June 8, 2012
News Release
Company: Olympus Corporation
Representative Director, President: Hiroyuki Sasa
(Code: 7733, First Section, Tokyo Stock Exchange)
Contact: Tetsuo Hyakutake, General Manager, Public Relations and IR Office

Announcement of “Medium-Term Vision”

Olympus Corporation today announced its new Five-Year Medium-Term Vision, for the period starting from thefiscal year ending in March 2013.
Please refer to the attached “Appendix 1” and “Appendix 2” for details.

END

Appendix 1
June 8, 2012

Medium-Term Vision Toward Realization of New Olympus
Regaining credibility through “Back to Basics”— Rebuilding Olympus and creating new corporate value
Olympus Corporation (hereinafter, “the Company”) is announcing a new medium-term vision
for the five years from fiscal year ending March 2013. This vision is based on the new
management structure established on April 20, 2012, with “Back to Basics” as the slogan. The
Company aims to return to the basic values it had at founding and make a fresh start in order toregain the credibility of its stakeholders, build itself anew, and create new corporate value.

< Corporate Management Policies >Under the new management structure, we have designated three corporate management policies: “Backto Basics,” “One Olympus,” and “Profitable Growth.” Expressing regret for our past misconduct, we aim
to achieve growth with profitability by adopting “Back to Basics” as the principle behind all our actions
and strategies. We will make a concerted effort to share values and goals among all our employees
around the world with the aim of building “One Olympus.” Back to Basics
We aim to regain the credibility of our stakeholders, rebuild Olympus, and create new corporate value by
going back to the basic values that existed when Olympus was first established and looking ahead to a
fresh start.
(Olympus’ founding basic values)(i)
Our mission to contribute to society and its development through products and solutions.
(ii)
Continuously strive to develop the world’s first and best products(iii)
Focus on customers and customer needs.
 One Olympus
We will strive to maximize our corporate value by making a concerted effort to share values and goals
among all our employees around the world, harnessing their collective wisdom and demonstrating
teamwork.
 Profitable Growth
We will redefine our core business domains as “Medical Business,” “Life Science & Industrial Business”
and “Imaging Business.” This will enable us to abandon our previous excessive emphasis on sales,
comprehensively review our cost structures and achieve growth with profitability while pursuing efficiency< Basic Strategies >With these management policies as a foundation, we will implement the following basic strategies torebuild Olympus and create new corporate value.
1.

Rebuilding of the Business Portfolio and Optimal Allocation of Management Resources
By designating the “Medical Business,” “Life Science & Industrial Business” and “Imaging Business”
as our core business domains, we will invest our management resources strategically with a special
focus on the “Medical Business.”

In the Medical Business, we will ensure that expansion of emerging markets, etc. results inincreased profitability while securing steady revenue streams by reinforcing the foundation of ourgastroenterological endoscope business. In the surgical business, we aim to achieve drastic growthby expanding our market share of the operating room imaging field and by establishing thefoundation for an energy business (electrosurgical knives, ultrasound scalpels, etc.) to meet thepressures placed by societal aging, capture the increased demand for minimally invasive therapy
and respond to the calls for reduced medical costs.
In the Life Science & Industrial Business, we aim to achieve growth in the industrial businessfield by proactively enhancing our product lineup utilizing the backbone technologies of the Groupand expanding our target markets. In the life science business field, we will carry out drastic
earnings structure reform by reducing manufacturing costs through a review of production sites aswell as curtailment of SG&A expenses by exerting global control over parts procurement andenhancing operational efficiency.
In the Imaging Business, we will review our product lineup by allocating management resources
with a focus on mirrorless interchangeable-lens cameras and high-end compact cameras while
improving profitability. In addition, we will strive to achieve profitability in fiscal year ending
March 2013 and establish a revenue structure that will enable us to continue generating a steadyincome stream in the following years. We will do so by enhancing productivity through therestructuring of our existing manufacturing functions, selection and concentration of our advertisingexpense and reduction of SG&A expenses through personnel optimization.
In our non-business domains, we will reconsider the optimal measures to enhance the value of eachbusiness and subsidiary. Specifically, after evaluating their correlation with our business domains
and reviewing the best way to improve their value, we will take drastic measures to sell, downscale,liquidate or withdraw from businesses whose continuous operation within the Olympus Group isjudged to be difficult from the perspective of profitability and potential. In principle, we will notmake new growth investments in non-business domains.
2.

