

130)(Urine sediment
Diabetes

8,400

Others

10,620(Sysmex estimates)

The Shift to Preventive Medicine and Rising Levels of Basic HealthcareAs the societies of Japan and other advanced countries age,countries are implementing healthcare reforms centeredon preventive healthcare to extend the healthy lifespan of their
populations in a bid to rein in rising healthcare costs. At the sametime, an increasing number of governments in emerging markets aremounting efforts to raise their levels of basic healthcare.
A healthcare reform bill passed in the United States in March2010 will greatly reduce the number of uninsured in the country,
raising the percentage of people with medical insurance from around
80% at present to more than 90%. Meanwhile, healthcare reforms in
China that commenced in 2009 involve an investment of CNY 850
billion in public healthcare services over a three-year period.
In April 2008, Japan introduced a new system of specifichealth checks and specific healthcare education, aimed at insured

individuals aged between 40 and 74 years, with the goal of
preventing and improving metabolic syndrome (a collection of
metabolic risk factors for cardiovascular disease and diabetes). The
focus on metabolic syndrome involves gaining a picture of visceralfat accumulation before any disease onset and is aimed at preventing lifestyle-related diseases—such as diabetes, hypertension andlipid abnormalities—that account for 30% of national healthcare
spending. Overall, testing is playing an increasingly important rolein healthcare, which is undergoing changes on a global basis.
Sysmex is cultivating new testing technologies that combine invitro diagnostics and the life sciences, driving progress in preventive healthcare and responding to an increasing emphasis on
improving patient quality of life (QOL). Through testing products,
we aim to contribute to healthcare quality and efficiency.

U.S. Health Insurance System
The number of people covered by health insurance is expected to rise from around 80% at present to more than 90%

Private health insurance (Approx. 200 million people)
IncomeMedicare
Uninsured (Approx. 47 million people)(Approx. 40 million people)

Coverage for some people now covered by Medicaid,
as well as new coverage for people who are not currently insured

Medicaid (Approx. 38 million people)
65

Age

Sysmex Annual Report 2010

Business Activities

Diagnostics Market and Sysmex’ s Position

Business Activities

Major Products
Diagnostics
Hematology

Business Activities

Specialization

28

XT

XS

High End

MiddleLow End

HST

XE

HST
XE-5000
XS-1000i

XT-4000i

This compact, highly functionalmodel features the same measurement principles, reagentsand operability as models in thehigh-end XE series. This spacesaving unit offers the ability
to analyze five types of whiteblood cell, as well as excellent
measurement data interchangeability. For this reason, it is suitable not only for use in hospitallaboratories, but also for POC
testing at clinics and emergency
laboratories.

This basic, compact model
is supported by the Sysmex
Network Communication
Systems (SNCS), and featuresa viewer-friendly screen andan easy-to-use operating
system.

pocH

The XE-5000 is the high-end
model in the XE series, whichis shipped with software tomeasure immature cells in the
blood as standard instrument.
The addition of a function tomeasure blood cells found in
extremely small quantities inbody fluids means that fully
automated measurement
can be completed within two
minutes, compared to the
60 minutes required for a
microscopic examination.

KX

Information Diversity

pocH-100i

KX-21

Featuring compact size andeasy operation, this counterallows high-precision measurement results and makes
it possible to perform hematology simply in diagnostic
and therapeutic settings.

Featuring compact size andeasy operation, this analyzer
provides valuable blood test
data such as the white blood
cell, three-part differential inless than one minute.

The HST series offers fully automated blood cell counting, including white blood cell differentials, reticulocyte
analysis, preparation of smears and staining. Multiple
system configurations are available to meet the needs ofindividual laboratory requirements.

XE-Alpha N
Fully automated blood cell counting, white blood celldifferentials, reticulocyte analysis, preparation of smears
and staining are carried out by a compact system,
ensuring efficient workflow and improved test precision.
The SP-1000i Slide Preparation Unit (to the left in thephotograph) is a network-capable system for automatically preparing hematology slides.

Reagents

Eﬃciency and Handling Capability

A full lineup of reagents is available for all
diagnostic needs, including hematology, hemostasis, immunochemistry, clinical chemistry andurinalysis.

Scale of Laboratory

Hemostasis

CS-2000i

CA-500 Series

CA-7000

The CS-2000i analyzer employs a fourth method, agglutination, in addition to the three fundamental measurement methods—the coagulation, chromogenic substrate
and turbidimetric immunoassay methods. Integrating
all these testing methods into a single station raises
processing performance.

These compact, fully automated analyzers offer advantages of the CA series such as high precision and easeof use. Operation is simple, making these analyzers
ideal for emergency laboratories and for use at small
and mid-size institutions that test infrequently.

The top of the CA series product line makes possible
ultra-fast throughput of 500 tests/hour possible (forsimultaneous measurement of PT/APTT). The Secure
Reagent System (SRS) allows control of reagent names,
lot numbers, and expiry dates through automatic
barcode reading.

Sysmex Annual Report 2010

Immunochemistry

HISCL-2000i
This model applies the chemiluminescence enzyme immunoassay (CLEIA) methodology to produce
a highly sensitive, rapid immunochemistry test system that can be used with reduced specimen
quantities. The model is designed for use by medium-sized hospitals. In a bid to establish our presence in the immunochemistry market, Sysmex released reagents for infectious diseases such as
hepatitis B, hepatitis C and HIV, and those for the detection of thyroid hormone markers. With theaim of expanding our offering of measurement items, our R&D team is working on the developmentof reagents for detection of diseases and coagulation molecular markers. In order to expedite thedevelopment of these reagents, we are also working closely with our partner companies.
Note: Only available in Japan.

29

POC Testing
UF-1000i

POCTEM S Series
P

The UF-1000i offers fully automated, highprecision, quantitative analysis of urine
sediment using Sysmex’s proprietary
technology utilizing flow cytometry, further
improving the reliability of urinalysis.

T POCTEM S Series is a rapid influenzaTheddiagnostic kit that employs the immun
nochromatography method. Samples exttracted from the body are dropped on testppaper that can simultaneously determine
tthe presence of Influenza A and B.
Note: Only available in Japan.

Life SciencesRD-100iIT

LYNOAMP BC

This gene amplification detector, which extracts and amplifies genes in lymphatic
tissues in order to detect lymph-node metastasis, is the first commercial offering for clinical use from the Company’s life science line. The detection system,
which consists of a proprietary reagent (LYNOAMP BC) and analyzer (RD-100i)
licensed by the Ministry of Health, Labour and Welfare for manufacture and sale,
represents the first Japanese technology of this type to automate metastasis
determination and to be covered under national health insurance.

CNA-Net
CNA-Net is a laboratory-information system provided by Sysmex subsidiary
Sysmex CNA. The system consists of independently operable subsystems forclinical chemistry, hematology, urinalysis and immunology testing. When used as
an independent system, CNA-Net is configured to encompass all processes fromexamination reception to routine testing and test results reporting.
Note: Only available in Japan.

New Business (Particle Analysis, etc.)
FPIA-3000

SD-2000

The FPIA-3000 is a highly advanced
particle measuring analyzer thatincorporates a CCD camera. The
analyzer not only measures particle size
distribution, but it also provides a great
deal of information on particle size andshape and makes it possible to evaluate
particulate matter that was previously
difficult to analyze.

Through a combination of the electric
resistance method and sheath flow technology, particle distribution is obtained
without complex correction and analysis
and the sizes and numbers of particles
are determined more accurately.

ASTRIM SU

PROWELL

This non-invasive blood vessel monitor
measures hemoglobin concentrations
and blood-vessel width through nearinfrared spectroscopic images simply byplacing a finger on the detector. There isno need for blood sampling.

PROWELL is a software package for use
with a quick health-check service offeredat healthcare corners in drugstores andother outlets in Japan. The service allows
individuals to perform simple checks ontheir state of health by entering somebasic body measurements and answering
questions on lifestyle and dietary habits.

Note: Only available in Japan.

Note: Only available in Japan.

Sysmex Annual Report 2010

Business Activities

Urinalysis

Business Activitiesrn you ges.
ialp
ase exvanta
. Ple nology ad
tech

Introduction to Sysmex Technology

Depending on blood cell type, anywhere from several thousand to several million bloodlcells—red
blood cells, white blood cells and platelets—exist per microliter of blood. Hematology tests are essential for determining the number of blood cells that are responsible for oxygen transport, or hemostasis.
Sysmex employs two basic technologies—sheath flow DC detection and flow cytometry—to achieveprecise measurements at the microliter level.

30

Basic Principles Underpinning Sysmex’s
Hematology: Sheath Flow DC Detection

Detection Chamber

B

Sheath solution(ﬂowing into thedetection aperture)lood cells can be broadly divided into three categories:

Business Activities

red blood cells, white blood cells and platelets. Platelets

are the smallest in diameter, at around 2 micrometers, while

Detection aperture
Sheath solution(ﬂowing out)

white blood cells are the largest, at around 15 micrometers.
Sheath flow DC detection is the basic method for measuring
the number of blood cells and distinguishing their types bysize. Broadly speaking, the method comprises three processes.

Detection Method
As a constant electric current is passed through a solution, this methodmeasures the changes in electrical resistance that occur when blood cells
pass through detection aperture.

ResistanceV

Three Processes in Counting Red Blood Cells–

DetectionchamberTime+

Platelet Red White
blood blood
cell cell

Accurate Dilution

Accurate dilution*1
Passing cells
one by one
through thedetection
aperture: Red blood cell
: White blood cell
: Platelet*2

Blood must first be diluted a certain amount to allow accurate measurementof the number and size of cells. This process reduces the number of cells pervolume of blood and minimizes errors caused by blood cells piling up on topof each other. Accurate dilution requires meticulous measurement of thequantity of blood and of the solution, or reagent. This process requires microlevel precision in the design of the measuring chamber and uses an apparatus
that minimizes degradation and abrasion.

Individual Passage through the Detection Aperture
Regardless of how accurately it has been diluted, a measured sample (thediluted blood solution) will contain a large number of cells. Lining up the cells
in a row beforehand simplifies the process of counting them, so a stream of
fluid*1 that forms a sheath around the flowing blood cells is generated to alignthe cells. The cells flow along the stream*2 toward the detection aperture,
where cells are counted, and pass through its center.*3 Unidirectional flow
prevents the stream*4 of blood cells from flowing backward through theaperture once they have passed through it.

Stream of ﬂuid
that forms a sheath*3

Counting cellsby the electric
signals*4

Sysmex Annual Report 2010

Counting Cells by Electric Signal
Blood cells do not transmit electric current easily, so cells in the test sample
cause resistance in a current applied across the detection aperture throughwhich they must pass. Therefore, blood cells can be counted by measuring
the number of times an electric resistance is generated. Larger blood cells
produce greater resistances, allowing the system to distinguish cells by type.

Capturing More Information: Flow Cytometry

Development of Instruments

L

Fully AutomatedHematology Analyzers

aboratory tests must be reliable to be useful in diagnosis
and treatment, and the medical community needs accessSemi-AutomatedHematology Analyzers
CC-1001

to measurement results that add value. Sysmex is addressingthese needs through a sustained program of technologicalCC-1001

innovation. Accordingly, we are progressing from the present
CC-710method of counting blood cells to using flow cytometry to1970

CC-1002CC-107

CC-710

1964
1965

1975

CC-108analyze their internal contents.

31

With flow cytometry, the target cells are stained withWorld’s ﬁrst

CC-720 model to include

capture information on cell size and internal structure. Thisa samplermethod enables detection of the five different types*5 of

CC-800white blood cell, as well as of any abnormal cells. Flow cytom-

CC-800CC-700etry provides clinically important information, as the distribution of the five types of white blood cells differs according to
the disease present.

E Series
E-5000/E-4000/
E-3000E-2500/
E-2000*5 : Each of the five types of white blood cell—neutrophil, lymphocyte,

CC-700E-5000CC-120CC-1101980

CC-180CC-170CC-150CC-130CC-780Fully AutomatedHematology Analyzers

monocyte, eosinophil and basophil—has a different shape and function.

1985

NE-8000

M-2000NE Series
NE-8000/NE-7000/
NE-6000

K-10001990

K-1000
NE-1500

Flow Cytometry

K-2000With flow cytometry, the number of red blood cells and platelets
are first shrunk through the action of a surfactant. The target
white blood cells are nucleic-acid stained and irradiated withforward-scattered light, side-scattered light and side-fluorescence using a laser diode. The light signals are then analyzed tocategorize the blood cells.

SE-9000

F-810
F-610
F-310

K-800

SE-9000

K-4500World’s ﬁrst model to use
a semiconductor laser

F-820
F-520

1995

SF-3000

World’ s highest
processing capacity

KX-21

XE-2100

KX-21NHigh EndXE Series
XE-2100/XE-2100L/
XE-2100D

Captured Information

2000

Lateral ﬂuorescent light intensity

KX-21N

Information on RNA and DNA amounts

pocH-100i

Middle Range

Side-scattered light intensity

XT Series
XT-2000i/
XT-1800i

Information concerning the internal
structure of cells (nucleus shape,presence of cell granules, etc.)

pocH-100i

Low End
XS Series
XS-1000i/
XS-800i

GD-100

GD-100RD-100i

2007
RD-100i

XE-5000

Forward-scattered
light intensity

2008

XS-1000i

2009

Information on cell size

Laser irradiation

F-800
F-500
F-300

XT-4000i

2010

Sysmex Annual Report 2010

Business Activities

a special reagent and then irradiated using a laser diode toBusiness Activities

Our first product in the life science field, a rapid breast cancer lymph-node metastasis detection
system, employs One-Step Nucleic Acid Amplification (OSNA) method technology.

M
32

inimizing the extent of dissection in breast cancer

the detection of breast cancer metastases in the sentinel

treatment is generally considered desirable in terms

lymph node in approximately 30 minutes, thus facilitating

Business Activitiesof the patient’s quality of life (QOL). At present, pathology

intra-operative diagnosis to reduce the need for further

labs offer a provisional diagnosis of the sentinel lymph node,

surgery.* This detection consequently decreases the burden

where metastasized cancer cells first reach, intra-operatively

on patients and reduces overall case costs. We are now con-and then conduct post-operative confirmatory studies toducting R&D in an effort to extend the system’s application todetermine the extent of resection, as well as the post-surgicalother types of cancer, such as stomach and colon cancer.

therapeutic principle. Intra-operative diagnosis of cancer* If metastasis is detected post-operatively with conventional testing
methods, additional surgical intervention or another treatment isrequired.

metastasis requires highly skilled and experienced surgeons.
Sysmex’s gene amplification detector, the RD-100i, enables

The OSNA Method
The OSNA method is a rapid gene amplification technique that does not require the purification of genes (mRNA) that have been takenfrom a living organism. The method can be used for time-restricted intra-operative diagnosis of the lymph node, detecting cancer cells witha high degree of accuracy.

OSNA method
OSNA method
7LVVXH

Homogenized buﬀer
New sample
preparation method

Homogenization

ȉ6WDELOL]DWLRQRIP51$
ȉ3UHYHQWLRQRIDPSOLȽFDWLRQLQKLELWRU\HȼHFWV*HQHRIFDQFHURXVFHOOV P51$
,QWHUIHUHQFH
VXEVWDQFHRI
JHQHDPSOLȽFDWLRQ

RD-100i (analyzer)'LUHFWJHQHDPSOLȽFDWLRQ
E\57/$03
ZLWKRXW51$SXULȽFDWLRQ

About 30 minutes

Sysmex Annual Report 2010

LYNOAMP BC (proprietary reagent)Functional Structure

As a comprehensive diagnostics supplier, Sysmex has built an integrated
business encompassing R&D, production, sales and after-sales support toprovide products and services to healthcare facilities around the world.

33
Functional Structure

Sysmex Annual Report 2010

Functional Structure

Perspective
Throughout its R&D, production, sales and after-sales support processes, Sysmex works to build
customer satisfaction, peace of mind and trust.

S

34

ysmex is a comprehensive supplier of the instruments,

Through its extensive sales and support network, Sysmex

reagents and software necessary for diagnostic testing.

actively communicates with customers around the world toFunctional StructureWith operations at 45 locations in 27 countries, Sysmex

understand customer needs and discuss the future of testing.

provides products and services to customers in more than

We apply the ideas and information that emerge through this160 countries. By integrating R&D, production, sales and after-

communication toward the selection of new research themes

sales support, we work to improve the reliability of diagnostic

and the development of new products, services and solutions,and medical-treatment testing, thereby ensuring increased

as we work to build trust and deliver peace of mind to customers.

customer satisfaction and trust.

Global Supply Chain

Research and Development

Production (Instruments)

Japan

Japan

<Technopark<Kakogawa Factory<R&D Center=Sysmex Medica=Sysmex RA

Sysmex maintains a trilateral R&D structure centeredin Japan and with facilities in North America andEurope, and the Company actively collaborates with
universities and research institutions throughout theworld. In 2008, the new Technopark was completed asa symbol of the “Creation of ‘knowledge’ and its inheritance” concept. Technopark serves as the Company’s
core R&D site used to accelerate research into new
diagnostic technologies and develop high-value-added
products.

Software Development
Japan=Sysmex CNA

Overseas=Sysmex Belgium IT (Belgium)=Sysmex Infosystems China (China)=Sysmex New Zealand (NZ)

Production (Reagents)
Sysmex emphasizes local raw material procurement and=Sysmex International Reagents product manufacturing, as this approach allows stableproduct supply and competitive pricing. At present,(two factories)
the Company operates nine reagent factories in sevenOverseas
countries. In 2007, Sysmex completed construction of=Sysmex Reagents America (US) a reagent plant in the United States that has doubled=Sysmex do Brasil Industria
production capacity in that country. In addition, in2008 the Company brought on-stream a reagent plant
Comerio (Brazil)
in India to capitalize on=Sysmex Europe (Germany)
rapid market growth=Jinan Sysmex
there, and it is currently
Medical Electronics (China)
working to achieve=Sysmex Wuxi (China)
production stability=Sysmex Asia Paciﬁc (Singapore) and raise production
eﬃciency at that facility.
=Sysmex India (India)

Japan

Logistics
Japan =Sysmex Logistics

Sysmex Annual Report 2010

The Kakogawa Factory, which produces all Sysmex
instruments shipped worldwide, provides a stablesupply of high-quality products that meet the strict
regulatory requirements for medical devices aroundthe world. Sysmex products enjoy an excellent
reputation with customers. We have introduced
quality and process
management systems
to ensure quality inall processes from thetesting and assembly ofcomponents to producttesting and shipment.

Overseas =Sysmex Logistics UK (UK)Central and South America

North America
EuropeAsia Pacific
China

Sales and Support
Japan<Solution Center<Seven branches, 12 sales oﬃces<Metropolitan Area Service Center=Sysmex TMC=Sysmex bioMérieux

Americas=Sysmex America (US)=Sysmex Canada (Canada)

Comerio (Brazil)
Europe=Sysmex Europe (Germany)=Sysmex France (France)=Sysmex Middle East (U.A.E.)=Sysmex South Africa (South Africa)

China=Sysmex Shanghai (Shanghai)=Sysmex Hong Kong (Hong Kong)

Asia Paciﬁc=Sysmex Asia Paciﬁc (Singapore)=Sysmex India (India)

Direct sales

Indirect sales(Agent)Worldwide customers=Sysmex do Brasil Industria

In addition to a direct sales and support network, the useof alliances has enabled Sysmex to build a global sales
and support system tailored to meet local characteristics.
In 2008, Sysmex established a company in Dubai toprovide these services, which it followed in 2009 with acompany in the Benelux region. In 2010, we converted
to a wholly owned subsidiary the German HITADOGroup, which sells and services point of care testing(POCT) products, marking our full-ﬂedged entry into the
POCT market. To capitalize on the ongoing changes inhealthcare infrastructure in Asia, we formed a subsidiaryin rapidly growing Vietnam. Also, we established a sales
and customer service base in Spain, with the aim of
expanding operations in our new life science businesssegment. In addition to the rapidly emerging markets
of Brazil, Russia, India and China (BRICs), we plan tostep up sales activities in other areas that are expected
to experience high levels of market growth, including
Central and South America, Eastern Europe and Africa.

and others<: Sysmex Corporation=: Aﬃliated companies

Sysmex Annual Report 201035
Functional Structure: Regional headquarters: R&D network: Instrument production: Instrument supply: Reagent production: Reagent supply

Functional Structure

Research and Development
Through its focus on improving test quality, Sysmex has established core technologies, developed arange of “industry-first” laboratory test technologies, and is now actively engaging in life science R&D.

S
36

ysmex’s inimitable R&D activities began in 1963 when

was completed on Technopark. This facility consolidates the

Functional Structure

it became the first company in Japan to commercialize

Company’s R&D activities, facilitates the sharing of knowledge

hematology analyzers. Since then, the Company has worked

and expertise, and fosters collaboration to generate synergies.

to improve diagnostic test quality at the microscopic level

At Technopark, the creation and fusion of new technolo-of blood cells by establishing core technologies for particle

gies will be facilitated by interaction between researchers andmeasurement or bioassays and developing a range ofengineers with expertise in electronics, mechanics, biology,“industry-first” laboratory test technologies.

chemistry, software and other areas. Sysmex will also build

Sysmex is leveraging the abundant expertise it has culti-

systems for the integrated management of R&D and intel-

vated in the development of products to bring efficiency tolectual property as part of its efforts to develop revolutionary

the increasingly complicated diagnostic testing environment.

new technologies and unique products that will generate new

Another goal is to contribute to the increased efficiency andmarkets.

lower costs not only in the testing laboratory, but also by

Sysmex has extended its business domains beyond

leveraging networks throughout the entire hospital for cus-

hematology to cover such laboratory test fields as hemostasis,

tomers ranging from small clinics to large medical institutions.

immunochemistry, clinical chemistry, urinalysis and others.

Sysmex considers R&D to be one of its most important

We are now working to broaden our R&D activities evenfunctions and the key source of Company growth. Each year,

further to create new diagnostic technologies for disease

we invest approximately 10% of net sales in R&D to keep

management including hematology, immune diseases, infec-

our technologies at the leading edge. In 2008, construction

tious diseases, cancer and diabetes.

Sysmex Annual Report 2010

Technopark, Focused on the Creation of “Knowledge”
and Its InheritanceLaboratory, R&D Center Europe and Diagnostic Reagent
Development Center in China.

In 2008, Sysmex unveiled the new Technopark as the trans-

At this central R&D facility, the Company will also step up
its development of instrument, reagent and software tech-Center. The Technopark will be used to accelerate research

nologies, which it aims to combine with life science technolo-

into disease and biology and produce further developments ingies to develop value-added laboratory and diagnostic tests inlife science technologies. The Technopark will provide an R&D

an aggressive bid to cultivate, plan and develop new businessenvironment where talented researchers and engineers canopportunities.

exchange information and freely generate innovative ideas.

We will continue to benefit from the “knowledge assets”

By enhancing its technology developments for instruments,

we have built up to date. We will also continue to accumulate

reagent and software, and enhancing their integration withknowledge in multiple fields throughout the world andthe life sciences, Technopark also aims to realize higher-value

combine this expertise creatively to engender advanced new

diagnostics. It will also support further collaboration between

technologies.

research facilities in Japan and overseas, as well as the BMAManagement System
R&D strategic planning
Instrument development

Research

Reagent development
Software development
Intellectual property

R&D Strategic PlanningResearch

This department sets groupwide technicalstrategies and product plans, manages acrossall development groups—research, instrument
development, reagent development andsoftware development—and oversees various
operations through to product commercialization. The department also researches andsupports registration under the Pharmaceutical
Affairs Law and other Japanese and overseas
regulations when introducing products into themarketplace.
Sysmex is working toward the establishmentof a global R&D structure through such activities as collaborative research with domestic andoverseas universities and research institutions
and broad-ranging support for the establishment of overseas development bases.