Review of Cost Structures
In order to improve the earning capability of the Group, we will significantly reduce COGS andSG&A expenses. Specifically, we will aggressively promote the measures for “personnel
optimization,” “reduction in costs through the restructuring of production sites and reinforcement ofprocurement capability” and “acceleration of Group-wide activities to curtail SG&A expenses.”
With regard to personnel optimization, we will reduce the number of employees by approximately
2,700 (approximately 7% of worldwide employees as of March 31, 2012) by March 31, 2014, byrestructuring subsidiaries, global production sites, etc., in addition to enhancing the efficiency of theindirect workforce at headquarters and in each business domain.
As a way to reduce costs through restructuring production sites and reinforcing our
procurement capability, we aim to strengthen our cost competitiveness by restructuring—throughelimination and consolidation— approximately 40% of the 30 production sites currently operatingaround the world by fiscal year ending March 2015. Furthermore, we will take measures to curtailprocurement costs by controlling the Group’s procurement functions in an integrated manner.
Under the planned group-wide activities to curtail SG&A expenses, we will accelerate themeasures that have been promoted since April 2011. Specifically, over the five years up until thefiscal year ending March 2017, we aim to reduce fixed expenses such personnel expenses andlowering the SG&A ratio in our three core business domains (Medical, Life Science & Industrial
and Imaging) by approximately 6.6 points, by enhancing the efficiency of our business functions
and optimizing personnel.

3.

Restoration of Financial Health

We will build up shareholders’ equity through the steady earnings from operations to be secured by
implementing our business strategies. Furthermore, we will be focusing growth investment—including
R&D and capital expenditures—on the Medical Business in order to improve our investment efficiency,
maximize cash flows, and reduce our interest-bearing debt. In addition, we will make efforts to streamline
our assets through the prompt disposal of inefficient assets such as unutilized noncurrent assets and reduce
our overall inventory so that we can improve our equity ratio to bring stability to management. Finally, we
recognize strengthening of capital as an important management matter from the standpoint of strengthening
the financial base to support investments in future growth and to enhance the foundations of our business inrebuilding Olympus.
4.

Restructuring of Governance

Based on the new corporate governance mechanism that was resolved and approved at the Extraordinary
General Meeting of Shareholders held on April 20, 2012, we will manage the Company through the clear
segregation of execution and management supervision, which is comprised of highly independent board
members. At the same time, to ensure that we never repeat our past errors in which we deferred posting ourlosses, all Olympus Group employees will make a concerted effort to engage in the restructuring of ourcorporate governance by expressing integrity in all their actions, making changes in compliance awareness,and strengthening our compliance promotion system.

< Performance Indices and Targets >Results of implementing these basic strategies will be monitored based on four performance indices,
including “return on invested capital (ROIC),” “operating margin,” “free cash flow” and “equity ratio.”(Performance indices)(Results for FY ended
March 2012)(Targets for FY ending
March 2017)

Return on invested capital(ROIC)

2.7%

10% or more

Operating margin

4.2%

10% or more

Free cash flow

-4.8 billion yen

70 billion yen or more

Equity ratio

4.6%

30% or more

(Note)
Return on Invested Capital (ROIC)
ROIC is an index that measures income generated on a Company’s invested capital (IC). At Olympus
Corporation, ROIC is calculated using the following assumptions:
Return (Operating income after taxes) / IC (Shareholders’ equity + interest-bearing debt)
End< For more information >● Media Contact:

Public Relations and Investor Relations, Olympus Corporation

< Reference >(Consolidated Financial Plans)(Units: Billion yen)
FY/March 2013

FY/March 2015

FY/March 2017

Net sales

920

1,010

1,160

Operating income

50
(5%)

90
(9%)

130
(11%)

21
(2%)

70
(7%)

115
(10%)

7
(1%)

40
(4%)

85
(7%)

95
(10%)

140
(14%)

185
(16%)

(Operating margin)
Ordinary income(Ordinary income
ratio)Net income(Net income ratio)
EBITDA(EBITDA margin)< Assumed foreign exchange rates > US$1 = 80 yen, 1 EUR = 100 yen(Business Segment Financial Plans)(Units: Billion yen)
FY/March 2013

FY/March 2015

FY/March 2017

Medical

383

470

570

Life Science &

97

108

120

Imaging

149

160

170

Information and

237

234

245

Others

54

38

55

Total

920

1,010

1,160

Medical

75

97

126

Life Science &

5.5

8

14

Imaging1

7

9OperatingInformation and

5

5

5

incomeCommunication
Others-6.5

15

Elimination and

-30

-28

-29

50

90

130

5%

9%

11%

Industrial
Net sales

Communication

Industrial

Corporate
Total
Operating margin (%)

Medium-Term Vision Toward Realization of
New Olympus“Back to Basics”
June 8, 2012
Olympus Corporation
Hiroyuki Sasa, President

Overview of Medium-Term Vision
1. Mission for the New Management
2. Recognition of Current Issues
3. Corporate Management Policies
4. Basic Strategies
5. Performance Indices and Targets
6. Key Strategic Measures
7. Financial Plans
2

1. Mission for the New Management

Endeavor to restore trust,damaged by the series of scandals,

to improve corporate value.