The Central Research Laboratories are key to
the Company’s research into novel diagnostic
technologies in the life science field to meetglobal demand for better patient QOL. Sysmex
is working to formulate new diagnostic methods in the areas of cancer and diabetes.

subsidiary, fusing International Reagent’s
technology development capabilities in
immunochemistry and clinical chemistry with
Sysmex’s strengths in hematology, hemostasis
and urinalysis to construct one of the mostadvanced reagent development organizationsin Japan. Sysmex is pursuing cutting-edge
R&D through close collaboration between thereagent development and instrument development operations.

Software Development
Sysmex has long focused attention on the
introduction of information technology into
testing operations and has developed software tointegrate test data management. In this segment,
Sysmex possesses highly specialized technologies
unmatched by any other company. The Company
has established an organization for providing
localized software by setting up softwaredevelopment units in China and Oceania.

Instrument Development

Intellectual Property

Sysmex employs a matrix system that draws
team members from mechanics, fluids, optics,
electrical and other specialties. Team members
can share expertise and experiences outside
their areas of specialty. This flexible products
development structure allows the Company tomeet market needs.

The results of the Company’s research anddevelopment activities are rapidly converted
into valuable intellectual property by securing the rights to and making use of these
intellectual properties. In collaboration withthe research department and the instrument,
reagent, software and other developments, theintellectual property department devises patentapplication strategies, identifies inventions andprovides appropriate responses to third-party
intellectual property rights.

Reagent Development
In 2002, Sysmex converted International
Reagents Corporation (currently Sysmex
International Reagents) to a wholly owned

Sysmex Annual Report 201037
Functional Structureformation of the core R&D facility formerly known as Techno

Functional Structure

R&D Facilities
Sysmex creates high-value-added diagnostic technologies
and develops instruments and reagents mainly at the core
38

Technopark facility. By enhancing links with research andFunctional Structuredevelopment centers in Japan and overseas, Sysmex works
to develop innovative technologies that will generate newmarkets.

BMA Laboratory

R&D Center Europe

The BMA Laboratory is located within the Business Support
Center for Biomedical Research Activities (BMA), a corefacility in the Kobe Medical Industry
Development Project. The Laboratory
is researching methods to predict anticancer efficacy and developing protein
chips that can simultaneously measureprotein activity and expression.

The R&D Center Europe was opened in 2006 in Germany as
the Company’s first overseas research facility. Sysmex is taking
advantage of this European location tocooperate with research and medical
treatment institutions in the development of new testing technologies
targeting diseases and other problems
that are uncommon in Japan.

Sysmex Asano Laboratory

Sysmex CNA

The Sysmex Asano Laboratory is a research base founded within
the Kobe Translational Research Informatics Center (TRI) to
pursue joint research with the cell therapy research group of
the Foundation for Biomedical Research and Innovation (FBRI).
Under the direction of Dr. Shigetaka Asano, Professor Emeritus,
University of Tokyo, Sysmex aims to develop new diagnostic
technologies through joint research at the laboratory on theefficacy of cell therapy and improved safety profiles.

Sysmex CNA is the specialist IT company within the Sysmex
Group. Sysmex CNA specializes in medical information
systems over a broad range of fields
and has built up a strong reputation
domestically in the clinical laboratory
test field.

Sysmex Establishes New Development Center in China
In December 2009, Sysmex opened the Diagnostic Reagent Center in China. Locatedwithin Sysmex Wuxi Co., Ltd., this center prepares for our entry in the immunochemistry
field in China, which is enjoying one of the highest rates of economic growth in Asia.
In China, demand for the early detection and treatment of hepatitis is strong, as thecountry has a high incidence of this disease. We will employ this new development center
to expedite the development of reagents that meet the specific demands of this growing
market. Our first initiative will be the development of immunochemistry reagents, suchas hepatitis markers and cancer markers.

Sysmex Annual Report 2010

Purchasing, Production and Logistics
Rigorous quality control and global supply chain management systems allow Sysmex to swiftly provide
a stable supply of products of consistently high quality to customers in more than 160 countries.

A

Global Reagent Manufacturing to Ensure Stable
Product Supplies

consistent supply of top-quality diagnostic and medicaltreatment test products is essential to medical care

support. Sysmex employs a proprietary, fully automatedIn its reagent production, Sysmex employs thorough quality

system that covers all procurement operations, giving themanagement and makes every effort to provide reagents

Company a real-time grasp of raw material and component

consistently and stably. Our core production facilities inorder, delivery, and receipt and inspection status. This system

Japan are the Ono Factory and the Seishin Factory of Sysmex

allows Sysmex to standardize at the R&D stage the selection

International Reagents, a subsidiary. Sysmex has substantiallyof suppliers that can ensure stable delivery of appropriate raw

cut production lead times, cost of sales and inventories atmaterials and components, thereby achieving swifter R&D andthese two plants to increase global cost competitiveness.

better cost-competitiveness. Another R&D focus, which aims

The Company pursues production that capitalizes on the char-to quickly launch new products into mass production, is on

acteristics of each plant. The Ono Factory is used for the masstransforming the engineering chain, including raw materials

production of reagents using automated facilities, whereas thepurchasing and through concurrent engineering.

Seishin Factory is used for the production of bulk biological39

Instruments Manufactured in Japan to DeliverHigh Quality

seeks to strengthen and expand its global production system

All Sysmex instruments are manufactured in Japan. The

overseas reagent production bases.

by actively transferring expertise developed at these plants toCompany uses cutting-edge production and quality control

Sysmex is also expanding its overseas production bases

technologies because of the sophisticated and specialized

to meet growing overseas demand and improve its ability

technologies that are required, delivering high-quality

to compete. The Company currently has seven production

products with high added value. To provide support for

facilities in six countries. By introducing at overseas facilities

sophisticated and complex production processes, thethe expertise in manufacturing technologies that we have

Kakogawa Factory has created an information system dubbed

cultivated and the quality assurance systems that are in place

Quality Information Control & Keep System 21, or Quick21.

at our Ono and Seishin factories, we are working to achieve aThis system enables “digital monozukuri” by using 3D CAD

high-quality, efficient production system on a global basis.

design data to achieve 3D animation and automation of work
processes (see the column on page 41).

Eﬀect of Introducing Concurrent Engineering
Brought forward
Investment

After
introduction

Beforeintroduction

Time
Beforeintroduction Component development

After
introduction

DesignPrototype

Mass-production preparations

Mass production

Shortened
timeframe
Mass-production preparations

Mass production

Sysmex Annual Report 2010

Functional Structure

reagents requiring advanced, specialized knowledge. Sysmex

Functional Structure

40
Functional Structure

Kakogawa Factory (Instrument Production, Japan)

Baddi Factory (Reagent Production, India) (Sysmex India)

The Kakogawa Factory is a production base for diagnostic
instruments that uses quality control systems to produce highly
reliable instruments based on international and industrywide
quality control standards, and the laws
and regulations of destination countries. The plant provides the capacity
to supply a wide range of products
to markets around the world andemploys flexible production systems.

This reagent factory in an industrial park in the state of
Himachal Pradesh will help ensure a steady reagent supply to
the Indian market, which is expected to grow.

Seishin Factory (Reagent Production, Japan)(Sysmex International Reagents)
The Seishin Factory is mainly responsible for the production of
bulk biological reagents and draws on wide-ranging production
technologies to produce a line of more than 1,000 products
ranging from clinical chemistry to immunochemistry reagents,
hemostasis reagents, and reagents foruse as quality control materials. The
factory has also constructed a flexible
production system to meet requirements for highly diverse, low-volume
manufacturing.

Ono Factory (Reagent Production, Japan)(Sysmex International Reagents)
The Ono Factory is dedicated to the high-volume production of
about 400 reagents, centered on products for the hematology
segment. The production lines are
divided into some types according
to capacity, and the factory seeks tosimultaneously increase quality, reduce
costs, and mass produce by optimizing
automated and manual operations.

Neumünster Factory (Reagent Production, Germany)(Sysmex Europe)
Additions to this plant were completed in April 2007, approximately doubling its reagent production capacity. This expansion
responds to increased reagent demand in line with the growing
installed base of instruments in Europe.
The Company aims to reorganize andexpand its business base to allow
a more stable supply of diagnostic
reagents and reduce cost of sales.

Sysmex Annual Report 2010

Chicago Factory (Reagent Production, United States)(Sysmex Reagents America)
In response to rising demand andto reinforce cost competitiveness,
Sysmex has built more facilities atthe site of its regional headquarters,Sysmex America, Inc.

Wuxi Factory (Reagent Production, China)(Sysmex Wuxi)
Sysmex became the first non-Chinese company to receive
local pharmaceutical manufacturing approval. The Company
became able to manufacture products
needed in hemostasis, clinical chemistry and sophisticated biotechnology
applications.

supply chain management (SCM) system by reorganizing

Sysmex factories promote upstream purchasing and aredomestic logistics locations and reconfiguring supply flow

strengthening its unified development and production struc-overseas. In the United States, the Company reorganizedture to move forward mass production. We are improving ourits reagent supply system, creating a logistics system that

global supply chain management systems by reorganizing

encourages direct communications with customers.

logistics locations and reconfiguring supply flow.

In Europe, the Company established a European parts center

For instrument and reagent manufacturing, Sysmex

and reworked its system for supplying the parts needed

promotes upstream purchasing and is strengthening thefor maintenance services. In the future, the Company will

Company’s unified development and production structure toreinforce its IT-based logistics management system to allow

enable early-stage mass production. Sysmex Trade Mission

the groupwide sharing of inventory and order information.

(STM), an electronic purchasing system that automates

For overseas reagent production, Sysmex has set upcomplex ordering activities, helps reduce procurement costs

reagent factories in Germany, the United States, Brazil, China,

and strengthen groupwide production management.

Singapore and India to enable the stable and speedy supply of

For the logistics function that is responsible for delivering

reagents to global markets.

final products to customers, Sysmex is improving its global

Monozukuri Goes Digital, Shortening Production TimesT

he Kakogawa Factory uses Quick21, a production
support system that Sysmex developed in-house tosupport factory associates, manage processes and assist
quality management.
In 2006, we began using 3D CAD design data to
make work processes more visual, helping to shorten
the time associates require to commit these processes
to memory and contributing greatly to their ability
to absorb multiple skills. Monitors located alongside
workbenches depict assembly and other processes in 3D,
with an audio explanation accompanying each process.
This arrangement makes work processes easier for new
associates to understand, and helps to maintain quality
and boost productivity.
Furthermore, we use our IT and networking technologies to configure networks linking manufacturing
facilities to the products themselves. This configuration
automates the final product adjustment and testingprocesses, which cuts down significantly on time toshipment.

Sysmex Annual Report 201041
Functional Structure

Reconfiguring Systems to Make Them More EfficientFunctional Structure

Sales and After-Sales Support
Sysmex focuses on regional business needs in its R&D, production, sales and after-sales support in
45 locations around the world. Sysmex has an excellent reputation with customers for its global aftersales support system.

T
42

hroughout its history, Sysmex has always set its sights on

position by reorganizing business structures and working toFunctional Structure

overseas markets and adapted its business activities toexpand market share in the United States, the world’s largest

the requirements of markets in diverse geographical regions.

market. Customer satisfaction survey results demonstrate

Today the Company engages in R&D, production, sales andthat Sysmex has earned a solid reputation with its customers

after-sales activities at 45 locations around the world andfor the processing capacity and quality of its products, which

supplies products to customers in more than 160 countries.

reduces down time, as well as for the added value provided by

In line with the core strategy of Global Niche No. 1,

its after-sales, online and other support services.

Sysmex has established its position as the market leader in

Building on the foundations of its hematology business,the hematology segment in Japan, Europe, China and theSysmex is working aggressively to establish itself as a solu-

Asia Pacific region, as well as capturing the top share oftions provider in the diagnostics field.

Customer Assessment in the United States (by IMV ServiceTrak™)• Survey of Customer Satisfaction
A survey of customer satisfaction published in 2009 has shown that Sysmex is ranked No. 1 in the United States for instrument
performance meeting expectations.

Instrument Performance Meets Customer Expectations
SysmexCompetitor 2Competitor 1

Competitor 3

Industry Avg.

Competitor 4

1=Very Poor 2=Poor 3=Fair 4=Good 5=Very Good 6=Excellent

Sysmex Rated Highest for the Past 10 Years
5.4

5.31

5.2
5.04
5.0
4.8
4.6
4.4
4.2
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Percentage of Call-Backs for Same Problem in 30 Days
1.5x 1.4x 1.4x 1.3x

Likelihood ofcompetitors vs. Sysmex

Sysmex Rated the Best!
SysmexCompetitor 1
Competitor 2Competitor 3
Competitor 4
0

2

4

6

8

10

12

14

16

18 (%)

Industry Avg.

Founded in 1977, IMV continues to be a leading supplier of comprehensive clinical diagnostic and medical imaging market research
reports and site-specific databases for the healthcare industry.

Sysmex Annual Report 2010eers rattom
do cus. How ex?
Sysm

the global market. The Company is building on its current

43Functional Structure

Building Regional Sales andAfter-Sales Support Networks

engineers to customer premises as necessary. In the United

Sysmex operates a network of seven branches and 12 sales

extensive areas, close collaboration between call centers

offices in Japan and has established a sales and support struc-and service engineers allows Sysmex to respond rapidly toture second to none in the diagnostics market. The Company

customer requests.

States, where customer support functions must coverprovides multifaceted solutions for test efficiency and cost
cutting, involving after-sales support that takes full advantage

After-Sales Support Systemof this extensive network. It now provides such high-valueadded sales and after-sales support around the world, having

Customerbuilt support networks tailored to the various local markets.
In Japan, the Customer Support Center responds toinquiries around the clock, 365 days a year.* Knowledgeable

Field
engineer

SNCS*

specialists answer questions not only about instruments andreagents, but also about scientific matters. Sysmex has established a rapid support system by stepping up cooperation
Operator

between the Customer Support Center and Sysmex offices
and sales offices across Japan. The Company has further
enhanced after-sales support by consolidating the customer

Technical
supportScientiﬁc
supportTechnical
specialist

Scientiﬁc
specialist

after-sales support function in the Solutions Center, which
opened in 2005, and opened a service center in the Tokyo
metropolitan area in 2006.
* Service for customers who have maintenance contracts

Customer Support Center

Online Maintenance of Customer Instruments
Sysmex operates call centers in Japan, the United States,
China, Germany and Singapore, and dispatches service*SNCS: A service that connects customer products with customer
support center terminals through a web interface to provide
online support and online quality control.

Sysmex Annual Report 2010

Functional Structure

44
Functional Structure

The company is rolling out on a global scale the Sysmex

expertise we have gained through ISO 9001 and ISO 14001

Network Communication Systems (SNCS), a support service

certification, as well as our experience as a manufacturer

that connects the Customer Support Center and customers’of medical instruments, we consult with organizations on

products via the web for the online provision of remote instru-

earning certification under ISO 9001 and ISO 15189, as wellment maintenance and quality control. The SNCS is used byas other standards. Our services have been instrumental inmany customers and has earned a strong reputation. The

helping a number of customers gain ISO certification.

Company launched the SNCS in the United States in 2006
and is steadily expanding the installed base.

Sysmex sponsors hematology seminars around the world
to provide physicians and laboratory technologists withinformation on the latest trends in hematology. The Company

Sponsoring Scientific Seminars for
Advancement of Healthcarebegan conducting annual seminars in Japan in 1978 andTo promote higher levels of healthcare service, Sysmex

seminars and other activities in Thailand, Indonesia and India

provides an ISO support service for healthcare institutions

and holds symposiums in Europe and North America.

expanded this program to China in 1998. Sysmex now runsthat are creating ISO management systems. Leveraging theSysmex Network Communication Systems
SNCS puts the Customer Support Center on line, enabling Sysmex to manage the precision of customer equipment in real time, automatically monitor equipment and provide information over the Web.

Online Quality Control
Precision management data is transmitted automatically over theInternet on a daily basis. The system conducts sample surveys todetermine precision. Customers can browse up-to-the-moment
survey results from anywhere in Japan. Using the system’s listviewing function, customers can see at a glance the status ofequipment at multiple facilities across Group medical institutions.

Sysmex Network Communication Systems
SysmexHospital

Network

Customer Support Center

Automated hematology
analyzer XE-5000 andother Sysmex instruments

Online Support
Analyzers retain a host of data, such as error logs, numberof operations and set values. This information is transmitted
automatically to our server, allowing us to understand the statusof customer equipment and, if conditions warrant, offer advice tominimize potential damage. Remote diagnosis and image-sharing
systems help to accurately pinpoint failure locations so that we
can quickly provide necessary parts, to shorten down time.

Web Information Service
We communicate with customers via a specialized e-mail application. Our web information service also offers case studies of
illnesses, literature lists and technical information.

Sysmex Annual Report 2010

1. Online support
2. Online
monitoring
3. Real-time QC
4. Supply support
information

Corporate Governance

Sysmex considers reinforcing corporate governance one of its mostimportant management topics. We aim to maximize the overall corporate
value of the Group through management robustness, better transparency
and improved management speed and efficiency.
45
Corporate GovernanceShaping the advanceementt of heealthcare.

We contiinue to create unique andd innoovativevaluees, whille buillding trust and conﬁdence.

With passion and ﬂexibility, we demonstrate ourindividual competence and unsurpassed teamwork.

Sysmex Annual Report 2010

Corporate Governance46
Corporate GovernanceManagement Organization

attend the Board of Directors and Steering Committee meet-

Sysmex has adopted the corporate auditor system. The current

ings and maintain systems for appropriately supervising themanagement organization consists of eight directors (sevenconduct of business on the part of the directors. The corpo-of whom are executive officers), four corporate auditors

rate auditors also maintain close communications with the(including two external auditors), and 14 executive officers.

Internal Audit Office, exchanging information and opinions

The Company adopted the executive officer system andas necessary, and confirm and evaluate the appropriatenessestablished the Nominating Committee and the Compensationof business execution. The Board of Auditors will continue toCommittee in April 2005 in order to increase the speed ofenhance management soundness by engaging in appropriate

decision making in the conduct of business and respondsupervision of the execution of business as stipulated by law.

quickly to changes in the business environment.

The Board of Auditors works closely with the accounting

Matters Concerning Business Execution,
Auditing, Appointments, Supervision andOther Functions

auditors on the audit plans report (annual) and the audit
results reports (annual), exchanging information and opinions
as necessary, such as when conducting internal control audits
related to financial reporting.

The Board of Directors consists of eight directors. The Board

The Company has contracted with Deloitte Touche

meets regularly once a month to deliberate on important

Tohmatsu to perform a certified public accountants audit. In

management issues and convenes extraordinary meetings asaddition to conducting an audit of the entire Sysmex Group,

necessary.

the Company maintains an environment that makes it pos-

The Global Strategic Committee consists of the president

sible to rapidly cope with changes in the accounting system.

and executive officers. As a rule, this committee meets once

The Company has contracts in place with several law officesa month to deliberate on the Group’s management direction

and maintains a structure to solicit and obtain advice on

and important strategic issues.

important matters as necessary.

The Steering Committee consists of the president andexecutive officers. The committee meets once a month, inprinciple, serving as a consultative body to the president

Shareholders’ Meeting
Election/Dismissal

Election/Dismissal

Election/Dismissal

to deliberate on important matters concerning the Group’sbusiness.

regional headquarters and division managers. The committee
meets once every three months, in principle, reporting impor-

Board of Directors (Directors)

Nominating Committee

Compensation Committee

Board of Auditors(Corporate Auditors)of the president and executive officers, directors of overseas

Accounting Auditors

The Group Management Reporting Committee consists

tant matters concerning the Group’s operations.
The Operating Committee consists of managers of divisions. The Committee meets once a month to find solutions
to cross-functional problems.
In the fiscal year ended March 31, 2010, the Board of
Directors met 15 times, the Global Strategic Committee

Auditing

Auditing
President & CEO

Global Strategic
Committee

Internal Audit Office

Steering Committee

Risk Management
Committee

12 times, the Steering Committee 17 times, the GroupManagement Reporting Committee four times and the
Operating Committee 12 times to address matters relating to

Executive Officers

management strategy and important issues facing the Group.
The Board of Auditors consists of four corporate auditors,
two of whom are external auditors. The corporate auditors

Sysmex Annual Report 2010

Divisions, Subsidiaries and AffiliatesDirectors

47
Corporate Governance

Front row, from left: Hisashi Ietsugu, Kenichi Yukimoto
Back row, from left: Kazuya Obe, Yukio Nakajima, Masayoshi Hayashi, Shigenori Ohigashi, Koji Tamura, Mitsuru Watanabe

Hisashi Ietsugu

Yukio Nakajima

President and CEO

Member of the Managing Board and Executive Officer
Managing Director
Corporate Business Planning, Corporate Business Administration,
Human Resources & General Affairs, Corporate Executive Office

Kenichi Yukimoto
Member of the Managing Board and Executive Officer
Senior Managing Director
CSR Promotion

Masayoshi Hayashi
Member of the Managing Board and Executive Officer
Managing Director
Business Management (Japan), Sales & Marketing, Scientific Affairs,
Customer Support

Shigenori Ohigashi
Member of the Managing Board and Executive Officer
Managing Director
Quality & Environmental Management, SCM,
Manufacturing Management, Instrument Production

Koji Tamura
Member of the Managing Board and Executive Officer
Managing Director
IVD Business Development, Life Science Business Development,
Scientific Instrumentation BusinessKazuya Obe
Member of the Managing Board and Executive Officer
International Business Management

Mitsuru Watanabe
Member of the Managing Board and Executive Officer
R&D Strategic Planning, Intellectual Property, Central Research Laboratories,
Diagnostics System Development, Diagnostic Reagent Development,Life Science Business Development

Sysmex Annual Report 2010

Corporate Governance

Basic Policy on Internal Control Systems
and Their State of Development
Systems for Ensuring That the Execution of Duties
by Directors and Employees Is Compliant with the
Law and the Articles of Incorporation
48

Systems to Ensure That Directors Execute Their
Duties Efficiently
The Company has positioned the Board of Directors as theinstitution to make important management decisions andsupervise the execution of the Company’s business affairs.
The Company has introduced the executive officer system toSysmex defines compliance as “the conduct of open andbe capable of making swifter operating decisions and respond

aboveboard business activities on the basis of observancequickly to changes in the business environment.

Corporate Governanceof laws and regulations and high ethical standards” and will

With respect to the management of business, themaintain a system to ensure compliance as described below.

Company shall ensure the efficient execution of business

The Company is promoting and enhancing Group compli-

in accordance with the organization regulations, scope ofance, as it believes compliance countermeasures are theauthority regulations, and approval procedure. The Company

first and most important way to maintain society’s trust andshall establish mid-term plans and annual management plans,counter risk. The Company shall implement and strengthen

periodically confirm the progress made with those plans, andcompliance in the corporate group under the control of atake any necessary measures.

compliance officer and compliance committee. The Company
training for directors and employees, promote the rapid

Systems to Ensure the Appropriateness of Business
Activities in the Corporate Groupdetection and correction of violations of the law or the

The Company shall ensure compliance in accordance with the

Articles of Incorporation by means of an internal compliancecompliance code applied to all the directors and employees

related reporting system, and conduct audits of the compli-of companies in the Group. In conformance with regulations

ance structure by means of the Internal Audit Office.

established with respect to risk management, the Company

shall rigorously ensure compliance through education andshall maintain groupwide risk management systems based

Systems for the Retention and Management ofInformation Relating to the Execution of Duties byDirectors

on those regulations. The Internal Audit Office shall conduct
groupwide internal audits.
With regard to the management of affiliated companies,

The Company shall appropriately retain and manage informa-

the Company shall respect the autonomy of the managementtion relating to the execution of duties by directors in accor-of affiliated companies and ensure the appropriateness ofdance with document management regulations and maintainbusiness activities throughout the corporate group by suchthe information in a state available for inspection as necessary.

means as periodic reporting on the details of the businessof affiliated companies and advance discussion concerning

Regulations Concerning the Management of Risk
and Other Systems

important matters.

entire Group shall comply with risk management regulations

Assignment and Independence of Employees toAssist Corporate Auditors

established by the Risk Management Committee for the

Although the Company does not assign full-time staff tointegrated management of risk throughout the Company.

assist corporate auditors in the performance of their duties,

The Company shall endeavor to discover foreseeable risks,

employees of the Internal Audit Office cooperate with theselect the most important of these risks, clarify the sections

corporate auditors to conduct efficient audits at important

responsible for coping with risks, establish countermeasuresplaces of business.

To maintain a structure concerning risk management, theand engage in measures to mitigate risks.

At the request of the corporate auditors, the Company shallprovide full-time staff to assist the Board of Auditors. In suchcase, the directors shall discuss with the corporate auditors inadvance matters such as the transfer of such support staff.

Sysmex Annual Report 2010

Systems for Reporting to the Corporate Auditors
and Systems for Ensuring Effective and Efficient
Auditing by the Corporate Auditors

Basic Policy on and Status of Systems for Excluding
Antisocial Forces

If a director discovers a violation of the law or the Articles

executives and associates throughout the Sysmex Group. We

of Incorporation or a material fact that poses risk of causing

maintain absolutely no relationships with antisocial forces, andsignificant damage to the Company, the director is respon-

we take a firm stand to thoroughly counter any such forces.

sible for promptly reporting that fact to the Board of Auditors.
The corporate auditors shall attend Board of Directors andSysmex has in place a Compliance Code that applies to all

Our education and training programs for executives andassociates provide a thorough grounding on the exclusionof antisocial forces. We have an internal reporting system in

as approval requests, and request explanations from directors

place to respond quickly and appropriately to any overtures.

and employees as necessary.

Furthermore, we maintain close relations with specialized
external institutions to gather information about the activities
of antisocial forces.

Corporate Auditors
Haruyoshi Kobayashi
Standing Corporate Auditor

Toshiyuki Miyauchi
Standing Corporate Auditor

Hiromu Fujioka
Corporate Auditor

Isamu Inamasu
Corporate Auditor

From left: Haruyoshi Kobayashi, Hiromu Fujioka, Toshiyuki Miyauchi, Isamu Inamasu

Sysmex Annual Report 201049
Corporate Governanceother important meetings, read important documents such

Corporate GovernanceCompliancecompliance to remain a Company that stakeholders consider

Sysmex has established a compliance code to be observed

highly trustworthy.

by all executives and employees of the Sysmex Group in
Japan and overseas. The Company’s view of compliance isdefined as “the conduct of open and aboveboard businessactivities on the basis of observance of laws and regulations
and high ethical standards.” Various training activities are
50* The campanula is also commonly known as the bellflower for the
shape of its blossoms. Sysmex’s Campanula Lines are so named to
evoke an awareness that all employees have the ability to “ring a bell”
on actions that are or could be considered non-compliant.

Corporate Governanceunderway, including groupwide programs on the introduction

Risk Managementof the compliance code, to ensure that all employees have a

Sysmex has raised the bar on risk management by promoting

thorough understanding of the code. The Company has also

these activities from a divisional level to a companywide

appointed Compliance Training Managers in each Grouprisk management system. In 2007, the Company establishedcompany.

a Risk Management Committee to steadily address risk

In 2007, Sysmex looked to combine its compliance andrisk-management systems and began managing complianceresponses, prioritized according to importance.
In terms of quality, Sysmex is working to improve internal

activities on a groupwide basis under the direction of aquality assurance levels and to further improve its quality

newly established Risk Management Officer. The Groupmanagement system (QMS). Moving toward the establishment

Compliance Sub-committee meets periodically to confirm

of a groupwide QMS, Sysmex is pursuing ISO certification

the implementation status of the Compliance Promotion Plan

centered on the Quality Assurance Department. The Company

and deliberate the overall direction of the Group’s compliance

has introduced quality training to promote an understand-activities. To promote and supervise compliance activities,

ing of QMS, build individual employee awareness of these

Sysmex has established “Campanula Lines*” as points of con-systems and ultimately raise quality control levels. Internal

tact for all Group employees in Japan for advice or questions

quality audits, which are conducted by a committee of internal

on any compliance issues. The Campanula Lines are designed

product quality auditors selected by each department, provide

to eliminate any concerns held by the staff member seeking

periodic checks on the operational status of the QMS.

advice, for example by providing contacts with male or female
managers or external legal consultants.

We disclose information in accordance with the timely
disclosure regulations that stock exchanges have establishedFor product exports, Sysmex has established a Security

for this purpose. Managerial divisions create documents on

Export Control Committee to ensure the Company’s tech-decisions that have been made,*1 issues that have arisen,*2

nologies and products are not used illegally overseas. The

and earnings reports, as well as liaising with the communica-

Committee conducts ongoing and in-depth investigations

tions divisions responsible for disseminating this information

to confirm export destinations or product usage. In 2008,

externally. Information on Company decisions and earnings

the Kobe Customs Office approved Sysmex as a Designatedreports is disseminated quickly after deliberation by the

Exporter under the Designated Export Declaration System.

Steering Committee or following decisions by the Board ofThis system is designed to speed up administrative

Directors or the president. Any issues that arise are reported

procedures for products distribution in line with tighterto the president, following deliberation by the Steering

security procedures and greater international distribution

Committee, before being promptly disclosed publicly.

of products. Only exporters with an excellent compliance

Sysmex will reinforce its risk and quality management

record are approved as Designated Exporters. Sysmex markets

procedures to ensure the ongoing trust of a wide range of

its products around the world and now aims to improve its

stakeholders.

service by using the Designated Export Declaration System toachieve greater administrative efficiency in export procedures.
The ultimate goal in the Company’s pursuit of compliance*1 : Decisions that have been made include decisions on mergers or
stock swaps as stipulated in the Rules on Timely Disclosure of
Corporate Information from the Tokyo Stock Exchange.

is for every Sysmex employee to be aware of compliance as*2 : Issues that have arisen include changes in major shareholders oran ongoing factor and to be able to apply this understanding

lawsuit filings as stipulated in the Rules on Timely Disclosure of
Corporate Information from the Tokyo Stock Exchange.

in their work. Sysmex will continue to ensure thoroughSysmex Annual Report 2010

Executive Officers

51
Corporate Governance

From left: Takashi Goda, Michiaki Ishida, Katsuo Uhara, Takuji Nishino, Masami Kitagawa, Yukio Hamaguchi, Kaoru Asano

Takuji Nishino

Yukio Hamaguchi

Executive Officer
Executive Vice President of Intellectual Property

Executive Officer
Executive Vice President of Diagnostic Reagent Development

Katsuo Uhara

Takashi Goda

Executive Officer
Executive Vice President of SCM

Executive Officer
Executive Vice President of Business Management (Japan)
President of Sysmex TMC Co., Ltd.

Masami Kitagawa
Executive Officer
President of Sysmex International Reagents Co., Ltd.

Kaoru Asano
Executive Officer
Executive Vice President of Central Research Laboratories

Michiaki Ishida
Executive Officer
Executive Vice President of Manufacturing Management

Sysmex Annual Report 2010

Corporate GovernanceOperating Riskss
isk factor
. What arce?
you f

do
be affected if problems with product quality were to arise
nevertheless.

Overseas Sales

52

To avoid this situation, Sysmex works to maintain productCorporate Governance

Sysmex sells to overseas customers through its overseas

quality in accordance with international standards, such as ISO

affiliates and distributors. For this reason, Sysmex hedges

13485, and local laws and ordinances, such as the Pharmaceuticalagainst the risk of currency fluctuations through exchange

Affairs Law. Sysmex reviews on a daily basis product information

contracts and other means. Nevertheless, the Company’sfrom Japanese and overseas markets, as well as from within

operating results and financial position are affected by foreign

the Company; collates technical information that may improveexchange fluctuations. The proportion of consolidated net

design quality; and implements rigorous quality checks at thesales contributed by overseas sales is rising each year, fromstart of mass production and prior to product launch.

67.5% in the fiscal year ended March 31, 2008, to 68.0% in thefiscal year ended March 31, 2009, and 68.3% in the fiscal year

Stable Product Supply

ended March 31, 2010.

Sysmex markets its products to customers in more than

As of the start of the fiscal year ending March 31, 2011, the160 countries and has internal systems in place to ensure

Company assumes forex rates of US$1.00 = ¥90 and €1.00 =the stable supply of these products to customers. The raw¥125.

materials used in these products are sourced from about
300 Japanese companies and 50 overseas companies. The

The Impact of Healthcare System Reform

Company might experience difficulties with procurement if,

Against a backdrop of a sharp decline in the birthrate andfor example, business operations were suspended at suppliers

rapid aging of the Japanese population, advances in medicalor the supply of raw materials was interrupted. The stable

technology, increased demand from patients for a bettersupply of products could also become problematic if Sysmex

quality of life (QOL), and other changes in the healthcare

products were affected by environmental regulations.

environment, Japanese healthcare system reform continues.

For these reasons, Sysmex is improving communication

Such reforms are designed to optimize healthcare costswith suppliers, sharing information with suppliers and affili-

and efficiently provide high-quality healthcare services. The

ates, and building a global supply network for reagents. The

Company’s mainstay diagnostics business could be indirectly

Company endeavors to respond to environmental regulations

affected* by such healthcare system reforms.

that may affect products by initiating full-time projects toAmid ongoing healthcare cost optimization measures anddemands for greater efficiency in hospital management, more

make products compliant and by responding to the demandsof each regulation in order of priority.

advanced medical care and new clinical testing procedures,
including definitive diagnostic tests for cancer, and strive to

Measures to Counter Risks Associated with theUse of Information Systems

meticulously respond to diversifying needs by providing total

Sysmex employs information technology in its decision-mak-solutions that combine instruments and reagents, information

ing procedures, such as transmitting information, supporting

technology and after-sales support.

core businesses and completing approval documents via theSysmex will boost its investment in the life science field,* The Japanese medical fee system is amended every other year. In 2010,
fees increased for the first time in 10 years, but Sysmex expects a negligible impact on earnings compared to the previous year. Diagnostic
tests are covered by a fee for the provision of the test, unlike the fixed
reimbursement prices set for pharmaceuticals. Therefore, any changes
made to test fees by amendments to the medical fee system should
not have a direct effect on Company earnings.

Company’s internal network.
The Company has therefore introduced countermeasures
to minimize the potential operational impacts of network or
information system disruption, computer viruses or unauthorized external access to information systems. Sysmex has inplace secondary, alternate network routes; implements dailysystem administration procedures; runs security measures

Product Quality
The instruments and reagents that Sysmex supplies must be
extremely reliable, so the Company has introduced a comprehensive quality management system. However, earnings could
Sysmex Annual Report 2010

including virus gateways; and works to reinforce its internal
controls, for example by controlling access through strict user
management procedures and fingerprint authorization.

Sysmex Value

Founded in Kobe more than 40 years ago, Sysmex is now undergoing a transformation. The Company is moving its operations to a new stage, in order tofulfill its social responsibilities and contribute to a comfortable and healthysociety, thereby enhancing its corporate value.

53
Sysmex Value

Sysmex Annual Report 2010

Sysmex Value

Creating New Value
In 2008, Sysmex celebrated the 40th anniversary of its founding. We created a new corporate logo tocommemorate this date and make a definitive statement about our fervent desire to move to the nextstage of healthcare.

A

54
Sysmex Valuelthough Sysmex got its start as a specialized manufac-

value and mind. “Mission” outlines the significance to society

turer in the field of hematology, the Company has sinceof the Company’s continued existence. “Value” elucidates

extended its operations into a broad range of fields spanningthe principles that we consider important and defines ourhemostasis, immunochemistry, urinalysis and clinical chem-

management stance, while “mind” expresses the attitudes thatistry and recently, into the life sciences. The environment

we expect every member of the Sysmex Group to uphold.

in which we operate has changed substantially in line with

In addition to putting the Sysmex Way into practicalthese shifts, and our stakeholders have become more global.

application, in 2008, we unveiled a completely redesigned

Accordingly, their needs and our responsibilities have growncorporate logo to symbolize the many ways in which themore sophisticated and diverse.

Company is evolving toward a new stage in its development.

To keep pace with these developments, we recognized the

Our new logo embodies our dedication to remaining at theneed to redefine a basic management policy that had served

leading edge of healthcare, the assurance that we will work

us well since the Company’s foundation. Our groupwide

toward ever higher levels of health and peace of mind, andcorporate philosophy, the “Sysmex Way,” went into effecta firm commitment to innovation in testing and diagnostics

in 2007. The Sysmex Way comprises three parts: mission,technology. Owing to its frontrunner status, Sysmex fosters ahost of knowledge and creates new technologies. We also aim
to contribute to society by raising patient quality of life (QOL)
and bringing peace of mind to people throughout the world.

About Our Logo
The mark combines two contrasting elements symbolizes the fusionand sublimation of two contrasting ideas. The shape reminds us of
the infinity symbol “∞” and illustrates the unlimited possibilities of
Sysmex. The ocean and mountain design evokes the evolution oflife as well as the landscape of Kobe, the birthplace of Sysmex.

Sysmex Annual Report 2010

The Sysmex Group is conducting a number of activities to entrench its new corporate philosophy, theSysmex Way. Through “VQ Sessions,” we conduct activities designed to make the Company attractive
to various stakeholders. As one aspect of these activities, we work to promote communications on a
global level to unleash Sysmex’s new potential.

In striving to make the Company attractive to a variety ofWay.” We receive some 3,700 responses from Group members

stakeholders, we believe it is important for each employee

worldwide. Associates asked and answered questions about

to understand the ideas behind our corporate philosophy,

these ideas, distilling them into well-considered suggestions.

consider these concepts carefully in light of their everyday

These ideas were then put into actions to be realized by the timeideas into practice. Sysmex considers the fiscal year ended
March 31, 2009, to have been a turning point in the creationof corporate value, when we made a qualitative shift.
One program that we introduced to encourage commu-

of the VQ Session in the fiscal year ended March 31, 2010.
Certain social contribution activities were conducted under
the theme “Bring a Smile to Children on Earth.” As one of these
activities, people from Sysmex headquarters visited a junior highnications on a global level and introduce activities that would

school in Kobe to teach a class. As specialists on the blood andcreate new value for stakeholders was the “VQ Session.” A VQ

health, they taught students about such subjects as “functions of

Session involves all employees Groupwide. True to the mean-

the blood” and “the importance of staying healthy.” The courses

ing behind the acronym—a quest for value—a VQ Session

then touched on advanced technologies. When describing one

provides the framework for employees to consider and debate

promising new technology, associates explained about ASTRIM,

actions that can be taken to make Sysmex attractive to

our analyzer that measures bloodstream hemoglobin without

stakeholders, and then to put theory into practice.

taking samples, and students were invited to measure the hemo-

In 2008, we invited associates to contribute their ideas for
putting into practice our corporate philosophy, the “Sysmex

globin levels of their own blood. Lecture feedback was extremely
positive.

VQ Session
VQ, short for “value quest,” epitomizes our search for Sysmexappropriate value that will put the Sysmex Way into action andlaunch us toward our next stage of operations.

Sysmex Annual Report 2010

Sysmex Value

activities and discuss their meaning, as they steadily put these55Sysmex Value

Socially Responsible Activities
We are committed to activities that ensure our attractiveness to stakeholders. As a healthcare
opspecialist, we aim for a healthy and prosperous society.
devel ?
uoyes
w do ourc
. Houman res
h

W

56

e believe that our corporate responsibility involves

that management’s responsibility is to nurture individual

delivering products that are consistent with the Sysmex

strengths and incorporate them into the overall organization.

Sysmex Valuebrand and conducting business activities that contribute to a

Sysmex will continue to cultivate a corporate culture where

healthy and prosperous society. To this end, Sysmex fosters

employees are fulfilled in their work, based on a sense ofa corporate culture where each employee can feel a sense of

mutual agreement and common understanding among all

fulfillment in their work and emphasizes excellent communica-

Group employees.

tions with all stakeholders as it conducts its corporate activities.

Developing Human Resources
Sysmex fosters a corporate culture where employees
can feel a sense of fulfillment in their work, based on
mutual agreement and common understanding.

As part of its efforts to develop a positive working
environment, Sysmex introduced flex-time systems to enable
employees to adjust their work hours for childcare and longterm nursing care responsibilities. In this way, the Company isworking to improve its systems in support of a better work-lifebalance. In April 2009, we opened Sysmex Kids’ Park, aninternal childcare facility where parents can go about their

Sysmex believes that recruiting, retaining and developing

work assured that their children are being nurtured in an

human resources is among the most fundamental of man-appropriate care-giving environment. In 2006, the Company

agement tasks. The Company fosters a fulfilling corporate

established a re-employment system for retirees aimed at

culture that draws out and maximizes the strengths ofindividuals who have passed retirement age but still want to

individual employees so that employees can make the mostwork and would like to continue to be engaged in fulfillingof their abilities and feel a sense of fulfillment in their work.

work at Sysmex. The objective is to provide a working environ-

Currently, around 50% of Sysmex employees are stationed atment that can utilize the expertise and experience of thesecompanies overseas. As it becomes more global, the Company

employees. To raise employee skill levels, the Company also

will attract an even greater range of personalities. Sysmex

runs companywide staff development programs, including

believes that diversity and globalization go hand in hand andtraining aimed at specific employee tiers and global training.

Evolve as an Attractive Company
Evolve into an attractive company by developing human resources and a culture to generate high value
Human resources (enhance individual skills)

System (respect diversity, rules)

GlobalManagement

Understanding

Transparency

Autonomy

Teamwork

Equal opportunity

Training

Foster a positive corporate climate, create original value and oﬀer trust and conﬁdence to stakeholders

Oﬀer job satisfaction and ideal working conditions

Sysmex Annual Report 2010

Ensure support from diverse stakeholders

Social Contributions

Sysmex contributes to the advancement of medical care andsupports local communities in a manner befitting a global
healthcare testing company.

Project, which is promoted by the city of Kobe. These funds
were used to open the Sysmex Asano Laboratory in January
2007. Under the direction of Professor Shigetaka Asano, aleading hematology expert, the laboratory aims to create new
diagnostic technologies for effective cell therapy.
Sysmex looks to make global contributions to healthcare.
We have opened the Sysmex African Service Center in

Since 1984, Sysmex has provided assistance for research

Cotonou, Benin, as a technical support base covering Western

into electronic measuring technology through the Nakatani

Africa. As well as acting as a local service center, the Sysmex

Foundation of Electronic Measuring Technology Advancement.

African Service Center works to improve skill levels in devel-

The foundation’s goal is to contribute to the development

oping countries through technology transfers to local techni-of Japan’s economy and society and to improve the quality

cians. The Company also supports improvements in medicalof life (QOL) of the Japanese people. The late Taro Nakatani,

device maintenance and management skills by providing

the Company’s founder and first president, established thetechnical assistance to the Japan International Cooperation

Nakatani Foundation using funds contributed by himself,

Agency (JICA), which runs programs to provide technical

Sysmex and others. So far, the foundation has provided sup-training for researchers from emerging markets.

port for 273 research projects.
Sysmex provides funds to the Kobe University School of

In December 2005, the Company established the Sysmex
Women’s Track & Field Team, welcoming Coach Nobuyuki

Medicine for an endowed course in laboratory medicine. The

Fujita, who has trained numerous athletes representing Japan,

purpose of the course is to contribute to the advancement ofand Athens Olympic Games gold medalist Mizuki Noguchi.

diagnosis and medical care by developing evaluation methods

The team supports the training of young athletes who aim tofor new clinical testing in advanced medical fields. Sysmex

become world-class competitors.

Donating Hematology Analyzers to Assist the Fight against HIV/AIDS
Preventing the spread of HIV/AIDS is mentioned in the Millennium Development Goals* as one of the most urgent issues that must be taken on
by the whole world. However, the numbers of both HIV carriers and patients are on the rise. As of 2007, the number of HIV carriers reached 33.2
million worldwide. The situation is particularly serious in southern Africa, where more than 60% of the world’s HIV carriers are concentrated and
AIDS is the number one cause of death.
To help prevent the spread of HIV/AIDS, Sysmex began its drive to market and donate hematology analyzers and reagents to medical institutions in developing countries in Africa and other regions where healthcare infrastructures have yet to be developed, so that they can monitor thevirus in HIV carriers.
For example, Sysmex offers an HIV testing method that uses the pocH-100i, a compact, easy-to-operate hematology analyzer, so that clinics inlocal cities and small hospitals can also perform the test. In addition to marketing the product, we donate it via NPOs. So far, hospitals in six Africancountries, including South Africa, Botswana and Benin, have received them. Additionally,
to ensure that such testing instruments can be used continually after installation, we offer
the necessary reagents, maintenance and other services free of charge for several years. In
cooperation with the Japan International Cooperation Agency (JICA), we extended these
donations to Senegal in 2008.
* The Millennium Development Goals: In accordance with the Millennium Declaration, which was
adopted by leaders from 189 nations at the U.N. Millennium Summit of September 2000, eight
goals that the global community urgently needs to address in the 21st century were decided
upon, including “eradicating extreme poverty and hunger,” “combating HIV/AIDS, malaria andother diseases,” “reducing childhood mortality” and “improving maternal health.”

Sysmex Annual Report 201057
Sysmex Value

Sysmex is involved in healthcare, with its headquarters in Kobe but conducting operations andmaking social contributions on a global scale.

also participates in the Kobe Medical Industry Development

Sysmex Value

Environmental Conservationre youtal
r
a
t
a
ties?
n
. Whvironmeion activi
en servat
and waste reduction, and effective use of water resources.
con
These targets call for the Group to conserve energy andOur activities aim to fulfill social responsibilities for environmental conservation and act inharmony with the global environment.
Sysmex considers its social responsibility toward environ-resources and reduce waste by promoting eco-friendly service
models (such as SNCS,* its proprietary network-based support
service), developing eco-friendly products and raising theefficiency of its business activities.
Through its conservation efforts, Sysmex aims to enhancemental conservation a management priority. In line with the58
Sysmex Value

Sysmex environmental policy, Sysmex aims to protect theits overall corporate value. In addition to striving to meetenvironment in the course of product development,

its corporate responsibilities and achieve harmony with the

production and customer support and conducts a variety of

global environment, these initiatives are designed to reinforce

other activities at its operating sites to reduce its environmen-

the value of the Sysmex brand.

tal impact and achieve harmony with the global environment.

* Sysmex Network Communication Systems (SNCS): Service that con-Sysmex has formulated long-term environmental objec-

nects the customer environment (product) with the customer support
center network via SNCS server, automatically analyzes quality control
data and operating conditions and provides support over the network.

tives in recognition of the important responsibility it faces toconserve the environment in light of increasingly severe environmental issues such as global warming, resource depletionand disruption of ecosystems. The Sysmex Group has always
been a strong believer in corporate efforts to preserve theInvestor Relations Activities

Ramping up its environmental conservation activities even

We strive to sustain growth and increase corporate value. Our investor relations activities aim
to proactively disclose information to enhance
management soundness and transparency,
communicate our corporate directions to shareholders and promote a management style that isboth steady and innovative.

further, in 2010, Sysmex established long-term environmental

Sysmex recognizes investor relations as an important facet ofobjectives to be achieved by fiscal 2020, under the themes ofcorporate management and is active in its investor relations

global warming countermeasures, effective use of resources

efforts, in line with its investor relations policy. The investor

local environment and has been proactive in its conservation
efforts. As part of this ongoing commitment, in May 2009, theCompany reviewed the existing Environmental Policy with aneye toward reducing the environmental impact of each stageof its product life cycle, from product design, production andsales to use and disposal.