32. Recognition of Current Issues
Excessive Investment in Non-Business Domain Areas Strategic areas for investment were not clearly identified
 Management system and mechanisms to identify actual
conditions in the businesses were insufficient

Decline in Profitability
 Response to changes in operating environment was slow
 Management had put too high a priority on the expansion ofbusiness scale

Vulnerable Financial Position
 Bloated balance sheet
 Significant decrease in net assets

Insufficient Governance System Decline of free and vigorous corporate culture Insufficient compliance awareness4

3. Corporate Management Policy

Back to Basics
One Olympus
Profitable Growth5

3. Corporate Management Policy
Back to Basics◆ Go back to Olympus’ basics and start anew
focusing on the future.
Olympus’ Founding Basic Values:- Our mission to contribute to society and its development
through products/solutions- Continuously strive to develop the world’s first and bestproducts- Focus on customers and customer needs◆ Restore the open climate where one canspeak out without being censored.
63. Corporate Management Policy
One Olympus◆ Teamwork- As one company, overcome the crisis with joined
forces◆ Maximum use of resources to optimize overall
operation- With the same goal in mind, allocate resources
efficiently to achieve maximum output as a group◆ One value, amalgamated strategies- Share value/goal/strategy among all of Olympus
73. Corporate Management Policy
Profitable Growth◆ Redefine and allocate management resources
to core business domains◆ Abandon extreme sales volume prioritization◆ Review cost structure and improve efficiencies
to maximize profits

8

4. Basic Strategies(i)Rebuilding of business portfolio/Optimal
allocation of management resources(ii) Review of cost structures(iii) Restoration of financial health(iv) Restructuring of governance94. Basic Strategy(i) Rebuilding of business portfolio/Optimal allocation of management resources By designating “Medical Business,” “Life Science and Industrial Business” and“Imaging Business” as core business domains, we will invest management
resources strategically with a special focus on the “Medical Business”(1) Clarifying our core business domains<Medical> → Driver of profit & growth-Reinforce the foundation of the gastroenterological endoscopes
business to secure stable profits-Drastic expansion of Surgical products & emerging market sales<Life/Industrial> → Driver of Opto-Digital Technology & growth-Apply Opto-Digital Technology to meet the customers’ needs-Secure profit in Life Science business and expand Industrial business<Imaging> → Driver of optical/imaging Technology & brand- Lead Olympus with cutting-edge optical/image technologies andcontribute to the company through established brand power- Establish stable, profit-generating capacity
A company around Medical domain, contributing to the total wellness of people10

4. Basic Strategies(i) Rebuilding of business portfolio/Optimal allocation of management resources(2) Identification and liquidation of non-business domains－ Reconsideration of optimal measures to improve the value of eachbusiness•

We will withdraw from businesses which we judge to offer insufficientprofitability and potential. We will sell, downscale or withdraw fromsuch businesses after evaluating their correlation with core businessdomains•

In principle, we will not make new investment in areas other than thecore business domains(3) Establishment of mechanisms to drive optimal allocation ofmanagement resources－ Review and strict application of investment appraisal processes－ Periodical review of plans and operating results and thoroughimplementation of PDCA cycle for management114. Basic Strategies(ii) Review of cost structures(1) Cost reduction－Reduction of manufacturing and procurement costs(2) Significant curtailment of indirect expenses－ Acceleration of measures toward curtailment of SG&A expenses－ Streamlining of indirect workforce

Improve profitability of the entire Group through drastic
review of cost structures124. Basic Strategies(iii) Restoration of financial health
Strive to restore financial health while aiming to maximize shareholders’value as a basic principle(1) Securing steady flow of profits from businesses•

Steady efforts to accumulate shareholders’ equity(2) Maximization of cash flow•

By maximizing cash flows generated from businesses, reduce
interest-bearing debt

(3) Streamlining of assets••

Improve efficiency of assets in use
Review use of fixed assets and eliminate inefficiencies

Improve equity ratio as soon as possible and realize stable management(Target: 30% or more by FY/March 2017)13

4. Basic Strategies(iv) Restructuring of governance(1) Restructuring of governance system
・ Clear segregation of execution and supervision of management
・ Reduce power concentrated in President(appointment, compensation committee, etc.)(2) Reinforcement of internal controls
・ Achieve removal of “Designation as a Security on Alert” within one
year through reinforncement of internal controls
・ Establish internal check system
・ Enhance management system for business investments, subsidiaries,
and affiliates(3) Strengthening of the compliance system
・ Develop a system and mechanism to avoid the same mistakes frombeing made in the future・ Implement thorough changes in awareness and regain corporate
culture which values free spirit and integrity
14

5. Performance Indices and Targets(Basic Strategies)(Performance Indices)(i) Rebuilding of businessportfolio/Optimal allocation ofmanagement resources

Return on invested
capital (ROIC)(ii) Review of cost structures

Operating margin(iii) Restoration offinancial healthFree cash flow

(Management Policies)