Long-Term Environmental Objectives (Excerpted)
Long-Term Environmental Objectives

Item*1(Year Ending March 31, 2021)

Reduce the power consumption of diagnostic instruments
Global warming by 25% (in comparison with conventional models)countermeasures Reduce greenhouse gas emissions at business offices by
50% (per unit of consolidated sales*2)
Effective use of Reduce materials for containers and packaging forresources and products and packing for transportation by 15%
waste reduction (per unit of Sysmex Corporation’s parent-only sales)
Effective use of Reduce water usage at business offices by 30%
water resources (per unit of consolidated sales)
OthersPromote life cycle assessment*3

Main Measures

Implement eco-friendly designing (save power at the time ofoperation and standby, and achieve miniaturization)
Upgrade to high-efficiency equipment (air conditioners andlighting) at all offices
Reduce the amount of usage of packing materials byintroducing simplified packing, and introducing designing forminiaturization
Improve the efficiency of transportation
Reduce water consumption by installing high-efficiency
equipment (water purifiers, air conditioners) and improving
production processes
Establish life cycle assessment methods
Implement and operate life cycle assessment*1 Divisions in charge differ by item.
*2 Unit of sales: Value derived by dividing the total target reduction volume by net sales*3 Life cycle assessment: Method of evaluating environmental impact by measuring resource consumption and waste during all product-related processes, including
production, use and disposal

Sysmex Annual Report 2010

relations department is located within the corporate businessCompany’s website was designated as an Excellent Corporate

planning division, which reports directly to the president. The

Website according to the survey ranking listed company

department is charged with disclosing appropriate information

websites run by Nikko Investor Relations.

in a timely manner, communicating directly with shareholders

To raise the level of the Company’s investor relations

and other investors, and promptly providing feedback toactivities further, in addition to proactive external information

management regarding the Company’s external assessment.

disclosure Sysmex will concentrate on responding to feedback

One focus of the Company’s communications withshareholders and other investors is to explain a complex

to ensure the results of its investor relations activities arereflected in its capital policies and management.
59business in a straightforward manner. In addition to briefing
investor relations department provides technical briefings onareas such as the life sciences and hosts tours to research andmanufacturing facilities. Overseas, the department holds investor relations meetings, attends conferences held by securities

Position of Sysmex IR Activities
Externallyȉ5DLVHFRUSRUDWHYDOXH ZKLFKHTXDOVPDUNHW
capitalization)

A management strategy tool for reinforcing themanagement base by ensuring appropriate shareprice formation

firms and seeks opportunities to foster an understanding of
the Company’s strengths by providing individual explana-'HWHUPLQHFDSLWDOPDUNHWUHVSRQVHVDQGUHTXHVWVtions at industry exhibitions or tours of local factories. For
individual investors and other shareholders, the department
prepares corporate brochures and shareholder reports, as well
as extensive web content, all with the aim of introducing theCompany’s business in an easily understandable way.
The Company has earned the Japan Investor Relations'LVVHPLQDWHTXDOLW\
information in atimely manner

6ZLIWO\UHȾHFW
PDQDJHPHQWDQG
IR activities

Association’s Award for Excellence in Corporate IR. Sysmex
has also received the Award for Excellence in Internet Investor
Relations, sponsored by Daiwa Investor Relations, and theȉ6XVWDLQDEOHJURZWKDQG
SURȽWDELOLW\LPSURYHPHQWVȉ$SSURSULDWHLQYHVWPHQW IRUIXWXUHJURZWKInternally
A management innovation tool that works byfeeding back external evaluations and requests

Investor Relations Policy
1. IR Goals and Basic Policy
The basic policy of Sysmex in IR activities is to disclose corporate information on performance, financial position, forecasts of the future and management
strategies in a fair, prompt, accurate and easy-to-understand manner, to ensure accountability to shareholders and other investors and gain proper
understanding about management and business activities.

2. Basis of Information Disclosure
Sysmex discloses corporate information in accordance with applicable laws and regulations concerning securities trading and the Rules on Timely
Disclosure of Corporate Information by the Issuer of Listed Securities and the Like (“Timely Disclosure Rules”) established by the Stock Exchange. The
Company also seeks to disclose corporate information not required by the Timely Disclosure Rules fairly and promptly, to help shareholders and otherinvestors better understand the Company.

3. Methods of Information Disclosure
Sysmex releases corporate information required under the Timely Disclosure Rules via TD-net, operated by the Tokyo Stock Exchange. The Company
posts information through TD-net on its website as promptly as possible. The Company also provides corporate information not subject to the Timely
Disclosure Rules on its website.

4. IR Quiet Period
Sysmex observes a quiet period from the day after the closing date of each quarter until the release of earnings statements. During this period, theCompany will refrain from replying to questions or commenting on earnings projections. However, in the event that results are expected to deviatesignificantly from the projections during the quiet period, the Company will release appropriate information.

Sysmex Annual Report 2010

Sysmex Value

analysts and institutional investors about operating results, theSysmex Value

ourline yolving
t
u
o
ase
inv
ty.
. Ple itiatives al properin llectu
inteIntellectual Property Activities

Creating an environment that encourages intellectual creativity and ensuring a competitive edge tosupport stable growthI60n line with its expanding business domains and global

As a research-driven company, Sysmex is reinforcing

development, Sysmex has established basic principles to

its intellectual property management and supporting theSysmex Value

share with employees its fundamental thoughts on intel-

knowledge-building efforts of its employees. We believe that

lectual property activities and do its utmost to strengthen thepersevering in these areas will help us sustain our global

Group through these activities. The Company’s basic policy

competitiveness.

on specific intellectual property activities is to liaise with R&D
divisions, uncover intellectual property opportunities andsurvey the intellectual property rights of third parties. EachPatent Applications
g

Japan

g

Overseas

250

year, we formulate global filing strategies, on which we baseour patent filings in the United States, Europe, China andother parts of the world. In addition to an expanded intel-

200
150

lectual property liaison function (which supports everythingfrom idea generation to conversion to intellectual property

100

and the utilization of these assets), Sysmex works aggressively
to foster an internal understanding of intellectual assets as
it aims to convert R&D successes quickly into valuable intellectual property.

5002001 2002 2003 2004 2005 2006 2007 2008 2009 2010
(Years ended March 31)

Sysmex holds approximately 950 patents worldwide,
concentrated in Japan, the United States and Europe. We are

Patents Held, by Region

striving to ensure worldwide flexibility in R&D and operational

Asia Paciﬁc 4%development by also acquiring patent rights in the rapidly

China 4%developing China and Asia Pacific regions.

Japan 34%

41 38

In recent years, counterfeit Sysmex reagents havebeen discovered in China, Indonesia, Malaysia and othercountries. As we cannot guarantee the diagnostic reliabilityof these knock-offs, we have cautioned consumers by placing

329

954
360

As of March 31, 2010

advertisements in local newspapers. We have also mounted
extensive efforts to elicit the cooperation of these countries’
governments in addressing the problem.

186
Europe 39%

Americas 19%

Basic Concept for Intellectual Property Activities
Basic Principles of Intellectual Property Activities
The goal of Sysmex’s intellectual property activities is to secure flexibility in R&D and business development and contribute to the management of
the Group’s business.

Basic Policy on Intellectual Property
Sysmex ensures global competitive advantage and sustains stable growth by maintaining an environment that supports employee intellectual
creation activities, by actively securing and utilizing rights to valuable intellectual property created in the activities of all Group companies, and byrespecting the intellectual property of third parties.

Sysmex Annual Report 2010

Financial Section

61
Financial Section

Contents
11-Year Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . 62
Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . 64
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . 72
Consolidated Statements of Changes in Equity . . . . . . . . . . . . 73
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . 74
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 75
Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Sysmex Annual Report 2010

11-Year Consolidated Financial Data

For the years ended March 31,

2000

2001

2002

2003

¥ 37,244¥ 38,817¥ 47,532¥ 57,253

Operating income

3,618

2,975

3,417

5,299

Net income

1,838

1,363

1,308

3,125

Net increase (decrease) in cash and cash equivalents

5,818(2,562)

1,842

1,071

Cash and cash equivalents, end of year

9,901

7,338

9,181

10,253

Capital expenditure

3,018

2,098

2,455

2,317

Depreciation

2,316

2,541

2,810

3,107

R&D expenditure

3,155

3,527

4,130

4,969

Total assets

49,96755,21966,502

66,449

Shareholders’ equity

33,596

34,10335,57743,325Interest-bearing liabilities

5,810

11,02011,606

10,893

Shareholders’ equity (yen)¥ 1,606.8¥ 1,631.0¥ 1,701.5¥ 1,879.5

Net income (basic) (yen)

87.9

65.2

62.6

132.2

Net income (diluted) (yen)

87.7

60.8

58.4

121.8

Cash dividends applicable to the year (yen)

22.0

22.0

22.0

25.0

Dividend ratio (%)

25.0

33.7

35.2

18.9

Shareholders’ equity ratio (%)

67.2

61.8

53.5

65.2

Return on equity (ROE) (%)

5.6

4.0

3.8

7.9

Return on assets (ROA) (%)

4.0

2.6

2.1

4.7

Price-earnings ratio (times)

36.7

42.6

35.6

15.9

Price-book value ratio (times)

2.0

1.7

1.3

1.1

1,809

1,985

2,530

2,639

For the year:
Net sales

62
Financial Section

At year-end:

Per share data:*Two-for-one stock split in Nov. 2005

Other data:

Number of employees*Including part-time employees

Notes:
1. U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥93 = U.S. $1, the approximate rate of exchange on March 31, 2010.
2. Per share data: Certain retroactive adjustments of previously reported per share information have been made to conform with the current method from the year ended
March 31, 2003.
3. ROA = Net Income/Total Assets (Yearly Average)×100

Sysmex Annual Report 2010

(Millions of yen)(Thousands of
U.S. dollars)

2005

2006

2007

2008

2009

2010

2010

¥ 65,970¥ 76,935¥ 87,888¥ 101,041¥ 110,724¥ 111,843¥ 116,175$ 1,249,194

6,615

9,104

10,724

12,71515,033

15,134

15,709168,914

3,157

5,731

7,423

9,008

9,132

8,014

9,765

105,000

3,465(3,261)

(499)

3,299

(3,044)

(269)

4,403

47,344

13,71810,4589,416

12,715

9,679

9,410

13,813

148,527

2,451

2,729

5,638

4,546

8,244

9,340

4,540

48,817

3,203

3,296

3,592

3,959

3,924

7,189

7,034

75,634

5,549

6,509

8,184

9,026

9,221

10,771

11,238120,839

71,983

77,66087,447

101,225

109,027

118,522

120,702

1,297,871

51,09656,14962,647

71,34478,75379,18386,358928,581

4,175

657

695

669

1,081

10,344

2,565

27,581(yen)(U.S. dollars)¥ 2,042.7¥ 2,244.9¥ 1,251.8¥ 1,411.0¥ 1,541.0¥ 1,548.2¥ 1,684.9$ 18,117.2

132.9

225.1

145.5*

179.6

178.9

156.7

190.8

2.05

123.1

224.0

143.8*

178.0

178.3

156.5

190.5

2.05

30.0

40.0

36.0*

36.0

48.0

50.0

56.0

0.60

22.6

17 .8

17.9*

20.0

26.8

31.9

29.4

71.0

72.3

71.6

70.5

72.2

66.8

71.5

6.7

10.7

12.5

13.4

12.2

10.1

11.8

4.6

7.7

9.0

9.5

8.7

7.0

8.2

20.3

27.2

35.3

23.8

20.1

20.0

28.7

1.3

2.7

4.1

3.0

2.3

2.0

3.3

2,907

3,115

3,334

3,580

3,916

4,148

4,587

Sysmex Annual Report 2010

63
Financial Section

2004

Management’s Discussion and Analysis

64

Financial Policy

construct a flexible and more robust financial base, paying

Sysmex regards increasing its market capitalization to maxi-

attention to expanding business scale while considering themize corporate value as an important management objectivebalance between sales and income, and assets, liabilities andand pays careful attention to stable cash flow generation. We

equity. Specifically, the Company regards net sales, operating

consider it important to share this goal with all stakeholders,income, operating margin, return on equity (ROE) and freeincluding shareholders, customers, business partners, local

cash flow (FCF) as important management indicators andcommunities and employees, while sustaining medium- toaims to maintain a balance between scale and efficiency bylong-term growth. To that end, Sysmex has in place measures

ensuring the optimal combination of sales and income and of

to communicate with stakeholders on the Company’s current

assets, liabilities and equity.

Financial Section

situation and the direction it should pursue. These measures
include enhancing timely disclosure, the website, business

Overview

reports, financial data, periodic briefings on business results,

During the fiscal year ended March 31, 2010, although job

visits to institutional investors and briefings for individual

opportunities remained scarce in Japan, economic stimulus

investors.

measures introduced in Japan and overseas during the past

Sustaining medium- to long-term growth requires a levelyear appear to have been successful in averting an economicof R&D expenditure sufficient to prevail in global competi-

crisis. Some signs of improved corporate performance weretion. We must consistently create new technologies andapparent, largely thanks to a recovery in overseas demand

products and stimulate the growth of our critical mass tobrought about by economic growth in China and other emerg-

absorb increases in selling, general and administrative (SG&A)

ing markets.

expenses. In recent years, our sales growth in overseas

In the U.S. and European economies, labor markets

markets has been striking and succeeded in sustaining steadyremained lackluster, but business sentiments began improving

growth. Sysmex is aggressively making forward-looking

as the economic stimulus filtered down to consumer spending

investments not only in the hematology and other diagnostic

and exports picked up. The Chinese economy is already on asegments, the current key business domain, but also in new

recovery track, owing to economic stimulus measures such as

forms of medical testing in the life science field.

public works, as well as monetary easing, providing a driving

Sysmex pays attention not only to business scale, but

force for the global economy.

also to asset and capital efficiency and liability and capital

The global outbreak of a new strain of influenza during thesoundness. The Company holds an A (single A flat) issuer

first half of the year had major implications for the healthcare

rating from Rating & Investment Information, Inc. (R&I), andindustry. In Japan, the management of medical institutions

reviews and renews this rating each year. Having a high rating

continued to present difficulties, such as deteriorating

reduces the cost of raising funds in the capital markets andfinancial conditions, hospital mergers and the combination

helps build trust among our shareholders and with the worldor closure of some of their departments. On the positiveat large. To enhance its rating in upcoming years, Sysmex willside, however, in 2010 medical remuneration was revised

Rating Institution

RatingRating & Investment
Information Inc. (R&I)

A

Rating Information

Sysmex website

Sysmex Annual Report 2010

Financial data (English/Japanese)posted in the “IR Library” on the Sysmex
website(As of May 31, 2010)
Rating symbols and definitions:Rating A; The credit quality is high. It is also
accompanied by some excellent factors.

upward for the first time in 10 years, and certain changes

assets), improved from 7.0% to 8.2%, but the asset turnoverin the conventional government policy of seeking to curtail

ratio slipped to 0.97, from 0.98 in the previous term. Return

medical expenditure grew evident, as the new government’s

on equity, meanwhile, grew from 10.1% to 11.8%.

plans to reconstruct community medicine and the systems forproviding various healthcare services, including emergency
medical services, obstetrics and pediatrics departments, began* POCT: Point of care testing. Testing that may be performed rapidly,
easily and accurately anywhere, such as at the patient’s bedside orpractitioners’ offices, and in emergency situations.

materializing. In advanced countries in Europe and North
America, efforts are underway to reduce healthcare costs andreform medical systems. The United States government has

Net Sales by Destination*
Looking at net sales by destination, in Japan the market environment remained difficult. However, our ongoing efforts toof people without medical insurance. In China, medical systempromote solutions led to higher reagent sales as the number

reform that is underway aims to build infrastructures thatof installations of hematology and other analyzers increased.

provide uniform medical services in cities and farming villages

Furthermore, due to the spread of the new influenza virus,

throughout the country.

sales of our influenza detection kit, POCTEM, increased. As

Under these circumstances, in Japan we expanded thea result, we posted net sales of ¥36,821 million, up 2.8% fromrange of our diagnostic reagents for HISCL-2000i, our fully

the previous fiscal year. In overseas markets, we made steadyautomated immunoassay analyzer, thereby reinforcing

progress in the development of direct sales and support

our business strength in the immunochemistry market. In

structures and the provision of solutions that meet clients’

anticipation of the rapid growth in demand for influenza

needs. As a result, sales moved steadily upward on a local

detection kits following the seasonal outbreak, we ramped

currency basis due to increased sales of diagnostic reagents.

up our production capacity by automating production lines.

Consequently, the Group’s overseas sales were ¥79,354

Overseas, we acquired two local sales subsidiaries responsible

million, up 4.4% from the preceding fiscal year. The overseas

for businesses in the Benelux area (Belgium, the Netherlands

sales ratio was 68.3%, up 0.3 percentage point from the sameand Luxemburg), and converted the companies to subsidiar-period of the previous fiscal year.

ies. These companies will enable us to further strengthen

Breaking down overseas net sales by destination, sales inour sales activities through the direct provision of solutions

the Americas were up 0.9%, to ¥23,622 million; sales in Europe

to various challenges confronting medical institutions. In

dropped 2.9%, to ¥36,495 million; sales in China were up 17.1%,

Germany, the single largest European market, we converted

to ¥11,843 million; and sales in the Asia-Pacific region were up

the HITADO Group to a subsidiary. Boasting a broad

5.1%, to ¥7,394 million.

customer base that covers clinics and specialized physicians
as well as large hospitals, HITADO focuses on products for
rapid tests such as glucose monitoring, all being conducted“near-patient.” Accordingly, we commenced new initiatives* Net sales by destination is defined as the sales amount recorded byGroup companies to customers in a particular region. However, net
sales by geographical region refers to the sales amount made by aGroup company in a particular location.

in the point-of-care testing (POCT*) market through theirsales system and network by making use of telemarketingand other approaches. We also established a new subsidiary,
Sysmex Espana S.L., to reinforce the sales structure of our
expanding life science business in the Spanish market, which
is moving forward in the intraoperative diagnosis of sentinel
lymph node breast cancer metastasis.

Net Sales by Destination
Japan
Overseas
Americas
EuropeChina
Asia Paciﬁc

6.4%
10.2%
0.2%

During the fiscal year ended March 31, 2010, consolidated
net sales increased 3.9%, to ¥116,175 million. Operating income
grew 3.8%, to ¥15,709 million, and net income amounted to

OVERSEASJAPAN

Net sales

68.3%¥79,354 million

31.7%¥116,175 million¥36,821 million¥9,765 million, a 21.8% jump. The equity ratio rose to 71.5%,
from 66.8% in the preceding fiscal year, owing to an increase
in total equity. Return on assets, or ROA (net income to total

31.4%
%
20.3%

Sysmex Annual Report 2010

Financial Section

passed a medical reform bill that aims to reduce the number

65

Management’s Discussion and Analysis

Net Sales by Geographical Region

decrease in sales in Latin America as a result of economicJapanrecession and the effects of yen appreciation, sales in the

In the hematology field, our main business domain, sales

Americas grew 0.3%, to ¥23,444 million. Owing to cost reduc-of diagnostic reagents increased, and sales of our influenza

tions, operating income increased 55.1%, to ¥2,775 million.

detection kit grew, owing to the spread of the new influenza

66

virus. We therefore posted net sales of ¥38,595 million, up

Europe2.7% from the preceding fiscal year. Operating income, how-

Our shift to a direct sales and support structure through theever, fell 37.2%, to ¥2,932 million, as yen appreciation caused aacquisition of sales subsidiaries helped boost sales in the

decline in export sales to Group companies.

Benelux area, and we achieved sales increases in France, theFinancial Section

United Kingdom and Others. Accordingly, the hematology

Americasbusiness fared particularly well on a local currency basis.

In the United States, sales grew on a local currency basis as

Despite the negative effect of yen appreciation on earnings,

the result of our focus on expanding direct sales territories

we posted net sales for the region of ¥36,446 million, up 3.0%

and support networks, as well as our success in promoting

from the previous fiscal year. Bolstered by higher earnings,

solutions that meet customer needs. As a result, despite theoperating income grew 3.3%, to ¥5,304 million.

Net Sales by Geographical Region
Japan
Americas
EuropeChina
Asia Pacific

Sales and Operating Income
by Geographical Region

Sales and Operating Income
by Geographical Region

Japan

AmericasInterarea transfer: exports to Group aﬃliates
Sales to customers: including Korea, Taiwan and Mongolia
Operating income(¥ million)
75,00064,928 66,880

5.0%
10.2%

69,09015,000(¥ million)
25,00012,00020,0009,000

15,62015,000Net sales
Operating income
5,000

23,368 23,444

66,452
20,84559,38260,0004,000

19,15825,532 29,327 31,501 27,857

33.2%
33

22,62245,0007,870

Net Sales

4,672

3,000
2,775

7,432

¥116,175 million

6,484

30,000

6,000

10,000

2,000

1,789

2,932
38,59536,760 39,396 37,533 37,589
15,000

31.4
.4%

3,000

991

5,000

1,000

593
215

20.2%

0

2006 2007 2008 2009 2010

00

2006 2007 2008 2009 2010

(Years ended March 31)(Years ended March 31)

Sales and Operating Income
by Geographical Region

Sales and Operating Income
by Geographical Region

Sales and Operating Income
by Geographical Region

EuropeChina

Asia Paciﬁc

Net sales
Operating income(¥ million)
39,17540,00010,000Net sales
Operating income(¥ million)
12,50011,84335,387 36,446
31,58532,000

8,000

5,135

6,000
5,304

7,500

4,000

5,000

5,388

4,000

1,200

4,800
4,054

8,127

25,36924,000Net sales
Operating income
5,847 1,500(¥ million)
6,000
5,024

10,111

10,000

5,000

2,752

6,404 6,848

3,735

3,000

3,600

2,000

2,400

1,000

1,200

900

4,621

16,000

3,547

1,309

2,000

2,500
612

0

2006 2007 2008 2009 2010
(Years ended March 31)

0

0

781

824

2006 2007 2008 2009 2010
(Years ended March 31)

547
360

0

0

600

333

300

2006 2007 2008 2009 2010

(Years ended March 31)(Excluding Korea, Taiwan and Mongolia)

Sysmex Annual Report 2010

900

647

3,014

8,000

0

0

ChinaOverall, consolidated net sales expanded 3.9%, to ¥116,175 million.

Despite the negative effects of yen appreciation, in China

Yen appreciation continued throughout the fiscal year,

we recorded net sales of ¥11,843 million, up 17.1% from thewith the average exchange rate against the U.S. dollar risingprevious fiscal year, thanks to a substantial increase in sales of¥7.67, from ¥100.52 to ¥92.85. This shift had a ¥1,819 million

high-end hematology analyzers and diagnostic reagents. We

negative impact on sales. Likewise, the yen appreciated ¥12.35

achieved an increase in operating income to ¥2,752 million (upagainst the euro, with the average for the year moving from110.3% compared with the preceding term) as a result of the¥143.50 against the euro to ¥131.15. This yen appreciation insales increase, cost reductions and lower SG&A expenses.

comparison to the euro had a ¥2,686 million negative effecton sales. The appreciation of the yen against other currencies
had a negative impact on sales of ¥7,071 million.

Sales were strong in Southeast Asia and other markets. On
a local currency basis, growth in sales of diagnostic reagents

Cost of Sales and SG&A Expenses

was particularly robust, and despite the negative effects ofCost of sales increased 4.0%, to 42,480 million, causing the

yen appreciation sales in this region grew 8.5%, to ¥5,847

cost of sales ratio to edge up 0.1 percentage point, to 36.6%.
SG&A expenses rose 3.8%, to ¥57,986 million, stemming

million. The combination of cost reductions and sales growthfrom the Company’s efforts to reinforce its sales structure inraised operating income 39.1%, to ¥900 million.

Europe. These activities included the conversion of two local

Profits and Losses

distributors to subsidiaries. Accordingly, the ratio of SG&A

Net Sales

expenses to net sales decreased 0.1 percentage point, to 49.9%.

In Japan, the market environment remained difficult during
the year. However, our ongoing efforts to promote solutions

R&D Expenditure

led to higher reagent sales as the number of installations

To enhance its product portfolio, during the year Sysmexof hematology and other analyzers increased. In overseas

developed new products and aggressively pursued R&D in themarkets, on the other hand, we made steady progress in thelife sciences, a field targeted to future growth. Such moves

development of direct sales and support structures and thepushed up R&D expenditure 4.3%, to ¥11,238 million. R&D

provision of solutions that meet clients’ needs. As a result,

expenditure as a percentage of net sales rose 0.1 percentage

sales moved steadily upward in all overseas markets on a local

point, to 9.7%.

currency basis due to increased sales of diagnostic reagents.

Net Sales

SG&A Expenses
SG&A Ratio(¥ million)
125,000(¥ million / %)60,000110,724 111,843

116,175

101,041

100,000

SG&A expenses
SG&A ratio
55,871

57,986 100(¥ million / %)12,50050,29448,00087,88844,82880

10,00060

7,500

40,42536,00075,000R&D Expenditure
R&D Expenditure as a Percentage of Net Sales
R&D expenditure
R&D expenditure as a percentage of net sales
15
11,238
10,771

9,026
8,184
9.3

12

9,221
9.6

8.9

9.7

9
8.3

50,00024,00025,00012,00002006 2007 2008 2009 2010
(Years ended March 31)

0

46.0

44.4

45.4

50.0

49.9

2006 2007 2008 2009 2010
(Years ended March 31)

40

5,000

6

20

2,500

3

0

0

2006 2007 2008 2009 20100(Years ended March 31)

Sysmex Annual Report 2010

Financial Section

Asia Pacific67Management’s Discussion and Analysis

68

Income¥56 per share, which includes an interim dividend of ¥25. As a

Bolstered by higher sales, operating income increased 3.8% year

result, the consolidated payout ratio for the year under review

on year, to ¥15,709 million, and the operating margin remained

was 29.4%, up for the eighth consecutive fiscal year.

essentially unchanged, at 13.5%. The foreign exchange situation,

Going forward, Sysmex will continue to effectively invest

meanwhile, had a ¥4,176 million negative impact on operating

its internal reserves in the implementation of strongly com-income, compared with the preceding fiscal year.

petitive product development and global business strategies,

Net income expanded 21.8% from the preceding term, toaiming to respond to anticipated changes in the business¥9,765 million, after taking into account a ¥376 million write-

environment. We will retain this commitment to continue

down of marketable and investment securities and a 29.1%

meeting our shareholders’ expectations.

Financial Section

increase in total income taxes, to ¥5,558 million.

Liquidity and Sources of Capital

Dividend Policy

Fund Procurement and Liquidity Management

As our earning power increases, we aim to maintain a proper

The Company raises working capital as necessary throughbalance between internal reserves for R&D and capital

short-term bank loans and other means. Consolidated

expenditure, which are designed to sustain steady highsubsidiaries obtain bank loans as necessary to secure working

growth, and returns to our shareholders. In terms of returns

capital, but in October 2003, the Company introduced a cash

to shareholders, we intend to provide a stable dividend on a

management system to increase efficiency by unifying financ-continuous basis and aim for a consolidated payout under ouring and capital management at affiliates in Japan.
For long-term capital requirements such as capital invest-

basic policy of sharing the successes of our operations in line

ment, the Company decides the funding method after taking

with business performance.
As a basic policy, Sysmex pays twice-yearly dividends on

into account the investment recovery period and risk. Duringretained earnings, an interim dividend and a year-end divi-

the year, the Company financed capital expenditure and R&D

dend. The year-end dividend is decided upon approval of theactivities primarily from cash provided by operating activities.

annual shareholders’ meeting, and the interim dividend upon
approval by the Board of Directors meeting. In accordance

Assets, Liabilities and Equity

with this policy and in light of business performance during

As of March 31, 2010, total assets amounted to ¥120,702

the year under review, we announced dividends for the year of

million, up ¥2,180 million from the end of the previous fiscal

Cash Dividends Applicable to the Year
Dividend Ratio
Net Income

Operating Income(¥ million)
10,000(¥ million)
18,00015,033 15,134

15,00015,7098,000
12,71512,00010,724

9,765
9,008

9,132
8,014

Figures for 2006 are adjusted for a stock split
conducted on November 18, 2005
Cash dividends applicable to the Year
Dividend ratio(¥ / %)
50
60
56
48*2

48

7,423

6,000

36

36*1

50

40
31.9

36

30
29.4

9,000

26.8

4,000

24

6,000
2,000

3,000

0

20.0

20

17.9

2006 20072008 2009(Years ended March 31)

2010

0

10

12

2006 20072008 2009(Years ended March 31)

2010

0

2006 2007 2008 2009 20100(Years ended March 31)*1: Two-for-one stock split in Nov. 2005
*2: Including special dividends of ¥8 commemorating
the 40th anniversary of the Company’s founding.

Sysmex Annual Report 2010

year. Major factors included a ¥4,403 million rise in cash andCash Flows from Operating Activities

cash equivalents and a ¥1,624 decrease in trade notes andNet cash provided by operating activities was ¥21,230

accounts receivable.

million, up ¥8,036 million. The major source of cash

Meanwhile, total liabilities were down ¥5,105 million, towas ¥15,355 million in income before income taxes and¥33,566 million. The main contributor to this decline was aminority interests, which was ¥3,008 million higher than

¥6,083 million reduction in short-term bank loans.

during the preceding fiscal year. The Group posted a

Total equity came to ¥87,136 million at year-end, up¥2,686 million decrease in notes and accounts receivable,¥7,285 million. The principal reason for this rise was ancompared with a ¥2,335 million increase during the previ-¥7,156 million increase in retained earnings. The equity ratio

ous fiscal year.

69

Cash Flows from Investing Activities

from a year earlier.

Net cash used in investing activities came to ¥6,603 million,

Capital Expenditure and Depreciation¥6,942 million less than during the preceding year. The main

Capital expenditure (investment in property, plant anduse of cash was purchases of property, plant and equipment,

equipment, including construction in progress) was down

which used ¥4,461 million, ¥4,932 million less than in the

51.4% year on year, to ¥4,540 million. The main reason for theprevious year.

decrease was the absence during the year under review of theprevious term’s ¥5,045 million expenditure for the construc-

Cash Flows from Financing Activities

tion of Technopark, Sysmex’s new R&D facility.

Net cash used in financing activities amounted to ¥10,091

Depreciation and amortization decreased 2.2%, to ¥7,034

million, compared with ¥723 million provided by these activi-

million.

ties the previous year. The main use of cash was the net
decrease in short-term bank loans of ¥6,142 million, whereas

Cash Flowsa net increase in these loans provided ¥5,871 million in the

As of March 31, 2010, cash and cash equivalents amounted

preceding term.

to ¥13,813 million, up ¥4,403 million from a year earlier. Cashflows from various activities are described in more detailbelow.

Total Assets
ROA

Total assets
ROA(¥ million)
150,000

Capital Expenditure
Depreciation

Total Equity
Equity Ratio
20

Total equity
Equity ratio(¥ million / %)100,000

Capital expenditure
Depreciation(¥ million)
100

10,00080

8,000

10,0009,340

87,136
118,522 120,702

120,000

16

109,02780,000101,255

90,00060,0009.0

72,396

62,64787,447

12

9.5

8.7

8.2

8,244

79,117 79,851
71.6

60,000

70.5

72.2

8,000
7,189

71.5
66.8

60

7,034

6,000 5,638

8

40,000

40

4,000

4

20,000

20

2,000

0

0

0

0

6,000

4,546
3,959
3,592

4,540
3,924

4,000

7.0

30,00002006 2007 2008 2009 2010
(March 31)

2006 2007 2008 2009 2010
(March 31)

2,0002006 2007 2008 2009 20100

(March 31)

Sysmex Annual Report 2010

Financial Section

as of March 31, 2010, was 71.5%, up 4.7 percentage points

Consolidated Financial Statements

Consolidated Balance Sheets
Sysmex Corporation and Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen
March 31, 2010 and 200970
Financial Section

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 12)
Short-term investments (Note 3)
Receivables (Note 12):Trade notes
Trade accounts
Associated company
Other
Allowance for doubtful accounts
Investments in lease (Notes 11 and 12)
Inventories (Note 4)
Deferred tax assets (Note 10)Prepaid expenses and other current assets
Total current assets

2010

2010

9,410
153

$ 148,527
1,688

3,048
27,245
218
278
(384)
1,254
18,7774,657
1,807
70,8702,960
28,957
186
183
(531)
622
18,342
4,601
2,739
67,622

32,774292,957
2,344
2,989(4,129)13,484201,903
50,076
19,430762,043

PROPERTY, PLANT AND EQUIPMENT:Land
Buildings and structures
Machinery and equipment
Furniture and fixtures
Lease assets
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

7,898
25,595
6,094
22,7696,372
274
69,002(32,988)
36,014

7,896
25,508
6,043
18,4127,570
279
65,707(29,094)
36,61384,925275,215
65,527
244,828
68,516
2,946
741,957(354,710)
387,247

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 3 and 12)
Investment in associated company
Goodwill
SoftwareDeposits
Investment in real estate (Note 5)
Deferred tax assets (Note 10)
Other assets
Total investments and other assets
TOTAL

3,151
198
1,742
4,237
1,126
2,103
115
1,146
13,818¥ 120,702

2,998
258
1,098
3,928
1,122
2,117
220
2,546
14,287¥ 118,522

33,882
2,129
18,73145,55912,10822,613
1,237
12,322
148,581$ 1,297,871

See notes to consolidated financial statements.

Sysmex Annual Report 2010

¥ 13,813
157

2009

¥

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

March 31, 2010 and 2009

LONG-TERM LIABILITIES:Long-term debt (Note 6)Long-term lease obligations (Notes 11 and 12)
Liability for retirement benefits (Note 7)
Guarantee deposits received
Deferred tax liabilities (Note 10)
Other long-term liabilities
Total long-term liabilities
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 11 and 13)
EQUITY (Notes 8, 9 and 15):
Common stock, 149,672,000 shares authorized, 51,353,708
shares issued in 2010 and 51,243,508 shares issued in 2009
Capital surplus
Stock acquisition rights
Retained earnings
Unrealized gain (loss) on available-for-sale securities
Deferred gain (loss) on derivatives under hedge accounting
Foreign currency translation adjustments
Treasury stock - at cost: 99,726 shares in 2010 and 97,981 shares in 2009
Total
Minority interests
Total equity
TOTAL

¥

11
6
1,223

2010

2009

¥

6,094
55
1,521

$

118
65
13,151

1,495
8,566
176
2,736
2,447
7,205
4
5,719
29,588

1,576
9,281
202
2,524
948
6,431
3
4,810
33,445

16,075
92,108
1,892
29,41926,31277,47343
61,495318,151

4
806
799
1,041
681
647
3,978

5
2,150
422
1,048
550
1,051
5,226

43
8,667
8,591
11,193
7,323
6,957
42,774

8,825
13,764666
66,277271(14)(2,560)(205)
87,024112
87,136¥ 120,702

8,685
13,624578
59,121(45)

94,892148,000
7,161
712,656
2,914(150)(27,527)(2,204)
935,7421,204
936,946$ 1,297,871(2,006)(196)
79,76190
79,851¥ 118,522

Sysmex Annual Report 2010

71
Financial Section

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term bank loans (Note 6)
Current portion of long-term debt (Note 6)
Current portion of long-term lease obligations (Notes 11 and 12)
Payables (Note 12):Trade notes
Trade accounts
Associated company
Construction and other
Income taxes payable (Note 12)
Accrued expenses
Deferred tax liabilities (Note 10)
Other current liabilities
Total current liabilities

Consolidated Financial Statements

Consolidated Statements of Income
Sysmex Corporation and Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen
Years Ended March 31, 2010 and 2009

NET SALESCOST OF SALES
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating income
72
Financial Section

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Foreign exchange loss - net
Other - net
Other income (expenses) - net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTSINCOME TAXES (Note 10):
Current
Deferred
Total income taxes
MINORITY INTERESTS IN NET INCOME
NET INCOME

2010¥ 116,175
42,48073,69557,986
15,7092009¥ 111,843
40,83871,00555,871
15,1342010$ 1,249,194
456,774
792,420
623,506
168,914

159
(214)
(253)
(46)
(354)
15,355195(428)(2,228)(326)(2,787)
12,3471,710(2,301)(2,720)(495)(3,806)
165,108

5,647
(89)
5,558
32
9,765

4,071
234
4,305
28
8,014

60,721(957)
59,764344$ 105,000¥

Years Ended March 31, 2010 and 2009

PER SHARE OF COMMON STOCK (Notes 2.v and 14):
Basic net income
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

Sysmex Annual Report 2010¥
Yen

¥ 190.75
190.51
56.00

U.S. Dollars¥ 156.72
156.4650.00$ 2.052.05
0.60

Consolidated Statements of Changes in Equity
Sysmex Corporation and Subsidiaries
Millions of Yen
Number of
Shares ofCommonStockYears Ended March 31, 2010 and 2009 Outstanding

CommonStockCapitalSurplusRetained
Earnings¥ 236 ¥ 55,737

¥ 351

¥ 611

Treasury
Stock(1,972)
8,014(1,972)8,014(2,658)(13)
3
68(2,671)
79,761
9,765(2,658)(13)
3
68(2,708)79,851
9,765

(13)
2
(396)
(45)

(2,617)(2,006)(2,609)88¥ 666 ¥ 66,277(196)¥ (14)(554)¥ (14) ¥ (2,560)

(37)
90

(2,609)(9)(2,609)
(9)

280
(164)
¥ (205) ¥ 87,024

280
22
(142)
¥ 112 ¥ 87,136

(9)
316
¥ 271

Total Equity¥ 127 ¥ 79,117(2,658)59,121
9,765

Minority
Interests¥ (185) ¥ 78,990(1,972)
8,014

342
578

Total

Thousands of U.S. Dollars (Note 1)

Years Ended March 31, 2010

BALANCE, MARCH 31, 2009
Net income
Cash dividends, $0.55 per share
Purchase of treasury stock
Disposal of treasury stock
Exercise of warrants
Net change in the year
BALANCE, MARCH 31, 2010

CommonStockCapitalSurplus$ 93,387 $ 146,495

1,505

Stock
Acquisition
RightsRetained
Earnings

Deferred
Unrealized
Gain
Gain on(Loss) on
Foreign
Available- Derivatives Currency
for-Sale under Hedge Translation
Securities Accounting Adjustments$ 6,215 $ 635,710
105,000(28,054)$ (484)946$ 7,161 $ 712,656

3,398$ 2,914

1,505$ 94,892 $ 148,000$ (21,570)

Treasury
Stock

Total

Minority
Interests

Total Equity$ (2,108) $ 857,645
105,000(28,054)(96)(96)$ 968 $ 858,613
105,000(28,054)
(96)

3,010
$ (150) (5,957)(1,763)$ (150) $ (27,527) $ (2,204) $ 935,742

3,010
236
(1,527)$ 1,204 $ 936,946

See notes to consolidated financial statements.

Sysmex Annual Report 201073
Financial Section

BALANCE, APRIL 1, 2008
51,107,217 ¥ 8,651 ¥ 13,589
Adjustment of retained
earnings due to an adoptionof PITF No. 18 (Note 2.b)
Net income
Cash dividends,¥52.00 per share
Purchase of treasury stock(3,015)
Disposal of treasury stock
925
1
Exercise of warrants
40,40034
34
Net change in the year
BALANCE, MARCH 31, 2009 51,145,527
8,685 13,624
Net income
Cash dividends,¥51.00 per share
Purchase of treasury stock(1,840)
Disposal of treasury stock95
Exercise of warrants
110,200
140
140
Net change in the year
BALANCE, MARCH 31, 2010 51,253,982 ¥ 8,825 ¥ 13,764

Stock
Acquisition
RightsDeferred
Unrealized
Gain
Gain on(Loss) on
Foreign
Available- Derivatives Currency
for-Sale under Hedge Translation
Securities Accounting Adjustments

Consolidated Financial Statements

Consolidated Statements of Cash Flows
Sysmex Corporation and Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

¥ 15,355¥ 12,347$ 165,108(3,839)
7,633
376
160

(5,437)
7,691
15
387

(41,280)
82,075
4,043
1,720

2,686
(94)
(2,073)(2,335)(1,701)
2,376

28,882(1,011)(22,290)308
718
21,230(153)
413,194

3,312
7,720
228,279

INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Purchases of software and other assets
Acquisitions, net of cash acquired
Other - net
Net cash used in investing activities(4,461)(1,963)(355)
176(6,603)(9,393)(1,583)(73)(2,496)(13,545)(47,968)(21,108)(3,817)1,893(71,000)

FINANCING ACTIVITIES:
Increase (decrease) in short-term bank loans - net
Repayments of long-term debt
Payments of lease obligations
Exercise of warrants
Dividends paid
Other - net
Net cash provided by (used in) financing activities(6,142)(55)(1,537)256(2,609)(4)(10,091)

5,871
(56)
(2,543)68(2,658)41723(66,043)(591)(16,527)2,753(28,054)(43)(108,505)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR

(133)
4,403
9,410
¥ 13,813

(641)
(269)
9,679
¥ 9,410(1,430)47,344
101,183$ 148,527

ADDITIONAL CASH FLOW INFORMATION - Interest paid

¥ 211

¥ 423

$ 2,269

Years Ended March 31, 2010 and 200974
Financial Section

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes - paid
Depreciation and amortization
Write-down of marketable and investment securities
Loss on disposal of property, plant and equipment
Changes in assets and liabilities:(Increase) decrease in notes and accounts receivable
Increase in inventories
Increase (decrease) in notes and accounts payable
Increase (decrease) in liability for retirement benefits,
net of provision
Other - net
Net cash provided by operating activities

See notes to consolidated financial statements.

Sysmex Annual Report 2010

Notes to Consolidated Financial Statements
Sysmex Corporation and Subsidiaries

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated ﬁnancial statements as of March 31, 2010
and 2009 include the accounts of the Company and 43 (37 in 2009) subsidiaries(together, the “Group”).
Under the control or inﬂuence concept, those companies in which theCompany, directly or indirectly, is able to exercise control over operations are
fully consolidated, and those companies over which the Group has the ability to
exercise signiﬁcant inﬂuence are accounted for by the equity method.
Investment in an associated company is accounted for by the equity method.
Goodwill represents the excess of the cost of an acquisition over the fair valueof the net assets of the acquired subsidiary and associated company at the dateof acquisition, and are carried at cost less accumulated amortization, which is
calculated by the straight-line method over ﬁve years.
All signiﬁcant intercompany balances and transactions have been eliminatedin consolidation. All material unrealized proﬁt included in assets resulting fromtransactions within the Group is eliminated.

b. Uniﬁcation of Accounting Policies Applied to Foreign Subsidiaries
for the Consolidated Financial Statements—In May 2006, the AccountingStandards Board of Japan (the “ASBJ”) issued ASBJ Practical Issues Task
Force (PITF) No. 18, “Practical Solution on Uniﬁcation of Accounting Policies
Applied to Foreign Subsidiaries for the Consolidated Financial Statements”.
PITF No. 18 prescribes: (1) the accounting policies and procedures applied to aparent company and its subsidiaries for similar transactions and events undersimilar circumstances should in principle be uniﬁed for the preparation of
the consolidated ﬁnancial statements, (2) ﬁnancial statements prepared byforeign subsidiaries in accordance with either International Financial ReportingStandards or the generally accepted accounting principles in the United Statesof America tentatively may be used for the consolidation process, (3) however,the following items should be adjusted in the consolidation process so that net
income is accounted for in accordance with Japanese GAAP unless they are notmaterial: 1) amortization of goodwill; 2) scheduled amortization of actuarial gainor loss of pensions that has been directly recorded in the equity; 3) expensing
capitalized development costs of R&D; 4) cancellation of the fair value modelaccounting for property, plant, and equipment and investment properties andincorporation of the cost model accounting; 5) recording the prior years’ eﬀects
of changes in accounting policies in the income statement where retrospective
adjustments to ﬁnancial statements have been incorporated; and 6) exclusionof minority interests from net income, if contained. PITF No. 18 was eﬀective forﬁscal years beginning on or after April 1, 2008 with early adoption permitted.
The Company applied this accounting standard eﬀective April 1, 2008. In
addition, the Company adjusted the beginning balance of retained earnings at
April 1, 2008 as if this accounting standard had been retrospectively applied.

c. Business Combination—In October 2003, the Business Accounting
Council (the “BAC”) issued a Statement of Opinion, “Accounting for Business
Combinations”, and on December 27, 2005, the ASBJ issued ASBJ Statement
No. 7, “Accounting Standard for Business Divestitures” and ASBJ Guidance No.
10, “Guidance for Accounting Standard for Business Combinations and Business
Divestitures”. These new accounting pronouncements were eﬀective for ﬁscal years
beginning on or after April 1, 2006.
The accounting standard for business combinations allows companies toapply the pooling of interests method of accounting only when certain speciﬁccriteria are met such that the business combination is essentially regarded as auniting-of-interests.
For business combinations that do not meet the uniting-of-interests criteria,
the business combination is considered to be an acquisition and the purchasemethod of accounting is required. This standard also prescribes the accounting
for combinations of entities under common control and for joint ventures.
d. Cash Equivalents—Cash equivalents are short-term investments thatare readily convertible into cash and that are exposed to insigniﬁcant risk ofchanges in value. Cash equivalents include time deposits, commercial paper
and mutual funds investing in bonds, all of which mature or become due within
three months of the date of acquisition.
e. Marketable and Investment Securities—Marketable and investment
securities are classiﬁed and accounted for, depending on management’s intent,
as follows: i) trading securities, which are held for the purpose of earning capitalgains in the near term are reported at fair value, and the related unrealized gains
and losses are included in earnings, ii) held-to-maturity debt securities, which
are expected to be held to maturity with the positive intent and ability to holdto maturity are reported at amortized cost and iii) available-for-sale securities,
which are not classiﬁed as either of the aforementioned securities, are reported
at fair value, with unrealized gains and losses, net of applicable taxes, reported
in a separate component of equity.
Non-marketable available-for-sale securities are stated at cost determinedby the moving-average method.
For other than temporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.
f. Allowance for Doubtful Accounts—The allowance for doubtful accounts
is stated in amounts considered to be appropriate based on the Group’s pastcredit loss experience and an evaluation of potential losses in the receivables
outstanding.
g. Inventories—Inventories are stated at cost determined by the average cost
method, or net selling value for the Company and its domestic subsidiaries, andat the lower of cost, determined by the ﬁrst-in, ﬁrst-out method, or market forforeign subsidiaries.
h. Property, Plant and Equipment—Property, plant and equipment are statedat cost. Depreciation is computed by the straight-line method over the estimateduseful lives of the assets. The range of useful lives is from 31 to 50 years forbuildings and structures, and from 5 to 12 years for machinery and equipment.
Equipment held for lease is depreciated by the straight-line method over therespective lease periods.
i. Long-lived Assets—The Group reviews its long-lived assets for impairment
whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized
if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash ﬂows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss would be measured
as the amount by which the carrying amount of the asset exceeds its recoverable
amount, which is the higher of the discounted cash ﬂows from the continued use
and eventual disposition of the asset or the net selling price at disposition.
j. Software—Software to be sold is amortized at the greater of either the
proportional amount to be amortized in proportion of the actual sales of thesoftware to be made of the software during the current year to the estimatedtotal sales over the estimated salable years or the amount to be amortized using
a straight-line method over the estimated salable years. The estimated salable
years are principally three years.
Sysmex Annual Report 201075
Financial Section

The accompanying consolidated ﬁnancial statements have been prepared inaccordance with the provisions set forth in the Japanese Financial Instruments
and Exchange Act and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan (“Japanese GAAP”), which are
diﬀerent in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing these consolidated ﬁnancial statements, certain reclassiﬁcations
and rearrangements have been made to the consolidated ﬁnancial statements
issued domestically in order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassiﬁcations have been made in the2009 ﬁnancial statements to conform to the classiﬁcations used in 2010.
The consolidated ﬁnancial statements are stated in Japanese yen, thecurrency of the country in which Sysmex Corporation (the “Company”) is
incorporated and operates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside Japanand have been made at the rate of ¥93 to $1, the approximate rate of exchange
at March 31, 2010. Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S. dollars at that or
any other rate.