Back to Basics
One Olympus
Profitable
GrowthRegainingcredibility

Equity ratio(iv) Restructuring ofgovernanceMaximization of
corporate value
15

5. Performance Indices and Targets
Performance IndicesTargetResults(FY Ended March 2012) (FY Ending March 2017)

Return on invested
capital(ROIC)

2.7%

10% or more

Operating margin

4.2%

10% or more

Free cash flow
(Cash flow from operating activities +cash flow from investing activities)-4.8 billion
yen

70 billion yen or
more

Equity ratio

4.6%

30% or more

16

6. Key Strategic Measures(i)

Expansion of Medical Business(ii) Restructuring of Imaging Business(iii) Improvement of Life Science business andexpansion of Industrial business(iv) Restructuring of non-business domains(v) Review of cost structures(vi) Restoration of financial health(vii) Restructuring of governance17

6-(i): Expansion of the Medical Business
Aim to achieve average annual sales growth of 10%
and profit growth of 13%
FY/March 2012
Results

FY/March 2013
TargetFY/March 2015
TargetFY/March 2017
TargetNet sales

349.2 billion
yen

383.0 billionyen

470.0 billion
yen

570.0 billion
yen

Operatingincome68.2 billion
yen

75.0 billion
yen

97.0 billion
yen

126.0 billion
yen

Operatingmargin

20%

20%

21%

22%

Review of business for the period up to
FY/March 2012
 Measures to provide high added value in“Early Diagnosis” and “Minimally Invasive
Therapy” matched market needs.
 Excluding the impact of currency
fluctuations, the Medical Business realizedsound growth in sales.

Basic policies for FY/March 2013 and after Reinforcement of the gastroenterologicalendoscope business Realization of drastic growth in the surgicalbusiness
 Sales expansion in emerging markets186-(i): Expansion of the Medical BusinessBusiness Mission and Surrounding Environment
With the aim of realizing a medical environment which cares for the physical and mental
health of people around the world by meeting demand for efficiency and delivering
effective medical results

Endoscopes
Early Diagnosis
Minimally Invasive
Therapy
1. Increasing needs for “Early Diagnosis” and “Minimally Invasive Therapy”- Acceleration of aging society + demand for QOL (Quality of Life) from patients + pressure to reduce
medical costs
2. A leading comprehensive endoscope manufacturer- Continuous provision of innovative devices which meet needs for “Early Diagnosis” and “Minimally
Invasive Therapy”- Development of medical equipment by pursuing usability
19

6-(i): Expansion of the Medical Business
Reinforcement of the gastroenterological endoscope business(Aim to achieve average annual growth of 9%)

 Maintain a commanding market share byintroducing new products
Introduction and penetration of next- generation
endoscopy systems

 Expansion of fields for early diagnosis using endoscopes
through the establishment of cutting-edge technologies
Measures for standardization of NBI observation as adiagnosis method
NBI(Enlarged)
NBI
Ordinary observation

 Definitive diagnosis of lungcancer using an ultrasonicbronchoscope

Image provided by: Dr. Yasushi Sano (National Cancer Center East Hospital)20

6-(i): Expansion of the Medical BusinessRealization of drastic growth in the surgical business(Aiming to achieve average annual growth of 14%)
<Tailwinds for early diagnosis using endoscopes and minimally invasive therapy>
Acceleration of aging society + increasing needs for minimally invasive surgeries +pressure to reduce medical costs
Gastroenterological Surgery/Obstetrics and Gynecology
Business incubation for theworld’s first energy
therapeutic instruments using
ThunderBeat
Sales expansion in the surgicalimaging field leveraging strength inflexible scope technologies
Flexible scopes: Urology andotorhinology
ENDOEYLE FLEX
Laparoscopic Toupet
fundoplication (LTF)

Sales expansion in theurological field leveraging theacquisition of Gyrus ACMI
From monopolar to bipolar
From capital-oriented
business to disposablebusiness

Global expansion of theotorhinological business
Imaging devices
Various therapeutic devices
Diego

Combine Olympus’technologies and Gyrus ACMI’s sales andmarketing capabilities21

6-(i): Expansion of the Medical BusinessRealization of drastic growth in the surgical business(Aiming to achieve average annual growth of 14%)
 Acquisition of 25% global share in the operating room imaging field (by 2015)
 Introduction of new integrated endoscopy video system “VISERA Elite”
 Expansion of contact points with customers and establishment of businessfoundation leveraging the penetration of (translumenal) endoscopic surgery
and LESS (Laparo-Endoscopic Single-Site) surgery using flexible scopes
 Enhanced lineup of differentiated products focused on minimalｌｙ invasive
therapeutic techniques Establishment of the energy business=> To grow into a new pillar for the surgical businessalong with the operating room imaging business[Product image]
Advanced bipolar and ultrasonicintegrated energy device

 Market generation through the introduction ofAdvanced bipolar Ultrasonic(サンダービート)sophisticated energy devices
 Expansion of disposal product businesses
 Establishment and utilization of training
centers22

6-(i): Expansion of the Medical Business
Sales expansion in emerging markets(Aiming to achieve average annual growth of 23%)

Expand market size and shareIncrease the number of endoscopic
surgeons and reinforce training-Shanghai Training Center in 2008
-Beijing Training Center in 2010

Training Center in
Beijing City

Will open and operate 22 training centers in Asia andpromote the development of endoscopic surgeons
and penetration of endoscopic techniques.
Targets of Axeon (Examples in China)
by Olympus’
Classification by administrative division Classification
categories

Customersegmentatio
n of Axeon

Province
Prefecturelevel city

Countynotpossessed

TownshipTown

Endoscopes possessedCultivate new customer segments byintroducing low-end models
Strengthen sales and service system in
China and India*Products to be launched after obtaining legal and regulatory licenses in China

23

6-(ii): Restructuring of Imaging Business
Achieve steady flow of operating income
FY/March 2012
Results
Net sales

FY/March 2013
TargetFY/March 2015
TargetFY/March 2017
Target128.6 billion yen 149.0 billion yen 160.0 billion yen 170.0 billion yen

Operating income-10.8 billion yen

1.0 billion yen

7.0 billion yen

9.0 billion yen

Operating margin

-8%

1%

4%

5%

Review of business for the period up to
FY/March 2012

Basic policies for FY/March 2013 and afterDecline in investment efficiency as aresult of omni-directional strategies

Focus on mirrorless interchangeable-lenscameras and high-end compact cameras

High-cost structure for development,
manufacturing and sales
infrastructures due to sales decrease

Drastic improvement in revenue structure
for manufacturing cost and SG&A
expenses, etc.
24

6-(ii): Restructuring of Imaging Business
Focus on mirrorless and high-end compact cameras
Setting realistic growth targets
Net sales (Unit: Billion yen)
4000
400

3200
320.0

300
3000
200
2000

1950
195.0
1310
131.0

1480
149.0

800
8

3700
370.0

600
6
1600
160.0

1700
170.0

400
4

SLR (mirrorless and conventional models)High-end compact

FY Ended March FY Ending March
2011
2013
11/3期
13/3期

Basic Management Plan for 20102010年経営基本計画

FY Ending March FY Ending March
2015
2017
15/3期
17/3期

+180%
+70%

Low-end compact

200
2

100
1000
0

Changes in unit sales (Unit: Million units)
1,000
10

-50%

00
FY Ended March FY Ending March FY Ending March FY Ending March
12/3月期
13/3月期
15/3月期
17/3月期
2012
2013
2015
2017

Medium-Term Vision for 20122012年中期ビジョン

Conventional digital SLR
cameras・Highly-profitable growth market
・Top two companies dominate in terms of market share,brand strength and development capability

Mirrorless interchangeable ・Highly-profitable growth market
Segments -lens cameras
・Olympus has technological lead in mirrorless cameras
to focus
High-end compact cameras ・Highly-profitable stable market
on・Differentiation is possible by leveraging Olympus’ advanced
optical technologies
Low-end compact cameras ・Low-profit mature market (excluding emerging markets)25

6-(ii): Restructuring of Imaging Business
Achieve Profitability in FY/March 2013
Operating income
Improvement amountMeasures
Impact of thefloods inThailandControl over the impact of the floods inThailandApprox. 4.0 billion
yen

Sales andproduct
domains

Increase in sales of high value added
models
Review of product lineup

Approx. 3.5 billion
yen

Manufacturing
field

Decrease manufacturing cost throughimprovement inplant operations, etc.
Decrease manufacturing cost through thereinforcement of collaboration with partners

Approx. 2.5 billion
yen

R&D field

Review of R&D expenses

Approx. 0.5 billion
yen

Other SG&A
fields

Review and rationalization of IT-related
expenses
Review of advertising and brand investment

Approx. 1.5 billion
yen

Total

Approx. 12 billionyen26

6-(ii): Restructuring of Imaging Business
Extensive product lineup leveraging advanced technologies for mirrorlessinterchangeable-lens cameras
 Developed differentiated technologies for mirrorless interchangeable-lens cameras ahead ofcompetitors and created markets for these products, launching products equipped with FAST AF,
five-axis image stabilizer, etc.
 Will continue to incorporate advanced technologies for differentiation in line with the Technology
Road Map in an effort to enhance product lineup as a leading manufacturer of mirrorlessinterchangeable-lens cameras
Reflections on Past Product Strategy
・Lack of differentiating
technologies
・Loss of uniqueness

Advanced technologies for mirrorless cameras
Road Map of 14 technologies such as AF, etc.
Strategy for key technologies