Consolidated Financial Statements

76
Financial Section

Software for internal use is amortized by the straight-line method over theestimated usable years. The estimated usable years are principally ﬁve years.
k. Investment in Real Estate—Investment in real estate mainly consists ofa beneﬁcial interest in a trust. Depreciation of investment in real estate iscomputed according to property, plant and equipment. Accumulated depreciation of the investment in real estate were ¥259 million ($2,785 thousand) and¥227 million as of March 31, 2010 and 2009, respectively.
l. Liability for Retirement Beneﬁts—The Company has a non-contributory
funded pension plan covering substantially all of its employees.
The liability for employees’ retirement beneﬁts is accounted for based on
projected beneﬁt obligations and plan assets at the balance sheet date.
Unfunded retirement beneﬁts for the Company and certain subsidiaries’ directors and corporate auditors are provided at the estimated amount which would be
required if such individuals retired at the balance sheet date. However, the Company
abolished its unfunded retirement beneﬁt plan in June 24, 2005. No additional
provisions have been recorded for retirement beneﬁts to be paid to the Company’s
directors and corporate auditors since then. The liability for director and corporate
auditor retirement beneﬁts is the amount provided in proportion to the term that
present directors and corporate auditors had been in place before June 24, 2005.
“Partial Amendments to Accounting Standard for Retirement Beneﬁts(Part3)” (ASBJ Statement No. 19, issued on July 31, 2008) become eﬀective fromthe ﬁscal year beginning on and after April 1, 2009. Accordingly, the company
applied them from this ﬁscal year. This Accounting method has no impact on the
consolidated ﬁnancial statements for the ﬁscal year ended March 31, 2010.
m. Stock Option—The ASBJ Statement No. 8, “Accounting Standard for Stock
Options” and related guidance are applicable to stock options granted on andafter May 1, 2006.
This standard requires companies to recognize compensation expense for
employee stock options based on the fair value at the date of grant and overthe vesting period as consideration for receiving goods or services. The standard
also requires companies to account for stock options granted to non-employees
based on the fair value of either the stock option or the goods or services
received. In the balance sheet, the stock option is presented as a stock acquisition right as a separate component of equity until exercised.
The Company has applied the accounting standard for stock options tothose granted on and after May 1, 2006.
n. Research and Development—Research and development costs are charged
to income as incurred. Such costs were ¥11,238 million ($120,839 thousand) and¥10,771 million for the years ended March 31, 2010 and 2009, respectively.
o. Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, “AccountingStandard for Lease Transactions”, which revised the previous accounting
standard for lease transactions issued in June 1993. The revised accounting
standard for lease transactions is eﬀective for ﬁscal years beginning on or after
April 1, 2008 with early adoption permitted for ﬁscal years beginning on or after
April 1, 2007.
(1) Finance Leases as Lessee
Under the previous accounting standard, ﬁnance leases that deem totransfer ownership of the leased property to the lessee were to be capitalized. However, other ﬁnance leases were permitted to be accounted for
as operating lease transactions if certain “as if capitalized” information
is disclosed in the note to the lessee’s ﬁnancial statements. The revised
accounting standard requires that all ﬁnance lease transactions should becapitalized to recognize lease assets and lease obligations in the balance
sheet. In addition, the revised accounting standard permits leases which
existed at the transition date and do not transfer ownership of the leased
property to the lessee to be accounted for as operating lease transactions.
(2) Finance Leases as Lessor
Under the previous accounting standard, ﬁnance leases that deem totransfer ownership of the leased property to the lessee were to be treatedas sales. However, other ﬁnance leases were permitted to be accounted for
as operating lease transactions if certain “as if sold” information is disclosed
in the note to the lessor’s ﬁnancial statements. The revised accounting
standard requires that all ﬁnance leases that deem to transfer ownership ofSysmex Annual Report 2010

the leased property to the lessee should be recognized as lease receivables,
and all ﬁnance leases that deem not to transfer ownership of the leased
property to the lessee should be recognized as investments in lease.
The Company applied the revised accounting standard eﬀective April 1, 2008.
p. Bonuses to Directors—Bonuses to directors are accrued at the year end towhich such bonuses are attributable.
q. Construction Contracts—In December 2007, the ASBJ issued ASBJ
Statement No. 15 “Accounting Standard for Construction Contracts” and ASBJ
Guidance No. 18 “Guidance on Accounting Standard for Construction Contracts”.
Under the previous Japanese GAAP, either the completed-contract method or
the percentage-of-completion method was permitted to account for construction contracts. Under this new accounting standard, the construction revenue
and construction costs should be recognized by the percentage-of-completion
method, if the outcome of a construction contract can be estimated reliably.
When total construction revenue, total construction costs and the stage ofcompletion of the contract at the balance sheet date can be reliably measured,
the outcome of a construction contract can be estimated reliably. If the outcomeof a construction contract cannot be reliably estimated, the completed-contract
method should be applied. When it is probable that the total construction costs
will exceed total construction revenue, an estimated loss on the contract shouldbe immediately recognized by providing for a loss on construction contracts.
This standard is applicable to construction contracts and software development
contracts and eﬀective for ﬁscal years beginning on or after April 1, 2009. The
Company applied the new accounting standard eﬀective April 1, 2009. The eﬀectof this change has slight impact on the consolidated ﬁnancial statements for theyear ended March 31, 2010.
r. Income Taxes—The provision for income taxes is computed based on thepretax income included in the consolidated statements of income. The asset
and liability approach is used to recognize deferred tax assets and liabilities forthe expected future tax consequences of temporary diﬀerences between the
carrying amounts and the tax bases of assets and liabilities. Deferred taxes aremeasured by applying currently enacted tax laws to the temporary diﬀerences.
s. Foreign Currency Transactions—All short-term and long-term monetary
receivables and payables denominated in foreign currencies are translated
into Japanese yen at the exchange rates at the balance sheet date. The foreignexchange gains and losses from translation are recognized in the consolidated
statements of income to the extent that they are not hedged by forward
exchange contracts.
t. Foreign Currency Financial Statements—The balance sheet accounts of theconsolidated foreign subsidiaries are translated into Japanese yen at the current
exchange rate as of the balance sheet date except for equity, which is translated
at the historical rate. Diﬀerences arising from such translation were shown as“Foreign currency translation adjustments” in a separate component of equity.
Revenue and expense accounts of consolidated foreign subsidiaries aretranslated into yen at the average exchange rate.
u. Derivatives and Hedging Activities—The Group uses foreign exchange
forward contracts and interest rate swaps to manage their exposure to ﬂuctuations in foreign exchange and interest rates. The Group does not enter into
derivatives for trading or speculative purposes.
Derivative ﬁnancial instruments and foreign currency transactions areclassiﬁed and accounted for as follows: a) all derivatives are recognized as either
assets or liabilities and measured at fair value, and gains or losses on derivativetransactions are recognized in the statements of income and b) for derivatives
used for hedging purposes, if derivatives qualify for hedge accounting becauseof high correlation and eﬀectiveness between the hedging instruments and thehedged items, gains or losses on derivatives are deferred until maturity of thehedged transactions.
The interest rate swaps that qualify for hedge accounting and meet speciﬁcmatching criteria are not remeasured at market value but the diﬀerential paidor received under the swap agreements are recognized and included in interest
expense or income.
v. Per Share Information—Basic net income per share is computed by dividing
net income available to common shareholders by the weighted-average number ofcommon shares outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reﬂects the potential dilution that could occur
if securities were exercised or converted into common stock. Diluted net income
per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of the year (or at the time of issuance)with an applicable adjustment for related interest expense, net of tax, and full
exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated
statements of income are dividends applicable to the respective years including
dividends to be paid after the end of the year.

w. New Accounting Pronouncements
Business Combinations—In December 2008, the ASBJ issued a revised account-

Uniﬁcation of Accounting Policies Applied to Foreign Associated Companies
for the Equity Method—The current accounting standard requires to unify
accounting policies within the consolidation group. However, the current
guidance allows to apply the equity method for the ﬁnancial statements of
its foreign associated company which have been prepared in accordance withgenerally accepted accounting principles in their respective jurisdictions without
uniﬁcation of accounting policies.
In December 2008, the ASBJ issued ASBJ Statement No. 16 (Revised2008), “Revised Accounting Standard for Equity Method of Accounting forInvestments”. The new standard requires adjustments to be made to conform theassociate’s accounting policies for similar transactions and events under similar
circumstances to those of the parent company when the associate’s ﬁnancial
statements are used in applying the equity method unless it is impracticable todetermine adjustments. In addition, ﬁnancial statements prepared by foreign
associated companies in accordance with either International Financial ReportingStandards or the generally accepted accounting principles in the United States
tentatively may be used in applying the equity method if the following items areadjusted so that net income is accounted for in accordance with Japanese GAAP
unless they are not material: 1) amortization of goodwill; 2) scheduled amortization of actuarial gain or loss of pensions that has been directly recorded in theequity; 3) expensing capitalized development costs of R&D; 4) cancellation of thefair value model accounting for property, plant, and equipment and investment
properties and incorporation of the cost model accounting; 5) recording the prioryears’ eﬀects of changes in accounting policies in the income statement whereretrospective adjustments to the ﬁnancial statements have been incorporated;and 6) exclusion of minority interests from net income, if contained.
This standard is applicable to equity method of accounting for investments
eﬀective on or after April 1, 2010 with early adoption permitted for ﬁscal years
beginning on or after April 1, 2009.

accounting standard for asset retirement obligations, ASBJ Statement No. 18“Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No.
21 “Guidance on Accounting Standard for Asset Retirement Obligations”. Under
this accounting standard, an asset retirement obligation is deﬁned as a legal
obligation imposed either by law or contract that results from the acquisition,
construction, development and the normal operation of a tangible ﬁxed asset
and is associated with the retirement of such tangible ﬁxed asset.
The asset retirement obligation is recognized as the sum of the discounted
cash ﬂows required for the future asset retirement and is recorded in the period
in which the obligation is incurred if a reasonable estimate can be made. If
a reasonable estimate of the asset retirement obligation cannot be made in
the period the asset retirement obligation is incurred, the liability should berecognized when a reasonable estimate of asset retirement obligation can be
made. Upon initial recognition of a liability for an asset retirement obligation,
an asset retirement cost is capitalized by increasing the carrying amount of therelated ﬁxed asset by the amount of the liability. The asset retirement cost is
subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present value eachperiod. Any subsequent revisions to the timing or the amount of the original
estimate of undiscounted cash ﬂows are reﬂected as an increase or a decreasein the carrying amount of the liability and the capitalized amount of the related
asset retirement cost. This standard is eﬀective for ﬁscal years beginning on orafter April 1, 2010 with early adoption permitted for ﬁscal years beginning on or
before March 31, 2010.
Accounting Changes and Error Corrections—In December 2009, ASBJ issued
ASBJ Statement No. 24 “Accounting Standard for Accounting Changes and Error
Corrections” and ASBJ Guidance No. 24 “Guidance on Accounting Standard for
Accounting Changes and Error Corrections”. Accounting treatments under thisstandard and guidance are as follows;(1) Changes in Accounting Policies
When a new accounting policy is applied with revision of accounting
standards, a new policy is applied retrospectively unless the revised accounting standards include speciﬁc transitional provisions. When the revised
accounting standards include speciﬁc transitional provisions, an entity shallcomply with the speciﬁc transitional provisions.
(2) Changes in Presentations
When the presentation of ﬁnancial statements is changed, prior period ﬁnancial statements are reclassiﬁed in accordance with the new presentation.
(3) Changes in Accounting Estimates
A change in an accounting estimate is accounted for in the period of thechange if the change aﬀects that period only, and is accounted for prospectively if the change aﬀects both the period of the change and future periods.
(4) Corrections of Prior Period Errors
When an error in prior period ﬁnancial statements is discovered, thosestatements are restated.
This accounting standard and the guidance are applicable to accountingchanges and corrections of prior period errors which are made from the beginningof the ﬁscal year that begins on or after April 1, 2011.
Segment Information Disclosures—In March 2008, the ASBJ revised ASBJ
Statement No. 17 “Accounting Standard for Segment Information Disclosures” andissued ASBJ Guidance No. 20 “Guidance on Accounting Standard for Segment
Information Disclosures”. Under the standard and guidance, an entity is required
to report ﬁnancial and descriptive information about its reportable segments.
Reportable segments are operating segments or aggregations of operating
segments that meet speciﬁed criteria. Operating segments are components of anentity about which separate ﬁnancial information is available and such information
is evaluated regularly by the chief operating decision maker in deciding how toallocate resources and in assessing performance. Generally, segment informationis required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating
segments. This accounting standard and the guidance are applicable to segment
information disclosures for the ﬁscal years beginning on or after April 1, 2010.
Sysmex Annual Report 2010

77
Financial Section

ing standard for business combinations, ASBJ Statement No. 21, “AccountingStandard for Business Combinations”. Major accounting changes under therevised accounting standard are as follows;(1) The current accounting standard for business combinations allows companies to apply the pooling of interests method of accounting when certain
speciﬁc criteria are met such that the business combination is essentiallyregarded as a uniting-of-interests. The revised standard requires to accountfor such business combination by the purchase method and the pooling ofinterests method of accounting is no longer allowed.
(2) The current accounting standard accounts for the research and development
costs to be charged to income as incurred. Under the revised standard, an
in-process research and development (IPR&D) acquired by the businesscombination is capitalized as an intangible asset.
(3) The current accounting standard accounts for a bargain purchase gain
(negative goodwill) to be systematically amortized within 20 years. Underthe revised standard, the acquirer recognizes a bargain purchase gain in
proﬁt or loss on the acquisition date after reassessing whether it has correctly identiﬁed all of the assets acquired and all of the liabilities assumed
with a review of such procedures used.
This standard is applicable to business combinations undertaken on or after
April 1, 2010 with early adoption permitted for ﬁscal years beginning on or after
April 1, 2009.

Asset Retirement Obligations—In March 2008, the ASBJ published a newConsolidated Financial Statements

78
Financial Section

3. SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIES

4. INVENTORIES

Short-term investments and investment securities as of March 31, 2010 and2009 consisted of the following:Thousands ofMillions of Yen
U.S. Dollars
2010
2009
2010
Current:
Time deposits other than cash
equivalents
¥ 22
¥ 48
$ 236
Investment trust
135
105
1,452
Total
¥ 157
¥ 153
$ 1,688
Non-current:¥ 2,045 ¥ 1,831$ 21,989
Marketable equity securities
Debt securities
500
500
5,376
Investment trust and other1
2
11
Unquoted equity securities
605
665
6,506
Total
¥ 3,151 ¥ 2,998$ 33,882

Inventories at March 31, 2010 and 2009 consisted of the following:Thousands ofMillions of Yen
U.S. Dollars
2010
2009
2010
Finished products¥ 7,397 ¥ 7,120$ 79,538
Merchandise
6,591
6,211
70,871Work in process
1,265
1,253
13,602
Raw materials
3,142
3,381
33,785
Supplies
382
377
4,107
Total
¥ 18,777 ¥ 18,342$ 201,903

The costs and aggregate fair values of investment securities at March 31,
2010 and 2009 were as follows:
Millions of Yen
2010
Unrealized Unrealized
Cost
Fair Value
Gains
LossesAvailable-for-sale:
Equity securities¥ 1,578¥ 478¥ (11) ¥ 2,045
Investment trust and other
1
1
Total
¥ 1,579¥ 478¥ (11) ¥ 2,046

Cost
Available-for-sale:
Equity securities¥ 1,896
Investment trust and other2
Total¥ 1,898

Millions of Yen
2009
Unrealized Unrealized
Fair Value
Gains
Losses¥ 326¥ 326¥ (391)¥ (391)¥ 1,8312¥ 1,833

5. INVESTMENT PROPERTYIn November 2008, the ASBJ issued ASBJ Statement No. 20 “Accounting Standard
for Investment Property and Related Disclosures” and issued ASBJ Guidance
No. 23 “Guidance on Accounting Standard for Investment Property and Related
Disclosures”. This accounting standard and the guidance are applicable to investment property and related disclosures at the end of the fiscal years ending on
or after March 31, 2010. The Company applied the new accounting standard andguidance effective March 31, 2010.
The Company holds an investment property in Kobe as a beneficiary ofa real estate investment trust. Rental income, net of operating expenses, forthis investment property was ¥224 million ($2,409 thousand) for the fiscal year
ended March 31, 2010.
The carrying amounts, changes in such balances and market prices of suchproperties are as follows.
Millions of Yen
Carrying Amount
Fair Value
April 1, 2009
¥ 2,117

Available-for-sale:$ 16,967
Equity securities
Investment trust and other1
Total$ 16,978$ 5,140$ 5,140$ (118) $ 21,989
11$ (118) $ 22,000

Available-for-sale securities and held-to-maturity securities whose fair value
is not readily determinable as of March 31, 2009 were as follows. The similar
information for 2010 is disclosed in Note 12.
Carrying AmountMarch 31, 2009
Millions of Yen
Available-for-sale - Equity securities¥ 665
Held-to-maturity - Debt securities
500
Total
¥ 1,165
Commercial paper was classiﬁed as cash equivalents.

Sysmex Annual Report 2010

¥ (14)March 31, 2010

March 31, 2010

¥ 2,103¥ 3,026

Thousands of U.S. Dollars
Carrying Amount
April 1, 2009
$ 22,763

Thousands of U.S. Dollars
2010
Unrealized Unrealized
Cost
Fair Value
Gains
LossesIncrease/
Decrease

Increase/
Decrease$ (150)Fair Value

March 31, 2010

March 31, 2010

$ 22,613$ 32,538

Notes: 1) Carrying amount recognized in balance sheet is net of accumulated depreciation.
2) Increase during the fiscal year ended March 31, 2010 primarily represents theappropriation of trust income to principle of certain properties of ¥11 million ($118
thousand), and decrease primarily represents the recognition of depreciation of¥32 million ($344 thousand).
3) Fair value of land as of March 31, 2010 is measured by the Group in accordancewith its Appraisal Standard that reflects market value. Carrying amount is applied
to fair value of depreciable properties such as buildings.

6. SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans were principally represented by bank overdrafts.
Weighted average per annum interest rates of short-term bank loans at March
31, 2010 and 2009 were 12.8% and 1.1%, respectively.
Long-term debt at March 31, 2010 and 2009 consisted of the following:Thousands ofMillions of Yen
U.S. Dollars
2010
2009
2010
Loans from banks, due through2016, with interest ranging
from 2.3% to 3.5% for 2010
(from 3.5% to 9.7% for 2009):
¥ 10
¥ 60
$ 108
Unsecured
Total
10
60
108
Less current portion
(6)
(55)
(65)
Long-term debt, less current portion
¥ 4
¥ 5
$ 43

At March 31, 2010, annual maturities of long-term debt were as follows:
Thousands ofYear Ending March 31
Millions of Yen
U.S. Dollars
2011

¥ 6

2012

4

43

Total

¥ 10

$ 108

$ 65

The Company also has recorded a liability for an unfunded retirement
benefit plan covering all of its directors and corporate auditors in the amount of¥160 million ($1,720 thousand), and ¥197 million as of March 31, 2010 and 2009,
respectively. Payment of retirement benefits to directors and corporate auditors
is subject to approval at the shareholders’ meeting.

8. EQUITY
7. RETIREMENT BENEFITS

The components of net periodic retirement benefit costs for the years
ended March 31, 2010 and 2009 are as follows:
Thousands ofMillions of Yen
U.S. Dollars
2010
2009
2010
Service cost
¥ 1,073 ¥ 1,032$ 11,538
Interest cost
165
157
1,774
Expected return on plan assets
(174)
(207)
(1,871)
Recognized actuarial (gain) loss
489
47
5,258
Net periodic retirement benefit costs ¥ 1,553 ¥ 1,029$ 16,699
Assumptions used for the years ended March 31, 2010 and 2009 are set
forth as follows:
2010
2009
2.0%
2.0%
Discount rate
3.0%
3.0%
Expected rate of return on plan assets
5 years
5 years
Recognition period of actuarial gain/loss
In addition, the Company and certain subsidiaries participate in contributory multi-employer pension plans covering substantially all of their employees.
Under these plans, the amount of pension assets and benefit obligation wereapproximately ¥6,575 million ($70,699 thousand) and ¥8,198 million ($88,151
thousand) at March 31, 2009, the most recent valuation date.

(a) Dividends
Under the Companies Act, companies can pay dividends at any time during theﬁscal year in addition to the year-end dividend upon resolution at the shareholders
meeting. For companies that meet certain criteria such as; (1) having the Boardof Directors, (2) having independent auditors, (3) having the Board of Corporate
Auditors, and (4) the term of service of the directors is prescribed as one year rather
than two years of normal term by its articles of incorporation, the Board of Directors
may declare dividends (except for dividends in kind) at any time during the ﬁscal
year if the company has prescribed so in its articles of incorporation. However, theCompany cannot do so because it does not meet all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (non-cash
assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution
by the Board of Directors if the articles of incorporation of the company sostipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is deﬁned as
the amount available for distribution to the shareholders, but the amount of net
assets after dividends must be maintained at no less than ¥3 million.

(b) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must
be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity
account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Companies Act, the total amount of additional paid-in
capital and legal reserve may be reversed without limitation. The Companies Act
also provides that common stock, legal reserve, additional paid-in capital, othercapital surplus and retained earnings can be transferred among the accounts
under certain conditions upon resolution of the shareholders.

(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stockand dispose of such treasury stock by resolution of the Board of Directors. The
amount of treasury stock purchased cannot exceed the amount available for
distribution to the shareholders which is determined by speciﬁc formula.
Under the Companies Act, stock acquisition rights are now presented as aseparate component of equity.
The Companies Act also provides that companies can purchase bothtreasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directlyfrom stock acquisition rights.