World’s fastest
FAST AF

World’s first five-axis
image stabilizer

Incubation of markets
for mirrorless cameras

Flagship mirrorlesscameraE-P3

OM-D

Introduction of advanced
technologies
Fla
gs
hip
mir
rra
O
MD

Fla
gs
hip
mir
rra
O
MD

Fla
gs
hip
mir
rra
O
MD

Enhancement of product lineup
as a leading manufacturer ofmirrorless cameras27

6-(ii): Restructuring of Imaging Business
Application of advanced technologies developed for mirrorless cameras tohigh value-added compact cameras
 Launch of unique high value-added compact cameras
 Compact cameras for the first time equipped with “ZUIKO”-branded lenses
 TOUGH will be equipped with FAST AF from mirrorless interchangeable-lens cameras
 Will launch next-generation flagship models by applying technologies from mirrorless cameras

Advanced technologies for mirrorless cameras
World’s fastest FAST
AF

World’s first five-axis
image stabilizer

Incubation of markets formirrorless cameras
E-P3

Flagship mirrorless camera

ZUIKO lensIntroduction of advanced
technologies

OM-D

FAST AF

Development of advanced technologies

High-end compact

Flagship TOUGH

XZ-1 i ZUIKO

TG-1

DIGITAL lens

F2.0 high speed lens

Nextgeneration
flagshipmodel
UniqueHigh value-added compact
cameras28

6-(ii): Restructuring of Imaging Business
Drastic improvement in revenue structures
 Reinforce cost competitiveness by raising manufacturing value-add and enhancing productivity
 Selection and concentration of advertising investment and improvement in SG&A ratio throughpersonnel optimization

Key measures
Review of
product
structure

Details of measures
 Focus on mirrorless interchangeable-lenscameras and high-end compact cameras

Restructuringof productfunctionality

 Achieve comprehensive productivity enhancement
through the introduction of the latest manufacturing
technologies at Shenzhen plant.
 Concentrate on the manufacturing of high value-added
mirror cell and exchangeable lenses
 Proactive utilization of OEM/EMS for assembly
processes

Improvementin SG&A
expenses Maximize effectiveness of SG&A expenses throughselection and concentration of advertising investments
and re-enhanced online communication with users, etc.
 Optimize the number of employees based in Japan andoverseas Utilize imaging technologies and know-how among
employees within the Group

Ratio of cost of
sales:
Improvement by
3 points(FY/March 2015)

SG&A ratio:
Improvement by
8 points(FY/March 2015)29

6-(iii): Improvement of Revenue in Life Science Businessand Expansion of Industrial Business
Aim to achieve average annual sales growth of 5% and profit growth of 21%
FY/March 2012
Results

FY/March 2013
TargetFY/March 2015
TargetNet sales

92.4 billion yen

97.0 billion yen

108.0 billion yen 120.0 billion yen

Operating income

5.4 billion yen

5.5 billion yen

8.0 billion yen

14.0 billion yen

Operating margin

6%

6%

7%

12%

Review of business for the period up to
FY/March 2012

FY/March 2017
TargetBasic policies for FY/March 2013 and afterWar of attrition in a limited market(small product portfolio)

Proactive product portfolio expansion

High cost structure
due to inefficient business operations

Increase market share in emerging

Reform revenue structure
markets30

6-(iii): Improvement of Revenue in Life Science Businessand Expansion of Industrial Business

Proactive expansion of product portfolio
 Effectively expand business fields by leveraging the Olympus Group’s global
infrastructure from the perspective of customers and technologies/productmaterials.
Technology/
Product material

Customer

Microscopes Endoscopes

UltrasoundEnergyDevelopment of
new customer
categories

Aviation andtransportation
Metals and manufacturing
Research andpathologicaldiagnosis
Resources and recycling

Development of
new customer
categories

X-ray analysis

Development of new
business fields through theacquisition of newtechnologies and productmaterials

Sales expansion byentering vacantcustomer category fields

Development of
new businessfields throughacquisition of newtechnologies andproduct materials31

6-(iii): Improvement of Revenue in Life Science
Business and Expansion of Industrial Business

Improved revenue structures
Measures

Details of measures

Increase
profitability
with highvalue-added
products

 Further customer development in growth markets withthe main focus on the Industrial Business The Life Science Business will focus on the volume
zone which deal with ordinary goods in the advanced
research market
 Focus on growing emerging countries and sales
expansion

Reformproduction
structures

 D
Decrease manufacturing
f t i costst b
by reviewing
i iproduction sites
 Streamlining of overseas production sites(Philippines) Streamlining of domestic production sites(Nagano)Enhance
operational
efficiency fromglobalperspective Global control over procurement of parts
 Shared utilization of the Olympus Group’s existing
infrastructure

Manufacturing cost competivenessRatio of cost of
sales:
Improvement of
1 points(FY/March 2015)

SG&A ratio:
Improvement of
2 points(FY/March 2015)

developed in the Imaging Business

Customer management method developedin the Medical Business32

6-(iv): Restructuring of Non Business Domains－Reconsideration of optimal measures to enhance the value of each business•We will withdraw from businesses which we judge to offer insufficientprofitability and potential. We will sell, downscale or withdraw from suchbusinesses after evaluating their correlation with core business domains.

•

In principle, we will not make new investments in areas other than the corebusiness domains.

Measures

Details of measures

EffectDissolutionof threedomestic
companies It was resolved to dissolve the following
companies at the Board of Directors’ Meeting
held on April 27, 2012.
• Altis Co., Ltd.
• NEWS CHEF Inc.
• Humalabo Co., Ltd.

To be sold or
liquidated byMarch 31, 2013

Liquidation ofsubsidiary It was resolved to liquidate the following
company at the Management Implementation
Committee Meeting held on March 2, 2012.
・ Olympus Visual Communications Corp.

To be liquidatedby November 30,
2012

33

6-(v): Review of Cost Structures
Measures to reduce SG&A expenses
Ratio of SG&A
expenses to
net sales(Medical +Life Scienceand Industrial+ Imaging+ Corporate)

53. 2%

48. 0%

46. 6%
Reduction effect- 6.6pt

FY/March 2012

FY/March 2015

FY/March 2017

- 1.8pt- 6.6pt

Corporate

Total- 3.1pt- 1.5pt- 0.2pt
MedicalLife Scienceand Industrial

Imaging34

6-(v): Review of Cost Structures

Personnel optimization
 Reduction of number of employees by approximately
2,700 (7%) around the world by the March 31, 2014.
Enhancement of functional efficiency of each businessEnhancement of efficiency of indirect workforce acrossthe GroupEnhancement of efficiency through the restructuring ofsubsidiaries
Enhancement of efficiency through the restructuring of
global production sites

35

6-(v): Review of Cost Structures
Reduction of costs through the restructuring of production sites andreinforcement of procurement
capabilityppy Promotion of Group-wide structural reform of procurement
 Restructuring of production sites through the review of productlineup

Procurement
 Restructuring of
global supplierstructure Expansion of bulk
purchases mainly
for indirectmaterials

Manufacturing
 Will reduce approximately
40% of 30 sites in the world(FY/March 2015)
 Will consolidate foursites in Nagano district
into one (excluding
repair sites) Will close thePhilippines plant in 2012,
etc.

COGS ratio*
Improvement by
2 points(FY/March 2015)
Improvement by
3 points(FY/March 2017)* Total for Medical, Imaging, Life Science and Industrial, and Corporate36

6-(vi): Restoration of Financial HealthStreamlining of assets((Reduction of property,
p p y, plantpand equipment,q p, and operatingpg capital)p ) Expedite the sale of unutilized noncurrent assets
 Promote the shortening of the inventory turnover period through the
reduction of inventories
Measures
Reduction ofproperty, plantand equipment

Details of measures
 Sale of idle properties

MedicalBusiness

Reduction of
inventories

 Restructuring and consolidationof expanded product lineup Improvement of supply chain,inventory management method
and production method

Imaging
Business Reduction of production leadtime (supply)

Life
ScienceandIndustrial

 Improvement of supply chain,inventory management method
and production method

EffectReduction of 1.5
billion yen(As of March 31, 2014)

Shortening by 1.4
monthsReduction by 28
billion yen(As of March 31, 2017)

Note) Effect of asset reduction is based on FY/March 2012 cost of sales37

6-(vi): Restoration of Financial HealthMaximization of cash flow
 Will use cash flow generated to repay and halve interest-bearing debt
 Will reduce the balance of cash and deposits to an adequate level<Plan for reducing interest-bearing debt andcash and deposits>

FY/March 2017
Five-Year Plan

FY/March 2012
Results

Balance of interestbearing debt at
year-end

642.4

Balance of cash
and deposits at
year-end

200.1

Cash and deposits
turnover period(months)

2.9(Unit: Billion yen)Will generate free cash
flow amounting to 250
billion yen over five years
and halve interest-bearing
debt of 350 billion yen
through the repayment
using free cash flow
Shorten the cash anddeposits turnover period
from approximately 3months to 0.8 months

300
80
0.8
38

6-(vi): Restoration of Financial HealthResource allocation (R&D, CAPEX, Shareholder return) Will continue to invest for growth with a main focus on the Medical Business in order to realize
appropriate shareholder returns(Billion yen)
1,000
100

Medical
医療Life Science
Imaging
映像
ライフ・産業
その他Others
and Industrial

80
800

R&D
investment

60
600
40
400

200
20

61%

59%

62%

0

0

FY Ending March 2013

Ratio
of R&D expenses to
全社売上高R&D比率
consolidated net sales(Billion yen)

13/3期

FY Ending March 2015

7.0%
7.0%

7.1%
7.1%

Medical
Medical
医療

15/3期

The composition ratio of
the Medical Businesswill increase by 3 points.