9. STOCK OPTION
The stock options outstanding as of March 31, 2010 are as follows:
Stock Option

Persons Granted2004 Stock Option

11 directors
170 employees
9 directors of subsidiaries
3 employees of subsidiaries
9 directors
152 employees
18 directors of subsidiaries
42 employees of subsidiaries

2007 Stock Option

Number of
Options Granted(Shares)
1,043,400

Date of
Grant

Exercise
Price

Exercise Period

2004.7.01¥ 1,685($ 18.12)

From July 1, 2006 toJune 30, 2010

733,200

2007.7.30¥ 4,650($ 50.00)

From July 30, 2009 to
July 29, 2015

Sysmex Annual Report 2010

79
Financial Section

The Company and its certain subsidiaries have retirement benefit plans for
employees. Under most circumstances, employees terminating their employment
are entitled to retirement benefits determined based on the rate of pay at the timeof termination, years of service and certain other factors. Employees are entitled tolarger payments if the termination is involuntary, as opposed to by retirement at
the mandatory retirement age or by death.
Certain subsidiaries have unfunded lump-sum payment plans and certain
overseas subsidiaries have defined contribution pension plans.
The liability for employees’ retirement benefits at March 31, 2010 and 2009
consisted of the following:Thousands ofMillions of Yen
U.S. Dollars
2010
2009
2010
Projected benefit obligation¥ 9,094 ¥ 8,560$ 97,785
Fair value of plan assets(7,225)(5,868)(77,688)
Prepaid pension cost
4
(1,230)(2,471)(13,226)
Unrecognized actuarial loss
Net liability¥ 639 ¥ 225$ 6,871

Japanese companies are subject to the Companies Act of Japan (the “CompaniesAct”). The significant provisions in the Companies Act that affect financial andaccounting matters are summarized below:

Consolidated Financial Statements

The stock option activity is as follows:
For the year ended March 31, 200980
Financial Section

Non-vested
March 31, 2008 - Outstanding
GrantedCanceled
VestedMarch 31, 2009 - Outstanding
VestedMarch 31, 2008 - Outstanding
VestedExercised
Canceled
March 31, 2009 - Outstanding

For the year ended March 31, 2010
Non-vested
March 31, 2009 - Outstanding
GrantedCanceled
VestedMarch 31, 2010 - Outstanding
VestedMarch 31, 2009 - Outstanding
VestedExercised
Canceled
March 31, 2010 - Outstanding
Exercise price
Average stock price at exercise
Fair value price at grant date2004 Stock
Option(Shares)2007 Stock
Option(Shares)
727,200(17,500)
709,700

191,000(40,400)(13,000)
137,600

2004 Stock
Option(Shares)2007 Stock
Option(Shares)709,700(4,000)(705,700)

137,600

51,200¥ 1,685

705,700(23,800)(4,200)677,700¥ 4,650¥ 4,190¥ 4,190(86,400)¥ 98,325

The assumptions used to measure fair value of 2007 Stock Option
Estimate method:Black-Scholes option pricing model
Volatility of stock price:26.14%
Estimated remaining
outstanding period:
five years
Estimated dividend:¥ 36 per share
Interest rate with risk free:
1.403%

10. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national
and local income taxes which, in the aggregate, resulted in a normal eﬀective
statutory tax rate of approximately 40.6% for the years ended March 31, 2010
and 2009. Foreign subsidiaries are subject to income taxes of the countries inwhich they operate.
The tax eﬀects of signiﬁcant temporary diﬀerences and loss carryforwards
which resulted in deferred tax assets and liabilities at March 31, 2010 and 2009
are as follows:

Sysmex Annual Report 2010

2010

2009

Thousands of
U.S. Dollars
2010¥ 1,908
401
881
188
1,287
(7)
¥ 4,658¥ 1,763
318
793
45
1,691
(6)
¥ 4,604$ 20,516
4,312
9,473
2,021
13,839(75)$ 50,086

¥

91
242
67
886
245
1,110
(323)
¥ 2,318
¥
5

¥ 104
117
144
505
369
953
(384)
¥ 1,808
¥
6

$

¥ 189

¥

12

$ 2,032

457

457

4,914

431
1,807
¥ 2,884¥ 4,087431
1,238¥ 2,138¥ 4,268

4,634
19,430$ 31,010$ 43,947

Millions of Yen

Deferred tax assets (Current):
Unrealized intercompany profits
Inventories
Accrued bonuses
Accrued enterprise tax
OtherLess valuation allowance
Total
Deferred tax assets (Non-current):
Depreciation
Liability for retirement benefits
Tax loss carryforwards
SoftwareInvestment securities
Other
Less valuation allowance
Total
Deferred tax liabilities (Current)

979
2,602
720
9,527
2,634
11,936(3,473)$ 24,925$
54

Deferred tax liabilities (Non-current):
Net unrealized gain on
available-for-sale securities
Revaluation of land forconsolidation
Investment loss for subsidiaries
capital reduction bycorporation tax law
Other
Total
Net deferred tax assets

A reconciliation between the normal eﬀective statutory tax rates and theactual eﬀective tax rates reﬂected in the accompanying consolidated statements
of income for the years ended March 31, 2010 and 2009 is as follows:
2010
2009
40.6%
40.6%
Normal effective statutory tax rate
1.7
3.2
Expenses not deductible for income tax purposes
0.3
0.8
Per capita levy
(1.9)
(4.5)
Foreign tax credit
Tax effect on elimination of dividends from
3.9
6.7
foreign subsidiaries
(4.0)
(2.7)
Research and development tax credit
Tax effect on undistributed earnings of foreign
4.6
(3.4)
subsidiaries
(9.9)
(8.6)
Different tax rates applied to foreign subsidiaries
(0.2)
1.0
Change in valuation allowance
1.1
1.8
Other - net
36.2%
34.9%
Actual effective tax rate
Certain subsidiaries have tax loss carryforwards available to oﬀset futuretaxable income as of March 31, 2010 of approximately ¥192 million ($2,065
thousand). These tax loss carryforwards, if not utilized, will expire mainly in 2011.

12. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(Lessee)
Lease obligations at March 31, 2010 consisted of the following:
Millions ofThousands of
Yen
U.S. Dollars

On March 10, 2008, the ASBJ revised ASBJ Statement No. 10 “AccountingStandard for Financial Instruments” and issued ASBJ Guidance No. 19 “Guidanceon Accounting Standard for Financial Instruments and Related Disclosures”. Thisaccounting standard and the guidance are applicable to ﬁnancial instruments
and related disclosures at the end of the ﬁscal years ending on or after March 31,
2010 with early adoption permitted from the beginning of the ﬁscal years ending before March 31, 2010. The Group applied the revised accounting standard
and the new guidance eﬀective March 31, 2010.
(1) Group policy for ﬁnancial instruments
The Group invests cash surpluses in low risk ﬁnancial assets, mainly
short-term deposits and uses ﬁnancial instruments, mainly short-term bankloans, for funding. Derivatives are used, not for speculative purposes, but tomanage exposure to ﬁnancial risks as described in (2) below.
(2) Nature and extent of risks arising from ﬁnancial instruments
Receivables such as trade notes, trade accounts and lease investment
assets are exposed to customer credit risk. Although receivables in foreign
currencies are exposed to the market risk of ﬂuctuation in foreign currency
exchange rates, the position, net of payables in foreign currencies, is hedgedby using forward foreign currency contracts. Marketable and investment
securities, mainly held-to-maturity securities and listing shares, are exposedto the risk of market price ﬂuctuations.
Payment terms of payables, such as trade notes and trade accounts, aremostly less than six months.
Maturities of ﬁnance lease obligation, which are mainly used for fundingof equipment investment, are less than ﬁve years after the balance sheet date.
Derivatives mainly include forward foreign currency contracts, which areused to manage exposure to market risks from changes in foreign currency
exchange rates of receivables. Please see Note 13 for more detail about
instruments, hedged items and policy for hedge accounting and assessment
procedures of hedge eﬀectiveness.
(3) Risk management for ﬁnancial instruments

Lease obligations¥ 2,029$ 21,818

Less current portion(1,223)(13,151)

Lease obligations, less current portion¥ 806$ 8,667

The future minimum payments required at March 31, 2010 were as follows:
Millions ofThousands ofYear Ending March 31
Yen
U.S. Dollars
2011¥ 1,223$ 13,151

2012

517

5,559

2013

259

2,785

2014

19

205

2015

11

118

¥ 2,029$ 21,8182016 and thereafter
Total

The minimum rental commitments under noncancelable operating leases at
March 31, 2010 were as follows:
Millions ofThousands of
Yen
U.S. Dollars
Due within one year

¥ 431

Due after one year

1,294

13,914¥ 1,725$ 18,548(Lessor)The net investment in lease are summarized as follows:
Millions ofYen

Thousands of
U.S. Dollars

Total

Gross lease receivables$ 4,634

2010

2010

¥ 1,353$ 14,548

Estimated residual values

196

2,108

Unearned interest income(295)(3,172)¥ 1,254$ 13,484

Investments in lease, current

Maturities of investment in lease for ﬁnance leases that deem not totransfer ownership of the leased property to the lessee are as follows:
Millions ofThousands ofYear Ending March 31
Yen
U.S. Dollars
2011

¥ 324

$ 3,484

2012

319

3,430

2013

316

3,398

2014

267

2,871

2015

120

1,290

7

75

¥ 1,353$ 14,548

2016 and thereafter
Total

Future rental income under operating leases (including imputed interest
income):Millions
Thousands of
U.S. Dollarsof YenDue within one year
Due after one year
Total

2010
¥ 363
103
¥ 466

2010
$ 3,903
1,108$ 5,011Credit risk management
Credit risk is the risk of economic loss arising from a counterparty’s failure to
repay or service debt according to the contractual terms. The Group manages
its credit risk from receivables on the basis of internal guidelines, which include
monitoring of payment term and balances of major customers by each businessadministration department to identify the default risk of customers in earlystage. The credit risk regarding subsidiaries is also managed in the same manner.
With respect to held-to-maturity ﬁnancial investment, the Group manages its
exposure to credit risk by prohibiting its funding to high credit rating bonds
in accordance with in its internal guidelines. Credit risk from derivatives isminimized because the group deals only with large ﬁnancial institutions.

Market risk management (foreign exchange risk)
Foreign currency trade receivables are exposed to market risk resulting fromﬂuctuations in foreign currency exchange rates. Such foreign exchange risk,
which is recognized with respect to each currency and each month, is hedged
principally by forward foreign currency contracts. Forward foreign currency contracts are used when foreign currency trade receivables are certainly expectedfrom forecasted transaction according to conditions in exchange ﬂuctuations.
Marketable and investment securities are managed by monitoring market
values and ﬁnancial position of issuers on a regular basis.
Derivative transactions have been approved by a predeﬁned decision makerbased on the internal guidelines which prescribe the authority and the limit andmanaged by regularly conﬁrming the balance of each day by the ﬁnance department.

Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual
obligations in full on maturity dates. The Group manages its liquidity risk byholding adequate volumes of liquid assets in view of business income andexpenditure and equipment investment spending plan along with adequateﬁnancial planning by the corporate treasury department. Subsidiaries also reporttheir ﬁnancial plans to the group. The ﬁnance department manages the liquidity
risk by obtaining information of cash ﬂows of the whole group.
Sysmex Annual Report 2010

81
Financial Section

11. LEASESConsolidated Financial Statements

82
Financial Section(4) Fair values of ﬁnancial instruments
Fair values of ﬁnancial instruments are based on quoted price in active
markets. If quoted price is not available, other rational valuation techniques
are used instead. The techniques include some changing factors and the fairvalues may be changed by adopting diﬀerent assumptions. In addition, thecontract amounts of derivatives in Note 13 “DERIVATIVES” do not directly
indicate the market risk of derivatives.
(a) Fair value of ﬁnancial instruments
The carrying amounts, fair values and unrealized gain/loss as of March
31, 2010, are as follows. Note that ﬁnancial instruments whose fair value
cannot be reliably determined are not included (See (b)).
Millions of Yen
Unrealized
Carrying
March 31, 2010
Fair Value
Gain/Loss
AmountCash and cash equivalents¥ 13,813 ¥ 13,813
Receivables:
3,048
Trade notes
Trade accounts
27,245
Associated company
218
Allowance for doubtful accounts (*1)(384)
Receivables - net
30,12730,125¥ (2)Investments in lease
1,254
1,198
(56)
Investment securities:
500
507
7
Held-to-maturity securities
Available-for-sale securities
2,045
2,045
Total
¥ 47,739 ¥ 47,688¥ (51)
Payables:¥ 1,495 ¥ 1,495
Trade notes
Trade accounts
8,566
8,566
Associated company
176
176
Lease obligations
2,029
2,057
¥ 28
Income taxes payable
2,447
2,447
Total
¥ 14,713 ¥ 14,741¥ 28
Derivatives (*2)
¥ 12
¥ 12

March 31, 2010

Thousands of U.S. Dollars
Unrealized
Carrying
Fair Value
Gain/Loss
Amount$ 148,527 $ 148,527

Cash and cash equivalents
Receivables:
32,774
Trade notes
Trade accounts
292,957
Associated company
2,344
Allowance for doubtful accounts (*1)
(4,129)Receivables - net
323,946 323,925
Investments in lease
13,484
12,882
Investment securities:
5,376
5,452
Held-to-maturity securities
Available-for-sale securities
21,98921,989Total$ 513,322 $ 512,775
Payables:$ 16,075 $ 16,075
Trade notes
Trade accounts
92,108
92,108
Associated company
1,892
1,892
Lease obligations
21,81822,118
Income taxes payable
26,312
26,312
Total$ 158,205 $ 158,505
Derivatives (*2)
$ 129
$ 129

$ (21)(602)
76$ (547)

$ 300
$ 300

Notes: *1. Allowance for doubtful accounts associated with trade accounts receivables
are deducted.
*2. Derivative assets and liabilities are on net basis.
Sysmex Annual Report 2010

AssetsCash and cash equivalents
The carrying values are adopted for cash and cash equivalents as they
approximate fair value because of their short maturities.
Receivables
The carrying values are adopted for short-term receivables as they approximate fair value.
The fair values of long-term receivables such as installment receivables
measured at the present values discounted by risk-free rates and the future
cash ﬂows including credit risks.
Investments in lease
The fair values of investments in lease are measured at the present values
discounted by the interest rate after consideration of remaining term andcredit risks.
Investment securities
The fair values of equity securities are determined by securities exchange
prices. With respect to other securities, the values which the correspondentﬁnancial institutions present are adopted for the fair values. Please see
Note 3 “SHORT-TERM INVESTMENT AND INVESTMENT SECURITIES” forsecurities categorized by purposes.

Liabilities
Payables and Income tax payable
The carrying values are adopted for payables and income tax payable as they
approximate fair value because of their short maturities.
Lease obligations
The fair values of lease obligations are measured at the present values of
total principle discounted by the interest rate which would be used if a newlease transaction occurred.

Derivatives
The information of the fair value for derivatives is included in Note 13“DERIVATIVES”.
(b) Financial instruments whose fair value cannot be reliably determined
Carrying AmountMillions
Thousands ofMarch 31, 2010
U.S. Dollarsof YenInvestments in equity instruments that
do not have a quoted market price in an
active market¥ 804$ 8,645

The above ﬁnancial instruments are not included in investment securities because they do not have market values and it is diﬃcult to estimate
the future cash ﬂows.
(5) Maturity analysis for ﬁnancial assets and securities with contractual
maturities
Millions of Yen
Due after Due after
Due inOne Year Five Years Due after
March 31, 2010
One Yearthrough through Ten Yearsor Less
Five Years Ten Years
Cash and cash equivalents ¥ 13,813
Receivables:
Trade notes
3,048
Trade accounts
26,878¥ 367
Associated company
218
Investments in lease
222
1,027
¥ 5
Investment securities:
Held-to-maturity securities
500
Total
¥ 505
¥ 44,179¥ 1,394

Derivative transactions to which hedge accounting is applied at March 31,
2010

At March 31, 2010

Foreign currency forward
contracts:
Selling U.S.$
Receivables
Selling Euro
Receivables

13. DERIVATIVESThe Group enters into foreign currency forward contracts and foreign currency
option contracts to hedge foreign exchange risk associated with certain assets
and liabilities denominated in foreign currencies.
The Group also enters into interest rate swap contracts to manage its
interest rate exposures on certain liabilities.
All derivative transactions are entered into to hedge interest and foreign
currency exposures incorporated within the Group’s business. Accordingly,
market risk in these derivatives is basically oﬀset by opposite movements in thevalue of hedged assets or liabilities. The Group does not hold or issue derivatives
for trading purposes.
Because the counterparties to these derivatives are limited to majorinternational ﬁnancial institutions, the Group does not anticipate any losses
arising from credit risk.
Derivative transactions entered into by the Group have been made inaccordance with internal policies which regulate the authorization and credit
limit amount.
As noted in Note 12, the Group applied ASBJ Statement No. 10 “AccountingStandard for Financial Instruments” and ASBJ Guidance No. 19 “Guidance on
Accounting Standard for Financial Instruments and Related Disclosures”. The
accounting standard and the guidance are applicable to ﬁnancial instruments
and related disclosures at the end of the ﬁscal years ending on or after March 31,
2010; therefore, the required information is disclosed only for 2010.

Derivative transactions to which hedge accounting is not applied at March
31, 2010

March 31, 2010
Foreign currency forward
contracts:
Selling U.S.$
Selling EuroMarch 31, 2010
Foreign currency forward
contracts:
Selling U.S.$
Selling EuroMillions of Yen
Contract
Contract Amount
Unrealized
Fair Value
Amount Due after
Gain/LossOne Year¥ 1,765
2,144¥ (48)
83¥ (48)
83

Thousands of U.S. Dollars
Contract
Unrealized
Contract Amount
Fair Value
Gain/Loss
Amount Due after
One Year$ 18,97823,054$ (516)
892

¥ 454
798

¥ (11)(12)83

At March 31, 2010(6) Please see Note 11 “LEASES” for future payments of lease obligations.

HedgedItem

Millions of Yen
Contract
Contract Amount
Fair Value
Amount Due after
One YearThousands of U.S. Dollars
Contract
Hedged Contract Amount
Fair Value
Item
Amount Due after
One Year

Foreign currency forward
contracts:
Selling U.S.$
Receivables
Selling Euro
Receivables$ 4,882
8,581$ (118)(129)

The fair value of derivative transactions is measured at the quoted priceobtained from the ﬁnancial institution.
The contract amounts of derivatives which are shown in the above table do
not represent the amounts exchanged by the parties and do not measure theGroup’s exposure to credit or market risk.

14. NET INCOME PER SHARE
Reconciliation of the diﬀerences between basic and diluted net income per share(“EPS”) for the years ended March 31, 2010 and 2009 is as follows:
Millions of Thousands ofYen
Dollars
Yen
U.S. Dollars
Weighted
Net
Average
EPS
IncomeSharesFor the year ended March 31, 2010:
Basic EPS
Net income available to¥ 9,765
51,189,418 ¥ 190.75$ 2.05common shareholders
Effect of Dilutive
Securities
65,227
Stock options
Diluted EPS
Net income for¥ 9,765
51,254,645 ¥ 190.51$ 2.05computation
For the year ended March 31, 2009:
Basic EPS
Net income available to¥ 8,014
common shareholders
Effect of Dilutive
Securities
Stock options
Diluted EPS
Net income forcomputation¥ 8,014

51,132,256 ¥ 156.72

87,456

51,219,712 ¥ 156.46$ (516)892

Sysmex Annual Report 2010

Financial Section

Thousands of U.S. Dollars
Due after Due after
Due inOne Year Five Years Due after
March 31, 2010
One Yearthrough through Ten Yearsor Less
Five Years Ten Years
Cash and cash equivalents $ 148,527
Receivables:
Trade notes
32,774
Trade accounts
289,011 $ 3,946
Associated company
2,344
Investments in lease
2,387
11,043$54
Investment securities:
Held-to-maturity securities
5,376
Total
$ 5,430$ 475,043 $ 14,989

Consolidated Financial Statements

15. SUBSEQUENT EVENTS
a. Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2010 was approved at the shareholders’ general meeting of the Company held on June 25, 2010:
Millions of Thousands of
Yen
U.S. Dollars
Year-end cash dividends, ¥31 ($0.33) per share¥ 1,589$ 17,086

16. SEGMENT INFORMATION
a. Industry Segments
84

The Group’s main operations are to manufacture and sell laboratory testing instruments and reagents used by clinical laboratories around the world. Under Japanese
accounting regulations, the Group is not required to disclose industry segment information because its main industry segment represented more than 90% of its
operations.

Financial Section

b. Geographical Segments
The geographical segments of the Group for the years ended March 31, 2010 and 2009 are summarized as follows:
Millions of Yen

2010
Japan
Sales to customers
Interarea transfer
Total sales
Operating expenses
Operating income
Total assets¥ 38,595
27,85766,452
63,520¥ 2,932¥ 77,834

Americas¥ 23,444
7
23,451
20,676¥ 2,775¥ 14,930

EuropeChina

Asia Pacific¥ 36,446480
36,926
31,622¥ 5,304¥ 25,405¥ 11,843
5
11,848
9,096¥ 2,752¥ 8,385¥ 5,847
159
6,006
5,106
¥ 900
¥ 4,813

Eliminations/
Consolidated
Corporate¥116,175¥ 116,175
28,508¥ (28,508)
144,683(28,508)
116,175
130,020(29,554)
100,466¥ 14,663¥ 1,046¥ 15,709¥131,367¥ (10,665) ¥ 120,702
Total

Millions of Yen

2009
Japan
Sales to customers
Interarea transfer
Total sales
Operating expenses
Operating income
Total assets¥ 37,589
31,501
69,09064,418¥ 4,672¥ 80,339

Americas¥ 23,368
2
23,37021,581¥ 1,789¥ 14,860

EuropeChina

Asia Pacific¥ 35,387
521
35,90830,773¥ 5,135¥ 24,790¥ 10,111
9
10,1208,811¥ 1,309¥ 7,601¥ 5,388
184
5,572
4,925
¥ 647
¥ 3,810

Eliminations/
Consolidated
Corporate¥ 111,843¥ 111,843
32,217¥ (32,217)
144,060(32,217)
111,843
130,508(33,799)
96,709¥ 13,552¥ 1,582¥ 15,134¥ 131,400¥ (12,878) ¥ 118,522
Total

Thousands of U.S. Dollars

2010
Sales to customers
Interarea transfer
Total sales
Operating expenses
Operating income
Total assets

Japan

Americas

EuropeChina$ 415,000
299,538
714,538
683,011$31,527$ 836,925$ 252,086
75
252,161
222,323$ 29,838$ 160,537$ 391,893
5,161
397,054
340,022$ 57,032$ 273,172$ 127,344
54
127,398
97,806$ 29,592$ 90,161

Asia Pacific$ 62,871
1,710
64,581
54,903$ 9,678$ 51,753

Eliminations/
Consolidated
Corporate$ 1,249,194$ 1,249,194
306,538 $ (306,538)
1,555,732(306,538) 1,249,194
1,398,065(317,785) 1,080,280$ 157,667 $ 11,247$168,914$ 1,412,548 $ (114,677) $ 1,297,871
Total

c. Sales to Foreign Customers
Sales to foreign customers for the years ended March 31, 2010 and 2009 consisted of the following:
Millions of Yen
Americas
EuropeChina
Asia Pacific
Total

Sysmex Annual Report 20102010
¥ 23,622
36,495
11,843
7,394¥ 79,354

2009¥ 23,414
35,454
10,111
7,036¥ 76,015

Thousands of
U.S. Dollars
2010$ 254,000
392,419
127,344
79,506$ 853,269

Independent Auditors’ Report

85
Financial Section

Sysmex Annual Report 2010

Corporate Information
Network
Sysmex UK Limited
Sysmex Logistics UK Ltd.
Jinan Sysmex Medical Electronics Co., Ltd.
Sysmex France S.A.S.
Sysmex Wuxi Co., Ltd.
Sysmex Nederland B.V.
Sysmex Belgium N.V.

Sysmex Infosystems China, Ltd.

Sysmex Belgium IT S.A.

Sysmex San Tung Co., Ltd.

Sysmex Deutschland GmbH
Welltec GmbH
Sysmex Europe GmbH86
Corporate Information

HITADO GmbH
Sysmex Polska Sp.z o.o.
Sysmex CZ s.r.o.
Sysmex Slovakia s.r.o.
Sysmex Hungaria Kft.

Sysmex America, Inc.

Japan
Sysmex Shanghai Ltd.

Sysmex RA Co., Ltd.
Sysmex CNA Co., Ltd.
Sysmex bioMérieux Co., Ltd.

Sysmex India Pvt. Ltd.

Sysmex Canada, Inc.
Sysmex Reagents America, Inc.

Sysmex Belgium IT S.A.
Sysmex Austria GmbH
Sysmex Middle East FZ - LLC
Sysmex Digitana AG

Sysmex Transasia Services Pvt. Ltd.

Sysmex Espana S.L.

Sysmex Hong Kong Limited
Sysmex Vietnam Company Limited

Sysmex (Thailand) Co., Ltd.
Sysmex (Malaysia) Sdn Bhd

Sysmex do Brasil
Industria e Comercio Ltda.

PT. Sysmex Indonesia
Sysmex New Zealand Limited

Sysmex Asia Paciﬁc Pte Ltd.

Sysmex Logistics Co., Ltd.
Sysmex South Africa (Pty) Ltd.

Sysmex TMC Co., Ltd.
Sysmex International Reagents Co., Ltd.
(Ono Factory)
Sysmex Medica Co., Ltd.
Sysmex International Reagents Co., Ltd.
(Head Oﬃce/Seishin Factory)
Kakogawa Factory

Sales
Production
R&D
Distribution
Regional headquarters

Technopark

Head Oﬃce

Solution Center
Research and Development Center

Kansai Area
Domestic Offices

Location

TEL

FAX

Head Office

1-5-1 Wakinohama-Kaigandori, Chuo-ku, Kobe, Hyogo 651-0073, Japan

TEL: (+81) 78-265-0500

FAX: (+81) 78-265-0524

Tokyo Office

1-2-2 Ohsaki, Shinagawa-ku, Tokyo 141-0032

TEL: (+81) 3-5434-8910

FAX: (+81) 3-5434-8555

Technopark

4-4-4 Takatsukadai, Nishi-ku, Kobe 651-2271

TEL: (+81) 78-991-1911

FAX: (+81) 78-991-1917

Solution Center

1-3-2 Murotani, Nishi-ku, Kobe 651-2241

TEL: (+81) 78-992-5860

FAX: (+81) 78-992-5868

Research and Development Center

1-1-2 Murotani, Nishi-ku, Kobe 651-2241

TEL: (+81) 78-991-2212

FAX: (+81) 78-992-1082

Kakogawa Factory

314-2 Kitano, Noguchicho, Kakogawa, Hyogo 675-0011

TEL: (+81) 79-424-1171

FAX: (+81) 79-424-6814

Sendai Branch

4-6-1 Chuo, Aoba-ku, Sendai 980-6024

TEL: (+81) 22-722-1710

FAX: (+81) 22-265-1661

Kita Kanto Branch

4-261-1 Kishiki-cho, Oomiya-ku, Saitama 330-0843

TEL: (+81) 48-600-3888

FAX: (+81) 48-601-2272

Tokyo Branch

1-2-2 Ohsaki, Shinagawa-ku, Tokyo 141-0032

TEL: (+81) 3-5434-8550

FAX: (+81) 3-5434-8551

Nagoya Branch

1-603 Kamiyashiro, Meito-ku, Nagoya 465-0025

TEL: (+81) 52-775-8101

FAX: (+81) 52-775-5217

Osaka Branch

17-1 Enoki-cho, Suita, Osaka 564-0063

TEL: (+81) 6-6337-8300

FAX: (+81) 6-6337-8200

Hiroshima Branch

3-17 Fukuro-machi, Naka-ku, Hiroshima 730-0036

TEL: (+81) 82-248-9070

FAX: (+81) 82-248-9075

Fukuoka Branch

4-9-24 Hakata Eki Minami, Hakata-ku, Fukuoka 812-0016

TEL: (+81) 92-411-4314

FAX: (+81) 92-474-3862

Sapporo Sales Office13-1 Kita Nijo Nishi, Chuo-ku, Sapporo 060-0002

TEL: (+81) 11-281-6116

FAX: (+81) 11-281-6136

Morioka Sales Office

1-7-25 Chuodori, Morioka City, Iwate 020-0021

TEL: (+81) 19-654-3331

FAX: (+81) 19-623-6429

Nagano Sales Office

2-5-26 Fukashi, Matsumoto City, Nagano 390-0815

TEL: (+81) 263-31-8180

FAX: (+81) 263-31-8191

Niigata Sales Office

1-20-5 Sasaguchi, Chuo-ku, Niigata City, Niigata 950-0911

TEL: (+81) 25-243-6266

FAX: (+81) 25-241-4452

Chiba Sales Office

1-3 Nakase, Mihama-ku, Chiba 261-8501

TEL: (+81) 43-297-2701

FAX: (+81) 43-297-2707

Shizuoka Sales Office2-5-11 Takamatsu, Suruga-ku, Shizuoka City, Shizuoka 422-8034

TEL: (+81) 54-237-4815

FAX: (+81) 54-237-8148

Kanazawa Sales Office

2-11-1 Ekinishi Honmachi, Kanazawa City, Ishikawa 920-0025

TEL: (+81) 76-221-9363

FAX: (+81) 76-262-5615

Kyoto Sales Office

3-1 Mibu Kayo Gosho-cho, Nakagyo-ku, Kyoto 604-8811

TEL: (+81) 75-801-3196

FAX: (+81) 75-841-8445

Kobe Sales Office

4-1-2 Kumoidori, Chuo-ku, Kobe 651-0096

TEL: (+81) 78-251-5331

FAX: (+81) 78-251-5505

Takamatsu Sales Office

1-6-6 Bancho, Takamatsu City, Kagawa 760-0017

TEL: (+81) 87-823-5801

FAX: (+81) 87-823-5834

Okayama Sales Office3-10 Togiya-cho, Kita-ku, Okayama 700-0826

TEL: (+81) 86-224-2605

FAX: (+81) 86-222-6814

Kagoshima Sales Office2-9-13 Komatsubara, Kagoshima City, Kagoshima 891-0114

TEL: (+81) 99-267-1344

FAX: (+81) 99-267-1338

Metropolitan Area Service Center

2-16-2 Minami-kamata, Ota-ku, Tokyo 144-0035

TEL: (+81) 3-5711-8301

FAX: (+81) 3-5711-8302

Sysmex Annual Report 2010

(As of April 1, 2010)

Corporate name

EquityEstablished ownershipby Group

Sysmex Corporation

LocationTEL

1-5-1 Wakinohama-Kaigandori, Chuo-ku, Kobe, Hyogo 651-0073, Japan

TEL: (+81) 78-265-0500

Sysmex International Reagents Co., Ltd.

1969

100.00% Head Office/Seishin Factory 4-3-2 Takatsukadai, Nishi-ku, Kobe, Hyogo 651-2271, Japan

Sysmex RA Co., Ltd.

1978

100.00% 1850-3 Hirookanomura, Shiojiri, Nagano 399-0702, Japan

TEL: (+81) 263-54-2251

Sysmex Medica Co., Ltd.

1978

100.00% 323-3 Miyaoki, Yumesaki-cho, Himeji, Hyogo 671-2121, Japan

TEL: (+81) 79-335-2080

Sysmex TMC Co., Ltd.

1992

100.00% 1-3-2 Murotani, Nishi-ku, Kobe, Hyogo 651-2241, Japan

TEL: (+81) 78-992-5883

Sysmex CNA Co., Ltd.

1996

100.00% 2-3-7 Hakata Eki Mae, Hakata-ku, Fukuoka 812-0011, Japan

TEL: (+81) 92-476-1121

Sysmex Logistics Co., Ltd.

1997

100.00% 17 Takumidai, Ono, Hyogo 675-1322, Japan

TEL: (+81) 794-64-2326

Sysmex bioMérieux Co., Ltd.

2008

34.00% 1-2-2 Ohsaki, Shinagawa-ku, Tokyo 141-0032, Japan

TEL: (+81) 3-6834-2666

Sysmex America, Inc.

2003

100.00% 1 Nelson C. White Parkway, Mundelein, IL 60060, U.S.A.

TEL: (+1) 847-996-4500

Sysmex Reagents America, Inc.

1993

100.00% 2 Nelson C. White Parkway, Mundelein, IL 60060, U.S.A.

TEL: (+1) 847-367-2800

Sysmex Canada, Inc.

2007

100.00% 5045 Orbitor Drive Building 9, Suite 401 Mississauga, ON L4W 4Y4, Canada

TEL: (+1) 905-366-7900

Sysmex do Brasil Industria e Comercio Ltda.

1998

100.00% Rua Joaquim Nabuco, 615-Bairro Cidade Jardim-Sao Jose dos Pinhais-Parana- Brasil-CEP 83040-210

TEL: (+55) 41-2104-1314

Sysmex Europe GmbH1980

100.00% Bornbarch 1, 22848 Norderstedt, Germany

TEL: (+49) 40-527260

Sysmex Deutschland GmbH1995

100.00% Bornbarch 1, 22848 Norderstedt, Germany

TEL: (+49) 40-5341020

Welltec GmbH2002

76.60% Rheingaustrasse 190-196, 65203 Wiesbaden, Germany

TEL: (+49) 6119-628-823

HITADO GmbH2010

100.00% Dreihausen 2, D-59519 Moehnesee, Germany

TEL: (+49) 2924-9705-0

Sysmex UK Limited

1991

100.00% Sysmex House, Garamonde Drive, Wymbush, Milton Keynes, MK8 8 DF, U.K.

TEL: (+44) 870-902-9210

Sysmex Logistics UK Ltd.

2003

100.00% Unit 4 IO Centre, Fingle Drive, Stonebridge, Milton Keynes, MK13 0AT, Buckinghamshire, U.K.

TEL: (+44) 870-902-9230

Sysmex France S.A.S.

2000

100.00% Paris Nord II, 22, avenue des Nations, B.P. 50414 Villepinte, 95944 ROISSY-CDG Cedex, France

TEL: (+33) 1-48-170190

Sysmex Espana S.L.

2010

100.00% Frederic Mompou, 4-B Planta 2 08960 – Sant Just Desvern, España

TEL: (+34) 934-236-231

Sysmex Belgium IT S.A.

1997

100.00% Rue Pres Champs 25B, 4671 Barchon, Belgium

TEL: (+32) 4-387-9393

Sysmex Belgium N.V.

2009

100.00% Park Rozendal, Building A Terhulpsesteenweg 6a 1560 Hoeilaart, Belgium

TEL: (+32) 2-769-7474

Sysmex Nederland B.V.

2009

100.00% Ecustraat 11, 4879 NP Etten Leur, The Netherlands

TEL: (+31) 76-508-6000

Sysmex Polska Sp.z o.o.

2005

100.00% Kopernik Office Building, III Al. Jerozolimskie 176, 02-486 Warszawa, Poland

TEL: (+48) 22-57284-00

Sysmex Digitana AG

2006

80.00% Tödistrasse, 50, 8810 Horgen, Switzerland

TEL: (+41) 44-718-38-38

Sysmex Austria GmbH2007

100.00% Odoakergasse 34-36 A-1160 Wien, Austria

TEL: (+43) 1-4861631

Sysmex Hungaria Kft.

2007

100.00% Forum Offices Obuda Irodahaz 1037 Budapest, 3 kerulet Becsi ut 271, Hungary

TEL: (+36) 1-3143076

Sysmex CZ s.r.o.

2007

100.00% Elgartova 4/683 61400 Brno Czech Republic

TEL: (+420) 548-216-855

Sysmex Slovakia s.r.o.

2007

100.00% Galvaniho 15/A 821 04 Bratislava, Slovakia

TEL: (+421) 2-6453-2881-2

Sysmex Middle East FZ-LLC

2008

100.00% Dubai Healthcare City, City Pharmacy Building C/P 72, Office 201, P.O. Box 505119, Dubai, U.A.E.

TEL: (+971) 4-4370515

Sysmex South Africa (Pty) Ltd.

2006

100.00% Fernridge Office Park, Block 2; 5 Hunter Avenue; Ferndale; Randburg 2194 RSA

TEL: (+27) 11-3299480

Sysmex Shanghai Ltd.

2000

100.00% 9th Floor, Azia Center, 1233 Lujiazui Ring Road, Shanghai, 200120, China

TEL: (+86) 21-6888-2626

Sysmex Infosystems China, Ltd.

2000

100.00% 9th Floor, Azia Center, 1233 Lujiazui Ring Road, Shanghai, 200120, China

TEL: (+86) 21-6888-2606

Ono Factory

TEL: (+81) 78-991-2211

17 Takumidai, Ono, Hyogo 675-1322, Japan

TEL: (+81) 794-62-7001

Japan
EuropeChina
Asia Pacific1995

100.00% 7493 Airport Road, Yaoqiang Town, Licheng District, Jinan City, Shandong Province, China; PC. 250107 TEL: (+86) 531-8873-4440

Sysmex Hong Kong Limited

1999

100.00% Rm. 1509, 15/ F., Tower 1, Silvercord, 30 Canton Road, Tsimshatsui, Kowloon, Hong Kong

TEL: (+852) 2543-5123

Sysmex Wuxi Co., Ltd.

2003

100.00% #8-9, No. 93, Science Technology Stand-up Park, New District, Wuxi, Jiangsu, 214028, China

TEL: (+86) 510-8534-5837

Sysmex Asia Pacific Pte Ltd.

1998

100.00% 9 Tampines Grande #06-16 to #06-22 528735, Singapore

TEL: (+65) 6221-3629

Sysmex (Malaysia) Sdn Bhd

1998

100.00% No.11A&15, Jalan PJS 7/12, Bandar Sunway, 46150 Petaling Jaya, Selangor, Malaysia

TEL: (+60) 3-56371788

Sysmex (Thailand) Co., Ltd.

1999

100.00% 14 Soi Ramkamhaeng 43/1, Ramkamhaeng Road, Wangthonglang, Bangkok 10310, Thailand

TEL: (+66) 2539-1127

PT. Sysmex Indnesia

2002

100.00% Menara Hijau, Suite 1005 JI. MT. Haryono Kav. 33, Jakarta, 12770 Indonesia

TEL: (+62) 21-7986005

Sysmex Vietnam Company Limited

2010

100.00% 8th floor, 106 Nguyen Van Troi, Phu Nhuan District, Ho Chi Minh City, Vietnam

TEL: (+84) 8-39979400

Sysmex Transasia Services Pvt. Ltd.

2009

51.00% 308, ASCOT Centre, 3rd Floor, Next to Hotel Le Royal Meridian Sahar Airport Road, Andheri (East) MUMBAI 400 099, India

TEL: (+91) 22-2822-4040

Sysmex India Pvt. Ltd.

1998

100.00% 308, ASCOT Centre, 3rd Floor, Next to Hotel Le Royal Meridian Sahar Airport Road, Andheri (East) MUMBAI 400 099, India

TEL: (+91) 22-2822-4040

Sysmex San Tung Co., Ltd.

2000

51.00% 1 ST Fl., 11, Lane 6, Sec. 1, Hangchow S. Rd., Taipei, Taiwan R.O.C.

TEL: (+886) 2-2341-9290

Sysmex New Zealand Limited

2001

100.00% 382-386 Manukau Road, Epsom, Auckland 1344, New Zealand

TEL: (+64) 9-630-3554

Sysmex Annual Report 2010

Corporate Information

Americas

Jinan Sysmex Medical Electronics Co., Ltd.

87

Corporate Information

Brief History of the Company
Management

R&D

Production

1963

88

MarketingCorporate Information

Successfully developed and commercialized Automated Hematology
Analyzer “CC-1001” the first blood cellcounter in Japan.
Feb. 1968 Toa Electric founded Toa Medical
Electronics as the affiliate for salesof its medical electronics devices andinstrument.
May 1973 Established the Kakogawa Factory inJapan.
Oct. 1975 Launch of the first fully AutomatedHematology Analyzer developed inJapan.
Feb. 1978 Launch of the Sysmex brand to markthe 10th anniversary of founding.
May 1978 Started hematology seminar in Japan.
(now held 31 times)
Oct. 1979 Established a US affiliate, now
Sysmex America.
Oct. 1980 Established a European affiliate
Sysmex Europe.
Oct. 1984 Launch of the automated coagulation analyzer marks entry into thehemostasis segment.
Mar. 1987 Launch of the immunochemistry
analyzer, which utilized an original
immunoassay method, marks entry
into the immunochemistry segment.
Aug. 1990 Launch of an integrated hematology
system that fully automated theentire process from the counting ofblood cells through preparation ofsmear samples.
Feb. 1991 Opened the Ono Factory in Japan andtransferred the reagent production
division.
May 1991 Established the UK affiliate, now
Sysmex UK.
Jul. 1993 Completed the Neumünster Factory,
the base for reagent production in
Europe.
Mar. 1995 Signed an agreement with Dade
International a US based company(now Siemens) for collaboration inselling coagulation product lines.
Jun. 1995 Established a joint venture, now Jinan
Sysmex Medical Electronics in China.
Nov. 1995 Listed stocks on the 2nd Section of
the Osaka Securities Exchange.
Nov. 1995 Launch of the world’s first analyzer
of tangible constituents of urinethat fully automated inspections ofurinary sediments.
Jul. 1996 Listed stocks on the 2nd Section of
the Tokyo Stock Exchange.
Oct. 1996 Hisashi Ietsugu becomes president.
Feb. 1998 Established a Singaporean affiliate
now Sysmex Asia Pacific.
May 1998 Signed a basic agreement with
F. Hoffmann-La Roche of Switzerland
for global collaboration in marketingand joint R&D.
Oct. 1998 Change of company name to Sysmex
Corporation to mark the 30th
anniversary of founding.
Feb. 1999 Launch of the automated hematology
analyzer developed for the 21st
century.

Sysmex Annual Report 2010

Jan. 2000 Founded a Shanghai affiliate Sysmex
Shanghai.
Mar. 2000Promoted to the 1st Section of theTokyo Stock Exchange and the Osaka
Securities Exchange.
Mar. 2000Opened Central ResearchLaboratories in the Techno Center.
Apr. 2002 Consolidated Sysmex International
Reagents as a wholly owned affiliate
through a share exchange.
Apr. 2003 Sysmex and Toshiba announce
development of minimal-invasive
blood glucose self-measurement
technology that does not require
blood sampling.
Jun. 2003 Consolidation of two local affiliates in
the US to establish Sysmex America.
Rebuilding of the sales and support
structure in the US.
Jan. 2004 Release for research purposes of the
GD-100, an instrument incorporating
the independently developed OSNA
method that detects cancer lymph
node metastasis in a short time.
Jan. 2004 Development of the world’s firstmulti-protein analysis chip capableof simultaneous measurement ofactivities and amounts of up to 20
proteins.
Apr. 2004 Acquired 50.8% of the shares in CNA,
a medical data systems enterprise,and consolidated as an affiliate.
Jun. 2004 Established the R&D bases at
the Business Support Center for
Biomedical Research Activities (BMA)
on Port Island Second Stage, offshore from Kobe.
Dec. 2004 Receipt of the Japan Investor
Relations Association’s IR Award for
Excellence for 2004.
Jan. 2005 Sysmex develops technology todiagnose the risk of post-operative
recurrence of early-stage cancer.
Apr. 2005 Introduction of the executive officer
system as a means of strengthening
corporate governance.
May 2005 Establishment of the Solution Centerin Nishi-ku, Kobe and concentrationof the marketing planning, customer
support and scientific support
functions.
Nov. 2005 A stock split.
Jan. 2006 Released the XS Series, the world’s
smallest automated hematology
analyzers, which require only minutequantities of blood.
Apr. 2006 Introduction in Europe of the RD-100i
gene amplification detector for
detecting breast cancer lymph-nodemetastasis.
Nov. 2006 The Japan Investor Relations
Association awards the Fiscal 2006 IR
Excellence Company Prize to Sysmex.
Apr. 2007 Established a Group Corporate
Philosophy, the “Sysmex Way.”

Apr. 2007 Announced preparations for establishing a business presence in Austria,
Slovakia, Hungary and the Czech
Republic.
Jun. 2007 Formed a global partnership with
bioMérieux for urinary screening in
microbiology.
Oct. 2007 Established a Canadian affiliate
Sysmex Canada.
Dec. 2007 Started supplying hematology
analyzers to animal test laboratories
operated by animal diagnostics major
Idexx Laboratories.
Jan. 2008 Formed a commercial joint venturewith bioMérieux for the Japanese invitro diagnostics market.
Apr. 2008 Started direct sales and support
services in France.
Apr. 2008 Awarded MAFF manufacturing andmarketing approval for a rapid andeasy test kit to detect influenza
infection in chickens.
Jun. 2008 Adoption of Sysmex products asstandard instruments by the
Mongolian Ministry of Health.
Jun. 2008 Acquisition of approval from the
MHLW for manufacture and sale ofgene amplification reagent as an invitro diagnostic pharmaceutical.
Jun. 2008 Established the Dubai’s subsidiary
Sysmex Middle East FZ-LLC.
Oct. 2008 Renewed the new corporate logo on
the occasion of the 40th anniversaryof the company’s establishment.
Oct. 2008 Established Technopark, Sysmex
core R&D base; Double the size ofprevious Techno Center facilities.
Nov. 2008 First insurance coverage in Japan for
the Sysmex system for rapid detection of breast cancer lymph nodemetastasis.
Dec. 2008 The Indian joint venture Sysmex India
Pvt. Ltd. became a wholly-owned
subsidiary.
Feb. 2009 Launched sales of the XT-4000i,
a new model in its XT series ofhematology analyzers.
Apr. 2009 Established the Netherlands
subsidiary Sysmex Nederland B.V.
Apr. 2009 Established the Belgian subsidiary
Sysmex Belgium N.V.
Dec. 2009 Opened a reagent development basein China.
Dec. 2009 Realized a full-scale entry into the
POCT market in Germany.
Jan. 2010 Established an overseas subsidiary in
Spain to expand life science business.
Mar. 2010 Started joint research with the
National Cancer Center Hospital toverify clinical usefulness of technology for detecting circulating tumor
cells.
Mar. 2010 Established a sales and support
subsidiary: Sysmex Vietnam.
Jun. 2010 Launched joint business with IDEXX,
leader in pet diagnostics.

Corporate Overview/Stock Information (As of March 31, 2010)
Sysmex Corporation

Composition of Shareholders

EstablishedFebruary 20, 1968

Number of Employees

4,578 (consolidated basis)

Individuals and others
35.77%

Financial institutions
23.76%

1,951 (non-consolidated basis)

Financial instrument ﬁrms
0.25%

*Including part-time employees

Fiscal Year

April 1—March 31

Shareholders’ Meeting

In JuneOther Japanese companies
8.84%

Number of Shares Authorized 149,672,000 shares

Foreign investors
31.38%

Number of Shares Issued

51,353,708 shares

Paid-in Capital¥8,824 million

Stock Listings

Tokyo Stock Exchange, First Section

July 1996: Listed on Tokyo Stock Exchange, Second Section
March 2000: Listed on Tokyo Stock Exchange, First Section andOsaka Securities Exchange, First Section
Ticker Code

6869

Transfer Agent

Mitsubishi UFJ Trust and Banking
Corporation

Independent Auditor

Deloitte Touche Tohmatsu

RatingA (Rating and Investment
Information, Inc. (R&I))

Indexes

Less than 1,000 shares 2.65%

More than 1,000 shares 3.04%

Number of shares: 1,360,726(5,120 shareholders)Number of shares: 1,563,491(825 shareholders)More than 500,000 shares 61.38%

More than 5,000 shares 1.44%

Number of shares: 31,516,358(22 shareholders)Number of shares: 740,543(110 shareholders)More than 10,000 shares 12.74%
Number of shares: 6,544,796(199 shareholders)More than 100,000 shares 18.75%
Number of shares: 9,627,794(46 shareholders)

MSCI Standard Index
Russell/Nomura Japan Equity Indexes
FTSE Japan Index

Principal Shareholders

NOMURA400
DSI (Daiwa Stock Indices)
S&P Japan 500

Stock Price Range and Trading Volume
(Yen)
6,000
5,000

Number of Percentage ofshares held(Thousands) shareholding

Shareholders
Japan Trustee Services Bank, Ltd.

4,811

9.37

Tadako Nakatani

4,003

7.80

Tadashi Nakatani

2,995

5.83

The Master Trust Bank of Japan, Ltd.

2,677

5.21

Nakatani Kosan, Ltd.

2,574

5.01

THE CHASE MANHATTAN BANK, N. A. LONDONSECS LENDING OMNIBUS ACCOUNT (Standing proxy:
Mizuho Corporate Bank. Custody & Proxy Dept.)

1,700

3.31

National Mutual Insurance Federation ofAgricultural Cooperatives(Standing proxy: The Master Trust Bank of Japan, Ltd.)

1,610

3.14

Kazuko Ietsugu

1,531

2.98

Taeko Wada

1,531

2.98

Kenji Itani

1,250

2.43

Common stock price range (¥)

4,000

Cash Dividends per Share and Dividend Ratio (Consolidated)

3,000

80

Tokyo Price Index close
1,000
0

(%)

(Yen)

2,000

Figures before 2006 are adjusted for a stock
split conducted on November 18, 2005

60
4/09

5

6

7

8

9

10

11

12

1/10

2

3

4
5
(Month)40(Thousands)
15,000Monthly trading volume (shares)

20

26.8

Cash dividends per share
Dividend ratio

29.4

31.9

17.9

20.0

36*1

36

48*2

50

56

2006

2007

2008

2009

2010

40
30
20
10

12,00009,000*1: The shares of shareholders were split two for one on November 18, 2005.
*2: Including special dividends of ¥8 commemorating the 40th anniversary of theCompany’s founding.

6,000
3,000
0

0

4/09

5

6

7

8

9

10

11

12

1/10

2

3

4
5
(Month)Dividend Policy
Our dividend policy is to attain a balance between investment in sustainable growth
and return to shareholders. In line with this policy, we maintain a payout ratio of 20%
on a consolidated basis.

Sysmex Annual Report 2010

Corporate Information

Osaka Securities Exchange, First Section
November 1995: Listed on Osaka Securities Exchange, Second Section

89
Distribution of Shares by Number of Shares HeldSysmex Corporation
1-5-1 Wakinohama-Kaigandori,Chuo-ku, Kobe 651-0073, Japanwww.sysmex.co.jp
This brochure was printed in Japan on FSC-certified paper using 100% soy ink.