7.0%
7.0%

and Industrial

Others

The ratio of CAPEX toconsolidated net sales
will be maintained at the
3% level.

30
300
20
200
10
100

60%

00

FY Ending March 2013

13/3期

Ratio of CAPEX toconsolidated net sales

17/3期

Life Science
Life Science
Imaging
OthersImaging
映像
ライフ･産業
その他
and Industrial

40
400

CAPEX

FY Ending March 2017

The ratio of R&D expenses
to consolidated net
sales will be maintainedat the7% level.

3.6%

61%
FY Ending March 2015

68%

15/3期

FY Ending March 2017

3.3%

3.2%

17/3期

The composition ratio of
the Medical Businesswill increase by 8 points.

39

6-(vii): Restructuring of GovernanceRestructuring of corporate governance system
 Will shift to a new management system with clear segregation of
execution and supervision
(i)

(i)

Board of Directors(ii)
Chairman

Nominating
Committeeof the(iii) Chairman
Board of Directors

Compensation(iv)
Committee

Executive Committee

President andRepresentative
Director

Chairman

Board ofCorporate
Auditors

Accounting Auditors

General Shareholders Meeting(v)
2

Majority of board members consist ofhighly independent Outside Directors(ii) Chairman for the Board of Directors
served by someone other than President(= Chairman)(iii) Establishment of the Nominating
Committee (To nominate candidates for
Chairman, President, Director andCorporate Auditor)(iv) Establishment of the Compensation
Committee(To implement proposals oncompensation amount for Directors andcompensation standards for Executive
Officers)(v) Maximum length of term for President,
maximum length of term for Executive
Officers in charge of a particular division(President: six years in principle) andupper age limit will be decided.
40

6-(vii): Restructuring of GovernanceReinforcement of compliance system
 Will commence measures toward changes in compliance awareness andreinforcement of promotion system
Audit by Corporate Auditors

Internal Audit(iii)

Supervision ofcompliance
Compliance
Committee

Establishment of a Compliance
Committee chaired by an Outside
Director(i)

Chief Compliance Officer will be
appointed and a promotionalorganization will be establishedGroup’s Internal
Audit Division
Promotion of compliance
CCO: (ii)
ChiefCompliance
OfficerPresident

Board of Directors

Board ofCorporate
Auditors

(i)

Group
Compliance

Global Compliance
Committee
Japan
U.S.
EuropeAsia
Whistle-blowing
Desk (internal)(i)

Whistle-blowing
Desk (external)(ii) Declaration on commitment tocompliance by management andenhancement of complianceeducation for various groups(iii) Enhancement of the whistleblowing system and“Compliance Help Line”(iv) (external)41

6-(vii): Restructuring of Governance
Development of internal control system Measures toward the removal of “Designation as a Security on Alert”(Target: within one year) Internal project team was established on March 1
 Will establish a Group-wide promotional system with more than 100 staff membersin the future
March

April

May

June

Internal system development
periodJuly

AugustSeptember

OctoberNovember December

Internal system operational period

January

February –May

Inspection
periodDevelopment ofsystemDevelopment ofregulations

Implementation of improvement measures

Submission ofinternal
confirmation
document

Clarification of
improvement
measures

指定
解除

42

7. Financial Plans
 Aim to return to profitability for the FY ending March 2013 and achieve
operating income ratio of approximately 11% for the FY ending March 2017with continuous growth.
 Olympus is sure to achieve this plan in order to regain the credibility of
stakeholders and to maximize corporate value.
FY/March 2012
Results

FY/March 2013
Plan

FY/March 2015
Three-Year Plan

FY/March 2017
Five-Year Plan

Net sales

848.5 billion yen

920.0 billion yen

1,010.0 billion yen

1,160.0 billion yen

Operating income(Operating margin)

35.5 billion yen

50.0 billion yen

90.0 billion yen

130.0 billion yen

4%

5%

9%

11 %

Ordinary income(Ordinary income ratio)

17.9 billion yen

21.0 billion yen

70.0 billion yen

115.0 billion yen

2%

2%

7%

10%

Net income(Net income ratio)-49.0 billion yen

7.0 billion yen

40.0 billion yen

85.0 billion yen

-6%

1%

4%

7%

EBITDA(Net sales ratio)

80.3 billion yen

95.0 billion yen

140.0 billion yen

185.0 billion yen

9%

10%

14%

16%

[Assumptions for financial plans]• Exchange rate: US$1 = 80 yen, 1 EUR = 100 yen
43

44Performance forecasts and other forward-looking
statements in this presentation reflect judgments
and assumptions based on information available atthe time of writing. Because of the uncertainty
inherent to judgments and assumptions, andbecause of the potential for future changes inbusiness operations, conditions in Japan oroverseas, or other factors, actual results, etc., maydiffer substantially from the targets stated.

45